ETNB - 89bio: Lead Candidate Shows Strong Efficacy In NASH And SHTG Trials

2023-03-08 11:35:54 ET

Summary

• 89bio is a clinical-stage company focused on the treatment of liver and cardio-metabolic diseases.
• The company's lead candidate, pegozafermin, shows strong efficacy and favorable tolerability in treating non-alcoholic steatohepatitis (NASH) and severe hypertriglyceridemia (SHTG).
• The Phase 2 ENTRIGUE trial showcased noteworthy decreases in triglycerides and a positive impact on atherogenic lipids among patients with severe hypertriglyceridemia (SHTG) who received pegozafermin.
• With a strong financial position and a focus on developing innovative therapies for unmet medical needs, 89bio presents a compelling investment opportunity.

89bio ( ETNB ) is a promising clinical-stage biopharmaceutical company that is dedicated to the development of novel therapies to treat liver and cardiometabolic diseases. The company's lead candidate, pegozafermin, has shown strong efficacy and favorable tolerability in treating non-alcoholic steatohepatitis ((NASH)) and severe hypertriglyceridemia (SHTG). With the liver and cardio-metabolic disease market projected to continue growing, 89bio's potential to become a major player in the space presents an attractive investment opportunity for investors seeking exposure to the biopharmaceutical industry.

A Unique Approach to NASH Treatment

89bio's product line, centered around its lead candidate pegozafermin , will change the treatment of liver and cardiometabolic diseases as a whole. The unique technology used in pegozafermin's development, glycoPEGylation, prolongs biological activity of FGF21 while maintaining its efficacy. This gives pegozafermin a significant competitive advantage over other treatments for these diseases.

The company's emphasis on non-alcoholic steatohepatitis ((NASH)) is particularly promising given the growing demand for effective treatments worldwide. The clinical results have demonstrated significant reductions in liver fat, with a notable proportion of patients achieving clinically meaningful responses. This represents a significant milestone for pegozafermin's effectiveness in treating NASH and has the potential to revolutionize the approach to managing the disease.

Additionally, the company is actively exploring the use of pegozafermin as a treatment for severe hypertriglyceridemia (SHTG), which is defined as patients with triglycerides levels of 500 mg/dL or higher. Initial data suggest that pegozafermin may offer durable and robust reductions in triglycerides, as well as address other common metabolic issues in SHTG patients, such as lowering hepatic fat. In my view, the broad impact of pegozafermin makes it a highly innovative therapy for this condition.

ENTRIGUE Phase 2 Results Are Good

The recent announcement by 89bio regarding the Phase 2 ENTRIGUE trial of pegozafermin in patients with severe hypertriglyceridemia (SHTG) is a major breakthrough. The post hoc analysis of the trial results, which examined the effect of pegozafermin treatment on lipids in patients based on their background lipid-modifying therapy ((LMT)) status, is very promising. The analysis showed that adding pegozafermin to background therapy, including high-intensity statins, resulted in significant reductions in triglycerides and positive effects on atherogenic lipids in patients with SHTG.

I find this development particularly exciting because current treatment options for SHTG are limited. The early data suggests that pegozafermin could offer a robust and long-lasting reduction in triglycerides and address other metabolic issues that are common in patients with SHTG, making it a highly differentiated new therapy for this condition. As the only FGF21 analog in development for the treatment of SHTG, I believe pegozafermin has the potential to become an important new cardiometabolic treatment.

Moreover, the trial met several secondary endpoints, including improvements in atherogenic lipoproteins, metabolic measures, and liver fat, which is a positive indicator of pegozafermin's overall efficacy. The safety and tolerability of the drug are also promising, further indicating its potential to be a highly effective treatment for SHTG, which supports its advancement into a pivotal Phase 3 program.

Overall, I am highly encouraged by these findings and believe that pegozafermin has the potential to be a game-changer in the treatment of SHTG. The promising results of the Phase 2 ENTRIGUE trial further support the efficacy and safety of pegozafermin, and I look forward to the continued progress of the drug's development by the company.

Financial Context

The company's balance sheet appears strong, with $193.3 million stored in cash, equivalents, and short-term investments as of September 30, 2022. This amount includes $88.2 million from a public offering of its common stock and warrants in July 2022. This strongly suggests that the company has enough money to operate its business and pursue clinical plans without having to secure more outside capital.

Research and Development (R&D) expenses have also increased, presenting a positive sign for investors. R&D expenses were $61.7 million for the nine months that ended September 30, 2022, compared to $49.4 million for the same period in 2021. This increase reflects ongoing clinical trials and personnel-related expenses, suggesting significant progress toward drug development program objectives. This is perceived as an encouraging signal as it implies a substantial investment into long-term growth potential.

General & Administrative (G&A) expenses have likewise increased, which suggests broader expansion and commercialization preparation. G&A costs amounted to $15.2 million for the nine months ended September 30, 2022, compared to $14.2 million for the same period in 2021; this change stems from greater personnel fees as well as professional services.

Despite the augmented overhead, the company's net loss remains moderately close to the original numbers. For the nine months that ended September 30, 2022, the reported net loss was $77.4 million, slightly higher than the previous year's mark of $63.8 million. This discrepancy mostly originates from amplified R&D outlays and operating requirements associated with being open to the public. Nonetheless, the smaller marginal increase shows agreement with the company's progression plans.

Sector and Market Concerns

The liver and cardio-metabolic disease market is a high-potential area for biopharmaceutical companies like 89bio. However, there are several risks that could impact the market, and ultimately, the company's success.

One significant risk facing 89bio is the changing regulatory landscape, particularly around drug pricing and reimbursement. Governments and healthcare payers are placing increasing pressure on reducing costs, which could reduce access to new therapies. Additionally, the implementation of value-based pricing models could decrease the profitability of new drugs. This could make it more difficult for companies such as 89bio to get their innovative treatments to market and gain commercial success.

Another considerable risk is the increasing competition in the liver and cardio-metabolic disease space. The greater investment by various companies brings a rising number of potential treatment options for patients, leading to intensified price erosion and strenuous pressure on companies to differentiate their products. Therefore, 89bio must continue illustrating the superiority of its offerings and maintain a competitive edge in order to remain successful.

Additionally, there is a risk of failure in clinical trials. Despite promising results in preclinical studies, clinical trials may not always demonstrate the desired efficacy and safety profile, leading to significant setbacks for companies. This could result in delays in regulatory approval or even the termination of a product's development altogether. For 89bio, the failure of its lead candidate, pegozafermin, could significantly impact the company's financial outlook and overall success.

In the future, there could be other potential risks that affect the liver and cardio-metabolic disease market. One example is how personalized medicines and digital health technologies may alter the way businesses view and advertise new treatments.

Competitor Comparison

Their novel approach to treatment puts 89bio in a strong position to compete with other players in the market, including Madrigal Pharmaceuticals ( MDGL ) and Intercept Pharmaceuticals ( ICPT ).

Madrigal Pharmaceuticals is a clinical-stage biopharmaceutical company that focuses on developing novel, small-molecule drugs for cardiovascular and metabolic conditions. Their main product, Resmetirom, is a selective thyroid hormone receptor beta (THR-?) agonist studied to treat NASH and familial hypercholesterolemia (FH).

In comparison, 89bio's lead candidate, pegozafermin, has had more advanced results demonstrating successful reductions in liver fat and other key markers related to NASH, as well as sizeable diminutions in triglycerides and other atherogenic lipids observed in patients with severe hypertriglyceridemia (SHTG), indicating that they have progressed beyond Madrigal Pharmaceuticals when it comes to providing relief to those struggling with liver and cardio-metabolic diseases.

Intercept Pharmaceuticals is focused on the development of drugs to treat chronic liver diseases. The company's lead product , Ocaliva (obeticholic acid), is approved for the treatment of PBC and is also being evaluated for the treatment of NASH. While Ocaliva has shown some efficacy in treating PBC, it has been associated with serious adverse events , including liver injury, and requires careful monitoring. In contrast, pegozafermin has demonstrated favorable tolerability and dosing convenience, making it a more appealing option for patients with liver and cardio-metabolic diseases. Additionally, while Ocaliva is approved for PBC, it is not yet approved for the treatment of NASH. This puts 89bio ahead of Intercept Pharmaceuticals in terms of potential applications for pegozafermin, as it has shown promise in both NASH and SHTG.

Outlook

89bio presents a compelling investment opportunity for those looking to invest in the biopharmaceutical industry. With a focus on developing innovative therapies for liver and cardio-metabolic diseases, the company's lead candidate, pegozafermin, has shown strong efficacy and favorable tolerability in treating NASH and SHTG.

Furthermore, with the liver and cardio-metabolic disease market projected to continue growing, 89bio's potential to become a major player in the space is significant. The company's strong financial position provides the necessary resources to continue advancing its clinical trials and bring pegozafermin to market, and investors looking to diversify their portfolio with exposure to the biopharmaceutical industry should strongly consider the company as an addition.

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