Enanta, No Longer Obscure, Seeks Slice of Big Hepatitis C Market

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snapping up protease inhibitors and forming alliances to develop them as potential treatments for the chronic liver disease.

Nearby, for instance, the much larger Cambridge, MA-based Vertex Pharmaceuticals (NASDAQ: VRTX) was seeing its stock soar in 2005 on some promising clinical data from the most advanced protease inhibitor of the bunch, telaprevir. It formed a partnership to develop that drug with Johnson & Johnson. InterMune (NASDAQ: ITMN), another public company larger than Enanta, struck a deal with Roche. Schering-Plough, later acquired by Merck, was also developing what would become the first protease inhibitor for hepatitis C to hit the market, boceprevir (Victrelis).

Enanta, seeing all these large powers align, quickly decided it needed help to develop its drug and get in on the race. Luly’s Abbott connections came through. Negotiations between Enanta and Abbott ensued over the second half of 2006, and the deal closed in December of that year. Enanta got its then-biggest payday: a $57 million check up front, $250 million in potential milestones, and double-digit royalties down the road. All in return for worldwide rights to the protease inhibitors developed through the partnership. This despite the fact that Enanta didn’t have a finished compound—just IP, and “a lot of leads,” according to Luly.

As it got to work in the Abbott partnership, Enanta branched out some more. It put some research dollars towards antibiotics again, and has since won a contract from the National Institute of Allergy and Infectious Diseases to develop antibiotics that would be used against bacteria found in anthrax. Luly also saw a bigger opportunity within hepatitis C. It was becoming clear that treating the disorder “would be a cocktail therapy kind of a game.” So Enanta came up with an NS5A inhibitor, EDP-239. Novartis grabbed rights to the drug in return for $34 million up front, and another $440 million in milestone payments down the road. Enanta’s also developed some other in-house drug candidates that affect other proteins implicated in the replication of hepatitis C, and has a next-generation protease inhibitor it’s developing in tandem with AbbVie.

Unlike the antibiotic that started the ball rolling for Enanta, these partnered drug candidates haven’t fizzled as of yet. The original protease inhibitor to come out of the Abbott deal is now known as ABT-450, and it’s one of the drugs being used in all six of the Phase III studies AbbVie is running in hepatitis C. Enanta has already gotten $55 million of those milestone payments, and “should get the majority” of the remaining $195 million this year, as they’re tied to regulatory applications and approvals, Luly says. Novartis has paid Enanta $11 million in milestones so far, with the next $15 million check coming if EDP-239 makes it to a Phase II clinical trial.

Even though Enanta didn’t need cash at the time, it still went public last year. Sure, the access to more cash down the road from deep-pocketed public investors was a lure, but according to Luly, the company was also tired of living in the shadows while AbbVie’s hepatitis C program continued to gain value in the public marketplace.

“You kind of get no credit for that as a private company,” he says. “You’re just sitting there cheering in Watertown with good news, but nothing happens in terms of people recognizing that, in terms of valuation of the company and so forth. Part of [the reason we filed] was to get out and be able to get credit for that publicly, because we knew we were going to have a tremendous amount of newsflow coming.”

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