Enanta Pharmaceuticals: Holding Ahead of Some Key Events

Since our July 24 report on Enanta Pharmaceuticals (ENTA), shares of the HCV company have risen over 15%, even after accounting for the sell-off in recent weeks due largely to sales made by SCP, one of the company’s largest investors. In our view, this selling pressure should be seen as a buying opportunity for the long-term investor; both in the context of Enanta’s relative position in the HCV market and considering forthcoming events.

Relative and Absolute Potential

In recent months, the FDA has taken a hardline stance regarding the safety of multiple development-stage HCV assets, making clear that the agency is placing a premium on the safety of next-generation HCV regimens. Multiple companies have seen their HCV development plans unravel, including Idenix (IDIX), Achillion (ACHN) (although there have yet to be any reports of actual safety issues for ACHN), and Vertex (VRTX) (in fairness to Vertex, few investors ascribe meaningful value to VX-135, and most of the company’s valuation is built around Kalydeco and its CF franchise).

Enanta has become the only major development-stage HCV company to not have any part of its HCV program placed under a clinical hold.

In addition to emerging as a stronger HCV player relative to Achillion, Idenix, and Vertex (as it relates to HCV), Enanta will see several incremental catalysts over the course of the next few weeks. On October 25, AbbVie will report third quarter results and will likely spend time discussing the HCV program with Enanta. The 2nd and more important catalyst occurs on November 3, when Enanta and AbbVie will present Phase III data for ABT-450, ABT-267, and ABT-333 at the American Association for the Study of Liver Disease’s (AASLD) Annual Meeting. Enanta has already disclosed a few details about these Phase III results: SVR4 was achieved in 100% of genotype Ib patients and in 87.9% of prior null responders. SVR12 figures for these treatment regiments will be released on November 3. Enanta and AbbVie will give a total of 6 presentations at the AASLD annual meeting. Assuming positive data, Enanta’s own Q3 earnings call (likely in mid-November), will feature prominent discussion on the path forward for ABT-450 and its partnered HCV compounds, and may give more clarity to the timing of the companies’ NDA filing, which is currently expected in “mid-2014.”

You can read more about Enanta here.

In connection with ENTA, PropThink has taken a long position.