Conatus Pharmaceuticals (CNAT) PT Lowered to $14 at H.C. Wainwright

H.C. Wainwright analyst Ed Arce lowered the price target on Conatus Pharmaceuticals (NASDAQ: CNAT) to $14.00 (from $15.00) while maintaining a Buy rating.

Arce commented, "We fully expect CNAT shares to drop over 10% today as some investors will undoubtedly look no further at yesterday's release of the ENCORE-PH top-line results, than to see that the study missed its primary endpoint. Following this expected initial drop in CNAT shares, and as a result of this myopic focus on the primary as an all-encompassing arbiter of success, we expect shares to remain mostly flat until the lead-up to the ENCORE-LF results in 1H19, the next emricasan data readout expected. However, for those investors who prefer to read beyond the headline snippet, we submit that there is actually a lot to like in these results. As a reminder, the 263-patient Phase 2b ENCORE-PH trial (NCT02960204) is the first ever interventional study exclusively in NASH cirrhosis patients with severe portal hypertension (HVPG ≥ 12 mmHg), those at increased risk of rupture and bleeding of esophageal varices (Bosch J. et al, Nat Rev Gastroenterol Hepatol, Oct 2009). As shown on Exhibit 1, roughly 75% of patients across the study had compensated cirrhosis, and the mean baseline HVPG reading across the three emricasan dose groups was approximately 17 mmHg, meaningfully lower than the mean baseline HVPG of 21.3 mmHg in the previous pilot study of portal hypertension (PH) patients which showed improvements in just four weeks. Nevertheless, in this 24 week study (Exhibit 2), nearly all compensated patients, stratified across six baseline groups (except the five patients with 12 ≤HVPG< 13 on the 50 mg dose), achieved at least a 1.0 mmHg mean reduction in HVPG, which has recently been shown to reduce the risk of decompensation or death (Garcia-Tsao G et al, AASLD 2018). In fact, a few of the more severe patients achieved improvements approaching 3.0 mmHg."

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