Novartis And Tropifexor In NASH, And The Market Assessment – Novartis AG (NYSE:NVS) No ratings yet.

Market Assessment

Novartis AG (NVS) is a Swiss (Basel, Switzerland) multi-billion biopharmaceutical company with a market cap of $217 billion and a broad therapeutic portfolio that encompasses many facets of biomedical science, including immunology, oncology, respiratory, neuroscience, ophthalmology, cell and gene therapy.

Novartis could have been at the forefront of NASH therapeutics development given its history with blockbuster therapeutics, Lescol, for cardiovascular and metabolic disorders. Lescol was approved by the FDA in 2000 for the use as an adjunct to diet to positively regulate hypercholesterolemia and dyslipidemia by reducing elevated total cholesterol, LDL-C, TG, and Apo B levels and to increase HDL-C. Lescol acts through the inhibition of 3-hydroxy-3-methylglutaryl-coenzyme A (HMG-CoA) reductase.

Novartis is currently clinically developing Tropifexor, an FXR agonist and a fully synthetic non-bile acid ligand with carboxylic acid group and its in-house lead investigative drug candidate for NASH. It is currently in Phase 2 clinical trial for NASH. Analysis of the interim data from the Phase 2 NASH trial revealed that Tropifexor had a moderate effect on liver fat reduction with mild pruritogenic responses in some of the patients.

Novartis CEO Dr. Vas Narasimha had this to say:

We believe because of the profile, of tropifexor, we can avoid pruritus. We can avoid LDL elevations and get the dose effective dose much higher than other established therapies. Obviously, this earnings call was before the interim data AASLD presentation. However, this trial is ongoing and we await the complete results on clinical efficacy and pruritogenic responses (or lack of).

Although this is not a full data readout, pruritus is emerging as a generalized FXR agonists clinical dilemma rather than an Obeticholic acid clinical problem. In an article on GS-9674, an FXR agonist drug candidate in clinical development for NASH and PBC by Gilead (GILD), I highlighted the unexpected pruritogenic effects of GS-9674 in NASH that was absent in the NAFLD trial.

Institutional Investors, Insiders Purchase And Analyst Ratings

The company’s latest 13F filings revealed Institutional ownership at 11.69% with 1,149 Institutional holders holding 270,262,561 total shares. The top 4 holders include Dodge & Cox, PRIMECAP Management, Franklin Resources and BlackRock Inc. Analysts from 4 firms recommend a Strong Buy with a 12-month consensus price target of $98.8.

At the moment, Novartis is not considered a leader or a trailblazer in the clinical development of NASH therapeutics. As a matter of fact, its in-house NASH program is still relatively in its infancy compared to current front-runners, However, the company’s clinical alliance with Conatus Pharmaceuticals (CNAT) on emricasan, a Phase 2b NASH drug candidate, could be a game changer, pending the clinical outcome of the two NASH trials. A successful clinical outcome moves Novartis closer to an otherwise impossible mission of it being considered a major contender in this expanding and competitive field of investigative NASH drug candidates.

It is my opinion that the licensing agreement is an equal partnership for both parties. Importantly, the clinical success of emricasan is somewhat paramount to the successful and rapid development of Novartis’ NASH pipeline and ensuing financial rewards. For this reason, clinical success in either of the two late phase NASH trials involving emricasan is also good news for the company. Novartis also has clinical agreements with Allergan (AGN) and Pfizer (PFE) for combination NASH trials with their respective drug candidates. The NASH trial with Allergan is ongoing, whilst that with Pfizer is pending.

Market Outlook

I have always emphasized the clinical need for diverse investigative drug candidates due to the complexity of NASH disease and the multi-factorial causal pathogenic pathways that have been associated with this disease. The safety and tolerability signals associated with the prototype FXR agonist, obeticholic acid, may not been an isolated event. Until the full data readout on Tropifexor in Phase 2b NASH trial is announced, we cannot accurately discern the magnitude of these adverse events.

Disclosure: I am/we are long CNAT. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: As always, my articles are meant to facilitate your understanding. Readers are expected to form their own trading plan, do their own research and take responsibility for their own actions. Investing in common stock can result in partial or total loss of capital. Please implement due diligence and invest wisely.

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