Small biotech company 89bio scored a win Wednesday in fatty liver disease, and ETNB stock rocketed well above its 50-day moving average.
The company tested a drug called pegozafermin in patients with nonalcoholic steatohepatitis, or NASH. With this disease, patients experience scarring of the liver known as fibrosis. In a midstage test, pegozafermin improved fibrosis at more than three times the rate of the placebo.
The results met 89bio's goals and set the company up to compete with Akero Therapeutics, which is testing a similar drug that requires more frequent injections.
On today's stock market, ETNB stock soared 25.2% to close at 13.68. Akero stock rose 1.8% to end the regular session at 37.93, reversing a premarket loss.
ETNB Stock: Improving Fibrosis
When it comes to NASH treatment, the Food and Drug Administration requires one of two results. A drug must improve fibrosis by one stage while patients show no worsening of NASH symptoms. Or, a drug must completely resolve NASH symptoms, but lead to no worsening in fibrosis.
In the Phase 2 study, 89bio tested two doses of its experimental NASH treatment. Depending on the dose, 26%-27% of patients showed fibrosis improvement compared with just 7% of placebo recipients. So, pegozafermin topped the placebo by 19%-20%. SVB Securities analyst Thomas Smith expected the drug to only beat out the placebo by 15%.
The result also was statistically significant, 89bio said. In comparison, Akero's experimental NASH treatment didn't have a statistically significant result in fibrosis improvement among the intent-to-treat patients, Smith said. These are patients analyzed based on the original group in which they were assigned.
On the second bar, 23%-26% of patients achieved NASH resolution vs. just 2% of placebo recipients. That means the pegozafermin result was 12-14 times better than the placebo, 89bio said. Smith noted Akero's drug had better results on this metric. But Akero's drug requires more frequent dosing.
"We believe physicians and patients will value pegozafermin's safety and less frequent dosing, especially in a chronic disease like NASH," Smith said in a note to clients.
Smith kept his outperform rating on ETNB stock.
Cross-Study Comparisons Are Tricky
RBC Capital Markets analyst Brian Abrahams, though, argued it's hard to make comparisons across studies from two competitors. Akero had higher responses from placebo recipients. But 89bio had more stringent criteria for enrolling patients in the study, he said in a note.
Overall, the drugs "are likely generally comparably active," he said.
Importantly, there don't appear to be any major safety concerns with 89bio's drug. The most common side effects were gastrointestinal-related, and those tended to be mild. There was one case of pancreatitis tied to the drug. But that also occurred in Akero's study, Abrahams said.
This suggests "it may just be related to this population's underlying cardiometabolic/liver disease rather than being related to the drug or class," Abrahams said. But it's something to watch going forward. Still, Abrahams retained his outperform rating and 27 price target on ETNB stock.
89bio shares have a best-possible Relative Strength Rating of 99, according to IBD Digital. This puts the stock's 12-month performance in the top 1% of all stocks.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
