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Conatus: What's Next For This Small-Cap Potential NASH Play?

Apr. 06, 2018 4:15 PM ETHistogen Inc. (HSTO)NVS11 Comments


  • The stock of potential NASH development concern Conatus Pharmaceuticals plunged some 30% in trading on Thursday.
  • The trigger for the decline was a trial setback for the company's primary drug candidate Emricasan.
  • However, the company has several other "shots on goal" as well as a big collaboration deal with drug giant Novartis.
  • We profile post-trial analyst opinion, upcoming milestones and how this small-cap could fare after these disappointing trial results in the paragraphs below.

The greatest enemy of knowledge is not ignorance, it is the illusion of knowledge.” ― Daniel J. Boorstin

Thursday was not a good day for shareholders of Conatus Pharmaceuticals (CNAT). The shares plunged some 30% on the trading day. The trigger for the decline was disappointing trial results from a key candidate in this "Tier 4" concern's pipeline.

Specifically, the company's primary drug candidate Emricasan had an unsuccessful POLT-HCV-SVR proof-of-concept clinical trial (Phase 2B) in liver transplant patients with fibrosis or cirrhosis. The company did say that the data for a subgroup of patients where this endpoint is most relevant supported "further evaluation."

So where does this leave investors in this small "Tier 4" concern?

Source: Company Website

First, it is important to remember that this was one of several trial milestones due to hit over the next year or so. The next reading should be top line Phase 2 data for NASH Cirrhosis that should be out in the back half of 2018.

In addition, the analyst community has not given up on Conatus despite this setback. Here's a sampling of analyst opinions that have surfaced since this disappointing data came out. Oppenheimer reissued their Outperform rating yesterday and cut slightly its price target on Conatus to $14 from $16 previously. This is what Oppenheimer's analyst had to say about his view on CNAT after these study results.

Despite the lack of clarity around F6 patients in POLT, we remain optimistic about the next catalyst for CNAT which is top-line results for the Ph2 NASH study, ENCORE-PH, in 2H18. We believe the POC established for Emricasan anti-fibrotic activity in POLT provides confidence for ENCORE-PH because this study also includes fibrotic and cirrhotic patients. As it is the leader of caspase inhibition, we believe CNAT presents a unique opportunity for investors to

This article was written by

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Analyst’s Disclosure: I am/we are long CNAT. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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