Conatus' (CNAT) Q3 Loss In Line, Revenues Lag Estimates

Conatus Pharmaceuticals, Inc. (NASDAQ:CNAT) incurred a loss of 15 cents per share for the third quarter of 2018, meeting the Zacks Consensus Estimate. However, the figure was wider than the year-ago quarter’s loss of 13 cents per share.

Revenues came in at $7.7 million, down 23% year over year due to lower reimbursement from partner Novartis (NYSE:NVS) for the costs incurred to support development of Conatus’ lead pipeline candidate, emricasan. Moreover, the top line marginally missed the Zacks Consensus Estimate of $9.7 million.

Conatus has no approved product in its portfolio at the moment. The revenues generated by the company are all related to its collaboration with Novartis for the worldwide development and commercialization of emricasan.

Shares of Conatus have lost 7.4% so far this year against the industry’s increase of 1.3%.

In the third quarter, research and development expenses were $9.7 million, down 13.4% from the year-ago period’s figure, mainly owing to lower spending associated with the ongoing ENCORE -NF and ENCORE-PH studies on emricasan. This was partially offset by higher spending in the ENCORE-LF study on the same candidate.

General and administrative expenses were $2.7 million, marginally up from the year-ago quarter’s $2.4 million on higher personnel costs.

Emricasan in Focus

Emricasan, a caspase inhibitor, is being developed for the treatment of patients with fibrosis or cirrhosis caused by nonalcoholic steatohepatitis (NASH). Conatus acquired the worldwide rights to emricasan from Pfizer (NYSE:PFE) in July 2010.

The company is conducting three ongoing phase IIb ENCORE studies on emricasan for treating fibrosis or cirrhosis induced by nonalcoholic steatohepatitis (NASH). The programs are namely, ENCORE-NF (for NASH fibrosis), ENCORE-PH (for portal hypertension) and ENCORE-LF (for liver function).

Top-line data from the ENCORE-PH evaluation is expected later this year while top-line outcomes from the ENCORE-NF study are awaited in the first half of 2019.

However, top-line data from the ENCORE-LF study will now be presented in mid-2019, much earlier than the previously estimated timeline of the second half of 2019.

The company remains focused on the development of emricasan as positive results from these analyses will pave the way for a phase III efficacy and safety assessment on the candidate for the given disease.

Apart from emricasan, another candidate in the company’s portfolio is IDN-7314, which is currently undergoing a phase II study for the treatment of primary sclerosing cholangitis (PSC), a chronic liver disease.

Guidance

Conatus continues to expect its 2018 year-end cash balance between $35 million and $40 million.

However, with Novartis sharing half of Conatus’ development costs for investigations on emricasan, the latter expects its current financial resources to be sufficient for funding operations through the end of 2019.

Zacks Rank & Stock to Consider

Conatus carries a Zacks Rank #3 (Hold). A better-ranked stock in the healthcare sector is Gilead Sciences, Inc. (NASDAQ:GILD) , which sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Gilead Sciences’ earnings estimates have been revised 4.4% upward for 2018 and 4.2% for 2019 over the past 60 days.

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