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Edited Transcript of ENTA earnings conference call or presentation 21-Nov-19 9:30pm GMT

Q4 2019 Enanta Pharmaceuticals Inc Earnings Call

WATERTOWN Dec 8, 2019 (Thomson StreetEvents) -- Edited Transcript of Enanta Pharmaceuticals Inc earnings conference call or presentation Thursday, November 21, 2019 at 9:30:00pm 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

* Nathalie Adda

Enanta Pharmaceuticals, Inc. - Senior VP & Chief Medical Officer

* Paul J. Mellett

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

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Conference Call Participants

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* Akash Tewari

Wolfe Research, LLC - Director of Equity Research & Senior Research Analyst

* Brian Corey Abrahams

RBC Capital Markets, Research Division - Senior Biotechnology Analyst

* Jack Kilgannon Allen

Robert W. Baird & Co. Incorporated, Research Division - Research Associate

* Jay Olson

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

* Liisa Ann Bayko

JMP Securities LLC, Research Division - MD and Senior Research Analyst

* Patrick Ralph Trucchio

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

* Turner Andrew Kufe

JP Morgan Chase & Co, Research Division - Research Analyst

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Presentation

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Operator [1]

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Ladies and gentlemen, thank you for standing by, and welcome to the Enanta Pharmaceuticals' Fourth Quarter Financial Results Conference Call. (Operator Instructions) Please be advised that today's conference is being recorded. (Operator Instructions)

I would now like to hand the conference over to your speaker today, Carol Miceli. Thank you. Please go ahead.

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

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Thank you, Shantel, and thanks for joining us this afternoon. The news release with our financial results was issued and is available on our website. On the call today is Dr. Jay Luly, President and Chief Executive Officer; 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 research and development pipeline 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, and good afternoon, everyone. We made great progress at Enanta this year, and I'm excited to share with you the plans we have for the year ahead. From our clinical development programs, we announced positive Phase IIa data for our RSV and NASH compounds. We are advancing our first HBV Core Inhibitor through a Phase Ia/Ib study and our research continues to discover world-class molecules. This afternoon, we announced our newest drug candidate, EDP-297, which is our follow-on FXR agonist development candidate for NASH. We are also working on follow-on compounds for RSV and HBV as well as new compounds in the early stages of discovery that are targeting other mechanisms of action and, in some cases, other disease areas.

We continue to receive substantial royalties from our HCV collaboration with AbbVie, and this coupled with our strong cash balance of $400 million, is sufficient to fund our business, including our growing clinical development programs for the foreseeable future. In fact, since our March 2013 IPO, we have not needed to raise nor have we raised any additional capital.

Before I begin with a review of our development programs, I want to thank our talented and dedicated employees who worked tirelessly to bring forward what we believe are some of the most promising compounds for RSV, NASH, and HBV in development today. I'll now begin my review with our most advanced program, EDP-938, our N protein inhibitor for respiratory syncytial virus, known as RSV. As a reminder, RSV is a severe respiratory infection associated with significant morbidity and mortality in infants, the elderly and immune-compromised adults, and the condition for which there is currently no safe and effective therapy.

In June, we announced positive top line results from our Phase 2a Human Challenge Study of EDP-938 in healthy adults infected with RSV. This study yields some of the most promising data to date from an RSV challenge study. EDP-938 demonstrated highly statistically significant reductions in RSV viral load as measured by RT-PCR assay and by plaque assay as well as in total symptom score and mucus weight.

Given these results, we are pleased to announce that we have initiated a phase IIb study of EDP-938. This study, which we have named RSVP will focus on adult outpatients with community-acquired RSV. RSVP is designed to provide further information about EDP-938 in a community-acquired RSV adult population and to better understand the feasibility of DAA therapy in an outpatient setting. We're preparing to conduct further studies in targeted patient populations such as the immune compromised, the elderly and pediatric populations.

The RSVP study is a randomized, double-blind, placebo-controlled study that is designed to enroll approximately 70 subjects up to the age of 75 years, randomized to receive either 800 milligrams of EDP-938 or placebo for 5 days. The primary objective of this study is to evaluate the effect of EDP-938 on progression of RSV infection by assessment of clinical symptoms measured over the course of the 14-day study observation period. Any viral activity will be evaluated as a key secondary endpoint.

Depending upon the severity of the RSV season in North America and the rate of enrollment, our goal is to complete RSVP study in one season, and top line data could be announced in the third quarter of calendar 2020. If needed, however, we have planned to continue this study in the southern Hemisphere, where RSV infection occurs later in the year.

Given our promising Phase IIa results in RSV and the non-Fusion mechanism of EDP-938, we believe it represents the best chance for success in a therapeutic area that, to date, has been challenging.

Our next most advanced program is for NASH. In September, Enanta announced top line data from the Phase IIa ARGON-1 study in NASH subjects. The primary endpoint ALT reduction at week 12, and a key secondary endpoint, reduction in liver fat content as measured by MRI-PDFF at week 12 were met in the 2.5 milligram dosing group. At the 1-milligram dose, also showed -- I'm sorry, the 1-milligram dose showed nonstatistical numerical trends on several efficacy markers.

Given this overall profile, we plan to further evaluate EDP-305 and ARGON-2, a Phase IIb study that we plan to initiate in the second quarter of calendar 2020. ARGON-2 will be a randomized, double-blind, placebo-controlled 72-week study in approximately 340 subjects with biopsy-proven NASH. The primary endpoint of the study will be improvement of fibrosis without worsening of NASH and/or NASH resolution without worsening of fibrosis. Two doses of EDP-305 have been selected to provide strong target engagement and a balanced profile in terms of efficacy and tolerability. We plan to use doses of 1.5 milligrams and 2 milligrams with the aim of demonstrating stronger biomarker signals of efficacy than seen at 1 milligram and less pruritus than seen at 2.5 milligrams, which were the doses investigated in ARGON-1.

The study will include a 12-week interim analysis designed to enhance our ability to seek opportunities more quickly for development of EDP-305 in combinations with other mechanisms in NASH. Also in our NASH program, Enanta has identified EDP-297 as its follow-on FXR candidate. Preclinical data on EDP-297 reveal a differentiated profile that delivers high-target tissue distribution, along with potency greater than that published on any FXR agonist in clinical development today.

In preclinical models, EDP-297 delivered the drug preferentially to tissues with FXR receptors, namely in liver and intestine while minimizing drug levels in plasma and skin. We believe that having a highly potent and highly targeted FXR agonist like EDP-297 may allow for lower doses and reduced drug levels at nontargeted tissues, thereby potentially reducing pruritus if it's an off-target effect. We expect to initiate a Phase I study of EDP-297 in mid-calendar 2020 and plan to have data in the first half of 2021.

Finally, the INTREPID study in PBC is continuing, and we expect to have top line data in the second quarter of calendar 2020. Our HBV program is also progressing well. Earlier this year, we 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 aims 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 assess the safety in antiviral activity of EDP-514 in NUC-suppressed patients with chronic HBV infection. NUC-suppressed refers to chronic HBV patients who are being treated with nucleoside analog therapies, which are the current standard of care. We have completed the SAD portion, are well along in the MAD portion in healthy volunteers. We plan to have that data in the first quarter of calendar 2020. We then plan to proceed to study EDP-514 in NUC-suppressed HBV patients in calendar Q1, followed by a separate study in viremic HBV patients in calendar Q2. 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.

Finally, it's important to mention that drug discovery remains a core strength of this company. We continue to invest substantial resources and research programs to discover backup compounds as well as new compounds targeting different mechanisms of action both in our core areas and in other areas. Reviewing the broad range of R&D portfolio makes me very excited about the coming year, and I look forward to addressing any questions you may have about it.

First so, I will 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 a September 30 fiscal year schedule. Today, we are reporting results for our fourth fiscal quarter and fiscal year ended September 30, 2019.

For the quarter, total revenue was $51.3 million and consisted entirely of royalty revenue earned on Abbvie's global HCV product sales of $698 million. This compares to total revenue of $67.2 million for the same period in 2018. The decrease in our royalty revenue quarter-over-quarter was due to lower global HCV product sales reported by AbbVie. Royalty revenue was calculated on 50% of MAVYRET sales at a blended royalty rate for the quarter of 15%, and on approximately 30% of VIEKIRA sales at a royalty rate of 10% after adjustments for certain contractual discounts and rebates, which historically have approximated 1.5% of AbbVie's total reported HCV product sales.

During our fourth fiscal quarter, our royalty rate for MAVYRET was a blend of our third and fourth royalty tiers of 14% and 17%, respectively. Our royalties are calculated on a calendar year basis. Therefore, royalties for our fiscal first quarter ending December 31 will be calculated at the highest royalty rate. And royalties for our fiscal quarter ending March 31 will be calculated at 10%, our lowest royalty rate tier 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 September 30, 2019, research and development expenses totaled $38.7 million compared to $26.9 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, a slight increase to the comparable quarter in 2018.

Enanta recorded an income tax benefit of $0.5 million for the 3 months ended September 30, 2019, compared to income tax expense of $8.5 million for the same period in 2018. For the 12 months ended September 30, 2019, Enanta's effective tax rate benefit was approximately 2% compared to an effective tax rate of approximately 23% for the 12 months ended September 30, 2018. I'd like to note that the drivers of the decrease in the effective tax rate are covered in the press release.

Net income for the 3 months ended September 30, 2019, was $9.2 million or $0.44 per diluted common share compared to net income of $27.4 million or $1.30 per diluted common share for the corresponding period in 2018. And then at the end of the quarter with approximately $400 million in cash and marketable securities, an increase of $75 million from our 2018 fiscal year-end balance of $325 million.

In terms of guidance for fiscal 2020, we expect our research and development expense to be between $155 million and $175 million, and our general and administrative expense to be between $27 million and $33 million. Further financial details are available in our press release and will be available in our annual report on Form 10-K 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 Brian Abrahams with RBC Capital Markets.

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

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Congrats on all the continued progress. I guess, first, on the NASH program and ARGON-2. Can you talk a little bit more about how you guys selected those doses and maybe some of the data analyses that you did to find what you believe could be a sweet spot there? And I guess, I'm also wondering if you can also talk more about the interim analysis, when that might -- when you might expect to see that? And how you would think about positioning this in combination, are you thinking about internal combinations or external combinations, what might be the optimal mechanisms? And then I had a quick follow-up on RSV.

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

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Sure. Thanks for the questions, Brian. So on ARGON-2, we -- it was actually reasonably straightforward as we indicated on the ARGON-1 data call. We saw a very strong target engagement at 2.5 milligrams, whether you looked at ALT reductions, fat reductions either on an absolute or on a relative scale, GGT reductions. Looking at alk phos, C4, FGF19. I mean, the whole profile lined up to show very, very strong target engagement. One milligram, we saw some reasonable signs of that, but certainly not as strong as 2.5. So we looked at those 2 sort of doses as sort of goal post and then started asking ourselves what would we like to ultimately achieve? Number one, obviously, we saw a fair amount of pruritus at 2.5 milligrams, not much at all at 1 milligram. And so I think the key is really driving to a dose that's higher than 1 in terms of giving better biomarker indications of efficacy and dose lower than 2.5 in relations to having a better tolerability profile than 2.5. So we ultimately aimed to -- we came down on 1.5 and 2 as reasonable doses. And so those will be going ahead.

And from a timing perspective, that will depend on accrual, we'll share results with those as the study gets up and going. What we'll do is take information, ultimately, from those intermediate doses, which we think might be one or both, I guess, in theory. It might be interesting to explore in relation to combinations.

And with regards to ideal combination partners, we're not likely to have an internal molecule that will be at that stage to do those combinations with the time other than an FXR agent. So we'll be looking at other non-FXR mechanisms out there to do those combinations. So stay tuned on that front. You had an RSV question?

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

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Yes. And then just on the RSVP study. I guess, how important is reductions in hospitalization? I guess, what I'm kind of getting at is, do you view this initial population you're going to be testing that the agent in is -- a population that you may potentially move forward with for registration? Or is this just more of a way to get quick proof-of-concept with real-world infection? I guess I'm wondering when we see the data, how translatable would the results be to some of the high unmet need groups like pediatrics, just given the differences in immune system and viral kinetics there as well as to immune-compromised patients?

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

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Yes. Well, I would certainly put it into the category of -- it's a really good proof-of-concept study in community-acquired RSV. I don't know that it ultimately is the largest patient population, but there's still a lot of adults that do get RSV in patients. So it's also -- and it's further, it's a way to us to look at conducting a trial on an outpatient setting, which is interesting all by itself. So I'd say it's a good and logical step in the progression.

It's our ability to kind of get at the feasibility too of rapid treatment after a rapid diagnostic that could prevent hospitalizations ultimately. But -- so yes, it will give us a whole bunch of information in the broad spectrum. Again, we're trying to learn as much about this drug in different patient populations as we can.

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Operator [6]

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Your next question comes from Jay Olson with Oppenheimer.

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Jay Olson, Oppenheimer & Co. Inc., Research Division - Executive Director & Senior Analyst [7]

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My first question is, did you learn anything at AASLD that changes your view of the opportunity for an FXR in NASH? And specifically with regards to potential to improve upon efficacy, safety or tolerability over other FXR agonists? And then I had a follow-on, if I may.

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

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Learn anything at AASLD? I mean, I think the -- one thing that we saw at AASLD was tropifexor had pruritus. I mean that was an interesting, I guess, observation that comes from a sort of a different chemical class and so forth. And they hadn't reported too much until they did their dose escalation up into the range where they started seeing significant efficacy marker movement, and then that came in. So that was one aspect to it.

The -- I think the other, I guess, maybe that's a good segue to thinking about EDP-297 in terms of our new candidate. We've been working on a follow-on molecule for quite some time, as I think everybody sort of listening in is probably aware, and we're trying to fine-tune a profile. Nobody fundamentally understands exactly what's causing the tolerability issue with FXRs that have been seen today. So we felt one of the absent discrete mechanism that one could fully understand, the best -- next best thing you can do is ratchet down the potency against your intended target super, super well. And we certainly did this. The discovery team at Enanta deserves a lot of congratulations in terms of being able to fine tune that. The goal is, if you can push harder and harder on FXR, generally speaking, at least you have a chance of improving selectivity over other receptors. We then came up with a targeting approach which is aimed at the intestine -- FXR receptors in the intestine and also in the liver, both sites of which have shown places where you can -- FXR agonist can modulate pathways that are important in the pathogenesis of NASH patients. So we have a very high degree of targeting in those tissues with FXR receptors, and we dialed down dramatically, the associated plasma levels that you would run into. So that will help contain things outside in the periphery and in other tissues such as skin, where we, again, we're focusing on getting drug levels way down. So will that play out? It will remain to be seen. But we think it's a very interesting approach and worthy of exploration in our next study. So again, we're aiming to have EDP-297 in the clinic in mid '20.

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Jay Olson, Oppenheimer & Co. Inc., Research Division - Executive Director & Senior Analyst [9]

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Okay, great. And then if I could ask a quick question on EDP-514. Could you just talk about your treatment objectives for the 2 populations you mentioned NUC-suppressed HBV patients and viremic HBV patients? What are the goals in those 2 different patient populations?

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

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Yes. So maybe I'll hand this question over to Nathalie just to make a couple of quick comments on those studies.

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Nathalie Adda, Enanta Pharmaceuticals, Inc. - Senior VP & Chief Medical Officer [11]

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Thank you for your question. So I think at that stage, obviously, we are looking at a Phase Iab study for NUC-suppressed and viremic patients. And therefore, as you know, we have to go step-wise, as we are looking to have big compound in those populations. So we will be looking at safety and tolerability, mainly, for 28 days of treatment as well as, obviously, some of the new biomarker, giving us a sense mainly in the viremic patient for the activity of the drug. So that's the plan for the early stage.

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Operator [12]

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Your next question comes from Yasmeen Rahimi with ROTH Capital.

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Unidentified Analyst, [13]

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[Paul] on for Yasmeen. Congrats on the progress in the quarter. So we just have 2 questions today. First, could you just help walk us through the powering for primary endpoint on RSVP? And also, we just were wondering if you could give us your thoughts on moving 305 into Phase b, given the competitive NASH landscape.

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Jay R. Luly, Enanta Pharmaceuticals, Inc. - President, CEO & Director [14]

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So maybe I'll start with the second question first and I'll let Nathalie work on the first question for you. The second question is the NASH landscape is anything but understood right now. We're at an early stage in this whole disease area, I would sort of call it a 1.0 stage where only now are we beginning to understand what are the most promising mechanisms in NASH, and we barely know much about that yet in patients, especially when you're looking at later stage studies with good patient numbers and good readouts. So we're at the very early stages of understanding what are the most important mechanisms. And then we have even further to go before people will know for sure what are the very best single agents against those single mechanisms, and then only then can we really begin to move on to 2.0 and beyond, which will be likely involving combinations of agents.

So I think what we continue to see is EDP-305 does have very strong profiles in FXR agonist. It's generally safe, the tolerability profile we know. That profile's not dissimilar from some others, we're trying to see if we can improve upon it. We've also, at least in the ARGON-1 study, appear to have seen a good profile of EDP-305 on lipids. And so we're going to, again, press to the next question. Just like in Phase I when we made the Phase I migration into ARGON-1 study, we had to change our doses to lower doses where we still saw target engagement, but avoided pruritus. Then in NASH patients, we were surprised that everything became more sensitive with our FXR agonist in terms of efficacy and tolerability.

So we're just frame shifting things a bit. But it's a very strong candidate. And we're going to keep that one moving ahead. Again, if we can get some information ultimately to aid us in peeling that off into combination sooner, we're going to do that. And meanwhile, in parallel, we'll have a follow-on that has a very differentiated profile versus any other FXR agonist in development today in terms of, number one, at least on preclinical data being the most potent one that's out there, eclipsing tropifexor by a bit; and number two, having this tissue-targeting component, which, again, we think is very attractive versus other molecules that we've looked at. So I think now we -- back to the question, I think it was asked, FXR does appear to be one of the mechanisms that can meaningfully move the needle with the fibrosis endpoint, and I think that's going to continue to be an important thing to try to do and we're obviously heavily engaged in that with our -- with now both of our molecules. On the RSV study, I'll let Nathalie just make a few remarks about that.

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Nathalie Adda, Enanta Pharmaceuticals, Inc. - Senior VP & Chief Medical Officer [15]

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Okay. So just to make sure I completely understand your question. It's about the justification of the power of the RSVP?

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Unidentified Analyst, [16]

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Yes, just the power for the primary endpoint for the pro RSVP.

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Nathalie Adda, Enanta Pharmaceuticals, Inc. - Senior VP & Chief Medical Officer [17]

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Yes, it's obviously a good question given that it may not be completely intuitive. So I mean, obviously, you know that we haven't yet used EDP-938 rate in patient in more real-life. And so the experience that we had was based on our challenge study. The nice thing about the challenge study is that you have a placebo arm. And therefore, we are looking at the treatment effect and compare that to the placebo arm. And as you know, the primary endpoint that will be looked at in the RSVP is the total symptom score. So we power our study by looking at the effect in comparison to the placebo arm in the challenge study.

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Operator [18]

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Your next question comes from Liisa Bayko with JMP Securities.

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Liisa Ann Bayko, JMP Securities LLC, Research Division - MD and Senior Research Analyst [19]

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Just want to understand a little bit more about the study design, how are you thinking about the assumptions behind the powering for the endpoint? And then also, where are you thinking about like how quickly patients come in into the study? Obviously, it's important to try to get them in as soon as possible. Is there any way you can try to augment that? And do you have a cut-off on we only will accept patients with symptoms for this period of time prior to entry? So 2 questions there.

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

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Yes. So I think Nathalie just answered that question. So the powering came as a result of studying our challenge study.

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Liisa Ann Bayko, JMP Securities LLC, Research Division - MD and Senior Research Analyst [21]

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Do you have the specific -- yes.

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Jay R. Luly, Enanta Pharmaceuticals, Inc. - President, CEO & Director [22]

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Yes, we can be specific with you later on that, if you want to hear it again. But the other part is, we're going to try to catch patients in the first 48 hours in the study.

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Liisa Ann Bayko, JMP Securities LLC, Research Division - MD and Senior Research Analyst [23]

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Okay. And is that -- I mean, how do you sort of get patients in that early of a window of time? Are you doing any specific targeting or...

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Nathalie Adda, Enanta Pharmaceuticals, Inc. - Senior VP & Chief Medical Officer [24]

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Yes, I can take that question. And maybe just briefly say that, obviously, we are using a certain number of sides that have had experience not only in RSV infection, but also in the flu. And so there are diverse type of sides. There could be research side, academic side or family practitioners' side. They have been selected mainly on their experience with dealing with RSV infection or flu infection. We will be obviously also taking a big campaign of education and information about our study, and therefore, we hope to link patient with symptoms and bring them to the clinic within the appropriate window.

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Liisa Ann Bayko, JMP Securities LLC, Research Division - MD and Senior Research Analyst [25]

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Okay. And then for your new NASH compound. Can you maybe give us a little bit more information on how it's differentiated from 305? And also, just wanted to better understand the PK? Is it linear? Does it have a similar profile to 305?

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Jay R. Luly, Enanta Pharmaceuticals, Inc. - President, CEO & Director [26]

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Well, it's certainly more potent than 305 and more potent than all the other FXR agonists. The other -- with regards to other key differentiations, we talked about the tissue targeting. We've enhanced that over 305. We've enhanced it over other FXRs that we've benchmarked against. And so from that perspective, and again, we need to test 297 to see how that translates, but there's at least an opportunity to drive a wedge in the tolerability signal.

The PK, I think what you might have been referring to was the clinical -- the human clinical PK dose-ranging study that we did on EDP-305 in healthies, which was very linear through the whole range until we got to -- I think it was going from 10 to 20 milligrams is where the nonlinearity in the PK curve crept in, but that was in a dose-ranging study and human clinical studies where you're looking at very low doses all the way up to very high doses, and we haven't obviously gotten that far yet with 297.

Preclinical profile, preclinical PK profile on 297 is very strong. I mean we typically don't put any molecules into the clinic unless we've past that hurdle in a number of different preclinical species. So it's a fairly polished candidate at this point.

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Liisa Ann Bayko, JMP Securities LLC, Research Division - MD and Senior Research Analyst [27]

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Okay. Is this the same kind of scaffold, I guess, as EDP-305?

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Jay R. Luly, Enanta Pharmaceuticals, Inc. - President, CEO & Director [28]

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We'll say more about the structural components of the molecule at a future time.

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Operator [29]

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Your next question comes from Eric Joseph with JPMorgan.

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Turner Andrew Kufe, JP Morgan Chase & Co, Research Division - Research Analyst [30]

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This is Turner on for Eric. I'm just hoping you can help set expectations for the Phase I EDP-514 readout in healthy volunteers as it relates to safety, tolerability. Are there any specific AEs that you anticipate? And what are deemed acceptable rates, particularly within the broader core inhibitor class? And lastly, what plasma concentrations correlate with EC90s observed in vitro? Or in preclinical models, rather?

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Jay R. Luly, Enanta Pharmaceuticals, Inc. - President, CEO & Director [31]

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So we obviously will report the results when we have them, but we're not in -- we don't anticipate anything (inaudible). It's a study that we've had up and going, [as I said], the SAD component is done, the MAD is well along the way. And we'll have the data set in Q1. So there's nothing in our priority that we're expecting out of that study. I don't -- I think you asked what blood levels correlated? Say that again? What's your question?

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Turner Andrew Kufe, JP Morgan Chase & Co, Research Division - Research Analyst [32]

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Just curious what plasma levels correlate with the EC90 observed in preclinical models?

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Jay R. Luly, Enanta Pharmaceuticals, Inc. - President, CEO & Director [33]

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I'd have to get back to you on that. I'm not sure that, that's a -- yes, I'd have to get back to you on that.

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Operator [34]

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Your next question comes from Patrick Trucchio with Berenberg Capital Markets.

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Patrick Ralph Trucchio, Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst [35]

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I have a few follow-ups on EDP-305. So regarding the interim readout, we know that changes in liver histology can take some time. So I'm interested in understanding what efficacy and/or safety and tolerability measures will be evaluated in the interim analysis. And how far into the study, this analysis will be built in?

And then secondly, if you can -- can you tell us if in addition to accelerating the development in combinations with other mechanisms, would there also be an opportunity to accelerate the start of the pivotal program for 305 as a monotherapy treatment for NASH?

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Jay R. Luly, Enanta Pharmaceuticals, Inc. - President, CEO & Director [36]

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Yes. So I'll answer the last question first. It wouldn't accelerate that. The idea behind a 12-week interim read is, again, it won't examine the primary endpoint. It's really going to be looking at secondary markers of efficacy, some like what we've done in ARGON-1 in the 12-week study. And also tolerability. So by that point, we will have looked at 1, 1.5, 2 and 2.5 at 12 weeks, and we'll have good directional information, I think, in terms of knowing how we might proceed with that in a combination study.

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Patrick Ralph Trucchio, Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst [37]

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Okay. And then on EDP-938, can you tell us what is the incidence rate of community-acquired RSV infection. What is that? And what additionally relevant inclusion or exclusion criteria should be -- should we be aware of for the trial?

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Jay R. Luly, Enanta Pharmaceuticals, Inc. - President, CEO & Director [38]

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Well, the incidence is not quite flu. So it's a -- I forget the exact numbers, but it's a fraction of what flu is. But still really significant. So there are a lot of significant number of hospitalizations of elderly and children every year. So there is a tremendous amount of morbidity associated with this, morbidity and hospitalizations.

What -- in terms of exclusion criteria, we obviously want to sample very carefully to make sure people don't have flu. And we'll be doing that with an in-office, RT-PCR diagnostic, where we can rule out flu A, we can rule out flu B and we can rule in RSV. So it's very impressive, actually. You can do this in about 20 minutes. And so obviously, patients with asthma and COPD would be excluded, but they're -- apart from that, people with stable asthma and treated COPD -- or treated COPD, could be allowed.

So we're not bringing in people with really complicated respiratory -- underlying respiratory pathologies that aren't either stable or being treated. So we'll be on the lookout for that. We'll be on the lookout to exclude flu. And again, the key in this and in every other study -- I think among the lessons learned is, you want to try to get to patients quickly. So that's what we aim to do.

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Operator [39]

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Your next question comes from Brian Skorney with Baird.

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Jack Kilgannon Allen, Robert W. Baird & Co. Incorporated, Research Division - Research Associate [40]

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This is Jack dialing in for Brian. Many of my questions have already been asked, but I just have one brief one on the follow-on FXR agonist. I know you spoke a bit about the pruritus side effects and how you're optimizing for, I guess, liver exposure as opposed to skin exposure. How would that play with respect to the lipid side effects that we've seen with some of the FXR agonists? Have you investigated that preclinically? And do you see any differences with this follow-on compared to your FXR that's already moved into a clinic or some of the competitors as well?

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Jay R. Luly, Enanta Pharmaceuticals, Inc. - President, CEO & Director [41]

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Yes. I can speak more about 305. We -- as by way of backdrop with -- in terms of looking at lipids, you can see on -- mechanistically on paper, how one might get an increase in LDL levels by virtue of having reduced C4 because you blocked the conversion to C4. You can have a backup of cholesterol in the system. What we saw at least preclinically in the case of EDP-305 and other kinds of studies we'll ultimately be doing with 297, is that there was -- we saw what might be, I guess, a compensatory upregulation of LDL receptor. And so the biology is fascinating, and actually, that was a sort of a differential effect that we saw versus OCA when we looked at them side-by-side preclinically. So we'll be looking at that and other things preclinically as we continue to finalize all of our data on 297. And our aim will also be to start to put some of that data out next year.

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Operator [42]

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(Operator Instructions) Your next question comes from Liisa Bayko with JMP Securities.

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Liisa Ann Bayko, JMP Securities LLC, Research Division - MD and Senior Research Analyst [43]

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I actually forgot to ask one of my questions earlier. I was just curious, what are you looking for in the RSV study to move forward into either the elderly or the younger pediatric population? Is it more just a clear safety? Do you definitively want to see sort of -- some sort of benefit in this adult population? How are you thinking about kind of the hurdle to move forward into those other populations from this study?

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Jay R. Luly, Enanta Pharmaceuticals, Inc. - President, CEO & Director [44]

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Yes, I'd say, we want to see -- continue to see a very good safety and tolerability profiles we've seen in the past and basic efficacy. These are fundamental things. We're getting to this adult population, we opened a timely way. So we want to be able to basically duplicate what we've seen in the challenge study. But obviously with a community-acquired RSV patient population, so-called real-world study.

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Operator [45]

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Your next question comes from Akash Tewari with Wolfe Research.

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Akash Tewari, Wolfe Research, LLC - Director of Equity Research & Senior Research Analyst [46]

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So we've seen Tamiflu get FDA approval by reducing the duration of symptoms by basically a day or 1.5 days. Can you give us some color on your discussions with the FDA? And kind of what you guys are looking for, for your adult outpatient study in terms of absolute symptom reduction? And I guess, some color on those endpoints.

And then also, you've kind of -- you alluded today on the call that you're going to have kind of a 20-minute rapid-acting test to detect RSV for your outpatient trial. If we look at prior RSV studies, when we -- and we think about baseline viral titer, at the time of dose, it's about 6 logs, so kind of right at the peak of the virus. When you think about your trial and you're trying to get these patients within this 48-hour window, what type of viral titer does that actually translate into?

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Jay R. Luly, Enanta Pharmaceuticals, Inc. - President, CEO & Director [47]

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Yes. So first of all, this -- in terms of discussions with the FDA, et cetera, et cetera, this is not a registrational study, it's a proof-of-concept study. So -- and further, the ultimate registration study is going to be obviously a very detailed set of discussions around those endpoints. And at the appropriate time, those discussions will be had. So it's important to realize what the study is and what it's not.

The titers are likely to be a bit higher than what we've had in the past in a challenge study, but it's not clear by exactly how much. Some of the people in our challenge study were already starting to exhibit symptoms, right? So it's going to be really a spectrum of folks depending upon where in that window they come exactly, where their viral loads are and so forth. And so -- but again, the goal is to get folks not only before the viral load has taken its toll over several days, but also to try to catch things, if you can, while it's still an upper airway infection, earlier stage in the process. That can only -- it can only be a more positive approach to treatment. So yes. So we'll be lined up with the diagnostics, again, that are readily available and rapid.

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Operator [48]

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Your next question comes from Yasmeen Rahimi with ROTH Capital.

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Unidentified Analyst, [49]

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I just have one follow-up and then maybe a little overlap. I think you said for RSVP, the primary endpoint will be total symptom score. And I was just wondering what -- how does that translate to a hospitalization endpoint? Is it possible? I know it's only 14 days of observation. But is there any way to get a granular sense of which way things are going?

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Nathalie Adda, Enanta Pharmaceuticals, Inc. - Senior VP & Chief Medical Officer [50]

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This is Nathalie. I just want to make sure I fully understand your question. You mentioned hospitalization, can you just clarify?

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Unidentified Analyst, [51]

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Yes. Just hospitalization as in that's the endpoint typically used in a Phase III study.

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Nathalie Adda, Enanta Pharmaceuticals, Inc. - Senior VP & Chief Medical Officer [52]

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Okay. I see. So again, I think we have mentioned that it is more like a proof-of-concept study at that stage. We will not be assessing prevention of hospitalization. But Jay mentioned earlier that there would be patient with comorbidity that are stable, obviously, with asthma and COPD. And if we can learn from those patient populations about severity or even prevention of hospitalization, obviously, those information will be important together. But this is not an endpoint at that stage that we will be assessing. We will need a larger sample size that can't even change.

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Operator [53]

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There are no further questions at this time. I will now turn the call back over to Carol for closing remarks.

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Carol Miceli, Enanta Pharmaceuticals, Inc. - Director of IR [54]

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Thank you, everyone, for joining us today. A new corporate presentation will be posted on our website shortly. And if you have any additional questions, feel free to give us a call in the office. Thank you.

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Operator [55]

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This concludes today's conference call. You may now disconnect.