Replies to post #2600 on Enanta Pharmaceuticals Inc (ENTA)

[DewDiligence]

ENTA FY3Q23 CC transcript:

https://finance.yahoo.com/news/q3-2023-enanta-pharmaceuticals-inc-144243688.html

[Rocky3]

ENTA FY3Q23* financials—6/30/23_cash=$393M:

Probably should be reduced by $200MM of "debt" on balance sheet from sale of future revenue. At least the net worth of company may be better figure when talking about "enterprise value."

[DewDiligence]

ENTA’s fully-diluted share count @6/30/23=26.09M—a decrease of 0.07M since 3/31/23.

The 26.09M figure above consists of: 21.06 basic shares on the 6/30/23 balance sheet (https://www.sec.gov/ix?doc=/Archives/edgar/data/0001177648/000095017023039754/enta-20230630.htm#consolidated_balance_sheets ); and 5.03M options and unvested restricted-stock shares and equivalents (whether or not exercisable) (ibid, p.10).

[DewDiligence]

ENTA’s pro forma cash @6/30/23=$221.2M—treating_ENTA’s_deferred-royalty_obligations_as debt (as is done under GAAP [#msg-172603887]—but see note at bottom of this post). The $212.2M figure consists of:

• $380.3M of net current assets on the 6/30/22 balance sheet (https://www.sec.gov/ix?doc=/Archives/edgar/data/0001177648/000095017023039754/enta-20230630.htm#consolidated_balance_sheets );

• $5.9M of marketable securities on the 6/30/23 balance sheet designated as long-term (e.g. bonds with a time to maturity greater than one year) (ibid); and

• ($165.0M) deferred long-term liabilities relating to the Omers royalty agreement. ($36.7M of liabilities relating to the Omers agreement are booked as current liabilities and hence are included in the $380.3M figure in the first bulleted item.)

Note: Excluding the “debt” associated with the Omers royalty agreement, ENTA’s pro forma net cash at 6/30/23 was $422.9M ($221.2M + $165.0M + $36.7M).

[DewDiligence]

ENTA reports FY4Q23* results and pipeline update:

https://ir.enanta.com/news-releases/news-release-details/enanta-pharmaceuticals-reports-financial-results-its-fiscal-37

FY4Q23 royalty revenue was $18.9M, unchanged from the prior quarter. 54.5% of ENTA’s Mavyret royalties are payable to OMERS†, and this amount is treated for accounting purposes as an amortization of debt (see discussion in #msg-172603887).

9/30/23 cash = $370M, a decrease of $23M relative to 6/30/23.

Today, ENTA issued FY2024* guidance as follows:

• R&D expense of $100-120M, down sharply from $163.5M in FY2023.

• SG&A expense of $45-50M, down modestly from $52M in FY2023.

Based on the reduced operating expenses described above, ENTA says its cash and expected royalty revenue are sufficient to fund operations for the next four years—i.e. through the end of FY2027.

Pipeline

• EDP-938 (RSV N-protein inhibitor): ENTA expects to report data from the phase-2b RSVPEDs (pediatric) and the phase-2b RSVHR (high-risk adults) trials in calendar 3Q23, assuming there is a normal RSV season in the Northern Hemisphere.

• EDP-323 (RSV L-protein inhibitor): ENTA just started a phase-2a “challenge” study; data expected in calendar 3Q23.

• The preclinical program for single-agent dual inhibition of RSV and hMPV has been terminated.

• EDP-235 (COVID protease inhibitor): If a partnership is secured for a phase-3 trial, the population tested will be standard-risk patients with a primary endpoint based on symptom relief.

• Non-virology: “The company will announce new therapeutic programs beginning in early 2024.” An analyst on today’s CC asked if one of these programs was GLP-1, but ENTA declined to answer.

*ENTA’s fiscal years end on September 30

†Ontario Municipal Employees Retirements System (Canada’s largest pension fund)