MGL-3196: Not Ideal, But Currently The Best

Summary

Although possessing huge market opportunities, there is currently no ideal NASH candidate in the late clinical stage.

MGL-3196, based on its comprehensive measurements, large Phase II enrollment and clear signs of improvement in NASH symptoms, is currently out-competing its competitors.

Criticisms driven by MGL-3196’s outcome in fibrosis stage improvement as well as “NAS point reduction” are over-stated.

As the current leader and apotential strong candidate for solo / combination therapy, we think MDGL deserves a premium in price. Madrigal Pharmaceuticals ( MDGL ) is a US biotech company that currently has only one drug, MGL-3196, under clinical investigation stage. Being Madrigal’s key asset, MGL-3196 has proven its strong potential in Non-Alcoholic Steatohepatitis (NASH) and is currently advancing to Phase III.

Non-Alcoholic Steatohepatitis (NASH) is a disease that affects a lot of people worldwide yet no FDA approved drug ever exists. It currently affects about 8% of the entire US population and is estimated to exceed a $20~30B market size in 2026 globally. It’s a more aggressive form of Non-Alcoholic Fatty Liver Disease (NAFLD) that exhibits liver inflammation and cell injury with fibrosis. NASH’s serious impact is usually underestimated by its asymptomatic nature. Without proper treatment, NASH is more likely to progress to cirrhosis and hepatocellular carcinoma which greatly increases mortality of the patients. According to the record from United Network for Organ Sharing (UNOS), NASH has overtaken HCV as the leading cause of liver transplantation in US.

Despite heavy investments and continuous efforts from the industry, none of the NASH trials has shown indisputable result. The difficulty of the development of NASH medication is probably due to:

a) Numerous physiological indicators and nonuniform definition.

NASH’s physiological indicators include liver steatosis, lipotoxicity, insulin resistance, inflammation, fibrosis, etc. The diversity of the indicators makes trial design more complex. One may see unusually long endpoint description like “at least 2 point reduction in NAS score while non-worsening in fibrosis for patients with fibrosis stage 3 or larger”. This is a good example to show that companies are trying their best to make the endpoint reasonably achievable under such a multi-indicator environment.

Another example comes from the fact that different trials use different definitions of “NASH resolution”. This makes direct comparison between trials hard for investors. Trial Drug Target Company Definition of Resolution of NASH PIVENS Pioglitazone PPARγ Pattern recognition: resolution of definitive NASH FLINT Obeticholic Acid (OCA) FXR Intercept Pattern recognition: either not NAFLD, or NAFLD but not NASH LEAN Liraglutide GLP-1 receptor Novo Nordisk Disappearance of hepatocyte ballooning. GOLDEN Elafibranor PPARα/δ Genfit Ballooning = 0 and lobular inflammation score of 0/1 without worsening of fibrosis CENTAUR Cenicriviroc (CVC) CCR2/5 Allergan Pattern recognition: resolution of NASH without worsening of fibrosis MGL-3196 THR-β Madrigal ballooning=0, inflammation =0, 1 with at least 2-point reduction in NAS b) Hard to recruit patients and even harder to get measurement.

NASH is asymptotic until very late stage, and it sometimes combines its presence with comorbidities like diabetes. Primary care physicians may not recognize the disease and its risk. As a result, recruiting NASH patients to trials have been historically hard. Further, the biggest difference between NASH and NAFLD, the liver fibrosis, is very hard to confirm diagnostically. The only way to recognized liver fibrosis is by liver biopsy under current standard of care. This invasive and expensive diagnostic process makes NASH data collection from patients in the trial even harder – imagine asking a patient for a second liver biopsy within three months. This even creates selection bias in the trial result: patients under the trial who show better resolution or even remission (demonstrated from other indicators) may likely to reject further biopsy request. Thus, it is reasonable to assume that, trial results with pathology scores from liver biopsy may be understated .

c) The mechanism of NASH development is very complex and not fully understood.

While there exist very effective medications for certain diseases whose mechanisms are poorly understood, unclear mechanism definitely reduces the success rate of the related clinical trials. It is believed that multiple complex mechanisms drive the development of NAFLD and NASH. For example, a well-accepted “two-hit hypothesis” was proposed as the mechanism of development of NASH, trigger by environmental factors (HBV/HCV infection, dietary habits, etc) as well as GWAS (genome-wide-association-study)- revealed genetic predisposition as revealed by a recent publication in Hepatol Int . [ Eslam , 2016].

Although difficult, the huge market opportunity attracts numerous players. Gilead ( GILD ) is probably the most committed company that of one time, had five pipelines (solely owned or in collaboration) in NASH. However, strong commitments have yet turned to promising results. Two of its pipelines discontinued (Simtuzumab, Anti-Loxl2 Mab and Px-102, FXR agonist) and its fastest progressing Selonsertib (Ask1 inhibitor) just encountered a big hit in the failure of Stella-4 trial in Feb, 2019. Allergan ( AGN )’s cenicriviroc (( CVC ) )failed its Phase IIb primary endpoint (CENTOUR study) in mid 2017 but still advancing to Phase III (AURORA study) and collaborating for combos with Novartis. Other companies like Genfit, Madrigal, Viking ( VKTX ), NGMBio ( NGM ), Galmed ( GLMD ) all have their key NASH pipelines advancing (or close to advance) to Phase III, trying to grab a portion of the market share.

Madrigal Pharmaceuticals Inc’s THR-β agonist (thyroid hormone receptor beta agonist) MGL-3196 is Madrigal’s key asset. Although detailed mechanisms still unclear, THR-β is thought to lower LDL-cholesterol, lower triglycerides, lower liver fat and potentially reducing lipotoxicity and NASH. It’s highly selective on THR-β comparing to THR-α, making it localize in liver, reducing its systematic side effects.

MGL-3196’s Phase II primary endpoint was relative reduction of liver fat (through MRI-PDFF) at 12/36 weeks. This primary endpoint is similar to Viking’s VK2809 (also a THR-β agonist) Phase II primary endpoint (reduction in LDL-cholesterol). In comparison, other competitor’s phase II primary endpoints, such as Intercept ( ICPT )’s OCA (FXR ligand) or Genfit’s PPARα/δ agonist elafibranor (GOLDEN 505) trial, are more involved in NAS score [Fig. 1], NASH resolution or fibrosis. This may draw criticism since Madrigal’s primary endpoint is more likely to be associated with NAFLD trials rather than NASH trials. Further, reducing liver fat is probably an easier endpoint to reach (simply losing body weight can reduce liver fat) comparing to other direct-NASH-related endpoints. However we think it is actually a smart move: a) after so many trial failures, Madrigal took one step back and recognized that NASH is a special form of NAFLD and proper treatment cannot ignore its disease origination; b) it does have direct-NASH-related secondary endpoints, which will be discussed later in this article. Figure 1. The NAFLD Activity Score (NAS) is simply the summation of the three sub-scores in steatosis, inflammation and ballooning. Source: Internet

At 12 weeks of treatment, the relative fat reduction (comparing to placebo) is 26%, the absolute fat reduction is 6% (Fig.2). These numbers are not as significant as Viking’s 47%/ 8%. At 12 weeks, the relative percentage of responders (with a 30% liver fat reduction or more) to MGL-3196 is 42%, which is also lower than Viking’s 59%. We argue that it is too early to draw the conclusion that VK2809 is a better liver fat reducer. First, MGL-3196 recruited much more patients in Phase II (150 vs. 35 for Viking), making results more reliable. Second, MGL-3196 clearly shows a continuous improvement, from week 12 to week 36 but VK2809 does not show such trend.

The LDL-cholesterol reduction (22% vs. Viking’s 24%), apolipoprotein B reduction (22% vs. Viking’s 23%), lipoprotein A reduction (37% vs Viking’s 26%, however Madrigal exclude BL<10mg/dL so original number should be smaller) are all very similar in both trials, suggesting similar mechanisms on THR-β agonists. As just mentioned above, neither did Intercept’s OCA trial nor Genfit’s Elafibranor put great amount of emphasis on liver fat reduction. Elafibranor is capable of reducing total cholesterol as well as LDL-cholesterol, while in a recent publication in World J Gastroenterol that OCA was found to actually increase serum LDL-cholesterol [Makri, 2016]. Figure 2. The liver fat reduction on MGL-3196. Source: Madrigal’s website .

The liver enzyme levels indicate the functionality of the liver. MGL-3196 successfully reduces ALT, AST and GGT and clearly shows a continuous enhancement of liver function even after 12 weeks [Fig. 3]. Vk2809 does not show the data but mentioned such reduction in the memo, with some AEs showing elevated ALT and AST. In a recent publication in Gastroenterology, researchers demonstrated that Elafibranor shows clear reductions in ALT and GGT as well [Ratziu, 2016]. Intercept’s OCA from the most recent data coming out on April.11 th , 2019, shows an stabilized liver enzymes too. Figure 3. MGL-3196’s impact on liver enzymes. Source: Madrigal’s website.

The main outcome of MGL-3196 is the liver biopsy endpoint showing in Figure 4. The NASH resolution is 27% vs. 6% in placebo for all patients. The industry is interested more in NASH resolution without fibrosis worsening. Genfit summarized a head-to-head comparison between Intercept’s OCA, their own Elafibranor and Madrigal’s MGL-3196 (Fig. 5). At that time, the NASH resolution with no fibrosis worsening data for MGL-3196 was not disclosed. So […]

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