Conatus Pharmaceuticals Inc (NASDAQ:CNAT), a biotechnology company focused on the development and commercialization of novel medicines to treat liver disease, today announced financial results for the first quarter ended March 31, 2015, and provided updates on its initial registration pathway and clinical development programs.

Financial Results

The net loss was $6.0 million for the first quarter of 2015 compared with $5.2 million for the first quarter of 2014.

Research and development expenses were $3.9 million for the first quarter of 2015 compared with $3.7 million for the first quarter of 2014, reflecting higher clinical trial and personnel costs, including noncash stock-based compensation expense, partially offset by lower external manufacturing costs. General and administrative expenses were $2.1 million for the first quarter of 2015 compared with $1.6 million for the first quarter of 2014, reflecting higher personnel costs, including noncash stock-based compensation expense.

Cash, cash equivalents and marketable securities were $31.0 million at March 31, 2015, compared with $37.1 million at December 31, 2014. In April 2015, the company completed a public offering of 4,025,000 shares of its common stock at a price to the public of $5.75 per share, yielding estimated net proceeds of $21.4 million. Including net proceeds from the completed offering, the company is projecting a year-end 2015 balance of cash, cash equivalents and marketable securities in the mid-$20 million range.

Registration Pathway Update

Conatus met with the U.S. Food and Drug Administration (FDA) this week to discuss the company’s proposed initial registration pathway for its lead compound, emricasan, in patients with liver cirrhosis due to non-alcoholic steatohepatitis (NASH).

Steven J. Mento, Ph.D., President and Chief Executive Officer of Conatus, said, “Our registration strategy for emricasan is based on three factors: 1) understanding how to dose emricasan in patients with different etiologies of liver disease; 2) understanding how to dose emricasan in patients with different levels of liver impairment; and 3) regulatory clarity on endpoints suitable for registration trials, in particular those potentially useful in accelerated approval pathways. Results from our trial in patients with non-alcoholic fatty liver disease (NAFLD), including a subset of patients with NASH, announced in March, and results from our three organ impairment trials, announced in January, addressed the first two factors and guided our initial focus on NASH-driven cirrhosis. Our meeting this week with the FDA provided us with important feedback on endpoints for our future trials.”

In January 2015, the proceedings of a September 2013 NASH endpoints workshop sponsored by the American Association for the Study of Liver Diseases (AASLD) and the FDA were published online. The publication identified three validated surrogate clinical endpoints that could be useful for accelerated approval in patients with NASH-driven liver cirrhosis:  Model for End-stage Liver Disease (MELD) score, Child Pugh Turcotte (CPT) score, and hepatic venous pressure gradient (HVPG). Conatus has two ongoing clinical trials in patients with liver cirrhosis in which these three endpoints, MELD, CPT and HVPG, are being measured along with biomarkers.

In the meeting this week, the FDA provided feedback on the company’s proposed patient populations and methods of measuring and analyzing the published validated surrogate endpoints of MELD, CPT, and HVPG in patients with NASH cirrhosis. Specific design details for registration trials are expected to be finalized based on results expected in the second half of 2015 from the two ongoing cirrhosis trials and additional feedback from regulatory agencies.

“Our clinical trials have demonstrated that emricasan’s mechanism of action has the potential to benefit patient populations across the spectrum of liver disease,” added Dr. Mento. “In addition to gaining feedback on surrogate endpoints for NASH cirrhosis trials during our meeting with the FDA, we also discussed the use of histology-based endpoints more broadly for future clinical trials. Based on this discussion, we are evaluating the potential to include a clinical trial in patients with NASH-driven fibrosis as a component of our overall emricasan registration strategy. We believe a trial in NASH fibrosis could provide additional safety data supportive of an initial registration in NASH cirrhosis and potentially extend our reach within the liver disease spectrum.”

Program Updates

Conatus is developing emricasan for the treatment of patients with chronic liver disease including active clinical trials in:

  • post-orthotopic liver transplant (POLT) recipients with liver fibrosis or cirrhosis post-transplant as a result of recurrent hepatitis C virus (HCV) infection who have successfully achieved a sustained viral response (SVR) following HCV antiviral therapy (POLT-HCV-SVR);
  • patients with liver cirrhosis (LC) and portal hypertension (PH); and
  • patients with LC and MELD scores of 11 to 18.

POLT-HCV-SVR Trial Update

In May 2014, the company initiated a double-blind, placebo-controlled Phase 2b clinical trial in POLT-HCV-SVR patients who will receive 25 mg of emricasan or placebo orally twice daily for two years. Consistent with its focus on cirrhosis, the company expanded the inclusion criteria in this trial to allow enrollment of patients with unresolved cirrhosis post-transplant. The trial is evaluating long-term safety and biopsy-based changes in fibrosis and cirrhosis. At the request of the company’s independent data monitoring committee, the company now plans to keep results blinded until completion of the treatment and follow-up period to maintain the integrity of the final data analysis. Pre-treatment histology and biomarker data from an initial group of patients in this trial are expected to be available in the second quarter of 2015.

Portal Hypertension Trial Update

In September 2014, the company initiated an exploratory, open-label Phase 2 clinical trial in patients with LC of mixed etiologies and PH confirmed by HVPG procedure prior to enrollment. Patients will receive 25 mg of emricasan orally twice daily for 28 days. The co-primary endpoints are the changes from baseline in HVPG and cleaved Cytokeratin-18 (cCK18), a mechanism-specific biomarker that increases with liver disease severity. Secondary endpoints include changes from baseline in MELD score and CPT score. Top-line results from this trial are expected to be available in the third quarter of 2015.

Liver Cirrhosis Trial Update

Also in September 2014, the company initiated a double-blind, placebo-controlled Phase 2 clinical trial in patients with LC of mixed etiologies, mild to moderate liver impairment and a MELD score of 11 to 18 during the screening period. In the first stage, which is double-blind and placebo-controlled, patients will be randomized 1:1 to receive either 25 mg of emricasan or placebo orally twice daily for three months. The primary endpoint is change from baseline in cCK18. Secondary endpoints include changes from baseline in MELD score and CPT score. In the second stage, which will be open-label, patients who complete the first stage of the trial, either on treatment or placebo, may receive emricasan for up to an additional three months. Initial results from the first stage of this trial are expected to be available in the fourth quarter of 2015. (Original Source)

Shares of Conatus Pharmaceuticals closed today at $5.76, down $0.19 or 3.19%. CNAT has a 1-year high of $11.74 and a 1-year low of $5.06. The stock’s 50-day moving average is $6.34 and its 200-day moving average is $6.71.

On the ratings front, Conatus has been the subject of a number of recent research reports. In a report issued on April 27, MLV analyst Vernon Bernardino maintained a Buy rating on CNAT, with a price target of $16, which represents a potential upside of 168.5% from where the stock is currently trading. Separately, on the same day, Brean Capital’s Difei Yang initiated coverage with a Buy rating on the stock and has a price target of $13.

According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Vernon Bernardino and Difei Yang have a total average return of -13.7% and 13.5% respectively. Bernardino has a success rate of 23.2% and is ranked #3559 out of 3594 analysts, while Yang has a success rate of 65.1% and is ranked #503.

In total, 5 research analysts have given a Buy rating to the stock. When considering if perhaps the stock is under or overvalued, the average price target is $5.96 which is 114.8% above where the stock opened today.

Conatus Pharmaceuticals Inc is a biotechnology company focused on the development and commercialization of novel medicines to treat liver disease.