Conatus's PSC Candidate Gets Orphan Designation In The U.S.

Conatus Pharmaceuticals Inc.’s (NASDAQ:CNAT) shares increased almost 10% after the biotech company announced FDA’s grant of Orphan Drug Designation (ODD) to its pipeline candidate IDN-7314 for treatment of primary sclerosing cholangitis (PSC).

IDN-7314 is an oral pan-caspase protease inhibitor, designed to reduce the activity of enzymes that mediate inflammation and cell death.

Notably, the FDA through its Office of Orphan Products Development, usually grants ODD to only those drugs and biologics which are being developed for a safe and effective treatment, diagnosis or prevention of rare diseases or disorders affecting less than 200,000 people in the U.S. On receiving this status, the company developing it gets entitled to certain benefits and incentives, including a period of marketing exclusivity upon a regulatory approval for the designated indication.

Shares of Conatus have significantly outperformed the Zacks classified Medical Products industry so far this year. The stock rallied 175.4% ahead of the broader industry’s modest gain of 15.6%.



ODD was conferred by the FDA based on positive results from two preclinical studies evaluating IDN-7314 for treatment of PSC. IDN-7314 has demonstrated a reduction in relevant PSC biomarkers in both the studies. This set of data would act as a positive proof of concept for future clinical trials in humans.

Significantly, PSC is a rare chronic liver disease, prone to cause cirrhosis and liver failure. Presently there are no curative or disease-modifying treatments for PSC in the U.S. Hence, approval of the candidate would provide the company with a potential opportunity to address the unmet needs of patients suffering from this disease.

Apart from IDN-7314, another candidate in the company’s portfolio is emricasan, also developed to treat chronic liver disease, including NASH fibrosis. It is presently in phase II development for the given indication. Meanwhile, several phase I and phase II studies are evaluating emricasan across a broad range of liver disease etiologies and stages of progression.

Notably in Dec 2016, Conatus had signed an exclusive option, collaboration and license agreement with Novartis AG (NYSE:NVS) for the worldwide development and commercialization of emricasan.

The company expects to provide an update on IDN-7314 and other candidates in its early-stage pan-caspase inhibitor pipeline, later in 2017.

Zacks Rank & Key Picks

Conatus currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in healthcare sector are Bayer (DE:BAYGN) AG (OTC:BAYRY) and Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Regeneron’s earnings per share estimates inched up from $10.16 to $10.52 for 2017 and from $10.90 to $12.10, in the last 60 days. The company delivered a positive earnings surprise in two of the trailing four quarters, with an average beat of 0.45%. Regeneron’s shares have surged 40.6% so far this year.

Bayer’s earnings per share estimates have minutely crawled ahead from $8.28 to $8.85 for 2017 and from $8.80 to $9.52 for 2018, in the last 60 days. The company delivered a positive earnings surprise in three of the trailing four quarters, with an average beat of 10.25%. Shares of Bayer have rallied 31.1% so far this year.

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