Suffering Novartis partner Conatus grabs the ax and packs it in on NASH after a series of setbacks
The NASH party is over at Novartis-backed Conatus. And this time they’re turning off the lights.
More than 2 years after Novartis surprised the biotech investment community with its $50 million upfront and promise of R&D support to partner with the little biotech on NASH — igniting a lightning strike for the share price — Conatus $CNAT is back with the latest bitter tale to tell about emricasan, which once inspired confidence at the pharma giant.
Not only did the topline results for the ENCORE-LF Phase IIb clinical trial fail to reach statistical significance, the extension study of the ENCORE-PH study also flopped. ENCORE-LF is now being wrapped up.
This is Conatus’ fourth strike, following a series of setbacks that eliminated any serious hope in its future. The company is now laying off 40% of its staff. And in an SEC filing, the biotech noted that it will now search out its “strategic alternatives,” which are severely limited.
The biotech stood up and took the bullet, reading the last rites for this one: “Conatus will continue to work with its partner Novartis on ensuring that all remaining obligations related to the emricasan program are fulfilled.”
“We designed the ENCORE program to give emricasan an opportunity to achieve its potential through a series of clinical trials tailored to specific patient populations encompassing a broad range of chronic liver disease,” said a straightforward Steven Mento, CEO and co-founder of Conatus, in a statement. “We are disappointed that emricasan failed to meet the expectations established in prior preclinical and clinical studies, but confident that the ENCORE trials provided a fair evaluation of emricasan’s lack of efficacy in these patient populations.”
Back in late 2016, though, it was a different story as Novartis shocked the market by providing an upfront that equaled Conatus’ market cap at the time. It’s in much worse shape now, with its penny stock slashed more than 60% after the market closed, dropping below the 40 cent mark in extinction territory.
NASH has proven to be a graveyard for a number of small and not-so-small biotechs. But with a market projected to reach the tens of billions of dollars, the hunt continues.
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