In a June 25 research note, H.C. Wainwright & Co. analyst Ed Arce reported that GENFIT SA (GNFT:NADSAQ; GNFT:EURO) outlicensed elafibranor for $228 million for development, registration and marketing in the Greater China area for nonalcoholic steatohepatitis (NASH) and primary biliary cirrhosis (PBC).
GENFIT entered into the licensing and collaboration agreement with Terns Pharmaceuticals Inc., a private company with locations in San Mateo, Calif., and Shanghai, China, that is targeting chronic liver diseases such as NASH, liver fibrosis and hepatocellular carcinoma (HCC).
Arce reviewed the terms of the agreement. Terns has the exclusive right to advance elafibranor in NASH and PBC. Should it commercialize the drug, GENFIT will earn royalties in the mid-teens on net sales.
Terns is to pay GENFIT $35 million up front as well as up to $193 worth in clinical, regulatory and commercial milestone payments. "The upfront payment from Terns serves to extend GENFIT's cash runway by several months (more than a quarter)," Arce pointed out.
Both companies will conduct joint research and development projects in liver disease, concentrating on potential combination therapies for NASH of elafibranor along with one or more of Terns' proprietary compounds. Terns currently has at least five of them targeting NASH. "Any resulting therapeutic treatment from this collaboration may potentially be commercialized worldwide," noted Arce.
The analyst commented that "the deal checks a lot of the right boxes" in terms of Terns being a good match for GENFIT. Specifically, GENFIT selected Terns as a partner for a handful of reasons. Terns is an innovative company solely focused on NASH, has a broad pipeline in that indication and sees the value in combination NASH therapies. The company has a presence in both Northern California's biotech center and in China and is backed by "a number of savvy, well-known biotech-specialist investors, including Orbimed, Lilly Asia Ventures, Vivo Capital and Decheng Capital."
H.C. Wainwright has an Outperform rating and a $72 per share target price on GENFIT. The company's stock is trading currently at around $19.87 per share.
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Disclosures from H.C. Wainwright & Co., GENFIT S.A., First Take, June 25, 2019
Investment Banking Services include, but are not limited to, acting as a manager/co-manager in the underwriting or placement of securities, acting as financial advisor, and/or providing corporate finance or capital markets-related services to a company or one of its affiliates or subsidiaries within the past 12 months.
I, Ed Arce, certify that 1) all of the views expressed in this report accurately reflect my personal views about any and all subject securities or issuers discussed; and 2) no part of my compensation was, is, or will be directly or indirectly related to the specific recommendation or views expressed in this research report; and 3) neither myself nor any members of my household is an officer, director or advisory board member of these companies.
None of the research analysts or the research analyst’s household has a financial interest in the securities of GENFIT S.A. (including, without limitation, any option, right, warrant, future, long or short position).
As of May 31, 2019 neither the Firm nor its affiliates beneficially own 1% or more of any class of common equity securities of GENFIT S.A.
Neither the research analyst nor the Firm has any material conflict of interest in of which the research analyst knows or has reason to know at the time of publication of this research report.
The research analyst principally responsible for preparation of the report does not receive compensation that is based upon any specific investment banking services or transaction but is compensated based on factors including total revenue and profitability of the Firm, a substantial portion of which is derived from investment banking services.
The Firm or its affiliates did receive compensation from GENFIT S.A. for investment banking services within twelve months before, and will seek compensation from the companies mentioned in this report for investment banking services within three months following publication of the research report.
H.C. Wainwright & Co., LLC managed or co-managed a public offering of securities for GENFIT S.A. during the past 12 months.
The Firm does not make a market in GENFIT S.A. as of the date of this research report.
H.C. Wainwright & Co., LLC and its affiliates, officers, directors, and employees, excluding its analysts, will from time to time have long or short positions in, act as principal in, and buy or sell, the securities or derivatives (including options and warrants) thereof of covered companies referred to in this research report.
