LaJolla Pharmaceuticals (LJPC) is a biotechnology company focused on developing innovative compounds for unmet medical needs. The lead program for the company is its GCS-100 drug compound that treats patients with CKD - Chronic Kidney Disease. GCS-100 uses a compound known as polysaccharide which is derived from pectin. The reason for the use of pectin is that is has the ability to not only bind to but also block the effects of galectin-3. Galectin-3 is over-expressed in multiple chronic organ failures which makes this compound suitable for treating these patients with Chronic Kidney Disease.
Chronic Kidney Disease is the eventual loss of kidney functions that can be caused by tissue fibrosis being damaged over time. The kidney's functions are to remove wastes and other excess fluids from the body. Without the ability for the Kidney to do these functions wastes build up in the blood of the body which can lead to end-stage renal disease. End-stage renal disease is the final stage of Chronic Kidney Disease and at that point the patient would either need dialysis or a kidney transplant to avoid death. There are about 26 million people in the U.S. that have CKD and a treatment regimen from GCS-100 may be the key to helping these patients.
The company reported positive phase 2a results in CKD and has shown these results at a recent presentation known as the "American Society of Nephrology". The phase 2a trial recruited 121 patients that received GCS-100 drug doses 1.5 mg/m2 or 30 mg/m2. Another group of patients received a placebo instead and were not given the company's drug at all. One key thing to note is that GCS-100 is an IV drug that is given to patients through an IV infusion. The phase 2a trial was attempting to evaluate the patients' glomerular filtration rate or eFGR. This eFGR was considered to be the primary endpoint of the study while the secondary endpoint was to determine the safety and tolerability of the drug. The eFGR is a test that is used by doctors to determine the level of kidney function in its current state. The end results were that GCS-100 at 1.5 mg/m2 produced a statistically significant eFGR of the kidney as compared to a placebo drug.
The company achieved the primary endpoint with a p-value of (p=0.045). In essence this means that the GCS-100 drug was able to keep the kidney functioning at a normal rate as opposed to a placebo that dropped off into a negative rate on kidney function. All this testing took place in an 8-week period so it is great that these patients were able to improve their kidney function after such a short period of time compared to only using a placebo. With this data on hand the company has initiated a phase 2b trial in patients with CKD. The trial will enroll up to 280 patients that will be separated into different arms of a study. Each group of patients will either take 0.5 mg/m2, 1.5 mg/m2, 6 mg/m2, or a placebo -- saline -- and will continue dosage all the way through a 6 month period. There are no Current treatments for CKD. Fortunately there are drugs that treat the underlying problems that cause Chronic kidney Disease like Diabetes, high blood pressure, and blood sugar level. A therapy like GCS-100 could provide relief for these patients and may even help increase their eFGR filtration rate allowing their kidneys to function normally again.
Lajolla has seen excellent results to date in CKD, but the company also has an additional opportunity to target patients with nonalcoholic steatohepatitis - NASH. Many biotechnology companies are attempting to target NASH because it is said to be a huge market opportunity. Matter in fact the market potential for NASH just in the U.S. markets alone would be up to $40 billion dollars in revenue by the year 2025. NASH is a fatty liver disease which as the name suggests is not caused by excessive alcohol use. Lajolla's drug for NASH known as LJPC-1010 also uses a polysacheride derived from pectin that targets Galectin-3 just like GCS-100 mentioned above. Except the difference is that LJPC-1010 is distributed in an oral form of Galectin-3 in which NASH patients can take tablet treatments by mouth.
The first late-stage trial success in NASH was seen when Intercept Pharmaceuticals (ICPT) reported positive phase 2 results for their drug Obeticholic Acid - OCA. Intercept Pharmaceuticals soared as much as 218%, to $230 per share after it reported that its phase 2 study in NASH had been stopped because the OCA drug reached the primary endpoint of the study. The study known as FLINT had enrolled 283 patients for the treatment of NASH. Patients in the trial were either given a 25mg oral OCA or a placebo compound over a 72-week period. The positive primary endpoint was reached as the OCA compound achieved a highly significant improvement in NASH patients over a placebo , with a p-value of p=0.0024.
While Intercept Pharmaceuticals has a great start in NASH in terms of efficacy, later had many problems in terms of safety. For instance OCA over a long period of time was shown to cause a risk of increasing a patient's bad cholesterol level in the body. Another safety problem observed was that some patients had excessive itching on the skin. We are not talking about some random itching that is doable in daily life activities. The side effect of itching was so bad that patients reported that their daily life activities were being interfered with.
The company has stated in its 10-Q SEC Filing that it has cash of $54.1 million dollars and it expects that cash through 2016. The company won't wait until the end of 2016 to raise more capital. There may be some dilution that will take place sometime in the middle of 2015 to gain additional capital for the company's growing pipeline.
Some other risks associated with the stock is the fact that some of the results may end up negative. Negative results could potentially cause the share price of Lajolla to decline. Shares of LaJolla have seen a big rise over the last few weeks as investors are anticipating results from the other clinical trials like the NASH trial. Even if the other trials do end up being successful in phase 2 and eventually phase 3 testing they will still have to pass the FDA for marketing approval. The Drugs in the company's pipeline currently in phase 2 won't see FDA approval possibly until sometime in 2018. Until then there are risks of dilution at a later time point as mentioned above, and possible clinical trial failures. Investors should be aware that they may lose their entire investment if confirmatory trials do not succeed.
The company has expanded its pipeline greatly and continues to grow it using a multitude of various clinical compounds. We believe that Lajolla offers a great opportunity for investors as the company has already reported positive results with its GCS-100 drug against CKD. Although the company will need to eventually run a larger phase 3 trial to confirm the clinical findings from the phase 2a and phase 2b trials in CKD.
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