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What Spooked Conatus Pharmaceuticals (CNAT) Investors This Evening


Some investors might love biotech stocks for their lottery ticket-like returns when a company strikes medical gold. A lottery ticket, however, costs only a buck or two, while getting a biotech company wrong can hurt a lot more than that. Case in point: Conatus Pharmaceuticals (NASDAQ:CNAT) shares are diving over 25% in after-hours trading Wednesday, after the drug maker announced that POLT-HCV-SVR, the company’s exploratory Phase 2b POLT-HCV-SVR proof-of-concept clinical trial, did not meet its primary endpoint.

POLT-HCV-SVR, initiated in the second quarter of 2014, in approximately 60 post-orthotopic liver transplant (POLT) recipients with liver fibrosis or cirrhosis post-transplant as a result of recurrent HCV infection who have successfully achieved a sustained viral response (SVR) following HCV antiviral therapy.

Although the trial did not meet its primary endpoint in the heterogeneous overall trial population, the emricasan treatment effect in the subgroup of patients where the histology endpoint is most relevant, patients with advanced fibrosis and early cirrhosis, supports further evaluation. POLT-HCV-SVR has a separate patient population versus the other three Phase 2b clinical trials in the company’s collaboration with Novartis, which are in non-viral indications in patient populations with nonalcoholic steatohepatitis (NASH) fibrosis or cirrhosis.

Patients were stable transplant recipients who were an average of seven years post-transplant on chronic immunosuppression. Hepatitis C virus (HCV), the initial cause of the inflammatory insult to the transplanted liver, was eliminated by antiviral therapies prior to the study.

This is the first demonstration of the anti-fibrotic efficacy with emricasan using a histology endpoint in patients with fibrosis. Consistent with the previous 16 clinical trials, emricasan was generally well-tolerated in the POLT-HCV-SVR clinical trial, and the overall safety profile was similar in the emricasan and placebo groups.

A descriptive summary of the observed response rates (patients with both a baseline and two-year biopsy) after two years of dosing for different stages of fibrosis is provided below. All p values noted are ad hoc, as prospective statistical powering was not feasible in this previously unstudied patient population.

Analyses of Overall Population and Prespecified Subgroups

*Prespecified subgroup population

Emricasan provided evidence of an anti-fibrotic treatment effect in the prespecified subgroup of patients with advanced fibrosis or early cirrhosis (F3-F5 at baseline), with 95.0% of patients (19/20) in the emricasan arm achieving responses in Ishak Fibrosis Score after two years of treatment, compared with 58.3% (7/12) in the placebo arm, a 36.7 percentage point difference in response rate (p<0.02). Inflammatory activity markers (ALT, cCK18, flCK18, Knodell activity index components) were either normal or only slightly elevated at baseline in both the emricasan and placebo groups.

Steven J. Mento, Ph.D., President, Chief Executive Officer and co-founder of Conatus, said, “These are the first biopsy-based efficacy results for emricasan. We are particularly encouraged by the 95% response rate in a subgroup of advanced fibrosis and early cirrhosis patients with a favorable two-year safety profile. In addition, in patients with the potential to continue worsening, those less than F6 at baseline, only 2 of 26 (7.7%) on emricasan compared with 5 of 17 (29.4%) on placebo showed an increase in fibrosis score at year 2 – a treatment difference of 21.7 percentage points. We also plan to evaluate responses in additional subgroups in a variety of secondary and exploratory endpoints to learn as much as possible from this data-rich trial.”

“We are most grateful to the patients who participated in the trial, which required three biopsy procedures over a two-year period,” said David T. Hagerty, M.D., Executive Vice President of Clinical Development at Conatus, “and to the clinical investigators and support staff who treated and monitored these patients, as well as the site monitoring, data collection and analysis teams who kept this long and complex trial on schedule.”

The primary endpoint was defined as the difference in percentage of responders between the treatment and placebo arms at the two-year biopsy compared with the baseline biopsy. A response was defined as improvement or stability in Ishak Fibrosis Score for patients with baseline scores of F2 to F5 or improvement in Ishak Fibrosis Score for patients with baseline scores of F6. The prespecified goal was a difference of 15 percentage points or more in response rates between the treatment and placebo arms.

Emricasan Clinical Development

POLT-HCV-SVR studied a separate patient population versus the other three Phase 2b clinical trials in the company’s collaboration with Novartis, with the remaining three in non-viral indications – the EmricasaN, a Caspase inhibitOR, for Evaluation (ENCORE) trials, designed to evaluate emricasan in patients with fibrosis or cirrhosis caused by NASH:

  • ENCORE-PH (for Portal Hypertension), initiated in the fourth quarter of 2016, in approximately 240 patients with NASH cirrhosis and severe portal hypertension, with top-line results expected in the second half of 2018;
  • ENCORE-NF (for NASH Fibrosis), initiated in the first quarter of 2016, in approximately 330 patients with NASH fibrosis, with top-line results expected in the first half of 2019; and
  • ENCORE-LF (for Liver Function), initiated in the second quarter of 2017, in approximately 210 patients with decompensated NASH cirrhosis, with top-line results expected in the second half of 2019.

Analyst Ratings

TipRanks reveals that Conatus stock 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 $14.80 suggests the stock has upside potential of just over 146% from today’s closing price. These rating are expected to be revised soon.