You might have heard about the "NASH dash" among biopharmaceutical companies. NASH refers to non-alcoholic steatohepatitis, a fatty liver disease that's on track to become the leading cause of liver transplants but has no approved treatments.
Two drugmakers leading in the race to develop NASH therapies are Intercept Pharmaceuticals (NASDAQ: ICPT) and Genfit (NASDAQOTH: GNFTF). Intercept stock has soared in 2018 while Genfit's share price has dropped. But which of these two is the better pick now?
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The case for Intercept
Intercept claims one key advantage over every other company in the hunt to develop a NASH drug: The biotech's NASH candidate, Ocaliva, is already on the market for treatment of another liver condition, primary biliary cholangitis (PBC). Intercept expects Ocaliva to rake in between $170 million and $185 million this year in the PBC indication.
But it's the potential for Ocaliva to treat NASH that has investors excited about Intercept, with some viewing the stock as one of the best NASH plays around. Intercept is currently evaluating Ocaliva in a phase 3 clinical study targeting NASH. Results from this study are expected to be announced in the first half of 2019. If all goes well, Ocaliva could win approval for treating NASH in 2020.
There's reason for optimism about Intercept's prospects in NASH. Ocaliva was the first experimental NASH therapy to be designated as a breakthrough therapy by the FDA, which makes the drug eligible for expedited review. Previous clinical studies have shown promise for Ocaliva's efficacy in improving fibrosis and resolving NASH in patients.
In addition, Intercept is exploring the potential for Ocaliva to treat other liver diseases. The biotech reported positive top-line results from a phase 2 clinical study evaluating the drug in treating primary sclerosing cholangitis (PSC). Intercept also has another phase 2 study in progress for Ocaliva in treating biliary atresia.
Intercept isn't profitable yet. However, sales continue to climb for Ocaliva in the PBC indication. The company also has a cash stockpile of $489 million, including cash, cash equivalents, and investment securities. That should be enough to fund Intercept's operations into 2020.
The case for Genfit
Unlike Intercept, Genfit doesn't have an approved product yet. The French drugmaker hopes that will change in the not-too-distant future, though.
Genfit's lead candidate is elafibranor. The drug has a dual mechanism of action that can reduce triglycerides and promote the metabolism of fatty acid.
Phase 2 results for elafibranor in treating NASH weren't what Genfit had hoped for. The primary endpoint of significant NASH resolution without a worsening of fibrosis compared to placebo wasn't achieved. Genfit, though, saw promise for elafibranor in treating patients with more severe fibrosis and modified its design for its phase 3 study.
However, elafibranor performed quite well in a phase 2 study targeting the treatment of PBC. Genfit recently announced positive results from the study, with the primary endpoint and a key secondary endpoint both met.
Perhaps the most intriguing catalyst for Genfit is its NASH diagnostic in development. The symptoms of NASH don't usually show up early, which means that patients are frequently diagnosed after the disease has progressed. Currently, a liver biopsy is used to diagnose the disease. These biopsies, though, are costly and invasive. Genfit hopes to obtain a green light from the FDA to market its NASH diagnostic in 2020.
Genfit reported a cash position of 219.9 million euros as of Sept. 30, 2018. That's roughly the equivalent of $250 million. This amount should be sufficient to carry Genfit into 2020. However, the company is also planning a stock offering to raise more cash.
There are things to like about both of these stocks. Intercept's head start with Ocaliva is a big positive for the company. The same is true for Genfit's NASH diagnostic development.
I think the edge, though, goes to Intercept. Momentum should continue to pick up for Ocaliva in the PBC indication. The chances for the drug's approval in treating NASH should be relatively good. While Ocaliva might not ultimately prove to be the best NASH treatment, the unmet need is so great that I think there will be multiple winners.
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