Conatus Pharmaceuticals Inc. (NASDAQ: CNAT) shares took a big step back on Thursday after the firm announced that its midstage proof-of-concept clinical trial in liver transplant patients with fibrosis or cirrhosis failed to live up to expectations.

The firm’s Phase 2b POLT-HCV-SVR trial did not meet its primary endpoint in the heterogeneous overall trial population. The emricasan treatment effect in the subgroup of patients where the histology endpoint is most relevant, patients with advanced fibrosis and early cirrhosis, supports further evaluation.

Emricasan provided evidence of an anti-fibrotic treatment effect in the prespecified subgroup of patients with advanced fibrosis or early cirrhosis, with 95.0% of patients in the emricasan arm achieving responses in Ishak Fibrosis Score after two years of treatment, compared with 58.3% in the placebo arm, a 36.7 percentage point difference in response rate. Inflammatory activity markers were either normal or only slightly elevated at baseline in both the emricasan and placebo groups.

POLT-HCV-SVR has a separate patient population than the other three Phase 2b clinical trials in the company’s collaboration with Novartis, which are in nonviral indications in patient populations with nonalcoholic steatohepatitis fibrosis or cirrhosis.

Patients were stable transplant recipients who were an average of seven years post-transplant on chronic immunosuppression. Hepatitis C virus, the initial cause of the inflammatory insult to the transplanted liver, was eliminated by antiviral therapies prior to the study.

Steven J. Mento, Ph.D., president, CEO and co-founder of Conatus, commented:

These are the first biopsy-based efficacy results for emricasan. We are particularly encouraged by the 95% response rate in a subgroup of advanced fibrosis and early cirrhosis patients with a favorable two-year safety profile. In addition, in patients with the potential to continue worsening, those less than F6 at baseline, only 2 of 26 (7.7%) on emricasan compared with 5 of 17 (29.4%) on placebo showed an increase in fibrosis score at year 2 – a treatment difference of 21.7 percentage points. We also plan to evaluate responses in additional subgroups in a variety of secondary and exploratory endpoints to learn as much as possible from this data-rich trial.

Shares of Conatus traded down more than 27% early Thursday at $4.34, with a consensus analyst price target of $17.25 and a 52-week range of $3.88 to $9.40.

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