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Biotech Stock Mailbag: Enanta, Vanda, Pharmacyclics, Top 2014 Stock Catalysts

Before I open this week's Biotech Stock Mailbag, I'd like to remind readers to submit your nominations for Best and Worst Biotech CEO of 2013. You can submit your picks to me via email or on Twitter using the hashtags #BestBioCEO and #WorstBioCEO

@adamfeuerstein Adam, when is article on $ENTA coming out? After today's data, no reasonble person can say regimen isn't competitive in GT1. Roy Friedman (@DewDiligence) November 19, 2013

Roy is correct. The Abbvie (ABBV)-Enanta Pharma (ENTA - Get Report) all-oral regimen for hepatitis C has delivered a 96% cure rate for treatment-naive, genotype 1 patients. From an efficacy perspective, Gilead Sciences (GILD - Get Report) doesn't have much room to beat when it reports the cure rate for its own all-oral regimen soon.

If both regimens are equally effective against hepatitis C (and I consider cure rates in high 90-percent range to be basically the same), then convenience and pricing will be how Abbvie-Enanta and Gilead Sciences compete for patients.

Gilead has the convenience edge because its direct-acting antivirals sofosbuvir and ledipasvir are co-formulated into a single, once daily pill. Assuming ribavirin is part of the treatment regimen, patients will take 2 pills in the morning and one in the evening. Three pills per day.

For patients on the Abbvie-Enanta regimen (and assuming ribavirin is necessary), treatment consists of three pills in the morning (ABT-333, ABT-450r/ABT-267 and ribavirin) and two pills in the evening (ABT-333 and ribavirin). Five pills total.

Gilead bulls believe doctors and patients will choose fewer pills, enabling the company to capture upwards of 70-80% of the hepatitis C treatment market and $5 billion-plus in revenue in 2015. Gilead's incredible stock performance (and $110 billion market value) reflects the consensus view that it will dominate the all-oral hepatitis C treatment market.

But the hepatitis C "crumbs" left for Abbvie are still substantial. And if you believe convenience is less important, particularly for a treatment which only takes three months to complete, then Abbvie and Enanta have more upside potential than Gilead.

Enanta, in particular, doesn't seem to be getting much credit today for its share of the coming hepatitis C treatment bounty. Enanta is still eligible for $195 million in payments for regulatory milestones, which is not much less than the company's current $260 million enterprise value. Enanta will also receive double-digit royalties on sales of ABT-450, which is the drug it developed and licensed to Abbvie.

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SYM TRADE IT LAST %CHG
ITMN $73.89 -0.03%
ENTA $35.56 0.00%
GILD $102.94 0.00%
PCYC $256.82 0.00%
VNDA $9.50 0.00%

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