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1 Stock That Could Double Your Money

1 Stock That Could Double Your Money

This small but promising biotech recently had its U.S. debut and analysts say it could deliver a triple-digit return over the next twelve months.

Nonalcoholic steatohepatitis (NASH) is one of the hottest areas for biomedical research at the moment.

NASH is caused by a buildup of fat in the liver, leading to inflammation, and is often linked to diabetes and obesity. The disease effects around 20 million patients in the U.S. and is set to become the top reason patients are put on the liver transplant waitlist by 2020. 

Still, there are no approved treatments for the disease in either the U.S. or EU, though it is estimated that the indication could be worth upwards of $35 billion annually within the next two years. As such, multiple biotech companies are chomping at the bit to get an approval on a NASH treatment as those first to market stand to rake in billions.

NASH’s massive commercial potential remains largely academic at this point as the leaders in the space—Gilead Sciences (NASDAQ: GILD) and Intercept Pharmaceuticals (NASDAQ: ICPT)—have both released somewhat underwhelming late-stage clinical trial data recently. 

Late-stage data on Intercept’s drug, obeticholic acid (OCA), showed that it induced a statistically significant improvement in fibrosis, but not NASH resolution, and a higher-than-anticipated number of patients dropped out of the trial due to the treatment’s uncomfortable side effect of itching.

But there’s another stock that looks promising in the space. France’s Genfit (NASDAQ: GNFT) started trading in the U.S. a month ago with a $135 million IPO, and late-stage data for its elafibranor candidate is due out before the end of this year. 

Genfit hasn’t received nearly as much attention as many of the other biotechs working on treatments for NASH, but the company looks set to be one of the first to market with elafibranor, which is expected to be submitted for approval in 2020. 

So far, elafibranor is the only NASH drug to have demonstrated efficacy on resolution of the disease without worsening of fibrosis, but also potentially improving that issue as well, which could position the company for massive success in the growing NASH space. The drug was also shown to do this while also decreasing cardiovascular risks, and while demonstrating good safety and tolerability in trials.

“If you then think about the commercial opportunity and the target patient population, it’s not difficult to understand that if we have success in Phase 3 trials, elafibranor is positioned to treat the widest NASH patient population,” with both late stage patients suffering with a lot of fibrosis, as well as earlier stage sufferers, said Genfit’s COO, Dean Hum. 

But NASH treatment isn’t the only focus for Genfit. The company is also developing a less painful and invasive blood test to diagnose patients with NASH. The current diagnostic tool is a liver biopsy. The company hopes to market first as a laboratory-developed test in 2019 before submitting it for regulatory approval next year. 

Genfit is also working on the autoimmune liver disease primary biliary cholangitis (PBC), and its pediatric NASH treatment is currently in Phase 2 trials. 

It has already secured breakthrough designation with the FDA for elafibranor for the treatment of PBC on the heels of strong mid-stage data. The breakthrough designation comes as Genfit is set to begin a Phase 3 trial for the indication later this year. 

The company published top-line data from its Phase 2 trial for elafibranor in the PBC indication later last year, and the treatment demonstrated positive effects on serum alkaline phosphatase, bilirubin, and a host of other markers relevant to patients with PBC. 

While NASH is a much larger market, elafibranor’s use for another indication is certainly good news for Genfit. And Hum believes the positive PBC data could also provide evidence to counter those skeptics about the treatment’s viability for NASH.

“A lot of these different markets, whether they’re lipid markers or inflammatory markers or things like gamma GT, these are going to be important for the NASH patient as well. So, I think this provides some read through as to what we can expect in the phase 3 in the NASH patients. It is hitting targets in the liver,” Hum said. “The drug is well-positioned to become standard-of care.”

Analysts are bullish on Genfit and all five analysts covering the stock rate it a Buy. Their average target price for GNFT is $52.62, suggesting possible upside of 110.3% over the next twelve months. Earlier this week, HC Wainwright set its price target for the stock at $72 – 188% higher than Thursday’s closing price. 

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