Genfit stock tumbles after discontinuing VS-01 liver failure treatment

Genfit's stock fell 9% after discontinuing its VS-01 treatment for Acute-on-Chronic Liver Failure (ACLF) due to a safety event involving infection risks in the UNVEIL-IT trial, removing a key near-term growth driver. The company will now refocus the VS-01 program on Urea Cycle Disorder, with new catalysts expected from G1090N and GNS561 data by year-end 2025. Analysts acknowledge the immediate pressure but suggest the market may undervalue Genfit's existing business and remaining pipeline despite this significant setback.

Analysis

Genfit (GNFT) shares declined 9% following the company's announcement to discontinue its VS-01 treatment program for Acute-on-Chronic Liver Failure (ACLF). The decision was triggered by a safety event—a case of peritonitis—in the UNVEIL-IT trial, leading to a halt recommendation from an independent Data Monitoring Committee. This development removes what was considered Genfit's most significant near-term growth driver and a potential catalyst for a stock revaluation. The safety concerns, specifically infection risks from catheter placement in fragile ICU patients, had been previously flagged by the FDA and key opinion leaders, suggesting this was a known, albeit now realized, risk. In response, Genfit will refocus its VS-01 program on Urea Cycle Disorder (UCD), effectively pushing out its catalyst timeline. The next major data readouts, for G1090N and GNS561 in cholangiocarcinoma, are not expected until year-end 2025. Despite the setback, Kepler analysts noted that the ACLF program was not in their valuation model and suggested the market may be undervaluing Genfit's existing business, including its Iqirvo royalties, cash, and remaining pipeline.

Key Decisions for Investors

• Investors should re-evaluate their positions in GNFT, as the discontinuation of the ACLF program removes the primary near-term catalyst and extends the timeline for significant data readouts to year-end 2025, increasing the investment risk profile.
• Consider the contrarian analyst view that the market reaction may be excessive, and conduct due diligence on whether Genfit's existing assets, such as Iqirvo royalties and its cash position, provide a valuation floor that justifies holding through this period of uncertainty.
• Closely monitor the company's execution on pivoting the VS-01 program to Urea Cycle Disorder and track any progress updates on the G1090N and GNS561 programs, as these will be critical for rebuilding the pipeline's value proposition.