With a potential $458M per target payday, Aligos teams up with Merck hoping to reverse biotech’s recent NASH maladies

Just a few months after going public with a $150 million IPO, Aligos Therapeutics $ALGS is aiming to further capitalize on its momentum with a new NASH deal.

The biotech has teamed up with Merck to try to develop oligonucleotide therapies for the disease, a slate that could be worth up to $458 million in milestones per target. Aligos and Merck did not disclose how much would be paid upfront, but noted there would be another cash payment once the pair decides on a second target.

As part of the deal, Aligos will design and prepare the candidates for clinical studies, while Merck will take the lead on the R&D and commercialization efforts themselves. Aligos shares ticked up about 9% in early Monday trading.

It’s been a sharp rise for the San Francisco-based biotech since being founded in 2018. Aligos is focusing the vast majority of its efforts in liver diseases like hepatitis B and NASH, despite the latter field’s propensity for setbacks.

The company’s lead program, dubbed ALG-010133, is what Aligos calls a STOPS molecule, or an S-antigen transport-inhibiting oligonucleotide polymer. Having started a Phase I study in August for chronic hepatitis B, ALG-010133 aims to suppress the S-antigen in the hepatitis B virus itself.

Ultimately, Aligos says that can boost a patient’s compromised immune system and improve viral clearance in chronic hepatitis B. The company is expecting topline results for certain cohorts in the Phase I — measuring safety and antiviral activity in up to 12 weekly doses, both in healthy volunteers and virologically suppressed patients with CHB — sometime around the second half of 2021.

The past 24 months have brought nothing but difficulty for the NASH arena. Drug developers have been enticed by a potentially lucrative market, with some analysts projecting as much $20 billion in combined sales by 2025.

Gilead marked the first high-profile disappointments after its three-drug cocktail fizzled back in Dec. 2019, an effort that followed two other big defeats earlier in the year. None of the cocktail regimens induced a statistically significant increase in those trials’ primary endpoints.

Then this June, the FDA shot down Intercept’s own NASH program after several adcomm and hearing delays due to the Covid-19 pandemic and the agency wanting to see additional data. Regulators eventually rejected the drug because they were uncertain if the surrogate endpoint from their Phase III trial — reduction in liver fibrosis — would actually translate into benefit for patients.

In the subsequent months, both Genfit and Albireo shut down their NASH programs entirely. Though the former saw its stock price crushed by the flop, the latter emerged relatively unscathed given that its primary focus has been on other liver diseases like bile atresia and PFIC.

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