Oppenheimer Has a New Play for Biotech Fans: Conatus Pharmaceuticals Inc (CNAT)

Conatus Pharmaceuticals Inc (NASDAQ:CNAT) is a mover and shaker out on the Street today, with investors sparking the stock on an almost 17% upturn.

Why the excitement? Oppenheimer analyst Jay Olson initiated coverage on CNAT shares with an Outperform rating and price target of $16, which implies an upside of 163% from current levels. (To watch Olson’s track record, click here)

Olson wrote, “Our bullish view of CNAT is based on the company’s unique approach to Nonalcoholic steatohepatitis (NASH) which we believe should unlock significant value for physicians, patients and shareholders […] Emricasan is the company’s lead asset and is being developed in four distinct indications for liver injury due to Hepatitis C (HCV) or NASH. Emricasan is an orally active pan-caspase protease inhibitor designed to reduce the activity of human caspases, which are enzymes that mediate inflammation and apoptosis. NASH and HCV both lead to high levels of inflammation and emricasan is designed to treat liver injury by reducing this inflammation.”

“One of CNAT’s many competitive advantages is a focus on cirrhotic patients, which is a group of severe patients that is studied by fewer companies in the increasingly crowded NASH space and which has the potential to represent a large opportunity due to higher diagnosis rates and higher unmet medical needs. We estimate total peak NASH royalties to CNAT of $770M and $250M. We estimate total peak POLT HCV royalties to CNAT of $30M and $10M. We estimate that CNAT finished 2017 with $70M in cash and is funded until the end of 2019, at which point data should be available from all four ongoing Ph2 emricasan trials,” the analyst continued.

Overall, Conatus has one of the best ratings by the Street. TipRanks reveals that CNAT has a Strong Buy analyst consensus rating with 6 back-to-back buy ratings in the last 12 months. Meanwhile the average analyst price target of $15 suggests the stock still has upside potential of just over 147% from the current share price for the next 12 months.


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