As the slide above shows, the study's data was somewhat skewed by emricasan's inability to have a positive effect on F6 fibrosis patients. However, as Conatus pointed out in its press release, emricasan demonstrated significant antifibrotic effects on F3-F5 patients - fibrosis reduction occurred in over 60% more patients treated with emricasan than with placebo.
Despite this positive spin, the fact that emricasan was not able to have a meaningful effect on patients with F6 fibrosis is certainly a cause of concern, given that emricasan is primarily targeting patients at the latest stages of cirrhosis. Given this mixed data, it is difficult to forecast how emricasan will perform going forward - the only thing left to do is wait.
As I mentioned previously, Conatus is currently in the midst of three other Phase 2 trials for emricasan:
ENCORE-PH's upcoming data readout represents Conatus' most immediate catalyst. The study's primary endpoint is hepatic venous pressure gradient (HVPG) reduction in NASH patients with several portal hypertension, and is evaluating emricasan's ability to treat patients with compensated cirrhosis. Though it was difficult to get an idea of emricasan's actual potential from the POLT-HCV-SVR data, I believe that ENCORE-PH will provide investors with more definitive answers.
Simply put, if emricasan fails to have a meaningful effect in reducing HVPG, it will be clear that the drug's clinical applicability is severely limited - and Conatus' stock price will reflect this. Additionally, poor performance in ENCORE-PH may also foreshadow to investors a less than positive readout for ENCORE-LF, Conatus' decompensated cirrhosis trial.
ENCORE-NF, which is expected to read out in the first half of next year, is Conatus' NASH fibrosis trial. This trial is Conatus' least important clinical trial, given the current overcrowded state of the NASH fibrosis market. As such, a positive readout for ENCORE-NF will likely not have a major effect on Conatus' clinical progress or stock price.
ENCORE-LF is Conatus' decompensated cirrhosis trial, and the results of this trial will have a major impact on the company's future. As a treatment for decompensated cirrhosis, emricasan's primary objective is to keep patients alive long enough for them to receive a potentially life-saving liver transplant. Thus, the primary endpoint of the trial is event-free survival at 240 weeks.
If the company can achieve success in treating decompensated cirrhosis, it will be alone in that market. For this reason, failure in previous trials would not necessarily spell complete doom for Conatus. If emricasan shows efficacy against decompensated cirrhosis alone, the company has a blockbuster drug on its hands. Obviously, however, there would be significant risk surrounding the company in such a situation.
Current Financial Health
For the time being, Conatus is in an excellent financial position. At Q2 earnings, the company reported a balance of $57.7M in cash, cash equivalents, and marketable securities. Additionally, Conatus reported $13.5M in long-term debt and a net loss Q2 burn rate of $4.5M. At its current cash burn rate, management estimates that Conatus is funded through the end of 2019.