Public market investment by Element One hedge-fund
ABOUT THE COMPANY
Metacrine, Inc. (MTCR) — a clinical-stage biopharmaceutical company focused on discovering and developing differentiated therapies for patients with liver and gastrointestinal (GI) diseases.
The company conducted its IPO on September 16, 2020, at a price of $14.34, and it seems that the market did not believe in this security regarding the rise of the pharma industry. During the first 2 days of trading, the stock fell by 30% and until mid-March of this year was trading in the range of $8–11. From March 22, there was a sharp decline to $5.6, which may be associated with the end of the lock-up period. The total decline since entering the public market to the present day is 61%.
Even though the company is in the early stages of its research, it’s fair to consider that shares are significantly undervalued by the market and that the current price is attractive for entering a mid-to-long-term holding position.
METACRINE STRENGTHS
- The company specializes in the treatment of NAHS (non-alcoholic steatohepatitis, a liver disease characterized by excess liver fat, inflammation, and fibrosis). This disease is on the rise all over the world. In 2015, there were an estimated 17 million people in the United States with NASH, which is expected to increase to an estimated 27 million people by 2030.
- There are currently no approved treatments for NASH.
- The company showed promising results from interim studies of its candidates.
- Both candidates have FDA Fast Track status: August 2020 for MET409 and January 2021 for MET642. Fast Track — Eligibility for expedited approval and priority review of research programs.
DEVELOPING CANDIDATES
The most innovative candidate — MET409
The candidate has been investigated in a Phase 1b proof-of-concept clinical trial in NASH patients, in which it demonstrated notable improvements in NASH biomarkers after 12 weeks of treatment (in most patients, the fat content in the liver decreased by at least 30%).
Second candidate MET642
The company began a phase 2a study of MET642 monotherapy in March 2021. Objective — to evaluate the safety, tolerability, and pharmacological activity (change in liver fat content, as measured by MRI-PDFF) of the drug at two dosage levels: 3 mg and 6 mg.
A 16-week, randomized, placebo-controlled study enrolled up to 180 patients with NASH. An interim analysis is planned for the fourth quarter of 2021 when about 60 patients will complete 16 weeks of treatment. Results for all 180 patients are expected to be available in the first half of 2022.
Other candidates
The company also intends to further develop its FXR agonist candidate products for the treatment of inflammatory bowel disease, including ulcerative colitis and Crohn’s disease.
APPROACH TO RESEARCH
MARKET
- Left untreated, patients’ disease may progress to liver failure, which is life-threatening without a successful liver transplant. NASH is expected to become the leading cause of liver transplants in the United States.
- According to a 2018 report by Allied Market Research, the global NASH treatment market was valued at $1.2 billion in 2017 and is expected to reach $21.5 billion by 2025. The CAGR (compound annual growth rate) forecast is 58.4% from 2021 to 2025.
- Inflammatory bowel disease is a major global health problem. It is believed to occur due to a maladaptive immune response to gut microbes. Ulcerative colitis and Crohn’s disease are the two main types of IBD. Patients with IBD may suffer from abdominal pain and bloody diarrhea and are at increased risk of rectal cancer.
- By 2015, there were 3.1 million people with IBD in the United States, and the global incidence of IBD is on the rise.
RISKS
- Early stages of research. May prolong the investment opportunity
- Competition. A company’s business opportunities can be severely limited if competitors develop and commercialise products that are more effective, safer, less toxic, more convenient, or cheaper than the company’s comparable products.