A Brief Look at Albireo Pharma

Albireo pharma is a biopharmaceutical company with a focus in liver disease and other gastrointestinal disorders. Albireo currently has three investigational compounds on hand with two in phase 2 development and a third that is in phase 3 development.  Albireo’s compounds have the potential to treat Progressive Familial Intrahepatic Cholestasis (PFIC), biliary atresia, Non-alcoholic Steatohepatitis (NASH), Primary Biliary Cholangitis (PBC), chronic idiopathic constipation, and bile acid malabsorption. Currently, Albireo is doing clinical research in pediatric cholestasis within the US, but also has a number of clinical trials going on abroad.

Recent News

On Novemeber 3^rd, 2016, Albireo Pharma completed a reverse stock-for-stock merger with Biodel Inc. This allowed Albireo to bypass the costly, and at times risky, IPO process within the United States. After the merger, Biodel Inc. management chose to cease all activity related to its previous R&D pipeline - including any clinical studies that were still ongoing. As of November 3^rd, 2016, Albireo’s cash on hand was approximately $39.4M (although Biodel’s was listed as $28.7M), which I believe will be sufficient to carry Albireo into early 2018.

Pipeline

Albireo’s lead candidate is a compound that is currently named A4250. The compound, A4250, inhibits ileal bile acid transport. Ileal bile acid transport is where most (~95%) bile acids are picked up by your body.  Bile acids are made from cholesterol in the liver and are then secreted into the small intestine to help absorb fats, fat-soluble vitamins, and cholesterol (think of bile acid as being dish soap and digested food being hard to remove grease stuck on a pan – bile acid helps the body remove that grease). 

When the bile acids are reabsorbed in the ileum they head straight back to the liver, through the portal vein, to be reprocessed with new bile salts and then had back to the gall bladder to repeat the process.   Like anything in life, too much of something can sometimes begin to cause problems. When bile acid flow out of the liver slows, or stops, the body experiences an uptake in conjugated bilirubin and other waste products. Instead of being processed out, this waste then gets into the blood stream and begins to wreak havoc. A4250 can stop this process by (theoretically) stopping the flow of bile acids back into the liver. This has implications for a number of different diseases including cholestasis, primary biliary cirrhosis, primary sclerosing cholangitis, etc. Causing the flow of bile acids back to the liver to slow has an added bonus: it forces the body to utilize cholesterol stores to make more bile acid. That is precisely what early stage NASH is made up of – dietary cholesterol exacerbates hepatic steatosis and inflammation.

Safety

I suspect that this drug is likely to have a similar safety profile as a bile acid sequestrant as it acts in a very similar manner: both prevent bile acid from being taken back up again by the body.

Recent Efficacy

In a recent presentation to the American Association for the Study of Liver Diseases (AASLD), Albireo was able to show that its product performed much better than placebo in stopping bile acid uptake from the ileum. No serious adverse events occurred in this trial.

A4250	placebo	1 mg/dag	3 mg/day	1.5 mg x2/day
	Per cent change from baseline
Plasma bile acids	+ 28 (±13)	- 6 (±31)*	- 47 (±8)**	- 15 (±23)*
Fecal bile acids	18 (±37)	+ 338 (±10)	+ 421 (±19) **	+ 420 (±23) **
FGF19	- 6 (±20)	-28 (±25)	- 76 (±16) **	- 16 (±26)
C4	+ 9 (±27)	+ 555 (±19)*	+ 664 (±25)**	+ 292 (±31)*
Compared with placebo		*p<0.05	**p<0.01

Albireo has a number of ongoing trials in US, Denmark, Sweden, and Germany. I am unsure when we will hear a data readout from these trials, but I suspect that safety will not be a major question (even though a recent study was terminated due to expected side effects). I suspect that efficacy will be the major question of this drug. Does it stop/slow/ reverse NASH?

Forward Looking Thoughts

Albiero plans to initiate a Phase 3 clinical trial of A4250 in PFIC that will also evaluate long-term outcomes. I expect the planned PFIC trial to commence in 2Q-2017. Albireo claims that it has sufficient cash resources to fund a pivotal trial for PFIC, but I believe they will be in need of cash soon after.

“Current cash resources will be sufficient to enable us to fund a planned pivotal clinical trial of A4250 for the treatment of PFIC. Based on current plans for completing our ongoing Phase 2 clinical trial in children with chronic cholestasis, we expect to complete the planned pivotal PFIC trial in mid-2018.”

Immediately following this line, Albireo outlines that this claim is based on the assumption that EA Pharma will begin paying out milestone payments. Considering that Albireo expects EA Pharma to file for regulatory approval in the first quarter of 2017, this may be likely, but we cannot count our chickens before the eggs have hatched. Thus, barring any major milestone payments for 2017, I suspect Albireo will be in need of cash at some point by the end of 2017. Albireo might be able to secure some capital by either licensing or selling the rights to elobixibat for the for the US, the EU, and other areas not currently licensed to EA Pharma. Albireo has made it clear that it will not conduct future trials independently. Thus, it has a pocket ace to fall back on should it need to. However, it is too early to tell whether Albireo will have clinical success in NASH. The preclinical science seems promising, but we need to see some form of major clinical success.

A Brief Look at Intercept Pharmaceuticals

Today, I decided to take another look at Intercept’s farnesosoid X-receptor agonist, Ocaliva. If you are unfamiliar with the term FXR-Agonist, I suggest you catch up by reading this article that illustrates the potential of farnesoid x-receptor agonists for therapeutic use.  A quick summary of the article:

• FXR activation has an effect on liver growth and regeneration
• “FXR activation has been shown to prevent and resolve liver fibrosis in rodents.“
• “FXR has been shown to be important in preventing gallstone formation in susceptible mice.”
• “FXRs play a key role in the pathogenesis of HCC, and that FXR activation could prevent or treat HCC.”
• “Preclinical studies have shown that FXR activation improves insulin sensitivity.”
• “FXR activation lowers plasma glucose, free fatty acids, triglycerides, and total cholesterol.”

These statements and/or conclusions of studies all sound promising for Ocaliva, but the conclusions must also be reached in human clinical trials. Intercept Pharmaceuticals is the current front runner of the NASH space and is dominating the PBC space with its recently approved product, Ocaliva. Intercept has completed a number of studies using Ocaliva for conditions in bile acid malabsorption, non-alcoholic fatty liver disease (NAFLD - NASH), bariatric and gallstone disease, primary biliary cirrhosis (AKA primary biliary cholangitis - PBC), hepatic impairment, and  type 2 diabetes. Intercept’s human data has shown promising results, but has also raised a number of questions about efficacy and safety. Here’s what we know Ocaliva can do in humans so far:

• Ocaliva increases insulin sensitivity by ~28% from baseline in a group treated with 25 mg and 20.1% in a group treated with 50 mg. In combined groups that equals ~24.5%, whereas the placebo group dropped by ~5.5%. Both patient groups saw weight loss when compared to placebo. Markers of liver fibrosis saw a marked decrease in the 25mg treated group. Modest, but significant changes in LDL-C were seen in both treatment groups.

• Ocaliva did better than placebo in treating PBC. Levels of ALP dropped greater than placebo (21-35% vs. 3%). 68.68% of patients showed an ALP reduction of 20% or more vs. 8.10% of placebo. “The incidence of pruritus in the OCA 10-mg, 25-mg, and 50-mg groups were 47% (not significant), 85% (  P  < .0003), and 80% (  P  < .006) vs 50% in the placebo … Severe pruritus was reported in 16% (6 of 38) of the patients in the 10-mg group, 24% (9 of 37) of the patients in the 25-mg group, and 37% (15 of 41) of the patients in the 50-mg group of patients, respectively.”

• Patients with bile acid diarrhea experience improvements in median stool frequency. This makes sense because in other trials Ocaliva had a higher prevalence of constipation. Common adverse event was a headache.

• Ocaliva reduces liver stiffness as measured by a non-invasive measure (fibroscan).

• 45% of patients in an Ocaliva treated group who were meantto have biopsies at baseline and 72 weeks had improved liver histology comparedto 21% of patients in the placebo group. 23% of patients in the Ocaliva treatedgroup developed pruritus compared with 6% in the placebo group. Serumcholesterol concentrations increased more in the Ocaliva-treated patients thanin the placebo-treated patients. “Becauseof concerns about persisting changes in cholesterol concentrations in patientsreceiving obeticholic acid, the DSMB also recommended discontinuing treatment,but continuing the study to the final 24-week post-treatment assessment and thepatients were managed accordingly.”

• Top-line results of NASH study expected sometime in 2017.

Of course, these results are promising for Intercept and its investors. Ocaliva is currently approved for treatment of PBC in both the United States and Europe.  Many believe that Ocaliva will dominate the PBC market, which may be true – at least initially. Many also believe that Ocaliva will be the market leader in treating NASH. But I have my doubts that the latter will ever happen. This is because of the cost of the drug to the end user. A call to a specialty CVS pharmacy showed that both the 5 mg and 10 mg dose costs the end user $199.24 per dose (assuming that the end user doesn’t have insurance). That amounts to an annual price tag of $72,722.60 for the uninsured. However, the cost is drastically reduced when the end user has insurance (cost varies by insurance coverage). Usually I wouldn’t be too concerned about the price tag, but in this case the competition plans to charge ~4-10 times less the cost of Ocaliva. That should concern some investors. The long-term implications are not great. Especially for a market that will have very stiff competition as soon as new entrants get past their phase II trials.

Now that I have properly admonished Intercept and its Ocaliva pricing model, I would like to point out to readers that Intercept has a program that helps all patients afford Ocaliva treatment. With that being said, I still have doubts that Ocaliva will be highly accepted by care providers. Intercept’s 2016 earnings call will help us (investors) gauge how care providers view Ocaliva as a therapy option. We aren’t expecting ground breaking sales because PBC has a very small patient population. However, if sales fall far below estimates, it may signal that Ocaliva is either overpriced and/or not being accepted by the medical community or insurance companies. Poor sales could also signify that Intercept has invested poorly in its sales network (highly doubtful of this). Credit Suisse believes that Intercept will only pull in $7M in sales for 4Q-2016; I believe it might fall below that metric. Whatever the case, Intercept AND its product Ocaliva still have a lot of potential. Intercept has a substantial amount of cash that it can use to either repurchase shares, reinvest in the Ocaliva supply chain, and/or acquire and test other NASH products. Ocaliva is efficacious for both PBC and NASH, but it does have its drawbacks (pruritus, constipation, and headaches), which drew concerns from a number of potential investors who were itching for strong returns with minimal downside risk. Does Intercept’s stock have room to grow? Absolutely. Intercept has a drug that is generating revenue in both the US and European markets. Its stock is down 36% since 3Q-2016 and has enough capital on hand to quickly pivot should the need arise. An acquisition is possible in the near-term, but I suspect that Intercept will attempt to build a strong foundation for its NASH pipeline before an acquisition occurs.