UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 20-F
(Mark One)
o
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
x
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2024
OR
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
o
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of event requiring this shell company report
Commission File Number 001-38844
GENFIT S.A.
(Exact name of Registrant as specified in its charter and translation of Registrant’s name into English)
France
(Jurisdiction of incorporation or organization)
Parc Eurasanté
885, avenue Eugène Avinée
59120 Loos, France
(Address of principal executive offices)
Pascal Prigent
Chief Executive Officer
GENFIT S.A.
Parc Eurasanté
885, avenue Eugène Avinée
59120 Loos, France
Tel: +33 (0)3 2016 4000 / Fax: +33 (0)3 2016 4001
(Name, Telephone, Email and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act.
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
American Depositary Shares, each representing one ordinary share,
nominal value €0.25 per share
GNFT
The Nasdaq Global Select Market
Ordinary shares, nominal value €0.25 per share*
*
The Nasdaq Global Select Market*
*Not for trading, but only in connection with the registration of the American Depositary Shares.
Securities registered or to be registered pursuant to Section 12(g) of the Act. None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act. None
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report. Ordinary
shares: 49,996,185 shares outstanding as of December 31, 2024
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ☐ Yes ☒ No
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934. ☐ Yes ☒ No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒Yes ☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of “large
accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer o
Accelerated filer x
Non-accelerated filer o
Emerging growth company o
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended
transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act .☐
†
The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification
after April 5, 2012.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting
under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of
an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's
executive officers during the relevant recovery period pursuant to § 240.10D-1(b). ☐
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
U.S. GAAP ☐
International Financial Reporting Standards as issued by the International Accounting Standards Board ☒ Other ☐
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. ☐ Item 17 ☐ Item 18
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No
TABLE OF CONTENTS
Page
PART I
Item 1.
Identity of Director, Senior Management and Advisers.
7
Item 2.
Offer Statistics and Expected Timetable.
7
Item 3.
Key Information.
7
Item 4.
Information on the Company.
46
Item 5.
Operating and Financial Review and Prospects.
94
Item 6.
Directors, Senior Management and Employees.
108
Item 7.
Major Shareholders and Related Party Transactions.
128
Item 8.
Financial Information.
132
Item 9.
The Offer and Listing.
133
Item 10.
Additional Information.
134
Item 11.
Quantitative and Qualitative Disclosures About Market Risk.
146
Item 11C. Interim Periods.
148
Item 11D. Safe Harbor
148
Item 12.
Description of Securities Other than Equity Securities.
149
PART II
Item 13.
Defaults, Dividend Arrearages and Delinquencies.
151
Item 14.
Material Modifications to the Rights of Security Holders and Use of
Proceeds.
151
Item 15.
Disclosure Controls and Procedures.
151
Item 16A. Audit Committee Financial Expert.
152
Item 16B.
Code of Business Conduct and Ethics.
152
Item 16C. Principal Accountant Fees and Services.
152
Item 16D. Exemptions from the Listing Standards for Audit Committees.
153
Item 16E.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers.
153
Item 16F.
Change in Registrant’s Certifying Accountant.
153
Item 16G. Corporate Governance.
154
Item 16H. Mine Safety Disclosure.
155
Item 16I.
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.
155
Item 16J.
Insider trading policies
155
Item 16K.
Cybersecurity
155
PART III
Item 17.
Financial Statements.
157
Item 18.
Financial Statements.
157
Item 19.
Exhibits.
158
2
INTRODUCTION
Unless otherwise indicated, “GENFIT,” “the company,” “our company,” ‘the group,” “we,” “us” and “our” refer to GENFIT S.A.
and its consolidated subsidiaries.
“GENFIT”, the GENFIT logo, “RESOLVE-IT®”, "UNVEIL-IT®", “NIS4®”, "NIS2+®", “ELATIVE®”, "NASHNext®", "IQIRVO®" and other
trademarks or service marks of GENFIT appearing in this Annual Report on Form 20-F, or annual report, are the property of
GENFIT S.A. or its subsidiaries. All other trademarks, trade names and service marks appearing in this annual report are the
property of their respective owners. We do not intend to use or display other companies’ trademarks and trade names to imply
any relationship with, or endorsement or sponsorship of us by, any other companies.
Our audited consolidated financial statements have been prepared in accordance with International Financial Reporting
Standards, or IFRS, as issued by the International Accounting Standards Board, or IASB, and in accordance with IFRS as adopted
by the European Union. Our financial statements included in this annual report are presented in euros and, unless otherwise
specified, all monetary amounts are in euros. All references in this annual report to “$,” “US$,” “U.S.$,” “U.S. dollars,” “dollars” and
“USD” mean U.S. dollars and all references to “€” and “euros,” mean euros, unless otherwise noted. Throughout this annual report,
references to ADSs mean American Depositary Shares or ordinary shares represented by such ADSs, as the case may be.
3
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 20-F, or annual report, contains forward-looking statements within the meaning of Section 27A
of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that are based on
our management’s beliefs and assumptions and on information currently available to our management. All statements other than
present and historical facts and conditions contained in this annual report, including statements regarding our future results of
operations and financial positions, business strategy, plans and our objectives for future operations, are forward-looking
statements. When used in this annual report, the words “anticipate,” “believe,” “strive,” “can,” “could,” “estimate,” “expect,”
“intend,” “is designed to,” “may,” “might,” “plan,” “potential,” “predict,” “objective,” “should,” or the negative of these and similar
expressions identify forward-looking statements. Forward-looking statements include, but are not limited to, statements about:
•
potential regulatory approval and commercialization of Iqirvo® (elafibranor) in jurisdictions where it is not already
approved for commercialization, as well as future plans for development and commercialization of tests powered by our
NIS2+® technology or its improvements and our other drug candidates;
•
the initiation, timing, progress and results of our preclinical studies and clinical trials, including the timing of availability of
data from our clinical trials;
•
our ability to successfully expand and advance our pipeline of drug candidates, including through in-licensing agreements;
•
our and our collaborators' ability to expand the research, clinical and commercial use of diagnostics incorporating our
NIS4® technology or its improvements;
•
the timing of our planned regulatory filings;
•
the timing of and our ability to obtain and maintain regulatory approvals;
•
the clinical utility and market acceptance of our drug candidates and tests powered by our NIS4® technology or its
improvements;
•
the potential clinical utility of our product candidates and their potential advantages over existing therapies as well as
those in development;
•
our ability to establish and maintain manufacturing and supply arrangements for our product candidates;
•
our ability to build our commercial organization in the event we elect to directly commercialize any approved products;
•
the ability of third parties with whom we contract to successfully conduct, supervise and monitor clinical trials for our
product candidates;
•
the potential benefits of strategic collaboration agreements and our ability to enter into strategic arrangements;
•
the effects of increased competition as well as innovations by new and existing competitors in our industry;
•
our ability to maintain, protect and enhance our intellectual property rights and proprietary technologies and to operate
our business without infringing the intellectual property rights and proprietary technology of third parties;
•
our estimates regarding future milestone payments and royalties for Iqirvo® (elafibranor) under our licensing agreement
with Ipsen, cash consumption, revenues, expenses and needs for additional financing, including our ability to fund our
existing programs and execute our strategy based on our current financial position; and
•
other risks and uncertainties, including those listed in this annual report under the caption “Risk Factors.”
You should refer to the section of this annual report titled Item 3.D - "Risk Factors” for a discussion of important factors that
may cause our actual results to differ materially from those expressed or implied by our forward-looking statements. As a result of
these factors, we cannot assure you that the forward-looking statements in this annual report will prove to be accurate.
Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant
uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us
or any other person that we will achieve our objectives and plans in any specified time frame or at all. We undertake no obligation
to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise, except as
required by law.
You should read this annual report and the documents that we reference in this annual report and have filed as exhibits to
this annual report completely and with the understanding that our actual future results may be materially different from what we
expect. We qualify all of our forward-looking statements by these cautionary statements.
This annual report contains market data and industry forecasts that were obtained from industry publications. These data
involve a number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates. We have not
independently verified any third-party information. While we believe the market position, market opportunity and market size
information included in this annual report are generally reliable, such information is inherently imprecise.
4
SUMMARY RISK FACTORS
Investing in our shares involves numerous risks, including the risks described in Item 3.D - "Risk Factors" of this annual
report. Below are some of our principal risks, any one of which could materially adversely affect our business, financial condition,
results of operations, and prospects:
•
Drug development is subject to a number of risks and the Group is highly exposed to the occurrence of any one of these
inherent risks. Our activities in this area are all the more risky as many of our drug candidates are being evaluated in ACLF,
a new therapeutic area, characterized by a life-threatening condition that may be fatal in the short term, are at an early
development stage and, for some of them, we were not involved in the initial research and discovery work, and may be less
familiar with their mechanisms of action.
•
Development failure can occur at any stage of preclinical or clinical development. The results of earlier preclinical studies
or clinical trials are not necessarily predictive of future results of product candidates that we or our collaborators advance
through preclinical studies or clinical trials. We may not have favorable results in later clinical trials, which may delay, limit
or prevent our ability to receive regulatory approval or marketing authorization.
•
Delays in the commencement and completion of preclinical studies and clinical trials, and in enrollment of patients for
clinical trials, including our ongoing clinical trials, could result in increased costs to us and for different reasons, including
those related to the targeted disease area or technical characteristics of a protocol, delay or limit our ability to obtain
regulatory approval for elafibranor and our other drug candidates. Such delays and costs could impair our financing
capacity, and these events may limit or compromise our ability to continue development and to eventually commercialize
our drug candidates.
•
We cannot be certain that Iqirvo® (elafibranor) or any of our other product candidates, even if they meet preclinical,
clinical and regulatory requirements, will receive regulatory approval or certification, as applicable, and without
regulatory approval or certification, we or our collaborators will not be able to market our product candidates, to
continue marketing them or to market them in all territories or indications where we or our current or future partners
would like to market them. There is no guarantee that obtaining marketing authorization for a drug candidate in a given
territory or for a given indication will lead to similar marketing authorization in another indication or in another territory.
•
Even though we have obtained orphan drug designation for elafibranor for the treatment of PBC in both the US and EEA,
we, or Ipsen, may not be able to obtain or maintain the benefits associated with orphan drug status, including market
exclusivity. We have also received and may continue to seek orphan drug designation for other of our product candidates,
but we may not be able to obtain it or maintain the benefits associated with this designation.
•
To accelerate the development, approval or future commercialization of some of our other drug candidates, we, or our
current or future collaborators, may seek to use certain regulatory pathways, but such mechanisms may not actually lead
to a faster development or regulatory review or approval process, and may not increase the likelihood that our drug
candidates will receive marketing approval.
•
Our future capital resources depend in large part on the commercial success of Iqirvo® (elafibranor) in PBC in those
countries where it is approved, in particular in the United States and the European Union, where its approval is
conditioned results of confirmatory clinical studies which are ongoing. It also depends on the ability of Iqirvo® (elafibranor)
to obtain new regulatory approvals and/or reimbursement in additional countries and indications. Because our access to
alternative financing is limited, failure in PBC could impact our strategic decisions with respect to the preclinical or
clinical development of our other product candidates and may affect the development or timing of our business
prospects.
•
We will require substantial additional funding to develop and commercialize our drug candidates, if approved, as well as to
reinforce our pipeline, which may not be available to us, or to our current or future partners on acceptable terms, or at all,
and, if not so available, may require us or them to delay, limit, reduce or cease our operations.
•
Even if approved, our product candidates may find themselves at a competitive disadvantage or not achieve broad market
acceptance among physicians, patients and healthcare payors, in particular due to competition from other drugs or
diagnostics, and as a result our revenues generated from their sales may be limited.
•
If we, or our current and future collaborators are unable to establish sales, marketing and distribution capabilities for
elafibranor or our other product candidates, we may not be successful in commercializing those product candidates if and
when they are approved.
•
Government restrictions on pricing and reimbursement, as well as other healthcare pay or cost-containment initiatives,
may negatively impact our ability or that of our current or future collaborators to generate revenues even if we or they
obtain regulatory approval to market a product candidate.
•
We have entered, and may in the future enter into, collaboration, licensing or co-marketing agreements with third parties
for the development and eventual commercialization of our product candidates and NIS4® diagnostic technology or its
improvements and may not generate revenues from these agreements.
•
We depend on third-party contractors for a substantial portion of our operations, namely contract research organizations
or CROs for our preclinical studies and clinical trials and contract manufacturing organizations or CMOs for
manufacturing of our active ingredients and therapeutic units and may not be able to control their work as effectively as if
we performed these functions ourselves.
5
•
We rely entirely on third parties for the manufacturing of our drug candidates and the future manufacturing of an in-vitro
diagnostic, or IVD, powered by NIS4® or its improvements for use as a clinical diagnostic. Our business could be harmed if
those third parties fail to provide us with sufficient quantities of drug product or tests, or fail to do so at acceptable quality
levels or prices.
•
Starting in mid-2020 and into 2021, we embarked on a significant strategic reorientation which resulted in a significant
changes to our organization and workforce. As a result, we may encounter difficulties in managing development of our
product candidate pipeline, which could disrupt our operations.
•
We have recently acquired and may in the future acquire, products or businesses or form new strategic alliances, and we
may not realize the benefits of such partnerships or acquisitions.
•
Our internal information technology systems and those of our current or future collaborators or those of our third-party
contractors or consultants, may fail or suffer security breaches, any of which could result in a material disruption of our
product development and commercialization programs.
•
If we are unable to obtain and maintain sufficient patent protection for our product candidates, or if the scope of the
patent protection is not sufficiently broad, our competitors could develop and commercialize products similar or identical
to ours, and our ability or that of a potential future partner to commercialize our product candidates successfully may be
adversely affected.
•
To date we have not generated any significant direct recurring revenue from product sales. Indirect revenues from royalty
payments under our licensing agreements depend or will depend, among other things, on the success of the development
and/or marketing by our partners of the drug candidates or products we have out-licensed. As a result, our ability to
sustainably reduce our losses, reach lasting profitability, as a result of such types of revenue, and maintain our
shareholders equity on our own is unproven, and we may never achieve or sustain profitability.
•
Our ability to maintain profitability in the future will depend on our ability and that of our current or future collaborators to
obtain marketing approval for and successfully commercialize our product candidates, particularly our lead product,
Iqirvo® (elafibranor).
•
The market price of our equity securities is particularly volatile and may decline regardless of our operating performance.
•
The dual listing of our ordinary shares and our ADSs may adversely affect the liquidity and value of our ordinary shares and
ADSs.
•
The rights of shareholders in companies subject to French corporate law differ in material respects from the rights of
shareholders of corporations incorporated in the United States.
6
PART I
Item 1.
Identity of Director, Senior Management and Advisers.
Not applicable.
Item 2.
Offer Statistics and Expected Timetable.
Not applicable.
Item 3.
Key Information.
A.
[Reserved]
B.
Capitalization and Indebtedness
Not applicable.
C.
Reasons for the Offer and Use of Proceeds
Not applicable.
D.
Risk Factors
Our business faces significant risks. You should carefully consider all of the information set forth in this annual report and in
our other filings with the United States Securities and Exchange Commission, or the SEC, including the following risk factors
which we face and which are faced by our industry. Our business, financial condition or results of operations could be materially
adversely affected by any of these risks. This report also contains forward-looking statements that involve risks and
uncertainties. Our results could materially differ from those anticipated in these forward-looking statements, as a result of certain
factors including the risks described below and elsewhere in this annual report and our other SEC filings. See “Special Note
Regarding Forward-Looking Statements” above.
Risks Related to the Discovery and Development of and Obtaining Regulatory Approval for Our Product Candidates
Drug development is subject to a number of risks and the Group is highly exposed to the occurrence of any one of these
inherent risks. Our activities in this area are all the more risky as many of our drug candidates are being evaluated in ACLF, a
new therapeutic area characterized by a life-threatening condition that may be fatal in the short term, are at an early
development stage and, for some of them, we were not involved in the initial research and discovery work, and may be less
familiar with their mechanisms of action.
Drug development is a long, costly and uncertain process, aimed at demonstrating the therapeutic benefit of a drug
candidate that competes with existing products and standards of care or other drug candidates in development.
Since the successful clinical development of Iqirvo® (elafibranor) (Iqirvo® is the commercial name used by our partner Ipsen
to market elafibranor in PBC) carried out under the licensing agreements we signed with Terns Pharmaceuticals in 2019 in
Greater China, and Ipsen in 2021 in other major pharmaceutical markets, our product pipeline is now composed of drug
candidates whose development is much less advanced and therefore inherently more risky. These drug candidates, even if they
have demonstrated promising initial preclinical or clinical results, have yet to obtain their preclinical and/or clinical proof-of-
concept in the indications for which they are intended, and their safety and tolerability profiles are not yet proven.
For example, in the second half of 2023, our drug candidates VS-01 in ACLF and GNS561 in CCA with KRAS mutation entered
Phase 2 and Phase 1b/2 respectively, in order to provide clinical proof-of-concept and better understand the safety and
tolerability profiles of these mechanisms of action.
Our other drug candidates are at an even earlier stage, since they have either obtained initial Phase 1 clinical trial results,
which is the case for NTZ before we decided to reformulate this drug candidate now referred to as G1090N, or have never been
administered in humans in the therapeutic areas in which we are developing them (G1090N, SRT-015 in intravenous formulation,
and CLM-022 in ACLF, VS-01 in UCD/OAs and VS-02 in HE).
7
Most of these drug candidates are being developed to treat ACLF (VS-01, G1090N, SRT-015, CLM-022), a condition for which
we have little experience in recruiting patients for clinical trials, for which no treatment has yet been approved and in a disease
area characterized by a life-threatening condition that may be fatal in the short term . ACLF shares these characteristics with
CCA with KRAS mutation. As a result, we are more exposed to the risks associated with the preclinical and clinical development
of our drug candidates than companies operating in better-understood therapeutic areas, with patients suffering from less life-
threatening diseases and diseases for which there are already approved treatments and clearly-defined pathways to regulatory
approval. We are also exposed to the risks and uncertainties of not being able to demonstrate that our drug candidates provide
sufficient therapeutic benefit. Some of these product candidates are also intended to treat diseases for which we have limited
experience with drug development, which creates further risks in their development.
Finally, a significant part of our development pipeline (G1090N, VS-01 and VS-02, SRT-015 and CLM-022) results either from
the acquisition of licensing rights or intellectual property from other companies (Genoscience, Seal Rock Therapeutics and
Celloram), or from our Group's acquisition of Versantis AG. Despite due diligence and evaluation procedures we have carried out
on the quality of previous results obtained by these companies, the development of these programs is riskier than if we had
developed them ourselves from the outset.
Development failure can occur at any stage of preclinical or clinical development. The results of earlier preclinical studies
or clinical trials are not necessarily predictive of future results of product candidates that we or our collaborators advance
through preclinical studies or clinical trials. We may not have favorable results in later clinical trials, which may delay, limit or
prevent our ability to receive regulatory approval or marketing authorization.
Development failure can occur at any stage of our preclinical or clinical development or those of our current partner or a
future partner. Preclinical studies or clinical trials may produce negative or inconclusive results, and we or our collaborators may
decide, or regulators may require us, to conduct additional clinical trials or preclinical studies in order to continue development.
In addition, data obtained from trials and studies are susceptible to varying interpretations, including interim data, and regulators
may not interpret our data as favorably as we or our collaborators do, which may delay, limit or prevent regulatory approval or
marketing authorization.
Success in preclinical studies and early clinical trials, or positive interim clinical results, does not ensure that final clinical
results or subsequent clinical trials will generate the same or similar results or otherwise provide adequate data to demonstrate
the efficacy and safety of a product candidate. A number of companies in the pharmaceutical industry, including those with
greater resources and experience than us or our current and potential future collaborators, have suffered significant setbacks in
later-stage trials, including Phase 3 clinical trials and at other stages of preclinical and clinical development even after seeing
promising results in earlier clinical trials.
For example, in May 2020, we published the topline results of the interim analysis of our Phase 3 RESOLVE-IT® trial of
elafibranor in Metabolic dysfunction associated steatohepatitis or MASH. Elafibranor did not demonstrate a statistically
significant effect on the primary surrogate efficacy endpoint of MASH resolution without worsening of fibrosis or on the key
secondary endpoints. These results led us to stop development of elafibranor in MASH due to lack of efficacy but not due to
safety reasons.
In addition, the design of a preclinical study or clinical trial can determine whether its results will support approval of a
product and flaws in the design of a clinical trial may not become apparent until the clinical trial is well-advanced. We or our
collaborators may be unable to design and execute a preclinical study or clinical trial to support regulatory approval. Further,
clinical trials of potential products often reveal that it is not practical or feasible to continue development efforts. If elafibranor or
our other drug candidates are found to be unsafe or lack efficacy for any indication, we or our collaborators will not be able to
obtain regulatory approval for them, and our prospects and business may be materially and adversely affected.
In some instances, there can be significant variability in safety and/or efficacy results between different trials of the same
product candidate due to numerous factors, including changes or differences in trial protocols, patient distribution by clinical
investigator site, standards of care across sites, differences in composition of the patient populations, adherence to the dosing
regimen and other trial protocols and the rate of dropout among clinical trial participants. Such instances undermine the
readability and acceptability of the results, both for the clinical trial sponsor and regulatory authorities, and our ability to create
long-term shareholder value, and could lead to halting the development of the product candidate.
Delays in the commencement and completion of preclinical studies and clinical trials, and in enrollment of patients for
clinical trials, including our ongoing clinical trials, could result in increased costs to us and for different reasons, including
those related to the targeted disease area or technical characteristics of a protocol, delay or limit our ability to obtain
regulatory approval for elafibranor and our other drug candidates. Such delays and costs could impair our financing
capacity, and these events may limit or compromise our ability to continue development and to eventually commercialize our
drug candidates.
Our pipeline includes several drug candidates at different stages of preclinical and clinical development (see Item 4 -
"Information on the Company").
Preclinical and clinical development of a drug candidate is a long, costly and uncertain process, aimed at demonstrating the
therapeutic benefit of a drug candidate that competes with existing products and standards of care or those currently under
development.
8
At the preclinical stage, we may not be able to generate and complete the preclinical, toxicological, in vivo or in vitro data
needed to support the launch of clinical trials with regulatory authorities, or such data may be obtained later than anticipated,
which in the latter case could increase our product development costs, delay the subsequent phase of clinical development, and
potentially limit our ability to obtain regulatory approval of our drug candidates.
The results from these trials may not be available when we expect or we or our collaborators may be required to conduct
additional clinical trials or preclinical studies not currently planned in order to receive approval for our product candidates. In
addition, our clinical programs and those of our partners Ipsen and Terns Pharmaceuticals are subject to a number of variables
and contingencies.
The commencement, enrollment and completion of clinical trials can be delayed or suspended for a variety of reasons,
including:
•
inability to demonstrate sufficient safety and efficacy to obtain regulatory approval to commence a clinical trial;
•
inability to validate test methods to support quality testing of the drug substance and drug product;
•
inability to determine dosing and clinical trial design;
•
inability to obtain sufficient funds or financing required to conduct or complete a clinical trial due to unforeseen costs or
other strategic or business decisions of the Group, or its current or future partners;
•
inability to enter into collaborations relating to the development and commercialization of our product candidates;
•
inability to reach agreements on acceptable terms with prospective contract research organizations, or CROs, trial sites
and contract manufacturing organizations or CMOs, the terms of which can be subject to extensive negotiation and may
vary significantly among different CROs, trial sites and CMOs;
•
clinical holds, other regulatory objections to commencing or continuing a clinical trial or the inability to obtain regulatory
approval to commence a clinical trial in countries that require such approvals;
•
discussions with the FDA, European Medicines Agency or EMA, the competent authorities of European Economic Area, or
EEA, countries or other non-U.S. regulators regarding the scope or design of our clinical trials, which may occur at various
times, including subsequent to the initiation of the clinical trial;
•
governmental or regulatory delays and changes in regulatory requirements, policy and guidelines, including mandated
changes in the scope or design of clinical trials or requests for supplemental information with respect to clinical trial
results;
•
varying interpretations of our data, and regulatory commitments and requirements by the FDA, EMA, European
Commission (EC) and similar foreign regulatory authorities;
•
inability to identify and maintain a sufficient number of trial sites, many of which may already be engaged in other clinical
trial programs, including some that may be for the same indications targeted by our product candidates;
•
delay in receiving results from or the failure to achieve the necessary results in other clinical trials;
•
inability to obtain approval from institutional review boards, or IRBs, or positive opinions from Ethics Committees, to
conduct a clinical trial at their respective sites;
•
suspension or termination by a data and safety monitoring board, or DSMB, that is overseeing the clinical trial;
•
changes in the standard of care on which a clinical development plan was based, which may require new or additional
trials;
•
failure to conduct clinical trials in accordance with regulatory requirements;
•
severe or unexpected drug-related adverse effects experienced by patients, death of a patient during a trial, in particular
in a life-threatening condition that may be fatal in the short term such as those which our drug candidates aim to address
or any determination that a clinical trial presents unacceptable health risks;
•
breach of the terms of any agreement with, or termination for any other reason by, current or future collaborators that
have responsibility for the clinical development or commercialization of elafibranor or of any of our product candidates, or
investigators leading clinical trials on our product candidates;
•
inability to timely manufacture or deliver sufficient quantities of the product candidate, or other consumables required for
preclinical studies or clinical trials;
•
difficulty identifying, recruiting and enrolling patients to participate in clinical trials for a variety of reasons, including
meeting the enrollment criteria for our trial, the rarity of the disease or condition (for example ACLF and CCA with KRAS
mutation), the rarity of the characteristics of the population being studied (as is the case for the type of patients enrolled
in our Phase 1b/2 trial evaluating GNS561 and our Phase 2 trial evaluating VS-01 in ACLF), the life-threatening condition
that may be fatal in the short term for those patients and/or the significant and rapid decline in their health following
diagnosis, the nature of the protocol, the risks or technological difficulties related to procedures that may be required as
part of the trial (related to, for example, to the intravenous or intraperitoneal administration of some of our drug
candidates such as VS-01 or SRT-015), the availability of effective treatments for the relevant disease (such as PBC with
three approved treatments) and the eligibility criteria for the clinical trial, insufficient human resources or organizational
difficulties within clinical investigation centers, and competition from other clinical trial programs for the same
indications or with products with the same mechanism of action as our product candidates;
•
natural disasters or pandemics; and
9
•
inability to retain enrolled patients after a clinical trial is underway.
For example, our RESOLVE-IT® trial was a clinical trial in a disease without any approved therapies at the time and the
diagnosis of which generally involves invasive procedures such as liver biopsies. These specificities led us to face significant
competition for patient enrollment, and to delay the publication date of our topline interim analysis. More recently, delays and
difficulties in patient recruitment for our UNVEIL-IT® Phase 2 study of VS-01 in ACLF led us to delay the date on which we expect
to receive clinical results.
Delays in the commencement, enrollment and completion of our clinical trials could significantly increase our product
development costs, which could impair our financing capacity or limit our ability to obtain regulatory approvals required for the
continued development of other drug candidates and future commercialization, or have a material impact on our financial
position, commercial prospects and ability to generate revenues.
We cannot be certain that Iqirvo® (elafibranor) or any of our other product candidates, even if they meet preclinical,
clinical and regulatory requirements, will receive regulatory approval or certification, as applicable, and without regulatory
approval or certification, we or our collaborators will not be able to market our product candidates, to continue marketing
them or to market them in all territories or indications where we or our current or future partners would like to market them.
There is no guarantee that obtaining marketing authorization for a drug candidate in a given territory or for a given indication
will lead to similar marketing authorization in another indication or in another territory.
In PBC, Iqirvo® (elafibranor) received accelerated approval from the FDA in the United States in June 2024, conditional
market approval from the European Commission in the European Union in September 2024, and approval from the Medicines and
Healthcare products Regulatory Agency (MHRA) in the United Kingdom in October 2024. Iqirvo® (elafibranor) is not authorized for
any other indication and, at this stage, we do not have any other drug candidate with any marketing authorization.
In the short term, our business, our future revenues and our financial situation therefore mainly depend on the commercial
success of Iqirvo® (elafibranor) in PBC in the countries where this drug has a marketing authorization and, as relevant,
reimbursement approval.
In the longer term, and to a lesser extent, our ability to generate revenue derived from product sales will depend on Ipsen’s
ability to obtain regulatory approval/reimbursement of Iqirvo® (elafibranor) in other countries, or in that they are currently
developing or may develop in the future, as well as successful commercialization thereof
Finally, and more incidentally, in the long term, the ability to generate revenue from product sales under the license
agreement with our partner Terns Pharmaceuticals for the Greater China region.
However, there is no guarantee that the marketing authorizations already obtained for Iqirvo® (elafibranor) in PBC will lead to
similar authorizations in other territories or for other indications, or to reimbursement.
We or our current or future collaborators will not be permitted to market our drug candidates in the United States or the EEA
until we receive approval of a New Drug Application, or NDA, from the FDA or a marketing authorization, or MA, from the EC
(based on the positive opinion of the EMA), as applicable. The same is true for other countries, including the United Kingdom
since Brexit. NDAs, marketing authorization applications or MAAs and MAs in other countries must include extensive preclinical
and clinical data and supporting information to establish the drug candidate’s safety and effectiveness for each desired
indication. These marketing applications must also include significant information regarding the chemistry, manufacturing and
controls for the drug.
We cannot predict whether our ongoing or planned future trials and studies will be successful or whether regulators will
agree with our conclusions regarding the preclinical studies and clinical trials we have conducted to date, or for ongoing trials,
with our interim results.
Obtaining marketing authorization is therefore a long and costly process, with an uncertain outcome, and these applications
may fail.
Even if a drug is approved (whether conditional approval or final approval),the FDA, EMA, or competent authorities in other
countries may limit the indications for which the drug can be marketed, require a comprehensive warning to appear on the drug's
label, packaging and/or package insert, or make approval conditional on additional clinical trials or costly and/or time-consuming
reports, or post-marketing studies, such as is the case with accelerated approval granted by the FDA or conditional approval
granted by the European Commission for Iqirvo® (elafibranor) in PBC. In some cases, authorization may be withdrawn after it has
been granted. In some cases, regulatory approval or certification for any of our product candidates may be withdrawn.
Finally, obtaining regulatory approval or certification for marketing of a drug candidate or diagnostic in one country does not
ensure that we will be able to obtain regulatory approval or certification in any other country, or in another indication for the
same drug.
We are currently developing GNS561 in combination with another treatment that is not proprietary to GENFIT, and we or
our current or future partners, may pursue other combination programs in the future, which present additional risks in
comparison with single drug programs.
10
We are currently developing GNS561 in CCA with KRAS mutation in a Phase 1b/2 trial with trametinib, an MEK-targeting
protein kinase inhibitor. We, and our current or future partners, may also assess in the future, as part of some of our other current
or future programs, the potential combinations of some of our drug candidates in combination with other treatments or other of
our drug candidates.
Patients enrolled in this trial and future combination trials may not be able to tolerate our drug candidates in combination
with other treatments. Even if any drug candidate in development were to receive marketing approval or be marketed for use in
combination with other existing treatments, we would still be exposed to the risks that the FDA, EMA or other regulatory
authorities may withdraw approval of the treatment used in combination with our drug candidate or that safety, efficacy,
manufacturing or supply issues arise with such existing treatments. Combination treatments are commonly used for the
treatment of cancers and we, and our current or future partners, would be exposed to similar risks if we developed another of our
drug candidates for use in combination with other treatments for indications other than cancer. This could result in our own
products, if approved, being taken off the market or being less commercially successful.
We, and our current or future partners, may also evaluate our current drug candidates or any other future drug candidates in
combination with other treatments that have not yet been approved for marketing by the FDA, EMA or other regulatory
authorities. We or our current or future partners would not be able to commercialize and sell these drug candidates if, in the end,
these associated treatments do not obtain marketing approval.
To accelerate the development, approval or future commercialization of some of our other drug candidates, we, or our
current or future collaborators, may seek to use certain regulatory pathways, but such mechanisms may not actually lead to
a faster development or regulatory review or approval process, and may not increase the likelihood that our drug candidates
will receive marketing approval.
In 2019, the FDA granted breakthrough therapy designation for elafibranor for the treatment of PBC. A breakthrough therapy
is defined as a drug that is intended, alone or in combination with one or more other drugs, to treat a serious or life-threatening
disease or condition, and preliminary clinical evidence indicates that the drug may demonstrate substantial improvement over
existing therapies on one or more clinically significant endpoints. For drugs that are designated as breakthrough therapies,
interaction and communication between the FDA and the sponsor can help to identify the most efficient path for clinical
development while minimizing the number of patients placed in ineffective control regimens.
Designation as a breakthrough therapy is within the discretion of the FDA. Accordingly, even if we believe a drug candidate
meets the criteria for designation as a breakthrough therapy, the FDA may disagree and instead determine not to make such
designation. In any event, the receipt of a breakthrough therapy designation for a drug candidate may not result in a faster
development process, review or approval compared to conventional FDA procedures and does not assure ultimate approval by
the FDA.
In addition, even if one or more drug candidates qualifies as a breakthrough therapy, the FDA may later decide that the
product no longer meets the conditions for qualification or decide that the time period for FDA review or approval will not be
shortened. We may also seek various other designation mechanisms (such as Fast Track designation from the FDA, or orphan
drug designation) for our product candidates in the future, and even if granted, these designations may not lead to accelerated
regulatory approval, or approval at all. As is the case for all drugs, FDA will review the full data submitted to support approval of
drugs designated as breakthrough therapies to determine whether the drugs are safe and effective for their intended use and
whether the drug can be approved for marketing
For the development and eventual commercialization of elafibranor in PBC, Ipsen was able to benefit from two other
regulatory approval procedures. These are accelerated approval by the FDA and conditional marketing authorization in the EU.
The advantage of these procedures is that it is possible to obtain marketing authorization on the basis of surrogate
endpoints (a marker, laboratory measurement, physical sign or other measure, which is thought to predict clinical benefit but
which is not itself a measure of clinical benefit).
As is customary, the benefit of these procedures for the development and commercialization of Iqirvo® (elafibranor) in PBC
has been subject to our partner Ipsen's commitment to diligently conduct post-authorization studies to verify, describe and
confirm the clinical benefit of the drug. Iqirvo® (elafibranor)'s approval in the US and EU is subject to strict compliance
requirements after marketing, such as the performance of Phase 4 trials or post-authorization clinical trials by our partner Ipsen
in order to confirm the effect on the clinical endpoint. In the absence of post-marketing studies or confirmation of clinical benefit
by such post-marketing studies, the FDA and the EMA or regulatory authorities in other countries may initiate proceedings to
withdraw approval of the drug in question.
More generally, in the United States, accelerated approval is possible if the drug candidate (1) represents a treatment for a
serious life-threatening disease or condition, (2) demonstrates an effect on an endpoint that reasonably likely to predict clinical
benefit, taking into consideration (3) the condition and the availability of alternative treatments. Conditional marketing
authorization in EU is possible if (1) the benefit/risk ratio of the drug candidate is positive, (2) it is likely that the applicant will be
able to provide the required comprehensive clinical trial data, (3) the drug candidate corresponds to an unmet medical need, and
(4) the public health interest in the immediate availability of the drug candidate on the market outweighs the risks associated
with the fact that additional data still need to be provided.
11
We are also studying the possibility of benefiting from the two regulatory approval procedures described above for the
development of GNS561 in CCA with KRAS mutation and VS-01 in ACLF, in particular. In view of the significant unmet medical
needs in these indications, the Orphan Drug Designation granted by the FDA for GNS561 and VS-01 could make these programs
eligible for the various accelerated regulatory pathways proposed by the health authorities. However, the processes described
above entail decisions which are at the discretion of the EMA, the FDA or any other competent authority, and no guarantee can
be given that they will be obtained.
Even though we have obtained orphan drug designation for elafibranor for the treatment of PBC in both the US and EEA,
we, or Ipsen, may not be able to obtain or maintain the benefits associated with orphan drug status, including market
exclusivity. We have also received and may continue to seek orphan drug designation for other of our product candidates, but
we may not be able to obtain it or maintain the benefits associated with this designation.
Regulatory authorities in some jurisdictions, including the United States and the EEA, may designate drugs for relatively
small patient populations as orphan drugs. Generally, if a drug with an orphan drug designation subsequently receives the first
marketing approval for the indication for which it has such designation, the drug may be entitled to a period of marketing
exclusivity, which precludes the FDA or the EC from approving another marketing application for the same drug for that time
period.
Elafibranor received orphan drug designation for the treatment of PBC in both the US and the EEA in 2019. GNS561 also
received orphan drug designation in the United States for the treatment of CCA, and VS-01 received orphan drug designation in
both the United States and EEA for treatment of ACLF and in the United States for treatment of hyperammonemic crisis. We may
also seek orphan drug designation for future product candidates and indications.
However, we or our partners may not receive such designation for other drug candidates that we or our partners may
develop in the EEA and/or the United States or for any other drug candidate in any other jurisdiction, or for elafibranor, VS-01 or
GNS561 in any other indication. Even if we or our partners successfully receive the orphan drug designation, the orphan drug
designation does not necessarily guarantee market exclusivity on a given market. Even if we or our partners successfully obtain
the exclusivity pertaining to the orphan drug designation for any of our drug candidates, this exclusivity may not protect the
product efficiently as exclusivity may be suspended under certain circumstances. In the United States, even after a drug is
granted orphan exclusivity and approved, the FDA can subsequently approve another drug for the same condition if the FDA
concludes that the later drug is clinically superior in that it is shown to be safer or more effective than the approved drug or
makes a major contribution to patient care. In the EEA, the exclusivity pertaining to the orphan drug designation will not prevent
the marketing approval of a similar drug for the same condition if the later drug is shown to be safer, more effective or otherwise
clinically superior to the first drug, or if the owner of the market approval of the first product does not have the capacity to deliver
sufficient quantities of the product. In addition, if another orphan designated product receives marketing approval and exclusivity
for the same condition as the one for which we or a future partner seek to develop a drug candidate, we or our partner may not be
able to receive approval of our drug candidate by the relevant regulatory authorities for a significant period of time. In addition,
the European Union is considering a wide-ranging revision for the general pharmaceutical legislation, which may pose downside
risks to innovation and competitiveness in Europe, primarily due to the modification of regulatory exclusivities and a stricter
incentives framework for orphan medicinal products. Such regulatory proposals could adversely affect the exclusivity period of
elafibranor and our drug candidates generally.
If the FDA does not conclude that certain of our product candidates satisfy the requirements for the Section 505(b)(2)
regulatory approval pathway, or if the requirements for such product candidates under Section 505(b)(2) are not as we
expect, the approval pathway for those product candidates may likely take significantly longer, cost significantly more and
entail significantly greater complications and risks than anticipated, and in either case may not be successful.
We are currently conducting a clinical-stage program based on drug repositioning to develop the drug candidate G1090N
(NTZ) for ACLF, for which we may seek FDA approval through the Section 505(b)(2) regulatory pathway. The Drug Price
Competition and Patent Term Restoration Act of 1984, also known as the Hatch-Waxman Act, added Section 505(b)(2) to the
FDCA. Section 505(b)(2) permits the filing of an NDA where at least some of the information required for approval comes from
trials that were not conducted by or for the applicant and for which the applicant has not obtained a right of reference. Section
505(b)(2), if applicable to us under the FDCA, would allow an NDA we submit to the FDA to rely in part on data in the public
domain or the FDA’s prior conclusions regarding the safety and effectiveness of approved compounds, which could expedite the
development program for our product candidates by potentially decreasing the amount of clinical data that we would need to
generate in order to obtain FDA approval. NTZ is approved in another indication in the United States, and a previously-conducted
Phase 2 investigator-initiated clinical trial of NTZ in MASH-induced fibrosis was allowed based on the existing FDA evaluations of
safety in the currently-approved indication, which is a hallmark of the Section 505(b)(2) regulatory pathway. As we progress the
G1090N clinical program in ACLF, we may initiate such discussions with the FDA. If the FDA does not allow us to pursue the
Section 505(b)(2) regulatory pathway as we anticipated, we may need to conduct additional clinical trials, provide additional data
and information and meet additional standards for regulatory approval. Even if we are allowed to pursue the Section 505(b)(2)
regulatory pathway, we cannot assure you that our product candidates will receive the requisite approvals for commercialization.
12
In addition, the pharmaceutical industry is highly competitive, and Section 505(b)(2) NDAs are subject to special
requirements designed to protect the patent rights of sponsors of previously approved drugs that are referenced in a Section
505(b)(2) NDA. These requirements may give rise to patent litigation and mandatory delays in approval of our NDAs for up to 30
months or longer depending on the outcome of any litigation. It is not uncommon for a manufacturer of an approved product to
file a citizen petition with the FDA seeking to delay approval of, or impose additional approval requirements for, pending
competing products. If successful, such petitions can significantly delay, or even prevent, the approval of the new product.
However, even if the FDA ultimately denies such a petition, the FDA may substantially delay approval while it considers and
responds to the petition. In addition, even if we or a future partner are able to utilize the Section 505(b)(2) regulatory pathway,
there is no guarantee this would ultimately lead to accelerated product development or earlier approval.
Moreover, even if our product candidates are approved under Section 505(b)(2), the approval may be subject to limitations
on the indicated uses for which the products may be marketed or to other conditions of approval, or may contain requirements
for costly post-marketing testing and surveillance to monitor the safety or efficacy of the products.
The EEA and third countries have equivalent laws and obligations that could equally impact the approval of our product
candidates.
Our future capital resources depend in large part on the commercial success of Iqirvo® (elafibranor) in PBC in those
countries where it is approved, in particular in the United States and the European Union, where its approval is conditioned
results of confirmatory clinical studies which are ongoing. It also depends on the ability of Iqirvo® (elafibranor) to obtain new
regulatory approvals and/or reimbursement in additional countries and indications. Because our access to alternative
financing is limited, failure in PBC could impact our strategic decisions with respect to the preclinical or clinical development
of our other product candidates and may affect the development or timing of our business prospects.
Our future capital resources depend in large part on the commercial success of Iqirvo® (elafibranor) in PBC in the territories
where Ipsen has marketing authorization in particular in the United States and the European Union, where final approval is
conditioned on confirmation of its therapeutic benefit in ongoing confirmatory clinical trials. It also depends on Ipsen's ability to
obtain new regulatory approvals and/or reimbursement in additional countries and indications for elafibranor and on the
commercial success of Iqirvo® (elafibranor) in these territories and/or indications.
Because we have limited access to capital to fund our operations, a delay or the refusal of marketing authorization in a given
territory, unsuccessful post-marketing studies or limited commercial success in this indication could significantly negatively
affect our resources available to allocate to research, collaboration, management and financial resources toward particular
compounds, programs, product candidates or therapeutic areas. We may be restricted in the opportunities we can pursue, and
we may be required to collaborate with third parties to advance a particular product candidate at terms that are less than optimal
to us.
Because of our limited resources, we may also have to decline to pursue opportunities that may otherwise prove to be
profitable. Furthermore, any failure (or in some cases delay) in the successful development of elafibranor in PBC would result in
the non-payment of milestones and/or lower royalties negotiated under our partnership agreement with Ipsen. We may also not
be able to derive full benefit, or derive less benefit than hoped for, from the royalty-sharing agreement (royalty financing) signed in
early 2025 with HCRx (see Note 2.2 - "Major events after the period" to our consolidated financial statements included in this
annual report for further information on this agreement).
To a lesser extent, development failure of elafibranor in Greater China through Terns Pharmaceuticals could result in similar
outcomes.
Our product candidates may have undesirable side effects that may require us to stop their development, including a
clinical trial or which may delay or prevent marketing approval, or, if approval is received, require them to include safety
warnings or otherwise limit their sales.
Our drug candidates are in the early stages of development. As a result, their safety and tolerability profiles are not fully
known. Unforeseen side effects from any of our product candidates could arise either during clinical development, forcing us to
potentially stop or terminate preclinical development or a clinical trial, or, if approved or CE marked, after the approved or CE
marked product has been marketed. If severe side effects were to occur, or if elafibranor or one of our other product candidates is
shown to have other unexpected characteristics, we or our current or future collaborators may need to either restrict our use of
such product to a smaller population or abandon our or their development.
13
In addition, our product candidates are being developed as potential treatments for severe, life-threatening diseases and, as
a result, our trials will necessarily be conducted in a patient population that will be more prone than the general population to
exhibit certain disease states or adverse events. Patients with ACLF or CCA may suffer from other co-morbidities that may
increase the likelihood of certain adverse events. It may be difficult to discern whether certain events or symptoms observed
during our trials were due to our product candidates or some other factor, resulting in our company and our development
programs being negatively affected even if such events or symptoms are ultimately determined to be unlikely related to our drug
candidates. We cannot ensure that additional or more severe adverse side effects with respect to elafibranor, NTZ, GNS561, VS-01
or any other drug candidate will not develop in current or future preclinical studies or clinical trials or commercial use, which
could delay or preclude their regulatory approval, limit their commercial use or require them to be taken off the market. However,
DSMBs are set up in our main clinical trials to evaluate side effects observed during our studies at regular intervals defined in our
study protocols, and to issue recommendations concerning their continuation or the conditions for their continuation, although
they may not be effective.
If we or others later identify undesirable or unacceptable side effects caused by our products or product candidates:
•
regulatory authorities may require the addition of labeling statements, specific warnings, a contraindication or field alerts
to physicians and pharmacies;
•
we or current or future collaborators may be required to change instructions regarding the way the product is
administered, conduct additional clinical trials or change the labeling of the product;
•
we may be subject to limitations on how we may promote the product;
•
regulatory authorities may require us or current or future collaborator(s) to take our approved or CE marked product off
the market; and
•
our reputation or that of our current or future collaborators may suffer.
Risks Related to the Discovery and Development of, and Obtaining Regulatory Approval or CE Certificates of Conformity
for, our Diagnostic Technology
The development of our NIS4® technology and its variations and improvements, including NIS2+®, and tests powered by
this technology requires access to clinical trials, data and clinical samples in MASH patients and therefore our development is
also subject to the risks related to these trials.
In support of the development of our drug candidates, we conduct research and development programs to identify new,
innovative diagnostic strategies, in particular to determine the population of patients to be treated. We initially developed NIS4®
diagnostic technology as part of our elafibranor in MASH development program and have sought to continually make
improvements, with the primary objective of making it easier to identify patients with MASH who are eligible for therapeutic
intervention. Our NIS2+® technology is one of the improvements on NIS4® and carries with it the same objective.
Today, NIS4® technology (both NIS4® and NIS2+®) is out-licensed to Labcorp and Q Squared Solutions LLC or Q2 to allow
them to develop and deploy a test powered by NIS4® technology in the clinical research space. Since 2020, we have also out-
licensed to Labcorp the rights to develop NIS4® technology as an LDT and in 2021, Labcorp launched NASHNext®, an LDT
powered by NIS4® technology to provide broad clinical availability of the test to specialty and primary care physicians across the
U.S. and Canada and to identify patients with significant fibrosis or at-risk MASH.
Further development of our NIS4® technology and its improvements as an IVD will require us or our future partners to keep
gathering clinical data within the framework of trials or observational studies in which NIS4® is currently being evaluated or within
the framework of potential additional clinical trials or observational studies to come.
In these trials or observational studies, we will continue to use human samples. Even though we had preferred access to the
samples collected during the clinical development of elafibranor in MASH, we no longer develop elafibranor in this disease area
and consistent with our obligations under patient informed consent forms, no longer have access to those samples. As a result,
we may be unable to access a sufficient quantity of samples or samples of a sufficient quality or usability in the future, in which
case the continuation of the development of NIS4® and its improvements could be slowed down or even interrupted. In order to
have access to samples, we may be required to enter into partnership agreement with hospitals or other third parties, and we may
not be able to enter into these agreements under satisfactory conditions or within the desired timeframes, if at all.
The strength of NIS4® technology initially identified on a relatively limited number of samples could turn out to not be
sufficient during potential future validation studies on larger target populations, and notably not display sufficient levels of
accuracy, sensitivity or specificity in order to allow for the development of a competitive test for clinical care that would be
adopted by the medical community. The results of earlier clinical trials or studies does not allow predicting future results and
NIS4® technology may not obtain favorable results in ongoing or future clinical studies. Results for additional clinical trials may
not validate earlier positive results from other trials, which could call into question NIS4® technology's utility and medico-
economic benefit.
Developing the full medical and commercial potential of NIS4® and its derivatives, and of diagnostic tests using these
technologies, remains subject to the risks associated with diagnostic product development, requires regulatory approval
which may not be obtained and the commercial success of approved drugs to treat for MASH.
14
In order to reach the largest number of MASH patients possible, we or our future partners need to develop an IVD powered
by NIS4® technology or its improvements to identify patients with MASH and fibrosis who may be eligible for therapeutic
intervention.
In order to be allowed to directly market and sell an IVD powered by NIS4® or its improvements in the EEA, IVD
manufacturers must demonstrate compliance of their products through a conformity assessment procedure, which, depending
on the risk classification of the product, may involve a Notified Body. The Notified Body issues a CE Certificate of Conformity
following successful completion of a conformity assessment procedure. The successful completion of the conformity assessment
procedure is a prerequisite to being able to affix the CE mark to products, allowing manufacturers to market IVDs in the EEA. In
the United States, the product must achieve FDA approval/clearance. Other relevant regulatory requirements must be met to
market in other countries. In the United States, IVD tests are regulated as medical devices.
Alternatively, the product may be available as an LDT, which does not require FDA approval, but requires the laboratory
conducting the test to have been certified under the Clinical Laboratory Improvement Amendments of 1988 Act or CLIA and
certain state laboratory licenses. Both testing services by Labcorp and Covance are currently conducted within the framework of
CLIA, which establishes quality standards that must be followed in laboratory testing in order to ensure accuracy, reliability and
speed of patient test results wherever the test is conducted. This law has instated an accreditation program for clinical
laboratories, which Labcorp and Covance have received.
We currently do not have any IVD developed, approved, cleared or CE marked test that has been approved for marketing
through such a regulatory process and we cannot guarantee that we or potential collaborators will ever develop marketable IVD
tests. We have not submitted any marketing applications for any IVD test with the FDA, nor submitted any application for
certification with any Notified Body in the EEA, and, in particular, we have not submitted any marketing application for NIS4®.
The NIS4® technology and its improvements have been developed in a field where no MASH-specific non-invasive test has
been approved or CE marked nor commercialized for clinical care to date, and in an area where clinical experience is currently
limited. Our development approach relies therefore on new methodologies. It is thus possible that, in this context, our diagnostic
development does not meet a favorable outcome or that, despite a favorable outcome, regulatory authorities determine that the
results of our clinical trials or those of our collaborators are insufficient to grant market approval or CE Certificates of Conformity
for an IVD test using the NIS4® technology for clinical care of MASH patients.
Each regulatory authority may indeed refuse to issue approval or certification, impose conditions to such issuance, or
require additional data prior to issuance, even when such approval or certification would have been already granted by regulatory
authorities in other jurisdictions. Regulatory authorities may also modify their approval or certification policies, particularly by
adding new or additional conditions to grant approval or certification. As an example, Regulation (EU) 2017/746 (IVDR) governing
IVDs in the EEA entered into application on May 26, 2022 includes stricter requirements for manufacturers of IVDs to obtain the
CE Certificate of Conformity and commercialize IVDs in the EEA. We are also required to provide clinical data in the form of a
performance evaluation report as part of the conformity assessment process prior to CE marking and in post marketing clinical
follow-up activities. Fulfillment of the obligations imposed by the IVDR may cause us to incur substantial costs. We may be unable
to fulfil these obligations, or our Notified Body, where applicable, may consider that we have not adequately demonstrated
compliance with our related obligations to merit a CE Certificate of Conformity on the basis of the IVDR.
We or our potential collaborators may be subject to delays in obtaining the CE Certificate of Conformity required to affix the
CE Mark to our IVD and market a test using NIS4® or its improvements for clinical care, or even not be successful in receiving
certification, due to the entry into force the IVDR in the EEA. Such delay or failure may have an unfavorable impact on our ability
to market a test using NIS4® technology or its improvements and our ability to generate direct or indirect revenue from this
activity.
Once these authorizations have been obtained, the deployment of the IVD test will also depend to a large extent on the
distribution of the first treatments for MASH; at the date of this annual report on Form 20-F only one approved treatment exists,
Madrigal Therapeutic’s product RezdiffraTM while many other companies have been unsuccessful in clinical development.
Even after regulatory approval or CE Certificates of Conformity have been granted or declarations of commercialization have
been filed with regulatory authorities, IVD tests remains subject to materiovigilance and market-surveillance obligations
concerning incidents and risks of incidents related to their use. Even though such incidents may occur and lead regulatory
authorities to suspend, vary or even revoke the market authorization or CE Certificates of Conformity of such products.
Regulatory authorities may also conclude that procedures put in place by us or our collaborators are insufficient in order to
identify and handle incidents, and could suspend commercialization of the products until these procedures are considered
sufficient.
It is possible, in particular, that an LDT or IVD powered by NIS4® or its variations, at the time of its launch on the market for
clinical care, will not replace the current tests and medical examinations. In that case, the place of a test powered by NIS4® or its
variations, initially or as a complement or substitute of certain examinations would have to be assessed through additional
clinical studies that would allow evaluating its medico-economic benefit often required to obtain reimbursement. The results of
these studies may not meet the needs of clinical practitioners or demonstrates a favorable economic outcome. With such results,
a test powered by NIS4® or its variations may not obtain reimbursement, especially in European countries, which could materially
affect product sales.
Risks Related to the Commercialization of Our Drug Candidates and Diagnostic Technology
15
Even if approved, our product candidates may find themselves at a competitive disadvantage or not achieve broad
market acceptance among physicians, patients and healthcare payors, in particular due to competition from other drugs or
diagnostics, and as a result our revenues generated from their sales may be limited.
The commercial success of Iqirvo® (elafibranor) as a potential treatment for PBC or in other indications, our other drug
candidates or an LDT or IVD powered by NIS4® or its improvements, if approved or cleared, will depend upon their acceptance
among the medical community, including physicians, healthcare payors and patients. Given that there are a limited number of
products approved for the treatment of PBC, and no products approved for treatment of ACLF, we do not know the degree to
which Iqirvo® (elafibranor) or our other product candidates we are developing in ACLF would be accepted as a therapy, if
approved. Additionally, we cannot be assured that NASHNext®, or IVD powered by NIS4® or its improvements will continue to be
accepted by the medical community as a means of identifying patients with MASH or fibrosis who may be appropriate candidates
for therapeutic intervention, and even if an LDT or IVD powered by NIS4® or its improvements is used, a physician may still require
additional testing (e.g. liver biopsy) to confirm diagnosis using a test based on our technologies. The competitive intensity
represented by other drugs (such as Gilead's Livdelzi® (seladelpar) for the treatment of PBC, which receive accelerated approval
in the United States in August 2024 and conditional approval from the European Commission for marketing in the European
Union in February 2025) and future diagnostic solutions could very significantly influence this adoption.
The degree of market acceptance of Iqirvo® (elafibranor) in PBC or other potential indications or any of our other drug
candidates, or NASHNext® or IVD using our diagnostic technologies, if and when they would be approved will depend on a
number of factors, including:
•
demonstrated clinical safety and efficacy compared to other products;
•
changes in the standard of care or availability of alternative therapies at similar or lower costs (including generics) or with
better reimbursement rates for the targeted indications for any of our product candidates, such as competitors’ product
candidates that are in development or authorized for the treatment of PBC, or other cholestatic diseases like ACLF or
CCA, or an alternative to liver biopsy for the diagnosis of MASH and fibrosis;
•
limitations in the approved clinical indications or patient populations for our product candidates;
•
limitations or warnings, including boxed warnings, contained in our drug candidates’ FDA- or EC-approved labeling, if and
when approved;
•
lack of significant adverse side effects;
•
sales, marketing and distribution support for our products (including those out-licensed to our partners) and those of our
or our partners' competitors;
•
availability of coverage and adequate reimbursement from managed care plans and other third-party payors;
•
timing of market introduction and perceived effectiveness of competitive products;
•
the medical/economic added value of the product;
•
the extent to which our product candidates are approved for inclusion on formularies of hospitals and managed care
organizations;
•
whether our drug or diagnostic candidates are designated under physician diagnostic and treatment guidelines for the
treatment of the indications for which we, our partners Ipsen and Terns Pharmaceuticals or a potential future partner
have received regulatory approval;
•
adverse publicity about our product candidates or favorable publicity about competitive products;
•
convenience and ease of administration of our product candidates; and
•
potential product liability claims.
The following could also have a negative impact on sales:
•
if they were subject to intellectual property rights held by third parties;
•
if we or our current or future partners had no stock, or if we or our current or future partners were unable to have stock of
our authorized products manufactured;
•
if we or our current or future partners fail to obtain regulatory approval for the manufacture of our products; and
•
if they are subject to new, significant tariffs.
If our product candidates are approved, but do not achieve an adequate level of acceptance by physicians, patients, the
medical community and/or healthcare payors, sufficient revenue may not be generated from these products and we may not
become or remain profitable. In addition, efforts to educate the medical community and third-party payors on the benefits of our
product candidates may require significant resources and may never be successful.
If we, or our current and future collaborators are unable to establish sales, marketing and distribution capabilities for
elafibranor or our other product candidates, we may not be successful in commercializing those product candidates if and
when they are approved.
16
We have no sales, marketing or distribution experience and if we are unable to establish sales, marketing and distribution
capabilities, we may not be successful in commercializing our product candidates if and when they are approved. To develop
internal sales, distribution and marketing capabilities, we would need to invest significant amounts of financial and management
resources, prior to any confirmation that our product candidates will be approved. Worldwide development and
commercialization rights for elafibranor, our most advanced drug candidate, are licensed exclusively to Ipsen in PBC and in all
other indications, with the exception of rights licensed to Terns Pharmaceuticals for the development and commercialization of
elafibranor in MASH and PBC in mainland Greater China. We are therefore heavily dependent on the sales, marketing and
distribution capabilities of our partners, and Ipsen, in particular.
If we decide to market any of our products ourselves, we would need to develop our own sales and marketing capabilities.
For any product candidates where we decide to perform sales, marketing and distribution functions ourselves or through third
parties, we could face a number of additional risks, including:
•
we or our third-party sales collaborators may not be able to attract and build an effective marketing or sales force;
•
our sales personnel may be unable to obtain access to physicians or persuade adequate numbers of physicians to
prescribe any future products;
•
the cost of securing or establishing a marketing or sales force may exceed the revenues generated by any products; and
•
our direct sales and marketing efforts may not be successful or less successful than those of our competitors.
If we are unable to establish our own sales, marketing and distribution capabilities and decide to enter into arrangements
with third parties to perform these services for the products on the markets or indications that are not already subject to
licensing agreements, our revenue and our profitability, if any, are likely to be lower than if we were to sell, market and distribute
any products that we develop ourselves. Additionally, such collaboration agreements with current or potential collaborators may
limit our control over the marketing of our products and expose us to a number of risks, including the risk that the partner will not
prioritize the marketing of the product candidate or diagnostic test candidate or does not provide sufficient resources for its
commercialization.
Any of our product candidates for which we or our collaborators obtain marketing approval or CE Certificates of
Conformity will be subject to ongoing regulation and could be subject to post-marketing restrictions or withdrawal from the
market. Furthermore, we or our collaborators may be subject to substantial penalties if we fail to comply with regulatory
requirements or experience unanticipated problems with our products following approval or receipt of CE Certificates of
Conformity.
Even if we or our collaborators receive regulatory approval or CE Certificates of Conformity for a product candidate, this
approval or certification may carry conditions that limit the market for the product or put the product at a competitive
disadvantage relative to alternative therapies or diagnostic solutions. For instance, a regulatory approval may limit the indicated
uses for which we or our collaborators can market a product or the patient population that may utilize the product, or may be
required to carry a warning, such as a boxed warning, in its labelling and on its packaging. Products with boxed warnings are
subject to more restrictive advertising regulations than products without such warnings. These restrictions could make it more
difficult to market any product candidate effectively.
Additionally, any of our product candidates for which we or our collaborators obtain regulatory approval or certification, as
well as the manufacturing processes, post-approval studies and measures, labelling, advertising and promotional activities for
such products, among other things, will be subject to continual requirements of and review by the EMA, competent authorities of
EEA countries, FDA, other regulatory authorities, and Notified Bodies, as applicable. These requirements include submissions of
safety and other post-marketing information and reports, registration and listing requirements, requirements relating to
manufacturing, quality control, quality assurance and corresponding maintenance of records and documents, requirements
regarding the distribution of samples to physicians, recordkeeping, advertising and promotion and reporting of adverse
experiences with the drug.
Once approval is granted, the FDA, or other comparable foreign regulatory authorities, may issue enforcement letters or
withdraw the approval if compliance with regulatory requirements and standards is not maintained or if problems occur after the
drug reaches the market
Depending on the outcome, the FDA, EC, or national regulatory authorities of the EEA countries could revoke, suspend or
vary the previously granted approval.
Other potential consequences include, among other things:
•
restrictions on the marketing or manufacturing of the drug, under a risk evaluation and mitigation strategy, or REMS, or
comparable foreign strategy, suspension of the approval, complete withdrawal of the drug from the market or product
recalls;
•
revisions to the approved labelling to add new safety information;
•
fines, warning letters or holds on post-approval clinical trials;
•
refusal of the FDA, EC, or national regulatory authorities of the EEA countries to approve applications or supplements to
approved applications, or suspension, variation or revocation of drug approvals;
•
drug seizure or detention, or refusal to permit the import or export of drugs; or
17
•
injunctions or the imposition of civil or criminal penalties.
Corrective action could delay drug distribution and require significant time and financial expenditures. The requirement for a
REMS or comparable foreign strategies can be costly to establish and can materially affect the potential market and profitability
of the drug.
The FDA and other comparable foreign regulatory authorities strictly regulate marketing, labelling, advertising and
promotion of drugs that are placed on the market. Drugs may be promoted only for the approved indications and in accordance
with the provisions of the approved label. The FDA and other comparable national and foreign regulatory authorities enforce the
laws and regulations prohibiting the promotion of off-label uses, and a company that is found to have improperly promoted off-
label uses may be subject to significant liability, including civil, criminal and administrative penalties. Industry associations may
also actively supervise promotional activities and report any non-compliance to the competent authorities. However, physicians
may, in their independent medical judgment, prescribe legally available products for off-label uses. The FDA and other
comparable foreign regulatory authorities do not regulate the behavior of physicians in their choice of treatments but the FDA
and other comparable foreign regulatory authorities do restrict manufacturer’s communications on the subject of off-label use of
their products.
EEA countries' legislation may also restrict or impose limitations on our ability to advertise our products directly to the
general public. In addition, voluntary EU and national industry Codes of Conduct provide guidelines on the advertising and
promotion of our products to the general public and may impose limitations on our promotional activities with healthcare
professionals, which could negatively impact our business, operating results and financial condition.
In addition, if we are able to affix the CE mark to an IVD powered by NIS4® for marketing in the EEA, we may be required to
conduct costly post-market testing and surveillance to monitor the safety or effectiveness of such products in the EEA. We would
also be required comply with IVD reporting requirements, including the reporting of adverse events and malfunctions related to
our products. Later discovery of previously unknown problems with our products, including unanticipated adverse events or
adverse events of unanticipated severity or frequency, manufacturing problems, or failure to comply with regulatory
requirements may result in changes to labeling, restrictions on such products or manufacturing processes, withdrawal of the
products from the market, voluntary or mandatory recalls, a requirement to repair, replace or refund the cost of any IVD we would
manufacture or distribute, fines, suspension, variation or withdrawal of CE Certificates of Conformity, product seizures,
injunctions or the imposition of civil or criminal penalties which would adversely affect our business, operating results and
prospects. All manufacturers placing IVDs on the market in the EEA are legally bound to report incidents within strict deadlines
and trends involving devices they produce or sell to the regulator authority, in whose jurisdiction the incident occurred.
Malfunction of our products could result in future voluntary corrective actions, such as recalls, including corrections, or customer
notifications, or regulatory action, such as inspection or enforcement actions. If malfunctions do occur, we may be unable to
correct the malfunctions adequately or prevent further malfunctions, in which case we may need to cease manufacture and
distribution of the affected products, initiate voluntary recalls, and redesign the products.
In addition, any significant changes made to CE marked IVDs placed on the EEA market, or substantial changes to the
related quality assurance system affecting the IVD, must be notified to the Notified Body having delivered the related CE
Certificate of Conformity. Obtaining variation of existing CE Certificates of Conformity or a new CE Certificate or Conformity can
be a time-consuming process, and delays in obtaining required future clearances or approvals would adversely affect our ability
to introduce new or enhanced products in a timely manner, which in turn would harm our future growth.
If a regulatory authority of an EEA country finds a violation of the IVDR obligations for which we are considered to be
responsible we may be subject to a wide variety of enforcement actions, ranging from warning letters, injunction letters, ordering
recalls, fines, seizing affected products, civil penalties and criminal prosecution.
Accordingly, assuming we or our current or future collaborators receive regulatory approval or certification for one or more
of our product candidates, we and our collaborators will continue to expend time, money and effort in all areas of regulatory
compliance.
Government restrictions on pricing and reimbursement, as well as other healthcare payor cost-containment initiatives,
may negatively impact our ability or that of our current or future collaborators to generate revenues even if we or they obtain
regulatory approval to market a product candidate.
18
Our ability to successfully commercialize any of our product candidates or that of our current or future collaborators, if
approved, also will depend in part on the extent to which coverage and adequate reimbursement for these products and related
treatments will be available from third-party payors, including government authorities, such as Medicare and Medicaid in the
United States, private health insurers and health maintenance organizations. These third-party payors determine which
medications they will cover and establish reimbursement levels. Assuming we or our current or future collaborators obtain
coverage for a given product by a third-party payor, the resulting reimbursement payment rates may not be adequate or may
require co-payments that patients find unacceptably high. Patients who are prescribed medications for the treatment of their
conditions, and their prescribing physicians, generally rely on third-party payors to reimburse all or part of the costs associated
with their prescription drugs. Patients are unlikely to use our products unless coverage is provided and reimbursement is
adequate to cover all or a significant portion of the cost of our products. Therefore, coverage and adequate reimbursement is
critical to new product acceptance. Coverage decisions may depend upon clinical and economic standards that disfavor new
drug products when more established or lower cost therapeutic alternatives are already available or subsequently become
available. Moreover, no uniform policy requirement for coverage and reimbursement for drug products exists among third-party
payors in the United States. Third-party payors often rely upon Medicare coverage policy and payment limitations in setting their
own reimbursement rates, but also have their own methods and approval process apart from Medicare determinations.
Therefore, coverage and reimbursement for drug products can differ significantly from payor to payor. As a result, the coverage
determination process is often a time-consuming and costly process that will require us or our collaborators to provide scientific
and clinical support for the use of our products to each payor separately, with no assurance that coverage and adequate
reimbursement will be applied consistently or obtained in the first instance. Coverage and reimbursement may impact the
demand for, or the price of, any product candidate for which we or our collaborators obtain marketing approval. If coverage and
reimbursement are not available or reimbursement is available only to limited levels, we may not successfully commercialize any
product candidate for which we obtain marketing approval.
Furthermore, the nature of the policies adopted by future governments in countries where the biggest commercial outlets
for healthcare products are located could affect the reimbursement, and therefore the commercialization, of our products and
our product candidates.
In the United States, the European Union and other foreign jurisdictions, there have been a number of legislative and
regulatory changes to the healthcare system that could affect the Company's or its partners’ ability to sell its products profitably.
For example, we expect that the Patient Protection and Affordable Care Act, as amended by the Health Care and Education
Reconciliation Act of 2010, or collectively, ACA, as well as other healthcare reform and cost-containment measures that may be
adopted in the future, at both the federal and state levels in the United States, as well as internationally, may result in more
rigorous coverage criteria and lower reimbursement from both government funded programs as well as private payors, and in
additional downward pressure on the price that we or our partners receive for any approved product candidate.
Furthermore, there has been increasing legislative and enforcement interest in the United States with respect to drug pricing
practices. There have been several recent U.S. Congressional inquiries and proposed and enacted federal and state legislation
designed to, among other things, bring more transparency to drug pricing, review the relationship between pricing and
manufacturer patient programs, reduce the cost of drugs under Medicare and reform government program reimbursement
methodologies for drugs. For example, in August 2022, the Inflation Reduction Act of 2022 was signed into law. This legislation
contains substantial drug pricing reforms, including the establishment of a drug price negotiation program within the U.S.
Department of Health and Human Services that would require manufacturers to charge a negotiated “maximum fair price” for
certain selected drugs or pay an excise tax for noncompliance. Provisions of the IRA are subject to legal challenges, and the full
impact of the IRA on the pharmaceutical industry remains uncertain. The IRA also imposes penalties on drug manufacturers in
the form of mandatory additional rebates and/or discounts if commercial prices increase at a rate greater than the U.S. Bureau of
Labor Statistics consumer price index, and these rebates or discounts, which can be substantial, may affect the Company's ability
to raise commercial prices.
Pricing pressures may continue and even increase, which would make it difficult for us or our current or future partners to
sell any product candidates that may be approved in the future at an acceptable price or its existing or future collaborators.
Failures to reimburse an LDT or IVD powered by NIS4® or its improvements, if commercialized for clinical care, or changes
in reimbursement rates by third-party payors and variations in reimbursement rates could adversely affect our revenues and
could result in fluctuations in our revenues.
Our ability or that of a potential future collaborator to successfully commercialize an LDT or IVD powered by NIS4® or its
variations will depend on the availability and distribution of the first treatments for MASH; at the date of this annual report on
Form 20-F only one approved treatment exists, Madrigal Therapeutic’s product RezdiffraTM and also on the extent to which
coverage and adequate reimbursement for this test will be available from third-party payors, such as government health
administration authorities, private health insurers and other organizations. Insurance coverage and reimbursement rates for
diagnostic tests are uncertain, subject to change and particularly volatile during the early stages of a newly commercialized
diagnostic test. As of the date of this annual report, NASHNext® has not obtained reimbursement status in the countries where it
is commercialized by Labcorp. It is uncertain as to what extent third-party payors will provide coverage for NASHNext®, another
LDT or IVD powered by NIS4® or its variations, if commercialized for clinical care. We will also likely experience volatility in the
coverage and reimbursement of NASHNext®, another LDT or IVD test due to contract negotiation with third-party payors and
implementation requirements.
19
The reimbursement amounts we or our partners receive from third-party payors will vary from payor to payor, and, in some
cases, the variation is material. Third-party payors have increased their efforts to control the cost, utilization and delivery of
healthcare services. These measures have resulted in reduced payment rates and decreased utilization for the diagnostic test
industry. From time to time, the US Congress has considered and implemented changes to the Medicare fee schedules in
conjunction with budgetary legislation, and pricing for tests covered by Medicare is subject to change at any time. Reductions in
the reimbursement rate provided by third-party payors may occur in the future. Reductions in the price at which NASHNext®,
another LDT or IVD powered by NIS4® or its variations is reimbursed could have a material adverse effect on our revenues. If we
and our potential future collaborators are unable to establish and maintain broad coverage and adequate reimbursement for
NASHNext®, another LDT or IVD powered by NIS4® or its variations or if third-party payors change their coverage or
reimbursement policies with respect to NASHNext®, another LDT or IVD test, our revenues could be adversely affected.
Our future growth depends, in part, on our or our collaborators’ ability to penetrate international markets, where we or
they would be subject to additional regulatory burdens and other political, social and geopolitical risks and uncertainties.
Our future profitability will depend on our or our collaborators’ (Ipsen, Terns Pharmaceuticals, Labcorp/Covance, Q2) ability
to commercialize our product candidates in the United States, EEA and other territories around the world. If we or our
collaborators commercialize our product candidates in international markets, we would be subject to additional risks and
uncertainties, including:
•
economic weakness, including inflation;
•
political instability, armed conflict or war in particular economies and markets, such as in Ukraine;
•
future pandemics;
•
the burden of complying with complex and changing non-U.S. regulatory, tax, accounting and legal requirements, many of
which vary between countries;
•
different medical practices and customs in non-U.S. countries affecting acceptance in the marketplace;
•
governmental controls, export controls, tariffs and other trade barriers and modifications thereto, which could increase in
event of geopolitical tensions;
•
other trade protection measures, import or export licensing requirements or other restrictive actions by U.S. or other
governments, which could multiply in the event of geopolitical tensions;
•
longer accounts receivable collection times;
•
longer lead times for shipping;
•
compliance with tax, employment, immigration and labor laws for employees living or traveling abroad;
•
workforce uncertainty in countries where labor unrest is common;
•
language barriers for technical training;
•
reduced protection of intellectual property rights in some countries outside the United States, and related prevalence of
generic alternatives to therapeutics;
•
foreign currency exchange rate fluctuations and currency controls; and
•
the interpretation of contractual provisions governed by laws outside the United States in the event of a contract dispute.
Political, social and geopolitical conditions in the markets in which our products are developed have been and could
continue to be difficult to predict, resulting in adverse effects on our business. The ongoing armed conflict between Russia and
Ukraine, and the escalation of violence and potential further conflicts in the Middle East, as well as the global geopolitical
situation, changes in international trade policy and tariffs, and fiscal policy and regulations, may affect regional stability and
economic growth throughout the world. As a result of the 2024 presidential and legislative elections in the United States,
changes to applicable laws and regulations that have been announced, proposed, and/or adopted, or could be made or expanded
in the future, may result in new or expanded trade restrictions by the United States, including by the U.S. Presidential
administration and Congress, and/or other countries. For example, issued or future executive orders or other new changes in
laws, regulations or policy including, but not limited to, tariffs or import taxes being applied to imported goods and services could
affect GENFIT’s operations and exports into the United States and could have a material adverse effect on our business, earnings
and financial position, including the royalties we may receive on net sales of our out-licensed products. The actual impact of new
tariffs on our business is subject to a number of factors including, but not limited to, restrictions on trade, the effective date and
duration of such tariffs, countries included in the scope of tariffs, changes to amounts of tariffs, and potential retaliatory tariffs or
other trade restrictions imposed by other countries.
20
Adverse market and economic conditions may exacerbate certain risks associated with commercializing our product
candidates.
Future sales of our product candidates, if they are approved, will be dependent on purchasing decisions of and
reimbursement from government health administration authorities, distributors and other organizations. As a result of adverse
conditions affecting the global economy and credit and financial markets, including disruptions due to political instability, armed
conflict, wars, global pandemics or otherwise, these organizations may defer purchases, may be unable to satisfy their purchasing
or reimbursement obligations, or may delay payment for Iqirvo® (elafibranor), NASHNext® or another LDT or IVD powered by
NIS4® or its improvements or any of our product candidates that are approved for commercialization in the future. In addition, the
increase of inflation rates in recent years and the current armed conflicts in Ukraine or the Middle East may additionally affect the
commercialization of our products and product candidates.
Risks Related to the Dependency on Third Parties
We depend on third-party contractors for a substantial portion of our operations, namely contract research
organizations or CROs for our preclinical studies and clinical trials and contract manufacturing organizations or CMOs for
manufacturing of our active ingredients and therapeutic units, and other third party providers and may not be able to control
their work as effectively as if we performed these functions ourselves.
Under our supervision, or that of our partners, we outsource substantial portions of our operations to third-party service
providers, including preclinical studies and clinical trials, collection and analysis of data and manufacturing of our drugs or drug
candidates and the realization of certain analyses performed under our agreements with Labcorp and Q2 pertaining to an LDT or
IVD powered by NIS4® technology or its variations for use in the clinical research and clinical diagnostics markets. In particular,
we subcontract certain elements of the design and/or conduct of our preclinical studies and clinical trials to CROs, as well as the
manufacturing of our active ingredients and therapeutic units to CMOs.
We and our partners also contract with external investigators and other specialized services providers, for example with
respect to certain statistical analyses, to perform services such as carrying out and supervising, and collecting, analyzing and
formatting of data for our trials. Although we are involved in the design of the protocols for these trials and in monitoring them,
we do not control all the stages of test performance and cannot guarantee that the third parties will fulfil their contractual and
regulatory obligations. In particular, a contractor’s failure to comply with protocols or regulatory constraints, or repeated delays
by a contractor, could compromise the development of our products or result in liability for us, including our contractual liability
resulting from provisions in agreements we have signed with Ipsen and Terns Pharmaceuticals for the development of
elafibranor. Such events could also inflate the product development costs borne by us.
This strategy means that we have not in the past, do not currently directly control certain key aspects of our product
development, such as:
•
the quality of the product manufactured;
•
the delivery times for therapeutic units (pre-packaged lots specifically labeled for a given clinical trial);
•
the clinical and commercial quantities that can be supplied;
•
compliance with applicable laws and regulations; and
•
the quality or accuracy of the data obtained by third parties.
Additionally, our development activities or clinical trials conducted in reliance on third parties may be delayed, suspended, or
terminated if:
•
the third parties do not devote a sufficient amount of time or effort to our activities or otherwise fail to successfully carry
out their contractual duties or to meet regulatory obligations or expected deadlines; or
•
we replace a third party; or
•
the quality or accuracy of the data obtained by third parties is compromised due to their failure to adhere to pre-clinical
and clinical protocols, regulatory requirements, or for other reasons.
We may not be able to control the performance of third parties in their conduct of development activities. In the event of a
default, bankruptcy or shutdown of, or a dispute with, a third party, we may be unable to enter into a new agreement with another
third party on commercially acceptable terms. Further, third-party performance failures may increase our development costs,
delay our ability to obtain regulatory approval, and delay or prevent the commercialization of our product candidates. In addition,
our third-party agreements usually contain a clause limiting such third party’s liability, such that we may not be able to obtain full
compensation for any losses we may incur in connection with the third party’s performance failures. While we believe that there
are numerous alternative sources to provide these services, in the event that we seek such alternative sources, we may not be
able to enter into replacement arrangements without incurring delays or additional costs.
21
We rely entirely on third parties for the manufacturing of our drug candidates and the future manufacturing of an IVD
powered by NIS4® or its variations for use as a clinical diagnostic. Our business could be harmed if those third parties fail to
provide us with sufficient quantities of drug product or tests, or fail to do so at acceptable quality levels or prices.
We do not currently and do not intend in the future to manufacture the drug products, nor future test kits related to an IVD
powered by NIS4® or its variations, that we or our collaborators plan to sell if approved, or successfully complete the conformity
assessment procedure for use as a clinical diagnostic.
We currently have agreements with contract manufacturers for the production of the active pharmaceutical ingredients and
the formulation of drug product for our clinical trials. If any of these suppliers should cease to provide services to us, or our
collaborators, for any reason, we likely would experience delays in advancing our clinical trials and, if applicable, for the
commercial launch while we or our collaborators identify and qualify one or more replacement suppliers and we may be unable to
obtain replacement supplies on terms that are favorable to us.
Furthermore, an increase in the cost of raw materials or direct or indirect energy costs, or more generally a general increase
in the prices of goods and services, or even a shortage of the raw materials used to manufacture our candidate products, could
increase the manufacturing and development cost of our candidate products, or require stopping manufacturing, and increase
logistical costs. This is particularly the case in a difficult geopolitical context such as that caused by the current conflict in
Ukraine or the Middle East or by the current economic tensions between the European Union and the United States, for example.
Particularly in the context of the confirmatory trials of the therapeutic benefit of Iqirvo® (elafibranor) in PBC, our partner
Ipsen depends on CROs. Ipsen also depends on a supplier of active ingredients and a supplier of therapeutic units (CMO) for the
implementation of this trial as well as for the supply of commercial batches.
Regarding VS-01, we also depend on several CMOs to cover the supply needs of therapeutic units necessary for the
completion of the ongoing UNVEIL-IT® Phase 2 trial in ACLF. In addition, in 2024 we worked on the development of an innovative
medical device aimed at streamlining the process of reconstituting the product at the investigative sites participating in the
ongoing Phase 2 clinical trial or which will participate in the clinical trial scheduled to be launched in 2025, which will also be
produced by third parties.
Regarding G1090N, we have selected and depend on one supplier for the active substance NTZ and another pharmaceutical
subcontractor for the manufacture of G1090N therapeutic units. Regarding the supply of GNS561 and in accordance with our
license agreement, Genoscience has provided us with the therapeutic units needed for the ongoing Phase 1b/2 clinical study.
Following the acquisition of all intellectual property rights to GNS561 from Genoscience at the beginning of 2025, we will contract
directly with the manufacturer of the active substance and therapeutic units for all future supplies of GNS561. We also depend on
our partners Seal Rock Therapeutics and Celloram to cover supply needs related to the initial preclinical developments of SRT-015
and CLM-022, and depend on CMO for the development and supply of new injectable formulations.
Additionally, the facilities used by any contract manufacturer to manufacture elafibranor or any of our other product
candidates must be the subject of a satisfactory inspection before the FDA, the national competent authority of the EU member
states, or the regulators in other jurisdictions that approve the product candidate manufactured at that facility. We are
completely dependent on these third-party manufacturers for compliance with the requirements of U.S. and non-U.S. regulators
for the manufacture of our finished products. If our manufacturers cannot successfully manufacture material that conform to our
specifications and current good manufacturing practice requirements of any governmental agency whose jurisdiction to which
we are subject, our products or product candidates will not be approved or, if already approved, may be subject to recalls or other
enforcement action.
In the event of a default, bankruptcy or liquidation of a subcontractor, a service provider (CRO or CMO) or a collaborator,
with whom we have entered into a supply agreement, or Seal Rock Therapeutics or Celloram, or a dispute with one of these
collaborators or service providers, we may not be able to enter into a new contract with a different subcontractor or service
provider on commercially acceptable terms. In addition, failures of our subcontractors, collaborators or service providers in the
course of their work could increase our development costs, delay obtaining regulatory approval or prevent the commercialization
of our product candidates. Any of these factors could cause delays in launch or completion of our clinical trials, or of approval or
disruption of commercialization of our products or product candidates, cause us to incur higher costs, prevent us or our potential
future collaborators from commercializing our products and product candidates successfully or disrupt the supply of our
products after commercial launch. Furthermore, if any of our partners or contract manufacturers fails to deliver the required
clinical or commercial quantities of finished product on acceptable commercial terms and we or our current or future
collaborators are unable to find one or more replacement manufacturers capable of production at substantially equivalent cost,
volume and quality and on a timely basis, we would likely be unable to meet demand for our products and could lose potential
revenue. It may take several years to establish an alternative source of supply and to have any such new source approved by the
government agencies that regulate our products.
22
We have entered, and may in the future enter into, collaboration, licensing or co-marketing agreements with third parties
for the development and eventual commercialization of our product candidates and NIS4® diagnostic technology or its
variations, and may not generate revenues from these agreements.
We have entered into an exclusive licensing and collaboration agreement with Ipsen to develop and commercialize
elafibranor for the treatment of PBC and other indications worldwide, with the exception of Greater China which is licensed to
Terns Pharmaceuticals. Our NIS4® technology and its improvements are licensed to two partners, both to Labcorp to allow them
to deploy an LDT powered by NIS4® technology in the clinical research and clinical diagnostics spaces and also to Q2 in the
clinical research space. Should we seek to collaborate with additional third parties with respect to our development programs, we
may not be able to locate a suitable collaborator and may not be able to enter into an agreement on commercially reasonable
terms or at all.
We also signed licensing agreements with with Seal Rock Therapeutics to develop and commercialize an injectable
formulation of SRT-015 in acute liver disease, and with Celloram to develop and commercialize CLM-022 in liver disease.
Any new collaboration may require additional expenditures, increase our short and long term investments, require us to
issue new shares and dilute our existing shareholders or disrupt our management team or activities. With our current
agreements, or even if we succeeded in securing collaborators for the development and commercialization of elafibranor, our
NIS4® technology, the NASHNext® LDT or our other product candidates, we have limited control over the amount and timing that
our collaborators may dedicate to the development or commercialization of our product candidates.
These collaborations and licensing agreements pose a number of risks, including:
•
the means and resources used within the framework of these agreements remain, for the most part, at the discretion of
the partner, and they may not allocate sufficient resources to carrying out development and commercialization;
•
the partner might not fulfill its contractual obligations;
•
the partner might interrupt the development or commercialization or decide to interrupt or not renew the development or
commercialization programs due to a change in strategic orientation, a lack of financing or external factors such as an
acquisition that would reallocate resources or induce different priorities;
•
the partner might develop, independently or with the assistance of third parties, products, in the case of pharmaceuticals
or in-vitro tests, in the case of diagnostic technologies that are in direct or indirect competition with our product
candidates or future IVD powered by NIS4® or its variations if it believes that it is easier to successfully commercialize
competing products under more attractive economic conditions than ours;
•
the partner might not protect or defend our intellectual property rights in an appropriate manner or might use exclusive
information that belongs to us in a manner resulting in disputes that may compromise or discredit our exclusive
information or expose us to potential disputes;
•
the partner might not respect the property rights of third parties, which might expose us to litigation and potentially
involve our liability;
•
disputes might arise between us and the partner, which could result in delays or suspension of the commercialization of
the product candidate, or legal action or costly procedures that would monopolize resources as well as divert
management’s attention;
•
we might lose certain important rights obtained through these partnerships, notably in the case of change of control of
our company;
•
the collaboration might be terminated and, in such case, require additional financing to further develop or market the
product candidate licensed to it;
•
the partner has access to our discoveries and might use this information to develop future competing products;
•
there may be conflicts between different partners that could negatively affect those partnerships and potentially others;
•
the collaboration, due to its nature, might have a negative impact on our attractiveness for collaborators or potential
acquirers;
•
the collaboration might not result in the development and commercialization of the product candidate(s) in an optimal
fashion or never fulfill its objectives;
•
if the partner were to take part in a merger, the continuity of advancement and the central nature of our
commercialization program might be delayed, reduced or suspended by it; and
•
the partner may be unable to obtain or maintain the necessary marketing approvals.
23
Thus, collaboration agreements may not lead to development or commercialization of product candidates in the most
efficient manner or at all. For example, although we have entered into a license agreement with Labcorp to enable them to
develop and commercialize an LDT powered by NIS4® or its variations for clinical research and clinical diagnostic purposes, there
is no guarantee that our collaboration with Labcorp will result in widespread clinical or commercial use of NASHNext®, an LDT
powered by NIS4® technology for clinical care. Similarly, although we have entered into a collaboration and license agreement
with Ipsen and Terns Pharmaceuticals, there is no guarantee that our partnership with Ipsen or Terns Pharmaceuticals will
successfully result in a generalized clinical or commercial use of elafibranor for these indications and in those jurisdictions.
Finally, the conclusion of licensing-out agreements, such as those we have signed with Ipsen, Terns Pharmaceuticals, Labcorp
and Q2, necessarily implies that part of the value of the product candidates concerned is transferred to the partner. This reduces
our ability to generate revenues and profits, without necessarily being fully offset by the source of financing represented by the
payments received on signature or on reaching development milestones, or in the form of royalties.
We also face competition in seeking out collaborators. If we are unable to secure new collaborations that achieve the
collaborator’s objectives and meet our expectations, we may be unable to advance our product candidates and may not generate
meaningful revenues.
Licensing-in agreements, such as those we have signed with Seal Rock Therapeutics and Celloram, provide for payments to
partners in the event of scientific and regulatory milestones being met, and royalties in the event of commercialization. These
agreements may also impair our ability to generate profits if we fail to achieve the expected direct or indirect commercial
benefits.
If the manufacturing facilities of our third-party manufacturers of drug candidates as well as the central testing
laboratories of Labcorp fail to comply with applicable regulations or maintain these approvals, our business will be materially
harmed.
We do not currently and do not intend in the future to manufacture the drug candidates we or our collaborators intend to
sell. We outsource the manufacturing of our products to third parties, who are, in turn, subject to ongoing regulation and periodic
inspection by the national regulatory authorities of the EEA countries, FDA and other regulatory bodies to ensure compliance
with current Good Manufacturing Practices, or cGMP. Any failure to follow and document their adherence to such cGMP
regulations or other regulatory requirements may lead to significant delays in the availability of products for commercial sale or
clinical trials, may result in the termination of or a hold on a clinical trial, may delay or prevent filing or approval of marketing
applications for our product candidates, may lead to the shutdown of the third-party vendor or invalidation of drug product lots or
processes and in some cases, a product recall may be warranted or required, which would materially affect our ability to supply
and market our product candidates.
Failure to comply with applicable regulations could also result in the national regulatory authorities of the EEA countries,
FDA or other applicable regulatory authorities taking various actions, including:
•
levying fines and other civil penalties;
•
imposing consent decrees or injunctions;
•
requiring us or our current or future collaborators to suspend or put on hold one or more of our clinical trials;
•
suspending, varying or withdrawing regulatory approvals;
•
delaying or refusing to approve pending applications or supplements to approved applications;
•
requiring us or our current or future collaborators or our third-party manufacturers to suspend manufacturing activities or
product sales, imports or exports;
•
requiring us or our current or future collaborators to communicate with physicians and other customers about concerns
related to actual or potential safety, efficacy, and other issues involving our products;
•
mandating product recalls or seizing products;
•
imposing operating restrictions; and
•
seeking criminal prosecutions.
Any of the foregoing actions could be detrimental to our reputation, business, financial condition or operating results.
Furthermore, our key suppliers may not continue to be in compliance with all applicable regulatory requirements, which could
result in our failure or that of our current or future collaborators to produce our products on a timely basis and in the required
quantities, if at all. In addition, before any additional products would be considered for marketing approval in the United States,
EEA or elsewhere, our suppliers will have to pass an audit by the applicable regulatory authorities. We are dependent on our
suppliers’ cooperation and ability to pass such audits, and the audits and any audit remediation may be costly. Failure to pass
such audits by us or any of our suppliers would affect our ability or that of our current or future collaborators to commercialize
our product candidates in the United States, Europe or elsewhere.
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The deployment of an LDT powered by NIS4® or its variations depends on the ability of the central laboratories of our partner
Labcorp that conduct the diagnostic test to retain its CLIA certification or other regulatory authorizations or operating licenses,
which certification sets quality standards that must be followed in laboratory testing in order to ensure accuracy, reliability and
speed of test results for the patients wherever the testing is conducted. We do not plan on manufacturing the test kits that we
would market and that will be associated with an IVD powered by NIS4® or its variations if it were to be approved or CE marked on
the market of routine care; and the manufacturing sites of the contractor that we or our potential collaborators may choose for
their production would also be subject to significant authorizations, inspections and regulations.
Risks Related to Our Operations
Starting in mid-2020 and into 2021, we embarked on a significant strategic reorientation which resulted in significant
operational and organizational changes. As a result, we may encounter difficulties in managing development of our product
candidate pipeline, which could disrupt our operations.
In mid-2020 we terminated our development program of elafibranor in MASH and redefined our strategic priorities with
respect to our product candidate pipeline. In 2021, given that our access to market financing was limited, we chose to enter into
licensing and collaboration agreements to support the development and commercialization of certain of our product candidates,
and elafibranor in particular, as well as the in-licensing of a product candidate developed by a third party, for which we need to
develop our expertise.
In particular, this strategy of acquiring new product candidates developed by third-parties was realized in September 2022
with the acquisition of Versantis AG and its programs, and the in-licensing of drug candidates from Genoscience, Seal Rock
Therapeutics and Celloram in 2021 and 2023, respectively. We may undertake a similar type of transaction or additional in-
licensing projects in the future. In the context of these significant changes strategy, the focus of significant resources on
managing the success of these partnerships and new programs led to significant operational and organizational changes,
including with respect to workforce management. These changes could result in weaknesses in our infrastructure (including our
internal control over financial reporting), give rise to operational mistakes, loss of business opportunities, loss of employees and
reduced productivity among employees. In particular, running so many programs simultaneously could lead to a work overload
and an inappropriate dispersion of our resources, and negatively impact their development. This overload could, conversely, force
us to make choices that might not prove to be advantageous. These changes in our organization may lead to significant costs and
may divert financial resources from other projects, such as the development of our other product candidates. If our management
is unable to effectively manage these changes efficiently, our expenses may increase more than expected, our ability to generate
or increase our revenue could be impacted and we may not be able to implement our business strategy. Our future financial
performance and our ability to commercialize our other product candidates, if approved, and compete effectively will depend, in
part, on our ability to effectively manage the changes related to the significant strategic reorientation we have undertaken.
We depend on qualified management personnel and our business could be harmed if we lose key personnel and cannot
attract new personnel.
Our success depends to a significant degree upon the technical and management skills of our co-founders, scientific
advisers, senior management team, including, in particular, Pascal Prigent, our chief executive officer, Jean-François Mouney, our
chairman, Dean Hum, our chief scientific officer and Pascal Caisey, our chief operating officer. The loss of the services of Messrs.
Prigent, Mouney, Hum or Caisey would likely have a material adverse effect on us. In the context of the redefinition of our
strategic priorities undertaken since mid-2020, our success also will depend upon our ability to attract and retain additional
qualified scientific, management, marketing, technical, and sales executives and personnel, in particular in the new therapeutic
areas where we need to build up our experience. We compete for key personnel against numerous companies, including larger,
more established companies with significantly greater financial resources than we possess. In addition, there is risk of departures
or difficulties in hiring qualified personnel following the announcement of disappointing clinical results or the implementation of a
workforce reduction plan. There can be no assurance that we will be successful in attracting or retaining such personnel, and the
failure to do so could harm our operations and our growth prospects.
We may use hazardous chemicals and biological materials in our business. Any claims relating to improper handling,
storage or disposal of these materials could be time-consuming and costly.
Our research and development processes for our product candidates involve the controlled use of hazardous materials,
including chemicals and biological materials. We cannot eliminate the risk of accidental contamination or discharge and any
resultant injury from these materials. During their work, our researchers come into contact with a number of potentially
dangerous substances, including in particular (1) genetically modified organisms, or GMO, the safety of which is overseen in
France by the Ministry in charge of Research with the assistance of High Council for Biotechnologies (or the Haut Conseil des
Biotechnologies), (2) animals used for experimentation, the authorization of which is overseen by the local Préfet with the
assistance of the local Department for the Protection of People, or DDPP (for Direction Départementale de la Protection des
Populations) and (3) human samples. This research is subject to application for authorization from the competent authorities, in
particular the National Drug and Health Product Authority, or ANSM (for Autorité Nationale de Sécurité du Médicament et des
produits de santé) to assess the usefulness of the research, ensure that patients have been properly informed, and assess the
management of information obtained from the sampling.
25
We may be subject to fines or sued for any injury or contamination resulting from our use or the use by third parties of these
materials, and our liability may exceed any insurance coverage and our total assets, and we may also suffer reputational harm.
European, French and U.S. federal, state, local or foreign laws and regulations govern the use, manufacture, storage, handling and
disposal of these hazardous materials and specified waste products, as well as the discharge of pollutants into the environment
and human health and safety matters. Compliance with health, safety and/or environmental laws and regulations may be
expensive and may impair our research and development efforts. If we fail to comply with these requirements, we could incur
substantial costs, including civil or criminal fines and penalties, clean-up costs or capital expenditures for control equipment or
operational changes necessary to achieve and maintain compliance. Furthermore, we could face the rejection, suspension or
withdrawal of regulatory approval for our drugs or an IVD powered by NIS4® or its variations if they had received market approval.
In addition, we cannot predict the impact on our business of new or amended health, safety and/or environmental laws or
regulations or any changes in the way existing and future laws and regulations are interpreted and enforced.
We have recently acquired and may in the future acquire, products or businesses or form new strategic alliances, and
despite due diligence and evaluation procedures, we may not realize the benefits of such partnerships or acquisitions.
As part of our growth strategy, we have sought and intend to seek opportunities to in-license rights to drug candidates in
clinical development. This could also include the acquisition of companies or technologies facilitating or enabling us to access to
new medicines, new research projects, or new geographical areas, or enabling us to express synergies with our existing
operations. If such acquisitions occur in the future, we may not be able to identify appropriate targets or make acquisitions under
satisfactory conditions, in particular, satisfactory price conditions. In addition, we may be unable to obtain the financing for these
acquisitions on favorable terms, which could require us to finance these acquisitions using our existing cash resources that could
have been allocated to other purposes. If we acquire businesses with promising markets or technologies, we may not be able to
realize the benefit of acquiring such businesses or the expected synergies if we are unable to successfully integrate them with
our existing operations and company culture.
In September 2022, we acquired Versantis AG to strengthen our product candidate pipeline, including the drug candidates
VS-01-and VS-02 that we are developing respectively in ACLF, UCD and OA, and HE. As these three therapeutic areas are
relatively or totally new to us, despite our due diligence and our evaluation of the potential of these programs, we may be
unsuccessful in integrating the company or realizing the full potential of these programs and potential synergies. The anticipated
benefits and synergies of this acquisition are based on projections and assumptions, not actual experience, and assume a
successful integration.
In May 2023, we announced that we had entered into a licensing agreement with Seal Rock Therapeutics for exclusive
worldwide rights to the ASK1 inhibitor SRT-015, with a view to developing an injectable formulation for use in acute liver disease
and ACLF in particular; and in July 2023, we entered into a licensing agreement with Celloram for the worldwide rights to the
inflammasome inhibitor CLM-022, to develop and exploit it in liver diseases and ACLF in particular; in return, both companies are
eligible for potential clinical, regulatory and commercial development milestone payments, as well as royalties if the products are
commercialized. As ACLF is a new therapeutic area for us, it is possible that despite the due diligence and evaluation procedures
carried out, or in the event of less-than-efficient collaboration with these two companies, we may not be able to realize the full
potential of these two programs.
At the beginning of 2025, we acquired all the intellectual property rights developed by Genoscience Pharma concerning
GNS561. In return, Genoscience will receive 25% of the net profits actually received by GENFIT corresponding to the sales of the
said products during a period expiring on the first of the following dates: (i) 10 years from the first placing on the market, (ii) the
expiry, cancellation or revocation of one of the patents or (iii) the authorization of generic products implementing GNS
technology. It is possible that despite the prior audits and evaluation procedures carried out, we may not be able to realize the full
potential of the GNS561 program.
Our internal information technology systems and those of our current or future collaborators or those of our third-party
suppliers, contractors or consultants, may fail or suffer security breaches, any of which could result in a material disruption
of our product development and commercialization programs.
Despite the implementation of security measures, our internal information technology systems and those of our current or
future collaborators, or third-party contractors and consultants are vulnerable to damage from computer viruses, unauthorized
access, natural disasters, terrorism, war and telecommunication and electrical failures. If such an event were to occur and cause
interruptions in our operations, it could result in a material disruption of our programs.
26
In the ordinary course of our business, we and our subcontractors or partners collect and store sensitive data, including,
among other things, legally protected patient health information, personally identifiable information about our employees,
intellectual property and proprietary business information. We manage and maintain our applications and data utilizing on-site
systems and outsourced vendors. These applications and data encompass a wide variety of business critical information,
including research and development information, commercial information and business and financial information. We also store
data related to our clinical trials on our information technology systems. We also rely in part on the reliability of certain tested
third parties’ cybersecurity measures, including firewalls, virus solutions and backup solutions. Because information systems,
networks and other technologies are critical to many of our operating activities, shutdowns or service disruptions at our company
or vendors that provide information systems, networks or other services to us pose increasing risks. Such disruptions may be
caused by events such as computer hacking, phishing attacks, ransomware, dissemination of computer viruses, worms and other
destructive or disruptive software, denial of service attacks and other malicious activity and cyberattacks, as well as power
outages, natural disasters (including extreme weather), terrorist attacks or other similar events. Cybersecurity incidents can also
include employee or personnel failures, fraud, phishing or other social engineering attempts or other methods to cause
confidential information, payments, account access or access credentials, or other data to be transmitted to an unintended
recipient. Cybersecurity threat actors also may attempt to exploit vulnerabilities through in software including software
commonly used by companies in cloud-based services and bundled software. Such events could have an adverse impact on us
and our business, including loss of data and damage to equipment and data, business disruption, reputational damage, litigation
with third parties, investigations or actions by regulators, diminution in the value of our investment in research and development,
data privacy issues and increased cybersecurity protection and remediation costs. In addition, system redundancy may be
ineffective or inadequate, and our disaster recovery planning may not be sufficient to cover all eventualities. Any of these
developments could result in a disruption of our operations, damage to our reputation and our credibility or a loss of revenues. In
addition, we may not have adequate insurance coverage to compensate for any losses associated with such events. For example,
the loss of clinical trial data for our product candidates could result in delays in our regulatory approval efforts or those of our
current or collaborators and significantly increase our costs because we could be required to repair or replace information
systems or networks and recover or reproduce the lost data.
We could be subject to risks caused by misappropriation, misuse, leakage, corruption, falsification or intentional or
accidental release or loss of information and critical data (ours or that of third parties) maintained in the information systems and
networks of our company and our vendors, including personal information of our employees and patients, and company and
vendor confidential data, as could information stored in the networks or systems of our current or future collaborators. In
addition, outside parties may attempt to penetrate our systems, those of our current or future collaborators or those of our
vendors or fraudulently induce our personnel or the personnel of our current or future collaborators or our vendors to disclose
sensitive information in order to gain access to our data and/or systems.
The number and complexity of these threats continue to increase over time. If a material breach of our information
technology systems or those of our vendors occurs, the market perception of the effectiveness of our security measures could be
harmed. In addition, we could be subject to regulatory actions and/or claims made by individuals and groups in private litigation
involving privacy issues related to data collection and use practices and other data privacy laws and regulations, including claims
for misuse or inappropriate disclosure of data, as well as unfair or deceptive practices. Although we develop and maintain
systems and controls designed to prevent these events from occurring, and we have a process to identify and mitigate threats,
the development and maintenance of these systems, controls and processes is costly and requires ongoing monitoring and
updating as technologies change and efforts to overcome security measures become increasingly sophisticated. Moreover,
despite our efforts, the possibility of these events occurring cannot be eliminated entirely. As we outsource more of our
information systems to vendors, engage in more electronic transactions with payors and patients, and rely more on cloud-based
information systems, the related security risks will increase and we will need to expend additional resources to protect our
technology and information systems. In addition, there can be no assurance that our internal information technology systems,
those of our collaborators or our third-party contractors, or our consultants’ efforts to implement adequate security and control
measures, will be sufficient to protect us against breakdowns, service disruption, data deterioration or loss in the event of a
system malfunction, or prevent data from being stolen or corrupted in the event of a cyberattack, security breach, industrial
espionage attacks or insider threat attacks which could result in financial, legal, business or reputational harm.
The spread of rumors and false information, particularly through social networks, and their inappropriate use, may
materially and adversely impact our reputation.
We use social media to relay our official financial communications and participation in scientific congresses and other
events. Unauthorized communications, such as press releases or posts on social media, purported to be issued by us, may
contain information that is false or otherwise damaging and could have an adverse impact on the price of our securities. Negative
or inaccurate posts or comments about us, our research and development programs, and our directors or officers could seriously
damage our reputation. Tools using artificial intelligence have made disinformation easier and less costly to generate and spread,
and made such information seemingly more credible.
In addition, our employees and collaborators and other third parties with whom we have business relationships may use
social media and mobile technologies inappropriately, for which we may be held liable, or which could lead to breaches of data
security, loss of trade secrets or other intellectual property or public disclosure of sensitive information. Such uses of social
media and mobile technologies could have a material adverse effect on our reputation, business, financial condition and results
of operations.
27
Risks Related to Intellectual Property
If we are unable to obtain and maintain sufficient patent protection for our product candidates, or if the scope of the
patent protection is not sufficiently broad, our competitors could develop and commercialize products similar or identical to
ours, and our ability or that of a potential future partner to commercialize our product candidates successfully may be
adversely affected.
Our success depends in large part on our ability to obtain and maintain patent protection in the United States and other
countries with respect to our proprietary product candidates. If we do not adequately protect our intellectual property,
competitors may be able to erode or negate any competitive advantage we may have, which could harm our business and ability
to achieve profitability. To protect our proprietary position, we file patent applications in the United States and abroad related to
our novel product candidates that are important to our business. The patent application and approval process is expensive and
time-consuming. We may not be able to file and prosecute all necessary or desirable patent applications at a reasonable cost or
in a timely manner.
•
we may not have been the first to make the inventions covered by pending patent applications or issued patents;
•
we may not have been the first to file patent applications for our product candidates or the compositions we developed or
for their uses;
•
others may independently develop identical, similar or alternative products or compositions and uses thereof;
•
our disclosures in patent applications may not be sufficient to meet the statutory requirements for patentability;
•
any or all of our pending patent applications may not result in issued patents;
•
we may not seek or obtain patent protection in countries that may eventually provide us a significant business
opportunity;
•
any patents issued to us may not provide a basis for commercially viable products, may not provide any competitive
advantages, or may be successfully challenged by third parties;
•
our compositions and methods may not be patentable;
•
others may design around our patent claims to produce competitive products which fall outside of the scope of our
patents; or
•
others may identify prior art or other bases which could invalidate our patents.
Our pending patent applications cannot be enforced against third parties practicing the technology claimed in such
applications unless and until patent issues. Because the issuance of a patent is not conclusive as to its inventorship, scope,
validity or enforceability, our patents or pending patent applications may be challenged in the courts or patent offices in the
United States and abroad.
Obtaining and maintaining a patent portfolio entails significant expense and resources. Part of the expense includes periodic
maintenance fees, renewal fees, various other official fees on patents and/or applications due in several stages over the lifetime
of patents and/or applications, as well as the cost associated with complying with numerous procedural provisions during the
patent application examination proceedings. We may not choose to pursue or maintain protection for particular inventions. In
addition, there are situations in which failure to make certain payments or noncompliance with certain requirements in the
patent process can result in abandonment or lapse of a patent or patent application, resulting in partial or complete loss of
patent rights in the relevant jurisdiction. If we choose to forgo patent protection or allow a patent application or patent to lapse
purposefully or inadvertently, our competitive position or that of our current of future collaborators could suffer.
Even if our patent applications issue as patents, they may not issue in a form that will provide us with any meaningful
protection, prevent competitors from competing with us or otherwise provide us with any competitive advantage. Our
competitors may be able to circumvent our patents by developing similar or alternative technologies or products in a non-
infringing manner. Our competitors may also seek approval to market their own products similar to or otherwise competitive with
our products. Alternatively, our competitors may seek to market generic versions of any approved products by submitting
Abbreviated New Drug Applications, or ANDAs, to the FDA, in which they claim that patents owned or licensed by us are invalid,
unenforceable or not infringed. In these circumstances, we may need to defend or assert our patents, or both, including by filing
lawsuits alleging patent infringement. In any of these types of proceedings, a court or other agency with jurisdiction may find our
patents invalid or unenforceable, or that our competitors are competing in a non-infringing manner. Thus, even if we have valid
and enforceable patents, these patents still may not provide protection against competing products or processes sufficient to
achieve our business objectives or those of our current of future collaborators. In addition, given the amount of time required for
the development, testing and regulatory review of new product candidates, patents protecting such candidates might expire
before or shortly after such candidates are commercialized.
28
We may become involved in lawsuits to protect or enforce our patents or other intellectual property, and issued patents
covering our product candidates could be found invalid or unenforceable if challenged in court. An unfavorable outcome could
harm our business.
If we initiate legal proceedings against a third party to enforce a patent covering one of our product candidates or
technologies, the defendant could counterclaim that the patent covering one of our product candidates or technologies is invalid
or unenforceable. In patent litigation in the United States, defendant counterclaims alleging invalidity and unenforceability of an
asserted patent or patents are common. Grounds for a validity challenge include alleged failures to meet any of several statutory
requirements, including lack of novelty, obviousness, insufficient written description or non-enablement. Grounds for
unenforceability assertions include allegations that someone connected with prosecution of the patent withheld relevant
information from the USPTO, or made a misleading statement, during prosecution. Third parties may also raise similar claims
before administrative bodies in the United States or abroad, even outside the context of litigation. Such mechanisms include re-
examination, post-grant review or PGR and/or inter partes review and equivalent proceedings in foreign jurisdictions, such as
opposition proceedings. Such proceedings could result in revocation or amendment of our patents in such a way that they no
longer cover our product candidates or competitive products. Similarly, we may initiate proceedings before the Patent Trial and
Appeal Board, or PTAB, of the USPTO, such as PGR, derivation, or inter partes review, against patents granted to third parties.
This may delay us from obtaining issued patents with similar claims in the United States and may prompt additional proceedings
in the USPTO against such patent or against other third party applications or patents or may consider the need or benefit of
entering into a license agreement with such third party or parties in order to exploit such patent alone or together with such
other third party or parties. In the event that we do not prevail or the settlement terms with the adverse party are unfavorable, or
we are unable to reach an agreement on terms sufficiently favorable to us, our ability to market our product candidates may be
affected or delayed. The outcome following legal assertions of invalidity and unenforceability in the PTAB or the federal courts is
unpredictable. With respect to validity, for example, we cannot be certain that there is no invalidating prior art, of which we and
the patent examiner were unaware during prosecution. If a defendant were to prevail on a legal assertion of invalidity or
unenforceability, we would lose at least part, and perhaps all, of the patent protection on our product candidates.
Even if we establish infringement, the court may decide not to grant an injunction against further infringing activity and
instead award only monetary damages, which may or may not be an adequate remedy. Furthermore, because of the substantial
amount of discovery required in connection with intellectual property litigation, in particular, in the United States, there is a risk
that some of our confidential information could be compromised by disclosure during litigation. There could also be public
announcements of the results of hearings, motions or other interim proceedings or developments. If securities analysts or
investors perceive these results to be negative, it could have a material adverse effect on the price of our ADSs or ordinary
shares. Moreover, there can be no assurance that we will have sufficient financial or other resources to file and pursue such
infringement claims in the federal courts, which typically last for years before they are concluded. Even if we ultimately prevail in
such claims, the monetary cost of such litigation and the diversion of the attention of our management and scientific personnel
could outweigh any benefit we receive as a result of the proceedings.
Developments in patent law in the United States and in other jurisdictions could have a negative impact on our business.
From time to time, the U.S. Supreme Court, other federal courts, the U.S. Congress, the USPTO or similar foreign authorities
may change the standards of patentability and any such changes could have a negative impact on our business. In addition, the
Leahy-Smith America Invents Act, or the America Invents Act, which was signed into law in 2011, includes a number of significant
changes to U.S. patent law. These changes include a transition from a “first-to-invent” system to a “first-to-file” system, changes
to the way issued patents are challenged, and changes to the way patent applications are disputed during the examination
process. In certain areas, these changes may favor larger and more established companies that have greater resources to devote
to patent application filing and prosecution. The USPTO has developed new regulations and procedures to govern the full
implementation of the America Invents Act, and many of the substantive changes to patent law associated with the America
Invents Act, and, in particular, the first-to-file provisions, became effective on March 16, 2013. Substantive changes to patent law
associated with the America Invents Act, or any subsequent U.S. legislation regarding patents, may affect our ability to obtain
patents, and if obtained, to enforce or defend them.
Furthermore, recent U.S. Supreme Court rulings have narrowed the scope of patent protection available in certain
circumstances for diagnostic method claims and gene patents.
In view of these and other U.S. federal appellate cases, we cannot guarantee that our efforts to seek patent protection for
our tools and biomarkers will be successful.
The European Commission has proposed the creation of a unitary Supplementary Protection Certificate (uSPC), valid in all
EU countries. If this project is accepted in the future, it would enable third parties to bring a single legal action to try and obtain a
decision invalidating a uSPC in all member countries. The European Commission has also proposed a revision of pharmaceutical
legislation to reduce the duration of regulatory data protection and market exclusivity for orphan drugs. If these proposals are
accepted, they could reduce the duration of regulatory protection for our products.
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If we do not obtain protection under the Hatch-Waxman Amendments and similar non-U.S. legislation for extending the
term of patents covering each of our product candidates, our business may be materially harmed.
Given the amount of time required for the development, testing and regulatory review of new product candidates, patents
protecting such candidates might expire before or shortly after such candidates are commercialized. We expect to seek
extensions of patent terms for certain patents in the United States and, if available, in other countries where we are prosecuting
patents and seeking approval of various products. Depending upon the timing, duration and conditions of FDA marketing
approval of our product candidates, one or more of our U.S. patents may be eligible for limited patent term extension under the
Drug Price Competition and Patent Term Restoration Act of 1984, referred to as the Hatch-Waxman Amendments; similarly,
selected patents outside the U.S., may be eligible for supplementary protection certificate, or SPC, under corresponding
legislation in the EEA and several other countries.
Depending upon the circumstances, the Hatch-Waxman Amendments permit a patent term extension of up to five years for
a patent covering an approved product as compensation for effective patent term lost during product development and the FDA
regulatory review process. However, we may not receive an extension if we fail to apply within applicable deadlines, fail to apply
prior to expiration of relevant patents or otherwise fail to satisfy applicable requirements and we may not prevail in any actions
that it may bring under the Hatch-Waxman amendments against generic manufacturers or others. Moreover, the length of the
extension could be less than we request. If we are unable to obtain patent term extension or the term of any such extension is
less than what we request, the period during which we can enforce our patent rights for that product will be shortened. If this
occurs, the period during which the Company can enforce its patent rights for that product will be shortened, and our
competitors may be able to take advantage of our investment in development and clinical trials by referencing our clinical and
preclinical data and launch their product earlier than might otherwise be the case. As a result, our revenue from an applicable
product could be reduced, which could have a material adverse effect on our business, prospects, financial condition and results
of operations.
If we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be
harmed.
In addition to patent protection, because we operate in the highly technical field of development of therapies, we rely in part
on trade secret protection in order to protect our proprietary technology and processes. However, trade secrets are difficult to
protect. We have entered into confidentiality and intellectual property assignment agreements with our employees, consultants,
outside scientific collaborators, sponsored researchers, and other advisors. These agreements generally require that the other
party keeps confidential and does not disclose to third parties all confidential information developed by the party or made known
to the party by us during the course of the party’s relationship with us. These agreements also generally provide that inventions
conceived by the party in the course of rendering services to us will be our exclusive property. However, these agreements may
not be honored and may not effectively assign intellectual property rights to us.
In addition to contractual measures, we try to protect the confidential nature of our proprietary information using physical
and technological security measures. Such measures may not, for example, in the case of misappropriation of a trade secret by an
employee or third party with authorized access, provide adequate protection for our proprietary information.
For example, in 2021 we filed a complaint in the U.S. District Court for the Northern District of California against CymaBay
Therapeutics, Inc. (“CymaBay”). The suit alleged that CymaBay misappropriated our ELATIVE® Phase 3 clinical trial Protocol
synopsis for our drug candidate elafibranor in PBC (the “Protocol synopsis”). In February 2023, we reached a settlement
agreement. The settlement agreement, which is confidential, reflects that CymaBay improperly received, reviewed and circulated
our Protocol synopsis upon receipt, but also that CymaBay is not using any of our trade secrets in its clinical trials. CymaBay has
not admitted legal liability and we and CymaBay have agreed to resolve the litigation completely.
This example shows that the remedies we would then pursue against this type of misconduct may not be sufficient to fully
protect our interests, or those of our current partners, or those of potential future partners
Our security measures may not prevent an employee or consultant from misappropriating our trade secrets and providing
them to a competitor, and recourse we take against such misconduct may not provide an adequate remedy to protect our
interests fully. Although we try to ensure that our employees and consultants do not use the proprietary information or know-how
of others in their work for us, and no such claims against us are currently pending, we may be subject to claims that we or our
employees, consultants or independent contractors have used or disclosed intellectual property, including trade secrets or other
proprietary information, of a former employer or other third parties. Either we or these individuals may be subject to allegations of
trade secret misappropriation or other similar claims as a result of prior affiliations.
Enforcing a claim that a party illegally disclosed or misappropriated a trade secret can be difficult, expensive, and time-
consuming, and the outcome is unpredictable. In addition, courts outside the United States may be less willing to protect trade
secrets. Trade secrets may be independently developed by others in a manner that could prevent legal recourse by us. If any of
our confidential or proprietary information, such as our trade secrets, were to be disclosed or misappropriated, or if any such
information was independently developed by a competitor, our competitive position could be harmed.
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We will not seek to protect our intellectual property rights in all jurisdictions throughout the world and we may not be
able to adequately enforce our intellectual property rights even in the jurisdictions where we seek protection.
Filing, prosecuting and defending patents on our product candidates in all countries and jurisdictions throughout the world
would be prohibitively expensive, and our intellectual property rights in some countries outside the United States and Europe
could be less extensive than those in the United States and Europe, assuming that patent rights are obtained in the United
States. Competitors may use our technologies in jurisdictions where we do not pursue and obtain patent protection to develop
their own products and further, may export otherwise infringing products to territories where we have patent protection, but
enforcement is not as strong as that in the United States and Europe. These products may compete with our products and our
patents or other intellectual property rights may not be effective or sufficient to prevent them from competing. Even if we pursue
and obtain issued patents in particular jurisdictions, our patent claims or other intellectual property rights may not be effective or
sufficient to prevent third parties from so competing.
In addition, the laws of some foreign countries do not protect intellectual property rights to the same extent as the federal
and state laws in the United States. Many companies have encountered significant problems in protecting and defending
intellectual property rights in certain foreign jurisdictions. The legal systems of some countries, particularly in developing
countries, do not favor the enforcement of patents and other intellectual property rights, especially those relating to
biopharmaceuticals or biotechnologies. This could make it difficult for us to stop the infringement of our patents, if obtained, or
the misappropriation of our other intellectual property rights. For example, many foreign countries have compulsory licensing
laws under which a patent owner must grant licenses to third parties for certain products. In addition, many countries limit the
enforceability of patents against third parties, including government agencies or government contractors. In these countries,
patents may provide limited or no benefit. Patent protection must ultimately be sought on a country-by-country basis, which is an
expensive and time-consuming process with uncertain outcomes. Accordingly, we may choose not to seek patent protection in
certain countries, and we will not have the benefit of patent protection in such countries.
Proceedings to enforce our patent rights in foreign jurisdictions could result in substantial costs and divert our efforts and
attention from other aspects of our business, could put our patents at risk of being invalidated or interpreted narrowly, could put
our patent applications at risk of not issuing and could provoke third parties to assert claims against us. We may not prevail in any
lawsuits that we initiate and the damages or other remedies awarded, if any, may not be commercially meaningful. In addition,
changes in the law and legal decisions by courts in the United States and foreign countries may affect our ability to obtain
adequate protection for our technology and the enforcement of intellectual property. Accordingly, our efforts to enforce our
intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the
intellectual property that we develop or license.
Third parties may assert ownership or commercial rights to inventions we develop.
Third parties may in the future make claims challenging the inventorship or ownership of our intellectual property. We have
written agreements with collaborators that provide for the ownership of intellectual property arising from our collaborations.
These agreements provide that we must negotiate certain commercial rights with collaborators with respect to joint inventions
or inventions made by our collaborators that arise from the results of the collaboration. In some instances, there may not be
adequate written provisions to clearly address the resolution of intellectual property rights that may arise from collaboration. If
we cannot successfully negotiate sufficient ownership and commercial rights to the inventions that result from our use of a third-
party collaborator’s materials where required, or if disputes otherwise arise with respect to the intellectual property developed
with the use of a collaborator’s samples, we may be limited in our ability to capitalize on the market potential of these inventions.
In addition, we may face claims by third parties that our agreements with employees, contractors, or consultants obligating them
to assign intellectual property to us are ineffective, or in conflict with prior or competing contractual obligations of assignment,
which could result in ownership disputes regarding intellectual property we have developed or will develop and interfere with our
ability to capture the commercial value of such inventions. Litigation may be necessary to resolve an ownership dispute, and if we
are not successful, we may be precluded from using certain intellectual property, or may lose our exclusive rights in that
intellectual property. Either outcome could have an adverse impact on our business.
A dispute concerning the infringement or misappropriation of the proprietary rights of others could be time-consuming
and costly, and an unfavorable outcome could harm our business.
There is significant litigation in the biopharmaceutical industry regarding patent and other intellectual property rights. We
may be exposed to future litigation by third parties based on claims that our product candidates, technologies or activities
infringe the intellectual property rights of others. If our development activities are found to infringe any such patents, we may
have to pay significant damages or seek licenses to such patents. A patentee could prevent us from using the patented drugs or
compositions. We may need to resort to litigation to enforce a patent issued to us, to protect our trade secrets, or to determine
the scope and validity of third-party proprietary rights.
From time to time, we may hire scientific personnel or consultants formerly employed by other companies involved in one or
more areas similar to the activities conducted by us.
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If we become involved in litigation, it could consume a substantial portion of our managerial and financial resources,
regardless of whether we win or lose. We may not be able to afford the costs of litigation. Any adverse ruling or perception of an
adverse ruling in defending ourselves against these claims could have a negative impact on our cash position. Any legal action
against us or our collaborators could lead to:
•
payment of damages, potentially treble damages, if we are found to have willfully infringed a party’s patent rights;
•
injunctive or other equitable relief that may effectively block our ability to further develop, commercialize, and sell
products; or
•
us having to enter into license arrangements that may not be available on commercially acceptable terms, if at all.
Any of these outcomes could hurt our cash position and financial condition and our ability to develop and commercialize our
product candidates.
Moreover, our commercial success depends, in part, on our ability to develop, manufacture, market and sell our product
candidates and use our technologies without infringing the intellectual property and other proprietary rights of third parties. If
any third-party patents or patent applications are found to cover our product candidates or their methods of use, we may not be
free to manufacture or market our product candidates as planned without obtaining a license, which may not be available on
commercially reasonable terms, or at all.
If our trademarks and trade names are not adequately protected, we may not be able to build name recognition in our
markets of interest.
Our registered or unregistered trademarks or trade names may be challenged, infringed, circumvented or declared generic or
determined to be infringing on other marks. We may not be able to protect our rights to these trademarks and trade names (or
associated domain names), which we will need to build name recognition by potential collaborators or customers in our markets
of interest. Over the long term, if we are unable to establish name recognition based on our trademarks and trade names, we may
not be able to compete effectively.
Risks Related to Legal and Other Compliance Matters
We are subject to transparency, ethics and healthcare laws and regulations that may require substantial compliance
efforts and could expose us to criminal sanctions, civil penalties, contractual damages, reputational harm and diminished
profits and future earnings, among other penalties.
Healthcare providers and others in the healthcare and pharmaceutical sector will play a primary role in the clinical
development and potential regulatory approval or certification of our product candidates and their recommendation and
prescription, if approved or CE marked. Our arrangements with them and third party payors as well as our activities expose us to
broadly applicable federal and state healthcare laws, which may restrict these arrangements and relations through which we
research and develop our products, and if approved or CE marked, we or our current or future collaborators will market and
distribute them. These laws may thus impact, among other things, our research, development, proposed sales, marketing and
education programs of our product candidates that obtain marketing approval. Restrictions under applicable U.S. federal, state
and non-U.S. healthcare laws and regulations include, but are not limited to, fraud and abuse laws, including the federal anti-
kickback and false claims laws; healthcare data privacy and security laws, such as the U.S. federal Health Insurance Portability
and Accountability Act of 1996, or HIPAA; and transparency laws related to payments and/or other transfers of value made to
physicians and other healthcare professionals and teaching hospitals, including the federal Physician Payments Sunshine Act,
under the Patient Protection and Affordable Care Act, as amended by the Health Care Education Reconciliation Act, or the ACA.
Many states have similar laws that may differ from each other and federal law in significant ways, thus complicating compliance
efforts. For example, states have anti-kickback and false claims laws that may be broader in scope than analogous federal laws
and may apply regardless of payor. In addition, state data privacy laws that protect the security of health information may differ
from each other and may not be preempted by federal law. Moreover, several states have enacted legislation requiring
pharmaceutical manufacturers to, among other things, establish marketing compliance programs, file periodic reports with the
state, make periodic public disclosures on sales and marketing activities, report information related to drug pricing, require the
registration of sales representatives, and prohibit certain other sales and marketing practices.
Outside the United States, interactions between pharmaceutical companies and health care professionals are also governed
by strict laws, such as national anti-bribery laws of European countries, national sunshine rules, regulations, industry self-
regulation codes of conduct and physicians’ codes of professional conduct. These laws may include the French “Bertrand Law”,
French Ordinance n° 2017-49 of January 19, 2017 and the provisions of the French Public Health Code relating to benefits offered
by persons manufacturing or marketing health products or services, and the UK’s Bribery Act 2010, which may apply to items or
services reimbursed by any third-party payor, including commercial insurers, state marketing and/or transparency laws applicable
to manufacturers or any company providing services related to their products that may be broader in scope than the federal
requirements. Failure to comply with these requirements could result in reputational risk, public reprimands, administrative
penalties, fines or imprisonment.
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Ensuring that our business arrangements with third parties comply with applicable healthcare laws and regulations will likely
be costly. It is possible that governmental authorities will conclude that our business practices do not comply with current or
future statutes, regulations or case law involving applicable fraud and abuse or other healthcare laws and regulations. If our
operations were found to be in violation of any of these laws or any other governmental regulations that may apply to us, we may
be subject to significant civil, criminal and administrative penalties, damages, fines, disgorgement, imprisonment, possible
exclusion from government funded healthcare programs, such as Medicare and Medicaid or comparable foreign programs,
additional reporting requirements and oversight if we become subject to a corporate integrity agreement or similar agreement to
resolve allegations of non-compliance with these laws, contractual damages, reputational harm, diminished profits and future
earnings, and curtailment of our operations, any of which could substantially disrupt our operations. If the physicians or other
providers or entities with whom we expect to do business are found not to be in compliance with applicable laws, they may be
subject to criminal, civil or administrative sanctions, including exclusions from government funded healthcare programs and their
professional orders. Although an effective compliance program can mitigate the risk of investigation and prosecution for
violations of these laws, the risks cannot be entirely eliminated. Moreover, achieving and sustaining compliance with applicable
federal and state privacy, security, and fraud laws, and foreign equivalents, may prove costly. Any action against us for violation of
these laws, even if we successfully defend against it, could cause us to incur significant legal expenses and divert our
management’s attention from the operation of our business.
We are subject to laws and regulations related to data privacy, both in the United States and the European Union whose
breach might have a significant negative impact on our activities.
We, and our service providers, receive, process, store and use personal data and other data about our clinical trial
participants, employees, partners and others. We, and our service providers, must comply with numerous foreign and domestic
laws and regulations regarding data protection and the storing, sharing, use, processing, disclosure and security of personal data
and protection of personal information and other data, such as information that we collect about patients and healthcare
providers in connection with clinical trials in the EEA, the United States and elsewhere. Third parties (principally CROs during
clinical trials) manage on our behalf a significant part of the personal data we may use.
For example, HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, or HITECH,
and their respective implementing regulations imposes certain requirements on covered entities relating to the privacy, security,
and transmission of certain individually identifiable health information, known as protected health information. Among other
things, HITECH, through its implementing regulations, makes HIPAA’s security standards and certain privacy standards directly
applicable to covered subcontractors and business associates, HITECH also strengthened the civil and criminal penalties that
may be imposed against covered entities, business associates, and individuals, and gave state attorneys general new authority to
file civil actions for damages or injunctions in federal courts to enforce the federal HIPAA laws and seek attorneys’ fees and costs
associated with pursuing federal civil actions. In addition, other federal and state laws may govern the privacy and security of
health and other information in certain circumstances, many of which differ from each other in significant ways and may not be
preempted by HIPAA, thus complicating compliance efforts.
In May 2018 the General Data Protection Regulation (EU) 2016/679, or GDPR, went into effect in the EEA. The GDPR imposes
stringent requirements for processing personal data of individuals in the EEA. The GDPR increases our obligations with respect to
clinical trials conducted in the EEA by expressly expanding the definition of personal data to include “pseudonymized” or key-
coded data and requiring changes to informed consent practices and more detailed notices for clinical trial subjects and
investigators.
The GDPR also provides for more robust regulatory enforcement and greater penalties for noncompliance than previous
data protection laws, including fines of up to €20 million or 4% of global annual revenue of any noncompliant company for the
preceding financial year, whichever is higher. In addition to administrative fines, a wide variety of other potential enforcement
powers are available to competent supervisory authorities in respect of potential and suspected violations of the GDPR, including
extensive audit and inspection rights, and powers to order temporary or permanent bans on all or some processing of personal
data carried out by non-compliant actors. The GDPR also confers a private right of action on data subjects and consumer
associations to lodge complaints with supervisory authorities, seek judicial remedies, and obtain compensation for damages
resulting from violations of the GDPR.
European Union data protection laws, including the GDPR, generally restrict the transfer of personal data from the EEA to
the United States and most other countries unless the parties to the transfer have implemented specific safeguards to protect
the transferred personal information. The current mechanisms that may be used to transfer personal data from the EEA to the
United States in compliance with law are subject to legal challenges, and there is no assurance that we can satisfy or rely on
these measures to lawfully transfer personal data to the United States or other counties outside the European Union.
If there is no lawful way for us to transfer personal data from the EEA, the UK, or other jurisdictions to the United States — or if
the legal requirements become too burdensome — we could face serious consequences. These may include disruptions to our
operations, costly relocations of business or data activities, increased regulatory scrutiny, substantial fines, limitations on data
sharing with partners or vendors, and even legal injunctions that prevent us from processing or transferring necessary personal
data. Additionally, companies that transfer personal data out of the EEA and UK to other jurisdictions, particularly to the United
States, are subject to increased scrutiny from regulators, individual litigants and activist groups. Some European regulators have
ordered certain companies to suspend or permanently cease certain transfers out of Europe for allegedly violating the GDPR’s
cross-border data transfer limitations.
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The GDPR provides that EEA countries may make their own further laws and regulations to introduce specific requirements
related to the processing of “special categories of personal data,” including personal data related to health. In addition, in France,
the conduct of clinical trials is subject to compliance with specific provisions, which may include the filing of compliance
undertakings with “reference methodologies” (such as the MR-001) adopted by the French data protection authority. This fact
could expose us to multiple parallel regimes or may lead to, greater divergence on the law that applies to the processing of such
data types across the EEA and/or United Kingdom, compliance with which, as and where applicable, may increase our costs and
could increase our overall compliance risk. Such country-specific regulations could also limit our ability to collect, use and share
data and/or could cause our compliance costs to increase, ultimately having an adverse impact on our business, and harming our
business and financial condition.
Additionally, other countries outside of the EEA, including Switzerland, the UK and China, have enacted or are considering
enacting similar cross-border data transfer restrictions and laws requiring local data residency, which could increase the cost and
complexity of delivering our services and operating our business.
New and proposed laws, regulations, policies, codes of conduct, industry standards and legal obligations concerning privacy,
data protection and information security, may arise, continue to evolve, be interpreted and applied in a manner that is
inconsistent from one jurisdiction to another and conflict with one another. Moreover, we cannot yet determine the impact that
they will have on our business.
Any failure or perceived failure by us or third parties working on our behalf to adequately comply with applicable laws and
regulations, any privacy and data security obligations pursuant to contract or pursuant to our stated privacy or security policies
or obligations to third parties may result in governmental enforcement actions (including fines, penalties, judgments,
settlements, imprisonment of company officials and public censure), civil claims, litigation, damage to our reputation and loss of
goodwill, any of which could have a material adverse effect on our business, operations and financial performance. With
substantial uncertainty over the interpretation and application of these laws, regulations and other obligations, we may face
challenges in addressing their requirements and making necessary changes to our policies and practices, and may incur
significant costs and expenses in our efforts to do so.
We cannot assure that our CROs or other third-party service providers with access to our or our suppliers’, manufacturers’,
trial participants’ and employees’ sensitive data in relation to which we are responsible will not experience data security
incidents, which could have a corresponding adverse effect on our business, financial condition, results of operations and
prospects, including putting us in breach of our obligations under privacy laws and regulations. Any actual or perceived failure by
us to comply with federal, state or foreign laws, rules or regulations, industry standards, contractual or other legal obligations, or
any actual, perceived or suspected cybersecurity incident, whether or not resulting in unauthorized access to, or acquisition,
release or transfer of personal data, may result in enforcement actions and prosecutions, private litigation, significant fines,
penalties and censure, claims for damages by customers and other affected individuals, regulatory inquiries and investigations or
adverse publicity and could cause our customers to lose trust in us, any of which could adversely affect our business, financial
condition, results of operations and prospects.
Our employees may engage in misconduct or other improper activities, including violating applicable regulatory
standards and requirements or engaging in insider trading, which could significantly harm our business.
We are exposed to the risk of employee fraud or other misconduct. Misconduct by employees could include intentional
failures to comply with legal requirements or the requirements of FDA, EMA and other government regulators, provide accurate
information to applicable government authorities, comply with fraud and abuse and other healthcare laws and regulations in the
United States and abroad, report financial information or scientific and medical data accurately or disclose unauthorized
activities to us.
In particular, sales, marketing and business arrangements in the healthcare industry are subject to extensive laws and
regulations intended to prevent fraud, misconduct, kickbacks, self-dealing and other abusive practices. These laws and
regulations restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer
incentive programs and other business arrangements. Employee misconduct could also involve the falsification or improper use
of, including trading on, information obtained in the course of clinical trials, which could result in regulatory sanctions and serious
harm to our reputation. We strive to maintain an ethical corporate culture and have adopted a Code of Business Conduct and
Ethics and have a training program in place, but it is not always possible to identify and deter employee misconduct, and the
precautions we take to train employees and detect and prevent this activity may be ineffective in controlling unknown or
unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a
failure to comply with these laws or regulations. If any such actions are instituted against us, and we are not successful in
defending ourselves or asserting our rights, those actions could have a significant impact on our business, including the
imposition of significant fines or other sanctions.
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Product liability and other lawsuits could divert our resources, result in substantial liabilities, reduce the commercial
potential of our product candidates and harm our reputation.
The risk that we may be sued on product liability claims is inherent in the development and commercialization of
biopharmaceutical and diagnostic products that are intended to be tested and evaluated on humans in an initial phase, then
commercialized. Side effects of, or manufacturing defects in, products that we develop could result in the deterioration of a
patient’s condition, injury or even death. This risk is particularly important where patients suffer from life-threatening illnesses,
such as ACLF. For example, our liability or that of our current or future collaborators could be sought after by patients
participating in the clinical trials in the context of the development of the therapeutic or diagnostic products tested and
unexpected side effects resulting from the administration of these products.
Once a product is approved for sale and commercialized, the likelihood of product liability lawsuits increases. Criminal or
civil proceedings might be filed against us or our partners by patients, regulatory authorities, biopharmaceutical companies and
any other third party using or marketing our products. These actions could include claims resulting from acts by our partners,
licensees, service providers and subcontractors, over which we have little or no control. These lawsuits may divert our
management from pursuing our business strategy and may be costly to defend. In addition, if we or our partners are held liable in
any of these lawsuits, we and/or they may incur substantial liabilities and may be forced to limit or forgo further
commercialization of the affected products, which may harm our reputation. Patients may not follow warnings identifying
potential known side effects, including some patients who should not be using our drug candidates.
A successful liability claim against our products may lower the value of our stock, Product liability claims could also harm our
and our partners' reputation, which may adversely affect our and our partners' ability to commercialize our products successfully.
Risks Related to our Financial Position and Capital Needs
To date we have not generated any significant direct recurring revenue from product sales. Indirect revenues from
royalty payments under our licensing agreements depend or will depend, among other things, on the success of the
development and/or marketing by our partners of the drug candidates or products we have out-licensed. As a result, our
ability to sustainably reduce our losses, reach lasting profitability, as a result of such types of revenue, and maintain our
shareholders equity on our own is unproven, and we may never achieve or sustain profitability.
We recorded a net loss of €28,894 thousand for the year ended December 31, 2023 and a net loss of €23,719 thousand for the
year ended December 31, 2022. Despite our net profit of €1,507 thousand for the year ended December 31, 2024, we have a history
of recorded losses during prior years.
We have never generated any direct profits from the sale of approved products and we do not expect to become profitable
from such sales in the foreseeable future. Although under the collaboration and license agreement entered into with Ipsen in 2021
we have received significant milestones for development and marketing authorization of Iqirvo® (elafibranor) in PBC in the United
States and the agreement provides for additional regulatory and commercial milestones and significant royalties on net sales of
Iqirvo® (elafibranor), there is no assurance that this will occur on the timelines we expect, if at all.
In recent years, our most significant revenue has resulted from one-time upfront payments received in 2019 under our
license agreement with Terns Pharmaceuticals, and since 2021 upfront and milestone payments under our license agreement and
non-recurring revenues under our transition service agreements with Ipsen. To these are added, to a lesser extent, the
reimbursements of our research tax credit or CIR, which alone have the character of significant recurring operating income,
although our ability to continue to benefit from the CIR depends on our ability to continue to meet the criteria and decisions of
French policy makers with respect to the scope or rate of the CIR benefit (see Note 7.2 - "Other income" to the financial
statements for the year ended December 31, 2024).
Revenues from our agreements with Labcorp/Covance and Q2 for the use of our NIS4® diagnostic technology and its
improvements have so far been insignificant. Their eventual growth will depend on many external factors, including the market
availability the first treatments for MASH. However, these revenues will never be of the same order as those that could result
from additional marketing authorizations and revenues from Iqirvo® (elafibranor) or the potential commercialization of our other
drug candidates, and will never enable us to be profitable on their own.
At the same time, we plan to continue to incur significant expenses for the development of some of our current product
candidates and new product candidates for which we acquire licensing rights, or preparation of the marketing of such products.
We have devoted almost all of our resources to our research and development projects related to our drug candidates, and to a
lesser proportion to our NIS4® program and to providing general and administrative support for our operations, protecting our
intellectual property and engaging in activities to prepare for the potential commercialization of our drug candidates and an IVD
powered by NIS4® or its variations. In addition, during the regulatory development process for some of our drug candidates and
for IVD tests using our NIS4® technology or its variations, our operating costs may increase, particularly if the FDA, EMA or EC
requires studies or preclinical studies or clinical trials additional to those already planned, or, if a delay occurs in the realization of
our preclinical studies or clinical trials or, more generally, in the development of one of our products.
As a result, we expect to continue to incur losses for the foreseeable future, and we expect these losses to increase as we
continue our development of, and seek regulatory approvals, or with our current or future partners, as the case may be, for our
product candidates.
35
One of the potential consequences of such losses, and which we experienced at December 31, 2020, is the inability to
maintain the amount of our equity at a level at least half of our share capital. As a result, and in accordance with Article L.225-248
of the French Commercial Code, we were required to submit to our June 30, 2021 general meeting a resolution to decide to
continue our activities. This resolution was approved by our shareholders in June 2021, and we were able to reconstitute positive
shareholders' equity at least equal to half of the share capital at June 30, 2021 and further reinforce our share capital at December
31, 2021 due to the agreement signed with Ipsen and their equity investment in December 2021, and therefore a third party is no
longer able to sue to dissolve the company on these grounds. However, we could still face this situation again in the future
depending on the development of our product candidates, in particular if we are unable to realize expected revenues from the
potential commercial success of Iqirvo® (elafibranor) in PBC.
Our ability to maintain profitability in the future will depend on our ability and that of our current or future collaborators
to obtain marketing approval for and successfully commercialize our product candidates, particularly our lead product,
Iqirvo® (elafibranor).
Our ability to be profitable in the future will depend on our ability and that of our current or future collaborators to obtain
marketing approval for and successfully commercialize our product candidates, particularly our lead product, Iqirvo®
(elafibranor). The success of NASHNext® LDT commercialized by Labcorp powered by NIS4® technology, or by Q2, or a future IVD
powered by NIS4® or its improvements for clinical care will not on their own enable us to be profitable. We or our partners may not
be successful in our or their efforts to obtain such approval and to commercialize the products.
Obtaining marketing approval will require us or our current or future collaborators to be successful in a range of challenging
activities, including:
•
obtaining regulatory approvals to run clinical trials;
•
obtaining positive results in preclinical studies and clinical trials;
•
regulatory bodies determining that clinical data are sufficient, without further clinical data, to support an application for
approval, whether or not conditional or accelerated;
•
obtaining approval to market and securing coverage and reimbursement from third-party payors in additional significant
territories for elafibranor Iqirvo® (elafibranor) and our other product candidates;
•
expanding manufacturing of commercial supply for our licensed product candidates;
•
establishing sales, marketing and distribution capabilities to effectively market and sell and our drug candidates;
•
market acceptance by patients and the medical community of Iqirvo® (elafibranor) and our other product candidates;
•
obtaining additional positive results in our or our partners’ formal validation studies required to commercialize a test
powered by NIS4® or its improvements for clinical care that would allow an IVD test to be developed and approved for
diagnosing MASH patients;
•
market acceptance by patients and the medical community of an LDT or IVD powered by NIS4® as a diagnostic
complement to liver biopsy for clinical care; and
•
negotiating and securing coverage and adequate reimbursement from third-party payors for an LDT or IVD powered by
NIS4® or its improvements and our other product candidates.
We may also need to carry out preparatory activities for the future commercialization of some of our product candidates, in
order to gain a better understanding of how doctors treat and diagnose their patients, without deriving any benefit from them,
particularly in the absence of subsequent approval. Furthermore, as most of the therapeutic areas for which we are targeting our
product candidates are characterized by medical needs that remain largely unsatisfied, there is considerable uncertainty as to
the level of adoption of future treatments and diagnostic tools by patients and healthcare professionals, as well as third-party
payers.
Even if we or our collaborators receive marketing approvals for our product candidates and commence our commercial
launch, we may not be able to generate significant revenues in the near term. We cannot foresee if our product candidates will
ever be accepted as a therapies in their designated indications eventually resulting in sustained revenues and it may take the
passage of a significant amount of time to generate significant sustained revenues even if our product candidates become
accepted as therapies in their designated indications.
MASH is currently an under-diagnosed disease, and we believe that an LDT or IVD powered by NIS4® or its improvements will
facilitate the identification of patients with MASH and fibrosis who may be eligible for therapeutic intervention. There is
significant uncertainty in the degree of market acceptance that future treatments or diagnostic tools will have among MASH
patients and their healthcare providers as well as third-party payors. If an IVD powered by NIS4® or its improvements does not
obtain marketing authorization or is unable to be commercialized, we, or our collaborators, may not be able to generate sufficient
test volume to generate significant revenues. Even if an IVD powered by NIS4® or its improvements were approved, revenues from
that IVD alone would not be sufficient alone for us to be profitable.
36
If Iqirvo® (elafibranor) or any of our other product candidates fails in preclinical studies or clinical trials to which they are
subject or do not gain regulatory approval, or do not achieve market acceptance, we may never become profitable. Our net losses
have had, and will continue to have, an adverse effect on our shareholders’ equity and working capital. Because of the numerous
risks and uncertainties associated with pharmaceutical and diagnostic product development and commercialization, we are
unable to accurately predict the timing or amount of increased expenses or when, or if, we will be able to achieve profitability. The
amount of future net losses/revenues will depend, in part, on the rate of future growth of our expenses and our ability to generate
revenues, including from licensing agreements with current or future partners.
We will require substantial additional funding to develop and commercialize our drug candidates, if approved, as well as
to reinforce our pipeline, which may not be available to us, or to our current or future partners on acceptable terms, or at all,
and, if not so available, may require us or them to delay, limit, reduce or cease our operations.
Our drug candidates are in preclinical or clinical development. Developing pharmaceutical and diagnostic products,
including conducting preclinical studies and clinical trials, along with obtaining necessary validation, is expensive.
Subject to obtaining regulatory approval of any of our drug candidates or an IVD powered by NIS4® or its improvements, we
or our current or future collaborators expect to incur significant pre-marketing and commercialization expenses for product
sales, marketing, manufacturing and distribution. We anticipate incurring significant expenses in connection an increase in our
product development, scientific, commercial and administrative personnel and expansion of our facilities and infrastructure in
the United States, France and other countries. We also expect to incur additional costs associated with operating as a public
company in the United States and further plan on expanding our operations in the United States, Europe and in other territories.
We could continue to require substantial additional capital in connection with our continuing operations, in particular to expand
our pipeline, and to continue our clinical development and pre-commercialization activities.
We could therefore still have significant needs in terms of additional funds to pursue our activities, particularly if the
revenues we expect to receive under and pursuant to our licensing-out agreements are lower than expected, or if we no longer
receive any, and/or if we further strengthen our current portfolio of product candidates and programs, and consequently our
preclinical and clinical development activities and, where applicable, pre-commercialization and commercialization.
In addition, access, in particular under acceptable conditions, to necessary financing is subject to obtaining positive
scientific results and contextual factors affecting the financial markets, investors and potential lenders including unfavorable
geopolitical circumstances. In addition, access, in particular under acceptable conditions, to necessary financing is subject to
contextual factors affecting the financial markets, investors and potential lenders including certain unfavorable geopolitical
circumstances, including inter-governmental disputes, changes in international trade policy and fiscal policy and regulations,
tariffs and other trade barriers, and impacts of political or civil unrest or military action, such as the ongoing conflict between
Russia and Ukraine and in the Middle East and their economic consequences, which could further restrict such access and
conditions.
Because successful development of our drug candidates and diagnostic program is uncertain, we are unable to estimate the
actual funds required to complete the research and development and commercialization of our products under development.
As of December 31, 2024, the Group had €81.8 million, in cash and cash equivalents (€77.8 million as of December 31, 2023).
Following receipt of the first payment of €130 million in March 2025 under the royalty financing agreement we signed with HCRx
(see Note 2.2 - "Major events after the period" to our consolidated financial statements included in this annual report for further
information on this agreement), part of which was used to finance the repurchase of 1,882,891 OCEANEs in March 2025 to
extinguish virtually all its bond debt, the Company considers that its cash, cash equivalents and current financial instruments are
sufficient to ensure its financing, in view of its current projects and obligations over the next twelve months.
Beyond this one-year outlook, the current amount of cash, cash equivalents and current financial instruments, plus the two
other potential additional payments of up to €55 million provided for under this royalty financing agreement, as well as future
milestone payments that we may receive under our license agreement with Ipsen (including the milestone payment milestone
expected in 2025 and subject to an agreement on the price and reimbursement of Iqirvo® (elafibranor) in a third major European
country), could enable us, based on current assumptions and plans and barring exceptional events, to fund our operating
expenses, general needs and investment needs beyond the end of 2027. The possibility of receiving both the milestone payments
provided for in the license agreement with Ipsen and the two other additional payments provided for in the royalty financing
agreement with HCRx is nevertheless conditional on the reaching certain sales targets for Iqirvo® (elafibranor) and sales targets.
These last elements, which are also uncertain, contribute to and reinforce the difficulty of accurately predicting the amount
of additional funds that will be needed for research and development as well as for the commercialization of our products under
development. They also explain why we cannot predict with certainty our funding needs relative to our financial resources.
Our failure to maintain certain tax benefits applicable to French biopharmaceutical companies may adversely affect our
results of operations.
37
As a French biopharmaceutical company, we have benefited from certain tax advantages, including, for example, the French
Research Tax Credit, or CIR (Crédit d'Impôt Recherche), which is a French tax credit aimed at stimulating research and
development. The CIR can be offset against French corporate income tax due and the portion in excess, if any, may be refunded.
The CIR is calculated based on our claimed amount of eligible research and development expenditures in France and was €3.4
million for the year ended December 31, 2024. We believe, due to the nature of our business operations, that we will continue to be
eligible to receive the CIR tax credit. However, if the French Parliament decides to eliminate, or to reduce the scope or the rate of,
the CIR benefit, either of which it could decide to do at any time, our results of operations could be adversely affected.
Risks Related to Ownership of Our Ordinary Shares and ADSs and Our Status as a Non-U.S. Company with Foreign Private
Issuer Status
The market price of our equity securities is particularly volatile and may decline regardless of our operating performance.
The trading price for our ADSs and ordinary shares has fluctuated, and is likely to continue to fluctuate, substantially. The
stock market in general and the market for biopharmaceutical companies in particular have experienced extreme volatility that
has often been unrelated to the operating performance of particular companies. As a result of this volatility, investors may not be
able to sell their ADSs or ordinary shares at or above the price originally paid for the security. The market price for our ADSs and
ordinary shares may be influenced by many factors, including:
•
announcements of clinical trial results;
•
actual or anticipated fluctuations in our financial condition and operating results;
•
actual or anticipated changes in our growth rate relative to our competitors;
•
competition from existing products or new products that may emerge;
•
announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures, collaborations,
or capital commitments;
•
failure to meet or exceed financial estimates and projections of the investment community or that we provide to the
public;
•
issuance of new or updated research or reports by securities analysts;
•
fluctuations in the valuation of companies perceived by investors to be comparable to us;
•
share price and volume fluctuations attributable to inconsistent trading volume levels of our shares;
•
additions or departures of key management or scientific personnel;
•
lawsuits threatened or filed against us, including securities litigation, disputes or other developments related to
proprietary rights, including patents, litigation matters, and our ability to obtain patent protection for our technologies;
•
changes to coverage policies or reimbursement levels by commercial third-party payors and government payors and any
announcements relating to coverage policies or reimbursement levels;
•
announcement or expectation of additional debt or equity financing projects;
•
sales of our ordinary shares or ADSs by us, our insiders or our other shareholders; and
•
general economic and market conditions.
These and other market and industry factors may cause the market price and demand for our ordinary shares and ADSs to
fluctuate substantially, regardless of our actual operating performance, which may limit or prevent investors from readily selling
their ordinary shares or ADSs and may otherwise negatively affect the liquidity of the trading market for our ordinary shares and
ADSs.
The dual listing of our ordinary shares and our ADSs may adversely affect the liquidity and value of our ordinary shares
and ADSs.
Our ADSs are listed on the Nasdaq Global Select Market, and our ordinary shares trade on Euronext Paris. We cannot predict
the effect of this dual listing on the value of our ADSs and ordinary shares. However, the dual listing of our ADSs and ordinary
shares may dilute the liquidity of these securities in one or both markets and may adversely affect the trading market or price for
our ADSs and ordinary shares. In the past, there been less liquidity for our ADSs trading on the Nasdaq Global Select Market as
compared to trading for our ordinary shares trading on Euronext Paris.
We have been the subject of a securities class action litigation and may become subject to additional litigation, which
could harm our business and financial condition.
38
Historically, securities class action litigation has often been brought against a company following a decline in the market
price of its securities. This risk is especially relevant for us because biotechnology and biopharmaceutical companies have
experienced significant share price volatility in recent years. We may have actions brought against us by shareholders relating to
past transactions, changes in our stock price or other matters. For example, we have, in the past, been the subject of a purported
shareholder class action complaint filed following our announcement that elafibranor had not achieved the primary or key
secondary endpoints of the Phase 3 RESOLVE-IT® trial in NASH. This complaint, naming us, our board of directors and certain
members of our senior management as defendants, alleged that we made materially misleading statements about the
development of elafibranor in connection with our U.S. initial public offering in violation of U.S. federal securities laws. We
ultimately prevailed and the time to appeal the decision of the Appellate Division has expired. However, future litigation could
give rise to substantial damages, and thereby have a material adverse effect on our financial position, liquidity, or results of
operations. Even if such actions are not resolved against us, the uncertainty and expense associated with shareholder actions
could harm our business, financial condition and reputation. Litigation can be costly, time-consuming and disruptive to business
operations. The defense of lawsuits could also result in diversion of our management's time and attention away from business
operations, which could harm our business.
If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our
business, the price of our ordinary shares and ADSs and their trading volume could decline.
The trading market for our ADSs and ordinary shares depends in part on the research and reports that securities or industry
analysts publish about us or our business. If no or few securities or industry analysts cover our company, the trading price for our
ADSs and ordinary shares would be negatively impacted. If one or more of the analysts who covers us downgrades our equity
securities or publishes incorrect or unfavorable research about our business, the price of our ordinary shares and ADSs would
likely decline. If one or more of these analysts ceases coverage of our company or fails to publish reports on us regularly, or
downgrades our securities, demand for our ordinary shares and ADSs could decrease, which could cause the price of our ordinary
shares and ADSs or their trading volume to decline.
We do not currently intend to pay dividends on our securities and, consequently, your ability to achieve a return on your
investment will depend on appreciation in the price of our ordinary shares and ADSs. In addition, French law may limit the
amount of dividends we are able to distribute.
We have never declared or paid any cash dividends on our ordinary shares and do not currently intend to do so for the
foreseeable future. We currently intend to invest our future earnings, if any, to fund our growth. Therefore, you are not likely to
receive any dividends on your ordinary shares or ADSs for the foreseeable future and the success of an investment in ordinary
shares or ADSs will depend upon any future appreciation in its value. Consequently, investors may need to sell all or part of their
holdings of ordinary shares or ADSs after price appreciation, which may never occur, as the only way to realize any future gains on
their investment. There is no guarantee that the ordinary shares or ADSs will appreciate in value or even maintain the price at
which our shareholders have purchased them. Investors seeking cash dividends should not purchase our ADSs or ordinary
shares.
Further, under French law, the determination of whether we have been sufficiently profitable to pay dividends is made on the
basis of our statutory financial statements prepared and presented in accordance with accounting standards applicable in
France. In addition, payment of dividends may subject us to additional taxes under French law. Therefore, we may be more
restricted in our ability to declare dividends than companies not based in France.
In addition, exchange rate fluctuations may affect the amount of euros that we are able to distribute, and the amount in U.S.
dollars that our shareholders receive upon the payment of cash dividends or other distributions we declare and pay in euros, if
any. These factors could harm the value of our ADSs, and, in turn, the U.S. dollar proceeds that holders receive from the sale of
our ADSs.
Future sales, or the possibility of future sales, of a substantial number of our ADSs or ordinary shares could adversely
affect the price of our ADSs and ordinary shares.
As of April 1, 2025, we had 49,996,185 ordinary shares issued and outstanding. Sales of a substantial number of our ADSs or
ordinary shares, or the perception that such sales will occur, could cause a decline in the market price of our securities and could
impair our ability to raise capital through the sale of additional equity securities. A substantial number of our ordinary shares and
ADSs are now generally freely tradable, subject, in the case of sales by our affiliates, to the volume limitations and other
provisions of Rule 144 under the Securities Act of 1933, as amended, or the Securities Act. If holders of these shares sell, or
indicate an intent to sell, substantial amounts of our securities in the public market, or if we issue additional shares or securities,
the trading price of our securities could decline significantly.
The rights of shareholders in companies subject to French corporate law differ in material respects from the rights of
shareholders of corporations incorporated in the United States.
39
We are a French company with limited liability. Our corporate affairs are governed by our bylaws and by the laws governing
companies incorporated in France. The rights of shareholders and the responsibilities of members of our board of directors are in
many ways different from the rights and obligations of shareholders in companies governed by the laws of U.S. jurisdictions. For
example, in the performance of its duties, our board of directors is required by French law to consider the interests of our
company, its shareholders, its employees and other stakeholders, rather than solely our shareholders and/or creditors. It is
possible that some of these parties will have interests that are different from, or in addition to, your interests as a shareholder or
holder of ADSs. See the sections of this annual report titled Item 6. C —"Directors, Senior Management and Employees—Board
Practices” and the documents referenced in “Item 10. B —"Additional Information—Memorandum and Articles of Association”.
U.S. investors may have difficulty enforcing civil liabilities against our company and directors and senior management
and the experts named in this annual report.
The vast majority of the members of our board of directors and senior management and certain experts named in this annual
report are non-residents of the United States, and all or a substantial portion of our assets and the assets of such persons are
located outside the United States. As a result, it may not be possible to serve process on such persons or us in the United States
or to enforce judgments obtained in U.S. courts against them or us based on civil liability provisions of the securities laws of the
United States. Additionally, it may be difficult to assert U.S. securities law claims in actions originally instituted outside of the
United States. Courts outside the United States may refuse to hear a U.S. securities law claim because non-U.S. courts may not
be the most appropriate forums in which to bring such a claim. Even if a court outside the United States agrees to hear a claim, it
may determine that the law of the jurisdiction in which the non-U.S. court resides, and not U.S. law, is applicable to the claim.
Further, if U.S. law is found to be applicable, the content of applicable U.S. law must be proved as a fact, which can be a time-
consuming and costly process, and certain matters of procedure would still be governed by the law of the jurisdiction in which
the non-U.S. court resides. In particular, there is some doubt as to whether French courts would recognize and enforce certain
civil liabilities under U.S. securities laws in original actions or judgments of U.S. courts based upon these civil liability provisions.
In addition, awards of punitive damages in actions brought in the United States or elsewhere may be unenforceable in France. An
award for monetary damages under the U.S. securities laws would be considered punitive if it does not seek to compensate the
claimant for loss or damage suffered but is intended to punish the defendant. French law provides that a shareholder, or a group
of shareholders, may initiate a legal action to seek indemnification from the directors of a corporation in the corporation’s
interest if it fails to bring such legal action itself. If so, any damages awarded by the court are paid to the corporation and any legal
fees relating to such action may be borne by the relevant shareholder or the group of shareholders.
The enforceability of any judgment in France will depend on the particular facts of the case as well as the laws and treaties in
effect at the time. The United States and France do not currently have a treaty providing for recognition and enforcement of
judgments, other than arbitration awards, in civil and commercial matters.
Our bylaws and French corporate law contain provisions that may delay or discourage a takeover attempt.
Provisions contained in our bylaws and French corporate law could make it more difficult for a third party to acquire us, even
if doing so might be beneficial to our shareholders. In addition, provisions of our bylaws impose various procedural and other
requirements, which could make it more difficult for shareholders to effect certain corporate actions. These provisions include
the following:
•
under French law, the owner of 90% of voting rights of a public company listed on a regulated market in a Member State of
the European Union or in a state party to the European Economic Area, or EEA, Agreement, including from the main
French stock exchange, has the right to force out minority shareholders following a tender offer made to all shareholders;
•
under French law, certain foreign investments in companies incorporated under French laws are subject to the prior
authorization from the French Minister of the Economy, where all or part of the target’s business and activity relate to a
strategic sector, such as energy, transportation, public health, telecommunications, etc., or constitutes a critical
technology, such as biotechnologies;
•
a merger (i.e., in a French law context, a share for share exchange following which our company would be dissolved into
the acquiring entity and our shareholders would become shareholders of the acquiring entity) of our company into a
company incorporated in the European Union would require the approval of our board of directors as well as a two-thirds
majority of the votes held by the shareholders present, represented by proxy or voting by mail at the relevant meeting;
•
a merger of our company into a company incorporated outside of the European Union would require 100% of our
shareholders to approve it;
•
under French law, a cash merger is treated as a share purchase and would require the consent of each participating
shareholder;
•
our shareholders have granted and may grant in the future our board of directors broad authorizations to increase our
share capital or to issue additional ordinary shares or other securities, such as warrants, to our shareholders, the public or
qualified investors, including as a possible defense following the launching of a tender offer for our shares;
•
our shareholders have preferential subscription rights on a pro rata basis on the issuance by us of any additional
securities for cash or a set-off of cash debts, which rights may only be waived by the extraordinary general meeting by a
two-thirds majority vote of our shareholders or on an individual basis by each shareholder;
•
our board of directors has the right to appoint directors to fill a vacancy created by the resignation or death of a director,
subject to the approval by the shareholders of such appointment at the next shareholders’ meeting, which prevents
shareholders from having the sole right to fill vacancies on our board of directors;
40
•
our board of directors can be convened by our chairman, including upon request from our chief executive officer, if any, or,
when no board meeting has been held for more than two consecutive months, from directors representing at least one-
third of the total number of directors;
•
our board of directors meetings can only be regularly held if at least half of the directors attend either physically or by way
of videoconference or teleconference enabling the directors’ identification and ensuring their effective participation in
the board’s decisions;
•
our shares are registered or bearer, if the legislation so permits, according to the shareholder’s choice;
•
approval of at least a majority of the votes held by shareholders present, represented by a proxy, or voting by mail at the
relevant ordinary shareholders’ general meeting is required to remove directors with or without cause;
•
advance notice is required for nominations to the board of directors or for proposing matters to be acted upon at a
shareholders’ meeting, except that a vote to remove and replace a director can be proposed at any shareholders’ meeting
without notice;
•
our bylaws can be changed in accordance with applicable French laws and regulations;
•
the crossing of certain thresholds has to be disclosed and can impose certain obligations; see the documents referenced
in the section of this annual report titled Item 10. B - "Additional Information - Memorandum and Articles of Association”;
•
transfers of shares shall comply with applicable insider trading rules and regulations and, in particular, with the Market
Abuse Directive and Regulation dated April 16, 2014; and
•
pursuant to French law, the sections of our Bylaws relating to the number of directors and election and removal of a
director from office, may only be modified by a resolution adopted by two-thirds of the votes of our shareholders present,
represented by a proxy or voting by mail at the meeting.
You may not be able to exercise your right to vote the ordinary shares underlying your ADSs.
Holders of ADSs may exercise voting rights with respect to the ordinary shares represented by the ADSs only in accordance
with the provisions of the deposit agreement. The deposit agreement provides that, upon receipt of notice of any meeting of
holders of our ordinary shares, the depositary will fix a record date for the determination of ADS holders who shall be entitled to
give instructions for the exercise of voting rights. Upon timely receipt of notice from us, if we so request, the depositary shall
distribute to the holders as of the record date (1) the notice of the meeting or solicitation of consent or proxy sent by us and (2) a
statement as to the manner in which instructions may be given by the holders.
A holder of ADSs may instruct the depositary of the ADSs to vote the ordinary shares underlying his or her ADSs. Otherwise,
such holder will not be able to exercise voting rights unless he or she withdraws the ordinary shares underlying the ADSs that he
or she holds. However, a holder of ADSs may not know about the meeting far enough in advance to withdraw those ordinary
shares. If we ask for a holder of ADSs’ instructions, the depositary, upon timely notice from us, will notify him or her of the
upcoming vote and arrange to deliver our voting materials to him or her. We cannot guarantee to any holder of ADSs that he or
she will receive the voting materials in time to ensure that he or she can instruct the depositary to vote his or her ordinary shares
or to withdraw his or her ordinary shares so that he or she can vote them. If the depositary does not receive timely voting
instructions from a holder of ADSs, it may give a proxy to a person designated by us to vote the ordinary shares underlying his or
her ADSs. In addition, the depositary and its agents are not responsible for failing to carry out voting instructions or for the
manner of carrying out voting instructions. This means that a holder of ADSs may not be able to exercise his or her right to vote,
and there may be nothing he or she can do if the ordinary shares underlying his or her ADSs are not voted as he or she requested.
Holders of ADSs are not holders of our ordinary shares.
A holder of ADSs is not treated as one of our shareholders and does not have direct shareholder rights. French law governs
our shareholder rights. The depositary is the holder of the ordinary shares underlying ADSs. The deposit agreement among us, the
depositary and all persons directly and indirectly holding ADSs sets out ADS holder rights, as well as the rights and obligations of
the depositary.
A double voting right is attached to each registered share which is held in the name of the same shareholder for at least two
years. However, the ordinary shares underlying our ADSs will not be entitled to double voting rights as the depositary will hold the
shares underlying our ADSs in bearer form.
The right as a holder of ADSs to participate in any future preferential subscription rights or to elect to receive dividends in
shares may be limited, which may cause dilution to the holdings of ADS holders.
41
Under French law, if we issue additional securities for cash, current shareholders will have preferential subscription rights for
these securities on a pro rata basis unless they waive those rights at an extraordinary meeting of our shareholders by a two-thirds
majority vote or individually by each shareholder. However, ADS holders will not be entitled to exercise or sell such rights unless
we register the rights and the securities to which the rights relate under the Securities Act or an exemption from the registration
requirements is available. In addition, the deposit agreement provides that the depositary will not make rights available to
purchasers of ADSs unless the distribution to ADS holders of both the rights and any related securities are either registered
under the Securities Act or exempted from registration under the Securities Act. Further, if we offer holders of our ordinary shares
the option to receive dividends in either cash or shares, under the deposit agreement the depositary may require satisfactory
assurances from us that extending the offer to holders of ADSs does not require registration of any securities under the
Securities Act before making the option available to holders of ADSs. We are under no obligation to file a registration statement
with respect to any such rights or securities or to endeavor to cause such a registration statement to be declared effective.
Moreover, we may not be able to establish an exemption from registration under the Securities Act. Accordingly, ADS holders
may be unable to participate in our rights offerings or to elect to receive dividends in shares and may experience dilution in their
holdings. In addition, if the depositary is unable to sell rights that are not exercised or not distributed or if the sale is not lawful or
reasonably practicable, it will allow the rights to lapse, in which case you will receive no value for these rights.
Holders of ADSs may be subject to limitations on the withdrawal of the underlying ordinary shares.
Temporary delays in the cancellation of ADSs and withdrawal of the underlying ordinary shares may arise because the
depositary has closed its transfer books or we have closed our transfer books, the transfer of ordinary shares is blocked to permit
voting at a shareholders’ meeting or we are paying a dividend on our ordinary shares. In addition, a holder of ADSs may not be
able to cancel his or her ADSs and withdraw the underlying ordinary shares when he or she owes money for fees, taxes and similar
charges and when it is necessary to prohibit withdrawals in order to comply with any laws or governmental regulations that apply
to ADSs or to the withdrawal of ordinary shares or other deposited securities.
ADSs holders may not be entitled to a jury trial with respect to claims arising under the deposit agreement, which could
result in less favorable outcomes to the plaintiffs in any such action.
The deposit agreement governing the ADSs representing our ordinary shares provides that, to the fullest extent permitted by
law, ADS holders waive the right to a jury trial of any claim they may have against us or the depositary arising out of or relating to
our shares, the ADSs or the deposit agreement, including any claim under the U.S. federal securities laws.
If we or the depositary opposed a jury trial demand based on the waiver, the court would determine whether the waiver was
enforceable based on the facts and circumstances of that case in accordance with the applicable state and federal law. It is
advisable that you consult legal counsel regarding the jury waiver provision before entering into the deposit agreement.
If you or any other holders or beneficial owners of ADSs bring a claim against us or the depositary in connection with matters
arising under the deposit agreement or the ADSs, including claims under federal securities laws, you or such other holder or
beneficial owner may not be entitled to a jury trial with respect to such claims, which may have the effect of limiting and
discouraging lawsuits against us and the depositary. If a lawsuit is brought against either or both of us and the depositary under
the deposit agreement, it may be heard only by a judge or justice of the applicable trial court, which would be conducted
according to different civil procedures and may result in different outcomes than a trial by jury would have, including results that
could be less favorable to the plaintiffs in any such action.
As a foreign private issuer, we are exempt from a number of rules under the U.S. securities laws and are permitted to file
less information with the SEC than a U.S. company. This may limit the information available to holders of ADSs and our
ordinary shares.
We are a foreign private issuer, as defined in the SEC’s rules and regulations and, consequently, we are not subject to all of
the disclosure requirements applicable to public companies organized within the United States. For example, we are exempt from
certain rules under the Securities Exchange Act of 1934, as amended, or the Exchange Act, that regulate disclosure obligations
and procedural requirements related to the solicitation of proxies, consents or authorizations applicable to a security registered
under the Exchange Act, including the U.S. proxy rules under Section 14 of the Exchange Act. In addition, our officers and
directors are exempt from the reporting and “short-swing” profit recovery provisions of Section 16 of the Exchange Act and
related rules with respect to their purchases and sales of our securities. Moreover, while we currently make annual and semi-
annual filings with respect to our listing on Euronext Paris and have filed, and expect to continue to file, financial reports on an
annual and semi-annual basis, we are not required to file periodic reports and financial statements with the SEC as frequently or
as promptly as U.S. public companies and are not required to file quarterly reports on Form 10-Q or current reports on Form 8-K
under the Exchange Act. Accordingly, there is, and will continue to be, less publicly available information concerning our
company than there would be if we were not a foreign private issuer.
As a foreign private issuer, we are permitted and we expect to follow certain home country practices in relation to
corporate governance matters that differ significantly from Nasdaq’s corporate governance listing standards. These
practices may afford less protection to ADS holders than they would enjoy if we complied fully with the corporate governance
listing standards of the Nasdaq Global Select Market.
42
As a foreign private issuer listed on the Nasdaq Global Select Market, we are subject to Nasdaq’s corporate governance
listing standards. However, Nasdaq rules provide that foreign private issuers are permitted to follow home country corporate
governance practices in lieu of Nasdaq’s corporate governance standards as long as notification is provided to Nasdaq of the
intention to take advantage of such exemptions. Therefore, as a general matter, we refer to the French Middlenext corporate
governance code for corporate governance matters, and thus its corporate governance practices may differ significantly from
Nasdaq corporate governance listing standards. For example, while the Nasdaq rules would require a majority of our directors to
be independent, the Middlenext corporate governance code requires that at least one third of the members of the board of
directors to be independent and encourages 50% independent directors. Currently, all of our directors except for Jean-François
Mouney, Dr. Sandra Silvestri and Florence Séjourné are independent (as defined by the Nasdaq corporate governance listing
standards) and meet both Middlenext and Nasdaq requirements for independence. However, in the future, the composition of the
board may change such that we only meet the Middlenext requirement, but not the Nasdaq requirement for independence.
Currently, we intend to follow home country practice to the maximum extent possible.
We are also exempt from provisions set forth in Nasdaq rules which require an issuer to provide in its bylaws for a generally
applicable quorum, and that such quorum may not be less than one-third of the outstanding voting stock. Consistent with French
law, our bylaws provide that a quorum requires the presence of shareholders having at least (1) 20% of the shares entitled to vote
in the case of an ordinary shareholders’ general meeting or at an extraordinary shareholders’ general meeting where shareholders
are voting on a capital increase by capitalization of reserves, profits or share premium, or (2) 25% of the shares entitled to vote in
the case of any other extraordinary shareholders’ general meeting. If a quorum is not present, the meeting is adjourned. There is
no quorum requirement when an ordinary general meeting is reconvened, but the reconvened meeting may consider only
questions which were on the agenda of the adjourned meeting. When an extraordinary general meeting is reconvened, the
quorum required is 20% of the shares entitled to vote, except where the reconvened meeting is considering capital increases
through capitalization of reserves, profits or share premium. For these matters, no quorum is required at the reconvened meeting.
If a quorum is not present at a reconvened meeting requiring a quorum, then the meeting may be adjourned for a maximum of two
months.
As a foreign private issuer, we are required to comply with Rule 10A-3 of the Exchange Act, relating to audit committee
composition and responsibilities. Under French law, the audit committee may only have an advisory role and appointment of our
statutory auditors, in particular, must be decided by the shareholders at our annual meeting. Therefore, our shareholders may be
afforded less protection than they otherwise would have under Nasdaq’s corporate governance listing standards applicable to
U.S. domestic issuers. For an overview of our corporate governance practices, see "Item 6. C - "Directors, Senior Management and
Employees—Board Practices” and “Item 16.G - Corporate Governance.”
The Company incurs significant costs as a result of being a public company and, as a dual-listed issuer, is subject to
multiple securities regulations.
As a public company, we have incurred and will continue to incur significant legal, accounting and other expenses, including
costs associated with public company reporting requirements. We have also incurred and will continue to incur costs associated
with corporate governance requirements, including requirements of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act,
as well as rules implemented by the SEC and Nasdaq, which include requirements with respect to corporate governance
practices of public companies.
We ceased to be an “emerging growth company,” as defined in the U.S. Jumpstart Our Business Startups Act of 2012, or the
JOBS Act, on December 31, 2024 and are therefore no longer eligible for reduced disclosure requirements and exceptions
applicable to emerging growth companies. As we are no longer an emerging growth company, we will be required to devote
significant additional attention from management toward ensuring compliance with the auditor attestation requirements of
Section 404(b) of the Sarbanes-Oxley Act and will likely incur significant additional costs, which could include higher legal fees,
accounting fees and fees associated with investor relations activities, among others. The stringent standards set by the
Sarbanes-Oxley Act require that our audit committee be advised and regularly updated on management’s review of internal
control over financial reporting. To comply with this obligation, we must maintain an extensive framework of internal control over
financial reporting, that needs to be regularly updated and tested. Our independent registered public accounting firm is required
to attest to the effectiveness of its internal controls over financial reporting. Management may not be able to effectively and
timely implement controls and procedures that adequately respond to the increased regulatory compliance and reporting
requirements that are now applicable to us as a public company listed in the United States. If we do not succeed in maintaining
the appropriate level of internal control, it could result in material misstatements in its financial statements, result in the loss of
investor confidence in the reliability of our financial statements and subject us to regulatory scrutiny and sanctions, which in turn
could harm the market value of our ordinary shares and ADSs.
In addition, our status as a company listed on the Euronext market in France and on the Nasdaq market in the United States
requires us to be more transparent and precise in our external communications, particularly when such communications are
likely to have an impact on the price of our financial instruments and may constitute insider information. Thus, any information
likely to influence the price of our financial instruments and qualified as insider information must be disseminated as soon as
possible and rigorously protected prior to its publication, provided that the legal criteria for qualification are met. Failure to
comply with the rules on the dissemination, accuracy, management and security of information could result in significant
administrative, civil and criminal penalties from the financial market regulatory authorities, the AMF in France and the SEC in the
United States, as well as from the competent courts. Beyond the legal and financial risks, failure to comply with these regulations
could also damage our reputation in the financial markets, i.e. the trust of our investors or potential investors, and therefore
negatively impact the valuation or the potential valuation of our securities.
43
We may lose our foreign private issuer status in the future, which could result in significant additional cost and expense.
While we currently qualify as a foreign private issuer, the determination of foreign private issuer status is made annually on
the last business day of an issuer’s most recently completed second fiscal quarter and, accordingly, the next determination will be
made with respect to us on June 30, 2025. In the future, we would lose our foreign private issuer status if we fail to meet the
requirements necessary to maintain our foreign private issuer status as of the relevant determination date. We will remain a
foreign private issuer until such time that more than 50% of our outstanding voting securities are held by U.S. residents and any of
the following three circumstances applies: (1) the majority of our executive officers or directors are U.S. citizens or residents; (2)
more than 50% of our assets are located in the United States; or (3) our business is administered principally in the United States.
The regulatory and compliance costs to us under U.S. securities laws as a U.S. domestic issuer may be significantly more
than costs we incur as a foreign private issuer. If we are not a foreign private issuer, we will be required to file periodic reports and
registration statements on U.S. domestic issuer forms with the SEC, which are more detailed and extensive in certain respects
than the forms available to a foreign private issuer. We would be required under current SEC rules to prepare our financial
statements in accordance with U.S. GAAP, rather than IFRS, and modify certain of our policies to comply with corporate
governance practices associated with U.S. domestic issuers. Such conversion of our financial statements to U.S. GAAP would
involve significant time and cost. In addition, we may lose our ability to rely upon exemptions from certain corporate governance
requirements on U.S. stock exchanges that are available to foreign private issuers such as the ones described herein and
exemptions from procedural requirements related to the solicitation of proxies.
Changes to U.S. and non-U.S. tax laws could materially adversely affect our company.
Our tax treatment is subject to the enactment of, or changes in, tax laws, regulations and treaties, or the interpretation
thereof, tax policy initiatives and reforms under consideration and the practices of tax authorities in jurisdictions in which we
operate, including those related to the Organization for Economic Co-Operation and Development’s Base Erosion and Profit
Shifting Project, the EC’s state aid investigations and other initiatives. Such changes may include (but are not limited to) the
taxation of operating income, investment income, dividends received or (in the specific context of withholding tax) dividends
paid. We are unable to predict what tax reform may be proposed or enacted in the future or what effect such changes would have
on our business, but such changes, to the extent they are brought into tax legislation, regulations, policies or practices, could
affect our financial position and overall or effective tax rates in the future in countries where we have operations, reduce post-tax
returns to our shareholders, and increase the complexity, burden and cost of tax compliance.
Further, existing tax laws, statutes, rules, regulations or ordinances could be interpreted, changed, modified or applied
adversely to us. For example, in the United States, the Inflation Reduction Act of 2022 imposes, among other rules, a 15%
minimum tax on the book income of certain large corporations and a 1% excise tax on certain corporate stock repurchases.
Changes in corporate tax rates, the realization of net deferred tax assets relating to our operations, the taxation of foreign
earnings, and the deductibility of expenses or future reform legislation could have a material impact on the value of our deferred
tax assets, could result in significant one-time charges, and could increase our future U.S. tax expense.
Although not free from doubt, we do not believe we were a "passive foreign investment company," or PFIC, for U.S. federal
income tax purposes for the taxable year ended December 31, 2024. However, we cannot assure you that we will not be
classified as a PFIC for current taxable year or any future taxable year, which may result in adverse U.S. federal income tax
consequences to U.S. holders.
Although the matter is not free from doubt, based on our analysis of our income, assets, activities and market capitalization
for our taxable year ended December 31, 2024, we do not believe that we were classified as a PFIC for the taxable year ended
December 31, 2024. Whether we are a PFIC for any taxable year will depend on our assets and income (including whether we
receive certain non-refundable grants or subsidies, and whether such amounts along with reimbursements of certain refundable
research tax credits will constitute gross income for purposes of the PFIC income test) in each year, and because this is a factual
determination made annually after the end of each taxable year there can be no assurance that we will not be considered a PFIC
in any taxable year. In addition, we hold a substantial amount of cash and cash equivalents, which are generally treated as a
passive asset for purposes of determining PFIC status. Because the calculation of the value of our assets may be based in part on
the value of our ordinary shares or ADSs, the value of which may fluctuate considerably, our PFIC status may change from year to
year and it is difficult to predict whether we will be a PFIC for the current year or any future year. Therefore, we have not yet made
any determination as to our expected PFIC status for the current taxable year. However, we could be considered a PFIC for the
current taxable year or a future taxable year if the current percentage of our passive assets compared to our total assets
increases. There can be no assurance that the IRS will agree with our conclusion with respect to any taxable year that we were
not a PFIC for such taxable year. Our U.S. counsel expresses no opinion regarding our conclusions or our expectations regarding
our PFIC status.
44
Under the Internal Revenue Code of 1986, as amended, or the Code, a non-U.S. company will be considered a PFIC for any
taxable year in which (1) 75% or more of its gross income consists of passive income or (2) 50% or more of the average quarterly
value of its assets consists of assets that produce, or are held for the production of, passive income. For purposes of these tests,
passive income includes dividends, interest, gains from the sale or exchange of investment property and certain rents and
royalties. In addition, for purposes of the above calculations, a non-U.S. corporation that directly or indirectly owns at least 25% by
value of the shares of another corporation is treated as if it held its proportionate share of the assets and received directly its
proportionate share of the income of such other corporation. If we are a PFIC for any taxable year during which a U.S. holder (as
defined below under Item 10. E - "Additional Information—Taxation”) holds our ordinary shares or ADSs, we will continue to be
treated as a PFIC with respect to such U.S. holder in all succeeding years during which the U.S. holder owns the ordinary shares or
ADSs, regardless of whether we continue to meet the PFIC test described above for a particular year, unless the U.S. holder
makes a specified election once we cease to be a PFIC. If we are classified as a PFIC for any taxable year during which a U.S.
holder holds our ordinary shares or ADSs, the U.S. holder may be subject to adverse tax consequences regardless of whether we
continue to qualify as a PFIC, including ineligibility for any preferred tax rates on capital gains or on actual or deemed dividends,
interest charges on certain taxes treated as deferred, and additional reporting requirements. For further discussion of the PFIC
rules, the adverse U.S. federal income tax consequences in the event we are classified as a PFIC and the availability of elections
that may mitigate such adverse consequences, see the section of this annual report titled Item 10. E - "Additional Information—
Taxation”.
If a United States person is treated as owning at least 10% of our ordinary shares, such holder may be subject to adverse
U.S. federal income tax consequences.
If a U.S. holder is treated as owning, directly, indirectly or constructively, at least 10% of the value or voting power of our
ordinary shares or ADSs, such U.S. holder may be treated as a “United States shareholder” with respect to each “controlled
foreign corporation” in our group, if any. Because our group currently includes one U.S. subsidiary, our non-U.S. subsidiaries (and
any other non-U.S. subsidiaries we form or acquire in the future) could be treated as controlled foreign corporations, regardless of
whether we are treated as a controlled foreign corporation. A United States shareholder of a controlled foreign corporation may
be required annually to report and include in its U.S. taxable income its pro rata share of “Subpart F income,” “global intangible
low-taxed income” and investments in U.S. property by controlled foreign corporations, regardless of whether we make any
distributions. An individual that is a United States shareholder with respect to a controlled foreign corporation generally would
not be allowed certain tax deductions or foreign tax credits that would be allowed to a United States shareholder that is a
corporation. Failure to comply with controlled foreign corporation reporting obligations may subject a United States shareholder
to significant monetary penalties. We cannot provide any assurances that we will furnish to any United States shareholder
information that may be necessary to comply with the reporting and tax paying obligations applicable under the controlled
foreign corporation rules of the Code. U.S. holders should consult their tax advisors regarding the potential application of these
rules to their investment in our ordinary shares or ADSs.
We must maintain effective internal control over financial reporting, and if we are unable to do so, the accuracy and
timeliness of our financial reporting may be adversely affected, which could hurt our business, lessen investor confidence and
depress the market price of our securities.
As a public company, we must maintain effective internal control over financial reporting in order to accurately and timely
report our results of operations and financial condition. In addition, as a public company listed in the United States, the Sarbanes-
Oxley Act requires, among other things, that our management assesses the effectiveness of our internal control over financial
reporting beginning with this Annual Report.
The rules governing the standards that must be met for our management to assess our internal control over financial
reporting pursuant to Section 404 of the Sarbanes-Oxley Act are complex and require significant documentation, testing and
possible remediation. These stringent standards require that our audit committee be advised and regularly updated on
management’s review of internal control over financial reporting. To comply with this obligation, we must maintain an extensive
framework of internal control over financial reporting, that we need to regularly update and test. This process is time-consuming,
costly, and complicated. Moreover, as we are no longer “emerging growth company” as of December 31, 2024, we are now
required to comply with Section 404(b) of the Sarbanes-Oxley Act and our registered public auditor is now required to attest to
and report on the effectiveness of our internal controls over financial reporting.
Management identified no material weakness as of December 31, 2024. See Item 15 - "Disclosure Controls and Procedures” of
this Annual Report for further discussion of management’s assessment of the effectiveness of our internal control over financial
reporting.
Assessing our procedures to improve our internal control over financial reporting is an ongoing process. We have identified
material weaknesses in our internal control over financial reporting in the past, which were remediated and can provide no
assurance that we will not have material weaknesses in the future. Any material weaknesses we identify could result in an
adverse reaction in the financial markets due to a loss of confidence in the reliability of our consolidated financial statements.
Any failure to maintain internal control over financial reporting could severely inhibit our ability to accurately report our financial
condition, results of operations or cash flows. If material weaknesses occur which we are unable to remediate and we conclude
that our internal control over financial reporting is ineffective, we could lose investor confidence in the accuracy and
completeness of our financial reports, the market price of the ADSs could decline, and we could be subject to sanctions or
investigations by the NASDAQ Stock Market, the SEC or other regulatory authorities. Failure to remedy any material weakness in
our internal control over financial reporting, or to implement or maintain other effective control systems required of public
companies, could also restrict our future access to the capital markets.
45
The outbreak of a future pandemic or public health crisis could adversely impact our business, including our preclinical
studies and clinical trials.
In December 2019, COVID-19 spread across the world, including to countries where our facilities are located, where our
product candidates are being evaluated in ongoing or future clinical trials, and where our CROs and CMOs are located, which had
a significant impact on our activities.
If a new public health crisis were to arrive, no assurance can be given that new, restrictive measures will not be adopted by
governments, and it is not possible to predict with certainty the economic impact of such measures on us. Such a situation could
lead to an economic slowdown in one or several markets in which the Group operates, or have disruptions that could have a very
significant impact on our activities, our operations and those of our current or future partners, our clinical trials, and in particular:
•
delays or difficulties manufacturing active ingredients and therapeutic units to be sent to our clinical investigation sites;
•
delays or difficulties in enrolling patients in clinical trials in which our product candidates are being evaluated;
•
delays or difficulties in recruiting new clinical investigation sites and in starting their activities, including difficulties in
recruiting physician investigators and personnel assigned to trials of the clinical investigation site. In particular, the delays
in the launch and in enrollment of patients for the Phase 3 ELATIVE® trial evaluating elafibranor in PBC which led us to
have to revise our forecasts with regard to obtaining clinical results;
•
reallocations of resources normally dedicated to the conduct of clinical trials, including the resources of hospitals hosting
clinical investigation sites and hospital staff involved in the conduct of our clinical trials or those of our current partners
or potential future partners that made conducting trials technically difficult or impossible;
•
disruptions to key clinical trial-related activities, such as monitoring clinical investigation sites;
•
limitations if management, members of the Board of Directors and/or employees are unable to work due to illness or
unable to work remotely, or in case of the Board of Directors, unable to meet and specifically in the human resources that
would usually be concentrated on the conduct of our clinical trials, or those of our current or future partners;
•
additional costs related to the implementation of specific protocols within the framework of our ongoing or future clinical
trials, or those of our current or future partners;
•
delays in obtaining authorizations from the regulatory authorities necessary to start clinical or preclinical studies that we,
or our current partners, have planned to launch;
•
delays in receipt by the clinical investigation sites of the supplies and equipment needed to carry out these clinical trials;
•
disruptions in global trade that may affect the transportation of clinical trial materials such as our therapeutic units
required in our clinical trials;
•
changes in local regulations that could require us or our current partners to modify the terms of our clinical trials, which
could result in unexpected costs, or lead to the interruption of our clinical trials;
•
delays in necessary interactions with local regulatory agencies, particularly the FDA and EMA, Ethics Committees and
other important agencies and contractors due to limited human resources or the unavailability or forced leave of public
officials or due to the concentration of their efforts on the examination of other treatments or other activities related to
the pandemic; and
•
refusals by the FDA or the EMA to accept clinical trial data collected in geographical areas affected by the COVID-19
pandemic.
Furthermore, the extent of the negative impact of a new pandemic on the financial markets, on our share price and therefore
on our ability to obtain additional financing is unknown at this time. Disaster recovery, business continuity or restructuring plans
may be inadequate or insufficient in these circumstances.
Item 4.
Information on the Company.
A.
History and Development of the Company
GENFIT is a biopharmaceutical group conducting preclinical and clinical research and development of drug candidates and
diagnostic technologies and dedicated to improving the lives of patients with liver diseases with high unmet medical needs, with
a special focus on rare, life-threatening and acute pathologies. Our legal name is "GENFIT SA," or a French société anonyme, and
our principal executive office is located at Parc Eurasanté 885, avenue Eugène Avinée 59120 Loos, France. Our telephone number
at our principal executive office is +33 (0)3 2016 4000. Our agent for service of process in the United States is Corporation Service
Company, located at 19 West 44th Street, Suite 200, New York, NY 10036.
46
With its rich scientific heritage spanning more than two decades, the Group is a pioneer in the discovery and development of
drugs for liver diseases. Our pipeline encompasses a total of ten programs. The main franchise focuses on Acute-on-Chronic Liver
Failure (ACLF) and includes five therapeutic programs at different development stages (preclinical, Phase 1, Phase 2): VS-01-ACLF,
nitazoxanide (NTZ) now known as G1090N following our reformulation of NTZ, SRT-015, CLM-022 and VS-02-HE. A second
franchise includes two therapeutic programs targeting other life-threatening liver diseases: GNS561 in Cholangiocarcinoma
(CCA) and VS-01-HAC in Urea Cycle Disorder (UCD) and Organic Acidemia (OA). In addition, in 2021, GENFIT successfully out-
licensed to Ipsen a proprietary program, elafibranor, which had been developed internally up to and including Phase 3. In June
2024, Ipsen received marketing authorization in the United States for commercialization of elafibranor under the name Iqirvo® in
Primary Biliary Cholangitis (PBC). Iqirvo® (elafibranor) also received conditional marketing authorization in the European Union
and the United Kingdom. Iqirvo® (elafibranor) has been entered onto the Australian Register of Therapeutic Goods (ARTG) and
the registration is public since March 25, 2025. Our pipeline also includes a diagnostic franchise including NIS2+® in Metabolic
dysfunction-associated steatohepatitis (MASH, previously known as NASH, for Nonalcoholic Steatohepatitis) and TS-01 focusing
on blood ammonia levels.
GENFIT was co-founded and incorporated in 1999 by Jean-François Mouney, now Chairman of the Board of Directors. Pascal
Prigent succeeded Jean-François Mouney as Chief Executive Officer in 2019. In 2003, GENFIT created GENFIT CORP., our
subsidiary in Massachusetts, United States. In 2006, GENFIT was listed on the Alternext Market, managed by Euronext Paris, and
transferred in 2014 onto the Euronext Market in Paris (compartment B - ISIN : FR0004163111). In March 2019, GENFIT SA listed its
American Depositary Shares on the Nasdaq Global Select Market in the United States under the symbol "GNFT". In September
2022, GENFIT completed the acquisition of Versantis AG, a Swiss-based clinical stage biotechnology company focused on
providing solutions for increasing unmet medical needs in liver diseases, which has since then become its wholly-owned
subsidiary. In 2023, we in-licensed two additional investigational drugs in ACLF: SRT-015 is an ASK1 inhibitor, in-licensed from Seal
Rock Therapeutics in acute liver diseases and CLM-022 is a small molecule inhibitor targeting the NLRP3 inflammasome, in-
licensed from Celloram. In early 2025, GENFIT acquired the full intellectual property rights for GNS561 from Genoscience Pharma,
initially in-licensed from Genoscience in CCA at the end of 2021. For more information, see Note 2.2 - "Major events after the
period" to our consolidated financial statements included in this annual report.
We are led by an executive team and board of directors with deep experience at leading biotech companies, large
pharmaceutical companies and academic institutions. The chair of our scientific advisory board, Bart Staels, is the other co-
founder of our company and a world-renowned expert in metabolic & inflammatory disorders, and nuclear receptors. Our
Scientific Advisory Board is composed of world-renowned key opinion leaders in metabolic and inflammatory diseases with a
particular focus on hepatic and gastroenterological diseases.
Throughout our company’s history, we have carried out numerous R&D programs through consortiums and co-research
agreements with large pharmaceutical companies, and experts from the academic world. The experience and expertise we’ve
gained have fueled our own research and development efforts, including the discovery of new therapeutic targets, the
development of novel technologies and the identification of drug candidates that have demonstrated potential therapeutic
efficacy in clinical trials.
The Group's workforce is spread over 4 sites: Lille and Paris (France), Zurich (Switzerland) and Cambridge (Massachusetts,
United States). As of December 31, 2024, we had a total of 180 employees.
Our capital expenditures in the years ended December 31, 2024, 2023, and 2022 totaled €1.0 million, €0.4 million, and €44.9
million, respectively. Investments in IT and scientific equipment primarily account for amounts in 2024 and 2023. The 2022
amount is primarily related to our acquisition of Versantis. (Note that in 2023 we acquired licence rights totaling €2.1 million not
included in the figure above.) We expect our capital expenditures in 2024 to be primarily financed from our existing cash.
We maintain a corporate website at www.genfit.com. We intend to post our annual report on our website promptly following
it being filed with the SEC. Information contained on, or that can be accessed through, our website does not constitute a part of
this annual report. We have included our website address in this annual report solely as an inactive textual reference.
The SEC maintains an internet site at http://www.sec.gov that contains reports and other information regarding issuers that
file electronically with the SEC.
B.
Business Overview
i.
Our Purpose
GENFIT is a late-stage biopharmaceutical company committed to improving the lives of patients with severe liver diseases
who have a significant unmet medical need.
The Company’s purpose is based on the affirmation of its long-term commitment with regard to the position it wishes to
occupy in society, not only as an economic contributor whose purpose is to be part of the long term and to create value for its
counterparts and its ecosystem, but also as an innovative biotechnology company aiming to improve the quality of life of
patients, and finally as a corporate citizen seeking to facilitate the professional and personal development of its employees.
47
The Company aims to generate a positive and significant social, societal and environmental impact in the course of its
activities. As part of this approach, the Board of Directors undertake to take into consideration (i) the social, societal,
environmental consequences of its decisions on all of the company’s stakeholders, and (ii) the consequences of its decision on
the environment.
ii.
Our Vision
Our ambition is to capitalize on our scientific, clinical and regulatory expertise acquired during more than two decades in the
field of liver diseases to build and expand a pipeline of innovative therapeutic and diagnostic solutions targeting severe and life-
threatening liver diseases with high unmet medical needs, and representing a significant market potential in order to finance
innovation to enable us to sustain excellence in medical innovation, research and development over time.
iii.
Our Mission
Our mission is to remain a pioneer in the field of liver diseases, i.e. identify high potential assets to bring them from discovery
or early stages up to late development stages, typically the end of Phase 3. Subject to successful development and marketing
approval, and depending on the nature of our collaboration and licensing agreements, we would either commercialize the assets
ourselves, capitalize on the know-how of our current partners, such as Ipsen, or enter into additional distribution agreements with
new partners.
iv.
Our Founding Values and Principles
Our employees are driven by common principles that shape their actions:
–
Innovation to serve patients: We are deeply committed to improving the health and quality of life of patients affected
by rare and life-threatening liver diseases characterized by high unmet medical needs. We seek new ways to advance
science and medicine, with the goal of optimizing care for patients. With a strong desire to leverage our agility and
responsiveness, we and our employees are striving to move our scientific and medical approaches forward, and
improve patient management in terms of diagnostics, prevention and care.
–
Respect and diversity: We bring together talented employees with unique perspectives and experiences, we
recognize and value diversity as a great strength, and ensure that all employees and third parties are treated fairly,
with dignity and respect.
–
Ethics: We deliver true and accurate information to our partners and stakeholders and build our business
relationships with honesty and transparency. We demand of ourselves and others the highest ethical standards and
we conduct our business in a socially and environmentally sustainable manner.
v.
Our Sustainability Journey
GENFIT considers Corporate Social Responsibility, or CSR, a key driver for success, in that extra-financial performance can
be considered as closely associated with financial performance. Although we are not yet subject to significant CSR reporting
regulations, we strive to be as proactive and transparent as possible, and publish an Extra-Financial Performance Report, or EFPR,
on an annual basis.
Our CSR journey pursues several objectives. First is our desire as a company to uphold the principles of our code of ethics
and our internal policies. Secondly, we seek to manage risks that could potentially affect our business activity, and to seize
opportunities that could potentially contribute to our growth. Third, we engage with key stakeholders in our ecosystem (doctors,
patient associations, investors, talents, employees, etc.) in order to capture, understand and address challenges that are material
for them and for us. Finally, we attempt to anticipate future regulations that may apply to our organization in the coming years.
With this in mind, at the end of 2021, our Board of Directors created a dedicated environmental, social and governance, or
ESG Committee, which meets at least twice per year and makes recommendations to the Board of Directors. This committee
reviews in particular the annual ESG roadmap (specific actions and initiatives conducted or to be launched), and is involved in the
drafting and review of the annual EFPR. This report describes our philosophy, our priorities and the nature of our engagement in
terms of (1) policies, (2) actions and (3) performance indicators, including criteria related to (1) the environment, (2) social and
societal topics and (3) governance matters.
Internally, our CSR approach involves stakeholders at all levels of the Company. At the top of the organization, beyond the
ESG Committee, the Audit Committee and the Nomination and Compensation Committee play a key role. The Economic and
Social Council, or Works Council, a council that is statutorily required in France and composed of employee representatives, also
plays a significant role. In addition, each functional department is responsible for ensuring that E- and/or S- and/or G-related
matters are properly addressed. Then at the bottom of the organization, a group of ESG volunteers - or ESG champions - is making
sure that CSR remains at the heart of our organization.
In 2025 and beyond, we are committed to further enhancing our ESG strategy, building upon a robust foundation established
through a formal materiality assessment initiated during the second half of 2023 in collaboration with key stakeholders. This
strategy aligns with evolving regulations and underscores our dedication to responsible and sustainable business practices
relevant to our business.
48
In 2024, GENFIT was closely monitoring regulatory developments and had prepared a progressive compliance plan for its
extra-financial reporting according to the European Union Corporate Sustainability Reporting Directive, or CSRD, framework,
until the EU Omnibus project published in early 2025 rendered the transition plan obsolete. However, this development does not
call into question our desire to move closer to European standards on a voluntary basis and in line with our corporate profile.
vi.
Overview of our main programs
Over the past several years, GENFIT has made a strategic pivot towards Acute-On-Chronic Liver Failure (ACLF) and other
life-threatening liver conditions, broadening its research pipeline to include promising drug candidates that aim to meet the
urgent and unmet needs of this challenging condition:
Upcoming milestones, data announcements and launch dates are anticipated and subject to change. ACLF: Acute-on-Chronic Liver Failure. CCA: Cholangiocarcinoma;
HAC: Hyperammonemic Crises; UCD = Urea Cycle Disorders ; OA = Organic Acidemias ; HE: Hepatic Encephalopathy; MASH: Metabolic dysfunction-Associated
Steatohepatitis; G1090N Repositioned (Nitazoxanide or NTZ) and reformulated molecule.
All drugs under development are investigational compounds that have not been reviewed nor been approved by a regulatory authority in targeted indications. GENFIT has
licensed the exclusive worldwide rights of ASK1 Inhibitor SRT-015 (injectable formulation in acute liver disease) from Seal Rock Therapeutics. GENFIT licensed the
exclusive worldwide rights of CLM-022, a potential first-in-class inflammasome inhibitor, from Celloram Inc. GENFIT purchased the intellectual property rights underlying
GNS651 from Genoscience Pharma in January 2025. Labcorp has a five-year exclusive license for the development and commercialization of NIS4® technology to power
a next-generation MASH diagnostic laboratory-developed test (LDT) to identify patients with at-risk MASH in the United States and Canada. NIS2+® is a next-generation
technology derived from NIS4®.
In December 2021, we entered into a license agreement with Ipsen, granting Ipsen a global license (excluding Greater China,
licensed to Terns) to develop, manufacture, and commercialize elafibranor for the treatment of patients with Primary Biliary
Cholangitis (PBC) and other indications. GENFIT led the research and clinical development of elafibranor through the Phase 3
ELATIVE® trial in PBC. Ipsen is now responsible for all future clinical development, including completion of the long-term
extension of the Phase 3 ELATIVE® trial, as well as global commercialization (excluding Greater China, licensed to Terns) which
began in several countries including the United States and several EEA countries in 2024 under the name Iqirvo® (elafibranor). For
more information regarding the license agreement with Ipsen, See Item 10.C - "Additional Information - Material Contracts"
herein.
vii.
Our Strengths
We rely on our strengths to accelerate our research and development efforts over the coming years:
–
A recognized expertise in bringing earliest stage assets into later development stages
Over the years, GENFIT has demonstrated its capacity to develop assets from the earliest stages to the pre-
commercialization stage. This track record was materialized by the development of elafibranor from discovery to Phase 3 in
MASH, and then in PBC, leveraging GENFIT's expertise in several fields: research (target identification, understanding of
molecular mechanisms of action, establishing a network of experts, etc.), clinical development (study design and protocol
definition, KOL coordination and Advisory Boards, clinical trial execution from site activation and patient recruitment to data
readout and statistical analysis), regulatory (U.S. Food and Drug Administration (FDA)/European Medicines Agency (EMA)
interactions for Investigational New Drug (IND) submissions, Breakthrough Therapy/Fast Track/Orphan designations,
accelerated pathways such as Subpart H, etc.) and pre-commercialization (disease awareness, patient engagement, forecasting,
sales force sizing, market-access, etc.).
49
–
A pipeline focused on disease areas with high unmet needs and high market potential
GENFIT's pipeline has become widely diversified, expanding from a single asset (elafibranor) and a single indication (PBC) to
a much larger pipeline. The wide range of mechanisms of action and indications we are targeting allow us to distribute risk over
several programs. The distribution of these programs across several development stages provides a dynamic and diverse
potential news flow over the coming months and years. Given their positioning and potential, some programs have received
special designations from regulatory agencies:
Program
Designation
Elafibranor in PBC
Orphan Drug Designation (FDA, EMA)
Breakthrough Therapy Designation (FDA)
VS-01-ACLF
Orphan Drug Designation (FDA, EMA*)
GNS561 in CCA
Orphan Drug Designation (FDA)
VS-01-HAC**
Orphan Drug Designation (FDA)
Rare Pediatric Disease Designation (FDA)
*In the EU Orphan Drug Designation is for ALF
**VS-01-HAC is potentially eligible for Priority Review Voucher (PRV) upon approval (FDA)
–
Partners with a strong commercial track-record
Ipsen became an 8% shareholder of GENFIT at the end of 2021. The strategic partnership also provides Ipsen with access to
our research capabilities and other clinical programs through rights to first negotiation, therefore becoming a potential natural
partner for GENFIT to commercialize any late stage asset successfully developed in the future. Ipsen’s world-class development
capabilities, well-established global commercial footprint and excellent track record in delivering therapies to patient populations
with unmet medical need indeed makes it an ideal partner for GENFIT. We have also developed partnerships with other
stakeholders, creating potential avenues to generate revenues in the future. In 2019, the Company signed a licensing and
collaboration agreement with Terns Pharmaceuticals for the development and commercialization of elafibranor in Greater China,
and also has agreements with Labcorp, to commercialize NIS4® technology in the U.S. and Canada as a Laboratory Developed
Test, as well as with Q2 in the clinical research space.
–
A strong cash position enabling us to finance our R&D programs
On March 20, 2025, GENFIT announced the closing of a royalty financing transaction (Royalty Financing) with HealthCare
Royalty (HCRx) providing up to €185 million non-dilutive capital: €130 million upfront, with eligibility to receive up to €55 million in
two additional installments based on near-term sales milestones for Iqirvo® (elafibranor), and can be exercised at the discretion of
GENFIT upon achievement of such milestones. In return, HCRx will receive a portion of royalties on global1 sales of Iqirvo®
(elafibranor) payable to GENFIT under its licensing agreement with Ipsen, up to an agreed upon cap after which all future royalties
will revert back to GENFIT.
GENFIT retains rights to all future regulatory, commercial and sales-based milestone payments from Ipsen under the Ipsen
agreement.
The Royalty Financing has significantly extended GENFIT’s cash runway, beyond the end of 2027, enabling the Company to
further develop its pipeline focused on Acute-on-Chronic Liver Failure (ACLF) and support general corporate purposes. This
estimation is based on current assumptions and programs and does not include exceptional events. This estimation assumes i)
our expectation to receive significant future milestone revenue, including the €26.55 million milestone in 2025 pending a third
pricing and reimbursement approval of Iqirvo® (elafibranor) in a major European market, and Ipsen meeting its sales-based
thresholds, ii) drawing down all installments under the Royalty Financing, and iii) the Repurchase of the OCEANEs as described
below and the reimbursement at maturity in October 2025 of any OCEANEs not repurchased and cancelled.
Concurrently with the Royalty Financing, GENFIT proposed to OCEANEs holders the possibility to enter into a put option
agreement for the repurchase of their OCEANEs (Repurchase). Following this proposal, holders of OCEANEs exercised their put
option for a total of 1,882,891 OCEANEs, i.e. 99% of the total number of OCEANEs outstanding. At a price of €32.75 per bond, this
represents a total Repurchase amount of €61.7 million. As of the date of this Annual Report, the nominal amount of GENFIT’s
convertible debt is €586 thousand.
For more information regarding the Royalty Financing transaction, see Note 2..2 - "Major events after the period" to the financial
statements for the year ended December 31, 2024. and Item 10.C - "Additional Information - Material Contracts".
For more information regarding our liquidity and capital resources, see Item 5 - "Operating and Financial Review and
Prospects”.
Expected future milestone payments from Ipsen for Iqirvo® (elafibranor) in PBC to support future development
50
1 Excluding China, Hong Kong, Taiwan and Macau for which Terns Pharmaceuticals has an exclusive license to develop and commercialize elafibranor
In December 2021, GENFIT entered into Collaboration and License Agreement with Ipsen, or the Ipsen Agreement. This
agreement granting Ipsen an exclusive worldwide (excluding Greater China which is licensed to Terns) license to develop,
manufacture and commercialize elafibranor, for people living with PBC, and in other indications. Under the Ipsen Agreement,
Ipsen will pay us up to €480 million, which is comprised of an upfront cash payment of €120 million, as well as regulatory,
commercial, and sales-based milestone payments of up to €360 million, plus tiered double-digit royalties of up to 20%
(considering that since the Royalty Financing, HCRx will receive a portion of these royalties under the terms described in Note 2.2
- "Major events after the period" of the consolidated financial statements of this Annual Report).
Potential near-term milestones include a €26.55 million milestone expected in 2025 pending a third pricing and
reimbursement approval of Iqirvo® (elafibranor) in a major European market and milestones based on Ipsen meeting certain sales-
based thresholds.
At the date of this report, GENFIT already has received €62 million of the potential €360 million milestone payments provided
for under the Ipsen Agreement.
–
Strategic developments across the ACLF pipeline: key strategic insights and emerging trends uncovered through
unique sources and channels
In 2024, GENFIT has made strides in understanding the ACLF continuum, adding to the body of knowledge available in the
field at the time of our pivot to ACLF.
Key takeaways derived from these workstreams will inform the design of on-going and upcoming trials evaluating VS-01, NTZ
and SRT-015. These insights will also help further strategize the research and clinical development of CLM-022 and VS-02-HE.
Cutting-edge processing of Real-World Evidence: An in-depth analysis of medical claims data – leveraged through
advanced artificial intelligence or AI and machine learning techniques from a targeted U.S. population of over 270,000 patients –
provided pivotal insights into risk profiles within specific patient sub-populations of the ACLF continuum, as well as differences in
referral dynamics, patient journeys and clinical management practices compared to Europe. Applying sophisticated algorithms
uncovered epidemiological patterns and trends within this substantial dataset, generating actionable intelligence that enhances
our understanding and supports more precise, data-driven decisions across our portfolio.
Preclinical research: New preclinical models have been established with leading experts, serving as key enablers to
deliver valuable data aimed at improving our understanding of our portfolio potential. To date, the data already generated
encompasses a range of disease models and various formulations. This approach is designed to optimize asset positioning and
refine population targeting, ultimately supporting strategic decision-making and maximizing impact across our therapeutic
landscape.
Collaboration with learned societies: Strategic partnerships, including with the European Foundation for the Study of
Chronic Liver Failure (EF CLIF) and engagement with U.S. Key Opinion Leaders or KOLs from the North American Consortia for
the Study of End Stage Liver Disease (NACSELD), offered important insights through unique data sources encompassing several
observational studies, while also accelerating and expanding discussions with key leaders in the field. This type of collaboration
places GENFIT at the forefront of international research, advancing the understanding of ACLF pathophysiology and uncovering
novel approaches for the treatment of this syndrome.
This integrated approach ensures a comprehensive foundation to advance our ACLF pipeline. Notably, we believe
including a subset of patients with acute decompensation of cirrhosis, or AD, at a high-risk of progressing to ACLF in our target
population for the new trials will better cover the ACLF continuum and creates opportunities to address both stages of the
disease. With easier and faster identification, we expect that this would enable a more rapid assessment of drug-candidates’
therapeutic potential, supporting data-driven prioritization and minimizing the risk of engaging larger-scale investments.
viii.
Our Strategy
GENFIT's strategy is to make the most of our strengths to become a world leader in the development of innovative therapies
and diagnostics in life-threatening liver diseases, prioritizing rare diseases. This strategy is designed to serve our purpose,
focused on improving patients' lives.
–
Targeted therapeutic areas
The relevance of our positioning in rare, life-threatening liver diseases for which unmet needs remain high is threefold:
•
It allows us to act, as a pioneer, for the benefit of patients whose lives are in danger, and who have few, if any, therapeutic
options;
•
It allows us to apply our know-how, our expertise and experience to try to bring patients satisfactory solutions thanks to
the advances enabled by our innovation work in the preclinical and clinical fields and;
•
Finally, it allows us to consider potential accelerated approval processes.
–
Our approach to generate value
51
In drug development, our goal is to focus our efforts in one specific area - rare and life-threatening liver diseases - for greater
operational efficiency, and to distribute risk across different programs with different mechanisms of action, with the goal to
improve our chances of success.
GENFIT's ambition is to develop drug candidates from the earliest stages up to the latest stages, including Phase 3.
Depending on predefined criteria such as the targeted indication or competitive environment, or potential opportunities in terms
of partnerships, GENFIT will then choose what we consider to be the best option to commercialize our most promising assets for
which the Company has not yet out-licensed the rights:
•
Build our own marketing and sales forces to commercialize the asset on our own, or
•
Leverage the existing relationship with our preferred commercial partner Ipsen which provides a natural path to
commercialization, or
•
Commercialize via another partner.
We consider the patient journey as a whole and are also looking to continue to be present in the diagnostic field, specifically
to determine which populations to treat within the therapeutic areas we are targeting with our drug candidates.
–
Our corporate priorities in 2025
In 2025, GENFIT continues to prioritize the execution of its clinical development programs, as well as research programs
focused on pre-clinical/non-clinical development. More specifically, GENFIT will focus its efforts on the execution of UNVEIL-IT®
Phase 2 trial in ACLF, the launch of another study evaluating VS-01 in a different population, as well as the launch of additional
studies with G1090N (new formulation of NTZ) and SRT-015.
ix. Elafibranor - out-licensed to Ipsen
In December 2021, we entered into the Ipsen Agreement granting Ipsen an exclusive worldwide (excluding Greater China
which is licensed to Terns) license to develop, manufacture and commercialize elafibranor, for people living with PBC, and in
other indications. The commercialization of elafibranor by Ipsen began in 2024 in the United States under the name Iqirvo®. See
Item 10.C - "Additional Information - Material Contracts" herein for more information regarding this license and partnership
agreement with Ipsen.
–
Commercialized asset - elafibranor in Primary Biliary Cholangitis (PBC)
PBC is a rare, chronic, progressive liver disease of autoimmune etiology, characterized by injury of the intrahepatic bile ducts
that, in untreated patients or non-responders to existing therapies, may progress to hepatic fibrosis, cirrhosis, hepatic
decompensation, and death unless they receive a liver transplant. PBC disproportionately affects women versus men
(approximately 10:1) and is typically diagnosed in patients between 40 years to 60 years of age. The incidence and prevalence
rates for PBC in Europe, North America, Asia, and Australia are reported as ranging from 0.33 to 5.8 per 100,000 inhabitants and
1.91 to 40.2 per 100,000 inhabitants, respectively. It is estimated that there were 47,000 prevalent cases of PBC in the United
States white population and that approximately 3500 new cases are diagnosed each year. Over 60% of the newly diagnosed cases
are asymptomatic. The majority of asymptomatic patients become symptomatic within 10 years and the estimates for developing
symptoms at 5 and 20 years are 50% and 95%, respectively. Patients with PBC progress at varying rates, some experiencing liver
decompensation over a period of several years while others experience liver decompensation over decades. PBC is one of the
leading indications for liver transplantation. Despite its rarity, PBC remains an important cause of morbidity in the Western world.
PBC has also been identified as an important risk factor for hepatocellular carcinoma.
PBC is characterized by cholestasis caused by autoimmune destruction of biliary ducts with progressive impairment of bile
flow in the liver. This results in increased hepatocellular bile acid concentrations, which are toxic to the liver. Such hepatocellular
injury is associated with a local inflammatory response resulting early on in an abnormal elevation of serum alkaline phosphatase
(ALP) levels, a hallmark of the disease. Antimitochondrial antibody and IgM are specific immunological hallmarks of PBC, and
antimitochondrial antibody is a diagnostic marker of the disease in approximately 90% of patients. Liver biopsy, while
confirmatory, is no longer the standard of care.
ALP is also routinely used to clinically monitor the disease and serves as a leading indicator of disease progression. ALP
increases with disease progression as bilirubin starts to decline in more advanced disease (as the excretory function starts to
decline), both having been shown to be highly predictive of long-term clinical outcomes (e.g., transplant-free survival of patients).
There is a near log-linear correlation of both elevated ALP and bilirubin after 1 year of follow-up with long-term liver transplant-
free survival.
The most common symptoms of PBC are fatigue and pruritus. The mechanisms underlying these symptoms are not well
elucidated and neither correlates with disease stage or clinical outcomes.
52
The following diagram depicts where and how bile ducts are destroyed.
–
Phase 3 ELATIVE® trial: topline data announced in June 2023
On June 30, 2023 we and Ipsen announced positive 52-week interim topline data from the pivotal ELATIVE® Phase 3 trial. In
November 2023, Ipsen provided additional details in a late breaking oral presentation during the American Association for the
Study of Liver Diseases congress in Boston, Massachusetts, USA, and published detailed results in the New England Journal of
Medicine.
The first part of the trial assessed the efficacy and safety of elafibranor, an investigational dual α,δ PPAR agonist, in the
treatment of patients with the rare cholestatic liver disease, PBC, who have an inadequate response or intolerance to the current
standard of care therapy, UDCA. Results position elafibranor as a potentially important new treatment option, where there is still
high unmet need.
Results showed statistically significant improvements in biomarkers of disease progression across key endpoints with a
significant treatment benefit achieved in the primary composite endpoint, demonstrating a 47% placebo-adjusted difference
(P<0.001) between patients on elafibranor 80mg (51%) compared with patients on placebo (4%) achieving a biochemical response.
In the trial, a biochemical response is defined as alkaline phosphatase (ALP) <1.67 x upper limit of normal (ULN), an ALP decrease
≥ 15 percent and total bilirubin (TB) ≤ ULN at 52 weeks. ALP and bilirubin are important predictors of PBC disease progression.
Reductions in levels of both can indicate reduced cholestatic injury and improved liver function.
Only patients receiving elafibranor achieved normalization of ALP (upper limit of normal 104 U/L in females and 129 U/L in
males) at Week 52 (15% vs 0% placebo, P=0.002), a key secondary endpoint of the trial. The significant biochemical effect of
elafibranor measured by ALP reduction was further supported by data demonstrating reductions from baseline in ALP levels were
rapid, seen as early as Week 4 in the elafibranor group, and were sustained through Week 52, with a decrease in ALP of 41% on
elafibranor compared with placebo.
Additional details covered the effect of treatment with elafibranor on pruritus (severe itch) across three separate patient-
reported outcome measures. On the key secondary endpoint using the PBC Worst Itch NRS score, the reduction of pruritus
observed for elafibranor versus placebo was not statistically significant (LS mean, –1.93 versus –1.15; difference, –0.78; 95% CI, –
1.99 to 0.42; P=0.20). Two other secondary patient-reported outcome measures were used to assess itch, and greater reductions
in pruritus were observed with elafibranor compared with placebo at Week 52, according to the itch domain of PBC-40 quality of
life questionnaire (LS mean difference -2.3; 95% CI, -4.0 to -0.7) and 5-D Itch total score (LS mean difference, -3.0; 95% CI, -5.5 to
-0.5).
In the study, elafibranor was generally well tolerated with a safety profile consistent with that observed in previously
reported studies.
Ipsen now assumes responsibility for all additional clinical development, including completion of the long-term extension
period of the ELATIVE® trial, and global commercialization (outside of Greater China, where elafibranor is licensed to Terns).
–
2024 Approval
On June 10, 2024, GENFIT announced the achievement of a historic corporate milestone: the U.S. Food and Drug
Administration (FDA) accelerated approval of Iqirvo® (elafibranor) 80 mg tablets as a first-in-class treatment for PBC in
combination with ursodeoxycholic acid (UDCA) in adults with an inadequate response to UDCA, or as monotherapy in patients
unable to tolerate UDCA. Iqirvo® (elafibranor) is now marketed and commercialized in the U.S. by Ipsen under the trademark
Iqirvo®.
53
This indication was approved under accelerated approval based on reduction of alkaline phosphatase (ALP). Improvement in
survival or prevention of liver decompensation events have not been demonstrated. Continued approval for this indication may
be contingent upon verification and description of clinical benefit in confirmatory trial(s). Iqirvo® (elafibranor) is not
recommended for people who have or who develop decompensated cirrhosis (e.g., ascites, variceal bleeding, Hepatic
Encephalopathy).
On September 23, 2024, the European Commission conditionally approved Iqirvo® (elafibranor) 80mg tablets for the
treatment of Primary Biliary Cholangitis (PBC) in combination with ursodeoxycholic acid (UDCA) in adults with an inadequate
response to UDCA or as a monotherapy in patients unable to tolerate UDCA.
On October 9, 2024, the UK Medicines and Healthcare products Regulatory Agency (MHRA) approved the commercialization
of Iqirvo® (elafibranor). Following the MHRA approval, the National Institute for Health and Care Excellence (NICE) approved the
reimbursement of Iqirvo® (elafibranor) in the UK on October 22, 2024.
On March 25, 2025, the Australian TGA approved the commercialization of Iqirvo® (elafibranor) 80mg tablets for the
treatment of Primary Biliary Cholangitis (PBC) in combination with ursodeoxycholic acid (UDCA) in adults with an inadequate
response to UDCA or as a monotherapy in patients unable to tolerate UDCA.
–
Developed asset - elafibranor in Primary Sclerosing Cholangitis (PSC)
PSC is a rare, chronic liver disease characterized by inflammation and scarring of the bile ducts, which can lead to liver
damage and eventually liver failure. The exact cause of PSC is unknown, but it is often associated with other autoimmune
conditions, such as inflammatory bowel disease. Symptoms of PSC can include itching, fatigue, jaundice, and abdominal pain.
Over time, PSC can result in complications like bile duct infections, liver cirrhosis, and an increased risk of liver cancer. Currently,
there are no FDA or EMA approved therapies for the treatment of PSC.
–
Phase 2 ELMWOOD trial: positive data announced in April 2025
Ipsen is currently developing elafibranor in PSC and announced on April 24, 2025 that it will be presenting data from its late-
breaking abstract highlighting favorable safety profile and significant efficacy from its in PSC Phase 2 ELMWOOD trial (LB25222/
OS089), at the European Association for the Study of the Liver (EASL) to be held on May 10, 2025.
x. Our Drug Candidates and Diagnostic Development Programs
1. Our therapeutic pipeline in ACLF
GENFIT’s ACLF pipeline is now comprised of five assets (VS-01-ACLF, G1090N/NTZ, SRT-015, CLM-022, VS-02-HE) based on
differentiated mechanisms of action leveraging complementary pathways.
VS-01 and VS-02 have integrated our pipeline in September 2022, following the acquisition of Versantis AG, a private Swiss-
based clinical stage biotechnology company, now our wholly-owned subsidiary. See Item 10.C - "Additional Information - Material
Contracts" herein for more information regarding the acquisition of Versantis.
In May 2023, GENFIT licensed the exclusive worldwide rights of ASK1 Inhibitor SRT-015 in acute liver diseases from Seal Rock
Therapeutics, a Seattle, Washington (USA) based clinical stage company developing first-in class and best-in-class kinase
inhibitors.
In July 2023, GENFIT licensed the exclusive worldwide rights to CLM-022, a first-in-class inflammasome inhibitor, from
Celloram Inc., a Cleveland-based biotechnology company.
See in Item 4.B - "In-Licensing Partnerships” herein for more information regarding these agreements.
G1090N is our proprietary formulation of nitazoxanide (NTZ).
•
About ACLF
ACLF is a rare, life-threatening, but potentially reversible condition with varied etiology. It is a syndrome globally defined by
multi-organ dysfunction and failure in patients with chronic liver disease or cirrhosis, leading to high short-term mortality (25-40%
and 40-80% within 28 days and 90 days of hospital admission, respectively). Today, the scientific community recognizes ACLF as a
distinct medical entity.
54
Patients with cirrhosis may initially be compensated, but as the disease progresses, many develop acute decompensation,
characterized by the rapid onset of complications such as ascites, HE, and gastrointestinal hemorrhage - common causes of
hospitalization. These patients, who are generally hospitalized in a regular hepatology ward, may progress to ACLF and are usually
transferred to an intensive care unit. It has been estimated that after admission, approximately 30% of these patients either have
or will develop liver and/or other organ failure(s) (i.e, brain, kidneys, cardiovascular, coagulation system, and respiratory) within
three months, classifying them as patients having ACLF.
ACLF remains an underserved medical condition, with no approved drug treatments other than the treatment of
precipitating events, when identified, and organ failure support. Liver transplantation is the only effective medical intervention
but is available to fewer than 10% of eligible candidates each year. Due to the emergency setting, limited access to compatible
liver donors and, in some cases, no accessible liver transplant capabilities, approximately 15-30% of patients die while awaiting
liver transplant. In 2021, the prevalence of ACLF was estimated to be approximately 300,000 patients across the U.S., EU4 (France,
Germany, Italy, and Spain), and the UK. This market is expected to grow due to an aging population and the increasing prevalence
of metabolic dysfunction-associated fatty liver disease (MAFLD)/MASH, diabetes, obesity, alcohol consumption and drug
induced liver injuries.
Rising alcohol consumption has already impacted China, the United States, and European countries, all of which have
documented a doubling in alcoholic liver disease hospitalizations over a 10-year period.
Cirrhosis and ACLF impose a substantial health and economic burden. In the United States, total inpatient hospitalization
costs increased from $14.9 billion in 2016 to $18.8 billion in 2021. The mean hospitalization cost in 2016 for cirrhosis exceeded
>$20,000 for admission of patients with one or more cirrhosis-related complications. Notably, the mean cost per ACLF
hospitalization has been estimated to be two or three times higher than that for patients with cirrhosis without ACLF.
The significantly higher hospitalization costs for critically ill patients with ACLF, compared to those with cirrhosis without
ACLF, can be largely attributed to increased ICU admissions and, most importantly, hospital stays that are two to three times
longer - an average of 16 days for patients with ACLF versus 7 days for patients with cirrhosis without ACLF. Complications are
the primary drivers of prolonged hospitalization, with renal and infectious complications being associated with the longest
hospital stays.
55
–
Bedside management of ACLF patient hospitalized in Intensive Care Unit
Bernal W et al, J Hepatol, 2021, 75 (Suppl 1), S163-S177
•
Key learnings from 2024
In 2024, GENFIT acquired key insights from complementary workstreams that contributed to our understanding of the ACLF
continuum, including:
▪
Advanced Real-World Evidence analysis: AI-driven evaluation of medical claims data from over 270,000 U.S. patients,
uncovering ACLF risk profiles, referral dynamics, and management practices, including patients with acute
decompensation of cirrhosis (AD)
▪
KOL insights: Key perspectives from the ACLF KOL Advisory Board held during the November 2024 Liver Meeting2 in San
Diego, including both U.S. and European perspectives, with both NACSELD (The North American Consortium for the
Study of End-Stage Liver Disease) and EF CLIF (European Foundation for the Study of Chronic Liver Failure) stakeholders
▪
EF CLIF collaboration: Ongoing engagement with our academic partner EF CLIF, providing strategic insights into clinical
management practices and needs
▪
Learnings from UNVEIL-IT®: Feedback from investigators on challenges and opportunities
This integrated approach ensures a comprehensive foundation to advance our ACLF pipeline. Notably, we believe including a
subset of patients with acute decompensation of cirrhosis, or AD, at a high-risk of progressing to ACLF in our target population
for the new trials will better cover the ACLF continuum creates opportunities to address both stages of the disease. With easier
and faster identification, we expect that this would enable a more rapid assessment of drug-candidates’ therapeutic potential,
supporting data-driven prioritization and minimizing the risk of engaging larger-scale investments.
•
Specific highlights from Real World Data program conducted in 2024
Launched in July 2024, the Real-World Evidence (RWE) project was designed to enhance understanding of ACLF syndrome by
leveraging real-world data to inform more targeted and effective decision-making. The project was based on the Komodo dataset,
linked with Komodo Lab results, one of the largest real-world healthcare data sources in the United States. This database
includes comprehensive information on millions of patients, encompassing clinical characteristics, diagnosis, prescriptions,
comorbidities, outcomes, and laboratory values.
As part of this initiative, more than 270,000 patients meeting the EASL-CLIF criteria for ACLF were identified for the 2017–
2024 period. The collected data offers a longitudinal perspective on patient profiles and disease progression. Additionally, a
machine learning model was developed to segment subgroups of ACLF patients and those with Acute Decompensation (AD),
facilitating a deeper understanding of risk stratification across different patient profiles.
The first key outcome of this project was an in-depth analysis of the disease continuum between AD and ACLF patients, as
well as a detailed characterization of subpopulations at varying levels of mortality risk. These insights served as a scientific
foundation for updating GENFIT’s 2025 strategic action plan, supporting the decision to expand our target population in
upcoming trials to include a subset of high-risk AD patients who are more likely to progress to ACLF.
Furthermore, the project enabled the development of several high-value deliverables, including:
56
▪
An abstract submitted to EASL 2025 has been accepted for publication, reinforcing GENFIT’s leadership in ACLF research
and helping to raise awareness of the syndrome:
▪
An enhancement of the UNVEIL-IT® protocol; the analysis of Real-World Data or RWD has further refined the inclusion and
exclusion criteria of the clinical protocol, allowing for an approximately 1.4x increase in the pool of recruitable patients.
▪
A clinical feasibility assessment for additional proof-of-concept (PoC) trials planned for 2025; a series of simulations on
the AD and ACLF RWD cohorts supported the decision on the target subpopulations and the selected endpoints for these
clinical studies.
▪
An expanded in-house capability for further RWD analyses.
•
Our first program: VS-01-ACLF for enhancing the systemic elimination of ammonia and other ACLF-related
metabolites
–
Rationale and mechanism of action
VS-01-ACLF is an innovative, potential first-in-class investigational drug candidate based on a proprietary scavenging
liposomal technology. It is administered directly into the peritoneal (abdominal) cavity following drainage (paracentesis) of
ascites, one of the most common complications in patients with ACLF. VS-01-ACLF was granted the Orphan Drug Designation in
ACLF by the FDA.
In the setting of ACLF, toxic metabolites build up in the bloodstream due to organ failures. VS-01-ACLF is designed to
enhance the clearance of ACLF-related metabolites by extracting them from the blood into the peritoneal cavity by passive
diffusion. Toxic metabolites, either captured by the liposomes or in the surrounding fluid, are then drained from the body.
VS-01-ACLF is in clinical development as a potential first-line therapy for the timely resolution of ACLF. The identification of
the toxic metabolites extracted by VS-01 and associated clinical outcomes are being further investigated in the ongoing proof of
concept Phase 2a study. Preclinical and clinical pharmacodynamic and metabolomic studies have shown that VS-01-ACLF could
be the first drug to use the intraperitoneal route to:
•
Simultaneously support the liver, kidney and brain, the organs that most often fail in patients with cirrhosis, ACLF, and
ascites; and
•
Reduce inflammation, which is a key driver of ACLF.
More specifically, VS-01-ACLF liposomes are designed to trap bacterial endotoxins and mediators of inflammation as well as
ammonia, one of the main toxins associated with Hepatic Encephalopathy and brain failure. Overall, we believe VS-01-ACLF will
enhance the clearance of hepatic and uremic toxins to support liver, kidney and brain function.
Thus, VS-01-ACLF may be well suited as a treatment for patients with ACLF, with the potential to improve survival, to
increase the probability of success for liver transplant in selected patients, and to reduce healthcare costs.
–
Evidence supporting further development
◦
Non-clinical evidence
Non-clinical studies have shown the ability of VS-01 to extract kidney and liver toxins (185 extracted metabolites, including
ACLF-related metabolites and uremic toxins) as well as inflammation mediators (28 lipophilic compounds identified including
fatty acids and bile acids). Moreover, VS-01-ACLF efficiently captured ammonia. In healthy rats, VS-01-ACLF was shown to remove
20 times more ammonia than a control solution without liposomes. The extraction of ammonia in the peritoneal space further led
to a decrease in ammonemia in rats and pigs and to a decrease in brain edema in a model of bile duct ligated rats.
57
Additional experiments have highlighted VS-01’s ability to counteract lipopolysaccharides (LPS)-induced inflammatory
response in a cellular model, and to bind hydrophobic bile acids in a peritoneal fluid diffusion system. On top of its ability to clear
ammonia, these findings further support its development for the treatment of patients with decompensated liver cirrhosis and
ACLF. These results were presented during the AASLD 2024 Congress.
In rats, VS-01-ACLF had a favorable safety and tolerability profile during a prolonged intraperitoneal dwell time (>4h) and
during single and multiple doses.
Based on safety pharmacology studies and a GLP repeated dose toxicity study in minipigs receiving a daily session for 10
days, VS-01-ACLF was found to be safe and well tolerated. No immune reactions were observed in minipigs which are known to be
highly sensitive to colloidal formulation and prone to the so-called complement activation-related pseudoallergy (CARPA)
reaction following single and daily administration for 10 days.
◦
Clinical evidence
A Phase 1b first-in-human (FIH) open-label study has been completed in 12 patients with cirrhosis, ascites, and covert
Hepatic Encephalopathy. As a primary objective, the study assessed the safety and tolerability of VS-01-ACLF following
intraperitoneal administrations of single-ascending doses and multiple doses on top of standard of care (SOC). VS-01-ACLF
pharmacokinetics and efficacy profile were assessed as secondary objectives. VS-01-ACLF was generally well tolerated.
Importantly, >80% of patients demonstrated improvement or stabilization of the severity of their liver disease (as assessed by
Child-Pugh score). There was a trend towards dose related increases in the clearance of ammonia removed from the peritoneal
cavity as well as improvement in cognitive assessments used in the evaluation of patients with Hepatic Encephalopathy. Taken
together, the benefit risk profile of VS-01-ACLF is supportive of ongoing clinical investigation in patients with ACLF having ascites.
The main outcomes of the Phase 1b FIH study were presented at the AASLD 2021 Congress.
Based on a metabolomic study done on samples collected during this Phase 1b clinical study, a potential effect of VS-01-
ACLF in capturing metabolites associated with ACLF and with intense systemic inflammation has been observed. This potential
capture of metabolites by VS-01-ACLF in ascites led to reduced accumulation of those ones in blood, and could thus represent a
beneficial impact for treated patients. These results were presented at the EASL 2024 Congress and should be further validated in
larger cohorts.
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–
Next milestones
◦
UNVEIL-IT® Phase 2 trial
An international Phase 2a, open-label, randomized, controlled, multi-center, proof of concept study (UNVEIL-IT®) is ongoing
and aims to assess the efficacy, safety and tolerability of VS-01 in addition to standard of care (SOC), compared to SOC alone, in
approximately 60 adult patients with ACLF grades 1 and 2 and ascites.
The primary objective is to evaluate efficacy as measured by the CLIF-C ACLF (Chronic Liver Failure Consortium Acute on
Chronic Liver Failure score) at Day 7, which is highly correlated with mortality in patients with ACLF. Secondary objectives include
90-day mortality, 28-day mortality, time to death, change in ACLF grade, transplant-free survival, and safety and tolerability.
As announced in September 2024, lower than expected trial enrollment prompted a protocol amendment to better
accommodate patient care logistics and comorbidities. These modifications require time before they can be implemented in
every investigational site and before they can significantly impact the enrollment curve. The two main points of focus for our
improvement efforts have been:
•
Inclusion and exclusion criteria were overly restrictive for a patient population with multiple co-morbidities. As we
accumulated data to better characterize these patients, we collaborated with investigators and KOLs to modify the
protocol and better address the targeted population.
•
Logistical challenges are inherent to the introduction of any new technology. In the case of VS-01 the necessary steps in
the reconstitution process, and the limitation of a clinical trial setting, had previously restricted patient enrollment
windows. By generating additional stability data, we now offer enhanced storage flexibility for study material, enabling
clinical trial centers to use VS-01 more frequently. Additionally, we have been working on the development of an
innovative medical device which should be available in 2026 and will further streamline the reconstitution process.
Interim data from the UNVEIL-IT® trial are targeted for the second half of 2025.
◦
Proof-of-concept trial
In February 2025, GENFIT announced that alongside UNVEIL-IT®, a new proof-of-concept study highlighting GENFIT’s
commitment to VS-01 is expected to launch in the first half of 2025, with results expected in the second half of 2025:
59
•
Target population: patients with AD or ACLF grade 1 having overt Hepatic Encephalopathy, or HE, grades 2, 3 or 4, and
ascites as a prerequisite for drug administration
•
Number of patients: 21
•
Treatment duration: up to 4 days
•
Primary endpoint: Time to improvement in overt HE
•
Secondary endpoints: Safety and tolerability, pharmacokinetic and pharmacodynamic parameters
•
Exploratory endpoints will include blood ammonia, inflammatory and other clinical markers or outcomes
•
Our second program: G1090N, based on a reformulation of nitazoxanide (NTZ)
–
Rationale and mechanism of action
NTZ and TZ (tizoxanide, NTZ active circulating metabolite), are known to have a wide anti-infectious spectrum acting on
bacteria commonly encountered in human intestinal flora. An oral treatment with NTZ is therefore expected to act on bacterial
overgrowth and possibly preserve or restore intestinal barrier permeability in patients with acute liver decompensation (AD) and
ACLF. During further research, we have also discovered that tizoxanide TZ displays anti-inflammatory and anti-cell death
activities. These additional activities are believed to be the main drivers of the therapeutic activity of NTZ (see preclinical
evidences below).
–
Evidence supporting further development
◦
Preclinical evidence
As part of our preclinical program, we have studied (i) the effect of TZ in different cell models, and (ii) the efficacy of orally-
administered NTZ in different animal disease models.
•
Efficacy on Liver Function and Organ Injury: In two rat ACLF models, one single oral dose of NTZ was previously shown to
protect the liver (reduction of major liver enzymes levels, prevention of LPS-induced increases in GGT and total bilirubin),
improve markers of renal function (reduction of cystatin C and creatinine levels in plasma) and reduce brain edema (figure
below). Additional in vitro experiments have further shown that TZ blunts stress-induced apoptotic cell death in
hepatocytes, and protects from necroptotic cell death. This mechanism of action was confirmed in vivo, with oral NTZ
treatment reversing the increased expression of apoptotic and necroptotic markers in the livers of ACLF rats ; these
results were presented during the EASL 2024 Congress.
•
Anti-Inflammatory Efficacy: TZ was previously shown to inhibit the release of inflammatory cytokines in a model of
macrophages activated with LPS, and to reduce the inflammation markers in a rat model of ACLF (Figure below). In vivo,
one single oral dose of NTZ was further shown to significantly and dose-dependently reduce the rise in circulating
inflammatory markers in a model of sterile endotoxemia in rats ; these results were presented during the AASLD 2024
Congress.
60
•
Efficacy against Bacteria- and PAMPs-induced Damages: A repeated oral NTZ treatment was previously shown to improve
survival rates in a mice model of intestinal microbiota leakage-induced sepsis. In vitro, TZ was shown to inhibit cytokine
production induced by a large range of Pathogen-Associated Molecular Patterns (PAMPs). Together with the efficacy of
NTZ to reduce systemic inflammation as well as hepatic injury in a sterile endotoxemia rat model (with LPS used as a
PAMP), these data reinforce the therapeutic potential of NTZ to counteract systemic inflammation (and subsequent liver
damage), triggered by bacteria and PAMPs ; these results were presented during the AASLD 2024 Congress.
◦
Clinical evidence
Two Phase 1 studies were conducted to evaluate the safety and pharmacokinetics of NTZ metabolites in the setting of
hepatic impairment or renal impairment. These studies were completed in the fourth quarter of 2022 and the first quarter of 2023,
respectively, and are supportive of future investigation in patients with ACLF. The data for the hepatic impairment study were
presented in a poster presentation during Digestive Disease Week® (DDW) 2023.
–
Next milestones
A proof-of concept study with the new formulation of NTZ was initiated as planned in first quarter 2025. Following recent
exchanges with the FDA, it was decided to optimize dose-selection for the planned proof-of-concept study in patients with ACLF,
by first evaluating our new formulation in healthy volunteers, followed by hepatic and renal impairment studies. These studies will
also generate additional safety data as well as provide data on early markers of efficacy-in-patients with compromised liver
function. These data are expected by the end of the year and will serve to optimize the design of the proof-of-concept study now
targeted to launch in early 2026.
•
Our third program SRT-015 (injectable formulation): an ASK1 inhibitor with multi-system benefits
–
Rationale and mechanism of action
SRT-015 is an ASK1 inhibitor. ASK1 triggers the activation of several pathways, most notably two key ones: the p38 MAPK
pathway and the JNK pathway. This activation contributes to increased inflammation, cell death and fibrosis. ASK1 inhibition has
shown several potentially beneficial effects that may be relevant in ACLF, such as blocking LPS (lipopolysaccharide) associated
hyperinflammatory response, reducing the ROS (Reactive Oxygen Species)-related immune response, reducing apoptosis, and
reducing fibrosis.
–
Evidence supporting further development
Preclinical and clinical evidence support ASK1 inhibition as a relevant therapeutic strategy in multi-system disorders such as
Acute-on-Chronic Liver Failure (ACLF). Multi-organ activities of ASK1 inhibitors have been observed in several animal models and
clinical trials.
At GENFIT, we have studied the effect of SRT-015 in cell models, and its efficacy in animal disease models, in two posters
presented during the 2024 AASLD Congress:
61
•
SRT-015 was shown to decrease the secretion of pro-inflammatory cytokines by human primary PBMCs activated with
LPS (and other PAMPs), and to reduce cell death in a model of oxidative stress-induced apoptosis in hepatocytes, even
when added after the stress.
•
In addition, intravenous administration of SRT-015 was demonstrated to significantly alleviate liver injury and counteract
systemic inflammation in two models of acute liver failure in mice.
–
Next Milestones
Following the positive preclinical data generated up to and including in first quarter 2025, GENFIT will advance the program
and work on an improved formulation aimed at increasing exposure. Pending positive development, the launch of a first-in-human
trial could be initiated as early as the second half of 2026.
•
Our fourth program CLM-022: a potential first-in-class NLRP3 inflammasome inhibitor
–
Rationale and mechanism of action
CLM-022 is a small molecule inhibitor which inhibits the NLRP3 inflammasome at nanomolar concentrations, by blocking the
NLRP3 block assembly. Activation of the NLRP3 pathway leads to cell death by the formation of gasdermin D pores at the cell
membrane (following gasdermin cleavage), known as pyroptosis, and also initiates the synthesis and maturation of pro-
inflammatory cytokines, particularly IL-1β and IL-18. The relevance of this pathway is underscored by several studies, including
one which observed a key difference in NLRP3 inflammasome activity by patients with both HBV infection and ACLF versus those
with chronic HBV infection alone. Thus, inhibiting the NLRP3 pathway is a promising strategy for treating ACLF.
–
Evidence supporting further development
Preliminary preclinical data generated at GENFIT with CLM-022 have confirmed that inhibition of NLRP3 inflammasome is a
promising therapeutic approach for ACLF, in two posters presented during the 2024 AASLD Congress:
•
In vitro, CLM-022 was shown to inhibit cytokine secretion (IL-1β) in a model of inflammasome activation in human
macrophages, even when added in a curative setting. This was associated with the inhibition of gasdermin cleavage,
demonstrating engagement of the NLRP3 target with CLM-022.
•
First in vivo data have shown that one oral administration of CLM-022 decreases inflammation and protects against liver
injury in a model of acute liver injury in mice.
–
Next Milestones
Next experiments will aim at confirming the therapeutic efficacy of CLM-022 using different disease models relevant for
acute liver decompensation (AD) and ACLF as well as starting formulation development and first toxicological studies in 2025.
Pending further positive developments, a first-in-human trial could be initiated as early as end of 2026 or beginning of 2027.
•
Our fifth program VS-02-HE: a urease inhibitor
VS-02-HE is being developed in hepatic encephalopathy, or HE, one of the major complications of advanced liver disease and
portal hypertension.
–
About HE
HE, is a central nervous system disorder representing a diverse spectrum of neurologic symptoms (sleep-wake cycle
disturbance, fatigue, concentration difficulty, personality changes, tremor, cognitive deficits, and, in severe cases, coma), and
typically occurs in patients with advanced chronic liver disease or porto-systemic shunting. In chronic liver disease, toxins,
including ammonia, accumulate in the systemic circulation and can cross the blood-brain barrier. Excess ammonia induces
accumulation of glutamine in astrocytes causing osmotic stress and alteration of cell metabolism and can result in brain edema
or swelling. As many as 45% of patients with cirrhosis will experience at least one episode of HE. In the U.S. only, two million
patients are believed to be at risk of developing HE and 200,000 patients are hospitalized yearly. In Europe, incidence is close to
one million patients. Patients with ACLF and HE have higher mortality rates compared to patients who have ACLF only. The
prevalence of overt HE at the time of cirrhosis diagnosis is approximately 10–14%. The estimated annual economic burden
associated with HE in the US was $7.2 billion in 2009 and around $12 billion in 2014.
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A high unmet medical need
HE is largely underdiagnosed and undertreated and is associated with poor quality of life. Due to its neurotoxic effect,
ammonia has been the main target for HE therapy. Current treatment options for HE focus on either reducing ammonia
production and absorption (e.g., non-absorbable disaccharides) or on promoting its elimination by eliminating ammonia-
producing colonic bacteria (e.g., antibiotics). Non-absorbable disaccharides such as lactulose, however, exhibit various
limitations such as persistent side effects leading to poor compliance which indirectly affects overall efficacy. Additionally,
antibiotics (e.g., rifaximin), according to the approved label for rifaximin as of the date of this annual report, are limited to the
reduction of overt HE recurrence rather to the treatment of overt HE.
•
VS-02-HE : Our Program to Reduce Hyperammonemia and Stabilize Ammonia Levels in the Blood
–
Rationale and mechanism of action
We are developing VS-02, a urease inhibitor currently in preclinical stage. VS-02 is a hydroxamic acid (HA) derivative, which is
designed to inhibit ureases by binding to nickel atoms in their active site. As urease-producing bacteria in the gut represent one
source of circulating ammonia in humans, urease-inhibitors may represent a promising therapeutic approach for HE. Inspired by
earlier studies, the in vitro activity of a series of novel hydroxamic acid (HA) derivatives was investigated on rat caecum content.
The lead candidate, VS-02, showed a potency largely exceeding that of HA derivatives tested in former clinical trials. It was further
found that VS-02 was neither cytotoxic nor mutagenic at up to 1 mM, which makes it an ideal candidate for development as a
novel treatment for HE via a colonic formulation.
–
Evidence supporting further development
In vivo efficacy studies showed that VS-02-HE was able to reduce ammonia blood levels in bile-duct ligated (BDL) rats.
Additionally, in vivo analyses showed a significant decrease in brain glutamine levels after 5 days of treatment compared to non-
treated BDL rats, confirming the therapeutic effects of VS-02-HE. This data supports further evaluation of VS-02-HE as a
promising oral candidate for treatment of HE.
–
Next milestones
We intend to develop VS-02-HE as a unique oral formulation designed to act where ammonia is primarily produced,
minimizing systemic absorption of ammonia while reducing glutamine levels in the brain. Investigational New Drug-enabling
nonclinical studies and formulation development started in 2024 with completion expected in 2025. Pending further confirmation,
a first-in-human trial could be initiated in 2027.
2. Other life-threatening diseases programs
In addition to our programs in ACLF indication, our pipeline includes also other life-threatening diseases programs GNS561 in
Cholangiocarcinoma (CCA) and VS-01-HAC for Ammonia Clearance and Prevention of Hyperammonemic Crises or HAC.
In December 2021, we licensed the exclusive rights from Genoscience Pharma to develop and commercialize the
investigational treatment GNS561 in CCA in the United States, Canada and Europe, including the United Kingdom and
Switzerland.
63
In early 2025, GENFIT completed the acquisition of the full intellectual property rights for GNS561 from Genoscience Pharma,
expanding upon the limited rights initially obtained through a license at the end of 2021. For more information about the financial
terms of this new agreement, see Note 2.2 - "Major events after the period" to our consolidated financial statements included in
this annual report.
VS-01 was added to our pipeline in September 2022, following the acquisition of Versantis AG.
•
GNS561 in Cholangiocarcinoma (CCA)
•
About Cholangiocarcinoma
Biliary tract cancer (BTC) is the second most common primary liver malignancy diagnosed globally. Cholangiocarcinoma
(CCA) is a type of BTC and represents approximately 15% of all primary liver tumors and 3% of gastrointestinal cancers.
Adapted from Nature Reviews Gastroenterology & Hepatology volume 17, p. 557–588
CCA is comprised of a heterogeneous group of cancers with pathologic features of biliary tract differentiation and is
presumed to arise from the intra- or extrahepatic biliary tract. Gallbladder cancer is distinct from Cholangiocarcinoma in
epidemiology, pathophysiology, clinical presentation, and management and is considered as a different type of biliary tract
cancer. Based on its anatomical origin, CCA is best classified anatomically as intrahepatic (iCCA) or extrahepatic (eCCA), which is
comprised of perihilar (pCCA) and distal (dCCA) CCA. The incidence of iCCA appears to be increasing and may be as high as 2.1
per 100,000 person years in Western countries.
CCA may occur in normal livers or in the setting of underlying liver disease, and in these cases, it appears as a mixed type
hepatocellular-cholangiocarcinoma instead of traditional adenocarcinoma. Several risk factors of chronic inflammatory damage
and increased cellular turnover have been established, such as hepatobiliary flukes (Opistorchis viverrini and Clonorchis
sinensis), primary sclerosing cholangitis, biliary tract cysts, hepatolithiasis and toxins. Cirrhosis, chronic hepatitis B and C,
obesity, diabetes mellitus and alcohol-related liver disease are also emerging as risk factors for CCA.
The clinical presentation of CCA is non-specific and most often insufficient to establish a diagnosis. Early diagnosis is a
major challenge as most patients with early-stage disease do not have symptoms due to limited biliary obstruction. Rather,
patients characteristically manifest symptoms related to their underlying cirrhosis, a condition present in some patients with
CCA.
Taken together, the majority of patients with CCA are diagnosed with advanced disease, often precluding potentially
curative therapies. Once symptomatic, CCA is often associated with non-specific complaints, including right upper abdominal or
epigastric pain or discomfort, jaundice, weight loss, malaise, hepatomegaly or a palpable abdominal mass. The onset of ascites,
encephalopathy, jaundice or variceal bleeding in patients with previously compensated cirrhosis also increases the clinical
suspicion for liver tumor. Tumor-related fever may rarely occur, although night sweats are common in advanced disease. CCA
should be considered in patients with underlying hepatolithiasis or primary sclerosing cholangitis (PSC) with worsening
performance status, unexplained loss of weight or failure to thrive.
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A high unmet medical need
There are limited therapeutic options for this aggressive disease. The 5-year survival rates drop to 5-15% in the advanced and
unresectable settings. The only potentially curative treatment remains surgical resection. Unfortunately, at time of first diagnosis,
only about 25% of the patients are eligible for surgery. Moreover, even after curative intent surgery, the clinical outcomes are
disappointing, with 5-year survival rates of 7% to 20%. The role of adjuvant therapies, including systemic chemotherapy and
radiotherapy, remains poorly defined yielding only a modest survival benefit. Around 60% to 70% of patients are diagnosed with
advanced disease, which is defined as unresectable or metastatic disease. For these patients, palliative treatment with systemic
chemotherapy is the only treatment option. Patients progressing on first line chemotherapy often have a rapidly worsening
performance status, and only a small number of patients may be suitable for further treatment. The estimated median survival for
these patients is 3.7 months.
In the advanced setting, the standard of care for first line therapy is a combination of gemcitabine and platinum-based
chemotherapy; other gemcitabine- or fluoropyrimidines-based regimens are also commonly used. At time of relapse, patients
whose tumor displays fibroblast growth factor receptor 2 (FGFR2) or isocitrate dehydrogenase 1 (IDH-1) alterations may receive
approved therapies that target these specific alterations. All other patients are offered second line chemotherapy. The most
efficacious regimen is currently a combination of cytotoxics (folic acid, 5-FU/fluorouracil, and liposomal irinotecan (FOLFIRI))
yielding a median overall survival of 8.6 months.
•
Our Program: GNS561
To address the significant unmet need in patients diagnosed with CCA, GENFIT is developing GNS561 to prolong the overall
survival of patients who present with iCCA and eCCA. GNS561 is a Palmitoyl Protein Thioesterase-1 (PPT1) inhibitor that blocks
autophagy.
–
GNS561: rationale and mechanism of action
Autophagy is activated in tumor cells as a survival mechanism in a nutrient poor environment, due to tumor cell growth in
advanced cancers. One of the key cellular organelles implicated in the autophagy process is the lysosome. By decreasing the
activity of PPT1 in lysosomes, GNS561 may have an important inhibiting activity on late-stage autophagy, which leads to tumor
cell death.
–
Evidence supporting development
Lysosomal function is an essential element in autophagy, and GNS561 is a lysosomotropic small molecule which inhibits
PPT1, a lysosomal enzyme required to maintain lysosome-autophagy function. PPT1 expression is high in most cancer cell lines,
increased in tumors compared with paired normal tissue, and in metastases versus primary tumors, and high levels of PPT1 have
been associated with shorter overall survival. Thus, these findings, along with the role of PPT1 in maintaining lysosome-autophagy
function, establishes the potential of PPT1 inhibition as a strategy in cancer therapy. In addition to its inhibition of PPT1, studies
with GNS561 showed that it has high liver tropism when administered orally, significantly reduced cell viability in human iCCA cell
lines and induced apoptosis. GNS561-mediated cell death was correlated with inhibition of late-stage autophagy and induction of
a dose-dependent build-up of dysfunctional lysosomes. GNS561 was also efficient in vivo against a human intrahepatic CCA cell
line in a chicken chorioallantoic membrane xenograft model, with a good tolerance at doses high enough to induce an antitumor
effect in this model.
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In a first-in-human Phase 1 study in patients with advanced primary (HCC and iCCA) and secondary liver cancer (metastasis
from distant carcinomas), GNS561 was observed to have good tolerability, exposure, and preliminary signal of activity. Taken
together, the results generated with GNS561 highlight its potential to provide benefit in prolonging survival of patients diagnosed
with CCA. In particular, we believe that GNS561, as an inhibitor of autophagy, could potentially be beneficial in combination
therapy, including combinations with inhibitors of the MAP kinase pathway or immunotherapy/checkpoint inhibitors.
Cytotoxic chemotherapy drugs as well as multiple targeted therapies such as kinase inhibitors have been proposed to
induce autophagy as a survival mechanism in cancer cells. In 2019, the results of two major studies showed that, in the context of
a cancer with the KRAS mutation (active RAS leading to activation of the MAP kinase pathway), inhibitors of the MAP kinase
pathway can induce autophagy in pancreatic cancer, and combinations of MAP kinase pathway inhibitors with autophagy
inhibition can enhance tumor cell killing. Importantly, a significant proportion of CCA patients have mutations including KRAS.
Therefore, the combination of therapies targeting the MAP kinase pathway with GNS561 to inhibit autophagy is a potential
therapeutic strategy to treat CCA patients.
–
Next milestones
GNS561 received orphan drug designation for CCA from the FDA in September 2022. Given the high unmet need in this
indication and the Orphan Drug Designation obtained from the FDA for GNS561, we believe that the program may qualify for
some of the expedited regulatory pathways provided by health authorities.
The GNS561 Phase 1b/2a clinical trial is currently ongoing. In Phase 1b of this study, patients with advanced KRAS mutated
CCA, who have previously failed a standard of care first line therapy, will be enrolled to evaluate the safety and tolerability of
GNS561 when given in combination with trametinib, a MEK inhibitor, and to identify the recommended doses of the combination
to be administered in Phase 2a. In Phase 2a, the safety and efficacy of the combination will be assessed in patients with advanced
KRAS mutated CCA who have otherwise failed standard-of-care for first line therapy and who do not have an actionable
mutation.
Phase 1b data is expected by year-end 2025.
•
VS-01-HAC in Urea Cycle Disorders (UCD) and Organic Acidemias (OA)
•
About Hyperammonemic Crisis (HAC) in UCDs and OAs
Hyperammonemia is defined as plasma ammonia levels above 80 µmol/L in newborns up to 1 month of age and above 55
µmol/L in older children. In the mammalian organism, the hepatic urea cycle is the main pathway to detoxify ammonia.
Hyperammonemic crisis occurs whenever the load of waste nitrogen exceeds the detoxification capacity. Plasma ammonia levels
in HAC can reach up to 1000 µmol/L.
Inborn errors of metabolism causing HAC comprise a group of hereditary disorders in which a single gene defect results in a
clinically significant block of the urea cycle responsible for the metabolic clearance of ammonia from the bloodstream. The
accumulation of ammonia, which is continuously produced by the breakdown of protein and other nitrogen-containing
molecules, rapidly leads to cerebral edema and the related signs of lethargy, anorexia, hyperventilation or hypoventilation,
hypothermia, seizures, neurologic posturing, and coma.
66
Adapted from Rupesh Raina et al., Nature 2020
Hyperammonemia in Inborn Errors of Metabolism (IEM) is classified as follows:
•
Primary hyperammonemia, when the urea cycle is directly affected by a defect of any of the involved enzymes or
transporters, defining UCDs; and
•
Secondary hyperammonemia, when enzymes of the urea cycle are inhibited due to accumulating metabolites or substrate
deficiencies. The most relevant group of disorders associated with secondary hyperammonemia is called Organic
Acidemias, or OAs.
Regardless of the underlying genetic disorder, the clinical characteristics, outcome, prognosis and treatment of HACs
associated with IEM are similar.
Patients are usually diagnosed shortly after birth via universal newborn screening tests. The clinical presentation of patients
with HAC caused by IEM may start as early as the first days of life and as late as adulthood. The most severe cases present in the
first week after birth with unspecific symptoms like feeding refusal and vomiting, loss of thermoregulation, neurologic posturing,
seizures, hyperventilation and then hypoventilation, and irritability that progress rapidly to somnolence, lethargy, coma, multi-
organ failure and death.
While these conditions are ultra-rare with 1,900 acute hyperammonemic crisis in the U.S. and the five major European
countries per year, the mortality rate is as high as 75%. Most patients will die after 5 years, and survivors will often have severe
brain injuries. Patients with HAC associated to IEM must be transferred to specialized tertiary centers to be treated which
increases the costs on the healthcare system.
–
A high unmet medical need
The treatment of hyperammonemic crisis typically involves prompt management of the elevated ammonia levels in the
blood. This may involve hospitalization, administration of medications such as sodium benzoate and phenylacetate, and
intravenous fluids to help remove excess ammonia from the bloodstream. In severe cases, hemodialysis may be necessary to help
remove ammonia from the blood. In centers where hemodialysis is not available, hemofiltration or other forms of dialysis should
be used.
In practice, pediatric patients presenting HAC must be transferred in highly specialized tertiary centers having devices
adapted to their size. Consequently, dialysis in IEM HAC is often initiated late when ammonia levels are above 1000 µmol /L and
this may contribute to poor outcomes. Moreover, neonatal hemodialysis is risky, highly invasive and widely unavailable. As many
as 45% of UCD patients remain untreated, and no drug is currently approved for treatment of OA.
•
Our Program: VS-01-HAC for Ammonia Clearance and Prevention of HAC
–
VS-01-HAC: rationale and mechanism of action
We are developing VS-01-HAC, a potential first-line lifesaving treatment for acute hyperammonemic crisis associated with
IEMs.
To reduce high mortality and morbidity associated with HAC in IEMs, early diagnosis and immediate start of treatment are
thought to improve the prognosis. Indeed, coma duration and levels of ammonia blood concentration are the main factors for
determining mortality and neurologic outcome.
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Therefore, a new drug using the peritoneal route with optimized ammonia clearance and a quick implementations time,
would allow for the initiation of efficient dialysis immediately after HAC is confirmed and could help in overcoming the crises.
Moreover, as the peritoneal route of administration is well adapted to pediatric patients, this treatment could be safely feasible in
the hospital setting. Speed of implementation and safety represent tremendous improvements over neonatal hemodialysis,
which is only possible in specialized centers and is a long and risky procedure in pediatric patients.
Use of a new treatment before transferring the patient to a tertiary center would save costs to the healthcare system as well
as reduce burden on pediatric patients and their parents.
In addition to Orphan Drug Designation for the treatment of hyperammonemia in inborn errors of metabolism, Rare Pediatric
Disease Designation (RPDD) has been granted to VS-01-HAC by the FDA for treatment of Urea Cycle Disorders (UCD) indication.
GENFIT is potentially eligible to receive a Priority Review Voucher upon approval of an NDA by the FDA.
–
Evidence supporting further development
An in vivo feasibility study was performed with OTC-deficient mice (homozygous females (Otcspf-ash/spf-ash) and
hemizygous males (Otcspf-ash/Y)), a gold standard model which develops hyperammonemia and presents many characteristics
of the human disorder. The results showed that ammonia extracted from blood into the peritoneal cavity was significantly (p <
0.0006) higher following single intraperitoneal injection of VS-01 compared to the control solution at all timepoints during the
dwell time and led to a significant decrease in blood ammonia.
Our non-clinical and first-in-human clinical data showed that ammonia clearance in the peritoneal fluid increased
proportionally with the volume of fluid infused and ranged between 5 and 95 mL/min following treatment with 0.3 L and 3 L VS-01,
respectively. These values are in the same range as those reported in UCD patients treated with different extra corporal dialysis
modalities.
–
Next milestones
Following feedback from FDA (U.S.) and PDCO (Europe), we are in a situation to start a pivotal juvenile toxicology study in
Göttingen Minipigs earlier than initially planned, potentially as early as 2H25, with data expected before the end of 2025. Pending
further confirmation, a first-in-human trial could be initiated toward the end of 2026.
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3. Our diagnostics franchise
In addition to our therapeutic programs in ACLF and other life-threatening liver diseases, our pipeline also includes a
diagnostic franchise (NIS4®/NIS2+® in Metabolic dysfunction-associated steatohepatitis, or MASH, and TS-01 focusing on blood
ammonia levels).
NIS4®/NIS2+® is our internally developed next-generation technology for the identification of patients with at-risk NASH/
MASH. We out-licensed our NIS4® technology and its improvements to Labcorp in 2019 and 2020 in the field of clinical research
and for the development of a laboratory-developed test (LDT), respectively. NIS4® is commercialized under the name NASHnext®
in the US and Canada. In 2021, we also signed a non-exclusive license with Q Squared Solutions LLC, or Q2, with the objective to
broaden access to our NIS4® technology in the clinical research space. Our agreements with Labcorp and Q2 also provide access
to NIS2+®. See in Item 4.B - "Out-licensing partnerships” herein for more information regarding these agreements.
TS-01 is our technology for measuring ammonia in blood. It has integrated our pipeline in September 2022, following the
acquisition of Versantis AG.
–
NIS2+®, a next-generation technology derived from NIS4® for the identification of patients with at-risk NASH/MASH
•
About NASH/MASH
At EASL Congress in June 2023 it was announced that nonalcoholic steatohepatitis (NASH) would now be referred to as
Metabolic dysfunction-Associated Steatohepatitis (MASH). Nonalcoholic fatty liver disease (NAFLD) will now be referred to as
metabolic dysfunction-associated steatotic liver disease (MASLD).
MASH, the more severe form of metabolic dysfunction-associated steatotic liver disease (MASLD) is characterized by the
presence of hepatocyte ballooning and inflammation, in addition to steatosis. MASH can progress silently towards cirrhosis,
precluding the opportunity for clinicians to diagnose and intervene therapeutically prior to the development of severe liver
complications, and constitutes a growing cause of cirrhosis, liver failure, and liver cancer globally. Furthermore, MASH is
projected to become the leading cause of liver transplantation in the United States—it already is the primary cause among
women and the secondary cause overall. Given this clinical scenario, there is a pressing need to identify patients at higher risk of
disease progression, who could be considered for therapeutic intervention with existing options or when potentially promising
agents currently in late-stage clinical development obtain regulatory approval.
•
Today’s Challenges in Diagnosing MASH
Liver biopsy is the reference standard for the diagnosis of MASH among patients with clinical risk factors for this disease,
such as metabolic disorders in the absence of alternative causes for steatosis. The implementation of this diagnostic approach,
however, is limited in routine clinical practice by its invasive procedure, cost, attendant risks, variability in interpretation, and the
restricted number of professionals able to perform and interpret the test, among other factors. These limitations preclude liver
biopsies from being broadly used as the primary diagnostic in such a prevalent disease. Providing a non-invasive alternative to
liver biopsy will therefore be critical to facilitate improved patient diagnosis, management, and future treatment access in routine
clinical practice, and may eventually reduce the morbidity and mortality associated with this disease.
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At the end of 2022, Madrigal Pharmaceuticals announced positive data in its pivotal Phase 3 MAESTRO-NASH clinical trial of
resmetirom for the treatment of MASH and liver fibrosis. On March 14, 2024, Madrigal Pharmaceuticals announced FDA approval
of Rezdiffra™ (resmetirom) in conjunction with diet and exercise for the treatment of adults with noncirrhotic NASH with
moderate to advanced liver fibrosis. Rezdiffra™ is thus the first-ever approved drug for the treatment of MASH, which should
increase the focus on diagnosis over the coming years. On November 1, 2024, Novo Nordisk announced positive results from their
pivotal ESSENCE Phase 3 trial, evaluating the safety and efficacy of Semaglutide 2.4mg for the treatment of patients with at-risk
MASH, becoming the second company with a successful Phase 3 read-out in the MASH field. Novo Nordisk expects to file for
regulatory approvals in the US and EU in the first half of 2025.
The treatment of MASH is a pressing public health challenge and there is a large unmet need for a widely available, non-
invasive test, or NIT, to identify patients with at-risk MASH as an alternative to liver biopsy. The availability of such a test would
help address the under diagnosis of MASH by supporting physicians in identifying patients with at-risk MASH, who are at higher
risk for clinical outcomes and would be eligible for therapeutic intervention.
•
Our Program: NIS Technology Comprising Our Proprietary Biomarker Algorithms
As part of our strategy to address unmet needs in MASH, we have an advanced diagnostic program based on the
identification of specific biomarkers that are expressed at different levels in patients with MASH and significant fibrosis (F≥2) as
compared to patients with less severe disease. This discovery kicked off a multi-year effort that has resulted in the development
of NIS4® technology, a blood-based molecular technology for the identification of patients with MASH (NAS≥4) and significant
fibrosis (F≥2), also referred to as “at-risk” MASH, who are at higher risk of disease progression and may be appropriate candidates
for therapeutic intervention.
Our first biomarker technology, NIS4®, integrated the outputs of four MASH-associated biomarkers (alpha-2-macroglobulin,
YKL-40, hemoglobin A1c, and miR-34a-5p) through an algorithm to produce a single score that can be utilized to rule in and rule
out at-risk MASH, while minimizing the number of indeterminate test results. In November 2021, NIS4® technology’s utility was
demonstrated in a biomarker qualification Phase 1 study undertaken by the NIMBLE consortium with unique performance for
identifying patients with “at-risk” MASH and the components of "at-risk MASH (MASH, NAS ≥ 4 and fibrosis stage ≥ 2). In
September 2023, these data have been published in the prestigious scientific journal Nature Medicine.
In 2023 and 2024, first-ever NIS4® data obtained on samples collected from external clinical trials were published and
presented, showing significant reduction of NIS4® in patients who have been treated and on which treatments were effective,
confirming a potential use of NIS4® as a treatment response biomarker.
In October 2022, we announced the development of NIS2+®, a next-generation technology for the diagnosis of at-risk MASH,
designed as a robust optimization of NIS4®. Since then, NIS2+® performances were detailed and presented in four different
manuscripts, accepted and published in important scientific journals.
•
The first paper, published in the Journal of Hepatology in May 2023, highlighted the development and validation of NIS2+®
as an optimization of NIS4® technology for identifying at-risk MASH. NIS2+® demonstrated strong clinical performance in
detecting at-risk MASH, while its composite scores were not impacted by the status of important subpopulations such as
Type-2 diabetes, age and sex, addressing an important unmet need. In addition, the increased robustness and simplicity of
NIS2+® technology (from a 4 to a 2-biomarker panel) should allow for a wider and easier application in clinical settings.
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•
The second paper, published in conjunction with Labcorp in Hepatology Communications in August 2023, highlighted the
high clinical performances of NIS2+® in a population of older adults (≥65 years of age), which were superior to other well-
known tests for the diagnosis of at-risk MASH. These data support the clinical value of this blood-based technology for
the diagnosis of at-risk MASH in older adults who would benefit from intensive lifestyle or therapeutic interventions, and
is expected to greatly assist with US Centers for Medicare & Medicaid Services (CMS) reimbursement efforts.
•
The third paper, published in the Journal of Hepatology in December 2023, positioned NIS2+® as a powerful tool for
improving the recruitment of at-risk MASH patients into clinical trials, reducing the high inclusion failure rates based on
liver biopsy results (>60%) and thus the overall cost associated with recruitment, without significantly increasing the
number of patients to be examined or introducing bias into the recruited patient population.
•
The last in date paper, published in JHep Reports in January 2024, provided a global analysis of the impact of age on
different NITs concluding that, unlike other usual NITs such as FIB-4 or ELF, NIS2+® was not impacted by this factor,
allowing physicians to use and interpret NIS2+® results irrespective of patients' age.
Besides these publications in scientific journals, further data on NIS2+® (diagnostic, screening, prognostic, subpopulations
analyses) were presented in 10 posters and three oral presentations at five international congresses.
In November 2024, new data on NIS2+® were presented at the 2024 AASLD Congress :
•
NIS2+® to monitor disease evolution in patients with MASH and Fibrosis (2 posters of distinction)
•
NIS2+® as a monitoring tool for the detection of patients who achieved the MASH clinical trial endpoints (1 poster)
•
NIS2+® as a second line test in patients with intermediate FIB-4 score improves the referral of patients to specialists (late-
breaking poster)
Importantly, the new Clinical Practice Guidelines for metabolic dysfunction-associated steatotic liver disease (MASLD)
published in June 2024 in the Journal of Hepatology have included our NIS2+® Diagnostic technology as a key tool for detecting
at-risk MASH, representing an important milestone for this technology. These guidelines were developed as a joint effort by the
European Association for the Study of the Liver (EASL), the European Association for the Study of Diabetes (EASD), and the
European Association for the Study of Obesity (EASO), and provide healthcare providers an update on prevention, screening,
diagnosis, follow-up and treatment for MASLD. The new guidelines were presented during the EASL Congress in June 2024.
NIS2+® is included for the first time is these guidelines as a non-invasive tool to detect at-risk MASH, and is the only blood-
based panel mentioned for this condition. With the recent U.S Food and Drug Administration approval of resmetirom in the US,
and given that liver biopsy will continue to be used sparingly in routine clinical practice due to its invasiveness and procedure-
related limitations, alternative non-invasive panels with high predictive value validated for the detection of at-risk MASH such as
NIS2+®, could play an important role in selecting individuals able to benefit from pharmacotherapy.
Graphical summary of NIS2+® development and validation:
–
Next milestones
Significant progress has been made since the recognition of NIS2+® as a key tool for detecting at-risk MASH in June 2024, as
our technology is now also covering screening and monitoring needs, and not just diagnostics needs. With more than 20 clinical
MASH trials using our technology, more publications are referring to it, highlighting the relevance of our solution. In March 2024,
Rezdiffra™ (resmetirom) was the first drug approved for treatment of MASH in the United States. Our business goal is to develop
out technology into an IVD test, either in collaboration with a commercial partner or by ourselves.
–
TS-01 as a point of care (POC) device for measuring ammonia in blood
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Approximately 90% of hyperammonemia cases in adults are in people who have cirrhosis of the liver. Cirrhosis is the end
stage of every chronic liver disease and is the 11th leading cause of death worldwide. Globally, an estimated 112 million people
suffer from compensated cirrhosis, claiming more than 1.3 million lives in 2017. Complications of cirrhosis are marked by liver
metabolic dysfunctions and the development of clinical signs, of which the most frequent is HE. HE is a serious neurologic
condition caused when ammonia accumulates in blood, eventually affecting the brain. Elevated ammonia concentration in blood
and brain (hyperammonemia) is associated with high mortality and is the mainstay for pathogenesis and treatment of HE. In
patients with cirrhosis, fully symptomatic overt HE leads to hospitalizations and readmissions. HE-related hospitalizations
generated charges of approximately US $11.9 billion per year in the United States, a 46% cost increase from 2010 to 2014. Costs
are expected to further increase due to disease progression, requiring more complex health care efforts.
Overt HE occurs in 30-45% of patients with cirrhosis, leading to approximately 1 million cases considering approximately 2.8
million cases of cirrhosis worldwide. There is a need for a reliable point of care device to measure ammonia in the blood in
patients with HE, so that there can be a repeated quantification of ammonia levels to test the efficacy of ammonia-lowering
treatments. Furthermore, ammonia levels can predict the onset of new episodes of HE even with mild hyperammonemia, but
there are currently logistical challenges to accurately measure ammonia in the blood.
We believe that the ammonia POC diagnosis would complement both VS-01 and VS-02 product candidates and is in line with
our business strategy to improve the management of severe liver diseases globally. We believe combining diagnostics with
therapeutics under one umbrella synergistically multiplies the value of each product.
–
A high unmet medical need
When patients with altered mental status are admitted to the emergency department, HE should be diagnosed as fast as
possible to initiate further diagnostic tests, especially in the emergency department, where resources of medical staff and time
are limited. Since many of the symptoms of HE also occur in people with other types of brain disease or damage (e.g., stroke, brain
tumor, or bleeding inside the skull), an ideal bedside test for fast, precise and accurate ammonia measurements would:
•
Allow for the rapid diagnosis of HE. A high ammonia level increases the probability of HE especially in patients who have
known liver disease.
•
Trigger other diagnostic steps to explore other etiologies of altered mental status (a low ammonia level reduces the
probability of HE) or to rule out potential gastrointestinal bleeding if HE confirms (e.g., endoscopy).
•
Initiate specific medical treatment (e.g., lactulose/antibiotic therapy). Especially in the emergency department, where
resources of medical staff and time are limited.
In addition, self-monitoring of ammonia with an accurate and user-friendly POC ("Point of Care") device offers the
opportunity for early identification of severe HE episodes, timely therapeutic management, and therefore decreasing hospital
visits, long-term risks of complications, and global burden on public health. Moreover, close follow-up of the ammonia offers the
possibility to better tailor current therapies for HE, which are unfortunately associated with poor compliance due to their side
effects. Adapting treatment dose and schedule, can increase compliance and hence reduce occurrence of severe episodes.
Finally, HE impacts daily functioning by altering fitness to drive, attention, memory, mood, and psychomotor speed. A tighter
control of the disease is expected to increase the quality of life of patients and their families.
Today, serum ammonia testing and interpretation remain logistically challenging. After the sample is collected, erythrocyte
and platelet metabolism persist in vitro, and ammonia concentrations increases at room temperature. Therefore, it is
recommended that samples are kept on ice and immediately processed after collection, which increases the overall burden on
staff.
Despite these challenges, the literature indicate that serum ammonia testing is increasing. Future improved ammonia
testing may enhance value-based use of ammonia in patients with cirrhosis and HE. A POC device for ammonia is expected to
save time, efforts, and expenses to the health care professionals while supporting caregivers, and family members.
Currently, the only marketed POC device for ammonia measurement is the PocketChem. It is mainly used in research
because of its narrow quantification range (7-286 µmol/L), its interference issues and underestimation of ammonia levels in
comparison to enzymatic assays.
•
TS-01 for at-home monitoring of ammonia in liver disease patients to help detect HE
TS-01 is a device based on a "transmembrane pH-gradient polymersome" technology designed to easily measure ammonia
levels at home.
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The underlying technology behind the Transmembrane pH-gradient polymersomes for ammonia quantification in blood
consist of vesicles made of non-biodegradable polymers that form a bi-layer membrane. The aqueous core of the vesicles is
loaded with a pH-sensitive dye in an acidic buffer. An alkaline buffer on the outside generates the pH-gradient across the
polymersomes’ membrane. Uncharged ammonia in blood samples can easily diffuse across the polymeric membrane into the
core of the polymersomes, where it is protonated due to the acidic environment. Generated ammonium ions cannot diffuse back
due to their charge. Accumulation of protonated ammonia inside the core of the vesicles triggers an increase in pH and
consequently an increase in fluorescence intensity of the pH-sensitive dye. The increase correlates with the ammonia
concentrations in the sample. When an equilibrium state is reached, fluorescence can be easily measured and thus ammonia
concentrations in blood can be derived. This unique mechanism allows us to scale polymersome technology from high
throughput to single measurements in a POC device.
The polymersomes technology was developed and validated by the Federal Institute of Technology Zurich (ETH Zurich) and
we hold an exclusive worldwide license to develop and commercialize this technology in all fields, with an option to purchase the
intellectual property subject to certain conditions.
The development of TS-01, based on polymersome technology, is being carried out in collaboration with the ZHAW School of
Engineering, which has expertise in optoelectronics and the development of advanced biomedical instrumentation. A lab-bench
prototype has been created, designed for simple and fast handling through a portable point-of-care (POC) device. This device
offers a swift turnaround time for tests, requires only a small sample volume (80 µL of blood), and provides a large quantification
range for ammonia. The test has been validated in human whole blood, and the next steps include miniaturization and
optimization of the prototype device and components of the test.
xi. Strategic Partnerships
•
Out-Licensing Partnerships
◦
Strategic Collaboration with Ipsen
In December 2021, GENFIT entered into a long-term strategic partnership for global collaboration with Ipsen Pharma SAS, or
Ipsen, a global, mid-sized biopharmaceutical company focused on transformative medicines in oncology, rare disease and
neuroscience. The agreement gives Ipsen an exclusive worldwide (excluding Greater China which is licensed to Terns, see below)
license to develop, manufacture and commercialize our investigational treatment elafibranor, for people living with PBC, and in
other indications. The partnership also gives Ipsen access to future clinical programs led by GENFIT through rights to first
negotiation and combines GENFIT’s scientific expertise and proprietary technologies in liver disease with Ipsen’s development
and commercialization capabilities.
GENFIT remained responsible for the Phase 3 ELATIVE® trial through the completion of the double-blind treatment period.
Ipsen has assumed responsibility for all additional clinical development, including completion of the long-term, open-label
extension period of the ELATIVE® trial, and global (excluding Greater China) commercialization.
Under the agreement, Ipsen will pay GENFIT up to €480 million, comprising an upfront cash payment of €120 million received
in 2021, as well as regulatory, commercial, and sales-based milestone payments up to €360 million, plus tiered double-digit
royalties of up to 20%. In addition, to underscore its long-term commitment, Ipsen also became our largest shareholder through
the purchase of 3,985,239 newly issued shares representing 8% of GENFIT S.A after issuance, via a €28 million investment. The
new shares were, but no longer are, subject to a lock-up period. For more information about the financial terms of the agreement,
including milestones received to date, see Note 7 - "Revenues and other income" as well as Note 29 - "Commitments, contingent
liabilities and contingent assets"" to our consolidated financial statements included in this annual report.
This agreement will remain in force until the later of either a 10-year period after the first sale of a licensed product in the
territory or the expiration of the last patent concerning such a licensed product in the relevant country (determined on a per-
country basis).
◦
Agreement with Terns Pharmaceuticals
In June 2019, we announced the signing of a licensing and collaboration agreement with Terns Pharmaceuticals, a global
biopharmaceutical company based in the U.S. and China with a focus on developing novel and combination therapies to treat
liver disease. Under the agreement, Terns has been granted the exclusive rights to develop, register and commercialize
elafibranor in Greater China (mainland China, Hong Kong, Macau, and Taiwan), for the treatment of MASH and PBC.
Under the terms of the license agreement, GENFIT has received an initial payment of $35 million from Terns and may receive
up to $193 million in additional payments upon completion of clinical, regulatory and commercial milestones. At commercial
launch of elafibranor in Greater China, GENFIT may receive mid-teen percentage royalties from Terns based on the sales in this
territory. As part of the agreement, GENFIT and Terns will also undertake joint R&D projects in liver disease.
This agreement will remain in force until the later of either a 10-year period after the first sale of a licensed product in the
territory or the expiration of the last patent concerning such a licensed product in the relevant territory (determined on a per-
territory basis).
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◦
Agreements with LabCorp and Q2
In January 2019, we entered into a worldwide, non-exclusive license agreement with Labcorp, a global life sciences leader
specializing in health improvement and patient treatment decision support, to enable them to further develop and deploy NIS4®
in the context of clinical research. We believe this agreement will provide expanded access to, and further validation of an LDT
powered by NIS4®. The license agreement permits Labcorp, through its subsidiary Covance, to market and sell an LDT powered by
NIS4® test in the context of clinical research studies. Covance processes samples and provides test results to clinical trial
sponsors. Covance has made significant progress in the deployment of NIS4® in several clinical trials conducted by leading
players in the pharmaceutical industry. Covance is permitted and accredited, and will be responsible for submitting any validation
that may be required under applicable state and federal laws.
In September 2020 we and Labcorp announced the signature of a five-year exclusive license agreement for our NIS4®
technology, which seeks to enable easier identification of patients with at-risk MASH. Under the license agreement, Labcorp will
commercialize a blood-based molecular test based on NIS4® technology in the United States and Canada, thereby making it more
widely accessible to health professionals. Leveraging the NIS4® technology, in April 2021, Labcorp launched the LDT
"NASHNext®".
In May 2021, we signed a worldwide, non-exclusive license agreement with Q2 to broaden the availability of NIS4® technology
in the clinical research field.
•
In-Licensing Partnerships
◦
Agreement with Genoscience Pharma
On December 16, 2021, we signed an exclusive license from Genoscience Pharma to develop and commercialize the
investigational treatment GNS561 in CCA in the United States, Canada and Europe, including the United Kingdom and
Switzerland. Genoscience Pharma is a French clinical-stage biotechnology company developing novel lysosomotropic
therapeutics to establish a new standard of care against cancer, autoimmune and infectious diseases. GENFIT also purchased a
10% equity stake in Genoscience Pharma through the subscription of new ordinary shares for a total amount of approximately
€3.1 million.
In January 2025, GENFIT acquired all patents and patent applications, know-how, and data held by Genoscience Pharma
necessary for the development, manufacturing, and marketing of GNS561 worldwide (“GNS561 Technology”) regardless of its
therapeutic indication, form, dosage, or formulation, incorporating in whole or in part the GNS561 Technology (including as an
active ingredient) or manufactured using this Technology. As a result of the acquisition, the License and Development Agreement
described above was terminated. For more information about the financial terms of this new agreement, see Note 2.2. - "Major
events after the period" to our consolidated financial statements included in this annual report.
◦
License Agreement with Seal Rock Therapeutics
In May 2023, GENFIT licensed the exclusive worldwide rights of ASK1 Inhibitor SRT-015 (injectable formulation in acute liver
disease) from Seal Rock Therapeutics, a Seattle, Washington (USA) based clinical stage company.
Under the terms of the agreement, Seal Rock Therapeutics is eligible for payments of up to €100 million (of which €2 million
has already been paid), including regulatory, clinical and commercial milestones, as well as tiered royalties. Remaining payments
would only begin to become due following positive Phase 2 results, which would not occur before 2026, according to our best
estimates. For more information about the financial terms of the agreement, see Note 29 - "Commitments, contingent liabilities
and contingent assets" to our consolidated financial statements included in this annual report.
◦
License Agreement with Celloram
On July 28, 2023, GENFIT licensed the exclusive worldwide rights to CLM-022, a first-in-class inflammasome inhibitor in liver
disease, from Celloram Inc., a Cleveland-based biotechnology company.
Under the terms of the agreement, Celloram is eligible for payments of up to €160 million (of which €50 thousand has already
been paid), including regulatory, clinical and commercial milestones, as well as tiered royalties. Almost all of these payments
would only begin to become due following positive Phase 2 results, which would not occur before 2028, according to our best
estimates. For more information about the financial terms of the agreement, see Note 29 - "Commitments, contingent liabilities
and contingent assets" to our consolidated financial statements included in this annual report.
•
Other strategic collaboration: European Foundation for the Study of Chronic Liver Failure (EF CLIF)
In April 2024, GENFIT announced the launch of a research collaboration with EF CLIF, aimed at advancing the understanding
of ACLF. EF CLIF has conducted several large prospective observational studies in large numbers of patients admitted to hospital
in Europe and Latin America for acute decompensation of cirrhosis, helping to better understand the onset and progression of
ACLF.
•
Competitive Landscape
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Because we focus on therapeutic areas with high unmet medical needs, characterized by a lack of diagnostic or treatment
options, there are relatively few companies with approved products compared with other therapeutic or diagnostic areas where
several options are already approved from a regulatory standpoint, and available for healthcare providers and patients.
We however operate in a competitive sector. Several companies are working on technologies, therapeutic targets or drug or
biomarker candidates that aim to treat or diagnose the same diseases or identify the same patient population as our product
candidates. While we believe that our drug candidates and diagnostic solutions, combined with our expertise and know-how,
provide us with competitive advantages, we face potential competition from various sources, including pharmaceutical and
biotechnology companies, as well as from academic institutions, governmental agencies and public and private research
institutions. We anticipate that we will face intense and increasing competition as new drugs and therapies enter the market and
advanced technologies become available. In some indications, off-label use of non-approved drugs can also be considered as
competition.
◦
PBC
UDCA, approved by the FDA to treat PBC in 1997, remained the only approved treatment for PBC until 2016, when Ocaliva®
was approved by the FDA and European Medicines Agency for the treatment of PBC in combination with UDCA in adults with an
inadequate response to UDCA, or as monotherapy in adults unable to tolerate UDCA.
In 2024 and early 2025, the competitive landscape has evolved significantly:
1. Ocaliva® (Obeticholic Acid) – initially developed Intercept Pharmaceuticals
European Status:
On September 3, 2024, the European Commission (EC) made the decision to revoke the conditional marketing authorization
of Ocaliva® following a Phase 3 confirmatory study, the benefit/risk balance of Ocaliva® was no longer favorable. The decision was
suspended with immediate effect by the European Court of Justice shortly thereafter but in December 2024, the General Court of
the European Union declined to extend the suspension of this decision, effectively revoking Ocaliva®'s CMA in the European
Union and European Economic Area. As a result, Ocaliva® was withdrawn from the European market for PBC treatment.
U.S. Status:
In September 13, 2024, the FDA's Gastrointestinal Drugs Advisory Committee also concluded that Ocaliva®’s benefit-risk
profile was unfavorable for PBC treatment. A final decision from the FDA was expected by October 15, 2024. As of March 2025,
Ocaliva® continues to be available under accelerated approval for the treatment of appropriate patients.
2. Livdelzi® (seladelpar) – initially developed by CymaBay Therapeutics (acquired by Gilead in March 2024)
On August 14, 2024, Gilead announced that the FDA had granted accelerated approval to Livdelzi® (seladelpar) for the
treatment of PBC in combination with ursodeoxycholic acid (UDCA) in adults who have an inadequate response to UDCA, or as
monotherapy in patients unable to tolerate UDCA.
In February 2025, Gilead announced that the European Commission (EC) granted conditional marketing authorization for
seladelpar for the treatment of PBC in combination with UDCA in adults who have an inadequate response to UDCA alone, or as
monotherapy in those unable to tolerate UDCA. In January 2025, seladelpar received approval from the UK Medicines and
Healthcare products Regulatory Agency (MHRA).
◦
ACLF
No drugs have been approved in this indication so far and the only therapeutic option currently available is liver
transplantation. Some companies are investigating the potential of certain technologies, but given known challenges in the
space, we believe those would likely become complementary to what GENFIT is developing rather than serve as direct
competitors.
◦
CCA
Current treatment options are limited to chemotherapy. The current pipeline of drugs in development includes anti-PD-(L)1
combinations, FGFR2 and PARP inhibitors, and pan-KRAS inhibitors. FGFR2 and PARP inhibitors are limited to patients with
specific alterations, while the expectations from anti-PD-(L) to work in CCA are currently low. A combination of atezolizumab and
cobimetinib (anti-PD-(L)1 and MEKi) is being evaluated but preliminary data do not show a major benefit.
◦
HAC in UCD and OA
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No drugs have been approved for HAC. However, Buphenyl and Ravicti are ammonia scavengers approved in UCD in the U.S.
and in the US and Europe, respectively.
◦
HE
Standard-of-care therapeutics include lactulose (with various brands) and rifaximin (Xifaxan approved in the U.S. and EU, and
Rifxima approved in Japan), both oral treatments aiming to reduce ammonia. LOLA (Hepa-Merz approved in the EU) is a third
option, but not approved in the U.S.
◦
MASH Diagnostics
No blood-based diagnostic solution is approved to identify "at-risk" MASH.
◦
At-home ammonia monitoring
The international state of the art of ammonia quantification in blood is enzymatic assays that are implemented in extremely
costly large automatic analyzer machines usually only available at central or hospital clinical laboratories. Considering that
ammonia blood samples should be collected on ice and analyzed within the hour, these limitations may delay the results and may
add uncertainties to the diagnosis of HE.
The main limitations of the current gold standard can be resolved with a reliable point of care device at the patients' bedside.
The current point of care device commercially available (Arkray’s PocketChem BA analyzer) is however limited by its narrow
quantification range (7-286 µmol/L), its interference issues and its underestimation of ammonia levels in comparison to
enzymatic assays.
Therefore, the need of a fast, accurate, and precise point of care device has not yet been achieved satisfactorily.
◦
Other considerations
Many of our competitors, either alone or with their strategic collaborators, have substantially greater financial, technical and
human resources than we do. Accordingly, our competitors may be more successful than we are in obtaining approval for their
drug candidates and achieving widespread market acceptance and may render our drug candidates, such as elafibranor, obsolete
or non-competitive. Mergers and acquisitions in the biotechnology and pharmaceutical industries may result in even more
resources being concentrated among a smaller number of our competitors. These competitors also compete with us in recruiting
and retaining qualified scientific and management personnel and establishing clinical study sites and patient registration for
clinical studies, as well as in acquiring technologies complementary to, or necessary for, our programs.
We anticipate that we will face intense and increasing competition as new drugs and therapies enter the market and
advanced technologies become available. We expect any drugs that we develop and commercialize to compete on the basis of,
among other things, efficacy, safety, delivery, price and the availability of reimbursement from government and other third-party
payors.
Our commercial opportunity could be reduced or eliminated if our competitors develop and commercialize drugs that are
safer, more effective, have fewer or less severe side effects, are more convenient or are less expensive or better reimbursed than
any drugs that we may commercialize. Our competitors also may obtain FDA, EMA or other regulatory approval for their drugs
more rapidly than we may obtain approval for ours, which could result in our competitors establishing a strong market position
for either the product or a specific indication before we are able to enter the market.
–
Manufacturing and Supply
We do not have any clinical manufacturing facilities or personnel. We currently rely, and expect to continue to rely, on third
parties for the manufacturing of our drug candidates for preclinical and clinical testing, as well as for commercial manufacturing
if our drug candidates receive marketing approval.
Pursuant to our agreement with Genoscience Pharma, Genoscience Pharma supplied our clinical and commercial
requirements for GNS561 until now. Following the acquisition of the full intellectual property rights for GNS561 from Genoscience
Pharma in early 2025, GENFIT will contract directly with the API manufacturer and the DP CDMO for all future supplies for
GNS561.
NTZ is already approved and commercialized in several jurisdictions in various indications and we therefore purchased our
supply of NTZ for clinical purposes in the market through pharmaceutical wholesalers. G1090N our new proprietary formulation
of NTZ, to be used for our new proof-of concept clinical trial has been developed. We have selected one supplier for the active
substance NTZ and another CDMO for the manufacture of the therapeutic units of G1090N.
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VS-01 contains citric acid anhydrous as active ingredient for which a supply agreement covering clinical trials is in place with
a third party GMP supplier. VS-01 is a kit containing three intermediate products, supplied by different GMP suppliers, each
responsible for the production of VS-01 lipid blend, citric acid solution, liposomal aqueous suspension, xylitol alkaline solution and
the kitting and clinical labeling activities. The supply of VS-01 kits to clinical sites is managed by an external supplier in
accordance with the GDP. The kits are to be reconstituted at the pharmacy hospital based on the instructions provided in the
pharmacy manual and prior administration to patients.
SRT-015 IV formulation is developed by GENFIT that owns its full intellectual property rights. Seal Rock supplied the SRT-015
API required for current developments. We have pre-selected two external CDMOs for the manufacture of the therapeutic units
of SRT-015 injectable drug product.
With respect to our NIS4® technology, we have entered into two license agreements with Labcorp to further develop and
manufacture a test using NIS4® technology for clinical research as well as to allow them to develop and commercialize an LDT
named NASHNext® and powered by our NIS4® technology in routine clinical care in the U.S. and Canada.
xii.
Intellectual Property
Our intellectual property is critical to our business, which we strive to protect by obtaining and maintaining patent
protection in territories throughout the world for our drug and biomarker candidates, innovative methods and tools, production
methods and other inventions that are important to our business. We also rely on trade secrets to protect aspects of our business
that are not amenable to, or that we do not consider appropriate for, patent protection.
Our commercial success depends in part upon obtaining and maintaining patent protection and trade secret protection of
our current and future drug and biomarker candidates and the methods used to develop and manufacture them, as well as
successfully defending these patents against third-party challenges. Our ability to stop third parties from making, using, selling,
offering for sale in the United Sates or importing into the United States, our products depends on the extent to which we have
rights under valid and enforceable patents or trade secrets that cover these activities. We cannot guarantee that patents will be
granted with respect to any of our pending patent applications or with respect to any patent applications filed by us in the future,
nor can we guarantee that any of our existing patents or any patents that may be granted to us in the future will be commercially
useful in protecting our drug and biomarker candidates, discovery programs and processes from competitors. Furthermore, our
patents may be challenged, circumvented, or invalidated by third parties. Because patent applications in the United States and
certain other jurisdictions are maintained in secrecy for 18 months or potentially even longer, and since publication of discoveries
in the scientific or patent literature often lags behind actual discoveries, we cannot be certain of the priority of inventions
covered by our pending patent applications. For this and more comprehensive risks related to our intellectual property, please
see Item 3D - "Risk Factors—Risks Relating to Our Intellectual Property”.
We monitor our competitors and seek to challenge patent infringements when such infringements would negatively impact
our business. We also seek to challenge validity of our competitors’ patents when we think that these patents do not fulfill
patentability or validity requirements.
–
Patents
As of March 31, 2025, we own 56 issued U.S. patents, over 643 issued foreign patents in force, 27 pending U.S. applications,
and over 348 pending foreign patent applications. Our patent portfolio contains 80 different patent families, which are made up of
over 991 patents and patents applications. Twenty-three of our patent families relate to our lead product candidate, elafibranor.
Following the acquisition of Versantis AG, three patent families (including two U.S. patent applications and three issued U.S.
patents) were integrated into our patent portfolio, now enriched by four new patent families. Following the acquisition of
intellectual property relating to GNS561 from Genoscience Pharma, five patent families (including one U.S. patent application and
three issued U.S. patents) were integrated into our patent portfolio.
•
Elafibranor
Our patent portfolio for elafibranor, a molecule synthesized by us, includes issued patents and pending patent applications
directed to manufacturing methods, combinations and methods of use. As of March 31, 2025, the U.S. patent directed to the
composition of matter of elafibranor is no longer in force, having expired in September 2024. Elafibranor is, protected in several
later patents, without taking patent term extensions into account. We also have counterpart patents in various countries and
regions, including Australia, Brazil, Canada, China, Europe, Israel and Japan.
In addition, we own eleven U.S. granted patents directed to the treatment of cholestatic diseases, in particular PBC, which, if
issued, are expected to expire from 2037 to 2041, without taking patent term extensions into account. We also have counterpart
pending patent applications in various countries or regions, including Australia, Canada, Europe, Israel, China, and Japan.
In addition, we own U.S. patents directed to the method of preparing elafibranor, one which expired in 2024 without any
significant impact for the business of elafibranor, and one which is expected to expire in 2031. We also have counterpart patents
granted in various countries and regions, including Canada, China, Europe, and Israel.
In addition to these patents and pending applications, we are also pursuing additional patents directed to specific forms of
elafibranor, and combinations with other pharmaceutical compounds.
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We also filed in 2024 three new priority patent applications and two international patent applications on elafibranor for
treating PBC, and also an international patent application on new formulation of elafibranor, thus reinforcing and further
protecting our lead product.
In 2024, two Patent Term Extension Applications were filed with the U.S. Patent and Trademark Office.
Elafibranor is currently covered by four Orange Book listed U.S. patents.
All the U.S. patent applications and patents are under license to IPSEN.
•
ACLF pipeline
We are further developing patent protection directed to our repositioning of nitazoxanide for treating ACLF/sepsis. As of
March 31, 2025, two U.S. patent applications are pending. These patent applications, if granted, would be expected to expire in
2041 and 2042 (excluding any patent term extension). In addition, we maintain protection directed to nitazoxanide for treating
cholestatic and fibrotic diseases. As of March 31, 2025, six U.S. patents have been granted for the use of NTZ in the treatment of
different fibrotic diseases. Three U.S. patents have been granted for combination of NTZ with other therapeutic agents in the
treatment of different fibrotic diseases. These patents and patent applications, if granted, would be expected to expire from 2037
to 2038 (excluding any patent term extension).
One international patent application filed in 2023 for the use of nitazoxanide in the treatment of ACLF / sepsis, also
reinforces our patent portfolio on this compound.
As of March 31, 2025, we also own two U.S. patent applications directed to proprietary compounds for treating ACLF/sepsis.
These patent applications, if granted, would be expected to expire in 2042 (excluding any patent term extension). Foreign filings
are expected in 2025 for the international patent application filed in 2023 for the use of other compounds in the treatment of
ACLF/sepsis.
Acquisition of Versantis AG has allowed us to reinforce our patent portfolio for the treatment of ACLF. As of March 31, 2025,
we own three U.S. granted patents and one U.S. patent application (some of them derivable from PCT applications) directed to
VS-01 for the treatment of ACLF. These patent applications, if granted, would be expected to expire from 2033 to 2036 (excluding
any patent term extension).
We also filed in 2023 one international patent application for the use of VS-01 in the treatment of UCD (Urea Cycle Disorder)
reinforcing our patent portfolio on this compound. Foreign filings are expected in 2025 for this application.
We also own one U.S. patent application directed to VS-02 in the treatment of UCD or Hepatic Encephalopathy.
•
Diagnostic Franchise
As of March 31, 2025, we own eight U.S. patent applications and two U.S. granted patent directed to the diagnosis of MASH,
in particular our NIS2+® and NIS4® diagnostic technology, using certain biomarkers. The U.S. applications, if issued, would be
expected to expire between 2036 and 2043.
We also have filed several US patent applications covering some other diagnostic tools and protecting some other research
tools. We filed in 2024 three international patent applications and four priority patent applications to reinforce our protection on
this diagnostic technology.
As of March 31, 2025, we also two one U.S. patent applications and one U.S. granted patent directed to the diagnosis of
MASH, using other biomarkers. The U.S. applications, if issued, would be expected to expire from 2038 to 2043. We also filed in
2024 four new priority applications on methods and devices for the diagnosis of advanced liver fibrosis or liver cirrhosis.
•
Cholangiocarcinoma
The acquisition of Genoscience Pharma's intellectual property assets relating to GNS561 has allowed us to reinforce our
patent portfolio for the treatment of cholangiocarcinoma. As of March 31, 2025, we own three U.S. granted patents and one U.S.
patent application directed to GNS561 or analogs for the treatment of CCA. These patent applications, if granted, would be
expected to expire from 2035 to 2043 (excluding any patent term extension).
•
In-licensed compounds
The licensing agreements signed in 2023 have reinforced our leadership position in the treatment of ACLF, with the
intellectual property rights attached to the candidate drugs SRT-015 and CLM-022. The licensing agreements have also reinforced
our intellectual property rights of the diagnostic franchise with TS-01.
As of March 31, 2025, one U.S. patent applications and one U.S. granted patent are directed to SRT-015. The U.S. applications,
if issued, would be expected to expire from 2038 and 2044. In 2024, GENFIT has filed one new priority application directed to
SRT-015 for treating ACLF/sepsis and one new priority application on a new formulation of SRT015.
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One U.S. patent application was also filed in 2025 for CLM-022 in relation with the treatment of ACLF.
As of March 31, 2025, one U.S. patent application and three U.S. granted patent are directed to TS-01, a diagnostic device for
hyperammonemia. The U.S. applications, if issued, would be expected to expire from 2037 to 2038.
•
Patent Term Extension (PTE)
In the United States, the term of a patent covering an FDA-approved drug may be eligible for a patent term extension, or PTE,
under the Hatch-Waxman Act as compensation for the reduction of patent monopoly time during the FDA regulatory review
process. This extended coverage period, PTE, can only be obtained provided we apply for and receive a marketing authorization
for a product. The period of extension may be up to five years beyond the normal expiration of the patent, but cannot extend the
remaining term of a patent beyond a total of 14 years from the date of product approval. Only one patent among those eligible for
an extension may be extended. In the European Union, Supplementary Protection Certificates, or SPCs, may also be available to
patents, which would be available by application to the member states. However, there is no guarantee that the applicable
authorities, including the FDA, will agree with our assessment of whether such extensions should be granted, and even if granted,
the length of such extensions. We will use the procedures established to compensate regulatory delays via Patent Term
Extension in the U.S. and via Supplementary Protection Certificates in the EU as soon as Health authorities grant NDA in the U.S.
or MA in the EU for our products.
•
Trademarks
Our candidate products are protected and will be sold around the world under trademarks that we consider to be of material
importance.
Our trademarks will help to identify our products and services and will protect the sustainability of our growth.
It is our policy to file and protect our trademarks with a strategy adapted to each product or service, depending on the
countries where the product will be commercialized or where the service will be proposed. Basically our trademarks are protected
worldwide for our products and services.
We own more than 550 registered or filed trademarks worldwide.
The protection offered by trademark varies country by country. In most of the countries, trademark right may only be
obtained through the filing and registration of a trademark application at the corresponding Patent and Trademark Office.
Registrations are granted for a fixed term (usually ten years) and can be renewed indefinitely, except in certain countries where
use of the trademark needs to be demonstrated at renewal time.
In most of the countries, protection of the trademark applies to the products and services designated in the registration
certificate.
We monitor our trademarks and defend them against competing trademarks by filing oppositions, observations when
appropriate. Similarly, we may enter into coexistence agreement when a third party owns a potentially conflicting or confusing
trademark with some of our products or services.
It is also our policy to defend our trademarks against infringement, counterfeiting and/or unfair competition.
•
Domain names
It is our policy to file domain names for communicating or giving information on our products or services to patients,
prescribers or payers. We own today more than 190 domain names.
•
Know-How and Trade Secrets
In addition to patent protection, we also rely on trade secret protection of our proprietary information that is not amenable
to, or that we do not consider appropriate for, patent protection. However, trade secrets can be difficult to protect. Although we
take steps to protect our proprietary information, including restricting access to our premises (we seek to preserve the integrity
and confidentiality of our data, trade secrets and know-how by maintaining physical security of our premises and physical and
electronic security of our information technology systems) and our confidential information, as well as entering into agreements
with our employees, consultants, advisors, and potential collaborators, that prohibit the disclosure of confidential information,
and require disclosure and assignment to us of ideas, developments, discoveries and inventions important to our business.
xiii.
Government Regulation
Our drug candidates must be approved by the FDA through the NDA process before they may be legally marketed in the
United States and by the European Commission following a positive opinion provided by the EMA through the MAA process for a
drug falling within the scope of the Centralized procedure before they may be legally marketed in the European Economic Area or
by one of the procedures administered by the national Competent Authorities of EEA countries (National Procedure, Mutual
Recognition or Decentralized procedure) before they may be legally marketed in the respective country/countries.
79
Our drug candidates will be subject to similar requirements in other countries prior to marketing in those countries. The
process of obtaining regulatory approvals and the compliance with applicable federal, state, local and foreign statutes and
regulations require the expenditure of substantial time and financial resources.
–
United States Government Regulation
In the United States, the FDA regulates drugs under the Federal Food, Drug, and Cosmetic Act, or the FDCA, and its
implementing regulations. The process of obtaining regulatory approvals and compliance with applicable federal, state, local and
foreign statutes and regulations requires the expenditure of substantial time and financial resources. Failure to comply with the
applicable legal requirements at any time during the drug development process, approval process or post approval may subject
an applicant and/or sponsor to a variety of administrative or other enforcement proceedings, including imposition of a clinical
hold, refusal by the FDA to approve applications, withdrawal of an approval, import/export delays, issuance of warning letters and
other types of enforcement actions, product recalls, product seizures, total or partial suspension of production or distribution,
injunctions, fines, refusals of government contracts, restitution, disgorgement of profits, or civil or criminal investigations and
penalties. These actions may be instituted or prosecuted by a variety of governmental entities, such as the FDA, the U.S.
Department of Justice, state attorneys general or governmental entities and, in certain cases, by private parties.
The clinical testing, manufacturing, labeling, storage, distribution, record keeping, advertising, promotion, import, export and
marketing, among other things, of our drug candidates are governed by extensive regulation by governmental authorities in the
United States and other countries. The steps required before a drug may be approved for marketing in the United States generally
include:
•
completion of preclinical laboratory tests, animal studies and formulation studies in compliance with the FDA’s good
laboratory practice, or GLP, regulations;
•
the submission to the FDA of an IND application for human clinical testing, which must become effective before human
clinical trials commence;
•
approval by one or more independent institutional review boards, or IRBs, or ethics committees covering each clinical site
before each clinical trial may be initiated;
•
performance of adequate and well-controlled human clinical trials to establish the safety and efficacy of the drug for each
indication and conducted in accordance with good clinical practices, or GCPs;
•
preparation and submission to the FDA of an NDA;
•
FDA acceptance, review and approval of the NDA, which might include an Advisory Committee review;
•
satisfactory completion of an FDA inspection of the manufacturing facilities at which the drug, or components thereof,
are made to assess compliance with current good manufacturing practices, or cGMPs;
•
satisfactory completion of FDA audits of clinical trial sites to assure compliance with GCPs and the integrity of the clinical
data; and
•
agreement for compliance with any post-approval requirements, including Risk Evaluation and Mitigation Strategies, or
REMS, and post-approval studies required by the FDA.
The testing and approval process requires substantial time, effort and financial resources, and the receipt and timing of any
approval is uncertain. The FDA may suspend clinical trials at any time on various grounds, including a finding that the subjects or
patients are being exposed to an unacceptable health risk.
Preclinical and Human Clinical Trials in Support of an NDA
Preclinical studies include laboratory evaluations of the drug candidate, as well as in vitro and animal studies to assess the
potential safety and efficacy of the drug candidate. The conduct of preclinical studies is subject to federal regulations and
requirements including GLP regulations. The results of the preclinical studies, together with manufacturing information and
analytical data, among other things, are submitted to the FDA as part of the IND, which must become effective before human
clinical trials may commence. The investigational new drug application, or IND, will become effective automatically 30 days after
receipt by the FDA, unless the FDA raises concerns or questions about the conduct of the trials as outlined in the IND prior to
that time and places a clinical hold on the IND. In this case, the IND sponsor and the FDA must resolve any outstanding concerns
before clinical trials can proceed. The FDA may nevertheless initiate a clinical hold after the 30 days if, for example, significant
public health risks arise.
Clinical trials involve the administration of the drug candidate to human subjects under the supervision of qualified
investigators in accordance with GCP requirements, which include the requirement that all research subjects provide their
informed consent in writing for their participation in any clinical trial. Clinical trials are conducted under protocols detailing,
among other things, the objectives of the trial, the parameters to be used in monitoring safety, and the effectiveness criteria to be
evaluated. A protocol for each clinical trial and any subsequent protocol amendments must be submitted to the FDA as part of
the IND. Each clinical trial must be reviewed and approved by one or more IRBs or Ethics Committees covering the sites at which
the trial will be conducted. The IRB or Ethics Committee will consider, among other things, ethical factors, the safety of human
subjects and the possible liability of the institution.
Clinical trials are typically conducted in three sequential phases prior to approval, but the phases may overlap or be
combined. These phases generally include the following:
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•
Phase 1. Phase 1 clinical trials represent the initial introduction of a drug candidate into human subjects, frequently
healthy volunteers. In Phase 1, the drug candidate is usually tested for safety, including adverse effects, dosage tolerance,
absorption, distribution, metabolism, excretion and pharmacodynamics.
•
Phase 2. Phase 2 clinical trials usually involve studies in a limited patient population to (1) evaluate the efficacy of the drug
candidate for specific indications, (2) determine dosage tolerance and optimal dosage and (3) identify possible adverse
effects and safety risks.
•
Phase 3. If a drug candidate is found to be potentially effective and to have an acceptable safety profile in Phase 2 clinical
trials, the clinical trial program will be expanded to Phase 3 clinical trials to further demonstrate clinical efficacy, optimal
dosage and safety within an expanded patient population at geographically dispersed clinical trial sites.
Post-approval trials, sometimes referred to as Phase 4 clinical trials, may be conducted after approval to gain additional
experience from the treatment of patients in the intended therapeutic indication and to document a clinical benefit in the case of
drugs approved under accelerated approval regulations, or when otherwise requested or required by the FDA in the form of post-
market requirements or commitments. Failure to promptly conduct any required Phase 4 clinical trials could result in
enforcement action or withdrawal of approval. Companies that conduct certain clinical trials are also required to register them
and post the results of completed clinical trials on a government-sponsored database, such as ClinicalTrials.gov in the United
States, within certain timeframes. Failure to do so can result in fines, adverse publicity and civil and criminal sanctions.
Submission and Review of an NDA
The results of preclinical studies and clinical trials, together with detailed information on the drug’s manufacture,
composition, quality, controls and proposed labeling, among other things, are submitted to the FDA in the form of an NDA,
requesting approval to market the drug for one or more indications. The application must be accompanied by a significant user
fee payment, which typically increases annually, although waivers may be granted in limited cases. The FDA conducts a
preliminary review of all NDAs within the first 60 days after submission, before accepting them for filing, to determine whether
they are sufficiently complete to permit substantive review. The FDA may request additional information rather than accept an
NDA for filing. In this event, the application must be resubmitted with the additional information. The resubmitted application is
also subject to review before the FDA accepts it for filing. The FDA has substantial discretion in the approval process and may
refuse to file or approve any application or decide that the data is insufficient for approval and require additional preclinical,
clinical or other studies.
Once an NDA has been accepted for filing, the FDA sets a user fee goal date that informs the applicant of the specific date
by which the FDA intends to complete its review. This goal date is typically 10 months from the date that the FDA accepts the
filing. The review process can be extended by FDA requests for additional information or clarification. The FDA reviews NDAs to
determine, among other things, whether the proposed drug is safe and effective for its intended use, and whether the drug is
being manufactured in accordance with cGMPs to assure and preserve the drug’s identity, strength, quality and purity. Before
approving an NDA, the FDA typically will inspect the facilities at which the drug is manufactured and will not approve the drug
unless the manufacturing facilities comply with cGMPs. Additionally, the FDA will typically inspect one or more clinical trial sites
for compliance with GCP and integrity of the data supporting safety and efficacy.
During the approval process, the FDA also will determine whether a REMS is necessary to assure the safe use of the drug.
REMS can include medication guides, communication plans for healthcare professionals, and elements to assure safe use, or
ETASU. ETASU can include, but are not limited to, special training or certification for prescribing or dispensing, dispensing only
under certain circumstances, special monitoring and the use of patient registries. If the FDA concludes a REMS is needed, the
sponsor of the application must submit a proposed REMS, and the FDA will not approve the application without an approved
REMS, if required. A REMS can substantially increase the costs of obtaining approval. The FDA may also convene an advisory
committee of external experts to provide input on certain review issues relating to risk, benefit and interpretation of clinical trial
data. The FDA may delay approval of an NDA if applicable regulatory criteria are not satisfied and/or the FDA requires additional
testing or information.
On the basis of the FDA’s evaluation of the NDA and accompanying information, including the results of the inspection of
the manufacturing facilities and clinical trial sites, the FDA will issue either an approval of the NDA or a Complete Response
Letter, detailing the deficiencies in the submission and the additional testing or information required for reconsideration of the
application. Even with submission of this additional information, the FDA may ultimately decide that the application does not
satisfy the regulatory criteria for approval.
If the FDA approves a new drug, it may limit the approved indications for use of the drug. It may also require that
contraindications, warnings or precautions be included in the drug labeling, such as a special warning, known as a boxed warning,
to highlight a particular safety risk. In addition, the FDA may call for post-approval studies, including Phase 4 clinical trials, to
further assess the drug’s safety after approval. The agency may also require testing and surveillance programs to monitor the
drug after commercialization, or impose other conditions, including distribution restrictions or other risk management
mechanisms, including REMS, to help ensure that the benefits of the drug outweigh the potential risks. The FDA may prevent or
limit further marketing of a drug based on the results of post-market studies or surveillance programs.
After approval, many types of changes to the approved drug, such as adding new indications, manufacturing changes and
additional labeling claims, are subject to further testing requirements and FDA review and approval.
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Fast Track, Breakthrough Therapy and Priority Review Designations
The FDA is authorized to designate certain drugs for programs intended to facilitate and expedite development and review if
they are intended to address an unmet medical need in the treatment of a serious or life-threatening disease or condition. These
programs are fast track designation, breakthrough therapy designation and priority review designation.
Fast track designation may be granted by the FDA to a drug if it is intended, whether alone or in combination with one or
more other drugs, for the treatment of a serious or life-threatening disease or condition, and nonclinical or clinical date
demonstrate the potential to address unmet medical need for such a disease or condition. For fast track designated drugs,
sponsors may have a higher number of interactions with the FDA. In addition, the FDA may review sections of the NDA for a fast
track designated drug on a rolling basis before the complete application is submitted. Fast track designation may be rescinded if
the qualifying criteria are no longer met.
Breakthrough therapy designation may be granted by the FDA to a drug intended to treat a serious or life-threatening
disease or condition and preliminary clinical evidence indicates that the drug may demonstrate substantial improvement on a
clinically significant endpoint(s) over available therapies. The features of this program provide the same advantages of the fast
track designation, but also intensive FDA guidance to promote efficient development and FDA organizational commitment.
Breakthrough therapy designation may be rescinded if the qualifying criteria are no longer met.
Priority review designation may be granted by the FDA to an application (original or efficacy supplement) for a drug that
treats a serious condition and, if approved, would provide a significant improvement in safety or effectiveness, among other
qualifying criteria. Priority review provides a shorter clock for review of marketing application (i.e. six months compared with the
10-month standard review) following acceptance of the NDA.
Accelerated Approval Pathway
The FDA may grant accelerated approval, under Subpart H of 21 CFR Part 314, to a drug for a serious or life-threatening
condition that provides meaningful advantage to patients over available therapies based upon a determination that the drug
demonstrates an effect on a surrogate endpoint that is reasonably likely to predict clinical benefit. The FDA may also grant
accelerated approval for such a disease or condition when the drug demonstrates an effect on an intermediate clinical endpoint
that can be measured earlier than an effect on irreversible morbidity or mortality, or IMM, that is reasonably likely to predict an
effect on IMM or other clinical benefit, in each instance taking into account the severity, rarity or prevalence of the condition and
the availability or lack of alternative treatments. Drugs granted accelerated approval must meet the same statutory standards for
safety and effectiveness as those granted traditional approval.
For the purposes of accelerated approval, a surrogate endpoint is a marker, such as a laboratory measurement, radiographic
image, physical sign or other measure that is thought to predict clinical benefit, but is not itself a measure of clinical benefit.
Surrogate endpoints can often be measured more easily or more rapidly than clinical endpoints. An intermediate clinical endpoint
is a measurement of a therapeutic effect that is considered reasonably likely to predict the drug's effect on IMM or other clinical
benefit. The FDA has stated its belief that such endpoints generally may support accelerated approval where the therapeutic
effect measured by the endpoint is not itself a clinical benefit and basis for traditional approval, if there is a basis for concluding
that the therapeutic effect is reasonably likely to predict the ultimate clinical benefit of a drug.
The accelerated approval pathway has been primarily used where the course of a disease is long and an extended period of
time is required to measure the intended clinical benefit of a drug, even if the effect on the surrogate or intermediate clinical
endpoint occurs rapidly. Thus, accelerated approval has been used extensively in the development and approval of drugs for
treatment of a variety of cancers in which the goal of therapy is generally to improve survival or decrease morbidity and the
duration of the typical disease course requires lengthy and sometimes large trials to demonstrate a clinical or survival benefit.
The benefit of accelerated approval derives from the potential to receive approval based on surrogate endpoints sooner than
possible for trials with clinical or survival endpoints, rather than deriving from any explicit shortening of the FDA approval
timeline, as is the case with priority review.
The accelerated approval pathway is usually contingent on a sponsor’s agreement to conduct, in a diligent manner,
confirmatory studies to verify and describe the drug’s clinical benefit, the design of which must be agreed upon with the FDA prior
to approval. FDA generally intends to require that confirmatory trials be underway prior to accelerated approval. No later than the
date of the accelerated approval, the FDA must specify the conditions for a post-approval trial or trials required to be conducted
with respect to the drug, which may include enrollment targets, the trial protocol and milestones, including the target date of trial
completion. Sponsors must submit status reports on required post-approval trials every six months. Failure to conduct required
post-approval studies, or confirm a clinical benefit during post-marketing studies, would allow the FDA to initiate expedited
proceedings to withdraw approval of the drug. All promotional materials for drug candidates approved under accelerated
regulations are subject to prior review by the FDA.
Post-Approval Requirements
In addition to the post-approval requirements specific to an accelerated approval pathway, other post-approval
requirements apply regardless of the approval pathway.
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Approved drugs that are manufactured or distributed in the United States pursuant to FDA approvals are subject to
pervasive and continuing regulation by the FDA, including, among other things, requirements relating to recordkeeping, periodic
reporting, drug sampling and distribution, advertising and promotion and reporting of adverse experiences with the drug. After
approval, most changes to the approved drug, such as adding new indications or other labeling claims and some manufacturing
and supplier changes are subject to prior FDA review and approval. There also are continuing, annual program user fee
requirements for marketed drugs, as well as new application fees for certain supplemental applications.
The FDA may impose a number of post-approval requirements as a condition of approval of an NDA. For example, the FDA
may require post-marketing testing, including Phase 4 clinical trials, and surveillance programs to further assess and monitor the
drug’s safety and effectiveness after commercialization. The FDA may also require a REMS, which could involve requirements for,
among other things, medication guides, special trainings for prescribers and dispensers, patient registries, and elements to
assure safe use.
In addition, entities involved in the manufacture and distribution of approved drugs are required to register their
establishments with the FDA and state agencies, and are subject to periodic unannounced inspections by the FDA and these
state agencies for compliance with cGMP requirements. The FDA has promulgated specific requirements for drug cGMPs.
Changes to the manufacturing process are strictly regulated and often require prior FDA approval before being implemented.
FDA regulations also require investigation and correction of any deviations from cGMP requirements and impose reporting and
documentation requirements upon the sponsor and any third-party manufacturers that the sponsor may decide to use.
Accordingly, manufacturers must continue to expend time, money, and effort in the area of production and quality control to
maintain cGMP compliance.
The FDA may issue enforcement letters or withdraw the approval if compliance with regulatory requirements and standards
is not maintained or if problems occur after the drug reaches the market. Corrective action could delay drug distribution and
require significant time and financial expenditures. Later discovery of previously unknown problems with a drug, including
adverse events or AEs of unanticipated severity or frequency, or with manufacturing processes, or failure to comply with
regulatory requirements, may result in revisions to the approved labeling to add new safety information; imposition of post-
market studies or clinical trials to assess new safety risks; or imposition of distribution or other restrictions under a REMS
program. Other potential consequences include, among other things:
•
restrictions on the marketing or manufacturing of the drug, suspension of the approval, complete withdrawal of the drug
from the market or product recalls;
•
fines, warning letters or holds on post-approval clinical trials;
•
refusal of the FDA to approve applications or supplements to approved applications, or suspension or revocation of drug
approvals;
•
drug seizure or detention, or refusal to permit the import or export of drugs; or
•
injunctions or the imposition of civil or criminal penalties.
The FDA strictly regulates marketing, labeling, advertising and promotion of drugs that are placed on the market. Drugs may
be promoted only for the approved indications and in a manner consistent with the final approved label. The FDA and other
agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses, and a company that is found to
have improperly promoted off-label uses may be subject to significant liability, including investigation by federal and state
authorities. However, physicians may, in their independent medical judgment, prescribe legally available products for off-label
uses. The FDA does not regulate the practice of medicine and the behavior of physicians in their choice of treatments but the
FDA does restrict manufacturer’s promotional communications on the subject of off-label use of their products.
Section 505(b)(2) NDAs
As an alternative path to FDA approval for modifications to formulations or uses of drugs previously approved by the FDA, an
applicant may submit an NDA as described under Section 505(b)(2) of the FDCA. The 505(b)(2) pathway allows for flexibility in the
characteristics of the proposed product without having to conduct studies on what is already known about the product. A
505(b)(2) is an application that contains full reports of investigations of safety and effectiveness, but where at least some of the
information required for approval comes from studies not conducted by or for the applicant and for which the applicant has not
obtained a right of reference. A 505(b)(2) application may rely on, for example, published literature or FDA's finding of safety,
effectiveness or both for an approved drug product. The FDA may require 505(b)(2) applicants to perform additional studies or
measurements, including clinical trials, to support changes from the approved reference drug.
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US Pediatric Studies and Exclusivity
The Pediatric Research Equity Act of 2003 (“PREA”) requires all applications (or supplements thereto) submitted under
section 505 of the FDCA (i.e., NDA, 505(b)(2), or supplement to the same) for a new active ingredient, new indication, new dosage
form, new dosing regimen or new route of administration to contain a pediatric assessment unless the applicant has obtained a
waiver or deferral. It authorizes the FDA to require holders of approved NDAs for marketed drugs to conduct pediatric studies
under certain circumstances. The required clinical assessment must evaluate the safety and effectiveness of the product for the
claimed indications in all relevant pediatric subpopulations and support dosing and administration for each pediatric
subpopulation for which the product is safe and effective. The sponsor or FDA may request a deferral of required pediatric clinical
trials for some or all of the pediatric subpopulations. A deferral may be granted for several reasons, including a finding that the
drug is ready for approval for use in adults before pediatric clinical trials are complete or that additional safety or effectiveness
data needs to be collected before the pediatric clinical trials begin. The FDA must send a non-compliance letter to any sponsor
that fails to submit the required assessment, keep a deferral current or fails to submit a request for approval of a pediatric
formulation. The PREA pediatric studies requirement do not apply to certain drugs with orphan drug designation.
In addition, the Best Pharmaceuticals for Children Act (“BPCA”), provides NDA holders a six-month extension of any eligible
exclusivity—existing patent or nonpatent with at least nine months of exclusivity remaining—for a drug, if a sponsor conducts
clinical trials in children in response to a written request from the FDA. The issuance of a written request does not require the
sponsor to undertake the described clinical trials. If the sponsor does undertake the clinical trials and submits pediatric data that
fairly respond to the written request, the FDA may grant six-months exclusivity. The data do not need to show the product to be
effective in the pediatric population studied. The six-month exclusivity attaches to all existing, eligible exclusivity and patents.
Orphan Drug Designation
Under the Orphan Drug Act, the FDA may grant orphan designation to a drug intended to treat a rare disease or condition,
which is a disease or condition that affects fewer than 200,000 individuals in the United States or, if it affects more than 200,000
individuals in the United States, there is no reasonable expectation that the cost of developing and making a drug product
available in the United States for this type of disease or condition will be recovered from sales of the product. Orphan drug
designation must be requested before submitting a marketing application for the drug for the orphan use. After the FDA grants
orphan designation, the FDA publicly discloses the identity of the therapeutic agent and its potential orphan use. The designation
of such drug entitles a party to financial incentives such as opportunities for grant funding towards clinical trial costs, tax
advantages and user-fee waivers. Orphan drug designation does not convey any advantage in or shorten the duration of the
regulatory review and approval process.
If a product that has orphan drug designation subsequently receives the first FDA approval of the drug for the disease or
condition for which it has such designation, the product is entitled to orphan product exclusivity, which means that the FDA may
not approve any other applications to market the same drug for the same use or indication for seven years, except in limited
circumstances, such as a showing of clinical superiority to the product with orphan exclusivity or inability to manufacture the
product in sufficient quantities. Competitors, however, may receive approval of different products for the indication for which the
orphan product has exclusivity or obtain approval for the same product but for a different indication for which the orphan
product has exclusivity.
Orphan exclusivity also could block the approval of one of our products for seven years if a competitor obtains approval of
the same drug as defined by the FDA for an indication we intend to pursue or are pursuing or if our product candidate is
determined to be contained within the competitor’s product for the same indication or disease. If an orphan designated product
receives marketing approval for an indication broader than what is designated, it may not be entitled to orphan exclusivity.
–
FDA Regulation of In Vitro Diagnostics
Under the FDCA, in vitro diagnostics are regulated as medical devices. In the United States, the FDCA and its implementing
regulations, and other federal and state statutes and regulations govern, among other things, medical device design and
development, preclinical and clinical testing, premarket clearance or approval, registration and listing, manufacturing, labeling,
storage, advertising and promotion, sales and distribution, export and import, and post-market surveillance. Unless an exemption
applies, diagnostic tests require marketing clearance or approval from the FDA prior to commercial distribution. The two primary
types of FDA marketing authorization applicable to a medical device are premarket notification, also called 510(k) clearance, and
premarket approval, or PMA; however, other devices may be commercialized after the FDA grants a de novo request.
Device Classification
Under the FDCA, medical devices are classified into one of three classes — Class I, Class II or Class III — depending on the
degree of risk associated with each medical device and the extent of control needed to provide reasonable assurances with
respect to safety and effectiveness.
Class I devices are those for which safety and effectiveness can be reasonably assured by adherence to a set of regulations,
referred to as General Controls, which often require compliance with the applicable portions of the FDA’s Quality System
Regulation, or QSR, facility registration and product listing, reporting of adverse events and malfunctions, and appropriate,
truthful and non-misleading labeling and promotional materials. Most Class I products are exempt from the premarket
notification requirements.
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Class II devices are those that are subject to the General Controls, as well as Special Controls, which can include
performance standards, guidelines and post market surveillance. Most Class II devices are subject to premarket review and
clearance by the FDA. Premarket review and clearance by the FDA for Class II devices is accomplished through the 510(k)
premarket notification process. Under the 510(k) process, the manufacturer must submit to the FDA a premarket notification,
demonstrating that the device is “substantially equivalent,” as defined in the statute, to either:
•
a device that was legally marketed prior to May 28, 1976, the date upon which the Medical Device Amendments of 1976
were enacted, or
•
another commercially available, similar device that was cleared through the 510(k) process.
To be “substantially equivalent,” the proposed device must have the same intended use as the predicate device, and either
have the same technological characteristics as the predicate device or have different technological characteristics and not raise
different questions of safety or effectiveness than the predicate device. Clinical data are sometimes required to support
substantial equivalence.
After a 510(k) is submitted, the FDA determines whether to accept it for substantive review. If it lacks necessary information
for substantive review, the FDA will refuse to accept the 510(k). If it is accepted for filing, the FDA begins a substantive review. If
the FDA agrees that the device is substantially equivalent, it will grant clearance to commercially market the device.
Class III devices include devices deemed by the FDA to pose the greatest risk such as life-supporting or life-sustaining
devices, or implantable devices, in addition to those deemed not substantially equivalent following the 510(k) process. The safety
and effectiveness of Class III devices cannot be reasonably assured solely by the General Controls and Special Controls described
above. Therefore, these devices are subject to the PMA application process, which is generally more costly and time consuming
than the 510(k) process. Through the PMA application process, the applicant must submit data and information to demonstrate
reasonable assurance of the safety and effectiveness of the device for its intended use to the FDA’s satisfaction. Accordingly, a
PMA application typically includes, but is not limited to, extensive technical information regarding device design and
development, preclinical and clinical study data, manufacturing information, labeling and financial disclosure information for the
clinical investigators in device studies. The PMA application must provide valid scientific evidence that demonstrates to the
FDA’s satisfaction reasonable assurance of the safety and effectiveness of the device for its intended use. Overall, the FDA
review of a PMA application generally takes between one and three years, but may take significantly longer.
If the FDA determines that a device is not “substantially equivalent” to a predicate device pursuant to a 510(k) submission, or
if the device is classified into Class III by operation of law, the device sponsor must then fulfill the much more rigorous
premarketing requirements of the PMA process, described above, or seek classification of the device through the de novo
process by submitting a de novo request. This process allows a manufacturer whose novel device is automatically classified into
Class III to request down-classification of its medical device into Class I or Class II on the basis that the device presents low or
moderate risk. If the manufacturer seeks reclassification into Class II, the manufacturer must include a draft proposal for special
controls that are necessary to provide a reasonable assurance of the safety and effectiveness of the medical device. The FDA
may reject the reclassification petition if it identifies a legally marketed predicate device that would be appropriate for a 510(k) or
that general controls would be inadequate to control the risks and special controls cannot be developed. In response to a de
novo request, FDA may classify the device into class I or II. When FDA grants a de novo request, the device is granted marketing
authorization and further can serve as a predicate for future devices of that type, including for 510(k)s.
Laboratory Developed Tests (LDTs)
The FDA has generally considered LDTs to be in vitro diagnostic products that are intended for clinical use and that are
designed, manufactured and used within a single clinical laboratory certified under the Clinical Laboratory Improvement
Amendments of 1988 (“CLIA”) and meeting the regulator requirements under CLIA to perform high complexity testing. The FDA
takes the position that it has the authority to regulate such tests as devices under the FDCA. The FDA has historically exercised
enforcement discretion, meaning FDA has not enforced premarket review or other applicable FDA requirements with respect to
LDTs. On May 6, 2024, the FDA issued the LDT Final Rule amending FDA’s regulations to make explicit that IVDs are medical
devices under the Federal Food, Drug, and Cosmetic Act or FDCA, including when the IVD manufacturer is a laboratory. The LDT
Final Rule would have required companies to obtain FDA clearance in order to continue marketing their LDTs. Along with this
amendment, FDA finalized a policy under which FDA was set to begin a phased implementation of IVD requirements over the
course of four years. These phases were set to begin in May 2025. However, on March 31, 2025, in a suit before the U.S. District
Court for the Eastern District of Texas, the court vacated the FDA's LDT Final Rule, outlining its disagreement with FDA’s
expansion and interpretation of the definition of “device” and the agency’s overall interpretation of its authority to regulate LDTs
under the FDCA. As a result of this decision, the LDT Final Rule will not go into effect in May 2025 and its future is uncertain.
–
European Union Regulation for Drug Development and Registration
Privacy and Security
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We may be subject to diverse laws and regulations relating to data privacy and security as a result of our employee data or
other personal information that we may collect. In addition, if we do collect personal data as part of any clinical trials or other
testing, we would be subject to regulatory obligations. This includes, (i) in the European Union, or EU, and the European Economic
Area, or EEA, the EU General Data Protection Regulation, or EU GDPR, (ii) in the United Kingdom, or UK, the UK GDPR. EU member
states are also able to legislate separately on health and genetic information, and we must comply with these local laws where we
operate. For example, in France, the conduct of clinical trials is subject to compliance with reference methodologies (such as
MR-001) imposing stringent rules to process health-related information.
Preclinical and Clinical Development
In the European Economic Area (which is comprised of the 27 Member States of the European Union plus Norway, Iceland
and Liechtenstein), our drug candidates are also subject to extensive regulatory requirements. As in the United States, medicinal
products can only be marketed if a marketing authorization from the competent regulatory authorities has been obtained.
Similar to the United States, the various phases of preclinical and clinical research in the EEA are subject to significant
regulatory controls.
In the EEA, clinical trials are governed by the Clinical Trials Regulation (EU) No 536/2014, or CTR, which entered into
application on January 31, 2022 repealing and replacing the former Clinical Trials Directive 2001/20, or CTD, and related national
implementing legislation of EEA countries. As from January 31, 2023, all new clinical trial applications are registered pursuant to
the CTR. Trials approved under the CTD before January 30, 2023 and continuing beyond January 31, 2025 had to be transitioned to
the CTR.
The CTR is intended to harmonize and streamline clinical trial authorizations, simplify adverse-event reporting procedures,
improve the supervision of clinical trials and increasing their transparency. Specifically, the Regulation, which is directly
applicable in all EEA countries, introduces a streamlined application procedure through a single-entry point, the "EU portal", the
Clinical Trials Information System, or CTIS; a single set of documents to be prepared and submitted for the application; as well as
simplified reporting procedures for clinical trial sponsors. A harmonized procedure for the assessment of applications for clinical
trials has been introduced and is divided into two parts. Part I assessment is led by the competent authorities of a reporting
Member State selected by the trial sponsor and relates to clinical trial aspects that are considered to be scientifically harmonized
across EEA countries. This assessment is then submitted to the competent authorities of all concerned Member States in which
the trial is to be conducted for their review. Part II is assessed separately by the competent authorities and Ethics Committees in
each concerned Member State. Individual EEA countries retain the power to authorize the conduct of clinical trials on their
territory.
European Union Drug Review and Approval
In the EEA, medicinal products can only be commercialized after obtaining a Marketing Authorization, or MA.
To obtain an MA for a product in the EEA, an applicant must submit a Marketing Authorization Application, or MAA, either
under a centralized procedure administered by the EMA or one of the procedures administered by the Competent Authorities of
EEA countries (decentralized procedure, national procedure or mutual recognition procedure). An MA may be granted only to an
applicant established in the EEA.
The centralized procedure provides for the grant of a single MA by the European Commission that is valid for all EEA
countries. Pursuant to Regulation (EC) No 726/2004, the centralized procedure is compulsory for specific products, including for
human drugs that are (i) derived from biotechnological processes, (ii) officially designated as orphan medicinal products, (iii)
advanced therapy medicinal products, or ATMPs, and (iv) contain a new active substance indicated for the treatment of HIV/
AIDS, cancer, neurodegenerative diseases, diabetes, auto-immune and other immune dysfunctions and viral diseases. For
products with a new active substance indicated for the treatment of other diseases and products that are highly innovative or for
which a centralized process is in the interest of patients, authorization through the centralized procedure is optional on related
approval. Under the centralized procedure, the EMA’s Committee for Medicinal Products for Human Use, or CHMP, conducts the
initial assessment of a product. The CHMP is also responsible for several post-authorization and maintenance activities, such as
the assessment of modifications or extensions to an existing MA.
Under the centralized procedure in the EU, the maximum timeframe for the evaluation of an MAA and delivery of the CHMP
opinion is 210 days, excluding clock stops when additional information or written or oral explanation is to be provided by the
applicant in response to questions of the CHMP. Accelerated assessment may be granted by EMA in exceptional cases, when a
medicinal product targeting an unmet medical need is expected to be of major interest from the point of view of public health
and, in particular, from the viewpoint of therapeutic innovation. If EMA accepts a request for accelerated assessment, the time
limit of 210 days will be reduced to 150 days (excluding clock stops). EMA can, however, revert to the standard time limit for the
centralized procedure if it considers that it is no longer appropriate to conduct an accelerated assessment.
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Unlike the centralized authorization procedure, the decentralized MA procedure requires a separate application to, and
leads to separate approval by, the competent authorities of each EEA country in which the product is to be marketed. This
application is identical to the application that would be submitted to the EMA for authorization through the centralized
procedure. The reference Member State prepares a draft assessment and drafts of the related materials within 120 days after
receipt of a valid application. The resulting assessment report is submitted to the concerned Member States who, within 90 days
of receipt, must decide whether to approve the assessment report and related materials. If a concerned Member State cannot
approve the assessment report and related materials due to concerns relating to a potential serious risk to public health,
disputed elements may be referred to the Heads of Medicines Agencies’ Coordination Group for Mutual Recognition and
Decentralised Procedures – Human, or CMDh, for review. The subsequent decision of the European Commission is binding on all
EEA countries.
The mutual recognition procedure allows companies that have a medicinal product already authorized in one EEA country to
apply for this authorization to be recognized by the competent authorities in other EEA countries. Like the decentralized
procedure, the mutual recognition procedure is based on the acceptance by the competent authorities of EEA countries of the
MA of a medicinal product by the competent authorities of other EEA countries. The holder of a national MA may submit an
application to the competent authority of an EEA country requesting that this authority recognize the MA delivered by the
competent authority of another EEA country.
An MA has, in principle, an initial validity of five years. The MA may be renewed after five years on the basis of a re-evaluation
of the risk-benefit balance by the EMA or by the competent authority of the EEA country in which the original MA was granted. To
support the application, the MA holder must provide the EMA or the competent authority with a consolidated version of the
eCTD (Common Technical Document) providing up-to-date data concerning the quality, safety and efficacy of the product,
including all variations introduced since the MA was granted, at least nine months before the MA ceases to be valid. The
European Commission or the competent authorities of EEA countries may decide on justified grounds relating to
pharmacovigilance, to proceed with one further five year renewal period for the MA. Once subsequently definitively renewed, the
MA shall be valid for an unlimited period. Any authorization which is not followed by the actual placing of the medicinal product
on the EEA market (for a centralized MA) or on the market of the authorizing EEA country within three years after authorization
ceases to be valid (the so-called sunset clause).
Innovative products that target an unmet medical need and are expected to be of major public health interest may be
eligible for a number of expedited development and review programs, such as the Priority Medicines, or PRIME, scheme, which
provides incentives similar to the breakthrough therapy designation in the U.S. PRIME is a voluntary scheme aimed at enhancing
the EMA’s support for the development of medicinal products that target unmet medical needs. Eligible products must target
conditions for which there is an unmet medical need (there is no satisfactory method of diagnosis, prevention or treatment in the
EU or, if there is, the new medicinal product will bring a major therapeutic advantage) and they must demonstrate the potential to
address the unmet medical need by introducing new methods of therapy or improving existing ones. Benefits accrue to sponsors
of product candidates with PRIME designation, including but not limited to, early and proactive regulatory dialogue with the EMA,
frequent discussions on clinical trial designs and other development program elements, and potentially accelerated MAA
assessment once a dossier has been submitted.
In the EEA, a “conditional” MA may be granted in cases where all the required safety and efficacy data are not yet available.
The European Commission may grant a conditional MA for a medicinal product if it is demonstrated that all of the following
criteria are met: (i) the benefit-risk balance of the medicinal product is positive; (ii) it is likely that the applicant will be able to
provide comprehensive data post-authorization; (iii) the medicinal product fulfills an unmet medical need; and (iv) the benefit of
the immediate availability to patients of the medicinal product is greater than the risk inherent in the fact that additional data are
still required. The conditional MA is subject to conditions to be fulfilled for generating the missing data or ensuring increased
safety measures. It is valid for one year and must be renewed annually until all related conditions have been fulfilled. Once any
pending studies are provided, the conditional MA can be converted into a traditional MA. However, if the conditions are not
fulfilled within the timeframe set by the EMA and approved by the European Commission, the MA will cease to be renewed.
An MA may also be granted “under exceptional circumstances” where the applicant can show that it is unable to provide
comprehensive data on efficacy and safety under normal conditions of use even after the product has been authorized and
subject to specific procedures being introduced. These circumstances may arise in particular when the intended indications are
very rare and, in the state of scientific knowledge at that time, it is not possible to provide comprehensive information, or when
generating data may be contrary to generally accepted ethical principles. Like a conditional MA, an MA granted in exceptional
circumstances is reserved to medicinal products intended to be authorized for treatment of rare diseases or unmet medical
needs for which the applicant does not hold a complete data set that is required for the grant of a standard MA. However, unlike
the conditional MA, an applicant for authorization in exceptional circumstances is not subsequently required to provide the
missing data. Although the MA “under exceptional circumstances” is granted definitively, the risk-benefit balance of the
medicinal product is reviewed annually, and the MA will be withdrawn if the risk-benefit ratio is no longer favorable.
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EU Pediatric Development
In the EEA, Regulation (EC) No 1901/2006 provides that all marketing authorization applications for new medicinal products
must include the results of trials conducted in the pediatric population, in compliance with a pediatric investigation plan, or PIP,
agreed with the EMA’s Pediatric Committee, or PDCO. The PIP sets out the timing and measures proposed to generate data to
support a pediatric indication of the medicinal product for which marketing authorization is being sought. The PDCO may grant a
deferral of the obligation to implement some or all of the measures provided in the PIP until there are sufficient data to
demonstrate the efficacy and safety of the product in adults. Furthermore, the obligation to provide pediatric clinical trial data
can be waived by the PDCO when these data are not needed or appropriate because the product is likely to be ineffective or
unsafe in children, the disease or condition for which the product is intended occurs only in adult populations, or when the
product does not represent a significant therapeutic benefit over existing treatments for pediatric patients. Once the marketing
authorization is obtained in all EEA countries and study results are included in the product information, even when negative, the
product is eligible for a six-month extension to the Supplementary Protection Certificate, or SPC, if any is in effect at the time of
authorization or, in the case of orphan medicinal products, a two-year extension of orphan market exclusivity.
Orphan Drugs in the EU
In the EEA, Regulation (EC) No 141/2000 as amended by Regulation 847/2000, as implemented by Regulation (EC) No.
847/2000, provides that a drug will be designated as an orphan drug if its sponsor can establish:
•
that it is intended for the diagnosis, prevention or treatment of a life-threatening or chronically debilitating condition
affecting not more than five in ten thousand persons in the European Union when the application is made, or that it is
intended for the diagnosis, prevention or treatment of a life-threatening, seriously debilitating or serious and chronic
condition in the European Union and that without incentives it is unlikely that the marketing of the drug in the European
Union would generate sufficient return to justify the necessary investment; and
•
that there exists no satisfactory method of diagnosis, prevention or treatment of the condition in question that has been
authorized in the European Union or, if such method exists, that the drug will be of significant benefit to those affected by
that condition.
Regulation (EC) No 847/2000 sets out further provisions for implementation of the criteria for designation of a drug as an
orphan drug. An application for the designation of a drug as an orphan drug must be submitted at any stage of development of
the drug but before filing of a MAA. A MA for an orphan drug may only include indications designated as orphan. For non-orphan
indications treated with the same active pharmaceutical ingredient, as a separate MA has to be sought.
Orphan medicinal product designation entitles an applicant to incentives such fee reductions or fee waivers, protocol
assistance, and access to the centralized marketing authorization procedure. If an EU MA in respect of an orphan drug is granted
pursuant to Regulation (EC) No 726/2004, the EMA cannot, for a period of usually 10 years, accept another application for a MA, or
grant a MA or accept an application to extend an existing MA, for the same therapeutic indication, in respect of a similar drug.
This period may however be reduced to six years if, at the end of the fifth year, it is established, in respect of the drug concerned,
that the criteria for orphan drug designation are no longer met, including, when it is shown on the basis of available evidence that
the product is sufficiently profitable not to justify maintenance of market exclusivity or where the prevalence of the condition has
increased above the threshold. The exclusivity period may increase to 12 years if, among other things, the MAA includes the
results of studies from an agreed pediatric investigation plan. Notwithstanding the foregoing, a MA may be granted, for the same
therapeutic indication, to a similar drug if:
•
the holder of the MA for the original orphan drug has given its consent to the second applicant;
•
the manufacturer for the original orphan drug is unable to supply sufficient quantities of the drug; or
•
the second applicant can establish in the application that the second drug, although similar to the orphan drug already
authorized, is safer, more effective or otherwise clinically superior. Regulation (EC) No 847/2000 lays down definitions of
the concepts ‘similar medicinal product’ and ‘clinical superiority’.
Orphan drug designation does not shorten the duration of the regulatory review and approval process.
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EU Data and Market Exclusivity
The EU provides opportunities for data and market exclusivity related to MAs. Upon receiving marketing authorization,
innovative, medicinal products are generally entitled to receive eight years of data exclusivity followed by an additional two years
of market exclusivity. Data exclusivity, if granted, prevents generic or biosimilar applicants from referencing the innovator’s pre-
clinical and clinical trial contained in the dossier of the reference product when submitting a generic application or biosimilar
MAA for eight years from the date of authorization of the reference product. During the additional two-year period of market
exclusivity, a generic or biosimilar MAA can be submitted, and the innovator’s data may be referenced, but no generic or
biosimilar product can be marketed in the EU until ten years have elapsed from the initial MA of the reference product in the EU.
The overall ten-year period will be extended for a further year to a maximum of 11 years if, during the first eight years of those ten
years, the MA holder obtains an authorization for one or more new therapeutic indications which, during the scientific evaluation
prior to their authorization, are held to bring a significant clinical benefit in comparison with existing therapies. A sponsor can
also choose to use positive data from the agreed pediatric program for this additional authorization, however if a sponsor decides
for this, it is no longer possible to request the 6-month SPC extension as explained under the EU pediatric regulation. However,
there is no guarantee that a product will be considered by the EU’s regulatory authorities to be a new chemical/biological entity,
and products may not qualify for data exclusivity. In the EEA, there is a special regime for biosimilars, or biological medicinal
products that are similar to a reference medicinal product but that do not meet the definition of a generic medicinal product. For
such products, the results of appropriate preclinical or clinical trials must be provided in support of an MAA. Guidelines from the
EMA detail the type of quantity of supplementary data to be provided for different types of biological product.
EU Regulatory Requirements after Marketing Authorization
Where an MA is granted in relation to a medicinal product in the EU, the holder of the MA is required to comply with a range
of regulatory requirements applicable to the manufacturing, marketing, promotion and sale of medicinal products.
Similar to the United States, both MA holders and manufacturers of medicinal products are subject to comprehensive
regulatory oversight by the EMA, the European Commission and/or the competent regulatory authorities of the individual EEA
countries. The holder of an MA must establish and maintain a pharmacovigilance system and appoint an individual qualified
person for pharmacovigilance who is responsible for oversight of that system. Key obligations include expedited reporting of
suspected serious adverse reactions and submission of periodic safety update reports, or PSURs.
All new MAAs must include a risk management plan, or RMP, describing the risk management system that the company will
put in place and documenting measures to prevent or minimize the risks associated with the product. The regulatory authorities
may also impose specific obligations as a condition of the MA. Such risk-minimization measures or post-authorization obligations
may include additional safety monitoring, more frequent submission of PSURs, or the conduct of additional clinical trials or post-
authorization safety studies. RMPs and PSURs are routinely available to third parties requesting access, subject to limited
redactions.
In the EEA, the advertising and promotion of medicinal products are subject to both EU and EEA countries’ laws governing
promotion of medicinal products, interactions with physicians and other healthcare professionals, misleading and comparative
advertising and unfair commercial practices. Although general requirements for advertising and promotion of medicinal products
are established under EU legislation, the details are governed by regulations in individual EEA countries and can differ from one
country to another. For example, applicable laws require that promotional materials and advertising in relation to medicinal
products comply with the product’s Summary of Product Characteristics, or SmPC, as approved by the competent authorities in
connection with an MA. The SmPC is the document that provides information to physicians concerning the safe and effective use
of the product. Promotional activity that does not comply with the SmPC is considered off-label and is prohibited in the EEA.
Direct-to-consumer advertising of prescription medicinal products is also prohibited in the EEA.
In Vitro Diagnostics
On 26 May 2022, Regulation (EU) 2017/746 on in vitro diagnostic medical devices (IVDs), or the IVDR, entered into application,
repealing and replacing Directive 98/79/EC concerning IVDs, or IVDD. The IVDR and its associated guidance documents and
harmonized standards govern, among other things, device design and development, preclinical and clinical or performance
testing, premarket conformity assessment, registration and listing, manufacturing, labeling, storage, claims, sales and
distribution, export and import and post-market surveillance, vigilance, and market surveillance. IVDs must comply with the
General Safety and Performance Requirements, or GSPRs, set out in Annex I of the IVDR. Compliance with these requirements is
a prerequisite to be able to affix the CE mark to devices, without which they cannot be marketed or sold in the EEA. To
demonstrate compliance with the GSPRs provided in the IVDR and obtain the right to affix the CE mark, medical devices
manufacturers must undergo a conformity assessment procedure, which varies according to the type of IVD and its
classification. Apart from low risk IVDs (Class A which are not sterile), in relation to which the manufacturer may issue an EU
Declaration of Conformity based on a self-assessment of the conformity of its products with the GSPRs, a conformity assessment
procedure requires the intervention of a Notified Body, which is an organization designated by a competent authority of an EEA
country to conduct conformity assessments. Depending on the relevant conformity assessment procedure, the Notified Body
audits and examines the technical documentation and the quality system for the manufacture, design and final inspection of the
medical devices. The Notified Body issues a CE Certificate of Conformity following successful completion of a conformity
assessment procedure conducted in relation to the medical device and its manufacturer and their conformity with the GSPRs.
This Certificate and the related conformity assessment process entitles the manufacturer to affix the CE mark to its medical
devices after having prepared and signed a related EC Declaration of Conformity.
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As a general rule, demonstration of conformity of medical devices and their manufacturers with the GSPRs must be based,
among other things, on the evaluation of clinical data supporting the safety and performance of the products during normal
conditions of use. Specifically, a manufacturer must demonstrate that the device achieves its intended performance during
normal conditions of use and that the known and foreseeable risks, and any adverse events, are minimized and acceptable when
weighed against the benefits of its intended performance, and that any claims made about the performance and safety of the
device (e.g., product labeling and instructions for use) are supported by suitable evidence. This assessment must be based on
clinical data, which can be obtained from (1) clinical studies conducted on the devices being assessed, (2) scientific literature
from similar devices whose equivalence with the assessed device can be demonstrated or (3) both clinical studies and scientific
literature. The conduct of clinical studies in the EEA is governed by detailed regulatory obligations. These may include the
requirement of prior authorization by the Competent Authorities of the country in which the study takes place and the
requirement to obtain a positive opinion from a competent Ethics Committee. This process can be expensive and time-
consuming. After a device is placed on the market, it remains subject to significant regulatory requirements.
French Regulatory Framework on Transfer of Values to Health Care Professionals
The French Public Health Code provides for two sets of requirements regarding the transfer of values by health care
companies to health care professionals:
•
The Anti-Benefit regime prohibits companies that produce or market healthcare products or provide services related to
healthcare products, or healthcare companies, from offering or promising benefits in cash or kind to healthcare
professionals admitted to practice in France (Article L.1453-3 of the French Public Health Code). In certain limited
circumstances, benefits may be excluded from this general prohibition. Exceptions include benefits of negligible value
(Article L.1453-6 of the French Public Health Code). Additional exceptions apply to benefits such as remuneration,
compensation or disbursements to healthcare professionals in relation to scientific research, speaker fees or hospitality
provided in the course of scientific event. This includes benefits provided on the basis of a prior written agreement
concluded between the parties where, depending on the amount of the benefit, the benefit is either notified to or
authorized by the French competent authority prior to granting the benefit (Article L.1453-7 of the French Public Health
Code).
•
The Transparency or Sunshine regime, set out by Article L.1453-1 of the Public Health Code, requires healthcare
companies in France to publicly disclose the benefits and fees paid to healthcare professionals admitted to practice in
France where the related amount is 10 euros or above. The related agreements concluded between the parties, along with
detailed information about each agreement (the precise subject matter of the agreement, the date of signature of the
agreement, its end date, the total amount paid to the healthcare professional, etc.) must also be disclosed. Information
must be submitted to the website https://www.entreprisestransparence.sante.gouv.fr and will be disclosed twice a year
through this website.
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Reimbursement
Significant uncertainty exists in the United States as to the coverage and reimbursement status of any drug candidates for
which we obtain regulatory approval. Sales of our products will depend, in part, on the extent to which our products, once
approved, will be covered and reimbursed by third-party payors, such as government health programs, commercial insurance and
managed healthcare organizations. These third-party payors are increasingly reducing reimbursement levels for medical products
and services. The process for determining whether a third-party payor will provide coverage for a drug product typically is
separate from the process for setting the price of a drug product or for establishing the reimbursement rate that a payor will pay
for the drug product once coverage is approved. Third-party payors may limit coverage to specific drug products on an approved
list, also known as a formulary, which might not include all of the approved drugs for a particular indication.
To secure coverage and reimbursement for any product candidate that might be approved for sale, we may need to conduct
expensive pharmacoeconomic studies in order to demonstrate the medical necessity and cost-effectiveness of the product
candidate.
These costs are in addition to the costs required to obtain FDA or other comparable regulatory approvals. Whether or not we
conduct such studies, our drug candidates may not be considered medically necessary or cost-effective. A third-party payor’s
decision to provide coverage for a drug product does not imply that an adequate reimbursement rate will be approved. Further,
no uniform policy for coverage and reimbursement exists in the United States, and coverage and reimbursement can differ
significantly from payor to payor. One payor’s determination to provide coverage for a product does not assure that other payors
will also provide coverage, and adequate reimbursement, for the product. Third-party reimbursement may not be sufficient to
enable us to realize an appropriate return on our investment in product development.
With respect to elafibranor in the PBC indication, Ipsen, as the laboratory partner, is responsible for marketing the product to
healthcare providers and is responsible for seeking coverage and reimbursement from third party payors in all markets.
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With respect to NASHNext®, the LDT powered by NIS4® technology, Labcorp, as the laboratory partner, is responsible for
marketing the product to healthcare providers and is responsible for seeking coverage and reimbursement from third party
payors, including Medicare and Medicaid. Separately, our strategy is to seek FDA marketing authorization for a kit-based IVD
powered by NIS4® or its improvements to allow us to commercialize the test within the United States as a medical device. In
parallel, we intend to progress towards submitting an application for a CE Certificate of Conformity to a European Notified Body
in the EEA to enable CE marking, alone or with a potential future partner. In Europe, we are still finalizing our plans but are
considering, if the appropriate approvals or certifications are obtained, selling the IVD powered by NIS4® through a distributor or
commercial partner to independent, smaller laboratories, as there are fewer large central laboratories in these regions. We, or our
collaborators, will be required to obtain coverage and reimbursement for this test separate and apart from the coverage and
reimbursement we plan to seek for our product candidates, if approved. There is significant uncertainty regarding our ability to
obtain coverage and adequate reimbursement in some or all commercial territories for this test for the same reasons applicable
to our product candidates.
The containment of healthcare costs has become a priority of federal, state and foreign governments, and the prices of drugs
have been a focus in this effort. The United States federal government, state legislatures and foreign governments have shown
significant interest in implementing cost-containment programs, including price controls, restrictions on reimbursement,
utilization management and requirements for substitution of generic products. Adoption of price controls and cost-containment
measures, and adoption of more restrictive policies in jurisdictions with existing controls and measures, could further limit our
net revenue and results. Decreases in third-party reimbursement for our drug candidates or a decision by a third-party payor to
not cover our drug candidates could reduce physician usage of the drug candidates and could have a material adverse effect on
our sales, results of operations and financial condition.
In addition, in some foreign countries, the proposed pricing and reimbursement for a drug must be approved before it may be
lawfully marketed. The requirements governing drug pricing and reimbursement vary widely from country to country.
The complexity of this process explains why, there can be no assurance that any country that has price controls or
reimbursement limitations for pharmaceutical products will allow favorable reimbursement and pricing arrangements for any of
our drug candidates. Historically, products launched in the EEA do not follow price structures of the United States and generally
prices tend to be significantly lower.
In the EEA, pricing and reimbursement schemes vary widely from country to country. Some countries provide that products
may be marketed only after a reimbursement price has been agreed. Other countries may require the completion of additional
studies that compare the cost-effectiveness of a particular product candidate to currently available therapies (so called health
technology assessments) in order to obtain reimbursement or pricing approval. For example, some EEA countries may approve a
specific price for a product, or they may instead adopt a system of direct or indirect controls on the profitability of the company
placing the product on the market. Other EEA countries allow companies to fix their own prices for products but monitor and
control prescription volumes and issue guidance to physicians to limit prescriptions. Recently, many EEA countries have
increased the amount of discounts that pharmaceutical companies are requirement to offer. These efforts could continue as
countries attempt to manage healthcare expenditures. The downward pressure on healthcare costs in general, particularly
prescription products, has become intense. As a result, increasingly high barriers are being erected to the entry of new products
onto national markets. Political, economic, and regulatory developments may further complicate pricing negotiations, and pricing
negotiations may continue after reimbursement has been obtained. Reference pricing used by various EEA countries, and parallel
trade (arbitrage between low-priced and high-priced member states), can further reduce prices.
In addition, some EEA countries may require the completion of additional studies that compare the cost-effectiveness of a
particular medicinal product candidate to currently available therapies. Health Technology Assessment, or HTA, of medicinal
products is becoming an increasingly common part of the pricing and reimbursement procedures in some EEA countries,
including those representing the larger markets. The HTA process, which is currently governed by national laws in each EEA
country, is the procedure to assess therapeutic, economic and societal impact of a given medicinal product in the national
healthcare systems of the individual country. The outcome of an HTA will often influence the pricing and reimbursement status
granted to these medicinal products by the competent authorities of individual EEA countries. The extent to which pricing and
reimbursement decisions are influenced by the HTA of the specific medicinal product currently varies between EEA countries. In
December 2021, the EU Parliament adopted the HTA Regulation which aims to harmonize the clinical benefit assessment of HTA
across the EEA, the consequences of which remain unknown at this time. In addition, a joint EU HTA process is being
implemented in phases, starting with oncology medicines and advanced therapy medicinal products (ATMPs) from 2025, before
expanding to orphan drugs in 2028 and other products in 2030. It will introduce EU-level joint scientific consultations (JSCs) and
joint clinical assessments (JCAs) that will serve as the basis for national value assessments and price negotiations. 25 JCAs are
planned to be conducted by the EU HTA Coordination Group (HTACG) in 2025.
While preparations gathered pace in 2024, there are short-term risks and uncertainties related to the new JCA framework,
especially as regards methodologies (i.e. comparators and endpoints), potential delayed assessments, and the disruption caused
to national HTA processes in adopting EU HTA without additional resources.
Furthermore, the new EU HTA regulation will trigger increased workload and higher evidence requirements at launch,
requiring manufacturers to adapt their operating models. As countries and companies transition to the new processes, EU-wide
coordination on HTA is anticipated to gain momentum, albeit slower than initially expected.
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Another priority of the European Commission is to secure the uninterrupted supply of medicines in Europe. In 2024 it
launched the Critical Medicines Alliance, paving the way for a possible Critical Medicines Act in the future. To mitigate drug
shortages, the European Commission is pursuing several actions including reshoring of generics production, compulsory
stockpiling, and joint procurement of the most critical medicines. The anticipated revenue from and growth prospects for
products in the EEA could be negatively affected by the HTA Regulation.
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Healthcare Reform
In the United States and some foreign jurisdictions, there have been, and continue to be, several legislative and regulatory
changes and proposed changes regarding the healthcare system that could prevent or delay marketing approval of product
candidates, restrict or regulate post-approval activities, and affect the ability to profitably sell product candidates for which
marketing approval is obtained. Among policy makers and payors in the United States and elsewhere, there is significant interest
in promoting changes in healthcare systems with the stated goals of containing healthcare costs, improving quality and/or
expanding access. In the United States, the pharmaceutical industry has been a particular focus of these efforts and has been
significantly affected by major legislative initiatives.
For example, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation
Act, or collectively, ACA, enacted in the United States in March 2010, has had a significant impact on the healthcare industry. The
ACA, among other things, expanded and increased industry rebates for drugs covered under Medicaid programs and made
changes to the coverage requirements under the Medicare Part D program.
There have been judicial, executive and Congressional challenges, as well as a number of proposed and enacted health
reform measures that have impacted certain aspects of the ACA. For example, on August 16, 2022, President Biden signed the
Inflation Reduction Act of 2022, or IRA, into law, which among other things, extends enhanced subsidies for individuals
purchasing health insurance coverage in ACA marketplaces through plan year 2025. The IRA also eliminates the "donut hole"
under the Medicare Part D program beginning in 2025 by significantly lowering the beneficiary maximum out-of-pocket cost and
creating a new manufacturer discount program. It is possible that the ACA will be subject to additional judicial or Congressional
challenges in the future. It is unclear how any such challenges or the health reform measures of the Biden Administration will
affect the ACA. Although a full repeal of the IRA may be unlikely due to budgetary impact, the new U.S. administration could
change some of the IRA provisions, including Medicare drug price negotiations.
In addition, there has been heightened governmental scrutiny over the manner in which manufacturers set prices for their
marketed products. Such scrutiny has resulted in several recent U.S Presidential Orders, U.S. Congressional inquiries and
proposed and enacted federal and state legislation designed to, among other things, bring more transparency to drug pricing,
review the relationship between pricing and manufacturer patient programs, reduce the cost of drugs under Medicare and reform
government program reimbursement methodologies for drug products. At the federal level, for example, the IRA, among other
things (i) directs the Department of Health and Human Services, or HHS, to negotiate the price of certain high-expenditure,
single-source drugs and biologics covered under Medicare and (ii) imposes rebates under Medicare Part B and Medicare Part D to
penalize price increases that outpace inflation. These provisions took effect progressively starting in fiscal year 2023, although
they may be subject to legal challenges. President Trump rescinded former U.S. President Biden's October 14, 2022 executive
order directing HHS to report on how the Center for Medicare and Medicaid Innovation can be further leveraged to test new
models for lowering drug costs for Medicare and Medicaid beneficiaries. At the state level, legislatures have increasingly passed
legislation and implemented regulations designed to control pharmaceutical product pricing, including price or patient
reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency
measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.
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Other U.S. Healthcare Laws and Compliance Requirements
Our business operations in the United States and our arrangements with clinical investigators, healthcare providers,
consultants, third-party payors and patients expose us to broadly applicable federal and state fraud and abuse and other
healthcare laws. These laws may impact, among other things, our research, and if approved, proposed sales, marketing and
education programs of our drug candidates. The laws that may affect our ability to operate include, among others:
•
the U.S. federal Anti-Kickback Statute, which prohibits, among other things, persons and entities from knowingly and
willfully soliciting, receiving, offering or paying remuneration (including any kickback, bribe or rebate), directly or indirectly,
in cash or in kind, to induce or reward, or in return for, either the referral of an individual for, or the purchase, lease, order,
or recommendation of, an item, good, facility or service reimbursable under a federal healthcare program, such as the
Medicare and Medicaid programs;
•
federal civil and criminal false claims laws, including the federal civil False Claims Act, which can be enforced by private
individuals acting on behalf of the federal government, through civil whistleblower or qui tam actions, and civil monetary
penalty laws, which prohibits individuals and entities from, among other things, knowingly presenting, or causing to be
presented, claims for payment from Medicare, Medicaid, or other third-party payors that are false or fraudulent, or making
a false statement or record material to payment of a false claim or avoiding, decreasing, or concealing an obligation to pay
money to the federal government, including for example, providing inaccurate billing or coding information to customers
or promoting a product off-label;
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•
the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, which created additional federal
criminal statutes that prohibit, among other things, knowingly and willfully executing or attempting to execute a scheme
to defraud any healthcare benefit program, knowingly and willfully embezzling or stealing from a healthcare benefit
program, willfully obstructing a criminal investigation of a healthcare offense, and knowingly and willingly falsifying,
concealing or covering up a material fact or making materially false statements, fictitious, or fraudulent statements in
connection with the delivery of or payment for healthcare benefits, items, or services;
•
the federal Physician Payments Sunshine Act, enacted as part of the ACA, which requires applicable manufacturers of
drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid, or the Children’s
Health Insurance Program, with specific exceptions, to track and annually report to CMS payments and other transfers of
value provided to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), certain
other healthcare professionals (such as physician assistants and nurse practitioners), and teaching hospitals and certain
ownership and investment interests held by physicians and their immediate family members;
•
HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, or HITECH, and their
implementing regulations, which imposes certain requirements on certain healthcare providers, health plans, and
healthcare clearinghouses, known as covered entities, and their business associates, which are individuals and entities
that perform functions or activities on behalf of covered entities that involve protected health information, relating to the
privacy, security and transmission of protected health information; and
•
State and foreign equivalents of each of the above federal laws and regulations, such as: state anti-kickback and false
claims laws which may apply to items or services reimbursed by any third-party payor, including commercial insurers;
state marketing and/or transparency laws applicable to manufacturers that may be broader in scope than the federal
requirements; state laws that require biopharmaceutical companies to comply with the biopharmaceutical industry’s
voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government; state
and local laws that require the registration of pharmaceutical sales representatives; and state and/or foreign laws
governing the privacy and security of health information in certain circumstances, many of which differ from each other in
significant ways and may not have the same effect as HIPAA, thus complicating compliance efforts.
The ACA broadened the reach of the federal fraud and abuse laws by, among other things, amending the intent requirement
of the U.S. federal Anti-Kickback Statute and certain federal criminal healthcare fraud statutes. Pursuant to the statutory
amendment, a person or entity does not need to have actual knowledge of these statutes or specific intent to violate them in
order to have committed a violation. In addition, the ACA provides that a claim including items or services resulting from a
violation of the U.S. federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the federal civil False
Claims Act.
Efforts to ensure that our business arrangements with third parties comply with applicable healthcare laws involves
substantial costs. It is possible that governmental authorities will conclude that our business practices may not comply with
current or future statutes, regulations or case law involving applicable fraud and abuse or other healthcare laws. If our operations
are found to be in violation of any of these laws or any other governmental regulations that may apply to us, we may be subject to,
for example, significant administrative, civil, and/or criminal penalties, damages, fines, disgorgement, contractual damages,
reputational harm, diminished profits and future earnings, imprisonment, exclusion from government funded healthcare
programs, such as Medicare and Medicaid, additional reporting requirements and oversight if we become subject to a corporate
integrity agreement or similar agreement to resolve allegations of non-compliance with these laws and the curtailment or
restructuring of our operations. If the physicians or other healthcare providers or entities with whom we expect to do business
are found to be not in compliance with applicable laws, they may be subject to significant administrative, civil, and/or criminal
sanctions, including exclusions from government funded healthcare programs.
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C.
Organizational Structure
In September 2022, we finalized the acquisition of Versantis AG, and its U.S.-based wholly-owned subsidiary, Versantis, Inc.
Versantis, Inc. does not currently have any operational activities.
In June 2023, we liquidated Versantis Inc., a wholly-owned subsidiary which did not have any operational activities.
D.
Property, Plants and Equipment
Our corporate headquarters are located in Loos, France. To date, the total surface occupied is approximately 5,500 square
meters of office space. The lease for our Loos headquarters continues through March 2029. We also lease office space in Paris,
France, in Cambridge, Massachusetts for our U.S. subsidiary, GENFIT Corp., and in Zurich, Switzerland, for our Swiss subsidiary,
Versantis AG.
Item 4A.
Unresolved Staff Comments.
Not applicable.
Item 5.
Operating and Financial Review and Prospects.
Overview
We are a late-stage clinical biopharmaceutical company dedicated to the discovery and development of innovative drug
candidates and diagnostic solutions targeting liver-related diseases where there is considerable unmet medical need. We are a
pioneer in the discovery and development of drugs for liver diseases with a rich history and strong scientific heritage spanning
almost two decades. Our pipeline now covers the following therapeutic areas with the following drugs at different development
stages (preclinical, Phase 1 and Phase 2), with different mechanisms of action:
Acute on Chronic Liver Failure, or ACLF:
•
VS-01-ACLF,
•
Nitazoxanide, or NTZ,
•
SRT-015,
•
CLM-022,
Hepatic Encephalopathy, or HE:
•
VS-02-HE
Cholangiocarcinoma, or CCA:
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•
GNS561
Urea Cycle Disorder, or UCD, and Organic Acidemia, or OA:
•
VS-01-HAC
In addition, our pipeline includes a diagnostic franchise including NIS2+® in Metabolic dysfunction-Associated
Steatohepatitis (MASH, previously known as NASH, for nonalcoholic steatohepatitis) and TS-01 focusing on blood ammonia
levels.
The worldwide development and commercialization rights in elafibranor for the treatment of PBC and other indications were
licensed to Ipsen Pharma SAS, or Ipsen, through a partnership agreement signed in December 2021, the Ipsen Agreement, with
the exception of Greater China, which is licensed to Terns Pharmaceuticals, Inc., or Terns, in MASH and PBC since June 2019. In
June 2023, we and Ipsen announced positive 52-week interim topline data from the pivotal ELATIVE® Phase 3 trial. In June 2024,
we and Ipsen announced Ipsen’s Iqirvo® (elafibranor) of 80 mg tablets received U.S. FDA accelerated approval as a first-in-class
treatment for Primary Biliary Cholangitis (PBC).
In September 2022, we acquired Versantis AG, a private Swiss-based clinical stage biotechnology company, focused on
addressing the growing unmet medical needs in liver diseases. With the acquisition, we added the following Versantis' assets to
our pipeline: VS-01, VS-02 and TS-01.
We are also developing GNS561 in CCA following the execution in December 2021 of an exclusive license to develop and
commercialize GNS561 in the United States, Canada and Europe (including United Kingdom and Switzerland) from Genoscience
Pharma. In January 2025, we acquired all patents and patent applications, know-how, and data held by Genoscience Pharma
necessary for the development, manufacturing, and marketing of GNS561 worldwide (“GNS561 Technology”) regardless of its
therapeutic indication, form, dosage, or formulation, incorporating in whole or in part the GNS561 Technology (including as an
active ingredient) or manufactured using this Technology. As a result of the acquisition, the License and Development Agreement
described above was terminated.
In 2023, we in-licensed two additional investigational drugs in ACLF. SRT-015 is an ASK1 inhibitor in-licensed from Seal Rock
Therapeutics in acute liver diseases. CLM-022 is a small molecule inhibitor targeting the NLRP3 inflammasome in-licensed from
Celloram.
We are also developing a MASH biomarker-based diagnostic program, called NIS4® and its improvement, NIS2+®, a
technology to identify patients with MASH who may be appropriate candidates for drug therapy. In January 2019, we entered into
a first license agreement with Labcorp to allow Labcorp to develop and commercialize NIS4® in the clinical research space
through their drug development subsidiary, Covance. A second exclusive license agreement with Labcorp to allow them to
develop and commercialize an LDT powered by NIS4® technology for use in routine clinical diagnostic testing in the United States
and Canada and in 2021, Labcorp launched commercialization of NASHNext®, an LDT powered by our NIS4® technology. The
technology is also licensed to Q Squared Solutions LLC (Q2) in the clinical research field.
In 2021, we recorded revenue from the receipt of an upfront payment under the Ipsen Agreement (part of which was
recognized in 2022, 2023 and 2024). In 2023, we recorded revenue from a first milestone payment from Ipsen, which was triggered
by the acceptance of the NDA filing by the FDA and MAA by the EMA for accelerated approval of elafibranor in PBC in December
2023. In 2024, we recorded a second milestone payment from Ipsen, which was triggered by the first commercial sale of Iqirvo®
(elafibranor) in the U.S. in June 2024. In addition, in 2024 we recorded royalty revenue based on Iqirvo® (elafibranor) sales. We
expect to receive additional milestone payments and revenues from the Ipsen agreement in 2025 if elafibranor receives a third
pricing and reimbursement approval in a major European country. However, we do not expect to generate material revenue from
other product sales unless and until we successfully complete clinical development of, obtain marketing approval for and
commercialize our drug candidates and LDT and IVD tests. Clinical development, regulatory approval and commercial launch of a
product candidate or diagnostic can take several years and are subject to significant uncertainty.
Historically, we have financed our operations and growth through share capital issuances, convertible bonds, conditional
advances, subsidies from Banque Publique d'Investissement (BPI France), research tax credits, and through the upfront
milestone of €120 million from the Ipsen agreement. In 2006, we completed the initial public offering of our ordinary shares on the
Alternext market of Euronext in Paris and transferred to the Euronext Paris in April 2014. Between 2010 and 2016, we raised a total
of over €220 million in gross proceeds from the issuance of ordinary shares. In October 2017, we issued €180 million in convertible
bonds. In March 2019, we completed a global offering consisting of an initial public offering of our American Depositary Shares, or
ADSs, in the United States, and a private placement of our ordinary shares in Europe and other countries outside the United
States, including France. Aggregate gross proceeds from the global offering, before deducting underwriting discounts and
commissions and offering expenses payable by us, were approximately $155.4 million. In 2021, Ipsen also became a shareholder of
GENFIT through the purchase of 3,985,239 newly issued shares representing 8% of GENFIT after issuance, via a €28 million
investment. There have been no subsequent equity raises.
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In addition, in March 2025, GENFIT completed a royalty financing transaction by which GENFIT issues bonds of up to €185
million to HCRx after unanimous OCEANE bondholder approval, triggering a €130 million initial payment received in March 2025,
with potential for an additional €55 million upon achieving near-term milestones based on the net sales as measured under the
Ipsen Agreement. As part of the Royalty Financing, HCRx has the right to receive the royalties payable to GENFIT based on annual
net sales (as defined in the Ipsen Agreement) of Iqirvo® (elafibranor) under the Ipsen Agreement, up to an agreed cap that
increases over time if the specific cap is not met by certain deadlines, after which all future royalties will revert back to GENFIT.
Since our inception, we have incurred significant operating losses.
Financial Operations Overview
Revenue and Other Income
In 2019, we entered into two licensing agreements, one with Terns with respect to the development and commercialization of
elafibranor in Greater China, or the Terns Agreement, and one with Covance, Labcorp’s drug development business, with respect
to the development and deployment of a test powered by NIS4® technology in the clinical research space. Pursuant to the Terns
Agreement, we received an upfront payment of $35 million in 2019, and are eligible for up to $193 million in clinical, regulatory and
commercial milestone payments, as well as mid-teen percentage royalties (For more information see Note 29 - "Commitments,
contingent liabilities and contingent assets" to our consolidated financial statements included in this annual report). In 2020, we
entered into a second agreement with Labcorp, for a five-year exclusive licensing agreement with Labcorp to develop and
commercialize an LDT powered by NIS4® technology and its improvements in the clinical diagnostic market. In May 2021, we
signed a worldwide, non-exclusive license agreement with Q Squared Solutions LLC, to broaden the availability of NIS4®
technology and its improvements in the clinical research field.
In December 2021, we entered into the Ipsen Agreement granting Ipsen an exclusive worldwide (excluding Greater China
which is licensed to Terns) license to develop, manufacture and commercialize elafibranor, for people living with PBC, and in
other indications. Under the Ipsen Agreement, Ipsen will pay us up to €480 million, which is comprised of an upfront cash
payment of €120 million, as well as regulatory, commercial, and sales-based milestone payments of up to €360 million, plus tiered
double-digit royalties of up to 20%. (For more information see Note 29 - "Commitments, contingent liabilities and contingent
assets" to our consolidated financial statements included in this annual report). Other than pursuant to these three agreements,
we do not expect to receive any revenue from any of our product candidates until we obtain regulatory approval and
commercialize such products, or until we potentially enter into collaborative agreements with third parties for the development
and commercialization of such candidates.
In 2022, we entered into the Inventory Purchase Agreement signed with Ipsen, pursuant to which Ipsen purchased inventory
of elafibranor active pharmaceutical ingredient and drug product during the second half of 2022 with the prospect of transferring
the conduct of the ELATIVE® study to Ipsen. In addition, we entered into the Transition Services Agreement with Ipsen, which
essentially outlines the scope of services to facilitate the transition of some activities related to the Phase 3 clinical trial
evaluating elafibranor in Primary Biliary Cholangitis. In 2023, we entered into the Part B Transition Services Agreement with Ipsen,
in order to facilitate the transition of certain services related to the Phase 3 ELATIVE® clinical trial until the complete transfer of
the responsibility of the trial to Ipsen.
Our other income results principally from the research tax credits. We expect to continue to be eligible for these tax credits
and subsidies for so long as we incur eligible expenses.
CIR Research Tax Credit
We benefit from a tax credit known as Crédit d’Impôt Recherche, or CIR, which is granted by French tax authorities to
encourage companies to conduct technical and scientific research. Companies demonstrating that they have expenses that
meet the required criteria, including research expenses located in France or within the European Union or in another state that is
a party to the agreement in the European Economic Area that has concluded a tax treaty with France that contains an
administrative assistance clause, receive a tax credit that can be used against the payment of French corporate income tax due
for the fiscal year in which the expenses were incurred and the three fiscal years thereafter, or, as applicable, can be reimbursed
for the excess portion. The expenses taken into account for the calculation of the CIR only involve certain eligible research and
development expenses. The subcontracting expenses are limited to an amount equal to €10 million.
The main characteristics of the CIR are the following:
•
the CIR results in a cash inflow from the tax authorities paid to us as we are not subject to corporate income tax;
•
a company’s corporate income tax liability does not limit the amount of the CIR—a company which meets certain criteria
in terms of sales, headcount or assets to be considered a small/mid-size company and that does not pay any corporate
income tax can request cash payment of the research tax credit; and
•
the CIR is not included in the determination of the corporate income tax.
We have concluded that the CIR meets the definition of a government grant as defined in IAS 20, Accounting for Government
Grants and Disclosure of Government Assistance, and, as a result, it has been classified as other income within operating income
in our statement of operations.
96
Exchange Gain on trade receivables and liabilities
We also recognize in other operating income within “other income” the exchange gains on trade receivables because we
determined that they are attributable to the related revenue and other income initially recognized.
Operating Expenses
Research and Development Expenses
We engage in substantial research and development (R&D) efforts to develop our drug and diagnostic candidates. Research
and development expenses include:
•
raw materials and consumables, such as lab supplies, used in research and development activities;
•
fees and costs paid to third parties, such as clinical research organizations and scientific advisors, for clinical trial and
other research and development activities, including services subcontracted to research partners for technical or
regulatory reasons;
•
employee-related costs and costs related to external employees seconded to us for clinical development, biometrics and
information technology; and
•
intellectual property fees related to the filing of patents.
Research and development activities are central to our business model. Drug candidates in later stages of clinical
development generally have higher development costs than those in earlier stages of clinical development, primarily due to the
increased size and duration of later-stage clinical trials, such as the ELATIVE® trials. We expect that our research and
development expenses will increase compared to 2024 for the foreseeable future. As we continue to advance our current product
candidates, conduct preclinical studies and conduct clinical trials, we expect that our cash used in operational activities will
amount to €85 million in 2025. This estimate takes into account our projected cash flows from operating activities and
government funding of research programs. We have based this estimate on assumptions that may prove to be wrong. Our net
losses may fluctuate significantly from quarter to quarter and year to year, notably depending on the timing of our clinical trials
and our expenditures on other research and development activities. Also, we could use our available capital resources sooner
than we currently expect. They may also fluctuate depending on the next steps initiated in the clinical development of our drug
candidates, new development programs, which we may decide to start, and progress in the development of our diagnostic tests.
General and Administrative Expenses
General and administrative expenses include:
•
employee-related costs for executive, intellectual property, finance, legal and human resources and communications
functions;
•
facility-related costs;
•
fees for third-party providers of administrative services, including legal, audit and accounting, press relations and
communication services, security and reception and recruiting; and
•
intellectual property fees for the registration and maintenance of our patents.
General and administrative expenses will remain significant due to expenses associated with being a public company in the
United States, including costs related to audit, legal, regulatory and tax-related services associated with maintaining compliance
with U.S. exchange listing and SEC requirements, director and officer insurance premiums, and investor relations costs. In
particular, we will continue to incur additional expenses associated with accounting and internal control over financial reporting
to comply with the Sarbanes-Oxley Act of 2002 in the United States.
Marketing and Market Access Expenses
Marketing and market access expenses include:
•
employee-related costs for marketing, and business development functions;
•
facility-related costs; and
•
fees for third-party providers of marketing and pre-commercialization services including market surveys, brand strategy,
medical communication and market access services.
Reorganization and Restructuring Expenses
Reorganization and restructuring expenses include the following, as a result of the RESOLVE-IT® failure in MASH :
•
the accruals and provisions recognized within the scope of the reduction in force plan;
•
the extraordinary amortization, loss of value and impairment of fixed assets recognized within the scope of the
reorganization;
•
the impairment of the right of use of the leased equipment and premises;
97
•
the provision recognized for some of the costs of the closing process for the RESOLVE-IT® study, which, after detailed
analysis, we concluded do not have any future economic advantage for the PBC program.
The impact of the RESOLVE-IT® study in MASH on our 2023 and 2024 results was insignificant.
Financial Income (Expense)
Financial income relates primarily to interest income received from cash and cash equivalents deposits. Our cash and cash
equivalents have been deposited primarily in cash accounts and term deposit accounts with short maturities, as well as medium
term notes or Undertaking for Collective Investment in Transferable Securities and therefore generate only a modest amount of
interest income.
Financial expense relates primarily to interest expense on our outstanding convertible bonds as well as interest expense for
bank loans and for leases. We also incur foreign exchange losses related to our purchases of services in U.S. dollars and Swiss
Francs, which amounts are recorded as financial expense and interest expenses due to leases in application of IFRS 16.
A.
Operating Results
Our results of operations for the years ended December 31, 2022, 2023 and 2024 are summarized in the table below.
Notes
Year ended
(in € thousands, except earnings per share data)
2022/12/31
2023/12/31
2024/12/31
Revenues and other income
Revenue
7
20,195
28,565
67,002
Other income
7
6,371
9,610
3,937
Revenues and other income
26,566
38,176
70,939
Operating expenses and other operating income
(expenses)
Research and development expenses
8
(35,818)
(46,503)
(47,210)
General and administrative expenses
8
(16,405)
(17,741)
(19,497)
Marketing and market access expenses
8
(992)
(876)
(634)
Reorganization and restructuring income (expenses)
8
11
505
—
Other operating expenses
8
(652)
(141)
(316)
Operating income (loss)
(27,289)
(26,580)
3,281
Financial income
10
8,212
3,680
3,339
Financial expenses
10
(4,758)
(5,614)
(4,774)
Financial profit (loss)
3,453
(1,934)
(1,434)
Net profit (loss) before tax
(23,836)
(28,514)
1,847
Income tax benefit (expense)
11
116
(380)
(340)
Net profit (loss)
(23,719)
(28,894)
1,507
Comparisons for the Years Ended December 31, 2023 and 2024
A discussion and analysis of our financial condition and operating results for the year ended December 31, 2023 as compared
to the year ended December 31, 2022 is included in Item 5 of our Annual Report on Form 20-F for the year ended December 31,
2023, filed with the SEC on April 5, 2024 and is incorporated herein by reference.
Revenue
Revenue amounted to €67.0 million during the year ended December 31, 2024. €48.7 million was attributable to a milestone
payment invoiced to Ipsen in June 2024 and €2.7 million was attributable to royalty revenue from U.S. sales of Iqirvo® (elafibranor)
which commenced mid-June in application of the Ipsen Agreement signed in December 2021. €15.3 million was attributable to the
final recognition of deferred income of €40 million accounted for in accordance with IFRS 15, in application of the Ipsen
Agreement. €0.1 million in revenue was generated from the services rendered under the Transition Services Agreement and Part
B Transition Services Agreement, signed in April 2022 and September 2023 respectively by GENFIT and Ipsen, in order to facilitate
the transition of certain services related to the Phase 3 ELATIVE® clinical trial until the complete transfer of the responsibility of
the trial to Ipsen. €0.2 million was attributable to other ancillary activities.
98
Revenue amounted to €28.6 million during the year ended December 31, 2023. €13.3 million was attributable to a milestone
invoiced to Ipsen in December 2023 in accordance with the Ipsen Agreement. This milestone was earned following the NDA filing
acceptance by the FDA and MAA filing acceptance by the EMA for accelerated approval of elafibranor. €8.7 million in revenue
was attributable to the partial recognition of the €40.0 million deferred income from 2021 related to the Ipsen Agreement. €6.5
million in revenue was generated from the services rendered under the Transition Services Agreement and Part B Transition
Services Agreement, signed in April 2022 and September 2023 respectively by GENFIT and Ipsen, in order to facilitate the
transition of certain services related to the Phase 3 ELATIVE® clinical trial until the complete transfer of the responsibility of the
trial to Ipsen. €0.1 million was attributable to other ancillary activities.
Other Income
Other income for the years ended December 31, 2023 and 2024 consisted of the following:
Other income
Year ended
(in € thousands)
2023/12/31
2024/12/31
CIR tax credit
5,807
3,415
Other operating income
464
247
Government grants and subsidies
3,340
275
TOTAL
9,610
3,937
Changes in other income compared to the previous year is explained as follows.
CIR tax credit
•
The CIR tax credit (research tax credit granted by the French tax authorities) decreased from €5.8 million in 2023 to €3.4
million in 2024 due to a decrease in eligible research and development expenditures in 2024.
The tax inspection by the French tax authorities covering the 2019 and 2020 financial years (including the CIR declared
for these financial years), which began on December 10, 2021, ended in December 2024. See Note 11 - "Income tax".
Other operating income
•
Foreign exchange gains related to trade receivables, which is included in other operating income, amounted to €0.2
million in 2024, compared to €0.5 million in 2023.
Government grants and subsidies
•
In 2023, there was a one-time cancellation of a €3.2 million refundable government grant from Bpifrance (the BPI France
IT-DIAB). Refer to Note 20.2 - Breakdown of other loans and borrowings.
Operating Expenses
The tables below summarize our operating expenses for the years ended December 31, 2023 and 2024.
Operating Expenses for the Year Ended December 31, 2024
Operating expenses and
other operating income
(expenses)
Year
ended
Of which :
2024/12/31
Raw
Contracted
Employee
Other
Depreciation,
Gain /
materials
research and
expenses
expenses
amortization
(loss) on
and
development
(maintenance,
and
disposal of
consumables
activities
fees, travel,
impairment
property,
used
conducted by
taxes…)
charges
plant and
(in € thousands)
third parties
equipment
Research and
development expenses
(47,210)
(1,755)
(20,766)
(13,577)
(9,746)
(1,366)
—
General and
administrative expenses
(19,497)
(294)
(139)
(8,145)
(10,565)
(354)
—
Marketing and market
access expenses
(634)
(6)
(1)
(571)
(50)
(6)
—
Reorganization and
restructuring expenses
—
—
—
—
—
—
—
Other operating income
(expenses)
(316)
—
—
—
(360)
(12)
56
TOTAL
(67,658)
(2,056)
(20,906)
(22,293)
(20,723)
(1,737)
56
99
Operating Expenses for the Year Ended December 31, 2023
Operating expenses and
other operating income
(expenses)
Year
ended
Of which :
2023/12/31
Raw
Contracted
Employee
Other
Depreciation,
Gain /
materials
research and
expenses
expenses
amortization
(loss) on
and
development
(maintenance,
and
disposal of
consumables
activities
fees, travel,
impairment
property,
used
conducted by
taxes…)
charges
plant and
(in € thousands)
third parties
equipment
Research and
development expenses
(46,503)
(1,831)
(23,455)
(12,475)
(7,452)
(1,291)
—
General and
administrative income
(expenses)
(17,741)
(337)
(205)
(7,486)
(9,396)
(317)
—
Marketing and market
access expenses
(876)
(4)
(1)
(556)
(300)
(14)
—
Reorganization and
restructuring income
(expenses)
505
—
—
—
—
505
—
Other operating income
(expenses)
(141)
—
—
—
(222)
—
81
TOTAL
(64,756)
(2,172)
(23,661)
(20,517)
(17,370)
(1,117)
81
Research and Development Expenses
For the year ended December 31, 2024, research and development expenses totaled €47.2 million, or 69.8% of our total
operating expenses. These expenses were comprised of €20.8 million in contracted research and development conducted by
third parties, €13.6 million in employee expenses, €9.7 million in other expenses, €1.4 million in depreciation, amortization and
impairment charges and €1.8 million in raw materials and consumables.
For the year ended December 31, 2023, research and development expenses totaled €46.5 million, or 71.3% of our total
operating expenses. These expenses were comprised of €23.5 million in contracted research and development conducted by
third parties, €12.5 million in employee expenses, €7.5 million in other expenses, €1.3 million in depreciation, amortization and
impairment charges and €1.8 million in raw materials and consumables.
The decrease of €2.7 million in contracted research and development conducted by third parties is mainly due to:
–
Decreasing costs €8.8 million related to ELATIVE®, as Iqirvo® (elafibranor) was commercialized in 2024,
–
Increasing costs related to the VS-01 product candidate of €5.2 million,
–
Increasing costs related to the SRT-015 product candidate of €1.5 million,
–
Decreasing costs related to the GNS-561 product candidate of €0.9 million, and
–
Increasing costs related to the CLM-022 product candidate of €0.3 million.
The increase of €1.1 million in employee expenses, consisting of wages, salaries, social security, pension costs and share-
based compensation paid to employees in the research and development function is mainly due to an increase in workforce (117
employees in 2024 vs. 96 employees in 2023).
The increase of €2.2 million in other expenses is mainly due to strategic consulting R&D services amounting to €2.0 million
and increased costs related to VS-01 and the Versantis subsidiary of €0.2 million.
We expect our research and development expenses to increase in 2025 compared to 2024, as we continue our efforts to
identify potential product candidates, conduct preclinical studies and clinical trials and advance the development of our
diagnostic tests. They may fluctuate depending on the next steps initiated in the clinical development of our drug candidates,
new development programs, which we may decide to start, and progress in the development of our diagnostic tests.
General and Administrative Expenses
For the year ended December 31, 2024, general and administrative expenses totaled €19.5 million, or 28.8% of our total
operating expenses. These expenses were composed primarily of employee-related expenses, consisting of wages, salaries, social
security and pension costs and share-based compensation paid to employees in general and administrative function of €8.1
million, as well as €10.6 million in other expenses.
100
For the year ended December 31, 2023, general and administrative expenses totaled €17.7 million, or 27.2% of our total
operating expenses. These expenses were composed primarily of employee-related expenses, consisting of wages, salaries, social
security and pension costs and share-based compensation paid to employees in general and administrative function of €7.5
million, as well as €9.4 million in other expenses.
The increase of €0.6 million in employee expenses consisting of wages, salaries, social security, pension costs and share-
based compensation paid to employees in the general and administrative function is mainly due to increased salary levels for
newly hired employees in 2024 partially compensated by departures, and not an overall increase in workforce (63 employees in
2024 vs. 63 employees in 2023).
The increase of €1.2 million in other expenses in the general and administrative function is mainly due to increased IT costs
of €0.9 million, increased strategic communications consulting of €0.2 million, and other taxes of €0.1 million.
The general and administrative expenses will remain significant due to expenses associated with being a public company in
the United States, including costs related to audit, legal, regulatory and tax-related services associated with maintaining
compliance with U.S. exchange listing and SEC requirements, director and officer insurance premiums, investor relations and
litigation costs. In particular, we will continue to incur additional expenses associated with accounting and internal control over
financial reporting to comply with the Sarbanes-Oxley Act of 2002 in the United States.
Marketing and Market Access Expenses
For the year ended December 31, 2024, marketing and market access expenses totaled €0.6 million, or 0.9% of our total
operating expenses. These expenses consisted primarily of €0.6 million in employee-related expenses, consisting of wages,
salaries, social security and pension costs paid to employees in marketing and business development functions.
For the year ended December 31, 2023, marketing and market access expenses totaled €0.9 million, or 1.3% of our total
operating expenses. These expenses consisted primarily of €0.3 million of other expenses, including market surveys, brand
strategy, medical communication and market access services. We also incurred €0.6 million in employee-related expenses,
consisting of wages, salaries, social security and pension costs paid to employees in marketing and business development
functions.
We do not anticipate that our marketing and market access costs will increase significantly.
Reorganization and Restructuration Expenses
For the year ended December 31, 2024, reorganization and restructuration expenses were not significant.
For the year ended December 31, 2023, the €0.5 million amount consisted of unused office space provision reversals as the
RESOLVE-IT® study is complete. As a reminder, a provision was recorded in 2020 as part of the reorganization following the
RESOLVE-IT® failure.
Other operating income (expenses)
For the year ended December 31, 2024, other operating income (expenses) totaled €0.3 million. These expenses consisted
primarily of other expenses of €0.4 million offset by a gain of property, plant and equipment of €0.1 million.
For the year ended December 31, 2023, other operating income (expenses) totaled €0.1 million. These expenses consisted
primarily of other expenses of €0.2 million offset by a gain of property, plant and equipment of €0.1 million.
The increase of €0.2 million in other expenses overall is due to several reasons that are immaterial individually yet material in
the aggregate. These are primarily due to one time increases in i) penalties related to our French tax inspection (€38 thousand), ii)
bank fees, and iii) foreign exchange losses on accounts payable.
Financial Income (Expense)
Our net financial loss for the year ended December 31, 2024 was €1.4 million, consisting primarily of €0.7 million in foreign
exchange gain on cash and cash equivalents, €2.6 million in interest income, offset by €4.7 million of interest expense.
Our net financial loss for the year ended December 31, 2023 was €1.9 million, consisting primarily of €0.5 million in foreign
exchange gain on cash and cash equivalents, €3.2 million in interest income, offset by €4.6 million of interest expense, and €1.0
million in foreign exchange losses.
The foreign exchange result in 2024 was a net gain of €0.7 million and is notably related to the exchange rate fluctuations on
the cash held in U.S. dollars, as we made the decision to keep part of our cash in U.S. dollars. These cash holdings in U.S. dollars
are to be used to pay expenses in U.S. dollars directly (natural currency hedge).
B.
Liquidity and Capital Resources
101
Overview
As of December 31, 2024 and 2023, we had €81.8 million and €77.8 million respectively, in cash and cash equivalents.
Since our inception, we have financed our operations primarily through the issuance of new ordinary shares and bonds
convertible into new ordinary shares in public offerings and private financing transactions, as well as an upfront payment
pursuant to our collaboration with Ipsen. In 2006, we completed the initial public offering of our ordinary shares on the Alternext
market of Euronext in Paris. The listing of our ordinary shares was transferred to the regulated market of Euronext Paris in 2014.
Between 2010 and 2016, we raised a total of over €220.0 million in gross proceeds from the issuance of additional ordinary shares
for cash. In October 2017, we issued €180.0 million in bonds convertible into new ordinary shares or exchangeable for existing
ordinary shares. In March 2019, we completed a global offering consisting of an initial public offering of our ADSs in the United
States, and a private placement of our ordinary shares in Europe and other countries outside the United States, including France.
Aggregate gross proceeds from the global offering, before deducting underwriting discounts and commissions and offering
expenses paid by us, were approximately $155.4 million. Additionally, in 2021, Ipsen also became a shareholder of GENFIT through
the purchase of 3,985,239 newly issued shares representing 8% of GENFIT S.A after issuance, via a €28 million investment. There
have been no subsequent equity raises.
In addition, in March 2025, GENFIT completed a royalty financing transaction by which GENFIT issues bonds of up to €185
million to HCRx after unanimous OCEANEs bondholder approval, triggering a €130 million initial payment received in March 2025,
with potential for an additional €55 million upon achieving near-term milestones based on the net sales as measured under the
Ipsen Agreement. As part of the Royalty Financing, HCRx has the right to receive the royalties payable to GENFIT based on annual
net sales (as defined in the Ipsen Agreement) of Iqirvo® (elafibranor) under the Ipsen Agreement, up to an agreed cap that
increases over time if the specific cap is not met by certain deadlines, after which all future royalties will revert back to GENFIT.
We have also financed our operations through collaborative research alliances, such as the Terns Agreement and the Ipsen
Agreement. Pursuant to the Terns Agreement, we received an upfront payment of $35 million in 2019. Pursuant to the Ipsen
Agreement, we received a €120 million upfront payment in 2021, out of which €80 million was recognized as revenue in 2021, and
€40 million was deducted as deferred revenue (now fully settled as of December 31, 2024). We also received €28 million from
Ipsen as a result of their purchase of an 8% equity stake in us in 2021. In addition, during the year ended December 31, 2023, we
recognized a €13.3 million milestone pursuant to the Ipsen Agreement following the NDA filing acceptance by the FDA and MAA
filing acceptance by the EMA for accelerated approval of elafibranor. In 2024, we also recognized a €48.7 million milestone
pursuant to the Ipsen Agreement following the first commercial sale of Iqirvo® (elafibranor) in the U.S. In addition, in 2024 we
recorded royalty revenue of €2.7 million based on Iqirvo® (elafibranor) sales. We expect to receive additional royalty revenues,
although such royalty revenues will be paid into a trust that will be paid to HCRx pursuant to the Royalty Transaction until a
specific cap is met at which GENFIT will have the right to receive the remaining royalty revenues from the Ipsen Agreement. We
also expect to receive a milestone payment from the Ipsen agreement in 2025 if elafibranor receives a third pricing and
reimbursement approval in a major European country.
Additionally, we have financed our operations through the receipt of research tax credits and subsidies granted by various
public institutions, such as BPI France, conditional and repayable advances agreements with governmental entities, loans with
commercial banks and BPI France and the issuance of convertible bonds.
Cash Flows
The table below summarizes our cash flows for the years ended December 31, 2022, 2023 and 2024:
Year ended
(in € thousands)
2022/12/31
2023/12/31
2024/12/31
Cash flows provided by (used in) operating activities
(72,638)
(55,429)
15,549
Cash flows provided by (used in) investment activities
(46,266)
2,234
(1,039)
Cash flows provided by (used in) financing activities
(3,786)
(5,098)
(10,570)
(122,690)
(58,293)
3,940
Operating Activities
Cash provided by (used in) operating activities was €(72.6) million, €(55.4) million and €15.5 million for the years ended
December 31, 2022, 2023 and 2024, respectively.
For the 2024 period, this amount mainly resulted from positive increases in net working capital.
For the 2023 period, this amount resulted from our net loss of €28.9 million, in addition to significant research and
development efforts including ELATIVE®, GNS561, and VS-01, an increase in receivables of €17.4 million, a decrease in payables
and other liabilities of €10.4 million, taxes paid of €0.5 million, and adjusted by €1.8 million in non-cash expenses. Specifically
regarding the increase in receivables, this is primarily attributable to a milestone payment recognized in 2023 amounting to €13.3
million related to Ipsen as discussed in the revenue related paragraphs in the above section entitled "Comparisons for the Years
Ended December 31, 2022 and 2023."
Investing Activities
102
Cash provided by (used in) investment activities was €(46.3) million, €2.2 million and €(1.0) million for the years ended
December 31, 2022, 2023 and 2024, respectively.
For the 2024 period, this consisted primarily of normal acquisitions of property, plant and equipment of €1.0 million.
For the 2023 period, this consisted primarily of a liquidation of a short term investment of €4.6 million offset by acquisitions
of intangible assets and property, plant and equipment (net of disposals) of €2.3 million.
Financing Activities
Cash provided by (used in) financing activities was €(3.8) million, €(5.1) million and €(10.6) million for the years ended
December 31, 2022, 2023 and 2024, respectively.
For the 2024 period, this amount consisted primarily of €2.1 million in interest paid on our debt and €10.3 million in
repayments of loans and lease repayments (including early repayments of loans in anticipation of the Royalty Financing), offset by
€1.8 million in financial interest payments received.
For the 2023 period, this amount consisted primarily of €2.2 million in interest paid on our debt and €4.6 million in
repayments of loans and lease repayments, offset by €1.7 million in financial interest payments received.
Restriction on use of capital
With the exception of deposits and guarantees (€0.3 million) recognized in non-current and current financial assets as of
December 31, 2024, the Company is not faced with any restrictions as to the availability of its capital.
Currencies
GENFIT has expenses and holds cash and cash equivalents in multiple currencies, namely the Euro, the U.S. Dollar and the
Swiss Franc (following the acquisition of Versantis in 2022). For further information refer to Note 6.1 - "Financial Risks
Management - Foreign exchange risk” to our consolidated financial statements included in this annual report.
Operating and Capital Expenditure Requirements
Since our inception, we have incurred significant operating losses. We expect to incur high expenses and substantial
operating losses over the next several years, as we:
•
conduct our planned preclinical studies and clinical trials of our drug candidates, including in particular, our Phase 2
clinical trial of VS-01 for the treatment of ACLF and our Phase 1b/2 trial of GNS561 in CCA, as well as pre-clinical
development of SRT-15 and CLM-022 ;
•
continue and complete the validation and development of NIS4® and its improvements for diagnosis of at-risk MASH;
•
continue the research and development of our other drug candidates, including planned and future preclinical studies and
clinical trials;
•
seek to discover and develop additional drug candidates and explore combination therapies for our existing drug
candidates;
•
continue our efforts to identify potential product candidates;
•
seek regulatory approval for an IVD powered by NIS4® or its variations and any drug candidates that successfully
complete clinical trials;
•
assist with the scale-up of our subcontractors’ manufacturing capabilities in order to support the launch of additional
clinical trials and the commercialization of our drug candidates, if approved;
•
establish a sales and marketing infrastructure for the commercialization of our drug candidates and diagnostic
candidates, if approved, in certain geographies, either on our own or in partnership with a third party;
•
maintain, expand and protect our intellectual property portfolio;
•
hire additional clinical, quality control and scientific personnel; and
•
add operational, financial and management information systems and personnel, including personnel to support our
product development and commercialization efforts and our operations as a public company listed in the United States.
Our present and future funding requirements will depend on many factors, including, among other things:
•
the size, progress, timing and completion of our clinical trials of our other current or future product candidates;
•
the number of potential new product candidates we identify and decide to develop;
•
the costs involved in filing patent applications and maintaining and enforcing patents or defending against claims of
infringement raised by third parties;
•
the time and costs involved in obtaining regulatory approval for our product candidates and any delays we may encounter
as a result of evolving regulatory requirements or adverse results with respect to any of these product candidates;
103
•
selling and marketing activities undertaken in connection with the commercialization of elafibranor and our other current
or future product candidates, including other product candidates in preclinical development, together with the costs
involved in the creation of an effective sales and marketing organization; and
•
the amount of revenues, if any, we may derive either directly, or in the form of royalty payments from any future potential
collaboration agreements.
Until such time, if ever, that we can generate substantial revenue from product sales, we expect to finance these expenses
and our operating activities through a combination of our existing liquidity, equity offerings, royalty financings, debt financings,
collaborations, strategic alliances and licensing arrangements. To the extent that we raise additional capital through the sale of
equity or convertible debt securities, your ownership interest will be diluted, and the terms of these securities may include
liquidation or other preferences that adversely affect your rights as a holder of ordinary shares or ADSs. Debt financing, if
available, may involve agreements that include covenants that would further limit or restrict our ability to take specific actions,
such as incurring additional debt, making capital expenditures or declaring dividends.
As part of our Royalty Financing concluded in 2025, we relinquished certain future revenue streams as disclosed in Note 2.2 -
Major events after the period. If we raise funds through additional collaborations, strategic alliances or licensing arrangements
with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or
product candidates or to grant licenses on terms that may not be favorable to us.
If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit,
reduce or terminate our product development or future commercialization efforts or grant rights to develop and market product
candidates that we would otherwise prefer to develop and market ourselves, which could materially adversely affect our
business, financial condition and results of operations.
We believe that our existing cash and cash equivalents as of December 31, 2024, will enable us to fund our operating
expenses and capital expenditure requirements for at least the next 12 months. We have based this estimate on assumptions that
may prove to be wrong, and we could use our capital resources sooner than we currently expect.
For more information as to the risks associated with our future funding needs, see the section of this annual report titled
Item 3.D - "Risk Factors".
Liquidity Contract
Consistent with customary practice in the French securities market, we entered into a liquidity agreement (contrat de
liquidité) with Crédit Industriel et Commercial S.A. ("CIC") in August 2013. The liquidity agreement was entered into in accordance
with applicable laws and regulations in France. The liquidity agreement authorizes CIC to carry out market purchases and sales of
our shares on Euronext Paris. The amount is classified in other non-current financial assets in our statement of financial position.
At December 31, 2024, 207,500 shares and $0.4 million were in the liquidity account. The liquidity agreement has a term of one
year and will renew automatically unless otherwise terminated by either party. On a half-yearly basis, we provide a report on the
use of the liquidity contract through a press release.
Disclosure of Contractual Obligations
Our contractual obligations as of December 31, 2024 as noted immediately below are disclosed in Note 29 - "Commitments,
contingent liabilities and contingent assets" to our consolidated financial statements included in this annual report.
We enter into contracts in the normal course of business with CROs and contract manufacturing organizations, or CMOs, for
clinical trials, preclinical studies and clinical manufacturing, and with vendors for pre-commercial activities, research and
development activities, research supplies and other services and products for operating purposes. These contracts generally
provide for termination upon notice. Such agreements may be terminated at will.
We have entered into an agreement with Genoscience Pharma whereby we are obligated to pay royalties based on future
events that are uncertain and therefore they constitute contingent liabilities not recognized in our consolidated financial
statements for the period ending December 31, 2024.
We have entered into a share purchase agreement with the former shareholders of Versantis AG whereby we are obligated
to pay milestone payments based on future events that are uncertain and therefore they constitute contingent liabilities not
recognized in our consolidated financial statements for the period ending December 31, 2024.
We have entered into a licensing agreement with Seal Rock Therapeutics pursuant to which we may be required to pay
royalties and milestone payments based on future events that are uncertain and therefore they constitute contingent liabilities
not recognized in our consolidated financial statements for the period ending December 31, 2024.
We have entered into a licensing agreement with Celloram, Inc. pursuant to which we may be required to pay royalties and
milestone payments based on future events that are uncertain and therefore they constitute contingent liabilities not recognized
in our consolidated financial statements for the period ending December 31, 2024.
Subsidies and Refundable and Conditional Advances
104
We have received financial assistance from BPI France, and other governmental organizations in connection with the
development of our product candidates. Such funding, in the form of refundable and conditional advances, is intended to finance
our research and development efforts and the recruitment of specific personnel. We account for non-refundable subsidies as
other income ratably over the duration of the funded project. Funds received in the form of refundable advances are recognized
as financial liabilities, as we are obligated to reimburse BPI France for such refundable advances in cash based on a repayment
schedule if specified conditions are met.
As of December 31, 2022, we had one outstanding repayable advance from BPI France with an aggregate remaining balance
of €3.2 million. This advance, in an amount of €3.2 million, is a conditional advance we received in our capacity as leader of a
research consortium initiated in 2008 called IT-DIAB to follow patients at risk for type 2 diabetes. The program ended on
December 31, 2014. The conditional advance is not refundable except in the event of technical or commercial success of the
consortium’s activities, defined as the sale of related drugs or diagnostic devices developed using research results. We would
then be required to repay the advance, plus an additional specified amount, based on a percentage of any revenues generated
from the licensing of such products over a 10-year period. The maximum amount that we would have been required to pay under
this arrangement was €14.8 million, inclusive of the €3.2 million advance to be repaid.
As provided in the contract, we sent a letter to BPI France in December 2019 in order to notify it of our Labcorp and Terns
contracts while indicating that elafibranor was now aimed at treating hepatic diseases and no longer type 2 diabetes as provided
for in the agreement. We proposed to BPI France to acknowledge the failure of the IT-DIAB project. Following this letter, the
parties met in March 2020 for the presentation of our arguments, and were in contact again in June 2020 following the results of
the RESOLVE-IT® trial. We sent another letter in November 2020.
On October 20, 2023, BPI France agreed to formally recognize the failure of the project and therefore write off their
outstanding receivable as previously mentioned. As of December 31, 2023, GENFIT had no remaining obligation associated with
this, and thus the liability was reversed with the amount recognized in "Other income" in the 2023 consolidated statement of
operations. There has been no further activity in 2024. Refer to Note 20.2.1 - "Breakdown of other loans and borrowings -
Refundable and conditional advances" to our consolidated financial statements included in this annual report for further
information.
Convertible Bonds & Royalty Financing
In October 2017, we issued convertible bonds (OCEANEs) for gross proceeds of €180.0 million, with a maturity date initially of
October 16, 2022.
On November 23, 2020, we presented to all OCEANEs bondholders a two-prong renegotiation offer:
•
A partial buyback of the outstanding OCEANEs for a maximum amount of 3,048,780 OCEANEs at €16.40 per bond; and
•
An amendment of the terms of the remaining OCEANEs to extend their maturity (by three years) and increase the
conversion ratio (to 5.5 shares per bond).
At the Shareholders’ and Bondholders’ Meetings on January 25, 2021, the shareholders and bondholders approved this
renegotiation offer, and:
•
We completed the partial buyback of 2,895,260 OCEANEs at a price of €16.40 (including accrued interest of €0.30) per
bond for a total buyback cost of €47.48 million on January 29, 2021. We then cancelled the repurchase of OCEANEs.
Following the renegotiation, the OCEANEs bear interest at an annual nominal rate of 3.50% payable semi-annually in
arrears on April 16 and October 16 of each year (or the following business day if this date is not a business day). The
OCEANEs will be redeemed at par on October 16, 2025 (or the following business day if this date is not a business day).
The effective interest rate is 8.8%.
•
The nominal unit value of the OCEANEs was set at €29.60. The OCEANEs conversion ratio is 5.5 shares for one OCEANE,
subject to any subsequent adjustments.
•
The OCEANEs may be redeemed early at the option of the Company, under certain conditions. Specifically, the OCEANEs
may be redeemed early at the option of the Company from November 3, 2023 onward if i) the mathematical average of the
volume-weighted average price of GENFIT shares on the regulated market of Euronext in Paris and ii) the conversion ratio
of the shares in force (over a period of 20 trading days) exceeds 150% of the nominal value of the OCEANEs bonds.
As of December 31, 2024, there were 1,902,698 OCEANEs outstanding, and the maximum dilution to GENFIT's current share
capital in the event of full conversion would be 17.31%, with approximately €56.3 million nominal amount outstanding. The
OCEANEs are admitted to trading on Euronext Access (the free market of Euronext in Paris).
On March 20, 2025, GENFIT announced the closing of the Royalty Transaction providing an initial payment of €130 million
with eligibility to receive up to €55 million in two additional installments based on near-term milestones. The closing of the
Royalty Transaction was subject to approval by the 2025 OCEANEs (i.e., OCEANEs in circulation in 2025 prior to the Royalty
Financing announcement ("2025 OCEANEs")) bondholders of an amendment to the OCEANEs negative pledge clause, allowing
for the grant of the security interest contemplated in the Royalty Financing documentation, as well as other customary closing
conditions.
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Concurrently with the Royalty Financing, the Company proposed to all of the OCEANE holders to enter into a Put Option
Agreement, pursuant to which the Company unconditionally and irrevocably undertook to repurchase the OCEANEs of such
holder at a price of €32.75 per bond, subject to approval by the general meeting of the 2025 OCEANEs holders of the amendment
of the terms and conditions of the OCEANEs and the closing of the Royalty Financing (the “Repurchase”).
The Company also undertook, subject to the approval of the amendment of the terms and conditions of the 2025 OCEANEs
and the closing of the Royalty Financing, to pay a consent fee (the “Consent Fee”) of €0.90 per bond to the holders of 2025
OCEANEs still outstanding after cancellation of the repurchased 2025 OCEANEs. The payment of the Consent Fee occurred on
April 14, 2025, totaling €18 thousand. The Consent Fee was only paid after the Repurchase took place. The 2025 OCEANEs that
were bought back by the Company as part of the Repurchase thus did not receive the Consent Fee.
As of the date of this Form 20-F, there was a total of 19,807 OCEANEs still in circulation, totaling €586.
For more information see Note 20.1 - "Loans and Borrowings - Breakdown of convertible loan" and Note 2.2 - Major events
after the period to our consolidated financial statements included in this annual report.
Bank Loans
We have borrowed under multiple bank loans primarily intended to finance the acquisition of scientific and information
technology equipment. As of December 31, 2023 and 2024, the total principal amount outstanding was €11.6 million and €2.5
million, respectively. These bank loans carry fixed interest rates of between 0.40% and 2.25% and are generally payable over
periods ranging from three to five years from the original date of the loan.
In 2021, we entered into three new bank loans for a total nominal amount of €15.2 million, granted in the context of the
COVID-19 pandemic, including:
•
A €11.0 million loan in June 2021 by a pool of four French commercial banks,
•
A €2.0 million loan in July 2021 by BPI France,
•
A €2.2 million subsidized loan in November 2021 by BPI France,
The June 2021 and July 2021 bank loans are 90% guaranteed by the French government (State-Guaranteed Loans or Prêts
Garantis par l’Etat "PGE") and carry an initial term of one year with repayment options up to six years, and the November 2021
bank loan carries an initial term of six years.
In 2022, 2023, and 2024 we did not enter into any additional loan agreements.
Several of said loans were repaid in advance prior to December 31, 2024 without penalty. For further information, refer to
Note 20.2.2 - "Breakdown of other loans and borrowings - Bank loans" to our consolidated financial statements included in this
annual report
Leases
As of December 31, 2024, leases subject to IFRS 16 consist of real estate leases for our offices located in Loos, France and
Zurich, Switzerland, and lease agreements for scientific equipment. Additionally, we rent coworking spaces in Paris, France and
Cambridge, MA which are not considered leases pursuant to IFRS 16.
For further information, refer to Note 15 - "Property, Plant and Equipment" to our consolidated financial statements included
in this annual report.
Pension and Employee Benefits
French law requires payment of a lump sum retirement indemnity to employees based on years of service and annual
compensation at retirement. Benefits do not vest prior to retirement. The amount presented in the table included in Note 25 -
“Employee Benefits" to our consolidated financial statements included in this annual report, represents the present value of the
estimated future benefits to be paid, applying a number of assumptions, including dates of expected retirement, life
expectancies, salary growth rates and a discount rate.
C.
Research and Development, Patents and Licenses, etc.
For a discussion of our research and development activities, see Item 4.B - "Information on the Company - Business
Overview” and Item 5.A- "Operating and Financial Review and Prospects - Operating Results”.
D.
Trend Information
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For a discussion of trends, see Item 4.B - "Information on the Company - Business Overview”, Item 5.A- "Operating and
Financial Review and Prospects - Operating Results” and Item 5.B - "Operating and Financial Review and Prospects - Liquidity and
Capital Resources".
E.
Critical Accounting Estimates
For a discussion of our critical accounting estimates, see Note 4.1 - "Use of estimates and judgements" to our consolidated
financial statements included in this annual report.
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Item 6.
Directors, Senior Management and Employees.
A.
Directors and Senior Management
Following the death of Mr. Xavier Guille des Buttes in April 2024, Vice-Chairman of the Board of Directors, the composition of
the Board of Directors of the Company changed. In accordance with the succession plan, Mr. Éric Baclet became Vice-Chairman
of the Board of Directors. He was also appointed Chairman of the Nomination and Compensation Committee. Mr. Jean-François
Tiné joined the Audit Committee and Ms. Katherine Kalin joind the ESG Committee.
In December 2024, the Chief Technology Officer, Meriam Kabbaj, left the Company to pursue other opportunities.
The following table sets forth information concerning our senior management and Directors as of April 1, 2025. Unless
otherwise stated, the address for our senior management and directors is c/o GENFIT S.A., Parc Eurasanté, 885 avenue Eugène
Avinée, 59120 Loos, France.
Name
Age
Position(s)
Senior Management
Pascal Prigent
57
Chief Executive Officer
Carol Addy, M.D.
65
Chief Medical Officer
Thomas Baetz
51
Chief Financial Officer
John Brozek
48
EVP, Data & Information Technology
Pascal Caisey
57
Chief Operating Officer
Emilie Desodt
42
EVP, Human Resources
Dean Hum, Ph.D
62
Chief Scientific Officer
Laurent Lannoo
54
Corporate Secretary, Director of Legal Affairs
Stefanie Magner, J.D.
44
Chief Compliance Officer, EVP International Legal Affairs
Jean-Christophe Marcoux
47
Chief Corporate Affairs Officer, Head of Investor Relations, Head of ESG
Sakina Sayah-Jeanne
53
EVP Research & Translational Science
Tom Huijbers
54
EVP Regulatory
Non-Employee Directors
Jean-François Mouney (1)(7)(9)
69
Chairman of the Board of Directors
Eric Baclet (2)(3)
65
Vice-Chairman of the Board of Directors
Katherine Kalin (8)(9)
62
Director
Catherine Larue, Ph.D (1)(10)
69
Director
Anne-Hélène Monsellato (4)
57
Director
Philippe Moons
73
Board observer (censeur)
Florence Séjourné (5)
53
Director
Sandra Silvestri, M.D., Ph.D. (6)
51
Director
Jean-François Tiné (2)(8)
68
Director
(1)
Member of the Nomination and Compensation Committee.
(2)
Member of the Audit Committee.
(3)
Chair of the Nomination and Compensation Committee.
(4)
Chair of the Audit Committee.
(5)
As representative of Biotech Avenir SAS, the legal entity that holds this Board seat.
(6)
As representative of IPSEN, the legal entity that holds this Board seat, since June 2023.
(7)
Chair of the Strategy and Alliances Committee
(8)
Member of the Strategy and Alliances Committee
(9)
Member of the Environmental, Social, Governance Committee
(10) Chair of the Environmental, Social, Governance Committee
Senior Management
Pascal Prigent has served as our Chief Executive Officer since September 2019. He served as our Executive Vice President,
Marketing and Development from May 2018 to September 2019. Prior to that, he served as Vice President of Marketing—U.S.
Vaccines for GlaxoSmithKline USA from April 2014 to November 2017. Prior to this, he was Vice President and General Manager of
GlaxoSmithKline Romania from January 2011 to March 2014. He also served in various roles at Eli Lilly and its affiliates from 1996
through January 2011. Mr. Prigent is a graduate of Reims Management School, now known as NEOMA Business School, in Reims,
France and earned his MBA from INSEAD in Fontainebleau, France.
Carol Addy has served as our Chief Medical Officer since September 2019. Prior to this, Dr. Addy held various leadership
roles, including most recently, Chief Medical Officer at Health Management Resources, a subsidiary of Merck & Co., from
November 2013 to August 2019, and as Associate Director, Director and Senior Principal Scientist at Merck Research
Laboratories from June 2003 to November 2013. In addition to an M.D. degree, she holds a Masters of Medical Science from
Harvard Medical School, and has also been an endocrinology consultant for MIT Medical.
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Thomas Baetz has served as our Chief Financial Officer since April 1, 2021. He has extensive global finance experience across
the investment banking and biotech industries. Prior to joining our company, Mr. Baetz was a Healthcare Director at Dragon
Financial Partners, where he specialized in licensing agreements and fundraising consultancy for European biotechs. Before that,
he was Group Chief Financial Officer and Head of Asia-Pacific for four years at Impeto Medical, a medtech company based in
Hong-Kong and Paris, where he oversaw the corporate and business development in China until 2017. Prior to moving to Asia, he
held key senior management positions, specializing in mergers and acquisitions, financial control, and consultancy among other
areas. Mr. Baetz earned his MSc. in Finance and Actuarial Science from ENSAE and his BA from ESCP Europe.
John Brozek was appointed to the Executive Committee in March 2022 as Executive Vice-President, Data & Information
Technology. He holds three master’s degrees respectively in Cell and Molecular Biology from Lille University, Bioinformatics from
Paris 7 University and Information Technology from Amiens University. He started his career in 2001 as Bioinformatician with IT-
omics, a startup specializing in Information Systems design and data mining for biotech companies. In 2005, he joined GENFIT
where he progressively took the lead of In Silico activities providing support in bioinformatics, biostatistics and Information
Systems design. Since 2016, in addition to managing the In Silico activities, he leads the IT Department as Vice-President Data &
Information Technology where he has been focusing on a global Information System renewal project while continuing to develop
data related projects (data science and business intelligence).
Pascal Caisey joined GENFIT in September 2019 as Executive Vice President of Commercial Development, becoming Chief
Commercial Officer in January 2021 and was appointed Chief Operating Officer in March 2022. He has vast pharmaceutical
business experience, holding roles with GSK, BMS, Pfizer, Schering Plough and most recently Boehringer Ingelheim, where he
oversaw, as the European Business Manager, the commercial launch of empagliflozin in Europe. Mr. Caisey is a registered nurse
and holds an MBA from École des Hautes Études Commerciales (HEC) in Paris.
Emilie Desodt joined GENFIT in January 2018 as Human Resources Director and was appointed to the Executive Committee
in March 2022 as the Executive Vice-President, Human Resources. Ms. Desodt has been working in Human Resources for the past
18 years in various operational and strategic positions. Prior to joining GENFIT, she was in charge of HR activities, first at regional
level (Americas & Middle East) then at global level at the Lesaffre Group. She has also held various HR roles of increasing
responsibilities within General Electric. Ms. Desodt holds a bachelor’s degree in computer sciences (MIAGE) and a master’s
degree in HR Development.
Dean Hum, Ph.D has served as our Chief Scientific Officer since 2000. He also served as a member of our former Executive
Board from May 2014 until the change in management and administration in June 2017. He earned a Ph.D in Biochemistry from
McGill University in Montreal in 1990. He is an expert in the regulation of gene expression and nuclear receptors associated with
endocrine and cardio metabolic diseases. Prior to becoming a Professor at Laval University in Quebec from 1994 to 2000, Dr. Hum
held a research position at the University of California in San Francisco from 1990 to 1994. Dr. Hum coordinates our research and
development activities with our Chief Executive Officer and in close collaboration with our other scientific officers and project
managers.
Laurent Lannoo has served as our Corporate Secretary and Director of Legal Affairs since 2008. From 2005 to 2008, he
served in various roles at the Coeur et Artères foundation, including as chairman of its executive board from 2007 to 2008 and as
corporate secretary from 2005 to 2006. Prior to that, from 1996 to 2005, he was in charge of finance and administration for
Eurasanté, the public agency for the economic development of healthcare activities in the Nord-Pas de Calais region of France.
He began his professional career at M&M, a consulting firm, in 1994, becoming partner in 1996. Mr. Lannoo graduated from Lille
Law School with a degree in Business Law.
Stefanie Magner has served as our Chief Compliance Officer and Executive Vice-President International Legal Affairs since
March 2021, after joining our company in 2016 as Deputy Director of Legal Affairs. Prior to joining GENFIT, she spent nearly 10
years at the Paris office of the global law firm Jones Day, advising issuers, many in the biotech space, and banks on a variety of
corporate, cross-border securities and M&A transactions, including several U.S. IPOs. She is admitted to practice law in New York
and is a former member of the Paris Bar. She graduated from the University of Pennsylvania with a Bachelor of Arts in
International Relations and French, and has an international diploma from Sciences-Po Paris. She received her U.S. law degree
from Washington College of Law at the American University in Washington D.C. and holds a Masters of Business Litigation from
the Université de Paris X – Nanterre.
Jean-Christophe Marcoux has served as our Chief Corporate Affairs Officer, Head of Investor Relations, Head of ESG
(previously titled Chief Strategy Officer) since 2016. He joined our company in 2015 to play a cross-disciplinary role regarding
tactical, strategic and operational matters. He is an engineer and graduated from INSA Lyon in France, having spent part of his
time at the University of Leeds in England. In addition, he also holds a degree in Strategic Management and Economic Intelligence
from EGE in France. From 2000 to 2015, he led international projects and programs in a variety of industrial sectors, in Europe and
Asia, and with clients and colleagues in the United States. In 2012, he joined IQVIA (formerly known as IMS Health), a global
information and technology services company for clients in the healthcare industry, where he led projects in healthcare systems,
such as patient longitudinal studies, forecasting, targeting, profiling, prospective analyses, digital healthcare and innovation.
Since 2021, he is responsible for the Company's extra-financial reporting and activities, covering the challenges of corporate
social and environmental responsibility.
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Sakina Sayah-Jeanne joined GENFIT on April 3, 2023 as Executive Vice-President Research & Translational Science, member
of the Executive Committee. Sakina has more than 20 years pharmaceutical industry experience, including 7 years at GENFIT.
Sakina obtained her PhD in Molecular and Cellular Biology in 1998, specializing in Neuro-Immunology, at the University of Rouen
(Role of the complement in central nervous system pathologies with an inflammatory component). In 1999, Sakina joined
Innothera, a French pharmaceutical group, as Project Leader, Pharmacology (Neurogenic pain). In 2002, Sakina joined GABA
Laboratoire, as Scientific Attaché (oral and dental care). Sakina joined GENFIT in 2003 as a Project Leader, Preclinical. She then
became Director of Therapeutic Target Research in 2005 (Cardiometabolic diseases, Alzheimer’s disease). In 2011, Sakina joined
DaVolterra as the Manager of the Preclinical Research, to define and manage the nonclinical strategy for mechanistic and proof-
of-concept studies for the product under development (Gut microbiome protection for the prevention of infectious diseases). In
2015, she was appointed Senior Director, Translational and Transversal R&D, where she was in charge of producing decision
support for clinical development of the product, addressing questions around dose regimen and safe use for the different
indications and populations, developing argumentation and defending Sponsor’s position statements with regulatory authorities
(Gut microbiome protection for the prevention of infectious diseases, and increased efficacy of anti-cancer treatments).
Tom Huijbers joined GENFIT on March 13, 2023 as Executive Vice-President Regulatory, member of the Executive Committee.
Tom has more than 20 years of experience in the pharmaceutical industry. In 1999, he graduated with a Master of Science in
Medicinal Chemistry and Molecular Pharmacology, from the University of Groningen (Netherlands). The same year, he joined the
Janssen Research Foundation (Belgium) as Associate Manager Regulatory Affairs. In 2004, he joined Grünenthal GmbH based in
Germany, as Regulatory Affairs Manager. As of 2006, he became Senior Regulatory Affairs Manager before holding the positions
of Associate Director Global Regulatory Affairs, then Senior Director Global Regulatory Affairs between 2009 and 2018. In 2018,
Tom became Vice President, Head Development Strategy & Intelligence in Grünenthal’s Innovation Unit Devices and
Technologies. Before joining GENFIT, Tom had worked since 2020 at Pinney Associates (USA) and Harm Reduction Therapeutics
(USA), as an independent Regulatory Affairs Consultant.
Non-Employee Directors
Jean-François Mouney has served as Chairman of our Board of Directors since June 2017. Mr. Mouney also served as our
Chief Executive Officer from September 1999 to September 2019. Mr. Mouney served as Chairman of our Executive Board from
September 1999 to June 2017, when we changed our management structure. He co-founded GENFIT in 1999 after having been
actively involved in the incubation of the Company since 1997. Prior to this, he founded, managed and developed several
companies specializing in high-performance materials, particularly in the aeronautical industry. In 1992, he founded M&M, a
consultancy firm specializing in health economics. He was responsible for carrying out a feasibility study for the economic
development agency, Eurasanté, within the field of health and biology in Nord-Pas-de-Calais region of France and was appointed
Chief Executive Officer of this agency when the agency was launched in 1995. Mr. Mouney has also served as Deputy Chairman of
the “Nutrition, Health and Longevity” research hub between 2008 and 2016 and as an Advisor to the Banque de France from 2008
to 2023. Mr. Mouney is a graduate of ESCP-Europe Business School, and holds a masters degree in Economics from the University
of Lille.
Eric Baclet joined our Board of Directors in 2020 and has served as Vice-Chairman since April 2024. In 1987, he began his
extensive experience in the pharmaceutical industry with Eli Lilly and since the late 1990s until 2017, held executive or corporate
officer positions in various countries where Eli Lilly and Company has a presence (North Africa, Belgium, the United States, China
and Italy). From 2009 to 2013, Mr. Baclet was President and General Manager of Lilly China and most recently from 2014 to 2017,
President of Lilly Italy and General Manager of Lilly Italian Hub. He is a seasoned executive with extensive experience gleaned
from senior executive positions, having built and managed diverse and multicultural teams involved in the biopharmaceutical
value chain throughout the world. From this background Mr. Eric Baclet has acquired extensive experience in international
management from initial clinical development to final commercialization. Mr. Baclet has been responsible for portfolio strategies,
international brand development, global marketing projects, global sales operations and the management of various geographic
areas and countries. He currently serves as a board member of AIF Pharma NA (Future Pharmaceutical Industries); Mr. Baclet
holds a Pharmacy degree from the University René Descartes.
Katherine Kalin joined our Board of Directors in 2020. She brings more than 25 years of experience as a senior executive in
healthcare and professional services. Her healthcare industry experience spans pharmaceuticals, medical devices, diagnostics
and digital health. From 1990 to 2002, Katherine was a partner in the global healthcare practice of McKinsey & Company, where
she served clients across a range of healthcare disciplines. In 2002, Katherine joined Johnson & Johnson where she held
leadership roles in marketing, sales and new business development, until 2011. From 2012 to 2017, Katherine led corporate
strategy at Celgene Corporation. She began her career as an investment banker in Corporate Finance at Nomura in Tokyo, Japan
and London, UK. Ms. Kalin currently serves as a non-executive director of Sellas Life Sciences, a publicly-traded, late-stage clinical
biopharmaceutical company, and as a member of the Board of Directors of Brown Advisory LLC, an independent investment and
strategic advisory firm and FemHealth Ventures, a women’s health venture capital firm. She has a B.A. from Durham University,
U.K., and an M.B.A. from Harvard Business School.
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Catherine Larue, Ph.D has served as a member of our Board of Directors since 2017. Since September 2020, she runs a
consulting business in the biotechnology and diagnostic fields (CoDx). From 2012 to 2020, Dr. Larue was CEO of the Integrated
Biobank of Luxembourg (IBBL), where she led the development of the biobanking strategy and new initiatives in the field of
personalized medicine. During this period, she also served as interim CEO of the Luxembourg Institute of Health (LIH), a
biomedical research institute, between 2016 and 2017. Prior to joining the IBBL, Dr. Larue piloted GENFIT’s biomarker program
until 2012. Dr. Larue began her career as team leader at Sanofi at the Montpellier, France based research and development center
in the cardiovascular research department. She later joined Sanofi Diagnostics Pasteur, as Director of Research and
Development for France and U.S. and then spent 11 years at the Bio-Rad group, holding different management positions. She
participated in the discovery of several innovative biomarkers and the commercialization of dozens of diagnostic products. Dr.
Larue holds a doctorate in experimental biology and an accreditation to direct research (Habilitation à Diriger la Recherche, or
HDR) from the University of Rouen, a university degree in clinical oncology from the University of Paris VI and an executive MBA
from St. John’s University (New York).
Anne-Hélène Monsellato has served as a member of our Board of Directors and the chair of our Audit Committee since 2017.
From May 2015 to March 2023, she was an independent member of the Supervisory Committee and the Chairman of the Audit
and Risk Committee of Euronav, a Belgian crude oil tanker company listed on the New York Stock Exchange and Euronext
Brussels. In addition, she served as the Vice President and Treasurer of the Board of Trustees of the American Center for Art and
Culture, a U.S. private foundation based in New York, which operated the American cultural center in Paris, France, from 2014 up
until its strategic reorientation and dissolution in 2024. From 2005 until 2013, Ms. Monsellato served as a Partner with Ernst &
Young (now EY), Paris, after having served as Auditor and, Manager for the firm starting in 1990. During her time at EY, she gained
extensive experience in financial communication, IFRS, cross border listing transactions (in particular with the United States),
internal control over financial reporting and risk management, as well as financial statements audits and audits of internal control
over financial reporting. She was involved with several companies in the pharmaceutical and biotechnology sector. Ms.
Monsellato is an active member of the French association of Directors (IFA) since 2013, and in particular with three commissions
(Audit Committees' Chairs, ESG and Prospective) where she regularly contributes to publications (November 2023 : Durabilité :
les nouveaux engagements du conseil; February 2024 : Le conseil et la cybersécurité, November 2024 : Les systèmes
d’intelligence artificielle et les conseils d’administration) and of the European Confederation of Directors’ Association (ecoDa).
She was a member of the Consultative Working Group for the ESMA Corporate Reporting Standing Committee for 2019-2020, and
a member of the EFRAG community for the development of the listed SMEs standards (LSME ESRS). Ms. Monsellato has been a
Certified Public Accountant in France since 2008 and received a board member certification from IFA-Sciences Po in 2014. She
graduated from EM Lyon in 1990 with a degree in Business Management. In December, Ms Monsellato obtained the certification
"Governance, Climate and Sustainable Transition" of the Executive Education program of Université Paris Dauphine-PSL, a
dedicated training for executives and board members providing a framework for reflection and action at governance level in the
face of complex and urgent climate-related issues.
Philippe Moons served as member of our former Supervisory Board since 2015 and served as a member of our Board of
Directors from June 2017 until February 2021, when he resigned from his position as director on the Board of Directors. He
continues to assist on our Board as a Board observer. Mr. Moons graduated from the Institut Catholique des Arts et Métiers de
Lille and received an MBA from the Ecole des Hautes Etudes Commerciales du Nord (EDHEC), and began his career as a business
engineer at Delattre Leviver, part of the Creusot-Loire Group, a French industrial Group. In 1989, he joined Finorpa, a venture
capital and growth capital company, operating under the aegis of the Group “Charbonnage de France” in the Nord-Pas-de-Calais
region of France. Between 2006 and 2015, he was in charge at Finorpa of supporting and financing several companies in their
early-stage activities or development phases, in particular in the fields of biology and health. Mr. Moons was a member of the
executive board of Finovam, a regional venture capital company, established in 2014 to strengthen the emergence and provide
seed capital to innovative businesses, primarily technological projects in the Nord-Pas-de-Calais region, until 2015.
Florence Séjourné has served as a member of our Board of Directors since June 2017 as representative of SAS Biotech
Avenir. She was a member of our former Supervisory Board from 1999 until the change in our management and administration in
June 2017. Ms. Séjourné co-founded our company and served as our Chief Operating Officer, business development director,
industrial alliances coordinator and member of our former Executive Board from 1999 to 2008. From 2008 to 2022, she was the
Chairwoman and CEO of Da Volterra, a clinical-stage biotechnology company developing novel Microbiota Protective therapies
for protection against antibiotics residues, in particular in cancer and blood disorders. Since September 2022, Ms. Séjourné has
been appointed CEO of a newly formed biopharmaceutical company founded as a joint venture by Boehringer Ingelheim, Evotec
SE and bioMérieux, named AUROBAC THERAPEUTICS, to create the next generation of antimicrobials along with actionable
diagnostics to fight AntiMicrobial Resistance. Ms. Séjourné graduated from the Ecole des Mines of Paris with a degree in
Biotechnology and holds a master’s degree in Pharmacy from the University of Illinois in Chicago.
Sandra Silvestri, MD., Ph.D, has served as a member of our Board of Directors since June 2023 as representative of Ipsen.
Sandra Silvestri, M.D., Ph.D., joined Ipsen in 2023 as Executive Vice President, Chief Medical Officer and Head of Global Medical
Affairs, Patient Safety and Patient Affairs. Prior to joining Ipsen, Ms. Silvestri held multiple leadership roles at Sanofi, where she
was most recently SVP Chief Medical Officer for General Medicine GBU, leading a team of 1,600 medical employees worldwide.
She also held several leadership positions at Eli Lilly in multiple disease areas including diabetology, endocrinology, neuroscience,
immunology, dermatology, and oncology. Sandra Silvestri is a medical doctor specialized in endocrinology and metabolic
diseases. She has been an investigator in several clinical studies, published numerous book chapters as well as scientific articles
in international journals, been a speaker in several national and international congresses, and from 2017 to 2023 she led the
Gender Balance Board and Global Network at Sanofi. She stays active as a professor at the medical schools of the University of
Florence, Italy, and Descartes University in Paris. She has lived in Italy, Denmark, the U.S., France, and speaks Italian, English and
French.
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Jean-François Tiné joined the Board of Directors in 2021. He was a senior investment banking executive until 2022, having
most recently served since 2017 as Chairman of Equity Capital Markets at Natixis Corporate & Investment Banking after joining
Natixis in 2005 as Global Head of Equity Capital Markets. He began his career in various sales, trading and syndication positions in
the London and Paris capital markets at Union Bancaire Privée, Crédit Suisse, First Boston and Bank of America. In 1993, he
became an associate at MC Securities in London, before being appointed three years later as Global Head of Equity Syndicate at
Société Générale in Paris.
Family Arrangements and Selection Arrangements
There are no family relationships between any of the members of our senior management or Board of Directors. Except as
described below, there are no arrangements or understandings with major shareholders, customers, suppliers or others, pursuant
to which any member of our senior management or Board of Directors was selected as such.
Pursuant to an investment agreement entered into with Ipsen on December 16, 2021 pursuant to which Ipsen became a
shareholder of GENFIT through the purchase of 3,985,239 newly issued shares representing 8% of GENFIT S.A after issuance, our
shareholders, at the annual shareholders meeting held on May 25, 2022, appointed Ipsen as Director.
B.
Compensation
Director Compensation
At our general meeting of shareholders held on May 22, 2024, shareholders renewed the total annual compensation policy to
be distributed among non-employee members of the Board of Directors for the 2024 financial year. The following table sets forth
information regarding the compensation earned by our non-employee Directors for service on our Board of Directors during the
year ended December 31, 2024, which consisted solely of attendance fees, with the exception of our Chairman, Jean-François
Mouney.
NAME
(€)
Jean-François Mouney(1)
382,684
Eric Baclet
68,416
Xavier Guille des Buttes
31,864
Katherine Kalin
38,386
Catherine Larue, Ph.D.
50,140
Anne-Hélène Monsellato
45,780
Philippe Moons(2)
14,170
Florence Séjourné, as representative of Biotech Avenir SAS
—
Sandra Silvestri, MD., Ph.D., as representative of IPSEN
—
Jean-François Tiné
45,193
(1)
Mr. Mouney’s compensation includes his fixed compensation, Directors’ fees and social security charges. See below “Chairman of the Board Compensation” for
more details.
(2)
Philippe Moons is an observer on the Board of Directors
We compensate all the members of the Board of Directors, with the exception of the permanent representatives of Biotech
Avenir SAS and Ipsen, both shareholders of the Company. Director compensation includes a fixed part for each Director and a
variable part depending on their attendance. The fixed part varies according to:
• the role played by each Director on the Board of Directors and the committees; and
• the function of Vice-Chairman of the Board of Directors or Chairman of a specialized committee.
Given the frequency of meetings observed in recent years, the variable portion linked to attendance is greater than the fixed
portion.
Directors fees are allocated as follows:
(in euros)
Annual fixed amount (1)
Variable amount (per director and per meeting)
Board member
10,000
2,500
Board committee member
2,500
2,500
Vice-Chairman of the Board of Directors
10,000
—
Chairman of a Board committee
5,000
—
(1) For Board members joining during the course of the fiscal year, calculated pro-rata to number of months spent on the Board of Directors. Amounts may be cumulative.
The Board of Directors may also compensate members on an exceptional basis for special assignments, within the meaning
of article L.225-46 of the French Commercial Code. To date, no special assignments have been given to any of the board
members.
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The Board of Directors, in accordance with the Articles of Association, decided on March 11, 2021 to appoint Philippe Moons
as an observer. Mr. Moons’ compensation is provided for under the Board of Directors compensation policy adopted by the
Shareholders Meeting, at the rate of €1,250 per meeting of the Board of Directors and the ESG Committee in which he attends.
At its meeting on December 15, 2023, the Board of Directors decided that Mr. Eric Baclet would receive, in respect of his role
as chair and coordinator of a working group on cybersecurity, between 4 and 6 directors' fees with a unit value of 2,500 euros
gross per year, depending on the number of working group meetings.
At the same meeting, the Board of Directors also decided that Mr. Jean-François Tiné would receive, in respect of his role as
co-leader and co-coordinator of a working group on financial strategy, between 4 and 6 attendance fees, with a unit value of 2,500
euros gross per year, depending on the number of working group meetings.
Chairman of the Board Compensation – Jean-François Mouney
The components of the overall annual compensation of Mr. Mouney for his duties within the GENFIT group during the fiscal
year ended December 31, 2024 are summarized below:
•
gross fixed compensation under article L.22-10-16 of the French Commercial Code;
•
attendance fees for participation in the work of the committees of the Board of Directors (as a member and/or Chairman),
according to the distribution decided by the Board of Directors; and
•
other benefits related to his position including use of a company vehicle and eligibility for the Group’s life insurance and
health insurance benefits.
Mr. Mouney does not have an employment contract with the Company.
Fixed Compensation
Mr. Mouney received a gross fixed compensation of €220,500.
Attendance Fees
Mr. Mouney also received gross compensation of €40,000 as Chairman of the Board of Directors, which amount includes
Directors’ fees for his participation in certain Board committees (Nomination and Compensation Committee, Strategy and
Alliances Committee and ESG Committee).
Other Compensation
The benefits in kind granted to Mr. Mouney for the year ended December 31, 2024 consisted of the use of a company car
valued at €7,200 and eligibility for the Group’s life insurance and health insurance benefits.
Chief Executive Officer Compensation – Pascal Prigent
Our only executive officer under French law is our Chief Executive Officer.
Mr. Prigent's compensation for the fiscal year ended December 31, 2024 is composed of:
•
fixed compensation;
•
variable compensation (annual assessment);
•
equity awards subject to presence and performance conditions;
•
other benefits:
◦
change of control and severance benefits, and
◦
use of a company vehicle and eligibility for the Group’s life insurance and health insurance benefits.
Mr. Prigent does not have an employment contract with the Company.
The following table sets forth information regarding compensation earned during the year ended December 31, 2024 by Mr.
Prigent.
NAME AND PRINCIPAL POSITION
FIXED
COMPENSATION
VARIABLE
COMPENSATION
(1)(2)
EQUITY
AWARDS (1)
ALL OTHER
COMPENSATION
TOTAL
(€)
(€)
(€)
(€)
(€)
Pascal Prigent, Chief Executive Officer
405,562
202,781
59,300
14,302
681,945
(1)
Variable compensation and equity awards subject to “Say-on-Pay” approval of the Shareholders’ Meeting to be called to approve the financial statements for the
year ended December 31, 2024.
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(2)
Including variable compensation and exceptional bonus.
The various components of the overall annual compensation of Mr. Prigent for his duties as Chief Executive Officer of the
GENFIT group during the fiscal year ended December 31, 2024 are summarized below:
Fixed Compensation
Through his executive officer contract (contrat de mandat social), Mr. Prigent received a gross fixed compensation of
€405,562.
Variable Compensation
After evaluating the performance conditions relating to the variable compensation of the Chief Executive Officer, the Board
of Directors has determined that the Chief Executive Officer’s variable compensation will be €101,391. This amount represents
25% of the Chief Executive Officer's fixed compensation.
The Board of Directors has determined that 50% of the Chief Executive Officer's objectives were achieved in 2024.
The 2024 objectives of the Chief Executive Officer and their weighting in the annual assessment of his performance were
defined at the beginning of the financial year by the Board of Directors around the following four pillars/assessment criteria:
•
Execution of the Company's R&D programs with reference to (i) obtaining regulatory approval from the FDA or the EMA to
market elafibranor in PBC, (ii) progress, in line with roadmap, of the various clinical and preclinical studies scheduled for
2024 for the development of the drug candidates GNS561, NTZ, SRT-015, CLM-022, VS-01-HE and VS-02 in ACLF, and (iii)
the strategy for commercializing the NIS4® and NIS2+® technologies (representing a relative weight in the evaluation of
the performance of 35%);
•
Development of the VS-01 candidate in ACLF with reference to (i) the progress of the program in line with the roadmap
and (ii) the achievement of positive interim results in the ongoing UNVEIL-IT® clinical trial (representing a relative
weighting in the assessment of the CEO's overall performance of 30%);
•
Financial performance of the Company with reference to the evolution of the Company's stock market valuation and the
execution of the forward-looking cash management plan (representing a relative weight in the evaluation of the
performance of 20%);
•
Implementation of the Company's CSR policy with reference to the execution of the 2024 roadmap, as defined on the
recommendation of the ESG Committee and described in the extra-financial performance report, with reference to the
overall extra-financial performance, as measured according to a panel of reference indices, and with reference, finally, to
measurable indicators, in particular the diversity and satisfaction of the Company's employees (representing a relative
weight in the evaluation of the performance of 15%).
The Board of Directors evaluated the performance of the Chief Executive Officer as follows:
•
Execution of the Company's R&D programs: 43% of the target achieved, considering the FDA and EMA marketing
authorization for elafibranor in PBC and the execution, in accordance with the roadmap, of the development programs for
the drug candidates GNS561, CLM-022 and VS02 in HE;
•
Development of the VS-01 candidate in ACLF: 0% of the target achieved, considering the delay in the UNVEIL-IT® clinical
trial roadmap;
•
Financial performance of the Company: 100% of the target achieved, considering the evolution of the Company's market
valuation and the execution of the Company's cash flow management plan during the 2024 financial year; and
•
Implementation of the Company's CSR policy: 100% of the target achieved, considering the execution of the 2024
roadmap and the Company's maintenance of a very good level or progress on a panel of benchmark indices (Ethifinance,
ISS, Leem, etc.) evaluating the Company's non-financial performance and, finally, considering the evolution of indicators
measuring, in particular, the diversity and satisfaction of the Company's personnel.
Furthermore, considering that the conclusion of the royalty financing agreement with HCRx constitutes an exceptional
achievement that was not fully taken into account in the definition of the Chief Executive Officer's objectives at the beginning of
the 2024 financial year, the Board of Directors, on the recommendation of the Nomination and Compensation Committee, has
decided to set at €101,390.50, or 25% of his gross annual fixed remuneration for 2024, as the amount of an exceptional bonus to be
paid to the Chief Executive Officer.
The Chief Executive Officer was not present during the Board of Directors discussion of his performance.
All variable compensation is subject to approval at the upcoming Shareholders’ Meeting scheduled on June 17, 2025 called to
approve the financial statements for the year ended December 31, 2024.
Equity Awards
Equity Awards granted in 2024:
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During the year ended December 31, 2024, Mr. Prigent received a grant of 35,000 stock options (SO D 2024) and 20,000 free
shares (AGA D 2024) with vesting subject to presence and performance conditions. The performance conditions attached to the
stock options and free shares granted in 2024 are linked to internal and external conditions, in particular, the acquisition of new
programs in accordance with the Group's strategy, clinical and regulatory advances in R&D programs and stock price. The
performance conditions are detailed hereafter. The grant of these instruments is subject to approval at the upcoming
Shareholders’ Meeting called to approve the financial statements for the year ended December 31, 2024.
Equity Awards vested in 2024:
In October 2024, after the recognition of the fulfillment of the presence condition and the assessment of the performance
conditions (as of October 19, 2024) of the stock option plan SO D 2021 of which the Chief Executive Officer is the beneficiary,
29,750 SO D 2021 stock options have vested in favor of the Chief Executive Officer, (compared to the maximum 35,000 SO
provided for by the plan regulations) in respect of the achievement of the performance criteria, considering:
•
at least one of the performance conditions relating to the development of elafibranor in PBC and the ELATIVE® study was
met with (i) the joint announcement made on June 30, 2023 by Ipsen and the Company of the positive interim results of
the ELATIVE® clinical study evaluating the safety and efficacy of elafibranor in PBC, (ii) the announcement made by Ipsen
on December 7, 2023, regarding the assurance that the registration dossiers it had submitted to the EMA and the FDA
were complete, and (iii) the joint announcements made by Ipsen and the Company regarding the accelerated approval of
Iqirvo® (elafibranor) for the treatment of PBC, first by the FDA (on June 10, 2024) and then by the European Union (on
September 23, 2024);
•
at least one of the performance conditions relating to the development of NTZ and the ACLF franchise was fulfilled with
the announcement (i) of the completion, in September 2022 of the acquisition of Versantis AG, enabling the Company to
develop drug candidates VS01 and VS02 for ACLF and hepatic encephalopathy, respectively, (ii) the signing, in May 2023,
with Seal Rock Therapeutics of a license agreement enabling the Company to develop the drug candidate SRT-015 for
ACLF; and (iii) the signing, in July 2023, with Celloram of a license agreement enabling the Company to develop the drug
candidate CLM-022 for liver diseases, including ACLF;
•
at least one of the performance conditions relating to the development of the Company's product portfolio (excluding
elafibranor, NTZ and new molecules entering the ACLF franchise) has been met with the announcement of the signing, in
December 2021, of a license agreement with Génoscience allowing the Company to develop the drug candidate GNS561 in
CCA; and
•
neither of the two performance conditions relating to the NIS4® technology has been met.
The performance conditions of the SO D 2021 plan which was adopted by the Board of Directors in 2021 are detailed below.
In April 2024, the Board of Directors noted that the attendance condition had been met and assessed the level of
achievement of the performance conditions as of March 31, 2024, of the AGA D 2021 plan, of which the Chief Executive Officer is
the beneficiary. As a result, of the 15,000 bonus shares initially granted to the Chief Executive Officer in 2021 subject to
performance conditions, none have been definitively acquired by the Chief Executive Officer. Although the operational
performance conditions were met, the cumulative application of the condition relating to the Company's share price meant that
none of the free shares initially allocated under the AGA D 2021 plan were definitively acquired; these free shares therefore
became null and void.
Other Compensation
Mr. Prigent received use of a company car valued at €4,787, and was eligible for the Group’s life insurance and healthcare
plans and the payment of premiums for unemployment insurance Social Security for Business Managers (GSC), which guarantees
the payment of compensation in the event of unemployment (up to 55% of net professional tax income for the uncapped share
for 12 months following the loss of the position) given that corporate officers are not eligible for standard French unemployment
benefits, valued at €9,515.
Change of Control and Severance Benefits
Mr. Prigent also benefits from a severance payment equal to 12 months’ gross compensation, calculated on the basis of the
last 12 months, increased, where applicable, by the amount of annual variable compensation due for the previous fiscal year and it
would be paid if, and only if, one of the following three performance conditions is achieved at the time that his post is terminated:
•
elafibranor has been granted marketing authorization by the FDA or EMA in PBC;
•
a license agreement for NTZ, GNS561, VS-01 or VS-02 has been signed for the U.S. market and / or for at least two of the
five major European markets (Germany, France, Italy, United Kingdom and Spain) and / or for Japan; or
•
there is a takeover of the Company.
Mr. Prigent also benefits from a non-compete indemnity equal to 18 months of gross fixed compensation, calculated on the
basis of the gross amounts due for the past twelve months end, and where applicable, by the amount of the annual variable
compensation due for the previous year. The amounts which he may receive under a non-compete indemnity are not cumulative
with his severance payment and vice-versa. The non-compete covenant would not apply to the Chief Executive Officer if he
leaves the Company, for whatever reason, either by decision of the Board of Directors or at his initiative, following a takeover of
the Company.
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Compensation recovery policy
In October 2022, the SEC adopted rules, pursuant to Rule 10D-1 under the Securities Exchange Act of 1934, as amended, or
the Exchange Act, requiring national securities exchanges and national securities associations, such as Nasdaq, to amend their
relevant listing standards no later than November 28, 2023 to require listed companies to adopt a written compensation recovery
(clawback) policy providing for the recovery, in the event of a required accounting restatement, of incentive-based compensation
received by the Chief Executive Officer and certain other “executive officers” as defined in Rule 10D-1(d) under the Exchange Act
that is wholly or partially contingent on the attainment of financial performance criteria based on reported financial information
that has been determined to be erroneous and has required restatement of the financial statements for accounting purposes.
Our Board of Directors adopted at its meeting on March 28, 2023 a written compensation recovery policy, or the Recovery Policy,
which, in accordance with French law, was presented to our shareholders and approved at our Annual General Meeting. That
policy is now in force with respect to the Chief Executive Officer and other executive officers, subject to compliance with
applicable local laws and is included as an exhibit to this annual report for the year ended December 31, 2024.
Limitations on Liability and Indemnification Matters
Under French law, provisions of bylaws that limit the liability of Directors are ineffective. However, French law allows sociétés
anonymes to contract for and maintain liability insurance against civil liabilities incurred by any of their Directors and officers
involved in a third-party action, provided that they acted in good faith and within their capacities as Directors or officers of the
company. Criminal liability cannot be indemnified under French law, whether directly by the company or through liability
insurance.
We have liability insurance for our Directors and officers and insurance coverage for liability under the Securities Act. We
have also entered into agreements with our Directors and senior management to provide contractual indemnification. With
certain exceptions and subject to limitations on indemnification under French law, these agreements will provide for
indemnification for damages and expenses including, among other things, attorneys’ fees, judgments and settlement amounts
incurred by any of these individuals in any action or proceeding arising out of his or her actions in that capacity. We believe that
this insurance and these agreements are necessary to attract qualified Directors and members of senior management.
Certain of our non-employee Directors may, through their relationships with their employers or partnerships, be insured
against certain liabilities in their capacity as members of our Board of Directors.
These agreements may discourage shareholders from bringing a lawsuit against our Directors and senior management for
breach of their fiduciary duty. These provisions also may have the effect of reducing the likelihood of derivative litigation against
Directors and senior management, even though such an action, if successful, might otherwise benefit us and our shareholders.
Furthermore, a shareholder’s investment may be adversely affected to the extent we pay the costs of settlement and damage
awards against Directors and officers pursuant to these insurance agreements.
Equity Incentives
We believe our ability to grant equity incentives is a valuable and necessary compensation tool that allows us to attract and
retain the best available personnel for positions of substantial responsibility, provides additional incentives to our employees,
senior management and Directors and promotes the success of our business. Due to French corporate law and tax
considerations, we have historically granted several different equity incentive instruments to our Directors, senior management,
employees and other service providers, including:
•
restricted, or free, shares (otherwise known as actions gratuites, or AGA);
•
stock options (otherwise known as options de souscription et/ou d’achat d’actions, or SO); and
•
share warrants (otherwise known as bons de souscription d’actions, or BSA), which have historically only been granted to
non-employee Directors.
Our Board of Directors has authority to grant these equity incentive instruments and the aggregate amount authorized to be
granted under these instruments must be approved by a two-thirds majority of the votes held by our shareholders present,
represented or voting by authorized means, at the relevant extraordinary shareholders’ meeting. Once approved by our
shareholders, our Board of Directors can grant restricted (free) shares (AGA) and stock options (SO) for up to 38 months from the
date of the applicable shareholders’ approval. The authority of our Board of Directors to grant equity incentives may be extended
or increased only by extraordinary shareholders’ meetings. As a result, we typically request that our shareholders authorize new
pools of equity incentive instruments at every annual shareholders’ meetings.
We have two types of share-based compensation plans for our senior management and employees, the AGA plan and the SO
plan. In general, vesting of our stock options and free shares is subject to continued employment or service of the holder and all
vested stock options must be exercised within post-termination exercise periods set forth in the grant documents. In the event of
certain changes in our share capital structure, such as a consolidation or share split or dividend, French law and applicable grant
documentation provides for appropriate adjustments of the numbers of shares issuable and/or the exercise price of the
outstanding warrants.
As of April 1, 2025, share warrants, stock options and free shares were outstanding allowing for the potential purchase and/
or free allocation of an aggregate of 1,511,475 ordinary shares.
116
Share Warrants (BSA)
In the past, share warrants were granted to the independent members of the former Supervisory Board and of the Board of
Directors and scientific consultants. Similar to options, share warrants entitle a holder to exercise the warrant for the underlying
vested shares at an exercise price per share determined by our Board of Directors and at least equal to the fair market value of an
ordinary share on the date of grant. However, unlike options, the exercise price per share is fixed as of the date of implementation
of the plans pursuant to which the warrants may be granted, rather than as of the date of grant of the individual warrants.
Pursuant to delegations granted by our shareholders, our Board of Directors, determines the recipients of the warrants, the
dates of grant, the number and exercise price of the share warrants to be granted, the number of shares issuable upon exercise
and certain other terms and conditions of the share warrants, including the period of their exercisability and their vesting
schedule.
As of April 1, 2025, no warrants plan is outstanding. The two BSA 2017 plans and the BSA 2019 plan expired respectively in
2022 and 2024 without any warrants having been exercised.
Plan title
BSA 2017-A
BSA 2017-B
BSA 2019
Meeting date
June 16, 2017
June 16, 2017
June 15, 2018
Dates of allocation
November 21, 2017
November 21, 2017
October 31, 2019
Exercise conditions(1)
1 warrant / 1 share
1 warrant / 1 share
Subscription periods
From December 11, 2017 to December
26, 2017
From July 1, 2018 to July 15, 2018
From October 31, 2019 to
November 30, 2019
Total number of BSAs granted
18,345
18,345
35,070
Start date for the exercise of
the BSAs
July 1, 2018
July 16, 2018
July 1, 2019
BSA expiry date
June 30, 2022
July 15, 2022
May 31, 2024
BSA issuance price
€2.00
€2.00
€1.23
BSA exercise price per share
€19.97
€19.97
€12.32
Number of shares subscribed as of
April 1, 2025
0
0
0
BSA cancelled or lapsed
18,345
18,345
35,070
BSA remaining
as of April 1, 2025
0
0
0
(1)
Exercisable by tranches of a minimum of 2,000 BSA, or a multiple thereof, except for outstanding balance under 2,000.
Free Shares (AGA)
Free shares may be granted to any individual employed by us or by any affiliated company. Free shares may also be granted
to our Chief Executive Officer (directeur général) and deputy executive officers (directeurs généraux délégués). No free shares
may be granted to the Directors. During the year ended December 31, 2024, Mr. Prigent, our Chief Executive Officer, received a
free share grant. We currently do not have any deputy executive officers. However, under French law, the maximum number of
shares that may be granted shall not exceed 10% of the share capital as at the date of grant of the free shares (40% if the
allocation benefits all employees).
Our Board of Directors has the authority to administer the AGA plans. Our Board of Directors determines the recipients, the
dates of grant, the number of free shares to be granted and the terms and conditions of the free shares, including the length of
their vesting period (starting on the grant date, during which the beneficiary holds a right to acquire shares for free but has not
yet acquired any shares) and holding period (starting when the shares are issued and definitively acquired but may not be
transferred by the recipient) within the limits determined by the shareholders. Our shareholders have determined that the vesting
period should be set by the Board of Directors and should not be less than one year from the date of grant and that the optimal
holding period should be set by the Board of Directors. From the beginning of the vesting period, the cumulated vesting and
holding period should not be less than three years.
The Board of Directors has the authority to modify awards outstanding under our AGA plans, subject to the consent of the
beneficiary for any modification adverse to such beneficiary. For example, the board has the authority to release a beneficiary
from the continued service condition during the vesting period after the termination of the employment.
The free shares granted under our AGA plans will be definitively acquired at the end of the vesting period as set by our Board
of Directors subject to performance conditions and continued service during the vesting period, except if the board releases a
given beneficiary from this condition upon termination of his or her employment contract. At the end of the vesting period, the
beneficiary will be the owner of the shares. However, the shares may not be sold, transferred or pledged during the holding period.
In the event of disability before the end of the vesting period, the free shares shall be definitively acquired by the beneficiary on
the date of disability. In the event the beneficiary dies during the vesting period, the free shares shall be definitively acquired at
the date of the request of allocation made by his or her beneficiaries in the framework of the inheritance provided that such
request is made within six months from the date of death.
117
As of April 1, 2025, our free shares plans will vest, subject to performance conditions and continued employment, as follows:
Plan title
AGA D and S 2021
AGA D and S 2022
AGA D and S 2023
AGA D and S 2024
AGA S 2025
Date of Shareholders' Meeting
November 27, 2019
May 25, 2022
May 25, 2022
May 24, 2023
May 22, 2024
Date of allocation
March 30, 2021
(S)
October 14, 2022
March 10, 2023
March 5, 2024
February 28, 2025
March 17, 2021
(D)
Vesting conditions
(1)
(1)
(1)
(1)
(1)
Number of free shares granted to
employees
32,400
38,900
30,100
47,900
53,600
Number of free shares granted to the
Chief Executive Officer:
15,000
20,000
10,000
20,000
0
– Pascal Prigent
15,000
20,000
10,000
20,000
0
Vesting date (subject to vesting
conditions)
April 1, 2024
October 17, 2025
March 14, 2026
March 16, 2027
March 16, 2028
Stock price on allocation date
4,00 € (S)
4,08 €
4,05 €
3,19 €
3.48 €
4,15 € (D)
Number of lapsed or voided shares
19,900
3300
2600
2200
0
Number of free shares vested(2)
27500
0
0
0
0
Number of outstanding free shares
0
55,600
37,500
65,700
53,600
(1)
Subject to meeting performance conditions (detailed below) and continued employment with us.
(2)
The vesting date varies depending on the fulfillment of the performance and presence conditions.
Stock Options (SO)
Stock options may be granted to any individual employed by us or by any affiliated company. Stock options may also be
granted to our Chief Executive Officer (directeur général) and deputy executive officers (directeurs généraux délégués). No stock
options may be granted to the Directors. In addition, incentive stock options may not be granted to owners of shares possessing
10% or more of the share capital of our company.
Since 2016, the Board of Directors, using the authorizations granted to them by the extraordinary shareholders’ meeting, has
granted stock options to the Chief Executive Officer and certain senior managers. These stock options were put in place as
motivation and retention instruments for the current teams, to recruit new talents interested in participating in our future
development and include them in obtaining operational and financial objectives.
These stock options allow us to continue to offer to new employees competitive packages compared to other companies in
our sector, in particular U.S. companies; substantiate in shares a portion of the total profit-sharing of our employees, this
contributing to the alignment of their interests with those of shareholders; and motivate the employees to achieve long-term
objectives, and particularly to retain some of them by establishing a direct link between their level of profit sharing and the
evolution of the stock price.
Stock options issued pursuant to these plans provide the holder with the right to purchase a specified number of ordinary
shares from us at a fixed exercise price payable at the time the stock option is exercised, as determined by our Board of Directors.
The plans generally provide that the exercise price for any stock option will be no less than 80% of the volume weighted average
price of the 20 market trading days prior to the day of the Board of Directors’ decision to grant the options. Starting from 2020,
stock options granted to the Chief Executive Officer are granted without discount. The vesting of the stock options is subject to
performance conditions and the continued presence in our company. These conditions are evaluated over a period of three years
and reflect our mid-term objectives. Incentive stock options and non-statutory stock options may be granted under the SO plans.
Our Board of Directors, and in certain cases our Chief Executive Officer, has the authority to administer and interpret the SO
plans. Subject to the terms and conditions of the stock option plan, our Board of Directors determines the recipients, dates of
grant, exercise price, number of stock options to be granted and the terms and conditions of the stock options, including the
length of their vesting schedules. Our Board of Directors is not required to grant stock options with vesting and exercise terms
that are the same for every participant. The term of each stock option granted under the SO plans will generally be 10 years from
the date of grant. Further, stock options will generally terminate on the earlier of when the beneficiary ceases to be an employee
of our company or upon certain transactions involving our company.
Our Board of Directors has the authority to modify awards outstanding under our SO plans, subject to the written consent of
the beneficiary for any modification adverse to such beneficiary. For example, our Board of Directors has the authority to extend a
post-termination exercise period.
118
Stock options granted under the SO plans generally may not be sold, transferred or pledged in any manner other than by will
or by the laws of descent or distribution. In the event of disability, unless otherwise resolved by our Board of Directors, the
beneficiary’s right to exercise the vested portion of his or her stock option generally terminates six months after the last day of
such beneficiary’s service, but in any event no later than the expiration of the maximum term of the applicable stock options. In
the event the beneficiary dies during the vesting period, then, unless otherwise resolved by our Board of Directors, the
beneficiary’s estate or any recipient by inheritance or bequest may exercise any portion of the stock option vested at the time of
the beneficiary’s death within the six months following the date of death, but in any event no later than the expiration of the
maximum term of the applicable stock options.
The main terms of the SO plans are as follows:
Plan title
SO 2016-1
SO
2016-2
SO
2017-1
SO
2017-2
SO
2018
SO 2018
US
SO 2019
SO 2019
US
SO
2019 US-2
SO
2020
SO 2020
US
Date of Shareholders'
Meeting
June 21,
2016
June 21,
2016
June 16,
2017
June 16,
2017
June 15,
2018
June 15,
2018
June 15,
2018
June 15,
2018
November
27, 2019
November
27, 2019
November
27, 2019
Date of allocation
December
15, 2016
December
15, 2016
November
21, 2017
November
21, 2017
November
7, 2018
November
7, 2018
July 18,
2019
July 18,
2019
November
27, 2019
December
11, 2020
December
11, 2020
Exercise conditions
(1) (2)
(1) (2)
(1) (2)
(1) (2)
(1) (2)
(1) (2)
(1) (2)
(1) (2)
(1) (2)
(1) (2)
(1) (2)
Number of stock
options granted to
employees
42 250
21 125
61 497
30 753
95 000
17 500
82 750
30 620
13 350
103 750
56,250
Number of stock
options granted to
the Chief Executive
Officer
6,667
3,333
11,333
5,667
27,000
0
25,130
0
0
35,000
0
– Jean-François
Mouney
6,667
3,333
11,333
5,667
17,000
0
15,130
0
0
0
0
– Pascal Prigent
0
0
0
0
10,000
0
10,000
0
0
35,000
0
Start date for the
exercise of the stock
options(3)
December
16, 2019
December
16, 2019
January 1,
2021
January 1,
2021
January 1,
2022
January 1,
2022
September
17, 2022
September
17, 2022
January 17,
2023
December
31, 2023
December
31, 2023
Stock options expiry
date
December
16, 2026
December
16, 2026
January 1,
2027
January 1,
2027
January 1,
2028
September
30, 2028
September
17, 2029
September
17, 2029
January 17,
2030
December
31, 2027
December
31, 2027
Stock options
exercise price per
share(4)
€15.79
€15.79
€17.91
€17.91
€16.00
€21.65
€13.99
€16.90
€14.31
€3.50 (C)
€4.52
€4.38 (D)
Number of stock
options exercised as
of April 1, 2025
0
0
0
0
0
0
0
0
0
15,000
0
Number of lapsed or
voided stock options
14,519
9,151
29,618
18,655
53,671
7 787
56,537
25,507
13,350
22,500
28,750
Number of stock
options vested
34,398
15,307
43,212
17,765
68,329
9,713
51,343
5,113
0
116,250
27,500
Number of stock
options remaining to
vest as of April 1, 2025
0
0
0
0
0
0
0
0
0
0
0
119
Plan title
SO
2021
SO 2021
US
SO 2022
SO US
2022
SO SU
2022
SO 2023
SO US
2023
SO SU
2023
SO 2024
SO US
2024
SO SU
2024
Date of Shareholders'
Meeting
June 30,
2021
June 30,
2021
May 25,
2022
May 25,
2022
May 25,
2022
May 25,
2022
May 25,
2022
May 25,
2022
May 24,
2023
May 24,
2023
May 24,
2023
Date of allocation
October
18, 2021
October
18, 2021
October
14, 2022
October
14, 2022
October
14, 2022
March 10,
2023
March 10,
2023
March 10,
2023
March 5,
2024
March 5,
2024
March 5,
2024
Exercise conditions
(1) (2)
(1) (2)
(1) (2)
(1) (2)
(1) (2)
(1) (2)
(1) (2)
(1) (2)
(1) (2)
(1) (2)
(1) (2)
Number of stock
options granted to
employees
134,375
32,500
131,000
34,625
8,750
108,700
30,200
16,300
156,875
20,625
21,250
Number of stock
options granted to
the Chief Executive
Officer
35,000
0
35,000
0
0
35,000
0
0
35,000
0
0
– Jean-François
Mouney
0
0
0
0
0
0
0
0
0
0
– Pascal Prigent
35,000
0
35,000
0
0
35,000
0
0
35,000
0
0
Start date for the
exercise of the stock
options(3)
October
20, 2024
October
20, 2024
October
18, 2025
October
18, 2025
December
3, 2025
March 14,
2026
March 14,
2026
March 14,
2026
March 16,
2027
March 16,
2027
March 16,
2027
Stock options expiry
date
October
20, 2031
October
20, 2031
October
17, 2032
October
17, 2032
December
3, 2032
March 13,
2033
March 13,
2033
March 13,
2033
March 15,
2034
March 15,
2034
March 15,
2034
Stock options
exercise price per
share(4)
€2.61 (C)
€3.22
€3.12 (C)
€3.94
€2.95
€3.26 (C)
€4.05
€3.26
€2.74 (C)
€3.30
€2.74
€3.26 (D)
€3.91 (D)
$4.07 (D)
€3.42 (D)
Number of stock
options exercised as
of April 1, 2025
3,400
0
0
0
0
0
0
0
0
0
0
Number of lapsed or
voided stock options
28,806
11,250
4,000
11250
5000
0
12600
10000
0
5625
10000
Number of stock
options vested
140,569
21,250
0
0
0
0
0
0
0
0
0
Number of stock
options remaining to
vest as of April 1, 2025
0
0
162,000
23,375
3,750
143,700
17,600
6,300
191,875
15,000
11,250
Plan title
SO SA
2025
SO US 2025
SO SU 2025
Date of Shareholders' Meeting
May 22, 2024
May 22, 2024
May 22, 2024
Date of allocation
February 28, 2025
February 28, 2025
February 28, 2025
Exercise conditions
(1) (2)
(1) (2)
(1) (2)
Number of stock options granted
to employees
166,000
5,625
15,250
Number of stock options granted
to the Chief Executive Officer
0
0
0
– Jean-François Mouney
0
0
0
– Pascal Prigent
0
0
0
Start date for the exercise of the
stock options(3)
March 16, 2028
March 16, 2028
March 16, 2028
Stock options expiry date
March 15, 2035
March 15, 2035
March 15, 2035
Stock options exercise price per
share(4)
€2.91
€3.44
€2.91
Number of stock options
exercised as of April 1, 2025
0
0
0
Number of lapsed or voided
stock options
0
0
0
Number of stock options vested
0
0
0
Number of stock options
remaining to vest as of April 1,
2025
166,000
5,625
15,250
(1)
One share per stock option exercised; exercisable by one-third of the number of stock options held by each beneficiary.
(2)
Performance conditions (detailed below).
(3)
Subject to meeting performance and presence conditions.
120
(4)
The exercise price of the stock options was set at 80% of the arithmetic average of Innate's volume-weighted average share prices for the twenty trading days
preceding the grant date, except for SO US and SO D, for which the exercise price of the stock options was set at 100% of the arithmetic average of Innate's
volume-weighted average share prices for the twenty trading days preceding the grant date. (C): SO exercise price for French employees (SO C) ; (D): SO
exercise price for the Chief Executive Officer (SO D).
Until 2020, all of our stock option plans (SO and SO US) and our AGA D free share plans were subject to internal performance
conditions related to our R&D programs, and to external performance conditions related to our stock price. The other free share
plans (AGA S) are subject only to internal performance conditions, as further described below.
Since then, and starting with the 2020 stock option plans, the Board of Directors decided that the stock option and AGA
plans would only be subject to internal performance conditions, with the exception of the AGA D plans dedicated to the Chief
Executive Officer, which would have both internal and external performance conditions.
Plans
Nature of performance conditions
SO D 2021
SO C 2021
SO US 2021
Evaluation
date for
performance
conditions:
10/20/2024
a) 50% of the Stock Options will be exercisable if at least one of the following three conditions relating to the development of elafibranor in
PBC and to the ELATIVE® clinical trial is fulfilled: (i) ELATIVE® topline results are released to the market before or during the second quarter
of 2023; (ii) a new drug application is filed for elafibranor in PBC with the Food and Drug Administration (FDA) or the European Medicines
Agency (EMA) in the second half of 2023 or before; (iii) elafibranor is approved by a regulatory authority in 2024. b) 15% of the Stock Options
will be exercisable if at least one of the following two conditions relating to the development of NTZ and the ACLF franchise is fulfilled: (i) a
Phase 2 clinical study or a more advanced clinical study evaluating NTZ is in ongoing or was carried out; (ii) the Company develops or
acquires the rights to a new molecule (including through repositioning) for development in ACLF. c) 15% of the Stock Options will be
exercisable if at least one of the following two conditions relating to the NIS4® diagnostic technology is fulfilled: (i) if a research and
development partnership agreement relating to the implementation of the NIS4® diagnostic technology into an IVD test with at least one
major MASH player (“big pharma”, biotech company, institution, etc.) is entered into by the Company; (ii) Labcorp’s NASHNext® LDT is
reimbursed by at least three payers in the United States (insurance, integrated system, etc). d) 20% of the Stock Options will be exercisable
if at least one of the following two conditions relating to the development of the product pipeline of the Company is fulfilled: (i) At least one
new molecule (excluding elafibranor and NTZ) is developed by the Company or the Company has acquired development rights to a new
molecule outside of the ACLF franchise (performance already covered by b(ii) above); (ii) At least two Phase 2 clinical studies or more
advanced clinical studies are ongoing or have been completed; not including a Phase 2 clinical study or more advanced clinical study in NTZ
(performance already covered by b(i) above).
Plans
Nature of performance conditions
AGA S 2021
AGA D 2021
Evaluation
date for
performance
conditions:
3/31/2024
Internal conditions - a) 50% of the Free Shares AGA S 2021 will be exercisable, and 7,500 of the Free Shares AGA D 2021 will be exercisable, if
at least one of the following three conditions relating to PBC and ELATIVE® is fulfilled: (i) “Last Patient Visit” in ELATIVE® in the fourth quarter
of 2022 or earlier; (ii) If the results of ELATIVE® are released to the market before or during the first half of 2023; (iii) if a registration request is
filed for elafibranor in PBC with the Food and Drug Administration (FDA) or the European Medicines Agency (EMA) in 2023. b) 25% of the
Free Shares AGA S 2021 will be exercisable, and 3,750 of the Free Shares AGA D 2021 will be exercisable, if at least one of the following two
conditions relating to the NIS4® diagnostic is fulfilled: (i) if a research and development partnership agreement with at least one major MASH
player (“big pharma”, biotech company, institution, etc.) is entered into by the Company; (ii) the NIS4® diagnostic is used in at least 20 clinical
studies. c) 25% of the Free Shares AGA S 2021 will be exercisable, and 3,750 of the Free Shares AGA D 2021 will be exercisable, if at least one
of the following two conditions relating to the product pipeline of the Company is fulfilled: (i) initiation of a clinical study for a new indication
with elafibranor or NTZ; (ii) if the Company develops or acquires the rights to a new molecule.
External conditions - Each applicable portion of all 15,000 Free Shares under the AGA D 2022 plan, as each Internal Conditions above is met,
is then subject to the External Condition according to the methods described below. The degree of fulfillment of the External Condition
relating to the Company's stock market price will be determined according to the relative performance of GENFIT shares. Each applicable
portion of all 15,000 Free Shares under the AGA D 2021 plan, as each Internal Conditions above is met, will be definitively acquired per the
following conditions: (a) No AGA D 2021 shall vest if the Final Price is strictly lower than the Initial Price; (b) If the Final Price is between (i) a
value equal to or greater than the Initial Price and (ii) a value lower than the Ceiling Price, the number of AGA D 2021 definitively allocated
will be equal to:[(Final Price / Initial Price) -1] x 1/2 of the number of AGA D 2021 instruments (c) All AGA D 2021 if the Final Price is equal to or
higher than the Ceiling Price. The notions of “Final Price”, “Initial Price” and “Ceiling Price” are defined in the plan regulations.
121
Plans
Nature of performance conditions
SO D 2022
SO C 2022
SO US 2022
SO SU 2022
AGA S 2022
AGA D 2022
Evaluation
date for
performance
conditions:
- 10/17/2025
for SO D
2022/SO C
2022/SO US
2022/AGA S
2022/ AGA D
2022
- 12/3/2025
for SO SU
2022
Internal conditions - a) 50% of the instruments SO D 2022/SO C 2022/SO US 2022/ SO SU 2022/AGA S 2022 will be exercisable or definitively
vest, and 10,000 of the Free Shares for the AGA D 2022 will vest, if during the 2022 financial year and then at any time during the Vesting
Period, 3 new R&D programs (at the rate of one third of these 2022 instruments per new program) complete the Company's R&D program
portfolio (as it was at 12/31/2021); that these programs are at the so-called clinical development stage when this addition is made or that
they reach this stage afterwards and that this addition originates: (i) a business-development operation (licensing-in, M&A, etc.), or (ii) the
identification of new opportunities resulting from internal research (repositioning). b) 25% of the instruments SO D 2022/SO C 2022/SO US
2022/ SO SU 2022/AGA S 2022 will be exercisable or definitively vest, and 5,000 of the Free Shares for the AGA D 2022 will vest, if at least one
of the following three conditions relating to the development of the elafibranor development program is fulfilled: (i) obtaining the main
results of the first part of the ELATIVE® trial in the second quarter of 2023; (ii) filing of a Marketing Authorization Application for elafibranor
in the second half of 2023; (iii) marketing authorization for elafibranor in 2024. c) 15% of the instruments SO D 2022/SO C 2022/SO US 2022/
SO SU 2022/AGA S 2022 will be exercisable or definitively vest, and 3,000 of the Free Shares for the AGA D 2022 will vest, if at least one of the
following two conditions relating to the development of the NTZ program in the ACLF is fulfilled: (i) First clinical results in 2022; (ii) start of a
Phase 2 clinical trial in the first half of 2023. d) 10% of instruments SO D 2022/SO C 2022/SO US 2022/ SO SU 2022/AGA S 2022 will be
exercisable or definitively vest, and 2,000 of the Free Shares for the AGA D 2022 will vest, if as part of the development of the GNS561
program, a Phase 2b trial starts in the first half of 2023.
External conditions - Each applicable portion of all 20,000 Free Shares under the AGA D 2022 plan, as each Internal Conditions above is met,
is then subject to the External Condition according to the methods described below. The degree of fulfillment of the External Condition
relating to the Company's stock market price will be determined according to the relative performance of GENFIT shares. Each applicable
portion of all 20,000 Free Shares under the AGA D 2022 plan, as each Internal Conditions above is met, will be definitively acquired per the
following conditions: (a) No AGA D 2022 shall vest if the Final Price is strictly lower than the Initial Price; (b) If the Final Price is between (i) a
value equal to or greater than the Initial Price and (ii) a value lower than the Ceiling Price, the number of AGA D 2022 definitively allocated
will be equal to:[(Final Price / Initial Price) -1] x 1/2 of the number of AGA D 2022 instruments (c) All AGA D 2022 if the Final Price is equal to or
higher than the Ceiling Price. The notions of “Final Price”, “Initial Price” and “Ceiling Price” are defined in the plan regulations.
Plans
Nature of performance conditions
SO D 2023
SO C 2023
SO US 2023
SO SU 2023
AGA S 2023
AGA D 2023
Evaluation
date for
performance
conditions:
3/13/2026
Internal conditions - a) 50% of the instruments SO D 2023/SO C 2023/SO US 2023/ SO SU 2023/AGA S 2023 will be exercisable or definitively
vest, and 5,000 of the Free Shares for the AGA D 2023 will be vest, if during 2023 and then at any time during the Vesting Period, 2 new R&D
programs (at the rate of one-half of these 2023 instruments per new program), join the Company’s R&D pipeline (as evaluated at December
31, 2022) ; and that these programs are at the clinical development stage at the time they join the pipeline or that they later enter this stage,
following: (i) A business development transaction (in-licensing, M&A, etc.) or, (ii) Identification of new opportunities resulting from in-house
research (program going from preclinical development stage to clinical development stage). b) 25% of the instruments SO D 2023/SO C
2023/SO US 2023/ SO SU 2023/AGA S 2023 will be exercisable or definitively vest, and 2,500 of the Free Shares for the AGA D 2023 will vest, if
at least one of the two following conditions related to development of elafibranor in PBC is met: (i) Filing of the Marketing Authorization
Application in the fourth quarter of 2023 (in Europe or the United States); (ii) Marketing Authorization obtained in 2024 (in Europe or the
United States). c) 15% of the instruments SO D 2023/SO C 2023/SO US 2023/ SO SU 2023/AGA S 2023 will be exercisable or definitively vest,
and 1,500 of the Free Shares for the AGA D 2023 will vest, if at least one of the two following conditions related to the development of the
ACLF program is met: (i) VS-01 in ACLF: top-line results from the Phase 2 study obtained in 2024 or communication of final results on the
Phase 2 study in 2025; (ii) NTZ : start of a Phase 2 clinical trial in the second half of 2023. d) 10% of the instruments SO D 2023/SO C 2023/SO
US 2023/ SO SU 2023/AGA S 2023 will be exercisable or definitively vest, and 1,000 of the Free Shares for the AGA D 2023 will vest, if
intermediate results in the Phase 1b/2 of GNS561 are obtained in the fourth quarter 2024 or final results obtained in 2025.
External conditions - Each applicable portion of all 10,000 Free Shares under the AGA D 2023 plan, as each Internal Conditions above is met,
is then subject to the External Condition according to the methods described below. The degree of fulfillment of the External Condition
relating to the Company's stock market price will be determined according to the relative performance of GENFIT shares. Each applicable
portion of all 10,000 Free Shares under the AGA D 2023 plan, as each Internal Conditions above is met, will be definitively acquired per the
following conditions: (a) No AGA D 2023 shall vest if the Final Price is strictly lower than the Initial Price; (b) If the Final Price is between (i) a
value equal to or greater than the Initial Price and (ii) a value lower than the Ceiling Price, the number of AGA D 2023 definitively allocated
will be equal to:[(Final Price / Initial Price) -1] x the number of AGA D 2023 instruments (c) All AGA D 2023 if the Final Price is equal to or
higher than the Ceiling Price. The notions of “Final Price”, “Initial Price” and “Ceiling Price” are defined in the plan regulations.
122
Plans
Nature of performance conditions
SO D 2024
SO C 2024
SO US 2024
SO SU 2024
AGA S 2024
AGA D 2024
Evaluation
date for
performance
conditions:
3/15/2027
Internal conditions - a) 10% of the instruments SO D 2024/SO C 2024/SO US 2024/ SO SU 2024/AGA S 2024 will be exercisable or definitively
vest, and 2,000 of the Free Shares for the AGA D 2024 will be vest, if elafibranor obtains marketing authorization from the FDA or EMA in
accordance with the road map. b) 30% of the instruments SO D 2024/SO C 2024/SO US 2024/ SO SU 2024/AGA S 2024 will be exercisable or
definitively vest, and 6,000 of the Free Shares for the AGA D 2024 will vest, if at least one of the three following conditions relating to the
development of VS-01 is met: (i) Interim results of the UNVEIL-IT® study are obtained in accordance with the road map; (ii) Final results of the
UNVEIL-IT® study are obtained in accordance with the road map; (iii) Positive clinical results obtained and communicated in at least one
ACLF sub-population or ACLF-related indication in accordance with the road map. c) 10% of the instruments SO D 2024/SO C 2024/SO US
2024/ SO SU 2024/AGA S 2024 will be exercisable or definitively vest, and 2,000 of the Free Shares for the AGA D 2024 will vest, if at least one
of the two following conditions relating to the development of GNS561 is met: (i) Interim biomarker data from the ongoing phase 1b/2 is
obtained in accordance with the road map; (ii) Final results for the Phase 1b part of the Phase 1b/2 study are obtained in accordance with the
road map. d) 15% of the instruments SO D 2024/SO C 2024/SO US 2024/ SO SU 2024/AGA S 2024 will be exercisable or definitively vest, and
3,000 of the Free Shares for the AGA D 2024 will vest, if at least one of the three following conditions relating to the development of NTZ and
SRT-015 is met: (i) Start of a phase 1b/2 study of NTZ in ACLF in accordance with the road map; (ii) Final results of a phase 1b/2 study of NTZ
in ACLF in accordance with the road map and finalization of preclinical development of SRT-015 in 2024 which would allow, as necessary, the
start of a first in human study of SRT-015 in accordance with the road map; (iii) Results of the first in human study of SRT-015 in accordance
with the road map. e) 10% of the instruments SO D 2024/SO C 2024/SO US 2024/ SO SU 2024/AGA S 2024 will be exercisable or definitively
vest, and 2,000 of the Free Shares for the AGA D 2024 will vest, if, with respect to one of the other programs in the Company’s pipeline in
preclinical development at the time of this allocation decision (VS01 UCD/OA, VS02, CLM-022, …), at least one clinical trial is ongoing in
accordance with the road map. f) 25% of the instruments SO D 2024/SO C 2024/SO US 2024/ SO SU 2024/AGA S 2024 will be exercisable or
definitively vest, and 5,000 of the Free Shares for the AGA D 2024 will vest, if, at any time during the Vesting Period, two of the programs in
the Company's pipeline at the date of the Grant Decision have delivered clinical results in humans enabling them to be considered for
further development, resulting in the initiation of a phase 2b clinical trial or a phase 3 clinical trial, or the granting of accelerated approval.
External conditions - Each applicable portion of all 20,000 Free Shares under the AGA D 2024 plan, as each Internal Conditions above is met,
is then subject to the External Condition according to the methods described below. The degree of fulfillment of the External Condition
relating to the Company's stock market price will be determined according to the relative performance of GENFIT shares. Each applicable
portion of all 20,000 Free Shares under the AGA D 2024 plan, as each Internal Conditions above is met, will be definitively acquired per the
following conditions: (a) No AGA D 2024 shall vest if the Final Price is strictly lower than the Initial Price; (b) If the Final Price is between (i) a
value equal to or greater than the Initial Price and (ii) a value lower than the Ceiling Price, the number of AGA D 2024 definitively allocated
will be equal to:[(Final Price / Initial Price) -1] x 1/2 of the number of AGA D 2024 instruments (c) All AGA D 2024 if the Final Price is equal to or
higher than the Ceiling Price. The notions of “Final Price”, “Initial Price” and “Ceiling Price” are defined in the plan regulations.
Plans
Nature of performance conditions
SO SA 2025
SO US 2025
SO SU 2025
AGA S 2025
Evaluation
date for
performance
conditions:
3/15/2028
a) 50% of the instruments SO SA 2025/SO US 2025/ SO SU 2025/AGA S 2025 will be exercisable or definitively vest, if at least one of the drug
candidates in clinical development (VS01 ACLF, NTZ ACLF and GNS561 in the CCA) obtains positive results justifying the initiation of a
phase 2b or phase 3 clinical trial or the granting of a marketing authorization; b) 25% of the instruments SO SA 2025/SO US 2025/ SO SU
2025/AGA S 2025 will be exercisable or definitively vest, if at least two of the development programs in preclinical development obtain
positive results which justify advancing into clinical development (initiation of a clinical trial in humans). These programs are: (i) drug
candidates in preclinical development at this date (SRT015, CLM022 and VS02); (ii) development programs in preclinical development at this
date in other indications (VS01 UCD/OA, GNS561 in tumors other than CCA); c) 25% of the instruments SO SA 2025/SO US 2025/ SO SU
2025/AGA S 2025 will be exercisable or definitively vest, if one or more “Business Development” agreements (either licensing-in or
commercial partnership) with a significant impact for the Company are signed.
C.
Board Practices
Board Composition
Under French law and our bylaws, our Board of Directors must be comprised of between three and 18 members. In
accordance with our bylaws, directors are appointed for a term of three years. Directors are appointed, reappointed to their
position, or removed by the company’s ordinary general meeting. Directors chosen or appointed to fill a vacancy must be elected
by our Board of Directors for the remaining duration of the current term of the vacant Director. The appointment must then be
ratified at the next shareholders’ general meeting. In the event the Board of Directors would be comprised of less than three
Directors as a result of a vacancy or removal, the remaining Directors shall immediately convene a shareholders’ general meeting
to elect one or several new Directors so there are at least three Directors serving on the Board of Directors, in accordance with
French law.
The annual meeting called to approve our financial statement for the year ended on December 31, 2022 and held on May 24,
2023 resolved to amend our articles of association to reduce the terms of our Directors from five to three years. The annual
meeting further decided that this amendment of the articles of association will only take effect at the initial expiry of the terms of
office of the Directors in office as of the date of the annual meeting and that in the event of the death, resignation or dismissal of
the Directors in office on the date of the annual meeting: (i) in the case of co-optation following a death or resignation, the
Director appointed in replacement of the deceased or resigning Director will be appointed for the remaining term of office of the
replaced Director, (ii) in any other case, the new Director shall be appointed for a term of office of three years.
123
Our Board of Directors currently consists of eight Directors, one of whom is a citizen or resident of the United States, and
one Board observer. As permitted by French law, two of our Directors, SAS Biotech Avenir, and Ipsen, are legal entities. These
entities have designated, respectively, individuals, Florence Séjourné, and Dr. Sandra Silvestri, to represent them and to act on
their behalf at meetings of our Board of Directors. Ms. Séjourné and Dr. Silvestri have the same responsibilities to us and to our
shareholders as they would have if they had been elected to our Board of Directors in their individual capacity. None of our
Directors serve pursuant to a service contract providing benefits upon termination of service as a Director.
The following table sets forth the names of our Directors, the years of their initial appointment as Directors of our Board or
our former Supervisory Board or our former Executive Board and the expiration dates of their current term.
CURRENT
POSITION
YEAR OF
INITIAL
APPOINTMENT
TERM
EXPIRATION
YEAR
Jean-François Mouney
Chairman
1999 (1)
2027
Eric Baclet
Vice-Chairman
2020
2025 (5)
IPSEN, represented by Dr. Sandra Silvestri
Director
2022
2027
Katherine Kalin
Director
2020
2025 (5)
Catherine Larue
Director
2017
2027
Anne-Hélène Monsellato
Director
2017
2027
Philippe Moons
Observer
2015 (2)
2027
Biotech Avenir SAS represented by Florence Séjourné
Director
2010 (3)
2027
Jean-François Tiné
Director
2020 (4)
2027
(1)
As member of the former Executive Board of our company and was subsequently appointed as Director at our combined general meeting in June 2017 and
elected as Chairman and Chief Executive Officer of our company. Mr. Mouney resigned as Chief Executive Officer of our company in September 2019 but
continues to serve as Chairman of our Board of Directors.
(2)
As member of the former Supervisory Board and was subsequently appointed as Director at our combined general meeting in June 2017. He resigned as a
Director on February 26, 2021 but remains as an observer on the Board of Directors.
(3)
Biotech Avenir SAS was appointed to the former Supervisory Board for the first time on incorporation of the Company on September 15, 1999. Ms. Séjourné has
been its permanent representative since 2010, first to the former Supervisory Board and later to the Board of Directors of our company.
(4)
Appointed by the Board of Directors on February 26, 2021 to replace Philippe Moons on the Board of Directors. His appointment was approved by the
Shareholders' Meeting on June 30, 2021 to serve out the remainder of the term of Philippe Moons which ended at the shareholders meeting called to approve the
financial statements for the year ended December 31, 2021 held on May 25, 2022. His appointment was renewed by the May 25, 2022 shareholders' meeting.
(5)
The renewal of his/her term will be proposed to the Shareholders Meeting of June 17, 2025.
The Board of Directors will also propose the appointment of a new director, Mr. Tristan Imbert at the June 17, 2025
Shareholders' Meeting. The biography, including the positions and mandates held by Mr. Tristan Imbert, will be published on the
Company's website (in the Report of the Board of Directors to the Shareholders’ Meeting) in accordance with Article R. 225-83 of
the French Commercial Code.
In 2024, the Board of Directors met 10 times, with an average participation rate of 84 % of Directors.
The average participation rates for each Director at Board of Directors’ meetings was:
Mr. Jean-François Mouney : 100 % ;
Mr. Eric Baclet : 100%
IPSEN (represented by Ms. Sandra Silvestri): 50%
Ms. Katherine Kalin: 90%;
Ms. Catherine Larue : 70% ;
Ms. Anne-Hélène Monsellato : 100% ;
Biotech Avenir SAS (represented by Ms. Florence Séjourné) : 60%.
Mr. Jean-François Tiné: 100%.
Board Diversity
Since January 1, 2017, under French law, the number of Directors of each gender may not be less than 40% of the total
number of Directors. Any appointment made in violation of this limit that is not remedied within six months of this appointment
will be null and void. Any appointment which remedies a violation of the 40% gender limit must be ratified by our shareholders at
the next ordinary general meeting pursuant to French Law. As of the date of this Annual Report, five of the eight Directors are
women.
The Nominations and Compensation Committee endeavors to seek nominees representing diverse experience in the drug
development and diagnostics business, finance and other areas that are relevant to our activities. Furthermore, our Board of
Directors is committed to actively seeking out highly qualified women and individuals from minority groups to include in the pool
from which Board nominees are chosen.
124
Director Independence
As a foreign private issuer, under the listing requirements and rules of the Nasdaq Global Select Market, we are not required
to have independent Directors on our Board of Directors, except to the extent that our Audit Committee is required to consist
exclusively of independent Directors. Nevertheless, our Board of Directors has undertaken a review of the independence of the
Directors and considered whether any Director has a material relationship with us that could compromise his or her ability to
exercise independent judgment in carrying out his or her responsibilities. Based upon information requested from, and provided
by, each Director concerning such Director’s background, employment and affiliations, including family relationships, our Board
of Directors determined that all of our Directors, except for Jean-François Mouney due to his ownership through Biotech Avenir,
Florence Séjourné, as representative of Biotech Avenir, and Dr. Sandra Silvestri, as representative of IPSEN, qualify as
“independent directors” as defined under applicable rules of the Nasdaq Global Select Market and the independence
requirements contemplated by Rule 10A-3 under the Exchange Act. In making these determinations, our Board of Directors
considered the current and prior relationships that each non-employee Director has with our company and all other facts and
circumstances that our Board of Directors deemed relevant in determining their independence, including the beneficial
ownership of our ordinary shares by each non-employee Director and his or her affiliated entities (if any).
Role of the Board in Risk Oversight
Our Board of Directors is primarily responsible for the oversight of our risk management activities and has delegated to the
Audit Committee the responsibility to assist our Board in this task. The Audit Committee also monitors our system of disclosure
controls and procedures and internal control over financial reporting and reviews contingent financial liabilities. The Audit
Committee, among other things, examines our balance sheet commitments and risks and the relevance of risk monitoring
procedures. While our Board oversees our risk management, our management is responsible for day-to-day risk management
processes. Our Board of Directors expects our management to consider risk and risk management in each business decision, to
proactively develop and monitor risk management strategies and processes for day-to-day activities and to effectively implement
risk management strategies adopted by the Board of Directors. We believe this division of responsibilities is the most effective
approach for addressing the risks we face.
Corporate Governance Practices
As a general matter, the Company's Board practices comply with the recommendations of the Middlenext corporate
governance code.
For an overview of the Company's corporate governance practices and the ways they may differ from Nasdaq's corporate
governance listing rules, see Item 16.G - "Corporate Governance".
Board Committees
The Board of Directors has established an Audit Committee, a Nomination and Compensation Committee, a Strategy and
Alliances Committee, and an ESG Committee, in accordance with the Middlenext Code requirements. Subject to available
exemptions, the composition and functioning of all of our committees complies with all applicable requirements of the French
Commercial Code, the Exchange Act, the Nasdaq Global Select Market and SEC rules and regulations.
In accordance with French law, committees of our Board of Directors have only an advisory role and can only make
recommendations to our Board of Directors. As a result, decisions will be made by our Board of Directors taking into account non-
binding recommendations of the relevant Board committee.
In addition of the Board committees, in 2023, the Board of Directors appointed Mr. Eric Baclet, Director, to chair and
coordinate a cybersecurity working group including the Executive Vice-President, Data & Information Technology and other key
GENFIT employees. Eric Baclet reports regularly to the Board of Directors on cybersecurity matters, allowing the Board of
Directors to provide effective oversight of management’s assessment and management of the cybersecurity risks.
In 2023, the Board of Directors also appointed Mr. Jean-François Mouney and Mr. Jean-François Tiné to chair and coordinate
a financial strategy working group including the Chief Financial Officer and other key GENFIT employees. Jean-François Mouney
and Jean-François Tiné report regularly to the Board of Directors on financial strategy, allowing the Board of Directors oversight
of key financial issues of the Company.
Following the death of Mr. Xavier Guille des Buttes in April 2024, the composition of our Board Committees changed. Mr. Éric
Baclet, the new Vice-Chairman of the Board of Directors, was appointed Chairman of the Nominations and Compensation
Committee. Mr. Jean-François Tiné joined the Audit Committee. In May, the Board of Directors appointed Ms. Katherine Kalin as
member of the ESG Committee.
Audit Committee.
125
Our Audit Committee assists our Board of Directors in its oversight of our corporate accounting and financial reporting and
submits the selection of our statutory auditors, their compensation and independence for approval. Ms. Anne-Hélène Monsellato,
Mr. Eric Baclet and Mr. Jean-François Tiné currently serve on our Audit Committee. Ms. Monsellato is the chairperson of our
Audit Committee. Our Board has determined that each member is independent within the meaning of the applicable listing rules
and the independence requirements contemplated by Rule 10A-3 under the Exchange Act. Our Board of Directors has further
determined that Ms. Monsellato is an “audit committee financial expert” as defined by SEC rules and regulations and that each of
the members qualifies as financially sophisticated under the applicable Nasdaq listing rules. The principal responsibility of our
Audit Committee is to monitor the existence and efficacy of the Company’s financial audit and risk control procedures on an
ongoing basis.
Our Board of Directors has specifically assigned the following duties to the Audit Committee:
•
monitoring the financial reporting process provided by the Company. In this respect, it examines in particular the
consistency and the relevance of the accounting standards and methods used by the Company, and the advisability of
any modification of the accounting methods. Special attention is paid by the Audit Committee to reviewing the
accounting policies used for the valuation of significant or unusual transactions. The Audit Committee may make
recommendations, in particular to ensure the integrity of the financial reporting process provided by the Company,
control the integrity of the financial information provided by the Company and, in particular, review the consistency and
relevance of the accounting standards and methods retained by the Company;
•
monitoring of the effectiveness of the internal control and risk management systems, as well as of the internal audit, as
regards the procedures relating to the preparation and processing of accounting and financial information, without it
undermining its independence. If necessary, it alerts the Board of Directors in the event of an irregularity or anomaly
identified in the Company’s financial statements or control procedures. The Audit Committee assists the Board of
Directors in drafting the report on internal control;
•
monitoring the appointment and renewal process of the statutory auditors. For this purpose, and in accordance with the
regulations, the Audit Committee issues a recommendation to the Board of Directors on the statutory auditors proposed
for appointment and / or renewal by the shareholders’ general meeting;
•
monitoring of the performance by the Statutory Auditors of their mission, taking into account, where appropriate, the
findings and conclusions of the Haut conseil du commissariat aux comptes (replaced by the Haute Autorité de l'Audit in
2024) following the audits carried out, in accordance with the regulations;
•
monitoring by the statutory auditors of the conditions of independence under the conditions and in the manner provided
for by the regulations, and in particular those mentioned in Article 6 of Regulation (EU) No. 537/2014. The Audit
Committee takes the necessary measures to implement paragraph 3 of Article 4 of this Regulation;
•
pre-approval of the provision of services of the statutory auditors in compliance with the applicable regulations; and
•
the regular report to the Board of Directors on the performance of its duties. The Audit Committee also reports on the
results of the certification of the financial statements, how this mission has contributed to the integrity of financial
reporting and the role it has played in this process. It informs the Board of Directors without delay of any difficulty
encountered.
In 2024, the Audit Committee met 4 times, with an average participation rate of 100% of committee members.
Nomination and Compensation Committee.
Mr. Eric Baclet, Dr. Catherine Larue and Mr. Jean-François Mouney currently serve on our Nomination and Compensation
Committee. Mr. Eric Baclet is the chairperson of our Nomination and Compensation Committee.
Our Board of Directors has specifically assigned the following duties to the Nomination and Compensation Committee:
•
ensure the professionalism and objectivity of the appointment procedure for senior executives and corporate officers and
senior management of the Company. In particular, it is in charge of making any proposal regarding the size and the
desirable balance of the composition of the Board of Directors in view of the structure and evolution of the shareholding
of our company, as well as the requirements for good corporate governance, including the proportion of independent
Directors at our Board of Directors, examine Board committee membership, including in relation to the new ESG
Committee. Its mission is to research and assess potential candidates as well as the opportunity to renew mandates; and
reviews the future succession of our company’s Chairman and Chief Executive Officer;
•
assess the status of each of its Directors relative to other relations they might have with our company, which may
compromise his or her free judgment or trigger potential conflicts of interest with us; the Nomination and Compensation
Committee must also organize a procedure to select future independent Directors; and
126
•
make proposals to the Board of Directors concerning the elements of compensation or benefits granted to senior
executives, corporate officers and senior management, including Directors’ attendance fees and salaries, allowances or
remuneration of any kind that such persons may receive under an employment contract or company contract with our
company, the indemnities and benefits due upon termination of their employment, function or subsequent to this, the
allocation of warrants, stock options or free shares, or any form of long-term incentive in the capital of the Company. In
this respect, the Nomination and Compensation Committee assesses the scale of the compensation offered by the
Company in comparison with those practiced on the market and gives its recommendations to the Board of Directors on
the remuneration levels and the breakdown between the various elements of the compensation, as well as the changes in
compensation that may be proposed by the Company to its senior management and corporate officers.
In 2024, the Nomination and Compensation Committee met 5 times, with an average participation rate of 100% of committee
members.
Strategy and Alliances Committee.
Mr. Jean-François Mouney, Ms. Katherine Kalin and Mr. Jean-François Tiné currently serve on our Strategy and Alliances
Committee. Mr. Jean-François Mouney is Chairman of our Strategy and Alliances Committee.
Our Board of Directors has specifically assigned the following duties to the Strategy and Alliances Committee:
•
analyze business and corporate development opportunities, including strategic opportunities for acquisition or licensing
of product rights or mergers and acquisitions with other companies, and certain financing transactions;
•
evaluate potential target products and companies;
•
review the feasibility of any potential transactions.
In 2024, the Strategy and Alliances Committee met 3 times, with an average participation rate of 78% of committee
members.
ESG Committee
Ms. Catherine Larue, Ms. Katherine Kalin and Mr. Jean-François Mouney currently serve on our ESG Committee. Ms.
Catherine Larue is the chairwoman of our ESG Committee.
The ESG Committee was created in October 2021, in accordance with the R8 recommendation of the Middlenext Code, with
the mission of ensuring that the Company adequately addresses the economic and societal challenges related to its corporate
purpose of proposing therapeutic and diagnostic solutions intended to address unmet medical needs of patients around the
world.
Our Board of Directors has specifically assigned the following duties to the ESG Committee:
•
review the Company's strategy, ambitions, policies and commitments in terms of social responsibility (Ethics and
compliance, Human Rights, Hygiene / Health / Safety of people, Environment);
•
ensure the Company's level of commitment to non-financial performance, ethics and social and environmental
responsibility in relation to stakeholders’ expectations;
•
ensure implementation of actions in these areas; and
•
make recommendations in this regard to the Board of Directors.
The ESG Committee may be called upon to work with the Board's other specialized committees, notably the Nomination and
Compensation Committee and the Audit Committee on issues that also concern them.
In 2024, the ESG Committee met 3 times, with a participation rate of 100% of committee members.
D.
Employees
As of December 31, 2024, we had 180 employees. Of these employees, 96 were engaged in research and development and
services related to research and development activities, 61 were engaged in administration and management, which includes
finance, investor relations, information systems, human resources and legal, and 2 were engaged in marketing and commercial
activities.
Of these 180 employees, 162 were employed by GENFIT S.A., 11 were employed by our U.S. subsidiary, GENFIT Corp, and 7
were employed by our Swiss subsidiary, Versantis AG. Employees employed by GENFIT S.A. are mainly based in France, employees
employed by GENFIT Corp. are mainly based in our Cambridge, Massachusetts office and employees employed by Versantis AG
are mainly based in Zurich, Switzerland.
127
Pursuant to French law, employees employed by GENFIT S.A. are subject to the pharmaceutical industry collective
bargaining agreement. We consider our relationship with our employees to be good.
E.
Share Ownership
For information regarding the share ownership of our Directors and senior management, see Item 6. B - "Directors, Senior
Management and Employees - Compensation” and Item 7.A - "Major Shareholders and Related Party Transactions”.
F.
Disclosure of a registrant’s action to recover erroneously awarded compensation
Not applicable.
Item 7.
Major Shareholders and Related Party Transactions.
A.
Major Shareholders
The following table sets forth, as of April 1, 2025, information regarding beneficial ownership of our ordinary shares by:
•
each person, or group of affiliated persons, known by us to beneficially own more than 5% of our ordinary shares;
•
each member of our senior management;
•
each of our directors; and
•
all of our senior management and directors as a group.
Beneficial ownership is determined according to the rules of the SEC and generally means that a person has beneficial
ownership of a security if he, she or it possesses sole or shared voting or investment power of that security, including free shares
that vest by June 1, 2025 the date that is 60 days after April 1, 2025, and stock options and warrants that are currently exercisable
or exercisable by June 1, 2025. Shares subject to options and warrants currently exercisable or exercisable by June 1, 2025 are
deemed to be outstanding for computing the percentage ownership of the person holding these options or warrants and the
percentage ownership of any group of which the holder is a member, but are not deemed outstanding for computing the
percentage of any other person.
Except as indicated by the footnotes below, we believe, based on the information furnished to us, that the persons named in
the table below have sole voting and investment power with respect to all shares shown that they beneficially own, subject to
community property laws where applicable. The information does not necessarily indicate beneficial ownership for any other
purpose, including for purposes of Sections 13(d) and 13(g) of the Securities Act.
Our calculation of the percentage of beneficial ownership is based on 49,996,185 of our ordinary shares outstanding as of
April 1, 2025.
Unless otherwise indicated, the address of each beneficial owner listed in the table below is c/o GENFIT S.A., Parc Eurasanté,
885, avenue Eugène Avinée, 59120 Loos, France.
128
Name of Beneficial Owner
Number of
Ordinary Shares
Percentage
Significant Shareholders:
Biotech Avenir SAS(1)
1,888,618
3.78%
Ipsen Pharma SAS(2)
3,985,239
7.97%
Members of the board of directors and senior management:
Jean-François Mouney(3)
1,976,539
3.95%
Pascal Prigent(4)
108,824
*
Dean Hum, Ph.D(5)
61,775
*
Carol Addy, M.D.
18,500
*
Jean-Christophe Marcoux(6)
40,125
*
Laurent Lannoo(7)
51,584
*
Thomas Baetz
—
—
Pascal Caisey(8)
23,375
*
Stefanie Magner(9)
39,116
*
Emilie Desodt (10)
3,393
*
John Brozek (11)
24,416
*
Sakina Sayah-Jeanne
—
—
Tom Huijbers
—
—
Catherine Larue, Ph.D
—
—
Anne-Hélène Monsellato
—
—
Sandra Silvestri, M.D., Ph.D.(2)
—
—
Florence Séjourné(1)
—
—
Philippe Moons(12)
1,040
*
Katherine Kalin (13)
5,000
*
Eric Baclet (14)
1,200
*
Jean-François Tiné (15)
10,600
*
All members of the board of directors and senior management as a group (21 people)(16)
2,365,487
4.73%
*
Represents beneficial ownership of less than 1%
(1) Biotech Avenir SAS is our holding company. Mr. Mouney, the Chairman of our board of directors, is also the Chief
Executive Officer and Chairman of the Management Committee of Biotech Avenir and holds 17.1% of its share capital.
Florence Séjourné, who represents Biotech Avenir on our board of directors, is also a member of the Management
Committee of Biotech Avenir and holds 9.9% of its share capital. Dean Hum holds 6.2% of its share capital, Laurent
Lannoo, who is a member of the Management Committee of Biotech Avenir, holds less than 0.03% of its share capital
and John Brozek holds 0.13% of its share capital.
(2) Sandra Silvestri represents Ipsen Pharma SAS (through Ipsen) on our board of directors. The Ipsen shares were, but no
longer are, subject to a lock-up period.
(3) Consists of 1,935,212 ordinary shares, of which 1,888,618 shares are held directly by Biotech Avenir, and 41,327 stock
options that are exercisable within 60 days of April 1, 2025.
(4) Consists of 30,708 ordinary shares and 78,116 stock options that are exercisable within 60 days of April 1, 2025.
(5) Consists of 10,293 ordinary shares and 51,482 stock options that are exercisable within 60 days of April 1, 2025.
(6) Consists of 4,670 ordinary shares and 35,455 stock options that are exercisable within 60 days of April 1, 2025.
(7) Consists of 11,236 ordinary shares and 40,348 stock options that are exercisable within 60 days of April 1, 2025.
(8) Consists of 1,500 ordinary shares and 21,875 stock options that are exercisable within 60 days of April 1, 2025.
(9) Consists of 2,760 ordinary shares and 36,356 stock options that are exercisable within 60 days of April 1, 2025.
(10)Consists of 235 ordinary shares and 3,158 stock options that are exercisable within 60 days of April 1, 2025.
(11) Consists of 3,008 ordinary shares and 21,408 stock options that are exercisable within 60 days of April 1, 2025.
(12)Consists of 1,040 ordinary shares. Philippe Moons is an observer on the Board of Directors.
(13)Consists of 5,000 ADS.
(14)Consists of 1,200 ordinary shares.
(15)Consists of 10,600 ordinary shares.
(16)Includes 1,888,618 shares held directly by Biotech Avenir.
As of April 1, 2025, to the best of our knowledge, we believe that we are not directly or indirectly owned or controlled by
another corporation, by any foreign government or by any other natural or legal persons.
Significant Changes in Percentage Ownership
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There were no significant changes in the percentage ownership held by our principal shareholders during the year ended
December 31, 2024.
Voting Rights
A double voting right is attached to each registered share that is held in the name of the same shareholder for at least two
years. Any of our principal shareholders who have held our ordinary shares in registered form for at least two years have this
double voting right.
Shareholders in the United States
As of April 1, 2025, to the best of our knowledge, approximately 1,728,840 of our outstanding ordinary shares (including
ordinary shares in the form of ADSs) or approximately 4.09% were held by 2 shareholders of record in the United States, including
The Bank of New York Mellon, the depositary of our ADR program. The actual number of holders is greater than these numbers of
record holders, and includes beneficial owners whose ordinary shares or ADSs are held in street name by brokers and other
nominees. This number of holders of record also does not include holders whose shares may be held in trust by other entities.
B.
Related Party Transactions
Since January 1, 2024, we have engaged in the following transactions with our directors, senior management and holders of
more than 5% of our outstanding voting securities and their affiliates, which we refer to as our related parties.
Directors
We have entered into agreements with our directors to provide contractual indemnification, with certain exceptions, for
damages and expenses including, among other things, attorneys’ fees, judgments and settlement amounts incurred by any of
these individuals in any action or proceeding arising out of his or her actions in that capacity. See Item 6 - "Directors, Senior
Management and Employees" for more information.
Chief Executive Officer
The Chief Executive Officer benefits from a non-compete indemnity equal to (i) twelve months of fixed compensation,
calculated on the basis of the gross amounts due to for the past twelve months and (ii) increased, where applicable, by the
amount of the annual variable compensation due for the previous year.
This compensation is intended to compensate the prohibition made to the Chief Executive Officer, for a period of 12 months
following the termination of his functions, for whatever reason, to collaborate in any way whatsoever with certain companies
carrying out an activity directly competing with the Company. This non-competition covenant will not apply to the Chief
Executive Officer if he leaves the Company, for whatever reason, either by decision of the Board of Directors or at his initiative,
following a takeover of the Company.
The Chief Executive Officer is also eligible to receive, except in the case he is terminated on the basis of serious misconduct
within the meaning of labor law, severance pay equal to (i) eighteen months of fixed compensation, calculated on the basis of the
gross amounts due for the past twelve months and (ii) increased, where applicable, by the amount of the annual variable
compensation due for the previous year. This compensation would be paid one month after his effective termination, provided
that at least one of the following criteria or events has occurred (updated by the Board of Directors on April 11, 2025):
•
a license agreement for NTZ, GNS561, VS-01 or VS-02 has been signed for the U.S. market and / or for at least two of the
five major European markets (Germany, France, Italy, United Kingdom, Spain and / or for Japan); or
•
there is a takeover of the Company.
Compliance with these performance conditions will be assessed by the Board of Directors, taking into account the best
interests of the Company, before any payment is made and after receiving the formal input from the Nomination and
Compensation Committee.
The compensation will not be paid if, on his own initiative, the Chief Executive Officer leaves the Company to exercise new
functions or changes functions within the Group, or even if he has the possibility of exercising in the short term his retirement
rights.
Any amount paid under the non-compete clause will count as money owed for severance pay and vice versa.
130
Biotech Avenir SAS
Biotech Avenir SAS, a management holding company, holds 3.78% of our share capital and 6.63% of our voting rights, as of
April 1, 2025. Jean-François Mouney, the Chairman of our Board of Directors and, until September 2019, our Chief Executive
Officer, is also Chairman of the Management Committee of Biotech Avenir SAS and holds 17.1% of its share capital. Florence
Séjourné, who represents Biotech Avenir SAS on our Board of Directors, is also member of the Management Committee of
Biotech Avenir SAS and holds 9.9% of its share capital. Other GENFIT Executive Committee members who hold share capital of
Biotech Avenir SAS are as follows: Dean Hum holds 6.2% of its share capital, Laurent Lannoo, who is a member of the
Management Committee of Biotech Avenir SAS, holds less than 0.03% of its share capital and John Brozek holds 0.13% of its
share capital. The registered office of Biotech Avenir SAS is located at the same address as our principal executive offices, which
is provided free of charge to Biotech Avenir SAS.
Shareholders’ Agreement
A Shareholders’ Agreement binds all shareholders who held equity in our company prior to the private placement we carried
out before the admission of our ordinary shares, on December 19, 2006, to trading on the Alternext stock exchange managed by
Euronext Paris. In particular, this Shareholders’ Agreement grants a right of first refusal to Biotech Avenir or to any shareholder it
designates, provided said shareholder is a signatory of the Shareholders’ Agreement, in the event that a shareholder who is a
party to the Shareholders’ Agreement plans an off-market sale of its shares, insofar as the projected sale, plus any other sales
carried out in a given year, represents at least 2% of our total share capital.
The parties to the Shareholders’ Agreement that hold our shares include the Université de Lille, Fondation partenariale de
l’Université de Lille, Finorpa SCR, Biotech Avenir SAS, our Chairman of the Board Jean-François Mouney and Charles Woler.
This Shareholders’ Agreement became effective on December 19, 2006, and remained effective for an initial 10-year period,
after which the Shareholders’ Agreement was, and may continue to be, automatically renewed for successive one-year periods.
The Shareholders’ Agreement was amended on January 30, 2018 as part of the restructuring of the University of Lille,
whereby on January 1, 2018, the three universities of Lille (the universities of Lille I, Lille II and Lille III) merged into a single
university (the Université de Lille). In this context, the Université de Lille II Droit et Santé (now Université de Lille) made a
donation of 200,000 ordinary shares at the end of 2017 to the foundation, Fondation partenariale de l’Université de Lille, which is
now one of our shareholders and a party to the Shareholders’ Agreement.
Ipsen Pharma SAS
Collaboration and license agreement
On December 16, 2021, we entered into an exclusive collaboration and license agreement with Ipsen for the development and
commercialization of elafibranor in PBC and other indications (the Ipsen Collaboration and License Agreement). On the same
date, we also entered into an investment agreement pursuant to which Ipsen became a shareholder of GENFIT through the
purchase of 3,985,239 newly issued shares representing 8% of GENFIT S.A after issuance and, following approval by our
shareholders at the shareholders' meeting on May 25, 2022, Ipsen became a member of our Board of Directors, currently
represented by Dr. Sandra Silvestri. Ipsen therefore qualifies as a related person.
See also Item 10.C - "Additional Information - Material Contracts" herein for more information regarding this agreement.
For information regarding the revenues from the Collaboration and license agreement, see Note 7.1 - "Revenues from
contracts with customers" to our consolidated financial statements included in this report.
Transition Services Agreement
The Transition Services Agreement (the "TSA") signed between the Company and Ipsen on April 6, 2022, pursuant to the
Ipsen Collaboration and License Agreement, was approved by the Board of Directors on April 6, 2022 in accordance with the
Company's Related Party Transactions policy.
The TSA governs the performance of a number of transition services by the Company in relation to the ongoing ELATIVE®
trial, the Phase 3 clinical trial evaluating elafibranor in PBC and the financial conditions thereof. These services are mainly related
to preparing the second Phase of the ELATIVE® trial as well as certain regulatory tasks such as preparation of the conditional
marketing authorization application for elafibranor in PBC. The services are being performed on an arms-length basis.
Part B Transition Services Agreement
The TSA was supplemented by a “Part B Transition Services Agreement” (the “Part B Agreement”) signed between the parties
following approval by the Company's Board of Directors on September 19, 2023 in accordance with the policy relating to
transactions between related parties and the Company.
131
The Part B Agreement governs the conditions under which a certain number of transition services have been marginally
carried out in 2024 by the Company until the total transfer of responsibility for the trial is turned over to Ipsen, and in particular
the terms of compensation for these services during the specific period when some patients had completed the treatment
corresponding to the first part of the clinical trial and initiated the treatment of the second part while others had not. These
services are independent of those provided for by the TSA and the Ipsen Collaboration and License Agreement.
For information regarding the revenues from the services rendered under the TSA and the Part B Agreement, see Note 7.1 -
"Revenues from contracts with customers" to our consolidated financial statements included in this report.
Related Person Transaction Policy
We comply with French law regarding approval of transactions with related parties. We have adopted a related person
transaction policy that sets forth our procedures for the identification, review, consideration and approval or ratification of
related person transactions. For purposes of our policy only, a related person transaction is defined as (1) any transaction,
arrangement or relationship (or any series of similar transactions, arrangements or relationships) in which we and any related
person are, were or will be participants in and the amount involved exceeds $120,000, or (2) any agreement or similar transaction
under French law which falls within the scope of Article L. 225-38 of the French Commercial Code. A related person is any
director, member of senior management or beneficial owner of more than 5% of any class of our voting securities, including any of
their immediate family members and any entity owned or controlled by such persons.
Under the policy, if a transaction has been identified as a related person transaction, including any transaction that was not
a related person transaction when originally consummated or any transaction that was not initially identified as a related person
transaction prior to consummation, our management must present information regarding the related person transaction to our
board of directors for review, consideration and approval or ratification. The presentation must include a description of, among
other things, the material facts, the interests, direct and indirect, of the related persons, the benefits to us of the transaction and
whether the transaction is on terms that are comparable to the terms available to or from, as the case may be, an unrelated third
party or to or from employees generally. Under the policy, we will collect information that we deem reasonably necessary from
each director, member of senior management and, to the extent feasible, significant shareholder to enable us to identify any
existing or potential related-person transactions and to effectuate the terms of the policy.
In addition, under our Code of Business Conduct, our employees and directors have an affirmative responsibility to disclose
any transaction or relationship that reasonably could be expected to give rise to a conflict of interest.
In considering related person transactions, our board of directors will take into account the relevant available facts and
circumstances including, but not limited to:
•
the risks, costs and benefits to us;
•
the impact on a director’s independence in the event that the related person is a director, immediate family member of a
director or an entity with which a director is affiliated;
•
the availability of other sources for comparable services or products; and
•
the terms available to or from, as the case may be, unrelated third parties or to or from employees generally.
The policy requires that, in determining whether to approve, ratify or reject a related person transaction, our board of
directors must consider, in light of known circumstances, whether the transaction is in, or is not inconsistent with, our best
interests and those of our shareholders, as our board of directors determines in the good faith exercise of its discretion.
With the exception of the agreements with Ipsen, all of the transactions described above were entered into prior to the
adoption of the written policy, but all were approved by our board of directors to the extent required by, and in compliance with,
French law.
C.
Interests of Experts and Counsel
Not applicable.
Item 8.
Financial Information.
A.
Consolidated Statements and Other Financial Information
Consolidated Financial Statements
Our consolidated financial statements are appended at the end of this annual report, starting at page F-1, and are
incorporated by reference herein.
132
Dividend Distribution Policy
We have never declared or paid any dividends on our ordinary shares. We do not anticipate paying cash dividends on our
equity securities in the foreseeable future and intend to retain all available funds and any future earnings for use in the operation
and expansion of our business, given our state of development.
Subject to the requirements of French law and our bylaws, dividends may only be distributed from our distributable profits,
plus any amounts held in our available reserves which are reserves other than legal and statutory and revaluation surplus. See
Item 10. B - "Additional Information - Memorandum and Articles of Association” for further details on the limitations on our ability
to declare and pay dividends. Dividend distributions, if any in the future, will be made in euros and converted into U.S. dollars with
respect to the ADSs, as provided in the deposit agreement.
Legal Proceedings
From time to time, we may be involved in various claims and legal proceedings relating to claims arising out of our
operations, including those described in Note 27 - "Litigation" of our consolidated financial statements for the year ended
December 31, 2024 appended to this annual report.
We are not currently a party to any legal proceedings that, in the opinion of our management, are likely to have a material
adverse effect on our business. Regardless of outcome, litigation can have an adverse impact on us because of defense and
settlement costs, diversion of management resources and other factors.
B.
Significant Changes
Not applicable
Item 9.
The Offer and Listing.
A.
Offer and Listing Details
Our ADS have been listed on the Nasdaq Global Select Market under the symbol “GNFT” since March 27, 2019. Prior to that
date, there was no public trading market for ADSs. Our ordinary shares have been trading on Euronext Paris under the symbol
“GNFT” since 2006. Prior to that date, there was no public trading market for our ordinary shares. Our convertible bonds
(OCEANEs) have been traded on Euronext Access in Paris under the symbol “GNFAA” since October 16, 2017.
B.
Plan of Distribution
Not applicable.
C.
Markets
Our ADSs have been listed on the Nasdaq Global Select Market under the symbol “GNFT” since March 27, 2019 and our
ordinary shares have been trading on Euronext Paris under the symbol “GNFT” since 2006. Our convertible bonds (OCEANEs)
have been traded on Euronext Access in Paris under GNFAA since October 16, 2017.
D.
Selling Shareholders
Not applicable.
E.
Dilution
Not applicable.
133
F.
Expenses of the Issue
Not applicable.
Item 10.
Additional Information.
A.
Share Capital
Not applicable.
B.
Memorandum and Articles of Association
The information set forth in Exhibit 2.3 "Description of Securities" hereto is incorporated herein by reference.
C.
Material Contracts
Collaboration and License Agreement with Ipsen Pharma SAS
On December 16, 2021, we entered into an exclusive collaboration and license agreement with Ipsen Pharma SAS or Ipsen, a
global, mid-sized biopharmaceutical company focused on transformative medicines in Oncology, Rare Disease and Neuroscience,
as well as Consumer Healthcare products. Under the agreement, Ipsen has an exclusive worldwide (excluding Greater China
which is licensed to Terns) license to develop, manufacture and commercialize elafibranor, our proprietary investigational
compound, for people living with PBC, and in any other indications.
Under the terms of the agreement, we received an upfront cash payment of €120 million, and are eligible for regulatory,
commercial, and sales-based milestone payments up to €360 million, plus tiered double-digit royalties of up to 20%. At the date of
this report, GENFIT already has received €62 million of the potential €360 million milestone payments provided for in Ipsen
Agreement.
We were responsible for the Phase 3 ELATIVE® trial until the completion of the double-blind period. Ipsen now has
responsibility for all additional clinical development, including completion of the long-term extension period of the ELATIVE® trial,
and global commercialization (excluding Greater China which is licensed to Terns).
This strategic partnership also provides Ipsen with access to our research capabilities and other clinical programs through
rights to first negotiation.
In addition, pursuant to an investment agreement entered into on the same date as the collaboration and licensing
agreement, Ipsen also became a shareholder of GENFIT through the purchase of 3,985,239 newly issued shares representing 8%
of GENFIT S.A after issuance, via a €28 million investment. The new shares were initially subject to a lock-up period which has
now ended. Following approval by our shareholders at the shareholders' meeting on May 25, 2022, Ipsen became a member of our
Board of Directors.
The summary provided above does not purport to be complete and is qualified in its entirety by reference to the complete
agreement, which is an exhibit to this annual report.
Royalty Financing Agreement with HCRx
We have signed a royalty financing agreement with HCRX Investments Holdco, L.P., or HCRx on January 30, 2025, comprising
a Bond Support Agreement and a Bond Subscription Agreement, with Terms and Conditions of the royalty financing bonds,
collectively the Royalty Financing Agreement. The royalty financing takes the form of an issuance by GENFIT of straight bonds to
be subscribed by HCRx (the “Royalty Financing Bonds”), for an aggregate subscription price plus premium of up to €185 million
(the “Subscription Price”, with a nominal value of €9,250,000). This agreement includes an initial payment of €130 million and up to
€55 million via two additional installments of €30 million and €25 million, respectively, based on near-term milestones being met.
Payment of the €130 million installment was made at closing on March 20, 2025. Payment of each additional installment is
subject to certain sales milestones for Iqirvo® (elafibranor), and can be exercised at the discretion of GENFIT upon achievement
of such milestones.
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HCRx will be compensated and repaid out of a portion of the royalties which GENFIT is eligible to receive from its partner
Ipsen pursuant to the Ipsen Agreement. Cumulative payment to HCRx is capped at a maximum value and subject to time-limits as
described below. Once the cap or time-limit is met, all future royalties will revert back to GENFIT. GENFIT retains the right to
receive any regulatory, commercial and sales-based milestone payments under the Ipsen agreement, including the €26.55 million
milestone expected in 2025 pending a third pricing and reimbursement approval of Iqirvo® (elafibranor) in a major European
market.
The royalties will be paid into a dedicated account and GENFIT will grant a security interest on the corresponding portion of
the royalty receivables.
Main terms of the Royalty Financing are as follows:
The Royalty Financing Bonds’ subscription price (the "Subscription Price") is payable in up to three installments as follows:
•
A first installment for a total subscription amount of €130 million issued on March 20, 2025;
•
A second installment for a total subscription amount of €30 million, subject to net sales of Iqirvo® (elafibranor) reaching a
certain threshold by December 31, 2025; and
•
A third installment for a total subscription amount of €25 million, subject to net sales of Iqirvo® (elafibranor) reaching a
certain threshold by December 31, 2026.
Payment of the second and third installments are at the option of GENFIT, provided the corresponding conditions are met.
The Royalty Financing Bonds issued by GENFIT will not bear interest. Instead, the returns on these bonds will be tied to a
portion of the royalties GENFIT receives under the Ipsen agreement from October 1, 2024. This portion of the royalties is subject
to the following caps and time-limits:
•
An annual cap equal to the amount of royalties based on an annual maximum amount of net sales of €600 million. GENFIT
will receive 100% of the royalties based on the annual net sales exceeding this maximum.
•
A combined overall cap and time-limit determined as follows: When the cumulated amount of royalties received by HCRx
will represent 155% of the Subscription Price of the Royalty Financing Bonds, excluding the nominal value (i.e.,
approximately €277.5 million if all installments of the Subscription Price are paid), it will no longer be entitled to the
royalties, which will, from then on, fully revert to the Company. If, at December 31, 2030, the cumulated amount of royalties
received by HCRx represents less than this 155% return rate, it will continue to receive the royalties until the cumulated
amount received represents 195% of the Subscription Price excluding the nominal value (i.e., up to a maximum of €351.5
million if all installments of the Subscription Price are paid). If, at December 31, 2033, this 195% return rate is not achieved,
HCRx will continue to receive the royalties until the cumulated amount received equals 250% of the Subscription Price
excluding the nominal value (i.e., up to a maximum of € 453.25 million if all installments of the Subscription Price are paid).
•
A final time-limit corresponding to the earlier of the following two dates: (i) the date on which the Company would no
longer be entitled to receive royalties under the Ipsen agreement, and (ii) March 31, 2045 (notwithstanding the fact that
none of the above return rates would have been achieved).
•
When either of the above cap/time limit is reached, GENFIT must repay the nominal amount of the Royalty Financing
Bonds (i.e. €9,250,000).
HCRx’s recourse against GENFIT is limited to GENFIT’s non-compliance with its contractual obligations under the royalty
financing documentation and repayment of the nominal value of the Royalty Financing Bonds (€9,250,000).
To secure its payment and repayment obligations under the Royalty Financing Bonds, GENFIT has transfered the
corresponding royalty receivables relating to net sales under the Ipsen Agreement to a French law trust (fiducie-sûreté) for the
benefit of the holders of the Royalty Financing Bonds, until the above mentioned cap/time limit is reached.
On March 13, 2025, HCRx transferred its rights to purchase all of the Royalty Financing Bonds, and all rights and obligations
relating to the purchase and ownership of the Royalty Financing Bonds under the Bond Support Agreement and the Bond
Subscription Agreement to HCR Iqirvo SPV, LP.
The summary provided above does not purport to be complete and is qualified in its entirety by reference to the complete
agreements, each of which are exhibits to this annual report.
Collaboration and License Agreement with Terns Pharmaceuticals, Inc.
On June 24, 2019, we entered into a collaboration and license agreement with Terns Pharmaceuticals, Inc., or Terns, a global
biopharmaceutical company based in the United States and China with a focus on developing novel and combination therapies
to treat liver disease. Under the agreement, Terns will have the rights to develop and commercialize elafibranor, our proprietary
investigational compound, in mainland China, Hong Kong, Macau and Taiwan, which we refer to as Greater China, for the
treatment of MASH and PBC.
135
Under the terms of the licensing agreement, we received an upfront payment from Terns of $35 million and will be eligible to
receive up to $193 million in potential clinical, regulatory and commercial milestone payments. Terns obtains the exclusive rights
to develop, register and market elafibranor in Greater China for both MASH and PBC. Upon commercial launch of elafibranor for
the treatment of MASH in Greater China, we will be entitled to receive mid-teen percentage royalties from Terns based on sales in
the territory.
As part of the deal, we and Terns will also undertake joint research and development projects in liver disease, including the
development of elafibranor in combination with Terns’ proprietary compounds.
The summary provided above does not purport to be complete and is qualified in its entirety by reference to the complete
agreement, which is an exhibit to this annual report.
Share Purchase Agreement for the Acquisition of Versantis AG
On September 19, 2022, we announced we had signed an exclusive agreement to acquire all the shares and voting rights of
Versantis AG, or Versantis, a private Swiss-based clinical stage biotechnology company, and its U.S. subsidiary, Versantis, Inc.,
focused on addressing the growing unmet medical needs in liver diseases.
With this acquisition, we acquired Versantis' pipeline, which includes Versantis' main asset VS-01, a liposomal-based
therapeutic product candidate currently in clinical development as a potential therapy for ACLF and HAC. In addition, it's second
asset, VS-02 is a pre-clinical oral and colon-active, drug candidate being developed for the chronic management of HE. Finally,
TS-01, a point-of-care diagnostic device in prototype development for at-home measurement of ammonia in the blood, is in-
licensed by Versantis from ETH Zurich.
The deal included an initial consideration of CHF40.0 million due at closing plus a CHF2.8 million cash adjustment, with
contingent consideration of up to CHF65 million upon positive Phase 2 results for VS-01 and VS-02 and regulatory approval of
VS-01. In addition, the former owners of Versantis are eligible to receive 1/3 of the net proceeds resulting from the sale of VS-01’s
pediatric review voucher to a third party, or 1/3 of the fair market value of this pediatric review voucher if we opt to apply it to one
of our own programs.
The summary provided above does not purport to be complete and is qualified in its entirety by reference to the complete
agreement, which is attached as an exhibit to this annual report.
For additional information on our material contracts, please see “Item 4—Information on the Company,” “Item 6—Directors,
Senior Management and Employees", and Item 7.B - "Major Shareholders and Related Party Transactions - Related Party
Transactions” of this annual report.
Convertible Bonds (OCEANEs)
In October 2017, we issued convertible bonds (OCEANEs) for gross proceeds of €180.0 million, with a maturity date initially of
October 16, 2022.
On November 23, 2020, we presented to all OCEANEs bondholders a two-prong renegotiation offer:
•
A partial buyback of the outstanding OCEANEs for a maximum amount of 3,048,780 OCEANEs at €16.40 per bond; and
•
An amendment of the terms of the remaining OCEANEs to extend their maturity (by 3 years) and increase the conversion
ratio (to 5.5 shares per bond).
At the Shareholders’ and Bondholders’ Meetings on January 25, 2021, the shareholders and bondholders approved this
renegotiation offer and we completed the partial buyback of 2,895,260 OCEANEs at a price of €16.40 (including accrued interest
of €0.30) per bond for a total buyback cost of €47.48 million on January 29, 2021. We then cancelled the repurchase of OCEANEs.
Following the renegotiation, the OCEANEs bear interest at an annual nominal rate of 3.50% payable semi-annually in arrears on
April 16 and October 16 of each year (or the following business day if this date is not a business day). The OCEANEs will be
redeemed at par on October 16, 2025 (or the following business day if this date is not a business day). The effective interest rate is
8.8%.
The nominal unit value of the OCEANEs was set at €29.60. The OCEANEs conversion ratio is 5.5 shares for one OCEANE,
subject to any subsequent adjustments.
The OCEANEs may be redeemed early at the option of the Company, under certain conditions. Specifically, the OCEANEs
may be redeemed early at the option of the Company from November 6, 2020 onward if i) the mathematical average of the
volume-weighted average price of GENFIT shares on the regulated market of Euronext in Paris and ii) the conversion ratio of the
shares in force (over a period of 20 trading days) exceeds 150% of the nominal value of the OCEANEs bonds.
The terms and conditions of the OCEANEs contain a negative pledge clause which limits the ability of the Company to grant
security interests to its creditors upon its present or future assets or revenues. The closing of the Royalty Financing, was subject
to approval of OCEANEs bondholders of an amendment to this negative pledge clause, allowing for the grant of the security
interest contemplated in the Royalty Financing. This amendment was approved by the OCEANEs bondholders on March 10, 2025.
136
Concurrently with the Royalty Financing, the Company proposed to all of the OCEANEs holders to enter into a Put Option
Agreement, pursuant to which the Company unconditionally and irrevocably undertook to repurchase the OCEANEs of such
holder at a price of EUR 32.75 per bond, subject to approval by the general meeting of the OCEANE holders of the amendment of
the terms and conditions of the OCEANEs and the closing of the Royalty Financing (the “Repurchase”).
Certain OCEANEs bondholders exercised their put option for a total of 1,882,891 OCEANEs, i.e. 99% of the total number of
OCEANEs outstanding. At a price of €32.75 per bond, this represents a total Repurchase amount of € 61,664,680.25. The
settlement of the Repurchase occurred on March 26, 2025 and the repurchased OCEANEs were thereafter canceled by the
Company.
As of April 1, 2025, there were 19,807 OCEANEs outstanding, representing 0.2% of the share capital of the Company. The
maximum dilution to GENFIT’s share capital in the event of full conversion would be 0.2%, with approximately €586 thousand
nominal amount outstanding.
The OCEANEs are admitted to trading on Euronext Access (the free market of Euronext in Paris).
For more information see Note 20.1 - "Loans and Borrowings - Breakdown of convertible loan" and Note 2.2 - "Major events
after the period" to our consolidated financial statements included in this annual report.
D.
Exchange Controls
Under current French foreign exchange control regulations there are no limitations on the amount of cash payments that we
may remit to residents of foreign countries. Laws and regulations concerning foreign exchange controls do, however, require that
all payments or transfers of funds made by a French resident to a non-resident such as dividend payments be handled by an
accredited intermediary. All registered banks and substantially all credit institutions in France are accredited intermediaries.
E.
Taxation
The following describes material U.S. federal income tax and French tax considerations relating to the acquisition, ownership
and disposition of ordinary shares or ADSs by a U.S. holder (as defined below). This summary addresses these tax considerations
only for U.S. holders that will hold such ordinary shares ADSs as capital assets (generally, property held for investment). This
summary does not address all U.S. federal income tax and French tax matters that may be relevant to a particular U.S. holder,
such as the effects of Section 451(b) of the U.S. Internal Revenue Code of 1986, as amended, or the Code. This summary does not
address tax considerations applicable to a holder of the ordinary shares or ADSs that may be subject to special tax rules
including, without limitation, the following:
•
banks, financial institutions or insurance companies;
•
brokers, dealers or traders in securities, currencies, commodities, or notional principal contracts;
•
tax-exempt entities or organizations, including an “individual retirement account” or “Roth IRA” as defined in Section 408
or 408A of the Code (as defined below), respectively;
•
real estate investment trusts, regulated investment companies or grantor trusts;
•
persons that hold ordinary shares or ADSs as part of a “hedging,” “integrated”, “wash sale” or “conversion” transaction or
as a position in a “straddle” for U.S. federal income tax purposes;
•
S corporations, partnerships, or other entities or arrangements classified as partnerships for U.S. federal income tax
purposes;
•
certain former citizens or long term residents of the United States;
•
persons that received ordinary shares or ADSs as compensation for the performance of services;
•
persons acquiring ordinary shares or ADSs in connection with a trade or business conducted outside of the United States,
including a permanent establishment or a fixed base in France;
•
holders that elect to apply the provisions of Section 1400Z-2 of the Code to any gain realized upon a disposition of our
ordinary shares or ADSs;
•
holders that own directly, indirectly, or through attribution 10% or more of the voting power or value of our ADSs and
ordinary shares or, in the case of the discussion of French tax consequences, 5% or more of the voting stock or our share
capital; and
•
holders that have a “functional currency” other than the U.S. dollar.
Holders of ordinary shares or ADSs who fall within one of the categories above are advised to consult their usual tax advisor
regarding the specific tax consequences which may apply to their particular situation.
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For the purposes of this description, a “U.S. holder” is a beneficial owner of ordinary shares or ADSs that is (or is treated as),
for U.S. federal income tax purposes:
•
an individual who is a citizen or resident of the United States;
•
a corporation, or other entity taxable as a corporation, created or organized in or under the laws of the United States, any
state therein or the District of Columbia;
•
an estate, the income of which is subject to U.S. federal income taxation regardless of its source; or
•
a trust, if a court within the United States is able to exercise primary supervision over its administration and one or more
U.S. persons have the authority to control all of the substantial decisions of such trust, or if such trust has a valid election
in effect under applicable U.S. Treasury Regulations to be treated as a U.S. person.
If a partnership (or any other entity treated as a partnership for U.S. federal income tax purposes) holds ordinary shares or
ADSs, the tax consequences relating to an investment in the ordinary shares or ADSs will depend in part upon the status of the
partner and the activities of the partnership. Such a partner or partnership should consult his, her or its tax advisor regarding the
specific tax considerations of acquiring, owning and disposing of the ordinary shares or ADSs in its particular circumstances.
The discussion in this section is based in part upon the representations of the depositary and the assumption that each
obligation in the deposit agreement and any related agreement will be performed in accordance with its terms.
Persons considering an investment in the ordinary shares or ADSs should consult their own tax advisors as to the particular
tax consequences applicable to them relating to the acquisition, ownership and disposition of the ordinary shares or ADSs,
including the applicability of U.S. federal, state and local tax laws, French tax laws and other non-U.S. tax laws.
Material French Tax Considerations
The following describes the material French income tax consequences to U.S. Holders of purchasing, owning and disposing
of our ordinary shares or ADSs.
This discussion does not purport to be a complete analysis or listing of all potential tax effects of the acquisition, ownership
or disposition of our ordinary shares or ADSs to any particular investor, and does not discuss tax considerations that arise from
rules of general application or that are generally assumed to be known by investors. All of the following is subject to change. Such
changes could apply retroactively and could affect the consequences described below.
In particular, the French finance bill for 2025 (loi de finances pour 2025) enacted on February 14, 2025 contains certain
measures that affect the French taxation of U.S. holders purchasing, owning and disposing of ordinary shares or ADSs.
This summary does not constitute a legal opinion or tax advice. U.S. holders are advised to consult their own tax advisors
regarding the tax consequences of the purchase, ownership and disposition of ordinary shares or ADSs in light of their particular
circumstances, including the effect of any U.S. federal, state, local or other national tax laws.
French tax rules applicable to French assets that are held by or in foreign trusts generally provide inter alia for the inclusion
of trust assets in the settlor’s net assets for the purpose of applying the French real estate wealth tax, the French gift and estate
tax to French assets held in trust, for a specific tax on capital on the French assets of foreign trusts not already subject to the
French real estate wealth tax and for a number of French tax reporting and disclosure obligations. The following discussion does
not address the French tax consequences applicable to securities (including ordinary shares or ADSs) held in trusts. If our
ordinary shares or ADSs are held in trust, the grantor, trustee and beneficiary are advised to consult their own tax advisor
regarding the specific tax consequences of acquiring, owning and disposing of such securities.
The description of the French income tax and real estate wealth tax consequences set forth below is based on the
Convention Between the Government of the United States of America and the Government of the French Republic for the
Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and Capital of August 31,
1994, or the U.S.-France Tax Treaty, which came into force on December 30, 1995 (as amended by any subsequent protocols,
including the protocol of January 13, 2009), and the tax guidelines issued by the French tax authorities in force as of the date of
this annual report.
For the purposes of this discussion, the term “U.S. Holder” means a beneficial owner of securities that is (1) an individual who
is a U.S. citizen or resident for U.S. federal income tax purposes, (2) a U.S. domestic corporation or certain other entities created
or organized in or under the laws of the United States or any state thereof, or (3) otherwise subject to U.S. federal income taxation
on a net income basis in respect of ordinary share or ADSs.
If a partnership (or any other entity treated as partnership for U.S. federal income tax purposes) holds ordinary shares or
ADSs, the tax treatment of the partnership and a partner in such partnership generally will depend upon the status of the partner
and the activities of the partnership. If a U.S. Holder is a partner in a partnership that holds securities, such holder is urged to
consult its own tax advisor regarding the specific tax consequences of acquiring, owning and disposing of securities.
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This discussion applies only to investors that hold ordinary shares or ADSs as capital assets that have the U.S. dollar as their
functional currency, that are entitled to U.S.-France Tax Treaty benefits under the “Limitation on Benefits” provision contained in
the U.S.-France Tax Treaty, and whose ownership of the ordinary shares or ADSs is not effectively connected to a permanent
establishment or a fixed base in France. Certain U.S. Holders (including, but not limited to, U.S. expatriates, partnerships or other
entities classified as partnerships for U.S. federal income tax purposes, banks, insurance companies, regulated investment
companies, tax-exempt organizations, financial institutions, persons subject to the alternative minimum tax, persons who
acquired the securities pursuant to the exercise of employee share options or otherwise as compensation, persons that own
(directly, indirectly or by attribution) 5% or more of our voting stock or 5% or more of our outstanding share capital, dealers in
securities or currencies, brokers, mutual funds, individual retirement or other tax-deferred accounts persons that elect to mark
their securities to market for U.S. federal income tax purposes and persons holding securities as a position in a synthetic security,
straddle or conversion transaction) may be subject to special rules not discussed below, and are advised to consult their usual
tax advisor regarding the specific tax consequences which may apply to their particular situation.
U.S. Holders are urged to consult their own tax advisors regarding the tax consequences of the purchase, ownership and
disposition of securities in light of their particular circumstances, especially with regard to the “Limitations on Benefits” provision
contained in the U.S.-France Tax Treaty.
Estate and Gift Taxes
In general, a transfer of securities by gift or by reason of death of a U.S. Holder that would otherwise be subject to French gift
or inheritance tax, respectively, will not be subject to such French tax by reason of the Convention between the Government of
the United States of America and the Government of the French Republic for the Avoidance of Double Taxation and the
Prevention of Fiscal Evasion with Respect to Taxes on Estates, Inheritances and Gifts, dated November 24, 1978 (as amended
from time to time), unless (1) the donor or the transferor is domiciled in France at the time of making the gift or at the time of his
or her death, or (2) the securities were used in, or held for use in, the conduct of a business through a permanent establishment or
a fixed base in France.
Financial Tax on Financial Transactions
Pursuant to Article 235 ter ZD of the French tax code (Code général des impôts, the “FTC”), purchases of shares or ADSs of a
French company listed on a regulated market of the European Union or on a foreign regulated market formally acknowledged by
the French Financial Market Authority (AMF) are subject to a 0.3% French tax on financial transactions at a 0.3% rate until March
31, 2025, and then at a 0.4% rate as from April 1, 2025 (pursuant to Article 98 of the finance bill for 2025, provided that, broadly, the
issuer’s market capitalization exceeds 1 billion euros as of December 1 of the taxation year. A list of companies whose market
capitalization exceeds 1 billion euros as of December 1 of the taxation year within the meaning of Article 235 ter ZD of the FTC is
published by the French tax authorities on an annual basis in their official guidelines. Pursuant to the official guidelines BOI-
ANNX-000467-23/12/2024 issued on December 23, 2024, we are currently not included in such list.
Moreover, Nasdaq Global Select Market, on which ADSs are listed, is not currently acknowledged by the AMF but this may
change in the future.
As a consequence, neither the ADSs nor the ordinary shares are currently within the scope of the French tax on financial
transactions.
Purchases of our securities may be subject to such tax in the future provided that our market capitalization exceeds 1 billion
euros as of December 1 of the taxation year and that the Nasdaq Global Select Market is acknowledged by the AMF.
Registration Duties
In the case where Article 235 ter ZD of the FTC is not applicable, transfers of shares issued by a French company which are
listed on a regulated or organized market within the meaning of the French Monetary and Financial Code (Code Monétaire et
Financier) are subject to uncapped registration duties at the rate of 0.1% if the transfer is evidenced by a written statement
(“acte”) executed either in France or outside France. As ordinary shares of our company are listed on Euronext Paris, which is an
organized market within the meaning of the French Monetary and Financial Code, their transfer should be subject to uncapped
registration duties at the rate of 0.1% in case of the existence of a written statement (“acte”) and provided that Article 235 ter ZD
of the FTC is not applicable. Although there is no case law or official guidelines published by the French tax authorities on this
point, transfer of ADSs should remain outside of the scope of the aforementioned 0.1% registration duties. U.S. Holders are urged
to consult their own tax advisor about the possible application of the registration duty upon the transfer of ADSs.
Tax on Sale or Other Disposals
As a matter of principle, under French tax law, and to the extent GENFIT is not a real estate company for the purpose of
Article 244 bis A of the FTC,a U.S. Holder should not be subject to any French tax on any capital gain from the sale, exchange,
repurchase or redemption by us of ordinary shares or ADSs, provided such U.S. Holder is not a French tax resident for French tax
purposes and has not held more than 25% of our dividend rights, known as “droits aux bénéfices sociaux,” at any time during the
preceding five years, either directly or indirectly, as relates to individuals, alone or with relatives and, it has not transferred
ordinary shares or ADSs as part of redemption by GENFIT, in which case the proceeds may under certain circumstances be
partially or fully characterized as dividends under French domestic law and, as result, be subject to French dividend withholding
tax.
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As an exception, a U.S Holder domiciled, established or incorporated in certain non-cooperative States or territories as
defined in Article 238-0 A of the FTC, except for those mentioned in paragraph 2 bis-2° of the same Article, should be subject to a
75% withholding tax in France on any such capital gain, regardless of the fraction of the dividend rights it holds, subject to safe-
harbor provisions and the more favorable provisions of the U.S.-France Tax Treaty. The list of non-cooperative states or territories
is published by decree and is in principle updated annually. This list was last updated on February 16, 2024, and currently includes
American Samoa, Anguilla, Antigua and Barbuda, the Bahamas, Belize, Fiji, Guam, Palaos, Panama, Russia, Samoa, Seychelles,
Trinidad and Tobago, Turk and Caicos, the United States Virgin Islands and Vanuatu. States referred to in Article 238-0 A, 2 bis-2°
of the FTC, and thus outside of the scope of Article 244 bis B of the FTC, are currently American Samoa, Antigua and Barbuda,
Belize, Fiji, Guam, Palaos, Panama, Russia, Samoa, Trinidad and Tobago and the United States Virgin Islands.
Under application of the U.S.-France Tax Treaty, a U.S. Holder who is a U.S. resident for purposes of the U.S.-France Tax
Treaty and entitled to Treaty benefit will not be subject to French tax on any such capital gain unless the ordinary shares or the
ADSs form part of the business property of a permanent establishment or fixed base that the U.S. Holder has in France. U.S.
Holders who own ordinary shares or ADSs through U.S. partnerships that are not resident for U.S.-France Tax Treaty purposes are
advised to consult their own tax advisors regarding their French tax treatment and their eligibility for Treaty benefits in light of
their own particular circumstances.
A U.S. Holder that is not a U.S. resident for U.S.-France Tax Treaty purposes or is not entitled to Treaty benefit (and in both
cases is not domiciled, established or incorporated in certain non-cooperative States or territories as defined in Article 238-0 A of
the FTC, except for those mentioned in paragraph 2-bis-2°) and has held more than 25% of our dividend rights, known as “droits
aux bénéfices sociaux,” at any time during the preceding five years, either directly or indirectly, and, as relates to individuals, alone
or with relatives will be subject to a levy in France at the rate (1) of 12.8% for individuals and (2) 25% for legal persons. However,
eligible non-French tax resident legal entities may claim a refund of the 25% French levy to the extent such tax exceeds the
amount that would have been due under French corporate income tax if they had been French tax residents. This refund
mechanism is only available to certain legal entities. Non-French tax resident legal entities are advised to consult their own tax
adviser regarding their French tax treatment and their eligibility to this refund mechanism.
The above French provisions expressly apply to sale, repurchase or redemption by us of ordinary shares. U.S. Holders who
own ordinary shares or ADSs through U.S. partnerships that are not resident for U.S.-France Tax Treaty purposes are advised to
consult their own tax adviser regarding their French tax treatment and their eligibility for Treaty benefits in light of their own
particular circumstances.
Special rules apply to U.S. Holders who are residents of more than one country.
Taxation of Dividends
Dividends paid by a French corporation to non-residents of France are generally subject to French withholding tax at a rate
of (i) 25% for payments benefiting legal persons that are the beneficial owners and are not French tax residents (and 15% for
distributions made to not-for-profit organizations with a head office in a Member State of the European Economic Area that
would be subject to the tax regime set forth under Article 206 paragraph 2 of the FTC if its head office were located in France and
that meet the criteria set forth in the tax guidelines BOI-RPPM-RCM-30-30-10-70-24/12/2019, No. 130, dated December 24, 2019),
and (ii) 12.8% for payments benefiting individuals who are not French tax residents. Dividends paid by a French corporation in
certain non-cooperative States or territories, as defined in Article 238-0 A of the FTC (except for those mentioned in paragraph 2-
bis-2°), will generally be subject to French withholding tax at a rate of 75%, irrespective of the tax residence of the beneficiary of
the dividends are received in such States or territories, save for the safe-harbor provisions to apply. However, eligible U.S. Holders
which are legal entities and entitled to U.S.-France Tax Treaty benefits under the “Limitation on Benefits” provision contained in
the U.S.-France Tax Treaty who are U.S. residents, as defined pursuant to the provisions of the U.S.-France Tax Treaty, will not be
subject to this 25% or 75% withholding tax rate, but may be subject to the withholding tax at a reduced rate (as described below).
Under the U.S.-France Tax Treaty, the rate of French withholding tax on dividends paid to an eligible U.S. Holder who is a U.S.
resident as defined pursuant to the provisions of the U.S.-France Tax Treaty and whose ownership of the ordinary shares or ADSs
is not effectively connected with a permanent establishment or fixed base that such U.S. Holder has in France, is generally
reduced to 15%, or to 5% if such U.S. Holder is a corporation and owns directly or indirectly at least 10% of the share capital of the
issuer; such U.S. Holder may claim a refund from the French tax authorities of the amount withheld in excess of the U.S.-France
Tax Treaty rates of 15% or 5%, if any.
For U.S. Holders that are not individuals but are U.S. residents, as defined pursuant to the provisions of the U.S.-France Tax
Treaty, the requirements for eligibility for Treaty benefits, including the reduced 5% or 15% withholding tax rates contained in the
“Limitation on Benefits” provision of the U.S.-France Tax Treaty, are complex, and certain technical changes were made to these
requirements by the protocol of January 13, 2009. U.S. Holders are advised to consult their own tax advisors regarding their
eligibility for Treaty benefits in light of their own particular circumstances.
Dividends paid to an eligible U.S. Holder may immediately be subject to the reduced rates of 5% or 15% provided that:
•
such holder establishes before the date of payment that it is a U.S. resident under the U.S.-France Tax Treaty by
completing and providing the depositary with a treaty form (Form 5000) in accordance with French guidelines (BOI-INT-
DG-20-20-20-20 dated September 12, 2012); or
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•
the depositary or other financial institution managing the securities account in the U.S. of such holder provides the
French paying agent with a document listing certain information about the U.S. Holder and its ordinary shares or ADSs
and a certificate whereby the financial institution managing the U.S. Holder’s securities account in the United States
takes full responsibility for the accuracy of the information provided in the document.
Otherwise, dividends paid to a U.S. Holder, if such U.S. Holder is a legal person, will be subject to French withholding tax at
the rate of 25%, or 75% if paid in certain non-cooperative States or territories (as defined in Article 238-0 A of the FTC - except for
those mentioned in paragraph 2 bis-2°), and then reduced at a later date to 5% or 15%, provided that such holder duly completes
and provides through the French paying agent, the French tax authorities with the treaty forms Form 5000 and Form 5001 (due to
recent case law regarding status of limitation for filing a withholding tax claim; U.S. Holders are advised to consult their own tax
advisors in this respect).
Certain qualifying pension funds and certain other tax-exempt entities and certain US residents may be subject to specific
filing requirements. They are advised to consult their own tax advisors on this point.
Form 5000 and Form 5001, together with instructions, will be provided by the depositary to all U.S. Holders registered with
the depositary. The depositary will arrange for the filing with the French tax authorities of all such forms properly completed and
executed by U.S. Holders of ordinary shares or ADSs and returned to the depositary in sufficient time so that they may be filed
with the French tax authorities before the distribution in order to immediately obtain a reduced withholding tax rate. Otherwise,
the depositary must withhold tax at the full rate of 25% or 75% as applicable. In that case, the U.S. Holders may claim a refund
from the French tax authorities of the excess withholding tax.
In any case, individual taxpayers who are not fiscally domiciled in France should not have to comply with these procedures if
the French withholding tax applying to them is lower than 15%. In particular, since the withholding tax rate applicable under
French domestic law to U.S. Holders who are individuals does not exceed the cap provided in the U.S.-France Tax Treaty (i.e., 15%),
the 12.8% rate shall apply, without any reduction provided under the U.S.-France Tax Treaty (except in the particular situation
when the dividends are paid to such U.S. Holders out of France in a non-cooperative State or territory as defined in Article 238-0 A
of the FTC other than those mentioned in 2° of 2 bis of the same Article 238-0 A of the FTC and are subject to the 75% withholding
tax in France).
In addition, please note that pursuant to Article 235 quater of the FTC (introduced by the French finance bill No. 2019-1479
for 2020) and under certain conditions (in particular, in addition to certain reporting obligations, the interest held in the
distributing company must not enable the beneficiary to participate effectively in the management or control of that company
and the beneficiary company is located in a country that has signed an administrative assistance agreement with France to
combat tax evasion and avoidance, as well as an administrative assistance agreement on tax collection, and that is not a non-
cooperative country), a corporate U.S. Holder which is in a tax loss position or which tax result is nil due to offset of tax losses
(French Administrative Supreme Court, October 18, 2022, n° 466329) for the fiscal year during which the dividend is received may
be entitled to a deferral regime, and obtain a withholding tax refund. The tax deferral ends in respect of the first financial year
during which this U.S. Holder is in a profit making position, as well as in the cases set out in Article 235 quater of the FTC. The
refund must be claimed within the same period applicable to claim related to taxes other than local taxes. Also, pursuant to
Article 235 quinquies of the FTC and under certain conditions, a corporate U.S. Holder may be entitled to a refund of a fraction of
the withholding tax, up to the difference between the withholding tax paid (on a gross basis) and the withholding tax based on the
dividend net of the expenses incurred for the acquisition and conservation directly related to the income, provided (i) that these
expenses would have been tax deductible had the U.S. Holder been established in France, and (ii) that the tax rules in the United
States do not allow the U.S. Holder to offset the withholding tax.
Given the special features of the ADSs, U.S. Holders are advised to consult their own tax advisor about the possible
application to ADSs of such provisions in light of their own circumstances.
Real Estate Wealth Tax
As from January 1, 2018, the French wealth tax (impôt de solidarité sur la fortune) is repealed and replaced by the French real
estate wealth tax (impôt sur la fortune immobilière, or IFI). The scope of such new tax is narrowed to real estate assets (and
certain assets deemed to be real estate assets) or rights, held directly or indirectly through one or more legal entities and whose
net taxable assets amount to at least €1,300,000.
Broadly, subject to provisions of double tax treaties and to certain exceptions, individuals who are not residents of France for
tax purposes within the meaning of Article 4 B of the FTC, are subject to real estate wealth tax (impôt sur la fortune immobilière)
in France in respect of the portion of the value of their shares of our company representing French real estate assets (Article 965,
2° of the FTC). Some exceptions are provided by the FTC. In particular, GENFIT’s ordinary shares or ADSs owned by a U.S. Holder
should not fall within the scope of the IFI provided that such U.S. Holder does not own (together with the members of his/her
household) directly or indirectly a shareholding exceeding 10% of the financial rights and voting rights of GENFIT. U.S. Holders
holding directly or indirectly a shareholding exceeding 10% of the financial rights and voting rights of GENFIT should seek
additional advice.
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Under the U.S.-France Tax Treaty (the provisions of which should be applicable to this IFI), the IFI will however generally not
apply to shares that are held by U.S. Holders who (1) own, alone or with related persons, directly or indirectly, shares in our
company which give rise to less than 25% of the rights in the company’s earnings, and (2) do not own their shares in connection
with a permanent establishment or a fixed base through which the U.S. Holder carries on business or performs personal services
in France.
U.S. Holders are advised to consult their usual tax advisor regarding the specific tax consequences which may apply to their
particular situation with respect to such IFI.
Material U.S. Federal Income Tax Considerations
This section discusses the material U.S. federal income tax considerations relating to the acquisition, ownership and
disposition of ADSs by a U.S. holder. This description does not address the U.S. federal estate, gift, or alternative minimum tax
considerations, or any U.S. state, local, or non-U.S. tax considerations, of the acquisition, ownership and disposition of the ADSs.
This description is based on the Code, existing, proposed and temporary U.S. Treasury Regulations promulgated thereunder
and administrative and judicial interpretations thereof, in each case as in effect and available on the date hereof. All the foregoing
is subject to change, which change could apply retroactively, and to differing interpretations, all of which could affect the tax
considerations described below. There can be no assurances that the U.S. Internal Revenue Service, or the IRS, will not take a
position concerning the tax consequences of the acquisition, ownership and disposition of the ADSs or that such a position
would not be sustained by a court. We have not obtained, nor do we intend to obtain, a ruling with respect to the U.S. federal
income tax considerations in the purchase, ownership or disposition of our ADSs. Accordingly, holders should consult their own
tax advisers concerning the U.S. federal, state, local and non-U.S. tax consequences of acquiring, owning and disposing of the
ADSs in their particular circumstances.
In general, and taking into account the earlier assumptions, for U.S. federal income and French tax purposes, a U.S. holder
holding ADSs will be treated as the owner of the shares represented by the ADSs. Exchanges of shares for ADSs, and ADSs for
shares, generally will not be subject to U.S. federal income or to French tax.
In addition, this discussion in this section is limited to holders who are not resident in France for purposes of the U.S.-France
Tax Treaty.
Passive Foreign Investment Company Considerations
If we are classified as a passive foreign investment company, or PFIC, in any taxable year, a U.S. holder will be subject to
special rules generally intended to reduce or eliminate any benefits from the deferral of U.S. federal income tax that a U.S. holder
could derive from investing in a non-U.S. company that does not distribute all of its earnings on a current basis.
We will be classified as a PFIC for U.S. federal income tax purposes in any taxable year in which, after applying certain look-
through rules with respect to the income and assets of our subsidiaries, either: (1) at least 75% of our gross income is “passive
income” or (2) at least 50% of the quarterly weighted-average value of our total gross assets (which would generally be measured
by fair market value of our assets, and for which purpose the total value of our assets may be determined in part by the market
value of the ADSs and our ordinary shares, which are subject to change) is attributable to assets that produce “passive income”
or are held for the production of “passive income.”
Passive income for this purpose generally includes dividends, interest, royalties, rents, gains from commodities and
securities transactions, the excess of gains over losses from the disposition of assets which produce passive income, and
includes amounts derived by reason of the temporary investment of funds raised in offerings of the ADSs. If a non-U.S.
corporation owns directly or indirectly at least 25% by value of the stock of another corporation or partnership, the non-U.S.
corporation is treated for purposes of the PFIC tests as owning its proportionate share of the assets of such other corporation or
partnership and as receiving directly its proportionate share of such other corporation’s or partnership's income. The
determination of whether we are a PFIC is a fact-intensive determination made on an annual basis and the applicable law is
subject to varying interpretation. If we are classified as a PFIC in any taxable year during which a U.S. holder owns our ordinary
shares or ADSs, such U.S. holder will be subject to special tax rules discussed below and could suffer adverse tax consequences.
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The fair market value of our assets may be determined in large part by reference to the market price of the ADSs and our
ordinary shares, which is likely to continue to fluctuate. Fluctuations in the market price of our ordinary shares or ADSs may
result in our being a PFIC for any taxable year. In addition, the composition of our income and assets will be affected by how, and
how quickly, we use the cash proceeds from our offerings. Although the matter is not free from doubt, based on our analysis of
our income, assets, activities and market capitalization for our taxable year ended December 31, 2024, we do not believe that we
were classified as a PFIC for the taxable year ended December 31, 2024. Whether we are a PFIC for any taxable year will depend on
our assets and income (including whether we receive certain non-refundable grants or subsidies, and whether such amounts
along with reimbursements of certain refundable research tax credits will constitute gross income for purposes of the PFIC
income test) in each year, and because this is a factual determination made annually after the end of each taxable year, there can
be no assurance that we will not be considered a PFIC in any taxable year. In addition, we hold a substantial amount of cash and
cash equivalents, which are generally treated as a passive asset for purposes of determining PFIC status. Our PFIC status may
change from year to year and it is difficult to predict whether we will be a PFIC for the current year or any future year. Therefore,
we have not yet made any determination as to our expected PFIC status for the current taxable year. However, we could be
considered a PFIC for the current taxable year or a future taxable year if the current percentage of our passive assets compared
to our total assets increases. There can be no assurance that the IRS will agree with our conclusion with respect to any taxable
year that we were not a PFIC for such taxable year. Our U.S. counsel expresses no opinion regarding our conclusions or our
expectations regarding our PFIC status.
If we are or become classified as a PFIC in any year with respect to which a U.S. holder owns our ordinary shares or ADSs, we
will continue to be treated as a PFIC with respect to such U.S. holder in all succeeding years during which the U.S. holder owns
the ordinary shares or ADSs, regardless of whether we continue to meet the tests described above, unless we cease to be a PFIC
and the U.S. holder has made a “deemed sale” election under the PFIC rules or is eligible to make and makes a mark-to-market
election (as described below), with respect to all taxable years during such U.S. holder’s holding period in which we are a PFIC. If
the “deemed sale” election is made, a U.S. holder will be deemed to have sold the ordinary shares or ADSs the U.S. holder holds at
their fair market value as of the date of such deemed sale, and any gain from such deemed sale would be subject to the rules
described below. After the deemed sale election, so long as we do not become a PFIC in a subsequent taxable year, the U.S.
holder’s ordinary shares or ADSs with respect to which such election was made will not be treated as shares in a PFIC and the
U.S. holder will not be subject to the rules described below with respect to any “excess distribution” the U.S. holder receives from
us or any gain from an actual sale or other disposition of the ordinary shares or ADSs. U.S. holders should consult their tax
advisors as to the possibility and consequences of making a deemed sale election if such election becomes available.
If we are or become a PFIC, and you are a U.S. holder that does not make one of the elections described above (and below in
further detail), a special tax regime will apply to both (a) any “excess distribution” by us to you (generally, your ratable portion of
distributions in any year which are greater than 125% of the average annual distribution received by you in the shorter of the three
preceding years or your holding period for the ADSs) and (b) any gain realized on the sale or other disposition of the ADSs. Under
this regime, any excess distribution or realized gain will be treated as ordinary income and will be subject to tax as if (a) the excess
distribution or gain had been realized ratably over your holding period in the ADSs, (b) the amount deemed realized in each year
had been subject to tax in each year of that holding period at the highest marginal rate for such year (other than income allocated
to the current period or any taxable period before we became a PFIC, which would be subject to tax at the U.S. holder’s regular
ordinary income rate for the current year and would not be subject to the interest charge discussed below), and (c) the interest
charge generally applicable to underpayments of tax had been imposed on the taxes deemed to have been payable in those
years. In addition, dividend distributions made to you will not qualify for the lower rates of taxation applicable to qualified
dividends as discussed below under the heading “Distributions.”
Certain elections may alleviate some of the adverse consequences of PFIC status and would result in an alternative
treatment of the ADSs. If a U.S. holder makes a mark-to-market election, the U.S. holder generally will recognize as ordinary
income any excess of the fair market value of the ADSs at the end of each taxable year over the U.S. holder's adjusted tax basis in
such ADSs, and will recognize an ordinary loss in respect of any excess of the adjusted tax basis of the ADSs over their fair market
value at the end of the taxable year (but only to the extent of the net amount of income previously included as a result of the
mark-to-market election). If a U.S. holder makes the election, the U.S. holder’s tax basis in the ADSs will be adjusted to reflect
these income or loss amounts. Any gain recognized on the sale or other disposition of ADSs in a year when we are a PFIC will be
treated as ordinary income and any loss will be treated as an ordinary loss (but only to the extent of the net amount of income
previously included as a result of the mark-to-market election). The mark-to-market election is available only if we are a PFIC and
the ADSs are “regularly traded” on a “qualified exchange.” The ADSs will be treated as “regularly traded” in any calendar year in
which more than a de minimis quantity of the ADSs are traded on a qualified exchange on at least 15 days during each calendar
quarter (subject to the rule that trades that have as one of their principal purposes the meeting of the trading requirement as
disregarded). The Nasdaq Global Select Market is a qualified exchange for this purpose and, consequently, if the ADSs are
regularly traded, the mark-to-market election will be available to a U.S. holder.
However, a mark-to-market election generally cannot be made for equity interests in any lower-tier PFICs that we own,
unless shares of such lower-tier PFIC are themselves “marketable.” As a result, even if a U.S. holder validly makes a mark-to-
market election with respect to our ordinary shares or ADSs, the U.S. holder may continue to be subject to the PFIC rules
(described above) with respect to its indirect interest in any of our investments that are treated as an equity interest in a PFIC for
U.S. federal income tax purposes. U.S. holders should consult their tax advisors as to the availability and desirability of a mark-to-
market election, as well as the impact of such election on interests in any lower-tier PFICs.
143
We do not currently intend to provide the information necessary for U.S. holders to make qualified electing fund elections for
any taxable year for which we are treated as a PFIC. U.S. holders should consult their tax advisors to determine whether any of
these elections would be available and if so, what the consequences of the alternative treatments would be in their particular
circumstances.
If we are determined to be a PFIC, the general tax treatment for U.S. holders described in this section would apply to indirect
distributions and gains deemed to be realized by U.S. holders in respect of any of our subsidiaries that also may be determined to
be PFICs. U.S. holders should consult their tax advisors regarding the application of the PFIC rules to our subsidiaries.
If a U.S. holder owns ADSs during any taxable year in which we are a PFIC, the U.S. holder generally will be required to file an
IRS Form 8621 (Information Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund) with
respect to the company, generally with the U.S. holder’s federal income tax return for that year. If we are a PFIC for a given taxable
year, U.S. holders should consult their tax advisor concerning such annual filing requirements.
The U.S. federal income tax rules relating to PFICs are complex. U.S. holders and (and prospective U.S. holders) are urged to
consult their own tax advisers with respect to the acquisition, ownership and disposition of the ADSs, the consequences to them
of an investment in a PFIC, any elections available with respect to the ADSs and the IRS information reporting obligations with
respect to the acquisition, ownership and disposition of the ADSs.
Distributions
Subject to the discussion under “— Passive Foreign Investment Company Considerations,” above, the gross amount of any
distribution (including any amounts withheld in respect of foreign tax) actually or constructively received by a U.S. holder with
respect to ADSs will generally be taxable to the U.S. holder as a dividend to the extent of the U.S. holder’s pro rata share of our
current and accumulated earnings and profits as determined under U.S. federal income tax principles. Distributions in excess of
earnings and profits will generally be non-taxable to the U.S. holder to the extent of, and will be applied against and reduce, the
U.S. holder’s adjusted tax basis in the ADSs. Distributions in excess of earnings and profits and such adjusted tax basis will
generally be taxable to the U.S. holder as either long-term or short-term capital gain depending upon whether the U.S. holder has
held the ADSs for more than one year as of the time such distribution is received. However, since we may not calculate our
earnings and profits under U.S. federal income tax principles, it is expected that any distribution will be reported as a dividend,
even if that distribution would otherwise be treated as a non-taxable return of capital or as capital gain under the rules described
above. Non-corporate U.S. holders may qualify for the preferential rates of taxation with respect to dividends on ADSs applicable
to long-term capital gains (i.e., gains from the sale of capital assets held for more than one year) and qualified dividend income (as
discussed below) if we are a “qualified foreign corporation” and certain other requirements (discussed below) are met. A non-U.S.
corporation (other than a corporation that is classified as a PFIC for the taxable year in which the dividend is paid or the
preceding taxable year) generally will be considered to be a qualified foreign corporation (a) if it is eligible for the benefits of a
comprehensive tax treaty with the United States which the Secretary of Treasury of the United States determines is satisfactory
for such purposes and which includes an exchange of information provision, or (b) with respect to any dividend it pays on ADSs
which are readily tradable on an established securities market in the United States. Our ADSs are currently listed on the Nasdaq
Global Select Market, which is an established securities market in the United States, and we expect the ADSs to be readily
tradable on the Nasdaq Global Select Market. However, there can be no assurance in this regard. The Company, which is
incorporated under the laws of France, believes that it qualifies as a resident of France for purposes of, and is eligible for the
benefits of, the U.S.-France Tax Treaty, although there can be no assurance in this regard. Further, the IRS has determined that
the U.S.-France Tax Treaty is satisfactory for purposes of the qualified dividend rules and that it includes an exchange-of-
information program. Therefore, subject to the discussion under “— Passive Foreign Investment Company Considerations,”
above, such dividends will generally be “qualified dividend income” in the hands of individual U.S. holders if such dividends are
paid in a taxable year in which we were not a PFIC and were not a PFIC in the preceding taxable year, provided that a holding
period requirement (more than 60 days of ownership, without protection from the risk of loss, during the 121-day period beginning
60 days before the ex-dividend date) and certain other requirements are met. The dividends will not be eligible for the dividends-
received deduction generally allowed to corporate U.S. holders.
Subject to applicable limitations and the Final FTC Treasury Regulations (as defined below), a U.S. holder generally may claim
the amount of any French withholding tax on a distribution not exceeding the rate provided by the U.S.-France Tax Treaty as
either a deduction from gross income or a credit against its U.S. federal income tax liability. Further, certain Treasury regulations
addressing foreign tax credits (the “Final FTC Treasury Regulations”) impose additional requirements for foreign taxes to be
eligible for a foreign tax credit if the relevant taxpayer does not elect to apply the benefits of an applicable income tax treaty, and
there can be no assurance that those requirements will be satisfied. Recent notices from the IRS provide temporary relief by
allowing taxpayers that comply with applicable requirements to apply many aspects of the foreign tax credit regulations as they
previously existed (before the release of the current Final FTC Treasury Regulations) for taxable years ending before the date that
a notice or other guidance withdrawing or modifying the temporary relief is issued (or any later date specified in such notice or
other guidance). U.S. holders should consult their tax advisors regarding the availability of foreign tax credits for any amounts
withheld with respect to dividends on ADSs or ordinary shares, including under the Final FTC Treasury Regulations.
144
The foreign tax credit is subject to numerous complex limitations that must be determined and applied on an individual
basis. Generally, the credit cannot exceed the proportionate share of a U.S. holder’s U.S. federal income tax liability that such U.S.
holder’s taxable income bears to such U.S. holder’s worldwide taxable income. In applying this limitation, a U.S. holder’s various
items of income and deduction must be classified, under complex rules, as either “foreign source” or “U.S. source.” This limitation
is calculated separately with respect to specific categories of income. The amount of a distribution with respect to the ADSs that
is treated as a “dividend” may be lower for U.S. federal income tax purposes than it is for French income tax purposes, potentially
resulting in a reduced foreign tax credit for the U.S. holder. In addition, the creditability of foreign taxes could be affected by
actions taken by intermediaries in the chain of ownership between the holders of ADSs and our company if, as a result of such
actions, the holders of ADSs are not properly treated as beneficial owners of the underlying ordinary shares. Each U.S. holder
should consult its own tax advisors regarding the foreign tax credit rules.
In general, the amount of a distribution paid to a U.S. holder in a foreign currency will be the U.S. dollar value of the foreign
currency calculated by reference to the spot exchange rate on the day the Depositary receives the distribution, regardless of
whether the foreign currency is converted into U.S. dollars at that time. Any foreign currency gain or loss a U.S. holder realizes on
a subsequent conversion of foreign currency into U.S. dollars will be U.S. source ordinary income or loss. If dividends received in a
foreign currency are converted into U.S. dollars on the day they are received, a U.S. holder should not be required to recognize
foreign currency gain or loss in respect of the dividend.
Sale, Exchange or Other Taxable Disposition of the ADSs
A U.S. holder will generally recognize gain or loss for U.S. federal income tax purposes upon the sale, exchange or other
taxable disposition of ADSs in an amount equal to the difference between the U.S. dollar value of the amount realized from such
sale or exchange and the U.S. holder’s adjusted tax basis in those ADSs, determined in U.S. dollars. Subject to the discussion
under “— Passive Foreign Investment Company Considerations” above, this gain or loss will generally be a capital gain or loss. The
adjusted tax basis in the ADSs generally will be equal to the cost of such ADSs. Capital gain from the sale, exchange or other
taxable disposition of ADSs by a non-corporate U.S. holder is generally eligible for a preferential rate of taxation applicable to
capital gains, if the non-corporate U.S. holder’s holding period determined at the time of such sale, exchange or other taxable
disposition for such ADSs exceeds one year (i.e., such gain is long-term taxable gain). The deductibility of capital losses for U.S.
federal income tax purposes is subject to limitations. Any such gain or loss that a U.S. holder recognizes generally will be treated
as U.S. source gain or loss for foreign tax credit limitation purposes.
For a cash basis taxpayer, units of foreign currency paid or received are translated into U.S. dollars at the spot rate on the
settlement date of the purchase or sale. In that case, no foreign currency exchange gain or loss will result from currency
fluctuations between the trade date and the settlement date of such a purchase or sale. An accrual basis taxpayer, however, may
elect the same treatment required of cash basis taxpayers with respect to purchases and sales of the ADSs that are traded on an
established securities market, provided the election is applied consistently from year to year. Such election may not be changed
without the consent of the IRS. For an accrual basis taxpayer who does not make such election, units of foreign currency paid or
received are translated into U.S. dollars at the spot rate on the trade date of the purchase or sale. Such an accrual basis taxpayer
may recognize exchange gain or loss based on currency fluctuations between the trade date and the settlement date. Any foreign
currency gain or loss a U.S. holder realizes will be U.S. source ordinary income or loss.
Medicare Tax
Certain U.S. holders that are individuals, estates or trusts are subject to a 3.8% tax on all or a portion of their “net investment
income,” which may include all or a portion of their dividend income and net gains from the disposition of ADSs. Each U.S. holder
that is an individual, estate or trust is urged to consult its tax advisors regarding the applicability of the Medicare tax to its income
and gains in respect of its investment in the ADSs.
Backup Withholding and Information Reporting
U.S. holders generally will be subject to information reporting requirements with respect to dividends on ADSs and on the
proceeds from the sale, exchange or disposition of ADSs that are paid within the United States or through U.S.-related financial
intermediaries, unless the U.S. holder is an “exempt recipient". In addition, U.S. holders may be subject to backup withholding on
such payments, unless the U.S. holder provides a taxpayer identification number and a duly executed IRS Form W-9 or otherwise
establishes an exemption. Backup withholding is not an additional tax, and the amount of any backup withholding will be allowed
as a credit against a U.S. holder’s U.S. federal income tax liability and may entitle such holder to a refund, provided that the
required information is timely furnished to the IRS.
Foreign Asset Reporting
Certain individual U.S. holders are required to report information relating to an interest in the ADSs, subject to certain
exceptions (including an exception for shares held in accounts maintained by U.S. financial institutions) by filing IRS Form 8938
(Statement of Specified Foreign Financial Assets) with their federal income tax return. U.S. holders are urged to consult their tax
advisors regarding their information reporting obligations, if any, with respect to their ownership and disposition of the ADSs.
145
THE DISCUSSION ABOVE IS A SUMMARY OF THE MATERIAL FRENCH AND U.S. FEDERAL INCOME TAX CONSEQUENCES
OF AN INVESTMENT IN OUR ADSs OR ORDINARY SHARES AND IS BASED UPON LAWS AND RELEVANT INTERPRETATIONS
THEREOF IN EFFECT AS OF THE DATE OF THIS ANNUAL REPORT, ALL OF WHICH ARE SUBJECT TO CHANGE, POSSIBLY WITH
RETROACTIVE EFFECT. EACH PROSPECTIVE INVESTOR IS URGED TO CONSULT ITS OWN TAX ADVISOR ABOUT THE TAX
CONSEQUENCES TO IT OF AN INVESTMENT IN ADSs OR ORDINARY SHARES IN LIGHT OF THE INVESTOR’S OWN
CIRCUMSTANCES.
F.
Dividends and Paying Agents
Not applicable.
G.
Statement by Experts
Not applicable.
H.
Documents on Display
We are subject to the information reporting requirements of the Exchange Act applicable to foreign private issuers and
under those requirements will file reports with the SEC. Those reports may be inspected without charge at the locations
described below. As a foreign private issuer, we are exempt from the rules under the Exchange Act related to the furnishing and
content of proxy statements, and our officers, directors and principal shareholders are exempt from the reporting and short-
swing profit recovery provisions contained in Section 16 of the Exchange Act. In addition, we are not required under the Exchange
Act to file periodic reports and financial statements with the SEC as frequently or as promptly as United States companies whose
securities are registered under the Exchange Act. Nevertheless, we will file with the SEC an Annual Report on Form 20-F
containing financial statements that have been examined and reported on, with and opinion expressed by an independent
registered public accounting firm.
We maintain a corporate website at www.genfit.com. We intend to post our annual report on our website promptly following
it being filed with the SEC. Information contained on, or that can be accessed through, our website does not constitute a part of
this annual report. We have included our website address in this annual report solely as an inactive textual reference.
The Securities and Exchange Commission maintains a website (www.sec.gov) that contains reports, proxy and information
statements and other information regarding registrants, such as GENFIT S.A., that file electronically with the SEC.
With respect to references made in this annual report to any contract or other document of our company, such references
are not necessarily complete and you should refer to the exhibits attached or incorporated by reference to this annual report for
copies of the actual contract or document.
I.
Subsidiary Information
Not required.
J.
Annual Report to Security Holders
If we are required to provide an annual report to security holders in response to the requirements of Form 6-K, we will submit
the annual report to security holders in electronic format in accordance with the EDGAR Filer Manual.
Item 11.
Quantitative and Qualitative Disclosures About Market Risk.
Foreign Currency Exchange Risk
We use the euro as our functional currency and the majority of our operations are denominated in euros. However, a portion
of our operating expenses is denominated in U.S. dollars and Swiss Francs (notably due to the acquisition of Versantis in 2022), as
well as a significant portion of our cash and cash equivalents. As result, we may be exposed to foreign currency risk.
Our overall exposure to the foreign exchange risk depends, in particular, on:
146
•
the currencies in which we receive our revenues;
•
the currencies chosen when agreements are entered into, such as licensing agreements, or co-marketing or co-
development agreements;
•
the location of clinical trials on drug or biomarker candidates;
•
the ability for our co-contracting parties to indirectly transfer foreign exchange risk to us;
•
our foreign exchange risk policy; and
•
the fluctuation of foreign currencies against the euro.
For the years ended December 31, 2023 and December 31, 2024, expenses in U.S. dollars totaled $15.3 million and $11.7 million
respectively, based on the exchange rate in effect at December 31, 2023 and December 31, 2024. As a result, an adverse 10%
change in the exchange rate for the U.S. dollar against the euro would have resulted in a foreign exchange rate loss of
approximately €1.5 million and €1.2 million for the years 2023 and 2024 respectively.
For the years ended December 31, 2023 and December 31, 2024, expenses in Swiss Francs totaled CHF4.7 million and CHF3.0
million respectively, based on the exchange rate in effect at December 31, 2023 and December 31, 2024. As a result, an adverse
10% change in the exchange rate for the Swiss Franc against the euro would have resulted in a foreign exchange rate loss of
approximately €0.6 million and €0.3 million for the years 2023 and 2024 respectively.
As of December 31, 2023 and December 31, 2024, cash and cash equivalents in U.S. dollars totaled $22.0 and $10.8 million
respectively, based on the exchange rate in effect at December 31, 2023 and December 31, 2024. As a result, an adverse 10%
change in the exchange rate for the U.S. dollar against the euro would have resulted in a foreign exchange rate loss of
approximately €1.8 million and €0.9 million for the years 2023 and 2024 respectively.
As of December 31, 2023 and December 31, 2024, cash and cash equivalents in Swiss Francs totaled CHF1.1 million and
CHF0.6 million respectively, based on the exchange rate in effect at December 31, 2023. As a result, an adverse 10% change in the
exchange rate for the Swiss Franc against the euro would have resulted in a foreign exchange rate loss of approximately €0.1
million and €0.1 million for the years 2023 and 2024 respectively.
For the year ended December 31, 2023, we recorded a total net foreign exchange loss of €0.5 million (operating and financial),
including a realized gain of €0.4 million. For the year ended December 31, 2024, we recorded a total net foreign exchange gain of
€0.7 million (operating and financial), including a realized gain of €0.4 million. Any such historical gains or losses do not predict
the future impact of foreign exchange rate risks.
We maintain a balance between euros, U.S. dollars and Swiss Francs in line with the projected outflows of expected
resources in order to naturally cover the risk and therefore hold a significant portion of our cash in U.S. dollars and to a lesser
extent Swiss Francs. Given the significant portion of our operations denominated in U.S. dollars and Swiss Francs, we decided to
limit the conversions into euros of our U.S. dollar denominated cash and the conversions into euros of our Swiss Franc
denominated cash. We do not use any specific hedging arrangements. However, as the majority of our expenses are denominated
in euros, we could be required to convert U.S. dollars into euros or Swiss Francs into euros, and are therefore exposed to a foreign
exchange risk. As of December 31, 2024, we did not have foreign exchange rate hedging tools or contracts in place.
In the future, and in particular with respect to our clinical trials and the funding of our U.S. subsidiary and our Swiss
subsidiary, we will continue to have a significant portion of transactions denominated in currencies other than the euro or
indirectly exposed to currency risk, and as a result, we will continue to have exposure to this risk.
See also Note 6.1 - "Financial Risks Management - Foreign Exchange Risk” to our consolidated financial statements included
in this annual report.
Interest Rate Risk
We believe we have low exposure to interest rate risk.
Our financial liabilities, which consist primarily of convertible bonds and bank loans, carry either no interest or fixed interest
rates, and therefore are not subject to interest rate risk, with the exception of the state-guaranteed loans (PGE), the interest rates
of which may be revised in case of their extension beyond their current maturity, which in turn could lead to an increase in
interest in the future.
With respect to our financial assets, which consist primarily of cash and cash equivalents, our exposure is also limited, as
these assets are held on euro and U.S. dollar denominated demand deposits, term deposits with progressive rates, or invested in
euro and U.S. dollar denominated medium-term negotiable notes or in euro denominated UCITs (Undertakings for the Collective
Investment of Transferable Securities). While these interest-earning instruments carry a degree of interest rate risk, historical
fluctuations in interest income in comparison to the average balance have not been significant.
Credit Risk
We believe that the credit risk related to our cash and cash equivalents is not significant in light of the quality of the financial
institutions at which such funds are held.
147
Liquidity Risk
We had €81.8 million in cash and cash equivalents, as of December 31, 2024.
On March 20, 2025, GENFIT announced the closing of a royalty financing agreement (Royalty Financing) with HealthCare
Royalty (HCRx) providing up to €185 million non-dilutive capital: €130 million upfront, with eligibility to receive up to €55 million in
two additional installments based on near-term sales milestones for Iqirvo® (elafibranor), and can be exercised at the discretion of
GENFIT upon achievement of such milestones.
Concurrently with the Royalty Financing, GENFIT proposed to OCEANE holders the possibility to enter into a put option
agreement for the repurchase of their OCEANEs (Repurchase). Following this proposal, holders of OCEANEs exercised their put
option for a total of 1,882,891 OCEANEs, i.e. 99% of the total number of OCEANEs outstanding. At a price of €32.75 per bond, this
represents a total Repurchase amount of €61.7 million. As of the date of this Annual Report, the nominal amount of GENFIT’s
convertible debt is €586 thousand.
For more information regarding our 2025 Royalty Financing Agreement and Debt Overhang Resolution Plan, see Note 2.2 -
"Major events after the period" to the financial statements for the year ended December 31, 2024. and Item 10.C - "Additional
Information - Material Contracts".
As a result we do not believe that we are exposed to short-term liquidity risk.
We estimate that we will be able to fund our operating expenses and capital expenditure requirements for the next 12
months at least. This estimate is based primarily on existing cash and cash equivalents, available financing (including the recent
Royalty Financing), the reimbursement of research tax credits, and expected future milestones (subject to Iqirvo® (elafibranor)
pricing and reimbursement approval in three European countries). Furthermore, this is based on current assumptions and
programs, and does not include exceptional events. Lastly, this estimate is based on our current business plan and does not
include any other potential milestones payable to or from us, nor any additional expenditures resulting from the potential in-
licensing or acquisition of additional product candidates or technologies, or any associated development we may pursue. We
have based this estimate on assumptions that may be incorrect and we may use our capital resources sooner than anticipated.
We may need to seek additional funds, through public or private equity or debt financings, government or other third-party
funding, marketing and distribution arrangements and other partnerships, strategic alliances and licensing arrangements or a
combination of these approaches. However, no assurance can be given at this time as to whether we will be able to achieve these
financing objectives.
Detail of calculation of net cash
As of
(in € thousands)
2022/12/31
2023/12/31
2024/12/31
Cash and cash equivalents
136,001
77,789
81,788
Current convertible loans
415
415
54,572
Other current loans and borrowings
4,665
7,510
2,009
Non-current convertible loans
49,861
52,206
—
Other non-current loans and borrowings
20,334
10,047
5,552
Net cash
60,726
7,610
19,655
Inflation Risk
We do not believe that inflation has had a material effect on our business, financial condition or results of operations in 2024.
If our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs, as
we do not generate significant revenue from product sales. Our inability or failure to do so could harm our business, financial
condition and results of operations.
Item 11C.
Interim Periods.
Not applicable.
Item 11D.
Safe Harbor
This annual report contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section
21E of the Exchange Act and as defined in the Private Securities Litigation Reform Act of 1995. See “Special Note Regarding
Forward-Looking Statements”.
148
Item 12.
Description of Securities Other than Equity Securities.
A.
Debt Securities
Not applicable.
B.
Warrants and Rights
Not applicable.
C.
Other Securities
Not applicable.
D.
American Depositary Shares
The Bank of New York Mellon, as depositary, registers and delivers American Depositary Shares, or ADSs. Each ADS
represents one ordinary share (or a right to receive one ordinary share) deposited with BNP Paribas Securities Services, as
custodian for the depositary in France. Each ADS will also represent any other securities, cash or other property that may be held
by the depositary. The depositary’s office at which the ADSs are administered and its principal executive office are located at 240
Greenwich Street, New York, New York 10286.
A deposit agreement among us, the depositary and the ADS holders sets out the ADS holder rights as well as the rights and
obligations of the depositary. New York law governs the deposit agreement and the ADSs. A copy of the deposit agreement is
incorporated by reference as an exhibit to this annual report.
Fees and Charges
Pursuant to the terms of the deposit agreement, the holders of ADSs will be required to pay the following fees:
Persons depositing or withdrawing ordinary shares or ADS holders must pay:
For:
$5.00 (or less) per 100 ADSs (or portion of 100 ADSs)
• Issuance of ADSs, including issuances resulting
from a distribution of ordinary shares or rights or
other property
• Cancellation of ADSs for the purpose of
withdrawal, including if the deposit agreement
terminates
$.05 (or less) per ADS
• Any cash distribution to ADS holders
A fee equivalent to the fee that would be payable if securities distributed to
you had been ordinary shares and the ordinary shares had been deposited
for issuance of ADSs
• Distribution of securities distributed to holders
of deposited securities (including rights) that are
distributed by the depositary to ADS holders
$.05 (or less) per ADS per calendar year
• Depositary services
Registration or transfer fees
• Transfer and registration of ordinary shares on
our share register to or from the name of the
depositary or its agent when you deposit or
withdraw ordinary shares
Expenses of the depositary
•
Cable
(including
SWIFT)
and
facsimile
transmissions (when expressly provided in the
deposit agreement)
• Converting foreign currency to U.S. dollars
Taxes and other governmental charges the depositary or the custodian has
to pay on any ADSs or ordinary shares underlying ADSs, such as stock
transfer taxes, stamp duty or withholding taxes
• As necessary
Any charges incurred by the depositary or its agents for servicing the
deposited securities
• As necessary
149
The depositary collects its fees for delivery and surrender of ADSs directly from investors depositing ordinary shares or
surrendering ADSs for the purpose of withdrawal or from intermediaries acting for them. The depositary collects fees for making
distributions to investors by deducting those fees from the amounts distributed or by selling a portion of distributable property to
pay the fees. The depositary may collect its annual fee for depositary services by deduction from cash distributions or by directly
billing investors or by charging the book-entry system accounts of participants acting for them. The depositary may collect any of
its fees by deduction from any cash distribution payable (or by selling a portion of securities or other property distributable) to
ADS holders that are obligated to pay those fees. The depositary may generally refuse to provide fee-attracting services until its
fees for those services are paid.
From time to time, the depositary may make payments to us to reimburse us for costs and expenses generally arising out of
establishment and maintenance of the ADS program, waive fees and expenses for services provided to us by the depositary or
share revenue from the fees collected from ADS holders. In performing its duties under the deposit agreement, the depositary
may use brokers, dealers, foreign currency dealers or other service providers that are owned by or affiliated with the depositary
and that may earn or share fees, spreads or commissions.
The depositary may convert currency itself or through any of its affiliates and, in those cases, acts as principal for its own
account and not as agent, advisor, broker or fiduciary on behalf of any other person and earns revenue, including, without
limitation, transaction spreads, that it will retain for its own account. The revenue is based on, among other things, the difference
between the exchange rate assigned to the currency conversion made under the deposit agreement and the rate that the
depositary or its affiliate receives when buying or selling foreign currency for its own account. The depositary makes no
representation that the exchange rate used or obtained in any currency conversion under the deposit agreement will be the most
favorable rate that could be obtained at the time or that the method by which that rate will be determined will be the most
favorable to ADS holders, subject to the depositary’s obligations under the deposit agreement. The methodology used to
determine exchange rates used in currency conversions is available upon request.
Payment of Taxes
ADS holders are responsible for any taxes or other governmental charges payable on their ADSs or on the deposited
securities represented by any of their ADSs. The depositary may refuse to register any transfer of ADSs or allow an ADS holder to
withdraw the deposited securities represented by his or her ADSs until those taxes or other charges are paid. It may apply
payments owed to the ADS holder or sell deposited securities represented by the ADS holder’s ADSs to pay any taxes owed and
such ADS holder will remain liable for any deficiency. If the depositary sells deposited securities, it will, if appropriate, reduce the
number of ADSs to reflect the sale and pay to ADS holders any proceeds, or send to ADS holders any property, remaining after it
has paid the taxes. An ADS holder’s obligation to pay taxes and indemnify us and the depositary against any tax claims will survive
the transfer or surrender of his or her ADSs, the withdrawal of the deposited ordinary shares as well as the termination of the
deposit agreement.
150
PART II
Item 13.
Defaults, Dividend Arrearages and Delinquencies.
Not applicable.
Item 14.
Material Modifications to the Rights of Security Holders and Use of Proceeds.
In October 2017, we issued convertible bonds for gross proceeds of €180.0 million. The convertible bonds carried a fixed
interest rate of 3.5%, with an effective interest rate of 7.2%, payable semi-annually in arrears in April and October.
On November 23, 2020, we presented to all OCEANEs bondholders a two-prong renegotiation offer:
• A partial buyback of the outstanding OCEANEs for a maximum amount of 3,048,780 OCEANEs at €16.40 per bond; and
• An amendment of the terms of the remaining OCEANEs to extend their maturity (by 3 years) and increase the conversion
ratio (to 5.5 shares per bond).
At the Shareholders’ and Bondholders’ Meetings on January 25, 2021, the shareholders and bondholders approved this
renegotiation offer.
Following the shareholders’ and bondholders’ decisions, GENFIT completed the partial buyback of 2,895,260 OCEANEs at a
price of €16.40 (including accrued interest of €0.30) for a total buyback cost of €47.48 million. The settlement operations occurred
on January 29, 2021. The repurchased OCEANEs were then cancelled by GENFIT. The convertible bonds carry a fixed interest rate
of 3.5%, with an effective interest rate of 8.8%, payable semi-annually in arrears in April and October.
In March 2025, concurrently with the Royalty Financing, the Company sought OCEANE holder approval to amend the terms
and conditions of the OCEANEs which contained a negative pledge clause which limits the ability of the Company to grant
security interests to its creditors upon its present or future assets or revenues. The closing of the Royalty Financing was subject
to approval of OCEANEs bondholders of an amendment to this negative pledge clause, allowing for the grant of the security
interest contemplated in the Royalty Financing. This amendment was approved by the OCEANEs bondholders on March 10, 2025.
At the same time, the Company proposed to all of the OCEANE holders to enter into a Put Option Agreement, pursuant to
which the Company unconditionally and irrevocably undertook to repurchase the OCEANEs of such holder at a price of EUR 32.75
per bond, subject to approval by the general meeting of the OCEANE holders of the amendment of the terms and conditions of
the OCEANEs and the closing of the Royalty Financing (the “Repurchase”).
OCEANE holders exercised their put option for a total of 1,882,891 OCEANEs, i.e. 99% of the total number of OCEANEs
outstanding. At a price of €32.75 per bond, this represents a total Repurchase amount of € 61,664,680.25. The settlement of the
Repurchase occurred on March 26, 2025 and the repurchased OCEANEs were canceled by the Company.
As of April 1, 2025, there were 19,807 OCEANEs outstanding which represent 0.2% of the share capital of the Company. The
maximum dilution to GENFIT’s share capital in the event of full conversion would be 0.2%, with approximately €586 thousand
nominal amount outstanding.
For more information please see Note 20.1 - “Breakdown of convertible loan” to our consolidated financial statements
included in this annual report.
Item 15.
Disclosure Controls and Procedures.
A.
Disclosure Controls and Procedures
We maintain “disclosure controls and procedures,” as such term is defined in Rules 13a-15(e) and 15d-15(e) under the
Exchange Act, that are designed to ensure that information required to be disclosed in the reports that we file or submit under
the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the
Securities and Exchange Commission. Disclosure controls and procedures include, without limitation, controls and procedures
designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is
accumulated and communicated to management, including our chief executive officer (principal executive officer) and chief
financial officer (principal financial officer), as appropriate, to allow timely decisions regarding required disclosure.
Our principal executive officer and principal financial officer, after evaluating the effectiveness of our disclosure controls and
procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of December 31, 2024, have concluded that, as of
such date, our disclosure controls and procedures were effective at the reasonable assurance level.
151
B.
Management’s Annual Report on Internal Control Over Financial Reporting
Management of the Company is responsible for establishing and maintaining adequate internal control over financial
reporting, as such term is defined in Exchange Act Rule 13a-15(f). Management assessed the effectiveness of internal control over
financial reporting as of December 31, 2024 based on the framework in “Internal Control - Integrated Framework” (2013
framework) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on that
assessment, management has concluded that, as December 31, 2024, the Company’s internal control over financial reporting was
effective to provide reasonable assurance regarding the reliability of its financial reporting and the preparation of its financial
statements for external purposes, in accordance with generally accepted accounting principles. Due to its inherent limitations,
internal control over financial reporting may not prevent or detect misstatements and can only provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or
that the degree of compliance with the policies or procedures may deteriorate.
C.
Attestation Report of the Registered Public Accounting Firm
The effectiveness of the Company’s internal control over financial reporting has been audited by Ernst & Young et Autres,
independent registered public accounting firm, as stated in their report on the Company’s internal control over financial reporting
as of December 31, 2024.
See report of Ernst & Young et Autres included under Item 17. - "Financial Statements” on page F-3.
D.
Changes in Internal Control Over Financial Reporting
There were no changes to our internal control over financial reporting that occurred during the period covered by this Form 20-F
that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Item 16A.
Audit Committee Financial Expert.
Our Board of Directors has determined that Ms. Anne-Hélène Monsellato is an “audit committee financial expert” as defined
by SEC rules and regulations and has the requisite financial sophistication under the applicable rules and regulations of the
Nasdaq Stock Market. Ms. Monsellato is independent as such term is defined in Rule 10A-3 under the Exchange Act and under the
listing standards of the Nasdaq Stock Market.
Item 16B.
Code of Business Conduct and Ethics.
We have adopted a Code of Business Conduct and Ethics, or the Code of Conduct, applicable to all of our employees, senior
management and directors. The Code of Conduct is available on our website at www.genfit.com. We expect that any
amendments to the Code of Conduct, or any waivers of its requirements, will be disclosed on our website.
Item 16C.
Principal Accountant Fees and Services.
Ernst & Young et Autres, or E&Y, served as our independent registered public accounting firm for 2023 and 2024. Our
accountants billed the following fees to us for professional services in each of those fiscal years :
As of
(in € thousands)
2023/12/31
2024/12/31
Audit fees
635
608
Audit-related fees
34
5
Tax fees
—
—
Other fees
—
—
TOTAL
669
613
“Audit Fees” are the aggregate fees billed for the audit of our annual financial statements. This category also includes
services that E&Y provides, such as consents and assistance with and review of documents filed with the SEC.
152
“Audit-Related Fees” are the aggregate fees billed for assurance and related services that are reasonably related to the
performance of the audit and are not reported under Audit Fees.
“Tax Fees” are the aggregate fees billed for professional services rendered by E&Y for tax compliance, tax advice and tax
planning related services.
“Other Fees” are any additional amounts billed for products and services provided by E&Y.
There were no “Tax Fees” or “Other Fees” billed or paid during 2023 or 2024.
Auditor Name
Auditor Location
Auditor Firm ID
Ernst & Young et Autres
Paris, France
1704
Audit and Non-Audit Services Pre-Approval Policy
The Audit Committee has responsibility for appointing, setting compensation of and overseeing the work of the independent
registered public accounting firm. In recognition of this responsibility, the Audit Committee has adopted a policy governing the
pre-approval of all audit and permitted non-audit services performed by our independent registered public accounting firm to
ensure that the provision of such services does not impair the independent registered public accounting firm’s independence
from us and our management. Unless a type of service to be provided by our independent registered public accounting firm has
received general pre-approval from the Audit Committee, it requires specific pre-approval by the Audit Committee. The payment
for any proposed services in excess of pre-approved cost levels requires specific pre-approval by the Audit Committee. All audit
and non-audit services rendered by our independent registered public accounting firm in 2024 were pre-approved by the Audit
Committee.
Pursuant to its pre-approval policy, the Audit Committee may delegate its authority to pre-approve services to the
chairperson of the Audit Committee. The decisions of the chairperson to grant pre-approvals must be presented to the full Audit
Committee at its next scheduled meeting. The Audit Committee may not delegate its responsibilities to pre-approve services to
the management.
Item 16D.
Exemptions from the Listing Standards for Audit Committees.
Not applicable.
Item 16E.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers.
Not applicable.
Item 16F.
Change in Registrant’s Certifying Accountant.
Our Audit Committee oversaw the selection of the auditors to be appointed by the Annual Shareholders’ Meeting in 2024
following a call for tenders. As part of the tender process, the Audit Committee paid particular attention to the quality of the
information made available to the candidate firms, and to the fairness of the process. At the end of this process, the Committee's
recommendation was to propose the renewal of Ernst & Young et Autres (EY) and Grant Thornton term of office as statutory
auditors for an additional six-year period, pursuant to the French Law. The main factors taken into account in the renewal of the
auditors, and in particular of EY (the only auditor of the Company that issues a Report of Independent Registered Public
Accounting Firm on the Consolidated Financial Statements on Form 20-F), were the sectoral and PCAOB standards experience of
the EY partner proposed to manage our account (rotation), enabling a renewed approach (including with regard to the potential
use of technology in auditing), and the desire to capitalize on efforts to improve auditing conditions, in particular the
implementation in 2023 of test run with a view to the auditors' assessment of internal control over financial reporting in 2024
(regarding section 404b of the Sarbanes-Oxley Act).
The Board of Directors, at its meeting of January 24, 2024 approved the Audit Committee’s recommendation. The Annual
Shareholders’ Meeting held in May 22, 2024 approved the Board of Director's proposal to renew Ernst & Young et Autres and
Grant Thornton as joint statutory auditors for a six-year term, i.e. until the Annual Shareholders’ Meeting to be held in 2030, which
will approve the financial statements for the year 2029.
153
Item 16G.
Corporate Governance.
As a French société anonyme, we are subject to various corporate governance requirements under French law. In addition,
as a foreign private issuer listed on the Nasdaq Global Select Market, we will be subject to Nasdaq’s corporate governance listing
rules. However, the Nasdaq Global Select Market’s Listing Rules provide that foreign private issuers, as defined in the rules
promulgated under the US Securities Exchange Act of 1934, as amended, (the “Exchange Act”), are permitted, pursuant to Nasdaq
Listing Rule 5615(a)(3), to follow home country corporate governance practices in lieu of Nasdaq Listing Rules, with certain
exceptions. A foreign private issuer that elects to follow a home country practice instead of Nasdaq's Listing Rules must submit
to Nasdaq a written statement from an independent counsel in such issuer’s home country certifying that the issuer’s practices
are not prohibited by the home country’s laws. As a general matter, the Company follows the French Middlenext corporate
governance code for corporate governance matters and it intends to follow home country practice to the maximum extent
possible. Certain corporate governance practices in France may differ significantly from Nasdaq’s corporate governance listing
rules. For example, while Nasdaq Listing Rule 5605(b) would require a majority of the Board of Directors to be independent,
neither the corporate laws of France, nor the Middlenext corporate governance code, nor the Company’s bylaws require that (1) a
majority of our Board of Directors consist of independent directors; (2) our nomination committee be composed entirely of
independent directors; (3) our compensation committee be composed entirely of independent directors; and (4) our independent
directors hold regularly scheduled meetings at which only independent directors are present. However, the Middlenext corporate
governance code recommends that at least two members of the Board of Directors be independent (as such term is defined
under the code).
Moreover, in accordance with French law, each of the committees of our Board of Directors will only have an advisory role
and can only make recommendations to our Board of Directors. As a result, decisions will be made by our Board of Directors
taking into account non-binding recommendations of the relevant Board of Directors committee.
The following is a summary of the significant ways in which our corporate governance practices differ from those followed by
U.S. companies listed on Nasdaq:
•
Audit Committee. As a foreign private issuer, the Sarbanes-Oxley Act of 2002 and the Nasdaq Listing Rules require that
our Audit Committee must be composed of at least three independent members. In addition, we are required to comply
with Rule 10A-3 under the Exchange Act, relating to audit committee composition and responsibilities. Rule 10A-3
provides that the audit committee must have direct responsibility for the nomination, compensation and choice of our
auditors, as well as control over the performance of their duties, management of complaints made, and selection of
consultants. However, under Rule 10A-3, if the laws of a foreign private issuer’s home country require that any such
matter be approved by the Board of Directors or the shareholders, the audit committee’s responsibilities or powers with
respect to such matter may instead be advisory. Under French law, the audit committee may only have an advisory role
and appointment of our statutory auditors, in particular, must be decided by the shareholders at our annual meeting.
•
Quorum Requirements. Nasdaq Listing Rules require that a listed company specify that the quorum for any meeting of
the holders of common stock be at least 33 1/3% of the outstanding shares of the company’s voting stock. We follow our
French home country practice, rather than complying with these Nasdaq Listing Rules. Consistent with French law, our
bylaws provide that when first convened, the quorum at the shareholders meeting requires the presence of shareholders
having at least (1) 20% of the shares entitled to vote in the case of an ordinary shareholders’ general meeting or at an
extraordinary shareholders’ general meeting where shareholders are voting on a capital increase by capitalization of
reserves, profits or share premium, or (2) 25% of the shares entitled to vote in the case of any other extraordinary
shareholders’ general meeting. If a quorum is not present, the meeting is adjourned. There is no quorum requirement
when an ordinary general meeting is reconvened, but the reconvened meeting may consider only questions which were
on the agenda of the adjourned meeting. When an extraordinary general meeting is reconvened, the quorum required is
20% of the shares entitled to vote, except where the reconvened meeting is considering capital increases through
capitalization of reserves, profits or share premium. For these matters, no quorum is required at the reconvened meeting.
The reconvened meeting may consider only questions that were on the agenda of the adjourned meeting. If a quorum is
not present at a reconvened meeting requiring a quorum, then the meeting may be adjourned for a maximum of two
months.
154
•
Authorization for issuances of securities. The Company follows French law with respect to shareholder approval
requirements in lieu of the various shareholder approval requirements of Nasdaq Listing Rule 5635, which requires a
Nasdaq listed company to obtain shareholder approval prior to certain issuances of securities, including: (a) issuances in
connection with the acquisition of the stock or assets of another company if upon issuance the issued shares will equal
20% or more of the number of shares or voting power outstanding prior to the issuance, or if certain specified persons
have a 5% or greater interest in the assets or company to be acquired (Nasdaq Listing Rule 5635(a)); (b) issuances or
potential issuances that will result in a change of control of us (Nasdaq Listing Rule 5635(b)); (c) issuances in connection
with equity compensation arrangements (Nasdaq Listing Rule 5635(c)); and (d) 20% or greater issuances in transactions
other than public offerings, as defined in the Nasdaq Listing Rules (Nasdaq Listing Rule 5635(d)). Under French law, the
Company’s shareholders may approve issuances of equity, as a general matter, through the adoption of delegation of
authority resolutions at the Company’s shareholders’ meeting pursuant to which shareholders may delegate their
authority to the Board of Directors to increase the Company’s share capital within specified parameters set by the
shareholders, which may include a time limitation to carry out the share capital increase, the cancellation of their
preferential subscription rights to the benefit of named persons or a category of persons, specified price limitations and/
or specific or aggregate limitations on the size of the share capital increase. Due to differences between French law and
corporate governance practices and Nasdaq Listing Rule 5635, the Company follows French home country practice,
rather than complying with this Nasdaq Listing Rule.
Other than as set forth above, we currently intend to comply with the corporate governance listing standards of Nasdaq to
the extent possible under French law. However, we may choose to change such practices to follow home country practice in the
future.
Item 16H.
Mine Safety Disclosure.
Not applicable.
Item 16I.
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.
Not applicable.
Item 16J.
Insider trading policies
We have adopted our Insider Trading Policy governing the purchase, sale, and/or other dispositions of our securities by our
directors, officers, employees, as well as by the Company itself, that we believe is reasonably designed to promote compliance
with insider trading laws, rules and regulations, and the exchange listing standards applicable to us. A copy of our Insider Trading
Policy, including any amendments thereto, is filed as Exhibit 11.1* to this Annual Report on Form 20-F.
Item 16K.
Cybersecurity
Risk management and strategy
GENFIT’s business is heavily dependent on our computer network and the use of information technology, or IT, systems,
whether maintained directly by GENFIT or through external IT providers, including cloud-based applications. As a result, damage
from computer viruses, unauthorized access, telecommunication and electrical failures can cause significant disruption to our
operations.
We have implemented and maintain various information security processes to assess and manage the security, integrity, and
availability of our IT systems, and safeguards to protect our data and that of patients participating in our clinical trials, our
employees, and partners. To identify and mitigate cybersecurity risks, counteract threats, and limit and/or prevent disruptions to
our IT systems, we have implemented detailed cybersecurity policies and procedures.
These processes are prioritized across all organizational levels, with cybersecurity acknowledged as a critical risk within the
core enterprise risks that we regularly evaluate and address as an integral part of our risk management plan. As part of this plan,
we also conduct periodic assessments of our assets, including IT assets, to evaluate the effectiveness of applicable security
controls. In the past we regularly commission third-party audits of our security controls.
Additionally, as part of our approach to third-party risk management, we generally assess our external partners to determine
whether their cybersecurity standards meet our specifications prior to engagement. In addition, we have migrated some tools to
cloud-based applications, which can offer increased assurances as to security upgrades and swiftness of remediation in the
event of disruptions, to which we would not normally have access to in a closed environment.
Employees across all levels and departments receive training on cybersecurity policies through an extensive "read and
understood" process and are informed about cybersecurity risks via digital ongoing and annual awareness training programs
conducted through the IT department. Employees are required to report IT security incidents to the cybersecurity team through a
dedicated communication channel, and if necessary, by contacting a member of the IT team.
155
In partnership with our internal cybersecurity team, a specialized third-party service provider responsible for managing our
Cyber Security Operations Center investigates security incidents and alerts such as virus detection, abnormal traffic or
unauthorized software installation. This includes identifying the type of threat, determining the scope of the incident, and
assessing the severity of each situation.
Governance
Our cybersecurity initiatives are subject to ongoing monitoring and regular reporting to senior management and the GENFIT
Board of Directors.
The IT Security Manager, or ITSM, in collaboration with the Executive Vice-President, Data & Information Technology who is
also known as the Chief Information Officer, or CIO, leads our cybersecurity risk management efforts, aligning these initiatives
with the strategic objectives established by our executive leaders. With nearly a decade of expertise in information security and
technology, our ITSM plays a pivotal role in safeguarding our digital assets. Our CIO has more than twenty years of experience in
information technology management and strategic planning and reports directly to the Chief Operating Officer or COO. The CIO
is responsible for guiding our technology strategy, overseeing technology deployment, and managing operations. Our CIO
regularly updates a working group established specifically by the Board of Directors in 2023 in order to oversee our cybersecurity
status. This includes briefings on any recent incidents and our responses, testing of cybersecurity systems and third-party
activities.
This cybersecurity working group is chaired by a member of the Board of Directors and includes the CIO, the ITSM and other
key GENFIT employees. The chair of the cybersecurity working group meets and reports regularly to the Board of Directors on
cybersecurity matters, allowing the Board of Directors to provide effective oversight of management’s assessment and
management of the cybersecurity risks, in particular to reinforce transparency and accountability in our cyber strategies.
In addition, we have developed a procedure that details how we classify incidents, management of any incidents, and
internal and external communication thereof. In accordance with that procedure, major or critical incidents are escalated for
review to our Cyber Crisis Committee, which is comprised of various members of the Executive Committee, including our CEO.
This committee is responsible for identifying and evaluating cybersecurity incidents. Our CEO reports directly to our Board of
Directors regarding incidents identified as material by the Cyber Crisis Committee. This committee meets on an ad hoc basis as
required to manage cybersecurity incidents.
As of the filing of this Form 20-F, we are not aware of any cyber-attacks that have occurred over the last three years that
have materially affected, or are reasonably likely to materially affect us, including our business strategy, results of operations or
financial condition. Although we have put in place the cybersecurity processes described above, we remain exposed to
cybersecurity attacks and incidents and misuse or manipulation of any of our IT systems, which could have a material adverse
effect on our business strategy, results of operations or financial condition. You should refer to the section of this annual report
titled Item 3. D - "Key Information - Risk Factors” for additional information about these risks.
156
PART III
Item 17.
Financial Statements.
See Item 18 –“Financial Statements"
Item 18.
Financial Statements.
See pages F-1 through F-56 of this annual report.
157
Item 19.
Exhibits.
Incorporation by Reference
Exhibit
Description
Schedule/
Form
File
Number
Exhibit
File Date
1.1*
Articles of Association of GENFIT S.A. (English
translation)
2.1
Form of Deposit Agreement
F-6
333-230265
4.1
3/14/2019
2.2
Form of American Depositary Receipt (included in
Exhibit 2.1)
F-6
333-230265
4.1
3/14/2019
2.3*
Description of Securities
4.1†
Summary of 2022 Free Shares (AGA) Plan
20-F
001-38844
4.5
4/18/2023
4.2†
Summary of 2023 Free Shares (AGA) Plan
20-F
001-38844
4.6
4/18/2023
4.3†
Summary of 2024 Free Shares (AGA) Plan
20-F
001-38844
4.6
4/5/2024
4.4†*
Summary of 2025 Free Shares (AGA) Plan
4.5†
Summary of 2016, 2017 and 2018 Share Option Plans
F-1
333-229907
10.3
2/27/2019
4.6†
Summary of 2019 Share Option Plans
20-F
001-38844
4.7
5/27/2020
4.7†
Summary of 2020 Share Option Plans
20-F
001-38844
4.8
4/23/2021
4.8†
Summary of 2021 Share Option Plans
20-F
001-38844
4.9
4/29/2022
4.9†
Summary of 2022 Share Option Plans
20-F
001-38844
4.11
4/18/2023
4.10†
Summary of 2023 Share Option Plans
20-F
001-38844
4.12
4/18/2023
4.11†
Summary of 2024 Share Option Plans
20-F
001-38844
4.1
4/5/2024
4.12†*
Summary of 2025 Share Option Plans
4.13
Summary of Lease Agreement (English translation)
F-1
333-229907
10.5
2/27/2019
4.14#
Collaboration and License Agreement between the
registrant and Terns Pharmaceuticals, Inc., dated June
24, 2019
20-F
001-38844
4.9
5/27/2020
4.15#
Collaboration and License Agreement between the
registrant and Ipsen Pharma SAS, dated December 16,
2021
20-F
001-38844
4.12
4/29/2022
4.16#
Share Purchase Agreement among the registrant,
certain sellers of Versantis AG, as representative of the
sellers, dated September 29, 2022
20-F
001-38844
4.16
4/18/2023
4.17*
Amended and Restated Terms and Conditions of the
OCEANE convertible bonds dated March 10, 2025
20-F
001-38844
4.16
4/18/2023
4.18*#
Royalty Bond Support Agreement between GENFIT SA
and HCRX Investment HoldCo, L.P., dated January 30,
2025
4.19*#
Bond Subscription Agreement between GENFIT SA and
HCRX Investment HoldCo, L.P., dated January 30, 2025
4.20*#
Amendment to Bond Subscription Agreement between
GENFIT SA and HCRX Investment HoldCo, L.P., dated
March 12, 2025
8.1
Subsidiaries of GENFIT S.A.
20-F
001-38844
8.1
4/5/2024
11.1*
GENFIT Insider Trading Policy
12.1*
Certification by the Principal Executive Officer pursuant
to Securities Exchange Act Rules 13a-14(a) and 15d-14(a)
as adopted pursuant to Section 302 of the Sarbanes-
Oxley Act of 2002
12.2*
Certification by the Principal Financial Officer pursuant
to Securities Exchange Act Rules 13a-14(a) and 15d-14(a)
as adopted pursuant to Section 302 of the Sarbanes-
Oxley Act of 2002
13.1**
Certification by the Principal Executive Officer pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
13.2**
Certification by the Principal Financial Officer pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
15.1*
Consent of Ernst & Young et Autres
97.1
Compensation Recovery Policy
20-F
001-38844
97.1
4/5/2024
158
101.INS*
XBRL Instance Document
101.SCH*
XBRL Taxonomy Extension Schema Document
101.CAL*
XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*
XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*
XBRL Taxonomy Extension Label Linkbase Document
101.PRE*
XBRL Taxonomy Extension Presentation Linkbase Document
104
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
*
Filed herewith.
**
Furnished herewith.
†
Indicates a management contract or any compensatory plan, contract or arrangement.
#
Certain portions of this exhibit have been omitted because they are not material and would likely cause competitive harm to the registrant if
disclosed.
SIGNATURES
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and
authorized the undersigned to sign this annual report on its behalf.
GENFIT S.A.
By:
/s/ Pascal Prigent
Pascal Prigent
Chief Executive Officer
Date: April 29, 2025
159
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
Consolidated Financial Statements for December 31, 2024
Reports of Ernst & Young et Autres, Independent Registered Public Accounting Firm
F-1
Consolidated Statements of Financial Position
F-5
Consolidated Statements of Operations
F-6
Consolidated Statements of Other Comprehensive Income (Loss)
F-7
Consolidated Statements of Cash Flows
F-8
Consolidated Statements of Changes in Equity
F-9
Notes to the Consolidated Financial Statements
F-10
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors of GENFIT S.A.
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Genfit S.A. and its subsidiaries (the Group) as of December
31, 2024 and 2023, the related consolidated statements of operations, other comprehensive income (loss), cash flows and
changes in equity for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred
to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material
respects, the financial position of the Group at December 31, 2024 and 2023, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 2024, in conformity with International Financial Reporting Standards
(“IFRS”) as issued by the International Accounting Standards Board and in conformity with IFRS as endorsed by the European
Union at December 31, 2024.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the Company's internal control over financial reporting as of December 31, 2024, based on criteria established in
Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission 2013
framework, and our report dated April 29, 2025 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Group's management. Our responsibility is to express an opinion on the
Group’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to
be independent with respect to the Group in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to
error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial
statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included
evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that
were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that
are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The
communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as
a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit
matters or on the accounts or disclosures to which they relate.
■
Impairment test of the Versantis intangible asset
Description of the matter
The Versantis intangible asset amounted to €45.9 million out of the total intangible asset balance of €48.8 million as of December
31, 2024. As more fully described in Note 14 to the consolidated financial statements, in accordance with IAS 36, the Company
performed an impairment test in 2024 related to the Versantis intangible asset.
Also as disclosed in Note 14, management estimates the recoverable amount of the Versantis intangible asset and recognizes an
impairment loss if the carrying amount of the Versantis intangible asset exceeds its recoverable amount. The recoverable amount
of the Versantis intangible asset is the higher of its fair value less costs to sell or its value in use. Value in use is determined by
management based on the excess earnings method using discounted cash flow techniques for the scientific research program
VS-01. This income method utilizes management’s estimates of future operating revenue, cash flows discounted using a
weighted-average cost of capital that reflects market participant assumptions, and the expected success rate of the program
based on similar external programs.
Auditing the impairment test of the Versantis intangible asset required complex auditor judgment, to assess the aforementioned
estimates and assumptions used by management in the value in use determination, since the estimates and assumptions are
forward looking and inherently uncertain.
How We Addressed the Matter in Our Audit
F-2
To assess management’s impairment test of the Versantis intangible asset, our audit procedures included, among others,
evaluating management’s undiscounted cash flows, by considering the current expenses of the scientific research program VS-01
in comparison to management’s previous and current forecasts, by assessing the consistency of the cash flow assumptions
including future operating revenue with external market and industry data, and whether the cash flow assumptions were
consistent with evidence obtained in other areas of the audit, such as internal company communications and presentations and
external communications. In addition, to evaluate the success rate of the program, we considered the phase of development of
the project and evaluated this against third-party data regarding clinical trial success rates. We also performed a sensitivity
analysis of the significant estimates and assumptions used in the value in use determination. We involved our valuation
specialists to assist us in evaluating the cash flow model against the requirements of IAS 36 and to assess the weighted average
cost of capital used by management, by developing and independent range.
■
Completeness of research and development expenses conducted by third parties
Description of the matter
As discussed in Note 8 to the consolidated financial statements, contracted research and development (“R&D”) activities
conducted by third parties include services subcontracted to research partners for technical and/or regulatory reasons. The total
contracted R&D activities conducted by third parties recognized in the consolidated statement of operations for the year-ended
December 31, 2024, amounted to €20.1 million and the related prepayments and accrued liabilities from R&D projects were €0.6
million and €5.4 million, respectively, as of December 31, 2024.
At each reporting date, management estimates the R&D expenses for ongoing activities subcontracted as part of the clinical
trials and not yet invoiced, on the basis of detailed information provided by subcontractors and reviewed by the Group’s internal
departments.
Auditing the completeness of R&D expenses conducted by third parties (’’clinical vendors’’) was challenging, due to the
judgement and subjectivity involved in management’s assessment of the progress of R&D activities, relative to the costs incurred,
and the evaluation of the completeness and accuracy of the data used in the estimate.
How We Addressed the Matter in Our Audit
To assess the completeness of R&D expenses conducted by third parties, our audit procedures included, among others, testing
the accuracy and completeness of the underlying data used in estimating services performed, by assessing the progress of the
R&D activities through discussion with the Company’s clinical controllers, who oversee these activities and by reviewing progress
reports that we directly confirmed with the clinical vendors, as well as invoices and other correspondence provided by the clinical
vendors to the Company’s clinical controllers. We inspected the Company’s clinical vendor contracts, amendments, and pending
change orders to assess whether the key financial and contractual terms align with the amounts recognized. We also performed
analytical reviews of fluctuations in the services performed by project throughout the period subject to audit. We compared
invoices received from and cash disbursements made to clinical vendors prior to and following year-end.
/s/ Ernst & Young et Autres
We have served as the Group’s auditor since 1999.
Paris-La Défense, France
April 29, 2025
F-3
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors of GENFIT S.A.
Opinion on Internal Control Over Financial Reporting
We have audited Genfit S.A.’s (the Company) and its subsidiaries (the Group) internal control over financial reporting as of
December 31, 2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission 2013 framework (the COSO criteria). In our opinion, Genfit S.A.’s (the
Company) and its subsidiaries (the Group) maintained, in all material respects, effective internal control over financial reporting
as of December 31, 2024, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the consolidated balance sheets of the Company as of December 31, 2024 and 2023, the related consolidated
statements of comprehensive income, shareholders’ equity and cash flows for each of the three years in the period ended
December 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”) and our report
dated April 29, 2025 expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting, included in the Report of Management on Internal
Control Over Financial Reporting appearing under Item 15. Our responsibility is to express an opinion on the Company’s internal
control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required
to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all
material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material
weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk,
and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a
reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that
(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions
of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young et Autres
We have served as the Group’s auditor since 1999.
Paris-La Défense, France
April 29, 2025
F-4
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(amounts in thousands of euros)
ASSETS
Notes
As of
(in € thousands)
2023/12/31
2024/12/31
Current assets
Cash and cash equivalents
13
77,789
81,788
Current trade and others receivables
16
32,707
7,564
Other current assets
19
2,615
3,409
Inventories
17
4
4
Total - Current assets
113,115
92,766
Non-current assets
Intangible assets
14
48,761
47,998
Property, plant and equipment
15
7,872
7,595
Other non-current financial assets
18
4,125
3,065
Deferred tax assets
11
—
—
Total - Non-current assets
60,758
58,659
Total - Assets
173,872
151,424
SHAREHOLDERS' EQUITY AND LIABILITIES
Notes
As of
(in € thousands)
2023/12/31
2024/12/31
Current liabilities
Current convertible loans
20
415
54,572
Other current loans and borrowings
20
7,510
2,009
Current trade and other payables
22
18,799
18,387
Current deferred income and revenue
23
11,692
—
Current provisions
24
40
40
Other current tax liabilities
11
23
155
Total - Current liabilities
38,480
75,162
Non-current liabilities
Non-current convertible loans
20
52,206
—
Other non-current loans and borrowings
20
10,047
5,552
Non-current deferred income and revenue
23
3,755
—
Non-current employee benefits
25
978
1,341
Deferred tax liabilities
11
455
145
Total - Non-current liabilities
67,441
7,038
Shareholders' equity
Share capital
26
12,459
12,499
Share premium
—
445,261
446,948
Retained earnings (accumulated deficit)
—
(361,870)
(392,077)
Currency translation adjustment
26
996
347
Net profit (loss)
—
(28,894)
1,507
Total - Shareholders' equity
67,951
69,224
Total - Shareholders' equity & liabilities
173,872
151,424
The accompanying notes form an integral part of these consolidated financial statements.
F-5
CONSOLIDATED STATEMENTS OF OPERATIONS
(amounts in thousands of euros, except per share data)
Revenues and other income
Revenue
7
20,195
28,565
67,002
Other income
7
6,371
9,610
3,937
Revenues and other income
26,566
38,176
70,939
Operating expenses and other operating income (expenses)
Research and development expenses
8
(35,818)
(46,503)
(47,210)
General and administrative expenses
8
(16,405)
(17,741)
(19,497)
Marketing and market access expenses
8
(992)
(876)
(634)
Reorganization and restructuring income (expenses)
8
11
505
—
Other operating expenses
8
(652)
(141)
(316)
Operating income (loss)
(27,289)
(26,580)
3,281
Financial income
10
8,212
3,680
3,339
Financial expenses
10
(4,758)
(5,614)
(4,774)
Financial profit (loss)
3,453
(1,934)
(1,434)
Net profit (loss) before tax
(23,836)
(28,514)
1,847
Income tax benefit (expense)
11
116
(380)
(340)
Net profit (loss)
(23,719)
(28,894)
1,507
Basic and diluted earnings (loss) per share
Basic earnings (loss) per share (€/share)
12
(0.48)
(0.58)
0.03
Diluted earnings (loss) per share (€/share)
12
(0.48)
(0.58)
0.03
Notes
Year ended
(in € thousands, except earnings per share data)
2022/12/31
2023/12/31
2024/12/31
The accompanying notes form an integral part of these consolidated financial statements.
F-6
CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE INCOME (LOSS)
(amounts in thousands of euros)
Net profit (loss)
(23,719)
(28,894)
1,507
Actuarial gains and losses net of tax
25
258
(51)
(207)
Change in fair value of equity instruments included in financial assets
and financial liabilities
18
—
(785)
(923)
Other comprehensive income (loss)
that will never be reclassified to profit or loss
258
(836)
(1,130)
Exchange differences on translation of foreign operations
26
(1,366)
2,340
(649)
Other comprehensive income (loss)
that are or may be reclassified to profit or loss
(1,366)
2,340
(649)
Total comprehensive income (loss)
(24,827)
(27,390)
(272)
Notes
Year ended
(in € thousands)
2022/12/31
2023/12/31
2024/12/31
The accompanying notes form an integral part of these consolidated financial statements.
F-7
CONSOLIDATED STATEMENTS OF CASH FLOWS
(amounts in thousands of euros)
Cash flows from operating activities
+ Net profit (loss)
(23,719)
(28,894)
1,507
Reconciliation of net loss to net cash used in operating activities
Adjustments for:
+ Depreciation and amortization on tangible and intangible assets
15
1,832
1,654
1,724
+ Impairment and provisions
(179)
(392)
169
+ Expenses related to share-based compensation
9
245
578
610
- Loss (gain) on disposal of property, plant and equipment
(16)
(81)
(56)
+ Net finance expenses (revenue)
10
2,042
485
346
+ Income tax expense (benefit)
11
(116)
380
340
+ Other non-cash items
2,210
(878)
2,549
Operating cash flows before change in working capital
(17,702)
(27,148)
7,190
Decrease (increase) in trade receivables and other assets
16
(8,565)
(17,418)
23,965
(Decrease) increase in trade payables and other liabilities
22
(46,226)
(10,397)
(15,531)
Change in working capital
(54,791)
(27,815)
8,433
Income tax paid
(145)
(465)
(74)
Net cash flows provided by (used in) in operating activities
(72,638)
(55,429)
15,549
Cash flows from investment activities
- Acquisition net of cash acquired (Versantis intangible)
(41,525)
—
—
- Acquisition of other intangible assets
14
—
(2,074)
—
- Acquisition of property, plant and equipment
15., 29.
251
(414)
(979)
+ Proceeds from disposal of / reimbursement of property, plant and
equipment
20
172
80
- Acquisition of financial instruments
18
(5,012)
(12)
(140)
+ Proceeds from disposal of financial instruments
18
—
4,562
—
Net cash flows provided by (used in ) investment activities
(46,266)
2,234
(1,039)
Cash flows from financing activities
+ Proceeds from issue of share capital (net)
5
—
61
+ Proceeds from new loans and borrowings net of issue costs
20
—
89
—
- Repayments of loans and borrowings
20
(628)
(3,619)
(9,170)
- Payments on lease debts
20
(1,120)
(1,075)
(1,113)
- Financial interests paid (including finance lease)
(2,180)
(2,201)
(2,134)
+ Financial interests received
137
1,709
1,786
Net cash flows provided by (used in ) financing activities
(3,786)
(5,098)
(10,570)
Increase (decrease) in cash and cash equivalents
(122,690)
(58,292)
3,939
Cash and cash equivalents at the beginning of the period
13
258,756
136,001
77,789
Effects of exchange rate changes on cash
(66)
80
60
Cash and cash equivalents at the end of the period
136,001
77,789
81,788
Notes
Year ended
Year ended
Year ended
(in € thousands)
2022/12/31
2023/12/31
2024/12/31
The accompanying notes form an integral part of these consolidated financial statements.
F-8
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Amounts in thousands of euros, except for number of shares)
As of January 01, 2022
49,815,489
12,454
444,438
(986)
(404,090)
22
67,259
119,097
Net profit (loss)
(23,719)
(23,719)
Other comprehensive income (loss)
258
(1,366)
(1,108)
Total comprehensive income (loss)
—
—
—
—
258
(1,366)
(23,719)
(24,827)
Allocation of prior period profit (loss)
67,259
(67,259)
—
Capital increase
19,494
5
—
(5)
—
Share-based compensation
245
245
Treasury shares
8
8
As of December 31, 2022
49,834,983
12,459
444,683
(978)
(336,573)
(1,344)
(23,719)
94,528
Net profit (loss)
(28,894)
(28,894)
Other comprehensive income (loss)
(836)
2,340
1,504
Total comprehensive income (loss)
—
—
—
—
(836)
2,340
(28,894)
(27,390)
Allocation of prior period profit (loss)
(23,719)
23,719
—
Share-based compensation
578
578
Treasury shares
8
8
Other movements
227
227
As of December 31, 2023
49,834,983
12,459
445,261
(970)
(360,901)
996
(28,894)
67,951
Net profit (loss)
1,507
1,507
Other comprehensive income (loss)
(1,130)
(649)
(1,779)
Total comprehensive income (loss)
—
—
—
—
(1,130)
(649)
1,507
(272)
Allocation of prior period profit (loss)
(28,894)
28,894
—
Capital increase
161,202
40
1,068
(7)
1,101
Equity component of OCEANE net of deferred taxes
10
10
Share-based compensation
610
610
Treasury shares
(177)
(177)
Other movements
1
1
As of December 31, 2024
49,996,185
12,499
446,948
(1,147)
(390,930)
347
1,507
69,224
Share capital
Share
Treasury
Retained
Currency
Net
Total
Number
Share
premium
shares
earnings
translation
profit
shareholders'
of shares
capital
(accumulated
adjustment
(loss)
equity
(in € thousands)
deficit)
The accompanying notes form an integral part of these consolidated financial statements.
F-9
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(amounts in thousands of euros, except for numbers of shares and per share amounts, and unless stated
otherwise)
1.
THE COMPANY
Founded in 1999 under the laws of France, GENFIT S.A. (the "Company") is a biopharmaceutical company dedicated to the
discovery and development of innovative drugs and diagnostic tools in therapeutic areas of high unmet need due in particular to
a lack of effective treatments or diagnostic solutions and/or an increase in patients worldwide.
The Company focuses its research and development (R&D) efforts on the potential marketing of therapeutic and diagnostic
solutions to combat certain metabolic, inflammatory, autoimmune and fibrotic diseases affecting in particular the liver (such as
Primary Biliary Cholangitis or PBC) and more generally gastroenterological diseases.
The consolidated financial statements of the Company include the financial statements of GENFIT S.A. and those of its
wholly-owned subsidiaries: GENFIT CORP. (U.S. subsidiary) and Versantis AG (Swiss subsidiary) (together referred to in these
notes to the consolidated financial statements as "GENFIT" or the "Group" or “we“ or “us”). There are no non-controlling interests
for any period presented herein.
2.
MAJOR EVENTS IN THE PERIOD AND EVENTS AFTER THE PERIOD
2.1
Major events in the period
2.1.1
Historic Milestone Achieved with U.S. FDA Accelerated Approval of Ipsen’s Iqirvo® for Primary Biliary
Cholangitis
FDA Approval
On June 10, 2024, GENFIT announced the achievement of a historic corporate milestone: the U.S. Food and Drug
Administration (FDA) accelerated approval of Iqirvo® (elafibranor) 80 mg tablets, as a first-in-class treatment for PBC in
combination with ursodeoxycholic acid (UDCA) in adults with an inadequate response to UDCA, or as monotherapy in patients
unable to tolerate UDCA.
Elafibranor is marketed and commercialized by Ipsen under the trademark Iqirvo® and can be prescribed in the U.S. for
eligible patients.
This indication is approved under accelerated approval based on reduction of alkaline phosphatase (ALP). Improvement in
survival or prevention of liver decompensation events have not been demonstrated. Continued approval for this indication may
be contingent upon verification and description of clinical benefit in confirmatory trial(s). Iqirvo® (elafibranor) is not
recommended for people who have or who develop decompensated cirrhosis (e.g., ascites, variceal bleeding, Hepatic
Encephalopathy).
License and Collaboration Agreement with Ipsen, and milestone payments
As previously communicated, in December 2021, Ipsen acquired global rights to develop and commercialize the molecule
(except for China, Hong Kong, Taiwan, and Macau, where Terns Pharmaceuticals holds the exclusive license to develop and
market elafibranor).
Under the terms of the agreement, GENFIT is eligible to receive a €48.7 million milestone payment upon the first commercial
sale of Iqirvo®/elafibranor in the U.S. This event occurred on June 17, 2024, and as such this amount was invoiced to and received
from Ipsen and recorded as revenue on the consolidated statement of operations for the year ended December 31, 2024.
GENFIT expects to receive an additional €26.5 million milestone payment, subject to Iqirvo® (elafibranor) pricing and
reimbursement approval in three European countries. Approval will only be considered probable when said approval is actually
granted, as this is a regulatory milestone outside of GENFIT's control. GENFIT is also eligible for tiered double-digit royalties of up
to 20%, applied to the annual sales of licensed products realized by Ipsen. See Note 29 - Commitments, contingent liabilities and
contingent assets. Related royalty revenues for 2024 totaled €2.7 million.
2.2
Major events after the period
2.2.1
Non-Dilutive Royalty Financing Agreement and concurrent OCEANE repurchase
Non-Dilutive Royalty Financing Agreement
F-10
On January 30, 2025, GENFIT announced the signing of a royalty financing deal with HealthCare Royalty (HCRx) providing up
to €185 million non-dilutive capital, including €130 million upfront, with eligibility to receive up to €55 million in two additional
installments based on near-term milestones.
Installments
The royalty financing takes the form of an issuance by GENFIT of straight bonds to be subscribed by HCRx (the “Royalty
Financing Bonds”), for an aggregate subscription price plus premium of up to €185 million (the “Subscription Price”, with a
nominal value of €9.25 million). The Royalty Financing Bonds’ subscription price is arranged in up to three installments as follows:
•
A first installment for a total subscription amount of €130 million, already issued on March 20, 2025 and received following
i) approval of the OCEANEs bondholders at the bondholders meeting held on March 10, 2025 and ii) satisfaction of other
customary closing conditions;
•
A second installment for a total subscription amount of €30 million, subject to net sales of Iqirvo® (elafibranor) reaching a
certain threshold by December 31, 2025; and
•
A third installment for a total subscription amount of €25 million, subject to net sales of Iqirvo® (elafibranor) reaching a
certain threshold by December 31, 2026.
Payment of the second and third installments are at the option of GENFIT, provided the corresponding conditions are met.
Repayment terms / multiples
The Royalty Financing Bonds issued by GENFIT will not bear interest. Instead, the returns on these bonds will be tied to a
portion of the royalties GENFIT receives under the Ipsen agreement from October 1, 2024. This portion of the royalties is subject
to the following multiples:
•
If the cumulated amount of royalties received by HCRx represents 155% of the Subscription Price of the Royalty Financing
Bonds, excluding the nominal value (i.e., approximately €277.5 million if all installments of the Subscription Price are paid),
it will no longer be entitled to the royalties, which will, from then on, fully revert to the Company.
•
If, at December 31, 2030, the cumulated amount of royalties received by HCRx represents less than this 155% return rate, it
will continue to receive the royalties until the cumulated amount received represents 195% of the Subscription Price
excluding the nominal value (i.e., up to a maximum of €351.5 million if all installments of the Subscription Price are paid).
•
If, at December 31, 2033, this 195% return rate is not achieved, HCRx will continue to receive the royalties until the
cumulated amount received equals 200% of the Subscription Price excluding the nominal value (i.e., up to a maximum of
€453.25 million if all installments of the Subscription Price are paid).
Caps and time-limits
This portion of the royalties is subject to the following caps and time-limits:
•
An annual cap equal to the amount of royalties based on an annual maximum amount of net sales of €600 million. The
Company will receive 100% of the royalties based on the annual net sales exceeding this maximum.
•
A final time-limit corresponding to the earlier of the following two dates: (i) the date on which the Company would no
longer be entitled to receive royalties under the Ipsen agreement, and (ii) March 31, 2045 (notwithstanding the fact that
none of the above return rates would have been achieved).
Nominal value repayment / HCRx recourse
When either i) the applicable multiple is fully repaid (excluding the nominal value) or ii) one of the above final time limits is
reached, then the Company must repay the nominal amount of the Royalty Financing Bonds (i.e. €9.25 million).
HCRx’s recourse against GENFIT is limited to GENFIT’s non-compliance with its contractual obligations under the royalty
financing documentation and repayment of the nominal value of the Royalty Financing Bonds (€9.25 million).
French law trust (fiducie-sûreté)
To secure its payment and repayment obligations under the Royalty Financing Bonds, GENFIT will transfer the corresponding
royalty receivables to a French law trust (fiducie-sûreté) for the benefit of the holders of the royalty financing bonds. To grant the
security interest on the royalty receivable, the Company obtained the consent of the OCEANEs holders.
Initial accounting, incurred expenses
The Royalty Financing will be accounted for as a debt issuance in accordance with IFRS 9. Full accounting treatment is
currently under review. The first installment of €130 million was received on March 20, 2025 (net of applicable fees).
F-11
Total related fees incurred relative to this transaction through December 31, 2024 totaled €847, which have been temporarily
capitalized in "Other current assets" on the Consolidated statement of financial position as of said date. These costs will be
deducted from the carrying amount of the financial liability and amortized over the life of the bond using the effective interest
method.
Other disclosures
The royalty revenue incurred for the period between October 1, 2024 and December 31, 2024 totals €1.8 million, which is
included in "Current trade and others receivables" on the Consolidated statement of financial position as of December 31, 2024.
This amount was then paid to the French law trust (fiducie-sûreté) in accordance with this royalty financing agreement on April
17, 2025.
OCEANE bondholder approval and subsequent repurchase/consent
The terms and conditions of the OCEANEs contained a negative pledge clause which limited the ability of the Company to
grant security interests to its creditors upon its present or future assets or revenues. The closing of the royalty financing with
HCRx, which was signed and announced by GENFIT on January 30, 2025, was subject to approval of OCEANEs bondholders of an
amendment to this negative pledge clause, allowing for the grant of the security interest contemplated in the Royalty Financing
documentation, and other customary closing conditions.
In order to obtain approval of the royalty financing by the OCEANEs holders, GENFIT convened a general meeting of the
holders on March 10, 2025. All resolutions proposed by the Company to the bondholders were approved unanimously.
Repurchase
As announced on February 10, 2025 and February 14, 2025, the Company proposed to all of the OCEANEs holders to enter
into a Put Option Agreement, pursuant to which the Company unconditionally and irrevocably undertook to repurchase the
OCEANEs of such holder at a price of EUR 32.75 per bond, subject to approval by the general meeting of the OCEANEs holders of
the amendment of the terms and conditions of the OCEANEs and the closing of the Royalty Financing (the “Repurchase”). Holders
had until March 19, 2025 to exercise this option.
The settlement of the Repurchase occurred on March 26, 2025. 1,882,891 OCEANEs were repurchased for a total amount paid
of €61.7 million. The repurchased OCEANEs were then canceled by the Company.
Consent Fee
The Company also undertook, subject to the approval of the amendment of the terms and conditions of the OCEANEs and
the closing of the Royalty Financing, to pay a consent fee (the “Consent Fee”) of EUR 0.90 per bond to the holders of OCEANEs
still outstanding after cancellation of the repurchased OCEANEs. The OCEANEs that were bought back by the Company as part
of the Repurchase thus did not receive the Consent Fee.
The payment of the Consent Fee occurred on April 14, 2025, totaling €18 thousand.
Outstanding OCEANEs
Following the transaction, a total of 19,807 OCEANEs still in circulation, for a total nominal value of €586.
2.2.2
Genoscience Pharma
Former 2021 agreement
In December 2021, GENFIT licensed the exclusive rights from Genoscience Pharma to develop and commercialize the
investigational treatment GNS561 in CCA in the United States, Canada and Europe, including the United Kingdom and
Switzerland. Under the agreement, Genoscience Pharma was eligible for clinical and regulatory milestone payments for up to
€50 million and tiered royalties. The first payable milestones were contingent on positive Phase 2 clinical trial results in CCA, and
may total up to €20 million. Further milestones depended on positive Phase 3 results.
New 2025 transfer protocol
On December 10, 2024, in the context of a “conciliation” (a French law, amicable pre-insolvency proceeding), GENFIT and
Genoscience Pharma entered into an asset transfer protocol which entered into legal force on January 3, 2025 and terminates
the previous agreement signed in 2021. The main terms of the agreement are as follows:
F-12
•
GENFIT acquired all patents and patent applications, know-how, and data held by Genoscience Pharma necessary for the
development, manufacturing, and marketing of GNS561 Products worldwide (“GNS561 Technology”). “GNS561 Product”
means any product, including any pharmaceutical product regardless of its therapeutic indication, form, dosage, or
formulation, incorporating in whole or in part the GNS561 Technology (including as an active ingredient) or manufactured
using the GNS561Technology.
•
The sale price is a lump sum payment of €2 million euros excluding taxes.
•
Contingent liabilities
◦
(Patent sales) Genoscience Pharma will receive 25% of the proceeds of the sale of one or several GNS561 patents
actually received by GENFIT.
◦
(Commercialization) Genoscience Pharma will receive 25% of the net profits actually collected by GENFIT
corresponding to the sales of said products for a period expiring on the earliest of the following dates (i) 10 years from
the first commercialized sale, (ii) the expiration, cancellation or revocation of one of the patents or (iii) the
authorization of generic products utilizing the GNS Technology.
◦
(Licensing-out) Genoscience Pharma will receive 25% of 1) any milestone payments (including upfront milestone
payments) from GNS561 patent licensing and 2) royalties from said patent licensing actually collected by GENFIT
during a period expiring on the earlier of (i) 10 years from the first commercialized sale, (ii) the expiration, cancellation
or revocation of one of the patents or (iii) the authorization of generic products implementing the GNS Technology.
◦
Time limit: Such amounts would only be due if one of the above circumstances occur within five years of the date of
signing the 2025 transfer protocol (December 10, 2024).
IAS 10
This agreement was considered as an adjusting event under IAS 10 and was taken into account for the annual valuation of
Genoscience shares held by GENFIT as of December 31, 2024. See Note 18 - Other financial assets.
However, as this agreement was subject to an amicable pre-insolvency proceeding, which included a mandatory opposition
period, the agreement did not enter into legal force until January 3, 2025. As such, the acquisition of the patents and patent
applications, know-how, and data held by Genoscience Pharma as described above is an event that will be recorded in 2025.
3.
BASIS OF PRESENTATION
The Consolidated Financial Statements of GENFIT have been prepared in accordance with International Financial Reporting
Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”), and in accordance with IFRS as adopted
by the European Union at December 31, 2024. The Comparative information is presented as of and for the years ended December
31, 2023 and December 31, 2022.
The consolidated financial statements have been prepared using the historical cost measurement basis except for certain
assets and liabilities that are measured at fair value in accordance with the IFRS general principles of fair presentation, going
concern, accrual basis of accounting, consistency of presentation, materiality and aggregation.
These consolidated financial statements for the year ended December 31, 2024 were prepared under the responsibility of the
Board of Directors that approved such statements on April 23, 2025.
The term IFRS includes International Financial Reporting Standards ("IFRS"), International Accounting Standards (the "IAS"),
as well as the Interpretations issued by the Standards Interpretation Committee (the "SIC"), and the International Financial
Reporting Interpretations Committee ("IFRIC").
The principal accounting methods used to prepare the Consolidated Financial Statements are described below.
All financial information (unless indicated otherwise) is presented in thousands of euros (€).
3.1.
Changes in accounting policies and new standards or amendments
The accounting policies applicable for these consolidated annual financial statements are the same as those applied to the
previous consolidated annual financial statements.
The following new standards are applicable from January 1, 2024, but do not have any material effect on the Group’s financial
statements as of and for the year ended December 31, 2024.
•
Amendments to IAS 7 and IFRS 7 Supplier Finance Arrangements,
•
Amendments to IFRS 16 Lease Liability in a Sale and Leaseback,
F-13
•
Amendments to IAS 1 Non-current Liabilities with Covenants, and
•
Amendments to IAS 1 Classification of Liabilities as Current or Non-current.
3.2.
Standards, interpretations and amendments issued but not yet effective
The amendments and modifications to the standards below are applicable for financial years beginning after January 1, 2025,
as specified below. GENFIT is in the process of assessing these amendments and modifications to the standards, however they
are not expected to have a material impact on the financial statements.
•
Amendments to IAS 21 – Lack of Exchangeability, effective in 2025,
•
Amendments IFRS 9 and IFRS 7 regarding the classification and measurement of financial instruments, effective in 2026
(subject to endorsement by the European Union),
•
Annual Improvements to IFRS Accounting Standards — Volume 11, effective in 2026 (subject to endorsement by the
European Union), and
•
IFRS 19 Subsidiaries without Public Accountability: Disclosures, effective in 2027 (subject to endorsement by the
European Union).
This standard in its current state is likely to have a significant impact on the financial statements:
•
IFRS 18 Presentation and Disclosures in Financial Statements, effective in 2027
However, this standard has not yet been adopted by the European Union and at this stage a comprehensive evaluation is still
underway.
The Group has not identified any other standard or amendment that could have a significant impact on the consolidated
financial statements.
4.
SUMMARY OF MATERIAL ACCOUNTING INFORMATION
4.1.
Use of estimates and judgments
In preparing these consolidated financial statements, management makes judgments, estimates and assumptions that
affect the application of accounting policies and the reported amounts of assets and liabilities, incomes and expenses. Actual
amounts may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognized in the period in which the estimates are revised and in any future periods affected.
Significant estimates mainly relate to the following:
•
Allocation of income to the performance obligations provided for in the agreement entered into with Ipsen, see Note 7 -
"Revenues and Other Income")
•
Research tax credits, see Note 7.2 - "Revenues and Other Income - Other income"
•
Accruals related to clinical trials, see Note 8 - "Operating expenses"
•
Share-based payments, see Note 9 - "Share-based compensation"
•
Valuation of our VS-01 assets related to the Versantis acquisition, see Note 14 - "Goodwill and intangible assets"
•
Valuation of our license rights acquired, see Note 14 - "Goodwill and intangible assets"
•
Leases, see Note 15 - “Property, plant and equipment including Leases”
•
Valuation of our investments in Genoscience, see Note 18 - "Other financial assets"
•
Convertible loans, see Note 20 - "Loans and Borrowings"
•
Employee benefits, see Note 25 - "Employee benefits".
4.2.
Consolidation
Going concern
The consolidated financial statements were prepared on a going concern basis. The Group believes it has sufficient
resources to continue operating for at least twelve months following the consolidated financial statements’ publication.
F-14
When assessing going concern, the Group’s Board of Directors considers the liquidity available at the statement of financial
position date, available financing, the recent Royalty Financing, and cash spend projections for the next 12-month period from the
date the financial statements are issued.
Consolidated entities
The Group controls an entity when it is exposed to variable returns from its involvement with the entity, and it has the ability
to affect those returns through its power over the entity.
The Group controls all the entities included in the scope of consolidation.
4.3.
Foreign currency
4.3.1.
Foreign currency transactions
Transactions in foreign currencies are translated into the respective functional currencies of the entities of the Group at the
exchange rates applicable at the transaction dates. Monetary assets and liabilities denominated in foreign currencies are
translated into the functional currency at the reporting date.
The resulting exchange gains or losses are recognized in the statements of operations.
4.3.2.
Translation of foreign subsidiary financial statements
The assets and liabilities of foreign operations having a functional currency different from the euro are translated into euros
at the closing exchange rate. The income and expenses of foreign operations are translated into euros at the exchange rates
effective at the transaction dates or using the average exchange rate for the reporting period unless this method cannot be
applied due to significant exchange rate fluctuations.
Gains and losses arising from foreign operations are recognized in the statement of other comprehensive loss. When a
foreign operation is partly or fully divested, the associated share of gains and losses recognized in the currency translation
reserve is transferred to the statements of operations.
The Group’s presentation currency is the euro, which is also the functional currency of GENFIT S.A.
The functional currency of GENFIT CORP is the U.S. dollar. The applicable exchange rates used to translate the financial
statements of this entity for each of the periods are as follows:
Year ended
Ratio : 1 US dollars (USD) = x euros (EUR)
2022/12/31
2023/12/31
2024/12/31
Exchange rate at period end
0.93756
0.90498
0.96256
Average exchange rate for the period
0.95105
0.92471
0.92440
The functional currency of Versantis AG is the Swiss Franc. The applicable exchange rates used to translate the financial
statements of this entity for each of the periods are as follows:
Year ended
Ratio : 1 CH franc (CHF) = x euros (EUR)
2022/12/31
2023/12/31
2024/12/31
Exchange rate at period end
1.01554
1.07991
1.06247
Average exchange rate for the period
1.01710
1.02936
1.05010
Note that the average rate immediately above for the year ended December 31, 2022 is based on the period between
September 29, 2022 (the date of the acquisition of Versantis AG) and December 31, 2022.
5.
SEGMENT INFORMATION
The Board of Directors and Chief Executive Officer are the chief operating decision makers.
The Board of Directors and the Chief Executive Officer oversee the operations and manage the business as one segment
with a single activity; namely, the research and development of innovative medicines and diagnostic solutions, the marketing of
which depends on the success of the clinical development phase.
F-15
The assets, liabilities and operating income (loss) are mainly located in France and in Switzerland (the latter due to the
acquisition of Versantis in September 2022).
Revenue breakdown by geographical area
Revenue by destination
Year ended
(in € thousands)
12/31/2022
12/31/2023
12/31/2024
Revenue from France
100 %
100 %
100 %
Revenue from other countries
— %
— %
— %
TOTAL
100 %
100 %
100 %
In 2022, 2023, and 2024, revenue was generated entirely in France. Substantially all revenue was generated from Ipsen.
Non-current assets by geographical area
Non-current assets break down by geographical area as follows:
NON-CURRENT ASSETS
As of December 31, 2023
As of December 31, 2024
(thousands of euros)
France
Switzerland
Total
France
Switzerland
Total
TOTAL
13,869
46,889
60,758
12,580
46,079
58,659
6.
FINANCIAL RISKS MANAGEMENT
The Group may be exposed to the following risks arising from financial instruments: foreign exchange risk, interest rate risk,
liquidity risk and credit risk.
6.1.
Foreign exchange risk
The Group's overall exposure to the foreign exchange risk depends, in particular, on:
•
the currencies in which it receives its revenues;
•
the currencies chosen when agreements are entered into, such as licensing agreements, or co-marketing or co-
development agreements;
•
the location of clinical trials on drug or biomarker candidates;
•
the ability, for its co-contracting parties to indirectly transfer foreign exchange risk to the Company;
•
the Group’s foreign exchange risk policy; and
•
the fluctuation of foreign currencies against the euro.
Given the significant portion of its operations denominated in US dollars, the Company has chosen to limit conversions into
euros from its US dollars reserves, which resulted from funds received from the listing of its securities on the Nasdaq in March
2019 in US dollars. The Company has not entered into hedging agreements, opting instead to use its cash in US dollars to meet
expenses denominated in said currency through 2025.
The following table shows the sensitivity of the Group's cash and cash equivalent and expenses in U.S. dollars to a variation
of 10% of the U.S. dollar against the euro in 2022, 2023 and 2024.
Sensitivity of the Group's cash and cash equivalents to a variation of +/- 10%
As of
of the US dollar against the euro
(in € thousands or in US dollar thousands, as applicable)
2022/12/31
2023/12/31
2024/12/31
Cash and cash equivalents denominated in US dollars
34,192
22,023
10,800
Equivalent in euros, on the basis of the exchange rate described below
32,057
19,930
10,395
Equivalent in euros, in the event of an increase of 10% of US dollar vs euro
35,619
22,145
11,550
Equivalent in euros, in the event of a decrease of 10% of US dollar vs euro
29,143
18,119
9,450
F-16
Sensitivity of the Group's expenses to a variation of +/- 10%
Year ended
of the US dollar against the euro
(in € thousands or in US dollar thousands, as applicable)
2022/12/31
2023/12/31
2024/12/31
Expenses denominated in US dollars
14,884
15,326
11,706
Equivalent in euros, on the basis of the exchange rate described below
13,955
13,870
11,268
Equivalent in euros, in the event of an increase of 10% of US dollar vs euro
15,506
15,411
12,520
Equivalent in euros, in the event of a decrease of 10% of US dollar vs euro
12,686
12,609
10,244
2024/12/31 : Equivalent in euros, on the basis of 1 euro = 0,96256 dollars US
2023/12/31 : Equivalent in euros, on the basis of 1 euro = 0,90498 dollars US
2022/12/31 : Equivalent in euros, on the basis of 1 euro = 0,93756 dollars US
The following table shows the sensitivity of the Group's cash and cash equivalent and expenses in Swiss Francs to a variation
of 10% of the Swiss Franc against the euro in 2024.
Sensitivity of the Group's cash and cash equivalents to a variation of +/- 10%
As of
of the CH franc against the euro
(in € thousands or in CH franc thousands, as applicable)
2022/12/31
2023/12/31
2024/12/31
Cash and cash equivalents denominated in CH franc
2,321
1,111
614
Equivalent in euros, on the basis of the exchange rate described below
2,357
1,200
652
Equivalent in euros, in the event of an increase of 10% of CH franc vs euro
2,618
1,333
724
Equivalent in euros, in the event of a decrease of 10% of CH franc vs euro
2,142
1,091
593
Sensitivity of the Group's expenses to a variation of +/- 10%
Year ended
of the CH franc against the euro
(in € thousands or in CH franc thousands, as applicable)
2022/12/31
2023/12/31
2024/12/31
Expenses denominated in CH franc
2,016
4,678
2,987
Equivalent in euros, on the basis of the exchange rate described below
2,048
5,052
3,174
Equivalent in euros, in the event of an increase of 10% of CH franc vs euro
2,275
5,614
3,526
Equivalent in euros, in the event of a decrease of 10% of CH franc vs euro
1,862
4,593
2,885
2024/12/31 : Equivalent in euros, on the basis of 1 euro = 1,06247 CH franc
2023/12/31 : Equivalent in euros, on the basis of 1 euro = 1,07991 CH franc
2022/12/31 : Equivalent in euros, on the basis of 1 euro = 1,01554 CH franc
The following table shows the Group's cash and cash equivalent and financial assets by currency (EUR, USD, CHF).
Cash, cash equivalents and financial assets
As of
(in € thousands)
2023/12/31
2024/12/31
At origin, denominated in EUR
Cash and cash equivalents
56,593
70,707
Current and non current financial assets
4,095
3,035
Total
60,689
73,742
At origin, denominated in USD
Cash and cash equivalents
19,931
10,395
Current and non current financial assets
15
16
Total
19,946
10,411
At origin, denominated in CHF
Cash and cash equivalents
1,200
652
Current and non current financial assets
14
14
Total
1,214
666
Total, in EUR
Cash and cash equivalents
77,789
81,788
Current and non current financial assets
4,125
3,065
Total
81,913
84,853
6.2.
Interest rate risk
F-17
As of December 31, 2024, the Group was only liable for bank loans denominated in euros with no interest or interest at a fixed
rate, generally below market rate.
As of December 31, 2023 and 2024, the Group's financial liabilities totaled €70.2 million and €62.1 million respectively (net of
the equity component of the convertible loan and debt issue costs). Current borrowings are at a fixed rate. The Group's exposure
to interest rate risk through its financial assets is also insignificant since these assets are mainly euro-denominated Undertakings
for the Collective Investment of Transferable Securities (UCITs), medium-term negotiable notes or term deposits with progressive
rates denominated in euros or US dollars.
6.3.
Liquidity risk
The Group's loans and borrowings mainly consist of bonds convertible or exchangeable into new or existing shares
(OCEANE), repayable for an nominal amount of €56.3 million on October 16, 2025, and bank loans. See Note 20 - "Loans and
borrowings" for additional information.
The Group has conducted a specific review of its liquidity risk and considers that it is able to meet its future maturities. On
December 31, 2023 and 2024, we had €77,789 and €81,788 respectively, in cash and cash equivalents.
The Group does not believe it is exposed to short-term liquidity risk. The Company believes that its cash and cash
equivalents are sufficient to ensure its financing for the next 12 months, in light of its current projects and obligations.
If the Group's funds are insufficient to cover any additional financing needs, the Group would require additional financing.
The conditions and arrangements for any such new financing would depend, among other factors, on economic and market
conditions that are beyond the Group's control.
6.4.
Credit risk
Credit risk is the risk of financial loss if a customer or counterparty to a financial asset defaults on their contractual
commitments. The Group is exposed to credit risk due to trade receivables and other financial assets.
The Group's policy is to manage this risk by transacting with third parties with good credit standards.
F-18
7.
REVENUES AND OTHER INCOME
The Company's revenue and other income is primarily composed of revenues, research tax credits, government grants and
subsidies, and other operating income.
Revenues and other income
Year ended
(in € thousands)
2022/12/31
2023/12/31
2024/12/31
Revenues
20,195
28,565
67,002
CIR tax credit
6,017
5,807
3,415
Government grants and subsidies
34
3,340
275
Other operating income
320
464
247
TOTAL
26,566
38,176
70,939
7.1.
Revenues from contracts with customers
Accounting policy overview
Under IFRS 15, revenue is recognized when the Company fulfills a performance obligation by providing separate goods or
services to a customer, i.e., when the customer obtains control of those goods or services. An asset is transferred when the
customer obtains control of that asset or service.
Under this standard, each contract must be analyzed, on a case-by-case basis, in order to verify whether it contains
performance obligations towards third parties, and, if applicable, to identify their nature in order to determine the appropriate
accounting of amounts that the Company has received or is entitled to receive from third parties, for example:
•
The transfer of control over the intellectual property, via a license granted by the Company, as it exists at the time of the
sale, the date of which will determine that of the revenue recognition;
•
If the license is considered as a right of access to the intellectual property of the Company over the life of the license, the
revenue would be recognized over this lifetime;
•
The supply of products whose revenues would be recognized at the time of transfer of control of the delivered products;
•
Potential revenue from milestones (including potential upcoming regulatory milestones) would not be recognized until
the actual achievement of the milestone or the attainment of needed regulatory approvals; and
•
Potential revenue from royalties or royalties based on sales would not be recognized until the completion of the sale.
Financial statement line item detail
Revenues amounted to €67,002 in 2024 (€28,565 in 2023, and €20,195 in 2022). Revenues are primarily composed of:
1.
Licensing Agreement (Ipsen). In December 2021, GENFIT and Ipsen entered into an exclusive licensing agreement for
elafibranor, a Phase 3 asset evaluated in Primary Biliary Cholangitis (PBC), as part of a long-term global partnership
("Collaboration and License Agreement").
◦
In 2024, €48.7 million was attributable to a milestone payment invoiced to Ipsen in June 2024 following the first
commercial sale of Iqirvo® (elafibranor) in the U.S. €15.3 million was attributable to previously deferred revenue of
€40 million from 2021, in line with the progress in the ELATIVE® clinical study and related expenses incurred during the
period, estimated remaining expenses, and the fact that the study was fully transferred in 2024. See Note 23 - Deferred
revenue. Lastly, €2.7 million was attributable to royalty revenue from U.S. sales of Iqirvo® (elafibranor) which
commenced mid-June.
◦
In 2023, €13.3 million was attributable to a milestone invoiced to Ipsen in December 2023 in accordance with the
Collaboration and Licensing agreement signed in December 2021. This milestone was earned following the NDA filing
acceptance by the FDA and MAA filing acceptance by the EMA for accelerated approval of elafibranor. €8.7 million
was attributable to previously deferred revenue of €40 million from 2021 as noted immediately below, in line with the
progress in the ELATIVE® clinical study and related expenses incurred during the period.
◦
In 2022, €15.9 million was attributable to previously deferred revenue of €40 million from 2021 as noted immediately
below, in line with the progress in the ELATIVE® clinical study and expenses incurred during the period.
2.
Transition Services Agreements (Ipsen). GENFIT and Ipsen entered into the Transition Services Agreement and Part B
Transition Services Agreement, signed in April 2022 and September 2023 respectively, in order to facilitate the transition
of certain services related to the Phase 3 ELATIVE® clinical trial until the complete transfer of the responsibility of the trial
to Ipsen.
◦
In 2024, the services provided under this contract generated €0.1 million in revenue.
◦
In 2023, the services provided under this contract generated €6.5 million in revenue.
◦
In 2022, the services provided under this contract generated €1.0 million in revenue.
F-19
3.
Inventory Purchase Agreement (Ipsen). GENFIT and Ipsen also entered into an Inventory Purchase Agreement in 2022,
which provided for the purchase by Ipsen of batches of active ingredients and elafibranor products during the second half
of 2022.
◦
In 2024, no revenue was generated under this contract.
◦
In 2023, no revenue was generated under this contract.
◦
In 2022, inventory sold to Ipsen under this contract generated €3.3 million in revenue.
4.
Other revenue
◦
In 2024, other revenue totaled €0.2 million from other ancillary activities.
◦
In 2023 and 2022 other revenue was not significant.
Application of IFRS 15 to the Ipsen License Agreement signed in 2021
Performance obligations
We have identified that the agreement provides for four distinct performance obligations:
•
The license for elafibranor,
•
The completion of the ELATIVE® Phase 3 trial until the end of the double-blind period,
•
The knowledge transfer related to elafibranor, as well as support for Ipsen in future undertakings and processes, and
•
The provision of drug tablets that may be needed by Ipsen to conduct their clinical trials.
The compensation under this agreement consists of an upfront payment, milestone payments, and royalties on future sales
of elafibranor by Ipsen. Besides, it must be noted that, with respect to (i) support services other than the knowledge transfer and
(ii) the provision of drug tablets, the agreement provides for separate prices covering all costs borne by the Company to provide
those goods and services, therefore constituting in each case an individual and distinct sale price for the relevant goods or
service, which is not included in the aforementioned price elements.
We estimate the individual sale price of the clinical trial phase to be €40 million, including forecasted external costs,
personnel expenses for the relevant staff, indirect costs pertaining to the work environment of such staff, augmented of a
customary margin rate for CRO (Clinical Research Organization) contracting. This calculation of the individual sale price for the
clinical trial phase reflects observable price conditions as recommended under IFRS 15.79.c. We used the same method to
calculate the individual sale price of the knowledge transfer.
Revenue accounting treatment for periods presented
Regarding the recognition of revenue related to the license, we have applied the following methods:
•
Milestone payments constitute variable and uncertain income, which would be, if applicable, recognized in revenue at the
time they become highly probable, which means, in this case, due by Ipsen. In 2023, the €13.3 million milestone was
triggered by the acceptance of the New Drug Application (NDA) filing by the US Food and Drug Administration (FDA) and
Marketing Authorization Application (MAA) by the European Medicines Agency (EMA) for accelerated approval of
elafibranor in Primary Biliary Cholangitis (PBC). In 2024, the €48.7 million milestone was triggered in June 2024 following
the first commercial sale of Iqirvo® (elafibranor) in the U.S.
Regarding the recognition of revenue related to the Phase 3 ELATIVE® trial until the end of the double-blind period, we have
applied the following method:
•
The part of the upfront payment allocated to this service will be recognized progressively as completion progresses.
Accounting treatment for future milestones and royalties
•
Milestone payments constitute variable and uncertain income, which would be, if applicable, recognized in revenue at the
time they become highly probable, which means, in this case, due by Ipsen. Furthermore, we expect to receive future
milestone revenue, subject to Iqirvo® (elafibranor) pricing and reimbursement approval in three European countries,
representing a total of approximately €26.5 million. Approval will only be considered probable when said approval is
actually granted, as this is a regulatory milestone outside of GENFIT's control.
•
Royalties are progressively recognized in revenue as sales are completed by Ipsen, in accordance with the IFRS 15 except
for royalties constituting variable income.
Application of IFRS 15 to the Ipsen Inventory Purchase Agreement signed in 2022
In 2022, GENFIT and Ipsen entered into an Inventory Purchase Agreement, pursuant to which Ipsen purchased inventory
from GENFIT, namely the elafibranor active pharmaceutical ingredient and related drug product, during the second half of 2022
with the prospect of transferring the conduct of the ELATIVE® study to Ipsen. We evaluated the agreement under IFRS 15 and we
concluded that the services constitute a single performance obligation for which revenue is recognized when inventory is
provided to Ipsen.
F-20
Application of IFRS 15 to the Ipsen Transition Services Agreement signed in 2022
In 2022, GENFIT and Ipsen entered into a Transition Services Agreement, which outlines the scope of services to facilitate
the transition of some activities related to the Phase 3 clinical trial evaluating elafibranor in Primary Biliary Cholangitis (PBC). This
agreement is a supplementary follow-on to the Collaboration and License Agreement mentioned above. We evaluated the
agreement under IFRS 15 and we concluded that the services constitute a single performance obligation for which revenue is
recognized as services are performed.
Application of IFRS 15 to the Ipsen Part B Transition Services Agreement signed in 2023
In 2023, GENFIT and Ipsen entered into a Part B Transition Services Agreement, which outlines the scope of services to
facilitate the transition of some activities related to the Phase 3 clinical trial evaluating elafibranor in Primary Biliary Cholangitis
(PBC). This agreement is a supplementary follow-on to the Collaboration and License Agreement mentioned above. We evaluated
the agreement under IFRS 15 and we concluded that the services constitute a single performance obligation for which revenue is
recognized as services are performed.
7.2.
Other income
7.2.1.
Research tax credit
The Research Tax Credit ("Crédit d'impôt recherche," or "CIR") is granted to entities by the French tax authorities in order to
encourage them to conduct technical and scientific research. Entities that demonstrate that their research expenditures meet
the required CIR criteria receive a tax credit that may be used for the payment of their income tax due for the fiscal year in which
the expenditures were incurred, as well as in the next three years. If taxes due are not sufficient to cover the full amount of tax
credit at the end of the three-year period, the difference is paid in cash to the entity by the tax authorities. If a company meets
certain criteria in terms of sales, headcount or assets to be considered a small/mid-size company, immediate payment of the
Research Tax Credit can be requested. The Group meets such criteria.
The CIR meets the definition of a government grant as defined in IAS 20, Accounting for Government Grants and Disclosure
of Government Assistance, and, as a result, it has been classified as Other income within operating income in our statement of
operations. The Group applies for the CIR based eligible research expenditures incurred in each fiscal year and recognizes the
amount claimed in the same fiscal year. In the notes to the financial statements, the amount claimed is recognized under the
heading "CIR tax credit" (see Note 16 - "Trade and other receivables" and the table below).
The breakdown of Other income is as follows:
Other income
Year ended
(in € thousands)
2022/12/31
2023/12/31
2024/12/31
CIR tax credit
6,017
5,807
3,415
Government grants and subsidies
34
3,340
275
Other operating income
320
464
247
TOTAL
6,371
9,610
3,937
CIR tax credit
The research tax credit (CIR) amounted to €3,415 in 2024 (€5,807 in 2023 and €6,017 in 2022), due to a reduction in eligible
research and development expenses. It is important to note that this amount includes i) the 2024 CIR of €3.9 million, ii) a
reduction of €0.7 million following the conclusion of the tax audit relating to the 2019 and 2020 financial years, and iii) an increase
of €0.2 million in late payment interest collected for the 2022 and 2023 CIRs.
The Company was subject to a tax audit covering the 2019 and 2020 financial years (including the CIR declared for these
financial years), which began on December 10, 2021 and continued until December 2024. Refer to Note 11 - "Income tax".
Government grants and subsidies
Government grants and subsidies amounted to €275 in 2024 (€3,340 in 2023 and €34 in 2022). There was a one-time
cancellation of €3,229 refundable government grant from Bpifrance (the BPI France IT-DIAB). Refer to Note 20.2 - Breakdown of
other loans and borrowings.
Other operating income
Other operating income amounted to €247 in 2024 (€464 in 2023 and €320 in 2022), mainly comprised of exchange gains on
trade receivables.
8.
OPERATING EXPENSES
F-21
Accounting policies - Research and development expenses
Research expenses are recorded in the financial statements as expenses.
In accordance with IAS 38, Intangible Assets, development expenses are recognized as intangible assets only if all the
following criteria are met:
•
Technical feasibility necessary for the completion of the development project;
•
Intention on the Group's part to complete the project and to utilize it;
•
Capacity to utilize the intangible asset;
•
Proof of the probability of future economic benefits associated with the asset;
•
Availability of the technical, financial, and other resources for completing the project; and
•
Reliable evaluation of the expenses attributed to the intangible asset during its development.
As of the date of these financial statements, these criteria have not all been met for expenses incurred in the periods
presented.
Accounting policies - Classification of operating expenses
Research and development expenses include:
•
employee-related costs;
•
costs related to external employees seconded to the Company (such as clinical development, biometrics and IT, …);
•
lab supplies and facility costs;
•
fees paid to scientific advisers and contracted research and development activities conducted by third parties;
•
intellectual property fees corresponding to the filing of the Group's patents, and
•
provision and reversals of provisions in relation to the Research Tax Credit dispute.
Contracted research and development activities conducted by third parties include services subcontracted to research
partners for technical and/or regulatory reasons. In particular, this includes the production of active ingredients and therapeutic
units, all or a part of clinical trials and preclinical trials that are necessary to the development of GENFIT's drug candidates and
biomarker candidates.
Research and development expenses at each reporting date take into account estimates for ongoing activities
subcontracted as part of the clinical trials and not yet invoiced, on the basis of detailed information provided by subcontractors
and reviewed by the Group’s internal departments. The accuracy of these estimates for some types of expenses improves with
the progression of the trials and the review of their determination methods. For regulatory reasons, research services for clinical
trials and the production of active ingredients and therapeutic units are contracted out to third parties.
General and administrative expenses include:
•
employee-related costs for executive, business development, intellectual property, finance, legal and human resources
and communications functions;
•
facility-related costs;
•
marketing, legal, audit and accounting fees;
•
press relations and communications firm fees;
•
the cost of external employees seconded to the Company (such as security, reception, and accounting, ...);
•
other service costs (recruitment, etc.); and
•
intellectual property fees corresponding to the maintenance of the Group's patents.
Marketing and market access expenses include:
•
employee-related costs for marketing and business development functions; and
•
marketing, and market access firm fees.
Reorganization and restructuring expenses include:
•
(2022 and prior) the accruals and provisions recognized within the scope of the reduction in force plan;
•
(2022 and prior) the extraordinary amortization, loss of value and impairment of fixed assets recognized within the scope
of the reorganization of GENFIT;
•
(2022 and prior) the impairment of the right of use of the leased equipment and premises;
•
(2022 and prior) the portion of the OCEANEs renegotiation expenses;
F-22
•
(2023 and prior) the provision (and subsequent reversals) recognized for some of the costs of the closing process for the
RESOLVE-IT® study, which, after detailed analysis, do not have any future economic advantage for the PBC program.
Other operating expenses include:
•
Legal fees, audit and accounting fees;
•
Advisor fees (banking, press relations, communication, IT, market access, marketing, scientific advising);
•
Intellectual property expenses, including in particular the charges and fees incurred by the Company for patent
applications and maintenance;
•
Expenses related to insurance, notably those triggered by the Company listing on the Nasdaq since 2019;
•
Expenses related to the rental, use, and maintenance of the Group's premises;
•
Expenses related to external personnel contracted out to the company (safety and security, front desk, clinical and IT
services); and
•
Expenses related to travel and conferences, including mainly employee travel costs as well as scientific, medical, financial
and business development conference registration fees.
Financial statement line item detail
Operating expenses and other
operating income (expenses)
Year ended
Of which :
2022/12/31
Raw
Contracted
Employee
Other
Depreciation,
Gain /
materials
research and
expenses
expenses
amortization
(loss) on
and
development
(maintenance,
and
disposal of
consumables
activities
fees, travel,
impairment
property,
used
conducted by
taxes…)
charges
plant and
(in € thousands)
third parties
equipment
Research and development
expenses
(35,818)
(1,876)
(17,407)
(10,029)
(5,177)
(1,328)
—
General and administrative
expenses
(16,405)
(248)
(71)
(6,772)
(9,168)
(146)
—
Marketing and market access
expenses
(992)
(3)
(1)
(565)
(416)
(6)
—
Reorganization and restructuring
income (expenses)
11
—
—
—
—
11
—
Other operating income
(expenses)
(652)
—
—
—
(667)
—
16
TOTAL
(53,855)
(2,128)
(17,479)
(17,366)
(15,429)
(1,469)
16
Operating expenses and other
operating income (expenses)
Year ended
Of which :
2023/12/31
Raw
Contracted
Employee
Other
Depreciation,
Gain /
materials
research and
expenses
expenses
amortization
(loss) on
and
development
(maintenance,
and
disposal of
consumables
activities
fees, travel,
impairment
property,
used
conducted by
taxes…)
charges
plant and
(in € thousands)
third parties
equipment
Research and development
expenses
(46,503)
(1,831)
(23,455)
(12,475)
(7,452)
(1,291)
—
General and administrative
expenses
(17,741)
(337)
(205)
(7,486)
(9,396)
(317)
—
Marketing and market access
expenses
(876)
(4)
(1)
(556)
(300)
(14)
—
Reorganization and restructuring
income (expenses)
505
—
—
—
—
505
—
Other operating income
(expenses)
(141)
—
—
—
(222)
—
81
TOTAL
(64,756)
(2,172)
(23,661)
(20,517)
(17,370)
(1,117)
81
F-23
Operating expenses and other
operating income (expenses)
Year ended
Of which :
2024/12/31
Raw
Contracted
Employee
Other
Depreciation,
Gain /
materials
research and
expenses
expenses
amortization
(loss) on
and
development
(maintenance,
and
disposal of
consumables
activities
fees, travel,
impairment
property,
used
conducted by
taxes…)
charges
plant and
(in € thousands)
third parties
equipment
Research and development
expenses
(47,210)
(1,755)
(20,766)
(13,577)
(9,746)
(1,366)
—
General and administrative
expenses
(19,497)
(294)
(139)
(8,145)
(10,565)
(354)
—
Marketing and market access
expenses
(634)
(6)
(1)
(571)
(50)
(6)
—
Reorganization and restructuring
expenses
—
—
—
—
—
—
—
Other operating income
(expenses)
(316)
—
—
—
(360)
(12)
56
TOTAL
(67,658)
(2,056)
(20,906)
(22,293)
(20,723)
(1,737)
56
2023 Activity
Research and Development Expenses
The increase in research and development costs is generally explained by the increase in costs related to new programs and
product candidates, in particular VS-01 and GNS561, offset by a reduction in costs related to NTZ.
General and Administrative Expenses
The increase in general and administrative expenses is explained by an increase headcount in the normal course of business.
Marketing and Market Access Expenses
This decrease is mainly explained by the decrease in marketing activity in the United States and France.
Reorganization and Restructuration Expenses
Reorganization and restructuration expenses were not significant. The income in 2023 relates solely to the reversal of a prior
year provision related to unused office space.
2024 Activity
Research and Development Expenses
The decrease in research and development costs is generally explained by the sharp decrease related to ELATIVE® and
GNS-561 partially offset by costs related to new programs and product candidates, in particular VS-01, SRT-015, and CLM-022.
General and Administrative Expenses
The increase in general and administrative expenses is explained by an increase headcount in the normal course of business.
Marketing and Market Access Expenses
This decrease is mainly explained by the decrease in marketing activity in the United States and France.
Reorganization and Restructuration Expenses
Reorganization and restructuration expenses were not significant.
Employee expenses
Employee expenses and number of employees were as follows:
F-24
Employee expenses
Year ended
(in € thousands)
2022/12/31
2023/12/31
2024/12/31
Wages and salaries
(12,188)
(14,524)
(15,613)
Social security costs
(4,765)
(5,296)
(5,949)
Changes in pension provision
(169)
(119)
(121)
Employee profit-sharing
—
—
—
Share-based compensation
(245)
(578)
(610)
TOTAL
(17,366)
(20,517)
(22,293)
Number of employees at year-end
Year ended
2022/12/31
2023/12/31
2024/12/31
Average number of employees
133
154
170
Number of employees
Research and development
73
78
96
Services related to research and development
18
18
21
Administration and management
55
61
61
Marketing and commercial
2
2
2
TOTAL
148
159
180
The increase in employee expenses resulted mainly from an increase in workforce of the average headcount from 154 in 2023
to 170 in 2024.
9.
Share-based compensation
Accounting policies
The fair value of equity-settled share-based compensation granted to employees, officers, board members and consultants
as determined on the grant date is recognized as a compensation expense with a corresponding increase in equity, over the
vesting period. The amount recognized as an expense is adjusted to reflect the actual number of awards for which the related
service and non-market performance conditions are expected to be met.
Evaluation models
The fair value of equity-settled share-based compensation granted to employees are measured using i) the Black-Scholes
model for share warrants ("Bons de Souscriptions d'Actions" or "BSA") and stock options ("SO") and ii) the Monte Carlo model for
free shares ("actions gratuites" or "AGA").
Data and key assumptions used in evaluations
For evaluating BSAs, the following data and key assumptions are utilized in accordance with IFRS 2 - Share based payment:
issue price, exercise price, expected volatility, exercise period, expected dividends, risk free interest rate (based on government
bonds), and conversion ratio.
For evaluating AGAs, the following data and key assumptions are utilized in accordance with IFRS 2 - Share based payment:
grant date, share price at grant date, expected volatility, vesting period, expected dividends, risk free interest rate (based on
government bonds), conversion ratio, and expected employee turnover.
For evaluating SOs, the following data and key assumptions are utilized in accordance with IFRS 2 - Share based payment:
grant date, share price at grant date, exercise price, expected volatility, vesting period, exercise period, expected dividends, risk
free interest rate (based on government bonds), conversion ratio, and expected employee turnover.
Regarding SOs and AGAs, market conditions are taken into account in the determination of the fair value of the plans award.
For share-based compensation awards with non-vesting conditions, the grant date fair value of the share-based compensation is
measured to reflect such conditions and there is no adjustment for differences between expected and actual outcomes.
Volatility assumptions in the above tables are determined by reference to the Company's historical share price observed on
the grant date over a two- and three-year period prior to the grant date, adjusted for extreme variations, if any.
Consultants
GENFIT may also grant equity-settled share-based compensation in exchange for services to consultants who are not
considered employees. In such cases, the value of the services is measured when they are rendered by the consultants and the
share-based compensation exchanged for the services is measured at an equal amount. If the value of the services cannot be
measured reliably, then such value is measured with reference to the fair value of the equity instruments granted.
F-25
Financial detail
Share-based compensation granted to employees and executive officers corresponds to stock options and free shares.
Share-based compensation granted to board members and consultants corresponds to share warrants. For the
measurement of this share-based compensation, the Group determined that under IFRS its consultants were not equivalent to
employees.
Under these programs, holders of vested instruments are entitled to subscribe to shares of the Company at a predetermined
exercise price. All of the plans are equity settled.
In 2024, only SO and AGA plans were granted as share-based compensation.
The expense recognized during 2024 pursuant to IFRS 2 was €610 (compared to €578 at December 31, 2023 and €245 at
December 31, 2022).
The table below shows the share-based compensation by plan:
Share-based compensation - expense
Year ended
(in € thousands)
2022/12/31
2023/12/31
2024/12/31
SO D 2020
14
14
—
SO C 2020
40
40
—
SO US 2020
19
(7)
—
AGA S 2021
32
34
15
AGA D 2021
7
7
(20)
SO D 2021
13
12
4
SO C2021
55
50
30
SO US 2021
9
9
3
AGA S 2022
11
49
47
AGA D 2022
2
11
11
SO D 2022
4
18
18
SO C 2022
17
83
78
SO US 2022
4
18
5
SO SU 2022
—
4
4
AGA S 2023
—
47
54
AGA D 2023
—
12
15
SO D 2023
—
31
38
SO C 2023
—
104
130
SO US 2023
—
27
8
SO SU 2023
—
16
(2)
AGA S 2024
—
—
59
AGA D 2024
—
—
10
SO D 2024
—
—
13
SO C 2024
—
—
77
SO US 2024
—
—
6
SO SU 2024
—
—
5
TOTAL
245
578
610
9.1.
Share warrants
The following table summarizes the data relating to share warrants and the assumptions used for the measurement thereof,
in accordance with IFRS 2—Share-based Payment:
F-26
Share warrants (BSA)
2019
2017
BSA 2019
BSA 2017-A
BSA 2017-B
Option pricing model
Black Scholes
Fair value per IFRS 2
€0.75
€3.78
€3.81
Issue price
€1.23
€2.00
€2.00
Exercise price
€12.32
€19.97
€19.97
Expected volatility
40.0 %
36.4 %
35.7 %
End of exercise period
2024/05/31
2022/06/30
2022/07/15
Expected dividends
0 %
0 %
0 %
Risk free interest rate
0 %
0 %
0 %
Conversion ratio
1:1
1:1
1:1
The services performed by the consultants are mainly:
•
to evaluate product development plans and propose, if necessary, changes to strategic or technical approaches;
•
to advise the Company's management and the Scientific Board in identifying strategies and selecting drug candidates,
based in particular on the scientific results obtained by the Group (new therapeutic targets, new compounds); and
•
to assist and advise the Group in its alliance strategies, such as external growth-supporting synergies (acquisition of new
competencies and the purchase of operating rights, drug candidates and innovative technologies, etc.)
Information on share warrants activity is as follows for 2024:
Grant Date
Type
BSAs
issued
BSAs outstanding
as of January 1,
2024
BSAs
awarded
BSAs
exercised
BSAs cancelled/
forfeited
BSAs outstanding
as of December 31,
2024
BSAs exercisable
as of December 31,
2024
31/10/2019
BSA 2019
35,070
35,070
0
0
35,070
0
0
TOTAL
35,070
0
0
0
35,070
35,070
Information on share warrants activity is as follows for 2023:
Grant Date
Type
BSAs
issued
BSAs outstanding
as of January 1,
2023
BSAs
awarded
BSAs
exercised
BSAs cancelled/
forfeited
BSAs outstanding
as of December 31,
2023
BSAs exercisable
as of December 31,
2023
31/10/2019
BSA 2019
35,070
35,070
0
0
0
35,070
35,070
TOTAL
35,070
0
0
0
35,070
35,070
9.2. Free shares (actions gratuites attribuées or AGA)
The following table summarizes the data relating to free shares and the assumptions used for the measurement thereof, in
accordance with IFRS 2—Share-based Payment:
Free Shares (AGA)
2024
2023
AGA S
2024
AGA D
2024
AGA S
2023
AGA D
2023
Fair value per IFRS 2
€3.19
€1.23
€4.05
€3.01
Grant date
03/05/2024
03/10/2023
Share price at grant date
€3.19
€4.05
Expected volatility
42.69%
84.3%
Vesting period
From 03/05/2024
to 03/15/2026
From 03/10/2023
to 03/13/2026
Expected dividends
0%
0%
Risk free interest rate
2.85%
3.06%
Conversion ratio
1:1
1:1
Expected employee turnover
0%
0%
F-27
Free Shares (AGA)
2022
2021
2019
AGA D & S
2022
AGA S
2021
AGA D
2021
AGA D & S
2019
Fair value per IFRS 2
€4.08
€4.00
€4.15
€17.06
Grant date
10/14/2022
03/30/2021
03/17/2021
07/18/2019
Share price at grant date
€4.08
€4.00
€4.15
€17.06
Expected volatility
50 %
51 %
51 %
40.2 %
Vesting period
From 10/14/2022
to 10/16/2025
From 03/30/2021
to 03/31/2024
From 03/17/2021
to 03/31/2024
From 07/18/2019
to 09/16/2022
Expected dividends
0 %
0 %
0 %
0 %
Risk free interest rate
2.24 %
-0.59 %
-0.59 %
0 %
Conversion ratio
1:1
1:1
1:1
1:1
Expected employee turnover
0 %
0 %
0 %
0 %
The final allocation of free shares is subject to continued employment with the Group and performance conditions.
Information on free shares activity is as follows for 2024:
Grant Date
Type
AGAs
issued
AGAs
outstanding as of
January 1, 2024
AGAs
awarded
AGAs
vested
AGAs
cancelled/
forfeited
AGAs
outstanding as of
December 31, 2024
03/05/2024
AGA S 2024
48,500
48,500
2,800
45,700
03/05/2024
AGA D 2024
20,000
20,000
20,000
03/13/2023
AGA S 2023
30,900
28,900
1,400
27,500
03/13/2023
AGA D 2023
10,000
10,000
10,000
10/14/2022
AGA S 2022
39,200
36,900
1,300
35,600
10/14/2022
AGA D 2022
20,000
20,000
20,000
03/30/2021
AGA S 2021
32,400
27,500
27,500
0
03/17/2021
AGA D 2021
15,000
15,000
15,000
0
TOTAL
138,300
68,500
27,500
20,500
158,800
Information on free shares activity is as follows for 2023:
Grant Date
Type
AGAs
issued
AGAs
outstanding as of
January 1, 2023
AGAs
awarded
AGAs
vested
AGAs
cancelled/
forfeited
AGAs
outstanding as of
December 31, 2023
03/13/2023
AGA S 2023
30,900
30,900
2,000
28,900
03/13/2023
AGA D 2023
10,000
10,000
10,000
10/14/2022
AGA S 2022
39,200
38,900
2,000
36,900
10/14/2022
AGA D 2022
20,000
20,000
20,000
03/30/2021
AGA S 2021
32,400
27,800
300
27,500
03/17/2021
AGA D 2021
15,000
15,000
15,000
TOTAL
101,700
40,900
0
4,300
138,300
9.3. Stock options (options de souscription d'actions or SO)
The following tables summarize the data relating to stock options and the assumptions used for the measurement thereof, in
accordance with IFRS 2—Share-based Payment:
F-28
Stock options (SO)
2024
2023
SO D 2024
SO C 2024
SO US 2024
SO SU 2024 SO SU 2023
SO D 2023
SO C 2023
SO US 2023
Fair value per IFRS 2
€0.94
€1.20
€0.98
€1.20
€2.39
€2.19
€2.39
€2.19
Grant date
3/5/2024
3/5/2024
3/5/2024
3/5/2024
3/13/2023
3/13/2023
3/13/2023
3/13/2023
Share price at grant date
€3.19
€3.19
€3.19
€3.19
€4.00
€4.00
€4.00
€4.00
Exercise price
€3.42
€2.74
€3.30
€2.74
€3.26
€4.07
€3.26
€4.05
Expected volatility
42.69 %
42.69 %
42.69 %
42.69 %
83.74 %
83.74 %
83.74 %
83.74 %
Vesting period
From 3/5/2024 to 3/15/2026
From 3/13/2023 to 3/13/2026
Exercise period
From 3/5/2024 to 3/4/2034
From 3/14/2023 to 3/13/2033
Expected dividends
0 %
0 %
0 %
0 %
0 %
0 %
0 %
0 %
Risk free interest rate
2.85 %
2.85 %
2.85 %
2.85 %
2.75 %
2.75 %
2.75 %
2.75 %
Conversion ratio
1:1
1:1
1:1
1:1
1:1
1:1
1:1
1:1
Expected employee turnover
0 %
0 %
0 %
0 %
0 %
0 %
0 %
0 %
Stock options (SO)
2022
2021
SO SU 2022
SO D 2022
SO C 2022
SO US 2022
SO D 2021
SO C 2021
SO US 2021
Fair value per IFRS 2
€1.40
€1.57
€1.90
€1.56
€1.06
€1.30
€1.07
Grant date
12/2/2022
10/17/2022
10/17/2022
10/17/2022
10/20/2021
10/20/2021
10/20/2021
Share price at grant date
€3.46
€4.16
€4.16
€4.16
€3.24
€3.24
€3.24
Exercise price
€2.95
€3.91
€3.12
€3.94
€3.26
€2.61
€3.22
Expected volatility
49.0 %
50.0 %
50.0 %
50.0 %
50.0 %
50.0 %
50.0 %
Vesting period
From 3/12/2022
to 3/12/2025
From 10/17/2022 to 10/17/2025
From 10/20/2021 to 10/20/2024
Exercise period
From 3/12/2022
to 3/12/2032
From 10/18/2025 to 10/17/2032
From 10/21/2024 to 10/21/2031
Expected dividends
0 %
0 %
0 %
0 %
0 %
0 %
0 %
Risk free interest rate
2.1 %
2.24 %
2.24 %
2.24 %
-0.6 %
-0.6 %
-0.6 %
Conversion ratio
1:1
1:1
1:1
1:1
1:1
1:1
1:1
Expected employee turnover
0 %
0 %
0 %
0 %
0 %
0 %
0 %
Stock options (SO)
2020
2019
SO D 2020
SO C 2020
SO US 2020
SO 2019
SO US 1 2019
SO US 2 2019
Fair value per IFRS 2
€1.16
€1.46
€1.12
€4.59
€3.67
€3.23
Grant date
12/31/2020
12/31/2020
12/31/2020
7/18/2019
7/18/2019
11/27/2019
Share price at grant date
€3.99
€3.99
€3.99
€17.06
€17.06
€14.50
Exercise price
€4.38
€3.50
€4.52
€13.99
€16.90
€14.31
Expected volatility
49.0 %
49.0 %
49.0 %
40.0 %
40.0 %
40.0 %
Vesting period
From 12/31/2020 to 12/31/2023
From 7/18/2019 to 9/16/2022
From 11/27/2019 to 01/16/2023
Exercise period
From 1/1/2024 to 12/31/2027
From 9/17/2022 to 9/17/2029
From 1/17/2023 to 1/17/2030
Expected dividends
0.0 %
0.0 %
0.0 %
0.0 %
0.0 %
0.0 %
Risk free interest rate
-0.7 %
-0.7 %
-0.7 %
0.0 %
0.0 %
0.0 %
Conversion ratio
1:1
1:1
1:1
1:1
1:1
1:1
Expected employee turnover
0 %
0 %
0 %
0 %
0 %
0 %
Stock options (SO)
2018
2017
2016
SO 2018
SO US 2018
SO 2017
SO 2016
Fair value per IFRS 2
€9.32
€6.90
€9.32
€10.30
Grant date
11/7/2018
11/7/2018
12/6/2017
12/15/2016
Share price at grant date
€22.10
€22.10
€21.95
€20.79
Exercise price
€16.00
€21.65
€17.91
€15.79
Expected volatility
44.1 %
44.1 %
53.7 %
63.0 %
Vesting period
From 11/7/2018 to 12/31/2021
From 12/6/2017 to 12/31/2020
From 12/15/2016 to 12/15/2019
Exercise period
From 11/11/2022 to 12/31/2028
From 1/1/2021 to 12/31/2027
From 12/16/2019 to 12/16/2026
Expected dividends
0 %
0 %
0 %
0 %
Risk free interest rate
0.0 %
0.0 %
0.0 %
0.0 %
Conversion ratio
1:1
1:1
1:1
1:1
Expected employee turnover
15 %
15 %
15 %
15 %
F-29
In 2019, the Group revised its estimate of the number of equity instruments expected to be vested taking into account the
number of lapsed instruments noted after 4 years of successive plans. As a result, GENFIT revised the turnover rate assumption,
which was estimated at 15%, to a rate of 0%, taking into account recent observations and the actual number of lapsed
instruments at each closing.
Definitive vesting is subject to continued employment with the Group and performance conditions.
Information on stock options activity is as follows for 2024:
Grant Date
Type
SO
issued
SO outstanding
as of January 1,
2024
SO
awarded
SO
cancelled/
forfeited
SO
exercised
SO outstanding
as of December 31,
2024
SO exercisable
as of December 31,
2024
05/03/2024
SO D 2024
35,000
35,000
35,000
0
05/03/2024
SO C 2024
156,875
156,875
156,875
0
05/03/2024
SO US 2024
20,625
20,625
5,625
15,000
0
05/03/2024
SO SU 2024
21,250
21,250
10,000
11,250
0
03/13/2023
SO SU 2023
16,300
16,300
10,000
6,300
0
03/13/2023
SO D 2023
35,000
35,000
35,000
0
03/13/2023
SO C 2023
108,700
108,700
108,700
0
03/13/2023
SO US 2023
30,200
30,200
12,600
17,600
0
02/12/2022
SO SU 2022
8,750
8,750
8,750
0
10/17/2022
SO D 2022
35,000
35,000
35,000
0
10/17/2022
SO C 2022
131,000
131,000
4,000
127,000
0
10/17/2022
SO US 2022
34,625
34,625
11,250
23,375
0
10/20/2021
SO D 2021
35,000
35,000
5,250
29,750
29,750
10/20/2021
SO C 2021
134,375
130,375
19,556
3,400
107,419
107,419
10/20/2021
SO US 2021
32,500
25,000
3,750
21,250
21,250
12/31/2020
SO D 2020
35,000
35,000
35,000
35,000
12/31/2020
SO C 2020
103,750
81,250
15,000
66,250
66,250
12/31/2020
SO US 2020
56,250
27,500
27,500
27,500
07/18/2019
SO 2019
107,880
51,343
51,343
51,343
07/18/2019
SO US 1 2019
30,620
5,113
5,113
5,113
11/07/2018
SO 2018
122,000
68,329
68,329
68,329
11/07/2018
SO US 2018
17,500
9,713
9,713
9,713
12/06/2017
SO 2017-1
64,164
43,212
43,212
43,212
12/06/2017
SO 2017-2
32,086
17,765
17,765
17,765
12/15/2016
SO 2016-1
41,917
34,398
34,398
34,398
12/15/2016
SO 2016-2
20,958
15,308
15,308
15,308
TOTAL
978,881
233,750
82,031
18,400
1,112,200
532,350
Information on stock options activity is as follows for 2023:
F-30
Grant Date
Type
SO
issued
SO outstanding
as of January 1,
2023
SO
awarded
SO
cancelled/
forfeited
SO
exercised
SO outstanding
as of December 31,
2023
SO exercisable
as of December 31,
2023
03/13/2023
SO SU 2023
16,300
16,300
16,300
0
03/13/2023
SO D 2023
35,000
35,000
35,000
0
03/13/2023
SO C 2023
108,700
108,700
108,700
0
03/13/2023
SO US 2023
30,200
30,200
30,200
0
02/12/2022
SO SU 2022
8,750
8,750
8,750
0
10/17/2022
SO D 2022
35,000
35,000
35,000
0
10/17/2022
SO C 2022
131,000
131,000
131,000
0
10/17/2022
SO US 2022
34,625
34,625
34,625
0
10/20/2021
SO D 2021
35,000
35,000
35,000
0
10/20/2021
SO C 2021
134,375
134,375
4,000
130,375
0
10/20/2021
SO US 2021
32,500
25,000
25,000
0
12/31/2020
SO D 2020
35,000
35,000
35,000
35,000
12/31/2020
SO C 2020
103,750
81,250
81,250
81,250
12/31/2020
SO US 2020
56,250
50,000
22,500
27,500
27,500
07/18/2019
SO 2019
107,880
51,343
51,343
51,343
07/18/2019
SO US 1 2019
30,620
5,113
5,113
5,113
11/07/2018
SO 2018
122,000
68,329
68,329
68,329
11/07/2018
SO US 2018
17,500
9,713
9,713
9,713
12/06/2017
SO 2017-1
64,164
43,212
43,212
43,212
12/06/2017
SO 2017-2
32,086
17,765
17,765
17,765
12/15/2016
SO 2016-1
41,917
34,398
34,398
34,398
12/15/2016
SO 2016-2
20,958
15,308
15,308
15,308
TOTAL
815,181
190,200
26,500
0
978,881
388,931
9.5. Performance conditions
The SO and SO US stock option plans as well as certain free share plans (AGA "D") implemented in 2016, 2017, 2018 and 2019
are subject to internal performance conditions related to the progress of the Group's research and development programs, and to
external performance conditions related to the evolution of the Company's stock price.
The other free share plans (AGA "S") and SO plans implemented starting in 2020 are subject only to internal performance
conditions.
F-31
Performance conditions of 2024 plans
Plans
Nature of performance conditions
SO D 2024
SO C 2024
SO US 2024
SO SU 2024
AGA S 2024
AGA D 2024
Evaluation
date for
performance
conditions:
3/15/2027
Internal conditions - a) 10% of the instruments SO D 2024/SO C 2024/SO US 2024/ SO SU 2024/AGA S 2024 will be exercisable or definitively
vest, and 2,000 of the Free Shares for the AGA D 2024 will be vest, if elafibranor obtains marketing authorization from the FDA or EMA in
accordance with the road map. b) 30% of the instruments SO D 2024/SO C 2024/SO US 2024/ SO SU 2024/AGA S 2024 will be exercisable or
definitively vest, and 6,000 of the Free Shares for the AGA D 2024 will vest, if at least one of the three following conditions relating to the
development of VS-01 is met: (i) Interim results of the UNVEIL-IT® study are obtained in accordance with the road map; (ii) Final results of the
UNVEIL-IT® study are obtained in accordance with the road map; (iii) Positive clinical results obtained and communicated in at least one
ACLF sub-population or ACLF-related indication in accordance with the road map. c) 10% of the instruments SO D 2024/SO C 2024/SO US
2024/ SO SU 2024/AGA S 2024 will be exercisable or definitively vest, and 2,000 of the Free Shares for the AGA D 2024 will vest, if at least one
of the two following conditions relating to the development of GNS561 is met: (i) Interim biomarker data from the ongoing phase 1b/2 is
obtained in accordance with the road map; (ii) Final results for the Phase 1b part of the Phase 1b/2 study are obtained in accordance with the
road map. d) 15% of the instruments SO D 2024/SO C 2024/SO US 2024/ SO SU 2024/AGA S 2024 will be exercisable or definitively vest, and
3,000 of the Free Shares for the AGA D 2024 will vest, if at least one of the three following conditions relating to the development of NTZ and
SRT-015 is met: (i) Start of a phase 1b/2 study of NTZ in ACLF in accordance with the road map; (ii) Final results of a phase 1b/2 study of NTZ
in ACLF in accordance with the road map and finalization of preclinical development of SRT-015 in 2024 which would allow, as necessary, the
start of a first in human study of SRT-015 in accordance with the road map; (iii) Results of the first in human study of SRT-015 in accordance
with the road map. e) 10% of the instruments SO D 2024/SO C 2024/SO US 2024/ SO SU 2024/AGA S 2024 will be exercisable or definitively
vest, and 2,000 of the Free Shares for the AGA D 2024 will vest, if, with respect to one of the other programs in the Company’s pipeline in
preclinical development at the time of this allocation decision (VS01 UCD/OA, VS02, CLM-022, …), at least one clinical trial is ongoing in
accordance with the road map. f) 25% of the instruments SO D 2024/SO C 2024/SO US 2024/ SO SU 2024/AGA S 2024 will be exercisable or
definitively vest, and 5,000 of the Free Shares for the AGA D 2024 will vest, if, at any time during the Vesting Period, two of the programs in
the Company's pipeline at the date of the Grant Decision have delivered clinical results in humans enabling them to be considered for
further development, resulting in the initiation of a phase 2b clinical trial or a phase 3 clinical trial, or the granting of accelerated approval.
External conditions - Each applicable portion of all 2,000 Free Shares under the AGA D 2024 plan, as each Internal Conditions above is met,
is then subject to the External Condition according to the methods described below. The degree of fulfillment of the External Condition
relating to the Company's stock market price will be determined according to the relative performance of GENFIT shares. Each applicable
portion of all 10,000 Free Shares under the AGA D 2024 plan, as each Internal Conditions above is met, will be definitively acquired per the
following conditions: (a) No AGA D 2024 shall vest if the Final Price is strictly lower than the Initial Price; (b) If the Final Price is between (i) a
value equal to or greater than the Initial Price and (ii) a value lower than the Ceiling Price, the number of AGA D 2024 definitively allocated
will be equal to:[(Final Price / Initial Price) -1] x 1/2 of the number of AGA D 2024 instruments (c) All AGA D 2024 if the Final Price is equal to or
higher than the Ceiling Price. The notions of “Final Price”, “Initial Price” and “Ceiling Price” are defined in the plan regulations.
Performance conditions of 2023 plans
Plans
Nature of performance conditions
SO D 2023
SO C 2023
SO US 2023
SO SU 2023
AGA S 2023
AGA D 2023
Evaluation
date for
performance
conditions:
3/13/2026
Internal conditions - a) 50% of the instruments SO D 2023/SO C 2023/SO US 2023/ SO SU 2023/AGA S 2023 will be exercisable or definitively
vest, and 5,000 of the Free Shares for the AGA D 2023 will be vest, if during 2023 and then at any time during the Vesting Period, 2 new R&D
programs (at the rate of one-half of these 2023 instruments per new program), join the Company’s R&D pipeline (as evaluated at December
31, 2022) ; and that these programs are at the clinical development stage at the time they join the pipeline or that they later enter this stage,
following: (i) A business development transaction (in-licensing, M&A, etc.) or, (ii) Identification of new opportunities resulting from in-house
research (program going from preclinical development stage to clinical development stage). b) 25% of the instruments SO D 2023/SO C
2023/SO US 2023/ SO SU 2023/AGA S 2023 will be exercisable or definitively vest, and 2,500 of the Free Shares for the AGA D 2023 will vest, if
at least one of the two following conditions related to development of elafibranor in PBC is met: (i) Filing of the Marketing Authorization
Application in the fourth quarter of 2023 (in Europe or the United States); (ii) Marketing Authorization obtained in 2024 (in Europe or the
United States). c) 15% of the instruments SO D 2023/SO C 2023/SO US 2023/ SO SU 2023/AGA S 2023 will be exercisable or definitively vest,
and 1,500 of the Free Shares for the AGA D 2023 will vest, if at least one of the two following conditions related to the development of the
ACLF program is met: (i) VS-01 in ACLF: top-line results from the Phase 2 study obtained in 2024 or communication of final results on the
Phase 2 study in 2025; (ii) NTZ : start of a Phase 2 clinical trial in the second half of 2023. d) 10% of the instruments SO D 2023/SO C 2023/SO
US 2023/ SO SU 2023/AGA S 2023 will be exercisable or definitively vest, and 1,000 of the Free Shares for the AGA D 2023 will vest, if
intermediate results in the Phase 1b/2 of GNS561 are obtained in the fourth quarter 2024 or final results obtained in 2025.
External conditions - Each applicable portion of all 10,000 Free Shares under the AGA D 2023 plan, as each Internal Conditions above is met,
is then subject to the External Condition according to the methods described below. The degree of fulfillment of the External Condition
relating to the Company's stock market price will be determined according to the relative performance of GENFIT shares. Each applicable
portion of all 10,000 Free Shares under the AGA D 2023 plan, as each Internal Conditions above is met, will be definitively acquired per the
following conditions: (a) No AGA D 2023 shall vest if the Final Price is strictly lower than the Initial Price; (b) If the Final Price is between (i) a
value equal to or greater than the Initial Price and (ii) a value lower than the Ceiling Price, the number of AGA D 2023 definitively allocated
will be equal to: [(Final Price / Initial Price) -1] x 1/2 of the number of AGA D 2023 instruments (c) All AGA D 2023 if the Final Price is equal to
or higher than the Ceiling Price. The notions of “Final Price”, “Initial Price” and “Ceiling Price” are defined in the plan regulations.
F-32
10. FINANCIAL INCOME AND EXPENSES
Financial income and expenses
Year ended
(in € thousands)
2022/12/31
2023/12/31
2024/12/31
Financial income
Interest income
137
1,709
1,786
Foreign exchange gain
7,470
452
727
Other financial income
605
1,519
826
TOTAL - Financial income
8,212
3,680
3,339
Financial expenses
Interest expenses
(4,341)
(4,553)
(4,684)
Interest expenses for leases
(69)
(71)
(63)
Foreign exchange losses
(340)
(966)
8
Other financial expenses
(8)
(23)
(35)
TOTAL - Financial expenses
(4,758)
(5,614)
(4,774)
FINANCIAL GAIN (LOSS)
3,453
(1,934)
(1,434)
Interest income recognized is almost exclusively related to current financial assets. Other financial income similarly is
almost exclusively related to accrued interest income for ongoing current financial assets at the end of the year.
The financial expenses are related to the interest of the OCEANEs and they mainly relate to the payment of coupons at the
rate of 3.5% and the amortization of the discount of the bond debt at the effective interest rate of 8.8% to accrete the bond debt
up to the amount that will be repaid (or converted) at maturity, recognizing a theoretical annual interest accrual as a result of the
accretion on the period of an amount equivalent to the equity component at an effective interest rate. It is important to note that
in the context of the Royalty Financing transaction concluded in 2025, there was an OCEANE buyback which also occurred and
was disclosed an a major event occurring after the period. Refer to Note 2.2 - Major events after the period for further information.
The portion of financial gain related to currency exchange is a net gain of €735 in 2024 notably due to the difference in
currency exchange recognized on the cash equivalents and other current financial assets in US dollars, as GENFIT has decided to
keep some of its cash in US dollars. See Note 13 - “Cash and cash equivalents”. These cash investments in US dollars are to be
used to pay directly expenses in US dollars (natural currency hedge).
11.
INCOME TAX
Accounting policies
Income tax expense (or benefit) comprises current tax expense (or benefit) and deferred tax expense (or benefit), as
applicable.
Deferred taxes are recognized for all the temporary differences arising from the difference between the tax basis and the
accounting basis of assets and liabilities.
Deferred tax assets are recognized for unused tax losses, unused tax credits and temporary deductible differences to the
extent that:
•
it is probable that future taxable profit will be available against which they can be used; or
•
if there are deferred tax liabilities for the same entity in the same tax jurisdiction on which they can be applied.
Financial detail
As of December 31, 2024, and 2023, corporate income tax payable amounted to €155 and €23, respectively, which is
recognized as "Other current tax liabilities" in the consolidated financial statements.
The Parent company GENFIT SA benefited from a reduced tax rate on part of the income from the licensing agreement
signed with Ipsen pursuant to Article 238 of the French Tax Code.
The determination of the income tax expense recognized in the consolidated financial statements, which amounted to (an
expense) of €340 for 2024, is summarized in the table "Effective tax rate" hereunder.
Effective tax rate
F-33
Year ended
(in € thousands)
2022/12/31
2023/12/31
2024/12/31
Net profit (loss)
(23,719)
(28,894)
1,507
Income tax benefit (expense)
116
(380)
(340)
Net profit (loss) before tax
(23,836)
(28,514)
1,847
Tax rate in France
25.00 %
25.00 %
25.00 %
Theoretical tax benefit (expense)
5,959
7,129
(462)
Increase / decrease in tax benefit arising from :
Tax credits
1,504
1,452
1,055
Permanent differences
(31)
43
(205)
Differences between rates
(67)
(840)
1,439
Tax losses for the period, unrecognised as deferred tax
assets
(7,037)
(7,832)
(2,520)
Utilisation of previously unrecognised tax losses
0
0
809
IFRS adjustments without tax incidence
(61)
(145)
0
Non recognition of deferred tax assets related to temporary
differences
331
454
5
Recognition of deferred tax assets against deferred tax
liabilities
(453)
(418)
(447)
Other
(29)
(224)
(13)
Income tax benefit (expense) recognised in profit or loss
116
(380)
(340)
Effective income tax rate
(0.49) %
1.33 %
18.40 %
Tax Inspection
The Company was subject to a tax audit covering the 2019 and 2020 financial years (including the CIR tax credit declared for
these financial years), which began on December 10, 2021 and ended in December 2024.
The Company agreed with the French Tax Administration to use the regularization procedure provided for by Article L.62 of
the Book of Tax Procedures for errors, inaccuracies, omissions, or insufficiencies contained in the 2069A research tax credit
declarations (filed in 2020 and 2021 and relating to 2019 and 2020 expenses respectively). As a result of this procedure, the sum of
the expenses and interest in arrears amounted to €684 thousand and is broken down as follows:
Year
2019
2020
Expenses
512
134
Interest
30
8
Totals
542
142
This was netted against the 2023 CIR and were fully liquidated prior to December 31, 2024. Specifically, this settlement was
recorded as a reduction in "Other revenues" for the period ended December 31, 2024.
11.1. Losses available for offsetting against future taxable income
At December 31, 2024, 2023 and 2022, the tax loss carry forwards for the Group amounted to €528,233, €523,392 and €489,157
respectively.
In general, unused losses can be carried forward indefinitely in the United States and France while in Switzerland unused
losses can be carried forward for a limit of 7 years.
French tax loss carry forwards can be offset against future taxable profit within a limit of €1.0 million per year plus 50% of the
profit exceeding this limit.
11.2.Deferred tax assets and liabilities
The Group's main sources of deferred tax assets and liabilities as of December 31, 2023 and 2024 related to:
•
Temporary differences, recognized:
◦
OCEANEs: a deferred tax liability for €1,183 and €540 as of December 31, 2023 and 2024, respectively, and a deferred
tax asset for €842 and €395 as of December 31, 2023 and 2024.
•
Temporary differences, unrecognized
F-34
◦
GENFIT Corp: a deferred tax asset for €1,669 as of December 31, 2024,
◦
Post-employment benefits: a deferred tax asset for €335 as of December 31, 2024, and
◦
Other sources (tax-driven amortization): a deferred tax liability of €203 as of December 31, 2024.
•
Tax loss carry forwards
◦
The Group also has tax loss carry forwards losses which have not been recognized as deferred tax in the assets of the
consolidated statement of financial position to the uncertainties related to the possibility of its use in the future (see
above Note 11.1 - "Income Tax - Losses available for offsetting against future taxable income").
Deferred taxes detail
The Company offsets its deferred tax assets and liabilities as permitted by IAS 12, resulting in a net deferred tax liability of
€145 as of December 31, 2024 (€455 as of December 31, 2023).
As of
Impact on
Impact on the
As of
(in € thousands)
2022/12/31
equity
profit/loss
2023/12/31
Deferred tax liabilities / convertible loan
OCEANE
(1,770)
—
586
(1,183)
Deferred tax assets / convertible loan
OCEANE
1,260
—
(418)
842
Deferred tax liabilities / other items
—
—
(113)
(113)
TOTAL
(510)
—
55
(455)
As of
Impact on
Impact on the
As of
(in € thousands)
2023/12/31
equity
profit/loss
2024/12/31
Deferred tax liabilities / convertible loan
OCEANE
(1,183)
10
634
(540)
Deferred tax assets / convertible loan
OCEANE
842
—
(447)
395
Deferred tax liabilities / other items
(113)
—
113
—
TOTAL
(455)
10
300
(145)
Other than as it relates to deferred tax assets recognized based on the available deferred tax liabilities, no other deferred tax
asset has been recognized as it is not probable that taxable profit will be available to offset deductible temporary differences and
tax loss carry forwards.
12.
Earnings (loss) per share
Basic earnings (loss) per share are calculated by dividing profit or loss attributable to the Company's ordinary shareholders
by the weighted average number of ordinary shares outstanding during the period, excluding shares held by GENFIT.
Diluted earnings (loss) per share are calculated by adjusting profit attributable to ordinary shareholders and the average
number of ordinary shares outstanding weighted for the effects of all potentially dilutive instruments (share warrants,
redeemable share warrants, free shares, stock options and bonds convertible into new and/or existing shares).
F-35
The components of the earnings (loss) per share computation are as follows:
Earnings per share
Year ended
2022/12/31
2023/12/31
2024/12/31
Profit (loss) for the period (in € thousands)
(23,719)
(28,894)
1,507
Weighted average number of ordinary shares used to calculate basic earnings (loss) per share
49,673,936
49,700,223
49,754,474
Basic earnings (loss) per share (€/share)
(0.48)
(0.58)
0.03
Weighted average number of ordinary shares used to calculate diluted earnings (loss) per share
49,673,936
49,700,223
49,946,117
Diluted earnings (loss) per share (€/share)
(0.48)
(0.58)
0.03
The following table summarizes the potential common shares not included in the computation of diluted earnings per share
because their impact would have been antidilutive:
Potential common shares not included in the computation of diluted earnings per share
Year ended
Year ended
2023/12/31
2024/12/31
BSA
35,070
0
STOCK OPTIONS
978,881
0
AGA
138,300
0
OCEANES
10,580,141
10,535,460
13.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprise cash on hand, bank accounts and term deposits, together with short-term deposits and
highly liquid investments. They are readily convertible to a known amount of cash and thus present a negligible risk of a change in
value. They also include Undertakings for Collective Investments in Transferable Securities (UCITs) whose characteristics allow
them to be classified as cash and cash equivalents.
Initially recognized at their purchase cost at the transaction date, investments are subsequently measured at fair value.
Changes in fair value are recognized in net financial income (expenses).
The main components of cash equivalents were:
•
UCITS and interest-bearing current accounts, available immediately;
•
Term accounts, available within the contractual maturities or by the way of early exit with no penalty; and
•
Negotiable medium-term notes, available with a quarterly maturity or by the way of early exit with no penalty.
These investments, summarized in the tables below, are short-term, highly liquid and subject to insignificant risk of changes
in value.
Cash and cash equivalents
As of
(in € thousands)
2023/12/31
2024/12/31
Short-term deposits
67,530
63,027
Cash on hand and bank accounts
10,258
18,761
TOTAL
77,789
81,788
Short-term deposits
As of
(in € thousands)
2023/12/31
2024/12/31
TERM ACCOUNTS
67,530
63,027
TOTAL
67,530
63,027
14.
GOODWILL AND INTANGIBLE ASSETS
Goodwill
The company does not have any goodwill.
Intangible assets
F-36
Intangible assets mainly consist of software and operating licenses acquired by the Group. They are recognized at cost less
accumulated amortization and impairment. Amortization expense is recorded on a straight-line basis over the estimated useful
lives of the intangible assets. The estimated useful lives of both software and license agreements are between 1 and 8 years. The
estimated useful life of licensed intangibles is up to 20 years, consistent with patent lifetimes in the United States and the
European Union.
In the event of an acquisition not qualifying as a business combination under IFRS 3, GENFIT initially records the acquired
asset at cost of the consideration transferred, excluding variable payments that are dependent on future events. No liability is
recognized initially for these contingent payments. A liability will be recorded when the condition that triggers the obligation
occurs.
The variable payments that would be due if the asset acquired complies with agreed-upon specifications at specific dates in
the future are recognized as an adjustment to the cost of the related asset.
As it relates to impairment tests, indicators of impairment considered by the Group are as follows:
•
Failure of or unfavorable data from our clinical trials
•
Competition from other clinical trial programs covering the same indications as our drug candidates
•
Availability of necessary financing
These indicators of impairment are examined annually or whenever an indication of impairment occurs. This covers i) both
Seal Rock and Versantis per below and ii) other amortized intangible assets.
Seal Rock licence agreement (2023)
On May 31, 2023, GENFIT announced the signing of a licensing agreement for the exclusive worldwide rights to the injectable
formulation of ASK1 inhibitor SRT-015 in acute liver disease with Seal Rock Therapeutics, a clinical-stage company based in
Seattle, USA.
Under the terms of the agreement, GENFIT made an upfront payment in the amount of €2 million to Seal Rock in exchange
for acquiring the know-how and rights of use to SRT-015 as described above. The addition is recorded in the table below under line
item "Other intangibles."
In accordance with IAS 38 - Intangible assets, this amount was capitalized and allocated to Intangible assets. Further, given
the nature of the intangible asset, it was determined to have a definite useful life of 20 years, consistent with patent lifetimes in
the United States and the European Union. Amortization will start based on the remaining patent term upon EMA/FDA regulatory
approval and until then will be subject to an annual impairment test in accordance with IAS 38 - Intangible Assets. As future
milestones for this agreement are paid, they will be analyzed and be either i) capitalized and subject to the same annual
impairment test or ii) expensed as incurred. The annual impairment test will be based on a valuation methodology including an
income approach using discounted cash flow techniques for the injectable formulation of ASK1 inhibitor SRT-015 in acute liver
disease.
In accordance with IAS 36, we performed an annual impairment test in 2024 related to the SRT-015 asset (and in general
whenever there is a triggering event), which was based on the excess earnings method using discounted cash flow techniques for
the scientific research program SRT-015. The aforementioned income method utilizes management’s estimates of future
operating revenue, cash flows discounted using a weighted-average cost of capital that reflects market participant assumptions,
and the expected success rate of the program based on similar external programs. Based on our analysis performed as of
December 31, 2024, the initial valuation of €2 million is still appropriate and no impairment loss has been recognized.
The period over which management has projected its cash flows spans through 2038. The drug price growth rate used to
extrapolate cash flow projections is 2%. Furthermore, we have performed the following sensitivity analyses in order to determine
if a reasonably possible change in a key assumption on which we have based our determination of the recoverable amount would
cause the carrying amount of the intangible asset to exceed its recoverable amount.
Values assigned to each key assumption
Discount rate: 12.5%
The recoverable amount would be equal to the carrying amount if the value assigned to the weighted average cost of
capital were: 13.0%
Overall expected success rate of the program: 7.9%
The recoverable amount would be equal to the carrying amount if the value assigned to the expected rate of success of
the program were: 7.5%
Indicators of impairment considered by the Group as part of the implementation of the impairment test above are as follows:
F-37
•
Failure of or unfavorable data from our clinical trials
•
Competition from other clinical trial programs covering the same indications as our drug candidates
•
Availability of necessary financing
Versantis (2022)
On September 29, 2022, GENFIT acquired Versantis AG, a private Swiss-based clinical stage biotechnology company focused
on addressing the growing unmet medical needs in liver diseases.
The Phase 2 ready program, VS-01-ACLF, a program in scavenging liposomes technology, was deemed to be the asset with
substantially all attributable value in accordance with the optional concentration test of fair value under paragraph B7A of IFRS 3.
Of the total acquisition price paid of €46.6 million, €43.9 million was allocated to Intangible assets in accordance with IAS 38 -
Intangible Assets. The difference between that amount and the acquisition price corresponds to the other assets acquired and
liabilities assumed as part of the transaction. Further, given the nature of the intangible asset, it was determined to have a
definite useful life of 20 years, consistent with patents lifetimes in the United States and the European Union. Amortization will
start upon EMA/FDA regulatory approval and until then will be subject to an annual impairment test in accordance with IAS 38 -
Intangible Assets.
In accordance with IAS 36, we performed an annual impairment test in 2024 related to the Versantis intangible asset (and in
general whenever there is a triggering event). Management estimates the recoverable amount of the asset and recognizes an
impairment loss if the carrying amount of the asset exceeds its recoverable amount. The recoverable amount of the asset is the
greater of its fair value less costs to sell or its value in use. This estimate is based on the excess earnings method using
discounted cash flow techniques for the scientific research program VS-01. The aforementioned income method utilizes
management’s estimates of future operating revenue, cash flows discounted using a weighted-average cost of capital that
reflects market participant assumptions, and the expected success rate of the program based on similar external programs.
Based on our analysis performed, the valuation of €45.9 million as of December 31, 2024 (after exchange rate conversion
differences) is still appropriate and no impairment loss has been recognized.
The period over which management has projected its cash flows spans through 2036. The drug price growth rate used to
extrapolate cash flow projections is 2%. Furthermore, we have performed the following sensitivity analyses in order to determine
if a reasonably possible change in a key assumption on which we have based our determination of the recoverable amount would
cause the carrying amount of the intangible asset to exceed its recoverable amount.
Values assigned to each key assumption
Discount rate: 12.5%
The recoverable amount would be equal to the carrying amount if the value assigned to the weighted average cost of
capital were: 13.8%
Overall expected success rate of the program: 15.1%
The recoverable amount would be equal to the carrying amount if the value assigned to the expected rate of success of
the program were: 13.7%
Indicators of impairment considered by the Group as part of the implementation of the impairment test above are as follows:
•
Failure of or unfavorable data from our clinical trials
•
Competition from other clinical trial programs covering the same indications as our drug candidates
•
Availability of necessary financing
Other intangible assets
Intangible assets (apart from Celloram, Seal Rock and Versantis) is comprised primarily of office and scientific software.The
following tables show the variations in intangible assets for the years ended December 31, 2023 and 2024:
F-38
As of
Increase
Decrease
Translation
Reclassification
As of
(in € thousands)
12/31/2022
adjustments
12/31/2023
Gross
Software
977
24
(45)
—
—
955
Patents
351
—
—
—
18
369
Other intangibles
43,569
2,050
—
2,746
—
48,366
TOTAL—Gross
44,897
2,074
(45)
2,747
18
49,690
Accumulated depreciation and impairment
Software
(940)
(63)
75
—
—
(928)
Patents
—
—
—
—
—
—
Other intangibles
—
—
—
—
—
—
TOTAL - Accumulated depreciation and
impairment
(940)
(64)
75
—
—
(928)
TOTAL - Net
43,957
2,010
29
2,747
18
48,761
As of
Increase
Decrease
Translation
Reclassification
As of
(in € thousands)
12/31/2023
adjustments
2024/12/31
Gross
Software
955
—
(180)
—
—
776
Patents
369
—
—
—
(5)
364
Other intangibles
48,366
—
—
(748)
—
47,618
TOTAL—Gross
49,690
—
(180)
(748)
(5)
48,757
Accumulated depreciation and impairment
Software
(928)
(10)
180
—
—
(759)
Patents
—
—
—
—
—
—
Other intangibles
—
—
—
—
—
—
TOTAL - Accumulated depreciation and
impairment
(928)
(10)
180
—
—
(759)
TOTAL - Net
48,761
(10)
—
(748)
(5)
47,998
15.
PROPERTY, PLANT AND EQUIPMENT
Property, Plant and Equipment
Property, plant and equipment are initially recognized at cost. Cost includes expenditures that are directly attributable to the
acquisition of the asset. Routine maintenance costs are expensed as incurred.
Depreciation of an asset starts when it becomes available for use. The asset should be in the location and condition that is
required for it to be operating in the manner intended by management. Subsequently, depreciation expense is recognized on a
straight-line basis over the estimated useful lives of the assets. If components of property, plant and equipment have different
useful lives, they are accounted for separately. Depreciation methods, useful lives and residual values are reviewed at each
reporting date and adjusted, if appropriate.
Estimated useful lives are as follows:
Building on non-freehold land
10 years
Fittings and fixtures
Between 9 and 25 years
Scientific equipment
Between 2 and 12 years
Computer equipment
Between 2 and 5 years
Furniture
Between 4 and 10 years
Vehicles
Between 4 and 6 years
Any gain or loss on disposal of an item of property, plant and equipment is determined by comparing the proceeds from
disposal with the carrying amount of the item. The net amount is recognized in the consolidated statements of operations under
the line item "Other operating income (expenses)."
F-39
Leases
IFRS 16 introduces for the lessee a single model of accounting on the balance sheet for leases. The lessee recognizes a "right
of use" asset which represents its right to use the underlying asset, and a lease liability for its obligation to pay the rent.
The Group recognizes a "right of use" asset and a lease liability at the start of the lease term. The "right of use" asset is
initially measured at cost and then at cost less any amortization and accumulated impairment losses. The amount can be
adjusted based on certain revaluations of the lease liability.
The lease liability is initially measured at the discounted value of the rents owed and not yet paid at the start date of the
contract. The discount rate used is the implicit interest rate of the contract or, if it cannot be easily determined, the Company’s
incremental borrowing rate of the lessee. The Group generally uses the latter as the discount rate.
The lease liability is then adjusted by the interest expense minus the amounts of rent paid. It is revalued in the event of a
change in future rents following a change in the index or rate, a new estimate of the amount to be paid under a residual value
guarantee or, where applicable, a revaluation of the exercise of an option to purchase or to extend, or the non-exercise of an
option to terminate (which then becomes reasonably certain).
The Group has exercised its judgment in determining the term of the lease agreements that provide for extension options.
The fact that the Group has determined that it is reasonably certain to exercise such options has an impact on the lease term
used and has a significant impact on the amount of lease debt and the "right of use" asset in the accounts. The amount of short
term or low value leases which are not included in the IFRS 16 model is not material.
The following tables show the variations in tangible assets for the years ended December 31, 2023 and 2024:
Property, plant and equipment - Variations
As of
2022/12/31
Increase
Decrease
Translation
Reclassification
As of
2023/12/31
(in € thousands)
adjustments
Gross
Buildings on non-freehold land
10,921
427
—
—
19
11,367
Scientific equipment
6,467
207
(1,378)
—
—
5,295
Fittings
1,537
33
(7)
—
—
1,563
Vehicles
91
—
—
—
—
91
Computer equipment
1,500
150
(32)
—
(4)
1,613
Furniture
279
5
(9)
—
—
274
In progress
—
16
—
—
(16)
—
TOTAL - Gross
20,794
839
(1,426)
—
(3)
20,204
Accumulated depreciation
Buildings on non-freehold land
(3,934)
(1,127)
—
(3)
—
(5,064)
Scientific equipment
(5,481)
(296)
1,307
(5)
—
(4,471)
Fittings
(985)
(100)
2
—
—
(1,083)
Vehicles
(43)
(12)
—
—
—
(55)
Computer equipment
(1,365)
(91)
24
4
—
(1,421)
Furniture
(223)
(11)
5
1
—
(228)
In progress
—
—
—
—
—
—
TOTAL - Accumulated depreciation
(12,032)
(1,637)
1,338
(3)
—
(12,323)
Accumulated impairment
Buildings on non-freehold land
(455)
—
455
—
—
—
Scientific equipment
(59)
—
51
—
—
(9)
Fittings
(24)
—
24
—
—
—
Vehicles
—
—
—
—
—
—
Computer equipment
(10)
—
10
—
—
—
Furniture
(3)
—
3
—
—
—
In progress
—
—
—
—
—
—
TOTAL - Accumulated impairment
(552)
—
543
—
—
(9)
TOTAL - Net
8,210
(798)
455
(3)
(3)
7,872
F-40
Property, plant and equipment - Variations
As of
Increase
Decrease
Translation
Reclassification
As of
(in € thousands)
2023/12/31
adjustments
2024/12/31
Gross
Buildings on non-freehold land
11,367
322
—
—
(5)
11,684
Scientific equipment
5,295
961
(1,071)
—
—
5,186
Fittings
1,563
8
(11)
—
1
1,561
Vehicles
91
—
(1)
—
—
90
Computer equipment
1,613
160
(188)
—
8
1,594
Furniture
274
18
(38)
—
—
254
In progress
—
—
—
—
—
—
TOTAL - Gross
20,204
1,469
(1,308)
—
4
20,368
Accumulated depreciation
Buildings on non-freehold land
(5,064)
(1,193)
—
—
—
(6,256)
Scientific equipment
(4,471)
(310)
1,052
—
—
(3,729)
Fittings
(1,083)
(82)
5
(1)
—
(1,162)
Vehicles
(55)
(12)
1
—
—
(66)
Computer equipment
(1,421)
(111)
182
(7)
—
(1,357)
Furniture
(228)
(13)
38
—
—
(203)
In progress
—
—
—
—
—
—
TOTAL - Accumulated depreciation
(12,323)
(1,721)
1,278
(8)
—
(12,773)
Accumulated impairment
Buildings on non-freehold land
—
—
—
—
—
—
Scientific equipment
(9)
—
9
—
—
—
Fittings
—
—
—
—
—
—
Vehicles
—
—
—
—
—
—
Computer equipment
—
—
—
—
—
—
Furniture
—
—
—
—
—
—
In progress
—
—
—
—
—
—
TOTAL - Accumulated impairment
(9)
—
9
—
—
—
TOTAL - Net
7,872
(252)
(21)
(8)
4
7,595
Impairment
If indicators of impairment are identified, amortizable intangible assets and depreciable tangible assets are subject to an
impairment test under the provisions of IAS 36, Impairment of Assets.
The recovery value of an asset is the higher value between the value in use and the fair value less costs of divestment. The
value in use is evaluated in relation to the future forecasted cash flows, discounted at current interest rates, before tax, which
reflects the current market appreciation of the time value of money and the risks specific to the asset. In the present case, the
recovery value of the tested assets corresponds to their fair value less costs of divestment.
Impairment tests under IAS 36
Some equipment belonging to the Group and others under a leasing agreement were no longer in use following the
reorganization of the group’s activities and the termination of the RESOLVE-IT® trial decided in mid-2020.
The Group considered that the discontinued use of some equipment following the termination of RESOLVE-IT® as well as the
decision to no longer use part of the leased premises were indicative of an impairment loss requiring the completion of an
impairment test of property, plant and equipment or of the rights of use recognized in the statement of financial position for this
equipment and lease agreements. The impacts related to the impairment (and any reversals thereof) of tangible assets and rights
of use related to equipment and premises that are no longer in use due to the discontinuation of the RESOLVE-IT® study are
recognized in the consolidated statement of operations under “Reorganization and restructuring costs”.
This indication of loss of value led the Group to conduct an impairment test over owned and leased equipment, based on the
value at which this equipment may be divested (on the basis of agreements with the lessors on the early purchase of the
equipment and near-term purchase offers) in order to determine the recovery value.
F-41
In 2023, part of these elements, mainly scientific equipment, were sold. As a result the accumulated impairment for these
equipments was reduced to €9 for scientific equipment (of which €9 related to owned equipment and €0 of leased equipment).
In 2024, the accumulated impairment was reduced to €0.
Supplemental IFRS 16 Disclosures
Right of use assets and accumulated amortization
In accordance with IFRS 16, the Group has chosen not to present the right of use separately from other assets and has added
them to the fixed assets of the same nature as the underlying leased assets.
The right of use assets and related accumulated amortization as of December 31, 2023 included in the table above affect:
•
The line item “Building on non-freehold land" amounting to €11,067 and €4,940, respectively;
•
The line item "Scientific equipment", amounting to €741 and €741 respectively.
The right of use assets and related accumulated amortization as of December 31, 2024 included in the table above affect:
•
The line item “Building on non-freehold land" amounting to €11,355 and €6,095, respectively;
•
The line item "Scientific equipment", amounting to €308 and €308 respectively.
Right of use additions
There were no Right of use asset additions in 2023 or 2024. Year over year increases in "Building on non-freehold land" relate
solely to contractual price indexation increases resulting in increased estimated gross values.
Fully depreciated property, plant and equipment still in use
Gross carrying amount of property, plant and equipment still in use as of December 31, 2023 : €4,492
Gross carrying amount of property, plant and equipment still in use as of December 31, 2024 : €4,043
16.
TRADE AND OTHER RECEIVABLES
Accounting policies
Trade and other receivables are recognized at fair value, which is the nominal value of invoices unless payment terms require
a material adjustment for the time value discounting effect at market interest rates. Trade receivables are subsequently
measured at amortized cost. Impairment losses on trade accounts receivable are estimated using the expected loss method, in
order to take account of the risk of payment default throughout the lifetime of the receivables. Should a specific trade receivable
be subject to a known credit risk, a specific impairment loss is recognized for said receivable.
Receivables are classified as current assets, except for those with a maturity exceeding 12 months after the reporting date,
according to IFRS 9 standards ("expected credit loss").
Trade and other receivables consisted of the following:
Trade and other receivables - Total
As of
(in € thousands)
2023/12/31
2024/12/31
Trade receivables, net
18,526
2,140
Research tax credit
12,200
3,392
VAT receivables
1,476
1,043
Grants receivables
7
8
Other receivables
498
981
TOTAL
32,707
7,564
Of which : Current
32,707
7,564
Of which : Non-current
—
—
Trade receivables, net
F-42
Trade receivables amounted to €2,140 as of December 31, 2024 (€18,526 as of December 31, 2023). The 2023 balance mainly
corresponds to the milestone of €13.3 million invoiced to Ipsen in December 2023 in application of the license and collaboration
agreement signed in December 2021. The 2024 balance mainly corresponds to Q4 2024 royalty revenue amounting to €1.8 million,
also related to the Ipsen agreement.
Per IFRS 7.35(h), we have concluded that the expected credit loss on these amounts are €0.
Research tax credit
The research tax credit receivable as of December 31, 2024 amounts to €3,392 (€12,200 as of December 31, 2023). The 2023
balance encompassed research tax credits from 2021 through 2023 as there was a tax inspection ongoing. In December 2024,
research tax credits pertaining to years prior to 2024 were fully liquidated (less applicable fees from the finalized tax inspection as
outlined in Note 11 - "Income tax"). As such, the 2024 balance relates only to current year activity.
VAT receivables
VAT receivables amounted to €1,043 at December 31, 2024 ( €1,476 at December 31, 2023).
Other receivables
The line item “other receivables” primarily consists of advance payments to suppliers for €981 and €498, respectively, as of
December 31, 2024 and December 31, 2023.
17.
INVENTORIES
The Company recognizes inventories of laboratory consumables.
These inventories are measured at the lower of cost and net realizable value. Cost is determined using the weighted average
cost method.
18.
OTHER FINANCIAL ASSETS
Accounting policies
A financial asset is initially recognized as measured at amortized cost, at fair value through other comprehensive income -
debt instrument, at fair value through other comprehensive income - equity instrument, or at fair value through profit or loss.
Financial assets will not be reclassified after initial recognition, unless we change our economic model of financial asset
management. If so, all affected financial assets would be reclassified as of the first day of the first reporting period following the
change in economic model. No such reclasses have taken place in any period presented herein.
A financial asset is measured at amortized cost if both of the following conditions are met, and if it is not a measure at fair
value through profit or loss:
•
Its ownership is part of an economic model of which the objective is to hold assets in order to receive its contractual cash
flows;
•
Its contractual conditions provide for cash flows at defined dates, which correspond only to principal payments and
interest on the remaining principal amount.
A debt instrument is measured at fair value through other comprehensive income if both of the following conditions are met,
and if it is not a measure at fair value through profit or loss:
•
Its ownership is part of an economic model of which the goal is met through both the receipt of contractual cash flows
and the sale of financial assets;
•
Its contractual conditions provide for cash flows at defined dates, which correspond only to principal payments and
interest on the remaining principal amount.
At the time of initial recognition of an equity instrument that is not held for trading, we may irrevocably choose to present
future changes in fair value in other comprehensive income. This choice is made for each investment.
All financial assets that are not categorized as measured at amortized cost or at fair value through other comprehensive
income as previously described are measured at fair value through profit or loss.
F-43
Financial detail
Other financial assets consisted of the following:
Financial assets - Total
As of
(in € thousands)
2023/12/31
2024/12/31
Non consolidated equity investments
2,348
1,425
Other investments
471
459
Financial investments
—
—
Loans
472
524
Deposits and guarantees
303
303
Liquidity contract
531
354
TOTAL
4,125
3,065
Of which : Current
—
—
Of which : Non-current
4,125
3,065
Financial assets - Variations
As of
Increase
Decrease
As of
(in € thousands)
31/12/2023
31/12/2024
Non consolidated equity investments
2,348
—
(923)
1,425
Other investments
471
(12)
—
459
Loans
472
51
—
524
Deposits and guarantees
303
30
(29)
303
Liquidity contract
531
—
(177)
354
TOTAL
4,125
70
(1,129)
3,065
Non-consolidated equity investments
As of December 31, 2024, the value of "Non-consolidated equity investments" totaled €1,425 (including a cumulative
impairment of €1,708) and relates solely to our equity purchase in Genoscience Pharma. The gross value of the investment (and
the initial transaction amount from 2021) totals €3,133.
Since the transaction occurred, no shares have been sold.
We did not complete the equity purchase in Genoscience Pharma for trading purposes. Therefore, pursuant to IFRS 9, we
elected to classify the equity in Genoscience Pharma we acquired in December 2021 as equity instruments recognized at fair
value through other comprehensive income (OCI). At the time of initial recognition in 2021, this investment in equity instruments
has been measured at fair value, inclusive of acquisition costs related to the purchase. The amount recognized on the balance
sheet at December 31, 2021 corresponds to the subscription price agreed upon between the parties as representative of the value
of Genoscience Pharma a few days before closing of the period. For future closings, changes in fair value on these equity
instruments are recognized as OCI. This OCI may not be reused as profit or loss, including in the case of a sale. If applicable, only
dividends related to the investment in equity instruments will be recognized as profit provided that all conditions are met.
For the year ended December 31, 2024, and in accordance with IFRS 13, we updated our estimated of the fair value of our
equity stake in Genoscience Pharma, which was based on a valuation methodology including a royalty based income approach
using discounted cash flow techniques for the company's main scientific research programs. The aforementioned income
method utilizes management’s estimates of future operating results, cash flows discounted using a weighted-average cost of
capital that reflects market participant assumptions, and the expected success rate of each program. It should be noted that
Genoscience Pharma's valuation takes into account a post-closing adjusting event. For more information, see See Note 2.2 -
"Major events after the period". Based on our analysis performed as of December 31, 2024, an impairment loss of €923 was
recognized in OCI.
The period over which management has projected its cash flows spans through 2037. The growth rate used to extrapolate
cash flow projections is 1%. Furthermore, we have performed the following sensitivity analyses in order to determine the change
in value of the asset by modifying certain key assumptions.
Values assigned to each key assumption
Discount rate: 12.5%
F-44
The amount by which the asset would decrease if the weighted average cost of capital increased by 1%: €146
Overall expected success rate: 14.5%
The amount by which the asset would decrease if the estimated overall success rate decreased by 1%: €124
Indicators of impairment considered by the Group as part of the implementation of the impairment test above are as follows:
•
Failure of or unfavorable data from our clinical trials
•
Competition from other clinical trial programs covering the same indications as our drug candidates
•
Availability of necessary financing
Other investments
As of December 31, 2024, the value of "Other investments" totaled €459. The balance relates solely to GENFIT's investment in
CAPTECH SANTE and is inclusive of a cumulative loss of €41 based on the net asset value of the investment.
On May 24, 2022, GENFIT undertook to subscribe for 50 units of the CAPTECH SANTE Professional Equity Fund (Fonds
Professionnel de Capital Investissement – FPCI) in the amount of €500. GENFIT’s investment in CAPTECH SANTE constitutes a
debt instrument that does not meet the SPPI (solely payments of principal and interest) criterion test. It is therefore classified as
a financial asset recognized at fair value through profit or loss. This investment is also consistent with a regular way purchase of a
financial asset. GENFIT has opted to use the trade date as date of initial recognition. An amount of €500 was therefore
recognized in the Group’s balance sheet on May 24, 2022.
As of December 31, 2024, the management company has made cumulative calls for funds from GENFIT in an amount equal to
50% of the subscription amount, i.e. €225, which GENFIT has paid. The remaining subscription amount of €225 must be paid upon
successive calls from the fund management company.
Liquidity contract
Consistent with customary practice in the French securities market, we entered into a liquidity agreement (contrat de
liquidité) with Crédit Industriel et Commercial S.A. ("CIC") in August 2013. The liquidity agreement was entered into in accordance
with applicable laws and regulations in France. The liquidity agreement authorizes CIC to carry out market purchases and sales of
our shares on Euronext Paris.
As of December 31, 2024, the liquidity account had a cash balance of €354, and as of December 31, 2023 a cash balance of
€531.
CIC holds the following number of GENFIT shares on behalf of the Company, recorded as a deduction in equity:
Financial assets - Current
As of
2023/12/31
2024/12/31
Number of shares (recorded as a deduction from equity)
147,812
207,500
19.
OTHER ASSETS
Other current assets of €3,409 at December 31, 2024 and €2,615 at December 31, 2023, consisting of prepaid expenses
related to current operating expenses.
20.
LOANS AND BORROWINGS
Accounting policies
Financial liabilities are initially recognized at fair value, net of directly attributable transaction costs, and are subsequently
measured at amortized cost using the effective interest rate method.
The Group derecognizes financial liabilities when the contractual obligations are discharged, cancelled or expire.
The bonds convertible or exchangeable into new or existing shares (OCEANEs—see Note 20.1 - "Breakdown of convertible
loan") are recognized as follows: in accordance with IAS 32, Financial Instruments—Presentation, if a financial instrument has
different components and the characteristics indicate that some should be classified as liabilities and others as equity, the issuer
must recognize the different components separately.
F-45
The liability component is measured, at the date of issuance, at its fair value on the basis of future contractual cash flows
discounted at market rates (taking into consideration the issuer's credit risk) of a debt having similar characteristics but without
the conversion option.
The value of the conversion option is measured by the difference between the bond's issue price and the fair value of the
liability component. After deduction of the pro rata portion of expenses related to the transaction, this amount is recognized in
the line item "Share premium" under shareholders' equity and is subject to a calculation of deferred tax according to IAS 12.28.
The liability component (after deduction of the pro rata portion of the transaction expenses attributed to the liability and the
conversion option) is measured at amortized cost. A non-monetary interest expense, recorded in net loss is calculated using an
effective interest rate to progressively bring the debt component up to the amount which will be repaid (or converted) at
maturity. A deferred tax liability is calculated on the basis of this amount. The shareholders' equity component is not remeasured.
20.1.
Breakdown of convertible loan
Introduction
On October 16, 2017, the Company issued 6,081,081 OCEANEs at par with a nominal unit value of €29.60 per bond for an
aggregate nominal amount of €180 million, which was renegotiated in 2020 and 2021.
Year-end balances and key terms and conditions are as follows:
Updated balances
As of 31/12/2023 :
Number of bonds
1,923,662
Nominal amount of the loan
56,940,395.20€
Nominal unit value of the bonds
29.60€
Effective interest rate
8.8%
As of 31/12/2024 :
Number of bonds
1,902,698
Nominal amount of the loan
56,319,860.80€
Nominal unit value of the bonds
29.60€
Effective interest rate
8.8%
It should be noted that 1,882,891 of the OCEANEs above have been repurchased and cancelled in 2025. For further
information related to financing, refer to Note 2.2 - "Major events after the period".
Nominal annual interest rate
The nominal annual interest rate is 3.5%, payable semi-annually in arrears.
Repayment Terms
Final reimbursement is scheduled for October 16, 2025.
Redemption prior to maturity at the option of the Company is possible if the arithmetic volume-weighted average price of
GENFIT's listed share price and the then prevailing conversion ratio over a 20 day trading period exceeds 1.5 times the nominal
value of the OCEANEs.
Conversion ratio and terms
The conversion ratio is 5.5 ordinary shares per bond.
There are no specific terms that need to be met for a holder of OCEANEs to convert their debt into GENFIT shares.
Conversions
There were no conversions in 2023. In 2024, 20,964 bonds were converted into 115,302 common shares.
Conversion / exchange premium
The conversion / exchange premium is 30% relative to GENFIT's reference share price (22.77€).
Maximum Dilution
F-46
The potential issuance of new shares upon conversion requests of the outstanding OCEANEs would represent 21.2% of the
share capital of the Company at December 31, 2023 (representing a 17.5% dilution if all OCEANEs were converted).
The potential issuance of new shares upon conversion requests of the outstanding OCEANEs would represent 20.9% of the
share capital of the Company at December 31, 2024 (representing a 17.3% dilution if all OCEANEs were converted).
Deferred taxes
Deferred tax assets and deferred tax liabilities related to the OCEANEs are disclosed in Note 11.2 - "Income Tax - Deferred tax
assets and liabilities".
Current and non current balances
Convertible loans - Total
As of
(in € thousands)
2023/12/31
2024/12/31
Convertible loans
52,622
54,572
TOTAL
52,622
54,572
Convertible loans - Current
As of
(in € thousands)
2023/12/31
2024/12/31
Convertible loans
415
54,572
TOTAL
415
54,572
Convertible loans - Non current
As of
(in € thousands)
2023/12/31
2024/12/31
Convertible loans
52,206
—
TOTAL
52,206
0
20.2.
Breakdown of other loans and borrowings
Other loans and borrowings consisted of the following:
Other loans and borrowings - Total
As of
(in € thousands)
2023/12/31
2024/12/31
Bank loans
11,578
2,496
Obligations under leases
5,884
5,060
Accrued interests
7
5
Bank overdrafts
89
—
TOTAL
17,557
7,561
Other loans and borrowings - Current
As of
(in € thousands)
2023/12/31
2024/12/31
Bank loans
6,339
859
Obligations under leases
1,076
1,145
Accrued interests
7
5
Bank overdrafts
89
—
TOTAL
7,510
2,009
Other loans and borrowings - Non current
As of
(in € thousands)
2023/12/31
2024/12/31
Bank loans
5,239
1,637
Obligations under leases
4,808
3,915
Accrued interests
—
—
Bank overdrafts
—
—
TOTAL
10,047
5,552
20.2.1.
Refundable and conditional advances
There were no refundable and conditional advances outstanding at December 31, 2024.
The following table shows no refundable and conditional advances outstanding at December 31, 2023.
F-47
Refundable and conditional advances—general
overview
Grant date
Total
amount
allocated
Receipts
Cancellations
Effects of
discounting
Net book
value As of
2023/12/31
(in € thousands)
BPI FRANCE - IT-DIAB
12/23/2008
3,229
3,229
(3,229)
—
—
Development of a global strategy for the prevention
and management of type 2 diabetes
TOTAL
3,229
3,229
(3,229)
—
—
BPI France - IT-DIAB
On December 23, 2008, the Group received an advance from Bpifrance (the BPI France IT-DIAB) as part of a framework
innovation aid agreement involving several scientific partners and for which the Group was the lead partner. The contribution
expected at each stage by each of the partners in respect of work carried out and results achieved is defined in the framework
agreement. With respect to the Group, the aid consisted of a €3,229 conditional advance and a €3,947 non-repayable government
grant.
The conditional advance was not refundable except in the event of success. The program ended on December 31, 2014. In the
event of success, defined as the commercial spin-offs of the IT-Diab program which involves products for the treatment or
diagnosis of type 2 diabetes, in that case, the financial returns generated will be used initially to repay the €3,229 conditional
advance and the agreement stipulates that the conditional advance will be regarded as repaid in full when the total payments
made in this regards by the recipient, discounted at the rate of 5.19%, equal the total amount, discounted at the same rate, of the
aid paid. Any further amounts will be classified as additional payments, up to a maximum amount of €14,800.
As provided in the project assistance contract, the Group sent a letter to Bpifrance in December 2019 in order to notify it of
GENFIT's Labcorp and Terns Pharmaceuticals contracts while indicating that elafibranor was now aimed at treating hepatic
diseases and no longer type 2 diabetes as provided for in the aid agreement. The Group proposed to Bpifrance to establish a
statement of abandonment of the IT-DIAB project on which the above advance is based. On October 20, 2023, BPI France formally
recognized the failure of the project and therefore wrote off their outstanding receivable. As of December 31, 2023, GENFIT had
no remaining obligation, and thus the liability was reversed with the related income recorded in "Other income" on the
consolidated statement of operations.
20.2.2.
Bank loans
In the context of the COVID-19 pandemic, in 2021 the Company secured several State-Guaranteed Loans (or "Prêt Garanti
par l'Etat (PGE) Bancaire") and Subsidized Loans (or "BPI Prêt Taux Bonifié").
Bank loans consisted of the following as of December 31, 2022 and 2023 with the following interest rates and repayment
terms:
Bank loans
Loan
Facility
Interest
Available As
of 2024/12/31
Installments
Outstanding
As of
2023/12/31
Outstanding
As of
2024/12/31
(in € thousands)
date
size
rate
AUTRES
-
—
— %
—
0
13
9
CDN PGE
June 2021
900
1.36 %
—
8 quarterly
675
—
CIC PGE
June 2021
2,200
0.75 %
—
8 quarterly
1,650
—
BNP PGE
June 2021
4,900
0.45 %
—
8 quarterly
3,675
—
NATIXIS PGE
June 2021
3,000
0.40 %
—
8 quarterly
2,250
—
BPI PGE
July 2021
2,000
2.25 %
—
16 quarterly
1,500
1,100
BPI PRÊT TAUX BONIFIE
November 2021
2,250
2.25 %
—
20 quarterly
1,820
1,380
TOTAL
11,583
2,489
The effective interest rates are follows for the PGE loans:
•
CDN PGE (loan of €900): 2.08% per annum
•
CIC PGE (loan of €2,200): 1.46% per annum
•
BNP PGE (loan of €4,900): 1.16% per annum
•
NATIXIS PGE (loan of €3,000): 1.11% per annum
•
BPI PGE (loan of €2,000): 1.65% per annum
F-48
20.2.3.
Maturities of financial liabilities
Maturity of financial liabilities
As of
Less than
Less than
Less than
Less than
Less than
More than
(in € thousands)
2024/12/31
1 year
2 years
3 years
4 years
5 years
5 years
TOTAL - Refundable and conditional
advances
—
—
—
—
—
—
—
Convertible loans
56,731
56,731
—
—
—
—
—
Bank loans
2,496
859
867
771
—
—
—
Leases
5,060
1,145
1,159
1,172
1,186
398
—
Accrued interests
5
5
—
—
—
—
—
Bank overdrafts
—
—
—
—
—
—
—
TOTAL - Other loans and borrowings
64,292
58,740
2,025
1,943
1,186
398
—
TOTAL
64,292
58,740
2,025
1,943
1,186
398
—
The values in the table above are contractual, undiscounted values.
20.2.4
Reconciliation of liabilities arising from financing activities
As of
Cash flows
Non cash changes
As of
31/12/2023
Conversions
Debt accretion*
31/12/2024
Convertible loans
52,622
(621)
2,570
54,572
Bank loans
11,578
(9,082)
2,496
Bank overdrafts
89
(89)
—
Obligations under leases
5,884
(1,113)
289
5,060
TOTAL
70,172
(10,283)
(621)
2,860
62,128
*Convertible loans progressively accrete up to their nominal value as the final reimbursement approaches (in this case, October 16, 2025).
The Group's obligations under leases accretion relates solely to annual contractual price indexation increases.
21.
FAIR VALUE OF FINANCIAL INSTRUMENTS
Accounting policies
IFRS 9 “Financial Instruments” takes into account the following three aspects of booking financial instruments :
•
Classification and measurement;
•
Impairment and;
•
Hedge accounting.
Loans and borrowings are initially measured at fair value and subsequently recorded at amortized cost.
Pursuant to IFRS 7 – Financial Instruments: Disclosures, the financial instruments are presented into three categories
according to a hierarchical method used to establish their fair value.
If financial instruments are measured at fair value, they are measured according to a hierarchy comprising three levels of
valuation inputs:
•
Level 1: Fair value measured on the basis of quoted prices in active markets for identical assets or liabilities;
•
Level 2: Fair value measured on the basis of valuation methods relying on quoted prices for similar assets, liabilities or
observable inputs in active markets;
•
Level 3: Fair value measured on the basis of valuation methods relying entirely or in part on unobservable inputs such as
quoted prices in inactive markets or the valuation based on multiples for non-listed securities.
Financial detail
The following tables provide the financial assets and liabilities carrying values by category and fair values as of December 31,
2024 and December 31, 2023:
F-49
As of 31/12/2023
Carrying value
Fair value
As per
Assets at
Assets at
Assets at
Debt at
Level 1
Level 2
Level 3
statement of
fair value
fair value
amortized
amortized
financial
through
through OCI
cost
cost
(in € thousands)
position
profit & loss
Assets
Equity investments
2,348
2,348
2,348
Other investments
471
471
471
Financial investments
—
Loans
472
472
472
Deposits and guarantees
303
303
303
Liquidity contracts
531
531
531
Trade receivables
18,526
18,526
18,526
Cash and cash equivalents
77,789
77,789
77,789
TOTAL - Assets
100,439
78,790
2,348
19,300
—
78,319
19,300
2,819
Liabilities
Conditional advances
—
Convertible loans
52,622
52,622
51,939
Bank loans
11,578
11,578
11,578
Obligations under finance leases
5,884
5,884
5,884
Accrued interests
7
7
7
Trade payables
10,448
10,448
10,448
Other payables
914
914
914
TOTAL - Liabilities
81,541
—
—
—
81,541
—
80,858
—
As of 31/12/2024
Carrying value
Fair value
As per
Assets at
Assets at
Assets at
Debt at
Level 1
Level 2
Level 3
statement of
fair value
fair value
amortized
amortized
financial
through
through OCI
cost
cost
(in € thousands)
position
profit & loss
Assets
Equity investments
1,425
1,425
1,425
Other investments
459
459
459
Loans
524
524
524
Deposits and guarantees
303
303
303
Liquidity contracts
354
354
354
Trade receivables
2,140
2,140
2,140
Cash and cash equivalents
81,788
81,788
81,788
TOTAL - Assets
86,993
82,601
1,425
2,967
—
82,142
2,967
1,885
Liabilities
Convertible loans
54,572
54,572
56,320
Bank loans
2,496
2,496
2,496
Obligations under finance
leases
5,060
5,060
5,060
Accrued interests
5
5
5
Bank overdrafts
—
Trade payables
13,437
13,437
13,437
Other payables
289
289
289
TOTAL - Liabilities
75,859
—
—
—
75,859
—
77,607
—
It should be noted that the section above “Equity investments” concerns the nonconsolidated equity investments in
Genoscience. The gross value of the asset is €3,133 and was partially impaired in 2023 and 2024. See Note 18 - "Other financial
assets".
For our convertible loans, fair value is measured on the basis of actual quoted prices for said security on or around the
balance sheet date.
22.
TRADE AND OTHER PAYABLES
Accounting policies
F-50
Trade and other payables are initially recognized at the fair value of the amount due. This value is usually the nominal value,
due to the relatively short period of time between the recognition of the instrument and its repayment.
Financial detail
Trade and other payables consisted of the following:
Trade and other payables - Total
As of
(in € thousands)
2023/12/31
2024/12/31
Trade payables
10,448
13,437
Social security costs payables
4,188
4,092
VAT payables
3,139
351
Taxes payables
110
218
Other payables
914
289
TOTAL
18,799
18,387
At December 31, 2024, trade payables amounted to €13,437 (€10,448 at December 31, 2023). This change is primarily due to an
increase in accrued expenses relating to yet unbilled amounts from the clinical trial sites via the Clinical Research Organizations
(CROs) in charge of the Company's clinical trials. (€5,426 and €4,765 at December 31, 2024 and 2023 respectively). The timeframe
in which those invoices will be received by the Company is unknown and may be spread out over a long period after the services
have been performed.
23.
DEFERRED INCOME AND REVENUE
Out of the €120 million upfront payment received from Ipsen in application of the licensing agreement signed in December
2021, an amount of €40 million was recognized as Deferred income in 2021. The Deferred income is recognized as revenue as
GENFIT carries out its part of the double-blind ELATIVE® study, based on the progress made relative to the budget.
In 2023, €8.7 million of said balance was recognized as revenue. As of December 31, 2023, €15.3 million of Deferred income
remained, which was determined based on the original budget.
At December 31, 2024, the Company updated its initial budget based on expected remaining costs taking into account
various events occurring during the financial year, including the final transfer of the ELATIVE® study to the sponsor IPSEN. In
2024, a total of €15.3 million of said balance was recognized as revenue. As of December 31, 2024, no deferred income remains, in
line with the updated budget.
See Note 7 - "Revenues and Other income".
24.
Provisions
Accounting policies
In accordance with IAS 37, Provisions Contingent Liabilities and Contingent Assets, provisions are recognized when the
Group has a present obligation (legal, regulatory, contractual or constructive) as a result of a past event, for which it is probable
that an outflow of resources will be required to settle the obligation, and of which the amount can be estimated reliably.
The amount recognized as a provision is the best estimate at the reporting date of the expenditure required to settle the
present obligation.
Provisions are discounted when the time value effect is material.
A provision for reorganization is recognized when the Group has approved a formal and detailed plan for its reorganization
and has either started to implement it or publicly disclosed it. A provision for onerous contract is estimated at the actual value of
the lowest expected cost of either the cancellation or the execution of the contract, the latter being established on the basis of
the additional costs required to fulfill the obligations stipulated by the contract. Before a provision is established, the Group
recognizes any impairment loss that occurred on the assets dedicated to this contract.
Financial detail
At December 31, 2024 and at December 31, 2023, this line item amounted to €40 and €40, respectively.
F-51
Change in provisions
As of
Increase
Decrease
Decrease
As of
(in € thousands)
2023/12/31
(used)
(unused)
2024/12/31
Provision for charges
40
0
0
0
40
TOTAL
40
0
0
0
40
For further information related to contingent assets and contingent liabilities, see Note 29 - "Commitments, contingent
liabilities and contingent assets".
25.
EMPLOYEE BENEFITS
Accounting policies
The Group's pension schemes and other post-employment benefits consist of defined benefit plans and defined contribution
plans.
25.1.
Defined benefit plans
Defined benefit plans relate to French retirement benefit plans under which the Group is committed to guaranteeing a
specific amount or level of contractually defined benefits. The obligation arising from these plans is measured on an actuarial
basis using the projected unit credit method. The method consists of measuring the obligation based on a projected end-of-
career salary and vested rights at the measurement date, according to the provisions of the collective bargaining agreement,
corporate agreements and applicable law.
Actuarial assumptions are used to determine the benefit obligations. The amount of future payments is determined on the
basis of demographic and financial assumptions such as mortality, staff turnover, pay increases and age at retirement, and then
discounted to their present value. The discount rate used is the yield at the reporting date on AA credit-rated bonds with maturity
dates that approximate the expected payments for the Group's obligations.
Re-measurements of the net defined benefit liability which comprise actuarial gains and losses are recognized in the
statements of other comprehensive loss.
The Group determines the net interest expense on the net defined benefit liability for the period by applying the discount
rate used to measure the defined benefit obligation at the beginning of the annual period to the then-net defined benefit liability,
taking into account any changes in the net defined benefit liability during the period as a result of contributions and benefit
payments.
25.2.
Defined contribution plans
Under defined contribution plans, the management of plans is performed by an external organization, to which the Group
pays regular contributions. Payments made by the Group in respect of these plans are recognized as an expense for the period in
the statements of operations.
25.3.
Short-term employee benefits
A liability is recognized for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group
has a present legal or constructive obligation to pay the amount as a result of past service provided by the employee, and the
obligation can be estimated reliably.
Detailed breakdown
In France, pension funds are generally financed by employer and employee contributions and are accounted for as a defined
contribution plan with the employer contributions recognized as expense as incurred. The Group has no actuarial liabilities in
connection with these plans. Related expenses recorded for the years ended December 31, 2024 and December 31, 2023
amounted to €1,097, €948, respectively.
French law also requires payment of a lump sum retirement indemnity to employees based on years of service and annual
compensation at retirement, which are accounted for as a defined benefit plan. Benefits do not vest prior to retirement. The
liability is calculated as the present value of estimated future benefits to be paid, applying the projected unit credit method
whereby each period of service is seen as giving rise to an additional unit of benefit entitlement, each unit being measured
separately to build up the final liability. At December 31, 2024 and December 31, 2023 pension provisions recorded were €1,341 and
€978, respectively.
As part of the measurement of the retirement indemnity to employees, the following assumptions were used for all
categories of employees in 2023 and 2024:
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Population
Permanent staff
Retirement age
65
Terms of retirement
Initiated by the employee
Life expectancy
On the basis of the INSEE table (1)
Probability of continued presence in the company at retirement age
On the basis of the DARES table
(1)
INSEE is the French National Institute of Statistics; DARES is the French Bureau of Studies and Statistics
Rate
As of
(in € thousands)
2023/12/31
2024/12/31
Salary growth rate - in 2024
3.00 %
3.00 %
Salary growth rate - beyond
3.00 %
3.00 %
Discount rate (iboxx)
3.59 %
3.20 %
The discount rates are based on the market yield at December 31, 2023 and 2024 on high-quality corporate bonds.
The following table presents the changes in the present value of the defined benefit obligation:
Changes in the present value of the defined benefit obligation
(in € thousands)
Defined benefit obligation as of January 01, 2023
782
Current service cost
137
Interest cost on benefit obligation
25
Past service costs
—
Actuarial losses / (gains) on obligation
51
Service paid to employees
(18)
Defined benefit obligation as of December 31, 2023
978
Current service cost
154
Interest cost on benefit obligation
35
Past service costs
—
Actuarial losses / (gains) on obligation
207
Service paid to employees
(33)
Defined benefit obligation as of December 31, 2024
1,341
Sensitivity of the Group’s retirement and post-employment benefits to a variation of the discount rate:
Retirement and post-employment benefits
Sensitivity of the Group's retirement and post-employment benefits
Changes in
Impact /
to a variation of the discount rate
assumptions /
present value of
(in € thousands)
discount rate
the undertaking
+
0.25 %
(36)
-
0.25 %
37
The following assumed (undiscounted) benefit payments under the Company's French retirement indemnity are expected to
be paid as follows, given the update assumptions.
2025
0
2026
0
2027
76
2028
71
2029
182
Years 2030 and thereafter
4,224
26.
EQUITY
Accounting policies
Share capital comprises ordinary shares and ordinary shares with double voting rights classified in equity. Costs directly
attributable to the issue of ordinary shares or share options are recognized as a reduction in the share premium.
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The Group has a liquidity agreement, contracted to an investment service provider. Purchases and sales of the Company's
shares carried out under the contract are recognized directly in shareholders’ equity under treasury shares. See Note 18 - “Other
financial assets”.
Detailed breakdown
Share capital
Number of shares
As of
2023/12/31
2024/12/31
Ordinary shares issued (€0.25 par value per share)
49,834,983
49,996,185
Convertible preferred shares registered
0
0
Total shares issued
49,834,983
49,996,185
Less treasury shares
0
0
Outstanding shares
49,834,983
49,996,185
Ordinary shares are classified under shareholders' equity. Any shareholder, regardless of nationality, whose shares are fully
paid-in and registered for at least two years, is entitled to double voting rights under the conditions prescribed by law (Article 32
of the Company's bylaws).
Changes in share capital in 2024
Ordinary shares increased by 161,202 in 2024. This is due to the following reasons:
•
AGA: 27,500 free shares were vested and converted to ordinary shares. Refer to Note 9 - "Share-based compensation".
•
SO: 18,400 stock options were exercised. Refer to Note 9 - "Share-based compensation".
•
OCEANEs: 20,964 bonds were converted into 115,302 common shares. Refer to Note 20 - "Loans and Borrowings".
At December 31, 2024, the remaining unused authorizations to issue additional share-based compensation or other share-
based instruments (stock options, free shares and share warrants) represent a total of 725,000 shares.
Currency Translation Adjustment
As of December 31, 2024, the currency translation adjustments on the consolidated statement of financial position amount
to €347 (compared to €996 as of December 31, 2023). For the year ended December 31, 2024, exchange differences on translation
of foreign operations on the consolidated statement of other comprehensive income (loss) amount to €(649) (compared to
€2,340 for the year ended December 31, 2023). The currency translation differences arise from the application of IAS 21 when
converting the functional currencies of the Group's subsidiaries (i.e. the US dollar for GENFIT Corp and the Swiss franc for
Versantis AG) into euros at each closing. The change period over period stems from the change of these two currencies' foreign
exchange rates against the euro.
27. LITIGATION
Not applicable.
28. RELATED PARTIES
Compensation of key management personnel
The aggregate compensation of the members of the Company’s Board of Directors (including the Chairman of the Board)
and to the Chief Executive Officer includes the following:
Year ended
(in € thousands)
2022/12/31
2023/12/31
2024/12/31
Fixed compensation owed
585
614
626
Variable compensation owed
169
170
148
Attendance fees - board of Directors
421
381
402
Contributions in-kind
21
23
22
Share-based payments
74
72
112
Employer contributions
410
396
400
Consulting fees
0
0
0
TOTAL
1,680
1,656
1,709
Biotech Avenir
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Biotech Avenir SAS is a holding company incorporated in 2001 by the Company's founders. Most of its share capital is
currently held by individuals, i.e. the four co-founders of the Company and twelve Company employees. Jean-François Mouney,
the Chairman of the Company, is also the Chairman of Biotech Avenir SAS.
At December 31, 2024, Biotech Avenir SAS held 3.79% of the share capital of the Company.
The Company did not carry out any transactions with Biotech Avenir in 2024, 2023, or 2022, with the exception of the
domiciliation without charge.
Ipsen Pharma SAS
The licensing agreement signed with Ipsen Pharma SAS in December 2021 provides for a certain number of service
agreements that were signed with the Company in 2022 and 2023, notably the Inventory Purchase Agreement, the Transition
Services Agreement and the Part B Transition Services Agreement.
These agreements cover support for Ipsen in future proceedings and processes (other than knowledge transfer) and the
provision of drug tablets which Ipsen may require to execute its clinical trial. As per the agreement signed with Ipsen in December
2021, the prices under these agreements cover all costs borne by the Company to provide the relevant goods and services,
without economic benefit for Ipsen. See Note 7.1 - "Revenues and other income" and Note 29 - Commitments, contingent
liabilities and contingent assets.
29. COMMITMENTS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS
Accounting policies
In accordance with IAS 37, Provisions Contingent Liabilities and Contingent Assets, provisions are recognized when the
Group has a present obligation (legal, regulatory, contractual or constructive) as a result of a past event, for which it is probable
that an outflow of resources will be required to settle the obligation, and for which the amount can be estimated reliably.
Future milestone and revenue based royalty payments may be recorded as contingent liabilities under IAS 37 or intangible
assets under IAS 38. We record a provision when we have a present obligation, whether legal or constructive, as a result of a past
event; it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; and a
reliable estimate can be made of the amount of the outflow of resources. Under IAS 38, we record intangible asset when it is
probable that the expected future economic benefits that are attributes to the assets will flow to us and the cost of asset can be
measured reliably.
Commitments
•
Obligations under the terms of subcontracting agreements
The Group enters into contracts for its business needs with clinical research organizations (CROs) for clinical trials, as well
as with Contract Manufacturing Organizations (CMOs) for clinical and commercial supply manufacturing, commercial and pre-
commercial activities, research and development activities and other services and products for operating purposes. The Group’s
agreements generally provide for termination with specified periods of advance notice.
Such agreements are generally cancellable contracts and not included in the description of the Group’s contractual
obligations and commitments.
•
Obligations under the terms of lease agreements
The Company has guaranteed its rental payment obligation under the lease agreement for the headquarters in Loos, France
in the amount of €600 at December 31, 2024 (€600 at December 31, 2023).
•
Planned capital expenditures
The investments for which the Company has already made firm commitments amount to €350 as of the date of this
document.
Contingent liabilities
•
Obligations under the terms of license agreement with Genoscience
For all information pertaining to Genoscience contingent liabilities, refer to Note 2.2 - "Major events after the period".
These obligations constitute contingent liabilities not recognized in the Company's consolidated financial statements at
December 31, 2024.
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•
Obligations related to the Versantis acquisition
On September 29, 2022, GENFIT finalized an exclusive agreement to acquire all of the shares and voting rights of Versantis, a
privately held clinical-stage biotechnology company based in Switzerland focused on addressing the growing medical needs in
the field of liver diseases.
Under the terms of this agreement:
1.
The former shareholders of Versantis are eligible to receive certain payments of up to 65 million CHF, contingent on the
following outcomes:
i.
positive Phase 2 results related to VS-01-ACLF,
ii.
regulatory approval of VS-01-ACLF, and
iii. positive Phase 2 results related to VS-02.
2.
Furthermore, the former shareholders of Versantis are eligible to receive 1/3 of the net proceeds resulting from the
potential sale of the Priority Review Voucher of VS-01’s pediatric application by GENFIT to a third party, or 1/3 of the fair
market value of this Voucher if GENFIT opts to apply it to one of its own programs.
The conditional payments will be subject to analysis when they are incurred to determine if they are eligible for capitalization
in accordance with IAS 38. If so, they will be capitalized. Otherwise, they will be expensed as incurred.
These obligations constitute contingent liabilities not recognized in the Company's consolidated financial statements at
December 31, 2024.
•
Obligations related to the licensing agreement with Seal Rock Therapeutics
On May 31, 2023, GENFIT announced the signing of a licensing agreement for the exclusive worldwide rights to the ASK1
inhibitor SRT-015 with Seal Rock Therapeutics, a clinical-stage company based in Seattle, Washington.
Under the terms of this agreement:
1.
Seal Rock is eligible for payments of up to €100 million (of which €2 million have been paid in 2023), subject to certain
regulatory, clinical and commercial outcomes.
2.
Seal Rock is likewise eligible for tiered royalties, applied to the annual sales of licensed products realized by GENFIT.
The conditional payments will be subject to analysis when they are incurred to determine if they are eligible for capitalization
in accordance with IAS 38. If so, they will be capitalized. Otherwise, they will be expensed as incurred.
These obligations constitute contingent liabilities not recognized in the Company's consolidated financial statements at
December 31, 2024.
•
Obligations related to the licensing agreement with Celloram
On July 28, 2023, GENFIT licensed the exclusive worldwide rights to CLM-022, a first-in-class inflammasome inhibitor, from
Celloram Inc., a Cleveland-based biotechnology company.
Under the terms of the agreement:
1.
Celloram is eligible for payments of up to €160 million (of which €50 have been paid in 2023), subject to certain regulatory,
clinical and commercial outcomes.
2.
Celloram is likewise eligible for tiered royalties, applied to the annual sales of licensed products realized by GENFIT.
The conditional payments will be subject to analysis when they are incurred to determine if they are eligible for capitalization
in accordance with IAS 38. If so, they will be capitalized. Otherwise, they will be expensed as incurred.
These obligations constitute contingent liabilities not recognized in the Company's consolidated financial statements at
December 31, 2024.
Contingent Assets
•
Contingent assets related to the licensing agreement with IPSEN
In December 2021, GENFIT and Ipsen Pharma SAS ("Ipsen") entered into an exclusive worldwide licensing agreement (except
for China, Hong Kong, Taiwan and Macao, which apply to Terns as noted below) for elafibranor, a Phase 3 asset evaluated in
Primary Biliary Cholangitis (PBC), as part of a long-term global partnership ("Collaboration and License Agreement").
Under the terms of the agreement:
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1.
GENFIT is eligible for total milestone payments up to €360 million (of which €62 million have been recognized through
2024). These milestone payments constitute future variable income, dependent on the completion of key steps related to
the development and sales of the licensed products. As such, in accordance with IFRS 15, this income will be recognized
as revenue depending on the completion of these milestones.
2.
GENFIT is eligible for tiered double-digit royalties of up to 20%, applied to the annual sales of licensed products realized by
Ipsen. As such, in accordance with IFRS 15, this income will be recognized as revenue depending on the realization of
these sales. See Note 7 - Revenues and other income for royalty revenue recognized.
Earned milestones to date
In 2023, a first milestone of €13.3 million was recognized as revenue, and in 2024 a second milestone of €48.7 million was
recognized as revenue, totaling a cumulative €62 million of the €360 million mentioned above.
Future milestones
GENFIT expects to receive future milestone revenue in 2025, subject to Iqirvo® (elafibranor) pricing and reimbursement
approval in three European countries, representing a total of approximately €26.5 million. Approval will only be considered
probable when said approval is actually granted, as this is a regulatory milestone outside of GENFIT's control. As such, this future
milestone of €26.5 million as well as remaining unrecognized milestones constitute contingent assets not recognized in the
Company's consolidated financial statements at December 31, 2024.
Royalty Financing
As described in Note 2.2 - Major events after the period, royalty revenue from the IPSEN agreement will be used to repay the
Royalty Financing debt starting as signed with HCRx.
In addition, the royalty revenue incurred for the period between October 1, 2024 and December 31, 2024 totals €1.8 million,
which is included in "Current trade and others receivables" on the Consolidated statement of financial position as of December
31, 2024. This amount will be paid to the French law trust (fiducie-sûreté) in accordance with this royalty financing agreement.
•
Contingent assets related to the licencing agreement with Terns Pharma
The Company entered into a licensing agreement with Terns Pharma whereby we could receive milestone payments based
on future events that are uncertain and therefore they constitute contingent assets not recognized in the Company's
consolidated financial statements for the period ending December 31, 2024. The licensing agreement with Terns concerns China,
Hong Kong, Taiwan and Macao.
Milestones include Development Milestone Payments upon the achievement of the development milestones for the licensed
product and Commercial Milestone Payments upon the achievement of commercial milestones depending on reaching certain
aggregate thresholds. There are also potential mid-teen royalties based on sales by Terns Pharmaceuticals in Greater China. The
potential Development and Commercial Milestone payments may represent up to $193 million.
30. SUPPLEMENTAL CASH FLOW INFORMATION
Supplemental cash flow information
Disclosure of non-cash financing and investing activities
Accrued property, plant and equipment, 2024: €196
Accrued property, plant and equipment, 2023: €42
Accrued property, plant and equipment, 2022: €142
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