Biotech Values

[DewDiligence]

Re: ENTA sell-off /ESRX 2019 formulary

Today’s ENTA sell-off is an overreaction, IMO, for a number of reasons.

First, the pre-announced change to ESRX’s 2019 formulary might still be amended. The exclusion of Mavyret could be a bluff to get a bigger price concession from ABBV.

Moreover, most of Mavyret’s US business is from the public segment of the market (Medicaid, traditional Medicare, VA), where ESRX doesn’t have any say. Thus, ESRX controls ~15% of Mavyret’s US sales, which is <10% of Mavyret’s worldwide sales.

Further, the formulary change in question is for 2019, specifically—i.e. one year, not forevermore.

Finally, Mavyret royalties do not represent 100% of ENTA's EV.

https://twitter.com/DewDiligence/status/1026851570615562240