ENTA - JP Morgan cuts Enanta to neutral cites extended timelines for key drugs

2023-08-09 15:34:02 ET

JP Morgan has downgraded Enanta Pharmaceuticals ( NASDAQ: ENTA ) to neutral, citing extended commercialization timelines for its COVID-19 and RSV treatment candidates.

The investment bank said it sees a challenging road ahead for the company's COVID-19 drug candidate EDP-235, given that the company intends to seek out a partner for the product before developing it further. JP Morgan said that even if a partnership is struck, the drug appears to have an undifferentiated efficacy profile post-Phase 2 readout.

"We see several hurdles to both successful trial execution and detection  of clinical benefit with a direct antiviral in a post-COVID/vaccine exposed setting, with a commercial launch likely a 2027+ event," the analysts wrote in their note.

JP Morgan added that protracted enrollment in Phase 2 trials for the company's RSV treatment EDP-938 has become a "point of increasing frustration for investors."

The bank said it sees Enanta shares remaining "under pressure" pending positive clinical data for its RSV product. It added that while identification of a COVID-19 partner or positive RSV data could be opportunities for the shares to become "constructive," it expects Enanta shares to underperform in the "mid-term."

JP Morgan lowered its price target for Enanta to $14 from $60.

Enanta released its fiscal Q3 earnings report on Monday. Shares of the biotech company were down 9% afternoon trading on Wednesday.

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