Business Overview and Detailed Company History: 89bio, Inc. is a clinical-stage biopharmaceutical company dedicated to developing and commercializing innovative therapies for the treatment of liver and cardiometabolic diseases. With a focus on addressing unmet medical needs, the company has established a robust pipeline led by its lead candidate, pegozafermin, which is currently undergoing pivotal trials for the treatment of metabolic dysfunction-associated steatohepatitis (MASH) and severe hypertriglyceridemia (SHTG).
89bio was founded in 2018 with the mission of advancing therapies for liver and cardiometabolic diseases. The company's origins trace back to January 2018, when it was incorporated in Israel as 89Bio Ltd. In June 2019, the company was reorganized and incorporated in Delaware as 89bio, Inc. to carry on the business of 89Bio Ltd.
The company's primary focus has been the development of pegozafermin, a specifically engineered glycoPEGylated analog of fibroblast growth factor 21 (FGF21). Pegozafermin is currently in late-stage clinical trials for the treatment of MASH and SHTG, two conditions that represent significant unmet medical needs.
In April 2018, 89bio entered into two Asset Transfer and License Agreements with Teva Pharmaceutical Industries Ltd., through which it acquired certain patents, intellectual property, and other assets related to Teva's glycoPEGylated FGF21 program, including pegozafermin. This acquisition provided the company with the rights to develop and commercialize pegozafermin globally.
Since its inception, 89bio has faced several challenges in advancing the development of pegozafermin. The company has had to navigate the complex regulatory landscape for therapies targeting MASH and SHTG, as these are relatively new disease areas without established regulatory precedents. Additionally, 89bio has encountered difficulties in enrolling patients for its clinical trials due to the challenges in diagnosing MASH and identifying SHTG patients.
To fund its operations and research and development activities, 89bio has raised capital through various means, including public offerings of its common stock and the issuance of debt. In 2019, the company completed an initial public offering, raising $157.7 million. Over the years, 89bio has also entered into at-the-market (ATM) equity offering programs and term loan facilities to further strengthen its financial position.
Over the past several years, 89bio has made significant progress in advancing pegozafermin through its clinical development programs. In 2020 and 2022, the company reported positive topline results from its Phase 1b/2a trial of pegozafermin in MASH patients, which informed the advancement of its subsequent clinical strategy. In March 2023, 89bio announced positive topline 24-week data from its Phase 2b ENLIVEN trial of pegozafermin in MASH patients, with the 44 mg every-two-week and 30 mg weekly dose groups both meeting the primary histology endpoints.
In September 2023, the U.S. Food and Drug Administration (FDA) granted Breakthrough Therapy Designation to pegozafermin for the treatment of MASH, recognizing the potential of the therapy to address this significant unmet medical need. Furthermore, in March 2024, the European Medicines Agency (EMA) granted Priority Medicines (PRIME) designation to pegozafermin for the treatment of MASH, based on the promising clinical data from the Phase 2b ENLIVEN trial.
Building on these regulatory milestones, 89bio initiated its Phase 3 ENLIGHTEN program for pegozafermin in MASH in the first and second quarters of 2024. The ENLIGHTEN program includes two pivotal trials: ENLIGHTEN-Fibrosis in patients with fibrosis stage F2-F3, and ENLIGHTEN-Cirrhosis in patients with compensated cirrhosis (F4).
In parallel, 89bio is also advancing the development of pegozafermin for the treatment of SHTG. In June 2022, the company announced positive topline results from the Phase 2 ENTRIGUE trial of pegozafermin in SHTG patients, which met its primary endpoint. Based on this data, 89bio initiated its Phase 3 ENTRUST trial, the first of two recommended Phase 3 trials in SHTG, in the second quarter of 2023. Topline data from the ENTRUST trial are expected in 2025.
The company's recent corporate updates include the strengthening of its Board of Directors and Executive Leadership Team. In October 2024, 89bio appointed Charles McWherter, Ph.D. to its Board of Directors, and in September 2024, the company welcomed Francis Sarena as Chief Operating Officer and Teresa Perney, Ph.D. as Chief Regulatory and Quality Officer.
In April 2024, 89bio entered into a collaboration agreement with BiBo Biopharma Engineering Co., Ltd. to construct a production facility in China specifically designed to supply pegozafermin for commercial needs, if approved. This strategic partnership aims to secure manufacturing capacity for pegozafermin, ensuring a reliable supply chain for potential future commercialization.
Financial Overview: As a clinical-stage biopharmaceutical company, 89bio has not yet generated any revenue from product sales. The company's financial performance has been primarily driven by its research and development expenses, which amounted to $122.23 million in the fiscal year ended December 31, 2023, compared to $80.80 million in the prior year. This increase in R&D expenses reflects the company's continued investment in the clinical development of pegozafermin.
For the fiscal year 2023, 89bio reported a net loss of $142.19 million, or $2.00 per diluted share, compared to a net loss of $102.03 million, or $2.93 per diluted share, in the prior year. The company's operating cash flow for the fiscal year 2023 was negative $129.19 million, and its free cash flow was negative $129.19 million.
For the most recent quarter (Q3 2024), 89bio reported a net loss of $149.07 million, with an operating cash flow of negative $145.36 million and a free cash flow of negative $145.36 million. The increase in net loss, negative operating cash flow, and negative free cash flow in Q3 2024 compared to the full year 2023 was primarily driven by increased research and development expenses, including $81 million in milestone payments made to the company's contract manufacturing partner BiBo under the Collaboration Agreement to secure manufacturing capacity for pegozafermin.
Liquidity: As of September 30, 2024, 89bio had $91.41 million in cash and cash equivalents and $332.36 million in marketable securities, for a total of $423.80 million in cash, cash equivalents and marketable securities. This strong financial position provides the company with sufficient resources to support its ongoing and future clinical development programs.
In September 2024, 89bio entered into an amended loan agreement, the Loan Agreement, which provides for a term loan facility with a maximum aggregate principal amount of $150 million. The Loan Agreement consists of a $70 million first tranche, of which $35 million was funded at closing, a $30 million second tranche available upon achieving a clinical milestone, and a $50 million third tranche available upon request and lender approval.
As of December 31, 2023, 89bio's debt-to-equity ratio was 0.051, indicating a relatively low level of debt compared to equity. The company's current ratio and quick ratio were both 11.66 as of December 31, 2023, suggesting a strong ability to meet short-term obligations.
Risks and Challenges: 89bio, as a clinical-stage biopharmaceutical company, faces several risks and challenges common to the industry. These include the inherent uncertainty of clinical development, the potential for regulatory setbacks, competition from other therapies, and the need to continuously raise capital to fund its operations.
The success of 89bio's lead candidate, pegozafermin, is critical to the company's future. Any delays or failures in the clinical trials for pegozafermin, or the inability to obtain regulatory approvals, would significantly impact the company's prospects. Additionally, the company's reliance on third-party manufacturers and vendors for the production and supply of pegozafermin introduces risks related to the availability and quality of these services.
The biopharmaceutical industry is highly competitive, and 89bio may face competition from both established and emerging therapies targeting MASH and SHTG. The company's ability to differentiate pegozafermin and demonstrate its clinical and commercial advantages will be crucial in navigating this competitive landscape.
Lastly, as a clinical-stage company, 89bio will need to continue accessing the capital markets to fund its ongoing and future research and development activities. The company's ability to raise additional capital on favorable terms will be critical to its long-term success.
Outlook and Conclusion: Despite the challenges, 89bio's progress in advancing pegozafermin through its clinical development programs, coupled with the regulatory designations received from the FDA and EMA, position the company for potential near-term milestones and long-term growth.
The initiation of the Phase 3 ENLIGHTEN program for pegozafermin in MASH and the ongoing Phase 3 ENTRUST trial in SHTG represent significant steps forward in the company's efforts to bring innovative therapies to patients with these significant unmet medical needs. The expected topline data readouts from these pivotal trials in the coming years, particularly the ENTRUST trial data expected in 2025, will be crucial in determining the future trajectory of 89bio.
The metabolic dysfunction-associated steatohepatitis (MASH) and severe hypertriglyceridemia (SHTG) markets that 89bio is targeting are expected to have a compound annual growth rate (CAGR) of over 20% from 2023 to 2030, driven by the increasing prevalence of these conditions and the lack of approved therapies. This market growth potential presents a significant opportunity for 89bio if pegozafermin receives regulatory approval.
As 89bio continues to execute on its strategic priorities, the company's strengthened leadership team and robust financial position provide a solid foundation for navigating the challenges and capitalizing on the opportunities that lie ahead. The collaboration agreement with BiBo Biopharma Engineering Co., Ltd. to construct a production facility in China demonstrates the company's proactive approach to securing manufacturing capacity for potential future commercialization of pegozafermin.
With its focus on addressing liver and cardiometabolic diseases, 89bio is well-positioned to emerge as a leader in the development of transformative therapies. The company's sole focus on the development of pegozafermin for MASH and SHTG allows for concentrated efforts and resources to be directed towards these promising indications. As 89bio advances through late-stage clinical trials and potential regulatory approvals, the coming years will be critical in determining the company's success in bringing pegozafermin to market and potentially generating its first product revenues.