The next-generation hepatitis C drug race is rapidly coming to a head with Gilead Sciences' (NASDAQ:GILD) regulatory filing of its all-oral, once-daily combo pill of Sovaldi plus ledipasvir and the anticipated filing of a New Drug Application for AbbVie (NYSE:ABBV) and Enanta Pharmaceuticals(NASDAQ:ENTA) competing hepatitis C regimen later this year. With these so-called "terminator" hepatitis C therapies likely to compete in the near future, investors have been focusing on whether AbbVie or Gilead offers the more compelling risk-to-reward ratio going forward. As a result, Enanta Pharmaceuticals has sort of gotten lost in the shadows of these pharma giants, evidenced by the company's mere $600 million market cap. That said, I believe there are three compelling reasons why Enanta Pharmaceuticals could offer the best investing vehicle to gain exposure to these game-changing hepatitis C drugs. 

Reason No. 1
Per Enanta's recent 10-Q, AbbVie plans to file an NDA for the duo's triple-therapy hepatitis C regimen in the second quarter of this year, with the goal of launching the drug before year's end. The filing will be based on the results of six late-stage studies showing that this therapy is essentially a functional cure for some forms of hepatitis C, even among patients that previously failed to respond to other therapies. What's important to bear in mind from an investing standpoint is the agreement between AbbVie and Enanta. Going forward, Enanta is owed up to $195 million in milestone payments, many of which could be triggered by a successful NDA filing. That's a nice chunk of change for a company sporting a market cap under $700 million. Even so, Enanta is also eligible for royalty payments that range from low double digits up to 20% of sales. In sum, Enanta will be earning a fairly significant amount of revenue through this agreement soon, although the exact numbers will only be clear later as this process unfolds.

Reason No. 2
AbbVie is responsible for bearing the significant costs of the regulatory filing and commercialization of the therapy. One of the most disappointing aspects of investing in clinical-stage biotechs is that investor enthusiasm following a successful regulatory filing can quickly be rendered moot by the harsh realities of commercializing a drug. Put simply, most development biotechs lack the significant resources needed to launch new drugs without substantial dilution to shareholders. Enanta shareholders can rest easy, however, because AbbVie is solely responsible for this portion of the therapy's life cycle. Enanta can thus focus its resources on the development of other compounds in its pipeline, creating further value for shareholders.

Reason No. 3
I expect the competition between AbbVie and Gilead in the hepatitis C space to be fierce. Each company has invested tremendous resources into their respective drugs and the hepatitis C market may not be sustainable over the long term. Specifically, the chronic hepatitis C market has naturally been declining in the U.S. for decades, and these new functional cures could hasten the disease's decline. AbbVie, Gilead, and other drugmakers will therefore likely be forced to rely more heavily upon ex-U.S. markets for hepatitis C sales, where prices are often dramatically lower. Gilead has reportedly already discounted Sovaldi by 99% in Egypt due to the prevailing socioeconomic problems in the country, combined with its world-leading rate of hepatitis C infections.

Again, Enanta does not have to worry about the complexities of the hepatitis C market for the most part, as the agreement with AbbVie entitles it to substantial up-front payments. And by the time the hepatitis C market has started to wane in the U.S., Enanta will probably have shifted its focus to other experimental compounds such as its antibiotics for MRSA. 

Foolish wrap-up
There are always two sides to an investing thesis, namely risk and reward. Although AbbVie and Gilead are widely expected to see blockbuster sales for their respective hepatitis C drugs, Enanta looks like it may be a better investing vehicle than either company because it faces fewer downside risks due to its agreement with AbbVie. Moreover, the milestone and royalty payments expected under the agreement are considerable in light of Enanta's current market cap. You can't exactly say the same for the projected sales of either AbbVie's or Gilead's drugs compared to their market cap. So, you may want to dig deeper into Enanta heading into the regulatory filing of its experimental hepatitis C therapy.