A condition many of us have never heard of has driven a handful of biotech stocks skyward recently. Too many calories and not enough exercise lead to fatty livers that can become inflamed, a condition called non-alcoholic steatohepatitis (NASH). Most of us have never heard of NASH, even though it leads to cirrhosis in roughly one-fifth of affected patients and is the leading cause of liver cancer.
An estimated 30 million Americans have NASH right now, and there aren't any specific treatments that address the underlying condition. Investors excited by the numbers have driven several NASH stocks through the roof this year, and several incoming catalysts could push these three a lot higher in the second half of the year.
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Galmed Pharmaceuticals: Mixed results
Galmed Pharmaceuticals (GLMD 3.20%) stock shot up more than 200% overnight after the company released mixed but arguably positive data from a 247-patient study that compared its NASH candidate to a placebo. Patients treated with either 600 mg or 400 mg of the company's lead candidate, Aramchol, showed significant reductions in circulating enzymes used to diagnose liver damage, but that wasn't the trial's main goal.
After a year of treatment, the average patient receiving 400 mg per day exhibited a 3.41% reduction in liver fat content. That was barely enough to be considered statistically significant, but investors are concerned because the higher dosage didn't reach the significance threshold.
On a more encouraging metric, 47% of patients given 600 mg showed a 5% or better improvement versus just 24% of those given a placebo, which was strong enough to be considered statistically significant.
These results will be enough to call a meeting with the Food and Drug Administration (FDA) later this year to discuss the design of a larger, pivotal trial. If the agency seems willing to allow a trial design that makes the proportion of responders the primary endpoint, the stock could surge again.
Galmed is also running studies of Aramchol in combination with other treatments, and intends to present some related data at a conference this November. Given the mixed nature of the phase 2b data as a monotherapy, investors will be reading between the lines for signs of encouragement.
Madrigal Pharmaceuticals Inc.: Up for sale
Former Incyte Corporation CEO Paul Friedman, M.D. is one of nine employees at Madrigal Pharmaceuticals (MDGL +1.39%), a NASH developer that skyrocketed at the end of May after releasing more encouraging results for its lead candidate.
Last December, Madrigal showed us that MGL-3196 reduced patients' liver fat content 36.3% from baseline, versus a 9.6% reduction for the placebo group after 12 weeks of treatment. That was the trial's primary endpoint, and investigators also noticed 63% of patients responded to the treatment with a 30% or greater reduction in liver fat content. At 36 weeks, 39% of these responding patients showed no NASH symptoms, versus just 6% of the placebo group.
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Madrigal also plans to meet with the FDA soon to hammer out details for an upcoming pivotal trial, but investors might not have to wait that long for the stock to soar again.
Bloomberg recently reported the company is working with an investment bank to facilitate a potential sale. You should never buy a stock solely because you expect it to be acquired at a premium, but there have been too many biotech buyouts this year to ignore the possibility.
Galectin Therapeutics: Something different
Galectin Therapeutics (GALT 2.21%) is the only biotech developing a drug aimed at cancer and severe NASH-driven liver damage. When NASH leads to cirrhosis, the pressure in the vein that carries blood full of nutrients to the liver can rise so high that it spills over to veins lining the esophagus. Bulging veins in this muscular tube that carries food to your stomach, called esophageal varices, bleed easily, making them a leading cause of death among cirrhosis patients.
Galectin's NASH candidate is the first aimed specifically at this advanced-stage population, and it seems to help. Just one out of 48 people given Galectin's lead candidate, GR-MD-02, developed dangerous new varices -- compared to six of 33 in the placebo group. Unfortunately, the candidate didn't meet its main goal by significantly lowering the hepatic venous pressure gradient (HVPG).
While we'd all like to see new drug candidates meet the goals set before them, it seems reasonable to assume a big reduction in new varices will lead to a significant survival benefit. The stock could soar if the FDA signs off on a pivotal trial protocol that makes reducing new varices its primary endpoint.
They don't all soar
Although all three of these NASH stocks have what it takes to deliver monstrous gains later this year, investors need to understand the risks. None of these companies has significant sources of revenue at the moment, and shareholders could get stuck paying their bills for years before they have a product to sell.
