CymaBay: Long-Term Potential Based On Prior PBC Trial Results (NASDAQ:CBAY)

CymaBay Therapeutics, Inc. (NASDAQ:CBAY) is a great long-term biotech to look into. I state this because the company is evaluating the use of its drug seladelpar for the treatment of patients with primary biliary cholangitis (PBC). It has already succeeded in using this drug for these patients in the phase 2 ENHANCE study. It is currently in the process of a phase 3 study known as RESPONSE, which is expected to have a data readout in 2023. Other indications in which it is using its main drug seladelpar for are non-alcoholic steatohepatitis (NASH) and primary sclerosing cholangitis (PSC).

The biotech also updated clinical data from the study in PBC patients just last week. It was noted that patients given seladelpar achieved a decrease in the GLOBE PBC Score and also saw an improvement in transplant-free survival. With established proof of concept in PBC patients using seladelpar, plus several other liver indications it is going after, these are the reasons why I believe it is a great long-term biotech to look into.

Seladelpar; Great Potential In Primary Biliary Cholangitis Space

Seladelpar is being explored for the treatment of patients with primary biliary cholangitis. Primary Biliary Cholangitis (PBC), is a rare chronic inflammatory disease that has impaired bile flow and the accumulation of toxic bile acids in the liver. When the bile can’t get out, it leads to damage of the bile ducts within the liver. In turn, this causes levels of Alkaline phosphatase and bilirubin to increase. There are two main symptoms that these patients need to worry about. These symptoms are:

• Itching (also known as pruritus)
• Fatigue

It is important for a person to get PBC under control, because if not taken care of it could possibly lead to liver cancer. That or a patient could die from liver-related injury. As I stated, it is a rare type of disease, however, it still does have a decent population. In the U.S. alone, there are fewer than 200,000 cases per year. It is still a growing market, but it is at a good place at the moment in terms of potential. It is said that the global Primary Biliary Cholangitis treatment market size is estimated to be worth $812.6 million in 2022 and could reach $2.5 billion by 2028. First-line treatment for this disease is something known as Ursodeoxycholic acid (UDCA).

This program is chugging along very well. That’s because CymaBay is currently exploring seladelpar in a phase 3 study known as RESPONSE. This phase 3 study is set to enroll and treat PBC patients over a 1-year period. It is expected that there will be a total of 180 PBC patients to be recruited. The thing is that these are patients who have to at least meet specific criteria. The first is that these are PBC patients who failed to respond to 1st line treatment with UDCA. UDCA is Standard of care (SOC) for 1st line patients. Each patient will be randomized to one of these two groups:

• Seladelpar 10 mg/day
• Seladelpar 5 mg/day
• Placebo

This dose of 10 mg/day of Seladelpar was shown to be adequate for improved efficacy/safety in the other study known as ENHANCE. It’s important to note that the primary endpoint is a composite one. What does it mean by composite? In essence, the primary composite endpoint consists of several measures as opposed to one. For example, the primary composite endpoint for this phase 3 study is:

• ALP < 1.67× ULN
• ≥ 15% decrease in ALP
• Total bilirubin 1.0× ULN

Alkaline phosphatase, or ALP, is the serum level that occurs in the body when the bile ducts are damaged for those who have PBC. That’s why the goal of the study is to see if Seladelpar can help the patients achieve ALP <1.67x upper limit of normal. The 15% then is similar in that the goal is to see if the drug can decrease a patients ALP levels by that amount. As far as bilirubin goes, this is another biomarker measure of the liver to let Doctors know if the liver has issues. This means the liver naturally breaks down pigments of red blood cells and causes a certain amount of bilirubin, which is okay. However, if the levels exceed that of normal it indicates an issue with the liver. Such issues could be PBC, NASH, cirrhosis, or other liver disease issues. Thus, the last measure of the primary composite endpoint is looking to see if Seladelpar is able to bring the bilirubin levels below 1x upper limit normal.

The phase 3 RESPONSE study is ongoing and results will be released in 2023. The key question is will the study be successful? There is a very good chance that it might be. The reason why I’m saying that is because Seladelpar has already been tested in a prior study. This prior study was known as ENHANCE, in which positive results were released. It was noted that 78% of patients given treatment with 10 mg of Seladelpar had achieved the primary composite endpoint with statistical significance. Not only that, but this statistical significance of the composite primary endpoint was done so at 3 months.

If you remember above, the composite primary endpoint dealt with ALP < 1.67× ULN, ≥ 15% decrease in ALP and Total bilirubin ≤1.0× ULN. The secondary endpoint was also achieved in that patients taking the drug had an ALP < 1x ULN. The main thing here is that the RESPONSE study is being conducted now as a registration study. In addition, it has the same composite endpoint as the ENHANCE study. Based on prior evidence of efficacy, I believe that the composite endpoint of the RESPONSE study should be met.

Just the other week the biotech provided updated data using Seladelpar in PBC patients over a 2-year period. It was shown that treatment with this drug decreased the GLOBE PBC score and improved transplant-free survival as well. Based on these additional findings, I have high hopes that Seladelpar should be successful for this patient population.

Financials

According to the 10-Q SEC Filing, CymaBay Therapeutics had $193.4 million in cash, cash equivalents and investments as of March 31 2022. The company is well positioned to fund its pipeline and run its late-stage studies. That’s because in July of 2021, CymaBay made a funding agreement with Abingworth. Based on this agreement, CymaBay is to receive $100 million of funding for Seladelpar costs.

This isn’t some long-term agreement though, which I think is a very good thing. About $75 million out of this will be dispersed in 3 installments over a 6-month period. But what about the other remaining $25 million? If and when enrollment for the phase 3 RESPONSE study is completed, then CymaBay will have the option of taking that last batch of $25 million. Of course, this doesn’t come free as there is a bit of a downside. It must pay fixed payments spread about in a 6-year period based on regulatory approvals in the U.S. and Europe (whichever is achieved first and thereafter). It will also have to pay fixed and capped sales milestones as well on U.S. product sales.

One great item I see, though, is that CymaBay left itself open to retain U.S. and full worldwide commercial rights for Seladelpar. I guess this is a super positive for the biotech. Either way, it gets itself funded for a few years and doesn’t have to worry about needing to find a partner to help commercialize the drug. In the first quarter of 2022, it received the third tranche of $25 million from Abingworth. It believes that it has enough cash to fund its operations through 2023. I believe that if it does need to raise cash again, it won’t need to do so until at least mid-2023.

Risks To Business

There are several risks that investors should be aware of before investing in this biotech. The first risk is that even though CymaBay was able to achieve statistical significance in a prior study using Seladelpar in PBC patients, there is no guarantee that the same will be done in the ongoing RESPONSE study.

Even if this study is successful, the next risk to consider is whether the FDA finds that not only does the drug work but that it is also safe to take. CymaBay had a huge mishap with a trial of Seladelpar being placed on clinical hold. The situation had been rectified, but I wouldn’t dismiss that this can’t happen again.

Another risk to consider is the cash position. I think it is well capitalized for now, but I expect that it may need to raise cash again by mid 2023.

Conclusion

The final conclusion is that CymaBay Therapeutics is a great long-term biotech to own. I think that it did well to clear up the clinical hold that was placed by the FDA for Seladelpar back in 2020. It has allowed the biotech to move forward towards completing its phase 3 RESPONSE study. Results from this study are expected to be released in 2023.

The clinical hold also freed up the ability to go after the other indications in the pipeline, all of which deal with liver diseases as well. As I noted in the beginning of this article, it is also exploring the use of Seladelpar for the treatment of patients with NASH and PSC.

Based on all of its progress to date with the use of its drug in PBC patients, plus the other indications it can go after, these are the reasons why I believe that CymaBay Therapeutics is a great long-term biotech to look into.