IPO Report: Conatus Pharmaceuticals (CNAT)

Francis Gaskins  |

Update:  7-23, hot sector, worth a shot on the IPO

Based in San Diego, CA, Conatus Pharmaceuticals (CNAT) scheduled a $55 million IPO with a market capitalization of $161 million at a price range mid-point of $11, for Thursday, July 25, 2013.

Ten other IPOs were scheduled for the week of July 15. The full IPO calendar can be found at IPOpremium.

S-1 filed July 8, 2013

Manager, Joint Managers:  Stifel; Piper Jaffray
Co Managers:  JMP Securities; SunTrust Robinson


CNAT is a biotechnology company focused on the development and commercialization of novel medicines to treat liver disease. 

CNAT has no collaborations and no revenue.

Accumulated deficit:  $61 million


Avoid because 3 times book is high for a biopharma with no revenue and no collaborations.


CNAT is a biotechnology company focused on the development and commercialization of novel medicines to treat liver disease.

CNAT is developing a lead compound, emricasan, for the treatment of patients in orphan populations with chronic liver disease and acute exacerbations of chronic liver disease.


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Emricasan is a first-in-class, orally active caspase protease inhibitor designed to reduce the activity of enzymes that mediate inflammation and cell death, or apoptosis.

CNAT believes that by reducing the activity of these enzymes, emricasan has the potential to interrupt the progression of liver disease.

To date, emricasan has been studied in over 500 subjects in ten clinical trials. In a randomized Phase 2b clinical trial in patients with liver disease, emricasan demonstrated a statistically significant, consistent, rapid and sustained reduction in elevated levels of two key biomarkers of inflammation and cell death, alanine aminotransferase, or ALT, and cleaved Cytokeratin 18, or cCK18, respectively, both of which are implicated in the severity and progression of liver disease.

CNAT’s initial development strategy targets indications for emricasan with high unmet clinical need in orphan patient populations, such as patients with acute-on-chronic liver failure, or ACLF, chronic liver failure, or CLF, and patients who have developed liver fibrosis post-orthotopic liver transplant due to Hepatitis C virus infection, or HCV-POLT.

CNAT expects to initiate a Phase 2b ACLF trial and a Phase 3 HCV-POLT trial (currently designated a Phase 3 registration study in the European Union and a Phase 2b study in the United States) in the second half of 2013 and a Phase 2b CLF trial in the second half of 2014.

CNAT has observed compelling preclinical and clinical trial results that suggest emricasan may have clinical utility in slowing progression of liver diseases regardless of the original cause of the disease.

In particular, CNAT has completed two placebo-controlled Phase 2 trials in patients with liver disease showing statistically significant reductions in ALT levels that occur rapidly, within as little as one day after initiation of therapy, and are maintained throughout the treatment period.

In a 204-patient Phase 2b trial, CNAT also measured cCK18, an important biomarker of apoptosis and disease severity. Statistically significant reductions in cCK18 were demonstrated in this trial as early as three hours post-dosing and were maintained for the duration of dosing. Emricasan has been generally well-tolerated in all of the clinical studies.

Intellectual property

CNAT’s patent portfolio for emricasan contains patents directed to the composition of matter, crystalline forms and methods of use. As of June 30, 2013 CNAT received three U.S. patents and corresponding foreign patents and patent applications directed to the composition of matter

CNAT”s patent portfolio also includes patents directed to certain methods of use of emricasan. As of June 30, 2013, CNAT received five U.S. patents and corresponding foreign patents and patent applications directed to methods of use of emricasan. Foreign patents have been granted in Europe, France, Germany, Great Britain, Ireland, Italy, Japan and Spain.


There are currently no therapeutic products approved for the treatment of ACLF, CLF or HCV-POLT.   Emricasan is the only therapeutic CNAT is aware of that is being developed specifically to reduce the level of apoptosis in the liver and as a result it may be used with other therapies.

There are a number of marketed therapeutics used in each of these diseases to try to remove the underlying cause of the disease and prevent further liver injury. For example, if the liver damage is a result of HBV or HCV, marketed antiviral medications may be used to treat the virus that led to liver damage. If the liver damage is a result of alcoholic hepatitis, marketed alcohol addiction drugs may be used. If the liver damage is a result of obesity, diet and exercise may be prescribed along with marketed therapeutics.

If the liver damage is a result of NASH, marketed drugs such as insulin sensitizers (e.g., metformin), antihyperlipidemic agents (e.g., gemfibrozil), pentoxifylline and ursodiol are generally used, although none of these are approved for NASH. In addition to the marketed drugs for those indications, there are drugs in development for each of these indications. Although these marketed therapies and those in development may be efficacious, all of them take time to show an effect and as long as the underlying conditions persist there will continue to be damage to the liver.

5% shareholders pre-IPO

Entities affiliated with Aberdare Ventures, 23.3%
Entities affiliated with Advent Private Equity, 21.1%
Coöperative Gilde Healthcare II U.A. , 14.3%
Entities affiliated with MPM Capital, 11.2%
AgeChem Venture Fund L.P., 7.6%                                                                                           
Entities affiliated with Roche Finance Ltd, 6.7%

Use of proceeds

CNAT expects to net $48.8 million from its IPO.

IPO funds are allocated as follows:

• $22.5 million to fund the planned Phase 3 HCV-POLT trial (currently designated a Phase 3 registration study in the European Union and a Phase 2b study in the United States);

• $4.5 million to fund the planned Phase 2b CLF trial;

• $3.8 million to fund the planned Phase 2b ACLF trial; and

• the remainder to fund the further clinical development of emricasan and for working capital and general corporate purposes.

CNAT believes that the IPO proceeds and existing cash and cash equivalents will be sufficient to fund operations for at least the next 18 months after the date the IPO.

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