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Conatus Pharmaceuticals Inc. (NASDAQ:CNAT)

Q4 2013 Results Earnings Conference Call

March 27, 2014 4:30 PM ET

Executives

Alan Engbring - Director, Investor Relations and Corporate Communications

Steve Mento - President and CEO

Chuck Cashion - Senior Vice President and CFO

Analysts

Roy Buchanan - Piper Jaffray

Stephen Willey - Stifel Nicolaus

John Boris - SunTrust

Bert Hazlett - ROTH Capital

Operator

Welcome to the Conatus Pharmaceuticals fourth quarter and year end 2013 financial results conference call. At this time, all participants are in a listen-only mode. This call is being webcast live on the investor center of the Conatus website at conatuspharma.com. This call is the property of Conatus Pharmaceuticals and recordings, reproductions and transmissions of this call without the express written consent of Conatus is strictly prohibited. As a reminder, today’s call is being recorded.

I would like now to introduce Alan Engbring, Director in Investor Relations and Corporate Communications of Connatus. Mr. Engbring, you may begin.

Alan Engbring

Thank you. Good Afternoon. Press release for the company’s fourth quarter and year-end 2013 financial results was issued earlier this afternoon and can be found on the Investor Center of the Conatus’ website at conatuspharma.com.

During today’s call, we may make forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. Actual results could differ materially from those projected in these forward-looking statements due to risks and uncertainties associated with Conatus’ business. These forward-looking statements are qualified by the cautionary statements contained in Conatus’ SEC filings, including its annual report on Form 10-K and quarterly reports on 10-Q and Conatus’ press releases, including today’s release on 2013 financial result. This call contains time-sensitive information that is accurate only as of the date of this live broadcast. Conatus undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this call.

Joining me on the call today is Steve Mento, President and Chief Executive Officer of Conatus who will discuss recent company highlights and clinical development program and Chuck Cashion, Senior Vice President and Chief Financial Officer of Conatus, who will review the company’s financial results. We will then open the call for questions from invited participants.

I would now like to turn the call over to Steve Mento.

Steve Mento

Thank you Alan. Good afternoon everyone. Since this is our year-end conference call, I'll begin with the review of highlights from 2013 and to date in 2014 and then provide updates on our major clinical development programs. As a reminder, Conatus is developing its lead compound, emricasan, for the treatment of patients across a broad spectrum of chronic liver disease including acute-on-chronic liver failure or ACLF, chronic liver failure or CLF, reestablished fibrosis, post-liver transplant and nonalcoholic -- and nonalcoholic steatohepatitis or NASH.

Emricasan inhibits the drivers of two underlying mechanisms of liver damage, excessive apoptosis or cell death and inflammation. Emricasan works on those same mechanisms, regardless of the etiology or initial insult that cause the disease whether it was a viral infection, obesity, drugs or alcohol or an autoimmune disease.

We started 2013 with good news that our IND for chronic dosing of emricasan in the post-liver transplant population had cleared FDA review. This clearance confirmed that we had adequately addressed the issue which had led Pfizer to initiate a self-imposed clinical hold. That IND clearance created an opportunity to pursue an initial public offering, which we successfully completed in July, raising approximately $59 million in net proceeds and enabling us to advance our clinical development plans.

First on that list was our Phase 2b trial in acute-on-chronic liver failure patients, which we initiated in September. Second was our plan study in post-transplant patients with hepatitis C-induced fibrosis which is on -- which was on track to start in December. The highly positive clinical results and subsequent approval of the new antiviral drug for hepatitis C caused us to table our original trial plans for this patient population in November and revise our approach.

We rolled out our new strategy in January of this year. Earlier this month, we initiated a Phase 2 exploratory trial in patients with nonalcoholic fatty liver disease or NAFLD and nonalcoholic steatohepatitis or NASH. That brings us to today's press release, which provided updates on our key clinical development programs.

I’ll review each of those now in a bit more detail, starting with ACLF. Acute-on-chronic liver failure represents the most critically ill and of our targeted liver disease spectrum, cirrhosis patients facing imminent life-threatening liver failure. These patients have been living with chronic but typically compensated cirrhosis meaning their livers are damaged but still functioning.

They then suffer some kind of acute event perhaps the viral hepatitis flare, bacterial infection or alcohol abuse that puts them in immediate danger of catastrophic liver failure and potentially rapid advance -- advancement to additional organ failure and death. Our goal in this population is to interrupt the rapid disease progression and restore these patients to a reasonably functional status.

We started a Phase 2b trial in this complex and challenging patient population last September in the U.K. and started to expand to U.S. sites in January of this year. An important goal for us to learn how to -- in this study is how to study a patient population that we have not studied before.

Our investigators have expressed a high level of enthusiasm for the trial as there are no treatment options currently available for these patients. This trial was initially focused on a precisely defined subpopulation of critically ill patients.

The initial enrollment criteria have proven to be too restrictive for timely patient recruitment and a delay in the completion of the trial. Our initial eligibility criteria targeted patients who were too ill to participate in our trial. Many patients deteriorated before they could complete the trial screening procedures. Another subset of patients had sufficient organ function during screening to be just outside our eligibility criteria.

We announced today that we are amending our protocol to revise inclusion and exclusion criteria and address the most common causes for patient screening failures. We expect this amendment to increase enrollment rates in both patient pools and allow more timely progress towards trial completion.

Let me remind you that this trial is primarily a dose ranging and safety study to determine whether any dosing adjustments are needed in this challenging patient population. To support dose selection in our overall clinical development program, we intend to evaluate pharmacokinetic data from three trials including a subset of patients from -- in our ACLF trial, our ongoing trial in patients with severe renal impairment and a trial in patients with hepatic impairment that will start soon.

Pharmacokinetic data from these three trials are expected in the second half of 2014 and together, these trials should provide more comprehensive data across a range of critically ill patients and allow us to establish appropriate dosing for potential future studies in both the ACLF and CLF patient populations. We also expect to revise ACLF protocol to increase the pace of enrollment of patients, which should provide information on directional movement of biomarkers and functional parameters in individual patients within the same timeframe.

Moving on to CLF, chronic liver failure patients are next on our spectrum of liver disease severity. These patients whose long-term cirrhosis has progressed the liver failure, also known as decompensation. They may be on the transplant waiting list or maybe too sick to qualify for transplant. Our goal for these patients is to delay further disease progression to give them more time for a suitable liver to become available for transplant or to allow their health to improve sufficiently to qualify for a liver transplant.

We will apply information derived from our ongoing ACLF trial, our ongoing severe renal impairment trial and our soon-to-start hepatic impairment trial design ACLF Phase 2 study, which we expect to start in the second half of 2014. We are also exploring the potential for this trial to include patients with earlier stage compensated cirrhosis whose liver function is still near normal. In this population, which is further upstream on the severity spectrum, we would hope to delay or prevent progression to decompensation.

Moving on to the POLT program, moving further towards a healthy end of the liver disease spectrum from cirrhosis to fibrosis, we find patients whose liver function has been restored as a result of transplant. These patients are still fragile and most remain on immunosuppressive drugs. They're also vulnerable to damage to the newly transplanted livers if the original insult is not removed.

Emricasan was granted U.S. Orphan Drug Designation late last year for the treatment of liver transplant recipients with reestablished fibrosis. Our goal for these patients is to prevent or delay the progression to cirrhosis and end-stage liver disease. In our initial clinical development plan, we are focused on a subset of this post-transplant population.

Specifically, we will treat patients, whose transplanted livers become infected with Hepatitis C virus, causing fibrosis to become established in the new warning. Effective antiviral treatments can eradicate the viral insult, but do not resolve the underlying fibrosis. We believe emricasan can improve the rate of healing in these patients and decrease the chance of their progressing -- fibrosis progressing to cirrhosis.

We plan to initiate a Phase 2b clinical trial in this whole HCV-SVR patient population in the second half of 2014, which provides our first proof-of-concept opportunity for emricasan as an anti-fibrosis agent. Continuing further upstream towards the less severe end of the liver disease spectrum, we find patients with fat deposits in their liver.

When alcohol consumption is not considered the primary driver, this indication is called nonalcoholic fatty liver disease or NAFLD. If the fat deposits persist and cause inflammation, the disease is called nonalcoholic steatohepatitis or NASH. As NASH progresses, it can cause damage to the underlying tissue leading to fibrosis and eventually cirrhosis, because NAFLD and NASH often go undiagnosed for years and damages cumulative. Patients may not discover their liver damage until it is well established.

We started a Phase 2 trial in patients with NAFLD and NASH earlier this month to expand our safety database with emricasan into earlier stage patients and to explore its potential activity against key biomarkers of liver damage. Preclinical studies in our model -- animal models of NAFLD and NASH have demonstrated emricasan’s ability to reduce fat deposition in the liver, as well as fibrosis and to also improve metabolic parameters.

This initial trial will evaluate safety and biomarkers to confirm that dosing is appropriate for potential futures studies in this population. The regulatory approval pathway in NASH in the NASH population is not yet defined and we do not intend to lead that effort. Rather, we intend to establish sufficient data to support a fast follower position to high more advanced programs. We expect topline results from the trial in the second half of 2014.

With that, I will now turn the call over to Chuck to discuss our 2013 financial results.

Chuck Cashion

Thank you, Steve. Earlier today, we announced our financial results for the fourth quarter and full year 2013. I’ll cover a few highlights on some perspectives. Our net loss for 2013 was $15.6 million, compared with $8.7 million for 2012. Research and development expenses were $6.9 million for the full year 2013, compared with $5.5 million for the full year 2012.

General and administrative expenses were $4.7 million for the full year 2013, compared with $3.1 million for the full year 2012. These increases in R&D expenses, G&A expenses and the net loss reflected the company's growth in clinical development program advancement as well as the increased obligations of public company status following the IPO in July.

We ended 2013 with cash, cash equivalents and marketable securities of $56.4 million, compared with $8 million at the end of 2012 and an anticipated balance of $28 million to $32 million at the end of 2014. Our financial position remains strong, and we believe sufficient to fund our planned clinical development activities through the significant clinical milestones Steve just reviewed.

With that, I will turn the call back to Steve for some closing comments before the Q&A session.

Steve Mento

Thank you, Chuck. In summary, I'd like to reiterate that our clinical development strategy for emricasan spans across a broad spectrum of liver disease, from the most gravely ill patients who are facing less or facing imminent multi-organ failure and death to outwardly healthy individuals with NAFLD or NASH, who accumulate fat deposits in the liver and advancing towards more serious consequences.

We are encouraged by emricasan’s preclinical and clinical safety profile to date, and we are designing and conducting the relevant trials to demonstrate suitable efficacy across this broad range of patients.

That concludes our prepared comments. Now, I’d like to turn the call over to our operator to moderate the Q&A session.

Question-and-Answer Session

Operator

Thank you. (Operator Instructions) Our first question comes from Roy Buchanan of Piper Jaffray. Your line is now open.

Roy Buchanan - Piper Jaffray

Hi, guys. Thanks for taking the question. Maybe I missed the (indiscernible) but could you specify precisely what the ACLF’s amendments are?

Steve Mento

No, we did not specify what those amendments are. In general, what we are doing are simplifying the timing associated with the screening process as well as reducing some of the levels of functional requirements. So that we can enroll, both sicker patients with the simplified screening procedure and patients who are little bit less sick with the reduced functional requirements.

Roy Buchanan - Piper Jaffray

Okay, great. And which set of patients are you going to look at subset of PK?

Steve Mento

Actually, both will be looked at. It sounds like they are widely different, but they really aren’t.

Roy Buchanan - Piper Jaffray

Okay. And then on the HCV-POLT, are you enrolling patients once they become re-infected, the liver becomes re-infected or once they develop fibrosis?

Steve Mento

Actually, the strategy now in the post-transplant patients are all inpatients who got a liver transplant due to their regional HCV infection, that had a recurrent HCV infection post-transplant, developed fibrosis, but were cured of their HCV infection with any antiviral treatment. So, we are looking to treat the fibrosis that remains after the HCV infection is cured.

Roy Buchanan - Piper Jaffray

I see. Okay. That’s helpful. All right. And then turning to the broad question, I am just wondering if you guys could describe a little bit the logic behind pan- caspase inhibition versus specific. Is it simply too difficult to find inhibitor specific caspases, or is there a logic behind the pan-caspase inhibition? Thanks.

Steve Mento

Thanks for that question, Roy. There actually is a logic for pan-caspase inhibition. There are 10 human caspases, 7 of those are involved in cell death or apoptosis, 3 of those are involved in processing two very important pro-inflammatory cytokines, IL-1β and IL-18. The power of a pan-caspase inhibitor is that by inhibiting the full 10 enzymes we can have an impact on two key drivers of liver disease, both excessive cell death or apoptosis and excessive inflammation. So in our opinion, it is very key that we cover both aspects of the mechanism and the only way you can do that is with the pan-caspase inhibitor.

Roy Buchanan - Piper Jaffray

Okay, great. Thank you.

Operator

Your next question comes from Ian Somaiya of Nomura Securities. Your line is now open.

Unidentified Analyst

Hi. Good afternoon. Thanks. It’s Matthew on for Ian. Just a couple of quick ones if I could. First, on the ACLF trial, I just wanted to get a sense if you could give some sort of building on Roy’s question a sense as to prior to the protocol amendment, how far along you were in terms of target enrollment and a little bit of color on the rate of screening failures you were seeing?

Steve Mento

Sure. Our policy is not to provide actual patient numbers, but I think what’s very clear is that if we were satisfied with the pace of enrollment, we would not be looking to amend the protocol.

Unidentified Analyst

Okay. Fair enough. And on the NASH trial, obviously it’s very early going the trial, just got started this month, but I was just wondering if you could share any early feedback in terms of how enrollments are -- what kind of -- if enrollment is off to a strong start or anything like that, that will be very helpful?

Steve Mento

Again, I think the most important guidance I can give you on that particular indication is we expect top line results in the second half of this year.

Unidentified Analyst

Okay. Thank you.

Operator

Thank you. The next question comes from [Lisa Bacon] (ph) of JPM. Your line is now open.

Unidentified Analyst

Hi, there. How are you doing? I was wondering if you could give us some insights into what kind of information we are going to get from this next study that you’re doing, the next data read-out, what kind of -- what are we going to learn?

Steve Mento

In which indication Lisa?

Unidentified Analyst

The ALCF?

Steve Mento

Well, I think our expectation is we’re going to learn what we need to learn in order to make a decision, whether or not to move into Phase 3. As I said part of the challenge with this particular patient population, not only are they critical ill, they are not a studied -- population certainly we studied before. So we need to learn how to identify these patients and get them involved in clinical trials. We'll certainly learn that and we are learning that.

We have to, the trial designed as a -- primarily as a pharmacokinetics study, that’s the primary endpoint. So we are required to do studies in these patients and we will supplement the ACLF data with the severe renal study and the hepatic impaired study that will start very shortly to understand whether or not we have to modify dosing in this more critically ill patient population.

And third and I think something that obviously a lot of people are looking for, we need to see some evidence of directional movement of biomarkers. As you are aware, we have some very compelling data with biomarkers and other patient populations. We would like to see that as well in this patient population. But also since they have functional abnormalities, we would like to see coincident movement in the right direction, again in individual patients of those functional abnormalities as well. And I think those are the kinds of things that we are going to be looking to get out of this trial in order to make the determination, whether or not it’s a Phase 3 candidate or not.

Unidentified Analyst

Remind us if it’s placebo-controlled?

Steve Mento

It is placebo-controlled and blinded.

Unidentified Analyst

Okay. And is there a change in the timing on the read-out of the study, I was on and off in the beginning when you are talking about it, I didn’t get all the details?

Steve Mento

Yes. We have updated guidance to indicate we have the pharmacokinetic data from a subset at the ACLF patients as well as added to that data from the severe renal study ongoing now and assume to be initiated hepatic failure study in the second half of this year, as we will also have information on that directional movement of biomarkers as and hopefully coincident reduction for improvement in functional parameters also in the second half of this year.

Unidentified Analyst

Okay. Would you -- are you going to be -- is it meaningful to look at any sort of these like kind of bridge transplant kind of metrics or anything like that is more kind of like a Phase 3 sort of endpoints if you are looking at those like outcomes or...?

Steve Mento

We will be measuring those. We will be -- the proposed Phase 3 endpoint in this trial population is time to clinical worsening which is a composite of death, time to next organ failure and transplant, I would say good outcome for the patient, but we have count that as a negative because we didn’t protect the organ. So we will be looking at that.

The challenge there is we only have 15 patients in the placebo group and then three groups of three different doses of the drug each with 15 patients. Although we will be looking at that, it’s not trial, the trial is not powered to detect differences between those groups. So certainly something we are going to be looking at, but we did not have power to show any difference in that Phase 3 endpoint.

Unidentified Analyst

Great. Thank you.

Operator

Thank you. Next question comes from Stephen Willey of Stifel. Your line is now open.

Stephen Willey - Stifel Nicolaus

Hi, guys. Good afternoon. So I guess to understand the amendments that are being made to enroll I guess sicker patients, and it sounds like those criteria are being adjusted primarily on the basis of baseline renal function, is that correct?

Steve Mento

No, it's actually -- it's interesting. We're actually defining the protocol to allow us to enroll more effectively two types of patients, patients that were critically ill will simplify the timing for enrollment to the patients that are critically ill basically during the screening process they deteriorated and died, the most critically ill patients. So we obviously want to treat them before that happens.

But the second thing we're doing is modifying functional criteria and it's not just renal, it's renal and liver to allow patients that are on the margin but are little bit less sick but still had significant morbidity. So we are really modifying the protocol in two ways to enhance enrollment of both types of patients. Both by the way are considered the ACLF population, it’s just degree of severity.

Stephen Willey - Stifel Nicolaus

Okay. And then I understand that you had expanded the study to include U.S. sites. I think it was mentioned back in January. And I know you're not giving us patients numbers but can you maybe just tell us how many sites were up and running in the U.S.?

Steve Mento

We have about a half a dozen sites up and running in the U.S. now. I think we'll max out just under a dozen.

Stephen Willey - Stifel Nicolaus

Okay.

Steve Mento

I remember the reason why and I think this has been a very important addition. The reason why we initiated those sites what is so much enrollment perspective but to make sure that we can capture the heterogeneity of this ACLF population. And I do think that having those U.S. sites on board will help us capture that heterogeneity of the population as we've described.

Stephen Willey - Stifel Nicolaus

Okay. And then just so I'm clear as well, the PK data that we're going to be getting in the second half of the year. I understand there is a severe renal kind of single dose study that's ongoing. There is going to be hepatic -- the patients with hepatic impairment but then there is also a subset of ACLF patients, I think that you refer to?

Steve Mento

Right.

Stephen Willey - Stifel Nicolaus

How is that subset defined exactly?

Steve Mento

They will just be the first ones in. The way we'll analyze the PK data is severe renal patients are currently excluded from the ACLF study. That’s a potential addition in Phase 3. The hepatic impaired patients are included in that study but in combination with other organ failure. So the hepatic impairment study will give us a clean population of mild, moderate and severe patient population.

So once we have that data plus the subset of patients in ACL that's when we’ll do the PK analysis. So we don't have to have the complete data set. In fact, we've always said we don't need a complete data set of the ACLF population for the PK determinations.

Stephen Willey - Stifel Nicolaus

Okay. And then I think, you had talked about the NAFLD, NASH study and looking at the reduction of key biomarkers, I guess that are known to be applicable in those conditions. Are those just ALT, AST, cCK18 or are there other…?

Steve Mento

They’ve included the other biomarker and this is actually one that we also looked at in the HCV infected population as caspase 3/7.

Stephen Willey - Stifel Nicolaus

Okay.

Steve Mento

So we have basically two mechanism specific biomarkers, the cCK18 which actually measures activity of the downstream caspase as a component subset of that pan-caspase population. The caspase 3/7 activity actually measures the activity, the upstream caspas. So two different subsets of that caspase population with those mechanisms specific bio-markers. And then ALT and AST are the more generic liver damage biomarkers that we've measured in the past.

Stephen Willey - Stifel Nicolaus

Okay. And then can you just remind us lastly the duration of this initial POLT study?

Steve Mento

The POLT study, the primary endpoint will be one point change or one point difference in the Ishak fibrosis score and that's a two-year time point…

Stephen Willey - Stifel Nicolaus

Okay.

Steve Mento

… but we have designed this study as a blinded study to the positions and patients but sponsor open. So our plan is to look at actual data sets from patients at least three intervals at about six months from the biomarkers and about one year for histology. There will be histology or a biopsy taken at one year looking primarily at the inflammation score and then at two years at the primary endpoint.

The rationale for that is there have not been a lot of studies in this population looking at the rate of regression. So we want to get some lead along the way to see whether or not the drug is performing as we’d expect to perform.

Stephen Willey - Stifel Nicolaus

Okay. And this will be a placebo-controlled study?

Steve Mento

Yes. Placebo-controlled blinded to the physicians and the patients with sponsor open.

Stephen Willey - Stifel Nicolaus

And then just the target any given?

Steve Mento

It's a 20 patients per group. So 20 on placebo on 20 to 25 milligrams twice a day.

Stephen Willey - Stifel Nicolaus

Okay. Thanks for the color.

Steve Mento

Okay.

Operator

Thank you. The next question comes from John Boris of SunTrust. Your line is now open.

John Boris - SunTrust

Thanks for taking the questions. First question just has to do with PK data. You've indicated that you're going to collect some from ACLF and then permanent in the hepatic impairment studies. How many total patients are you targeting to have and what's the venue to present that data?

Steve Mento

Sure. I actually can't tell you what the venue for the data will be to present the data right now. But as you're probably aware, the cohort sizes in the standard studies are eight patients. So in the severe renal patients with eight patients study and the hepatic impaired will be looking at three subset of patients and they have a parallel placebo group. So that's the ballpark for the minimum number of patients we want to see in the ACLF group which really has PK. We will be looking at PK with a combination of organ failures as opposed to the single organ failure.

John Boris - SunTrust

Okay. So, a minimum of 32, you're looking to get out of ACLF?

Steve Mento

No, it's a minimum of eight. You don’t really need.

John Boris - SunTrust

Okay.

Steve Mento

If we were going to capture the hepatic impaired in total in the ACLF population that’s when the 32 comes in. We're going to cover that with hepatic impaired pure population with that 32, so now we only need a small subset from the ACLF population to cover PK in individuals that have two organs involved.

John Boris - SunTrust

Somewhere between 32 to 40?

Steve Mento

You're talking about in the ACLF or you're talking about in total among the three studies?

John Boris - SunTrust

In total.

Steve Mento

In the three studies, yes, I think that's fair.

John Boris - SunTrust

Okay. Going back to the ACLF amendment on the functional requirements, what have you relaxed the functional requirements two on renal and liver?

Steve Mento

We are getting those requirements as we speak to make sure that we capture the right patient populations. But what I can tell you, it is likely we will reduce the numbers for including criteria for two organs of both renal and liver.

John Boris - SunTrust

So, if you're going to be relaxing what where they and what do you think the range will be that you are relaxing them to?

Steve Mento

I don't have it memorized in my head right now, but as I said we're getting the numbers based on our experience at the sites right now. And I don't think, we've disclosed other than what’s on clinical trials like that. I just don’t have the numbers in my head.

John Boris - SunTrust

No problem. And then on the timing of screening, can you help us understand? You probably have at least some understanding out of the U.K. cohort, the timing issue. How you are going to deal with the timing issue going forward here? Was the timing for patients and obviously …?

Steve Mento

Yeah. We had hope to have all the data we needed from the ACLF study in the first half of this year for PK except the severe renal because those patients were excluded from that study from the beginning, that’s why we had that study going earlier. Now, we are going to draw data from the three studies and have that available in the second half of the year.

John Boris - SunTrust

And then just on quick, more of a regulatory question on NASH. When you do talk about some of the hepatic experts, sounds like regulators at both FDA and EU may support NASH target, targeted drug use reversal of Steatohepatitis with no fibrosis progression as a surrogate histological endpoint, just your thoughts around that?

Steve Mento

I'm not aware of that and the information that I’m aware of suggests and this is primarily from the AASLD, FDA meeting, which was in back September, was that the suggestion at least of that meeting was that the minimum requirement for treatment was NASH plus fibrosis. Now that could have changed and I believe that there’s going to be a follow-up meeting or an additional meeting in June which we will be attending. So, I'm anxious to hear what ultimately the definition of that population is.

It may change and I think our rationale for being for trying to set ourselves up as fast followers is exactly for that reason. Once it’s defined with the population as once the endpoints are defined, we’ll know that those at emricasan to go into that population. We already have very strong preclinical data, but that's really why we’re focused more on the severe end of the disease and looking at our NAFLD/NASH study really as one to define the appropriate dose in that patient population.

John Boris - SunTrust

So you think following that June meeting of FDA and opinion leaders that that will be better elucidated?

Steve Mento

I hope so. Our approach is little bit different than some of the companies out there. We’re focusing on the more critically-ill and a spectrum of liver disease and within our patient population, they are NASH patients, but we’re just not looking at pure NASH patient population. I think others have focused at least initially on the less-ill patient population. But what I'm seeing and hearing is that there might be a movement more even in the pure NASH population towards sicker patients because I think it’s just easier to justify treatment of those patients as well as easier to define the relevance of surrogate endpoints.

John Boris - SunTrust

Okay. Very good. Thanks a lot for taking the question.

Steve Mento

Sure.

Operator

(Operator Instructions) And our final question comes from Bert Hazlett of ROTH Capital. Your line is now open.

Bert Hazlett - ROTH Capital

Yes. I’ve got a question or two on the NASH/NAFLD study. Do you expect to favor one particular group over the other in terms of enrollment -- enrollment of the individual patients? I’ve got a question on the HCV-POLT-SVR trial as well.

Steve Mento

Actually, we’re not going to require biopsy-proven NASH. What we are going to base the initial the fatty liver disease and elevated ALT. So it will be what it is as far as the distribution is concerned. Our expectation is that there'll be subsets of both. We have no preconceived notion of which needs to be enhanced or not, that’s NAFLD study.

Bert Hazlett - ROTH Capital

Okay. Thanks. And then the HCV-POLT-SVR, could you remind us the enrollment criteria for that study? You talked a little bit about earlier in the call, but could you just run us in broad strokes?

Steve Mento

Sure. So in that particular population, first off, recall, we have orphan drug designation for recurrent fibrosis due to any insult in patients, liver patients post-transplant. So I wanted to bring that up because the population that we’re talking about falls within we believe that orphan drug designation. So the population, we’re looking at are patients who originally lost their own liver because they had an HCV infection, probably for many decades.

If they have not had clearance of their HCV infection prior to that transplant and virtually a 100% of those patients post-transplant, the HCV infection recurs. And in many of those patients the deterioration of now their new liver progresses quite rapidly. We originally were planning on studying that particular population with the ongoing recurrent HCV infection post-transplant and fibrosis.

Well, with the advent of the new HCV antiviral therapies out there and at least an opportunity in this patient population to actually clear their HCV infection. With the input from our investigator decided to take a new approach and that is the same population except our treatment would begin only after their HCV infection have been cleared.

So these patients will have fibrosis in their liver. They will have had a cleared HCV infection and the goal of emricasan treatment is help in the resolution of the fibrosis, the remaining fibrosis in the liver. The literature hasn’t -- there hasn’t been a lot studied in these patients in the literature. But what has about 30% of the patients that have had a viral clearance post-transplant still have fibrosis, will show some improvement histologically after two years. So there's plenty of room for improvement in that population.

Bert Hazlett - ROTH Capital

Thanks. And just one last one, in term of ACLF study, has that been due to your experience in the U.S. in discussions there, or is this coming out of the U.K. in terms of just what might loosen the trial enrollment or free up the trial enrollment?

Steve Mento

It really has been a combination of the two. As I said earlier, I think that it was important for us to add those U.S. sites to get some diversity, and the treatment or the supportive therapies for those patients, the kinds of patients that have been treated. So it really has been I think a plus having, even though it’s been only a limited number of sites so far in the U.S. But having input from the U.S. clinical investigators as well on the patient population has been quite informative. So it's really been a combination of input from the U.K. site as well the U.S. sites.

Bert Hazlett - ROTH Capital

Okay. Thanks.

Operator

There are no further questions at this time. I will now turn the call back to Steve Mento for closing comments.

Steve Mento

Okay. Last closing comments. Thank you all for your participation in today's call and for your continued support of Conatus. We look forward to updating you again very soon.

Operator

Ladies and gentlemen, this concludes today’s presentation. Thank you once again for your participation. You may all now disconnect.

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Source: Conatus Pharmaceuticals' CEO Discusses Q4 2013 Results - Earnings Call Transcript

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