Can CymaBay Therapeutics Inc (NASDAQ:CBAY) Continue On Its Superb Run?

CymaBay Therapeutics Inc (NASDAQ:CBAY) has been one of the small cap biotechnology space's most consistent performers during 2017 to date. The company kicked off the year in risky listing status territory, in and around the $1.50 region. At its most recent close, this had risen to just shy of $7 a piece, cementing the company's long term NASDAQ safety and setting up shareholders for a more than 300% gain across the period.The most recent run comes on the back of a report detailing HC Wainwright's coverage of the stock and a $12 price target to accompany the analysis. Shortly before we got Wainwright's take, we got an update as to the company's lead development program and it's reasonable to assume that the vast majority of the former's price target is rooted in said program.So, we're going to ask the question, is this a valid target and, we're going to answer this question, by taking a look at the recent data against a backdrop of the target indication and the current state of the industry in this target population.Here goes.The data in question derives from a phase II study of a drug called seladelpar, which the company is investigating as a potential treatment for patients with primary biliary cholangitis (PBC). For those new to this condition, it's a life-threatening and life-limiting chronic cholestatic liver disease, which is rooted in the inability of bile to flow into the duodenum from the liver. This causes a buildup of the substance in the liver and its surrounding tissue and can lead to scarring and – eventually – death if left untreated. Current standard of care therapies in this indication become increasingly less effective over time and – in a large portion of the patient population – are ineffective from the get go. They also bring with them certain unwanted side effects.With seladelpar, CymaBay is trying to bring an asset to market that addresses these limitations. The drug is what' called a PPARδ agonist and its mechanism of action (MOA) is rooted in the reduction in production (and concurrent reduction in fibrotic potential of existing levels) of bile and – importantly – the acidic side of the substance.So what did the latest data tell us?In a nutshell, the drug seems to work. The study is designed to measure something called alkaline phosphatase (AP), the presence of which is a characteristic of elevated ursodeoxycholic acid (UDCA), which is the damaging acid at the root of this condition. The idea is that a lower AP level indicates a lower UDCA level, so if the company can show that its drug induces a reduction in AP then the numbers would imply a reduction in severity of the PBC disease that it's targeting. And it seems to have done just that. As per the recent release, which derived from a planned interim analysis of the first 24 patients enrolled across two dose groups, the data demonstrated that after 12 weeks of treatment a significant AP reduction occurred from baseline of 39% and 45% for the 5 mg and 10 mg groups, respectively.It's an interim release, sure, so it's not necessarily indicative of the trial's final outcome. With that said, the numbers are strong and – just as importantly – the drug is performing better than some of its competitor development assets in this sector. Intercept Pharmaceuticals Inc (NASDAQ:ICPT), which is developing a similar drug, was only able to show an AP reduction of 24% at 12 weeks, far below that of seladelpar. Couple this with the suggestion (based on earlier stage trial data) that the latter actually improves in efficacy over time and it looks like seladelpar could knock Intercept's asset out of the picture entirely.A final note:This is a young biotech stock and this brings with it all of the standard risks associated with this end of the sector. Primarily, that it's going to have to raise cash to get this drug through to commercialization, regardless of how good the results of the study are. With that said, there was around $23 million on hand at March 31, which management expects should carry the company through to the end of the first quarter of 2018. This somewhat delays any dilution necessity and makes this one an attractive exposure, even in light of the latest gains, going forward into the latter half of 2017.We will be updating our subscribers as soon as we know more. For the latest updates on CBAY, sign up below!Disclosure: We have no position in CBAY and have not been compensated for this article.