Genfit SA (GNFTF)

[Wildbilly]

Dump Intercept And Buy Genfit

Summary

NASH has no FDA-approved therapy and could represent a $35 billion untapped market.
Intercept and Genfit are currently leading the race to get the first NASH drug approved.
Intercept has the favors of many analysts, but a careful analysis of data and trial designs suggests that Genfit might come out first as Intercept's shortages are piling up.
As both companies' stock prices are inversely correlated, Intercept's loss is bound to be Genfit's gain.
Non-alcoholic steatohepatitis, or NASH, is a form of chronic liver disease caused by a build-up of fat in the liver (progressive fatty liver disease) affecting at least 2 to 5 percent of Americans. There is currently no FDA-approved therapy for NASH, even though the disease can progress to cirrhosis and ultimately lead to hepatocellular carcinoma (liver cancer), which makes it one of the major unmet medical need of the 21st century. The market for NASH drugs is currently estimated to reach $35 to $40 billion by 2025, a huge untapped market that could support one or several blockbuster drugs in the years to come.

Several companies are currently developing NASH drugs, but until now, only Intercept (NASDAQ:ICPT) and Genfit (OTCPK:GNFTF) have demonstrated histological proof of efficacy that their compounds are able to reverse or reduce NASH symptoms in randomized controlled trials. Intercept recently announced the design of its Phase 3 trial of obeticholic acid, or OCA, while Genfit is currently preparing its own Phase 3, to be announced before the end of the year, with its leading compound, elifibranor.

Since the announcement of Intercept's and Genfit's Phase 2b results, there has been a huge amount of speculation from investors and analysts about which of the two companies stands better chances of reaching FDA requirements in a larger pivotal Phase 3 trial - success in Phase 3 would translate in the ability to put on the market the very first specific NASH drug approved by the FDA and capture a significant share of this huge untapped market.

In terms of pair trading, this connection between Intercept and Genfit has been demonstrated by past events: the impact on both companies' stock prices due to major announcements has been strongly (inversely) correlated - see Figure 1. For example, upon the announcement of Genfit's Phase 2b results, Intercept's stock jumped more than 10% as the market's initial reaction was clearly negative towards Genfit's prospects. On the contrary, when Intercept announced its Phase 3 design, Genfit gained about 8% as the market was digesting the implications of the trial's size and endpoints.

Betting On The First NASH Blockbuster Drug: Dump Intercept And Buy Genfit - Intercept Pharmaceuticals (NASDAQ:ICPT) | Seeking Alpha

( Read more:) http://seekingalpha.com/article/3267965-betting-on-the-first-nash-blockbuster-drug-dump-intercept-and-buy-genfit?auth_param=vfef:1ao8hbe:5688b9c83c7f7fc58fc2e05718fbf05b&uprof=44

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