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Edited Transcript of ENTA earnings conference call or presentation 6-Aug-19 8:30pm GMT

Q3 2019 Enanta Pharmaceuticals Inc Earnings Call

WATERTOWN Aug 19, 2019 (Thomson StreetEvents) -- Edited Transcript of Enanta Pharmaceuticals Inc earnings conference call or presentation Tuesday, August 6, 2019 at 8:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Carol Miceli

Enanta Pharmaceuticals, Inc. - Director of IR

* Jay R. Luly

Enanta Pharmaceuticals, Inc. - President, CEO & Director

* Paul J. Mellett

Enanta Pharmaceuticals, Inc. - Senior VP of Finance & Administration and CFO

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Conference Call Participants

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* Brian Corey Abrahams

RBC Capital Markets, LLC, Research Division - Senior Analyst

* Jay Olson

Oppenheimer & Co. Inc., Research Division - Executive Director & Senior Analyst

* Jialin Xiao

Wolfe Research, LLC - Associate

* Jonathan Patrick Wolleben

JMP Securities LLC, Research Division - Associate

* Patrick Ralph Trucchio

Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst

* Turner Andrew Kufe

JP Morgan Chase & Co, Research Division - Research Analyst

* Yasmeen Rahimi

Roth Capital Partners, LLC, Research Division - MD, Senior Research Analyst & Co-Head of Biotechnology Research

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Presentation

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Operator [1]

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Good afternoon. My name is Catherine, and I will be your conference operator today. At this time, I would like to welcome everyone to the Enanta Pharmaceuticals third quarter financial results conference call. (Operator Instructions) Please note that today's conference is being recorded.

I'd now like to turn the call over to your host, Ms. Carol Miceli, Director of Investor Relations. Ma'am, you may begin your conference.

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Carol Miceli, Enanta Pharmaceuticals, Inc. - Director of IR [2]

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Thank you, Catherine, and thanks for joining us this afternoon. The news release with our financial results for the recent quarter was issued this afternoon and is available on our website. On the call today is Dr. Jay Luly, President and CEO; Paul Mellett, our Chief Financial Officer; and other members of Enanta's senior management team.

Before we begin with our formal remarks, we want to remind you that we will be making forward-looking statements, which may include our plans and expectations with respect to our product candidates and financial projections, all of which involve certain assumptions and risks beyond our control that could cause our actual developments and results to differ materially from those statements. A description of these risks is in our most recent Form 10-Q and other periodic reports filed with the SEC. Enanta does not undertake any obligation to update any forward-looking statements made during this call.

I'd now like to turn the call over to Dr. Jay Luly, President and CEO.

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Jay R. Luly, Enanta Pharmaceuticals, Inc. - President, CEO & Director [3]

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Thank you, Carol. Good afternoon, everyone, and thank you for joining us today. At the end of Enanta's fiscal third quarter, our clinical development programs to treat viral infections and liver diseases had progressed well. Our pipeline is maturing, and we have clinical studies ongoing with 3 different compounds, all of which have Fast Track designation. Our most recent achievements were the initiation of a Phase I study of EDP-514, our lead candidate for HBV, and the announcement of highly statistically significant top line data from our RSV program.

In addition, we and AbbVie, our HCV partner, recently announced that the European Commission has granted marketing authorization to AbbVie for MAVIRET to shorten the once daily treatment duration from 12 to 8 weeks for treatment naive chronic HCV patients with compensated psoriasis and genotype 1, 2, 4, 5 or 6 infection. I'll begin my review of our clinical development programs with our most advanced program, EDP-938, for respiratory syncytial virus known as RSV. In June, we announced

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Successful completion of this trial was a very exciting milestone for Enanta and yielded some of the most promising data from an RSV challenge study. Specifically, data from this study demonstrated that EDP-938 achieved a highly statistically significant reduction, both in viral load and in resolution of clinical symptoms, compared to placebo. And remember that highly statistically significant means that the P value is less than 0.001. The data on the viral load that we previously reported, namely the number of copies of viral RNA from quantitive RT-PCR is consistent with additional data we now have from cell-based infectivity assays using live virus.

The cell-based data show an approximately 80% reduction in live RSV virus across subjects in both treatment groups compared to the placebo group. This result was also highly statistically significant. In addition, EDP-938 demonstrated good pharmacokinetics. Mean trough levels of drug, namely the levels of drug in plasma just before the next dose, were maintained at approximately 20x to 40x above the in vitro EC90 or RSV infected human cells.

This means that the drug levels achieved in humans were dramatically higher than the amount of drug needed to reduce 90% of the viral RNA in RSV infected cells. Overall, EDP-938 was generally well tolerated and demonstrated a favorable safety profile that was comparable to placebo over 5 days of dosing through day 28 of follow up.

There were no serious adverse events and no discontinuations of study drug. We expect to present additional details of the challenge study in an upcoming conference. In summary, the challenge study has shown that we can safely deliver high trough blood levels and get the drug to the target site of infection in concentrations that effectively halt the progression of infection.

Also, over 250 subjects have now been exposed to EDP-938 for up to 7 days, and the drug has generally been very well tolerated, has demonstrated favorable safety profile similar to placebo. We are very pleased with this safety profile.

Challenge study's excellent safety and efficacy data give us confidence to advance EDP-938 into further trials, particularly since we have known for some time that EDP-938 is differentiated from fusion inhibitors currently in development because EDP-938 directly targets the viral replication process of RSV and has demonstrated a high barrier to resistance in vitro.

We now aim to show that EDP-938 can demonstrate efficacy in adult outpatients with community-acquired RSV infection. Our goal is to initiate our first Phase IIb study before the end of calendar 2019, and we then anticipate conducting additional studies in pediatric patients and other at-risk populations.

Let's move now to our most -- next most advanced program, which is for NASH. EDP-305, our lead FXR agonist is being investigated in 2 ongoing Phase II studies, 1 for NASH and 1 for PBC. ARGON-1, our NASH study, is a 12-week randomized double-blind placebo-controlled study designed to evaluate the safety, tolerability, pharmacokinetics and efficacy of EDP-305.

Enrollment is complete in the NASH study, and we anticipate sharing top line data by the end of this quarter. Directionally, we want to see positive improvements in ALT, C4 and FGF19 among other criteria. Assuming the aggregate data supported, we plan to initiate a Phase IIb study in the first quarter of calendar 2020 and look to partner the asset prior to Phase III.

This will allow us time both to gain more data on EDP-305 and to explore which combination assets and partners would be preferred. We continue to believe that FXR is one of the most promising mechanisms in development today for NASH. In addition to EDP-305, we've made good progress with our follow-on program from which we expect to announce a development candidate later this year. Regarding the INTREPID study of EDP-305 in PBC, we continue to enroll patients and will provide further updates as the study proceeds. Beyond FXR, we also continue our research into other mechanisms for NASH.

Let's shift to HBV. We recently initiated a Phase Ia, Ib clinical study with our novel Class II HBV Core Inhibitor, EDP-514. Part 1 of this randomized double-blind placebo-controlled study is designed to evaluate the safety, tolerability and pharmacokinetics of single ascending doses and multiple ascending doses of EDP-514 in healthy subjects, while Part 2 will explore the antiviral activity of EDP-514 in NUC-suppressed patients with chronic HBV infection.

The study plan is to enroll approximately 98 subjects and to evaluate up to 6 dose cohorts with EDP-514 administered orally once daily. We plan to share data from the healthy volunteer portion and initiate Part 2 of this study, dosing NUC-suppressed HBV patients in the first quarter of calendar 2020. In addition, we are planning to initiate another Phase Ib study in HBV patients, this time in viremic chronic hepatitis B patients not currently on treatment.

EDP-514 was selected from our lead series of HBV compounds that are characterized by potent antiviral activity, and our promising preclinical data support our excitement for this mechanism. Preclinical data demonstrates that EDP-514 is a potent inhibitor of the HBV replication and prevents the de novo formation of new cccDNA in primary human hepatocytes when given early during HBV infection.

In vitro data also show that EDP-514 is pangenotypic and that combinations of EDP-514 with nucleoside reverse transcriptase inhibitors, which are the current antiviral therapies for HBV, and with a Class I Core Inhibitor result in additive to synergistic antiviral effects. In vivo models of EDP-514 demonstrate excellent efficacy with greater than 4 log viral load reduction in HBV-infected PXB Mice. Based on our preclinical data, we believe EDP-514 may have best-in-class potential for the core inhibitor mechanism.

I'd like to conclude my remarks by reminding you that we look forward to communicating our progress on all our clinical programs starting with ARGON-1 Phase II NASH data by the end of this quarter and then additional updates on our other programs later this year.

I'll stop here and turn the call over to Paul to discuss our financials for the quarter. Paul?

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Paul J. Mellett, Enanta Pharmaceuticals, Inc. - Senior VP of Finance & Administration and CFO [4]

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Thank you, Jay. I'd like to remind everyone that Enanta reports on September 30 fiscal year schedule. Today, we are reporting results for our third fiscal quarter ended June 30, 2019. For the quarter, total revenue was $44.4 million and consisted entirely of royalty revenue earned on AbbVie's Global HCV net sales of $784 million. This compares to total revenue of $57.3 million for the same period in 2018.

The decrease in royalty revenue is a result of AbbVie's lower net sales, mainly driven by lower treated patient volumes in select international markets. Royalty revenue was calculated on 50% of MAVIRET sales at a blended royalty rate of 12% and approximately 30% of VIEKIRA sales at a royalty rate of 10%, after adjustments for certain contractual discounts and rebates, which historically have been approximately 1.5% of AbbVie's total reported HCV sales.

During our third fiscal quarter, our blended royalty rates for MAVIRET encompasses our first 3 royalty tiers of 10%, 12% and 14%. I will remind everyone that our royalties, which are calculated separately for each product, are determined on the calendar year basis through a tier schedule and rising royalty rates. The royalty schedule restarted at our lowest royalty rate of 10% in our quarter ending March 31. This means that the quarter ending March 31 will be at the lowest royalty rate of 10%, and our royalties for the quarter ending December 31 will have the highest royalty rates in our fiscal year. You can review our royalty tier schedule in our 2018 Form 10-K.

Moving on to our expenses. For the 3 months ended June 30, 2019, research and development expenses totaled $34.5 million compared to $28.5 million for the same period in 2018. The increase was primarily due to greater clinical costs associated with the progression of our wholly owned clinical programs in RSV, NASH, PBC and HBV, including our 3 Phase II clinical trials.

General and administrative expense for the quarter was $6.2 million, which was consistent with the comparable quarter in 2018. Enanta recorded an income tax benefit of $0.9 million for the 3 months ended June 30, 2019, compared to income tax expense of $3.7 million for the same period in 2018. The income tax benefit for the quarter was driven by a federal tax benefit associated with foreign-derived royalty income from our AbbVie collaboration agreement.

Enanta's effective tax rate for the 9 months ended June 30, 2019, was less than [1% to 2%] compared to approximately 22% for the same period in 2018. We expect our effective tax rate for fiscal 2019 to be approximately 1%, which reflects the impact of the foreign-derived royalty income tax benefit, R&D tax credits as well as tax benefits from stock award activity. Net income for the 3 months ended June 30, 2019, was $7 million or $0.33 per diluted common share compared to the net income of $20.3 million or $0.97 per diluted common share for the corresponding period in 2018.

Enanta ended the quarter with approximately $389 million in cash and marketable securities, an increase of approximately $64 million from our 2018 fiscal year-end balance of $325 million. We expect that these cash resources as well as our continuing royalty revenue will be sufficient to meet our anticipated cash requirements for the foreseeable future. Further financial details are available in our press release and will be available on our Form 10-Q for the quarter when filed.

I'd now like to turn the call back to the operator and open up the lines for questions. Operator?

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Questions and Answers

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Operator [1]

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(Operator Instructions) Your first question comes from the line of Brian Abrahams with RBC.

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Brian Corey Abrahams, RBC Capital Markets, LLC, Research Division - Senior Analyst [2]

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I guess first question on 938. It sounds like you've been able to do some additional analysis on the data from the positive challenge study. I'm wondering if you have -- were able to get any data with respect to resistance variance as well as the efficacy of the agent relative to when post infection it was given, and then I have a follow-up.

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Jay R. Luly, Enanta Pharmaceuticals, Inc. - President, CEO & Director [3]

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So no, we don't have data on resistance variance. We haven't identified really any patients with them. So it's challenging. I think one of the things to point out is -- with it -- 938 has an incredibly high barrier to resistance, and we've been -- even in laboratory settings where we tried to force the conditions to allow it, we haven't been able to really do that. So we've not identified any patient with a breakthrough yet.

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Brian Corey Abrahams, RBC Capital Markets, LLC, Research Division - Senior Analyst [4]

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Okay. That's really helpful. And then you mentioned in addition to the community-acquired study that's about to start, down the line you'd be also looking at potential pediatric study. And I was just curious what if any additional work would need to be done with respect to dose mapping, formulation, [tox], et cetera, before moving into the pediatric population? And what might that study look like?

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Jay R. Luly, Enanta Pharmaceuticals, Inc. - President, CEO & Director [5]

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So there's always preparatory work for ped studies. I mean you obviously need to switch up your formulation. You need to do a lot of, basically, DMPK work, modeling. You need to -- basically, a lot of it really results from modeling. The bioequivalence doses that you look at in adults, you've got to translate into children and it's going to depend on what age group the children are in too because some of them have still developing metabolic hardware, if you will. So there's still a few extra studies that you want to try to understand in advance to that. So all that will be going on in parallel with our adult studies which, from a timing perspective, is what we want to do anyway. We do want to get as much information as we can in adult population before we go into repeat study so that you can go into it most intelligently. So yes, I think that's where we're at.

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Operator [6]

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Your next question comes from the line of Yasmeen Rahimi with Roth Capital Partners.

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Yasmeen Rahimi, Roth Capital Partners, LLC, Research Division - MD, Senior Research Analyst & Co-Head of Biotechnology Research [7]

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Two questions for you. Question 1 is on RSV and question 2 is on NASH. So can you comment on, sort of, what led to your tremendous success in the challenge study? Your infection rates was one of the highest. And then second, that leads into what elements of the Phase IIb challenge study require really thoughtfulness? And how do you plan tackling it? And then I have a follow-up on NASH.

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Jay R. Luly, Enanta Pharmaceuticals, Inc. - President, CEO & Director [8]

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Well, you know -- we did have a very high rate of infection in this study. I mean that always helps the number 1 just because you can get more data on more patients more quickly. I think what the lesson learned and it's -- I think it is probably intuitive from even before we did the study that in translation to Phase IIb, we need to identify what is the allowable dosing window, and we're going to have to be very thoughtful about how we approach that. Just basically, really trying to understand for this virus and for this mechanism against this virus, what is the acceptable dosing window. So we'll look at that over a period -- a time window, breaking it down into parts so that we understand what the limits are.

Hopefully, the broader the window that's identified, the better but, for example, with flu, you really have like a 48-hour window in which you have to identify the patients and get drug on board. So will it be flu-like, will it be more forgiving than flu, we don't know. That's -- no one knows the answer to this question other than intuitively, the earlier the treat -- that you treat the better the likelihood of more impactful outcomes. So it's really every step of the way that -- from our Phase IIb studies that we're going to be looking at -- we're going to be thinking about looking at optimizing that dosing window opportunity. And we'll learn more about the drug as we go in terms of what that viable window is for -- again, for this mechanism against this virus.

Is that helpful?

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Yasmeen Rahimi, Roth Capital Partners, LLC, Research Division - MD, Senior Research Analyst & Co-Head of Biotechnology Research [9]

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Yes, very helpful. And then the question on NASH is, I mean, we're very eagerly awaiting the ARGON-1 data. But then you continuously remind us that you're going to advance a follow-on FXR clinical candidate, which sort of puts fear in investors, which makes one conclude that maybe 305 is not optimized, and therefore there's a need for a follow on. So can you explain to me, while we're waiting for the data, why there is such a need for a 2.0 version?

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Jay R. Luly, Enanta Pharmaceuticals, Inc. - President, CEO & Director [10]

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So again, just to back up a little bit, we at Enanta don't work on any program without having follow-on molecules and backups. Everything we do has done that. It's very common in small molecule drug discovery. It's a page right out of the sort of standard playbook. So there's nothing mysterious about this program or any of our other programs. We do this as a matter of course on everything we do.

You may remember in the hep C protease days, we had lots of molecules, thousands of them. We picked paritaprevir as the first candidate to move forward, but that was going along in clinical trials. You just have a lot of, what should I say, just quiet periods where you're waiting for data.

In the meantime, it's just prudent to have ever continuing activities in the mechanism that you feel strongly about, just -- it's just pipeline management and it also affords the opportunity that even if you have a good molecule at the outset, you may still be able to come up with an even better one. So that's the -- I think that's a worthy ambition to have, and it's just prudent practice, and it's just the way Enanta does its business, which isn't, quite honestly, that different than many other companies that do hardcore small molecule drug discovery and development.

So all that said, we look forward to ARGON-1 data at the end of this quarter. We have been working on our follow-on program now for a while. We've been just patiently going through lots of potential molecules and looking for -- within the contenders as a follow on, just basically we have the beauty contest, sort of, wrapping up. And we always -- it's safe to assume that no matter what we do, we're thinking about optimizing potency, selectivity, safety, anything that we can try to tweak we do. And so stay tuned on that front, but I think that we've made some very good progress on that program, and we'll have more to say later in the year.

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Yasmeen Rahimi, Roth Capital Partners, LLC, Research Division - MD, Senior Research Analyst & Co-Head of Biotechnology Research [11]

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And are you able to comment at least on what the follow-on chemistry is different versus 305 at this point?

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Jay R. Luly, Enanta Pharmaceuticals, Inc. - President, CEO & Director [12]

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Yes. We'll roll out a lot of data at the appropriate time. But again, just make the assumption that it's all about efficacy and safety and DMPK considerations and other kinds of things, bio distribution. There's lots of things you can study here, but really focus on what you would look for in a follow-on molecule. So anyway, that's about what I can say right now. We'll have quite a lot more to say later in the year.

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Operator [13]

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Your next question comes from the line of Akash Tewari with Wolfe Research.

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Jialin Xiao, Wolfe Research, LLC - Associate [14]

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This is Joyce Xiao on for Akash. My first question is, what's the cost of the potential Phase IIb for NASH? And my follow-up question will be, what are you expecting on AST, ALT reduction, LDL increase, MRI-PDFF and pruritus rate at week 12 for your compound EDP-305?

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Jay R. Luly, Enanta Pharmaceuticals, Inc. - President, CEO & Director [15]

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Yes. So if I had all the data, I would talk about it. But let me answer your first question first. So the cost of the Phase IIb, we're still in the process of mapping out the protocol, what that looks like in terms of powering the patient numbers, duration, et cetera, et cetera. So until we really finalized all of those inputs, it's hard for me to give you a dollar projection on that. But it wouldn't be dissimilar from what other people's similarly structured Phase IIb's would be.

Number two, with regards to all of the readouts from our trial, there -- again, there are a lot of things that we're looking at in this trial. We'll look at ALT, of course. We look at C4 or FGF19 with MRI-PDFF as -- we looked at MRI-PDFF predominantly as an inclusion criteria as we wanted to -- since we were bringing patients into the study phenotypically rather than necessarily having a biopsy-proven NASH, we wanted to make sure that the patients were (inaudible). So we did get baseline MRI-PDFF and, of course, we'll get that on subjects at end of study as well, so we'll have that kind of data and so on, other biochemical markers will have elastography, et cetera. But the punch line is, what you want to get from a study like this, this is a 12-week study.

I will remind you and others that this is a 12-week non-biopsy study that's aiming to do a few things. We aim to learn what is the safety profile in NASH patients. We want to confirm activity with our drug in NASH patients, and also importantly, we want to affirm what our dose selection is for Phase IIb. So from this, we're going to get directionality from a number of different readouts among the ones that you just mentioned.

But for FXRs at 12 for 12-week endpoints, there is just not a ton of comparable data out there. Even for ALT, on the 12-week time point. I think FLINT had -- if you're looking at placebo corrected percent change from baseline on ALT, FLINT had about a 20% reduction and Intercept's Phase III study REGENERATE had about a 15% to 18% reduction, and really the only other comparison out there on 12 weeks is Novartis' molecule that's advancing at about 6% to 9% reduction.

So that's the sum total of 12-week ALT data that you can look at. You look for a 12-week MRI-PDFF data, you find even less. I think Novartis was around 6% to 7% depending upon the dose, and Gilead was around 8% to 15% depending upon the dose.

So as I mentioned many times before, MRI-PDFF is not predominant, probably readout for an FXR, that's not the calling card necessarily of the mechanism, particularly at a 12-week time point.

So people just need to think about it in the context of what other people have seen in 12-week studies. We're going to look at that. Again, main goal here is to look at the number of different readouts that show proper safety, good target engagement and confirmation of what our Phase IIb dose should be progressing at the next step. So when we have data, we'll share it. And as we said in the prepared remarks and what we've said for many quarters now is we expect to have that at the end of this quarter.

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Operator [16]

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Your next question comes from the line of Jay Olson with Oppenheimer.

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Jay Olson, Oppenheimer & Co. Inc., Research Division - Executive Director & Senior Analyst [17]

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I just wanted to follow-up on EDP-305. There was a recent NASH Phase II study that read out in our competitor study and it missed a primary endpoint of MRI-PDFF. But it did hit on important secondary endpoints like ALT reduction. And you touched on this a little bit, but I was wondering if that study had any impact on your plans for EDP-305 and the designing of Phase IIb study that you plan to initiate in the third quarter, especially with regards to the use of MRI-PDFF as an endpoint?

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Jay R. Luly, Enanta Pharmaceuticals, Inc. - President, CEO & Director [18]

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Yes. I mean we -- again, I think you're referring to a PPAR mechanism; alpha, delta. We -- they set that as their primary. They didn't see that activity. They did see -- I think they had some ALT reductions from their study. But as I just mentioned, fast reduction isn't necessarily, especially in short time periods, it's not the hallmark of an FXR. So we're going to be looking. Our next study is going to be histology endpoint study along the lines of, say for example, what a FLINT-type study was. So we would be very cognizant of what everybody else is doing, particularly focusing on efficacy readouts, they are germane for the mechanism that you're studying, in this case FXR.

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Jay Olson, Oppenheimer & Co. Inc., Research Division - Executive Director & Senior Analyst [19]

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Okay. Great. Thanks for that color. And then I was wondering if you could provide any comments on the rationale behind your decision to partner EDP-305 prior to initiating Phase III?

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Jay R. Luly, Enanta Pharmaceuticals, Inc. - President, CEO & Director [20]

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Yes. We've spoken about that a little bit in the past. Again, I think that we've got a lot of things going on [other than the NASH]. We've got NASH, we've got hep B, we've got RSV. And if I line all those up at one end of the spectrum, NASH is going to be likely in the end. It's going to be a combination therapy. The Phase IIIs are going to be big and expensive and global. And importantly, the commercial enterprise that takes on this new field, this new indication to the marketplace, I think needs -- requires a certain degree of sophistication and strength. And this is where -- we've seen it before.

I mean I would put the same thing if we were looking at hep C today ourselves again. We're similarly situated. There's no question that having an AbbVie alongside us when they ran 12 or 15 Phase IIIs, I'm not suggesting that's what would be involved here, but with a huge Phase III program, it was global, it required sophisticated commercial launch strategy. There's no way that, I think, a smaller company like Enanta could maximize the asset like we could if we were teamed up with somebody who was powerful at that late stage. And not the least too is it's a very expensive undertaking. We know that would be the case. So I think we would aim to do that. The other part of this, there's strategic part of partnering too because, as I mentioned, there's combination therapy likelihood here.

And if you're thinking to the future about where the wind could ultimately be, perhaps, with other combination ingredients that we don't have today, you could team up in a way that would have strategic value by partner A bringing one asset. Partner B bringing another asset and going after it that way. So I think you just increase your overall chances of success and it's indication from many different perspectives. Like I said, it could always change. But for now, we've been -- that's the way we've been thinking and the way we've been thinking about it for a number of quarters. I would contrast that with RSV where we're hopeful that given our mechanism, given the fact that we've got a super high barrier to resistance, we may not need to combine up with other antivirals from an efficacy perspective or to prevent resistance. We may be able to proceed with a single agent into a little bit more of a defined area of RSV infection, something that's very easily and readily diagnosed.

And in an area where practitioners who have been looking forever for a successful RSV therapeutic, I think it would be an easy one for us to get message out and, ultimately, to have the opportunity to push forward with that one all the way ourselves. So we don't anticipate sort of a big, global type of partnership on RSV like we might well contemplate on a NASH program.

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Operator [21]

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Your next question comes from the line of Eric Joseph with JPMorgan.

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Turner Andrew Kufe, JP Morgan Chase & Co, Research Division - Research Analyst [22]

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This is Turner on for Eric. Just one on 514 and thinking about the Phase Ib and potential viral load in production. I'm curious what would be viewed as clinically differentiated to some of the other novel Core Inhibitors or rather what parameters would you look to establish differentiations with other Core Inhibitors and developments, and what would you be -- what would be viewed as a meaningful advantage on that front?

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Jay R. Luly, Enanta Pharmaceuticals, Inc. - President, CEO & Director [23]

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It was hard to hear you. But basically what -- at this juncture, what have we done? We've created a molecule 514, that, as far as we can tell, has one of the best preclinical profiles of any Core Inhibitor that's been reported, looking at the totality of in vitro data that we have generated and the in vivo data that we've done in some very, very challenging animal models.

So I think the preclinical profile looks good. We have also done a lot of work on DMPK. And so molecule 514 earned its wings to go into the clinic. This -- in the early studies, we're going to be really looking at safety and PK confirmation and healthies that we've got, just like we've had with many other candidates where we designed the molecule hopefully well, taking them into Phase I.

Hopefully, we'll have a nice safety profile and that will give very good exposures after QD administration. And then we'll rapidly be going into the Ib portion of the study Part 2 and looking at the antiviral activity of the molecule, especially once we get into the treatment naive patients, the viremic patients that will be the other Phase Ib. So we've got 2 Phase Ib's coming up to start next year. The first Ib study, which will be a NUC-suppressed, it's assuming Phase I and healthies finishes when we expected to, we would roll right into the NUC-suppressed on 1b, and then that would be in the first quarter of 2020 calendar quarter, and then we would aim to get into the viremic patients sometime in the first half. So stay tuned on that fine-tuning of that timing. The goal is really to get the molecule as quickly as possible into a variety of HBV patients and to start to confirm in infected patients the very good results that we've seen preclinically.

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Turner Andrew Kufe, JP Morgan Chase & Co, Research Division - Research Analyst [24]

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Got it. Is this line better now?

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Jay R. Luly, Enanta Pharmaceuticals, Inc. - President, CEO & Director [25]

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Yes. Sounds a little better.

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Turner Andrew Kufe, JP Morgan Chase & Co, Research Division - Research Analyst [26]

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I was asking specifically in thinking about the viral load reduction in the Phase Ib, will it be viewed as clinically differentiated to some of the other novel Core Inhibitors that are currently in development?

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Jay R. Luly, Enanta Pharmaceuticals, Inc. - President, CEO & Director [27]

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Yes. Again, I'm -- I think we'll have to wait. Why don't we pause on that one until we see more data at AASLD. I think right now we've only seen a minimal amount of data in terms of what cores can do in that environment, and I think we'll have a more complete data set from a larger group of potential competitors after AASLD in November. So I think we're still -- it's very early days to see what that log drop is, and it's not just the log drop, of course, that's 1 gate along the road. You're really looking into other pieces of information in terms of getting to functional cures.

So I mean Core Inhibitors, even with a poor Core Inhibitor, some of the earliest ones that went into the clinic showed some significant viral load reductions, but that's obviously necessary but not sufficient. So I would expect, based on the high potency of 514, that we would see a very good drop. But more importantly, it's going to be, how does it perform in combination with the NUC and how do you get to a functional cure. But right now, we have no reason to think that 514 is less than any other compound from a potential perspective out there. We just need to generate that data.

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Operator [28]

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Your next question comes from the line of Liisa Bayko with JMP Securities.

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Jonathan Patrick Wolleben, JMP Securities LLC, Research Division - Associate [29]

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Jon on for Lisa. Just a quick one NASH. Jay, when you're mentioning AASLD, I'm wondering is the goal to have the NASH data late this quarter and then hopefully have some additional presentation at AASLD, will that timing work out do you think.

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Jay R. Luly, Enanta Pharmaceuticals, Inc. - President, CEO & Director [30]

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Yes. I'd say that would be beyond -- probably beyond likely, but who knows. I can't commit today on that. Let us get the data first and then we'll roll out top line data first, and then we'll look to ultimately get it into the soonest reasonable conference that we can get it into.

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Jonathan Patrick Wolleben, JMP Securities LLC, Research Division - Associate [31]

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Okay. And then just one last one on RSV. Can you remind us of the size and design of the Phase IIb you're expecting to kick off here?

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Jay R. Luly, Enanta Pharmaceuticals, Inc. - President, CEO & Director [32]

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The outpatient study? The size? So protocols being put together, sort of, as we speak. So I -- we'll be discussing that soon enough, but we don't have the final in-scope worked out, looking at powering and other considerations. I don't want to put a number out until the team has had a chance to finalize the protocols.

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Operator [33]

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Your next question comes from the line of Patrick Trucchio with Berenberg Capital.

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Patrick Ralph Trucchio, Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst [34]

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I have a follow-up on 938 and also on 305. Just first on 938, Jay, you alluded earlier to determining acceptable dosing window for 938 for RSV, and we know with the influenza drug, this window is within 48 hours. That's the best case we can get with these drugs. So I'm wondering if with RSV, assuming there's also this acceptable dosing window in the Phase IIb study, is there a definitive way to understand whether or not a patient is actually in that optimal dosing window? Or is it more based on how long the patients demonstrated RSV symptoms with that being perhaps just a key part of the inclusion criteria?

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Jay R. Luly, Enanta Pharmaceuticals, Inc. - President, CEO & Director [35]

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I think it's the latter. We'll be looking at time from symptoms and we'll be able to analyze the data based on that. So I think it's the latter.

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Patrick Ralph Trucchio, Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst [36]

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And then in ARGON-1, and specifically on safety and tolerability of 305 in this study. Can you tell us what we should anticipate in terms of impact on LDLC and pruritus at each dose compared to placebo? If this data will be included in the data release that's expected at the end of the third quarter or will be provided at a later date? And then finally what would you want to see demonstrated by this data or other data to give you confidence that 305 has best-in-class safety and tolerability attributes?

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Jay R. Luly, Enanta Pharmaceuticals, Inc. - President, CEO & Director [37]

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Yes. The lipid data will be included in this analysis and, again, I think, as I was sort of saying before with all the efficacy parameters, I think we'll be looking at the safety parameters in the same way hitting the gestalt at what our doses do, and what that sort of "therapeutic window" defined is for a go-forward dose. So it's just going to -- it will be data that we'll put into context just like all the efficacy parameters. We should have that included in the data set at the end of the quarter.

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Operator [38]

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And with no further questions, I'd like to turn the call back over to Carol Miceli for any closing comments.

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Carol Miceli, Enanta Pharmaceuticals, Inc. - Director of IR [39]

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Thank you, everyone, for joining us. If you have any additional questions, feel free to call us in the office, thank you.

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Operator [40]

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Ladies and gentlemen, this concludes today's conference call. You may now disconnect.