IVA - Inventiva: An Untenable Cash Position Despite Enviable Data

2023-07-16 09:01:42 ET

Summary

• IVA has robust data from a mid-stage NASH trial.
• They have an ongoing pivotal study running, to topline in H2 2025.
• They don't have enough cash to complete that trial.

Inventiva ( IVA ) is a small French company developing medicines for NASH. The company has a phase 3 trial ongoing, having completed a phase 2 trial 3 years ago. Despite that, the company remains below the radar. Is it because it is a foreign company, or is there something wrong with it? Let’s find out.

First, here is the pipeline:

Lead candidate IVA337 or lanifibranor is an orally-available small molecule and the only pan-PPAR agonist currently in clinical development for the treatment of NASH. PPAR agonists are a class of drugs that activate one or more of the PPAR receptors. These receptors are mainly three - alpha, delta and gamma. There are well known approved drugs that target one of these PPARs - for example:

Pioglitazone (Actos): Approved for the treatment of type 2 diabetes mellitus. PPAR gamma activator.

Rosiglitazone (Avandia): Approved for the treatment of type 2 diabetes mellitus. PPAR gamma activator.

Fenofibrate (Tricor, Lofibra, and others): Approved as a lipid-lowering agent for treating high cholesterol and triglyceride levels. PPAR alpha activator.

There are also pipeline drugs that target PPAR - delta, for example, GW501516 (Cardarine), MBX-8025 and KD3010.

There are also dual PPAR agonists, meaning they target any two PPAR receptors. Recognized molecules of this type include Genfit’s failed Elafibranor which targets alpha and delta, and India-developed Saroglitazar, which targets PPAR alpha/gamma.

Lanifibranor is the only molecule in clinical development that targets all three of the PPARs. Two years ago, in the New England Journal of Medicine, data from the NATIVE (NASH Trial to Validate IVA337 Efficacy) Phase IIb trial of Lanifibranor was published. Here are the key findings:

• Primary Endpoint: Lanifibranor at a dose of 1200mg/day achieved a statistically significant reduction of the Steatosis Activity Fibrosis score ((SAF)). The SAF score combines assessments of hepatocellular inflammation and ballooning. Importantly, there was no worsening of fibrosis observed in both the Intention To Treat (ITT') and Per Protocol (PP') populations.

• Key Secondary Endpoints: Lanifibranor also met key secondary endpoints, which included:

  • NASH resolution with no worsening of fibrosis in both ITT and PP populations.

  • Improvement of liver fibrosis with no worsening of NASH in both ITT and PP populations.

  • Composite endpoint of NASH resolution and improvement of liver fibrosis.

• Significance of Results: The results from the trial indicate that lanifibranor is the first orally available drug candidate to achieve statistically significant results on the two primary endpoints recognized by both the U.S. Food and Drug Administration (FDA) and the European Medicines Agency ((EMA)). These endpoints are relevant for seeking U.S. accelerated approval and EU conditional approval during Phase III clinical development.

Two separate statistical methods (single and multiple imputation) used for addressing missing patient data came out with the same results, showing the robustness of the data.

The drug was generally well-tolerated, with a safety and AE profile similar to placebo. There were two serious AEs, both considered drug-related, but both in the placebo group. There were also some issues with weight gain, a common occurrence in PPARis.

Despite stumbling on a fibrosis trial in 2019, this 2021 data and the ongoing, redesigned phase 3 trial with topline data in H2 2025 has put Inventiva in a very robust position right now. Despite that, the company has a modest market cap and low stock price. Something is not right.

Part of the reason could be that besides this one successful molecule, Inventiva has failed at least two of its prior efforts, odiparcil and cedirogant. Cedirogant was returned by partner AbbVie, while odiparcil is looking for partners. These are not abject failures, but are not resounding successes, either. Even lead asset lanifibranor once failed a fibrosis trial. However, it has made up for that more than adequately by its positive 2021 NASH data, as well as by the more recent June 2023 phase 2 data from a type 2 diabetes and nonalcoholic fatty liver disease trial.

So it must simply be the France thing.

Financials

IVA has a market cap of $177mn and a cash balance of only €56.3 million as of March, excluding the $20mn in debt facility they have from the European Investment Bank. The company spent around €60mn in R&D for full year 2022, and €12mn in G&A. Extrapolating, they spend around €18mn per quarter. Given that, they have cash enough to just the end of 2023, barring that loan. Thus, the company is in dire financial situation, and whether this is a result of the market apathy, or the reason for it, this is a key reason I will need to avoid this stock despite the apparently excellent NASH data.

Risks

Like I said, cash is the single most consequential risk for IVA. They just do not have enough of it to survive more than the next few quarters. Their lead candidate’s pivotal trial will topline in 2025, so they will be out of cash long before that.

Bottomline

For what it is worth, IVA seemed like it was doing good science. The NASH data is solid and cannot be challenged. But that cash position is what is destroying its value, and it will further destroy value if they tried to borrow from the market, unless they post solid data and the price goes up, which won’t happen long after their cash is gone. This is a terrible situation, and I will avoid IVA for now.

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