Market Overview

Enanta Pharmaceuticals Reports Financial Results for its Fiscal Second Quarter Ended March 31, 2018

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Webcast and Conference Call today at 4:30 p.m. ET

  • Royalty revenue for the quarter increased to $44.0 million due to
    increase in AbbVie's MAVYRET™ sales
  • Net income for the quarter was $12.6 million, or $0.61 per diluted
    common share
  • Fast Track designation granted to EDP-938 for Respiratory Syncytial
    Virus (RSV) Infection
  • Cash and marketable securities totaled $288.9 million at March 31,
    2018

Enanta Pharmaceuticals, Inc. (NASDAQ:ENTA), a research and
development-focused biotechnology company dedicated to creating small
molecule drugs for viral infections and liver diseases, today reported
financial results for its fiscal second quarter ended March 31, 2018.

Enanta's results for the quarter benefited from $44 million of royalty
revenue on AbbVie's $919 million in sales of its HCV regimens that
contain either of the two protease inhibitor products developed through
Enanta's collaboration with AbbVie. Enanta earns its annually tiered,
per product royalties on a portion of AbbVie's net sales allocated to
Enanta's protease inhibitor product in each HCV regimen. In the case of
MAVYRET™ (U.S.)/ MAVIRET™ (ex-U.S.) (glecaprevir/pibrentasvir), Enanta's
royalty is based on 50% of AbbVie's net sales of that combination.

"Our strong financial results this quarter were driven by royalty
revenue earned on AbbVie's sales of MAVYRET, which reached $850 million
in sales in the quarter," commented Jay R. Luly. Ph.D., President and
Chief Executive Officer, Enanta. "This royalty revenue supports our
three clinical-stage programs in NASH, PBC and RSV, all of which have
now been granted Fast Track designation by the U.S. FDA. We are looking
forward to having preliminary data from our Phase 1 study of EDP-938
next quarter and initiating our planned Phase 2 RSV challenge study of
EDP-938 in the last quarter of calendar 2018. We also plan to designate
a candidate compound for HBV later this year."

Enanta's cash, cash equivalents and short-term and long-term marketable
securities totaled $288.9 million at March 31, 2018. This compares to a
total of $293.7 million at September 30, 2017. Enanta expects that its
current cash, cash equivalents and marketable securities, will be
sufficient to meet the anticipated cash requirements of its existing
business and development programs for the foreseeable future.

Fiscal Second Quarter Ended March 31, 2018 Financial Results

Total revenue for the three months ended March 31, 2018 was $44.0
million, compared to $9.0 million for the three months ended March 31,
2017. The increase in revenue was due to an increase in royalties earned
on AbbVie's worldwide net sales of HCV regimens as a result of the
launch of MAVYRET™/MAVIRET™ in major markets in the second half of 2017.
For the three months ended March 31, 2017, revenue consisted exclusively
of royalties earned on AbbVie's worldwide net sales of HCV regimens
containing paritaprevir. Royalties have varied significantly from period
to period, and that variability may continue in the future.

Research and development expenses totaled $21.5 million for the three
months ended March 31, 2018, compared to $13.0 million for the three
months ended March 31, 2017. The increase in research and development
expenses was primarily due to increased preclinical and clinical costs
associated with the progression of Enanta's wholly-owned R&D programs in
non-alcoholic steatohepatitis (NASH), primary biliary cholangitis (PBC),
respiratory syncytial virus (RSV) and hepatitis B virus (HBV).

General and administrative expenses totaled $5.7 million for the three
months ended March 31, 2018, which was consistent with the $5.5 million
of such expenses for the three months ended March 31, 2017.

Enanta recorded income tax expense of $5.4 million for the three months
ended March 31, 2018, compared to an income tax benefit of $3.6 million
for the three months ended March 31, 2017. During the three months ended
March 31, 2018, income tax expense reflected the significant increase in
pre-tax income during the quarter as well as an increase in Enanta's
estimated annual effective tax rate for fiscal 2018. Enanta's estimated
annual effective tax rate for fiscal 2018 of 27.1 percent includes the
impact of a non-cash revaluation charge against deferred tax assets to
reflect the reduced federal corporate income tax rate as a result of the
enactment of the U.S. Tax Cuts and Jobs Act.

Net income for the three months ended March 31, 2018 was $12.6 million,
or $0.61 per diluted common share, compared to a net loss of $5.4
million, or $(0.28) per diluted common share, for the corresponding
period in 2017.

Development Programs and Business Review

Respiratory Syncytial Virus

  • The U.S. Food and Drug administration has granted EDP-938 Fast Track
    designation for respiratory syncytial virus (RSV).
  • A Phase 1 clinical study of EDP-938 is ongoing. In the third quarter
    of calendar 2018, topline Phase 1 data is expected to be announced and
    a Phase 2 proof-of-concept challenge study in RSV-infected humans is
    expected to begin in the following quarter.

Hepatitis B Virus

  • New data on EP-027367, one of several core inhibitors Enanta is
    evaluating for hepatitis B virus was presented at the International
    Liver Congress™ (ILC) 2018 in April. The data demonstrated that in a
    chimeric SCID mouse model with human liver cells, EP-027367 reduced
    viral DNA and RNA levels by up to 3.0 logs from baseline with 4 weeks
    of treatment and demonstrated a favorable tolerability and
    pharmacokinetic profile. EP-027367 has also demonstrated potent,
    pan-genotypic, anti-HBV activity capable of preventing the
    establishment of cccDNA in vitro.

NASH and PBC

  • Three posters on EDP-305, Enanta's FXR agonist currently in a Phase 2
    study for NASH and a Phase 2 study for PBC, were presented at the ILC.
    Two posters focused on additional preclinical safety and efficacy data
    and a third presented data from Enanta's previously released Phase 1
    study highlighting the pharmacokinetics, pharmacodynamics and safety
    of EDP-305 in healthy and presumptive NAFLD subjects.

Upcoming Events and Presentations

  • June 12, 2018 – 38th NASDAQ Investor Conference, London
  • June 20-21, 2018 – JMP Securities Life Sciences Conference, New York
  • Enanta plans to issue its fiscal third quarter financial results press
    release, and hold a conference call regarding those results, on August
    7, 2018.

Conference Call and Webcast Information
Enanta will host a
conference call and webcast today at 4:30 p.m. ET. To participate in the
live conference call, please dial (855) 840-0595 in the U.S. or (518)
444-4814 for international callers. A replay of the conference call will
be available starting at approximately 7:30 p.m. ET on May 8, 2018,
through 11:59 p.m. ET on May 11, 2018 by dialing (855) 859-2056 from the
U.S. or (404) 537-3406 for international callers. The passcode for both
the live call and the replay is 3238478. A live audio webcast of the
call and replay can be accessed by visiting the "Events and
Presentation" section on the "Investors" page of Enanta's website at www.enanta.com.

About Enanta
Enanta Pharmaceuticals has used its robust,
chemistry-driven approach and drug discovery capabilities to become a
leader in the discovery of small molecule drugs for the treatment of
viral infections and liver diseases. Two protease inhibitors,
glecaprevir and paritaprevir, discovered and developed through Enanta's
collaboration with AbbVie, have now been approved in jurisdictions
around the world as part of AbbVie's direct-acting antiviral (DAA)
regimens for the treatment of hepatitis C virus (HCV) infection,
including the regimens marketed as MAVYRET™ (U.S.) and MAVIRET™
(ex-U.S.) (glecaprevir/pibrentasvir) and VIEKIRA PAK®
(paritaprevir/ritonavir/ombitasvir/dasabuvir) (U.S.) and VIEKIRAX®
(paritaprevir/ritonavir/ombitasvir) (ex-U.S.).

Royalties from the AbbVie collaboration are helping to fund Enanta's
research and development efforts, which are currently focused on the
following disease targets: non-alcoholic steatohepatitis (NASH), primary
biliary cholangitis (PBC), respiratory syncytial virus (RSV) and
hepatitis B virus (HBV). Please visit www.enanta.com
for more information.

Forward Looking Statements
This press release contains
forward-looking statements, including statements with respect to the
prospects for AbbVie's MAVYRET/MAVIRET regimen in HCV and the prospects
for advancement of Enanta's earlier stage programs in NASH, PBC, RSV and
HBV. Statements that are not historical facts are based on management's
current expectations, estimates, forecasts and projections about
Enanta's business and the industry in which it operates and management's
beliefs and assumptions. The statements contained in this release are
not guarantees of future performance and involve certain risks,
uncertainties and assumptions, which are difficult to predict.
Therefore, actual outcomes and results may differ materially from what
is expressed in such forward-looking statements. Important factors and
risks that may affect actual results include: Enanta's revenues are
dependent upon the success of AbbVie's continuing commercialization
efforts for its HCV treatment regimens, primarily its new
MAVYRET/MAVIRET regimen; competitive pricing, market acceptance and
reimbursement rates for AbbVie's HCV treatment regimens compared to
competitive HCV products on the market; the discovery and development
risks of early stage discovery efforts in other disease areas such as
NASH, PBC, RSV and HBV; potential competition from the development
efforts of others in those other disease areas; Enanta's lack of
clinical development experience; Enanta's need to attract and retain
senior management and key scientific personnel; Enanta's need to obtain
and maintain patent protection for its product candidates and avoid
potential infringement of the intellectual property rights of others;
and other risk factors described or referred to in "Risk Factors" in
Enanta's most recent Form 10-Q for the quarter ended December 31, 2017
and other periodic reports filed more recently with the Securities and
Exchange Commission. Enanta cautions investors not to place undue
reliance on the forward-looking statements contained in this release.
These statements speak only as of the date of this release, and Enanta
undertakes no obligation to update or revise these statements, except as
may be required by law.

         
ENANTA PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS

UNAUDITED

(in thousands, except per share amounts)

 
 
Three Months Ended
March 31,
Six Months Ended
March 31,
2018 2017 2018 2017
 
Revenue $ 44,049 $ 8,959 $ 82,158 $ 19,376
Operating expenses
Research and development 21,484 13,004 39,446 25,530
General and administrative   5,706     5,461     11,476     10,398  
Total operating expenses   27,190     18,465     50,922     35,928  
Income (loss) from operations 16,859 (9,506 ) 31,236 (16,552 )
Other income, net   1,066     549     2,026     1,073  
Income (loss) before income taxes 17,925 (8,957 ) 33,262 (15,479 )
Income tax (expense) benefit   (5,370 )   3,565     (9,014 )   5,107  
Net income (loss) $ 12,555   $ (5,392 ) $ 24,248   $ (10,372 )
Net income (loss) per share
Basic $ 0.65 $ (0.28 ) $ 1.27 $ (0.54 )
Diluted $ 0.61 $ (0.28 ) $ 1.20 $ (0.54 )
Weighted average common shares outstanding
Basic 19,206 19,047 19,167 19,042
Diluted 20,601 19,047 20,256 19,042
 
 
ENANTA PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED
BALANCE SHEETS

UNAUDITED

(in thousands)

     
March 31,
2018
September 30,
2017
Assets
Current assets
Cash and cash equivalents $ 66,926 $ 65,675
Short-term marketable securities 189,797 157,994
Accounts receivable 44,049 10,614
Prepaid expenses and other current assets   4,905   3,536
Total current assets 305,677 237,819
Long-term marketable securities 32,186 70,038
Property and equipment, net 8,616 8,049
Deferred tax assets 7,567 10,123
Restricted cash   608   608
Total assets $ 354,654 $ 326,637
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable $ 4,696 $ 3,714
Accrued expenses and other current liabilities 7,041 7,970
Income taxes payable   5,380   9,298
Total current liabilities 17,117 20,982
Warrant liability - 807
Series 1 nonconvertible preferred stock 1,528 762
Other long-term liabilities   2,607   2,410
Total liabilities   21,252   24,961
Total stockholders' equity   333,402   301,676
Total liabilities and stockholders' equity $ 354,654 $ 326,637
 

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