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Galmed Pharmaceuticals shares nearly triple on Aramchol trial results

Analysts at Maxim Group kept their Buy rating and raised the price target to US$30 after data strongly supported the advancement of Aramchol 600mg to Phase 3 trials
A researcher in a lab
The treatment of non-alcoholic steatohepatitis (NASH) produced positive 52-week results

Shares of Galmed Pharmaceuticals Ltd (NASDAQ:GLMD) hit the stratosphere Monday in pre-market trade after the biotech focused on the development of Aramchol announced positive results from a study.

Shares of the biotech soared more than 172% to US$19.

Analysts at Maxim group kept their Buy rating and raised their price target to US$30 after data strongly supported the advancement of Aramchol 600mg to Phase 3 trials.

A Phase 2bARREST study of Aramchol, an oral, once-daily, liver-targeted SCD1 modulator, for the treatment of non-alcoholic steatohepatitis (NASH), produced “positive top-line, 52-week results.” In the ARREST study, patients underwent Magnetic Resonance Spectroscopy (MRS) and biopsy at baseline and week 52, which were centrally read, blinded to treatment allocation. 

“Significantly more patients treated with Aramchol 600mg vs. placebo showed NASH resolution without worsening of fibrosis in the 52-week biopsy, a regulatory approvable endpoint,” said the company in a statement.

The study also showed that there was “statistically significant reduction” in liver fat demonstrated by MRS in patients completing 52 weeks of treatment with Aramchol 400mg versus placebo.

“Post hoc analysis of MRS responders, defined by a reduction of ≥5% absolute change from baseline, demonstrated a clinically and statistically significant effect of Aramchol 600mg vs. placebo,” said the company.

Galmed Pharmaceuticals said results for the two biopsy endpoints, which may “currently constitute a primary endpoint for a Phase 3 trial” to support an FDA marketing application, demonstrated two key things.

Firstly, significantly more patients treated with Aramchol 600mg versus a placebo achieved NASH resolution without worsening of fibrosis and NASH resolution. Secondly, a “higher proportion of patients showed at least one-point improvement in fibrosis score” without worsening of NASH in Aramchol 600mg versus a placebo.

At 52 weeks of treatment, Aramchol continues to show a favorable safety and tolerability profile. 

"Some studies have shown an effect on NASH and some on fibrosis, while this study has shown an effect on both. Concomitant ALT reduction strengthens the histological findings," said Vlad Ratziu, principal investigator of the ARREST study and Professor of Hepatology, Sorbonne Université and Hospital Pitié – Salpêtrière, in Paris.

"Aramchol 400mg is probably sufficient for fat reduction but, biologically, a higher dose is needed for achieving more stringent histological endpoints such as NASH resolution and fibrosis reversal. NASH is a chronic disease with complex comorbidities and Aramchol's favorable safety and tolerability profile support long-term treatment," said Professor Ratziu.

Similarly, Rohit Loomba, director of the UC San Diego NAFLD Research Center is dedicated to performing cutting-edge translational research in all aspects of nonalcoholic fatty liver disease hailed the results saying "the ARREST trial was notable in that MRS was performed in four continents for the assessment of treatment response."

Maxim Group raises price target citing good data

Analysts at Maxim said the data demonstrated effects on liver fat, but perhaps more "important on fibrosis and NAS score, as well as resolution of NASH." 

"Our model has been extended to 2028 and risk cut reduced to 15%, from 30%, as well as other minor adjustments. The net effect is our price target increases to US$30, from US$14, implying a market capitalization of US$450mln, which may be viewed as "conservative" given the rise in valuations of others in the space, including Madrigal Pharmaceuticals Inc. (NASDAQ:MDGL) which also completed a P2 study (smaller and shorter trial than Galmed too)," wrote Maxim Group analysts Jason McCarthy and Caroline Palomeque in a note to clients.

The biotech will present more detailed data at a conference and likely publish the results in a major journal.

"End of phase 2 meetings are also next which should set the stage for a pivotal program. The question is will a partner come on board? Aramchol is now one of the most clinically advanced NASH assets in the space with "good" data, which to us also could imply a scarcity value as well," wrote the analysts.

-- Updated with investment thesis from the Maxim group -- 



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