Description

Overview

Hundreds of millions of dollars have been burned trying to bring four CETP inhibitors to market for the treatment of high-cholesterol and cardiovascular disease risk-reduction; all have failed.

Despite the stain on the drug class, CETP is a clinically-validated target, and NAMS’ obicetrapib is emerging as a potential first/best-in-class drug that has been largely derisked. If approved, as I expect it will be in 2027, it will enter a massive market with a good, competitive product profile. I believe the stock is worth multiples of its current price.

I have wanted to own NAMS for a while but had been put off by the stock's sudden 4X (perhaps overly stingy of me…). Recently, the stock has come down and I’ve begun to build a position while hoping the stock continues to fall. I believe it’s a bargain today. 

So are the warrants – if you like the idea, they’re worth consideration as they expire in late-2027, after we get cardiovascular outcomes data (mid-to-late 2026).

This writeup contains a fair amount of sciencey jargon, so I’ve done my best to bold/highlight the important points. It is organized as such:

1. CETP is a genetically and clinically validated target for LDL-C reduction

   1.1 Genetic evidence

   1.2 Mechanistic rationale

   1.3 Clinical Validation

2. Past failures of CETP inhibitors do not portend an obicetrapib failure

   2.1 Torcetrapib

   2.2 Dalcetrapib

   2.3 Evacetrapib

   2.4 Anacetrapib

3. Obicetrapib has performed reproducibly well in clinical studies to date.

4. Obicetrapib has a high PoS on MACE risk reduction in PREVAIL Ph3.

5. Valuation

6. A few more points

   6.1. Competition

   6.2 Lp(a)

   6.3 Diabetes

1. CETP is a genetically and clinically validated target for LDL-C reduction

1.1. Genetic evidence

Interest in CETP inhibitors emerged from the observation that individuals with a genetic deficiency in CETP had measurably higher levels of HDL-C and lower levels of LDL-C, a profile that should lower one’s risk of developing atherosclerosis. (note: though we didn’t at the time, we now know that elevated HDL-C does not contribute to decreased cardiovascular mortality risk). Subsequently, it was established that individuals genetically deficient in CETP do indeed have a lower risk of cardiovascular mortality.

 1.2. Mechanistic rationale

CETP is a glycoprotein that facilitates the bidirectional transfer of cholesteryl ester (CE) from HDL particles to apoB-containing particles (LDL and VLDL), and triglycerides in the opposite direction.

Blocking CETP leads to increased CE content and size of HDL particles, which are catabolized more slowly than normal, and removes one pathway for non-HDL particles to uptake CE.

CE depletion in LDL and VLDL particles results in:

1. reduced non-HDL-C.
2. increased LDL catabolism (it has been hypothesized that as the triglyceride/CE ratio increases within LDL particles, its affinity for the LDL-receptor increases which results in degradation).

The net result of CETP inhibition is thus increased HDL-C and decreased non-HDL-C, as well as decreased apoB (i.e. decreased number of apoB-containing particles; because each particle contains one apoB molecule) – similar to what we observe in CETP-deficient individuals.

LDL-C, non-HDL-C, and apoB are all well-established, causative biomarkers predicting CVD risk. (It was initially thought that an increase in HDL-C would be a driver of clinical success, but significant evidence against this hypothesis has emerged).

1.3. Clinical validation

In the REVEAL study of 30,449 patients with atherosclerotic cardiovascular disease, patients received 100mg of anacetrapib, the fourth-generation CETP inhibitor (to be discussed in more detail later) or placebo daily, on top of statin therapy, and were followed for 4.1 years. Despite low expectations due to the failures of prior CETP inhibitors torceptrapib, dalcetrapib and evacetrapib, anacetrapib conferred a highly statistically-significant major adverse cardiovascular event (MACE) risk reduction of 9% relative to placebo (10.8% vs. 11.8%).

Compared to placebo, anacetrapib reduced the mean level of non-HDL-C by 18% at study-midpoint. The absolute placebo-adjusted LDL-C difference of 11mg/dl and risk reduction of 9% falls right on the Cholesterol Treatment Trialists’ meta-regression line for major adverse cardiovascular events (basically a highly cited study which pooled data from all studies of LDL-C and MACE, and plotted them).

Though Merck discontinued the drug for strategic reasons (drug accumulation in adipose tissue due to anacetrapib’s hydrophobicity), the data do validate CEPT inhibition for both non-HDL-C reduction and MACE risk-reduction.

2. Past failures of CETP inhibitors do not predict obicetrapib failure.

Given all that’s written above, the obvious question is – if CETP is such a great target, why have four inhibitors failed in clinical development? Problems with past candidates have ranged from safety, to poor trial design, do low potency. Below I briefly discuss all four.

2.1. Torcetrapib

The first large trial of a CETP inhibitor, torcetrapib, actually showed an increase in deaths and cardiovascular disease, despite having the desired pharmacodynamic effect of raising HDL-C and lowering non-HDL-C.

It was later demonstrated that torcetrapib caused off-target toxicity, which explained the increase in deaths (hyperaldosteronism; elevated blood pressure).

2.2. Dalcetrapib

We now know that CETP-inhibition’s effect on HDL-C is not important for reducing risk of cardiovascular events – the driver of efficacy is the reduction of apoB/LDL-C/non-HDL-C. Dalcetrapib, it turns out, acts more on HDL-C and has a minimal effect on apoB/LDL-C/non-HDL-C, and thus was likely never a good candidate.

2.3. Evacetrapib

Evacetrapib, on the other hand, does have activity on both apoB and LDL-C (apoB reduction in ACCELERATE trial was 19% compared to 18% in REVEAL trial of anacetrapib). It also lacks the off-target toxicity of torcetrapib. The reason for evacetrapib’s failure is likely one of trial design. Whereas the REVEAL trial of anacetrapib read out with a median follow-up period of 4.1 years, the ACCELERATE trial of evacetrapib was terminated after 2.2 years. This is important because it appears that the risk reduction benefits increase with time. Most of the benefit of anacetrapib was observed after 2 years (see below). Moreover, a follow-up study of anacetrapib at 6.3 years demonstrated an incremental 20% risk reduction.

2.4. Anacetrapib

In contrast with other CETP inhibitors, anacetrapib likely succeeded in clinical studies as a result of 1) cardiovascular safety (where torcetrapib failed), 2) potency on non-HDL-C/apoB (where dalcetrapib failed), and 3) trial design (where evacetrapib failed). As discussed above, anacetrapib would be on the market today were it not for its accumulation in adipose tissue.

3. Obicetrapib has performed reproducibly well in clinical studies to date.

The team at NAMS has had the benefit of using past CETP failures to inform their development plans. Three biomarkers that are important to watch in these trials are apoB, LDL-C, and non-HDL-C (90% of which LDL-C). All three have very-well established relationships with MACE risk that have been shown in dozens of clinical trials. LDL-C is the most widely studied even though apoB appears to be a better predictor – not important to get into here…

Across all six Ph1/2 trials,150 patients who have received obicetrapib 10mg monotherapy achieved good reductions in all three biomarkers–better than reductions achieved with anacetrapib.

A few months ago, the first of three Ph3 trials, BROOKLYN, read out. Based on Ph2b data, I had been expecting a 45%-50% reduction in in LDL-C (primary endpoint) in BROOKLYN, but the reduction came in a bit lower at 41.5% which may be why the stock has come down a bit. This is fine in my eyes, and does not negate the need for obicetrapib the second Ph3 trial, BROADWAY, will read out late this year or early next year, so we will get another outcome soon).

Note: NAMS has not yet given us non-HDL-C or apoB data from its Ph3 BROOKLYN trial, but disclosed that there was a stat-sig separation from placebo.

4. Obicetrapib has a high PoS on MACE risk reduction in PREVAIL Ph3.

BROOKLYN and BROADWAY Ph3’s (primary endpoint = LDL-C reduction) are registrational and sufficient to achieve approval, but the really important Ph3 in the eyes of doctors and insurers is the Ph3 PREVAIL trial, which is fully enrolled and reading out in mid-to-late 2026. This trial is measuring MACE risk-reduction as a primary endpoint, and a combination between the tight/well-established relationship between biomarkers and MACE, and obiceptrapib’s reproducible effect on those biomarkers, yields a very high probability of a good outcome, in my opinion.

In contrast to prior MACE-risk-reduction Ph3’s of CETP inhibitors, PREVAIL will 1) run longer, 2) enroll patients with a higher baseline LDL-C (this is important because a higher baseline level = greater absolute reduction, and it’s well established that MACE-risk reduction decreases linearly with absolute LDL-C reduction), and 3) treat a potentially easier-to-treat population.

Below are the company’s estimates of MACE risk reduction based on biomarker data from Ph2. I didn’t just take their word for it; I did a slightly more complicated analysis myself and came to basically the same conclusion. The company’s estimates, based on all three biomarkers, all call for a great MACE-risk-reduction of >20% which is good.

The company prediction is a bit of an oversimplification: though the study they cite says that a 1mmol reduction in LDL-C should yield a risk-reduction of 22% with a tight confidence interval from 20% to 24%, the range of possible outcomes in PREVAIL is much larger, due the >10-fold smaller sample size.

I wanted to know what the CTT analysis’ confidence interval would look like with a sample size of 9000 (PREVAIL) vs. 169000. Because I’m not a mathematician, I built a simulation in which I “ran 10,000 trials at n = 9000” by 1) converting the standard error in the CTT trial to standard deviation, 2) running 1 trial by randomly selecting an outcome from a normal distribution 4500 times, using the mean and SD from the CTT trial (this value is the RR difference between drug and placebo for one trial), 3) looping through this process 10000 times. This gave me a distribution for the expected RR per 1mmol LDL-C reduction. I then adjusted for an expected 1.1mol LDL-C reduction in PREVAIL (103mg/dL baseline LDL-C [reported] and expected 41.5% reduction (conservative assumption). Additionally, I adjusted for the time difference (PREVAIL avg follow up will be ~4 years vs. CTT avg follow up of ~5 years; anacetrapib arm of REVEAL experienced an additional 20% risk reduction after 4.1 years, when followed up at 6.3 years; assume approximate 10% additional RR per year; so discount risk reduction by 10%).

Bottom line: I think PREVAIL has a very high probability of showing a better benefit on MACE risk reduction than anacetrapib, and a >50% chance of showing a >20% risk reduction on MACE. (note: available PCSK9 inhibitors reduce MACE risk by about 15%). I arrive at a mean expected RR of 0.78 and 95% CI from 0.61 to 0.95. The code and distribution is shown below.

Additionally, my analysis passed a sanity check: trials in Lancet meta-analysis (IDEAL, LIPID, ASCOT, ALLHAT trials) with similar n’s as PREVAIL’s have approximately similarly sized 95% CI’s on per 1mmol reduction RR’s.

5. Valuation

The opportunity is large – despite the abundance of treatment options (many of which are generic), there are still 25-30M Americans with unacceptably high LDL-C levels. This should be a blockbuster drug if it works as well as it appears to. I’ve included my estimate of peak sales and fair value below (don’t be fooled by my down-to-the-penny precision, I think there’s room for noise here but that “>$16” is reasonable). The main risk here is a new safety event coming to light, but many patients have already been treated, so it seems unlikely. Nevertheless, I assigned a conservative 65% PoS.

6. A few more things

6.1. Competition

Obicetrapib will face competition from PCSK9 inhibitors, but these are currently injectable with MACE RR’s of around 15%, so Obi should stack up well if RR is in that ballpark. Oral PCSK9’s are in development, but these must be taken in a fasted state (no food effect for obi). MACE benefit TBD for oral PCSK9’s.

6.2. Lp(a)

One thing I hadn’t noted is that it appears obicetrapib has a lowering-effect on Lp(a) which is superior to other CETP inhibitors, Nextletol, generic ezetimibe, and available PCSK9’s. Lp(a) is a lipoprotein particle assembled in the liver a cholesterol (LDL-C)-like particle and apolipoprotein(a). Lp(a) levels in the blood can vary greatly between individuals primarily due to genetic variations and do not correlate with LDL-C levels. Even patients with LDL-C lowered to target levels remain at high-risk of cardiovascular events if they have high levels of Lp(a). Elevated Lp(a) is a genetically determined condition that is not responsive to lifestyle changes.

In 2025, we will see Ph3 cardiovascular outcomes data from Novartis’/Ionis’ pelacarsen, which targets Lp(a) and appears to reduce it by ~65%. If positive, aside from being an attractive quality in the eyes of physicians, obicetrapib’s ability to lower Lp(a) could increase it’s PoS in PREVAIL. Obicetrapib has demonstrated its ability to lower Lp(a) by 47-57%. Anacetrapib and evacetrapib lowered Lp(a) by 20-25%, and available PSCK9’s lower Lp(a) by 15-20%.

6.3. Diabetes

      Finally, another potentially attractive quality of obicetrapib is the apparent ability of the CETP inhibitor class to reduce the incidence of new-onset diabetes. A recent Lancet paper suggests that patients on a high-dose of statins are at a 36% elevated risk of new-onset diabetes. The CETP class has been shown to not only negate that effect, but further reduce the risk of new-onset diabetes by 15%.

Catalyst

BROADWAY data in December 2024 or January 2025.

PREVAIL data in mid-to-late 2026

Acquisition by a big pharma (likely outcome IMO)