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Here's Why NGM Biopharmaceuticals Is Soaring Today

By Brian Feroldi – Feb 24, 2020 at 11:16AM

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Shares popped after the clinical-stage biotech reported upbeat clinical results.

What happened

Shares of NGM Biopharmaceuticals (NGM -2.85%), a clinical-stage biotechnology company, jumped as much as 41% on Monday morning. The stock was up about 19% as of 10:52 a.m. EST. The double-digit boost is a response to the release of encouraging data from a phase 2 clinical trial.

So what

NGM reported results from its 24-week phase 2 trial that was testing its experimental drug called aldafermin as a hopeful treatment for non-alcoholic steatohepatitis (NASH).

Here are the key takeaways from the trial:

  • The trial achieved its primary endpoint, which was a statistically significant change in absolute liver fat content.
  • Many of the study's secondary endpoints achieved statistical significance as well.
  • Of patients who were treated with aldafermin, 38% showed a fibrosis improvement with no worsening of NASH. By contrast, only 18% of patients in the placebo arm could say the same. 
  • Of patients who took aldafermin, 24% achieved a resolution of NASH with no worsening of liver fibrosis. That also compares favorably to the 9% rate that was observed in the placebo group. 
  • Of patients who received aldafermin, 22% achieved a composite endpoint of both fibrosis improvement and resolution of NASH. This was a statistically significant outcome because 0% of the patients who received the placebo showed the same result.
  • Aldafermin was generally well-tolerated by patients. No study withdrawals from adverse events were reported.
Female doctor giving thumbs up

Image source: Getty Images.

Dr. Stephen A. Harrison, the principal investigator on the study, said:

To my knowledge, aldafermin is the first drug to demonstrate a robust, statistically significant effect of greater than 20% of patients achieving the FDA composite regulatory endpoint of fibrosis improvement and resolution of NASH versus placebo, as well as show an impressive impact on both of these endpoints independently. These preliminary results are remarkable and show that aldafermin's rapid and profound effect across all histological measures of NASH previously seen at 12 weeks is sustained, and also suggest that extended treatment may lead to further improvement in liver health. Moreover, these data further strengthen aldafermin's potential as a transformative monotherapy for NASH patients with established fibrosis.

This news should give investors confidence that aldafermin could be the real deal, so it's understandable why shares are flying high today.

Now what

The market for a successful NASH treat could be worth tens of billions of dollars in the U.S. alone, so aldafermin could go on to achieve blockbuster status if it can continue to produce strong clinical results and find its way to market.

From here, NGM expects to enroll 150 patients in a phase 2/3 study that is expected to start in the first half of 2021. NGM also plans to initiate a phase 2b study that is expected to kick off in the first half of 2020.

While there are still plenty of things that could still go wrong, aldafermin is certainly off to a good start. Risk-loving investors might want to keep an eye on this company as aldafermin continues to make progress in the clinic.

Brian Feroldi has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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