On March 11, 2020 Conatus Pharmaceuticals Inc. (Nasdaq:CNAT) reported financial results for the fourth quarter and full year ended December 31, 2019, and provided an update on its strategic process (Press release, Conatus Pharmaceuticals, MAR 11, 2020, View Source [SID1234555415]).
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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 focused on developing patented, innovative technologies that replace and regenerate tissues in the body for aesthetic and therapeutic markets, pursuant to 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 regenerative tissue 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. 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, based on the exchange ratio set forth in the merger agreement, 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 fourth quarter of 2019 was $2.7 million compared with $3.9 million for the fourth quarter of 2018. The net loss for the full year 2019 was $11.4 million compared with $18.0 million for the full year 2018.
Total revenues were $0.5 million for the fourth quarter of 2019 compared with $7.4 million for the fourth quarter of 2018, and $21.7 million for the full year 2019 compared with $33.6 million for the full year 2018. Total revenues consisted of collaboration revenues related to the Novartis agreement. The decreases in revenues for both periods were primarily due to lower emricasan-related research and development expenses resulting in corresponding lower revenues related to the Novartis agreement.
Research and development expenses were $0.8 million for the fourth quarter of 2019 compared with $8.9 million for the fourth quarter of 2018. Research and development expenses were $23.5 million for the full year 2019 compared with $41.4 million for the full year 2018. The decreases in both periods were primarily due to lower costs related to the ENCORE clinical trials as well as lower costs related to new product candidate development.
General and administrative expenses were $2.5 million for both the fourth quarter of 2019 and 2018. General and administrative expenses were $10.2 million for the full year 2019 compared with $10.5 million for the full year 2018. The decreases in both periods were primarily due to lower personnel costs in 2019 compared to the corresponding periods in 2018.
Cash, cash equivalents and marketable securities were $20.7 million at December 31, 2019, compared with $40.7 million at December 31, 2018.