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Conatus' (CNAT) Q2 Loss Narrows, Revenues Lag Marginally

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Conatus Pharmaceuticals, Inc. (CNAT - Free Report) incurred a loss of 15 cents per share for the second quarter of 2018, narrower than the Zacks Consensus Estimate of 20 cents and the year-ago quarter’s loss of 19 cents.

Revenues came in at $8.8 million, down 12% year over year due to lower reimbursement from partner Novartis (NVS - Free Report) for R&D costs incurred for the development of Conatus’ lead pipeline candidate, emricasan. Revenues marginally missed the Zacks Consensus Estimate of $9.06 million.

Conatus has no approved product in its portfolio at the moment. The revenues generated by the company are all related to its collaboration with Novartis (NVS - Free Report) for the worldwide development and commercialization of emricasan.

Shares of Conatus were up 1.75% in after-hours trading on Aug 1 following the earnings release. However, the stock has decreased 13.7% so far this year against the industry’s rally of 10.7%.

In the second quarter, research and development expenses were $10.7 million, down 18.9% from the year-ago period’s figure, mainly due to lower spending associated with the ongoing ENCORE studies on emricasan.

General and administrative expenses were $2.7 million, marginally up from the year-ago quarter’s $2.2 million on higher personnel costs.

Emricasan in Focus

Emricasan, a caspase inhibitor, is being developed for the treatment of patients with fibrosis or cirrhosis caused by nonalcoholic steatohepatitis (NASH).

There are now three ongoing phase IIb ENCORE studies, evaluating emricasan for the treatment of fibrosis or cirrhosis caused by nonalcoholic steatohepatitis (NASH). The trials are ENCORE-NF (for NASH fibrosis), ENCORE-PH (for portal hypertension) and ENCORE-LF (for liver function).

Top-line data from all these programs are expected between 2018 and 2019. Positive results from these analyses will also pave the way for a phase III efficacy and safety study on the candidate for the given disease.

The company completed the enrollment in the ENCORE-PH study in the second quarter.

Apart from emricasan, the company’s portfolio consists of IDN-7314, currently under evaluation in a phase II study for the treatment of primary sclerosing cholangitis (PSC). During the quarter under review, the company presented dataat The International Liver Congres 2018 — the Annual Meeting of the European Association for the Study of the Liver (EASL) — which showed IDN-7314 reduced bacteria-driven inflammation and related liver injury in a mouse model.

Guidance

Conatus continues to expect its 2018 year-end cash balance between $35 million and $40 million.

However, with Novartis sharing half of Conatus’ development costs for phase IIb studies on emricasan, the latter expects its current financial resources to be sufficient for funding 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 carries a Zacks Rank #3 (Hold). Two better-ranked stocks in the health care sector are Eagle Pharmaceuticals, Inc. (EGRX - Free Report) and Vanda Pharmaceuticals Inc. (VNDA - Free Report) , each sporting a Zacks Rank #1 (Strong Buy).You can see the complete list of today’s Zacks #1 Rank stocks here.

Eagle Pharmaceuticals’ earnings estimates have been moved 15.1% north for 2018 and 26% for 2019 over the past 60 days. The stock has soared 47.4% year to date.

Vanda Pharmaceuticals’ earnings estimates have been revised 11.1% upward for 2018 and 3.9% for 2019 over the past 60 days. The stock has surged 35.9% so far this year.

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