Business Overview and History

Entera Bio Ltd. (NASDAQ:ENTX) is a clinical-stage biopharmaceutical company at the forefront of developing first-in-class oral tablet formats of peptides and protein replacement therapies. With a focus on underserved, chronic medical conditions, Entera's innovative approach aims to significantly shift treatment paradigms and improve patient outcomes.

Entera Bio Ltd. was incorporated on September 30, 2009 and commenced operations on June 1, 2010. The company was founded with the goal of developing first-in-class oral tablet formats of peptides or protein replacement therapies. Entera recognized the potential to significantly shift treatment paradigms by enabling oral administration of protein therapies, which are typically delivered through frequent and painful injections.

From a technical standpoint, oral delivery of therapeutic proteins is challenging due to enzymatic degradation within the gastrointestinal tract and poor absorption into the bloodstream. To address these challenges, Entera leveraged its proprietary N-Tab oral delivery technology, designed to simultaneously stabilize peptides in the GI tract and promote absorption.

In January 2018, Entera incorporated a wholly-owned subsidiary, Entera Bio Inc., in Delaware, United States. This expansion into the U.S. market reflected the company's growing ambitions. Over the years, Entera has made important progress on its clinical pipeline, particularly with its most advanced product candidate, EB613, an oral PTH 1-34 therapy for osteoporosis.

The company has faced various challenges throughout its history. In 2021, Entera encountered delays in its clinical trials and faced difficulties securing additional funding, common issues that many early-stage biotechnology companies experience. However, the company has persevered, leveraging its innovative technology platform and strategic partnerships to advance its programs.

Entera's most advanced product candidate, EB613, is an oral formulation of parathyroid hormone (PTH 1-34), being developed as the first once-daily oral anabolic (bone-building) treatment for post-menopausal women with high-risk osteoporosis. In a placebo-controlled Phase 2 study, EB613 demonstrated statistically significant improvements in key bone turnover biomarkers. Notably, the study also highlighted EB613's potential to enhance both trabecular and cortical bone, a characteristic critical for reducing fracture risk.

Building on this success, Entera is preparing to initiate a pivotal Phase 3 registrational study for EB613, following the expected FDA qualification of a quantitative bone mineral density (BMD) endpoint as a surrogate for fracture risk reduction. This potential landmark regulatory decision could pave the way for EB613 to become the first oral, osteoanabolic treatment option for the millions of women suffering from osteoporosis.

In addition to EB613, Entera's pipeline includes EB612, an oral formulation of PTH 1-34 being developed as the first oral peptide replacement therapy for the treatment of hypoparathyroidism. The company is also collaborating with OPKO Health to advance novel oral formulations of glucagon-like peptide-2 (GLP-2) and oxyntomodulin (OXM) analogs, targeting conditions such as short bowel syndrome and obesity.

Financial Performance and Ratios

Entera's financial performance has been characteristic of a clinical-stage biotech company, with a focus on research and development to advance its pipeline. Over the past three years, the company has reported the following key financial metrics:

Annual Revenue:

• 2020: $365,000

• 2021: $571,000
• 2022: $134,000
• 2023: $0

Annual Net Income:

• 2020: $(11,216,000)
• 2021: $(12,187,000)
• 2022: $(13,071,000)
• 2023: $(8,889,000)

Annual Operating Cash Flow:

• 2020: $(10,557,000)
• 2021: $(9,063,000)
• 2022: $(12,499,000)
• 2023: $(7,310,000)

Annual Free Cash Flow:

• 2020: $(10,610,000)
• 2021: $(9,080,000)
• 2022: $(12,546,000)
• 2023: $(7,327,000)

The company's financial ratios reflect its focus on research and development, with a current ratio of 6.61 and a quick ratio of 6.61 as of the latest reporting period. Entera's debt-to-equity ratio stands at 0.04, indicating a conservative capital structure.

In the third quarter of 2024, Entera reported revenues of $42,000, primarily attributable to a research services agreement. The company's net loss for the quarter was $3.02 million, in line with its ongoing investment in research and development activities. For the nine months ended September 30, 2024, Entera reported $99,000 in revenues, which were attributable to research services provided under a third-party agreement. The company incurred $3.30 million in research and development expenses and $3.96 million in general and administrative expenses during this period, resulting in a net loss of $7.18 million.

Liquidity

As of September 30, 2024, Entera Bio maintains a solid liquidity position, with cash and cash equivalents of $6.92 million. Management believes this will be sufficient to fund operations into the third quarter of 2025, excluding the capital required for the planned Phase 3 study of EB613. This timeline includes capital required for regulatory expenses, optimization related to the EB613 Phase 3 study preparation, ongoing research and development, and the completion of an additional Phase 1 pharmacokinetic study for its new generation platform.

The company does not have any available credit lines or other debt facilities disclosed. Entera's conservative financial approach is reflected in its current ratio and quick ratio, both standing at 6.61.

Recent Developments and Outlook

Entera received positive news regarding the potential qualification of a quantitative BMD endpoint by the FDA for use as a surrogate for fracture risk reduction in osteoporosis drug trials. This development is crucial for the company's lead asset, EB613, as it paves the way for the initiation of a pivotal Phase 3 study.

Furthermore, Entera's collaboration with OPKO Health has yielded promising results, with the partners reporting positive preclinical pharmacokinetic and pharmacodynamic data for their oral GLP-2 and OXM analog programs. In May 2023, Entera published positive results from its oral glucagon-like-peptide 2 (GLP-2) program, demonstrating the potential of its N-Tab technology to enable oral delivery of GLP-2 analogs. In September 2023, Entera entered into a research collaboration with OPKO Biologics to develop oral tablet formulations of OPKO's proprietary long-acting GLP-2 peptide and oxyntomodulin (OXM) analogs using Entera's N-Tab platform. In March 2024, Entera announced positive in vivo pharmacokinetic results from the GLP-2 collaboration, while in September 2024 it reported favorable pharmacokinetic and pharmacodynamic data from the OXM program, showing significant systemic exposure and glucose-lowering effects in preclinical models.

These collaborative efforts underscore Entera's expertise in developing innovative oral peptide therapies.

Product Segments

Entera Bio Ltd. has two main product segments - oral peptide and protein replacement therapies.

Oral PTH Programs: Entera's most advanced product candidate is EB613, an oral parathyroid hormone (PTH) 1-34 tablet. EB613 is being developed as the first oral, osteoanabolic bone building once-daily tablet treatment for post-menopausal women with low bone mineral density (BMD) and high-risk osteoporosis. In a placebo-controlled, dose ranging Phase 2 study, EB613 met its primary pharmacodynamic-bone turnover biomarker and secondary endpoints of improved BMD. Entera has received FDA concurrence that a 2-year, placebo-controlled Phase 3 registrational study with Total Hip BMD as the primary endpoint could support a new drug application for EB613. Entera believes EB613 stands as the product candidate poised to potentially leverage the ASBMR-SABRE BMD endpoint qualification expected from the FDA.

Entera's other oral PTH product candidate is EB612, which is being developed as the first oral PTH1-34 tablet peptide replacement therapy for hypoparathyroidism. Entera is currently testing new generations of its N-Tab technology with the native PTH1-34 peptide to assess the effectiveness of once or twice daily dosing regimens, as well as collaborating with a third party on another peptide in this field.

Oral GLP-2 and Oral GLP-1/Glucagon Programs in Collaboration with OPKO: Entera is collaborating with OPKO Health to advance novel oral formulations of glucagon-like peptide-2 (GLP-2) and oxyntomodulin (OXM) analogs, targeting conditions such as short bowel syndrome and obesity.

Risks and Challenges

As a clinical-stage biotechnology company, Entera faces several risks and challenges common to the industry:

1. Clinical Development Risks: The successful development of Entera's product candidates, including EB613 and EB612, is subject to the inherent uncertainties and risks associated with clinical trials, such as enrollment challenges, regulatory hurdles, and the potential for adverse events.

2. Regulatory Approval Uncertainty: Obtaining regulatory approval for novel oral peptide therapies is a complex and time-consuming process. Delays or failures in the regulatory approval process could significantly impact Entera's ability to commercialize its product candidates.

3. Competitive Landscape: Entera's oral peptide and protein replacement therapies face competition from injectable and other alternative treatment options, which may limit their market potential even if approved.

4. Funding Requirements: As a clinical-stage company, Entera will require substantial additional funding to advance its pipeline and support ongoing operations. Failure to secure such funding could jeopardize the company's ability to continue as a going concern.

5. Geopolitical and Economic Risks: Entera's operations, particularly its research and development activities, are based in Israel, which has experienced periods of political and economic instability. Escalating regional conflicts and economic volatility could disrupt the company's business.

Despite these challenges, Entera's innovative approach, dedicated team, and promising pipeline continue to position the company as a leader in the development of oral peptide and protein replacement therapies. The potential regulatory milestone for EB613 and the ongoing collaborations represent significant catalysts that could drive long-term value for Entera's shareholders.

Conclusion

Entera Bio is at the forefront of revolutionizing the delivery of peptide-based therapies, offering the promise of improved patient experiences and outcomes. With a robust pipeline, a differentiated technology platform, and a seasoned management team, the company is well-positioned to address significant unmet medical needs in fields like osteoporosis, hypoparathyroidism, and metabolic disorders. As Entera continues to advance its clinical programs and strategic collaborations, investors should closely monitor the company's progress and the potential regulatory milestones that could unlock substantial value.

The company's focus on developing oral formulations of traditionally injectable therapies represents a significant market opportunity. While Entera has not yet generated substantial revenue from product sales, its innovative approach and strategic partnerships position it well for future growth. The company's conservative financial management, as evidenced by its strong liquidity position and low debt-to-equity ratio, provides a solid foundation as it progresses towards key clinical and regulatory milestones.

As Entera Bio advances its pipeline, particularly EB613 for osteoporosis and its collaborative programs with OPKO Health, the company stands at the cusp of potentially transformative developments in the field of oral peptide therapies. The success of these programs could not only generate significant value for shareholders but also markedly improve the quality of life for patients suffering from chronic conditions that currently require frequent injections or complex treatment regimens.