Conatus Pharmaceuticals Inc. (NASDAQ:CNAT) has taken a real hit heading into the latter half of this week on some fresh trial data. The company fell more than 33% during the session on Wednesday, closing out at $4.01 a share on a substantial multiplier of its average daily volume.
So what happened?
As noted, the action is rooted in the release of some clinical trial data and, specifically, the data derives from a phase 2 trial that was set up to investigate the safety and efficacy of an asset called emricasan, when used in liver transplant patients with fibrosis or cirrhosis.
The patient population specifically was post-orthotopic liver transplant (POLT) recipients with liver fibrosis or cirrhosis post-transplant as a result of recurrent HCV infection who have successfully achieved a sustained viral response (SVR) following HCV antiviral therapy.
The idea was to show some degree of fibrotic reduction efficacy against a histology endpoint and, as per the latest results, the trial failed to hit on its primary endpoint.
It’s not necessarily the end of the line, however.
The trial did demonstrate some degree of treatment effect in the subgroup of patients where the histology endpoint is most relevant – patients with advanced fibrosis and early cirrhosis, supports further evaluation.
That we saw such a steep decline, then, is a little bit of a surprise given the potential for the advance of this program in its target indication. Oftentimes, when we see a headline suggest a primary endpoint miss, it indicates that there is no room for continued investigation, at least as relates specifically to the asset in question, in the trialed population.
In this instance, however, things are a little different, meaning that there may be some value on offer as far as picking up some cheap shares on the back of this reaction is concerned.
Some reading may already be familiar with the program; it’s one that Conatus is running as part of a collaboration with biotechnology and healthcare behemoth Novartis AG (NVS) and it includes a number of trials investigating the same asset in different target populations – that is, non-viral indications in patient populations with nonalcoholic steatohepatitis (NASH) fibrosis or cirrhosis.
This expansive program, therefore, suggests further, or at least further vindicates the suggestion, that there may be some value in picking up some cheap shares ahead of a potential recovery if and when the remaining studies read out and do so in line with efficacy as opposed to an endpoint fail.
Another big mover heading into the end of this week is Paratek Pharmaceuticals, Inc. (NASDAQ:PRTK).
This company just announced that the FDA has granted a priority review for its New Drug Application (NDA) of a drug called omadacycline, which the company is investigating as a potential asset for the treatment of community-acquired bacterial pneumonia (CABP) and acute bacterial skin and skin structure infections (ABSSSI).
Both of these conditions are incredibly serious and can very quickly be fatal in certain environments and in a large portion of patients that acquire them. A number of companies are working on treatments right now but the reality is that it’s very difficult to treat these sorts of infections based on their continued evolution into further resistant formations.
Omadacycline is a drug that Paratek hopes can at least serve to stem the advance of these conditions in the general population and, if the company can get it to market, there’s the potential for some substantial revenues based on the fact that it could be a standard first-line treatment for anybody entering a hospital or healthcare setting (i.e., anybody putting themselves in a position where this sort of infection becomes a major risk.
With priority review in the bag, the speed with which this drug gets to market (assuming, of course, that it does) increases and, at the same time, so does the path to revenue generation from this asset for Paratek.
Markets are responding to this news as might be expected (positively) with the company picking up a couple of percentage points premarket on Thursday and looking set to continue its advance as normal participation gets underway.