Good afternoon. And welcome to Enanta Pharmaceuticals' Fiscal Third Quarter Conference Call. [Operator Instructions]. I will now turn the call over to Jennifer Viera, Senior Director, Investor Relations. Please go ahead.

Thank you, operator, and thanks to everyone 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 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, I want to remind you that we will be making forward-looking statements, which may include our plans and expectations with respect to our product candidates and financial projections, all of which involve certain assumptions and risks beyond our control that could cause our actual developments and results to differ materially from those statements. A description of these risks is in our most recent Form 10-Q and other periodic reports filed with the SEC. Enanta does not undertake any obligation to update any forward-looking statements made during this call. I'd now like to turn the call over to Dr. Jay Luly, President and CEO. Jay?

Thank you, Jennifer. Good afternoon, everyone. Thank you for joining us today. I'm pleased to report the progress we've made during the quarter across our pipeline, which is focused on our 2 areas of expertise, virology and liver disease, with programs in respiratory syncytial virus, hepatitis B virus, human metapneumovirus, SARS-CoV-2 and non-alcoholic steatohepatitis hepatitis. On this call, I will discuss clinical and preclinical updates across our pipeline, and Paul will review the financials for the quarter. Before I get into my formal remarks, I want to take a moment to welcome Mark Foletta, whose appointment we announced in June to our Board of Directors. We're very pleased to have Mark join our team, where he will serve as Chair of the Audit Committee and will be a member of the Nominating and Governance Committee. Mark has extensive financial, operating and governance experience, previously serving as Chief Financial Officer for various biopharma companies, including Amylin Pharmaceuticals. Mark will be instrumental in healthiness as we advance our pipeline of innovative treatments for viral infections and liver diseases. Additionally, I want to take a few moments to comment on the resiliency of our team here at Enanta. Despite the backdrop of the ongoing COVID-19 pandemic, the team has been able to stay focused and ensure that our business progresses and that our pipeline continues to mature. We have clinical studies ongoing with 3 different compounds, we are preparing a fourth compound to move into the clinic this quarter, and we are continuing our work to develop candidates for human metapneumovirus and SARS-CoV-2. To that end, I'll begin with our virology-focused programs, where we are leveraging our antiviral drug discovery expertise to discover and develop multiple product candidates. I'll start with EDP-514, our lead core inhibitor in our HBV program that is currently…

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, 2020. For the quarter, total revenue was $18.7 million and consisted entirely of royalty revenue earned on AbbVie's global HCV net sales of $376 million. This compares to total revenue of $44.4 million for the same period in 2019. The decrease in royalty revenue is a result of AbbVie's lower net sales, which were significantly affected worldwide by the decline in patient volumes due to the COVID-19 pandemic. AbbVie now expects HCV sales of approximately $2.1 billion for calendar year 2020 as treatments remain below pre-COVID levels. Royalty revenue was calculated on 50% of MAVIRET's sales at a royalty rate of 10% after adjustments for certain contractual discounts, rebates and set-offs, which are now just over 2% of AbbVie's total reported HCV sales. I'll remind everyone that our royalties, which are calculated separately for each product, are determined on a calendar year basis through a tiered schedule of rising royalty rates. The royalty schedule restarted at our lowest royalty rate of 10% in our quarter ending March 31. This means that royalties in the same amount of quarterly MAVIRET sales would typically increase each quarter, with our royalties for the quarter ending December 31 having the highest blended royalty rate. You can review our royalty tier schedule in our 2019 Form 10-K. Moving on to our expenses. For the 3 months ended June 30, 2020, research and development expenses totaled $34.7 million compared to $34.5 million for the same period in 2019. General and administrative expense for the quarter was $6.8 million compared to $6.2 million for the same period in 2019. This increase is due to an increase…

[Operator Instructions]. Your first question comes from Eric Joseph with JPMorgan.

Just a couple from us. First on EDP-514. Jay, I was just wondering if you can sort of frame expectations for us in the Phase Ib in nuc-suppressed patients with data expected in the second quarter. How should we be thinking about data that would be established in a go-forward dose regimen there? And what compelling results would look like in terms of virals? Well, sorry, yes, what the objectives there are in terms of establishing a go-forward dosing in that study.

Sure. Thanks, Eric. So this is Jay. So yes, the nuc-suppressed study is 1 of the 2 that we have going on right now. And why don't I just actually compare and contrast a little bit as I answer the question so you get a flavor for both studies? They're both 28-day studies, but they're quite different. The nuc-suppressed folks are obviously on an existing nuc therapy. So their DNA levels are already going to be quite suppressed. They're both, as I mentioned, 28-day studies. So what you can get out of the nuc-suppressed study that's extremely important is actually safety and tolerability and PK in the context of nuc. As you know, nucs are the -- sort of the standard of care today for hep B treatment, and the study substantially is looking to make sure that 514 plays well with nucs. So that's the main aim of the study. We'll, of course, also get other antiviral data from this, RNA, s antigen, e-antigen information, but not to expect too much there given the 28-day nature of the study. In the case of the viremic study, it's a little bit different. So we'll be -- again, it's a 28-day study. We'll be looking at patients who haven't been on HBV therapy for at least a year and who have significantly elevated DNA levels, so quite a different patient population in there. Again, we'll be dose-ranging to look for, again, safety, tolerability, PK with the drug alone in that case. But also, we'll be looking at virologic parameters as well. So DNA, we'll be able to get RNA, s antigen, e-antigen and so forth. But it's really over a 28-day time period. In terms of some sort of a range of what we would like to see in that viremic study, I'd say something that would give us a solid 2-log decrease or more over that time period would be -- I think give us a sense that 514 is working well. So we'll be using all that information together to pick go-forward doses.

Your next question is from Brian Skorney with Baird.

Just when we sort of think about the ARGON trial design and post when we get that data, kind of your thoughts on how you think about kind of Phase III and what the regulatory hurdle is here. I mean we've all seen OCA, the first FXR agonist, get a rejection by the FDA, although seemingly hitting what's within the FDA guidance. Just interested in getting your thoughts, Jay, on your view of that outcome and how we should be thinking about the development of FXR for a U.S. approval in the future.

Sure. So I think the community at large, the I think KOLs and certainly, Wall Street and some of Intercept's competitors were actually all sort of surprised to see the complete response letter there. So I think we just need -- regarding Phase III studies, I think we just need to see more information, try to understand a little bit better what the FDA had in mind with regards to Intercept's package. Intercept, I understand, is having some meetings with the agency. So over time, I think we'll get greater transparency as to what's going on there, what's happened there and what may lay in the future for Intercept and for others. So it's sort of a broad-ranging question that we'll just need to see how it plays out, but it's certainly a very intriguing development, to say the least, for us. Our path is pretty straightforward. We're not in the middle or even starting a registration study at this point. So to the extent there are any goalposts that could move around a little bit or other ways that the regulatory path could be impacted here, we'll have plenty of time to process that and incorporate it into future studies. So for us, for the ARGON study, ARGON-2, as you know, it's really about steering between goalposts of doses that we looked at in ARGON-1. We're bumping up the low dose, we're bringing down the top dose, and we know exactly what to look for vis-à-vis target engagement and also tolerability. So that's a fine-tuning of the dose selection there. And again, we'll have an interim analysis that will come along sort of mid next year, where we'll have a pretty good sense of how those 2 doses behave and will give us good guidance for the future. And then separately, you didn't ask about 297, but it's also the molecule of the same class. It's tucking along very nicely on a parallel path, and our plan is to get that into Phase I this quarter. And then to stare at the parameters that we know to measure well, first in healthies, where we can look both at target engagement and tolerability and then understand whether the thesis that we've generated in terms of the design of the follow-on FXR agent plays out in the clinic. So that will be exciting to watch, too, over the course of the next few quarters, and we expect data on that 297 molecule in the second quarter of next year.

Your next question is from Roy Buchanan with JMP Securities.

I had a handful on RSV. I'm just wondering if you can give us some details for RSVP on the Southern Hemisphere, RSV season is looking? And can you tell us how many targets -- how many sites you're targeting for Europe? And then I had a couple on the Phase II trials you're planning in pediatrics and the transplant patients. Where -- are those going to be solely based in the U.S.? And I have one follow-up.

So with regards to RSVP in the Southern Hemisphere, it's just -- winter is just kicking up. It's going to be really interesting to see how the Southern Hemisphere plays out. It's a little bit of a different setting. Australia and New Zealand opened up reasonably early after being locked down for a while, so they were opening up. But that said, one of the things that was -- that's interesting is we're watching the flu numbers and the flu season is coming late in the Southern hemisphere. So the question is, did the -- all the social distancing and did the lockdown and the sort of -- they had a severe sort of travel ban that blocked what would otherwise be a lot of Northern Hemisphere people from coming down to the Southern Hemisphere right before their winter season. So they were able to kind of go to school on what was happening in the Northern Hemisphere, take some of the best practices and start prevention down there early. So what we'll have to wait and see is as things open back up, and they have been for several weeks now, and as they slide into winter, which they are doing right now, will it simply be a frame shift of a sort of a normal cold and flu season and RSV season? Or will it be somehow blunted a little bit? And we obviously can't know the answer to that. We'll have to wait and see how it plays out over the next few months. But we sort of anticipated that a little bit earlier this year when we were doing our planning, which is why we plan to come back up to the Northern Hemisphere, where we have dozens and dozens of sites already set up in North America and where we'll be adding sites in Europe. So I think we're anticipating -- all total, with the U.S., Canada and Europe, I think we'll have over 100 sites on that order. And we're also thinking about further mitigation, whether or not we even consider strapping on Asia countries as might be appropriate. So the team has done a great job at sort of -- it's a little bit of a wild ride on respiratory viruses these days. But I think we're well poised, well positioned and have everything, including the testing equipment that we need, to get the characterization done on the diagnostic front. The -- I think you had a question on the peds. Does that answer your question?

I was just curious if -- yes. No, that was great. Yes. No, that was perfect. The pediatric and the transplant trials, I was wondering if those are going to be solely U.S.-based trials.

So we'll be starting in the Northern Hemisphere. But ultimately, we'll be adding on other ex U.S. sites as well.

Okay. Great. And then I had a -- I actually had a follow-up, and you kind of answered it with your, I think, with the Southern Hemisphere answer. But the RSV season in the U.S. this last year kind of dropped off quickly. And I was wondering if that was possibly people getting tested for COVID and not following up when it was negative or the social distancing, reducing the kind of bystander effect.

It actually had sort of come and gone before COVID was a word. That was the really surprising thing. Usually, RSV in the Northern Hemisphere is peaking in the January, February time frame, sliding through March and maybe tailing into Q2. That's sort of the typical presentation. And for whatever reason, this last year was very strange. It peaked in December and then fell very quickly so -- and unexpectedly. So I think that's a -- hopefully, that's a bit of an anomaly. But either way, the difference between this year and last year, last year, as you know, we were just finishing up the challenge study and just getting the RSVP study up and running as fast as we could after data just by the end of the year, figuring the January, February and 2 -- Q2 would be the big period, but sort of pretty much done. This time, we still have all the sites that we had before. We've suggested we're supplementing that with a bunch of European sites and so forth, and then we'll get what we can down in the Southern Hemisphere. So we'll just continue to watch it, but we're adding lots of sites.

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

This is Leo on for Brian. I have one on the human metapneumovirus. So you guys have hinted at some of the leads you've identified. Can you remind us what the time lines are for this program to enter the clinic and perhaps what the ultimate opportunity you see for this program? And how much work is going to need to be done to educate physicians and patients about this respiratory virus? And I guess, will there be any synergy with the RSV program there?

So thanks for the question. It's -- I was wondering if human metapneumovirus would be picked up as a topic. It should be. The reason -- everybody is certainly aware of RSV and sort of the threat that it represents to a number of different patient populations, preying on the young and the old, immune-compromised and so forth. And in some years, RSV can be a big season sort of rivaling some of the -- in some patient populations, what flu does. Human metapneumo is sort of the second leading cause of everything that RSV causes. It hits the same patient populations for the most part. Patients have pretty much the same presentation and the same sort of patient journey. It starts as an upper airway disease, can migrate to a lower airway disease, you can get pulmonary inflammation, cytokine storms and so on. And I think it's a little bit less known because it was sort of first characterized about 20 years ago. And -- but if you hang out at the respiratory infection meetings, you actually see a lot of human metapneumo there. So the medical community, people who treat patients, are quite aware of this virus. And so I think it's the relative -- the fact that it's relatively new and that there hasn't been sort of a new approach coming into human respiratory viruses lately until sort of EDP-938 came along, sort of taking a different approach than what people had done in RSV with small molecules, that I think there's going to be now, and add COVID on top of that, just a whole lot more attention to human respiratory viruses. People are going to get these things and you can quickly sort of rule out flu. You can -- by testing, you can now…

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

I'm curious about the work you're doing on SARS-CoV-2, and I'm wondering if there's any recent research on the virus itself or any of the work that's been published on therapeutic antibodies or vaccines that has informed your discovery efforts for DAA. And then maybe if you could comment on how close you are to nominating a candidate.

Sure. Thanks, Jay, for the question. So I'd say there's -- mercifully, there are a lot of folks in the world trying to attack this problem, and let's all hope that vaccines are successful and can treat as many -- or prophylax as many people as humanly possible. I'd say the vaccine approach is something that hasn't really informed our strategy at all. I know people, whether it's antibodies or vaccines, are thinking about spike proteins and other sorts of targets to generate interesting biologics. What we're doing is something that's -- it's -- on the one hand, it's a bit different from what some other folks are doing out there. But it's very consistent, if you've been following the thread on our respiratory viral programs, with our approaches there. And that is we assume that vaccine, no vaccine, partially effective vaccine, or not -- or some compliance but not total compliance, there's always going to be people with infections, assuming that SARS-CoV-2 doesn't burn out. And right now, that doesn't seem as likely as people had once hoped. So if you put yourself into that box and think a few years from now, there could still well be, even with vaccines around, a lot of important need for therapeutics and going after them in a very targeted way. So imagine if we could ever get to a state where we're treating people like we are in our RSVP trial, where people walk in -- they present at a clinic, they're symptomatic, they get tested with an RT-PCR assay, it's determined that they have COVID or RSV or human metapneumo. And then they get put on a direct-acting antiviral, which can fairly rapidly, if other viruses -- other respiratory viruses or some signal of this, you ought to be able to fairly rapidly knock that viral load down and then, hopefully, change the course of the person's infection. And that's one of the exciting things we've shown with RSV, is that from the time we put people on the drug, within 24 hours, it's really altered the course of the infection. That's what our challenge study showed. So if we can do that with COVID, people can go home, people won't be spreading, turning into super spreaders. They won't be infecting their family and relatives. And hopefully, within a few days, they can go back to work. So that's where we're aiming. Again, it's not a vaccine, it's not sort of an antibody treatment where you're going to have to go into and then fuse it or otherwise treat somebody who's very symptomatic with the biologic. What we want to do is go early, hit hard with an oral regimen and knock it down and think that that's going to be -- if you follow where this is all going, it could well be an incredibly important opportunity out there that's not receiving as much attention as vaccines right now.

Your next question is from Akash Tewari with Wolfe Research.

This is Amy Li on for Akash. I just had a couple on your RSV program. First, on your powering an RCP, can you go over your assumptions in general on how you accounted for the differences in time to administration between the Phase IIa and Phase IIb given that patients in Phase IIb will likely be administered drug later into their course of disease? Also, will your powering allow you to properly stratify for baseline factors and end points such as time to symptom onset, baseline viral titer, different cuts of symptom/benefit, et cetera? And then in regards to the pediatric and adult HSCT RSV trials, will you also have a 48-hour symptom cut-off like RCP? And what type of clinical end points would you be evaluating in these studies? Anything you can share on the design would be very helpful.

I'm sorry. Share -- anything that we can share on the design of the peds or transplant? Is that what you said?

Yes.

Yes. So I'll start with that question first. I'm not sure we'll be able to dive into all the different powering discussions right now. My biostatisticians aren't within immediate reach right now. But trust that the biostatisticians have powered this in a way that looked very carefully at the challenge study, made further assumptions as it related to an outpatient study where we would be looking at somebody 48 hours -- within 48 hours, sometimes empowered the study according to those parameters. In terms of the peds study, again, we're going to be looking at hospitalized or nonhospitalized infants and children, going to be 28 days to 24 months of age. We'll be looking at safety, obviously, at the utmost and PK. Those will be the things we'll be looking at early on, and we'll also be, of course, getting virologic parameters as well. With regards to timing, as I recall, with the outpatient nonhospitalized subjects, we're going to be looking within a 48-hour time period. And with regards to the hospitalized peds, I believe we've set a 72-hour time period. Looking over at the hematopoietic cell transplant folks, again, we're going to be recruiting people who have acute RSV infection of the upper respiratory tract. We'll be looking to evaluate what the incidence is of lower respiratory track complications, and we'll also have secondary end points in there of safety and PK and -- while we're looking at virologic parameters as well. I think in that, too, we'll be looking in transplant to -- for an inclusion, people who are within 3 days of symptoms. These folks have obviously very compromised immune system and so they -- their symptoms can be quite persistent.

There are no further questions in queue at this time. I will now turn the call back over to Ms. Jennifer Viera.

Thank you, everyone, for joining us this afternoon. If you have any additional questions, please feel free to give us a call in the office or e-mail me. Thanks again. Have a good evening.

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