Posted 01/07/2014 07:15 PM ET
Since it went public in March, little biotech Enanta Pharmaceuticals has been in the middle of a clash between giants.
Enanta (ENTA) is the developer of ABT-450, a protease inhibitor that's one of three antiviral agents in AbbVie's (ABBV) cocktail of drugs in testing to treat the hepatitis C virus, HCV. AbbVie's is considered to be the nearest contender to Gilead Sciences' (GILD) Sovaldi, recently approved as part of the first officially sanctioned treatment for HCV that's all oral and doesn't include interferon.
The AbbVie-Enanta regimen has done as well as Sovaldi in trials, but analysts have debated how much its more complicated nature — it involves as many as five pills a day — will be a disadvantage on the market. Currently, analysts expect it to hit the market in 2015. They say it could be pulling in $2 billion a year by 2017.
That means a slew of milestone payments and royalties for Enanta, which is the rare development-stage biotech to be turning a profit thanks to the success it's already achieved in the pipeline.
Recently, CEO Jay Luly talked with IBD about the company's hepatitis C program as well as what's coming down the road.
IBD: How did Enanta get into the hepatitis C business?
Luly: We've been in the hep C business for over 10 years. We started with a single program, HCV protease, which is the one that we've partnered with AbbVie back in '06. Over the last decade, we've proliferated the number of targets. We're actually working on four different targets in HCV now.
IBD: Was the goal back then already to create the first interferon-free hepatitis C regimen?
Luly: Things have changed so rapidly. (From) when we first started working in protease, up until the time we signed the deal with (AbbVie), the assumption was that you would get a protease approved as a single agent, and then you would do combinations with it once it was approved. No one really imagined that the FDA was going to allow combination therapy on multiple investigational agents with none of them having been (previously) approved.
Even two and a half years ago, when Vertex (VRTX) and Merck (MRK) got approval (for Incivek), you still needed interferon if you were just using a protease alone. I'm not sure 10 years ago we would have imagined the field would have played out the way it did, but the way it's played out is probably much better than any of us had ever imagined, (with) the constructive nature of the FDA in exploring combinations earlier rather than later. That's really helped accelerate the whole field.
IBD: Can you explain how the AbbVie arrangement is structured?
Luly: It's had different phases. The discovery phase has mostly been accomplished and gave rise to ABT-450 and the next-gen protease inhibitor, ABT-493. Along with that, AbbVie paid an upfront licensing fee for our protease technology — that was a sizable upfront payment.
After that we stepped into clinical-development milestones. We've earned all of those milestones — that was about $55 million. Now we've moved on to the stage of regulatory milestones. We have $195 million in pre-commercial milestones on the 450 program. Those will be paid out starting with a (new drug application) filing targeted for the second quarter of (2014). We'll receive $40 million upon filing, and then we have $155 million more in approval milestones in the various territories.
Commercialization is targeted for early 2015. It's structured so that we receive double-digit royalties on the protease revenue.
IBD: People have been talking about the number of different drugs a patient has to take in AbbVie's regimen. Can you explain why it's necessary to have so many different agents at work?
Luly: For genotype 1 HCV, which is about 75% of the market in the large markets, you can't use a single agent to beat the virus. It's probably an expectation people had from the old HIV days when one agent wasn't enough — you needed to do a combination cocktail in order to be sure that you really hammered the virus. That's certainly turned out to be the case in HCV.
In the first regimen we're bringing forward with AbbVie, there are three different mechanisms of anti-HCV agents being used in the so-called 3D regimen. Optionally we've also studied adding on top of that ribavirin.
Gilead, on the other hand, is looking at a two-(anti)-HCV regimen, and also optionally studying it with ribavirin. It's really a question that gets answered ultimately by large clinical trials: Are three drugs in the combo the right number? Can you get away with two? Can you get away with two in some populations but not others? Do you need ribavirin? Going after genotype 1, it appears you need at least two drugs in the combination, and with some of the harder-to-treat populations you may need three or even more.
These HCV patients are not all the same. Some have a 1a virus; some have a 1b virus. Even within the 1a and 1b (groups), patients further stratify based on other factors. Some have more advanced disease, some have early disease, some have failed previous therapy, some are naive. So it's going to be interesting to see how all these different sub-populations settle down.
IBD: What are your goals for your next generation of HCV drugs?
Luly: Our first generation is really aiming at a very broad genotype 1 label — cirrhotics and all the different subtypes. But the next-gen program is looking beyond genotype 1. It is a pan-genotypic regimen. It also has activities against known resistance mutants that are out there.
It's shaping up in an interesting way where we have multiple regimens with AbbVie, but we're delighted to be — as a small-cap company — right in the thick of this all-oral race that's going on right now. It's actually very exciting.
IBD: Can you tell us about what you're doing with Novartis? That's also about hepatitis C, right?
Luly: You bet. With AbbVie we're partners on protease inhibitors; with Novartis (NVS) we're partners on NS5A inhibitors. If we pause for a minute and think, "Wait, the AbbVie cocktail has an NS5A in it too," that would be correct. We're in combinations with AbbVie that include some of their proprietary cocktail ingredients — (this) gives us more shots on goal that way than if we were doing it by ourselves. With Novartis, we're currently doing proof-of-concept studies with HCV patients. The goal would be to bring that forward into yet other combinations with agents of their pipeline.
Again, it gives us multiple shots on goal. We'll be able to participate in up to three different regimens with AbbVie, and we're hoping to duplicate additional shots with Novartis as well.
Read More At Investor's Business Daily:
http://news.investors.com/technology/010714-685548-enanta-ceo-jay-luly-interviewed.htm#ixzz2pqeYm8W6
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