Replies to post #3094 on Enanta Pharmaceuticals Inc (ENTA)

[mouton29]

The company will have $84MM less cash at the end of the deal than if they had not done the deal.

A bit simplistic. The Company invested the cash in Treasury securities bearing interest or will otherwise deploy it to generate a return, so the net cost (or benefit) is the difference.

[dewophile]

The only way that that does not happen is if the royalties are insufficient for the 9 year term to satisfy the deal

that is exactly why I don't think this should be thought of as real debt, because there isn't a date by which you have to pay back the principal (and of course interest along the way). It is simply an advance on future earnings with no monetary overhang otherwise

As I said before, ENTA needs other receipts before the end of this deal in order for this deal to make sense.

Enta did this deal to give them an additional 2 years or so to do exactly that