E Conatus Pharmaceutical: Act II In Fighting Liver Disease

One of the newest small cap biotechs that I’ve added to the Small Cap Gems portfolio is Conatus Pharmaceuticals (Nasdaq: CNAT). This company is a biotechnology company focused on the development and commercialization of novel medicines to treat liver disease.

The stock has an approximately $120 million market capitalization and goes for just over $7.50 a share. The shares touched over $14.00 earlier this year before the sharp biotech sell-off in early March, put in a bottom around $6.00 a share, and are starting to rally a bit of late. Conatus came public in late July of 2013 and the stock has traded in a wide range of $5 to $15.50 a share since then.

One of themes and focus areas around biotech this year has been diseases of the liver. Gilead Sciences (Nasdaq: GILD) released Sovaldi earlier in the year to treat Hepatitis C, a potentially fatal disease that affects 3.5 million people just in the United States. This drug has racked up more than $8.5 billion in sales just in the first three quarters of roll out and will go down as the most successful drug launch in history based on first year’s revenues. It’s on pace to finish up at $11 billion.

There are many diseases that attack the liver such as Hepatitis B, a much more prevalent but much less lethal version of that disease as well cirrhosis, cancer other forms of afflictions. Viral infection, alcohol, obesity and autoimmune diseases all increase caspase activity leading to liver damage.  The amount of people affected in the United State and other major Western economies with various liver afflictions is quite large and represents a lucrative opportunity.

The liver is the largest internal organ in the human body and its proper function is indispensable for many critical metabolic functions, including the regulation of lipid and sugar metabolism, the production of important proteins, including those involved in blood clotting, and purification of blood. There are over 100 described diseases of the liver, and because of its many functions, these can be highly debilitating and life-threatening unless effectively treated. 

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Jim Bres 4 years ago Member's comment

I agree that many catalysts are in the near term and $15 is very likely given any good phase-2 results.

imho

jb

Terry Chrisomalis 4 years ago Contributor's comment

Conatus Pharmaceuticals (CNAT) seems it might be good as well. But one I'm looking at is LaJolla Pharmaceuticals (LJPC) where they got positive results in phase 2a of chronic kidney disease and have seen good results in NASH in pre-clinical trial.

Bret Jensen 4 years ago Author's comment

Always good to spread your bets across this very volatile sector. That is why I place many more tiny bets across myriad names in small cap biotech plays. I have dubbed this "ShotGun Investing" in many pieces on SeekingAlpha and Real Money Pro. Also why my monthly newsletter Small Cap Gems (smallcapgems.com) has several names including have been very fortunate to have AVNR as one of inaugural picks in July. Great run before being bought out this month. Have looked at LJPC before but will take another look. Thanks for the comment. Happy Hunting.

Bret