Enanta Pharmaceuticals Inc (ENTA)

[Rocky3]

You are reading it wrong as that is an accounting "trick". They have $400 million in cash and cash equivalents.

If they have to pay $200MM+ out of future revenue to a creditor and cannot use that money for other operations, I would say treating it as a debt is correct. They have sold ~50% of their future revenue (at least for the next ~3 years) and have to pay it back. It was clearly a loan agreement is substance. It is true that they don't have to use current assets, but the $200MM is not really theirs - it is borrowed money. The net worth of the company has not gone up - it has gone done by the quarterly burn. If you think otherwise, I would suggest that you read it again. As DD pointed out, it is the way that it should be accounted for.

[JK2016]

Agree. I wasn’t meaning it’s a $3 stock this year or next but at some point unless a deal is struck. On the positive side there is also the patent litigation with PFE that could yield positive results as well.

[vinmantoo]

if ENTA continues to burn cash and the assigned value is based on the cash, it only makes sense to me that as the on hand cash goes lower, the stock price does as well.

That is true for just about every biotech. However, you talked about a $1.50 to $3 stock price without any timeline. ENTA said they have enough cash to fund operations into 2027 so that prediction will hold if nothing positive develops in the pipeline by then and no partnership is struck for EDP-235. I can't say that is impossible but it isn't imminent.

[vinmantoo]

Not net cash with the $200MM being a debt on the balance sheet. Quite a bit to go to get to net cash.

You are reading it wrong as that is an accounting "trick". They have $400 million in cash and cash equivalents.

The market is putting a significant value on pipeline. The bet is whether it should be putting a bigger value on it or not. I am getting close to saying it should be (but I thought that I would be a buyer at 18, and I'm glad that I held off).

Congratulations as that looks like a smart move right now.

[Rocky3]

ENTA market value is already below cash

Not net cash with the $200MM being a debt on the balance sheet. Quite a bit to go to get to net cash. And there is a bigger and bigger draw on that cash for operations. The market is putting a significant value on pipeline. The bet is whether it should be putting a bigger value on it or not. I am getting close to saying it should be (but I thought that I would be a buyer at 18, and I'm glad that I held off).

[JK2016]

I'M not saying the pipeline doesn't have value, but Wall Street clearly hasn't assigned any value to it therefore if ENTA continues to burn cash and the assigned value is based on the cash, it only makes sense to me that as the on hand cash goes lower, the stock price does as well.

[vinmantoo]

ENTA market value is already below cash and you are predicting it will drop 10x below cash. When? Are you saying the pipeline has zero value?

[JK2016]

The Street isn't giving much (if any) value to the pipeline. The $15/share price is reflective of only the 393M on hand cash which decreases on a monthly basis with the expected burn rate. With the sale of the royalties, the amount coming in from Abbvie isn't replacing and/or adding to the cash on hand. In summary, with each passing month, the on hand cash decreases and the stock price goes along with it. Correct me if I am wrong....?

[vinmantoo]

Anyone have an educated guess as to the likelihood of a partner for 235 or 938? If low, what in the pipeline would keep this from being a $1-$3 stock?

What??

[JK2016]

Anyone have an educated guess as to the likelihood of a partner for 235 or 938? If low, what in the pipeline would keep this from being a $1-$3 stock?

[vinmantoo]

On page 8 of the same 10-Q document, there’s a heading that says, “amounts in thousands, except per share data.” This header applies to all of the notes to the financial statements that follow, so the “$200,000” in the excerpt I posted means $200 million.

Thanks Dew. Glad to see they didn't make such a foolish error.

[DewDiligence]

There's no particular benefit to the accounting treatment; it's simply the proper way to handle a deferred liability under GAAP.

[DC15]

Thank you. Is the impetus for this accounting method tax efficiency?

Is it likely that the general market does not understand the accounting method being used, or is otherwise using this accounting method as an excuse to knock Enanta a little harder?

Does this accounting benefit Enanta through other mechanisms such as retaining eligibility for some government and oversight programs?

Thank you again!

[DewDiligence]

On page 8 of the same 10-Q document, there’s a heading that says, “amounts in thousands, except per share data.” This header applies to all of the notes to the financial statements that follow, so the “$200,000” in the excerpt I posted means $200 million.

[vinmantoo]

pursuant to which the Company was paid a $200,000 cash purchase price in exchange for 54.5% of future quarterly royalty payments on net sales of MAVYRET/MAVIRET, after June 30, 2023, through June 30, 2032, subject to a cap on aggregate payments equal to 1.42 times the purchase price.

There is a typo in there as ENTA got $200 million ($200,000,000) not $200,000.

[DewDiligence]

Re: Accounting treatment of the Omers transaction

Here’s the explanation from ENTA’s FY3Q23 10-Q (p.12):

https://www.sec.gov/ix?doc=/Archives/edgar/data/0001177648/000095017023039754/enta-20230630.htm

In April 2023, the Company entered into a royalty sale agreement with an affiliate of OMERS, pursuant to which the Company was paid a $200,000 cash purchase price in exchange for 54.5% of future quarterly royalty payments on net sales of MAVYRET/MAVIRET, after June 30, 2023, through June 30, 2032, subject to a cap on aggregate payments equal to 1.42 times the purchase price.

Because the royalty sale agreement will be paid back to OMERS up to a capped amount as well as the Company’s significant continuing involvement in the generation of future cash flows under its AbbVie Agreement, the Company recorded the proceeds from the transaction as a liability on its consolidated balance sheets which will be amortized as interest expense in the consolidated statements of operations under the effective interest rate method over the life of the royalty sale agreement. The Company will continue to record the full amount of royalties earned on MAVYRET/MAVIRET sales as royalty revenue in the consolidated statements of operations.

The Company’s liability related to the sale of future royalties is estimated based on forecasted worldwide MAVYRET/MAVYRET royalties to be paid to OMERS over the course of the royalty sale agreement. This estimate requires significant judgment, including the amount and timing of royalty payments up until the end of the royalty sale agreement, which is estimated to be the stated term of June 30, 2032. As royalties are earned by OMERS, the liability is reduced on the Company’s consolidated balance sheets. At June 30, 2023, the estimated future cash flows resulted in an effective annual imputed interest rate of approximately 5.5%.

Emphasis added. Note that the interest-expense amount that will appear on each quarter’s income statement (starting in FY4Q23) is a non-cash item.

[DC15]

I would like to propose a benefit of the doubt for the poor performing stock and attribute the decline in price to an expectation of the masses that the entire market is going to decline.

This poor stock is taking the hit upfront because it is strictly a provider of research and development.

I do not understand the accounting methods for the sale of a portion of the HCV revenue. I do understand the terms of the agreement, I do not understand the accounting practice, i.e., recording it as debt.
Please correct me if I am wrong and I am thankful for any explanation that can be provided.

[biocqr]

ENTA 13F data for 2Q which ended 6-30-23...

1.26% Increase in shares held
45% increase in new positions
25% increase in increased positions
46% decrease in reduced positions
P/C ratio = .89

It doesn't appear that hedge funds are running for the hills...

[ASPRV]

Like you know me.

Good humor
10 out of 10.

I made a song and dance about it. I admit.

Still nothing informative.

[vinmantoo]

Secondly, I understand EDP-235, 938, 514, 323 are the names of inhibitors. I am not entirely sure if people call them a pipeline or not. I thought we call them a pipeline.
If I were wrong, you could say in detail.

You said you knew the name of the pipeline. I said I didn't know the pipeline had a name. I asked you if the name of the pipeline was pipeline. It was an attempt at humor, which apparently you didn't get.

Firstly, what I said is not Paxlovid has better data than EDP-235.
In fact, I was asking from what perspective EDP-235 is better

Actually, you came here and declared that the data looks like EDP-235 didn't look like it had strong potency as compared to Paxlovid as being superior.

https://investorshub.advfn.com/boards/read_msg.aspx?message_id=172540382

People make mistakes or overstate their conclusions. I do both occasionally. However, I don't try to lie about what I said. I admit my mistakes and try not to repeat them. I suggest you do the same instead of denying what you said. Admitting ones errors and correcting them is what an honest and sincere person does.

Not just blaming. I think you should study how to speak to people. The way you use is so violent and rude. I am not sure whether it derives from your arrogance or pride or whatever.

I do sometime tend to be a bit forceful, but I am never violent and never make threats. I do notice you like to attack me for pointing out your errors and inconsistency. That isn't any way to behave.

You aren't worth dealing with.

[ASPRV]

Well, I am not sure if you read it or not.

Firstly, what I said is not Paxlovid has better data than EDP-235.
In fact, I was asking from what perspective EDP-235 is better

Secondly, I understand EDP-235, 938, 514, 323 are the names of inhibitors. I am not entirely sure if people call them a pipeline or not. I thought we call them a pipeline.
If I were wrong, you could say in detail.

Not just blaming. I think you should study how to speak to people. The way you use is so violent and rude. I am not sure whether it derives from your arrogance or pride or whatever.

I have never said you've told me the wrong 2Q revenue. You just ignore what you wrongly thought.

I am sensitive. YES. Because I try to think and understand others' perspectives. Not like you.
IMHO, someone who has better sympathy is a better person.

I can not get any informative information from your writing.

I will end discuss with you. It is hard to say this is a discussion, though. Bye. Enjoy your smart investment.

[vinmantoo]

What kind of person are you making me.
I listened conference call and watched the slides

If you did those things then it is astonishing that you would say Paxlovid has better data given that Paxlovid failed to reduce symptoms at least to statistical significance in a similar low risk population as in SPRINT where as EDP-235 did.

How do you think I know the name of company's pipeline.

I didn't know ENTA's pipeline had a name. What is the name of ENTA's pipeline? Is it pipeline?

And there is someone who claim about Paxlovid's 2Q revenue. You can easily find him

That person is Not You though

You did NOT say about Q2's Paxlovid revenue.

Mother of God! Correct. I never mentioned Paxlovid revenues in Q2 2023 and never claimed to have mentioned it. YOU were person who mentioned the low Paxlovid revenues in Q2 and gave a figure.

https://investorshub.advfn.com/boards/read_msg.aspx?message_id=172560414

Other people including myself mentioned how large Q1 2023 revenues were for Paxlovid ($4.1 billion). The difference in the two quarters was attributed by PFE to seasonality for Covid, then reiterated here on his board by a few people including myself. Nobody knows for sure if it Covid will become seasonal like the Influenza and RSV but the rise in Covid cases, not a spike, but a rise suggest there could be seasonality. Time will tell.

I do not know how long you followed Enanta.
And I don't know how well educated you are.
But this attitude is not that nice of you as a person.
You could just say what it is.
You DO NOT HAVE TO BUT.

I am sorry that you didn't like being challenged or corrected. Perhaps you should try and be less sensitive.

[ASPRV]

Oh I see. That makes sense :)
Thank you.

[DewDiligence]

The most recent quarter was fiscal Q3 because ENTA's fiscal years run from Oct 1 to Sep 30 (#msg-172537414).

[ASPRV]

Mother of god!
I know it is the 2Q conference call.
THE REASON I write Q3 is the company use that term. Go to the website or go to Seeking alpha, and you could easily find it. I don't know why they write down Q3 but it says so. I thought you must go to enanta's homepage or something. But I was wrong.

What kind of person are you making me.
I listened conference call and watched the slides

How do you think I know the name of company's pipeline.

'Waste water'wise
I couldn't find it in google yet because it needs context of this company.
I know it is not that great to ask everything
But I studied this company 7hours yesterday. And I will study more for a while.

But no worries at least I will find it finally at some point.

I do not know how long you followed Enanta.
And I don't know how well educated you are.
But this attitude is not that nice of you as a person.
You could just say what it is.
You DO NOT HAVE TO BUT.


And there is someone who claim about Paxlovid's 2Q revenue. You can easily find him

That person is Not You though

You did NOT say about Q2's Paxlovid revenue.

Please Think before you write.

[vinmantoo]

I've seen the data of EDP-235 and it has more steep data than Paxlovid. But I am not a doctor, and I don't exactly know how much it has more powerful efficacy than Paxlovid. I hope it is way better for lots of patients and us. That was the reason I posted it. Whoever saw the graph would know that simple information. Don't be mad. I apologize for my poor knowledge. I am just an investor who is trying to grasp about this company for my future investment.

If you want to be better informed then you should see the latest company slide presentation, listen to the last CC and also listen to the investor conference after the SPRINT data came out. You could also review some of the posts by knowledgable people here, especially those by DewDiligence and you will become more informed. As it was, you came he and spewed nonsense like the following.

By the looks of the data, it doesn't show strong potency compared to Paxlovid.

There is nothing wrong with ignorance as I am ignorant on many topics.

There is a lot wrong with coming here and definitively making that comment above then trying to backtrack and claim ignorance. Can you see how suspicious that makes you looks?

There is a lot right with asking for information and where you can find it. That is why I directed you to check the comments by DewDiligence and the links he provides and you will become better informed.

Anyway, I've listened about the 'waste water' in 3Q C.C. of Enanta. Do you happen to know where to see the data of it?

What?? There hasn't been a CC of Q3 2023. If you are interested in waste water, google it.

and when did I say something wrong about Paxlovid sales? I've only asked about 23.2Q. revenue. Isn't it 143m? I've seen it on 10Q, sec.gov.

Nobody is claiming you are wrong about Paxlovid Q2 2023 sales. I certainly never said or even hinted at that. People are bring up sales in for Q1 and DewDiligence linked to PFE's projection for full year 2023. I pointed out that Covid is endemic and has a number of animal reservoirs, but you seem to have ignored or discounted that.

[ASPRV]

I see. You think it is still a big opportunity for ENTA, don't you? I understand it. Compared to its Market Cap. it is huge, isn't it?

What I meant about transition is PFE says one of the reasons for poor revenue on Paxlovid is they are changing their method of sales to commercial markets rather than to government deals. That's what I understood from their recent conference call. I was asking you guys' opinion on it. Whether it would be better for PFE's Paxlovid sales or not.

[ASPRV]

Thank you for your elaboration. I mean it.

I've seen the data of EDP-235 and it has more steep data than Paxlovid. But I am not a doctor, and I don't exactly know how much it has more powerful efficacy than Paxlovid. I hope it is way better for lots of patients and us. That was the reason I posted it. Whoever saw the graph would know that simple information. Don't be mad. I apologize for my poor knowledge. I am just an investor who is trying to grasp about this company for my future investment.

Anyway, I've listened about the 'waste water' in 3Q C.C. of Enanta. Do you happen to know where to see the data of it?

and when did I say something wrong about Paxlovid sales? I've only asked about 23.2Q. revenue. Isn't it 143m? I've seen it on 10Q, sec.gov.

[vinmantoo]

But the guidance is still less than last year, like 1 of 3.

So what? Paxlovid sold $18.1 billion in 2022 and $4.1 billion in Q1 of 2023. That isn't peanuts.

https://www.fiercepharma.com/pharma/pfizer-pulls-q1-surprise-sales-covid-products-despite-plummeting-demand

https://www.fiercepharma.com/pharma/pfizer-sees-covid-19-vaccine-sales-falling-64-2023-paxlovid-declining-58

Do you think the transition to traditional commercial markets is better for Paxlovid's revenue? Care to elaborate?

What in the world are you talking about?

[vinmantoo]

I have heard of the seasonality of them and I have seen cases of covid-19 spike. But when you go to CDC and see the data of patients, which is not that many.

You seem to not grasp the fact that Covid testing is way down so of course the numbers are low. Scientists are monitoring Covid in waste water and it is rising.

You also don't seem to understand what seasonality of respiratory viruses means. It is lowest in the summer and starts rising in the late fall and peaks in the winter. Here is a 40 year pattern of influenza showing seasonality.

https://www.cdc.gov/flu/about/season/index.html

Look at 2022 2Q revenue. Don't you think it is almost the end of covid?

Only an idiot thinks Covid is at the end or near its end. It is now an endemic and there are animal reservoirs.

Funny how you have only made 6 posts, all in the last few days and all very negative about ENTA and also misinformed about Covid and about Paxlovid sales. You even made a comment that EDP-235 didn't look as potent as Paxlovid, which shows you lack even basic information about Paxlovid and EDP-235. Tell us how you came to that conclusion.

[ASPRV]

I see, thank you. But the guidance is still less than last year, like 1 of 3. Do you think the transition to traditional commercial markets is better for Paxlovid's revenue? Care to elaborate?

[ASPRV]

I have heard of the seasonality of them and I have seen cases of covid-19 spike. But when you go to CDC and see the data of patients, which is not that many. Look at 2022 2Q revenue. Don't you think it is almost the end of covid?

[ASPRV]

What are you talking about? Are you sure it is 1.49b? Is U.S. revenue like 1.39m?

[vinmantoo]

Do you think covid is over or it is just because of the cycle?

Haven't your heard of the Flu or RASV and their seasonality or that Covid cases are beginning to spike already?

[DewDiligence]

PFE says 2Q23 is a nadir, as explained in #msg-172488867.

[JK2016]

More like 1.49 Billion in Q2.

[ASPRV]

Have you seen the 2Q revenue of Paxlovid, Pfizer? It is 143m. Do you think covid is over or it is just because of the cycle?

[DewDiligence]

AVIR modifies phase-3 protocol for COVID antiviral, bemnifosbuvir:

https://investorshub.advfn.com/boards/read_msg.aspx?message_id=172556375

[DewDiligence]

Yes, I will post ENTA's pro forma net cash after I have studied the 2Q23 10-Q, which was filed this afternoon.

[Rocky3]

ENTA FY3Q23* financials—6/30/23_cash=$393M:

Probably should be reduced by $200MM of "debt" on balance sheet from sale of future revenue. At least the net worth of company may be better figure when talking about "enterprise value."

[DewDiligence]

"Cash" means actual bank-account cash or cash-equivalent securities such as money-market funds and Treasury bills. ENTA is not in the investment business.

[DC15]

I understand that ENTA's cash may carry them for a little while, but what do they do with their stash; Is it invested in US Treasuries? Can the company do anything with the money that the board approves, what options does a company like ENTA have for investing cash?

[DewDiligence]

ENTA FY3Q23 CC transcript:

https://finance.yahoo.com/news/q3-2023-enanta-pharmaceuticals-inc-144243688.html

[vinmantoo]

Which company do you think would be the partner for SPRINT? Was there any discussion on it? I mean, I could not find it yet.

What kind of discussion are you looking for? ABBV is clearly interested in Covid anti-virals as they just put one into a phase 1 trial. They are one of the top partner prospects for ENTA and they already have a relationship for their HepC drugs.

And what is the most important factor to substitute Paxlovid when it is approved? I guess it would be the absence of ritonavir. Do you agree with this?

Yes, that is the most important factor, especially in high risk patients as they are usually taking one or more other drugs. The high number of pills per day (~30) is also a negative for Paxlovid.

By the looks of the data, it doesn't show strong potency compared to Paxlovid.

Actually, EDP-235 showed superior efficacy as compared to Paxlovid as EDP-235 showed a statistically significant reduction in symptoms its phase 2 trial in healthy low risk patients whereas Paxlovid failed to do so.

[Jake2234]

Listen again. They said they have to talk to regulators first. You don’t have the facts straight

[ASPRV]

Which company do you think would be the partner for SPRINT? Was there any discussion on it? I mean, I could not find it yet.
And what is the most important factor to substitute Paxlovid when it is approved? I guess it would be the absence of ritonavir. Do you agree with this? By the looks of the data, it doesn't show strong potency compared to Paxlovid.

[Gene-e]

They repeated many times that their regulatory path is through a partnership (they’ve done it with ABBV before for HCV). ENTA definitely doesn’t have a bandwidth to run multi-thousand-patient global Phase III studies

[DewDiligence]

That job ad you caught a few weeks ago makes more sense in light of the disclosure on today’s CC that ENTA has initiated discovery work in an undisclosed non-virology area.

[Jake2234]

On today’s call, there was an admission that there was no regulatory path for the Covid drug. This is pretty disappointing.

Massive cash burn on HMPV. What’s the point?

[DewDiligence]

Combination treatment for RSV remains a possibility, as discussed on today's CC.