Genfit warns costs of failed NASH trial will drag deep into 2020

In 2017, Genfit issued €180 million in convertible bonds that are redeemable in 2022. (Genfit)

Genfit has warned work on its failed phase 3 nonalcoholic steatohepatitis (NASH) trial may continue deep into 2020, leading it to continue paying for a program that may never deliver returns. 

Last week, Genfit presented interim data showing dual PPARα/δ agonist elafibranor is no better than placebo at improving NASH symptoms without worsening fibrosis. At that time, Genfit opted against discussing the full implications of the setback, telling investors it needed time to get “more clarity” about what the data mean for its ambitions to bring elafibranor to market.

Genfit provided more details in its first-quarter results late Monday. The French biotech said the data do not support filings for approval in the U.S. or Europe, but, with a review of the results still ongoing, it is not yet in a position to stop the phase 3.

Before pulling the plug, Genfit wants to figure out why the placebo response rate was higher than it expected and whether elafibranor has a future in subpopulations of patients. Genfit expects to share details of the next steps for elafibranor in the fall.

The continuation of the phase 3 has implications for Genfit’s finances. In a statement, Genfit said that as “no immediate decision can be taken regarding the future of the RESOLVE-IT trial,” it will need to continue making payments related to CRO activities and patient monitoring. Genfit added that it cannot “abruptly” stop patient monitoring “due to ethical and regulatory concerns.”

Genfit suggested a decision to stop the trial could be made in the fall, but “given the size and complexity of the study” it expects to face residual costs and warned the full impact of the action on cash burn will only become clear “several months” later.

At first glance, Genfit looks well equipped to weather the costs. The biotech ended March with €252 million ($276 million) in the bank having burnt through close to €25 million over the previous three months. 

The financial situation is potentially complicated by the debt Genfit took on in 2017. To fund the phase 3 trial and other activities, Genfit issued €180 million in convertible bonds in 2017. The bonds, which are convertible into new shares and exchangeable for existing shares, are due to be redeemed in October 2022. Converting the bonds into new shares will cause equity dilution.  

While working to figure out the future of the RESOLVE-IT trial, Genfit is “reviewing all non-essential expenses” with a view to cutting costs. The review has identified marketing and commercialization activities related to elafibranor as the first areas to get the chop.