In early 2014, the stock price of a then lesser-known biotech called Intercept Pharmaceuticals soared six fold in two days of heady trading.
Sparking the surge was news from the company that a clinical study of its experimental drug obeticholic acid would be stopped early due to efficacy. The study found Intercept's drug helped patients with a type of inflammatory liver disease known as non-alcoholic steatohepatitis, or NASH.
Drawn in by Intercept's results, investors saw a market in the making. Bullish forecasts pegged NASH as the next hepatitis C and, with no treatments available for the condition, an unmet need.
In the four years since, there are still no approved drugs, but interest has deepened with several acquisitions brokered. Company pipelines have also advanced, with four candidates from Intercept, Gilead, Allergan and Genfit now in Phase 3 testing.
If all goes well, a drug could reach patients in the next few years.
Yet pharma's next big market may not materialize just as Wall Street first envisioned. With a more complex profile than the viral roots of hepatitis C, NASH presents a medical challenge that could elude the essentially curative solutions developed for the better-known liver disease. Further, NASH's heterogeneity will likely translate to a narrower, or more fragmented, treatment landscape than estimates of disease prevalence may suggest. Difficulties surrounding diagnosis could also pose challenges for future uptake.
A silent epidemic
NASH is thought to affect anywhere between 3% and 12% of U.S. adults, making it a looming public health concern. By 2020, NASH could become the leading cause of liver transplant in the U.S. Right now, it still trails hepatitis C.
NASH is also a complex disease, spurred by the accumulation of fat in the liver, but also associated with obesity, diabetes and dyslipidemia.
"We are only now starting to understand the pathways that are involved in NASH," Peter Traber, CEO of a NASH-focused biotech called Galectin Therapeutics, said in an interview. "The increased interest over the last five years in NASH is a combination of the recognition of how big a problem it really is, as well as a better understanding of the underlying pathophysiology."
Companies are mining that increased understanding to develop therapeutics. Unlike hepatitis C, the path to a knockout treatment is less clear. But like the other liver disease, the future of NASH development could lie in combination therapy.
An important catalyst
One of those companies is Gilead, the Foster City, California-based biotech best known for developing a slate of highly effective hepatitis C treatments.
Since the approval of Sovaldi (sofosbuvir) in late 2013, sales of these drugs earned Gilead over $50 billion dollars and propelled it to the top ranks of biotech. Over the past 18 months, however, the company's once dominant market position has eroded rapidly as the pool of treatable patients has shrunk and new competition arrived.
Investors concerned over what's next are looking, in part, to the company's pipeline of three clinical candidates for NASH. One, an ASK-1 inhibitor called selonsertib, is currently in two Phase 3 trials set to read out next year.
"We are still very focused on hepatitis C and B. But certainly advancing our NASH pipeline forward is a major focus for the company right now," said Robert Myers, VP of clinical research at Gilead, in an interview.
That focus can be seen in the company's choice of replacement for chief scientific officer, Norbert Bischofberger. He'll be succeeded by John McHutchison, a hepatologist, in July.
"Investors have begun to look to the NASH program, and these Phase III trials in particular, as an important catalyst for an otherwise thin late-stage product portfolio," wrote Leerink analyst Geoffrey Porges in an April 16 note to investors.
If estimates of NASH's prevalence are accurate, that would imply a patient population of anywhere between 7 million and 30 million in the U.S. But such broad estimates conceal the heterogeneity of the disease.
NASH patients with no or negligible fibrosis have a good prognosis and need only to change diet and exercise, according to a recent review article featured in The New England Journal of Medicine. Fibrosis can progress over time, but advancing one stage higher in a commonly used 5-point scale can take a decade.
"Relatively risky and expensive treatments merit consideration in patients with a high risk of bad liver-related outcomes but are not justified in patients at lower risk for disease progression," wrote the two researchers published in NEJM.
A narrower focus, of course, also means a smaller addressable market than some of the most eye-popping estimates might suggest.
"NASH is a disease where you have think about where you want to target your therapy, where it will be the most effective commercially," said Galectin's Traber. "It is a disease that from start to dying may take four decades."
In a cost-conscious healthcare world, in other words, turning to pharmacological options to treat a chronic condition in low-risk patients might not make sense.
And precisely because of the slow-moving, at-first asymptomatic nature of the disease, patient diagnosis remains a challenge. That has led to competition in clinical trial recruitment, with some studies slow to meet their enrollment targets, according to a recent Bloomberg report.
Gilead and Galectin have both focused their R&D on candidates for advanced patients which, for the larger biotech at least, has helped with clinical trial enrollment.
Given the need for new treatments, however, companies in the NASH space see room for more players and greater investment.
"There's going to be room for different drugs that eventually find their way in different subgroups of the NASH population, and it's important ultimately for patients to have options," noted Mark Pruzanski, CEO of Intercept, on a May 8 call with investors.
Wall Street enthusiasm, however, appears to have moderated, or at least acknowledged the complexity and uncertain market presented by NASH. Shares in Intercept, it's worth noting, now trade at about $70 a piece — just a touch higher than where prices sat before the 2014 boom.