ETNB - 89bio: Great Prospects After Excellent Phase 2 Data

2023-05-28 04:18:19 ET

Summary

• ETNB posted excellent phase 2 data in March.
• They plan to start a phase 3 trial now.
• The data is very competitive.

I have been covering 89bio ( ETNB ) for a few years now. I also added it to the List, but it was not a good idea in 2021. In biotech, timing is everything, and 2021 was not the best time for ETNB - 2022 was. ETNB has gone up a lot in recent times, after going down on Madrigal’s data. Now that was a strange reaction to a competitor’s data. While, like I noted before, Viking ( VKTX ), which has a THR-B molecule just like Madrigal’s, went up, ETNB, whose pegozafermin is a glycoPEGylated analog of fibroblast growth factor 21, went down. That is a surprisingly boring market reaction. So, when Madrigal proves THR-B, another THR-B molecule due for approval more than a year after Madrigal’s goes up, and a different mechanism is given no value? I would have done it differently.

3 months later, however, ETNB received its due after posting strongly positive topline data from the Phase 2b ENLIVEN trial for pegozafermin in patients with nonalcoholic steatohepatitis ((NASH)). The trial had 219 patients, and there were four arms, pegozafermin 44 mg every two weeks, 30mg weekly, 15mg weekly, and placebo. Both the 44mg and 30mg arms reached both the primary histology endpoints :

- 44mg Q2W dose had a placebo-adjusted effect size of 20% on at least one-stage fibrosis improvement without worsening of NASH (p=0.008) and 24% on NASH resolution without worsening of fibrosis (p=0.0005) -

- 30mg QW dose had a placebo-adjusted effect size of 19% on at least one-stage fibrosis improvement without worsening of NASH (p=0.008) and 21% on NASH resolution without worsening of fibrosis (p=0.0009) -

In safety, grade 1 or 2 gastrointestinal events (diarrhea, nausea, and increased appetite) were among the most commonly reported treatment-related adverse events, most of which were mild to moderate in severity. However, five patients who received pegozafermin discontinued the trial due to treatment-related AEs, while there were no discontinuations in the placebo group.

Madrigal did its own phase 2 NASH trial in 2017 - here . This trial has not much similarity with 89bio’s phase 2 trial, except that all these NASH trials were in biopsy-confirmed patients. Indeed, the latter has more similarities with Madrigal’s phase 3 trial. Here’s the primary endpoint set of ENLIVEN, ETNB’s trial:

1. Proportion of participants with histological resolution of NASH without worsening of fibrosis [Time Frame: 24 Weeks]

2. Proportion of participants with ?1 stage decrease in fibrosis stage with no worsening of NASH [Time Frame: 24 Weeks]

And here’s MAESTRO-NASH from Madrigal:

1. Week 52 Dual Primary Objectives: To determine the effect of 80 or 100 mg MGL-3196 vs matching placebo on liver biopsy (NASH CRN score) at Week 52 compared with Baseline [ Time Frame: 52 weeks ]

   1. Proportion with resolution of NASH (ballooning 0, inflammation 0,1) associated with at least 2-point reduction in NAFLD Activity Score (NAS) without worsening of fibrosis stage OR

   2. Proportion with at least a 1-point improvement in fibrosis stage with no worsening of NAS

2. Month 54 Primary Objective: Time to experiencing an adjudicated Composite Clinical Outcome event (Final Primary Endpoint, at 54 months) [Time Frame: up to 54 months] The Composite Clinical Outcome is composed of all-cause mortality, liver transplant, and significant hepatic events (including hepatic decompensation events [ascites, encephalopathy, or variceal hemorrhage], histological progression to cirrhosis, and a confirmed increase of MELD score from <12 to ?15).

ETNB’s two endpoints are the same as MDGL’s dual endpoints. MDGL has an extra endpoint that makes it robust - all-cause mortality. Even so, ETNB has that single endpoint similarity. MDGL’s trial enrolled 2000 patients, the largest ever in NASH.

Now, ETNB’s data has been given above for its own endpoints, which it met with great statistical significance. Here’s MDGL’s data for the same endpoints:

MDGL data (MDGL website)

If you place the data side by side, Madrigal’s data, even from a 10x larger patient population, looks better than ETNB’s, but ETNB is no pushover either. Of course, Madrigal is giving a much larger dose, but that doesn’t matter as long as it is tolerable. So, MDGL’s data is very good, and ETNB’s data is also quite good. NASH is a big enough space for multiple molecules with differentiated mechanisms. In fact, the Viking pop surprised me because while NASH has space for different MoAs, I wonder if there’s enough space for many molecules with same MoAs. On that note, though, Akero too has an FGF21 analogue similar to ETNB’s, and in September, it also announced very positive data.

Akero’s HARMONY trial, if analyzed using a completer’s population, produces very high data for both these primary endpoints, however, if a more stringent ITT population is used, the data becomes more humble. ETNB’s drug was also given fortnightly, while Akero’s was given once a week.

Financials

ETNB has a market cap of $1.19bn and a cash balance of $489mn after a successful $279mn stock offering in March. R&D expenses were $22.3 million for the three months ended March 31, 2023, while G&A expenses were $6.2 million. At that rate, ETNB has a cash runway of 14–15 quarters.

Bottomline

The right way to invest in the NASH space is to buy the top 3–4 players, a list that should include Madrigal, ETNB, AKRO, and so on. All these molecules have promise, and if one can get in and out at the right prices - getting in on all of them, getting out of those that lag, but after making a profit - one can do very well in NASH.

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