WATERTOWN, Mass.--(BUSINESS WIRE)--Enanta Pharmaceuticals, Inc. (NASDAQ:ENTA), a clinical-stage biotechnology company dedicated to creating small molecule drugs in virology and immunology, today reported financial results for its fiscal first quarter ended December 31, 2023. “In 2024, Enanta began a year which will be marked by execution and value creation across the company. We are preparing for multiple catalysts across our pipeline in 2024, starting with RSV, where we anticipate reporting topline data f ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 001-35839 ENANTA PHARMACEUTICALS, INC. (Exact name of registrant as specified in its charter) | Title of each class | Trading Symbol(s) | Name of each exchange on which regis ...

WATERTOWN, Mass.--(BUSINESS WIRE)--Enanta Pharmaceuticals, Inc. (NASDAQ: ENTA), a clinical-stage biotechnology company dedicated to creating small molecule drugs for indications in virology and immunology, today announced that it plans to report its financial results for its fiscal first quarter ended December 31, 2023 after the U.S. market closes on February 7, 2024. Enanta management will host a conference call at 4:30 p.m. ET to discuss these results and provide an update on the company’s business and re ...

Part I [Business](index=6&type=section&id=Item%201.%20Business) Enanta Pharmaceuticals is a biotechnology company focused on developing small molecule drugs for viral infections, primarily funded by MAVYRET/MAVIRET royalties and a recent royalty sale, to advance its wholly-owned pipeline in RSV, SARS-CoV-2, and HBV - The company's primary focus is on its wholly-owned research and development programs in virology, specifically targeting RSV, SARS-CoV-2, and HBV[21](index=21&type=chunk) - Enanta's main source of funding is ongoing royalties from its collaboration with AbbVie for the HCV drug MAVYRET/MAVIRET and a recent **$200.0 million** cash payment from a royalty sale agreement[18](index=18&type=chunk)[19](index=19&type=chunk) Fiscal Year 2023 & 2022 Financial Snapshot | Metric | FY 2023 | FY 2022 | | :--- | :--- | :--- | | **Revenue** | $79.2 million | $86.2 million | | **Net Loss** | $133.8 million | $121.8 million | - In April 2023, Enanta sold **54.5%** of its future MAVYRET/MAVIRET royalties to an affiliate of OMERS for a **$200.0 million** cash payment. This sale covers royalties through June 30, 2032, subject to a cap. Consequently, Enanta will only receive **45.5%** of these royalty payments going forward[29](index=29&type=chunk)[77](index=77&type=chunk) - The company expects its existing cash, equivalents, marketable securities, and retained royalties to fund operations through fiscal **2027**[20](index=20&type=chunk)[286](index=286&type=chunk) [Our Wholly-Owned Programs](index=6&type=section&id=Our%20Wholly-Owned%20Programs) Enanta's internal pipeline focuses on virology, with clinical candidates EDP-938 and EDP-323 for RSV, EDP-235 for COVID-19 (seeking partnership), and EDP-514 for HBV (seeking combination partner) - **RSV Program:** - **EDP-938 (N-protein inhibitor):** Currently in two Phase 2 studies (RSVPEDs in pediatrics, RSVHR in high-risk adults). Data is expected in **Q3 2024**[22](index=22&type=chunk)[24](index=24&type=chunk) - **EDP-323 (L-protein inhibitor):** Completed a Phase 1 study with positive results and initiated a Phase 2 challenge study in **Q4 2023**, with data also expected in **Q3 2024**[22](index=22&type=chunk)[24](index=24&type=chunk) - **COVID-19 Program (EDP-235):** Following topline results from the Phase 2 SPRINT trial in May 2023, the company will not advance the candidate on its own and is seeking collaborations for further progression[50](index=50&type=chunk) - **HBV Program (EDP-514):** The core inhibitor has demonstrated safety and strong antiviral activity in two Phase 1b studies. Advancement of the program into a combination therapy regimen depends on accessing another compound through partnership[25](index=25&type=chunk)[57](index=57&type=chunk) [Our Out-Licensed Products and Royalty Agreement](index=8&type=section&id=Our%20Out-Licensed%20Products%20and%20Royalty%20Agreement) Enanta's revenue primarily comes from AbbVie's MAVYRET/MAVIRET royalties, with **54.5%** of future royalties sold for **$200 million** covering July 2023 to June 2032 - Substantially all royalty revenue is derived from AbbVie's net sales of MAVYRET/MAVIRET, which contains Enanta's discovered protease inhibitor, glecaprevir[28](index=28&type=chunk) - The royalty structure consists of annually tiered, double-digit royalties on **50%** of the calendar year net sales of MAVYRET/MAVIRET. The tiers reset to the lowest level each January 1[69](index=69&type=chunk) - In April 2023, the company sold **54.5%** of its future MAVYRET/MAVIRET royalties for a **$200.0 million** cash payment. The sale is effective for royalties after June 30, 2023, through June 30, 2032, and is subject to a payment cap of **1.42 times** the purchase price[77](index=77&type=chunk)[294](index=294&type=chunk) [Competition](index=17&type=section&id=Competition) Enanta faces intense competition across all therapeutic areas from larger pharmaceutical companies and biotechs with greater resources - **RSV:** Competitors include Ark Biosciences and Pfizer (fusion inhibitors). Recently approved prophylaxis options include monoclonal antibodies (AstraZeneca/Sanofi's Beyfortus) and vaccines (Pfizer's ABRYSVO, GSK's AREXVY)[33](index=33&type=chunk)[85](index=85&type=chunk) - **COVID-19:** Pfizer's PAXLOVID is an approved oral antiviral. Other companies with oral antivirals in Phase 3 include Shionogi, Atea, and Gilead[47](index=47&type=chunk)[86](index=86&type=chunk) - **HCV:** AbbVie's MAVYRET/MAVIRET faces intense competition from Gilead's products (Epclusa®, Vosevi®, Harvoni®) and their authorized generic versions[87](index=87&type=chunk) - **HBV:** Many companies, including Vir, GSK, Arbutus, and Roche, are developing new drugs with the goal of finding a functional cure, often through combination regimens[89](index=89&type=chunk) [Risk Factors](index=29&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks including a need for additional funding, heavy reliance on MAVYRET/MAVIRET sales, uncertain pipeline development, third-party manufacturing reliance, and intellectual property challenges - The company requires substantial additional funding for its operations and product development, as it expects to have continuing operating losses for the foreseeable future[162](index=162&type=chunk) - Revenues are substantially dependent on AbbVie's success in selling MAVYRET/MAVIRET, and after June 30, 2023, **54.5%** of these royalty payments are directed to OMERS, reducing Enanta's retained cash flow[15](index=15&type=chunk)[164](index=164&type=chunk) - Clinical drug development is a lengthy, expensive process with uncertain outcomes. None of the company's proprietary candidates have advanced beyond Phase 2 trials, and trials could be delayed by factors like RSV seasonality or regulatory changes[183](index=183&type=chunk)[184](index=184&type=chunk) - The company relies on third-party manufacturers, including some in China, for key intermediates and API, creating risks related to supply disruption, geopolitical issues, and quality control[215](index=215&type=chunk)[221](index=221&type=chunk) - Enanta faces significant intellectual property risks, including the potential for patents to be invalidated and costly litigation, such as the current patent infringement suit against Pfizer regarding Paxlovid[230](index=230&type=chunk)[235](index=235&type=chunk) [Properties](index=52&type=section&id=Item%202.%20Properties) Enanta leases all its office and laboratory space in Watertown, MA, and is consolidating operations into a new **73,000 sq. ft.** facility by December 2023 - The company leases all its office and laboratory space in Watertown, Massachusetts[275](index=275&type=chunk) - A new lease for a **73,000 sq. ft.** facility at Arsenal on the Charles has been signed, with expected access for tenant improvements in December 2023. This new lease will consolidate operations and replace the current 500 Arsenal Street lease[275](index=275&type=chunk) [Legal Proceedings](index=52&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in a patent infringement lawsuit against Pfizer, Inc., filed in June 2022, alleging infringement by Paxlovid™ on its U.S. Patent No. 11,358,953 - In June 2022, Enanta filed a patent infringement lawsuit against Pfizer, Inc. in the U.S. District Court for the District of Massachusetts[488](index=488&type=chunk) - The suit alleges that Pfizer's COVID-19 treatment, Paxlovid™, infringes on Enanta's U.S. Patent No. 11,358,953, and seeks damages for this infringement[488](index=488&type=chunk) Part II [Market for the Company's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=53&type=section&id=Item%205.%20Market%20for%20the%20Company%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Enanta's common stock trades on NASDAQ under "ENTA" and has shown volatility, with no cash dividends paid or anticipated - The company's common stock trades on The NASDAQ Global Select Market under the symbol "ENTA"[279](index=279&type=chunk) Fiscal 2023 Quarterly Stock Price Range | Quarter | High ($) | Low ($) | | :--- | :--- | :--- | | First | 54.20 | 39.60 | | Second | 62.06 | 38.16 | | Third | 41.45 | 19.91 | | Fourth | 22.15 | 11.03 | - Enanta has never declared or paid cash dividends and does not expect to in the foreseeable future[279](index=279&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=55&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In fiscal 2023, Enanta's revenue decreased to **$79.2 million**, resulting in a net loss of **$133.8 million**, while a **$200 million** royalty sale bolstered cash, expected to fund operations through fiscal 2027 Results of Operations (in thousands) | | FY 2023 | FY 2022 | | :--- | :--- | :--- | | **Total Revenue** | $79,204 | $86,160 | | **Research and development** | $163,524 | $164,522 | | **General and administrative** | $52,887 | $45,482 | | **Net loss** | $(133,816) | $(121,755) | - The decrease in revenue was due to lower reported HCV sales by AbbVie. The weighted average royalty rate was approximately **11%** in both fiscal 2023 and 2022[316](index=316&type=chunk) - R&D expenses decreased slightly by **$1.0 million**. A **$6.8 million** increase in virology program costs was offset by a **$13.6 million** decrease as the non-viral liver disease (NASH) program was wound down[319](index=319&type=chunk) - G&A expenses increased by **$7.4 million**, primarily due to higher legal fees related to the patent infringement suit against Pfizer[321](index=321&type=chunk) - The company received **$200.0 million** from a royalty sale agreement in April 2023, which is recorded as a liability on the balance sheet. This transaction also led to **$5.1 million** in non-cash interest expense in fiscal 2023[294](index=294&type=chunk)[322](index=322&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=64&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) Enanta is exposed to interest rate risk on its **$369.9 million** cash and marketable securities, and foreign exchange risk from international operations, though both were immaterial in fiscal 2023 - The company is exposed to interest rate risk on its cash and marketable securities portfolio of **$369.9 million**, but does not expect a **1%** change in rates to have a material impact[343](index=343&type=chunk) - Foreign exchange risk exists due to contracts with vendors outside the U.S. (primarily British Pound and Euro), but the impact was immaterial in fiscal 2023[344](index=344&type=chunk) [Consolidated Financial Statements and Supplementary Data](index=60&type=section&id=Item%208.%20Consolidated%20Financial%20Statements%20and%20Supplementary%20Data) The audited consolidated financial statements for the fiscal year ended September 30, 2023, with an unqualified auditor opinion, reflect a **$133.8 million** net loss and highlight research and development accruals as a critical audit matter - The independent auditor, PricewaterhouseCoopers LLP, provided an unqualified (clean) opinion on the consolidated financial statements and internal control over financial reporting[386](index=386&type=chunk) - The auditor identified "Research and Development and Pharmaceutical Drug Manufacturing Accruals" as a Critical Audit Matter due to the significant management judgment involved in estimating these balances[393](index=393&type=chunk)[394](index=394&type=chunk) Consolidated Balance Sheet Highlights (in thousands) | | Sept 30, 2023 | Sept 30, 2022 | | :--- | :--- | :--- | | **Total Current Assets** | $422,791 | $311,713 | | **Total Assets** | $462,275 | $375,410 | | **Total Liabilities** | $245,540 | $54,076 | | **Total Stockholders' Equity** | $216,735 | $321,334 | [Controls and Procedures](index=64&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal control over financial reporting were effective as of September 30, 2023, with no material changes reported - Management concluded that the company's disclosure controls and procedures were effective as of September 30, 2023[348](index=348&type=chunk) - Based on the COSO 2013 framework, management concluded that internal control over financial reporting was effective as of September 30, 2023[352](index=352&type=chunk) - There were no changes in internal control over financial reporting during the fourth quarter of 2023 that materially affected, or are reasonably likely to materially affect, internal controls[349](index=349&type=chunk) Part III [Directors, Executive Compensation, Security Ownership, and Other Matters](index=66&type=section&id=Items%2010%2C%2011%2C%2012%2C%2013%2C%2014) Information for these items is incorporated by reference from the company's separately filed Definitive Proxy Statement for its 2024 Annual Meeting of Stockholders - The detailed information for Items 10 through 14 is not included in this 10-K report but is incorporated by reference from the company's 2024 Proxy Statement[358](index=358&type=chunk)[360](index=360&type=chunk)[364](index=364&type=chunk)[365](index=365&type=chunk) Equity Compensation Plan Information (as of Sept 30, 2023) | Plan Category | Securities to be issued upon exercise (thousands) | Weighted-average exercise price ($) | Securities available for future issuance (thousands) | | :--- | :--- | :--- | :--- | | **Approved by security holders** | 4,938 | 46.57 | 1,721 | Part IV [Exhibits and Financial Statement Schedules](index=68&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists all exhibits filed with the 10-K, including corporate governance documents and key material contracts like the AbbVie collaboration and OMERS royalty purchase agreements - This section provides a comprehensive list of all exhibits filed with the 10-K, including the Restated Certificate of Incorporation, Bylaws, and material contracts[369](index=369&type=chunk) - Key material contracts listed as exhibits include the Collaborative Development and License Agreement with AbbVie (and its amendments) and the Royalty Purchase Agreement with OCM Life Sciences Portfolio LP (an affiliate of OMERS)[369](index=369&type=chunk)[370](index=370&type=chunk)

Pharmaceuticals Great Chemistry Cures COVID-19: Phase 2 (SPRINT) complete A Proven Approach to Drug Discovery Proven Track Record of Success Strong Balance Sheet 3 | --- | --- | --- | |-------|-------|-------------------------------------------------------------------------------------------------| | | | | | HCV | HBV | viral infections Several therapeutic areas with goal of building multiple approaches in each | | --- | --- | --- | --- | --- | --- | --- | --- | --- | |-------------------|----------------|- ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 001-35839 ENANTA PHARMACEUTICALS, INC. (Exact name of registrant as specified in its charter) DELAWARE 04-3205099 (State or other jurisdiction of incorporation or organization) 5 ...

A Phase 2, Randomized, Double-Blind, Placebo-Controlled, Parallel Group Study to Evaluate the Effects of EDP-235 in Non-hospitalized Adults with Mild or Moderate COVID-19 • Low frequency of adverse events; most were mild in severity – 1.3%, 6.4%, and 2.6% in the EDP-235 200mg, 400mg and placebo arms Clinical Symptoms – Additional analysis of patients with baseline viral load >5 log showed decline of 0.4 log at day 3 with EDP-235 compared to placebo • Rapid decline in nasal viral RNA observed in all study ar ...

[PART I. UNAUDITED FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20UNAUDITED%20FINANCIAL%20INFORMATION) This part presents the company's unaudited consolidated financial statements and management's analysis of financial performance and condition [Item 1. Consolidated Financial Statements](index=4&type=section&id=Item%201.%20Consolidated%20Financial%20Statements) This section presents the unaudited consolidated financial statements for the periods ended March 31, 2023, and September 30, 2022 [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) The balance sheets show a decrease in total assets and an increase in total liabilities as of March 31, 2023 Consolidated Balance Sheet Summary | Metric (in thousands) | March 31, 2023 | September 30, 2022 | Change (vs. Sep 30, 2022) | | :-------------------- | :------------- | :----------------- | :------------------------ | | Total Current Assets | $271,137 | $311,713 | -$40,576 | | Total Assets | $326,445 | $375,410 | -$48,965 | | Total Current Liabilities | $32,166 | $29,827 | +$2,339 | | Total Liabilities | $57,070 | $54,076 | +$2,994 | | Total Stockholders' Equity | $269,375 | $321,334 | -$51,959 | | Accumulated Deficit | $(139,823) | $(73,179) | -$(66,644) | [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) The statements of operations detail increased net losses for both the three and six-month periods ended March 31, 2023 Statement of Operations Summary | Metric (in thousands, except per share) | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | Six Months Ended March 31, 2023 | Six Months Ended March 31, 2022 | | :------------------------------------ | :-------------------------------- | :-------------------------------- | :------------------------------ | :------------------------------ | | Total Revenue | $17,795 | $18,716 | $41,380 | $46,364 | | Total Operating Expenses | $57,246 | $52,563 | $110,844 | $110,620 | | Loss from Operations | $(39,451) | $(33,847) | $(69,464) | $(64,256) | | Net Loss | $(37,658) | $(33,592) | $(66,644) | $(63,707) | | Net Loss per Share, Basic and Diluted | $(1.79) | $(1.63) | $(3.19) | $(3.11) | [Consolidated Statements of Comprehensive Loss](index=6&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Loss) These statements show a slightly reduced comprehensive loss for the six months ended March 31, 2023, despite a higher net loss Statement of Comprehensive Loss Summary | Metric (in thousands) | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | Six Months Ended March 31, 2023 | Six Months Ended March 31, 2022 | | :-------------------- | :-------------------------------- | :-------------------------------- | :------------------------------ | :------------------------------ | | Net Loss | $(37,658) | $(33,592) | $(66,644) | $(63,707) | | Net Unrealized Gains (Losses) on Marketable Securities | $860 | $(2,031) | $1,909 | $(2,655) | | Comprehensive Loss | $(36,798) | $(35,623) | $(64,735) | $(66,362) | [Consolidated Statements of Stockholders' Equity](index=7&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Equity) Stockholders' equity decreased significantly due to the net loss incurred during the period - Total stockholders' equity decreased from **$321,334 thousand** at September 30, 2022, to **$269,375 thousand** at March 31, 2023, primarily due to a net loss of **$66,644 thousand** for the six months ended March 31, 2023, partially offset by stock-based compensation expense and other comprehensive income[18](index=18&type=chunk) - Additional paid-in capital increased by **$12,774 thousand**, driven by stock-based compensation expense (**$14,502 thousand**) and exercise of stock options (**$2,008 thousand**), partially offset by vesting of restricted stock units, net of withholding (**$3,734 thousand**)[18](index=18&type=chunk) [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Cash flows reflect increased cash from investing activities and a net increase in total cash and equivalents Cash Flow Activity Summary | Cash Flow Activity (in thousands) | Six Months Ended March 31, 2023 | Six Months Ended March 31, 2022 | | :-------------------------------- | :------------------------------ | :------------------------------ | | Net Cash Used in Operating Activities | $(49,424) | $(39,646) | | Net Cash Provided by Investing Activities | $80,334 | $10,446 | | Net Cash Provided by (Used in) Financing Activities | $(1,726) | $12,983 | | Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash | $29,184 | $(16,217) | | Cash, Cash Equivalents and Restricted Cash at End of Period | $77,146 | $41,597 | [Notes to Consolidated Financial Statements (unaudited)](index=9&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements%20(unaudited)) These notes provide detailed context for the company's financial statements, covering business nature, accounting policies, and specific financial items [1. Nature of the Business and Basis of Presentation](index=9&type=section&id=1.%20Nature%20of%20the%20Business%20and%20Basis%20of%20Presentation) The company is a biotechnology firm focused on viral infections, funded primarily by its AbbVie collaboration - Enanta Pharmaceuticals, Inc is a biotechnology company focused on discovering and developing small molecule drugs for viral infections, including RSV, SARS-CoV-2, hMPV, and HBV[24](index=24&type=chunk) - The company has reported net losses since fiscal 2020 and expects to continue generating operating losses, with an accumulated deficit of **$139,823 thousand** as of March 31, 2023[31](index=31&type=chunk) - The COVID-19 pandemic has impacted the company's royalty revenues due to reduced patient volumes and sales of AbbVie's HCV regimens[26](index=26&type=chunk)[27](index=27&type=chunk) [2. Summary of Significant Accounting Policies](index=10&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) Financial statements rely on management estimates for revenue, stock-based awards, and R&D expenses - The preparation of financial statements requires management to make estimates and assumptions, particularly regarding revenue arrangements, valuation of stock-based awards, and accrual of R&D expenses[33](index=33&type=chunk) Potential Common Shares | Potential Common Shares (in thousands) | As of March 31, 2023 | As of March 31, 2022 | | :------------------------------------- | :------------------- | :------------------- | | Options to purchase common stock | 4,522 | 4,124 | | Unvested rTSRUs | 81 | 112 | | Unvested PSUs | 81 | 112 | | Unvested restricted stock units | 430 | 217 | [3. Fair Value of Financial Assets and Liabilities](index=11&type=section&id=3.%20Fair%20Value%20of%20Financial%20Assets%20and%20Liabilities) This note details the fair value measurement of the company's financial assets and liabilities - The Series 1 nonconvertible preferred stock is measured at fair value as a Level 3 liability, using a probability-weighted valuation model with unobservable inputs like payout probabilities (**0%-65%**) and a discount rate (**7.25%**)[38](index=38&type=chunk)[39](index=39&type=chunk) Fair Value of Financial Instruments | Financial Assets (in thousands) | March 31, 2023 (Total Fair Value) | September 30, 2022 (Total Fair Value) | | :------------------------------ | :-------------------------------- | :------------------------------------ | | Money market funds | $70,562 | $13,905 | | U.S. Treasury notes | $22,003 | $91,328 | | Corporate bonds | $46,124 | $76,411 | | Commercial paper | $83,819 | $66,784 | | **Total Assets** | **$222,508** | **$248,428** | | Series 1 nonconvertible preferred stock (Liability) | $1,423 | $1,423 | [4. Marketable Securities](index=13&type=section&id=4.%20Marketable%20Securities) The company's marketable securities portfolio consists primarily of corporate bonds, commercial paper, and U.S. Treasury notes - Most marketable securities mature within one year, with some corporate bonds and U.S. Treasury notes having maturities between one and two years, totaling **$15,040 thousand** at March 31, 2023[42](index=42&type=chunk) Marketable Securities by Type | Marketable Securities (in thousands) | Amortized Cost (Mar 31, 2023) | Fair Value (Mar 31, 2023) | Amortized Cost (Sep 30, 2022) | Fair Value (Sep 30, 2022) | | :----------------------------------- | :---------------------------- | :------------------------ | :---------------------------- | :------------------------ | | Corporate bonds | $47,329 | $46,124 | $78,663 | $76,411 | | Commercial paper | $83,819 | $83,819 | $66,784 | $66,784 | | U.S. Treasury notes | $22,229 | $22,003 | $92,416 | $91,328 | | **Total** | **$153,377** | **$151,946** | **$237,863** | **$234,523** | [5. Accrued Expenses](index=13&type=section&id=5.%20Accrued%20Expenses) This note provides a breakdown of the company's accrued expenses as of the reporting dates Accrued Expenses Summary | Accrued Expenses (in thousands) | March 31, 2023 | September 30, 2022 | | :------------------------------ | :------------- | :----------------- | | Accrued pharmaceutical drug manufacturing | $4,521 | $6,932 | | Accrued research and development expenses | $5,380 | $5,532 | | Accrued payroll and related expenses | $3,075 | $6,439 | | Accrued professional fees | $1,639 | $1,273 | | Accrued other | $867 | $760 | | **Total** | **$15,482** | **$20,936** | [6. AbbVie Collaboration](index=13&type=section&id=6.%20AbbVie%20Collaboration) The collaboration with AbbVie for HCV inhibitors is the company's primary source of revenue - The company has a Collaborative Development and License Agreement with AbbVie for HCV NS3 and NS3/4A protease inhibitors, including glecaprevir (MAVYRET®/MAVIRET®)[44](index=44&type=chunk) - Royalties are annually tiered, ranging from **ten percent up to twenty percent**, or a blended basis from **ten percent up to the high teens**, on the portion of AbbVie's net sales allocated to the protease inhibitor in the regimen[45](index=45&type=chunk) [7. Series 1 Nonconvertible Preferred Stock](index=14&type=section&id=7.%20Series%201%20Nonconvertible%20Preferred%20Stock) This note describes the outstanding Series 1 nonconvertible preferred stock, which is carried as a liability - As of March 31, 2023, **1,930 shares** of Series 1 nonconvertible preferred stock were outstanding, carried at fair value as a liability due to liquidation features[46](index=46&type=chunk) [8. Stock-Based Awards](index=14&type=section&id=8.%20Stock-Based%20Awards) This section details the company's stock-based compensation plans, including option activity and related expenses - As of March 31, 2023, the company had **$70,253 thousand** of unrecognized stock-based compensation cost, expected to be recognized over a weighted average period of **2.6 years**[53](index=53&type=chunk) Stock Option Activity | Stock Option Activity (in thousands) | Shares Issuable (Mar 31, 2023) | Weighted Average Exercise Price (Mar 31, 2023) | | :----------------------------------- | :----------------------------- | :--------------------------------------------- | | Outstanding as of Sep 30, 2022 | 3,993 | $53.57 | | Granted | 728 | $45.44 | | Exercised | (117) | $17.14 | | Forfeited | (82) | $65.95 | | Outstanding as of Mar 31, 2023 | 4,522 | $52.98 | Stock-Based Compensation Expense | Stock-Based Compensation Expense (in thousands) | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | Six Months Ended March 31, 2023 | Six Months Ended March 31, 2022 | | :---------------------------------------------- | :-------------------------------- | :-------------------------------- | :------------------------------ | :------------------------------ | | Research and development | $2,520 | $2,710 | $5,052 | $5,294 | | General and administrative | $4,843 | $3,761 | $9,450 | $7,239 | | **Total** | **$7,363** | **$6,471** | **$14,502** | **$12,533** | [9. Commitments and Contingencies](index=15&type=section&id=9.%20Commitments%20and%20Contingencies) The company is involved in patent infringement litigation and provides standard business indemnifications - The company filed a patent infringement suit against Pfizer, Inc on June 21, 2022, in the U.S. District Court for the District of Massachusetts, seeking damages for infringement of U.S. Patent No 11,358,953 related to Pfizer's COVID-19 antiviral, Paxlovid™[55](index=55&type=chunk) - The company provides indemnifications in the ordinary course of business, including to directors and executive officers, with maximum potential amounts often unlimited[57](index=57&type=chunk) [10. Subsequent Events](index=16&type=section&id=10.%20Subsequent%20Events) A significant royalty sale agreement was executed after the reporting period - In April 2023, the company entered into a royalty sale agreement with an affiliate of OMERS, receiving a **$200,000 thousand** cash purchase price in exchange for **54.5%** of future quarterly royalty payments on MAVYRET/MAVIRET net sales from September 30, 2023, through June 30, 2032, subject to a cap of **1.42 times** the purchase price[59](index=59&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=17&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition, operational results, and future outlook [Overview](index=17&type=section&id=Overview) The company is a biotechnology firm specializing in viral infections, funded by AbbVie royalties and facing continued net losses - Enanta Pharmaceuticals is a biotechnology company specializing in small molecule drugs for viral infections, primarily funded by royalties from its collaboration with AbbVie for HCV treatment (MAVYRET®/MAVIRET®)[62](index=62&type=chunk) - The company has reported net losses since fiscal 2020, with **$66.6 million** and **$63.7 million** net losses for the six months ended March 31, 2023 and 2022, respectively, and an accumulated deficit of **$139.8 million** as of March 31, 2023[63](index=63&type=chunk) - As of March 31, 2023, the company had **$225.1 million** in cash, cash equivalents, and marketable securities[66](index=66&type=chunk) [Our Wholly-Owned Programs](index=18&type=section&id=Our%20Wholly-Owned%20Programs) The company's R&D pipeline is focused on developing treatments for RSV, COVID-19, hMPV, and HBV - The company's primary wholly-owned R&D programs focus on virology, specifically Respiratory Syncytial Virus (RSV), SARS-CoV-2 (COVID-19), Human Metapneumovirus (hMPV), and Hepatitis B Virus (HBV)[67](index=67&type=chunk) - The RSV program includes two clinical candidates: EDP-938 (N-protein inhibitor) in three ongoing Phase 2 studies and EDP-323 (L-protein inhibitor) in a Phase 1 study[67](index=67&type=chunk)[68](index=68&type=chunk) - The COVID-19 program features EDP-235 (3CL protease inhibitor) which completed a Phase 1 study with positive results and a Phase 2 SPRINT study showing dose-dependent symptom improvement[69](index=69&type=chunk) - The hMPV program includes a new research program for hMPV/RSV dual-inhibitors, with a clinical candidate expected in Q4 2023[70](index=70&type=chunk)[72](index=72&type=chunk) [Our Royalty Revenue Collaboration](index=20&type=section&id=Our%20Royalty%20Revenue%20Collaboration) Royalty revenue from AbbVie's sales of MAVYRET/MAVIRET remains the company's primary income source - Substantially all royalty revenue is derived from AbbVie's net sales of MAVYRET/MAVIRET, an HCV treatment containing glecaprevir, a protease inhibitor discovered by Enanta[73](index=73&type=chunk) - Royalty revenues declined in fiscal 2022 and the first half of fiscal 2023 due to the COVID-19 pandemic's impact on patient volumes, HCV diagnoses, and MAVYRET/MAVIRET sales[74](index=74&type=chunk) [Financial Operations Overview](index=21&type=section&id=Financial%20Operations%20Overview) Operations are funded by AbbVie royalties, with R&D expenses expected to increase as clinical programs advance - The company funds operations primarily through AbbVie collaboration royalties and existing cash/marketable securities[76](index=76&type=chunk)[77](index=77&type=chunk)[78](index=78&type=chunk) [Revenue](index=21&type=section&id=Revenue) Total revenue decreased due to lower royalty payments from AbbVie's HCV product sales - Royalty revenue decreased by **$0.9 million** for the three months and **$6.0 million** for the six months ended March 31, 2023, compared to the same periods in 2022, due to lower reported HCV sales by AbbVie[90](index=90&type=chunk)[97](index=97&type=chunk) - The company recognized **$1.0 million** in license revenue during the six months ended March 31, 2023, from an upfront payment for an antibacterial compound license agreement[98](index=98&type=chunk) Revenue Summary | Revenue (in thousands) | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | Six Months Ended March 31, 2023 | Six Months Ended March 31, 2022 | | :--------------------- | :-------------------------------- | :-------------------------------- | :------------------------------ | :------------------------------ | | Royalty revenue | $17,795 | $18,716 | $40,380 | $46,364 | | License revenue | — | — | $1,000 | — | | **Total revenue** | **$17,795** | **$18,716** | **$41,380** | **$46,364** | [Operating Expenses](index=22&type=section&id=Operating%20Expenses) Operating expenses fluctuated due to shifts in R&D program spending and increased G&A costs [Research and Development Expenses](index=22&type=section&id=Research%20and%20Development%20Expenses) R&D expenses shifted, with increased spending on virology programs and decreased spending on the non-viral liver disease program - R&D expenses increased by **$1.4 million** for the three months ended March 31, 2023, primarily due to a **$5.5 million** increase in the virology program offset by a **$5.0 million** decrease in the non-viral liver disease program[92](index=92&type=chunk) - For the six months, R&D expenses decreased by **$6.3 million**, driven by a **$9.7 million** decrease in the non-viral liver disease program, partially offset by a **$1.7 million** increase in the virology program[99](index=99&type=chunk) R&D Program Expenses | R&D Programs (in thousands) | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | Six Months Ended March 31, 2023 | Six Months Ended March 31, 2022 | | :-------------------------- | :-------------------------------- | :-------------------------------- | :------------------------------ | :------------------------------ | | Virology | $41,384 | $35,912 | $80,142 | $78,434 | | Liver disease (non-viral) | $515 | $5,547 | $1,366 | $11,101 | | Other | $1,569 | $628 | $2,862 | $1,101 | | **Total R&D Expenses** | **$43,468** | **$42,087** | **$84,370** | **$90,636** | [General and Administrative Expenses](index=22&type=section&id=General%20and%20Administrative%20Expenses) G&A expenses rose due to higher stock-based compensation and legal fees from patent litigation - General and administrative expenses increased by **$3.3 million** for the three months and **$6.5 million** for the six months ended March 31, 2023, compared to the same periods in 2022, due to higher stock-based compensation expense and legal fees related to the Pfizer patent infringement suit[94](index=94&type=chunk)[100](index=100&type=chunk) [Other Income (Expense)](index=22&type=section&id=Other%20Income%20(Expense)) Net interest and investment income increased significantly due to favorable changes in interest rates - Interest and investment income, net, increased by **$1.6 million** for the three months and **$2.3 million** for the six months ended March 31, 2023, compared to the same periods in 2022, primarily due to changes in interest rates[95](index=95&type=chunk)[101](index=101&type=chunk) [Income Tax Expense](index=23&type=section&id=Income%20Tax%20Expense) The company recorded a minimal income tax expense for the current periods - Income tax expense was **$(44) thousand** for the three months and **$(10) thousand** for the six months ended March 31, 2023, compared to zero in the prior year periods[12](index=12&type=chunk) [Results of Operations](index=23&type=section&id=Results%20of%20Operations) This section provides a comparative analysis of operational results for the three and six-month periods [Comparison of the Three Months Ended March 31, 2023 and 2022](index=23&type=section&id=Comparison%20of%20the%20Three%20Months%20Ended%20March%2031,%202023%20and%202022) The net loss widened in the three-month period due to lower revenue and higher operating expenses Three-Month Operational Comparison | Metric (in thousands) | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | Change | | :-------------------- | :-------------------------------- | :-------------------------------- | :----- | | Royalty revenue | $17,795 | $18,716 | -$921 | | R&D expenses | $43,468 | $42,087 | +$1,381 | | G&A expenses | $13,778 | $10,476 | +$3,302 | | Interest & investment income, net | $1,837 | $255 | +$1,582 | | Net loss | $(37,658) | $(33,592) | -$4,066 | [Comparison of the Six Months Ended March 31, 2023 and 2022](index=24&type=section&id=Comparison%20of%20the%20Six%20Months%20Ended%20March%2031,%202023%20and%202022) The six-month net loss also increased, driven by lower royalty revenue and higher G&A expenses, despite a decrease in R&D costs Six-Month Operational Comparison | Metric (in thousands) | Six Months Ended March 31, 2023 | Six Months Ended March 31, 2022 | Change | | :-------------------- | :------------------------------ | :------------------------------ | :----- | | Royalty revenue | $40,380 | $46,364 | -$5,984 | | License revenue | $1,000 | — | +$1,000 | | R&D expenses | $84,370 | $90,636 | -$6,266 | | G&A expenses | $26,474 | $19,984 | +$6,490 | | Interest & investment income, net | $2,830 | $549 | +$2,281 | | Net loss | $(66,644) | $(63,707) | -$2,937 | [Liquidity and Capital Resources](index=25&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity position is supported by existing cash, marketable securities, and a recent royalty sale - Net cash used in operating activities increased by **$9.8 million** to **$49.4 million** for the six months ended March 31, 2023, due to timing of R&D payments and a federal tax refund received in 2022[104](index=104&type=chunk) - Net cash provided by investing activities increased by **$69.9 million** to **$80.3 million**, driven by timing of marketable securities transactions, partially offset by increased capital expenditures for facility expansion[106](index=106&type=chunk) - Net cash used in financing activities was **$1.7 million**, a **$14.7 million** decrease from the prior year, due to lower proceeds from stock option exercises and higher payments for share-based awards[107](index=107&type=chunk) - The company expects its **$225.1 million** in cash, cash equivalents, and marketable securities as of March 31, 2023, plus the **$200.0 million** from the April 2023 royalty sale, to fund operations into calendar 2026[108](index=108&type=chunk) - Less than **5%** of the company's cash and marketable securities were held at Silicon Valley Bank (SVB) when it was closed, and transfers to a larger financial institution have been initiated[109](index=109&type=chunk) Cash Flow Activity Summary | Cash Flow Activity (in thousands) | Six Months Ended March 31, 2023 | Six Months Ended March 31, 2022 | | :-------------------------------- | :------------------------------ | :------------------------------ | | Operating activities | $(49,424) | $(39,646) | | Investing activities | $80,334 | $10,446 | | Financing activities | $(1,726) | $12,983 | | Net increase (decrease) in cash, cash equivalents and restricted cash | $29,184 | $(16,217) | [Off-Balance Sheet Arrangements](index=26&type=section&id=Off-Balance%20Sheet%20Arrangements) The company has no off-balance sheet financing activities or interests in variable interest entities - The company does not engage in any off-balance sheet financing activities or have interests in variable interest entities[111](index=111&type=chunk) [Contractual Obligations and Commitments](index=26&type=section&id=Contractual%20Obligations%20and%20Commitments) A significant royalty sale agreement represents a key future financial commitment - In April 2023, the company sold **54.5%** of its future MAVYRET/MAVIRET royalty payments for **$200.0 million** cash, with payments capped at **1.42 times** the purchase price through June 30, 2032[112](index=112&type=chunk)[113](index=113&type=chunk) [Critical Accounting Policies](index=26&type=section&id=Critical%20Accounting%20Policies) The company's critical accounting policies are referenced from its most recent Annual Report on Form 10-K - The company's critical accounting policies are detailed in its Annual Report on Form 10-K for the fiscal year ended September 30, 2022[114](index=114&type=chunk) [Recently Issued Accounting Pronouncements](index=26&type=section&id=Recently%20Issued%20Accounting%20Pronouncements) Information on new accounting pronouncements is available in the notes to the financial statements - A description of recently issued accounting pronouncements is provided in Note 2 to the consolidated financial statements[115](index=115&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=27&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) There were no material changes to the company's market risk disclosures during the reporting period - No material changes to market risk disclosures occurred during the three and six months ended March 31, 2023[117](index=117&type=chunk) [Item 4. Controls and Procedures](index=27&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective, with no material changes to internal controls [Evaluation of Disclosure Controls and Procedures](index=27&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) Disclosure controls and procedures were deemed effective as of the end of the reporting period - The principal executive officer and principal financial officer concluded that disclosure controls and procedures were effective as of March 31, 2023[118](index=118&type=chunk) [Changes in Internal Control Over Financial Reporting](index=27&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) No material changes affecting internal control over financial reporting occurred during the quarter - No changes in internal control over financial reporting occurred during the quarter ended March 31, 2023, that materially affected or are reasonably likely to materially affect internal control over financial reporting[119](index=119&type=chunk) [PART II. OTHER INFORMATION](index=27&type=section&id=PART%20II.%20OTHER%20INFORMATION) This part covers risk factors, other corporate information, and a list of filed exhibits [Item 1A. Risk Factors](index=27&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the company's previously disclosed risk factors occurred during the quarter - No material changes to the risk factors discussed in the 2022 Form 10-K occurred during the quarter ended March 31, 2023[120](index=120&type=chunk) [Item 5. Other Information](index=27&type=section&id=Item%205.%20Other%20Information) This section reports on an amendment to the company's equity incentive plan [Item 5.02 Departure of Directors of Certain Officers; Election of Directors; Appointment of Certain Directors; Compensatory Arrangements of Certain Officers](index=27&type=section&id=Item%205.02%20Departure%20of%20Directors%20of%20Certain%20Officers%3B%20Election%20of%20Directors%3B%20Appointment%20of%20Certain%20Directors%3B%20Compensatory%20Arrangements%20of%20Certain%20Officers) The company's 2019 Equity Incentive Plan was amended to increase the number of shares available for issuance - The 2019 Equity Incentive Plan was amended on March 2, 2023, to increase the number of shares of common stock reserved for issuance by **975,000 shares**[121](index=121&type=chunk) [Item 6. Exhibits](index=28&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including key agreements and certifications - Key exhibits include the Restated Certificate of Incorporation, Amended and Restated Bylaws, Royalty Purchase Agreement with OMERS, the amended 2019 Equity Incentive Plan, and certifications from the CEO and CFO[123](index=123&type=chunk) [Signatures](index=29&type=section&id=Signatures) The report is duly signed on behalf of the company by its Chief Financial Officer - The report was signed by Paul J Mellett, Chief Financial Officer, on May 9, 2023[127](index=127&type=chunk)

Enanta Pharmaceuticals, Inc. (NASDAQ:ENTA) Q1 2023 Earnings Conference Call February 7, 2023 4:30 PM ET Company Participants Jennifer Viera – Investor Relations Jay Luly – President and Chief Executive Officer Paul Mellett – Chief Financial Officer Tara Kieffer – Senior Vice President-New Product Strategy Development Conference Call Participants Joe Kim – RBC Luke Herrmann – Baird Roanna Ruiz – SVB Securities Matthew Hershenhorn – Oppenheimer Ed Arce – H.C. Wainwright & Co Eric Joseph – JPMorgan Roy Buchana ...

[PART I. UNAUDITED FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20UNAUDITED%20FINANCIAL%20INFORMATION) This section presents the company's unaudited consolidated financial statements, management's discussion of financial condition, market risk disclosures, and controls and procedures [Consolidated Financial Statements](index=4&type=section&id=Item%201.%20Consolidated%20Financial%20Statements) The company's financial statements for Q4 2022 show decreased assets, a net loss of $29.0 million, and $35.6 million cash used in operations [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) Total assets decreased to $347.5 million by December 31, 2022, driven by reduced cash, while liabilities and equity also declined Consolidated Balance Sheet Highlights (in thousands) | Account | Dec 31, 2022 | Sep 30, 2022 | | :--- | :--- | :--- | | Cash and cash equivalents | $42,223 | $43,994 | | Total current assets | $283,704 | $311,713 | | **Total assets** | **$347,534** | **$375,410** | | Total current liabilities | $23,001 | $29,827 | | **Total liabilities** | **$46,697** | **$54,076** | | **Total stockholders' equity** | **$300,837** | **$321,334** | [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) Total revenue for Q4 2022 was $23.6 million, with a net loss of $29.0 million, an improvement from the prior year due to lower R&D expenses Quarterly Operating Results (in thousands, except per share data) | Metric | Three Months Ended Dec 31, 2022 | Three Months Ended Dec 31, 2021 | | :--- | :--- | :--- | | Royalty revenue | $22,585 | $27,648 | | Total revenue | $23,585 | $27,648 | | Research and development | $40,902 | $48,549 | | General and administrative | $12,696 | $9,508 | | Loss from operations | ($30,013) | ($30,409) | | **Net loss** | **($28,986)** | **($30,115)** | | **Net loss per share, basic and diluted** | **($1.39)** | **($1.48)** | [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities significantly increased to $35.6 million in Q4 2022, resulting in a net decrease in cash of $1.8 million Summary of Cash Flows (in thousands) | Activity | Three Months Ended Dec 31, 2022 | Three Months Ended Dec 31, 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | ($35,641) | ($13,271) | | Net cash provided by investing activities | $33,569 | $45,501 | | Net cash provided by financing activities | $301 | $9,632 | | **Net (decrease) increase in cash** | **($1,771)** | **$41,862** | [Notes to Consolidated Financial Statements (unaudited)](index=9&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements%20(unaudited)) Notes detail the company's drug development business, funding from AbbVie royalties, ongoing net losses, and a patent infringement lawsuit against Pfizer - The company's primary business is the discovery and development of small molecule drugs for viral infections, with R&D programs focused on RSV, SARS-CoV-2, HBV, and hMPV. Operations are funded by royalties from its collaboration with AbbVie on the HCV drug MAVYRET/MAVIRET[24](index=24&type=chunk) - The company has a collaboration agreement with AbbVie for HCV protease inhibitors, receiving tiered royalties on net sales of MAVYRET/MAVIRET. Total proceeds from the collaboration have reached approximately **$1.228 billion** through December 31, 2022[45](index=45&type=chunk) - In June 2022, Enanta filed a patent infringement lawsuit against Pfizer, Inc., seeking damages for the manufacture, use, and sale of Paxlovid™, alleging it infringes on Enanta's U.S. Patent No. 11,358,953[55](index=55&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=16&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses decreased royalty revenue, reduced R&D expenses, and the company's cash position, expected to fund operations into Q4 fiscal 2024, alongside pipeline progress [Overview](index=16&type=section&id=Overview) Enanta, a biotechnology company, focuses on antiviral drug development, funded by HCV royalties, and expects continued net losses while holding **$241.4 million** in cash - The company's primary R&D focus is on treatments for respiratory syncytial virus (RSV), SARS-CoV-2 (COVID-19), hepatitis B virus (HBV), and human metapneumovirus (hMPV)[62](index=62&type=chunk)[65](index=65&type=chunk) - The company reported a net loss of **$29.0 million** for the quarter ended December 31, 2022, and expects to continue incurring net losses for the foreseeable future[63](index=63&type=chunk) - As of December 31, 2022, cash, cash equivalents, and marketable securities totaled **$241.4 million**, which is expected to fund operations into approximately the fourth quarter of fiscal 2024[65](index=65&type=chunk) [Our Wholly-Owned Programs](index=17&type=section&id=Our%20Wholly-Owned%20Programs) Enanta is advancing antiviral candidates, including EDP-938 in Phase 2 for RSV, EDP-235 in Phase 2 for COVID-19, and EDP-514 for HBV, with new programs for hMPV/RSV - **RSV Program:** EDP-938 is in three ongoing Phase 2 studies (RSVPEDs, RSVTx, RSVHR) in high-risk populations. A Phase 1 study of a second compound, EDP-323, was initiated with data expected in Q2 2023[67](index=67&type=chunk) - **COVID-19 Program:** Lead candidate EDP-235 is in a Phase 2 study (SPRINT) with data expected in Q2 2023. A Phase 3 study could initiate in the second half of 2023. A new program targeting the PLpro enzyme was also announced[68](index=68&type=chunk)[69](index=69&type=chunk) - **HBV and hMPV Programs:** The lead HBV candidate, EDP-514, is a core inhibitor with potential to be best-in-class. A new research program is targeting a dual inhibitor for hMPV and RSV, with a clinical candidate selection expected in Q4 2023[69](index=69&type=chunk) [Results of Operations](index=21&type=section&id=Results%20of%20Operations) Q4 FY2023 total revenue was $23.6 million, down from $27.6 million, primarily due to lower MAVYRET/MAVIRET sales, while R&D expenses decreased and G&A expenses increased Comparison of Operating Results (in thousands) | Item | Q1 FY2023 (ended Dec 31, 2022) | Q1 FY2022 (ended Dec 31, 2021) | | :--- | :--- | :--- | | Royalty revenue | $22,585 | $27,648 | | License revenue | $1,000 | $— | | Research and development | $40,902 | $48,549 | | General and administrative | $12,696 | $9,508 | | **Net loss** | **($28,986)** | **($30,115)** | - Royalty revenue decreased by **$5.0 million** due to lower HCV sales by AbbVie, as patient volumes remain below pre-COVID-19 levels[90](index=90&type=chunk) - R&D expenses decreased by **$7.6 million**, primarily due to a **$4.7 million** reduction in the non-viral liver disease (NASH) program and a **$3.8 million** decrease in virology program costs related to clinical trial timing[93](index=93&type=chunk) [Liquidity and Capital Resources](index=22&type=section&id=Liquidity%20and%20Capital%20Resources) The company held **$241.4 million** in cash and equivalents as of December 31, 2022, with **$35.6 million** cash used in operations, sufficient to fund operations into Q4 fiscal 2024 Summary of Cash Flows (in thousands) | Activity | Three Months Ended Dec 31, 2022 | Three Months Ended Dec 31, 2021 | | :--- | :--- | :--- | | Cash used in operating activities | ($35,641) | ($13,271) | | Cash provided by investing activities | $33,569 | $45,501 | | Cash provided by financing activities | $301 | $9,632 | - Cash used in operating activities increased by **$22.4 million** year-over-year, driven by the timing of R&D payments and a federal tax refund of **$8.5 million** received in the prior-year period[98](index=98&type=chunk) - The company believes its existing cash, equivalents, marketable securities, and future royalties will be sufficient to meet cash requirements into approximately Q4 of fiscal 2024[102](index=102&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=24&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's market risk is primarily from interest rate sensitivity on its cash portfolio and foreign exchange risk, both currently considered immaterial - The company's portfolio of cash, cash equivalents, and marketable securities (**$241.4 million** at Dec 31, 2022) is sensitive to interest rate changes, but a 1% change is not expected to have a material impact[108](index=108&type=chunk) - Foreign currency exchange risk, primarily from the British Pound and Euro, was immaterial during the quarter but may increase with the expansion of clinical trials and manufacturing outside the U.S[109](index=109&type=chunk) [Controls and Procedures](index=24&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of December 31, 2022, with no material changes to internal control over financial reporting - Management concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report[110](index=110&type=chunk) - No changes occurred in the company's internal control over financial reporting during the quarter ended December 31, 2022, that have materially affected, or are reasonably likely to materially affect, these controls[111](index=111&type=chunk) [PART II. OTHER INFORMATION](index=25&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section addresses risk factors and lists exhibits filed with the Form 10-Q [Risk Factors](index=25&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the risk factors previously disclosed in the Annual Report on Form 10-K for the fiscal year ended September 30, 2022, were reported - There have been no material changes to the risk factors discussed in the 2022 Form 10-K during the quarter ended December 31, 2022[112](index=112&type=chunk) [Exhibits](index=26&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications and financial statements in Inline XBRL format - The exhibits filed with the report include certifications from the CEO and CFO (Exhibits 31.1, 31.2, 32.1) and the financial data in Inline XBRL format (Exhibits 101, 104)[114](index=114&type=chunk)