UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2023

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 001-35839

ENANTA PHARMACEUTICALS, INC.

(Exact name of registrant as specified in its charter)

DELAWARE	04-3205099
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

500 Arsenal Street Watertown, Massachusetts	02472
(Address of principal executive offices)	(Zip Code)

(Registrants telephone number, including area code:) (617) 607-0800

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	ENTA	NASDAQ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of April 28, 2023, the registrant had 21,055,392 shares of common stock, $0.01 par value per share, outstanding.

Table of Contents

		Page
PART I.	UNAUDITED FINANCIAL INFORMATION
Item 1.	Consolidated Financial Statements	3
	Consolidated Balance Sheets	3
	Consolidated Statements of Operations	4
	Consolidated Statements of Comprehensive Loss	5
	Consolidated Statements of Stockholders' Equity	6
	Consolidated Statements of Cash Flows	7
	Notes to Consolidated Financial Statements (unaudited)	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	25
Item 4.	Controls and Procedures	25
PART II.	OTHER INFORMATION
Item 1A.	Risk Factors	25
Item 6.	Exhibits	26
Signatures		27

NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q ("Quarterly Report") contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) about us and our industry that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this Quarterly Report, including statements regarding our future results of operations and financial condition, business strategy and plans and objectives of management for future operations, are forward-looking statements. In some cases, forward-looking statements may be identified by words such as “anticipate,” “believe,” “continue,” “could,” “design,” “estimate,” “expect,” “intend,” “may,” “plan,” “potentially,” “predict,” “project,” “should,” “will” or the negative of these terms or other similar expressions. We caution you that the foregoing list may not encompass all of the forward-looking statements made in this Quarterly Report.

Forward-looking statements are based on our management’s beliefs and assumptions and on information currently available. These forward-looking statements are subject to a number of known and unknown risks, uncertainties and assumptions, including risks described in the section titled “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended September 30, 2022.

2

PART I—UNAUDITED FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

ENANTA PHARMACEUTICALS, INC.

CONSOLIDATED BALANCE SHEETS

(unaudited)

(in thousands, except per share amounts)

	March 31,			September 30,
	2023			2022
Assets
Current assets:
Cash and cash equivalents	$	73,178		$	43,994
Short-term marketable securities		136,906			205,238
Accounts receivable		17,795			20,318
Prepaid expenses and other current assets		14,484			13,445
Income tax receivable		28,774			28,718
Total current assets		271,137			311,713
Long-term marketable securities		15,040			29,285
Property and equipment, net		11,050			6,173
Operating lease, right-of-use assets		24,554			23,575
Restricted cash		3,968			3,968
Other long-term assets		696			696
Total assets	$	326,445		$	375,410
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	11,761		$	6,000
Accrued expenses and other current liabilities		15,482			20,936
Operating lease liabilities		4,923			2,891
Total current liabilities		32,166			29,827
Operating lease liabilities, net of current portion		23,073			22,372
Series 1 nonconvertible preferred stock		1,423			1,423
Other long-term liabilities		408			454
Total liabilities		57,070			54,076
Commitments and contingencies (Note 9)
Stockholders' equity:
Common stock; $0.01 par value per share, 100,000 shares authorized;    21,049 and 20,791 shares issued and outstanding at March 31, 2023    and September 30, 2022, respectively		210			208
Additional paid-in capital		410,803			398,029
Accumulated other comprehensive loss		(1,815	)		(3,724	)
Accumulated deficit		(139,823	)		(73,179	)
Total stockholders' equity		269,375			321,334
Total liabilities and stockholders' equity	$	326,445		$	375,410

The accompanying notes are an integral part of these consolidated financial statements.

3

ENANTA PHARMACEUTICALS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

(in thousands, except per share amounts)

	Three Months Ended March 31,						Six Months Ended March 31,
	2023			2022			2023			2022
Revenue
Royalty revenue	$	17,795		$	18,716		$	40,380		$	46,364
License revenue		—			—			1,000			—
Total revenue		17,795			18,716			41,380			46,364
Operating expenses:
Research and development		43,468			42,087			84,370			90,636
General and administrative		13,778			10,476			26,474			19,984
Total operating expenses		57,246			52,563			110,844			110,620
Loss from operations		(39,451	)		(33,847	)		(69,464	)		(64,256	)
Other income (expense):
Interest and investment income, net		1,837			255			2,830			549
Total other income, net		1,837			255			2,830			549
Loss before income taxes		(37,614	)		(33,592	)		(66,634	)		(63,707	)
Income tax expense		(44	)		—			(10	)		—
Net loss	$	(37,658	)	$	(33,592	)	$	(66,644	)	$	(63,707	)
Net loss per share, basic and diluted	$	(1.79	)	$	(1.63	)	$	(3.19	)	$	(3.11	)
Weighted average common shares outstanding, basic and    diluted		21,035			20,551			20,882			20,473

The accompanying notes are an integral part of these consolidated financial statements.

4

ENANTA PHARMACEUTICALS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(unaudited)

(in thousands)

	Three Months Ended March 31,						Six Months Ended March 31,
	2023			2022			2023			2022
Net loss	$	(37,658	)	$	(33,592	)	$	(66,644	)	$	(63,707	)
Other comprehensive income (loss):
Net unrealized gains (losses) on marketable securities		860			(2,031	)		1,909			(2,655	)
Total other comprehensive income (loss)		860			(2,031	)		1,909			(2,655	)
Comprehensive loss	$	(36,798	)	$	(35,623	)	$	(64,735	)	$	(66,362	)

The accompanying notes are an integral part of these consolidated financial statements.

5

ENANTA PHARMACEUTICALS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(unaudited)

(in thousands)

								Accumulated
					Additional			Other						Total
	Common Stock				Paid-In			Comprehensive			Accumulated			Stockholders'
	Shares		Amount		Capital			Loss			Deficit			Equity
Balances at September 30, 2022		20,791	$	208	$	398,029		$	(3,724	)	$	(73,179	)	$	321,334
Exercise of stock options		56		1		1,125			—			—			1,126
Vesting of restricted stock units, net of    withholding		37		—		(825	)		—			—			(825	)
Stock-based compensation expense		—		—		7,139			—			—			7,139
Other comprehensive income		—		—		—			1,049			—			1,049
Net loss		—		—		—			—			(28,986	)		(28,986	)
Balances at December 31, 2022		20,884		209		405,468			(2,675	)		(102,165	)		300,837
Exercise of stock options		61		1		881			—			—			882
Vesting of restricted stock units, net of    withholding		104		—		(2,909	)		—			—			(2,909	)
Stock-based compensation expense		—		—		7,363			—			—			7,363
Other comprehensive income		—		—		—			860			—			860
Net loss		—		—		—			—			(37,658	)		(37,658	)
Balances at March 31, 2023		21,049	$	210	$	410,803		$	(1,815	)	$	(139,823	)	$	269,375

								Accumulated			Retained
					Additional			Other			Earnings			Total
	Common Stock				Paid-In			Comprehensive			(Accumulated			Stockholders'
	Shares		Amount		Capital			Loss			Deficit)			Equity
Balances at September 30, 2021		20,238	$	202	$	351,033		$	(382	)	$	48,576		$	399,429
Exercise of stock options		248		2		10,407			—			—			10,409
Vesting of restricted stock units, net of    withholding		20		1		(778	)		—			—			(777	)
Stock-based compensation expense		—		—		6,062			—			—			6,062
Other comprehensive loss		—		—		—			(624	)		—			(624	)
Net loss		—		—		—			—			(30,115	)		(30,115	)
Balances at December 31, 2021		20,506		205		366,724			(1,006	)		18,461			384,384
Exercise of stock options		97		1		3,801			—			—			3,802
Vesting of restricted stock units, net of    withholding		15		—		(451	)		—			—			(451	)
Stock-based compensation expense		—		—		6,471			—			—			6,471
Other comprehensive loss		—		—		—			(2,031	)		—			(2,031	)
Net loss		—		—		—			—			(33,592	)		(33,592	)
Balances at March 31, 2022		20,618	$	206	$	376,545		$	(3,037	)	$	(15,131	)	$	358,583

The accompanying notes are an integral part of these consolidated financial statements.

6

ENANTA PHARMACEUTICALS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

(in thousands)

	Six Months Ended March 31,
	2023			2022
Cash flows from operating activities
Net loss	$	(66,644	)	$	(63,707	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation expense		14,502			12,533
Depreciation and amortization expense		1,051			1,602
Premium paid on marketable securities		(42	)		(802	)
Amortization (accretion) of premiums (discounts) on marketable securities		(1,345	)		928
Loss on disposal of property and equipment		7			—
Change in operating assets and liabilities:
Accounts receivable		2,523			4,860
Prepaid expenses and other current assets		(1,039	)		110
Income tax receivable		(56	)		8,507
Operating lease, right-of-use assets		1,891			2,784
Accounts payable		5,963			(3,473	)
Accrued expenses		(6,052	)		(808	)
Operating lease liabilities		(137	)		(2,498	)
Other long-term liabilities		(46	)		318
Net cash used in operating activities		(49,424	)		(39,646	)
Cash flows from investing activities
Purchase of marketable securities		(90,627	)		(124,631	)
Proceeds from maturities and sales of marketable securities		176,500			135,514
Purchase of property and equipment		(5,539	)		(437	)
Net cash provided by investing activities		80,334			10,446
Cash flows from financing activities
Proceeds from exercise of stock options		2,008			14,211
Payments for settlement of share-based awards		(3,734	)		(1,228	)
Net cash provided by (used in) financing activities		(1,726	)		12,983
Net increase (decrease) in cash, cash equivalents and restricted cash		29,184			(16,217	)
Cash, cash equivalents and restricted cash at beginning of period		47,962			57,814
Cash, cash equivalents and restricted cash at end of period	$	77,146