Conatus Pharmaceuticals Inc. (Nasdaq:CNAT) today announced
financial results for the fourth quarter and full year ended
December 31, 2019, and provided an update on its strategic process.
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 ResultsThe 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.
Forward-Looking Statements Certain statements
herein constitute forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended, and are
intended to be covered by the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. Such statements may be
identified by words such as “believes,” “will,” “would,” “expects,”
“project,” “may,” “could,” “developments,” “launching,”
“opportunities,” “anticipates,” “estimates,” “intends,” “plans,”
“targets” and similar expressions. These forward-looking statements
include, but are not limited to, statements concerning: the
expected structure, timing and completion of the proposed merger;
the expected ownership of the combined company based on the
exchange ratio set forth in the merger agreement; future product
development plans and projected timelines for the initiation and
completion of preclinical and clinical trials; any statements
regarding the combined company’s future financial performance,
results of operations or sufficiency of capital resources to fund
operating requirements; any statements relating to future Nasdaq
listing; and any other statements that are not statements of
historical fact. These statements are based upon the current
beliefs and expectations of each company’s management and are
subject to significant risks and uncertainties.
Actual results may differ materially from those set forth in the
forward-looking statements as a result of numerous factors. The
following factors, among others, could cause actual results to
differ materially from the anticipated results expressed in the
forward-looking statements: the risk that the conditions to the
closing of the proposed merger are not satisfied, including the
failure to timely obtain stockholder approval for the transaction,
if at all; uncertainties as to the timing of the consummation of
the proposed merger; risks related to each company’s ability to
manage its operating expenses and its expenses associated with the
proposed merger pending closing; the risk that as a result of
adjustments to the exchange ratio, Conatus stockholders and
Histogen stockholders could own more or less of the combined
company than is currently anticipated; risks related to the market
price of Conatus’ common stock relative to the exchange ratio; the
businesses of Histogen and Conatus may not be combined
successfully, or such combination may take longer than expected;
the combined company’s need for, and the availability of,
substantial capital in the future to fund its operations and
research and development activities; the combined company’s ability
to continue to successfully progress research and development
efforts and to create effective, commercially-viable products; and
the success of the combined company’s product candidates in
completing pre-clinical or clinical testing and being granted
regulatory approval to be sold and marketed in the United States or
elsewhere. Additional factors that could cause actual results to
differ materially from those expressed in the forward-looking
statements are discussed in Conatus’ reports (such as the Annual
Report on Form 10-K, Quarterly Reports on Form 10-Q and Current
Reports on Form 8-K) filed with the Securities and Exchange
Commission (SEC) and available at the SEC’s Internet website
(www.sec.gov). All subsequent written and oral forward-looking
statements concerning the proposed transaction or other matters
attributable to Histogen or Conatus or any person acting on their
behalf are expressly qualified in their entirety by the cautionary
statements above. Except as required by law, neither Conatus nor
Histogen undertakes any obligation to update any forward-looking
statement to reflect circumstances or events that occur after the
date the forward-looking statement is made.
Additional Information and Where to Find ItThis
communication is not intended to and does not constitute an offer
to sell or the solicitation of an offer to buy any securities or a
solicitation of any vote or approval. This communication may be
deemed to be solicitation material in respect of the proposed
merger. In connection with the merger, Conatus has filed a
registration statement on Form S-4 with the SEC that includes a
proxy statement of Conatus and that also constitutes a prospectus
of Conatus, but the Form S-4 has not yet become effective. Once the
Form S-4 has become effective, the proxy statement/prospectus will
be mailed or otherwise disseminated to Conatus stockholders when it
becomes effective. Conatus also plans to file other relevant
documents with the SEC regarding the proposed merger transaction.
INVESTORS ARE URGED TO READ THE PROXY STATEMENT/PROSPECTUS AND
OTHER RELEVANT DOCUMENTS FILED WITH THE SEC IF AND WHEN THEY BECOME
AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE
PROPOSED MERGER TRANSACTION.
In addition to receiving the proxy statement by mail,
stockholders also will be able to obtain these documents, as well
as other filings containing information about Conatus, the proposed
merger and related matters, without charge, from the SEC’s website
at http://www.sec.gov. In addition, these documents can be
obtained, without charge, by sending an e-mail to
info@conatuspharma.com, along with complete contact details and a
mailing address or by contacting Conatus at (858) 376-2600.
Participants in SolicitationConatus and certain
of its directors, executive officers and other members of
management and employees may, under SEC rules, be deemed to be
participants in the solicitation of proxies from stockholders with
respect to the merger. Information regarding the persons or
entities who may be considered participants in the solicitation of
proxies is set forth in the proxy statement and Form S-4 relating
to the merger filed with the SEC. Information regarding the
directors and executive officers of Conatus is set forth in the
Conatus Annual Report on Form 10-K for the year ended December 31,
2019, which was filed with the SEC on March 11, 2020. Additional
information regarding the interests of such potential participants
are included in the proxy statement and Form S-4 referenced
above.
|
Conatus Pharmaceuticals Inc. |
Selected Condensed Financial Information |
(In thousands, except per share data) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Years Ended |
Statements of Operations |
|
December 31, |
|
December 31, |
|
|
|
2019 |
|
|
|
2018 |
|
|
|
2019 |
|
|
|
2018 |
|
|
|
|
|
|
|
|
|
|
Revenues: |
|
|
|
|
|
|
|
|
Collaboration revenue |
|
$ |
526 |
|
|
$ |
7,409 |
|
|
$ |
21,717 |
|
|
$ |
33,586 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
Research and development |
|
|
833 |
|
|
|
8,886 |
|
|
|
23,527 |
|
|
|
41,368 |
|
General and administrative |
|
|
2,538 |
|
|
|
2,528 |
|
|
|
10,196 |
|
|
|
10,495 |
|
Total operating expenses |
|
|
3,371 |
|
|
|
11,414 |
|
|
|
33,723 |
|
|
|
51,863 |
|
Loss from operations |
|
|
(2,845 |
) |
|
|
(4,005 |
) |
|
|
(12,006 |
) |
|
|
(18,277 |
) |
Other income/expense |
|
|
116 |
|
|
|
99 |
|
|
|
621 |
|
|
|
267 |
|
Net loss |
|
$ |
(2,729 |
) |
|
$ |
(3,906 |
) |
|
$ |
(11,385 |
) |
|
$ |
(18,010 |
) |
|
|
|
|
|
|
|
|
|
Net loss per share, basic and diluted |
|
$ |
(0.08 |
) |
|
$ |
(0.13 |
) |
|
$ |
(0.34 |
) |
|
$ |
(0.59 |
) |
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding used in computing net loss per
share, basic and diluted |
|
|
33,170 |
|
|
|
31,118 |
|
|
|
33,169 |
|
|
|
30,370 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
December 31, |
Balance Sheets |
|
|
|
|
|
|
2019 |
|
|
|
2018 |
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash, cash equivalents and marketable securities |
|
|
|
|
|
$ |
20,703 |
|
|
$ |
40,692 |
|
Collaboration receivables |
|
|
|
|
|
|
122 |
|
|
|
3,677 |
|
Prepaid and other current assets |
|
|
|
|
|
|
781 |
|
|
|
3,057 |
|
Total current assets |
|
|
|
|
|
|
21,606 |
|
|
|
47,426 |
|
Property and equipment, net |
|
|
|
|
|
|
- |
|
|
|
154 |
|
Other assets |
|
|
|
|
|
|
221 |
|
|
|
1,223 |
|
Total assets |
|
|
|
|
|
$ |
21,827 |
|
|
$ |
48,803 |
|
|
|
|
|
|
|
|
|
|
Liabilities and stockholders' equity |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable and other current liabilities |
|
|
|
|
|
$ |
1,640 |
|
|
$ |
8,446 |
|
Current portion of deferred revenue |
|
|
|
|
|
|
- |
|
|
|
10,075 |
|
Total current liabilities |
|
|
|
|
|
|
1,640 |
|
|
|
18,521 |
|
Deferred revenue, less current portion |
|
|
|
|
|
|
- |
|
|
|
2,815 |
|
Other long-term liabilities |
|
|
|
|
|
|
- |
|
|
|
68 |
|
Stockholders' equity |
|
|
|
|
|
|
20,187 |
|
|
|
27,399 |
|
Total liabilities and stockholders' equity |
|
|
|
|
|
$ |
21,827 |
|
|
$ |
48,803 |
|
|
|
|
|
|
|
|
|
|
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