Log in
E-mail
Password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
Settings
Settings
Dynamic quotes 
OFFON

4-Traders Homepage  >  Equities  >  Nasdaq  >  Enanta Pharmaceuticals Inc    ENTA

ENANTA PHARMACEUTICALS INC (ENTA)
Mes dernières consult.
Most popular
  Report  
SummaryQuotesChartsNewsAnalysisCalendarCompanyFinancialsConsensusRevisions 
News SummaryMost relevantAll newsSector newsTweets

ENANTA PHARMACEUTICALS : MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-Q)

share with twitter share with LinkedIn share with facebook
share via e-mail
0
02/09/2018 | 10:14pm CET

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the unaudited consolidated financial statements and notes thereto included elsewhere in this Quarterly Report on Form 10-Q and the audited consolidated financial statements and notes thereto for our fiscal year ended September 30, 2017 included in our Annual Report on Form 10-K for that fiscal year which is referred to as our 2017 Form 10-K. Please refer to our note regarding forward-looking statements on page 2 of this Form 10-Q, which is incorporated herein by this reference.

The Enanta name and logo are our trademarks. This Quarterly Report also includes trademarks, trade names and service marks of other persons. All other trademarks, trade names and service marks appearing in this Quarterly Report are the property of their respective owners.

Overview

We are a biotechnology company that uses our robust, chemistry-driven approach and drug discovery capabilities to create small molecule drugs primarily for the treatment of viral infections and liver diseases. We discovered glecaprevir, the second of two protease inhibitors discovered and developed through our collaboration with AbbVie and marketed as part of AbbVie's new direct-acting antiviral (DAA) regimen under the tradenames MAVYRET™ (U.S.) or MAVIRET™ (ex-U.S.) (glecaprevir/pibrentasvir) for the treatment of chronic hepatitis C virus, or HCV. The other protease inhibitor under our HCV collaboration is part of AbbVie's initial DAA regimens for the treatment of chronic HCV marketed under the tradenames VIEKIRA PAK® (paritaprevir/ritonavir/

ombitasvir/dasabuvir) (U.S.) or VIEKIRAX® (paritaprevir/ritonavir/ombitasvir) (ex-U.S.). Our royalties from our AbbVie collaboration and our existing financial resources provide us funding to support our wholly owned research and development efforts, which are currently focused on the following disease targets:

    •   non-alcoholic steatohepatitis, or NASH, a liver disease estimated to
        affect approximately 6 million individuals in the U.S. alone;


    •   primary biliary cholangitis, or PBC, a chronic liver disease that slowly
        destroys bile ducts in the liver, which affects an estimated 17,000
        individuals in the U.S.;


    •   respiratory syncytial virus, or RSV, the most common cause of
        bronchiolitis and pneumonia in children under one year of age in the U.S.,
        resulting in an estimated 75,000 to 125,000 hospitalizations each year in
        the U.S.; and


    •   hepatitis B virus, or HBV, the most prevalent chronic hepatitis, which is
        estimated to affect approximately 250 million individuals worldwide.

We had $297.5 million in cash and marketable securities at December 31, 2017. In the first quarter of our fiscal year 2018, we earned $23.1 million in royalties on the portion of AbbVie's net sales of its HCV regimens allocated to glecaprevir or paritaprevir and earned our remaining $15.0 million milestone under our collaboration with AbbVie as a result of commercialization regulatory approval of MAVIRET™ in Japan. We expect our existing financial resources and cash flows will allow us to continue to fund our wholly owned research and development programs for the foreseeable future.

Our Wholly Owned Programs

Our wholly owned research and development programs are in liver disease (non-virology), namely NASH and PBC, and in virology, namely RSV and HBV:

    •   NASH and PBC: We are working on multiple compounds that selectively bind
        to and activate the farnesoid X receptor, or FXR. We plan to develop these
        compounds, referred to as FXR agonists, for use in the treatment of NASH
        and PBC, both of which are liver diseases with very few therapeutic
        options. Our lead FXR agonist, EDP-305, represents a new class of FXR
        agonist designed to take advantage of increased binding interactions with
        the receptor. We believe this class is significantly different from other
        FXR agonists in clinical development.


         o  In October 2017, we announced results of a Phase 1a/b clinical study
            of EDP-305, which was generally safe and well tolerated over a broad
            range of single and multiple doses with pharmacokinetic data
            supporting once daily oral dosing. Additional data from this study
            were also presented at the 2018 NASH-TAG conference. The study
            included 98 healthy volunteer subjects, or HV subjects, and 48
            subjects who were obese and with or without pre-diabetes or type 2
            diabetes, whom we refer to as subjects with presumptive non-alcoholic
            fatty liver disease, or PN subjects.


                                       17

--------------------------------------------------------------------------------

              ?  EDP-305 exhibited strong engagement of the FXR receptor as
                 evidenced by increased levels of FGF19 and reduced levels of C4,
                 both of which are monitored as downstream markers indicating FXR
                 receptor activity.


              ?  Results support the ability to administer EDP-305 in future
                 trials at doses that neither elicit clinically significant
                 changes in lipids nor result in pruritus (itching).


        o   Since November 2016, we have presented data at the 2016 and 2017
            annual meetings of the American Association for the Study of Liver
            Diseases (AASLD), the 2017 and 2018 NASH-TAG conferences and the 2017
            International Liver Congress (ILC) that demonstrated that EDP-305 is a
            highly selective FXR agonist and shows more potent activity in a
            variety of in vitro and in vivo NASH models compared to the most
            advanced NASH candidate in development today, obeticholic acid, or
            OCA.


        o   We initiated a Phase 2 clinical study of EDP-305 in PBC patients in
            December 2017.


        o   We have recently initiated recruitment of a Phase 2 clinical study of
            EDP-305 in NASH patients.


        o   EDP-305 has been granted Fast Track designation by the U.S. Food and
            Drug Administration (FDA) for the treatment of NASH patients with
            liver fibrosis and separately for the treatment of PBC.


        o   In addition, we are pursuing research in other classes of FXR agonists
            as well as other mechanisms that may provide therapeutic benefit in
            NASH, any of which could be used as combination therapies for NASH.


    •   RSV: We have selected EDP-938, a potent N-protein inhibitor of activity of
        both major subgroups of RSV, referred to as RSV-A and RSV-B, as our first
        development candidate for RSV. We believe EDP-938 is differentiated from
        fusion inhibitors currently in development for RSV because N-protein
        inhibitors directly target the viral replication process of RSV and have
        demonstrated high barriers to resistance against RSV in vitro.


         o  In June 2017, we presented preclinical data demonstrating that EDP-938
            is a potent inhibitor of both RSV-A and RSV-B activity, maintaining
            antiviral activity post-infection while presenting a high barrier to
            resistance in vitro. EDP-938 demonstrated a greater than 4-log
            reduction in viral load in an animal model challenged with RSV.
            Further, EDP-938 maintained antiviral potency across all clinical
            isolates tested in vitro, as well as virus that was resistant to
            fusion inhibitors. The compound inhibited RSV at a post-entry,
            replication step and maintained its activity in vitro when given 24
            hours post infection. In addition, combination studies of EDP-938 with
            other types of RSV inhibitors, such as fusion inhibitors, showed
            synergistic antiviral effects.


         o  We initiated a Phase 1 clinical study of EDP-938 in the fourth quarter
            of calendar 2017.


         o  We anticipate starting a Phase 2a challenge study in the second half
            of 2018. The challenge study will test the effect of EDP-938 on
            volunteers who will be infected with RSV in the course of the study.


    •   HBV: We also have a program to discover and develop new chemical entities
        for the treatment of HBV. Our initial focus is on core inhibition, a
        mechanism with early clinical validation. We believe that it may be
        necessary to utilize more than one compound/mechanism for the treatment of
        HBV and therefore we are pursuing multiple approaches. We continue to make
        progress in discovering, characterizing, and seeking patent protection for
        new core inhibitors of HBV with the goal of identifying a development
        candidate in 2018. In addition, we are conducting preclinical experiments
        with compounds we have discovered that use other mechanisms that target
        HBV.

We have utilized our internal chemistry and drug discovery capabilities to generate all of our development-stage programs.

Licensed Products

Through our Collaborative Development and License Agreement with AbbVie, we have developed and licensed to AbbVie two protease inhibitor compounds that have been clinically tested, manufactured, and commercialized by AbbVie. To date, we have earned a total of $330.0 million in milestone payments related to clinical development and commercialization regulatory approvals of these regimens in major markets:

    •   Glecaprevir: Glecaprevir is the protease inhibitor we discovered that was
        developed by AbbVie in a fixed-dose combination with its NS5A inhibitor,
        pibrentasvir, for the treatment of HCV. This combination, currently
        marketed under the brand name MAVYRET™ in the U.S. and MAVIRET™ (ex-U.S.)
        and referred to in this report as MAVYRET/MAVIRET, is a new, once daily,
        all oral, fixed-dose, ribavirin-free treatment for HCV genotypes 1-6, or
        GT1-6, which is referred to as being pan-genotypic. In the EU, U.S. and
        Japan it is approved as an 8-week treatment for patients without cirrhosis
        and new to treatment. Today, these patients are estimated to represent the
        majority of HCV patients in the developed country markets.


                                       18

--------------------------------------------------------------------------------

Our economics from AbbVie's MAVYRET/MAVIRET consist of two components:

        o   We receive annually tiered, double-digit, per-product royalties on 50%
            of the net sales of the 2-DAA glecaprevir/pibrentasvir combination in
            MAVYRET/MAVIRET. These royalties are calculated separately from the
            royalties on paritaprevir-containing regimens.


        o   We also earned all available milestones, totaling $80.0 million, for
            commercialization regulatory approvals of the glecaprevir/pibrentasvir
            combination in the U.S., EU and Japan.


The U.S., EU and Japan authorizations for the MAVYRET/MAVIRET combination of
glecaprevir and pibrentasvir, and AbbVie's applications for approval
of MAVYRET/MAVIRET in other jurisdictions, are supported by the following
studies:

        o    8 weeks for treatment-naïve, non-cirrhotics: In November 2016,
             results from several Phase 3 studies of this combination demonstrated
             97.5% of chronic HCV infected patients without cirrhosis and new to
             treatment across all major genotypes (GT1-6) achieved sustained
             virologic response at 12 weeks post-treatment, referred to as SVR12,
             with just 8 weeks of MAVYRET/MAVIRET treatment.


        o    8 weeks with chronic kidney disease: Results were also presented from
             AbbVie's EXPEDITION-4 study in chronic HCV patients with chronic
             kidney disease (CKD), in which 98% of patients (n=102/104) across all
             major genotypes (GT1-6) achieved SVR12 with 12 weeks of treatment
             with MAVYRET/MAVIRET.


        o    8 weeks for GT-3: Data from AbbVie's ENDURANCE-3 study were presented
             at the 2017 ILC, demonstrating that 95% of patients with
             challenging-to-treat, genotype 3 (GT3) chronic HCV infection, without
             cirrhosis and new to treatment, achieved SVR12 after 8 weeks of
             treatment with MAVYRET/MAVIRET.


        o    12 weeks for compensated cirrhosis: Data from AbbVie's EXPEDITION-1
             study were also presented at the 2017 ILC, demonstrating that 99% of
             HCV-infected patients with genotype 1, 2, 4, 5 or 6 and compensated
             cirrhosis (Child-Pugh A) achieved SVR12 following 12 weeks of
             MAVYRET/MAVIRET treatment without ribavirin.


    •   Paritaprevir: Paritaprevir is the protease inhibitor contained in AbbVie's
        initial HCV treatment regimens currently marketed in the U.S., EU, Japan
        and other countries around the world under the trade names VIEKIRA PAK®,
        VIEKIRAX®, VIEKIRAX XR™ and TECHNIVIE®. First approved and sold in the
        U.S. in December 2014 for treatment of GT-1 HCV, AbbVie's HCV regimens
        containing paritaprevir are now also approved for GT-4 HCV.




                                       19

--------------------------------------------------------------------------------

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



                               [[Image Removed]]

Financial Operations Overview

We are currently funding all research and development for our wholly owned programs. We expect to incur substantially greater expenses as we continue to advance our FXR agonist program for NASH and PBC. We have completed a Phase 1 study and initiated a Phase 2 study in PBC patients in calendar 2017 and have recently initiated recruitment of a Phase 2 study in NASH patients. We also initiated a Phase 1 clinical study of our lead RSV candidate, EDP-938, in the fourth quarter of calendar 2017 and plan to initiate a Phase 2a challenge study in RSV in the second half of 2018. We expect to increase expenses in fiscal 2018 as we conduct these clinical studies and advance other compounds into substantial preclinical development.

Since going public in 2013, we have devoted substantially all of our resources to the discovery and development of novel compounds for the treatment of viral infections and liver diseases. For the periods included in this report we have funded our operations primarily through payments received under our collaboration agreement with AbbVie. Our revenue in the near term will continue to be dependent on our royalty payments from our collaboration with AbbVie.

For its new MAVYRET/MAVIRET regimen, which in the majority of chronic HCV patients only requires 8 weeks of treatment compared to 12 weeks with VIEKIRA PAK, AbbVie has initially set a lower list price compared to its original HCV regimens and

                                       20

--------------------------------------------------------------------------------

other HCV products on the market. As MAVYRET/MAVIRET replaces AbbVie's paritaprevir-containing regimens over the next several quarters, AbbVie is seeking to increase its HCV market share through this pricing and the favorable treatment characteristics of the new regimen. It is still too early to know how successful AbbVie's efforts will be.

Revenue

Since our inception, our revenue has been derived from two primary sources: collaboration agreements with pharmaceutical companies and one government research and development contract. We have entered into three significant collaboration agreements and contracts since 2006, the most significant of which is our continuing collaboration agreement with AbbVie.

Beginning in our fiscal year ended September 30, 2015, we have generated royalty revenue from AbbVie's net sales allocable to our protease inhibitors, including paritaprevir, which is part of AbbVie's initial treatment regimens for HCV approved in the U.S. in December 2014 and in the EU and dozens of other countries since then. During the quarter ended September 30, 2017, AbbVie received approvals of its new HCV regimen containing glecaprevir in the U.S. and EU and began commercializing the combination under the tradenames MAVYRET™ in the U.S. and MAVIRET™ outside the U.S.

The following table is a summary of revenue recognized from our collaboration agreement for the three months ended December 31, 2017 and 2016:


                                           Three Months Ended
                                              December 31,
                                            2017          2016
                                             (in thousands)
                     AbbVie agreement:
                     Royalties           $   23,109$ 10,417
                     Milestones              15,000            -
                     Total revenue       $   38,109$ 10,417




AbbVie Agreement

Since all of our research obligations under the AbbVie agreement were concluded by June 30, 2011, all milestone payments received since then have been recognized as revenue upon achievement of each milestone by AbbVie. During the three months ended December 31, 2017, we earned and recognized as revenue the last milestone payment for glecaprevir, which was a $15.0 million milestone payment upon AbbVie's achievement of commercialization regulatory approval of MAVIRET™ in Japan. We did not earn any milestones during the same period in 2016.

We also receive annually tiered, double-digit royalties per protease inhibitor product on AbbVie's net sales allocable to either of our collaboration's protease inhibitors. Under the terms of our AbbVie agreement, as amended in October 2014, 50% of AbbVie's net sales of MAVYRET/MAVIRET are allocated to glecaprevir. In the case of regimens containing paritaprevir, 30% of net sales of 3-DAA regimens containing paritaprevir and 45% of net sales of 2-DAA regimens containing paritaprevir are allocated to paritaprevir for purposes of calculating our annually tiered royalties. Beginning with each January 1, the cumulative net sales of each royalty-bearing product start at zero for purposes of calculating the tiered royalties on a product-by-product basis.

Internal Programs

As our internal product candidates are currently in preclinical or early clinical development, we have not generated any revenue from our own product sales and do not expect to generate any revenue from product sales derived from these product candidates for at least the next several years. We expect that our revenue for 2018 and the next several years will be derived from royalties under our current collaboration agreement with AbbVie, as well as any additional collaboration that we may enter into in the future.

                                       21

--------------------------------------------------------------------------------

Operating Expenses

The following table summarizes our operating expenses for the three months ended December 31, 2017 and 2016:


                                               Three Months Ended
                                                  December 31,
                                                2017          2016
                                                 (in thousands)
                Research and development     $   17,962$ 12,526
                General and administrative        5,770        4,937
                Total operating expenses     $   23,732$ 17,463

Research and Development Expenses

Research and development expenses consist of costs incurred to conduct basic research, such as the discovery and development of novel small molecules as therapeutics, as well as any external expenses of preclinical and clinical development activities. We expense all costs of research and development as incurred. These expenses consist primarily of:

    •   personnel costs, including salaries, related benefits and stock-based
        compensation for employees engaged in scientific research and development
        functions;


    •   third-party contract costs relating to research, formulation,
        manufacturing, preclinical study and clinical trial activities;


  • third-party license fees;


  • laboratory consumables; and


  • allocated facility-related costs.

Project-specific expenses reflect costs directly attributable to our clinical development candidates and preclinical candidates nominated and selected for further development. Remaining research and development expenses are reflected in research and drug discovery, which represents early-stage drug discovery programs. At any given time, we typically have several active early stage research and drug discovery projects. Our internal resources, employees and infrastructure are not directly tied to any individual research or drug discovery project and are typically deployed across multiple projects. As such, we do not report information regarding costs incurred for our early-stage research and drug discovery programs on a project-specific basis. We expect that our research and development expenses will continue to increase in the future as we advance our NASH, PBC, RSV and HBV programs.

Our research and drug discovery programs are at early stages; therefore, the successful development of our product candidates is highly uncertain and may not result in approved products. Completion dates and completion costs can vary significantly for each product candidate and are difficult to predict. Given the uncertainty associated with clinical trial enrollments and the risks inherent in the development process, we are unable to determine the duration and completion costs of the current or future clinical trials of our product candidates or if, or to what extent, we will generate revenue from the commercialization and sale of any of our product candidates. We anticipate that we will make determinations as to which development programs to pursue and how much funding to direct to each program on an ongoing basis in response to the preclinical and clinical success and prospects of each product candidate, as well as ongoing assessments of the commercial potential of each product candidate.

General and Administrative Expenses

General and administrative expenses consist primarily of personnel costs, which include salaries, related benefits and stock-based compensation, of our executive, finance, business and corporate development and other administrative functions. General and administrative expenses also include travel expenses, allocated facility-related costs not otherwise included in research and development expenses, directors and officers liability insurance premiums, and professional fees for auditing, tax, and legal services and patent expenses.

We expect that general and administrative expenses will increase in the future primarily due to ongoing expansion of our operating activities in support of our own research and development programs, as well as potential additional costs associated with operating a growing public company.

                                       22

--------------------------------------------------------------------------------

Other Income (Expense), Net

Other income (expense), net, consists of interest income, interest expense and the change in fair value of our Series 1 nonconvertible preferred stock and the change in fair value of our outstanding warrant liability in 2017. Interest income consists of interest earned on our cash equivalents and short-term and long-term marketable securities balances as well as interest earned for refunds received from tax authorities. Interest expense consists of interest expense related to our capital lease obligation. The change in fair value of our outstanding warrant liability and Series 1 nonconvertible preferred stock relates to the remeasurement of these financial instruments from period to period as these instruments may require a transfer of assets because of the liquidation preference features of the underlying stock. The change in fair value also includes any forfeiture of unexercised warrants which expired on October 4, 2017.

Income Tax (Expense) Benefit

Income tax (expense) benefit is based on our best estimate of applicable income tax rates for the entire fiscal year applied to pre-tax profit or loss reported for the year-to-date period.

Critical Accounting Policies

Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of our consolidated financial statements and related disclosures requires us to make estimates and assumptions that affect the reported amount of assets, liabilities, revenue, costs and expenses, and related disclosures. We believe that the estimates and assumptions involved in the accounting policies described below may have the greatest potential impact on our consolidated financial statements and, therefore, consider these to be our critical accounting policies. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions and conditions. See also our Annual Report on Form 10-K for the fiscal year ended September 30, 2017 (referred to as our 2017 Form 10-K) for information about these accounting policies as well as a description of our other significant accounting policies. We believe that of our significant accounting policies, the following accounting policies involve the most judgment and complexity:

  • Revenue recognition;


  • Income taxes; and


  • Stock-based compensation

Accordingly, we believe the policies set forth above are critical to fully understanding and evaluating our financial condition and results of operations. If actual results or events differ materially from the estimates, judgments and assumptions used by us in applying these policies, our reported financial condition and results of operations could be materially affected.

There have been no material changes in our critical accounting policies since September 30, 2017 aside from the adoption of ASU 2016-09 in the first quarter of fiscal 2018. For further information, please see the discussion of critical accounting policies included in our 2017 Form 10-K.

Results of Operations

Comparison of Three Months Ended December 31, 2017 and 2016


                                                 Three Months Ended
                                                    December 31,
                                                  2017          2016
                                                   (in thousands)
                Revenue                        $   38,109$ 10,417
                Research and development           17,962       12,526
                General and administrative          5,770        4,937
                Other income (expense), net:          960          524
                Income tax (expense) benefit       (3,644 )      1,542




                                       23

--------------------------------------------------------------------------------

Revenue



                                           Three Months Ended
                                              December 31,
                                            2017          2016
                                             (in thousands)
                     AbbVie agreement:
                     Royalties           $   23,109$ 10,417
                     Milestones              15,000            -
                     Total revenue       $   38,109$ 10,417

We recognized revenue of $38.1 million during the three months ended December 31, 2017 as compared to $10.4 million during the three months ended December 31, 2016. During the three months ended December 31, 2017, revenue consisted of a $15.0 million milestone earned upon AbbVie's achievement of commercialization regulatory approval of MAVIRET™ in Japan, as well as royalties earned on the portion of AbbVie's net sales of its HCV treatment regimens allocable to glecaprevir or paritaprevir. During the three months ended December 31, 2016, our revenue consisted of royalties earned on the portion of AbbVie's net sales of its HCV treatment regimens allocable to paritaprevir.

Our revenue is generated through our collaboration with AbbVie. Our collaboration's new MAVYRET/MAVIRET regimen, a pan-genotypic treatment combining two DAAs, began commercialization in the third calendar quarter of 2017, following its approval in the EU and the U.S. We are entitled to annually tiered, double-digit, per-product royalties on 50% of all net sales of MAVYRET/MAVIRET. Our royalty revenues eligible to be earned in the future will potentially fluctuate depending on AbbVie's HCV market share, the pricing of the MAVYRET/MAVIRET regimen and number of patients treated.

Research and development expenses


                                                      Three Months Ended
                                                         December 31,
                                                       2017          2016
                                                        (in thousands)
          R&D programs:
          Liver disease                             $   10,710$  5,912
          Virology                                       7,222        6,524
          Other                                             30           90
          Total research and development expenses   $   17,962$ 12,526

Research and development expenses increased $5.4 million for the three months ended December 31, 2017 as compared to the same period in 2016. The increase was primarily due to progression of preclinical and clinical activities in our liver disease and virology programs. Increases were driven by an increase in headcount to support our preclinical activities and an increase in external costs for clinical and preclinical activities.

General and administrative expenses

General and administrative expenses increased by $0.8 million for the three months ended December 31, 2017 as compared to the same period in 2016. The increase was primarily due to an increase in compensation expense due to increased headcount.

Other income (expense), net

Other income (expense), net, increased $0.4 million for the three months ended December 31, 2017 as compared to the same period in 2016 due to an increase in interest income due to higher average investment balances and changes in interest rates for the period ended December 31, 2017 as compared to the same period in 2016. In addition, we recognized an increase to other income (expense), net, of less than $0.1 million as a result of the expiration of unexercised warrants during the three months ended December 31, 2017.

Income tax (expense) benefit

For the three months ended December 31, 2017 and 2016, we recorded an income tax (expense) benefit of $(3.6) million and $1.5 million, respectively. During the three months ended December 31, 2017, our income tax expense included a revaluation adjustment against deferred tax assets of $(3.8) million due to a decrease in the federal corporate income tax rate as enacted under the U.S. Tax

                                       24

--------------------------------------------------------------------------------

Cuts and Jobs Act (the "Tax Act"). We also recorded an income tax benefit of $0.2 million primarily related to tax deductions for stock option activity which is now recorded in income tax expense (benefit) due to the adoption of ASU 2016-09 during the first quarter of fiscal 2018. For the three months ended December 31, 2016, we recorded an income tax benefit due to the Company's loss before income taxes for the quarter as well as federal research and development tax credits which reduced taxes payable and were reflected in the Company's annual effective tax rate.

Estimates used to prepare our income tax expense during the three months ended December 31 2017 are based on our initial analysis of the Tax Act. Given the complexity of the Tax Act, anticipated guidance from the U.S.Treasury regarding implementation of the act, and potential for guidance from the Securities and Exchange Commission or the Financial Accounting Standards Board related to the act, these estimates may be adjusted during our fiscal 2018 to reflect any such guidance provided.

Liquidity and Capital Resources

At December 31, 2017, our principal sources of liquidity were cash, cash equivalents and short-term and long-term marketable securities totaling $297.5 million.

From our inception through December 31, 2017, we have financed our operations primarily through payments under our collaborations, government research and development contracts and grants, and the net proceeds from our initial public offering of our equity in March 2013. The following table shows a summary of our cash flows for the three months ended December 31, 2017 and 2016:



                                                           December 31,
                                                         2017        2016
                                                          (in thousands)
           Cash provided by (used in):
           Operating activities                        $  4,409$ 3,145
           Investing activities                        $ (2,448 )$   865
           Financing activities                        $    417$    31
           Net increase in cash and cash equivalents   $  2,378$ 4,041

Net cash provided by operating activities

The increase in cash provided by operating activities of $1.3 million for the three months ended December 31, 2017 as compared to the same period in 2016 is driven primarily by timing of payments received under our collaboration with AbbVie year over year, which were substantially offset by increased expenditures in research and development in order to progress clinical development and preclinical research in our proprietary programs. We received $25.6 million during the three months ended December 31, 2017 from AbbVie, including royalties and a $15.0 million milestone payment, compared to $12.8 million in cash during three months ended December 31, 2016 which consisted exclusively of royalties. In addition, our cash taxes paid decreased by $1.0 million due to timing of estimated tax payments.

Net cash provided by (used in) investing activities

The decrease in cash provided by investing activities of $3.3 million for the three months ended December 31, 2017 as compared to the same period in 2016 was driven by the timing of purchases, sales and maturities of marketable securities.

Net cash provided by financing activities

The increase in net cash provided by financing activities of $0.4 million for the three months ended December 31, 2017 as compared to the same period in 2016 was driven by an increase in exercises of stock options during the three months ended December 31, 2017 as compared to the same period in 2016.

Funding requirements

As of December 31, 2017, we had $297.5 million in cash, cash equivalents and short-term and long-term marketable securities. We believe that our existing cash, cash equivalents and marketable securities as of December 31, 2017 will be sufficient to meet our anticipated cash requirements for the foreseeable future. However, our forecast of the period of time through which our financial

                                       25

--------------------------------------------------------------------------------

resources will be adequate to support our operations is a forward-looking statement that involves risks and uncertainties, and actual results could vary materially.

Our future capital requirements are difficult to forecast and will depend on many factors, including:

    •    whether our existing collaboration continues to generate substantial
         royalties to us;


  • the number and characteristics of the future product candidates we pursue;


    •    the scope, progress, results and costs of researching and developing any
         of our product candidates on our own, including conducting preclinical
         research and clinical trials;


    •    opportunities to in-license or otherwise acquire new technologies,
         therapeutic candidates and therapies;


    •    the timing and amount of royalties on glecaprevir and paritaprevir and
         any sales of our product candidates, if any, or royalties thereon;


    •    the timing of, and the costs involved in, obtaining regulatory approvals
         for any product candidates we develop independently;


    •    the cost of commercialization activities, if any, of any product
         candidates we develop independently that are approved for sale, including
         marketing, sales and distribution costs;


    •    the cost of manufacturing our product candidates and any products we
         successfully commercialize independently, including manufacturing for
         clinical development;


    •    our ability to maintain our existing collaboration and to establish new
         collaborations, licensing or other arrangements and the financial terms
         of such agreements; and


    •    the costs involved in preparing, filing, prosecuting, maintaining,
         defending and enforcing patents, including any litigation costs and the
         outcomes of any such litigation.

Off-Balance Sheet Arrangements

We do not engage in any off-balance sheet financing activities. We do not have any interest in entities referred to as variable interest entities, which include special purpose entities and other structured finance entities.

Contractual Obligations and Commitments

In our 2017 Form 10-K Part II, Item 7, Management's Discussion and Analysis of Financial Conditions and Results of Operations, under the heading "Contractual Obligations and Commitments", we have described our commitments and contingencies. There were no material changes in our commitments and contingencies during the three months ended December 31, 2017.

Recently Issued Accounting Pronouncements

A description of recently issued accounting pronouncements that may potentially impact our financial position and results of operations is set forth in Note 2 to the consolidated financial statements included in this Quarterly Report on Form 10-Q.

© Edgar Online, source Glimpses

share with twitter share with LinkedIn share with facebook
share via e-mail
0
Latest news on ENANTA PHARMACEUTICALS INC
02/14ENANTA PHARMACEUTICALS : To present at two upcoming investor conferences
AQ
02/12ENANTA PHARMACEUTICALS : to Present at Two Upcoming Investor Conferences
BU
02/09ENANTA PHARMACEUTICALS : MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDI..
AQ
02/09ENANTA PHARMACEUTICALS : Reports Financial Results for its Fiscal First Quarter ..
AQ
02/07ENANTA PHARMACEUTICALS : posts 1Q profit
AQ
02/07ENANTA PHARMACEUTICALS INC : Results of Operations and Financial Condition, Fina..
AQ
02/07ENANTA PHARMACEUTICALS : Reports Financial Results for its Fiscal First Quarter ..
BU
02/07ENANTA PHARMACEUTICALS INC : Enanta Pharmaceuticals, Inc. to Host Earnings Call
AC
01/26ENANTA PHARMACEUTICALS TO HOST CONFE : 30 p.m. ET to Discuss Financial Results f..
AQ
01/24ENANTA PHARMACEUTICALS TO HOST CONFE : 30 p.m. ET to Discuss Financial Results f..
BU
More news
News from SeekingAlpha
02/09YOUR DAILY PHARMA SCOOP : Adamas' Gocovri Key Value Driver, BioMarin Data, Regen.. 
02/08HEALTHCARE - TOP 5 GAINERS / LOSERS : 00 am (2/8/2018) 
02/07Enanta Pharmaceuticals' (ENTA) CEO Jay Luly on Q1 2018 Results - Earnings Cal.. 
02/07Enanta Pharma beats by $0.32, beats on revenue 
01/29Enanta Pharma continues northward march, up 6%