Small-cap biotechnology firm, Genfit (NASDAQ:GNFT), is climbing 2% in pre-market trading. After hitting a recent lull, is Genfit stock about to break out?
Let’s check this out.
The French biotech company uplisted to the NASDAQ exchange in late March. Since then, it has hit highs of $25.65 and lows of $20.14—the latter only hit several days ago. Everything has been going well for the firm, so what caused the recent drop?
The issue lies with Genfit’s lead candidate drug called elafibranor. However, it is also the potential in this drug that makes Genfit stock attractive to some investors.
Here’s the good:
Elafibranor could become one of the first drugs ever approved to treat non-alcoholic steatohepatitis (NASH). The company expects to submit for approval of elafibranor in 2020.
So far, elafibranor is the only NASH drug “to have demonstrated efficacy on NASH resolution without worsening of fibrosis, improvement of patients’ lipid profiles, improvement of metabolic profiles, and tolerability.”
Because of this, Genfit is on the radar as the NASH market is gigantic. Should the drug receive approval, then Genfit stock is primed for massive rewards.
Additionally, with a market cap of less than $930 million USD, Genfit is relatively inexpensive when compared to several of its peers also developing NASH drugs.
So What Caused the Dip?
Sitting in the highly competitive NASH market also places Genfit in the firing line for when other companies falter. Yes, the knock-on effect from a competitor’s failure can be damaging, as often drugs are very close in make-up.
Recently, Genfit experienced this issue as it drew comparisons to biotech competitor, Cymabay (NASDAQ:CBAY)—whose NASH drug recently stumbled.
According to endpts.com, the latter’s “PPARδ agonist, seladelpar, fizzled in a snapshot of data from an ongoing mid-stage trial.”
Effectively, the drug failed as, after a twelve week trial period, patients on the placebo performed better.
This lead to Genfit having to defend its drug and its PPAR antagonist and Genfit stock dipped as investors lost faith.
On the Horizon
It seems the potential outweighs here, and only yesterday, the company unveiled a $228 million deal with China’s Terns Pharmaceuticals to further develop elafibranor.
Keep an eye on Genfit stock!
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