Novartis teams up with Allergan in NASH gamble; heated race to riches in full swing

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The News:

Allergan PLC (Dublin IRL) is expanding its research and development program on non-alcoholic steatohepatitis (NASH) through a collaboration with Novartis AG (Basel CHE) that will test a new combination therapy approach for the condition.

@Allergan and @Novartis combine efforts to fight non-alcoholic fatty liver #disease Click To Tweet

The firms have signed a clinical trial agreement under which Novartis will carry out a Phase 2b study testing Allergan’s cenicriviroc (CVC), a once-daily, oral, Phase 3 ready potent immunomodulator that blocks the chemokine receptors CCR2 and CCR5, which are involved in inflammatory and fibrogenic pathways, and Novartis’s lead FXR agonist for the treatment of NASH.

The study will look at the safety, efficacy and tolerability of this multi-therapy treatment approach for the condition, a progressive form of non-alcoholic fatty liver disease that is reportedly the fastest growing cause of liver cancer and liver transplant in the US.

“Our clinical collaboration with Novartis brings together our collective scientific and development expertise in NASH to focus on multi-therapy treatment, which is expected to be the most likely approach based on the multi-factorial aspects of this disease,” said David Nicholson, chief research and development officer at Allergan, according to PharmaTimes.

“Collaboration with companies like Novartis will help us improve our understanding of the disease and deliver effective, high-value medicines for NASH patients. This is also another terrific example of Allergan’s Open Science Research & Development model in action.”

Last September Allergan bought US biotech Tobira Therapeutics in a deal potentially worth up to $1.7 billion, as well as Akarna Therapeutics in a deal worth at least $50 million, securing access to a group of experimental therapies for NASH including CVC.

Steve’s Take:

With researchers estimating between 80 million and 100 million people in the US with non-alcoholic fatty liver disease (NAFLD), and about a fifth of those being non-alcoholic steatohepatitis (NASH) patients, it’s no surprise drugmakers are vying to crash this party and reach the pot of gold first.

Pinpointing the size of the NAFLD population is tricky because the illness often exhibits no symptoms. However, researchers estimate between 80 million and 100 million people in the US have the disease, with about a fifth of those being NASH patients.

With such a potentially large patient population and no Food and Drug Administration-approved treatments for NASH, it’s unsurprising that drugmakers are eager to get into this market. Return on investment is also promising, as the global NASH therapeutics market is slated to grow to $1.6 billion by 2020, according to a report from Allied Market Research.

Allergan and Novartis’s partnership will pair a drug from each company in a mid-stage trial.

The Phase 2b study will evaluate a multi-therapy comprised of Allergan’s cenicriviroc, an anti-inflammatory, and Novartis’ LJN452, a medication that promotes the creation of bile acids, which the body uses to break down sugars and fats. The companies plan to test the multi-therapy in patients with non-alcoholic steatohepatitis (NASH), a form of non-alcoholic fatty liver disease (NAFLD).

Allergan and Novartis aren’t exactly heavyweights in the liver disease cosmos, but they’ve raised the stakes recently to beef up their standing.

Allergan, for example, acquired NASH-focused Tobira Therapeutics in November for $570 million upfront and more than $1 billion more in potential milestone payments. The transaction gave the Irish pharma access to cenicriviroc as well as another drug, evogliptin, which helps increase insulin levels.

“Our clinical collaboration with Allergan expands our development programs for NASH, bringing together science and expertise to investigate a potential new combination therapy in an effort to make a positive change for people living with this condition,” said Vas Narasimhan, MD, global head, drug development, and CMO at Novartis. “We believe that collaboration is key to developing the best possible treatments that are urgently needed for NASH patients.”

CVC is a once-daily, Phase 3-ready oral immunomodulator, which Allergan acquired through its $1.695 billion acquisition of NASH therapeutics specialist Tobira in September 2016. A previous Phase 2b study, CENTAUR, showed that CVC treatment led to clinically meaningful improvements in fibrosis of at least one stage, without worsening NASH after 1 year of treatment.

Allergan says this is one of only two approvable Phase 3 NASH study endpoints. CVC has been granted fast-track designation by the FDA for the NASH and liver fibrosis indications. Allergan’s acquisition of Tobira also gave it the oral dipeptidyl peptidase-4 (DPP-4) inhibitor evogliptin, which is undergoing Phase 1 safety, tolerability, and pharmacokinetic testing alone and in combination with CVC.

On Novartis’s end, the mammoth drugmaker has been developing farnesoid X receptor (FXR) agonists, including LJN452, and in December inked a co-development and licensing agreement with Conatus Pharmaceuticals for the small company’s candidate emricasan, a caspase inhibitor under investigation as an anti-inflammatory for NASH patients with advanced liver scarring and cirrhosis.

Novartis paid $50 million upfront in the deal with Conatus. While financial terms of its deal with Allergan were not disclosed in an April 18 statement, it’s clear that both companies are willing to drop considerable cash into fleshing out their NASH treatment offerings.

The collaboration should also help the companies keep pace with rival players, including California’s Gilead and Intercept Pharmaceuticals, Frances’s Genfit and Dublin’s Shire–all hoping to be the first to get an approval in this dash for cash.

Earlier this year, Bristol-Myers Squibb inked a deal with Danish biotech Nordic Bioscience to produce new biomarkers for NASH diagnosis and monitoring, and Gilead’s CEO John Milligan signaled his company’s focus on developing treatments for the roughly 3 million end-stage NASH patients with fibrosis.

Bottom Line:

Analysts at Bernstein said the “deal partially validates Allergan’s acquisition of CVC,” and also “make us suspect NVS may have been the other bidder.” The brokerage noted that CVC is positioned as a potential third entrant (around 2020) with a differentiated mechanism versus the first two entrants, which are likely to come from Intercept and Genfit.

“The profile of the drug in phase 2 was decent (not great) and assuming approval, Allergan will need to develop the market (certainly if Genfit and Intercept remain independent). We do not see this as an important commercial asset until at least 2024” says Bernstein.

Bernstein added that it sees sales for the NASH market at around $7 billion by 2025 if all goes to plan, although it says there are still many issues, such as creating less invasive disease markers and diagnosis (done now via liver biopsy), and measuring just how well these drugs work in the real world.

Steve's Take: For value investors, @Allergan and @Novartis combination is worth keeping an eye on Click To Tweet

Investors have looked kindly on breaking news in the NASH province. In February, for instance, Intercept Pharmaceuticals’ shares rose when the FDA halved the required patient enrollment for a Phase 3 study of the company’s NASH drug, obeticholic acid.

Today (April 20, 2017), Novartis and Allergan were virtually unchanged in an otherwise mixed day on Wall Street. But keep your eyes peeled on developments in the clinical realm for all these NASH contenders, with you value investors keeping your eyes on Novartis, in particular.