NGM Biopharmaceuticals (NGM): A Double Whammy Of NASH And GA Failure Hurt Its Stock

NGM Biopharmaceuticals (NASDAQ:NGM) failed a critical NASH trial in June 2021, and the stock tanked. Last year, in April, I covered NGM as it was pivoting towards an oncology pipeline, and I was mildly optimistic, calling NGM a potential turnaround story. NGM had residual assets from its previous avatar, and one of these, NGM621 targeting Geographic Atrophy (GA’), failed a phase 2 trial in October 2022. My optimism for NGM, therefore, was premature. They turned all the way around, back to where they were in 2021 – at the brink of disaster.

All isn’t over for the company, however; their oncology pipeline is still there, and some of these assets have near term data readouts. NGM707 and NGM120, an ILT2/ILT4 dual antagonist antibody, and a GFRAL antagonist antibody respectively, have near term catalysts. In fact, NGM presented preliminary findings from the Phase 1a trial of NGM707 at the European Society of Medical Oncology Immuno-Oncology (ESMO I-O) Annual Congress in December 2022. As for NGM120, the company “plans to report final results from the Phase 1a and Phase 1b cohorts once all patients have completed treatment and follow-up per protocol.”

Data presented at ESMO for NGM707 was as follows:

• NGM707 was generally well tolerated to the highest dose evaluated (1800 mg) in the monotherapy escalation; maximum tolerated dose was not reached

• Linear pharmacokinetics (PK’) was observed at doses ≥200 mg, and analysis of peripheral immune cells demonstrated dose-dependent receptor occupancy (RO), with doses ≥200 mg maintaining full ILT2 and ILT4 RO for the entire dosing interval to date

• Potential proof-of-mechanism (myeloid reprogramming) was observed in peripheral blood and tumor biopsies

• Early signals of anti-tumor activity demonstrated across multiple tumor types. Of 24 response-evaluable patients as of November 23, 2022, best overall responses are partial response in 1 patient, stable disease in 6 patients and non-complete response/non-progressive disease in 1 patient

This was an open label (non-randomized, every patient received the treatment) monotherapy trial which in part 1b plans to have an NGM707+Keytruda arm for comparison with NGM707 alone. A total of 179 patients with a host of 15 solid tumor indications were inducted. Among the 7 primary endpoints, overall survival (at 48 months) was also included. Since the trial was begun in mid-2021, obviously, we don’t have this crucial OS data at hand.

Other than these, the results were benign – and standard. No MTD, well tolerated to the highest evaluated dose, and most interestingly, early signs of tumor response, including one partial response, including “six patients [who] had reduced target lesion size including a maximum decrease in one patient of 70%.” Data seems competitive in a group of patients with metastatic disease and a median of four prior therapies.

However, this data was unable to pull the stock up from the bog into which it had traveled after the GA trial failure. The data came out on December 7, and there was hardly a ripple. Perhaps the following had something to do with the lackluster response:

Treatment-related adverse events (TRAEs) occurred in 47% of patients, with 9% of patients experiencing Grade ≥3 TRAEs. One dose-limiting toxicity of pneumonitis (G5) in a patient with pulmonary metastasis was observed at NGM707 600 mg.

One interesting aspect of the data is the proof of mechanism of myeloid reprogramming that was observed in peripheral blood and tumor biopsies. This myeloid reprogramming is the company’s strategy in targeting solid tumors. It has been observed that myeloid-enriched tumors have poor prognosis in their treatment with checkpoint inhibitors. As one report says:

However, a number of patients do not respond to this treatment possibly due to profound immunosuppression, which is mediated partly by myeloid-derived suppressor cells (MDSC). This heterogeneous population of immature myeloid cells can strongly inhibit anti-tumor activities of T and NK cells and stimulate regulatory T cells (Treg), leading to tumor progression. Moreover, MDSC can contribute to patient resistance to immune checkpoint inhibition.

NGM’s strategy is to assist with checkpoint inhibitor treatment by improving their breadth and duration through targeting inhibitory receptors on myeloid cells. Thus, signs of this strategy working out are interesting.

In my previous coverage, I discussed some positive preliminary results from the NGM120 study. That was in April last year. Data was similar to NGM707 – safe and tolerated, with early signs of drug activity. Updated data presented at ESMO 2022 saw one partial response among two patients with disease control in 5 prostate cancer patients. The PR was ongoing at 62 weeks at the time of publication of the data. Two patients also had reductions in prostate-specific antigen (PSA’) levels, “one with a >30% reduction and one patient with reduction of PSA to undetectable levels.”

In a second, phase 1b trial in patients with metastatic pancreatic ductal adenocarcinoma, the following data was seen with NGM120 plus Gem/Nab-P:

• Among the six evaluable patients in the combination cohort, a disease control rate of 100% was observed, mPFS had not been reached and the 12-month survival rate was 83.3%

• Three of the six evaluable patients experienced PR extending more than 32 weeks including one patient with a PR that was ongoing at 90 weeks

mPDAC is a highly aggressive disease where the 5-year survival rate is just 3%. Current treatment options are limited for metastatic disease, and prognosis is poor. Among single agent chemo, gemcitabine is standardly used in 1st line settings. Fluorouracil is also used, but gemcitabine has higher survival. Among multiagent chemo, FOLFIRINOX (leucovorin calcium, 5-FU, irinotecan hydrochloride, and oxaliplatin) is the standard treatment option for mPDAC, while Gem/Nab-P is also used. However, cross trial comparison between FOLFIRINOX vs gem and gem/nab-p versus gem shows FOLFIRINOX having a better efficacy profile. Thus, NGM’s use of gem/nab-p in control is interesting.

Financials

NGM has a market cap of $426mn and a cash balance of $300mn. The company earned $7.9mn from Merck KGaA in collaboration revenue. R&D expenses were $46.1 million for the quarter ended September 30, 2022, while general and administrative expenses were $10.1 million. That gives them a cash runway of some 4 more quarters from the present time. The company anticipates cash runway to the fourth quarter of 2024, which is optimistic.

Bottom line

NGM is a beaten down stock with a dedicated oncology pipeline. After the NASH setback, the GA failure came as a second blow, however, by then, it was already focused on its novel oncology programs. Unfortunately, the GA whammy precluded the oncology data from making any positive changes to the stock price. If NGM120 phase 2 data in mPDAC is any good, the company may yet recover from its current lows.