Conatus Pharmaceuticals Inc (NASDAQ:CNAT) inked an alliance agreement with Novartis for development of their lead product, a drug called emricasan. The transaction was done with an upfront cost of $50 million and around $650 million to be paid in milestone payments in the times to come.

Novartis gets emricasan’s rights throughout the world

The deal gave Novartis, an exclusive Pan-globe right to Novartis’ emricasan. The deal has given Conatus, a unique position in the NASH field. Both these companies are known for having a strong position through their drug candidates in NASH field. Novartis has FXR agonist which functions against stellate cell activation, liver cell inflammation and lipid accumulation. Conatus, on the other hand, has emricasan in this category, which mainly, is targeted against NASH cirrhosis.

Both the companies share the opinion of working together for reducing liver insult and its effects in NASH field. If the deal remains a successful one, it will be a bonus for Novartis that will have a treatment for both preliminary as well as final stage, NASH treatment. This deal, will in turn, position Novartis in a powerful place.

Conatus Pharmaceuticals wishes for a deal without a glitch

The company at present is undertaking its phase 2 trial. If this trial goes on well, Conatus shall be receiving half of the cost reimbursement with the cost being forwarded for first stage of 2b ENCORE-LF trial. In the initial phase, the bonus of $7 million will be given and $15 million for promissory notes shall be given for the company’s expenses until 2019.

Conatus, at present, is in a stable position, which means that it can perform its rest of the trials with reduced risk of no-cash or dilutive financing. If the new drug, emricasan manages to show promissory results in phase 2b, Novartis shall pay it the cost for phase 3 trials completely. This definitely would prove to be a bonus for both the companies.

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