Conatus axes staff after latest failure of Novartis-partnered NASH drug

Conatus has said it will have to cut around 40% of its workforce and jettison some pipeline projects after its Novartis-partnered non-alcoholic steatohepatitis (NASH) candidate failed a phase 2b trial.

The ENCORE-LF study of an-caspase inhibitor emricasan in NASH cirrhosis showed that the drug was unable to meet it treatment objective of improving event-free survival  and the entire study is being stopped.

That effectively ends Conatus’ partnership with Novartis which was kicked off with a $50 million upfront payment in 2016 and firmed up when the Swiss big pharma took an option on emricasan the following year.

The biotech said it will “continue to work with its partner Novartis on ensuring that all remaining obligations related to the emricasan programme are fulfilled.”

The promise of big rewards for a successful drug treatment of NASH has spurred dozens of drug developers to try to develop the first therapy for the fatty liver disease, which affects millions of people worldwide and has been tipped to become a $20-$35 billion market.

So far NASH has provided a tough nut to crack, however, and Conatus’ failed study follows disappointing readouts for other candidates including Gilead’s selonsertib and Shire’s SHP626 (volixibat) in recent months.

Driven by rising levels of obesity, NASH causes fibrosis and swelling in the liver and has become a leading concern in healthcare as increasing numbers of people with the condition advance to cirrhosis and liver failure. It is expected to become the leading cause of liver transplants within the next decade.

The setback wasn’t a particular surprise, given that three earlier trials of emricasan failed to pass muster in other NASH settings, including a phase 2 trial in NASH fibrosis in March.

Shares in Conatus had already been pummelled when the earlier ENCORE-NF trial was reported, and lost another 60% pre-market after the latest announcement to languish in penny-share territory.

Along with emricasan, Conatus is also calling a halt to development work on its experimental inflammasome disease candidate CTS-2090 in order to “preserve… remaining resources to extend our cash runway to better explore strategic alternatives that can benefit shareholders.”

The company had around 31 employees as of the end of February, and said in an SEC filing that it expects to end the year with around $10-$15 million in cash or other liquid assets. The layoffs will cost around $1.5 million.

Eric Hughes, Novartis’ head of global development for immunology, hepatology and dermatology programmes, acknowledged that NASH is “a complex, poorly understood condition with no currently available pharmacotherapy treatment options.”

He added: “We remain fully committed to pursuing the development of our multiple compounds, partnerships and new technologies to tackle this challenging-to-treat disease, which impacts up to 5% of the world's population.”