Full Year 2022 Genfit SA Earnings Call

Okay, and Washington jumps as full year 2021 financial result on quarters I'll take calls this call is being recorded at this time I would like to turn the conference over to Stephanie Meltzer. Please go ahead.

Hello, everyone and thank you for joining us on our 2021 full year earnings call and corporate update which comes following publication of our annual results press release last night.

Press releases can be accessed via our website at IR dot dot com joining.

Joining me on the call today are Pascal pretty shocked CEO until my bets CFO .

Before we begin I'd like to remind everyone that statements made during this conference call, including the Q&A session relating to Gen fifth expected future performance business prospects events or plans, including clinical plans regulatory approvals anticipated timelines for clinical development.

Study enrollment and expected cash Houston or operational activities are forward looking statements as defined under the U S. Private Securities Litigation Reform Act of 1995.

So based on management's current assumptions and estimates, which although believed to be reasonable 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.

For further discussion of the material risks and other important factors that could affect our business operations and financial results. Please refer to those contained in our most recent filings with the SEC N I M S.

Forward looking statements speak only as of the date of this webcast and 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 a result of new information future events or otherwise.

Following the prepared remarks, we will open up the call for questions that will be addressed by Genesis management.

Please limit yourself to one initial question to allow time for others.

I'll now turn the call over to our CFO would come with it.

Hi, everyone. Thank you for joining us today I will provide a financial recap is send study focused on the second half of 'twenty to 'twenty. One since we already gave a detailed update last September on the company's finance deals for the first half of last year.

First I would like to refer to the press release issued yesterday evening for a summary of our financial results for 2021.

Our revenue and other operating income for 2021 amounted to 85 6 million euros compared to $7 8 million euros for 2020.

Operating expenses amounted to $53 8 million euros in 2021 down from 97 million euros in 2020.

As a result in 2021 and generated consolidated operating income of $31 8 million euros compared to an operating loss of $82 9 million euros for the previous year.

Our financial results for 2021 was a financial income.

$37 7 million euros compared to a financial loss.

$18 8 million euros for 'twenty 'twenty.

As a result of jealousy generated net proceeds of $67 3 million euros in 2021 after deduction of a corporate income tax expense of $2 2 million euros.

Paired with a net loss of $101 2 million euros in 2020.

Our total financial debt decreased from 185 7 million euros down to seven.

74.2.

2 million euros.

As of December 31st 2021, and change it had $258 8 million euros in cash and cash equivalents.

Third to 171 million euros at the end of 2020.

Now that you have the numbers in mind, let me give you some color and explain where these figures come from.

Well first briefly touching upon the revenue and other operating income.

Our revenue essentially came from the 120 million euros non refundable upfront payment received from <unk> in December 2021.

Out of which 18 million euros was recognized as revenue in 2021.

And 14 million euros, what was booked as deferred revenue and will be recognized as revenue in subsequent years.

Following the completion of the <unk> double blind study.

Other operating income included mainly the research tax credit granted by the French tax authorities, which amounted to $5 3 million euros in 2021 .

The work on our cost control plan in late 2020.

We started the reorganization and restructuring plan, including a significant reduction of our head count.

And cuts in non essential expenses.

Which had continuing effect throughout 2021 .

Our R&D expenses, G&A expenses marketing and market access expenses and other operating expenses were reduced by $31 7 million euros.

From $85 3 million euros in 2020 down to $53 6 million euros in 2021.

Besides the one time expenses associated with the implementation of these cost saving measures.

Kris significantly from $5 3 million euros in 2020.

Down to 0.1 million euros in 2021, including among others the reversal of certain impairment losses and provisions previously booked in 2020.

At the beginning of 2021 we achieved a great success as we manage to drastically reduce the amount of our outstanding convertible debt.

Nominal amount of of which now stands at just <unk>.

$56 9 million euros.

That is a third of its initial amounts.

This was completed through the renegotiation and partial buyback of the convertible bonds in January 2021.

All by the conversions of nearly $4, one full 0.1 media and convertible bonds into ordinary shares.

Which took place in the following months at some of the bondholders request.

At the same time the final maturity of our convertible debt was extended by three years from October 2022 to October 2025.

These new conditions negotiated with the convertible bondholders were approved by more than 98.

Per cent of their shoulders that took part in the votes.

We thank them for their continued support.

The partial buyback generated a onetime bonus of $35 6 million euros, which is included in our financial income.

Together with the conversions that took place after January 2021. It also contributed to reducing our financial interest expenses from 11 6 million euros in 2020 down to $4 8 million euros in 2021.

Later in 2021, we obtained three non dilutive loans, which were granted in the context of the COVID-19 pandemic.

Total amount of 15.2.

25 million euros in more details in June 2021, we obtained a loan of 11 million euros from a syndicate of four French banks.

Loan is backed by the French state.

290%.

He has an initial term of one year with repayment options up to six years.

In July we obtained.

Loan of 2 million euros from JP host under similar terms, including the French state guarantee.

In November we obtained an additional subsidized loan of $2 25 million euros from BP holes.

With an initial term of six years.

Now about our cash position as at the end of 2021.

This position was largely due to the 120 million euros upfront payments received from <unk>.

Other increased by.

24 million euros of collected via <unk> as.

As well as the <unk> 28 median.

<unk> equity investment in Gen feet.

Also of which were finalized in December 2021.

This strategic partnership is a landmark deal and one of the largest signed by a French biotech with a farmer.

Over the last few years.

From a financial standpoint.

Size of the upfront payment alone was quite significant.

And the equity stake and generate capital was taken at a premium compared to the stock price at the time of the deal.

In addition to the upfront and the equity payments. We are also eligible to receive substantial milestone payments up to 360 million euros.

With about 50% receivable upon the achievement of development milestone events.

Under the terms of the deal. We are also eligible to receiving tiered double digit royalties up to 20%, which may provide a regular revenue stream to finance our research into the future.

Next to this it's also important to realize that <unk> will be responsible for all further clinical development of <unk> B R and the completion of the electives that those lines studies, which means.

They will finance a long term extension period of the trial.

And that is required by the FDA to grant full approval.

And any additional trial rather than for the lifecycle management.

Finally in our projections well first it should be noted that we will make payments up to 30 million euros in the first half of 2022, comprising collected via <unk> and corporate tax in connection with the initial payment received from <unk> last December .

Besides this as we continue our efforts to identify product candidates with the highest potential.

And the preclinical studies and clinical trials and advance the development of our diagnostic tests.

We expect that the cash used in our operational activities will increase to 65 million euros in 2022.

This amount does not include potential expenses, we may incur in the future business development activities such as in licensing.

I'll now turn the call over to Pascal for the update on our programs progress and perspectives.

Thank you Thomas.

Obviously 2021 was a critical year for <unk>.

And after a disappointing and if our development program in Nash It was essential to pivot and execute the strategic plan, we developed and presented to you at the end of 2020.

You will recall that our plan had three parts. The first was to improve our financial position was taken was to accelerate our remaining programs and specifically the transition of our late stage development efforts from Nash to PBC and the third was to build a richer more diversified pipeline.

So let's start with the financial visibility I mean, as evidenced by Thomas presentation, We start 2022 totally different place from a financial standpoint.

The $180 million of convertible debt has been divided based Cree and instead of being do six months from today. Its maturity is now in Q4 2025.

The combination of <unk> deal and the state's Covid loans has brought us to over 135 million euros of non dilutive financing.

<unk> equity stake has brought us an additional 28 million and was relative for shareholders.

In terms of cash burn you heard that or operational expenses were almost reduced by half in 2021.

Obviously going forward <unk> gives us even further flexibility both because of forecasted expenses with no go down.

You've heard most development costs related to the fever, though we'd now be supported by <unk> and of course on the revenue side, because we will now have additional revenues as we will be expecting milestone payment and later royalties.

So we know have much greater financial visibility and this will allow us to continue to execute our R&D programs, which will also give us the possibility to strengthen our pipeline if we find the right opportunities.

Let's now move to our second corporate priority, which was to advance our two remaining lead programs and as you all know in PBC and our diagnostic for at risk <unk> patients.

The challenge for our clinical team was substantial in 2021, indeed, we needed to properly terminate with our with our phase III trial in Nash, while simultaneously execute elective or phase III trial in PBC that was initiated at the end of 2020.

It is noticed small task to close the trial as large and complex as a phase III Nash trial.

This exercise was not futile because your data are going to be important for us, let's see vinyl PVC last year Indeed.

It will give us a very strong safety database with data on thousands of patients who have had years of exposure to a few buy though.

That's a lot more data, but what we would have been able to develop if we had developed without people knowing PBC only.

The team did a great job last year with the timely delivery of high quality CSL, a clinical study report and all of this work is now behind us.

While they were performing the tasks necessary for the closing of resolve it or clinical team was also working hard on starting and then running this.

This challenge was made significantly more complex basically COVID-19 pandemic. However, we were able to minimize disruption to our operation and mitigate pandemic related risks for the patients through consider services virtual visits and a host of other measures.

As mentioned in our latest communication the latest wave of the pandemic did affect our timeline somewhat as we saw a drop in recruitment at the end of 2021 due to be highly contagious omi constraints.

Fortunately, our recruitment numbers rebounded significantly in the first quarter of this year as the pandemic situation normalize. Thanks.

Thanks to this we are now nearing the end of enrollment and we'll start screening for new patients to day or tumor wide choice.

Therefore, we reaffirm our commitment for topline data readout in the second quarter of 2023 in line with our previous guidance.

Besides there are a few but now we have another late stage program. So let me say a few words about the development of our diagnostic franchise at 2021 was a critical year for needs for technology as well.

As previously communicated we do not see a significant market opportunity for Nash diagnostic as long as there isn't a drug approved for Nash.

That being said, we remain absolutely convinced that once the drug is approved and it will happen eventually it will be essential to have a simple non invasive tests to identify at risk patients.

Once that market exists it will grow very quickly.

Our strategy is twofold first make sure that drug developers use these toys that clinical trials. So that we can generate data with data that they will then be able to use when they launch their product. If it is ultimately approved.

Second we want to establish our technology is the best solution. So that we become a natural choice when that market starts to grow.

In November 2021 study undertaken David Nimble consortium.

Doug on these four technology, our five blood based biomarker panels. This for capacity to identify at risk Nash patients are critical population has been recognized by independent experts, who consortium also highlighted evidence showing that this technology as the best results in the.

Five blood based biomarker panels, which were assessed this study for the diagnosis of fibrosis stage two and above.

This is a remarkable achievement because nimble as a large independent biomarker consortium of well respected expert using a robust approach based on independent cohorts of patients and simple.

So we're finding is consistent with our own findings and it further establishes needs for in the field and support displays as a great alternative for identifying patients more.

That's right.

Let's now talk about our third corporate priority I E our pipeline.

Since outlining our new R&D strategy of a year ago, we have made progress in the two therapeutic areas, we want to focus on namely ACSF and core aesthetic diseases.

As far as I see RF is concerned as mentioned during our pipeline update in May last year. There is a very high unmet medical need for acute on chronic liver failure. We have an estimated 180000 patients in the U S for which rates currently no approved treatment.

Following encouraging preclinical results. We are now moving forward with two phase one studies evaluating <unk> add the drug candidates that we've identified for affinity screening as part of our refocusing strategy.

The first phase one is focused on hepatic impairment and we expect the first result as early as Q3 this year.

We hope to be able to confirm MTS has potential in this market, which is currently estimated at $4 billion a year in the U S alone.

We also initiated another phase one in renal impairment data for this is expected to be available into the fourth quarter of 2022.

These <unk> represent key milestones in the development of our ICL franchise.

Upon completion, who will enable us to progress towards a proof of concept study in patients with ACF.

In terms of course static disease in December we in license an investigational compounds from Geoscience pharma with this deal we acquire executive rights to develop and commercialize DNA by six one in Cholangiocarcinoma in the United States, Canada, and Europe and in Europe . It includes United Kingdom.

I'm in Switzerland.

Concho carcinoma is strongly correlated with processes and account prognostic for patients is poor.

<unk> one is eligible for orphan indication and we believe its novel mechanism of action as well as preclinical and clinical evidence from a strong rationale supporting further development in CCA.

We've made significant progress since December with successful key oil engagement, helping to finalize the study protocol, we look forward to interaction with the FDA of this program, we have intention to load with the phase one two study towards the end of each year.

Overall for final design elements of the study are being finalized and will ultimately be informed by discussions with FDA, We hope to a first interim results in the first half of 2024.

Is this indication path to approval as a potential to be somewhat shorter compared with that of many of our indication.

The current standard of care, which is characterized by a lack of options for patients.

So with that and before I open the floor to your question I would like to thank the GNC team for all that they have accomplished in 2021 as well as our investors for their continued support thanks to them. We are able to enter 2022 with a very positive outlook.

Operator.

Now open for Q&A.

Sure.

Thank you and if you'd like to ask a question. Please of all by pressing star one on your telephone keypad, if you're using a speaker phone. Please ensure your function is turned off.

Thank you Andre.

And then Dan I wanted to ask a question.

We'll take our first question from Thomas Smith of.

Please go ahead.

Okay.

Hey, guys. Thanks for taking the questions and.

Congrats on the progress.

One question on the early pipeline can you talk a little bit more about how youre thinking about.

Your.

Development activity is maybe a little bit more in terms of.

The types of assets that you're interested in or the phase of development do you have a preference for earlier stage assets are a clinical stage assets or just help us think about I guess your capacity and your appetite for bringing in additional compounds similar to the geoscience deal. Thanks.

Yes.

Thanks, Tom Great question so.

What we are really looking at is trying to create a portfolio.

And <unk> specifically.

We are going to combine multiple mechanisms of action.

Because the disease is really complex also different phase in this disease and we're looking at opportunities at those various phases. So the idea is really to have multiple shots on goals and combine also potentially versus different approaches in terms of.

Of stage of the asset.

Looking at both early stage assets and.

And clinical stage asset, but or intention if we find ROI candidate and if we are convinced by the data or intention is to do at least one deal with clinical stage assets.

Dean I don't know if you want to come in forever.

Yes, Tom.

Thanks for the question.

We're looking at different mechanisms and.

As Cal said <unk> has many different.

Assets to it so when we consider the pathophysiology of ACL last I think it's important that we do zoom in on different key pathways of course, we know the <unk>.

Partner of systemic inflammation so.

We're having a hard look at different opportunities there.

Another important aspect of ACL last which.

Is it somewhat overlooked but it is really an emerging space is the aspect of.

Immuno inflammation and the rule that's played by meta Bob mitochondrial dysfunction and so on so there is a lot of exciting new data coming out of that area and so we are also weighing in on that pathway. So.

At the end of the day, we are considering different options and like Pascal mentioned is really.

<unk> of.

Testing different aspects different facets when it comes to ACL life, and really trying to have a portfolio with complementary mechanisms of actions.

Okay, Great. That's helpful. And then maybe just a quick follow up on and Q3, because you mentioned.

You're looking for that hepatic impairment results in Q3, and then the renal impairment results in Q4 and that could lead to the.

Proof of concept study I guess, just help us think through.

Kind of a timeline for when we could potentially see that first proof of concept data for MTV.

I'm going to let.

Carl comment.

On that I think it's worth mentioning that even in the phase one we'll have.

Potentially.

Interesting data not only related to safety I'll, let go that underwrites.

On the clinical development of <unk>.

Thanks for your question Tom This is Carol here and.

As Pascal indicated our current phase one studies are aimed to position us for <unk> and ultimately initiation of the proof of concept study and so just thinking in a big picture stand we're engaging actively with key opinion leader currently as we start to.

Get consideration study design elements refining the patient population and that.

That will be critical of course to inform decision, making for longer term more definitive evaluation and undoubtedly engaging with regulatory authorities, where there'll be a very important component of our strategic plan given that there are no approved therapies for this indication.

Shannon we're in a position similar to where we were a few years back with Nash, where we're really pioneers in that space.

And so as Pascal said and our ongoing phase one study and to evaluate.

Valuate, PK and safety and hepatic impairment and these are individuals with roasted childcare B and C category.

Bored us and exploratory opportunity to look at some of the markers that we feel may be important in patients with <unk> and so we may get some very early and valuable insights from this study and certainly we'll need to take those data into consideration.

And as we ultimately finalized the protocol for that proof of concept study I think in terms of overall timelines. Our plan is to initiate before the end of first quarter 2023, and I think it's really premature in my mind to speculate that the timelines given that we have not yet.

Engaged with FCA and really don't really have a fundamental understanding yet of sample size and duration.

More will be following over the course of the coming months as we have more opportunity to engage with thought leaders and in particular discuss.

<unk> with FCA, which will be <unk>.

Nicole aspect as we move forward.

We'll take our next question from Artem <unk> with Kepler Cheuvreux. Please go ahead.

Yes.

Alright, gentlemen, thank you for taking my question.

First of all to give you more color on the launch of the new score one are you satisfied with that.

The second question is related to NFC banana.

Cruisers, the rest of your pipeline because.

Current pipeline earnings.

Early stage of development.

Are you seeking to strengthen your portfolio.

Vince.

The drug candidate <unk>, just got to be sure about is the strategy.

Beyond electric burner.

Yes, Thank you well I would say so first of all in terms of Mistral.

We are pleased with the performance of <unk> I would say it depends if we're taking commercial or.

Clinical development I would say from a pure commercial standpoint, no. We're not we're not satisfied because.

As I alluded to earlier, we don't think there's really a market for a diagnostic for Nash right now because there is no approved drug in Nash and those two.

Really go go hand in hand, and what we have heard from from prescribers in the U S is that.

Really going to start using diagnostic when there's something.

But we can do about the finding.

Accusing fee of a diagnostic so.

So we think that for a while.

Waiting for a drug to be approved in Nash is not going to be an important market.

That being said we are quite pleased with.

Technical development.

Because we think the nimble study was really a <unk>.

Landmark study complete.

Completely independent and highly respected very well known officially in the U S.

And the fact that the results were so conclusive for us really solidify.

Swap position and gives us a great platform to continue to build on.

In preparation for when that market will start to materialize.

And I guess the other piece to it is the fact that we are discussing.

Discussing with many if not all of the people that are currently developing.

Drugs in Nash and making sure that we give them the opportunity if they want to use.

Israel and all of that data is going to do two things for US first is going to continue to help us solidify and improve on the <unk>, but also because they generate data if and when they're approved they're going to be using.

Data at launch which will.

In turn.

The commercial efforts too.

<unk>. So in other words, we think we are well positioned.

Inc, or we will continue to strengthen our position but.

The real commercial opportunity <unk> is not going to be before.

How large.

This fall.

Your second question was related to the gap so to speak that one could see between a late stage asset that's really.

Nearing commercialization and the early stage of our pipeline and the answer to your question is yes, we are definitely looking at clinical stage asset or goal ultimately as we build our pipeline is as I was saying she magically we want to be.

Targeting ACSF and cause the disease, but if you think in terms of stage, we would want to have a good mix of early stage assets and later stage assets. So that we can then.

As a stream of of meaningful catalysts, if you will.

Coming from from the pipeline so that's really.

That's very much which we're working on.

But of course, it's also defense.

Wherever we can find compelling.

Cases, and we are currently looking at several of those.

We will take our next question from <unk> <unk>. Please go ahead.

Hi, everyone. Thanks for taking my questions.

And let me add my congrats on all the progress last year.

Wanted to start with a question around.

On T cells and your program in <unk>.

It seems pretty clear from your earlier comments that you recognize this.

This disease is quite complex.

Acute obviously, so there may be likely a need for multiple mechanisms.

And so youre looking for.

Perhaps some other compounds with complementary mechanisms and so I'm wondering given all of that.

If you could outline for us.

How you see empty dead shading.

Overall in the mechanism in terms of the pathophysiology.

Dean mentioned earlier.

In particular things like inflammation and.

Other aspects.

Especially the areas where there might be.

The targets of the overall pathophysiology.

<unk> missing.

In targeting with antibodies that you could be looking for to to complement.

Ceiling.

Yes.

Boy CLO.

A follow up.

Sure.

Thanks, Ed I'm going to let dean answer that.

Good question.

Thank you for the question.

So.

Think about <unk> and what we know about <unk>, especially as it pertains to ACL life.

There's quite a bit of information out there in the public domain about Mt's Ed So.

It's clear that entity that has an anti biotic activity.

We have confirmed that.

Within our own laboratories here at hero Gen fit but.

There is another component of <unk>, which is less known which is its anti inflammatory activity. There is published data on that and that as well is something that we have confirmed that within their own laboratories here looking at macrophages and so on and really confirming that NTT said does at least at the very least has those.

Two major very important activities, namely a strong anti inflammatory activity as well as anti biotic activity in particular on anaerobic bacteria. So with that in mind I mean, what is important is that how does that pertain to ACI left and so.

Very quickly we moved into disease models in vivo live animal models and we weighed in really on different types of models. There is no one perfect gold standard a strong model for for ACI left but there are several out there which people in the field.

Use and these are experiments that we conducted within here at Gen fit using these different models so at a high level.

One model, which we use was really U.

Install chronic liver disease and the rodents.

You push them into cirrhosis, and then you induce ACL live with Lps, which is a well known pant, which is of high relevance to <unk> CLS in the human situation in that model, what we clearly show us that entity that has an impact on inflammatory marker.

And it has an impact.

On different organ systems that I mentioned organ systems without getting into details.

We know that ACL lapses.

Define as.

In stage.

Be compensated cirrhosis with multiple organ failure. So it was important.

For us to be able to derma.

Demonstrates that and he said does have impact on the level of organ function now some of the other models, which we performed looked at other aspects of ACL F.

To give you an example.

If we're going to have a therapeutic approach, which is going to impact rapidly on ACL left patients, which we think it's an important aspect of any therapy moving forward in ACSF.

We have tested the molecule in that model, where we induce.

High levels of systemic inflammation very rapidly with Lps and we measure the impact of MTS and co treatment with treatment with Lps and demonstrate efficacy as early as three hours and at the same time, we have another model.

At sepsis, which is in many as in many aspects.

Very closely associated or very closely mimic of ACSF and Theyre actually very importantly, we show that MTS that impacts on.

On mortality okay. So.

Just to summarize just that I mean, yes, we have confirmed that different at least two of the major activities of MTS that which we think is important for ACSF and then moving into different in vivo disease models.

Demonstrate the different activities with <unk>, which we think taken together.

It demonstrates and provides a very compelling evidence that entities that has a high.

Have a good probability of success in moving forward and that is just not.

I was thinking that we have shared.

This data with different key opinion leaders in the field and Theres a lot of enthusiasm.

And it was really experts in the field under their recommendation that we should move this forward into the clinic, because that's where the proof of the pudding is going to be sold so which is why we made that decision and we mentioned we are moving forward with that now the other part of your question Ed can pertaining to you know yesterday.

<unk> is a complex disease with different assets.

And I mentioned.

The importance.

<unk>.

Immuno metabolic pathways.

And I think this is something that's going to be important in this space. There's emerging data on that looking at adding human samples looking at metabolomics what is.

Become clear is that because when you have high systemic inflammation, there's a switch of.

Energy use from.

Beta oxidation that glycolysis for example, and.

And there what's happening is that we're creating an energy deficit and ACL live patients and so there and this is associated also with mitochondrial dysfunction and this is an area, which we're going to weigh in on and we are looking both from our own internal research as well as booking assets available. So this is Jeff <unk>.

Examples of that I think are our important pathways important network to an ACO life and yes, when we look at different assets.

We of course want to choose those who we think individually will have.

Hi potential benefits by themselves but of course.

Sure.

Working and thinking about combination strategies as we move forward in an ACL live.

Thank you.

Thank you for your question, we are running out of time.

For all of their questions I will now turn the floor over to Pascal for closing remarks.

Thank you thanks to all for all your questions just a few words to wrap up this session two.

21 was a pivotal year for us and has been marked by good progress on all three of our corporate priorities on the financial front through a combination of a successful convertible debt renegotiation and the landmark strategic partnership deal signed with Ipsen puts us in a great position not only ensuring refinancing of existing programs with <unk>.

Also opening Optionality from a business development standpoint, secondly on the development side, we've made great progress we've achieved despite the COVID-19 pandemic and we have continued to establish new useful as a diagnostic of choice for Wednesday Nash market Materializes and then lastly on the research side, we are continuing to build a pipeline either.

We're repositioning as is the case with <unk> or through acquisition like for GNL 561 in Cholangiocarcinoma going forward, we will continue to enrich and diversify our pipeline.

Thank you everyone for your attention.

Thank you that does conclude the call. Thank you for your participation you may now.

Okay.

Okay.

Yes.

Okay.

[music].

Okay.

Okay.

[music].

Yes.

[music].