PFE - Enanta: Multiple Shots On Goal For RSV Makes This A Must Watch

2023-11-30 15:34:48 ET

Summary

• Two mid-stage studies RSVHR and RSVPEDs are being advanced using EDP-938 for RSV; data from at least one of these studies expected Q3 of 2024.
• Data to be released from phase 2a challenge study, using L-protein inhibitor EDP-323, expected in Q3 of 2024.
• It is expected that the global Respiratory Syncytial Virus market is expected to reach $4.20 billion by 2027.
• The company has enough cash to fund its operations until fiscal 2027 and has the option to raise additional funds through a mixed shelf offering.

Enanta Pharmaceuticals ( ENTA ) has been making great progress in advancing its pipeline, because it has been able to advance the use of EDP-938 for the treatment of patients with Respiratory Syncytial Virus [RSV]. It has two ongoing phase 2 studies being advanced to explore the use of this antiviral for the treatment of this patient population. These ongoing mid-stage studies are known as RSVPEDs in pediatric patients and then RSVHR in adult patients at high risk of complications. Data from one of these two phase 2 studies are expected to be released in Q3 of 2024. EDP-938, which is an N-protein inhibitor, is only one candidate in the pipeline being advance for the treatment of these RSV patients. This biotech has made significant progress in also developing another drug for this patient population, which is an L-protein inhibitor known as EDP-323. This candidate is being advanced in a phase 2a clinical study and data from it is also expected in Q3 of 2024. With all these catalysts, I believe that there is a good opportunity here for shareholders.

Several Shots On Goal For RSV Could Bring Enormous Value

As I noted above, there are going to be multiple data readouts from the RSV program in 2024. It remains to be seen how successful the trials will be upon data release, but they are catalysts to trade around nonetheless. Respiratory Syncytial Virus [RSV] is whereby a patient has an infection of the lungs or respiratory tract. It is very common in children, so much so, that most children can become infected with it by the age of 2. In adults it is seen as a mild disease, however, it is highly important to treat in those who are highly compromised with other health issues. Thus, the targeting for Enanta makes sense, in that it is going after specific RSV patient populations. For instance, as I indicated above, the phase 2 RSVPEDs study is targeting pediatric patients. However, the specific group to be evaluated will be those aged 28 days to 36 months [3 years of age]. This study is being done in a more cautious manner. Why is that? It is because this is the first time that this biotech is exploring the use of EDP-938 in a pediatric patient population. Thus, with safety being a priority, the first part is looking to see what dose is going to be required for each age group. Only if everything ends up being okay with Part 1, will this trial move on to Part 2 to evaluate antiviral activity of this specific drug.

This market is expected to be a huge opportunity, should EDP-938 end up being successful in these clinical studies. It is expected that the global Respiratory Syncytial Virus market is expected to reach $4.20 billion by 2027 . With respect to the other ongoing phase 2b study, known as RSVHR, it is looking at targeting 180 adults with RSV infection. However, again it is specifically looking at such patients who are at high risk of complications. This would be patients who have other health problems such as chronic obstructive pulmonary disease [COPD], congestive heart failure and elderly people in general. It is important for Enanta Pharmaceuticals to be able to explore both of these studies, because it will prove whether or not it can move on towards phase 3 registrational studies for EDP-938. Having said that, there might be one data release that investors should keep an eye on in the latter part of 2024. It is expected that results from either one of the two studies [RSVPEDs or RSVHR] are going to be released in Q3 of 2024. There is another shot on goal with RSV and this would be with advancement of another clinical drug, known as EDP-323. However, this particular drug is an L-protein inhibitor being advanced for the treatment of RSV. This program is also important to track, because it too will have data to be released from a phase 2a study. Results from this specific phase 2a study, using EDP-323 for the treatment of patients with RSV, are expected in Q3 of 2024.

Financials

According to the 10-K SEC Filing , Enanta Pharmaceuticals had cash, cash equivalents and short-term marketable securities of $370 million as of September 30th 2023. It believes that it has enough cash to fund its operations into fiscal 2027. The reason for being able to have enough cash to last until that period is because it had recently taken steps to lower 2024 R&D and G&A expenses. It did so by reducing its pipeline and prioritizing certain clinical products. Despite having this cash runway, it is preparing to have a plan in place if it decides it needs to raise additional cash. That's why it filed a prospectus with the SEC , which is a mixed shelf offering to raise up to $150 million. This is not an immediate dilution, but the company can from time to time offer to sell securities such as common stock, preferred stock, warrants, debt securities and units up to the $150 million amount.

Risks To Business

There are a few risks that investors should be aware of before investing in Enanta Pharmaceuticals. The first risk to consider would be with respect to the two ongoing phase 2 studies, which are using EDP-938 for the treatment of patients with RSV. Even though there is the targeting of both the pediatric and adult at high risk patient populations, there is no assurance that one or both of these sets of data will ultimately turn out to be positive. A second risk to then consider would be the advancement of the other clinical candidate, known as EDP-323, which is also being advanced for the treatment of patients with RSV. However, this is an L-protein inhibitor, which may or may not yield positive data in ongoing clinical testing. It is not guaranteed to produce the desired results to move on towards pivotal clinical trial testing. A third risk to consider would be with respect to the ongoing lawsuit against Pfizer ( PFE ) for patent infringement with respect to a component found in the Covid-19 drug Paxlovid. There is no assurance that Enanta will be able to win this lawsuit or that it will obtain monetary damages from Pfizer with respect to it.

The fourth and final risk to consider would be a prior trial failure with the use of EDP-938. That's because this antiviral drug was being tested in another RSV patient population, whereby such a trial failed to prove statistical significance for this drug . This involves a phase 2b RSVP study, which tested the use of this N-protein inhibitor for the treatment of healthy adults with community-acquired RSV. The final outcome was that the primary endpoint of reduction in total symptom score compare to placebo did not achieve statistical significance. While this is disappointing, I believe there is a small chance for recovery with respect to the other phase 2 studies noted above. Why is that? Well, that's because the failed phase 2b RSVP study incorporated community acquired RSV patients who were otherwise healthy. This is important, because it was shown that viral load not only peaked at the time of dosing, but was already declining rapidly in a healthy patient population. What does this mean? In essence, a lot of these patients were able to resolve infection on their own. The other two studies noted above, however, are going after a much sicker patient population of RSV patients.

For instance, the phase 2b RSVHR study is testing the use of EDP-938 in 180 RSV patients who are older, have major health problems like chronic obstructive pulmonary disease [COPD] and are in poor health in general. The pediatric study on the other hand using EDP-938, known as RSVPEDs is targeting both hospitalized and non-hospitalized pediatric RSV patients. This trial might be a bit riskier, because an RSV antiviral hasn't been tested before in this patient population. Thus, safety is the main priority here. Regardless, both of these RSV patient populations are ones that are not only more at risk for complications, but also likely can't recover on their own. Whereas the low-risk RSV patients being studied in the phase 2b RSVP failed study were healthier. Thus, they had a good chance at clearing the viral load on their own. It remains to be seen if targeting more at risk patients makes a huge difference, but at least it provide an increased chance of success. Still, the prior trial failure should make investors cautious about the advancement of EDP-938 nonetheless. In previous clinical studies, it was noted that EDP-938 significantly improved the percentage of people with undetectable RSV RNA at the end of treatment. Despite not being able to achieve the primary endpoint in a short amount of time.

Conclusion

Enanta Pharmaceuticals has made great progress in being able to advance its pipeline of antivirals. It has several shots on goal with respect to the targeting of RSV. It has EDP-938 being explored in RSV pediatric and high risk patients in phase 2 testing, with data from one of these studies expected to be released in Q3 of 2024. During the same time period, it is even going to release results from another phase 2a study. However, this other study is using EDP-323, which is also being developed for the treatment of patients with RSV. A final thing to note is that the company also reported clinical results from a phase 2 study using EDP-235 for the treatment of patients with Covid-19. However, Enanta Pharmaceuticals fell into the same trap as the other program above, which is that it recruited patients who were healthy and highly immune experience.

Thus, the goal of advancement for the Covid program might be to test EDP-235 in a different phase 2 study. For instance, a study whereby only acute or long Covid patients are recruited to further show antiviral effects for this drug. It would be good for this biotech to advance such a study on its own, but it will not use its own funds to move this program forward. Instead, it is looking for a partner that might want to move the use of this antiviral drug for Covid-19 forward. Thus, this is a program that remains on the back burner for now. With several catalysts expected in 2024, along with the business being streamlined to conserve cash until 2027, I believe that investors might be able to benefit from any potential gains made.

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