Download degrassi ellie nash

Deutsche Bank
Markets Research
Rating
Company
Hold
Genfit
...
27 March 2015
Recommendation
Change
North America
United States
Health Care
0
Reuters
GNFT.PA
Bloomberg
GNFTFP
Exchange Ticker
PAR
GNFT
Biotechnology
Price at 26 Mar 2015 (EUR)
50.85
Price target
40.00
52-week range
Golden data set looks mixed w/ few
catalysts- DG to Hold
69.09 - 19.74
Alethia Young
Research Analyst
(+1)212 250-5751
[email protected]
We view GOLDEN trial readout as mixed; DG to Hold, 40 euros
Genfit's NASH trial missed on its primary endpoint due to high placebo rate in
early NASH patients. When corrections were made for baseline severity and
site heterogeneity by a standard stat analysis, the trial was significant. No
histological benefit in fibrosis was seen at 52 wks which was surprising to us.
We think Intercept's OCA data looks stronger on fibrosis. We have lowered
probability of success to 40% from 60% and our market shared in the adv.
fibrosis population from 50% to 25% for GFT-505. We feel today's data leaves
many questions around the efficacy, but does support moving to Ph3 with
slightly higher risk.
We think more detailed liver histology likely in the publication will help clarify
concerns. Based on data today, we don't know what conclusion to draw
On the call, we didn't get real color on how GFT-505 impacts the key measures
of liver histology (fat, inflammation, and ballooning). A key question from
investors is around how did the top-line data perform before the stats analysis
was conducted. We are more focused on histology especially ballooning
which we believe is a key parameter that must be lowered in NASH.
We think the publication will provide more answers around this top-line
readout, but we also see risk based on what we learned today
Genfit saw an abnormally high rate of placebo response of 57% in early NAS
patients (NAS score of 3). We do think that typical placebo response in NASH
trials is a bout 20% from our checks which was what they saw in NAS>=4 in
the sub-analysis. Genfit conducted a sta tistical correction for baseline severity
and site heterogeneity. There were some promising signs of efficacy when
one looks from the statistical adjustment.
Though the publication and color from regulators may provide some clarity, we
think some questions will remain unanswered until Ph3 readout
Based on high placebo rate, we think the trial was confounded and made it
hard to show the true potential of GFT-505. Key catalysts now remain:
detailed analysis from the publication like early 2H15 and more color from
regulators in 2H15 on PhS design. We may not have full clarity on the activity
of GFT-505 until the Ph3 reads out in end of '17 (our assumption). We think
the visibility is lowered around this asset's positioning in NASH. However, we
note even a small piece 25% share of a big NASH market suggests a
blockbuster drug.
Downgrade to Hold as we wait to learn more about GFT-505. Valuation & risks
Because the design was confounded, we find it very hard to draw conclusions
based on today's dataset. Beyond publication and color from regulators on PhS
design, we see limited upside catalysts to the Genfit story. We still think that
GFT-505 has a place in the NASH story, but we think that we have a better
grasp on OCA s profile especially NASH fibrosis. The TP is being lowered to 40
euros because the co released data on a highly binary event for their only drug
in the clinic We use a probability adjusted DCF analysis. We extend our
estimates to 2035 and apply a 1 4% discount rate and -100% terminal growth
rate inline with biotech peers of similar size and clinical risk profile.
Robyn Karnauskas
Research Analyst
(+1) 212 250-7591
[email protected]
Ellie Merle
Research Associate
(+1)212 250-2011
[email protected]
| Key changes
Rating
Buy to Hold I
Price target
110.00 to 40.00
1
-63.6%
Source: Deutsche Bank
| Price/price relative
75
60
45
30
15
3/12
9/12
3/13
9/13
3/14
9/14
S&P 500 INDEX (Rebased)
Performance (%)
Absolute
S&P 500 INDEX
1m
3m
12m
-19.1
39.0
78.2
-2.6
-1.6
11.0
Source: Deutsche Bank
Downside risks: worse than
expected efficacy and a
tough Ph3 design. Upside
risks: more clarity on efficacy
at publication
Deutsche Bank Securities Inc.
Deutsche Bank does and seeks to do business with companies covered in its research reports. Thus, investors should
be aware that the firm may have a c onflict of interest that could affect the objectivity of this report. Investors should
consider this report as only a single factor in making their investment decision. DISCLOSURES AND ANALYST
CERTIFICATIONS ARE LOCATED IN APPENDIX 1. MCI (P) 148/04/2014.