Replies to post #231 on Enanta Pharmaceuticals Inc (ENTA)

[marthambles]

CS Doctor Survey

Here's a summary. Unfortunately I do not have access to the full report.

HCV Doctor Survey Highlights Meaningful Opportunity for GILD and ABBV, but ABBV's Competitive
Position is Being Underappreciated; Revising Ests & TPs
? Bottom Line: Given intense debate on the competitiveness of the all-oral hepatitis C (HCV) treatment regimens that GILD
and ABBV will launch later this year, we conducted a survey with 40 specialists to better assess the market potential for
each company. While GILD is poised to be the clear market share leader in a market that we feel will be larger than people
realize, our survey results also suggest that the Street is greatly underappreciating ABBV's opportunity. We raise our ABBV
HCV sales estimates ('15/'16 now at ~$1Bn/$2.1Bn) and our '15/'16 EPS estimates are now 8c/26c above Consensus,
respectively. ABBV's HCV partner ENTA is a "derivative" play on the space and as we increase our estimates on the
franchise we increase our ENTA TP to $43 (from $36). We have also increased our GILD HCV franchise sales and our
peak 2018 revenues now stand at $11.6B (vs. $10.4B previously for CS and Consensus). We reiterate our Outperform
ratings on all three stocks. Related to our updated view on HCV we also update our target prices for MRK and BMY.
? Market share allocated to ABBV 1.5-2x greater than Consensus view. Assuming ABBV is priced at a modest 15-20%
discount to GILD, physicians allocated ABBV ~23-29% share in treatment (tx) naïve patients and ~29-42% share in tx
experienced patients. If priced at parity, ABBV shares were 14-17% for tx naïve and a still robust 21-38% in tx experienced.
? Overall HCV opportunity likely greater than Street expects. Physicians are still withholding treatment for ~56-69% of their
HCV patients and this will lead to a surge in 2015/16. We expect longer-term GT1 opportunity to be in the ~$15-16Bn range
owing to higher incidence of HCV in baby boomer population than currently appreciated, execution on new
screening/treatment guidelines and market development activities by major players in this space.
? MRK: Beyond our survey, we also note that recent strides in HCV make MRK a notable mid-long term competitor. We
increase our '20 HCV sales estimates to ~$1Bn and, along with updates to PD-1, BACE (Alzheimer's), and other minor
updates, we increase our TP to $53 (from $49).
? BMY: Now anticipating greater and earlier competitive threat to BMY's HCV presence in Japan (and stronger competition in
the US/EU), we reduce our BMY HCV estimates; 2020 sales estimates now ~$1.2Bn (previously ~$1.7Bn) and bring down
our TP to $62 (from $63)

[DewDiligence]

[Credit Suisse]: Our survey suggested a notably higher
patient share for ABBV's/ENTA's combination (20-30%/30-40% treatment naïve/experienced...

CS is slowly but surely inching closer to the 38% market-share figure in my valuation model :- )

[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