Stock Market: Who's Giving Genfit A Hard Time?
Translated from LaVoixDuNord, French newspaper - 31/03/2015
Rocketing on Euronext over the last 15 months (+185% to reach €1.6bn market capitalization), the French biotech from Lille, established since 1999 in Eurasante, experienced a massive correction last week (-44%). Being listed on Euronext and targeting the US market is a day-to-day challenge for this company engaged in a strategic market with fierce competition.
"Genfit is a case study with hundreds of small private investors joining forces to defend the stock" comments Silvain E, Chairman of Horizon Genfit. The association was created 18 months ago and gather today 1,500 members, accounting for 20% of the share capital (5 million out of 23 million shares). Genfit key stakeholders include Biotech Avenir (management), regional PE firm Finorpa, CIC bank, as well as a growing number of bulge-bracket institutional investors from the US and the UK - rushing on the French golden egg over the last six months.
A speculative move to potentially weaken Genfit? "nothing can be excluded" says Silvain E.
A €28bn virgin market
"Genfit is currently finalizing the phase 2b trial of GFT505, its lead pipeline product aiming at treating NASH (Non-Alcoholic Steato-Hepatitis), a metabolism-related liver disease which can progress to cirrhosis or liver cancer and shows a dramatically increasing prevalence worldwide - including in the United States and China. This virgin market is estimated to be worth $30bn per year in the next 10 years. Genfit may capture 30% to 50% of this huge market and we can presume it's a concern for main competitors in the US".
Last Friday, Genfit stock ($GNFTF) fell by 44% following the long-awaited results of its Golden 2b trial. A clumsy communication, perceived as disappointing by the Stock Market and amplified by speculators, that Mr. Jean-Francois Mouney (Chairman of Genfit) tried to turn round in financial media over the week-end. The stock has been slowly recovering since then, exchanging at around €35 on Tuesday morning (absolute peak of €70.64 on February 20th).
Sale as an option?
To conduct the final stage of its GFT505 product, Genfit will obviously need to raise significant financing, a typical issue for biotech companies requiring long and expensive R&D studies.
Mr. Mouney is exploring all options, including a partnership with a pharma company, a disposal of the company or an IPO on Nasdaq by year-end (second largest stock market in the US).
Will the mid-sized company from Lille (€1.6bn market capitalization for sales of c.€2m and 80 people employed) be able to resist temptations and assaults of the stock market?
Similarly to dot.com companies hit by the crisis in the 1990's and 2000's, biotech companies have become the new target of vulture funds. We wish Genfit a better future.