Intercept Vs. Genfit: Who Is Winning The NASH Race?
SummaryGenfit and Intercept are leading the NASH race.Scientifically not much to choose between the two.We give a slight edge to Intercept because of Genfit’s decision to commercialize elafibroanor all
“Since you're indicating in this recent articlethat you will write another piece of analysis shortly, we would like to draw your attention to a crucial element that you seem to have missed about our future commercialization strategy. Indeed, as mentioned consistently over ime and here (no link) again recently, GENFIT's intention with elafibranor is to generate a double source of income, retaining rights of elafibranor in some territories, but also reserving a significant share of the market for future partnerships. Would therefore be great if you could update your last article, considering that the current version provides quite misleading information to your readers. If you're interested, we can also propose a quick catch-up call before you write your next article, to make sure you have an updated picture on other key elements of our comprehensive program in liver and metabolic diseases which aims at addressing challenges in NASH and PBC treatment, NASH diagnosis, and NASH disease awareness.“
After Gilead’s (GILD) Hepatitis-C franchise met with phenomenal success and equally phenomenal decline, focus shifted to a new area in the liver space - non-alcoholic steatohepatitis or NASH as it is more commonly known now. NASH is the next stage of non-alcoholic fatty liver disease or NAFLD and is characterized by liver damage and inflammation. NASH, if left untreated, eventually leads to advanced fibrosis, cirrhosis of the liver and ultimately hepatocellular carcinoma or HCC. The diagram below gives the different stages of the disease.
Interest in the NASH space increased after a 2014 report from Deutsche Bank noting that the treatment market could be eventually worth more than $30 billion. That is from 0 to more than $30 billion in probably a decade. NASH was previously ignored by big biopharma as well as biotech companies. The reason was that up until a few years ago, NAFLD was seen as an effect of diabetes and therefore no treatment was developed for this disease.
While it is true that obesity and type 2 diabetes do have a role to play in the advancement of the disease, recent researchhas shown that the disease can also occur in a significant proportion of NAFLD patients without diabetes. Recent research combined with the success of Gilead’s Hep C franchise and the Deutsche Bank report has therefore sparked significant interest in the NASH space.
Not surprisingly, Gilead was initially seen as being a key player in the NASH space. However, what we have witnessed is intense competition and Gilead in fact is not even in the forefront. It must be noted here that Gilead has adopted a different strategy in the NASH space and is prepared to give up the chance to get to the market first. But this article is not focused on GILD’s NASH pipeline.
It is focusing on the two companies that are unanimously seen as being at the forefront of the NASH treatment development. These companies are Intercept (ICPT) and French biotech Genfit (OTCPK:GNFTF). It has been a neck-and-neck race between the two companies, however, we believe that Intercept has the edge in the NASH treatment market as of now. And the edge is not based on the science.
Intercept’s OCA vs. Genfit’s elafibranor
Intercept is evaluating its obeticholic acid (OCA) in NASH. An agonist of farnesoid X receptor (‘FXR), OCA is already approved in the U.S. for the treatment of primary biliary cholangitis (‘PBC). OCA is marketed as Ocaliva in PBC. Since approval, Ocaliva has seen strong uptake despite some safety concerns.
Genfit’s elafibranor on the other hand is an agonist of the peroxisome proliferator-activated receptors alpha and delta. Elafibranor has shown to improve insulin sensitivity, glucose homeostasis, and lipid metabolism.
Both elafibranor and OCA are currently in Phase III development. And with the changes in the definition of NASH resolution (ballooning = 0; inflammation = 0-1; and steatosis = 0-3), we can now have an apple to apple comparison between the two during the Phase III trials, Genfit’s RESOLVE-IT and Intercept’s REGENERATE. The path to development has not been easy for two the companies. Given the vast number of NASH trials now in progress, enrollment has become a major issue.
Both Intercept and Genfit (and in fact all Phase II and Phase III trials) have faced delays. The delay has pushed data readout to 2019 for both companies. Intercept in fact has gone and even reduced the number of patients it is enrolling for its Phase III trial. The patient reduction has allowed Intercept to cover some lost ground (a smart move in our opinion).
Another smart thing ICPT has done is made changes to its endpoints. The earlier primary endpoint was fibrosis improvement and NASH resolution under new modified definition. The “and” has now been replaced with an “or,” which we believe lowers the bar somewhat. So after all the chopping and changing, here is how the two trials look like.
Elafibranor
Who has the edge?
Scientifically there isn’t much to choose between elafibranor and OCA although Genfit bulls point to safety issues with OCA. The letter from ICPT last year to doctors regarding serious adverse events made their case stronger. But the serious adverse events were due to PBC patients being administered higher than recommended dose of OCA (something we discussed in an article on Seeking Alpha last year).
We believe the market overreacted to the issue without looking at the details. In fact, the FDA has not issued a boxed warning or label change for OCA until now and we do not expect that to happen. This in-vitro study also highlights the fact that efficacy wise there is not a lot of difference between the two therapies.
As of now, it is hard to say who has the edge in the NASH race. But if we had to stick our neck out, we would give an edge to Intercept. And the reason is Genfit’s decision to go all alone in commercializing elafibranor. At least that is the case as of now. The fact that Intercept already has an established liver franchise gives it a major edge in the NASH market. This is a huge market with a diverse set of prescribing physicians, and marketing outreach and sales can require big funding outlay. ICPT is stronger in that area.
This is not to say that we are bearish on Genfit. But we do think Genfit has missed a trick by not finding a commercialization partner for elafibranor. In terms of valuation, both companies look quite attractive right now. Intercept has not recovered since the FDA letter regarding patient deaths with OCA.
Genfit on the other hand has failed to take off despite getting some visibility in the U.S. In the end, if we had to make a recommendation, we would go for Genfit for investors with a higher risk appetite. If Genfit succeeds, the upside here could be more. Intercept on the other hand would be a safer bet for investors that are slightly risk averse.
Disclosure: I am/we are long GILD.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.