Deal Reporter - Genfit could attract takeover interest after Phase IIb result
French biotechnology company Genfit [EPA:GNFT] could attract significant takeover interest in March if its lead pipeline product GFT505 produces favourable Phase IIb data, said three sector bankers.
Genfit’s involvement in treating non-alcoholic steato-hepatitis (NASH) is the main draw for a potential buyer and GFT505, an oral treatment for the disease, could deliver promising data in March, said one of the bankers. It would be difficult for buyers to take serious interest before it is known whether GFT505 can pass on to Phase III trials, said a second banker.
Genfit declined to comment.
Although Genfit’s main competitor Intercept Pharmaceuticals [NASDAQ:ICTP] is further along in clinical development with a Phase III ready NASH candidate, obeticholic acid (OCA), it has been clouded by a safety signal observed in its Phase II program, said a liver-disease expert. Intercept's Phase II trial named FLINT demonstrated promising efficacy, with improvement in liver disease among 45% of treated patients, but was also associated with elevations in LDL, or "bad" cholesterol.
So far, GTF505 has a very clean safety profile, the liver disease expert said. The FLINT trial "set the bar" for efficacy, and GFT505 has a good chance of matching that efficacy, he added.
Genfit, which has a market capitalization of EUR 1.2bn, would interest existing large-cap players in liver disease such as AbbVie [NYSE:ABBV] and Merck [NYSE:MRK], said the bankers. Gilead [NASDAQ:GILD] could potentially be interested, said the first and second bankers. But an analyst following Genfit questioned whether Gilead would be interested in another NASH acquisition. Gilead announced in the beginning of January that it would acquire privately-held Phenex Pharmaceuticals AG, which is in the early stages of developing a treatment for NASH.
As NASH is a disease that is present in obese patients and those with diabetes, Genfit could also be an attractive target for companies who also operate in these spaces, such as Eli Lilly [NYSE:LLY] and Novo Nordisk [SWX:NOVOB], said the analyst. Sanofi [EPA:SAN], which has a small stake in Genfit, could also be interested, said the second and a third banker. The fact that both companies are French should not be underestimated, the third banker added. Genfit has a longstanding research partnership with Sanofi.
Players in the gastro-intestinal space, such as Shire [LON:SHP] could potentially look at Genfit as well, said the first banker. The third pointed out, however, that Shire has been focused on rare diseases. But, with NASH affecting 12% of the US population, this disease could potentially be a very large market that any major pharmaceutical buyer could tap into, said the second banker. Pfizer [NYSE:PFE], for example, would be interested should GFT505 prove to have blockbuster potential, said the third banker.
The liver disease expert, who is an industry consultant, said at least four large pharmaceutical companies have expressed interest in acquiring NASH assets, to his knowledge. Any company that doesn't have an in-house NASH pipeline product would likely be interested in Genfit, he continued.
One question is whether Genfit management would be willing to sell, said the analyst. Co-founder and CEO Jean-Francois Mouney is the company’s largest shareholder through his holding in SAS Biotech Avenir. Since July, he has sold down his stake incrementally. Biotech Avenir stated on 4 November that it held 7.43% of the capital and 13.06% of the voting rights in Genfit.
Both the first banker and the analyst foresaw the prospect of a rights issue if Genfit does not sell itself and GFT505 successfully moves on to Phase III. The size of the rights issue will depend on the money needed to set up the trial, they said.