Replies to post #254065 on Biotech Values

[jbog]

We have to keep in mind that Enanta is not following the norm when it comes to small bio research. By far, the majority of bio's of similar size would partner prior to patient trials so they could share the cost and risk. For Enta to develop a drug and then hoping a partner comes along is not good business. They should be negotiating what a partner wants and set the appropriate targets.

[DewDiligence]

ENTA—Assuming that it was reasonable to develop NASH compounds, I'm curious what your thoughts are on if/how they could have killed that program more efficiently.

What might seem unreasonable now probably seemed eminently reasonable in 2014. Back then ICPT, whose lead drug candidate (Ocaliva) was a weak FXR agonist, had an enterprise value of ~$9B (#msg-95784677) and had sell-side targets as high as $17B (#msg-98898159) based on phase-2b and limited phase-3 data. Even such reputable companies as GILD were hot on FXR agonists (#msg-109653984).

ENTA thought its own FXR agonist would succeed because it was a much more potent agent than ICPT’s Ocaliva. However, with the benefit of hindsight we now know that the industry’s understanding of the FXR target circa 2014 was deficient. I.e., the pruritis that all FXR agonists cause to some degree is not an off-target effect that can be mitigated with sufficient potency, but rather is an on-target] effect of this drug class, dooming all drugs in the class for an indication such as NASH.

(The excerpt in #msg-98851492 is an instructive case of how ICPT tried to conceal Ocaliva’s toxicity.)

Bottom line for answering the question you posed: I don’t think ENTA’s handling of its (now defunct) NASH program was misguided.