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Genfit Hopes to Buck the Odds With NASH Drug

A French biopharmaceutical company hopes to become the first to gain approval of a drug to treat a widespread liver disease. If Genfit SA (NASDAQ:GNFT) is successful, the payoff promises to be huge--for the company and its investors. But there are many big "ifs."

The disease Genfit is targeting is nonalcoholic steatohepatitis, a progressive liver disorder caused by an immune system that attacks fatty liver tissue. It is estimated that the disease affects some 30 million Americans. The market opportunity is estimated by analysts to be up to $35 billion, according to an article in Forbes earlier this year.


Pasha Sarraf of SVB Leerink began covering Genfit earlier this year with baseline revenue of $170 million for the company's NASH treatment, elafibranor. He thinks the drug could eventually generate peak sales of $570 million by 2030.

The independent group monitoring the progress of the phase 3 clinical trial for elafibranor recently gave the drug its seventh positive data safety review. MedCity News reported that in a note to investors, B. Riley FBR analyst Mayank Mamtani said that Genfit's announcement bodes favorably for the anticipated phase 3 readout for the drug.

The company plans to announce top-line interim results for the study in the first quarter of next year and will file for Food and Drug Administration and European Medicines Agency approval by the end of 2020 if they are positive. If greenlighted, elafibranor would be the first drug for resolution of NASH without worsening of fibrosis.

The day before the Genfit announcement, Intercept Pharmaceuticals (NASDAQ:ICPT) said in a press release the FDA had accepted and granted priority review to its application for the drug obeticholic acid for the treatment of liver fibrosis due to NASH. The New York-based company is seeking speedy approval based on interim results of its phase 3 study. Since the announcement, the company's shares have gained more than 13% to nearly $115.

Genfit's stock has been a laggard relative to Intercept, but analysts think the company has tremendous upside. Its stock trades at just more than $16, well below its 52-week high of $26.25. But according to a CNN Money article, the 11 analysts offering 12-month price forecasts for Genfit have a median target of nearly $64, with a high estimate of nearly $90 and a low estimate of $19.65. No surprise, the company is rated a buy.

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Given the difference between Genfit's current and projected share price, it appears the bears outnumber the bulls. There are a number of reasons for this. First, postponement of the interim results of the company's phase 3 study, the lack of interest among any big-name licensing partners, the recent resignation of Genfit CEO Jean-Francois Mouney and the failure of other drugs from Gilead Sciences (NASDAQ:GILD) and Cymabay Therapeutics (NASDAQ:CBAY) that act like elafibranor.

Disclosure: The author has a position in Gilead.

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This article first appeared on GuruFocus.