Shares of micro-cap biotech Conatus Pharmaceuticals Inc CNAT were sinking further into penny stock territory Tuesday after two announcements made Monday after the market close.
Conatus said it has engaged Oppenheimer to explore strategic alternatives in a bid to enhance shareholder value.
The company simultaneously announced a restructuring plan that includes the elimination of 40% of its workforce and the suspension of development of its inflammasome disease candidate CTS-2090.
NASH Failure Haunts Company
Top-line results from a Phase 2b study dubbed ENCORE-LF that evaluated emricasan in non-alcoholic steatohepatitis cirrhosis did not meet the primary endpoint, according to Conatus.
The primary endpoint was event-free survival, defined as a composite of all-cause mortality, new decompensation events or four points or more of progression in the Model For End-Stage Liver Disease score.
In the wake of the negative results, the company said it is discontinuing further treatment of patients enrolled in the trial.
The 24-week extension in the ENCORE-PH clinical trial of emricasan also did not meet pre-defined objectives, according to Conatus.
The ENCORE-LF study was initiated in the second quarter of 2017, enrolling 217 patients with decompensated NASH cirrhosis, with the patients randomized to receive 5mg of emricasan or 25mg of emricasan or placebo twice daily for at least 48 weeks.
The candidate faced a setback in a Phase 2b study in NASH fibrosis in late March.
Inflammasome Disease Trial Halted
CTS-2090, though a uniquely positioned inflammasome disease compound, has to be discontinued as Conatus looks to preserve its remaining resources to extend its cash runway to better explore strategic alternatives that can benefit shareholders, the company said.
"Although we are halting development activities for CTS-2090, we plan to continue to explore a variety of opportunities to advance this compound," CEO Steven Mento said in a statement.
Conatus also updated its financial guidance, estimating a year-end net balance of cash, cash equivalents and marketable securities of about $10 to $15 million.
The company said it will continue to work with partner Novartis AG NVS to fulfill its remaining obligations with respect to the emricasan program.
Conatus shares were down 61.12% at 36 cents at the time of publication Tuesday.
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