Genfit
New Coverage: Hedge Funds Buy Into Genfit’s €180M Convertible Bond as Company Prepares to Propose Adjustments to Notes Terms at Year-End; Advisors Circling
Tue 11/03/2020 07:18 AM
Relevant Documents:
H1 Report
Genfit Elafibranor Press Release
H1 Press Release
2019 Annual Results
Genfit Corporate Presentation
Hedge funds have bought into the debt of French pharmaceutical company Genfit as the price of its €180 million convertible bond has slumped after the group abandoned the late-stage trial of its elafibranor drug, which was designed as a treatment for a disease called non-alcoholic steatohepatitis (NASH), sources told Reorg. Continue reading for the EMEA Middle Market team's coverage of Genfit, and request a trial to access reporting and analysis on hundreds of other credits.
Genfit is working with White & Case to advise on various options for the company while financial advisors are monitoring the situation.
The company said it plans to propose an adjustment of the terms of notes to the holders of its €180 million OCEANE convertible bond, due Oct. 16, 2022, and its shareholders. Genfit aims to begin this process toward the end of the year. The convertible notes are now quoted in the low teens at around 12, down from the high 20s in May, sources said.
On May 12, Genfit’s share price tumbled 65% to €6.9 after the company said elafibranor “did not demonstrate a statistically significant effect on the primary endpoint of NASH resolution without worsening of fibrosis,” according to a release. Shares are now trading at €3.30 for a market capitalization of €129.5 million.
On July 22, the company announced the discontinuation of the “RESOLVE-IT Phase 3 clinical trial” of elafibranor in adults with non-alcoholic steatohepatitis (NASH) and fibrosis. It said that the investment needed to continue the trial was not justified, as it was unlikely to provide results that would be sufficient to support elafibranor for registration in NASH in the U.S. and Europe.
It added that it aims to accelerate its cost-saving plan, and to focus its efforts on developing the elafibranor development in PBC, and the commercial growth of NIS4, for NASH diagnostics. “PBC is an exciting opportunity with the market for second line therapy estimated to potentially reach $1.5 billion by 2035, and remains an indication with a high unmet medical need, the company said. “With the NIS4 program, Genfit plans to develop efficient and cost-effective non-invasive solutions, to address this growing need,” it added.
In the first half of the year, the group reported an operating income of €5.9 million compared with €5.3 million in the preceding half year. Operating expenses were €55 million of which 67% represented R&D expenses. This compares with €51.3 million in the same time period in 2019. Cash burn from operating activities amounted to €53 million in the first half.
The group had €226 million in cash as of June 30, and the company said it does not believe it is exposed to liquidity risk within the next 12 months.
The company announced a corporate restructuring plan to reprioritize capital for essential operating activities. Genfit aims to reduce cash burn by more than 50% to about €45 million annually by 2022. The restructuring plan envisions a reduction of the workforce by 40% to align the company size to the new scope of activity.
An overview of the company’s liabilities is below:
Genfit is a late-stage biopharmaceutical company dedicated to the discovery and development of innovative therapeutic and diagnostic solutions in metabolic and liver-related diseases where there are considerable unmet medical needs.
The company will publish its revenue and cash position as of Sept. 30 on Nov. 16.
--Luca Rossi, Aurelia Seidlhofer
H1 Report
Genfit Elafibranor Press Release
H1 Press Release
2019 Annual Results
Genfit Corporate Presentation
Hedge funds have bought into the debt of French pharmaceutical company Genfit as the price of its €180 million convertible bond has slumped after the group abandoned the late-stage trial of its elafibranor drug, which was designed as a treatment for a disease called non-alcoholic steatohepatitis (NASH), sources told Reorg. Continue reading for the EMEA Middle Market team's coverage of Genfit, and request a trial to access reporting and analysis on hundreds of other credits.
Genfit is working with White & Case to advise on various options for the company while financial advisors are monitoring the situation.
The company said it plans to propose an adjustment of the terms of notes to the holders of its €180 million OCEANE convertible bond, due Oct. 16, 2022, and its shareholders. Genfit aims to begin this process toward the end of the year. The convertible notes are now quoted in the low teens at around 12, down from the high 20s in May, sources said.
On May 12, Genfit’s share price tumbled 65% to €6.9 after the company said elafibranor “did not demonstrate a statistically significant effect on the primary endpoint of NASH resolution without worsening of fibrosis,” according to a release. Shares are now trading at €3.30 for a market capitalization of €129.5 million.
On July 22, the company announced the discontinuation of the “RESOLVE-IT Phase 3 clinical trial” of elafibranor in adults with non-alcoholic steatohepatitis (NASH) and fibrosis. It said that the investment needed to continue the trial was not justified, as it was unlikely to provide results that would be sufficient to support elafibranor for registration in NASH in the U.S. and Europe.
It added that it aims to accelerate its cost-saving plan, and to focus its efforts on developing the elafibranor development in PBC, and the commercial growth of NIS4, for NASH diagnostics. “PBC is an exciting opportunity with the market for second line therapy estimated to potentially reach $1.5 billion by 2035, and remains an indication with a high unmet medical need, the company said. “With the NIS4 program, Genfit plans to develop efficient and cost-effective non-invasive solutions, to address this growing need,” it added.
In the first half of the year, the group reported an operating income of €5.9 million compared with €5.3 million in the preceding half year. Operating expenses were €55 million of which 67% represented R&D expenses. This compares with €51.3 million in the same time period in 2019. Cash burn from operating activities amounted to €53 million in the first half.
The group had €226 million in cash as of June 30, and the company said it does not believe it is exposed to liquidity risk within the next 12 months.
The company announced a corporate restructuring plan to reprioritize capital for essential operating activities. Genfit aims to reduce cash burn by more than 50% to about €45 million annually by 2022. The restructuring plan envisions a reduction of the workforce by 40% to align the company size to the new scope of activity.
An overview of the company’s liabilities is below:
Genfit is a late-stage biopharmaceutical company dedicated to the discovery and development of innovative therapeutic and diagnostic solutions in metabolic and liver-related diseases where there are considerable unmet medical needs.
The company will publish its revenue and cash position as of Sept. 30 on Nov. 16.
--Luca Rossi, Aurelia Seidlhofer
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