ENTA - NASDAQ

Good afternoon and welcome to Enanta Pharmaceutical's First Quarter 2021 Financial Results Conference Call. At this time, all participants are in a listen-only mode. There will be a question-and-answer session at the end of the prepared remarks. Please be advised that this call is being recorded. I would now like to turn the conference over to Jennifer Viera Investor Relations. Please go ahead.

Thank you, operator and thank you to everyone for joining us this afternoon. The news release with our fiscal first quarter financial results was issued this afternoon 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. Jay?

Thank you, Jennifer and good afternoon everyone. Our fiscal first quarter was an exciting and productive time for Enanta as we continue to advance our robust wholly-owned pipeline. We currently have six ongoing clinical trials; two in respiratory syncytial virus; two in hepatitis B; and two in non-alcoholic steatohepatitis; as well as three respiratory virus discovery initiatives including our recently announced RSV L inhibitor to complement our hMPV and COVID-19 programs. We also recently introduced a new selective oral HBV RNA destabilizer that is advancing toward the clinic mid-year. I'd like to take a moment and acknowledge the commitment and dedication of our employees who continue to go above and beyond contributing to the significant pipeline progress we have made across our business. We continue to build out our team with talented individuals and just this quarter made three significant new hires who will contribute to the company's growth. We look forward to their contributions over the coming months as we approach several significant milestones. In December, Dr. Tara Kieffer joined us from Vertex as Senior Vice President of New Product Strategy and Development. Tara brings over 20 years of scientific expertise in infectious diseases and product development. In January, we announced Dr. John DeVincenzo one of the most highly regarded investigators and respiratory syncytial virus who will be joining the Enanta team. For the past 30 years, John has played a significant role in many of the major RSV clinical trials. Most recently we were pleased to announce Brendan Luu as our Senior Vice President of Business Development, a role to which he brings 20-plus years of diversified business development and sales and marketing experience in the pharmaceutical and technology industries most recently at Merck KGaA. Turning to our pipeline, I'm excited to review the progress of the past quarter in more detail and share our plans for multiple catalysts throughout 2021. I'll start with RSV where we are advancing a robust clinical development program consisting of two ongoing studies and one planned study of EDP-938, the only RSV N inhibitor in clinical development today. RSV is a severe respiratory infection associated with significant morbidity and mortality in infants the elderly and immune compromised adults, the condition for which there is currently no safe and effective therapy. Globally, there are an estimated 33 million cases of RSV annually in children less than five years of age with about three million hospitalized and approximately 118,000 dying each year from complications associated with the infection. The first of our ongoing studies is RSVP a Phase IIb double-blind placebo-controlled study of EDP-938 designed to enroll approximately 70 subjects who are randomized to receive either EDP-938 or placebo for five days. Currently, the RSV season in the Northern Hemisphere has not begun due to the continuing COVID-19 mitigation measures. We believe that when these measures subside, RSV will reemerge and recent modeling is even predicting large future outbreaks of respiratory viruses especially influenza and RSV. In fact this has already occurred in New South Wales, Australia's most populated state where a recent government surveillance report showed a steep increase in RSV rates that experts believe was due to relaxed social distancing measures. Further, the RSV rates were even higher than the usual average peak in the last five years despite being delayed by several months and this peak occurred in Australia's summer season when these cases are usually low. Also the scarcity of RSV cases during the pandemic is breaking a chain of immunity in children who normally get repeated exposures to RSV and build resistance in the first few years of life. This has allowed for a larger vulnerable patient population which experts believe may result in higher than average levels of RSV when the virus reemerges. That said, we believe RSV will reemerge and our strategy is to be ready across the globe with clinical trial sites ready to go when the hotspots emerge. For example we are setting up trial operations for RSVP not only in North America, but also in Europe, the Pan-Asia territory, and the Southern Hemisphere aiming to more than double the number of sites globally. We'll provide updated guidance on RSVP timelines as RSV becomes prevalent again. Turning to our other RSV clinical trials, in December, we initiated RSVTx, a global multicenter Phase IIb randomized double-blind placebo-controlled study evaluating the efficacy and safety of EDP-938 in adult hematopoietic cell transplant recipients with acute RSV infection of the upper respiratory tract. The study is designed to enroll approximately 200 adult subjects with the primary objective of evaluating the effect of EDP-938 on development of the lower respiratory tract complications in these transplant patients who will receive EDP-938 or placebo for 21 days and then be followed for 28 days. We are also currently planning to initiate our third RSV Phase 2 study, RSVPEDs later this quarter. This is a global multi-center Phase 2 double-blind placebo-controlled dose-ranging study of EDP-938 in children aged 28 days to 24 months. It is designed to enroll approximately 90 hospitalized or non-hospitalized infants and children with RSV. The study will have two parts. In Part 1, the primary objective is to evaluate the safety and pharmacokinetics of EDP-938 and multiple ascending doses in four age cohorts oldest to youngest, while the objective in Part 2 is to assess the antiviral effects against RSV. In each part subjects will be dosed for five days and then followed for 23 days. Beyond these three trials, we are excited about the expansion of our RSV program with the introduction of RSV L-protein inhibitor discovery initiative that includes potent nanomolar leads against both RSV-A and RSV-B. Similar to 938, we are focusing on replication inhibitors as this non-fusion approach directly targets viral replication as opposed to viral entry. RSV L-inhibitors are not expected to have cross resistance to other classes of inhibitors, and therefore can potentially be used alone or in combination with agents targeting different RSV mechanisms such as EDP-938 to possibly broaden the treatment window or the eligible patient population. Our respiratory virology discovery efforts are also urgently focused on developing targeted antiviral therapeutics for SARS-CoV-2. Recently several new variants of the original virus have been identified, initially emerging in the UK, South Africa and Brazil, which may have some impact on the activity of current monoclonal antibodies and vaccines. These variants have mutations in the spike protein that potentially allow the virus to spread more readily or evade the immune system. Our antiviral discovery program targets conserved regions in enzymes essential for viral replication, so mutations in a spike protein are not expected to affect the activity of our inhibitors. We expect the emerging variants to retain full sensitivity to our inhibitors and are currently in the process of confirming this pre-clinically. Among our respiratory virology discovery programs, which include RSV L-Protein SARS-CoV-2 and human metapneumovirus, we have nanomolar inhibitors undergoing lead optimization in each and our plan is to nominate clinical candidates in two of these three programs in 2021. Let's move on to our hepatitis B program where we are evaluating EDP-514 our lead core inhibitor and chronic HBV patients treated with a nucleoside reverse transcriptase inhibitor referred to as NUC-suppressed patients as well as in chronic HBV infected patients with high viral loads not currently on treatment, which we refer to as viremic patients. Each trial is a randomized double-blind placebo-controlled study designed to evaluate the safety, tolerability, pharmacokinetics antiviral activity of one of three orally administered multiple ascending doses of EDP-514 compared to placebo over a 28-day period in up to 24 randomized patients. We plan to have preliminary data from both trials next quarter. Last month we were excited to announce the expansion of our EDP program to include our newest clinical candidate EDP-721, a potent and selective oral HBV RNA destabilizer that has the potential to reduce production of multiple HBV proteins, which we believe could be a key component in achieving a functional cure for chronic HBV. We recognize this may take a multi-drug approach involving mechanisms to stop viral replication and inhibit surface antigen also referred to as S-antigen. NUCs are the current standard of care and they are reasonably effective at suppressing HBV replication. EDP-514, our core inhibitor affects several stages of HBV replication from uncoating and nuclear import of the virus to capsid assembly and recycling. And our new oral agent EDP-721 that can destabilize HBV RNAs leads to a reduction in viral proteins including S-antigen. Last month, we shared compelling data demonstrating a three log reduction in S-antigen levels with EDP-721 and a mouse model, which demonstrated equal or superior efficacy to siRNA based and antisense oligo-based agents tested in the same model. With EDP-721 now in our portfolio, we see the opportunity for an all-oral functional cure and we look forward to initiating a Phase 1 clinical study of this exciting new candidate by midyear. Moving on to our work in non-alcoholic steatohepatitis, or NASH our first FXR agonist EDP-305 is in an ongoing ARGON-2 Phase 2b randomized double-blind placebo-controlled 72-week study in approximately 340 subjects with biopsy-proven NASH with fibrosis. The primary endpoint of ARGON-2 is improvement of fibrosis without worsening of NASH and/or NASH resolution without worsening of fibrosis. While good target engagement and tolerability were observed with the one-milligram dose in ARGON-1, with ARGON-2 we are exploring doses of 1.5 and 2.0 milligrams to determine what additional dose or doses may also favorably balance target engagement with tolerability. In mid-2021, we will have an internal interim analysis of 12 weeks of treatment in a subset of patients. At which point we expect to have more information to determine what dose or doses we move forward for potential combinations through partnering. We are also developing EDP-297, our oral follow-on FXR agonist for NASH with potentially best-in-class potency and tissue-targeted effects. It's currently being studied in a Phase 1 randomized double-blind placebo-controlled first-in-human trial designed to assess the safety, tolerability and pharmacokinetics in approximately 74 healthy adult subjects. We look forward to reporting clinical data in mid-2021. So in mid-2021, we expect to have important insights for both EDP-305 and EDP-297 and we will be positioned to prioritize these assets and define the optimal go-forward strategy. I'd like to conclude my remarks by emphasizing a key few points. It's been an especially active time for Enanta, as we continue to progress and expand our wholly owned pipeline. Over 2021, we look forward to several catalysts including the initiation of a Phase 1 clinical study of EDP-721, our HBV RNA destabilizer by mid-2021 and preliminary data for both Phase 1 study of EDP-514 in HBV patients in the second quarter of 2021. Further, when looking toward our respiratory virology discovery efforts, we anticipate nominating two new clinical candidates this year among our hMPV, SARS-CoV-2 and RSV programs. Finally, in NASH with the ARGON-2 trial of EDP-305 and the Phase 1 study of EDP-297, we look forward to having valuable insights midyear to inform next steps. I'll stop here and turn the call over to Paul to discuss our financials for the quarter. Paul?

Thank you, Jay. I would like to remind everyone that Enanta reports on a September 30 fiscal year schedule. Today, we are reporting results for our first fiscal quarter ended December 31, 2020. For the quarter, total revenue was $31.7 million and consisted entirely of royalty revenue earned on AbbVie's global HCV product sales of $481 million. This compares to total revenue of $52.6 million for the same period in 2019. The decrease in royalty revenue quarter-over-quarter was driven by lower HCV product sales as treated patient volumes have remained below pre-COVID levels as reported by AbbVie. Royalty revenue was calculated on 50% of MAVIRET sales at a blended royalty rate for the quarter of 13% and on approximately 30% of VIEKIRA sales at a royalty rate of 10% after adjustments for certain contractual discounts, rebates and set offs which now are approximately 2.7% of AbbVie's total reported HCV product sales. As a reminder, 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 for the year. 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 2020 Form 10-K. Recently AbbVie reported that their global HCV sales were $1.83 billion in 2020 and guided to $2 billion for global HCV sales in 2021. Moving on to our expenses. For the three months ended December 31, 2020, research and development expenses totaled $36.7 million compared to $32.8 million for the same period in 2019. The increase was primarily due to the timing and activity of our clinical trials year-over-year. General and administrative expense for the quarter was $7.4 million compared to $6.9 million for the same period in 2019. This increase was primarily due to increased headcount and compensation expense. Enanta recorded an income tax benefit of $3.3 million for the three months ended December 31, 2020, compared to income tax expense of $1.5 million for the same period in 2019. This income tax benefit was due to the company's pretax loss in the period which can be carried back under the CARES Act of 2020. Net loss for the three months ended December 31, 2020, was $8.3 million or a loss of $0.41 per diluted common share compared to net income of $13.4 million or $0.65 per diluted common share for the corresponding period in 2019. Enanta ended the quarter with $404.7 million in cash and marketable securities. Enanta expects that its current cash, cash equivalents and marketable securities as well as its continuing royalty revenue will be sufficient to meet the anticipated cash requirements of its existing businesses and development programs for the foreseeable future. Further financial details are available in our press release and will be available in our quarterly report on Form 10-Q when filed. I'd now like to turn the call back to the operator and open up the lines for questions. Operator?

[Operator Instructions] Your first question is from Roy Buchanan with JMP Securities.

Hi. Great. Nice quarter. Thanks for taking the question. So I guess, I want to start on EDP-721. It kind of struck with the durable activity. I guess two weeks after the end of dosing, you still saw robust reductions in s-antigen. I guess, I'm curious, if you know of any other small molecules that have shown a kind of durable effect in the mouse model? And maybe, if you could give any comments on what maybe explains the durable effect? Is it something to do with drug half-life or the mechanism? And then, I wonder if you could give us any details about how you guys are approaching the potential for off-target activity from this agent potentially on the host transcripts? Thanks.

Hi. Roy, this is Jay. So the durability question I think I need to help you understand. It wasn't a single dose and then monitored two weeks later. It was dosed over a two-week period as a small molecule set, probably makes more sense to you in terms of the responses that we've seen with a small molecule. So it is daily dosing. It's daily dosing. It was over a 14-day period. It was compared to other people's 14-day data regardless of how they dosed. So that's the first thing. And comparing it to other agents, I think you may have seen the -- some of the data that we've shown with regards to some of the siRNAs that are out there or antisense oligos. And 721 performed very, very well, stacked up quite well either being as efficacious by log drop as any of the agents and more efficacious than almost all of them. So from that vantage point, we're very excited about the efficacy that we've seen so far and look forward to carrying it into the clinic. I mean there has been an extensive amount of preclinical work done virologically and mechanistically and looking at all sorts of things from a selectivity perspective. And we're quite pleased with the profile in terms of its specific targeting to HBV RNAs versus others. And also with regards to its safety profile preclinically. So very, very nice virology and very good preclinical package. And we're just sort of wrapping up readiness to get ourselves into the clinic mid-year.

Okay. Great. I will hop back into the queue. Thanks.

Thank you.

Your next question is from Yasmeen Rahimi with Piper Sandler.

This is Rachel on for Yasmeen. And thanks very much for taking our question. So we have one question and then a follow-up. First can you provide us some color on the process and what you're looking for in the clinical candidate for your L-protein inhibitor? What's the significance of advancing the L-protein inhibitor? And what advantages do they have over N-protein inhibitors? Thank you.

Yes. So the process for identification is one that we're very familiar with across lots of different viruses. We zeroed in on the polymerase, the so-called L-protein and got a drug discovery program going in earnest actually quite some time ago. And we sort of waited until we came up with some very highly potent compounds that we thought were within striking distance of a candidate and then therefore announced the program this year in January at JPMorgan. I'd say we're sort of finishing the sort of final lead optimization looking at all the different characteristics that make a drug candidate more than just a potent molecule. So a lot of DMPK work and another virologic work. But we're getting reasonably close. And I think it is one of the ones that we can add to our list of ones that could hit this year. With regards to advantage not certain that there is an advantage of an L inhibitor over N. I mean we're very, very pleased with the profile of 938 from the mechanism of the N-Protein targeting that we have with 938 has super high barriers to resistance and good activity across the different types of the virus performed exceptionally well clinically. And so this is more about us looking at different and potentially complementary mechanisms just to again to be defining hopefully the best-in-class across any different mechanism, so as the Enanta can continue to sort of build a leadership position and not only RSV, but even respiratory viral therapeutics more completely. We also wonder and we've done preclinical studies looking at these different combinations or mechanisms. And it's clear that, our N inhibitor plays well with other mechanisms and other mechanisms play well with N inhibitors. So whereas we may never need to do a combination trial to demonstrate more than adequate efficacy. We may want to and as such as it could extend the treatment window perhaps. Again we don't know that for certain, but these are the kinds of things that we'll be able to explore extending the treatment window for opportunity to use therapeutics and maybe even get us into -- maybe even more challenging to treat patient populations or patients who are further along. We may be able to reel them back in if we hit the virus with more than one mechanism. So these are the kinds of things that we're thinking about overtime. As we develop these and agents against several other viruses that we're targeting, we're really pleased to have John DeVincenzo joining the team at Enanta. He's the world expert on lots of this stuff. And he'll be able to fit in with a very accomplished team of investigators that we already have. We'll really broaden and expand our thinking on how we go about this. So I think hopefully that gets your question. Was that the follow-up too or -- yes?

Yes. No. Thank you. That was incredibly helpful. So our follow-up is about the COVID-19 program. Can you comment on which targets you're evaluating that you believe will prevent infection by -- will be protective against like protein variant? Thank you.

Sure. No thanks for the question. So we're -- as we said pretty early going into this thing. We think about direct-acting antiviral as our, sort of, go-to approach on a lot of these things, particularly, with regards to human respiratory viruses. You can look at entry inhibitors, but we're just wondering if entry inhibitors or entry inhibitors alone will offer enough either horsepower or flexibility to have a longer treatment duration. So instead, we're going after replication inhibitors. And I think we're sort of taking the same sort of approach not only to RSV, but we're carrying it into SARS-CoV-2. So with that in mind, we're -- we've stated publicly that among the things we're thinking about our protease inhibitors and polymerase inhibitors. So that's a fair assumption of what we're targeting there. And we think they're good approaches vis-à-vis the variants the spike protein variants that are starting to emerge in the community today.

That’s very helpful. Thank you so much and definitely proud of.

Thank you.

Your next question is from Brian Skorney with Baird.

Good afternoon, guys. Thanks for taking the question. Jay, we've talked before about, sort of, the almost acetic nature of nucleoside chemistry. And I've kind of always thought that small molecule RNA destabilization seems like an almost equally if not more complex chemistry. So I guess, can you help us think through the way in which you develop a small molecule as opposed to a targeted oligo that can result in specific destabilization of HBV RNA without interrupting RNA that might be critical for normal cellular processes in a person? Like did you actually know the end target or targets of this chemistry now? Or is this primarily been an evolution of high throughput screening for chemicals that wind-up stabilizing S-antigen in primary human hepatocytes? Thanks.

Yes. We know – thanks, Brian. So we know the targets and there's specific molecular targets that we're going after. They're ones -- they're specific enzymes that are focused on stabilizing HBV RNAs. And we've come up with very specific inhibitors of these enzymes that are not only good at inhibiting the enzymes, but inhibiting the enzymes in the context of hepatitis B infection. So it was not through a high throughput screen.

Great. Thanks, Jay. That’s really helpful.

You’re welcome.

Your next question is from Brian Abrahams with RBC Capital Markets.

Hey, guys. Thank you for taking my questions and congrats on the progress. I guess, one on NASH and then just a quick follow-up. I'm curious if you could speak to your views following the FDA's recent workshop on NASH drug development in the context of the setbacks for the most advanced FXR. Just wondering, how that may shape your plans and what you might be looking for mid-year from the 305 and 297 studies? And then just as a follow-up separately on the SARS-CoV-2 inhibitor. Just wondering if you could talk a little bit more about potential time lines there for both the preclinical variant data and clinical entry? And I guess would it be fair to say that once that gets into the clinic there could be a potential expedited regulatory path? Thanks.

Yes. So starting with the SARS-CoV-2 first the – again, we're working with very, very potent molecules right now that we're, sort of, apple polishing into candidates. Unfortunately, with that process you, sort of, can't legislate when you get to the finish line. It's iterative and sometimes its two steps forward one step back. But I feel confident enough that, when you line up the three programs the L Inhibitor for RSV, the human metapneumovirus and also the targets for SARS-CoV-2, they're all contenders for candidates this year. And hopefully, we'll harvest two of them and top of my list would actually be SARS-CoV-2. So depending upon when we get that we'll have to finish certain other IND-enabling studies before we can get it into the clinic. So the sooner that we can make that final candidate selection and nomination probably be three quarters or so before you could go out of the clinic. I think there's every sense that the new administration is looking at – COVID has been more than just a vaccination sort of approach. I think therapeutics are getting highlighted extensively and could there be some very constructive dialogue with regulators. I think the answer could be yes. Obviously, you need to get there and pull the agent forward and get it into the clinic. But I would be very hopeful that you would get a lot of receptivity and interaction with the FDA to help design studies that could get things to patients as soon as possible. With regards to NASH, I think there's no impact sort of on our progress and how we're thinking around our current Phase II – IIb study or study design elements. The FDA highlighted the importance of histology readout as an endpoint until noninvasive biomarkers are further validated. I think that was one of the key points. And safety is also key in chronic treatment. So, therefore, the need for long-term follow-up post conditional approval sort of thing. But at this point, we don't really feel that there's any modification to our current plan. Our plan is to get key information and data sets in mid 2021 and look at how all the data hangs together prioritize our NASH portfolio. And as we've said all along ideally, identify potential doses expeditiously around 305 that could be utilized in combinations likely through partnerships. So that's still a plan A, and one that we're continuing to execute very well on.

Got it. That's really helpful. Thanks for all the color, Jay.

You’re welcome.

[Operator Instructions] Your next question is from Jay Olson with Oppenheimer.

Hi. Thanks for taking the question. For your SARS-CoV-2 program, once you move that small molecule direct-acting antiviral into the clinic do you plan to seek out a partner to expedite the clinical development and ultimately manufacturing and distribution and commercialization of that drug? Or is that something you envision doing independently? And then, I guess, more broadly on the business development front now that you've increased your team's capabilities in business development and given your cash position what do you plan or what do you envision this year in terms of your business development objectives? Thank you.

Yeah. So with regards to SARS-CoV-2, I think Enanta's pretty well situated as a small company. Again, this isn't our first respiratory virus. And one of the ways that we're thinking about this and the way to be really successful with SARS-CoV-2 therapeutic in the longer term is to have something that's very safe and very oral – not very oral, safe and oral such that you could almost think about it in the context of like an RSVP study, where you have otherwise healthy patient shows up to the doctor's office with respiratory symptoms, hopefully, not terribly far advanced get tested or probably coming with a positive test result. But maybe, it's an symptomatic person, who just as part of some employee protocol or otherwise gets tested tests positive, and then may be asymptomatic. These are perfect candidates to receive direct-acting antiviral. Hopefully, jump on the virus quickly with just several days of dosing, and knock that viral load down, stop the shutting, stop the – break the chain of transmissibility. Hopefully get the person recovering at home quickly and being test negative very quickly and otherwise, back to gainful employment or school or whatever the case may be. So we're no stranger to setting up that kind of a study, running that study. In fact, a lot of the sites that we have around the globe could be candidates to run those kinds of studies. So I think we're – we'll have good insights in terms of how to jump in. Ultimately, if we have a very big product candidate of course, we'll have to look and think about can we maximize it completely ourselves or do we need to seek a partner? I think we've got a while to sort of sort that out. We'll be watching to see what gaps in vaccinations there are and look at that longer-term, as we would with any of our programs. But it's just – it's very nice to tuck that in into a broader portfolio, where we have multiple different RSV assets human metapneumo, another significant one and then SARS-CoV-2 dovetails perfectly in terms of building a very comprehensive human respiratory virus therapeutics franchise if you will. So first things first, we'll get the candidate and demonstrate what we need to demonstrate. But I think we've got a pretty clear set of thoughts and approach that we would take. On the BD front, we did hire Brendan Luu. We've – get asked on almost every one of these calls, what are you thinking about business development? Are you thinking about RSV or HBV or NASH? And we've always said that, NASH falls into that category probably being bigger than we are ultimately on a global basis, particularly and as much as combinations going to end up being very, very important. So I think, as we've guided along the way ARGON-2, a big piece of that was understanding, what 12-week data looked like in connection with ARGON-1 data to allow for potential combinations more quickly. And again, we're looking toward mid-year to get that understanding. Already we know from ARGON-1, that the 1-milligram dose looks pretty interesting. 2.5 milligrams gave us intercept like pruritus. With ARGON-2, we'll look at a couple of other doses to see if there's a dose above one milligram that gives good – a good balance there in terms of target engagement and tolerability. These are the things that we'll readily be able to sort of understand and move on. So I would say nothing's changed in that regard. NASH is an important one, probably nearer term and that we would aim to try to team up prior to any Phase III work and maybe sooner. And then the other things are on sort of a spectrum. I think HBV, we've got a portfolio of assets that's starting to build. We had – we started well everyone sort of has NUC as a background therapy out there that patients are on as a standard of care and they're becoming cheap and ultimately generic here soon. So you have that as a great sort of base line therapy that you can start adding other agents on. So 514, obviously is our first combination study with a NUC and we'll update on that next quarter. But we're hopeful that 721 could be a key piece in the missing link of creating an all-oral triple coming up with something that does affect S-antigen. And in addition to a couple of things that knockdown DNA and RNA and do other things mechanistically, adding 721 now could allow us to create an all-oral triple. Now, how far we progress that remains to be seen. I think we want to try to put that forward as an all-oral triple combination. Maybe we seek other things that we might ultimately add to that or – so that would be among the possibilities. But if you run it further out, I think hep B ultimately will be like hep C, where if you really want to maximize it and you want to cure millions and millions of people on a global basis, especially where hep B is predominantly ex US when you look at it, I think we would definitely have a global partner. Now would we at some point try to retain the possibility of co-commercialization? We had that option with AbbVie even in the Hep C days. We didn't exercise that at the time we needed to exercise it, because it didn't make sense for us as a company. But -- so, we would think about that as the time came where were we in terms of thinking about a commercial infrastructure around Hep B. We've got a while to sort that out. But in the meantime, we're, I think amassing a very nice set of assets one that we can control and one that may lead to a functional cure that's all-oral. And then, RSV is a broader human respiratory virus. This is something that we're not looking to do a global partnership on anytime soon. Maybe if ever, we'll have to see how that goes that maybe the one that we can prosecute ourselves, especially on the RSV front, where single agent 938 maybe all you need. And we have the opportunity to be the first or one of the early drugs to market in that indication, the first ever treatment, if you will. So, I'd lay them down kind of in that order of priority and then we'll just start to explore.

Thank you. That’s super helpful. Appreciate the details.

You’re welcome.

Your next question is from Liisa Bayko with Evercore ISI.

Hi. Thanks for taking my question. About your RNA destabilizer, can you talk about sort of the preclinical tox workup that you've done so far? I know it's a really interesting and exciting molecule, and I agree it can be a really important contributor to getting towards that goal of an all-oral functional cure for Hep B. At the same time, we've seen another -- a number of companies that have had some issues with their programs. So hopefully, you've threaded the needle there. So, just curious about your preclinical tox. Thanks.

Sure. Yeah. So, thanks for the question, Liisa. I mean others have tried to do this and haven't always been able to progress their programs. And so, as we were working on this program actually for years, optimizing the molecules, coming up with ones that were exclusively potent had very, very nice drug-like properties, and importantly safety. I mean we usually don't talk a lot about preclinical safety, because it's an enabler to get you to the real clinical data. But we've done a very extensive workup and have gone through 13-week tox in multiple species. So, the molecule looks incredibly good by every measure that we've looked at it. From a virologic perspective, from a DMPK and also from a safety perspective, it's a very, very nice molecule.

Can you talk about how -- your preclinical tox in species and duration? How much coverage do you have now in terms of moving into clinical development? Can you dose for a month three months? What's your coverage at this point?

Well, we have 13 weeks, so we've got three months' coverage with regards to that.

Okay, great. And then…

I mean obviously, we're going to go into shorter term. Phase 1 will be a three-month study in healthy volunteers, but we've got ample tox coverage.

Great, okay. Good. And do you mind saying what species you've done in?

Again, typically these are details that we just don't get into, but there -- you have to line them up with your metabolites and you have to line them up with where -- you make sure you cover all your -- any metabolites have to be covered in your toxicology program as well. So those selections are made by a combination of the DMPK and the safety team had an answer, but it's the appropriate ones that were for this molecule to go safely into humans.

Okay. And then you're a little vague on expectations for RSVP. Are you still targeting kind of this year? Or do you think that's something that you think it's more likely next year? I'm just trying to set expectations for myself.

No. It's not -- we're not expecting it this year. And as we pointed out a few weeks ago at JPMorgan, and people -- you can go look at those -- these articles in the papers all the time. There's been no influenza this year.

I know.

And I mean, I guess normally that's a good thing unless you're trying to recruit for a study like RSVP, but I don't want to wish RSV on anyone. But if anyone gets it, I'm happy to treat them. So they -- and RSV is pretty much -- it's paralleling flu. If you look at the map on the CDC website for flu, it's basically all green. There's not even a light shade of green except for in four states, I think. So it's -- but it's basically flatlined cases. So it's not something, I mean -- again, pandemic notwithstanding, I think, we were on a good trajectory based on our readiness. But that part's not likely to happen or at least not likely to happen in a normal season. I think, one of the things that was really interesting was that report we saw a few weeks ago out of Australia, where they let their guard down for just a little bit, because it's summer down there. And all of a sudden they saw this massive spike in RSV infections. And it was a big spike, bigger than most spikes. And it happened in their summertime, which is out of phase. So it's sort of pie out of phase with the normal season. And -- so when you think about those kinds of considerations, I'm not sure there's a real clear rulebook for what happens when COVID mitigation strategies start to subside. And I think, one thing that I can tell you that people are beginning to worry about is, could there be -- on the other side of the COVID pandemic, could there be epidemic levels of influenza and RSV. And people are worrying about that, particularly in children where you rely on the first year of birth to build up a little bit of immunity by exposures, once or more than once. And then in your second year of life you build it up a little more. And the third year you have a little more. Eventually, kids start to shake these RSV infections for a little while and then they're protected for a bit of time. But now, last year and into this year, every kid that was less than one year old probably didn't get an RSV infection. The kids who were between one and two years old didn't get them. And the kids who were two to three didn't get them. And so, you're breaking this chain of immunity. And ultimately that can lead to some really unexpected -- unprecedented level. So we'll have to see how that all shakes down, but there -- it could be a very different season on the other side of some of this. So we'll just -- as we said on today's call, we're just -- we'll just update our guidance when we see the RSV prevalence kicking up again.

Okay. But it won't be this year?

It's unlikely to be this year.

All right. Okay. Thanks a lot.

Yes. You’re welcome.

Your next question is from Eric Joseph with JPMorgan.

Hi. Good evening. Thanks for taking the questions. Just a couple on NASH. You alluded a little bit to it earlier, but I'm just wondering if you could clarify which endpoints you'll be reporting at the 12-week interim analysis for ARGON-2. We've been looking at ALT and fat fraction as well as safety, particularly pruritus? And then as we think about the Phase 1 data for 297, we know that safety and healthy volunteers has been a little under informative in the past. Is there a particular data point or a couple of data points that you'd be newly focused on that might better characterize or derisk the safety profile in NASH subjects compared with the 305 experience? Thanks.

Yes. So, I'll answer the first question hopefully very clearly, because it's in our slide deck and we -- and it's on our call and we said it starting this year at the JPMorgan conference. The ARGON-2 interim analysis is an internal read-only. So it will not be reported out. It will not be reported out. So this is something that the -- there's -- it's only the DSMB and key people who are not involved in the conduct of the study will be able to take a peek at some of the information. And again, in order to make dose selection determinations for potential combination and comparing that to ARGON-1 data, it's really for that purpose. And if we'd have to power the study in a different way, if we were going to be reporting that data out, because we would be spending alpha and that's something we certainly don't want to do on the ARGON-2 study. So it will be informational. We'll get information as it relates to prioritization of assets and doses and really defining for us the go-forward strategy for NASH "at large" at Enanta. So that's what it is. But we will -- just so you know, we'll be looking at things like target engagement, things like C4 and FGF19 fat. These are the kinds of things that we looked at in ARGON-1 and we have a very clear data set at, one milligram and 2.5 milligram. All we're going to be doing is trying to understand on a subset of ARGON-2 patients, how those parameters look at two new doses 1.5 and two milligrams, pure and simple. The 297 trial, on the other hand is, a study in healthies. And it's one of the things that we also know well by having studied 305 in healthies. So -- and you may recall, we looked at SAD, Single Ascending Dose. And we looked at Multiple Ascending Dose in healthies. And then, we redid the MAD alongside, in presumed NAFLD subjects, just so we could try to get a beat on, what a bona fide NASH patient might look like, to see, does the drug do anything different to that patient population? Or does that patient population do anything different to the drug? And it turned out it was on the one hand, uninformative or it wasn't -- how should I say this? The presumed NAFLDs behaved very similar to the healthy volunteers. And so -- but what we did learn was when you dosed to -- we were watching dose escalations. So as we went from, I remember, all the doses you go from 0.5 to one to 2.5 to five to 10 to 20 milligrams. As we doubled the dose escalating, we saw, these target biomarker changes and so forth, with or without pruritus all the way up until we got to 20 milligrams in healthies, where we saw a lot of pruritus. Unexpectedly, but we saw it. And so we knew kind of, how to handicap that. We could figure out the dose and the exposures that caused pruritus. And we could go backward, downward from that, to find the doses that gave us target engagement. And so I think, one of the things here when we overlay a new data set, like on 297 which has, some other design elements in it than 305 did. But when we lay that data set over the 305 data set, yeah, we'll have basically a good level of information to understand, did we do something different? Is this a product opportunity that has differentiation, above and beyond 305? Or is it just like a super, super potent 305? We hope it will be differentiated. We designed it to have certain elements that could lead to that. But the reality is, you got to go in there and run that study. And when we get that data set, I think, we'll be able to compare it to our 305 data set, and really understand, how it all hangs together. So, I think we will recognize improvement if it's there.

Okay. Thanks a lot for taking my question.

You're welcome.

Your next question is from

Hi guys. Thanks for taking my question. It looks like you have multiple milestones in 2021. So I just wanted some additional clarity on the HBV data, that's going to come in the second quarter of this year. With what we've seen with assembly just kind of wanted to know, how are you setting expectations as we head into that?

Yeah. So, the data sets -- so we're expecting two data sets. One will come from 514, that's added on top of a NUC. And the other one will be 514 in the backdrop of patients that haven't received any NUC therapy. So they're viremic they've got higher viral load. So, one population will have very low viral loads. The other one will have higher viral loads. So -- and the study -- with regards to the NUC, it's going to be -- a lot of it's going to be about safety and tolerability, and how the two molecules play well together over a 28-day period. You're not likely to get a lot of information about virology, in that patient population over that time period because they're already reasonably suppressed. And it's only 28 days, so you wouldn't expect to see some of the viral antigens, if they were to ever move to be moving on that. So it's one kind of a study. It's a necessary study because we'd start a standard of care. And then, ultimately, we're going to be looking at the viremic study data, which will be one in which we can get a little bit more information over that 28-day period. We should be able to see -- we should be able to see a good solid DNA drop in those subjects over a 28-day period, probably a multi-log drop would be encouraging something, say more than two logs or so. And you should also be able to see an effect on RNA as well, probably RNA effects are usually not as pronounced as DNA effects but you should still be able to see something in that over a 28-day time frame. So those are the kinds of data that we'll be reporting and to give us key information in terms of PK and PD safety and help us really understand dose ranging for future studies.

Okay. And just a follow-up on that one as well. When you do get the data, do you anticipate it going with the combo going forward, or do you think you'll wait for the triple?

We'll go forward, yeah. We'll have the -- the triple will catch up, shall I say.

Sounds good. And then the last one here is just about the recent hires. I'm viewing it as very promising for the company. And I was just wondering how these new hires, kind of, reflect your approach, or strategic approach towards the business? And what can we expect? I think you talked briefly about the business development efforts but just more broadly.

Yeah. Well, as you know Enanta, we've got a very experienced team. It's very well-rounded. You may remember we used to have a person in the company, it's probably before you started -- before you picked up initiation on us. But we had a person in that New Product Strategy and Development role. Previously he retired. And so I embarked upon a search in that front. And actually the prior person had a BD role as well, so it was sort of a combined role. And now as the company has grown and we built out strategy in a more complete way and BD in a more complete stand-alone way as we envision just the pipeline maturity and complexity of what we're prosecuting. So very good, young talented hires from great companies. We've spoken about BD. Brendan spent a lot of years at Merck KGaA. He headed up the oncology business development for them, which is a big chunk of their business. And Tara Kieffer is a current carrying Hopkins-trained PhD virologist who spent a lot of years at Vertex in many different roles, not just on the virology side although she was -- she and Nathalie, our CMO were involved. And ultimately the approval of telaprevir and Tara was presenting at FDA AdComs. And then she went more into a role in the clinical area and then ultimately into business development. So she's a very experienced person as well who's highly technically trained. And so those are the kinds of people we love to have on the team.

Thanks, Jay. I’m exciting and thanks for the recall. I think it’s really helpful in terms of any expectation for us.

Good, good. Thank you.

Your next question is from Akash Tewari with Wolfe Research.

Hey, guys, thanks so much for taking my question. So you're expanding the RSV trial sites for RSVP. How are you ensuring that patients are getting the drug within two days of symptoms? Like what are you putting into place to make sure as you're doubling the clinical trial sites that is still going to be run properly? And as we think about Dr. DeVincenzo and his recent hire how do you think he's going to be contributing to running the trial design? Specifically as we think about Phase 2b to go into Phase 3, what's the path forward for that program? Could the Phase 2b potentially be pivotal? And then finally on your COVID program, you guys are really thoughtful about whatever you're putting into the clinic. You're alluding to a polymerase inhibitor and then a protease inhibitor. I look at the Pfizer program and there's issues I think with that being an IV drug. I look at the Ridgeback/Merck program, and I'm thinking there's probably issues with carcinogenicity -- safety in general with that target. What are you optimizing right now when you're thinking about those targets? And how do you think that your molecule could potentially be differentiated versus the other protease and RNA polymerase inhibitors that are in development for COVID? Thank you.

Okay. So a bunch of questions, but I'll take them. I have a sense we're getting I think on to the end of the call here, but the -- so with regards to RSVP, I mean, this is the way we always do the study right? People show up. They show up to one of our sites. And just as part of the investigator questionnaire you find out when people were symptomatic. And it's -- so it's either they're within the 48-hour window or they're not. And so if they're outside of that window, they're just excluded from consideration. So, it's a key inclusion criteria for our study. If they are in that window they're tested on site. We've got RT-PCR machines on every site that will give quick answers and you find out basically while the subject's still in the office and they can be dosed straightaway. So, that part of it, I think we're all set on. And I don't expect there to be any abnormalities or perturbations from the existing protocols that we've had in place at other sites. So I think it should all be fine. So, John DeVincenzo, Dr. DeVincenzo who will be joining us is expert in this. As I know you know he's a KOL extraordinaire in the RSV space. He's been involved in many if not all of the key sort of RSV studies and key RSV therapeutic approaches over the years. And he spent a full career, hoping that he could ultimately help deliver a therapeutic for the patients he sees. And so we're -- it's too early to say anything now about his impact on creative clinical trial design in the future. But what I would say is it's absolutely the reason why we have him onboard. Again, our goal is to build the leading franchise in this space. We've got a very talented team of folks, who have been in the industry for quite a while. And I think now marrying that with sort of academic medicine and also sort of a translational thinker already, I mean he had a clinical virology lab in his lab. He saw patients. He's been working on trial designs. He's been advisers to pretty much everybody. So, I think we'll be thinking about it as hard as anybody can and hopefully trying to come up with the most expeditious pathway to commercialization as we possibly can. And then, with regards to COVID, you mentioned some of the pitfalls that have been with polymerase in the past. And protease inhibitor, I think you were referring to Pfizer's. Is that what you...

Yes.

So, their agent is not an interesting one but it's -- as you know, it's given IV. And we do not want to -- we don't want to go that route. I think by the time you're administering one of these agents IVs, you've lost -- or I shouldn't say it that way you've lost the opportunity to make it much more usable. And so our way of thinking again it's an oral agent. You take it and you get out and you don't have to have other more complicated routes of administration that brings you into proximity of other people and -- either in health care settings or other settings that you otherwise wouldn't need to be. So we're focused only on oral agents. We've got some very -- again as I mentioned, some very good oral agents that are potent and have good oral PK. And so we're again just fine-tuning and optimizing. With regards to polymerase inhibitors, NUCs have had issues over the past. And some are fine and some are not fine. And so, we'll be thinking broadly. We are not wedded to -- any time we go after a polymerase, we're certainly not wedded or necessarily even focused on new polymerases. And so we won't ignore them but we need not look to NUCs only as a way to skin that cat. And so suffice it to say anything that we look at there will have an extensive toxicology workup just like any of our other programs. So, I'm -- I think all of our approaches are generally fine on that front especially if you aim them to be safe and oral.

Thanks, so much.

You are welcome.

And there are no further questions in queue at this time. I'll turn the call back over to management for any closing remarks.

Thank you, everyone for joining us today. If you have any additional questions, feel free to contact us directly and have a good evening.