Sep. 28, 2020
September 28, 2020 Ms. Vanessa A. Countryman Secretary Securities and Exchange Commission 100 F Street, N.E. Washington, D.C. 20549-1090 rule-comments@sec.gov Re: Reporting Threshold for Institutional Investment Managers, Release No. 34-89290; File No. S7-08-20 Dear Ms. Countryman: We hereby respectfully submit our comments on the Commission’s proposed amendments to the Form 13F reporting rules for institutional investment managers. Enanta Pharmaceuticals, Inc. (NASDAQ: ENTA) is small/mid-cap biotechnology company whose mission is to discover and develop lifesaving treatments for viral infections and liver diseases with large patient populations and no current treatment options. We have a track record of success in drug development. Glecaprevir, a protease inhibitor discovered by Enanta, is sold by AbbVie in numerous countries as part of its leading treatment for chronic hepatitis C infection under the tradenames MAVYRET® (U.S.) and MAVIRET® (ex-U.S.) (glecaprevir/pibrentasvir). After being treated with MAVYRET, close to one million people who had hepatitis C are now cured. We are also working on cures for hepatitis B, respiratory syncytial virus, human metapneumovirus and SARS-CoV-2, as well as the liver disease non-alcoholic steatohepatitis, more commonly known as NASH. As a publicly traded company, we rely on 13F filings to aid in our shareholder engagement efforts – as it is the only available accurate source of institutional holdings. We believe that the proposed amendments would reduce transparency regarding these holdings, significantly undermining our investor engagement. Small and mid-cap companies such as Enanta rely on our shareholders to be engaged in understanding our business so that they will support and drive forward our potentially lifesaving products for patients in need. The proposed rule might also encourage the proliferation of smaller funds because they would be able to hide under the much higher disclosure threshold now proposed. Based on reporting data as of June 30, 2020, there were 225 institutional funds holding 18,431,933 shares of Enanta, or 91% percent of our total shares outstanding. If the proposal were enacted, we would lose visibility on approximately 25% of our institutional shareholders, including 20% of our top 20 shareholders. Moreover, some of the smaller funds that would fall below the disclosure threshold have the capacity to take disproportionately large positions. For example, one of our top ten holders has built a highly concentrated portfolio. Though they report only about $350M in AUM, this is distributed across a small number of companies, and they report a nearly $40M stake in Enanta (3.8% of our outstanding stock). Understanding how this particular shareholder is behaving is of great importance to us, as their trading behavior has the potential to have outsized impact on our stock price. Without a 13F filing, we would not even know who they are, much less how much stock they own and have traded. Beyond just our existing shareholders, we believe that this proposal would seriously jeopardize our shareholder engagement efforts by excluding more than 5,000 investment managers – or nearly 90% of all 13F filers – from disclosure. Like many of our peer companies, we use 13F data to conduct investment targeting each quarter by analyzing which investment managers own shares in peer companies but don’t yet own Enanta, as well as to check the 13F filings to assess the success of our past outreach efforts. Having information on the majority of filers – including the 5,000+ investment managers that would be excluded under the Commission’s current proposal -- is critical to our ability to identify a wide swath of potential new holders, and we worry that we would not have access to key insights that could inform both our outreach and investor engagement strategies. Additionally, the Commission’s proposal would negatively impact our ability to assess the success of our past outreach efforts. The long-term impact on the public markets could be detrimental to the U.S., as this proposal will deter private companies from going public, or prompt them to list on overseas exchanges that provide greater transparency around reporting disclosures. Further, this proposal would significantly impact the biotechnology industry. By discouraging biotech companies from being public, it could impact the number of companies with resources to discover and develop lifesaving treatments. We respectfully ask that the Commission step back to reconsider the implications of this proposed rule, and instead refocus its efforts on the modernization of the 13F disclosure regime to improve transparency. The need for effective shareholder engagement is clearer now than ever, and the proposed amendments to Form 13F would be a tremendous mistake at a time when shareholders generally are increasingly calling for greater transparency. As such, we urge the Commission to withdraw this proposal. Sincerely, Jay R. Luly, Ph.D. President, Chief Executive Officer and Director Enanta Pharmaceuticals, Inc. Jennifer Viera Senior Director, Investor Relations and Corporate Communications ENANTA Pharmaceuticals, Inc. 500 Arsenal Street Watertown, MA 02472