Results

Novartis’ partners at Conatus have another NASH setback to confess today

Eight months after Conatus’ execs tried unsuccessfully to sell a silver-lining playbook story to investors about the failure of a Phase IIb trial for their drug emricasan in fibrosis and cirrhosis, they’re back with another failed Phase IIb — and once again they’ve set out to try and sell it as a win.

Steven Mento

Conatus’ $CNAT shares were eviscerated on Thursday, falling 52% in early trading as investors registered their deep discontent having been forced to bottle their fury when the data were released on Wednesday as the stock market was closed to honor George HW Bush’s funeral in Washington.

Conatus’ drug failed to demonstrate a mean improvement in hepatic venous pressure gradient, or HVPG, among patients with compensated NASH cirrhosis taking one of three doses.

Conatus CEO Steven Mento nevertheless spotlighted the positive, with a greater than 10% improvement in HVPG in two doses while the placebo arm demonstrated an unspecified increase. In a prepared statement he said he was “encouraged by the treatment effect shown in this population in these top-line results.”

Last year Novartis handed the microchip biotech a $50 million upfront to get their alliance started, which equaled their market cap at the time. Novartis also agreed to cover half the costs of a Phase IIb program for the drug. The sudden and unexpected arrival of a giant player inspired a 146% increase in the share price at the time.

The biotech and the pharma giant still have a ways to go, with 2 more clinical tests underway.  

“Although the primary endpoint was not met, the data indicates an amelioration of portal pressures by emricasan,” said Arun Sanyal, chair of the NIH NASH Clinical Research Network and chair of the Liver Forum. “Not surprisingly, those with the highest HVPG had the greatest benefit and the trends in all groups on sensitivity analyses favored active therapy.”

Others were not as generous. “We believe these results (and the totality of data observed across the emricasan development program to date) still highlight a number of lingering uncertainties…which limit our ability to confidently recommend the stock into the next two data read-outs, which will now ultimately determine the company’s longer-term fate,” Stifel’s Stephen Willey wrote in a note on Thursday.


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