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Conatus Pharma (CNAT) Incurs Wider-than-Expected Loss in Q4

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Conatus Pharmaceuticals Inc. (CNAT - Free Report) reported fourth-quarter 2016 loss of 35 cents per share, wider than both the Zacks Consensus Estimate of a loss of 32 cents and the year-ago figure of 30 cents.


Conatus’ shares have traded below the Zacks classified Medical Products industry so far this year. Shares of the company lost 6.8% while the industry registered an increase of 10.3%.

Conatus has no approved product in its portfolio at the moment. However, the company recognized $0.8 million as collaboration revenues for the fourth quarter 2016 compared with no revenue in the year-ago quarter. The collaboration revenues were related to an agreement with Novartis AG (NVS - Free Report) , which was inked in Dec 2016, for the worldwide development and commercialization of Conatus’ lead candidate, emricasan, as a single agent treatment for NASH (Nonalcoholic steatohepatitis) cirrhosis in both compensated and decompensated patients.

In the fourth quarter, research and development expenses were $6.5 million, up 54.8% from the year-ago quarter. This was mainly due to an increase in external cost related to emricasan. General and administrative expenses were $3.5 million, up 94.4% from the year-ago quarter. This was due to an increase in personnel costs and higher consulting, legal and accounting fees.

Emricasan in Focus

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

In Nov 2016, Conatus initiated a placebo-controlled, phase IIb study evaluating the effect of emricasan for the reduction of hepatic venous pressure gradient (HVPG) in patients with compensated or early decompensated liver cirrhosis caused by NASH, and severe portal hypertension confirmed by HVPG of ≥12 mmHg at baseline. Data after 24 weeks of twice-daily treatment with emricasan or placebo are anticipated in 2018.

The company is conducting two additional phase IIb studies on emricasan. These include the POLT-HCV-SVR study evaluating potential improvements in Ishak fibrosis score in post-orthotropic liver transplant (POLT) recipients with liver fibrosis or cirrhosis post-transplant caused by recurrent hepatitis C virus (HCV) infection in those who have successfully achieved a sustained viral response (SVR) following HCV antiviral therapy. Data are expected in the first half of 2018.

ENCORE-NF is the other study evaluating potential improvements in fibrosis and steatohepatitis in patients with fibrosis caused by NASH. Results are expected in 2018.

The company also plans to initiate two other studies – ENCORE-LF and ENCORE-XT – on emricasan under the ENCORE program. The ENCORE-LF trial is expected to start in the second quarter of 2017.

We expect investor focus to remain on updates pertaining to the candidate’s development.

2016 Results

Full-year revenue totaled $0.80 million compared to no revenue a year ago.

Full-year loss of $1.31 per share was wider than Zacks Consensus Estimate of a loss of $1.28. The company had incurred a loss of $1.30 per share a year ago.

2017 Guidance

Cash, cash equivalents and marketable securities are expected between $45 million and $55 million by year-end 2017.

Conatus expects its current financial resources to be sufficient for continuing operations through the end of 2019. However, the company would need additional capital to fully implement its development plans. It expects to achieve this through financing opportunities, strategic partnerships or a combination of both.

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 #4 (Sell). Some better-ranked stocks in the health care sector include Addus HomeCare Corporation (ADUS - Free Report) and BioCryst Pharmaceuticals, Inc. (BCRX - Free Report) . Each of these stocks carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Addus HomeCare’s earnings per share estimates increased from $1.38 to $1.41 for 2017 over the last 30 days. The company posted positive earnings surprises in two of the four trailing quarters, with an average beat of 10.10%.

BioCryst Pharma’s loss per share estimates narrowed from 88 cents to 66 cents for 2017 and from a loss of 93 cents to 70 cents over the last 30 days. The company posted positive earnings surprises in three of the four trailing quarters, with an average beat of 20%.

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