Enanta Pharmaceuticals(ENTA) - 2025 Q2 - Quarterly Report

PART I. Unaudited Financial Information Item 1. Condensed Consolidated Financial Statements The company reported net losses of $22.6 million and $44.9 million for the three and six months ended March 31, 2025, respectively, with total assets at $323.0 million and $30.3 million in cash used in operations Condensed Consolidated Balance Sheets Total assets decreased to $323.0 million as of March 31, 2025, from $376.7 million, primarily due to reduced marketable securities, while liabilities and equity also declined Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | September 30, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $60,213 | $37,233 | | Short-term marketable securities | $133,162 | $210,953 | | Total current assets | $242,860 | $299,852 | | Total assets | $322,993 | $376,652 | | Liabilities & Equity | | | | Total current liabilities | $45,947 | $57,535 | | Liability related to the sale of future royalties (non-current) | $125,379 | $134,779 | | Total liabilities | $229,455 | $247,838 | | Total stockholders' equity | $93,538 | $128,814 | Condensed Consolidated Statements of Operations Net loss for the three months ended March 31, 2025, narrowed to $22.6 million on $14.9 million revenue, primarily due to lower operating expenses, with the six-month net loss also improving to $44.9 million Consolidated Statements of Operations (in thousands, except per share data) | Metric | Three Months Ended Mar 31, 2025 | Three Months Ended Mar 31, 2024 | Six Months Ended Mar 31, 2025 | Six Months Ended Mar 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | Royalty revenue | $14,926 | $17,054 | $31,885 | $35,057 | | Research and development | $28,065 | $35,585 | $55,721 | $71,956 | | General and administrative | $11,388 | $14,235 | $24,234 | $30,753 | | Loss from operations | $(24,527) | $(32,766) | $(48,070) | $(67,652) | | Net loss | $(22,644) | $(31,157) | $(44,934) | $(64,564) | | Net loss per share, basic and diluted | $(1.06) | $(1.47) | $(2.11) | $(3.06) | Condensed Consolidated Statements of Cash Flows Net cash used in operating activities significantly improved to $30.3 million for the six months ended March 31, 2025, with overall cash increasing by $22.4 million due to investing activities Summary of Cash Flows (in thousands) | Activity | Six Months Ended Mar 31, 2025 | Six Months Ended Mar 31, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(30,289) | $(53,589) | | Net cash provided by investing activities | $64,534 | $45,507 | | Net cash used in financing activities | $(11,873) | $(13,764) | | Net increase (decrease) in cash | $22,372 | $(21,846) | Notes to Condensed Consolidated Financial Statements (unaudited) The notes detail the company's biotechnology focus, primary revenue from AbbVie, sufficient cash for 12 months, ongoing patent litigation against Pfizer, and accounting for a $200 million royalty sale agreement - The company believes its cash, cash equivalents, and short-term marketable securities of $193.4 million as of March 31, 2025, are sufficient to fund operations for at least 12 months from the financial statement issuance date[28] - In April 2023, the company sold 54.5% of future royalty payments on MAVYRET/MAVIRET to an affiliate of OMERS for a $200 million upfront payment. The proceeds are recorded as a liability and amortized over the life of the agreement[39][46][47] - Enanta is appealing a December 2024 District Court summary judgment decision that ruled its '953 Patent, related to its infringement suit against Pfizer's Paxlovid, was invalid. The appeal was filed in February 2025[60] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's virology and immunology pipeline, noting decreased revenue from AbbVie but significantly lower operating expenses, and projects funding into fiscal 2028 with current cash and an anticipated tax refund Overview and Pipeline Enanta is a biotechnology company focused on small molecule drugs for virology and immunology, with primary revenue from AbbVie royalties and a pipeline including RSV, COVID-19, and immunology programs - The company's active development programs in virology are focused on respiratory syncytial virus (RSV), with two clinical-stage candidates: zelicapavir and EDP-323[67][73] - In immunology, the company is developing oral small molecule inhibitors, with initial targets being KIT for chronic spontaneous urticaria (CSU) and STAT6 for atopic dermatitis (AD)[68][69][70] Product Development Pipeline Summary | Program | Disease | Target | Stage | | :--- | :--- | :--- | :--- | | Virology | | | | | Zelicapavir | RSV | N-Protein | Phase 2 (Pediatrics & High-Risk Adults) | | EDP-323 | RSV | L-Protein | Phase 2 (challenge study completed) | | EDP-235 | COVID-19 | 3CL Protease | Phase 2 (seeking collaboration) | | Immunology | | | | | EPS-1421 | CSU | KIT | Preclinical (IND-enabling studies) | | STAT6 Inhibitor | Atopic Dermatitis | STAT6 | Discovery (lead optimization) | Results of Operations Net losses narrowed for both the three- and six-month periods ended March 31, 2025, driven by significant reductions in R&D and general and administrative expenses, despite lower royalty revenue Comparison of the Three Months Ended March 31, 2025 and 2024 Revenue decreased to $14.9 million for the three months ended March 31, 2025, but a significant reduction in R&D and general and administrative expenses led to a net loss improvement to $22.6 million - Revenue decreased by $2.1 million year-over-year to $14.9 million due to lower reported HCV sales by AbbVie[99] R&D Expense Breakdown - Three Months Ended March 31 (in thousands) | Program | 2025 | 2024 | Change | | :--- | :--- | :--- | :--- | | Total Virology | $18,106 | $26,545 | $(8,439) | | Total Immunology | $7,293 | $4,673 | $2,620 | | Total R&D | $28,065 | $35,585 | $(7,520) | - General and administrative expenses decreased by $2.8 million year-over-year, primarily due to a decrease in legal expenses related to the patent infringement suit against Pfizer[107] Comparison of the Six Months Ended March 31, 2025 and 2024 Revenue decreased to $31.9 million for the six months ended March 31, 2025, but a substantial reduction in R&D and general and administrative expenses resulted in a net loss of $44.9 million - Revenue decreased by $3.2 million year-over-year to $31.9 million due to lower reported HCV sales by AbbVie[112] R&D Expense Breakdown - Six Months Ended March 31 (in thousands) | Program | 2025 | 2024 | Change | | :--- | :--- | :--- | :--- | | Total Virology | $36,699 | $54,156 | $(17,457) | | Total Immunology | $13,838 | $8,695 | $5,143 | | Total R&D | $55,721 | $71,956 | $(16,235) | - General and administrative expenses decreased by $6.5 million year-over-year, primarily due to lower legal expenses related to the Pfizer patent suit[118] Liquidity and Capital Resources As of March 31, 2025, the company had $193.4 million in cash and marketable securities, expecting these resources plus a $33.8 million tax refund to fund operations into fiscal 2028 - The company expects its existing cash, marketable securities, retained royalties, and a $33.8 million tax refund (received in April 2025) will fund operations into fiscal 2028[126][86] Cash Flow Summary - Six Months Ended March 31 (in thousands) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Cash used in Operating activities | $(30,289) | $(53,589) | | Cash provided by Investing activities | $64,534 | $45,507 | | Cash used in Financing activities | $(11,873) | $(13,764) | Item 3. Quantitative and Qualitative Disclosures About Market Risk No material changes occurred in the company's market risk disclosures during the six months ended March 31, 2025, compared to the prior fiscal year's annual report - There were no material changes to the company's market risk disclosures during the six months ended March 31, 2025[140] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting during the quarter - Management concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report[141] - No changes occurred during the quarter ended March 31, 2025, that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[142] PART II. Other Information Item 1. Legal Proceedings The company is appealing a December 2024 District Court ruling that invalidated its patent claims in an infringement lawsuit against Pfizer regarding Paxlovid, filed in June 2022 - Enanta filed a lawsuit against Pfizer in June 2022 for infringement of its U.S. Patent No. 11,358,953 related to Pfizer's COVID-19 antiviral, Paxlovid[60] - On December 23, 2024, the District Court ruled that the asserted patent claims were invalid. Enanta filed an appeal with the Federal Circuit on February 3, 2025, and the outcome is pending[60] Item 1A. Risk Factors No material changes occurred to the company's risk factors previously disclosed in its Annual Report on Form 10-K for the fiscal year ended September 30, 2024 - No material changes to the company's risk factors occurred during the quarter ended March 31, 2025[145] Item 5. Other Information No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the three months ended March 31, 2025 - No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the three months ended March 31, 2025[146] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including corporate documents and certifications by the CEO and CFO - The report includes exhibits such as CEO and CFO certifications (31.1, 31.2, 32.1) and XBRL data files (101, 104)[147]