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Conatus (CNAT) Q2 Loss Narrows Y/Y, Revenues Beat Estimates

Conatus Pharmaceuticals Inc. CNAT reported second-quarter 2017 loss of 19 cents per share, wider than the Zacks Consensus Estimate of 11 cents. However, the loss was narrower than the year-ago figure of 30 cents.

Conatus’ shares have underperformed the industry so far this year. Shares of the company have lost 4.2% compared with the industry’s 17.9% increase.

Conatus has no approved product in its portfolio at the moment. However, the company recognized $10 million as collaboration revenues for the second quarter of 2017. Revenues beat the Zacks Consensus Estimate of $8 million.

The collaboration revenues were related to an agreement with Novartis AG NVS, which was inked in Dec 2016, for the worldwide development and commercialization of Conatus’ lead candidate, emricasan, as a single agent treatment of both compensated and decompensated patients for NASH (Nonalcoholic steatohepatitis) cirrhosis. Per the deal, Novartis will share 50% cost of four ongoing phase IIb clinical trials on emricasan.

In the second quarter, research and development expenses were $13.2 million, up 214.3% from the year-ago quarter. This was mainly due to costs related to the ongoing ENCORE studies. General and administrative expenses were flat at $2.2 million, compared with the year-ago quarter.

In May, Conatus completed an underwritten public offering of 5.9 million shares and raised $30.7 million as proceeds. The company used approximately $11.2 million of net proceeds to re-purchase and retire shares of Conatus’ common stock held by funds affiliated with Advent private equity.

Emricasan in Focus

Emricasan is being developed for treatment of patients with chronic liver disease.

With the initiation of the ENCORE-LF clinical trial in May, there are four ongoing emricasan phase IIb clinical studies. These include three ENCORE studies on patients with fibrosis or cirrhosis caused by nonalcoholic steatohepatitis (NASH) in various patient populations and a fourth ENCORE study on POLT-HCV-SVR patients. Data from all these studies are expected between 2018 and 2019.

The company also plans to initiate a new study — ENCORE-XT — on emricasan under the ENCORE program.

Apart from emricasan, another candidate in the company’s portfolio is IDN-7314, currently undergoing a phase II study for treatment of primary sclerosing cholangitis (PSC). In June, the FDA granted Orphan Drug Designation (ODD) to IDN-7314 for the indication.


Conatus raised its cash guidance for 2017. The company now expects cash, cash equivalents and marketable securities between $55 million and $65 million by year-end 2017 compared with $45 million and $55 million, expected previously.

Notably, last month, Conatus announced that its licensing agreement with Novartis, which was inked in Dec 2016, for worldwide development and commercialization of emricasan has become effective. Good news is that the company received an amount of $7 million for this. Conatus expects its current financial resources, together with the receipt of $7 million, to be sufficient for continuing operations through the end of 2019.

Conatus Pharmaceuticals Inc. Price, Consensus and EPS Surprise

Conatus Pharmaceuticals Inc. Price, Consensus and EPS Surprise | Conatus Pharmaceuticals Inc. Quote

Zacks Rank & Key Picks

Conatus currently carries a Zacks Rank #3 (Hold). Some other stocks worth considering in the healthcare sector are Enzo Biochem, Inc. ENZ and Exelixis, Inc. EXEL, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Enzo Biochem’s loss per share estimates narrowed down from 12 cents to 7 cents for 2017 and from 11 cents to 3 cents for 2018, over the last 60 days. The company delivered positive earnings surprises in all the trailing four quarters, with an average beat of 55.83%. The share price of the company has surged 59.2% year to date.

Exelixis’s earnings per share estimates inched up from 53 cents to 55 cents for 2018, over the last 30 days. The company has delivered positive earnings surprises in all the trailing four quarters with an average beat of 512.11%. Exelixis’s shares have soared 79.7% so far this year.

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