On April 7, 2022 GENFIT (Nasdaq and Euronext: GNFT), a late-stage biopharmaceutical company dedicated to improving the lives of patients with severe chronic liver diseases, reported annual financial results for the year ended December 31, 2021 (Press release, Genfit, APR 7, 2022, https://ir.genfit.com/news-releases/news-release-details/genfit-reports-full-year-2021-financial-results-and-provides [SID1234611641]). A summary of the consolidated financial statements is included below.
Schedule your 30 min Free 1stOncology Demo!
Discover why more than 1,500 members use 1stOncology™ to excel in:
Early/Late Stage Pipeline Development - Target Scouting - Clinical Biomarkers - Indication Selection & Expansion - BD&L Contacts - Conference Reports - Combinatorial Drug Settings - Companion Diagnostics - Drug Repositioning - First-in-class Analysis - Competitive Analysis - Deals & Licensing
Schedule Your 30 min Free Demo!
Pascal Prigent, CEO of GENFIT, commented: "2021 was a pivotal year for us. We are pleased to have delivered on our key commitments which were to improve our financial situation, pursue our Phase 3 trial and strengthen our pipeline. We are grateful to our dedicated team for their efforts in realizing these objectives and our investors for their continued support. We start 2022 having made great progress regarding ELATIVE, and our improved financial visibility will enable us to grow our pipeline and accelerate our existing programs, as we continue to seek therapeutic and diagnostic solutions that can improve the health and quality of life of patients affected by severe chronic liver diseases."
* Unaudited financial statements. The audit procedures by the Statutory Auditors are underway.
Revenue and other operating income
Revenue and other operating income for 2021 amounted to €85.6 million compared to €7.8 million for 2020.
Revenue for 2021 amounted to €80.1 million, mainly from the receipt of the €120.0 million upfront payment from Ipsen, out of which €80.0 million is recognized as 2021 revenue, after deduction of €40.0 million deferred revenue, which will gradually be recognized as revenue following the completion of the ELATIVE double-blind study. Other revenue recognized in 2021 is related to licensing agreements with Labcorp for the deployment of NIS4 technology in NASH.
Revenue for 2020 amounted to €0.8 million, mainly from the license agreements with Labcorp, as well as one-time sales of goods and services within the scope of the collaboration and license agreement with Terns Pharmaceuticals.
Other operating income included mainly the research tax credit (known as Crédit d’Impôt Recherche or CIR) granted by the French tax authorities, which amounted to €5.3 million for 2021 compared with €7.9 million for 2020, which was reduced by a €1.9 million expense following the settlement of a dispute relating to the CIR for 2010, 2011, 2012 and 2014.
Operating expenses and operating result
Operating expenses for 2021 amounted to €53.8 million compared to €90.7 million for 2020.
R&D expenditures, general and administrative expenses, marketing and market access expenses and other operating expenses decreased in 2021 compared to the previous year, amounting to €53.6 million compared to €85.3 million for 2020. This decrease mainly reflected the effects of the reorganization and restructuring plan, which was initiated during the fourth quarter 2020 and throughout 2021. The non-recurring costs associated with the implementation of the reorganization and restructuring plan decreased significantly from €5.3 million in 2020 to €0.1 million in 2021, consisting primarily of fees related to the renegotiation of the convertible bonds, partially offset by the reversal of certain impairment losses and provisions previously booked in 2020.
In 2021, GENFIT generated a consolidated operating result of €31.8 million compared to an operating loss of €82.9 million in 2020.
Financial result
2021 resulted in a financial income of €37.7 million compared to a financial loss of €18.8 million in 2020.
This variation was mainly due to the €35.6 million one-time bonus relating to the partial buyback of the convertible bonds (OCEANE) and to the decrease in expenses related to financial interest from €11.6 million in 2020 to €4.8 million in 2021.
The foreign exchange result on cash and cash equivalents was a net gain of €6.7 million in 2021, compared to a net loss of €8.5 million in 2020. This mainly resulted from the effect of the exchange rate fluctuations on the cash investments held in US dollars, which have been kept in their original currency since they were invested. In connection with the preceding, €5.9 million out of the total 2021 foreign exchange result is qualified as unrealized.
Cash and cash equivalents
As of December 31, 2021, the Company’s cash and cash equivalents amounted to €258.8 million compared with €171.0 million as of December 31, 2020.
This is mainly the result of:
The €120.0 million non-refundable initial payment received from Ipsen pursuant to the license agreement signed in December 2021, further increased by €24.0 million of collected VAT;
Ipsen’s €28.0 million equity investment in GENFIT’s share capital received in December 2021;
The reimbursement in October 2021 of the 2020 CIR for €7.9 million;
The granting of two State-guaranteed loans and a subsidized loan in June, July and November 2021 for a total amount of €15.2 million;
€47.5 million (not including transaction expenses) disbursed for the partial buyback of the OCEANE convertible bonds in January 2021; and
Cash used in operating activities over the period.
Note: taking into account the partial buyback of the OCEANEs and the conversions into shares that have taken place since the renegotiation of the convertible debt, which gave rise to the creation of 6,941,875 new shares, the residual convertible bond debt amounts to a nominal amount of €56.9 million as of April 7, 2022, i.e. less than a third of the amount of the initial nominal debt of €180.0 million. The number of OCEANEs remaining in circulation is 1,923,662, representing a maximum dilution in the event of conversion of all convertible bonds of 17.52% (in % of capital held as of April 7, 2022).
2021 Key Highlights
Financial – key highlights
Successful convertible debt renegotiation
We successfully restructured the convertible debt at the end of January 2021 with a partial buy-back and extended the maturity to October 2025. At the end of 2021, the outstanding nominal debt was approximately €56.9 million, i.e. less than a third of the initial nominal debt of €180.0 million.
Non-dilutive State-Guaranteed Loans for a total amount of €15.2 million
In 2021, GENFIT secured €15.2 million non-dilutive loans granted in the context of the COVID-19 pandemic, of which €13 million are guaranteed up to 90% by the French state.
Long-term strategic partnership with IPSEN
In December 2021, GENFIT entered into an exclusive, worldwide1 licensing agreement with IPSEN for elafibranor, a Phase 3 asset evaluated in Primary Biliary Cholangitis (PBC). Under the terms of the agreement, GENFIT received an upfront cash payment of €120.0 million and is eligible for regulatory, commercial and sales-based milestone payments of up to €360.0 million. GENFIT is also eligible to receive tiered double-digit royalties of up to 20%. In addition to global commercialization2, IPSEN will be responsible for all clinical development of elafibranor following completion of the ELATIVE double-blind period, including completion of the long-term open-label extension period of the ELATIVE trial. To underscore GENFIT and Ipsen’s long-term partnership, Ipsen has taken an 8% ownership stake for €28.0 million. Ipsen has now become GENFIT’s largest shareholder.
Pipeline development – key highlights
Elafibranor development program in PBC
Despite the COVID-19 pandemic, patient enrolment for the Phase 3 ELATIVE clinical trial progressed well throughout 2021, with positive Data Safety Monitoring Board (DSMB) outcomes. In February 2021, the Company announced the publication, in the Journal of Hepatology, of the positive results of the Phase 2 clinical trial evaluating elafibranor in patients with PBC and an incomplete response to ursodeoxycholic acid (UDCA). These results show a clinically significant improvement on the primary and composite biochemical evaluation criteria which is the primary endpoint of the pivotal trial to support accelerated approval. In addition, the results showed a positive trend on the improvement of pruritus, while preserving a favorable tolerability profile.
Significant progress made in implementing our new pipeline strategy
In May 2021, we announced our new strategic direction in R&D which centers around refocusing our efforts in two new franchises with significant unmet medical needs: Acute on Chronic Liver Failure (ACLF) and cholestatic diseases.
In November 2021, we announced the first patient first visit for the evaluation of NTZ in subjects with hepatic impairment and we are currently initiating a Phase 1 study in renal impairment as part of our ACLF program. ACLF is a severe liver disease with a high unmet need. These Phase 1 studies represent a key milestone in the Company’s pipeline development and, upon completion and if positive, will enable GENFIT to progress towards a proof-of-concept study in patients with acute decompensated cirrhosis and ACLF.
In December 2021, GENFIT strengthened its cholestatic disease franchise through the in-licensing of exclusive rights from Genoscience Pharma to develop and commercialize the investigational drug GNS561 in cholangiocarcinoma (CCA) in the United States, Canada and Europe, including the United Kingdom and Switzerland.
On the diagnostics side of the business, in November 2021, a study undertaken by the Non-Invasive Biomarkers of Metabolic Liver Disease (NIMBLE), an initiative of the Foundation for the National Institutes of Health’s Biomarkers Consortium (FNIH) confirmed that NIS4 technology demonstrates a unique performance in identifying patients with at-risk Non-Alcoholic Steatohepatitis (NASH), and provided evidence that it had the best results of the five blood-based biomarker panels which were assessed in this study, for the diagnosis of fibrosis stage≥ 2. The FNIH NIMBLE findings will have a strong utility for the whole NASH field and practitioners, and could potentially pave the way for regulatory qualification for non-invasive tests in NASH. NIS4 technology is currently powering a test called NASHnext commercialized by our partner Labcorp in the U.S. and Canada.
Organizational and governance updates
In March 2021, Jean-François Tiné was appointed Member of the Board of Directors, replacing Philippe Moons.
In April 2021, GENFIT appointed Thomas Baetz as Chief Financial Officer.
In 2021, GENFIT added four new members to its Executive Committee: Pascal Caisey (hired as Chief Commercial Officer and promoted Chief Operating Officer in February 2022), Stefanie Magner (Chief Compliance Officer and VP International Legal Affairs), Philippe Motté (Chief Regulatory and Quality Officer) and Thomas Baetz (Chief Financial Officer).
In October 2021, the Environmental Social Governance (ESG) Committee was created following new recommendations of the Middlenext Code. The aim of the committee is to measure and track GENFIT’s non-financial performance on an annual basis. Ms. Catherine Larue serves as Chairwoman on the ESG Committee.
Outlook 2022
Building on our strengths to execute our strategy
We believe our strengths, listed below, provide the foundation that will allow us to successfully expand our activities in 2022 and beyond:
Experience in bringing early-stage assets into late development stages, with expertise ranging from research to pre-commercialization, and including clinical development and regulatory affairs;
A portfolio rationalized in 2021, focusing on disease areas with high unmet needs and high market potential;
Choosing partners with a strong commercial track-record; and
A robust financial situation with a strong cash position.
Continuing elafibranor development program in PBC
As previously communicated, we saw a disruption in our clinical operations at the end of last year due to the COVID pandemic and specifically the rise of the Omicron strain. However, our recruitment numbers rebounded significantly in the first quarter 2022 as the situation normalized. Screening of patients will stop next week as end of enrollment is now imminent.
This means that we remain committed to deliver topline data readout in the second quarter 2023, in line with our previous guidance.
Pursuing the execution of existing programs
Our second objective is to continue the execution of the following programs:
NTZ in ACLF: following encouraging pre-clinical results, we are moving forward with the Phase 1 trial in hepatic impairment, aiming for data readout by the third quarter 2022. We are also initiating a Phase 1 study in renal impairment, with data anticipated in the fourth quarter 2022. If positive, both the hepatic and renal studies will be supportive of the ACLF Investigational New Drug application and proof-of-concept study.
GNS561 in CCA: we intend to start a Phase 1b/2 trial by the second half 2022.
NASH Diagnostics: our goal is to further establish NIS4 technology through scientific publications and increased use in the field.
Pipeline strategy and impact on financial outlook
GENFIT will continue to grow and diversify its pipeline in 2022 by leveraging its expertise in bringing early-stage assets to late-development stages. To achieve this goal, we follow a dual-track approach based on repurposing of molecules approved in other indications and in-licensing of molecules developed by other companies.
As we continue our efforts to identify product candidates with the highest potential, conduct pre-clinical studies and clinical trials and advance the development of our diagnostic test, we expect that our cash used in operational activities will increase to €65 million in 2022 (excluding exceptional items of €30.0 million payable in 2022 in relation to the upfront payment received from Ipsen in late 2021, i.e. primarily VAT collected and corporate income tax, as well as potential costs and expenses in future business development activities such as in-licensing).
GENFIT will host a conference call in English and in French on April 8, 2022 at 8.00am ET / 1:00pm GMT / 2:00pm CET
Both the English and French conference calls will be accessible on the investor page of our website, under the events section at https://ir.genfit.com/ or by calling 800-239-9838 (toll-free U.S and Canada), 0800 358 6377 (toll-free UK) or 0805 101 219 (toll-free France) five minutes prior to the start time (confirmation code: 9241456). A replay will be available shortly after the call.
*Unaudited financial statements. The audit procedures by the Statutory Auditors are underway