Europe’s Latest Biotech IPO: Unpacking GenSight Biologics

GenSight Biologics (EPA:SIGHT) is a niche French clinical-stage biotechnology company discovering and developing novel therapies for neurodegenerative retinal diseases and diseases of the central nervous system. Founded in 2012 by Dr. Bernard Gilly, the company completed its all-primary IPO on Euronext Paris on July 13. Here’s what the company’s CFO Thomas Gidoin had to say about the company’s lead therapies, the decision to go public and today’s challenging market for biotech IPOs.

GenSight Biologics in a nutshell

As previously mentioned, GenSight is a biotech company discovering and developing novel therapies for neurodegenerative retinal diseases and diseases of the central nervous system. Gidoin tells me that the company has two lead candidates. GS010, based on Mitochondrial Targeting Sequence (MTS) technology, targets Leber’s Hereditary Optic Neuropathy (LHON), a rare genetic condition leading to brutal, irreversible vision loss in teens and young adults. Meanwhile, GS030, based on optogenetics technology and targeting retinitis pigmentosa, and subsequently, geographic atrophies. Gidoin states that “we are currently conducting two parallel Phase III clinical trials for GS010, based on promising results in its Phase I/II study. These clinical trials are taking place in 7 clinical centers in the US and Europe. GS030 is currently in the pre-clinical development stage with strong animal proof of concept for visual function restoration.”

The right time to IPO

2016 looked like the time to IPO for GenSight. Gidoin explains that “we still had €30m of cash left at the end of 2015, which was a comfortable position. But with 2 programs running, one well advanced into Phase III and the other one in pre-clinical, this would have funded our operations until mid-2017. We wanted to fully secure the development of GS010 until we file for approval in the EU and the US mid-2018, and allow for GS030 to enter the clinic with a Phase I/II and get preliminary results early 2018. In addition to refinancing, given the maturity of GS010 now in Phase III, we felt that it was the right time to gain more international exposure and go public.”

However, the road to an IPO wasn’t easy – “we have faced many challenges indeed. We first launched an IPO on the NASDAQ in October last year. A couple of unexpected negative announcements of peers in conjunction with increasingly difficult market conditions suddenly closed the IPO window, forcing us to postpone. We decided to wait and see, hoping for a swift turnaround, but as we were closing the first quarter, still assessing whether to relaunch or seek alternative options, including M&A, the market was not giving any tangible sign of recovery, and our ongoing discussions with investors led us to conclude that a US IPO was not the right move for us at that time.”
Meanwhile, “there was no gene therapy company listed in Europe, and European investors were very intrigued by GenSight’s story. So we felt this was the right move and the right time. As we wanted to price before the Summer break, we had a narrow timeline, and a Brexit referendum in the UK right in the middle of it. I have to be honest, we were very confident, as the market was, that the Remain camp would win, and had planned to launch on the very next day. Obviously, we were wrong and decided to hold on and see how the market would react. We saw some signs of recovery the following week, and as some investors, mostly specialists, were clearly indicating that there was still room for good, carefully selected IPOs, we decided to move forward, and it paid off. So yes, this is what I would call facing challenges.”

Macro market view for upcoming IPOs

“I am not an economist or a banker,” states Gidoin, “but from what I can see, the market downturn initiated in the second half of 2015, together with the poor performance of 2015 IPOs and a lot of uncertainty on the markets, including the Brexit and its consequences, have affected investors and led them to be very risk averse. So I think that it is still possible to IPO in 2016, and we are a proof of it, but investors will be very picky, selecting the best equity stories, with a decent newsflow, a realistic valuation and a strong support from existing investors.”

What’s next for GenSight

GenSight’s IPO followed two private funding rounds, a Series A in 2013 and a Series B in 2015, which raised €52 million in total from top international VCs and cross-over investors. In the coming months, Gidoin “expect[s] to use the proceeds from the IPO to fund the ongoing development of our technology platforms and product candidates. We expect complete the recruitment of GS010’s Phase III trials by the end of the year, to announce top-line results at 48 weeks follow-up early 2018, and subsequently file for a Marketing Authorization Application in Europe and a New Drug Application in the US. In addition, we will regularly report follow-up results on the Phase I/II patients to confirm sustainability of visual acuity.” Furthermore, “regarding GS030, we will initiate the Toxicology program by September this year upon delivery of the GMP-like batches. We then expect to initiate a Phase I/II clinical trial in retinitis pigmentosa during the first half of 2017.”
Longer term, “just as we have been doing for the next 4 years, we will continue to execute on our plans, leverage our 2 technology platforms, the Mitochondrial Targeting Sequence (MTS) and optogenetics, continue to develop our 2 lead product candidates, GS010 and GS030, to provide patients with safe and efficient treatments to fight blindness. In addition, we will ensure a continuous newsflow, notably regular updates on the Phase I/II follow-up results to confirm sustainability of visual acuity and on the regulatory pathway for GS010 towards approval.”

Final IPO reflections

All told, Gidoin is happy about the outcome of GenSight’s IPO. He reflects that “this has been a long and demanding journey, shuttling between difficult market conditions, a lot of uncertainty and a Brexit referendum. So yes, this is a fantastic achievement for the team.” Looking back, it’s “always easy to replay the game afterwards. We may have underestimated the probability of a Brexit, but otherwise I think we did a decent job given the environment.” Investors appear to agree. It will be interesting to watch the company’s next steps, as they navigate a challenging market and unstable political landscape which is, nonetheless, filled with opportunities for promising biotech companies like GenSight.
Securities Disclosure: I, Morag McGreevey, hold no direct investment interest in any company mentioned in this article.