What happened

Shares of Enanta Pharmaceuticals (ENTA -6.10%) were down more than 9% as of 11:45 a.m. on Tuesday after the clinical-stage biotech released fiscal third-quarter earnings on Tuesday. The stock is down more than 62% so far this year.

So what

Enanta focuses on finding small-molecule drugs to treat viral infections and liver diseases. The company's quarterly revenue, all from royalties regarding sales of Mavyret, a hepatitis C therapy sold by AbbVie, fell 3% year over year to $18.9 million. Enanta reported a net loss of $39.1 million, or an earnings per share (EPS) loss of $1.86, compared to a loss of $31.7 million for an EPS loss of $1.53 in the same quarter a year ago.

The company cited increased clinical trial costs for the greater net loss. It said it had $392.5 million in cash, enough to fund operations into midyear in fiscal 2027.

In response to the earnings report, Jefferies downgraded its position on the company from buy to hold, and JMP Securities downgraded its price target for Enanta from $65 to $42.

Now what

The drop was a bit steep considering that the company, as a clinical-stage biotech, isn't expected to be profitable yet. The company had some positive phase 1 trial news regarding its respiratory syncytial virus (RSV) therapy EDP-323.

The company said encouraging safety and tolerability results for the drug means Enanta will start a phase 2 trial to see if it is effective as a monotherapy or combination therapy as an antiviral to treat RSV.

Enanta has a fairly robust pipeline of eight programs. Besides EDP-323, the company said that EDP-235, its oral protease inhibitor designed as a COVID antiviral, showed an improvement in 14 symptoms compared to a placebo in a recently completed phase 2 trial.