Here's a Look at Allergan's Opportunity in NASH

Here's a Look at Allergan's Opportunity in NASH January 13, 2017
By Mark Terry, Breaking News Staff

In September 2016, Dublin-based Allergan made an acquisition of San Francisco-based Tobira Therapeutics , that indicated the company was setting its sights on non-alcoholic steatohepatitis (NASH). Seeking Alpha reconsiders both the disease and Allergan’s portfolio approach.

NASH, sometimes called the “silent” liver disease,” resembles alcoholic liver disease, but appears in people who drink little or no alcohol. However, it can be quite severe and lead to cirrhosis. According to the National Institute of Diabetes and Digestive and Kidney Diseases, NASH affects 2 to 5 percent of people in the U.S. There are currently no specific treatments aside from weight loss, increased physical activity, and avoiding alcohol and unnecessary medications.

Allergan acquired Tobira for an upfront payment of $28.35 per share in cash, as well as up to $49.84 per share in Contingent Value Rights (CVRs) based on various development, regulatory and commercial milestones. The deal could add up to $1.695 billion.

Tobira has two complementary development programs, Cenicriviroc (CVC) and Evogliptin, for NASH.

On September 21, Allergan acquired Akarna Therapeutics, based in San Diego, and its lead candidate for NASH and other liver diseases. Allergan made $50 million in upfront payments.

At least one company, Genfit , has projected the potential worldwide market for NASH treatments to exceed $30 billion. SeekingAlpha writes, “I think that these expectations are too aggressive and unrealistic because they assume that 85 percent of the NASH population could be treated, which equates to a global NASH market size of around $30 to $40 billion.”

There’s a range of severity in NASH patients, and the advanced fibrosis stage (F3/F4) is when patients generally note symptoms that make them feel poorly and want treatment. Tobira’s analysis focused on high-risk NASH patients, presenting, according to Seeking Alpha, “a more conservative estimate about the addressable NASH patients is about 6 to 10 million people, which equates to a global NASH market size of at least $10 billion, which is still a really attractive opportunity for the pharmaceutical sector.”

It’s worth noting that the NASH market clearly overlaps the obesity and diabetes markets and are strongly related.

Allergan’s lead NASH compound is Cenicriviroc. In July, it reported mixed reports in a Phase II trial. It failed on the primary endpoint of “2+ points improvement on NASH scale” and secondary endpoints, “complete resolution of NASH” and “no worsening fibrosis” had results similar to placebo. On the plus side, the drug showed “a statistically significant improvement of at least one stage of fibrosis without worsening of NASH at year one (20% vs. 10%) for placebo, p=0.023)” across all fibrosis stages and greatest in severe patients.”

Allergan plans to start a Phase III trial of the drug this year. The primary endpoint for that trial will be “improvement in fibrosis by at least 1 stage and no worsening of steatohepatitis at month 12.”

The company has two other NASH drugs, Evogliptin and AKN-083. Not much data is available. Evogliptin is a DPP-4 inhibitor that targets metabolic abnormalities. It’s in a Phase I trial with and without Cenicriviroc. AKN-083 is a highly differentiated non-bile acid fxr agonist. The first human trial is expected in the first half of this year.

Allergan is not the only company to be looking at NASH. The other leaders in the area include Intercept , Genfit, Gilead and Novo Nordisk . Others include Shire , Novartis , Galmed (GLMD) and Conatus. Intercept is probably closest to having an actual product on the market.

Seeking Alpha writes, “I believe Allergan’s opportunity in NASH has been overlooked by the market. I like its portfolio approach, with different compounds developed for the same indication, which could also potentially be used in combination. Starting from the assumption that the NASH market could be >$10 billion, if Allergan will be able to achieve 10 to 15 percent market share with Cenicriviroc, the drug will generate around $1 to $2 billion of sales, which are currently not reflected in the stock price and in the consensus expectations.”

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