Enanta Pharmaceuticals Inc (ENTA)

[marthambles]

From B of A.

Still see GILD taking more share but enough left for ABBV
We are raising our ABBV HCV peak sales estimates to $3bn (in 2016, from
$1.5bn) on increased market share expectations, which are now more consistent
with the most recent new product cycle dynamics in HCV (MRK vs VRTX). Our
increased share expectations are based on the better-than-expected top-line data
on 1/31/14 (see our note), our Biotech team’s HCV survey in which docs
anticipated using ABBV’s regimen in ~30% of patients (see note) and our
expectation that ABBV will partially erode some of GILD’s competitive edge by coformulating
its regimen into a once-daily pill. In line with ABBV’s comments, we
expect ABBV to submit regulatory filings in early 2Q14 (we note GILD announced
it had submitted FDA filings on 2/10/14 – EU expected in 1Q14) and expect an
FDA decision before year end 2014 (ABBV has breakthrough designation). We
model launch in 2015 with peak WW sales of $3bn in 2016, followed by a modest
decline thereafter to account for increased competition from next-generation
regimens (e.g. MRK). We note our $3bn peak sales estimate implies a market
share of ~20%-25%, based on ABBV’s estimate for potential market size of
$12bn-$14bn. As a result of these changes, our DCF-based PO goes up to $58
(from $56).
Market debate feels similar to MRK/VRTX a few years ago
Current consensus market share estimates for the two regimens heavily favor
GILD, primarily based on lack of need for ribavirin and a more convenient regimen
(lower pill burden, potential for shorter duration). Despite these apparent
advantages for GILD, we see the launch of the next-generation all-oral regimens
following a similar dynamic to that of Victrelis (MRK)/Incivek (VRTX). We note that
MRK’s Victrelis showed a marginally inferior competitive profile vs. Incivek in
Phase III and has a significantly longer average treatment duration, yet has still
managed to capture ~20% of global sales