Half Year 2021 Genfit SA Earnings Call
Good day, everyone and welcome to the Gen set first half year, 2021 financial results and corporate update call.
Today's call is being recorded at this time I would like to turn the conference over to Stephanie Magner, Chief Compliance Officer VP International Legal Affairs. Please go ahead.
Thank you and good afternoon, everyone. Thanks for joining us.
Our 2021 half year financial results call. We just issued a press release, providing our 2021 and half year results.
Press release can be accessed on our website at IR <unk> com.
During our call, including during the Q&A session will be making forward looking statements with respect to Jensen.
Including those within the meaning of the private Securities Litigation Reform Act of 1995 buildings.
Looking statements regarding our new strategy and objective.
Size and relative accessibility of the PBC market anticipated timelines or dates for commencement of clinical studies as well as clinical data released in particular pardon me the trial.
Probability for successful would result in a rate of trial regulatory approvals expected commercial performance of our product candidates and our provisional cash burn.
The company believes these statements are based on reasonable expectations and assumptions of the company's management.
These forward looking statements are subject to numerous known and unknown risks and uncertainties, which could cause actual results to differ materially from those expressed in or implied or projected by the forward looking statements.
Risks and uncertainties include among other things.
The uncertainties inherent in research and development, including in relation to safety Biomarkers.
Aggression on the enrollment and timing of data release at outcomes as our ongoing and planned clinical trials.
Are you an approval by regulatory authorities of our drug and diagnostic candidates impacts of the ongoing COVID-19 pandemic.
Change rate fluctuations and the company's continued ability to raise capital to fund its development.
So all of those risks and uncertainties discussed or identified in the company's public filings with the M S and that's useful.
These forward looking statements speak only as of the date of this broadcast.
Other than as required by applicable law. The company does not undertake any obligation to update or revise any forward looking information or statements whether as he was all the new information future events or otherwise.
Joining me on this call are called pre Zhang our CEO and Tom are back.
CFO following the prepared remarks, we'll open up the call for questions that will be addressed by general management.
Limit yourself to one initial question to allow time for others.
Ill now turn over the call to our CEO Pascal Credo.
Thank you Stephanie and good afternoon, everyone. Thank you for joining us to discuss <unk> 2021 media results.
It has been a busy first semester and I am pleased to report that we have made important progress on a number of phone since we last spoke earlier this year.
But before I update you on where we are we have a program I'd like to turn the call over to Thomas will provide you with a short overview on our financial results for the first semester.
So starting with our cash position at the end of June 2000, 21000 feet.
104, 4 million euros in cash and cash equivalents.
Compared to 171 million euros that at the end of 2020.
This resulted essentially from the $52.0 million euros spent in January for the partial buyback of the Austin bowls.
As discussed position also included a non dilutive that state guaranteed loan amounts and amounting to 11 million euros obtained in June.
Regarding the partial buyback of the European bonds in January Genesis announced the success of the partial buyback over an amendment of the terms of its symbols.
The renegotiation of the bond that has enabled the company to differ Dep final maturity date from October 2022 to October 2025.
And to reduce its principal amount by 86 million euros, using just 47.5 million euros of cash.
The conversion ratio went from one ocean.
For one share to one ocean two for $5 five shares.
Our convertible debt has been further reduced due to the conversions made by bondholders. After the renegotiation. This conversions were mainly concentrated.
In January through March and according to the latest count at the end of August 2021, the number of outstanding Ocean bonds went from.
6 million to $81081, two 1 million or 923 six.
162.
And the principal amount of the convertible debts decreased from 180 million euros to $64.0 million euros.
Regarding the non dilutive state guaranteed loan of 11 million euros.
The loan was granted in June in the context of the COVID-19 pandemic.
By a syndicate of four French banks, it is 90% guaranteed by the French government.
This loan has an initial term of one year with repayment options up to six years.
Also in July after the first half period.
The first half Yep, sorry, Gen fifth obtained an additional loan of 2 million euros from BP falls under similar terms, including the 90% guarantee by the French government.
Note that this amount is not including in the June 30th cash position.
Now moving to the operating income in the first half of 2021, our operating income amounted to $7.0 million euros, compared with $14.0 million euros in the first half of 2020.
This essentially came from the research tax credit of 3.2 million euros compared to $7.0 million euros for the first half of 2020, which is in line with the reduction of the expenses eligible for the research tax credits.
On the operating expenses side, the operating expenses amounted to 33 million euros in the first half of 2021, compared with 55 million euros in the first half of 2020.
Of which 70% represented R&D expenses R&D expenses decreased from $45.0 million euros.
In the first semester.
From the sorry from $45.0 million euros in the first half of 2020.
To $24.0 million euros in the first half of this year, mainly due to the.
Discontinuation of the resolve it study.
The marketing and market access expenses decreased from $14.0 million euros in the first half of 2020.
208 million euros in the first of 2021 do.
Due to the discontinuation of the pre commercialization work for a lot of people I know in Nash.
The general and administrative expenses also decreased mainly due to the implementation of the cost saving plan announced in September 2020.
They're worried about labor costs there.
Total employee expenses amounted to eight 6 million euros in the first half of 2021 down from $13.0 million euros in the first.
Of 2020.
This resulted from the significant reduction in head count following the workforce plan implemented in.
In late 2020.
The financial results amounted to $42.0 million euros in the first half of 2021, compared with 4 million euros in the first half of last year.
Most importantly, this included a one off financial income of $41.0 million euros corresponding to the repurchase bonus from the partial buyback of the ocean bonds in January.
The net income of <unk> for the first half of this year amounted to 9 million euros, including these one of repurchases bonus.
Compared to a net loss of 53 million for the first half of 2021.
Overall, we are on track with our cost control plan year over year, our head count decreased by 40%, our operating expenses decreased by 40% as well.
Our cash used for operating activities decreased by 39% from.
45.
$49.0 million euros in the first half of 2020 to $35.0 million euros in the first half of 2021.
Our cash burn forecast for both years 2021, and 2022 remains in line with our previous communication that is accumulative 120 million euros approached EBIT clean excluding the cash used for the partial buyback of the ocean bonds.
Finally in our projections, we now take into account the lounge of the new R&D programs announced in May as well as the anticipation of regulatory preparation expenses in connection with the <unk> development program.
I now turn the call over to Pascal for the update on our programs progress and perspectives.
Thank you Thomas.
Let's just start with one main program for development of our drug candidates.
In primary biliary cholangitis or PBC, we will phase III relative trial.
The key there is obviously the dynamic of patient recruitment and we are pleased to report that it trends broadly in line with our expectation.
The context is challenging because of the COVID-19 pandemic is still active more silver than we anticipated originally.
This is due to vaccination rates that are lower than what we had estimated book in the U S where it has plateaued a bit and also in some areas like Latam, where it is still lagging. However, we had built in was difficulties into our plans and the measures we have taken to facilitate patients enrollment enrollment in this environment.
They've been well received and appear to be working.
So we foresee completion of patient recruitment.
First quarter of 2022, we say this with some degree of confidence.
The amount for last patient enrolled is actually mid January.
Domestic scenario.
March four pessimistic scenario so in any case during.
During the first quarter of 2022, so based on this timing, we think we should be announcing top line data readout between the end of the first quarter and the middle of the second quarter of 2023.
Our regulatory group has done a pretty good job of revising and optimizing the timeline to prepare the dossier and we now anticipate based on the latest estimate, but we should be filing assuming of course that the phase III successful roughly six months. After the top line result, so that is to say as early as Q3 two.
<unk> thousand 20, Threep in the optimistic scenario. So in any case, we know feels that if our phase III results.
Or a positive for potential approval would take place in the second semester of 2024.
So we continue to be very enthusiastic about this program.
We feel strongly that the phase III data, which we detailed in a peer reviewed article published in February and withdraw all of it but theology is robust and very encouraging.
We believe that the commercial opportunity is clear our research, but we shared earlier this year during our PBC data indicates that this market could be worth over $1 billion.
We expect to launch in the second half of 2024.
And we also believe based on our market research, which we could have.
Very desirable product profile, so to conclude I will say that we feel quite good about the potential of a few runoff in PBC and progress.
According to what we are seeing with the phase III. Despite the challenging context and we are excited that we are now getting closer to the next caller. Please.
Let's talk now about diagnostic and all this for business and here, we are a more nuanced picture on the one hand, we are making good progress on the R&D side and after the publication in the lancet last year showing this four performance relative to over technologies to identify Nash Nash patients.
With advanced fibrosis, we presented new data in June at the international liver Congress, but highlighted the usefulness of need for technology to identify at risk patients with and without the two diabetes.
As we continue to generate more compelling data, we expect to see more communication and communication later this year, but we will continue to strengthen our growing body of evidence supporting the use of this technology.
Identifying cause Nash patients that are most at risk we.
We also see continuous interest amongst sponsors of Nash clinical trials to use this technology in the studies and we believe it is a positive signal regarding the future use of its F shoot versus.
Products make it to the market eventually.
On the yoga and we are seeing a slow uptake of Nash next which is where this fall based product that is sold by labcorp in the U S. After a few months of commercial availability it.
It is obviously still early days, but the lack of the current lack of reimbursement and most importantly, the lack of approved therapies are two major hurdles for the development of a product.
We will obviously continue to monitor progress over lunch and we will update you when we have a little bit more time into market to start drawing meaningful conclusion.
So to conclude on the diagnostic I will say that we remain convinced that there is a stronger need in the market for tool that easy to use noninvasive and cost effective to reliably identify at risk Nash patients, but at the end of the day, we know that she has real products will eventually make it to the market.
Patient identification.
We will be absolutely key to commercial success.
However, it remains to be seen is how soon.
Diagnostic market will materialize.
Let's now talk about the pipeline.
May this year, we outlined our new R&D strategy and our move from a less centric research to one that was focusing on unmet medical needs in ACL F and of course, the tick diseases. We now have the first tangible results of this new approach in ACL F or acute on chronic liver failure.
Unmet need market with an estimated 180000 patients in the U S for which phase currently no approved treatment.
We're moving forward with a phase one trial evaluating <unk> T Z following extremely encouraging preclinical results. We expect the first results to come as early as Q3 next year and we hope to be able to confirm MTS potential in a market that is currently estimated at about $4 billion a year in the U S alone.
We are also starting a phase II proof of concept study evaluating <unk> in primary sclerosing cholangitis or PSC. This is a severe COVID-19 static disease, we have about 50000 eligible patients in the U S and EU.
And currently there are no therapeutic options today.
We think that ultra datasets, we've had a few bundle provides confidence starting with POC study to assess its potential for future development.
This study should readout by the end of next year.
And finally, we have decided to start a third study that is exploring the use of a fever on PBC patients who are treatment nave.
The study, we will pay close attention to quality of life indicators. As we think this is an absolute must from a patient perspective in particular, we will be looking at the impact even though it.
Might have on pruritus fatigue.
And over indicators like like patient quality of sleep.
This study should read out in early 2023.
So we are excited to concentrate our efforts on re therapeutic areas, where we believe there is a strong unmet medical need.
And where we believe also we have the greatest chances of success, we've always said.
We are hopeful that we will see results, which will be supportive of future development and that's coming in into near term.
Since we should see the first results of the.
Let's find a year from now as I was saying Q3 next year and then we expect a steady stream of data after that like roughly every two to three months.
Last but not least I want to highlight again, the two important financial items that were such the upon by Thomas earlier.
First the successful outcome of the convertible debt restructuring as all of us to regain some leeway. This was critical for Genesis and a top priority as we negotiated return from 'twenty to 'twenty one.
Last year, we had 180 million by October 22, and no we are less than $57 million due.
<unk> before October 25, so this will give us ample time to leverage or PBC data.
We also have benefited from the non dilutive financing of the state guaranteed loan for $11 million in June and an additional $2 million in July.
That additional 2 billion not being included June 30 cash position.
And again that will help us to get more financial visibility.
And then as Thomas has indicated the efforts we highlighted last year didn't materialize and we delivered both on our head count objective and on a cash savings objective. So we can therefore confirm that we are in line with our operational cash burn objective of $120 million over the 'twenty, one 'twenty two period and this.
Is achieved while funding our new R&D efforts and additional studies.
So now before I open the floor to your question I also would like to take a step back and think that GNC teams for what they've accomplished.
Since we can before you almost exactly a year ago to highlight what was on new strategy. Following the disappointment of the resolve its results.
Alright with that operator, let's open for Q&A.
Thank you.
I'd like to ask a question. Please press star followed by the number one on your telephone keypad. If you are calling from a speaker phone. Please make sure. Your mute function is often share your signal can reach our equipment again start wanted to ask a question and first we'll go to Thomas Smith from SBB Leerink. Your line is open.
Hey, guys. Thanks for taking the questions.
Just a couple of tomorrow and first of all on the.
The <unk> trial can you give us any additional color on some of the current enrollment trends any sense.
Quantitatively of how far along you are in terms of enrollment to date and then you mentioned, taking some measures to try to mitigate some of the COVID-19 related enrollment issues can you walk us through some of the steps you're taking here are you opening more study sites or expanding your patient outreach efforts or just kind of walk us through some of the steps you're taking to mitigate some of it.
The enrollment challenges.
Hello, Matt.
Carol.
Yeah, that's okay. Thanks, Pascal and Thomas Thank you very much like your question and certainly.
As Pascal indicated we're very much aligned with our expectations.
Well, our tests and I. Thank you.
Probably seen some of the information in terms of the number of sites have been activated on the clinical trials Gov website, and certainly it's a very dynamic situation as we continue to have new sites and new country economy activated while at the same time balancing what remains.
Some uncertainty and Covid pandemic all of this taken together, however, where we're very happy with the progress that we have achieved and we use.
For modeling tools to take into consideration available information to help us better understand when we may anticipate.
The completion of enrollment and as Pascal said, we've got a good level of confidence that we're aiming to achieve that by the first quarter of 2022 and.
And certainly looking for opportunities that we can continue to support our clinical site as it pertains to the evolving situation with the pandemic and we.
Like many others.
In clinical trials have incorporated.
The ball methodology to permit on site lab testing follow up safety by telephone the possibility of shipping study drug to patients Tom so while maintaining maximum flexibility to better enable patients to be able to participate.
To pay that and to better support our study sites in the process.
And just to add to what Bill just said I mean, the so called Concierge service.
Service that we've added to make life of.
For patient ease.
Year.
I mean, they are not free but they've been really well received by both.
<unk> and the patience and clearly they appear to be working and we're seeing a nice uptake in.
And we believe that those services.
I've been a you know auto thankful for that.
Okay got it yeah that makes sense. Thanks for the for the insights there and then maybe lastly on.
Patient enrollment if you could just speak a little bit more broadly I guess some of the other potential headwinds to enrollment I mean, I think we all understand some of the enrollment challenges with COVID-19, but maybe can you just talk a little bit about how much competition, you're seeing for the second line of PBC patients.
Between the commercially available option in Ocala, and you obviously have a competitor who is also enrolling a phase III pivotal study in this setting.
What sorts of assumptions are you, making around some of these other.
Potential enrollment challenges.
Thanks, Thomas So again very good questions and certainly when we think about PBC as a rare disease.
It certainly stands to reason that there may be competition across.
Different studies that are ongoing in it and as you pointed out it is a highly competitive environment for sure but that having been said, we're finding that the vast majority of our sites are or not.
Enrolling patients or competing trials. So we're not really seeing this as a major headwind as you.
Framed it rather we think that it's likely due to the further reaching effects of COVID-19 not specifically at the patient level so to speak but what we're finding is that many of our study sites are in specialty centers.
They're all centers academic centers, many of which are conducting COVID-19 related research and so simply the volume.
That you know when you think about the finance review.
Do you have contracts and so forth ethics committees, where he is it simply the volume.
Research, that's ongoing and the centers. We've also seen that some of our study sites have been impacted in terms of having sufficient staff available due to challenges presented by Covid.
Lastly, certainly not me.
Some of the countries that we are working with Latin America for Rob for sure in terms of just the time that is necessary to get the appropriate reviews by health authorities and so as some of these countries come online, we're anticipating seeing a robust uptick in enrollment towards the.
The end of this calendar year.
And.
I mean just.
To be clear.
No we have not really seen.
The negative impact from from other trials.
As Karl pointed out the main issues that we've been facing has been wrong.
A lot of bureaucracy.
Systems clogged by over Covid related fail, but at least up until now and we will obviously continue to monitor this very closely but we haven't seen.
A negative impact from.
Competing for patients so to speak.
Okay got it thanks for the.
Thanks for the insights, it's very helpful and thanks for taking the questions.
Sure.
And next we'll go to Ed Arce from H C. Wainwright Your line is open.
Yeah.
Hello, everyone. This is Thomas Yip asking questions for at first congratulations on the progress so far 2021.
First question for me for this for diagnostics.
Can you go over some metrics.
Investors should focus on.
And finally, what are your goals for the next six months and 12 months or beyond as well.
Hi, thank.
Thank you.
We're not guiding with specific metrics at this point because we think it's too early we want to have a discussion with our partner <unk> first to understand.
Understand I mean, we only have a few months.
Post launch and as I'm sure you realize this is Ben.
<unk>.
Complex environment with Covid, especially the testing space, where everybody involved in testing with extremely busy running thousands or millions of COVID-19 test.
So the feedback we were getting was okay.
Usual.
<unk> and its a little bit difficult to read what we do we do have some qualitative.
Feedback and liquidity feedback as it was.
Was that the lack of reimbursement.
And probably even more so for lack of approve.
Therapies in Nash and also the fact that in all likelihood.
We are relatively far from having a <unk>.
Approved therapies and that all of that creates an environment, where it's been it's been challenging for the commercial team of Labcorp, but again they themselves.
Only a few months.
Let's make sure that we really understand the feedback and adjust the strategy if necessary. So again at this stage too early to give.
Quantitative.
<unk>.
It will we'll come back to you.
On this when we have a little bit more more insight.
Paul.
At the end of the year.
Understood perhaps one.
Final question for me if I may.
According.
New indications specifically to face one efficacy study and ACO.
Is it still on target for <unk>.
Initiation in the fourth quarter this year.
From what we understand this safety PK and PD study what are some key endpoints that investors should focus on.
Okay.
Thomas Thanks for the question and so yes.
It is off Tonight Phase one study is on track for initiation in the fourth quarter of this year as you pointed out. This is a relatively straightforward phase one study in which we will be evaluating subjects with compensated cirrhosis.
And part individuals so that we may better understand safety and pharmacokinetic profile of <unk> and these individuals relative to healthy volunteers with normal hepatic function and this will be of course very important.
Before we give consideration to going into what next step would be a proof of concept study and in acutely ill hospitalized patient population and so of course, we want to ensure that we in that study would be administering a proper dose and be mindful of any.
Potential safety signals.
Hopefully that helps you with safety Tolerability PK as you outlined it is first and foremost in this upcoming study.
And next we'll go to Geoff Meacham from Bank of America. Your line is open.
Hey, guys, it's asking on for Jeff. Thanks for the questions. So just a couple from me.
First off on <unk> PFC, just wanted to see if you've received any additional feedback from FDA I know that trying to figure out what an approvable study an endpoint will look like as it was kind of still in the works I just wanted to see if you had any additional feedback in terms of what that could end up looking like and then secondly on the Nash diagnostic.
Could you maybe help characterize the Nash next uptake so far in the commercial setting understanding that it's been a little slow to start given the lack of a therapy.
Just kind of wanted to understand what the what some of the early adopters look like.
Using Nash next in the commercial setting thank you.
Jeff. Thanks for the question about PSC. So I'll address that question and then I'll hand back to Pascal to address the question pertaining to Nash next.
Yes.
Have a very well developed study protocol for our PSC proof of concept study, which is planned to initiate before the end of this calendar year that protocol has been submitted to our I N D and so now we're working with the CRO and term.
Refining study startup related activity site selection and what have you clearly this proof of concept study will guide our next steps in terms of engaging with health authorities like FDA to better frame, what ultimately would be a pivotal.
<unk> study and as you are well aware there are no approved therapies.
Or PFC, nor are they are clearly defined regulatory path for approval. So the next discussion. After this proof of concept study.
As we engage with FDA will be a critical discussion. So we may better understand what would be the primary endpoints in an optimal design for what would be our pivotal study hopefully that addresses your question.
Regarding.
Vanessa agnostic again, it's early.
Too early to give numbers, but it's quite actively what type of physicians that have used nationally because it can almost be defined in contrast to the changes.
Excluding earlier so those are I mean, the feedback we're getting is there doctors that do believe that in order to have a stronger call to action with their patients.
The test can be used to really motivate them to.
Two lifestyle modification get into more diet and exercise.
What they're saying is look we've been telling them.
For sometimes for years that they should be doing something about their health.
And changed our lifestyle, but it is very difficult.
And by using the diagnostic.
Really sort of motivate them is a strong call to action because now the sort of negative consequences that lifestyle become become more apparent.
That's one and then number two.
Yes.
Physician that tend to have a more affluent patient base because.
For a lot of.
Patients with current lack of reimbursement.
Issue so those that are.
BB more affluent and less.
It does.
As I said that.
But based right now is is still is still very limited so.
The discussion, we will be having with labcorp in the.
EBITDA future is how can we accelerate.
Access.
And reimbursement there.
Then I think the valve phew.
Ideas are on fee.
How to how to position for EBITDA and drive.
Drive thru.
<unk> for lack of available natural IP, but short term access is going to be critical.
A critical critical factor.
The coming months.
And now I'll turn it back to Pascal for Zhang for closing remarks.
Thank you for all your interesting question as always.
To conclude it's important to remember that a year ago. We said, we had four corporate priorities.
First one was about the execution of our phase III PBC trial and it is.
At the time, we had just included the first patient and we are targeting Q1 2020 free for high level results.
For placebo launched in 2025.
To date, despite the significant COVID-19 related challenges, we are broadly aligned with initial time line for city completion and believe we should be in a situation to actually file earlier than expected with a potential commercialization in the second semester of 2024, if the results are positive.
The second.
The element of our strategy was about securing the launch of our novel diagnostic test based on our technology for the launch as know taken place an overview uptake as we just discussed is affected by excess challenges as well as the time line of Nash drug availabilities, we are strengthening this for supporting.
Growing body of evidence and we are positioning ourselves for the future.
The third priority was about pivoting or AMD for Nash to new therapeutic areas, where we saw immediate and less risky potential and today, we have reorganized and rationalized R&D and this new focus is allowing us to move forward with those three new cities, which will create a steady stream of potential catalysts starting as.
Early at September next year.
And finally, we had those lines the necessity to cut our expenses lower our cash burn to about $120 million between the years 2021, and 2022 as well as bringing our total workforce to about 130 from over 200 head count before the results of each results.
We have already realized savings, we announced while funding the additional R&D that I highlighted earlier and our head count at the end of June was 122, so again.
We met.
Which we announced last year.
Finally, we eliminated the challenge both by our convertible debt.
Believes that thanks to the continued support from our shareholders and our bondholders. We all know they are well positioned for making for most of the exciting 18 months ahead of us.
With that said, thanks, everyone and looking forward to our next update.
And that does conclude our call for today. Thank you for your participation you may now disconnect.
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