Liver Disease Player 89Bio Downgraded: Analyst Sees Short-Term Uncertainties In Fatty Liver Drug Development

RBC Capital Markets downgraded 89Bio Inc ETNB, a clinical-stage biopharmaceutical company focused on developing and commercializing therapies for liver and cardio-metabolic diseases.

The analyst maintains a positive outlook on the long-term prospects of the FGF21 class drugs, considering it as a fundamental approach to addressing NASH (Non-Alcoholic Steatohepatitis) and other metabolic-related ailments. 

Additionally, RBC Capital is optimistic about ETNB’s pegozafermin (BIO89-100), which it sees as a strong contender in this space, particularly given recent favorable trial designs facilitated by the FDA. 

However, the analyst anticipates fewer short to medium-term clinical updates on pegozafermin that would materially de-risk or change the fundamental story. 

There is some uncertainty regarding how 2024 results for GLP-1 treatments and developments around the first entrant, Madrigal Pharmaceuticals Inc’s MDGL resmetirom, might impact perceptions of pegozafermin’s potential in treating NASH. 

The approaching March 14 PDUFA for Madrigal’s resmetirom might revive interest in the NASH sector. However, it could also underscore the oral medication’s approximately four-year advantage over pegozafermin.

RBC downgrades 89bio from Outperform to Sector Perform, with a price target of $15, down from $24.

A recent strategic decision to delay the severe hypertriglyceridemia (SHTG) filing until after the NASH phase 3 trial readout could diminish the immediate impact of next year’s initial pivotal SHTG results. 

The FDA’s guidance suggests an optimistic outlook for the progression of NASH treatment. However, the anticipated approval for the F2/F3 phase 3 data/acceleration is likely to occur around 2027/2028, indicating a more realistic timeline for the program’s development.

Additionally, heightened competition in the hypertriglyceridemia market may lead to ETNB shares trading more closely with industry norms in the near term.

Price Action: ETNB shares are down 0.90% at $11.07 on the last check Friday.