Biotech Values

[DewDiligence]

Re: ENTA valuation, royalties, and HCV pipeline

We should defer the royalty part of this discussion by about three months, until ENTA reports its financial results for 1Q15 and the size of ENTA’s royalty income for the US market, specifically, can be pinned down more precisely. We’ll probably have to wait at least an additional year (until 1Q16 financials are reported) to get a good read on ENTA’s royalty income from Europe and Japan.

By that time, we’ll also have more data on ABBV/ENTA’s second-generation HCV regimen of ABT-493 + ABT-530; GILD’s Sovaldi + GS-5816 regimen (mainly relevant to GT3 patients); and the competitive offerings (if any) from other companies.

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Regarding the HCV pipeline, ENTA is seeking to develop a wholly owned 2-drug regimen consisting of a nuke + NS5A, a cyclophilin inhibitor (CI) + NS5a, or—the most exciting option, IMO—a nuke + CI. In these potential combinations, the NS5A is EDP-239, but the nuke and CI have yet to be identified. In other words, ENTA has EDP-239 development on hold until the nuke and/or the CI catches up to it, allowing combination studies to begin in healthy volunteers.

Will these pipeline programs amount to anything of consequence? I don’t know, but the potential nuke + CI combination is intriguing insofar as it would have an unusually high barrier to resistance and no other company has tried such a regimen.