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Conatus Down More Than 60% in the Past 90 Days: Here's Why

Zacks Equity Research

Shares of Conatus Pharmaceuticals Inc. CNAT have declined sharply in the past three months. In fact, the stock has plunged 60.6%, wider than the industry’s dip of 2.8%.

In March 2019, Conatus announced that the ENCORE-NF study, which evaluated its lead pipeline candidate — emricasan — for treating patients with biopsy-confirmed nonalcoholic steatohepatitis (NASH) and liver fibrosis, could not achieve the primary goal as it lacked the desired effect on these earlier-stage NASH fibrosis patients.

Earlier last December, Conatus announced top-line results from the ENCORE-PH study. In the same, emricasan demonstrated clinically meaningful treatment effects on compensated NASH cirrhosis patients, who face the peril of passing to the decompensation state. However, the study failed to meet its primary endpoint. Following a post hoc analysis, emricasan showed a clinically meaningful treatment impact compared with placebo. Additional results are now expected in mid-2019.

Failure of both of these studies hurt investor sentiments and shares of the company then significantly plunged. The stock has been persistently down ever since. However, two phase IIb studies are underway on emricasan — a caspase inhibitor — under the ENCORE programs for treating fibrosis or cirrhosis induced by NASH. Those are, ENCORE-PH (for portal hypertension) and ENCORE-LF (for liver function).

Conatus acquired the worldwide rights to emricasan from Pfizer PFE in July 2010. Notably, the company has an exclusive option, collaboration and license agreement with Novartis NVS for the worldwide development and commercialization of emricasan.

Notably, during the first quarter of 2019, Conatus completed enrolling patients in the ENCORE-LF study, the primary endpoint being event-free survival. Top-line data from this investigation is anticipated in mid-2019.

Positive outcomes from the ongoing studies on emricasan will pave the way for a phase III efficacy and safety assessment on the candidate for the given disease.

Conatus is solely dependent on emricasan for growth as it has got no approved product in its portfolio at the moment. The company’s revenues are recognized from its collaboration with Novartis for the worldwide development and commercialization of emricasan.

Currently, several studies on emricasan are ongoing with data readouts, scheduled in the near term. An unfavorable result in any of the ongoing studies may force the company to defer or discontinue the planned future studies and negatively impact its stock.

Moreover, several companies like Allergan AGN, Intercept Pharmaceuticals, Galectin Therapeutics and Enanta Pharmaceuticals are working on developing therapies for NASH. Additionally, interest in this market has gone up of late, considering that several companies are inking deals and others aiming for an entry into the same space, all because of its high-revenue potential.

Another preclinical candidate in the Conatus’ portfolio is CTS-2090. The company plans to submit an investigational new drug (IND) application by the first half of 2020 to begin clinical studies on the candidate for treating autoinflammatory diseases.

Conatus Pharmaceuticals Inc. Price

Conatus Pharmaceuticals Inc. Price

Conatus Pharmaceuticals Inc. price | Conatus Pharmaceuticals Inc. Quote

Zacks Rank

Conatus currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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