On May 1, 2020 Conatus Pharmaceuticals Inc. (Nasdaq:CNAT) reported financial results for the first quarter ended March 31, 2020 and provided an update on its strategic process (Press release, Conatus Pharmaceuticals, MAY 1, 2020, View Source [SID1234556911]).
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Recent Developments
In January 2020, Conatus announced that it had entered into a definitive agreement with Histogen Inc., a privately-held regenerative medicine company with a novel biological platform that replaces and regenerates tissues in the body, under which Histogen will merge with a wholly-owned subsidiary of Conatus in an all-stock transaction. The combined company will operate under the name Histogen Inc., is expected to trade on the Nasdaq Capital Market under the ticker symbol HSTO and will focus on advancement of its patented technology for dermatological and orthopedic indications.
The merger agreement has been unanimously approved by the board of directors of each company, who have also recommended to their respective company’s stockholders that they approve the merger agreement, the merger and, with respect to Conatus’s stockholders, a reverse stock split. "We have mailed proxy materials to stockholders, and I encourage all stockholders to review those materials thoroughly. The Conatus board of directors recommends that stockholders vote "FOR" all proposals", said Steven J. Mento, Ph.D., President, Chief Executive Officer and co-founder of Conatus. Conatus has hired Laurel Hill Advisory Group, LLC as its proxy solicitor to facilitate the stockholder voting for the meeting and they can be contacted at 888-742-1305.
The transaction is expected to close by the end of the second quarter of 2020, subject to approvals by the stockholders of Histogen and Conatus, a reverse stock split being implemented by Conatus, the continued listing of the combined company on Nasdaq and other customary closing conditions. As a result, current Conatus stockholders will collectively own approximately 26%, and Histogen stockholders will collectively own approximately 74%, of the combined company on a fully-diluted basis, after taking into account Histogen’s and Conatus’ outstanding options and warrants at the time of closing, irrespective of the exercise prices of such options and warrants, with such ratio subject to adjustment based on each company’s net cash balance at closing and changes in capitalization prior to the closing of the merger.
Financial Results
The net loss for the first quarter of 2020 was $3.5 million compared with $4.7 million for the first quarter of 2019.
Conatus did not record any revenue for the first quarter of 2020 compared with total revenues of $7.0 million for the first quarter of 2019. The decrease in revenue was due to the termination of the emricasan programs and corresponding termination of the Novartis agreement and related revenues.
Research and development expenses were $0.1 million for the first quarter of 2020 compared with $9.4 million for the first quarter of 2019. The decrease was primarily due to the suspension of emricasan and CTS-2090 programs.
General and administrative expenses were $3.5 million for the first quarter of 2020 compared with $2.6 million for the first quarter of 2019. The increase was primarily due to higher legal expenses incurred in connection with the proposed merger with Histogen.
Cash, cash equivalents and marketable securities were $18.0 million at March 31, 2020, compared with $20.7 million at December 31, 2019.