- Stocks rallied Monday morning for several companies working to treat a prominent fatty liver disease, suggesting investor concern over Food and Drug Administration guidance released last week has at least somewhat subsided.
- Madrigal Pharmaceuticals, Viking Therapeutics, Intercept Pharmaceuticals and GenFit each saw small gains at market's open. All have experimental drugs targeting NASH, or nonalcoholic steatohepatitis, in mid- to late-stage clinical testing, with Intercept's being farthest along. Wall Street analysts predict that drug, called obeticholic acid, could secure approval for non-cirrhotic NASH patients as early as next year.
- Among the four companies, Intercept shares took the greatest hit on Wednesday, when the FDA issued draft guidance about developing drugs for NASH patients with compensated cirrhosis. The agency noted how histological measures, such as fibrosis improvement, may not provide enough support to evaluate a drug under the accelerated approval pathway. Intercept, notably, is also testing its drug in a Phase 3 study of cirrhotic NASH patients.
Doctors and drug companies claim that NASH affects a significant portion of the U.S. population, fueling investor optimism in the space. A recent survey of 43 investors conducted by Cantor Fitzgerald found more than half view it as at least a $10 billion market opportunity, results which "surprised" the financial services firm.
There are currently no FDA-approved treatments for NASH. While many are racing to be first, Intercept looks like it's in the best position after delivering positive data from the Phase 3 REGENERATE study, which tested obeticholic acid in patients with Stage 2 or 3 liver fibrosis due to NASH.
Analysts were quick to caution how the FDA draft guidance issued last week won't affect Intercept from filing for accelerated approval in that patient subset. They also highlighted an apparent agreement between the company and regulators about using data from that other Phase 3 study of cirrhotic patients as the basis for a potential approval in that population.
Investors were unnerved nonetheless, sending Intercept's stock down nearly 8%. Fellow NASH drugmakers, including GenFit, Madrigal and Viking, also saw stocks close lower on June 6.
"We understand the Street may see this as the FDA slightly getting more cautious on accelerating drugs in NASH but that might be an over-readthrough," Michael Yee of Jefferies wrote in a June 6 note.
In its guidance, FDA indicated that it would prefer to see outcomes data rather than histological data when considering NASH drugs for accelerated approval.
"Because currently there is insufficient evidence to support the use of histological improvements as a surrogate endpoint that is reasonably likely to predict clinical benefit to support accelerated approval, in general, the FDA expects to evaluate drugs for the treatment of compensated NASH cirrhosis under the traditional approval pathway," the agency wrote.
The FDA has signaled in prior guidance that NASH resolution, fibrosis improvement or the combination of the two would be acceptable endpoints for clinical trials supporting the approval of a NASH therapy.