Theratech’s new results don’t move the needle for Mackie Research

Following a fresh set of results from Theratechnologies (Theratechnologies Stock Quote, Chart TSX:TH) Mackie Research Capital analyst André Uddin has maintained his “Hold” rating on the stock.

This morning, Theratech announced a top-line study concluded that its tesamorelin (commercialized under the name Egrifta) significantly reduces liver fat in HIV patients with non-alcoholic fatty liver disease (NAFLD) which was the primary end point of the study.

“Findings from this study have significant clinical implications. Currently, there are no pharmacologic treatments available for NAFLD or NASH specifically proven in HIV patients, among whom NAFLD is common. While tesamorelin is not indicated for the treatment of NAFLD or NASH, the robust results obtained in this NIH-funded study clearly indicate that tesamorelin has now become a prime candidate for a potential indication in the treatment of NAFLD-NASH with further studies,” said Dr. Christian Marsolais, senior vice-president and chief medical officer, Theratechnologies.

Uddin says that while today’s news sounds positive for TH, he doesn’t think it’s enough to move the needle.

Although today’s results were promising and might drive some off-label use of Egrifta, we do not believe TH could utilize the data to file an sBLA for Egrifta as a treatment for NAFLD-NASH in HIV patients,” the analyst says. “There are four reasons: (i) there is no prior example that we can think of in which the data of an investigator-sponsored trial was used as a backbone for a drug application, (ii) the trial was small, (iii) all NASH studies that are being conducted to support regulatory approval are large Phase III trials, and (iv) the FDA requires that a primary endpoint of a pivotal NASH trial should be either NASH resolution without worsening of liver fibrosis, improvements in liver fibrosis without worsening of NASH, or both – in the Egrifta trial, the primary endpoint was liver fat measurements. TH is to evaluate potential options for developing Egrifta as a NAFLD-NASH treatment.”

In a research update to clients today, Uddin maintained his “Hold” rating and one-year price target of $9.65 on Theratechnologies, implying a return of 26 per cent at the time of publication.

Uddin thinks TH will post Fully Diluted EPS of $0.34 on revenue of $177.0-million in fiscal 2019. He expects those numbers will improve to earnings of $0.95 on a topline of $292.7-million the following year.

“While this clinical data is positive, we do not believe Egrifta and Trogarzo Rxs are where they need to be to meet street expectations,” the analyst adds.