• Genfit, a France-based biotech that has lost about three-quarters of its value since announcing a crucial study failure in May, plans to cut 40% of its staff and reduce spending as it refocuses research activities.
• The company said Wednesday that it’s ending development of elafibranor for the liver disease NASH, or nonalcoholic steatohepatitis, after a clinical trial showed the drug didn’t perform significantly better than placebo. Genfit in May had said it was going to evaluate the results with regulators.
• Genfit will continue to study elafibranor as a treatment for a different liver disease called primary biliary cholangitis, and it’s also working on a blood test for diagnosing NASH.

Genfit’s value tumbled as its prospects of entering the NASH drug market, which analysts estimate is potentially worth billions of dollars, dimmed. Just before the study failure in May, Genfit shares had climbed above the $22 mark. But by Thursday morning, they were trading at $4.64 apiece.

The company isn’t alone in facing NASH research setbacks. In June, the Food and Drug Administration rejected what could have been the first drug for the disease, Intercept Pharmaceutical’s obeticholic acid, and asked for more efficacy and safety data.

Researchers don’t completely understand the biology of NASH, and it often doesn’t cause obvious symptoms until later stages. But patients who get to the later stages can have such severe liver damage that they need a transplant.

The costs of running — and now terminating — the late-stage program for elafibranor in NASH will continue to impact next year, Genfit said. The company plans to reduce cash burn to about 45 million euros, or roughly $53 million, a year by 2022, down from a rate of 110 million euros a year.

As part of the cost savings, it will slash staff by 40%, which is equivalent to about 80 employees based on the company’s last annual report. In that report, GenFit said it had almost 200 workers in Lille and Paris, France, and Cambridge, Massachusetts.

Despite its failure with elafibranor, Genfit still hopes to access some of the lucrative NASH market with its NIS4 diagnostic test. The company is working with Labcorp and intends to have a “large-scale” launch next year. Currently, the main way to diagnose NASH is with a liver biopsy, a method that is impractical for diagnosing the estimated millions of NASH patients in the U.S.