ENANTA PHARMACEUTICALS INC

Previous wording

As of December 31, 2023, we had $337.2 million in cash, cash equivalents and short-term marketable securities. We expect that our existing cash, cash equivalents, short-term marketable securities and our retained portion of future HCV royalties, will enable us to fund our operating expenses and capital expenditure requirements through fiscal 2027.

Current wording

As of March 31, 2024, we had $300.3 million in cash, cash equivalents and short-term marketable securities. We expect that our existing cash, cash equivalents, short-term marketable securities and our retained portion of future HCV royalties, will enable us to fund our operating expenses and capital expenditure requirements through the third quarter of fiscal 2027.

Previous wording

Our primary wholly-owned research and development programs are in virology and immunology. Our virology programs have been focused on RSV, SARS-CoV-2 and HBV and our immunology program is focused on oral inhibitors of the receptor tyrosine kinase known as KIT for the treatment of CSU, and potentially other mast-cell-driven diseases.

Current wording

Our primary wholly-owned research and development programs are in virology and immunology. Our virology programs have been focused on RSV, SARS-CoV-2 and HBV and our immunology program is focused on oral inhibitors of the receptor tyrosine kinase known as KIT for the treatment of CSU, and potentially other mast-cell-driven diseases. The programs currently in active development are in RSV and CSU.

Previous wording

Zelicapavir - N-protein Inhibitor Candidate: We have studied zelicapavir in two Phase 2 studies that were designed to be proof-of-concept and exploratory studies to understand the viral response in the context of RSV infection. With these studies, zelicapavir has demonstrated a favorable safety profile, consistent with that observed in over 500 subjects exposed to zelicapavir to date. These studies were conducted in otherwise healthy adults (not at high-risk for serious outcomes with RSV) infected with RSV. The first study was a challenge study, in which healthy adults were infected with RSV in a clinical setting and statistically significant effects on viral load and symptoms were observed. The second study, known as RSVP, was in an otherwise healthy adult outpatient population with community-acquired RSV infection and showed that this population resolves quickly from infection and is not in need of treatment. We believe that zelicapavir has the greatest potential to show optimal efficacy in high-risk populations since these patients have reduced RSV immunity, which manifests in a higher and longer duration of viral load and greater disease severity, allowing a bigger window to realize the full potential of zelicapavir. Based on the growing safety profile of zelicapavir, we are continuing to evaluate zelicapavir in high-risk populations in the following ongoing clinical studies, including pediatric patients and high-risk adults, all of which have significant unmet need:

Current wording

Zelicapavir - N-protein Inhibitor Candidate: We have studied zelicapavir in two Phase 2 studies that were designed to be proof-of-concept and exploratory studies to understand the viral response in the context of RSV infection. With these studies, zelicapavir has demonstrated a favorable safety profile, consistent with that observed in over 500 subjects exposed to zelicapavir to date. These studies were conducted in otherwise healthy young adults (not at high-risk for serious outcomes with RSV) infected with RSV. The first study was a challenge study, in which healthy adults were infected with RSV in a clinical setting and statistically significant effects on viral load and symptoms were observed. The second study, known as RSVP, was in an otherwise healthy young adult outpatient population with community-acquired RSV infection and showed that this population resolves quickly from infection and is not in need of treatment. We believe that zelicapavir has the greatest potential to show optimal efficacy in high-risk populations since these patients have reduced RSV immunity, which manifests in a higher and longer duration of viral load and greater disease severity, allowing a bigger window to realize the full potential of zelicapavir. Based on its growing safety profile, we are continuing to evaluate zelicapavir in high-risk populations in the following ongoing clinical studies, including pediatric patients and high-risk adults, all of which have significant unmet need:

Previous wording

RSVPEDs: RSVPEDs is a Phase 2 study in pediatric patients. This dose-ranging, randomized, double-blind, placebo-controlled study, is evaluating multiple ascending doses for five days in two age cohorts to determine safety, tolerability, and pharmacokinetics, as well as a second part evaluating antiviral activity at the selected dose.

Current wording

RSVPEDs: RSVPEDs is a Phase 2 study in pediatric patients, aged >28 days to <36 months. This dose-ranging, randomized, double-blind, placebo-controlled study, is evaluating multiple ascending doses for five days in two age cohorts to determine safety, tolerability, and pharmacokinetics, as well as a second part evaluating antiviral activity at the selected dose.

Previous wording

EDP-323 - L-protein Inhibitor Candidate: Our second clinical RSV candidate, EDP-323, is a novel oral, direct-acting antiviral selectively targeting the RSV L-protein, a viral RNA-dependent RNA polymerase enzyme that contains multiple enzymatic activities required for RSV replication. EDP-323 has sub-nanomolar potency against RSV-A and RSV-Bin vitro and protected mice in a dose-dependent manner from RSV infection as demonstrated by both virological and pathological endpoints. EDP-323 is not expected to have cross-resistance to other classes of inhibitors and has the potential to be used alone, or in combination with other RSV mechanisms, to broaden the treatment window or addressable patient populations. In June 2023, we completed a Phase 1 clinical study and reported positive topline results, which demonstrated that EDP-323 was safe and well-tolerated with pharmacokinetics supportive of once-daily dosing with target exposures achieved and no food effect. Based on these positive data, we initiated a Phase 2 challenge study of EDP-323 in the fourth quarter of calendar 2023 and anticipate topline data in the third quarter of calendar 2024.

Current wording

EDP-323 - L-protein Inhibitor Candidate: Our second clinical RSV candidate, EDP-323, is a novel oral, direct-acting antiviral selectively targeting the RSV L-protein, a viral RNA-dependent RNA polymerase enzyme that contains multiple enzymatic activities required for RSV replication. EDP-323 has sub-nanomolar potency against RSV-A and RSV-Bin vitro and protected mice in a dose-dependent manner from RSV infection as demonstrated by both virological and pathological endpoints. EDP-323 is not expected to have cross-resistance to other classes of inhibitors and has the potential to be used alone, or in combination with other RSV mechanisms, to broaden the treatment window or addressable patient populations. In June 2023, we completed a Phase 1 clinical study and reported positive topline results, which demonstrated that EDP-323 was safe and well-tolerated with pharmacokinetics supportive of once-daily dosing and target exposures achieved with no food effect. Based on these positive data, we initiated a Phase 2 challenge study of EDP-323 in the fourth quarter of calendar 2023 and anticipate topline data in the third quarter of calendar 2024.

Previous wording

Phase 2 Study: In May 2023, we reported topline results from SPRINT (SARS-CoV-2 Protease Inhibitor Treatment), a Phase 2 clinical trial of EDP-235. This randomized, double-blind, placebo-controlled study evaluated the safety, tolerability, antiviral activity and affect on clinical symptoms of EDP-235 compared to placebo in approximately 230 non-hospitalized, symptomatic patients with mild to moderate COVID-19 who were not at increased risk for developing severe disease. Patients received either 200 mg or 400 mg EDP-235 or placebo orally once daily for five days. EDP-235 met the primary endpoint of the trial and was generally safe and well-tolerated. A dose-dependent improvement in total symptom score was observed with EDP-235 treatment compared to placebo, which achieved statistical significance (p<0.05) in the 400 mg treatment group at multiple time points, starting as early as one day after the first dose. While no difference was observed in time to improvement in the overall group of 14 measured COVID-19 symptoms, an analysis of a subset of six symptoms showed a two-day shorter time to improvement in patients receiving EDP-235 400 mg who were enrolled within three days of symptom onset (p<0.01). No effect on virologic endpoints as measured in the nose was detected due to the rapid viral decline in the placebo arm of this highly immunologically-experienced, standard risk population. However, in the subset of patients who were nucleocapsid seronegative (indicating no recent natural infection with SARS-CoV-2), a viral load decline was observed at day five in the 400 mg group of 0.8 log overall and 1 log in the patients with symptom onset within three days before treatment with EDP-235.

Current wording

COVID-19: We leveraged our expertise in developing protease inhibitors to discover compounds specifically designed to target the SARS-CoV-2 virus and potentially other coronaviruses. We selected EDP-235, an oral inhibitor of the coronavirus 3CL protease, also referred to as 3CLpro or the main coronavirus protease, or Mpro, for clinical development. In addition to nanomolar activity against all SARS-CoV-2 variants tested to date, EDP-235 has potent antiviral activity against other human coronaviruses, enabling the potential for a pan-coronavirus treatment, including possibly coronaviruses that may infect human populations in the future. Furthermore, EDP-235 has good tissue distribution, and is projected to have four times higher drug levels in lung tissue compared to plasma. A robust treatment effect and prevention of transmission was observed in a ferret model. A Phase 1 study demonstrated EDP-235 was generally safe and well-tolerated in doses up to 400 mg for seven days, adverse events were infrequent and mild, and pharmacokinetics were supportive of once-daily dosing without ritonavir and without regard to food and achieved target exposure levels of up to 13-fold over the plasma protein-adjusted EC 90. In May 2023, we reported topline results from a Phase 2 clinical trial of EDP-235 in non-hospitalized, symptomatic patients with mild to moderate COVID-19 who were not at increased risk for developing severe disease. EDP-235 met the primary endpoint of the trial and was generally safe and well-tolerated. A dose-dependent improvement in total symptom score was observed with EDP-235 treatment compared to placebo, which achieved statistical significance (p<0.05) in the 400 mg treatment group at multiple time points, starting as early as one day after the first dose. An analysis of a subset of six symptoms showed a two-day shorter time (5 days to 3 days) to improvement in patients receiving EDP-235 400 mg who were enrolled within three days of symptom onset (p<0.01). No effect on virologic endpoints as measured in the nose was detected due to the rapid viral decline in the placebo arm of this highly immunologically-experienced, standard risk population. However, in the subset of patients who were nucleocapsid seronegative (indicating no recent natural infection with SARS-CoV-2), a viral load decline was observed at day five in the 400 mg group of 0.8 log overall and 1 log in the patients with symptom onset within three days before treatment with EDP-235.

Previous wording

HBV: Our lead clinical candidate for the treatment of chronic infection with hepatitis B virus, or HBV, is EDP-514, a core inhibitor that displays potent anti-HBV activityin vitro at multiple points in the HBV lifecycle. Our goal is to develop a combination therapy approach, including existing approved treatments such as a nucleoside reverse transcriptase inhibitor, or NUC, with EDP-514 and one or more other mechanisms, which could lead to a functional cure for patients with chronic HBV infection. Advancement of this program is dependent upon our accessing another compound that could be developed with EDP-514 for such a treatment regimen.

Current wording

HBV: Our lead clinical candidate for the treatment of chronic infection with hepatitis B virus, or HBV, is EDP-514, a core inhibitor that displays potent anti-HBV activityin vitro at multiple points in the HBV lifecycle. Our goal has been to develop a combination therapy approach, including existing approved treatments such as a nucleoside reverse transcriptase inhibitor, or NUC, with EDP-514 and one or more other mechanisms, which could lead to a functional cure for patients with chronic HBV infection. Final data from two Phase 1b studies of EDP-514 demonstrate the compound is safe with strong antiviral activity in two different chronic HBV patient populations – those who have a high viral load and those who are on a treatment with a nucleoside reverse transcriptase inhibitor. Advancement of this program is dependent upon our accessing another compound that could be developed with EDP-514 for such a treatment regimen.

Previous wording

CSU: We have a discovery stage program to develop KIT inhibitors to treat CSU by depleting mast cells, thereby addressing a primary driver of this disease. We have developed novel, potent and selective oral inhibitors of KIT, which are now being optimized in preclinical development. Our prototype inhibitors demonstrate potent nanomolar activity in both binding and cellular function assays and are highly selective for KIT versus other kinases. These inhibitors also demonstrate strongin vitro andin vivo ADME properties. Our goal is to select a lead candidate for KIT in late 2024, as well as introduce a second immunology program in 2024.

Current wording

CSU: We have a discovery stage program to develop KIT inhibitors to treat CSU by depleting mast cells, thereby addressing a primary driver of this disease. We have discovered novel, potent and selective oral inhibitors of KIT, which are now being optimized in preclinical development. Our prototype inhibitors demonstrate potent nanomolar activity in both binding and cellular function assays and are highly selective for KIT versus other kinases. These inhibitors also demonstrate strongin vitro andin vivo ADME properties. Our goal is to select a lead candidate for KIT in calendar Q4 2024 and to move into the clinic shortly thereafter, as well as introduce a second immunology program in 2024.

Previous wording

The following table summarizes our product development pipeline in our virology programs:

Current wording

The following table summarizes our product development pipeline in our virology and immunology programs:

Previous wording

To date, we have funded our operations primarily through royalty payments received under our collaboration agreement with AbbVie, a $200.0 million payment from our royalty sale agreement, and our existing cash, cash equivalents, and short-term and long-term marketable securities. We believe that our existing cash, cash equivalents and short-term marketable securities, as well as our retained portion of future HCV royalties, will enable us to fund our operating expenses and capital expenditure requirements through fiscal 2027.

Current wording

To date, we have funded our operations primarily through royalty payments received under our collaboration agreement with AbbVie, a $200.0 million payment received in 2023 from our royalty sale agreement, and our existing cash, cash equivalents, and short-term and long-term marketable securities. We believe that our existing cash, cash equivalents and short-term marketable securities, as well as our retained portion of future HCV royalties, will enable us to fund our operating expenses and capital expenditure requirements through the third quarter of fiscal 2027.

Previous wording

To date, we have received annually tiered, double-digit royalties on our protease inhibitor product glecaprevir included in AbbVie’s net sales of MAVYRET/MAVIRET. Under the terms of our AbbVie Agreement, 50% of AbbVie’s net sales of MAVYRET/MAVIRET are allocated to glecaprevir. Beginning with each January 1, the cumulative net sales of MAVYRET/MAVIRET start at zero for purposes of calculating the tiered royalties. As disclosed above regarding the OMERS royalty sale agreement, we will only retain 45.5% of the cash payments from royalties on net sales of MAVYRET/MAVIRET occurring after June 30, 2023 through June 30, 2032, subject to a cap on aggregate payments to OMERS equal to 1.42 times OMERS’ purchase price.

Current wording

To date, we have received annually tiered, double-digit royalties on our protease inhibitor product glecaprevir included in AbbVie’s net sales of MAVYRET/MAVIRET. Under the terms of our AbbVie Agreement, 50% of AbbVie’s net sales of MAVYRET/MAVIRET are allocated to glecaprevir. Beginning with each January 1, the cumulative net sales of MAVYRET/MAVIRET start at zero for purposes of calculating the tiered royalties. As disclosed above regarding the OMERS royalty sale agreement, we only retain 45.5% of the cash payments from royalties on net sales of MAVYRET/MAVIRET occurring after June 30, 2023 through June 30, 2032, subject to a cap on aggregate payments to OMERS equal to 1.42 times OMERS’ purchase price.

Previous wording

The income tax benefit for the three months ended December 31, 2023 was driven by interest recorded on a pending federal income tax refund. The income tax benefit for the three months ended December 31, 2022 is the result of the release of a state tax reserve.

Current wording

The income tax benefit for the six months ended March 31, 2024 was driven by interest recorded on a pending federal income tax refund.

Previous wording

We recognized revenue of $18.0 million during the three months ended December 31, 2023 as compared to $23.6 million during the three months ended December 31, 2022. The $5.6 million decrease in revenue was primarily due to AbbVie’s lower reported HCV sales as compared to the comparable period in 2022.

Current wording

We recognized revenue of $17.1 million during the three months ended March 31, 2024 as compared to $17.8 million during the three months ended March 31, 2023. The $0.7 million decrease in revenue was primarily due to AbbVie’s lower reported HCV sales as compared to the comparable period in 2023.

Previous wording

The level of research and development expenses for the three months ended December 31, 2023 decreased by $4.5 million compared to the same period in 2022.

Current wording

The level of research and development expenses for the three months ended March 31, 2024 decreased by $7.9 million compared to the same period in 2023.

Previous wording

The costs in our immunology increased by $3.9 million as this is a new therapeutic area of focus for the company.

Current wording

The costs in our immunology increased by $4.2 million as this is a new therapeutic area of focus for the company.

Previous wording

Other program costs increased by $2.7 million as we focused on early stage drug discovery programs, offset by a decrease in costs for our NASH program as we continued to wind down this program.

Current wording

Other program costs increased by $2.8 million as we focused on early stage drug discovery programs, offset by a decrease in costs for our NASH program as we continued to wind down this program.

Previous wording

General and administrative expenses increased by $3.8 million for the three months ended December 31, 2023 compared to the same period in 2022. The change was due to an increase in stock compensation expense and an increase in legal expenses related to our patent infringement suit against Pfizer.

Current wording

General and administrative expenses increased by $0.5 million for the three months ended March 31, 2024 compared to the same period in 2023. The change was primarily due to an increase in legal expenses related to our patent infringement suit against Pfizer.

Previous wording

Interest expense increased $3.4 million for the three months ended December 31, 2023, as compared to the same period in 2022 due to interest expense and amortization of debt issuance costs associated with the royalty sale agreement entered into during April 2023 with an affiliate of OMERS.

Current wording

Interest expense increased $2.6 million for the three months ended March 31, 2024, as compared to the same period in 2023 due to interest expense and amortization of debt issuance costs associated with the royalty sale agreement entered into during April 2023 with an affiliate of OMERS.

Previous wording

Interest and investment income, net, increased $3.3 million for the three months ended December 31, 2023, as compared to the same period in 2022. The increase was due to an increase in our cash balance due to receipt of the $200.0 million from OMERS as well as changes in interest rates year over year.

Current wording

Interest and investment income, net, increased $2.0 million for the three months ended March 31, 2024, as compared to the same period in 2023. The increase was due to an increase in our cash balance due to receipt of the $200.0 million from OMERS in 2023 as well as changes in interest rates year over year.

Previous wording

During the three months ended December 31, 2023 and 2022, we recorded an income tax benefit of $0.6 million and less than $0.1 million, respectively. The income tax benefit in 2023 was driven by interest recorded on a pending federal tax refund. The income tax benefit for 2022 was driven by a release of a state tax reserve during the period.

Current wording

During the three months ended March 31, 2024, we recorded an income tax benefit of $0.4 million representing interest recorded on a pending federal tax refund.

Previous wording

The costs in our virology program decreased $11.1 million primarily due to a decrease in costs associated with our COVID-19 program as we stopped further internal development and will only progress the program in the context of one or more collaborations. This decrease was offset by an increase in costs for our RSV clinical programs as we had two ongoing Phase 2 studies of zelicapavir and a challenge study initiated for EDP-323 in the three months ended December 31, 2023. Costs associated with HBV decreased as we continued to wind down this program.

Current wording

The costs in our virology program decreased $26.0 million primarily due to a decrease in costs associated with our COVID-19 program as we stopped further internal development and will only progress the program in the context of one or more collaborations. This decrease was offset by an increase in costs for our RSV clinical programs as we had two ongoing Phase 2 studies of zelicapavir and a challenge study initiated for EDP-323 in the six months ended March 31, 2024. Costs associated with HBV decreased as we continued to wind down this program.

Previous wording

We fund our operations with cash flows from our retained portion of our royalty revenue and our existing financial resources. At December 31, 2023, our principal sources of liquidity were cash and cash equivalents and short-term marketable securities of $337.2 million.

Current wording

We fund our operations with cash flows from our retained portion of our royalty revenue and our existing financial resources. At March 31, 2024, our principal sources of liquidity were cash and cash equivalents and short-term marketable securities of $300.3 million.

Previous wording

Cash used in operating activities was $25.0 million for the three months ended December 31, 2023 as compared to cash used in operating activities of $35.6 million for the same period in 2022. Our cash used in operating activities decreased primarily due to a significant decrease in spending in our clinical programs which was partially offset by lower cash receipts associated with our AbbVie agreement as we now only retain 45.5% of cash royalties following the royalty sale agreement with OMERS.

Current wording

Cash used in operating activities was $53.6 million for the six months ended March 31, 2024 as compared to cash used in operating activities of $49.4 million for the same period in 2023. Our cash used in operating activities increased $4.2 million primarily due to timing of our research and development payments, offset by lower cash receipts associated with our AbbVie agreement as we now only retain 45.5% of cash royalties following the royalty sale agreement with OMERS.

Previous wording

Cash used in investing activities was $13.1 million for the three months ended December 31, 2023 as compared to cash provided by investing activities of $33.6 million for the same period in 2022. Our cash used in investing activities increased $46.7 million, driven by the timing of purchases, sales and maturities of marketable securities in 2023 compared to 2022 and decreased capital expenditures in fiscal 2023 compared to fiscal 2022 due to the timing of our buildout of our leased premises at 400 Talcott Avenue.

Current wording

Cash provided by investing activities was $45.5 million for the six months ended March 31, 2024 as compared to cash provided by investing activities of $80.3 million for the same period in 2023. Our cash provided by investing activities decreased $34.8 million, driven by the timing of purchases, sales and maturities of marketable securities in 2024 compared to 2023.

Previous wording

Net cash provided by (used in) financing activities

Current wording

Net cash used in financing activities

Previous wording

Cash used in financing activities was $7.4 million for the three months ended December 31, 2023 as compared to cash provided by financing activities of $0.3 million for the same period in 2022. Our cash used in financing activities increased $7.7 million, driven by our payment to OMERS for our royalty sale agreement.

Current wording

Cash used in financing activities was $13.8 million for the six months ended March 31, 2024 as compared to cash used in financing activities of $1.7 million for the same period in 2023. Our cash used in financing activities increased $12.1 million, driven primarily by our payments to OMERS for our royalty sale agreement which began in fiscal 2024.

Previous wording

As of December 31, 2023, we had $337.2 million in cash, cash equivalents and short-term marketable securities. We believe that our existing cash, cash equivalents and short-term marketable securities as of December 31, 2023, as well as the cash flows from our retained portion of future HCV royalties will be sufficient to meet our anticipated cash requirements through fiscal 2027. However, our projection of the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement that involves risks and uncertainties, and actual results could vary materially.

Current wording

As of March 31, 2024, we had $300.3 million in cash, cash equivalents and short-term marketable securities. We believe that our existing cash, cash equivalents and short-term marketable securities as of March 31, 2024, as well as the cash flows from our retained portion of future HCV royalties will be sufficient to meet our anticipated cash requirements through the third quarter of fiscal 2027. However, our projection of the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement that involves risks and uncertainties, and actual results could vary materially.

Previous wording

We currently lease space in Watertown, Massachusetts, under two separate lease agreements with one landlord. We have entered into a third lease agreement with the same landlord to lease additional laboratory and office space at a to-be-constructed facility located at Arsenal on the Charles in Watertown, Massachusetts.

Current wording

We currently lease space in Watertown, Massachusetts, under two separate lease agreements with one landlord and entered into a third lease agreement with the same landlord in May 2022 to lease additional laboratory and office space located at a to-be-constructed facility at Arsenal on the Charles in Watertown, Massachusetts.

Previous wording

Our first lease for office and laboratory space at 500 Arsenal Street expires on September 1, 2027. In May 2022, we entered into a new ten-year lease for laboratory and office space in Watertown, Massachusetts, adjacent to our 400 Talcott Avenue premises at Arsenal on the Charles, at 4 Kingsbury Avenue. The construction of the facility shell has been completed and we expect to gain access to the building to construct tenant improvements in February 2024. In connection with this lease, we amended our 500 Arsenal Street lease to shorten the expiration date from September 1, 2027, to the date the Kingsbury Avenue facility is ready for our occupancy, which is currently estimated to occur by the end of November 2024.

Current wording

Our first lease for office and laboratory space at 500 Arsenal Street expires on September 1, 2027. In May 2022, we entered into a new ten-year lease for laboratory and office space in Watertown, Massachusetts, adjacent to our 400 Talcott Avenue premises at Arsenal on the Charles at 4 Kingsbury Avenue. The construction of the facility shell was completed and we gained access to the building to construct tenant improvements during the three months ended March 31, 2024. Upon gaining access to the 4 Kingsbury Avenue building, we capitalized a right-of-use asset and lease liability of approximately $32 million on our consolidated balance sheets which reflects our fixed base rent payments, net of approximately $15 million of a tenant improvement allowance provided by the landlord, over the 10-year term of the lease.