Dive Brief:
- Novartis on Monday announced it would pay $50 million upfront to gain access to an experimental drug for nonalcoholic steatohepatitis (NASH) being developed by small-cap biotech Conatus Pharmaceuticals.
- The Swiss pharma will pay Conatus $50 million upfront for an exclusive option to emricasan, with other unspecified milestone payments lined up. If the option is picked up, Conatus and Novartis will split development costs equally in a planned Phase 2b study in decompensated NASH cirrhosis.
- NASH, a progressive form of fatty liver disease, has drawn major investment from larger biopharmas recently as prevalence in the U.S. rises.
Dive Insight:
Conatus stock surged in value Tuesday morning on news of the deal with Novartis, leaping to nearly 1.5 times Monday's closing price.
The upfront cash from Novartis is certainly a boost to Conatus' balance sheet, bolstering its $14.3 million in cash and equivalents (as of Sept. 30).
Novartis' interest in emricasan is also a vote of confidence in Conatus' agent, but only to a degree. Pharma cash has begun to flood into the NASH space (look no further than Allergan's pricey acquisition of Tobira Therapeutics) and $50 million upfront is small change to a company the size of Novartis.
The Swiss pharma also appears interested in pairing emricasan with its own farnesoid X receptor (FXR) agonists that are in development for chronic liver diseases.
"Emricasan shows great promise as a single agent and in potential combination with our internal FXR agonists as a treatment for NASH patients," said Vasant Narasimhan, chief medical officer at Novartis.
Conatus has a series of parallel studies planned for the drug, which is a pan-caspase protease inhibitor. ENCORE-LF will study emricasan in decompensated NASH cirrhosis, while ENCORE-PH will focus on primarily compensated NASH cirrhosis.
The latter study kicked off in November 2016, and Conatus expects to begin ENCORE-LF in the first half of 2017. Top-line results from the trials will start to roll in sometime in the first half of 2018.
Novartis plans to fund 50% of the Phase 2b costs. If those studies read out positive, Novartis will pick up responsibility for Phase 3 testing of emricasan, both as a single-agent and in combination with its FXR agonists.
Pharma interest in NASH looks set to grow further. In addition to the aforementioned Allergan acquisition, Gilead and Bristol-Myers Squibb have also made investments into companies focused on NASH and hepatic illnesses. And other potential acquisition targets, such Cempra, Galectin or Intercept Pharmaceuticals remain available.