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Enanta Pharmaceuticals, Inc. (ENTA) Q2 2019 Earnings Call Transcript

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Enanta Pharmaceuticals, Inc. (NASDAQ: ENTA)
Q3 2019 Earnings Call
Aug. 6, 2019, 4:30 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

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. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. If you would like to ask a question at that time, please press * and then the number 1 on your telephone keypad. If you would like to withdraw your question, press the # key. Please note that today's conference is being recorded. I'd now like to turn the call over to your host, Miss Carol Miceli, Director of Investor Relations. Ma'am, you may begin your conference.

Carol Miceli -- Director, Investor Relations

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 the 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.


Jay R Luly, Ph.D. -- President, Chief Executive Officer

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 have progressed well. Our pipeline is maturing, and we have clinical studies ongoing with three different compounds, all of which have Fast Track designation. Our most recent achievements were the initiation of a Phase 1 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 MAVYRET to shorten the once-daily treatment duration from 12 to eight weeks for treatment-naïve chronic HCV patients with compensated cirrhosis 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 [audio cuts out] 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 quantitative RTPCR is consistent with additional data we now have from cell-based infectivity assays using live virus. The cell-based data showed 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 20-40x above the in vitro EC90 for 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 five 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 at 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 seven days, and the drug has generally been very well tolerated, and has demonstrated a favorable safety profile similar to placebo. We're very pleased with the 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 applications with community-acquired RSV infections. Our goal is to initiate our first Phase 2B 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 next-most-advanced program, which is for NASH. EDP-305, our lead FXR agonist is being investigated in two ongoing Phase 2 studies, one for NASH and one 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, C-4, and FGF19, among other criteria. Assuming the aggregate data support it, we plan to initiate a Phase 2B study in the first quarter of calendar 2020, and look to partner the asset prior to Phase 3. 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. We'll 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 1A/1B clinical study with our novel class 2 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 infections.

The study plan is to enroll approximately 98 subjects, and to evaluate up to six 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 1B 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 pre-clinical data support our excitement for this mechanism. Pre-clinical data demonstrate 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 pan-genotypic, and that combinations of EDP-514 with nucleoside reverse-transcriptase inhibitors -- which are the current antiviral therapies for HBV -- or with a Class 1 core inhibitor result in additive to synergistic antiviral effects.

In vivo models of EDP-514 demonstrate excellent efficacy, with >4log viral load reduction in HBV-infected PXB mice. Based on our pre-clinical data, we believe EDP-514 may have best-in-class potential for the core inhibitor mechanism.

Now 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 2 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?

Paul J Mellett -- Chief Financial Officer

Thank you, Jay. I'd like to remind everyone that Enanta reports on a September 30th fiscal year schedule. Today we are reporting results for our third fiscal quarter, ended June 30th, 2019. 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 lowered treated patient volumes in select international markets.

Royalty revenue was calculated on 50% of MAVYRET's sales at a blended royalty rate of 12%, and approximately 30% of VIEKIRA sales at a royalty rate of 10%, after adjustments to 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 rate for MAVYRET encompasses our first three royalty tiers of 10%, 12%, and 14%.

I will remind everyone that our royalties, which are calculated separately for each product, are determined on a calendar year basis through a tiered schedule of 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 31st will have the highest royalty rates in our fiscal year. You can review our royalty tier schedule on our 2018 Form 10-K.

Moving on to our expenses: for the three months ended June 30th, 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 three Phase 2 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 three months ended June 30th, 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 nine months ended June 30th, 2019 was less than 1%, 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 awards activity.

Net income for the three months ended June 30th, 2019 was $7 million, or $0.33 per diluted common share, compared to a 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?

Questions and Answers:

Operator

Yes, sir. Ladies and gentlemen, just as a reminder: if you'd like to ask a question, please press * and then the number 1 on your telephone keypad. Once again, that is *, and the number 1. Your first question comes from the line of Bryan Abrahams with RBC.

Brian Abrahams -- RBC Capital -- Analyst

Hi, thank you for taking my questions. I guess first question on 938: it sounds like you've been able to do some additional analyses on the data from the challenge -- from the positive challenge study -- I'm wondering if you 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 had a follow up.

Jay R Luly, Ph.D. -- President, Chief Executive Officer

So, no, we don't have data on resistance variance. We haven't identified really any patients with them, so it's challenging, and I think one of the things, too, to point out is -- 938 has an incredibly high barrier to resistance, and we've been -- even in laboratory settings where we've 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.

Brian Abrahams -- RBC Capital -- Analyst

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 a 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, etc. before moving into a pediatric population, and what might that study look like? I'll hop back in the queue, thanks.

Jay R Luly, Ph.D. -- President, Chief Executive Officer

So there's always preparatory work for Peds studies. I mean, you obviously need to switch up your formulation; you need to do a lot of -- basically -- EMPK work, and modeling. You need to -- but 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 a few extra studies that you'll wanna try to understand in advance of that. So all of that will be going on in parallel with our adult studies, which -- from a timing perspective -- is what we wanted to do anyway.

We do want to get as much information as we can in an adult population before we go into the Peds study, so that we can go into it most intelligently. So yeah, I think that's where we're at.

Operator

Your next question comes from the line of Yasmeen Rahimi with ROTH Capital Partner.

Yasmeen Rahimi, Ph.D. -- ROTH Capital Partners -- Co-head of Biotechnology Research, Managing Director, Senior Research Analyst

Hi, team; thank you for the update. 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 rate was one of the highest. And then second: that leads into what elements of the Phase 2B challenge study require really thoughtfulness, and how do you plan tackling it? And then I have a follow-up on NASH.

Jay R Luly, Ph.D. -- President, Chief Executive Officer

Well, you know, we did have a very high rate of infection in the study. That always helps, No. 1, just because you can get more data on more patients more quickly. I think what the lesson learned -- and I think it's probably intuitive from even before we did this study -- that in translation to Phase 2B, we need to identify what is the allowable dosing window, and we're going to have to be very thoughtful in 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 level window? So we'll look at that over 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. No one knows the answer to this question, other than intuitively -- the earlier that you treat, the better the likelihood of more impactful outcomes. So it's really every step of the way from our Phase 2B 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 allowable window is for -- again, for this mechanism against this virus. Is that helpful?

Yasmeen Rahimi, Ph.D. -- ROTH Capital Partners -- Co-head of Biotechnology Research, Managing Director, Senior Research Analyst

Yeah, very helpful. Thank you, Jay. And then the question on NASH is: 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. Can you explain to me -- while we're waiting for the data -- why there is such a need for a 2.0 version?

Jay R Luly, Ph.D. -- President, Chief Executive Officer

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, and 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 a mechanism that you feel strongly about. 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 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 hard-core small molecule drug discovery and development.

So all of 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 the 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 we've made some very good progress on that program, and we'll have more to say later in the year.

Yasmeen Rahimi, Ph.D. -- ROTH Capital Partners -- Co-head of Biotechnology Research, Managing Director, Senior Research Analyst

Thank you, Jay, and are you able to comment -- at least -- of what the follow-on chemistry is different, versus 305 at this point?

Jay R Luly, Ph.D. -- President, Chief Executive Officer

Yeah, 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 DNPK considerations, and other kinds of things -- bio-distribution -- there's lots of things you can study here that really focus on what you would look for in a follow-on molecule. Anyway, that's about what I can say right now. We'll have a lot more to say later in the year.

Yasmeen Rahimi, Ph.D. -- ROTH Capital Partners -- Co-head of Biotechnology Research, Managing Director, Senior Research Analyst

Thank you. Thanks for taking my questions.

Operator

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

Joyce Xiao -- Wolfe Research -- Equity Research Associate, Biotechnology & Specialty Pharma

Hi, this is Joyce Xiao on for Akash. Thank you for taking my question. My first question is: what's the cost of the potential Phase 2B for NASH? And my follow-up question will be: what are you expecting on AST/ALT reduction, LDL increase, MRI-PDFF, and colitis rate at week 12 for your compound EDP-305?

Jay R Luly, Ph.D. -- President, Chief Executive Officer

Yeah, 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 2B, we're still in the process of mapping out the protocol -- what that looks like, in terms of powering, the patient numbers, etc., etc., so until we've really finalized all og 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 2Bs would be.

No. 2, with regards to all of the readouts from our trial -- again, there are a lot of things that we're looking at in this trial. We'll look at ALT, of course; we'll look at C-4, FGF19, but if MRI-PDFF -- we've looked at MRI-PDFF predominantly as an inclusion criteria, because we wanted to -- since we were bringing patients into the study genotypically rather than necessarily having a biopsy-proven NASH -- we wanted to make sure that the patients were steatotic, so we did get baseline MRI-PDFFs. 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.

We'll have elastography, etc., but the punch line is -- you know, what do you want to get from a study like this? This is a 12-week study; I want to 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 2B. 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 for a 12-week endpoint, it's just not a ton of comparable data out there.

Even for ALT on the 12-week time point, I think FLINT had -- you're looking at placebo corrected percent change from baseline. On ALT, FLINT had about a 20% reduction, and Intercept's Phase 3 study, REGENERATE, had about a 15-18% reduction. And really, the only other comparison out there in 12 weeks is Novartis' molecule that's advancing at about 6-9% reduction, so that's the sum total of 12-week ALT data that you can look at. You look for 12-week MRI-PDFF data, you find even less. I think Novartis was around 6-7%, depending upon the dose, and Gilead was around 8-15% depending upon the dose.

So as I mentioned many times before, MRI-PDFF is not the dominant -- 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, and -- again, the main goal here is to look at a number of different readouts that show proper safety, good target engagement, and confirmation of what our Phase 2B 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.

Joyce Xiao -- Wolfe Research -- Equity Research Associate, Biotechnology & Specialty Pharma

Thank you very much.

Jay R Luly, Ph.D. -- President, Chief Executive Officer

You're welcome.

Operator

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

Jay Olson -- Oppenheimer -- Research Analyst

Hey, congrats on the progress, and thank you for taking my questions. I just wanted to follow up on EDP-305. There was a recent NASH Phase 2 study that read out in a competitor's study, and it missed the 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 design of the Phase 2B study that you plan to initiate in the third quarter, especially with regards to the use of MRI-PDFF as an endpoint?

Jay R Luly, Ph.D. -- President, Chief Executive Officer

Yeah, I mean we -- again, I think you're referring to a PPAR mechanism, alpha, delta. They picked that as their primary -- they didn't see that activity. They did see -- I think they had some ALT reductions in their study, but -- as I just mentioned, fat 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 a histology endpoint study, along the lines of -- say, for example -- what a FLINT-type study was. We'll be very cognizant of what everybody else is doing, particularly focusing on efficacy readouts that are germane for the mechanism that you're studying -- in this case, FXR.

Jay Olson -- Oppenheimer -- Research Analyst

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 3?

Jay R Luly, Ph.D. -- President, Chief Executive Officer

Yeah, we've spoken about that a little bit in the past. Again, I think that we've got a lot of things going on at Enanta: 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 3s 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 -- requires a certain degree of sophistication and strength, and this is where -- we've seen it before.

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 3s -- I'm not suggesting that's what would be involved here, but it was a huge Phase 3 program. It was global; it required a 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. Not the least, too, is it's a very expensive undertaking -- we know that to be the case, so I think we would aim to do that.

The other part of this -- there's a strategic part of partnering, too, because -- as I mentioned -- there's a 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, as well. So I think you just increase your overall chances of success in this indication from many different perspectives.

I guess that could always change, but for now, that's the way we've been thinking -- 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 it 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 [inaudible].

Jay Olson -- Oppenheimer -- Research Analyst

Well, that's super helpful; thank you so much for all the color.

Jay R Luly, Ph.D. -- President, Chief Executive Officer

You're welcome.

Operator

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

Turner -- JP Morgan -- Analyst

Hi, this is Turner on for Eric. Thanks for taking the question. Just one on 514, and thinking about the Phase 1B, and potential viral load reduction: 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 differentiation to other core inhibitors in development, and what would be viewed as a meaningful advantage on that front? Thanks.

Jay R Luly, Ph.D. -- President, Chief Executive Officer

It's a little hard to hear you, but basically, what -- at this juncture -- what we've done, we've created a molecule, 514, that -- as far as we can tell -- has one of the best pre-clinical profiles of any core inhibitor that's been reported. Looking at the totality of the in vitro data that we've generated, and the in vivo data that we've done in some very, very challenging animal models, so I think the pre-clinical profile looks good.

We've also done a lot of work on DMPK, and so the molecule 514 earned its wings to go into the clinic is -- the early studies, we're really going to be looking at safety and PK confirmation in healthies. Then we've got -- just like we've had with many other candidates, where we've designed the molecules hopefully well, taking them into Phase 1 -- hopefully we'll have a nice safety profile that will give very good exposures after QD administration, then we'll rapidly be going into the 1B portion of this study -- Part 2 -- and looking at the antiviral activity of the molecule, especially as we get into the treatment-naïve patients, the viremic patients that will be the other Phase 1B.

So we've got two Phase 1Bs coming up to start next year. The first 1B study, which will be in NUC-suppressed is -- assuming Phase 1 in healthies finishes when we expect it to -- we would roll right into the NUC-suppressed in 1B and then -- that would be in the first quarter of 2020, calendar quarter -- and then we would get into the viremic patients sometime in the first half, so stay tuned on the 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 pre-clinically.

Turner -- JP Morgan -- Analyst

Got it, thanks. Sorry if -- is this line better now?

Jay R Luly, Ph.D. -- President, Chief Executive Officer

Yes, sounds a little better.

Turner -- JP Morgan -- Analyst

Great, yeah -- no, sorry, I was asking specifically in thinking about the viral load reduction in the Phase 1B, what would be viewed as clinically differentiated to some of the other novel core inhibitors that are currently in development? Thanks.

Jay R Luly, Ph.D. -- President, Chief Executive Officer

Yeah, again, I think we'll have to wait. Why don't we pause on that one until we see more data at AASLD? 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 it's very early days to see what that kind of log drop is, and it's not just the log drop, of course -- that's one 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, and 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 a NUC, and how do you get to a functional cure? 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.

Turner -- JP Morgan -- Analyst

Great, thank you. Sorry about the line.

Operator

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

Jon -- JMP Securities -- Analyst

Hi, Jon on for Lisa. Thanks for taking the questions, and for the updates. Just a quick one on NASH, Jay -- when you were 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?

Jay R Luly, Ph.D. -- President, Chief Executive Officer

Yeah, that would be beyond -- probably beyond likely, but who knows? I can't commit today on that. Let's 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.

Jon -- JMP Securities -- Analyst

Okay. And then just one last one on RSV: can you remind us of the size and the design of the Phase 2B you're expecting to kick off here? Thanks.

Jay R Luly, Ph.D. -- President, Chief Executive Officer

On the application study -- the size? So protocols being put together sort of as we speak, so we'll be discussing that soon enough, but we don't have the final ends quite worked out. We're looking at powering and other considerations; I don't want to put a number out till the team's had a chance to finalize the protocols.

Operator

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

Patrick Trucchio -- Berenberg Capital Markets -- Therapeutics Analyst

Hi, good afternoon. I have a follow-up on 938, and also on 305. Just first on 938: Jay, you alluded earlier to determining an acceptable dosing window for 938 for RSV, and we know with the influence of drugs, this window is within 48 hours, and that's the best case we can get with these drugs, so I'm wondering if -- with RSV, assuming there is also this acceptable dosing window -- in the Phase 2B 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 a patient has demonstrated RSV symptoms, with that being perhaps just a key part of the inclusion criteria?

Jay R Luly, Ph.D. -- President, Chief Executive Officer

Yeah, 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 yeah, I think it's the latter.

Patrick Trucchio -- Berenberg Capital Markets -- Therapeutics Analyst

And then in ARGON-1, specifically on safety and tolerability of 305 in the study, can you tell us what we should anticipate, in terms of impact on LDL-C and pruritus on 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 if it'll 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?

Jay R Luly, Ph.D. -- President, Chief Executive Officer

Yeah, so 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, getting the gestalt at what our doses do, and what that sort of "therapeutic window" defined is for a go-forward dose. It'll be data that we'll put into context, just like all the efficacy parameters, but we should have that included in the data set at the end of the quarter.

Patrick Trucchio -- Berenberg Capital Markets -- Therapeutics Analyst

That's helpful; thank you very much.

Jay R Luly, Ph.D. -- President, Chief Executive Officer

You're welcome.

Operator

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

Carol Miceli -- Director, Investor Relations

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

Operator

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

Duration: 49 minutes

Call participants:

Carol Miceli -- Director, Investor Relations

Jay R Luly, Ph.D. -- President, Chief Executive Officer

Paul J Mellett -- Chief Financial Officer

Brian Abrahams -- RBC Capital -- Analyst

Yasmeen Rahimi, Ph.D. -- ROTH Capital Partners -- Co-head of Biotechnology Research, Managing Director, Senior Research Analyst

Joyce Xiao -- Wolfe Research -- Equity Research Associate, Biotechnology & Specialty Pharma

Jay Olson -- Oppenheimer -- Research Analyst

Turner -- JP Morgan -- Analyst

Jon -- JMP Securities -- Analyst

Patrick Trucchio -- Berenberg Capital Markets -- Therapeutics Analyst

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