ENTA - NASDAQ

Good afternoon and welcome to Enanta Pharmaceuticals Fiscal Second 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 your prepared remarks. Please be advised that this call is being recorded. I would now like to turn the call over to Jennifer Viera, Investor Relations. Please go ahead.

Thank you, operator, and thanks to everyone for joining us this afternoon. The news release with our fiscal second 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 [Technical Difficulty] call over to Dr. Jay Luly, President and CEO. Jay?

Thank you, Jennifer, and good afternoon, everyone. Our fiscal second quarter marks another productive quarter for the company as we continue to work towards several upcoming catalysts across our pipeline in the remainder of the year. We currently have 3 active clinical programs across our portfolio in virology and liver diseases, in which we are conducting 7 clinical trials. Starting with hepatitis B, we are excited to report preliminary data from one of the 2 ongoing Phase 1b studies of our core inhibitor, EDP-514, which I will discuss in more detail [shortly] [ph]. Our HBV program also includes EDP-721, our oral HBV RNA destabilizer, which is set to enter the clinic in the middle of this year. Additionally, we have 3 ongoing studies investigating EDP-938 for respiratory syncytial virus, or RSV, and 2 ongoing clinical studies for 2 candidates to treat non-alcoholic steatohepatitis or NASH. Further, we continue to progress our viral respiratory discovery initiatives, identify an L inhibitor for RSV, and an inhibitor for human metapneumovirus, or hMPV. Finally, we are particularly enthusiastic about the prospects for an oral protease inhibitor specifically designed to target SARS-CoV-2. With that, I'd like to turn to our robust pipeline, beginning with our HBV program, where we are pleased to be able to report today positive data from the first 2 dose cohorts or Part 2 of our ongoing Phase 1b study of EDP-514 in chronic HBV patients treated with a nucleoside reverse transcriptase inhibitor, who we refer to as NUC-suppressed. The data announced today provide critical support for our approach to developing an all-oral functional cure for patients with chronic HBV. Based on preliminary results of the Phase 1b study, EDP-514 was safe and well tolerated in NUC-suppressed patients for up to 28 days, and the pharmacokinetic profile is supportive of once-daily dosing consistent with what was observed in Part 1 in healthy subjects. Going a bit deeper into the data, a total of 16 patients, the majority of whom were e-antigen negative, were randomized to receive 200 milligrams of EDP-514, 400 milligrams of EDP-514 or placebo for 4 weeks. There were no grade 3 or serious adverse events, and the majority of the treatment-emergent adverse events were mild. One patient in the 200 milligram arm had a grade 2 adverse event that led to study drug discontinuation. There were no liver enzyme elevations or other laboratory abnormalities. EDP-514 exposure increased linearly with dose, with trough concentrations up to 18-fold the protein adjusted EC50, supporting once-daily dosing. As expected, the HBV DNA assessment did not show any change from baseline, because these patients already had suppressed DNA levels from their NUC therapy. Additionally, no virologic failure or breakthrough was observed. Exploratory viral endpoints were also evaluated in this study and a mean reduction of 1 log in HBV RNA was observed in patients receiving EDP-514 compared to 0.3 log reduction in placebo, consistent with data reported for other core inhibitors after 4 weeks of treatment. Further, maximum reductions of 2.3 logs in the e-antigen negative group and 2.8 logs in the e-antigen positive group were observed in patients receiving EDP-514 versus a 1.2 log maximum reduction in the placebo group. The study is ongoing and we will obtain data on the highest dose group, 800 milligrams, and report final results at a future scientific conference. Later this quarter, we are also expecting preliminary results from our Phase 1b study of chronic HBV infected patients with high viral load, who are not currently on treatment, whom we refer to as viremic patients. As in the NUC-suppressed study, preliminary data in viremic patients will include safety, tolerability and pharmacokinetics. And importantly, the viremic study will give the first indication of EDP-514's effects on viral kinetics, when used as a single agent over a 28-day period. In addition, we're developing EDP-721, our newest HBV compound for use in combination with other mechanisms, such as NUCs and/or EDP-514, with a goal of creating an all-oral functional cure for chronic HBV infection. NUCs are the current standard of care for HBV patients and suppress HBV DNA. Core inhibitors such as EDP-514 also [Technical Difficulty] HBV DNA, in addition, affect several other stages of HBV replication, including uncoating, nuclear import of the virus, capsid assembly and recycling. However, high levels of HBV S antigen remains a challenge to achieving a functional cure. EDP-721 is an oral agent that destabilizes the HBV viral RNA, potentially leading to a reduction in HBV S-antigen as well as other viral proteins in patients. We are encouraged by compelling data, showing a 3 log reduction in S-antigen levels with EDP-721 in a mouse model, which demonstrated equal or superior efficacy to siRNA based agents and antisense oligo-based agents tested in the same model. We look forward to presenting data on the discovery and characteristics of EDP-721 in a poster presentation at this year's International Liver Congress sponsored by EASL in June, and we are eager to start our Phase 1 trial of EDP-721 in mid-year, with initial results expected in the first half of 2022. Moving to RSV, EDP-938, our lead product candidate and the only N-inhibitor in clinical development today, is currently being evaluated in 3 ongoing studies. RSV is a severe respiratory infection associated with significant morbidity and mortality in infants, the elderly and immune-compromised adults, and a condition for which there is currently no safe and effective therapy. Leveraging our expertise in virology, we designed EDP-938 to uniquely target the N-protein and block the replication machinery of the virus rather than blocking viral entry. As we have mentioned previously, RSV, like flu, did not emerge during the usual late fall and winter RSV season in the Northern Hemisphere in the past year due to the continuing COVID-19 mitigation measures. However, once social distancing measures subside, likely that RSV will reemerge as has already been observed in the recent spike of pediatric cases in Australia. With this in mind, we continue our preparedness efforts to ensure we are ready when RSV reemerges globally, including establishing trial sites in North America, Europe, the Asia-Pacific region, and the Southern Hemisphere. These efforts will key to recruitment in our clinical trial program, which includes RSVP, our Phase 2b study evaluating EDP-938 in adults with community-acquired infection; RSVTx, a Phase 2 study evaluating EDP-938 in adult hematopoietic cell transplant recipients with acute RSV infection and symptoms of upper respiratory tract infection; and RSVPEDs, a Phase 2 randomized, double-blind, placebo-controlled, dose-ranging study of EDP-938 in pediatric RSV patients. The primary objective of the first part of RSVP, which we initiated in March, is to evaluate the safety and pharmacokinetics of EDP-938 in multiple ascending doses, while the primary objective of the second part of the study will be to evaluate the antiviral activity of EDP-938. Once RSV becomes prevalent again, we will provide updated guidance for these ongoing clinical studies. Beyond EDP-938, our lead optimization efforts in our RSV L-protein inhibitor and human metapneumovirus inhibitor discovery initiatives continue to progress. RSV L inhibitors are another drug class that block replication and can potentially be used alone or in combination with other agents, such as EDP-938, to possibly broaden the addressable treatment window or patient population. For hMPV, we are making progress with lead optimization of potent molecules and our most advanced discovery initiative for respiratory viruses is SARS-CoV-2 where our current efforts to develop an oral direct-acting antiviral are focused on protease inhibitors and polymerase inhibitors. Building on our virology expertise and success in hepatitis C, we are designing compounds that prevent replication of the virus in human cells versus blocking viral entry. And we expect our approach will be effective against emerging spike protein variants. We plan to initiate IND-enabling studies with our lead oral protease inhibitor later this quarter. And if all progresses positively, we could have a candidate in Phase 1 clinical study in early 2022. I'll end my pipeline review with a summary of our work in NASH, a liver disease with a significant unmet medical need, where we are conducting clinical studies of FXR agonist, EDP-305 and EDP-297. Recruitment and dosing in ARGON-2, our Phase 2b study of EDP-305, approximately 340 patients with biopsy-proven NASH with fibrosis is ongoing. Due to the impact and resurgence of COVID-19 rates in Europe and in South America on some of our global clinical sites, our internal interim analysis based on 12 weeks of treatment on a subset of patients will now be in the third calendar quarter of 2021, rather than in mid-year. Recruitment and dosing are also ongoing in our Phase 1 first-in-human study on our follow-on FXR candidate, EDP-297, and we expect to report data from that study in mid-year to build upon compelling preclinical data, suggesting differentiated high potency and tissue targeting characteristics compared to other FXR agonists in development. In aggregate, we anticipate that EDP-297 data and the EDP-305 internal interim analysis will enable us to determine next steps such as potential combination approaches for our NASH program. Before moving to the financials, I'd like to reiterate our upcoming milestones. In HBV, we expect preliminary results of the Phase 1b study of EDP-514 in viremic HBV patients later this quarter, and we look toward the initiation of a clinical trial for EDP-721, our oral HBV RNA destabilizer in mid-year. For COVID-19, we expect to begin IND-enabling studies later this quarter for our lead oral protease inhibitor, specifically designed to target SARS-CoV-2. For NASH, we look forward to reporting preliminary data from the Phase 1 study of our FXR agonist, EDP-297, in mid-year, followed by an internal interim analysis of ARGON-2 and determination of next steps for this program. Finally, we are excited by the early prospects coming out of our respiratory virology discovery initiatives and are eager to identify 2 clinical development candidates out of our COVID-19, RSV and human metapneumovirus programs by year-end. With that, 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 second quarter ended March 31, 2021. For the quarter, total revenue was $20.1 million and consisted primarily of royalty revenue earned on AbbVie's global MAVYRET product sales of $415 million. This compares to total revenue of $27.6 million for the same period in 2020. The decrease in royalty revenue compared to the same period last year 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 MAVYRET sales at a royalty rate for the quarter of 10% and on approximately 30% of VIEKIRA sales at a royalty rate of 10% after adjustments for certain contractual discounts, rebates and setoffs, which are now approximately 2% 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 were calculated at the highest royalty rate for the year and royalties for our fiscal quarter ending March 31 are calculated at 10%, our lowest royalty rate tier. You can review our royalty tier schedule in our 2020 Form 10-K. Moving on to our expenses. For the 3 months ended March 31, 2021, research and development expenses totaled $41.5 million compared to $32.6 million for the same period in 2020. The increase was primarily due to the timing of our clinical trials year-over-year. General and administrative expense for the quarter was $8.3 million compared to $6.9 million for the same period in 2020. The increase was due to additional headcount and related compensation expense. Enanta recorded an income tax benefit of $7.1 million for the 3 months ended March 31, 2021, compared to an income tax benefit of $3.9 million for the same period in 2020. The income tax benefit in the coming period was due to the company's pretax loss, which can be carried back under the CARES Act of 2020. Net loss for the 3 months ended March 31, 2021, was $22 million or a loss of $1.09 per diluted common share compared to a net loss of $6 million or a loss of $0.30 per diluted common share, for the corresponding period in 2020. Enanta ended the quarter with approximately $400 million in cash and marketable securities. 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?

We will now begin our question-and-answer session. [Operator Instructions] Please stand by while we compile the Q&A roster. Our first question will come from Brian Abrahams with RBC Capital Markets. Please proceed with your question.

Hey, there. Thank you for taking my questions and nice to see all the progress across the pipeline. First question is on 514, can you provide a little bit more granularity on maybe some of the differences in RNA declines as well as lowest trough concentration that you observed across the 2 doses, and I guess, what you're looking to optimize in this particular study with the higher 800 milligram dose?

Yeah, hi, Brian. This is Jay. Thanks for the question. So, regarding the trough levels, so the trough levels are basically measured at the 24-hour time point after a given dose. And we're just really, really pleased to see the high trough levels. As you know, we bank on those kinds of attributes with all the product candidates that we make, whether it's RSV or any of the other viruses. And it's just a very helpful confidence builder when you see that you have such heavy pressure on the virus at the lowest concentrations that you'll see during the day. So we saw not only very good trough levels at the 400 dose group, which were about 18X the protein-adjusted EC50, but we also saw very high trough levels at 200 as well. So we'll get all that data out once we put it together with the third and final arm of the study, 800. But I can say, so far, based on what we're seeing with the - even the 2 lower doses, we have very, very good exposures at trough concentrations. And then, regarding the viral load reductions, again, in a NUC-suppressed study such as this, we've guided all along that this study isn't so much about virology as it is looking at safety and tolerability and these PK levels confirming that we see the same good safety and tolerability and exposure that we saw in healthy volunteers, and we've done that with these doses. But importantly, it was on top of a NUC and in HBV patients, and going out for 28 days. So all in, it's a very strong package. Again, the DNA is already suppressed from the NUC, so you're not going to see much there. RNAs are generally lower effects that you see. When you see it, it really kind of depends on the exact patient population you have and what their starting RNA levels were, how far they were also may or may not have been suppressed. But what we saw was what's been typical of a strong RNA response from core inhibitors that - and I want to underscore that at a 4-week time period, which is a short time period in the grand scheme of some longer trials that will ultimately be run. We're looking forward to the partner study of this, which I'd call the viremic study. So there the patients will have - coming in the study will have high viral loads, so their DNA will be elevated. And there you have a chance to see a single agent without a NUC coming along to see what 514 does in a dose-related manner as a single agent. So, again, so far so good. The virology is very strong. Preclinically, as you know, very potent molecule. It's pan-genotypic. It works incredibly well in animal models. And now, we've got our first in-patient data that I'm very excited about. Looking forward to the next installment, which will be viremic data, which we expect to get later this quarter.

Got it. And did you guys look for any potential changes in tenofovir concentration? And I know the adverse events appeared pretty mild, but I'm just curious, did any of those grade 1 and 2 side effects? Were any of them consistent with potential tenofovir-related AEs?

I'd have to check on that. I don't believe so. I think it was, again, once we'll put all the information out at a conference when we have the final cohort in. But the AEs were - the AEs observed were mild.

Got it. One more for me, if you don't mind, then I'll hop back in the queue. What are your latest views and what you'd be looking for in the coming months to determine a potential path forward in NASH? And what might those paths forward look like strategically? Thanks.

Well, again, we have 2 ongoing studies. So we have with 2 different compounds, with EDP-297 which is our follow-on FXR. Obviously, that's a super potent molecule. It looks like it's the most potent FXR in clinical development today. So that's 1 attribute that we observed, certainly pre-clinically. The other is the tissue targeting of that. So I think we've laid out the hypothesis of why and how that could build to a better index, if you will, from an efficacy and target engagement versus tolerability profile. And so, we'll let that study run to its conclusion. We're expecting data on that, as we just said, midyear. And then also, we're going to have to share alongside with that or to see alongside with that. Internally, we're going to have an internal look at an interim analysis on a subset of patients in EDP-305 ARGON-2 study. And as you know, we've looked at the goalpost doses previously in ARGON-1 and we're looking at interim doses now. So we have a very good calibration point to look at. Again, it's all about target-engagement/efficacy versus tolerability, whether it's molecule A or molecule B. We had hoped to have that data on ARGON-2 midyear, but as we just stated, COVID affected some of our sites in Europe and in South America. And that's - we had hoped to have that around our early August earnings in midyear. But it looks like that's not going to happen, but it should be in Q3. So we'll look at the aggregate of all that data, see what makes the most sense. I mean, in particular, we're looking for doses that - of drugs that could be very interesting in terms of their target engagement and tolerability profile and that could be used in combination. The goal here is to identify as early as we can this year dose or doses on either or both molecules that could be used in combination, and then seek about looking for combination opportunities, up here and including possible business development opportunities. So stay tuned on that front, but that's the plan.

It makes sense. Thanks so much, Jay.

You're welcome.

Your next question will come from Yasmeen Rahimi with Piper Sandler. Please proceed with you question.

Hi, team. Congrats on the continued progress and updates. 2 questions for you, maybe the first one is, can you help us understand if there were any serological tests done at week 2? I guess, what I'm trying to get at is sort of the time-dependent change in viral load reductions. And then also, like was there a dose separation difference between the 200 milligram and 400? And I recognize that the number of patients are really small. That's sort of part 1. And then, part 2, was that one AE that led to discontinuation? Was that deemed to be drug-related and did this occur at the 200-milligram dose group? And thank you for taking my questions.

Yeah, answering the second question first, I guess, the AE was possibly drug-related. So it was scored as possibly. So that's kind of all you know. It's not definitive, but it was stated as possibly related and at week 12, I beli6eve. With regards to looking at viral loads or kinetics, that's not really what this study was designed to do. So there wasn't that sort of data at 2 weeks. And then, we'll put out the data. You're right that it's a small study. Again, it's a small, but yet informative study to help us think about combination, how do we build them going forward. And again, looking into the future, this trial was to set the table, if you will, for the ultimate of adding a third agent to the combination so that we would have a NUC, we would have a core inhibitor and then we would have our EDP-721, which is our RNA destabilizer, which should be an oral agent to target S-antigen. And so, that's what we're shooting for, obviously. And that's why this is an incredibly important study, even though it isn't laden with virology. But that will come in due course and as early as the next study that we'll report out later this quarter.

Thank you so much. And then, maybe 1 last question, I apologize. As we head into EASL, we're very much looking forward on the preclinical data from 721. Should we be expecting some preclinical models where you have done combination studies with 514?

So I won't comment on an actual presentation until it's finalized. But what we have said is we have looked at combinations of 721. We've looked at 721 plus core inhibitors, and seeing additivity to synergistic behavior. And we've also added 721 to NUC and observed the same. So we have done those experiments. What shows up at EASL in its final form will be the - to be finalized. But we're pleased to be able to have the opportunity to present that at EASL.

Thank you so much.

You're welcome.

Your next question will come from Eric Joseph with J.P. Morgan. Please proceed with your question.

Thanks for taking my question. Maybe just a follow-up on 514 and safety, can you talk a little bit about the time of onset of the AEs albeit low-grade and how they resolve? I'm just curious to know whether as you continue to dose escalate or potentially look to explore longer course of the treatment, how you think the [digital pharm] [ph] might vary? And then, in terms of - and thinking about next steps with the HBV program, what we hear from KOLs is that, is it going to be a multimodal approach, 3 to 4 mechanisms perhaps, being what it will take to get patients to a functional cure, see it similarly, I guess, are you strategically thinking or how are you strategically thinking about combinations with 514 outside of your internal portfolio, perhaps with oligo approach or immunotherapy? Thanks.

I'm sorry, could you repeat the last part of the last question? You drifted off. How are we thinking strategically about what?

Evaluating 514 combination with agents outside of your portfolio, potentially with an oligo, like siRNA or ASO or with immunotherapy.

Got it. So, and again, with regards to any AEs, again, which were all mild except for the one that we noted. They're just scattered throughout the study in different doses over different periods of times, and so on and so forth. So there's just nothing to really point out at this time. It looked very sort of just like any sort of study like this, whether it's a Phase 1 study or any study like this, when you say unremarkable safety findings, they're just sort of scattered. So we'll have, again, a summary of all of that, but there was nothing concerning with regards to how we're looking at anything going forward. It was actually a very unremarkable profile with no real pattern. With regards to the strategy, so it wasn't so long ago that people in the community were wondering, could a core inhibitor plus a NUC lead to a functional cure? And, I guess, in theory, [nobody] [ph] really still knows the answer to that, although, some of the work that others have done suggest that that may not be enough. Even though we had a core inhibitor for many years now, and we're obviously planning for the study for a long-time that we just announced today, which was the first such combination of a NUC plus a core. We were never assuming that that would be enough. If it were to be enough, we would be delighted, because 514 is among the finest core inhibitors, we believe. But we were - that would be an exciting upside, but we were always planning for the future, assuming that that wouldn't be the case. So now what you now know is 721, our molecule that is oral and goes after s-antigen is the result of our continued pursuit down the line of - we will keep going until we know we have enough agents. And ideally, we're going to try to harvest all those agents in-house. I see, right now, we've shown comparative data of 721 versus siRNAs and antisense oligos. We've got a slight comparison of that in the same animal model that's been reported. And 721 stands up very well against them. So could that be a third agent, 721 plus our core inhibitor 514 plus a NUC, could that be enough? It certainly gives you a stronger chance than a NUC plus a core alone. We're hopeful that it could be, but it might or it might not. We'll find that out as we propel down into next year and hopefully get triple combinations going. But suffice it to say, we hope that it could be, but we won't rest in terms of looking at other kinds of things, thinking about other mechanisms until we're sure we give a functional cure, and hopefully, one that's an all-oral one. Could we find an asset outside that we could combine with on top of our triple, possibly could we generate something in-house that could be combinable on top of our triple, if you count the NUC again? I think that's another possibility. So - but our strategy, to be clear, is to keep aggregating as many mechanisms as we need to provide the same - ideally the same quality cure that we've been able to offer hepatitis C patients. That's our goal and our dream to do that.

Yeah. Thanks for taking the question.

You're welcome.

Your next question will come from Roy Buchanan with JMP Securities. Please proceed with your question.

Hi, thanks for taking my question. Congrats on the Phase 1 results for 514. First question on that. Can you just remind us, it sounds like you're stopping at 800 milligrams, how you chose that cutoff?

Yeah. So we modeled - all of these doses were just modeled based on Phase 1 work we had done in healthies. And to that end, we pay particular attention to pharmacokinetics, the exposure overall. But importantly, the sort of the C24 concentrations, make sure we have good pressure on the virus. And so it's really a combination of PK-PD safety information that we get from Phase 1a, the healthy portion, to help establish the doses that we did. And it's played out quite well. I think, again, 200 and 400 both give very, very nice exposures. And to remind everyone, we did put out the study in healthy volunteers at EASL - back at the virtual EASL meeting last year. That's a reference, too.

Okay. Great. And then for the SARS-CoV-2 inhibitor, I mean, you guys are clear that it's specific for SARS-CoV-2. Just curious if you have any sense of the pan coronavirus potential, have you specifically looked at it? And then do you think that your polymerase inhibitor might be close behind in development such that you might have a potential combination treatment option in the not-too-distant future?

Well, so starting - so the polymerase program is not as far along as the protease. So - and the way science goes, some things catch up, other things lag behind. But the goal, ultimately, will be to press down on both of these mechanisms bring them forward. And hopefully, the 2 pads are able to cross if we need them to cross to ultimately build combinations. Let's all hope for the world, 1 agent will be enough. And then with regards to SARS-CoV-2, I mean, we designed protease inhibitors to target it. We do look at other coronaviruses as well. So, I think, we'll have more to say on that, ultimately, but there is a possibility that whereas we didn't want something - well, let me back up. As you know, earlier in our process, we did scan through libraries of compounds, so on and so forth, just to see if there couldn't be an expedient start by catching a lead earlier. And whereas we did find molecules that had activity against the virus, we weren't satisfied with the degree of potency and other characteristics that we saw with them. So in parallel and kind of leaving nothing to chance, we were doing more of a design approach. And we did look and we have paneled against multiple different coronaviruses, including SARS-CoV-2. But to be clear, this was very targeted to make sure more than anything that we had molecules that work really well against SARS-CoV-2. I do believe now we're building up a stable of molecules, multiple different chemical classes and other kinds of properties that will be able to hit multiple different coronas. And that will put us in a great position to the extent there's ever, God forbid, another such beast as SARS-CoV-2, to be in a position to really harvest a much more targeted library that we know hits coronaviruses versus what we had prior to our efforts here.

Okay. Great. And then one last one actually on MAVYRET, I know, you guys are not marketing that drug yourself, but AbbVie sales came in quite a bit lower than we were expecting and understand the first quarter seasonality dynamics. But was there anything else that you guys can communicate that might have impacted the sales in the first quarter? Thanks.

Yeah. No, I would take your input from AbbVie on that. And they said what Gilead has also noted, there's still a COVID impact.

Okay. Thank you.

Yeah. You're welcome.

Your next question will come from Brian Skorney with Baird. Please proceed with your question.

Hey, good afternoon, guys. Thanks for taking my question. Start on EDP-721, I mean it sounds like you either have or just about to submit an IND. So I was just wondering how we should kind of think about the clinical development program here, I mean, can you kind of start with traditional, SAD/MAD in healthies. And then, how early can you get into patients? And what sort of the goal in terms of initial proof-of-concept data? I mean, obviously, it's not an antivirus, it wouldn't necessarily for DNA or RNA impact. So I mean, is the comps here really kind of the RNAi-based therapeutics? Or what's important is to look at the s-antigen reductions? Or what other sort of biomarkers should be kind of considering here for proof-of-concept?

Yeah. I think it'll be somewhat similar to the path with 514. First, we'll do SAD-MAD in healthies, as you pointed out, then we'll get into HBV patients, and we might be able to look at viremic and NUC patients for a period of time. But clearly, with this one, we're going to be also looking at s-antigen levels, right? So that will be 1 of the key reads in addition to obviously, DNA and RNA, which some of our other mechanisms will take care of. So hopefully being able to get as early a read as we can on that in HBV patients will be clearly 1 of our aims and getting the triple together as expeditiously as we can. So stay tuned on that front. I think, we'll have more to say as we take that in to healthies. Again, we're aiming to do that mid-year, have the results from that in the first half of next year, but also be getting on to other studies as quickly as we can, kind of like 514. I mean, with 514, we had the healthy stuff done. We saw the dose information, and then we were on to the next studies, because we saw what we knew we had to see in order to propel it. So I think as we get the healthy data and we're embarking upon the patient studies, we have a very detailed outline to share in terms of how we're going to prosecute that.

Great. And on the SARS-CoV-2 protease inhibitor program, I mean, I don't know if you'd be comfortable sharing specific data on your lead. I just want to talk kind of generally about what we know about the potential selection pressure and potential conservation of important binding pockets for protease inhibitors, and the ability to drive resistance. And, I think, there's a bit of, I guess, rewards for the utilization of mAb monotherapy and potential selection pressure. I guess, are regulators hesitant at all about sort of use of an antiviral monotherapy without a really well characterized barrier to resistance? And how do we think about that in the context of a protease inhibitor?

Yeah. Well, the good news is, we're talking about hopefully short period of treatment duration, right? Correlate that 1 might think about is looking at our RSV program and thinking about drug dosing durations of maybe 5 days or something like that. So that's number 1 thing that's good. The other is that we're not going after spike protein. Instead, we're going after highly conserved targets with conserved binding pockets that are key for the survival of the virus. So I think the opportunity to go in and inhibit these sort of conserved regions that conserve targets would be about the best strategy you could take if you're trying to minimize these sorts of challenges. So I think that's what we're on the mark for. And so far, so good, again, we're excited to be pushing the protease inhibitor against this target into IND-enabling studies soon. And if those go well, we hope to be in our Phase 1 study early next year.

Great. Thanks, Jay.

You're welcome.

Your next question will come from Akash Tewari with Wolfe Research. Please proceed with your question.

Hi. This is Lee on for Akash. Thanks for taking our questions. I think, starting with 514, I think the first question we have is, we noticed you mentioned that the treatment led to 1 log reduction of RNA. Did you notice any like dose response between the 200 mg versus 400 mg in reducing the RNA level? And the second on the COVID program. Previously, you mentioned about both protease inhibitor as well as polymers inhibitor being a very interesting target for COVID. So now you have moved forward a protease inhibitor. So I wonder is there any like pros on cons in comparing these 2 different targets, both in terms of efficacy as well as safety? And do you plan to test both molecules of different amylase in the clinic? I think the last question is more related to the RSV regulatory pathway.

Maybe we'll just pause there the questions, so we can keep up with it. So I think, I mean, this is a very small study in 514. And we - again, the dose response, I'm not sure. We - Nathalie, do you want to comment on any dose response?

Sure. Hello. So I think just to complete maybe what Jay was starting to say, obviously, as you have seen us, we have a small number of patients in each of our dose group. It is not totally clear that we can see the dose response, but I don't think I would have expected that clearly in the NUC-suppressed patients. Now, if we look at [April resitimic] [ph] patients, we could maybe say that the 400 milligram may have a little bit more decrease in the RNA. But, again, we're talking with a very small sample size, you deal with viability of the assay and viability of [most proper size] [ph]. So, I think, once we get all the very NUC data and we compile all the data together across the 3 doses, we will have a better sense.

Yeah. So - and again, I think the viremic data, we'll probably be dealing with a much more elevated DNA to start with, obviously, a greater opportunity to see dose responses. Again, we've only got 2 of the doses and not the third. And the changes that you're going to see in this NUC-suppressed population are going to be very small RNA changes if you see them typically. And usually, they're larger in e-antigen positive patients, and they were the minority of patients in this study. Some other studies have selected to get the e-antigen positive patients selected. We didn't do that. So we have [e-meg in the past] [ph]. Regarding your question about PI and polymerase, we're prosecuting both targets. And like was your question, if we're successful there, would we take them into the clinic? Did I understand your question, right?

Yeah. And also just high level, like is there any - like do you think in the pros and cons in terms of both efficacy and safety between these 2 targets?

Yeah. I think no one knows pros and cons yet. There's just no data really to speak of broadly across these different classes other than to say, either or both have a compelling rationale to work. Within protease inhibitors versus polymerases, you can - with polymerases, we can have either NUCs or non-NUCs. Sometimes NUCs can have safety challenges over non-NUCs, but it really just comes down to an individual molecule. So, again, I think both - we wouldn't be working on both mechanisms if we didn't think that they were compelling ones to try. That said, we need to let the field mature a little bit, get these molecules to some clinical data sets that are analyzable so that people will understand what these therapeutics can do. We're obviously very bullish on the need to have these beyond vaccines for obvious reasons.

Got it. Thank you. I think my last question is about RSV regulatory pathway. I wonder, based on your discussion with FDA, do you have any thoughts on the design for the pivotal trials, specifically on the endpoint selections, any specific outcome selection, for example, it could be the percentage of progression to lower respiratory infection or maybe time to hospitalization?

Yeah. So I think we need to finalize our Phase 2b program then we'll have these discussions with the agency over registration endpoints. It's not appropriate to comment on that until you've had that discussion.

Got it. Thank you very much.

You're welcome.

Your next question will come from

Hi, guys. Thanks for taking my question, and congrats on all the progress. I just have a few quick ones for you. I think the first, Jay, is just trying to clarify if you will not be moving forward toward approval if you don't have something that could perhaps produce a cure with your HBV program, even if you get to your triple and didn't have a cure, you're not going to move forward with that?

No, did I - if - so I don't believe I said that. You have to keep - I think, what I was trying to say was if 2 mechanisms isn't enough, you add a third. And if a third isn't enough, maybe you need to add a fourth or maybe you need a longer duration of treatment or what have you, maybe there's certain patient populations that you need to explore further. So no, I think it's really premature to know what the triple therapy will look like in this, especially, given one that hits so many different cylinders. I think, we're - for us, core inhibitors do a lot of things in addition to pushing on DNA like NUCs through, but they have a number of other points of mechanistic interest against the virus. But what a NUC and a core or NUC plus a lot of other mechanisms don't have is the ability to robustly affect s-antigen. And that's something that we really are anxious to get brought into this mechanism. If we can affect s-antigen, which obviously, among other things, is that sort of a foil to the immune systems being able to fully take on the virus. If you can knock that down along with the other mechanisms that we're adding, we're quite hopeful that we'll be able to have a major impact. But like I said, it's more of a - we're not going to say we're finished until we're done. If we need ultimately to add another mechanism, whether it's immune stimulation mechanism or something else, we'll continue to explore that. And if we can, we want to try to keep on our track of having an all-oral regimen, because right now, the 3 agents that we're talking about for our triple, do represent an all-oral opportunity, which is fairly rare in the landscape of HBV treatment. So, I think, what we want to do is if we can continue to build on that. Obviously, there could be other things out there that could give you an immune boost, I mean, an easy thing to look and others are doing, too, is to tack on an interferon arm to see what it could do. So there's easy ways to build the quad, if you want to do that in part of your arms, and we're obviously thinking about all kinds of things right now. So - but to be very clear, I think, we're very bullish going into the possibility of having our all-oral triple.

Thanks, Jay. Just a follow-up to that. Just kind of wondering - and this is a difficult one, but just kind of wondering what it is that we should be looking for, especially with the viremic data coming up in terms of signals as to perhaps combining this with your other agents could perhaps either lead to that cure with perhaps longer duration of treatment or whatnot? But just what should investors and analysts be looking toward? Is it the log difference? Or what should we keep our eyes on?

Yeah. I would say, it's the - so we've looked at safety, tolerability and pharmacokinetics in healthies. We've looked at safety, tolerability and pharmacokinetics now in HBV patients and on top of a NUC, and now we're in this next study, we're going to just back out the NUC. These will be patients that had higher viral loads, particularly on the DNA side. And so, what we want to see is, it's a very solid reduction in viral DNA. And probably, again, to a lesser extent, we should hopefully see some effect on RNA. The RNA changes are never as much as the DNA changes that you can usually see in these types of studies. So a good a couple of solid logs of viral load reduction, seeing good trough levels at 28 days, seeing good safety and tolerability. These will all be things that give us green light, green light, green light in terms of moving ahead into more advanced studies with 514. It's really helpful to, again, help define the optimal dose in terms of dose selection for future [doses] [ph]. So that's what we would be looking for. I think today is sort of a good prequel in terms of the kinds of information we get. I think just, in addition, we should be able to get information on HBV DNA. You're not going to see that on antigens in a 28-day period.

Understandable. I think people are just getting excited, me included, with the teaser from the HBV. But moving on to the ISB program, GSK similar like you, they noted finding, very difficult to find regions where there are high RSV cases. But I'm just wondering, even when those cases do return, with Sanofi talking about perhaps filing their drug for pediatric use sometime in 2022, I'm just wondering for your later studies for pediatric, at least, how you're thinking that may affect it?

Yeah, I think, well, I mean, people - they're looking for a more potent version of SYNAGIS, which is a monoclonal antibody that historically has been used prophylactically in high-risk premature births and which when used therapeutically did not work, got a longer-acting version of that. And so, you just have to wait and see, A, how it might work; and then, B, to the extent it has efficacy in the target patient populations. One of the things I think you're going to see then is it's a - children get RSV. They need to get RSV repeatedly when they're children to sort of build up a sort of a partial natural immunity to it. And if they're not getting exposed to the virus, in some ways, you're kicking the can down the road. So I suspect if these antibodies go on and start treating younger children, especially in the first year of life, the first season that they're exposed, would otherwise be exposed to and they're being treated prophylactically with a monoclonal antibody, you're just setting them up to get their first RSV infection in the next season that they're not on a prophylactic antibody, right? So I think it's a question of what age group of people our drug is going to ultimately treat. But there will be a lot of pediatric RSV out there.

Thanks, Jay. And just the last one here for me, regarding the NASH program, again I don't want to put words in your mouth, but just want a clarification of whether or not you'll be looking at 305 as a single agent or as combo use when you do get the data, you're thinking about moving forward? And then, the last bit, I thought the data for 305 and 297 will be coming at the same time, but it seems like 305 might be a little delayed. I don't know about 297, but I was just wondering if you're going to wait to have both of those datasets in hand before making a decision to move forward.

Yeah, I think the answer - we can't make a decision relating to 305 until we have the data on 305. So I think we will need to wait to look at that data to put it into the mix clearly. But I think, ultimately, I see FXRs and drug classes against NASH, all of them, the ones that have efficacy anyway are going to do something, right? But they're not going to be treating patients optimally. And I do believe that optimal treatment for patients is only going to come by way of combos. And I think the sooner you get on with the combos and start running combo trials, I think it'll be better just because you'll be getting more relevant datasets that have a higher chance of higher impact. And again, as we've stated previously, our ultimate goal here is to partner up in NASH, find a partner for our FXR program, certainly before Phase 3, and anytime as soon as dataset supports doing a combination to make sure. So that's what we're thinking about. But we just need to harvest the data.

Thanks. And I was just wondering if you're waiting for the data from 305 before making a decision on 297, but it doesn't sound like that's the case. And then, your last comment sounds like 297 is definitely up for consideration also as a combo.

I think all the FXRs will be up for consideration in combo. Right, again, I think we won't be able to make a complete analysis on our FXR program and strategy, which includes 2 different molecules until we see the totality of the data.

Perfect. Thanks, Jay. Appreciate it.

Yeah, you're welcome.

At this time, we will do one final call for questions. [Operator Instructions] And at this time, there appears to be no further questions in queue. I'd now like to turn the call back over to Jennifer Viera for closing remarks at this time.

Thank you, everyone, for joining us this afternoon. If you have additional questions, please do not hesitate to reach out to us. Thanks so much. Bye-bye.