In a Strategic Realignment, Conatus Pharma Merges with Histogen

Mergers and Acquisitions

Histogen and Conatus Pharmaceuticals announced a merger agreement. Under the deal, Histogen will merge with a wholly-owned subsidiary of Conatus in an all-stock transaction. The merged companies will operate under the name Histogen and trade on the Nasdaq Capital Market under a new ticker symbol.

Histogen’s lead product candidate is HST 001 or Hair Stimulating Complex (HSC). It is a minimally invasive treatment to treat male pattern hair loss. It is also developing HST 002, a human-derived collagen and extracellular matrix dermal filler. Another product, HST 003, is an extracellular matrix scaffold to treat articular cartilage defects. The company believes all three candidates will reach “clinical and regulatory inflection points in 2020.”

“This merger is transformative for Histogen as we look to advance our novel regenerative medicine pipeline,” said Richard Pascoe, chairman and chief executive officer of Histogen. “We believe the target product profile of our product candidates combined with their market potential provides an opportunity for Histogen to become a leader in the aesthetics and orthopedic medicine markets.”

Conatus focused on novel therapies for chronic diseases. Its lead in-licensed compound was emricasan, which was being developed in collaboration with Novartis for patients with nonalcoholic steatohepatitis (NASH)-driven chronic liver diseases. It also has an internally developed compound, CTS-2090, which is being developed for patients with chronic diseases involving inflammasome pathways.

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In June 2019, Conatus reported that its ENCORE-LF Phase IIb trial of enricasan failed to meet its primary endpoint and was discontinuing further treatment of patients enrolled in the trial. Data from the 24-week extension arm of the ENCORE-PH trial also did not meet predefined objectives. These were evaluating the drug in decompensated NASH cirrhosis. In September 2019, the company indicated it and Novartis had no further development plans for emricasan and terminated the collaboration agreement.

And in November, during its third-quarter financial report, it emphasized that the company was conducting a strategic evaluation to explore ways to “enhance shareholder value.”

In today’s announcement, Conatus president, co-founder and chief executive officer Steven J. Mento, said, “After completing a comprehensive review of multiple strategic alternatives, we determined that the proposed merger with Histogen would provide the best opportunity for Conatus shareholders moving forward. We believe that Histogen’s clinical-stage dermatological and orthopedic product development programs, under the continued guidance of the established Histogen senior management team, offer significant potential to drive future value for the combined company.”

The combined company will be located in San Diego and led by Histogen’s current management team. Once completed, the combined company’s board of directors is expected to be made up of eight people, including six from Histogen’s current board and two from Conatus’ current board.

At the final close, Conatus stockholders will own about 26% of the new company and Histogen stockholders will collectively hold about 74%.

Histogen is expecting several development milestones this year. These include an Investigational New Drug (IND) Application Amendment in the second quarter and to initiate a Phase Ib/IIa trial of HIST 001 for male pattern baldness in the same period. They expect to file an Investigational Device Exemption in the second quarter and launch a Phase I trial of HIST 002 as a dermal filler in the same period.

The company plans to file an IND in the third quarter and initiate a Phase I trial of HST 003 for articular cartilage defects in the knee. It also expects to announce topline data from the Phase I trial of HST 002 for the treatment of nasolabial folds in the third quarter. It also plans to announce topline data from the Phase Ib/IIa trial of HST 001 for male pattern baldness in the fourth quarter.

This pipeline is derived from a single patented manufacturing process that results in multiple biologic products from one bioreactor. It has an aesthetic product, SkinMedica A+, for topical skin care, that is marketed by Allergan.

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