The unexpected success of Intercept Pharmaceuticals' (ICPT)
Phase IIb trial in non-alcoholic steatohepatitis (also known as NASH)
not only propelled those shares, it has brought more attention to liver
disease as a therapeutic class and individual biotechs like Conatus Pharmaceuticals (CNAT).
Although
Conatus is a one-drug stock at this point, it is pursuing multiple
under-treated indications with its lead drug emricasan. Biotech
investors can, and do, argue extensively about the odds that a
particular drug will make it to market and what kind of revenue it will
earn once it makes it there, but there's usually general agreement about
pricing and likely dosing. Not so with Conatus, as nobody seems to know
how long patients will take the drug the company is developing, nor
what the market will bear for it.
Amidst that significant
uncertainty, I still believe that Conatus is worth a closer look today.
The liver failure market is significantly underserved today, with
thousands of patients dying for lack of enough donor livers and adequate
stabilization/supportive therapy. Should the company's efforts in NASH
pan out, the market potential could be orders of magnitude higher,
though again the question of pricing would become a large one. I
currently estimate a fair value of $23, but this estimate is highly
sensitive to changes in the drug price as well as the ultimate odds of
approval.
Follow this link for the full article:
Amidst Huge Unknowns, Conatus Pharmaceuticals Worth A Closer Look
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