Good afternoon. My name is Catherine and I will be your conference operator today. At this time, I would like to welcome everyone to the Enanta Pharmaceuticals Third Quarter Financial Results Conference Call. All lines have been placed on mute to prevent any background noise. [Operator Instructions] Please note that today’s conference is being recorded. I will now like to turn the call over to your host Ms. Carol Miceli, Director of Investor Relations. Ma’am, you may begin your conference.

Thank you, Catherine, and thanks for joining us this afternoon. The news release with our financial results for the recent quarter was issued this afternoon and is available on our website. On the call today is Dr. Jay Luly, President and CEO; Paul Mellett, our Chief Financial Officer; and other members of Enanta’s senior management team. Before we begin with our formal remarks, we want to remind you that we will be making forward-looking statements, which may include our plans and expectations with respect to our product candidates and financial projections, all of which involve certain assumptions and risks beyond our control that could cause our actual developments and results to differ materially from those statements. A description of these risks is in our most recent Form 10-Q and other periodic reports filed with the SEC. Enanta does not undertake any obligation to update any forward-looking statements made during this call. I’d now like to turn the call over to Dr. Jay Luly, President and CEO.

Thank you, Carol. Good afternoon, everyone, and thank you for joining us today. At the end of Enanta’s fiscal third quarter our clinical development programs to treat viral infections and liver diseases have progressed well. Our pipeline is maturing and we have clinical studies ongoing with three different compounds, all of which have fast track designation. Our most recent achievements were the initiation of a Phase 1 study of EDP-514, our lead candidate for HBV and the announcement of highly statistically significant top line data from our RSV program. In addition, we and AbbVie our HCV partner recently announced that the European Commission has granted marketing authorization to AbbVie for MAVIRET, to shorten once-daily treatment duration from 12 weeks to 8 weeks in treatment-naïve, chronic HCV patients with compensated cirrhosis and genotype 1, 2, 4, 5, or 6 infection. I’ll begin my review of our clinical development programs with our most advanced program, EDP-938 for respiratory syncytial virus known as RSV. In June, we announced [Audio Gap] successful completion of this trial was a very exciting milestone for Enanta and yielded some of the most promising data from an RSV challenge study. Specifically data from this study demonstrated that EDP-938 achieved a highly statistically significant reduction both in viral load and in resolution of clinical symptoms compared to placebo. And remember that highly statistically significant means that the p-value is less than 0.001. The data on the viral load that we previously reported, namely the number of copies of viral RNA from quantitative RT-PCR is consistent with additional data we now have from cell based infectivity assays using live virus. The cell based data show an approximately 80% reduction in live RSV virus across subjects in both treatment groups compared to the placebo group. This result was also highly statistically…

Thank you, Jay. I’d like to remind everyone that Enanta reports on a September 30 fiscal year schedule. Today, we are reporting results for our third fiscal quarter ended June 30, 2019. For the quarter, total revenue was $44.4 million and consisted entirely of royalty revenue earned on AbbVie’s global HCV net sales of $784 million. This compares to total revenue of $57.3 million for the same period in 2018. The decrease in royalty revenue is a result of AbbVie’s lower net sales mainly driven by lower treated patient volumes in select international markets. Royalty revenue was calculated on 50% of MAVYRET sales at a blended royalty rate of 12% and approximately 30% of VIEKIRA sales at a royalty rate of 10%, after adjustments for certain contractual discounts and rebates, which historically have been approximately 1.5% of AbbVie’s total reported HCV sales. During our third fiscal quarter, our blended royalty rates for MAVYRET encompasses our first three royalty tiers of 10%, 12% and 14%. I will remind everyone that our royalties, which are calculated separately from each product, are determined on the calendar year basis to a tier schedule rising royalty rates. The royalty schedule restarted at our lowest royalty rate of 10% in our quarter ending March 31. This means that the quarter ending March 31 will be at the lowest royalty rate of 10%, and our royalties for the quarter ending December 31 will have the highest royalty rates in our fiscal year. You can review our royalty tier schedule in our 2018 Form 10-K. Moving on to our expenses. For the three months ended June 30, 2019, research and development expenses totaled $34.5 million compared to $28.5 million for the same period in 2018. The increase was primarily due to greater clinical costs associated with the progression…

Yes, sir. [Operator Instructions] Our first question comes from the line of Brian Abrahams with RBC.

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

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

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

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

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

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

Well, we did have a very high rate of infection in the study. I mean, that always helps that number one just because you can get more data on more patients more quickly. I think what – the lesson learned and I think it’s probably intuitive from even before we did this study that, in translation to Phase 2b, we need to identify what is the allowable dosing window. And we’re going to have to be very thoughtful about how we approach that. Just basically really trying to understand for this virus and for this mechanism against this virus, what is the acceptable dosing window? So we’ll look at that over a time window, breaking it down into parts so that we understand what the limits are. Hopefully the broader the window, this identify the better. For example, with flu, you really have like a 48 hour window in which you have to identify the patients and get drug on board. So, will it be flu like? Will it be a more forgiving than flu? We don’t know that. No one knows the answer to this question other than intuitively, the earlier that you treat, the better, the likelihood of more impactful outcomes. So, it’s really every step of the way that from our Phase 2b studies that we’re going to be looking at, we’re going to be thinking about – looking at optimizing that dosing window, opportunity. And we’ll learn more about the drug as we go in terms of what that allowable window is for this mechanism but against this virus. Is that helpful?

Yes. Thank you, Jay. And then the question on NASH is, I mean, we’re very eagerly awaiting the ARGON-1 data, but then you continuously remind us that you are going to advance a follow-on FXR clinical candidate, which sort of puts fear in investors, which makes one conclude that maybe EDP-305 optimize and therefore there’s a need for a follow-on. So can you explain to me, while we’re waiting for the data, why there is such a need for a 2.0 version?

So again, just to back up a little bit. We don’t work on any program without having follow-on molecule, some backups. Everything we do is done. It’s very common in small molecule drug discovery, a page right out of the – the sort of standard playbook. So there’s nothing mysterious about this program or any of our other programs. We do this as a matter of course on everything we do. You may remember, in the hep C per use days, we had lots of molecules, thousands of them. We picked pibrentasvir as the first candidate to move forward. But that was going along in clinical trials. You just have a lot of – what should I say, just quiet periods where you’re waiting for data. In the meantime, it’s just prudent to have ever continuing activities in a mechanism that you feel strongly about just pipeline management and it also affords the opportunity that, even if you have a good molecule at the outset, you may still be able to come up with an even better one. So that’s a worthy ambition to have. And it’s just prudent practice and it’s just the way an answer to that business, which isn’t quite honestly that different than many other companies that do hardcore small molecule drug discovery and development. So all that said, we look forward to ARGON-1 data at the end of this quarter. We have been working on our follow-on program now for a while. We’ve been just patiently going through also potential molecules and looking for within the contenders as a follow on. Just basically, we have the beauty contest sort of wrapping up. And we always say, it’s safe to assume that no matter what we do, we’re thinking about optimizing potency, like activity, safety, anything that we can try to tweak. We do. And so stay tuned on that front, but I think that we’ve made some very good progress on that program. And then we’ll have more to say later in the year.

Thank you, Jay. And are you able to comment at least what the follow on chemistry? It’s different versus 305 at this point?

Yes. We’ll roll out a lot of data at the appropriate time. But again, this will make the assumption that is – it’s all about efficacy and safety and DMPK consideration and other kinds of things via distribution. There’s lots of things you can study here. That really focused on what you would look for in a follow on molecule. So anyway, that’s what I can say right now. We’ll have a lot more to say later in the year.

Thank you. Thanks for taking my question.

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

Hi, this is [indiscernible] on for Akash. Thank you for taking my question. The first question is what’s the cost of the potential phase should be for NASH? And my follow-up question will be, what are your expecting on ALT/AST reduction, LDL increase MRI, PDFF and pruritus rate at week 12 for your compound EDP-305?

Yes. So if I had all the data, I would talk about it. But let me answer your first question first. So the cost of the piece to be, we’re still in the process of mapping out the protocol, what that looks like in terms of powering patient numbers, duration, et cetera, et cetera. So until we really finalized all of those inputs, it’s hard for me to give you dollar projection on that. But it wouldn’t be dissimilar from what other people’s similarly structured pays to these. Number two with regards to all of the readouts from our trial. Again, there are a lot of things that we’re looking at in this trial. And we’ll look at ALT, of course, we’ll look at before FGF19. We have MRI, PDFF as we looked at MRI, PDFF predominantly as an inclusion criteria, because we wanted to since we were bringing patients into the study phenotypically, rather than necessarily having a biopsy proven NASH. We wanted to make sure that the patients were steatotic. So we just did baseline MRI, PDFF and of course we’ll get that on subjects that at the end of study as well. So we’ll have that kind of data. And so on other biochemical markers, we’ll have elastography, et cetera. But the punchline is, now what do you want to get from a study like this? This is a 12-week study over mind, you and others that this is a 12-week non-biopsy study that’s aiming to do a few things. We need to learn what is the safety profile in NASH patients? Now we want to confirm activity with our drug in NASH patients. And also importantly, we want to affirm what our dose selection is for a Phase 2b. So from this we’re going to get…

Thank you very much.

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

Congrats on the progress and thank you for taking my question. I just wanted to follow-up on EDP-305. There was a recent NASH Phase1 2 study that read out in our competitors study, and it missed a primary endpoint of MRI PDFF. But it didn’t hit on important secondary endpoints like ALT reduction. And you touched on this a little bit, but I was wondering if that study had any impact on your plans for EDP-305 and the designing of Phase 2b study that you plan to initiate in the third quarter, especially with regards to use of MRI PDFF as an end point?

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

Okay. Great. Thanks for that color. And then I was wondering if you could provide any comments from the rationale behind your decision to partner EDP-305 prior to initiating Phase 3?

Yes. We’ve spoken about that a little bit in the past. Again, I think that we’ve got a lot of things going on in the NASH. We’ve got NASH, we’ve got FB, we’ve got RSV. If I line all those up at one end of the spectrum, NASH is going to be likely in the end, it is going to be a combination therapy. The Phase 3 are going to be big and expensive and global. And importantly, the commercial enterprise that takes on this new field, this new indication to the marketplace, I think needs to require a certain degree of sophistication and strength. And this is where we’ve seen it before, I mean, I would put the same thing, If we were looking at AbbVie today, ourselves again, we’re similarly situated. There’s no question that having an AbbVie alongside us when they ran 12 or 15 Phase 3s and that’s suggesting what we would be involved here but that would be huge Phase 3 program, it was global. It required sophisticated commercial launch strategy. There’s no way that, I think, a smaller company like Enanta could maximize the asset like we could if we’re teamed up with somebody who was powerful at that late stage. And not the least to it’s a very expensive undertaking. We know that in the c case. So I think we would aim to do that with the other part of this, there’s strategic partnering too. Because as I mentioned, there’s combination therapy likelihood here. And if you’re thinking to the future about where the wind could ultimately be perhaps with other combination ingredients that we don’t have today, you could team up in a way that we have strategic value by partner A bringing one asset, partner B bringing another asset and going after that way. So, I think you just increase your overall chances of success in this indication from many different perspectives. I guess that could always change, but for now, we’ve been – that’s why we’ve been thinking and the way we’ve been thinking about it for a number of quarters. I would contrast that with RSV, where we’re hopeful that given our mechanism, given the fact that we’ve got a super high barrier to resistance, we may not need to combine it with other anti-virals from an efficacy perspective or to prevent resistance. We may be able to proceed with a single agent into a little bit more of a defined area of RSV infection, something that’s very easily and readily diagnosed, and an area, where practitioners, who have been looking forever for a successful RSV therapeutic, I think it would be an easy one for us to get a message out and ultimately, to have the opportunity to push forward with that one all the way ourselves. So, we don’t anticipate sort of a big global type of partnership on RSV like we might, well contemplate on NASH Program.

All right. That’s super helpful. Thank you so much for all the color.

You’re welcome.

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

Hi, this is [indiscernible] for Eric. Thanks for taking the question. Just one on EDP-514 and thinking about the Phase 1b and potential viral load reduction. I’m curious what we viewed as clinically differentiated to some of the other novel core inhibitors or rather one parameters would you look to establish differentiation to the other core inhibitors in development and what would you be – and what would be viewed as meaningful advantage on that front? Thank you.

A little hard to hear you. Basically what – just juncture, what we’ve done, we’ve created a molecule, EDP-514 that’s as far as we could tell has one of the best preclinical profiles of any core inhibitor that’s been reported, now looking at the totality of the in vitro data that we’ve generated and the in vivo data that we’ve done in some very, very challenging animal models. So, I think the preclinical profile, it looks good. We’ve also done a lot of work on DMPK. And so the molecule EDP-514 swings to go into the clinic. Phase – the early studies were going to be really looking at safe DMPK confirmation and healthies that we’ve got just like we’ve had with many other candidates, where we’ve designed the molecules, hopefully well, taking them into Phase 1. Hopefully, we’ll have a nice safety profile that will give very good exposures after acuity administration; none will rapidly be going into the 1b portion of this study part two. And looking at viral activity of the molecule, especially, once we get into the treatment naive patients by remix patients that will be the other Phase 1b. So, we’ve got two Phase 1b’s coming up to start next year. The first 1b study, which will be in nuke-suppressed is assuming Phase 1b and healthies finishes when we expect it to. We would roll right into the nuke-suppressed on 1b. and then that would be in the first quarter of 2020 calendar quarter. And then we would aim to get into the viremic patients sometime in the first half. So, stay tuned on that finetuning of that timing. The goal is really to get the molecule as quickly as possible into a variety of HPV patients and to start to confirm and in fact that patients be very good results that we’ve seen preclinically.

Got it. Thanks. Sorry if – is this line better now?

Yes. Sounds a little better.

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

Yes. Again, I’m – I think we’ll have to wait. Why don’t we pause on that one until we see more data at AASLD? I think, right now, we’ve only seen a minimal amount of data in terms of what cores can do in that environment. And I think we’ll have a more complete data set from a larger group of potential competitors after AASLD in November. So, I think we’re still – it’s very early days to see, with that log drop is – and it’s not just the log drop of course, that’s a – that’s one piece along the road, you’re really looking into other pieces of information, in terms of getting into functional cures. So I mean, core inhibitor is even with a poor core inhibitor, some of the earliest ones that went into the clinic showed some significant, viral load reductions. But that’s obviously necessary, but not sufficient. And so I would expect based on the high potency of EDP-514 that we would see a very good draw, but more importantly, it’s going to be, how does it perform in combination with the new and how do you get to a functional cure. right now, we have no reason to think that, EDP-514 is less than any other compound from a potential perspective out there. We just need to generate that data.

Great. Thank you. Sorry about the line.

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

Hi, Jon, on for Lisa. Thanks for taking the questions and for the updates. just the quick one on NASH, Jay, when you’re mentioning AASLD, I’m wondering it’s the goal to have the NASH data late this core and then hopefully have some additional presentation at AASLD will have timing workout do you think?

Yes, I’d say that would be beyond – probably beyond likely – but who knows, I can’t commit to say on that. What’s a – okay, well let’s get to the data first and then we’ll roll out a top-line data first. And then we’ll look to ultimately get it into as soon as reasonable conference that we can get into.

Okay. And then just one last one on RSV came in as of the size and design of the phase 2b you’re expecting to kick off here. Thanks.

No. The outpatient study of the size, so protocols being put together sort of as we speak. So, we’ll be discussing that soon enough, but we don’t have the final ends “worked out” looking at powering and other considerations. I don’t want to put a number out until the team’s had a chance to finalize the protocols.

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

Hi, good afternoon. I have a follow-up on EDP-938 and also on EDP-305. just first on EDP-938, Jay, you alluded earlier to determining acceptable dosing window for EDP-938 for RSV. And we know with the influence of drugs this windows within 48 hours, that’s the best case we can get with these drugs. So, I’m wondering if with RSV, assuming the results of this acceptable dosing window in the phase 2b study, is there a definitive way to understand whether or not a patient is actually in that optimal dosing window or is it more based on how long the patient’s demonstrated RSV symptoms with that being perhaps just a key part of the inclusion criteria?

I think it’s the ladder. Yes. We’ll be looking at time from symptoms. And we’ll be able to analyze the data based on that. So, yes, I think it’s a – it’s the ladder.

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

So, literally, lipid data will be included in this analysis. And again, I think as I was sort of saying before with all the efficacy parameters, I think we’ll be looking at the safety parameters in the same way, getting the gestalt at what our doses do. And what that sort of “therapeutic window”, defined as for a go-forward dose. So, it’s just going to – it’ll be data that we’ll put into context, just like all the efficacy parameters, but we should have that included in the data set at the end of the quarter.

That’s helpful. Thank you very much.

You’re welcome.

It looks no further questions. I’d like to turn the call back over to Carol Miceli for any closing comments.

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

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