Conatus to Cut Staff by 40%, Consider Sale in Light of Recent Failures

San Diego-based Conatus Pharmaceuticals indicated that it is considering a sale of the company as part of an exploration of strategic alternatives. It is already implementing a restructuring plan that will cut 40% of staff and suspend development of its inflammasome compound CTS-2090.

The first big disappointment was in March, when its emricasan failed its Phase IIb ENCORE-NF clinical trial in patients with biopsy-confirmed nonalcoholic steatoheptitis (NASH) and liver fibrosis. NASH is a metabolic disease similar to cirrhosis of the liver, but it occurs in people who drink little or no alcohol. The company had been partnered with Novartis on developing the drug, and had received a $50 million payment in 2017 for worldwide rights to the drug.

Then on June 24, the company announced topline results from ENCORE-LF, indicating that it didn’t meet its primary endpoint and was ending further treatment of patients enrolled in the trial. Conatus also said that the data from the 24-week extension of its ENCORE-PH trial of the drug was consistent with data from the first 24-week period and didn’t meet predefined objectives.

“We designed the ENCORE program to give emricasan an opportunity to achieve its potential through a series of clinical trials tailored to specific patient populations encompassing a broad range of chronic liver disease,” stated Steven J. Mento, president, chief executive officer and co-founder of Conatus. “We are disappointed that emricasan failed to meet the expectations established in prior preclinical and clinical studies, but confident that the ENCORE trials provided a fair evaluation of emricasan’s lack of efficacy in these patient populations.”

Also, last year, the drug failed to stop or reverse damage to liver transplants caused by hepatitis C.

“We remain excited by the potential of CTS-2090 as a uniquely positioned inflammasome disease compound,” Mento said in today’s announcement. “However, we must preserve our remaining resources to extend our cash runway to better explore strategic alternatives that can benefit shareholders, Although we are halting development activities for CTS-2090, we plan to continue to explore a variety of opportunities to advance this compound.”

Conatus indicates it is projecting a 2019 year-end net balance of cash, cash equivalents and marketable securities between $10 million and $15 million.

Company shares plunged to about 30 centers per share from just under $1.00.

NASH, for which there are no approved treatments, is proving to be a tough nut to crack. Other notable drug failures have been Cymabay Therapeutics and Gilead Sciences.

That may be about to come to an end, though. Intercept Pharmaceuticals’ Ocaliva (obeticholic acid) showed additional positive data from its REGENERATE Phase III trial in NASH in April. The drug was approved in May 2016 by the FDA for primary biliary cholangitis (PBC) in combination with ursodeoxycholic acid (UDCA) in adults with an inadequate response to UDCA or alone in adults unable to tolerate UDCA.

Intercept has indicated it plans to file with the FDA for NASH for the drug in the third quarter of this year.

And just yesterday, Genfit and Terns Pharmaceuticals inked a $228 million strategic partnership to develop Genfit’s elafabranor for NASH in China.