Good afternoon. And welcome to Enanta Pharmaceuticals' Fiscal Second Quarter 2022 Financial Results Conference Call. At this time, all participants are in a listen-only mode. There will be a question-and-answer session at the end of the prepared remarks. Please be advised that this call is being recorded. I would now like to turn the 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 2022 financial results was issued this afternoon and is available on our website. On the call today are 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. With that, I'd now like to turn the call over to Dr. Jay Luly, President and CEO. Jay?

Thank you, Jennifer, and good afternoon, everyone. Last quarter was an important one for Enanta during which we made progress in our pipeline and advanced our mission of developing therapeutics for life-threatening viral infections. This progress comes at an important time as we are soon approaching meaningful inflection points in our pipeline. Today, I'll start by detailing our most advanced programs in respiratory virology where we continue to build an industry-leading treatment portfolio. Respiratory syncytial virus, or RSV, can result in a severe respiratory infection and is associated with significant morbidity and mortality. The virus can cause serious disease in children, the elderly and the immune compromise, and there are no targeted treatments or vaccines available. Our robust RSV program includes EDP-938, the most advanced N-protein inhibitor in clinical development today as well as our newest clinical candidate, EDP-323, a potent L-protein inhibitor. We're excited by the potential of EDP-938, which currently is in three Phase 2 studies in different patient populations. EDP-938 is an oral potent molecule that has shown robust clinical data in a Phase 2 challenge study where it was safe and well tolerated and resulted in a significant decline in viral load and reduced symptoms of infection. Our leadership in RSV is further highlighted by the recent publication of the results of the challenge study in the New England Journal of Medicine. Our most advanced study of EDP-938 is RSVP, a Phase 2b trial in otherwise healthy adults with community-acquired RSV infection. The study was designed to confirm in a community-acquired setting the positive results of our Phase IIa challenge study and to further characterize efficacy by measuring symptom alleviation and viral load decline. Enrollment in RSVP is now complete. We are on track to report top-line data from this study later this quarter. Our 2…

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 second fiscal quarter ended March 31, 2022. For the quarter, total revenue was $18.7 million and consisted entirely of royalty revenue earned on AbbVie's global HCV product sales of $380 million. This compares to total revenue of $20.1 million for the same period in 2021. This decrease is due to treated patient volumes continuing to remain suppressed compared to pre-COVID levels. AbbVie has guided to $1.7 billion for global HCV sales in calendar 2022. As a reminder, our royalties are calculated on a calendar year basis. Therefore, royalties for our fiscal quarter ending March 31 will be calculated at 10%, our lowest royalty rate tiered in our fiscal year. You can review our royalty tier schedule in our 2021 Form 10-K. Moving on to our expenses. For the three months ended March 31, 2022, research and development expenses totaled $42.1 million compared to $41.5 million for the same period in 2021. The increase was driven by the timing of manufacturing and clinical trial costs associated with the company's virology and liver disease programs. General and administrative expense for the quarter was $10.5 million compared to $8.3 million for the same period in 2021. This increase was primarily due to increased head count and stock-related compensation expense. Enanta recorded no income tax expense for the three months ended March 31, 2022, compared to an income tax benefit of $7.1 million for the same period in 2021. Enanta recorded an income tax benefit in 2021 due to the provision of the CARES Act of 2020, which enabled the company to carry back its tax loss in the 2021 period to offset taxable income in prior years. This provision does not apply to periods ending after September 30, 2021. Net loss for the three months ended March 31, 2022, was $33.6 million or a loss of $1.63 per diluted common share compared to a net loss of $22 million or a loss of $1.09 per diluted common share for the corresponding period in 2021. Enanta ended the quarter with $322.5 million in cash and marketable securities. Enanta expects that its current cash, cash equivalents and marketable securities as well as its continuing royalty revenue will be sufficient to meet the anticipated cash requirements of its existing business and development programs for at least the next two years. 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?

Hi. This is Luke Herrmann on for Brian. Thank you for taking the questions. Just a few on COVID, could you discuss your current stance regarding potential for an invasive mutation of the main protease to reduce the antiviral impact of the existing PIs or EDP-235? And then is there anything specific about the healthy volunteer data you think could be particularly informative about a potential advantage over the competition at this point? Thanks.

Hi, thanks. This is Jay speaking. So with regards to resistance, we wouldn't expect to see much in an acute infection like COVID or even in some instances, perhaps RSV. If you have a good, robust molecule going after the drug, and it's only -- or going after the virus, it's only five days of treatment, I think that helps minimize things a lot. I don't think Pfizer has reported anything at this as of now. . With regards to the healthy volunteer study, absolutely, so we'll be looking at safety, of course, first and foremost making to demonstrating good safety profile. We'll also learn a lot from pharmacokinetics. I think, again, the goal here really in this COVID protease space is to try to come with something that's very convenient not only for the patient but also for the healthcare provider treating the patient. And to that end, something that's once-daily dosing and once-daily dosing without ritonavir boosting. And as you know, ritonavir adds a lot of complexity to the patient care. So those are the main points, I think we'll be turning to assess in our healthy volunteer study.

Great. And if I could just ask one more. Could you just provide any color on what a Phase 2 design might look like at this point? Or is that to be announced?

Well, certainly, it will be to be announced in the future. We haven't -- we're through all of that right now and in the context of a changing landscape. And ultimately, it's common to go in and take a look at any viral activity. So I suspect there's a good chance we'll be doing some of that assessing that antiviral activity and then having discussions with regulators to finalize the path.

Got you. Thanks a lot. Back in queue.

And our next question coming from the line of Brian Abrahams with RBC Capital Markets. Your line is open.

Hi. Good afternoon. Thanks for taking my questions. Two for me. I guess, first off, on 938. What's the right way that we should be thinking about the potential translatability from the RSVP data to a higher-risk population that you're going to be testing subsequently? I'm just wondering, I guess, if there's differences in immune impairment that might change the impact that 938 might have on viral load or on symptoms between the two populations? And then my second question is on 235. There's been some, I guess, anecdotal reports on rebound from and also some recent prophylactic data that didn't quite hit statistical significance. So I'm curious if those evolving data points, I guess, how those shape the way you might think about a development or regulatory path for 235 with respect to the doses, durations and populations you might study to most -- to best elicit its potential differentiation? Thanks.

Sure. So addressing 938 on the translation, again, we're -- as you know, we're coming on the heels of some very strong data in the human challenge study, which, of course, was in healthy volunteers who were infected with virus, all infected with the same strain and the same level of inoculum and then ultimately, treated. And what we saw was a dramatic reduction in symptoms. We saw a dramatic reduction in viral load. And so RSVP steps into the real world. We're dealing with a not terribly dissimilar patient population. They're otherwise healthy volunteers or adults. And the big difference is how did they contract the virus, what was the stream, what was the degree of inoculum and so on and so forth. But one of the gating items is the emergence of symptoms. So that's sort of a grand unifier in the patient population as when did symptoms emerge. And then getting people dosed and treated within the first 48 hours post-symptom onset. So it's a great translational study going from a challenge study to the real world. It's a slightly different patient population than others in the real world. So obviously, we have a transplant study going on where people are immune compromised. We have a pediatric study in young children, many of whom haven't been exposed before and are now being exposed. Later this year, we're going to have a study in high-risk adults. Adults elderly have another issue going on that puts them at high risk in an RSV infection setting. So each one of them is a little bit different. But I think you're going to be firmly grounded on the fundamentals the fact that the drug has very strong PK, very good exposures, half-life siemens, it's a very potent drug, as the resistance.…

Well, I think you kind of covered it, but I was just getting at some of the possible shortcomings that are beginning to emerge and maybe some slightly disappointing data on the prophylactic side, if that sort of changes how you might gear 235 for future development to most differentiate it and maybe take advantage of some of the potential advantageous properties like potency?

Got it. Yeah, I think in the sort of standard risk and lower-risk patient population, I think people are still trying to sort through what are the best endpoints to be looking at there. I think Pfizer had their run at it with some fairly stringent end points. And the question is what will that set of endpoints look like in the patient population as the virus continues to evolve, we'll be paying close attention to that. The same is true with post-exposure prophylaxis. Again, some of the first trial information is starting to come out. But I think figuring out the dynamics of how and when to get that drug on board to make a difference in that patient population. These are all things to sort out. But having one that is more accessible and easier to use without limitations based on ritonavir DDIs with other drugs. It's one thing if you're trying to treat a single patient who's infected. It's another to prophylax and then bring it into a broader swath of family members or their close contacts where each of them might have different circumstances that are confounded by ritonavir. So each one of those things would need to be carefully thought through and sorted through. And meanwhile, the clock is ticking. So you want to you want to try to mitigate that by getting people on drug as soon as possible. And that's why we're really focused on things that are easy to use and hopefully with every time of dosing.

Make sense. Thanks so much, Jay.

You’re welcome.

Our next question coming from the line of Yasmeen Rahimi with Piper Sandler. Your line is open.

Hi. This is Swapnil for Yasmeen. A couple of questions for us. So we have been like speaking with experts and KOLs and protease inhibitors who suggested that the return or boosting might be a critical component to maintain efficacy, especially in light of growing variants. So do you like -- how confident like what gives you confidence that 235 will not really need a return of boost and could have a similar efficacy? And then second question is like at what junction do you plan on partnering this asset? And like if you could walk us through the decision tree of that could happen? Thanks for taking my questions.

Sure. So I mean ritonavir is -- I mean we know what the drug did without ritonavir. The spectrum was, I believe it was three times a day dosing and over a gram dosing and so forth. And I think someone made the call that in the grand scheme of things, it be better to do ritonavir boosting in order to get adequate drug exposure that a BID regimen would be acceptable. And so there's no magic about it. I mean it's an HIV drug. It's a non-boosting agent and boost lots of drugs, and that's both the benefit and the confounding element of the boosting. So if you can demonstrate similar or better PK and you don't need ritonavir, then there's no reason to use it. And so that's the angle that we're exploring, obviously, that product profile tests very well. And we're in the process of sorting that out even as we speak. With regards to partnering, we -- I've said previously that our expectation is we will team up. This is a global pandemic. It's bigger than we are, so to speak. And I think to that end, much like we did in the area of hepatitis C to take on a really global problem like that, just made a tremendous amount of sense to team up. So we -- our plan is to do that. And our plan is to do that really in enough time such that when it comes time for global supply chain that -- and global launch that we're well partnered in terms of supply chain for clinical trial supply through registration, we've got all of that under control. We're thinking about the fees after that. And that's where given the timing and often compressed time lines to find them so that we'd be looking to do that sooner than we might otherwise. So -- but it's definitely in the plan.

Our next question coming from the line of Akash Tewari with Jefferies. Your line is open.

Hey, guys. So given the RSVP study completed sometime in January, is the C-suite fully blinded to the data at this time? And if that's the case, what gives you the confidence to initiate the high-risk study before getting a chance to look at the RSVP data? Additionally, I noticed on the press release today, you mentioned RSVP was running a low-risk in otherwise healthy population. Is it fair to say the chances of outright success for this trial are low given the background patient dynamics? Thank you.

Yeah. So they're -- thanks for the question. I mean it brings up, again, an interesting point that these -- the progression beyond RSVP is sort of independent as we look at these high-risk patient populations. Of course, we're looking to demonstrate safety in that patient population and also, hopefully, symptom reduction and viral load changes. . But when you look at high-risk patient populations, as I mentioned before, you've got a bigger dynamic window, maybe this is getting a good question about the low risk -- difference in low risk and high risk. In the COVID case, people demonstrated efficacy in high-risk populations without yet doing it in lower risk. And I think in part, it has to do with the dynamic range and the endpoints that you're able to work with. So again, I think it’s an interesting translational study. But I view them independently.

And our next question coming from the line of Roy Buchanan with JMP Securities. Your line is now open.

Hi. Thanks for taking the question. Just a couple of quick ones for me. On the RSVP study, Jay, I think you've said that it's designed to show a 40% benefit. Just want to check, that's at 80% or 90% powering?

It's an 80% powering to show a 55% effect, okay? And -- so -- but the minimal separation or effect size that you can detect with the sample size is 40% reduction. So as long as the final results show a 40% reduction, the study will be positive. .

Okay. Great. And then for the EDP-235, the Phase 1 later this quarter, you said preliminary data. I just want to check, are we going to get both the single ascending and multiple ascending results this quarter? Or is it just a single ascending?

So we should have most cohorts from SAD and MAD. We'll see if we have all, but we should have most of them.

Okay. Great. And I'm going to throw in one more. I guess that RSVP study, is it stratifying between hospitalized and non? And I didn't -- clinical trials.gov, I don't see a specification between upper and lower respiratory tract infections. Is it stratifying by that? And then I guess is it safe to assume that the hospitalization would imply a lower respiratory tract infection? Thanks.

I'll let -- actually, I'll let Nathalie answer this one. The hospitalization part is in part because, again, this is the first study in feeds and you're going to do it in a very careful environment. So that's the nature of the hospitalization. But, Nathalie, do you want to comment on any stratification?

Yeah, sure. Thank you, Jay. I can just complement the answer. So there's no stratification in our first -- in pediatric study. There was mainly a requirement from regulatory because of safety purposes. And that was necessarily just for the first cohort. So it doesn't mean necessarily that the kids will come with an.

Got it. Thank you.

You’re welcome.

Welcome.

And our next question coming from the line of Eric Joseph with JPMorgan. Your line is open.

Hi. This is Hannah on for Eric. Thanks for taking question. So first, just can you talk a little bit about some of the gating items to reporting data from the RSVP study? Enrollment has been complete since the end of last year. Just wondering if there's any work left to complete prior to announcing that data? And then also, you're planning to initiate the RSVP study or the RSV study in older adult at high risk by the end of the year. Just wondering from a sense of timeline, would you be anticipating being able to complete the study within 1 RSV season? And what data sets from which studies would you need to have in hand prior to designing or initiating a Phase 3 pivotal study? Thank you.

Sure. So with regards to the high-risk patient, it's a study, again, will get started in the second half of this year. Historically, it's been almost impossible for anyone to recruit a season or a recruited study in exactly in one season, certainly in one North American season. So as you know, you start in Northern Hemisphere and you got the Southern Hemisphere, it's really just going to depend on what RSV rates look like in terms of the speed to enrollment. So how we get into the actual season? It's really hard to provide granular guidance. The good news is as we roll through the study, we have a pretty good sense as we go. This study should enable a Phase 3 registration study. But this is something that we'll discuss with the agency as we have an end of Phase 2 meeting. So I think the -- what was your -- the other question about RSVP? The study did enroll -- finished enrollment late last year? Yeah. And I think one of the gating items was pulling in all of the virologic data samples from an outside vendor who is the clinical virology. So it's really related to that, but we're on track to report our top-line this quarter.

So just a follow-up on just pivotal, thinking about the pivotal design for RSV. So with each Phase 2 study, do you then plan to evaluate a pivotal opportunity in that setting? Or would you wait until all three studies are completed or I guess, all 4 studies have completed?

No, we wouldn't wait. We would definitely not wait.

Okay. Make sense. Thank you.

Yeah. You’re welcome.

And our next question coming from the line of Jay Olson with Oppenheimer. Your line is open.

Hi. Thanks for the update. And thanks for taking the questions. For RSV, how are you thinking about the monotherapy versus combination opportunities in various different patient populations? And what's the best strategy to advance both 938 and 323?

Sure. Actually, I'm going to this is went over to Tara Kieffer for -- to chat a little bit about that strategy.

Sure. No problem, Jay, this is Tara. So we're certainly looking at 323 that advances into the clinic, and we'll be looking at that in a typical Phase 1 study and then understanding a little bit more about the characteristics and antiviral activity on its own and then thinking about potential combinations down the road with 938. And that would be either to look at different patient populations or potentially expanding the treatment window, the opportunity of when we're able to treat patients after symptom onset. And so we'll be thinking about how best to bring both of those compounds forward alone and which, I think, we might try in combination. But certainly, both compounds have the ability and the profile to move forward as a monotherapy and there may be settings where we want to look in combination.

Great. Thank you. And if I could ask a follow-up on 235, do you expect 235 to benefit from an Emergency Use Authorization? And also, will future studies of 235 require an active control line?

So there's -- in terms of a control arm, I think we don't know. This is going to have to ultimately be discussed with the agency. With regards to EUA, again, that's sort of facts and circumstances on the ground at the time in terms of the agency decides what gets Emergency Use Authorization in some instances as you've know and they've given it and then they pulled it back depending upon the evolution of the virus and the severity. Right now, there is a thought that EUA could possibly be available in high-risk patient population that needs to be confined ultimately, obviously, through discussions with the agency.

Great, super helpful. Thank you, both very much.

You’re welcome.

Our next question coming from the line of Zegbeh Jallah with ROTH Capital. Your line is open.

Hello. Thank you for taking questions. I do have a few here. The first one, Jay, just about your 235 program relative to We've been looking at the chemical structure. We've just been wondering what you did to kind of optimize your molecule relative to theirs? And then how do you expect these programs to be differentiated in the clinic?

Well, I'm much as I could or much as I would love to. We won't get into chemical structures this evening. But suffice it to say, this is what we do at Enanta. Among the things we do at Enanta is very good at drug candidate optimization. So it's a process that we know well. We've done many times. We've done many times on protease inhibitors and have ultimately got to that to market with two protease inhibitors. So this process is no different. It's been a very strong drug discovery effort. And now we're going to supplement that with a very strong development effort. And what -- I'm sorry, the second part of your question?

I was just wondering how your first molecule could be in the clinic efficacy safety.

Yeah, sure. A lot of people can -- it's very easy to make -- well, I shouldn't trivialize it. It's easy to make a really potent molecule sometimes. But having all the other drug candidate characteristics that you would like to have on top of that can often erode the potency gains that you had. So getting everything put together in one package is the art and a challenge here. And so we just spent a lot of time focused on DMP characteristics of the molecule, making sure that the molecule had really good oral absorption, had really good half-lives, a very good trough drug concentrations, a very good distribution into important target organs. In this case, lung tissue. And so it was an iterative process working through lots of different molecules, lots of different chemical classes. And then ultimately, refining all the various attributes, including lots of virology, into a single molecule to take forward. So I think so far, the preclinical safety has been very good. And moving in the clinic soon, we'll have the clinical correlate of that in terms of safety and importantly, PK. So I think those are ways that you can differentiate starting in Phase 1. We certainly have differentiated already preclinically.

And then the follow-up here is just another catalyst program. I think everyone has been trying to figure out how would this translate to the high-risk patient population. And so I just kind of wanted to follow up one of the questions regarding which patient population do you think it will be more difficult or easier to kind of show a treatment benefit? I know you are doing the high risk because of the more addressable patient population, but in terms of translating the data from the less severe patients to the more high-risk patients, which patient population is it more difficult to show a benefit in?

Yeah. That's a very good question, but a very hard one to answer. It's -- because they're all unique you've got -- you have kids that -- even from a DMP standpoint, kids are different, they're not just little adults. Then you have a slightly different clinical presentation in high-risk elderly population. Sometimes they have other comorbidities and that can be confounded in the immune suppress, obviously have very different things going on. So to look at three very different patient populations and say, which is going to be the hardest? Very hard to do that from where we sit today. That said, it is fairly easy to understand how each of those patient populations could benefit from an antiviral versus not getting one. And that's in the end, what we need to show. And as long as we can show good clinical benefit, we will have moved the ball down the field where no one's done it.

Thanks. And then the last one is a combo question. The first part is just about plans or a more detailed specifics about the metapneumovirus program. I think one of the things we liked about the pipeline initially with the multiple shots on goal. And so I think people are just really interested in kind of understanding where you are with your next development candidate. And then the second part is for Paul. Can you talk a little bit about capital allocation towards these different efforts, including early-stage development efforts? And then whether or not the expenses associated with the NASH program have all fallen off? Thanks, again.

Yeah. So as I said in my opening remarks, program is looking very exciting. We've made a lot of drug candidates to Enanta, and we're taking it down to finalized molecules right now for human. To remind some of you who don't remember, the human metapneumo is sort of the second leading cause of everything that RSV does and then basically the same patient population. So the young, the elderly high-risk, the immune compromise. And so it's a very nice complement to RSV. We've got two candidates moving forward in RSV, obviously, human metapneumo will and COVID, of course, will really round it out. But from a capital allocation perspective, we find them as needed. And it's all stage dependent. You go through sometimes get into safety studies, that becomes very expensive for the preclinical side of things and then you get into Phase 1. It's all charted out basically in terms of how we're laying out the pipeline evolution and the timing of all the things that we've got going on. But that allocation changes around a little bit. What I will say is you are correct. We're -- the clinical trials in NASH were wound down. We do have discovery program that's quite interesting that we'll be presenting at EASL that is just sort of the last phase of the internal NASH activities. So we -- really, the focus there is now that we have two FXRs where we've defined doses for future combination, it would ultimately reside in potential combinations down the road through business development activities. But those would be activities that would be conducted by the partner. Okay. Thank you.

Our next question coming from the line of Roanna Ruiz from SVB Securities. Your line is open.

Great. Afternoon. So a question on your new adult RSV study. Could you talk a bit more about the rationale behind selecting high-risk patients that have asthma, chronic obstructive pulmonary disease or congestive heart failure over other possible comorbidities that could have conferred high risk? And I know it's still in the works, but are you considering doing anything to help balance enrollment across the subgroups in the future trial? Or are you thinking about other levers that you can pull here?

Sure. Why don't I ask Nathalie to take that one in terms of the other sub-patient populations stress anymore [ph]?

So maybe just simply answering that one of the patient population that we are defining at higher risk of developing severe progression of RSV disease are well established that regulatory guidance, but also from a clinical standpoint. So patients with high risk are defined as being age of more than 65 years old. So that will be part of our next study for adult with high-risk outpatient study. And typically, the one that have BPCO [ph 0:53:02] that have congestive heart failure and asthma are also candidate to develop progression to severe disease with RSV. So it is important, obviously, to look at that patient population to better understand once you use an antiviral treatment, how you change the course of the progression of the disease. So those are mainly the justification of why we are defining our adult high-risk patient this way. Did I answer your question?

Yeah. But I was curious if you would do anything to balance enrollment across the different subgroups?

There's no particular need to stratify within this group. But there will be certainly -- once the study is and well completed, as you know, we always need a different subpopulation if we need to, but there's no need to stratify. And again, I think Jay has mentioned earlier that we will give a little bit more color on the protocol design as we are getting closer to disclose it and after discussion with our regulatory.

Got it. And one more RSV question for me. So do you have any updates on how recruitment is going with -- for the RSVPs and RSVTx studies? Have you noticed any seasonal trends or unusual seasonal trends, et cetera, across your different sites?

Yeah. So as you might have seen the RSV kind of spiked up and spiked back -- trailed back down and so it's actually very in low rates presently. So I think like before, we'll be looking for spikes in the Southern Hemisphere followed by ultimately spikes in the Northern Hemisphere in the fall and early months.

Okay. Great. Thanks.

You’re welcome.

Thank you. And I will now turn the call back over to Jennifer Viera.

Thank you, everyone for joining us today. If you have any additional questions, feel free to contact us by e-mail or call the office. Thanks, and have a good night.

Ladies and gentlemen, that does complete conference for today. Thank you for your participation. You may now disconnect.