Conatus soars on Novartis deal
- 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.
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.
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