Novartis AG (NYSE:NVS) and Conatus Pharmaceuticals Inc (NASDAQ:CNAT) will jointly develop Conatus drug emricasan. This has resulted from the duo’s agreement under which the small U.S. company will receive $50 million upfront before further payments can follow. The exclusive collaboration and license agreement will facilitate effective development of a new experimental first-in-class oral treatment for non-alcoholic steatohepatitis (NASH) with advanced fibrosis and cirrhosis.

The partnership comes at a time when several drugmakers the likes of liver specialists such as Intercept Pharmaceuticals and Genfit are pursuing treatments for NASH. It is expected to help in the expansion of treatment options for chronic, progressive fatty liver condition, which involves inflammation and scarring. With the enormous patient population, this is likely to be a potential solution to a huge unmet need.

Conatus will conduct multiple Phase 2b clinical trials

One of the conditions of the collaboration is that Conatus will conduct multiple Phase 2b clinical trials with emricasan in NASH. Thereafter, the Swiss drugmaker will conduct Phase III studies of the drug before its development. This will be done in combination with the experimental treatment for chronic liver disease commonly known as an FXR agonist.

According to Steven Mento, Conatus Chief Executive, the resources are in place. He quotes, “For Conatus, the near-term infusion of capital and Phase IIb cost-sharing allows us to fund ongoing operations through 2019.”

Estimates indicate that NASH affects 3% – 5% of the U.S. population

Records reveal that NASH is headed to becoming the lead cause of liver transplants in the United States by 2020. Something must be done. However, any cause of alarm may be tamed by the presence of big Biomed NASH players such as Gilead Sciences, Inc. (NASDAQ:GILD) and Allergan plc Ordinary Shares (NYSE:AGN) who are seeking entry into the NASH development field as well.

On the other hand, Intercept, which does not trade on U.S. exchanges, recently won tentative European approval of a NASH drug for another liver disease. Meanwhile, Novartis closed at $71.63, a decline of $0.15 or 0.21%.