Biotech Values

[DewDiligence]

Re: ENTA and CEO Jay Luly

It seems to be they need to be quick and decisive and I don't think Jay Luly is the answer. I'm curious what others think of him? I'm a retail investor with a 6-figure investment but I would prefer a change at the top to consider further investment. Any thoughts on Jay Luly's performance or the possibility of replacing him would be appreciated.

Luly is 67, the age for retirement at many companies, yet ENTA has never announced or even hinted at a succession plan. My sense is that ENTA’s BoD thinks the company is likely to be acquired in the next few years, and so there is no need to groom a successor.

Regarding Luly’s job performance, I think your criticism is a little unfair. Luly has always been direct and honest with investors, which is more than one can say about many biotech CEOs. Moreover, Luly has been a protector of shareholder value insofar as the company has not sold any shares since its IPO twelve years ago, and the share-count increase from “option creep” has been modest by the industry standards.

True, several of ENTA’s pipeline compounds have fallen short, but (as ‘dewophile’ stated in reply to your post) failure is the industry norm for early-stage compounds. A different CEO would not have made ENTA’s compounds better.

Your assertion that Luly is not “quick and decisive” has more to do with style than substance, IMO. Luly speaks in a monotone and rarely shows emotion, and sometimes comes across as though he doesn’t particularly enjoy what he is doing. However, this is just Luly being Luly, and it should not be interpreted as an actual disinterest in the job.

All told, I’m ok with Luly as CEO, now and in the near future. I have tripled the number of ENTA shares I own during the recent downturn because misvaluations of this magnitude do not come along very often.