Genfit S.A. (NASDAQ:GNFT) is gearing up for two regulatory decisions in the coming months. The FDA and European Medicines Agency [EMA] had both accepted regulatory filings of elafibranor for the treatment of patients with primary biliary cholangitis [PBC]. This creates two inflection points which are anticipated during this year. The first inflection point being a PDUFA date of June 10, 2024, by which the FDA will decide upon whether this drug should be approved to treat this patient population. The second inflection point, or catalyst, would be the EMA deciding upon regulatory approval as well. Such a decision is expected to happen in the 2nd half of 2024. The importance of such approvals is not only to get the drug to market, but that such approvals and commercial launches would trigger additional milestone payments from Ipsen (OTCPK:IPSEF).
Total payment from Ipsen in 2024 is expected to be $92.4 million. Regarding this partnership, this is only the beginning because Ipsen also has a plan to test elafibranor for the treatment of patients with Primary Sclerosing Cholangitis [PSC]. This would be an expanded indication for the elafibranor side of things. There is another reason why investors should care about this biotech. That’s because there is a crucial data readout expected in the latter part of this year. It is expected that interim results from the phase 2 UNVEIL-IT study, using VS-01 for the treatment of patients with acute on chronic liver failure, also known as acute chronic liver failure [ACLF], will be released in the 2nd half of 2024. This biotech is taking a multi-prong approach in developing several drugs, each with a different mechanism of action, to target these specific patients.
Phase 2 UNVEIL-IT Study Moving Along With Upcoming Interim Data
As I noted above, Genfit is in the process of advancing the phase 2 UNVEIL-IT study, which is using VS-01 for the treatment of patients with Acute chronic liver failure. Acute Chronic Liver Failure [ACLF] is a type of disorder whereby the liver starts to fail quickly. Cytokines attack hepatocytes and thus regeneration of the liver can’t occur adequately. Depending on the cause of this disease, it is possible that some type of treatment might reverse it, but in most instances the only true cure would be a liver transplant. The problem with this is that there are three items that could hinder the ability for such patients to receive such a transplant. They are as follows:
- Outside the window of treatment – there is a period where an actual transplant can be done, which is very narrow
- Shortage of organs – With not enough organs to go around, there is no guarantee that a liver will be available for transplant
- Unable to get a high level of medical coverage.
The thing is that ACLF can lead to other problems such as: Hepatic encephalopathy [brain problem resulting from failing liver], ascites [fluid filling in the abdomen], portal hypertension, cirrhosis and high morbidity. This is where VS-01 from Genfit might come in. A major problem with ACLF is the inability for a person’s liver to filter out ammonia from the blood. In addition, to remove other ACLF toxins as well. The global Acute on chronic liver failure market size is projected to reach $3.21 billion by 2030. This is a considerable market opportunity with a huge unmet medical need. Consider that there are no approved treatment options and roughly 121,000 patients in the U.S. and Europe with ascites [fluid build-up in the abdomen]. Thus, VS-01 might be an appropriate treatment via intraperitoneal administration following.
The phase 2 UNVEIL-IT study is recruiting a total of 60 patients in the United States and Europe with ACLF. These are such patients who are ACLF grade 1 and 2, plus have ascites. The patients are being randomized as follows:
- 30 patients to receive standard of care – standard of care being ascites drainage only
- 30 patients to receive VS-01 – VS-01 to then be drained along with ammonia and ACLF toxins.
If VS-01 can achieve its function of reducing ammonia and other metabolites effectively, then it would allow for a drastic reduction in terms of treatment. For instance, shorter hospital stay, no need for a liver transplant, no re-hospitalization being necessary. The primary endpoint of the study is CLIF-C ACLF score at Day 7. What is this score? This score, in essence, is a predictor of mortality. The hope is that VS-01 can clear enough ammonia from the blood and, when ascites drainage occurs, improve the clinical outcome for patients. A prior phase 1b study showed that 83.4% of patients had improved or stable disease when given VS-01. Plus, that there was dose-dependent ammonia removal from the blood, along with the fact that no ACLF progression occurred. The thing is that VS-01 is only at the beginning of development for Genfit’s pipeline because it has other drugs to be advanced for ACLF. They each have a different mechanism of action and route of administration as follows:
- NTZ as an oral drug – antibacterial and anti-inflammatory type – reduce systemic inflammation and stop microbial pathogen-associated molecular patterns or PAMPS [infection and bacterial translocation causing a problem for ACLF patients because of cytokines causing further hepatocyte injury]
- SRT-015 as an injectable drug – ASK1 inhibitor type – stop cell death [apoptosis], fibrosis and inflammation injury
- CLM-022 as an oral drug – NLRP3 inflammasome inhibitor – inhibit inflammation and cell death
- VS-02-HE – Urease inhibitor – stabilize blood ammonia and prevent hepatic encephalopathy [again brain dysfunction from liver issue]
The point here is that there is potential to target ACLF patients beyond only using VS-01. Of course, these other programs are in the early part of the process. For instance, NTZ will be initiated in a phase 2a proof-of-concept study in the 1st half of 2025 and SRT-015 is expected to be brought to a first-in-human study in Q1 of 2025.
Financials
According to the 6-K SEC Filing, Genfit had $80.4 million in cash and cash equivalents as of March 31, 2024. The company is in good shape in terms of cash because it believes that it has a cash runway to fund its operations into Q4 of 2025. However, this estimate includes milestone payments it expects to receive as a result of approvals of elafibranor for PBC in both the U.S. and Europe.
What does this mean? Well, that’s because to keep itself funded and to have an easier time marketing this drug, it developed a partnership with Ipsen. This was a collaboration agreement made in December 2021, where the two companies entered into an exclusive licensing agreement to develop and commercialize this drug for the treatment of these patients with PBC. Genfit received an upfront payment of $129 million and is eligible to receive up to $388 million in milestone payments. Along with tiered double-digit royalties on net sales for products sold up to 20%. Thus, it is entitled to grab $81.08 million in revenues as an expectation in 2024.
Of course, this cash is only to be received if it can achieve approval of elafibranor in the United States and European territories. Its cash burn is $69.93 million per year, so without the milestone payments, its cash runway would be about a year.
Risks To Business
There are several risks that investors should be aware of before investing in Genfit. The first risk to consider would be regarding the upcoming PDUFA date of June 10th, 2024. That is when the FDA will decide upon whether elafibranor should be approved for the treatment of patients with PBC. Failure to achieve approval in the United States would not only mean a loss of potential revenues in sales, but it would also mean that it would not be eligible for milestone payments as part of it. The same goes for the European approval, which might happen in the 2nd half of 2024.
The second risk to consider would be regarding the ongoing phase 2 UNVEIL-IT study, which is using VS-01 for the treatment of patients with ACLF. There is no assurance that the results will turn out to be positive, nor that the primary endpoint will be met with statistical significance. The hope is that the data is good because there are no approved drugs for ACLF.
The third and final risk to consider would be in terms of the other drugs that Genfit is advancing, each with a different mechanism of action. While VS-01 is the first drug with the main goal of removing ammonia and other ACLF metabolites from the blood, there is no assurance that the other drugs will perform just as well. As I have shown above, initial data from a phase 1b study showed that 83.4% of the patients had improved or stabilized disease. Plus, they didn’t progress in ACLF.
Conclusion
Genfit has several milestones for investors to look forward to. The first two being the potential to receive marketing approvals of elafibranor in both the U.S. and European territories.
Besides these catalysts, there is a data readout as well. This would be regarding using VS-01 as an intraperitoneal treatment option for patients with ACLF. The goal is to get these patients to a point of not needing a transplant or to reduce the amount of time for a hospital stay. With the potential to receive two regulatory approvals of elafibranor for PBC, plus a major interim data readout expected in the 2nd half of 2024 for the ACLF program, I believe that Genfit S.A. investors could benefit with any potential gains made.
Editor’s Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.
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