Enanta Pharmaceuticals Inc (ENTA)

[marthambles]

CS ups target price:

Summary: We are increasing our TP on ENTA to $43 (from $36) due to higher HCV sales on the back of our HCV survey
work published in a separate document today. We have raised our peak ABBV/ENTA all oral, interferon-free (combination)
sales in 2018 to $2.5B (from $2.2B). Our 2014-2017 regimen sales also have increased. Our FY'14, FY'15, and FY'16 EPS
estimates are $1.20, $4.57, and $2.96 from $1.18, $3.78 and $1.94, respectively.
? Raising ABBV/ENTA HCV franchise sales forecasts based on proprietary physician survey - key conclusion = higher
ABBV/ENTA mkt share. The 4 key take-homes with regards to ENTA were (1) Our survey suggested a notably higher
patient share for ABBV's/ENTA's combination (20-30%/30-40% treatment naïve/experienced - vs. consensus which is
ca15%) See our full report.(2)...it also pointed to significant warehousing and concomitant patient tracking, which is likely to
result in a market-wide faster and larger patient treatment ramp upon the launch of all-oral, interferon-free regimens in
H2'14 - See our full report. (3) On pricing, we still consider a ca$100k/ treatment course gross price as obtainable (See our
full report) in the US for the initial all-oral, interferon-free regimens; however our survey work did highlight the market share
sensitivity to pricing. (4) The survey also pointed to general enthusiasm for formulation improvements and the G2/3
opportunity for ABBV/ENTA 2nd/next-gen regime.
? Reiterating our view that ENTA is an often overlooked way to play the HCV Revolution and/or ABBV's positioning within it.
(1) ENTA is the originator of ABT-450, the cornerstone of ABBV's all-oral, interferon-free regimen. ENTA is set to collect an
effective royalty rate of at least 4% (assuming 3 DAAs) on ABT450 based regimens. (2) ENTA's current market cap is
$630M and could have ~$700M in cash by 2020. (3) Potential upside could come from 2nd/next-gen protease inhibitor,
ABT-493, to which ENTA can opt into to garner greater economics. See our previously published note "Playing the ABBV
derivative via ENTA" dated 10 December 2013, for further details of our investment thesis.