Enanta Pharmaceuticals Inc (ENTA)

[willyw]

Let’s use the HCV market as a comparator

This makes very good sense to me- in a very general sense.
For broad strokes its as good as any way to ballpark sales.

annual size of the addressable market for an HBV-curing regimen will be comparable to what it was for HCV.

Again- I agree. But given general agreement I would be inclined to guess less. As you say correctly many of the countries have less money.
Interesting to me that Gilead was threatened with patents; both by India, but ALSO by rights to patents in earlier drug development. Might Enta experience the same OR can it sidestep that? (India and other countries subsequently eroded the Gilead's power over it's pricing.)

The peak-sales year for HCV

Rather than quoting the entire passage I have to note that there is only so much pie.
Right now HCV is still being funded.
There are also massive covid relief bills still planned against the backdrop of covid AND global warming.

For ENTA, specifically, an important question is what proportion of the total HBV functional-cure market will be comprised of all-oral regimens, assuming that an all-oral regimen exists. I would submit that this proportion will likely be at least 50%.

Like HCV there may be a few winners.
But often the first doesn't stay first place; example Gilead w/ HCV- but they made so much money simply being first.
In the case of Harvoni vrs Mavyret for instance the efficacy is quite close- so Gilead has benefited close to equally even in long term.

It's too early to actually be able to compare all HBV programs, but my sense is that Enanta may not have any close competitors;

1) I cannot think of a efficacious all oral program equally ENTA's.

2) Many are oral AND injectable.
COMPARE to ENTA's all oral.

3) Assuming it takes 3 compounds I'm not sure that any one company possesses all the requisite drugs -such as ENTA may have.
- Enanta- in possessing 2 of the 3 (the third being an existing nuke), was able to optimize the two drugs to work together and WITH the existing nuke. MANY collaborations may have decent drugs but they simply must be thrown together without that initial planning and optimizing. If they happen to be a perfect match it may be a fluke.

AND SO.... there may be temporary decent therapies (think early HCV; telaprevir, boceprevir, simeprevir) but none of these were the ultimate- even to some extent Gilead Harvoni was to ultimately take 2nd place.
I think there is a strong question as top whether other companies will be able to unseat the ENTA HBV program.
I admit- it's way, way early.
But many MANY large juggernaut companies were NOT able to produce what ENTA did- not once but twice in HCV.

So where I was a little stingy on annual spending on HBV, I wonder if Enanta could end up with a larger than half HBV share.
I wonder how much warehousing may occur?

I think I agree with you generally.
I think that the devil is in the details in development and distribution.
The drug development may have been the easy part. : )

[willyw]

I'd ultimately like to double, but relatively recently added an additional 2/3rds to my long term position- in a number of buys.
All green at this point- but I confess I was trapped in a position- so I'm not green for some of my longer term position....yet.

Not only do I want to ride the stock price up, but I want to lower my average share price cost.

I feel like with the stock price rising many have looked into the stock to investigate why.
(ENTA up 31%+ this past month)

[radford]

funding

[DewDiligence]

Like this company a lot. But always thought of them as a research boutique destined to be acquired at some point in the near future. Now I am thinking very differently.

What changed your view?

[vinmantoo]

Small biotechs had a good week. (XBI +8%.)

This rapid rise in ENTA stock price is annoying me as I am still in accumulation mode. :)

[vinmantoo]

Could be something big going on here. AF acknowledging that vaccines are not working.

What are you talking about? Vaccines are sure as hell working, but the delta variant is lowering efficacy for breakthrough infections. Vaccines are still quite good for preventing hospitalizations.

[radford]

Like this company a lot. But always thought of them as a research boutique destined to be acquired at some point in the near future. Now I am thinking very differently.

[radford]

APP. Could be something big going on here. AF acknowledging that vaccines are not working.

[DewDiligence]

Small biotechs had a good week. (XBI +8%.)

[JK2016]

Curious if the significant bump the last week is excitement around the HBV or SARS program or both?

[DewDiligence]

If anyone would like to comment or elaborate on #msg-165620670, I’m all ears.

[DewDiligence]

Re: HBV functional-cure market size

Let’s use the HCV market as a comparator, based on the assumption that ENTA (or somebody’s combination regimen) will be is successful in providing a functional cure for HBV.

The number of patients infected with chronic HBV is considerably larger than it ever was for HCV. However, a larger proportion of chronic-HBV patients live in poor countries as compared to HCV, which offsets the larger number of total patients. Thus, as a rough first-order approximation, we could hypothesize that the peak annual size of the addressable market for an HBV-curing regimen will be comparable to what it was for HCV.

The peak-sales year for HCV (2015) saw worldwide sales of approximately $23B, which dropped to about $19B the following year (2016) and has declined steadily since then as more and more patients are cured and the average selling price for a course of treatment has come down.

For HBV, the sales trajectory will not be as parabolic as it was for HCV; due to the greater difficulty diagnosing and treating patients in poorer countries, the initial bolus will be smaller and the rate of decline following the peak will be more gradual. Therefore, as compared to HCV, we should probably model a somewhat lower number for peak annual sales, but perhaps an equal or higher NPV for the total (all years) revenue stream.

For ENTA, specifically, an important question is what proportion of the total HBV functional-cure market will be comprised of all-oral regimens, assuming that an all-oral regimen exists. I would submit that this proportion will likely be at least 50%.

[semi_infinite]

What is your estimate (or range) of successful HBV combo pricing and total addressable market?

[JK2016]

https://www.enanta.com/investors/news-releases/press-release/2021/Enanta-Pharmaceuticals-Elects-Yujiro-S.-Hata-to-its-Board-of-Directors/default.aspx

[willyw]

This phase 1 work is being run by
Principal Investigator: ED Gane, MD
https://clinicaltrials.gov/ct2/show/NCT04971512?term=Enanta&cond=hbv&draw=2&rank=3

"Dr. Gane is an investigator for many international clinical trials with particular interest in early phase development of new direct acting antiviral therapies against chronic hepatitis C, hepatitis B, NASH and HCC. He has published almost 350 papers in peer-reviewed journals including The Lancet and The New England Journal of Medicine."

(my comment) Enanta seemed pretty confident about EDP-721. The guy they chose to run the phase 1 trial is also top notch, IMHO.

[vinmantoo]

ENTA doses first patient in EDP-721 phase-1:

Good to see and exciting news for ENTA shareholders.

[DewDiligence]

ENTA doses first patient in EDP-721 phase-1:

https://www.businesswire.com/news/home/20210816005078/en

Please see #msg-164540806 for background info.

[DewDiligence]

Yes, that's been a problem for some time.

[NY1972]

There is no liquidity. I bought 2K shares and the price jumped 75 cents.

[DewDiligence]

ENTA is a screaming buy, IMO, but it is no longer cash-flow positive because Mavyret sales remain well below pre-pandemic levels.

In 4Q19 (the last full pre-pandemic quarter), Mavyret sales were $632M; in 2Q21, they were $441M. Lower Mavyret sales have caused a more-than-proportional decrease in ENTA’s royalties because the royalty rate is tiered.

[rwwine]

it astounds me that this company has not been scooped up by big Pharma. Cash flow positive, solid leadership and promising products in the pipeline.

[DewDiligence]

ENTA files preliminary shelf registration for unspecified amount of capital:

https://www.sec.gov/Archives/edgar/data/1177648/000156459021042633/enta-s3asr.htm

ENTA certainly isn’t planning to raise capital in the near future, so I wouldn’t read anything in particular into this filing.

[DewDiligence]

ENTA’s_enterprise value_at_the_current_share_ price ($45.10) is ~$680M, based on 24.1M fully-diluted shares (#msg-165355921) and pro forma cash of $408.3M (#msg-165355929).

[DewDiligence]

ENTA’s pro forma cash @6/30/21=$408.2M—a decrease of $17.9M since 3/31/21 (#msg-163910195).

The $408.4M figure above consists of: $292.5M of net current assets on the 6/30/21 balance sheet (https://www.sec.gov/ix?doc=/Archives/edgar/data/1177648/000156459021042612/enta-10q_20210630.htm#CONSOLIDATED_BALANCE_SHEETS ); and $115.7M of marketable securities on the 6/30/21 balance sheet designated as long-term (e.g. bonds with a time to maturity greater than one year).

[DewDiligence]

ENTA’s fully-diluted share count @6/30/21=24.1M—unchanged since 3/31/21 (#msg-163910230).

The 24.1M figure above consists of: 20.2M basic shares on the 6/30/21 balance sheet (https://www.sec.gov/ix?doc=/Archives/edgar/data/1177648/000156459021042612/enta-10q_20210630.htm#CONSOLIDATED_BALANCE_SHEETS ); and 3.9M options outstanding at 6/30/21 (whether or not exercisable) (ibid, page 13).

[DewDiligence]

ENTA FY3Q21 CC transcript:

https://finance.yahoo.com/m/4cb2fad0-4884-3819-a519-fe65c58a560a/enanta-pharmaceuticals%2C-inc.html

[DewDiligence]

ENTA new corporate slide set:

https://s22.q4cdn.com/306858242/files/doc_presentations/2021/08/Enanta-Corporate-Presentation-Final-8.5.21.pdf

[willyw]

Who could have known?!?!

[DewDiligence]

Somebody didn't realize until today that ENTA is a COVID play?

[willyw]

A kind of crazy last few minutes of trading.
At 10 minute till 55.4K shares traded; up +.79 cents

at 5 minutes till 60K shares

at 4 minutes till 91K shares +1.74

at 3 minutes till 120K shares +$3.04

at 2 minutes 138K shares +$3.34

at 1 minute 150K shares +$3.67

at closing 225K shares +3.77 gain

Day's Range $42.18 - $46.52 Gain 8.87%

[DewDiligence]

ENTA FY3Q21* results—royalty_revenue=$21.6M—6/30/21_cash=$372.5M:

https://www.enanta.com/investors/news-releases/press-release/2021/Enanta-Pharmaceuticals-Reports-Financial-Results-for-Its-Fiscal-Third-Quarter-Ended-June-30-2021-with-Webcast-and-Conference-Call-Today-at-430-p.m.-ET/default.aspx

ENTA’s royalty rate on Mavyret sales from ABBV is tiered, as shown in the table in #msg-142808661. The royalty rate is applied to the 50% Glecaprevir component of Mavyret (a 2-drug combination). The royalty tiers reset at the start of each calendar year (like tax brackets), so ENTA’s royalty rate is highest in the fourth calendar quarter (ENTA’s fiscal* Q1) and is lowest during the first calendar quarter (ENTA’s fiscal* Q2).

During calendar 2Q21 (ENTA’s FY3Q21*), ABBV sold $441M of Mavyret. ABBV has issued calendar-2021 guidance for Mavyret sales of $1.9B (#msg-165196250), implying quarterly sales in calendar 2H21 approximately $500M per quarter.

ENTA’s 6/30/21 cash balance of $372.5M was down $27.5M from 3/31/21 (#msg-163650007); the relatively high cash burn was mostly due to R&D spend (see below).

ENTA previously issued FY2021* guidance for gross operating expenses (including non-cash components such as stock-based compensation): $145-165M for R&D; and $27-33M for G&A. The actual FY3Q21 R&D spend of $47.0M was well above that range ($188M annualized), while the actual FY3Q21 G&A spend of was at the top end of the prior guidance.

*ENTA’s fiscal year ends on September 30.

[willyw]

I'm sure they will talk about it in today's CC.

It strikes me that Pfizer is a huge company and has a head start; but not by much.

Enanta has a strong history and record with anti-virals; particularly with protease inhibitors.

I was anxious for ENTA to develop a compound. Did Pfizer's haste to create a PI create a best in class PI? ENTA may have a better solution than the goliath company; they have anti-viral expertise, created the best in class PI for HCV, and may have demonstrated the same in RSV and HBV.

It would seem that covid isn't going away.
There is talk about the virus evading vaccines.
This looks encouraging to me.

[vinmantoo]

Thanks willyw!

Chief scientific officer Mikael Dolsten said that in the phase 1 study, PF-07321332 exceeded the level predicted to inhibit coronavirus viral replication by more than fivefold.

A 5-fold decrease in viral replication doesn't seem to be earth shattering to me, especially since delta appears to have several orders of magnitude greater titer that earlier strains. However, it might make lower the chances for a long hospital stay or death.

[DewDiligence]

I posted some excerpts from ENTA’s PR in #msg-165291436.

[willyw]

Below an article on the Pfizer competition.
What was intriguing to me was the time line;
this protease inhibitor was in phase 1 this spring
"Pfizer advanced the experimental drug into phase 2/3 testing in July and thinks it could file for EUA in Q4 if all goes well." EUA = Emergency Use Authorization

https://www.fool.com/investing/2021/08/03/this-could-be-pfizers-next-covid-blockbuster-and-i/

[willyw]

Enanta Pharmaceuticals Announces Nomination of Clinical Candidate EDP-235, its Lead Oral Protease Inhibitor Specifically Designed for the Treatment of COVID-19
August 05, 2021

https://www.enanta.com/investors/news-releases/press-release/2021/Enanta-Pharmaceuticals-Announces-Nomination-of-Clinical-Candidate-EDP-235-its-Lead-Oral-Protease-Inhibitor-Specifically-Designed-for-the-Treatment-of-COVID-19/default.aspx

[DewDiligence]

ABBV's 2021 Mavyret guidance of $1.9B (lowered from $2.0B) implies about $500M per quarter in 3Q/4Q21. I thought ABBV might drop the full-year guidance to $1.8B (or less), so I'm ok with the $1.9B figure.

[vinmantoo]

ABBV 2Q21 Mavyret sales=$441M, +6% QoQ:........

New-patient starts are increasing but are not (yet) back to pre-pandemic levels.

Great as it gives me plenty of time to add more before ENTA rebounds.

[DewDiligence]

ABBV 2Q21 Mavyret sales=$441M, +6% QoQ:

https://news.abbvie.com/news/press-releases/abbvie-reports-second-quarter-2021-financial-results.htm

New-patient starts are increasing but are not (yet) back to pre-pandemic levels.

ABBV’s full-year 2021 Mavyret guidance is $1.9B, down from the prior guidance of $2.0B.

[DewDiligence]

Patience is required, but buying now (when nobody wants it) is a good bet, IMO.

The clinical catalysts for 2021 are pretty modest—see slide #38 at the link in #msg-164535206.

[usma67korea]

Any catalysts - near term? it's been a dog for 2 years... really disappointing for a company w/ great science... just do not understand the market's ignorance

[DewDiligence]

Nice pickup.

[vinmantoo]

I added shares today in the institutional account I manage.

I added more shares yesterday at $42 so now have more ENTA shares than ever. No guts, no glory. Not sure it takes much guts given the big dependable cash stream coming from Mavyret.

[willyw]

More RSV, but in the midwest.
It seems to re-emerging, albeit off season.
Perhaps Enanta can get their trials enrolled soon.
https://www.yahoo.com/news/cold-weather-virus-summer-baffles-141645322.html

[DewDiligence]

RSV reemerging in US South—(contrary to normal seasonality)—as COVID-related social distancing wanes:

https://www.wsj.com/articles/another-respiratory-virus-is-spreading-as-u-s-gets-back-to-pre-covid-19-life-11625140800

[DewDiligence]

I added shares today in the institutional account I manage.

[vinmantoo]

I'm a long time holder but have been adding on the low price.
I was *certain* that based on generally positive data from ENTA in many of their programs that the price would start climbing. : )
- HA!! That was not in the cards today but I still added again today.

Willy, you are preaching to the choir. I also bought more ENTA today and am back to my highest numbers of shares ever. I sold a bunch a few years ago when it was in the upper $80s and feel like I am getting a real bargain now. This is especially after seeing the relatively poor VIR data on HBV after some 48 weeks of treatment. FWIW, I also bought more ENTA last week too.

[willyw]

I'm a long time holder but have been adding on the low price.
I was *certain* that based on generally positive data from ENTA in many of their programs that the price would start climbing. : )
- HA!! That was not in the cards today but I still added again today.

* Hep B- ENTA has a strong plan and candidates, although they are not the furthest along, they may have a basis for an all oral cure- which in a global scheme would be more desirable than w/ injectable programs.

* RSV has been increasing and if they can just complete their trials they are probably a best in class and first approval- and they have a second compound in the wings.

* Even in NASH where no one is a strong leader ENTA looks somewhat successful, and looks to have an even better 2nd gen compound.

* I have also been adding on the number of near term catalysts and a thinning of competitors in many programs.

* Covid is not going away and continues to mutate. An effective anti-viral oral agent could attract Govt funding and accelerated approval.

* Note that ABBV and ENTA were not first in HCV but in the end were FIRST IN CLASS with the most effective and shortest treatment. Gilead was a close second BUT they didn't create their nuke; they bought it in Phase 3.
A G/P pediatric approval just happened in kids 3 years and older.
HCV acute cases also increased 14% 2018-2019.

* Anyone that has held ENTA has seen periods of volatility; both down and upwards- for me a better time to add than to sell.

Above are a few reasons I added today.

[vinmantoo]

Not sure why the big drop in ENTA today but it may entice me to buy a bit more.

[DewDiligence]

ENTA_presents_preclinical_data_on_EDP-721—an_oral_ HBV_RNA_destabilizer ENTA aims to make the third drug (with EDP-514 and a nuke) in an all-oral function-cure regimen; the data presentation was delivered at the International Liver Conference sponsored by EASL (European Association for Study of the Liver) going on now:

https://www.enanta.com/investors/news-releases/press-release/2021/Enanta-Pharmaceuticals-Presents-New-Data-for-EDP-721-an-Oral-Hepatitis-B-Virus-RNA-Destabilizer-at-the-European-Association-for-the-Study-of-the-Liver-EASL-International-Liver-Congress/default.aspx

Enanta Pharmaceuticals…today reported new preclinical data for EDP-721, a novel, oral hepatitis B virus (HBV) RNA destabilizer being developed for use in an all-oral combination regimen for HBV.

The data demonstrate potent, selective and pangenotypic inhibition of HBV surface antigen (HBsAg), with up to a 3-log drop in the AAV-HBV mouse model. The research on EDP-721 was presented in a poster titled Discovery and Characterization of EDP-721, a Novel Hepatitis B Virus RNA Destabilizer, during the EASL International Liver Congress 2021.

“The data presented today strongly support the continued development of EDP-721 for use in an all-oral regimen to provide a functional cure for HBV,” said Jay R. Luly, Ph.D., President and Chief Executive Officer of Enanta Pharmaceuticals. “While existing therapies for chronic HBV are moderately effective at suppressing HBV DNA, high levels of HBsAg present a key barrier to enduring viral clearance. These new preclinical data demonstrate that EDP-721 significantly reduced HBsAg production up to 3 logs and exhibited additive to synergistic activity with antivirals that target different mechanisms.”

[New MoA info]: …EDP-721 was shown to be a selective inhibitor of the non-canonical poly(A) polymerases, PAPD5 and PAPD7, host factors critical to the post-transcriptional stabilization of HBV RNA. Inhibition of PAPD5/7 results in potent and pangenotypic reduction in HBsAg production with minimal effects on the host transcriptome in uninfected primary human hepatocytes. Oral administration of EDP-721 demonstrated HBsAg reductions of up to 3 logs following 14 days of once-daily dosing in the AAV-HBV mouse model. EDP-721 was also shown to exhibit synergistic antiviral activity in vitro when combined with nucleos(t)ide reverse transcriptase inhibitors or the HBV core inhibitor EDP-514.

Enanta expects to initiate a Phase 1 single ascending dose (SAD) and multiple ascending dose (MAD) study to evaluate the safety and tolerability of EDP-721 in healthy volunteers in mid-2021.