Investors in Conatus, and especially those in Newlink, should question how valuations of the groups' reversing acquirers have been calculated.

Biotech stocks moved mostly sideways during the week, although there was a flurry of activity in the space. Earnings from the sector began to trickle in, with Bristol-Myers Squibb Co (NYSE: BMY) reporting forecast-beating earnings.

Conatus Pharmaceuticals’ emricasan has failed another midphase clinical trial. The latest setback saw the Novartis-partnered liver disease drug fail to beat placebo in NASH patients, wiping another 50% off Conatus’ stock price.

Emricasan, a caspase inhibitor, is being developed for the treatment of patients with fibrosis or cirrhosis caused by nonalcoholic steatohepatitis (NASH). Conatus acquired the worldwide rights to emricasan from Pfizer PFE in July 2010.

Eight months after Conatus’ execs tried unsuccessfully to sell a silver-lining playbook story to investors about the failure of a Phase IIb trial for their drug emricasan in fibrosis and cirrhosis, they’re back with another failed Phase IIb — and once again they’ve set out to try and sell it as a win.