Gilead puts small deposit down to snare NASH properties

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A clue to Gilead Sciences’ next act might have been delivered in yesterday’s deal with Phenex Pharmaceuticals. The transaction brings in the private German biotech’s programme of farnesoid X receptor agents, a class touted by some as a hope for the next big thing in pharma, non-alcoholic fatty liver disease.

Acquisition of the Phenex assets is a sign that Gilead does not see much hope in its own candidate in the condition, and needs to jump on promising alternatives before they are all spoken for – and still sensibly priced. At up to $470m this could be one of the better-value deals of recent years should it result in a marketed product and should non-alcoholic steatohepatitis (NASH) turn out to be the huge disease doomsayers are predicting.

Intercepting Intercept?

The NASH talk of the past year has been dominated by Intercept Pharmaceuticals and its similarly acting obeticholic acid (OCA), positive data from which turned the group into a midcap company a year ago. The group has stumbled since over worries of lipid elevations and itchiness side effects, but it remains capitalised at $3bn.

OCA looks like a pricey acquisition at this valuation, however – and a takeout is what Intercept seems to be angling for. On the other hand, for a significantly smaller up-front fee – Gilead did not disclose this, but it obviously amounts to millions – the California-based group acquired the next-most-advanced agent in the space, Phenex’s Px-104.

Phenex has disclosed little about the project. A difference between Phenex’s agents and Intercept’s is that the German group’s are fully synthetic while OCA is a semi-synthetic.

OCA is derived from chenodeoxycholic acid, a potent trigger of the farnesoid X receptor, which Phenex calls “one of the few clinically validated targets for NASH”. That target regulates lipid metabolism and is highly expressed in liver and intestinal tissue, and thus is a promising pathway for modulating the accumulation of liver fat that is the source of NASH and its precursor, fatty liver disease.

Health experts expect these conditions to become more common because of rising obesity rates.

Px-104 is in a 12-patient phase II safety trial that in addition will measure changes in bile acid concentrations and fibroblast growth factor 19 over 28 days. The study is to conclude later this year.

By comparison, OCA has completed phase III work in the form of the NIH-backed Flint study, although Intercept has stated that it expects the FDA to demand cardiovascular outcomes trials before reviewing a full licensing application (Full Flint data make Intercept look normal, November 10, 2014).

Gilead’s assumption of Px-104 should give it a bigger budget and help it catch up with OCA.

Next act

Gilead has asserted itself as the dominant figure in liver disease with its hepatitis C franchise of Sovaldi and Harvoni. That market will stop generating growth next year, however, as more players enter and millions of patients who have delayed care until now complete treatment.

The group had been studying an antibody, simtuzumab, in treating NASH – phase II data in patients with cirrhosis and fibrosis are due in 2019 – but the main focus of that agent is cancer.

For what in 2015 terms looks like a bargain, Gilead has bought its way into the thick of the NASH race. Given the focus on this disease, it will be interesting to see what forecasts emerge for Px-104 and the competitive threat it presents to OCA as analysts and investors take a closer look in coming months.

To contact the writer of this story email Jonathan Gardner in London at jonathang@epvantage.com or follow @JonEPVantage on Twitter

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