Ladies and gentlemen thank you for standing by and welcome to the Enanta Pharmaceuticals Fourth Quarter Financial Results Conference Call. At this time all participations are in a listen only mode. After the speakers presentation there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, Carol Miceli. Thank you. Please go ahead.

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

Thank you, Carol. Good afternoon, everyone. We made great progress at Enanta this year and I'm excited to share with you the plans we have for the year ahead. From our clinical development programs, we announced positive Phase 2a data for our RSV and NASH compounds, we are advancing our first HBV core inhibitor through a Phase 1a, 1b study, and our research continues to discover world class molecules. This afternoon we announced our newest drug candidate EDP-297, which is our follow on FXR agonist development candidate for NASH. We are also working on follow on compounds for RSV and HBV as well as new compounds in the early stages of discovery that are targeting other mechanisms of action and in some cases other disease areas. We continue to receive substantial royalties from our HCV collaboration with AbbVie and is coupled with our strong cash balance of $400 million is sufficient to fund our business including our growing clinical development programs for this foreseeable future. In fact, since our March 2013 IPO, we have not needed to raise, nor have we raised any additional capital. Before I begin with a review of our development program, I wanted to thank our talented and dedicated employees who work tirelessly to bring forward what we believe are some of the most promising compounds for RSV, NASH and HBV and development today. I'll now begin my review with our most advanced program EDP-938, our N-protein inhibitor for Respiratory Syncytial Virus known as RSV. As a reminder RSV is a severe respiratory infection associated with significant morbidity and mortality in infants, the elderly and immune compromised adults. And the condition for which there is currently no safe and effective therapy. In June, we announced positive top line results from our Phase 2a human challenge study…

Thank you, Jay. I'd like to remind everyone that Enanta reports on a September 30 fiscal year schedule. Today we are reporting results for our fourth fiscal quarter and fiscal year end ended September 30, 2019. For the quarter total revenue was $51.3 million and consisted entirely of royalty revenue earned on AbbVie’s global HCV product sales of $698 million. This compares to total revenue of $67.2 million for the same period in 2018. The decrease in our royalty revenue quarter-over-quarter was due to lower global HCV product sales reported by AbbVie. Royalty revenue was calculated on 50% of MAVYRET sales at a blended royalty rate for the quarter of 15% and an approximately 30% of VIEKIRA sales, at a royalty rate of 10%, after adjustments for certain contractual discounts and rebates, which historically have approximated 1.5% of AbbVie’s total reported HCV product sales. During our fourth fiscal quarter, our royalty rate for MAVYRET was a blend of our third and fourth royalty tiers of 14% and 17%, respectively. Our royalties are calculated on a calendar year basis therefore royalties for our fiscal first quarter ending December 31 will be calculated at the highest royalty rate and royalties for our fiscal quarter ending March 31 will be calculated at 10% our lowest royalty rate tier in our fiscal year. You can review a royalty tear schedule in our 2018 form 10-K. Moving on to our expenses, for the three months ended September 30, 2019, research and development expenses totaled $38.7 million compared to $26.9 million for the same period in 2018. The increase was primarily due to greater clinical costs associated with the progression of our wholly owned clinical programs in RSV, NASH, PVC and HBV, including our three Phase 2 clinical trials. General and administrative expense for the quarter…

[Operator instructions] Your first question comes from Brian Abrahams with RBC Capital Markets. Your line is open.

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

Sure. Thanks for the questions. Brian. So on ARGON-2, it was actually reasonably straightforward as we indicated on the ARGON-1 data call. We saw a very strong target engagement at 2.5 milligrams, whether you looked at ALT reductions, fat reductions either on an absolute or on a relative scale GTT [ph] reductions looking at ALT, C4, and FGF19. I mean, the whole profile lined up to show very, very strong target engagement. 1 milligram, we saw some reasonable signs of that, but certainly not as strong as 2.5. So we looked at those two sort of doses as sort of goalpost and then started asking ourselves, what would we like to ultimately achieve. Number one, obviously, we saw a fair amount of pruritus at 2.5 milligrams, not much at all at 1 milligram. And so, I think the key is really driving to a dose that's higher than one in terms of giving better biomarker indications of efficacy and dose lower than 2.5 in relations to having a better tolerability profile than 2.5. So we ultimately aimed to -- we came down on 1.5 and 2 as reasonable doses. And so, those will be going ahead and from a timing perspective that'll depend on accrual we’ll share results with those as the study gets up and going. What we'll do is take information ultimately from those intermediate doses, which we think might be one or both, I guess, in theory might be interesting to explore in relation to combinations. And with regards to ideal combination partners we're not likely to have an internal molecule that will be at that stage to do those combinations with the time other than in FXR agent. And so we'll be looking at other non-FXR mechanisms out there to do those combinations. So stay tuned on that front. Yes, and RSV question.

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

Yes, I would certainly put it into the category if it’s a really good proof-of-concept study in community acquired RSV. I don't know that it ultimately is the largest patient population, but there's still a lot of adults that do get RSV in patients. So it's also -- and it's further it's a way to us to look at conducting a trial in an outpatient setting, which is interesting all by itself. So I'd say it's a good and logical step in the progression. It's our ability to kind of get at the feasibility too of rapid treatment after a rapid diagnostic that could prevent hospitalizations ultimately. But -- so yes, I think it'll give us a whole bunch of information and the broad spectrum again, we're trying to learn so much about this drug and different patient populations as we can.

Make sense. Thanks so much, Jay.

You're welcome.

Your next question comes from Jay Olson with Oppenheimer. Your line is open.

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

Learned anything at AASLD, I mean, I think the one thing that we saw at AASLD was trope effects or had pruritus, I mean, that was an interesting, I guess, observation that comes from a bit of a different chemical class and so forth and they hadn't reported too much until they did their dose escalation up into the range where they started seeing significant efficacy marker movement, and then that came in. So that was one aspect to it. The -- I think the other -- I guess, maybe that's a good segue to thinking about EDP-297 in terms of our new candidate, we've been working on a follow on molecule for quite some time as I think everybody sort of listening in is probably aware and we were trying to fine tune a profile. Nobody fundamentally understands exactly what's causing the tolerability issue with FXR that have been seen today. So we felt one of the absent or discrete mechanism that one could fully understand the best -- next best thing you can do is ratchet down the potency against your intended target super, super well and we certainly did this. The discovery team at Enanta deserves a lot of congratulations in terms of being able to fine tune that. The goal is, if you can push harder and harder on FXR generally speaking at least you have a chance of improving selectivity over other receptors. We then came up with a targeting approach which is aimed at the intestine FXR receptors in the intestine and also in the liver, both sides of which have shown places where you -- can FXR agonist can modulate pathways that are important in the pathogenesis of NASH patients. So, we have a very high degree of targeting in those tissues with FXR receptors and we dial down dramatically the associated plasma levels that you would run into. So that'll help contain things outside in the periphery and other tissues, such as skin, where we -- again, we're focusing on getting drug levels way down. So will that play out, it will remain to be seen, but we think it's very interesting approach and worthy of exploration in our next study. So, again, we're aiming to have EDP-297 in the clinic in mid-2020.

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

Yes, so maybe I'll hand this question over to Nathalie just to make a couple of quick comments on the study.

Hi, thank you for your question. So I think at that stage, obviously, we are looking at the Phase 1ab study for NUC-suppressed in viremic patient. And therefore, as you know, we have to go step wise as we are looking to AbbVie compound in those populations. So we will be looking at safety and tolerability mainly for 28 days of treatment, as well as obviously some of the new biomarker giving us a sense, mainly in the viremic patient for the activity of the drug. So that's the plan for the early stage.

Okay, great. Thanks for taking the questions.

Good, thank you.

Your next question comes from Yasmeen Rahimi with Roth Capital. Your line is open.

Paul on for Yasmeen. Hi team, congrats on the progress for this quarter. We have had two questions today. First, could you just help walk us through the powering for primary endpoint on RSVP? And also we just were wondering, could you give us your thoughts on moving 305 into Phase B given the competitive NASH landscape?

So maybe I'll start with the second question first and I’ll let, Natalie, work on the first question for you. The second question is the NASH landscape is anything but understood right now, we're at an early stage in this whole disease area, I would sort of call it a 1.0 stage where only now are we beginning to understand what are the most promising mechanisms in NASH and we barely know much about that yet in patients to actually when you're looking at later stage studies with good patient numbers and good readouts. So, we're at the very early stages of understanding what are the most important mechanisms and then we have even further to go before people will know for sure what are the very best single agents against those single mechanisms. And then only then can we really begin to move on to 2.0 and beyond, which will be likely involving combinations of agents. So I think what we continue to see is EDP-305 does have a very strong profile as an FXR agonist it's generally safe. The tolerability profile we know, that profile is not dissimilar from some others we're trying to see if we can improve upon it. We've also, at least, in the ARGON-1 study appear to have seen a good profile of EDP-305 on lipids. And so we're going to, again, press to the next question just like in Phase 1, when we made the phase one migration into ARGON-1 study, we had to change our doses to lower doses where we still saw target engagement, but avoided pruritus, than in NASH patients we were surprised that everything became more sensitive with our FXR agonist in terms of efficacy and tolerability. So we're just frame shifting things a bit, but it's a very strong candidate and we're going to keep that one moving ahead. Again, if we can get some information ultimately to aid us and peeling that off into combination sooner, we're going to do that. And meanwhile, in parallel we’ll have a follow on that has a very differentiated profile versus any other FXR agonist in development today, in terms of number one, at least, on preclinical data being the most potent one that's out there eclipsing trope effects or by a bit, and number two, having this tissue targeting component, which again, we think is very attractive versus other molecules that we've looked at. So I think now we back to the question I think, was asked FXR does appear to be one of the mechanisms that can meaningfully move the needle with a fibrosis endpoint, and I think that's going to continue to be an important thing to try to do and we're obviously heavily engaged in that with our -- with now both of our molecules. On the RSVP study, I'll would Nathalie just make a few remarks about that.

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

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

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

Okay, great. Thanks again for taking your questions.

Your next question comes from Liisa Bayko with JMP Securities. Your line is open.

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

Yes. So I think, Nathalie, just answered that question. So the powering came as a result of studying our challenged study. And so we can do -- we can get back to you later on that if you want to hear it again. But the other part is we're going to try to catch patients in the first 48 hours in the study.

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

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

Okay. And then for your new NASH compound, can you maybe give us a little bit more information on how it's differentiated from 305 and also just wanted to better understand the PK, is it linear or it has a similar profile to 305? Thank you.

Well, it's certainly more potent than 305 and more potent than all the other FXR agonist. The other -- with regards to other key differentiations, we talked about the tissue targeting. We've enhanced that over 305, we've enhanced it over other FX ours that we've benchmarked against. And so from that perspective, and again, we need to test 297 to see how that translates, but there's at least an opportunity to drive a wedge in the tolerability signal. The PK, I think what you might have been referring to was the clinical -- the human clinical PK dose ranging study that we did on EDP-305 in healthies, which was very linear through the whole range until we got to, I think it was going from 10 to 20 milligrams is where the non-linearity in the PK curve crept in, but that was on a dose ranging study and human clinical studies where you're looking at very low doses all the way up to very high doses. And we haven't obviously, gotten that far yet with 297. Preclinical profile -- preclinical PK profile on 297 is very strong. I mean, we typically don't put any molecules into the clinic unless we've past that hurdle in a number of different preclinical species. So it's a fairly polished candidate at this point.

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

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

Okay, thank you.

You're welcome.

Your next question comes from Eric Joseph with JP Morgan. Your line is open.

Hi, good afternoon. This is Turner on for Eric. Thanks for taking the question. I'm just hoping you can help set expectations for the Phase 1 EDP-514 readout in healthy volunteers. As it relates to safety tolerability, are there any specific AEs that you anticipate? And what are deemed acceptable rates particularly within the broader core inhibitor class? And lastly, what plasma concentrations correlate with EC90s observed in vitro? Thank you -- or in preclinical models rather? Thank you.

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

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

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

Okay, great. Thanks.

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

Thanks. Good afternoon. I have a few follow-ups on EDP-305. So regarding the interim readout, we know that changes in liver histology can take some time. So I'm interested in understanding what efficacy and or safety and tolerability measures will be evaluated in the interim analysis and how far into the study this analysis will be built in? And then secondly, if you can -- can you tell us if in addition to accelerating the development in combinations with other mechanisms, would there also be an opportunity to accelerate the start of the pivotal program for 305 as a monotherapy treatment for NASH?

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

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

Well, the incidence is not quite flu. So it's a -- I forget the exact numbers but it's a fraction of what flu is, but still really significant. So there are a lot of significant number of hospitalizations of elderly and children every year. So there's a tremendous amount of morbidity associated with this morbidity and hospitalizations. What -- in terms of exclusion criteria, we obviously want to sample very carefully to make sure people don't have flu. We'll be doing that with in office RT-PCR diagnostic where we can rule out flu A, we can rule out flu B and we can rule in RSV. So it's very impressive actually, you can do this and in about 20 minutes. And so obviously patients with asthma and COPD [ph] would be excluded, but they're apart from that people with stable asthma treated COPD, or treated COPD could be allowed. So we're not bringing in people really complicated respiratory, underlying respiratory pathologies that aren't either stable or are being treated. So we'll be on the lookout for that, we'll be on the lookout to exclude flu. And again the key in this -- in every other study I think, among the lessons learned is you want to try to get to patients quickly. So that's what we're going to aim to do.

That's helpful. Thank you very much.

You're welcome.

Your next question comes from Brian Skorney with Baird. Your line is open.

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

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

Awesome. Thank you so much for your question.

You're welcome.

[Operator instructions] Your next question comes from Liisa Bayko with the JMP Securities. Your line is open.

Hi, thanks for taking the follow up. I actually forgot to ask one of my questions earlier. I was just curious, what are you looking for in the RSV study to move forward into either the elderly or the younger pediatric population. Is it more to secular safety do definitively want to see some sort of benefit in this adult population? How are you thinking about kind of the hurdle to move forward into this other populations from that study? Thanks.

Yes, I'd say we want to see -- continue to see very good safety and tolerability profile as we've seen in the past and basic efficacy. These are fundamental things we're getting to this adult population we hope in a timely way, so we want to be able to basically duplicate what we've seen in the challenge study.

Okay.

But, obviously, with a community acquired RSV patient population so called real world study.

Your next question comes from Akash Tewari with Wolfe Research. Your line is open.

Hey guys, thanks so much. So we've seen Pema Flu [ph] get FDA approval by reducing the duration of symptoms by basically a day or a day and a half. Can you give us some color on your discussions with the FDA and kind of what you guys are looking for your adult outpatient study in terms of absolute symptom reduction? And, I guess, some call on those endpoints. And then also, you alluded today on the call that you're going to have kind of a 20 minutes, rapid acting test to detect RSV for your outpatient trial. If we look at prior RSV studies, when we -- and we think about baseline viral tighter at the time of dose, it's about six logs, so kind of right at the peak of the virus. When you think about your trial, and you're trying to get these patients within this 48 hour window, what type of viral tighter does that actually translate into? Thanks so much.

Yes so, so first of all this is in terms of discussions with FDA et cetera. This is not a registrational study, it's a proof-of-concept study. So -- and further the ultimate registration studies, there's going to be obviously a very detailed set of discussions around those endpoints and at the appropriate time, those discussions will be ahead. So, it's important to realize what this study is and what it's not. The tighters are likely to be a bit higher than what we've had in the past in the challenge study, but it's not clear by exactly how much some of the people in our challenge study, were already starting to exhibit symptoms, right. So it's going to be really a spectrum of folks, depending upon where in that window they come, exactly where their viral loads are, and so forth. And so but again, the goal is to get folks, not only before the viral load has taken its toll over several days, but also to try to catch things if you can, while it's still an upper airway infection, earlier stage in the process that can only -- it can only be a more positive approach to treatment. So, we'll be lined up with the diagnostics again that are that are readily available and rapid.

Great, thank you so much.

You're welcome.

Your next question comes from Yasmeen Rahimi with ROTH Capital. Your line is open.

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

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

Yes. Those are just hospitalization as in that's the endpoint typically used in a Phase 3 study.

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

Okay, thank you.

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

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

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