Conatus to Slash Staff, Consider Sale After NASH Trial Failures

Xconomy San Diego — 

Conatus Pharmaceuticals said Monday that it would cut its staff by 40 percent and consider a sale or merger after a drug it was testing as a treatment for an increasingly common form of chronic liver disease failed to beat a placebo in a mid-stage clinical trial—the latest letdown in a number of trial failures.

The company is one among many racing to develop a treatment for nonalcoholic steatohepatitis (NASH), a fatty liver disease whose incidence has risen along with obesity, especially in Western countries. The disease, which causes liver inflammation and scarring, can progress to liver failure, which leaves patients in need of an organ transplant.

San Diego-based Conatus (NASDAQ: CNAT) has been developing its lead drug, emricasan, in partnership with Novartis (NYSE: NVS). The Swiss pharma giant paid Conatus $50 million for worldwide rights to the drug in 2017. The partners have been running multiple Phase 2b studies including the trial testing it as a treatment for NASH that Conatus announced Monday had failed.

The results from the 217-person trial, called ENCORE-LF, showed that in patients with the most severe cases of NASH, emricasan didn’t show a difference compared to a placebo for a number of symptoms related to end-stage liver disease.

Conatus also said that the results from a 24-week extension of another trial, a 263-person study dubbed ENCORE-PH, failed to benefit for patients with NASH that has progressed to cirrhosis and a complication of the condition known as severe portal hypertension. Results showed that patients’ portal hypertension didn’t improve compared to placebo—the study’s main goal.

Another Conatus trial, which enrolled liver transplant patients to test whether emricasan could stop or reverse damage to the transplanted organ caused by hepatitis C, failed last April to show the drug could improve upon a placebo.

Conatus stock cratered on the news, falling from just under $1 per share as of market close Monday to about 30 cents apiece in after-hours trading.

In addition to cutting staff, Conatus said it would also halt its development of CTS-2090, an internally developed preclinical anti-inflammatory compound that had been slated to begin human testing in the first half of 2020, to conserve its financial resources.

Novartis, which estimates NASH affects up to 5 percent of the world population, says it will continue to investigate therapies for liver diseases.

Conatus is far from alone in its failure to develop a marketed drug for the advanced liver disease: Others that have fallen short include Bay Area biotechs Cymabay Therapeutics (NASDAQ: CBAY) and Gilead Sciences (NASDAQ: GILD).

Notwithstanding the obstacles, many companies continue to pursue treatments. One of the companies at the front of the pack, France’s Genfit (NASDAQ: GNFT), on Monday announced it had struck a deal with a biotech for the rights to develop and commercialize its experimental NASH drug in China, Hong Kong, Macau, and Taiwan. The biotech, Terns Pharmaceuticals, which is based in Foster City, CA, and Shanghai, paid $35 million upfront. It could pay up to $193 million more if it hits certain milestones. Phase 3 results from a study of the drug in patients with NASH are expected in the fourth quarter.

And New York’s Intercept Pharmaceuticals (NASDAQ: ICPT) is anticipated to file for FDA approval of its treatment, a drug known as obeticholic acid, for NASH—a therapy that has already received approval in a related liver disease called primary biliary cholangitis.