Genfit Plunges After Liver Medicine Falls Short in Study

(Bloomberg) -- French biotech Genfit plunged after falling short in the race to develop a drug for a disease lurking undetected in tens of millions of people struggling with obesity and diabetes.

Preliminary data reported on Monday pointed to a failure of Genfit’s elafibranor drug in a crucial late-stage trial. The stock fell as much as 75% in Paris trading, reaching its lowest level in almost seven years and giving the company a market value of 246 million euros ($266 million).

For years, Genfit was seen as a top contender to find a treatment for a fatty liver disease known as nonalcoholic steatohepatitis, or NASH, which has no existing cure on the market.

“This leaves a big question mark for us and for the entire field,” said Chief Executive Officer Pascal Prigent in an interview. “The odds are not great for us,” he said, “but we still see this space as really attractive.”

NASH is marked by a build-up of fat and scarring in the liver. The mildest patients can be fairly asymptomatic, while the disease can progress to deadly liver cancer in others.

Genfit’s elafibranor belongs to a class of drugs that targets proteins that control how the body stores and distributes fat known as peroxisome proliferator-activated receptors, or PPARs. PPARs like GlaxoSmithKline’s diabetes medicine Avandia have been used to treat inflammation as well to improve blood sugar.

The first interim results from Genfit’s late-stage clinical trial of elafibranor in 1,070 patients found that the study did not meet the primary endpoint of NASH resolution without worsening of fibrosis. It showed that 19% of patients who received elafibranor saw the disease resolved, versus roughly 15% of patients in the placebo arm. The difference between those two groups wasn’t statistically significant.

Placebo Shock

The trial also evaluated improvement to scarring in liver tissue. The preliminary data showed that about 25% of patients who got elafibranor saw their fibrosis improve by at least one stage, compared with 22% of patients on a placebo. That result wasn’t statistically significant. Safety and tolerability were consistent with prior studies.

CEO Prigent said he was both surprised and disappointed by the results. He said he had expected elafibranor to show these rates of efficacy, but what came as a shock was the sheer level of benefit patients saw on placebo.

“Why the heck do we have a placebo response that is almost twice what we’d seen in the last trial?” Prigent asked. “We believe that the question about how we measure endpoints, and how we use biopsy, that’s probably going to continue to be a challenge for the space.”

Experts in general say NASH studies can be hindered by the fact that patients often see immediate benefit merely by consulting with doctors about their health conditions, and making lifestyle changes that include diet and exercise. That can confound the ability to assess the benefit of a treatment.

Prigent believes that a medicine is necessary to treat the condition despite the benefit patients can see through lifestyle changes. “I’m 100% convinced you need a drug,” he said. “We could give up medicine for lung cancer if people quit smoking, but we don’t. In this case, it’s simplistic to think that everyone could lose weight, and problem solved. Some cannot afford to make lifestyle changes.”

Genfit will conduct additional analysis to better understand why the placebo arm saw a greater benefit than expected and plans to share those details with regulators. Though the preliminary data serve as a proxy for the ultimate clinical outcomes, Prigent said the company will weigh the costs and benefits of moving forward before discontinuing the overarching trial. A more complete look at the results is expected at one of the international hepatology meetings that will take place in the second half of this year.

Genfit holders may have gotten an inkling that the drug wasn’t likely to work last June when another PPAR from CymaBay Therapeutics Inc. failed to beat a placebo at showing an improvement on liver fat levels. Some investors likely remained optimistic as each drug targeted a different one of the three types of PPARs.

Previous Failures

The path to developing new NASH therapies is littered with failures for once high-flying names like Conatus Pharmaceuticals Inc. and Galectin Therapeutics Inc. Novo Nordisk A/S reported mixed results from a mid-stage study of semaglutide last week.

While Intercept Pharmaceuticals Inc. is widely expected to get regulatory approval of the first drug to treat NASH in June, expectations around potentially better follow-on treatments from other small-cap drugmakers like Madrigal Pharmaceuticals Inc. and Viking Therapeutics Inc. have led to volatility in NASH-related stocks.

Prigent still sees a major value creator lurking within Genfit’s portfolio. Its non-invasive blood diagnostic test, known as NIS4, would potentially compete with experimental tests from the likes of Siemens AG. One study showed it outperformed other non-invasive diagnostics tools in identifying NASH in people with Type 2 diabetes.

“Sometimes as a biotech, your program fails, and it’s game over,” said Prigent. “Today, I think, unfortunately, is going to be about the disappointment of the Phase 3 trial. That was the immediate value proposition. But the diagnostic will be the cornerstone of out value proposition in the future. That’s the most important question: Which patients do you treat, and at what point do you treat them?”

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