Conatus May Still Have A Path Forward After Latest Phase 2b Data

Summary

• Conatus Pharmaceuticals didn't meet primary endpoint for phase 2b ENCORE-PH study, but a subgroup analysis of compensated cirrhosis patients had a clinically meaningful effect when taking emricasan.
• Those that benefited the most with 25 mg emricasan were compensated NASH cirrhosis patients with portal hypertension that had HVPG ≥13 mmHg.
• Both the 25 mg and 50 mg of emricasan achieved a >10% improvement in mean HVPG compared to placebo in all HVPG cohorts from ≥13 mmHg through ≥17 mmHg.
• Additional 48-week data from the phase 2b ENCORE-PH study measuring liver function and other clinical outcomes is anticipated by mid-2019.
• Results remain for two other studies, which are ENCORE-NF in NASH Fibrosis due 1st half 2019 and ENCORE-LF for NASH cirrhosis due by mid-2019.
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Recently, Conatus Pharmaceuticals (CNAT) announced results from its phase 2b ENCORE-PH study treating patients with NASH cirrhosis portal hypertension. The primary endpoint for the overall trial wasn't met. However, I believe that the company still has a path forward for a subpopulation of compensated cirrhosis patients. This could potentially be moved forward on a subgroup analysis. For this reason, I believe that the study may still push forward. On top of that, there is another 6-month treatment extension period that will look at other clinical outcomes besides HVPG as an endpoint.

Further Potential

The phase 2b ENCORE-PH study recruited a total of 263 patients with compensated or early decompensated liver cirrhosis and severe portal hypertension. Patients enrolled into the study had to have an HVPG > 12 mmHg at baseline. Patients were randomized to receive either 5 mg, 25 mg, 50 mg of emricasan or placebo twice daily for 24 weeks. It was announced that the primary endpoint of achieving a change in the mean hepatic venous pressure gradient (HVPG) from baseline to week 24 was not achieved. Despite this, there was a subgroup analysis done on compensated cirrhosis patients which may provide a path forward towards additional studies. A post-hoc analysis showed that there were consistent improvements in mean HVPG at week 24 over baseline in the compensated cirrhosis population. Clinically meaningful differences compared to placebo were shown consistently in multiple baseline HVPG cohorts from ≥13 mmHg through ≥17 mmHg. These values are shown below:

Patient Baseline HVPG	Emricasan 25 mg BID
≥13mmHg	-1.4 (p=0.040)
≥14mmHg	-1.8 (p=0.015)
≥15mmHg	-1.6 (p=0.035)
≥16mmHg	-2.3 (p=0.006)
≥17mmHg	-2.8 (p=0.005)

Click to enlarge

Notice above that it starts off with ≥13 mmHg and goes higher. That's because the >12 mmHg total population (both compensated and early decompensated patients) was not significant with a p-value of p <0.05. The chart above shows the subpopulation of patients with compensated cirrhosis. In my opinion, the post-hoc analysis is crucial because I believe there is a path forward for a phase 3 study based on the subpopulation noted above. I state this for a few reasons. The first reason is that compensated cirrhosis patients that are ≥13 mmHg or higher responded with a p-value of p <0.05 as you can see above in each HVPG cohort. The second reason is that there is a trend above in the 25 mg emricasan group. For instance, as the measurement of HVPG increases on the left of the chart, notice that, on the right, there is a continuing decrease in HVPG. That means the sicker the patient is in the compensated cirrhosis group, the greater the decrease in HVPG. The early decompensated group was not as successful at all. Therefore, if Conatus does move on to a phase 3 study it will likely be only in the compensated cirrhosis patients. The final reason is that once the baseline HVPG measurement for patients starts at ≥16mmHg, then the effect of 25 mg of emricasan was even greater. The ≥16mmHg baseline and higher groups saw the greatest improvement in HVPG. In addition, the study was purposely designed to recruit more compensated cirrhosis patients than early decompensated cirrhosis patients. The study had 201 out of 263 patients or 76% with compensated cirrhosis and 62 out of 263 patients with early decompensated cirrhosis. Why is it important to mention these different groups? That's because of the quote that was stated in the press release by Steven J. Mento, Ph.D., President, Chief Executive Officer and co-founder of Conatus:

"Based on previous discussions with regulators, we expect that separate registration trials would be needed in compensated and decompensated NASH cirrhosis. This trial purposely enrolled mostly compensated patients, and we are encouraged by the treatment effect shown in this population in these top-line results"

This means that despite any data from this study, prior discussion with the FDA would have forced two separate trials regardless. One potential registration trial for compensated cirrhosis patients and another registration study for early decompensated patients. The early decompensated population won't likely be pursued. However, I believe that the FDA may likely allow a phase 3 study to be initiated for the compensated NASH cirrhosis population. The reason why is because there are no alternate approved therapies for these patients. This is evidenced by a quote from Arun Sanyal, M.B.B.S, M.D., Professor of Medicine, Physiology and Molecular Pathology at Virginia Commonwealth University School of Medicine, chair of the NIH NASH Clinical Research Network, and chair of the Liver Forum:

"Not surprisingly, those with the highest HVPG had the greatest benefit and the trends in all groups on sensitivity analyses favored active therapy. Together, these suggest that the findings are real and support additional investigation of this compound for those with compensated cirrhosis due to NASH and high HVPG, i.e., the population at greatest risk of clinical decompensation for whom there are no alternate approved therapies."

Basically, those patients that are in the compensated cirrhosis stage with portal hypertension are a ticking time bomb. Meaning that they could eventually be at risk to become early decompensated cirrhosis patients if they are not treated properly. With no alternate treatment options, other than statin and beta blockers, these patients will likely progress to the decompensated stage.

Financials

According to the 10-Q SEC Filing, Conatus Pharmaceuticals has cash and cash equivalents and marketable securities of $49.6 million as of September 30, 2018. The company believes that it has enough cash to fund its operations for at least the next 12 months. This is not bad news, because Conatus is partnered with Novartis (NVS). It anticipates that Novartis will reimburse it by 50% for all three of the phase 2b studies: ENCORE-PH, ENCORE-NF, and ENCORE-LF. This doesn't include any potential milestone payments that may be given as a result of the three trials noted above. In addition, according to the deal, any study that moves on to phase 3 with emricasan either alone or in combination will be fully funded by Novartis. Conatus believes that the cash is anticipated to last at least until the end of 2019. That means that Conatus will have enough cash to least through all three remaining trial readouts. I consider the ENCORE-PH study as one of the studies because even though Conatus just reported results at the 24-week interim mark for HVPG, the study will continue. This study is expected to have another readout at week 48 for other clinical outcomes besides HVPG, like liver functions and other clinical outcomes. These updated results for ENCORE-PH are expected by mid-2019.

Conclusion

The overall primary endpoint was not met. However, a subgroup analysis of patients treated with emricasan who had HVPG ≥13 mmHg did achieve clinically meaningful evidence of efficacy in compensated cirrhosis patients. That means there is a possible path forward for a phase 3 study using a subpopulation. A risk would be whether or not Novartis would remain on board until the rest of the studies are read out. In my opinion, I think they will stay on board simply because the last two studies are going to be readout before mid-2019. When the deal was signed between both companies, Novartis didn't take the option to license emricasan until the phase 2b ENCORE-LF study was initiated. In other words, it wanted that study to initiate before it would consider licensing emricasan. Soon after the study was initiated, Novartis chose to license emricasan. That's why I'm inclined to think that Novartis will likely wait for the next two readouts before deciding on potential paths forward for any single or combination studies. In addition, it's also possible that Novartis may want to test out combination studies with emricasan as well before then. The phase 2b ENCORE-NF study that recruited 330 patients with NASH fibrosis has top-line results expected by 1st half 2019. The phase 2b ENCORE-LF study is due to readout results for decompensated NASH cirrhosis by mid-2019. The final 48-week readout for ENCORE-PH is due by mid-2019. The biggest risk is that it's possible not all these studies will be successful. In that case, the stock could be cut in half again by 50% or more. However, I believe there is a path forward still to treat these compensated NASH cirrhosis patients with portal hypertension who have no other alternative therapies.

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.