Shannon Jones: Todd, you recently had the unique opportunity to interview a member of
the executive team of a smaller biotech that over the past few years has caught a tremendous
amount of attention from biotech investors. That company is Genfit, ticker GNFT.
Genfit best known for its late-stage Phase III candidate Elafibranor, which is being
studied in a disease called NASH.
Todd, NASH is quickly becoming the target that many biotechs are striving to hit.
Todd Campbell: Right.
Gilead Sciences' success in hepatitis C, raking in about $20 billion analyzed at one point
after they came up with their new hepatitis C drugs earlier -- I think it was 2014 when
they launched the first one -- really got the attention of researchers.
They looked at it and said, "Jeez, what else can we tackle it in liver disease?"
NASH is now fast becoming, instead of hepatitis C, the major cause of liver transplants.
When you have liver disease, there's also the risk of liver cancer.
So, a lot of people are looking at NASH and saying, "If we can find a way to tackle this disease,
then maybe we can find the next mega blockbuster indication."
Like you said, I had the privilege of being able to go down to the Cambridge offices of Genfit.
They are an European company. They're primary exchange is in Paris.
They're a French company. But, they do have ADRs that trade here in the U.S.
They're a little illiquid, though, so investors should know that. It's a relatively small company.
I think their market cap's around $800 million.
They're far from the only competitors who are angling to try and come up with a win
in NASH, but they are one of the few that has an ongoing Phase III trial underway that's
expected to read out data in 2019.
If the data is good, then they could file this drug for FDA approval.
There are no drugs right now that are approved specifically for NASH, so estimates right
now are that you'll see up to -- I mean, I'm using the pie in the sky estimates -- up to
a $35 billion market once these drugs get out there.
Of course, they're going to have to prove their worth in the trials first.
Jones: Exactly. What's interesting about Genfit is, they've actually got multiple shots on goal here.
You mentioned Gilead. They've got a few drugs in the pipeline also going after this indication.
But Genfit is actually a little bit different. They obviously have a therapeutic component, Elafibranor.
But, what's really interesting is, they also have a diagnostic tool that, regardless of
which treatment a patient may go with, being able to diagnose these patients earlier, sooner,
I think, is a key area to win. Todd, tell us a little more about their strategy here.
How are they expecting to upend this huge unmet need market?
Campbell: I was fascinated by this, the potential for the diagnostic.
I hadn't been thinking that way.
Like a lot of people, I've been looking at and saying, NASH typically occurs in people
who are living sedentary lifestyles.
As Western diets have become more prevalent globally, you see more and more people getting
diagnosed with fatty liver disease and, unfortunately, NASH.
You start spending most of your time thinking not about how you diagnose those patients,
but instead of thinking about how you're going to treat those patients.
I think that this gives Genfit a competitive advantage over some of these other companies
like Gilead and everything that are focusing on the drugs but haven't spent as much time
trying to figure out the diagnostic side of it. The reason I say that is that NASH is a silent disease.
It's often not diagnosed until people really have advanced liver disease.
The gold standard for diagnosis is a liver biopsy.
Liver biopsies are expensive, they're invasive, and they're usually done by specialists.
This is not a test you're just getting done by your primary care physician.
What Genfit has gone out and done is, it's been able to identify some biomarkers that
show up in the blood of NASH patients.
The idea here is to be able to create a low-cost, easy to take blood test that would show you
whether or not you're likely to have NASH, and if you are, theoretically, you move on
to a biopsy or something else.
Next year, they're going to roll this diagnostic test out into different research facilities.
In theory, this is a drug-agnostic approach diagnostic.
It's not going to be used with Genfit's drug that's in Phase III trials.
It could be used with Gilead's drug, it could be used with Intercept's drug, it could be
used with Madrigral's drug, it could be used with Viking's drug.
All these companies that are racing towards the finish line in NASH could theoretically
drive demand for diagnostics beyond that specialty office market.
Jones: Looking ahead, I think it's really interesting.
Phase II for Genfit's drug, Elafibranor, actually didn't meet its primary endpoint.
There's some nuance there.
I think this is an important point, especially for biotech investors.
The company did a post hoc analysis. We've talked a little bit about the problems with that.
There was some nuance here because it really came down to study design.
It sounds like, for this Phase III trial that they're currently running, they've designed it with that in mind.
Tell me, looking forward, what are some of the key things that you'll be looking at with
this Phase III trial with that in mind?
Campbell: Yeah, I think that we always have to be very cautious when it comes to post hoc analysis.
But we also should remember that this is an indication that there are no approved treatments specifically for.
Phase I and Phase II truly are much more exploratory than maybe
it would be in other, more proven-out indications.
And, each one of these companies is targeting a slightly different mechanism of action.
For example, Genfit's targeting a dual agonist of the PPAR, which is a pathway that helps
regulate things like metabolism and lower the amount of fat that's in the bloodstream.
Their drug is a dual PPAR.
But you also have Intercept, that has an Fxr agonist, which works slightly differently.
You have Gilead's Selonsertib, that's different drug, works a little bit differently, as well.
All these companies have these different drugs that are going through trials, and they're
using these Phase II trials to try and figure out the best way to get the drug across the
finish line in Phase III. It truly is exploratory.
In that regard, maybe I'm willing to give a little bit of a benefit of the doubt to post hoc analysis.
In speaking with management, it does sound like they have a really good grasp
of the type of patients that are most likely to respond well to this drug.
We'll have to wait and see.
The interim data that could back an FDA approval, that's not expected until the end of 2019.
But, that's about a year away.
You're not waiting too long to find out whether or not they're onto something.
Intercept and Gilead, interestingly, their data is going to come out first.
They'll have data in the first half of 2019.
But Gilead is actually not even looking at NASH resolution as
the primary endpoint in their Phase III study.
They're actually looking at improvement in resolution of fibrosis.
It really may come down to, which ones do you use in different levels of treatment,
or do you use these because they all have mechanisms of action that are slightly different?
Do you use them as combination therapies? How that's all going to shake out, I don't know.
So, yeah, take it with a little bit of a grain of salt, because Phase III is based on post
hoc analysis, Phase II maybe isn't that indicative overall of what's going to happen in Phase III.
Jones: It'll be important to also watch a Phase II study in another chronic liver disease indication,
PBC, which is marked by progressive destruction of bile ducts within the liver.
The read-through from that Phase II study will obviously have implications from an investor
perspective on what that means for their drug.
Then, you've got to be mindful of cash burn, as well, because the company may need to do
a capital raise pretty soon. Campbell: I think so.
The PBC data is expected later on this year.
Intercept already has their drug that they're studying in NASH, approved in PBC.
That's generating out about $43 million a quarter for Intercept.
You're talking about a nine-figure opportunity.
They will need to conduct a Phase III study, but if the Phase II data is good in PBC for
Genfit, then maybe that helps validate the mechanism of action a little bit more,
maybe that causes share prices to rally a little bit.
If so, I wouldn't be too shocked if they went out and did a capital raise, issued some shares,
to try and bolster up the balance sheet. This is certainly not desperate times.
They've got $275 million using current exchange rates, euros to dollars, right now on the books.
But they are going to have to increase their spending unless they do a licensing deal or something.
They're going to have to bolster their cash through some other way if they're going to
launch this on their own.
Jones: Such an interesting space, so much to watch here in this particular company with Genfit.
It's really companies like these that keep me so intrigued in the biopharma market.
We should come back and do a NASH show.
There's so much more we can dig into about the race to approval and how they differ and how they're similar.
We'll have to put that on the calendar, Todd!