Good afternoon, and welcome to Enanta Pharmaceuticals Fiscal Fourth Quarter and Full Year Ended September 30, 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’d now like to hand 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 fourth quarter and full year 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. I'd now like to turn the call over to Dr. Jay Luly, President and CEO. Jay?

Thank you, Jennifer, and good afternoon, everyone. At Enanta, we are leveraging our expertise in medicinal chemistry, virology and preclinical sciences to discover new compounds that can be developed into groundbreaking medicines. Our fiscal fourth quarter, as well as 2022 overall was a year of progress toward this effort. With multiple ongoing and planned clinical studies across our pipeline, we are poised to execute on our vision to transform the lives of patients with curative therapies, building on our prior success in hepatitis C. Today, I'll start by detailing our recent advances in the development of EDP-235, our once-daily orally dosed inhibitor of coronavirus 3CL protease, which is in clinical development for the treatment of COVID-19. I will then comment on our RSV and human metapneumovirus pipeline progress since our last call, as well as our work in hepatitis B. Starting with COVID-19, we are pleased with the recent advancement of EDP-235 into the next stage of clinical development with the initiation of SPRINT, a Phase 2 clinical trial in COVID-19 patients. This randomized double-blind, placebo-controlled study will enroll approximately 200 non-hospitalized symptomatic patients with mild to moderate COVID-19 who are not at increased risk for developing severe disease. Patients will receive 200 milligrams or 400 milligrams of EDP-235 or placebo orally once daily with food for five days and will be followed for 28 days thereafter. Patients will be eligible to participate if they have had symptoms for not more than five days and have not received a SARS-CoV-2 vaccine or been infected with SARS-CoV-2 within 90 days of enrollment. Primary objective of the study is safety and tolerability and key secondary objectives include pharmacokinetics and multiple viralogic measures to guide our dose selection for subsequent trials. In other studies of protease inhibitors, the viral load decline has been…

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 quarter and full year ended September 30, 2022. For the quarter, total revenue was $20.3 million and consisted of royalty revenue earned on AbbVie's global MAVIRET net product sales. This compares to total revenue of $23.6 million for the same period in 2021. The decrease compared to the prior year was due to a decline in AbbVie sales of MAVIRET. Royalty revenue was calculated on 50% of MAVYRET sales at a royalty rate for the quarter of approximately 10% after adjustments for certain contractual discounts, rebates and set-offs, which are now approximately 2% of AbbVie's total reported HCV product sales. You can review our royalty tier schedule in our 2021 Form 10-K. Moving on to our expenses. For the three months ended September 30, 2022, research and development expenses totaled $34.8 million compared to $48.9 million for the same period in 2021. The decrease was primarily due to the timing and scope of the company's clinical trials. General and administrative expense for the quarter was $12.6 million compared to $8.4 million for the same period in 2021. The increase was due to additional headcount and stock compensation expense. Enanta recorded an income tax expense of $0.01 million for the three months ended September 30, 2022, and an income tax benefit of $0.4 million for the 12 months ended September 30, 2022, which are due primarily to the release of state tax reserves. Enanta recorded an income tax benefit of $8.8 million and $28.6 million for the three and 12 months ended September 30, 2021, respectively, due primarily to a federal net loss carryback available in fiscal 2021 under the CARES Act of 2020. Enanta…

Thank you, sir. [Operator Instructions] And I show -- our first question comes from the line of Brian Abrahams from RBC Capital Markets. Please go ahead.

Hey, good afternoon and thanks so much for taking my questions. congrats on the continued progress across all the programs. Maybe just starting on the COVID -- on the 235 study, the SPRINT program. I'm wondering if you could maybe talk a little bit more about some of the key virological measures that you're going to be looking at in order to help guide dose selection going forward? And I guess, how much are you going to be also looking at symptoms as well? And is there -- I guess, how might you account for the potential for patient-to-patient variability just based on intrinsic immune differences, vaccinations data as prior exposure status in terms of elimination of virus in order to make sure you have kind of a standardized look at the different doses relative to placebo?

Sure. So thanks, Brian, for the question. So, in terms of looking at the 'standardized' population, I think we're trying to control at least for some of the variables that we can. One of them is vaccination status. By now, so many people are vaccinated, but we're asking for people to be enrolled have had a vaccine in the last three months. And the same is true with COVID within the last 90 days. So, that's when immunity tends to wane and you're not taking fresh COVID patients or people that have been freshly vaccinated. So, that's one of the factors. And then going back to the study design. We're focusing primarily for safety and tolerability as a primary endpoint and then in a -- gather enough information as possible in the shortest smallest possible study that we could conduct that would be Phase 3 enabling. We're going to look at other parameters, virologically, the things that you can measure are going to predominantly be viral load. Again, as you know, COVID drugs in general, don't show hugely profound changes on viral loads. In fact, remdesivir doesn't show any change on viral load. So, the protease inhibitors though, have shown small sort of modest changes in viral load reduction. So, we'll certainly be looking at that. We'll look at time to undetectable things like that. Regarding clinical symptoms and outcomes, again, in a small study like this, they're more exploratory than anything, I think, in a small study that size in this way you're not really -- and in this patient population, in particular, you're not really going to be expecting to see too much in the way of that, but we'll be looking for -- we'll be definitely be looking for trends and things that can possibly measure and focus on as it relates to later stage studies. So, hopefully, putting all that together in a small study. We'll have enough information from there to select our dose between the 200-milligram dose and the 400-milligram dose and then go forward on to next steps.

Got it. No, that makes a lot of sense. And then we've obviously seen a wave of RSV across the country and the globe of late. To what extent have you been able to, I guess, take advantage of that with regards to patient enrollment in the ongoing 938 studies? And -- or are there any changes or adjustments you might make to this site onboarding a number of sites, overall protocols to be able to optimize enrollment in light of the spike we're seeing?

Yes. So well, as you know, we have three high-risk patient trials going on. We have a pediatric study and we have an immune suppressed patient population who are bone marrow transplant recipients. And then the third study, which we just announced and as just got up is the high-risk adult studies. So these are adults who are 65 years and older and/or have some other things going on, either asthma, COPD, congestive heart failure, things like that, so things that are putting them at high risk. And so as you know, from the past, there was definitely a drought in RSV during the heart of the pandemic. And it's clear that some of that's come unwound now that patients various people's immunities have waned over the period of time. There's also seems to be a very early season of RSV this year. We'll wait and see for the very least, early, we'll see how severe it is over time and how protracted it is over time. So we need to basically watch this Northern Hemisphere season, which is definitely cranking up, and then see where we stand with all of our sites around the globe on these various studies at the end of the North American or Northern Hemisphere season, I should say. And then we'll have a better sense of where we stand in each of those studies.

Got it. I’ll hop back in the queue. Thanks again.

You’re welcome.

Thank you. One moment while we compile our next question. And I show our next question comes from the line of Yasmeen Rahimi from Piper Sandler. Please go ahead.

Good afternoon team. Congrats on all of the updates and your thoughtful remarks as usual. I guess the question for you, team, is my fast forward to SPRINT data coming out in the first half of 2023. Thank you for telling us of what's the bar and what do you want to see in the study. But what would the next steps be? Where are we in terms of regulatory approval of COVID therapeutics? What's the bar? So just give us some framework on what are elements of the next steps post-SPRINT that are determined and what are maybe unknowns that would be really helpful? And then I have a quick follow-up.

Sure. So well, SPRINT is a Phase II study. Again, it's we're aiming to have it be Phase III enabling, and then also a dose selecting trial that we would be conducting. So, the next step would be Phase III. The specifics of that trial design will continue to plan internally, and also have interactions with the agency with regards to the exact trial design. So it's going to be some more interactions along the way, hopefully, with the hands having good data in our hands during those discussions. So, a little bit early to focus on what that design will look like. But again, we're hoping to wrap-up the study as quickly as we can, have data in the first half and then aim for Phase III in the back half of the year.

Thank you, Jay. And then a question about 323. It seems after we see the Phase I data, is the strategy -- like what is the type of data that you would want to see that would support moving it forward in monotherapy versus in combination? Maybe if you could walk us through what the data scenarios could be for both optionalities? That could be helpful for us. Thank you. I'll jump back into the queue.

Sure. So as you know, our first molecule in the clinic, 938 is a direct-acting antiviral. So it's a replication inhibitor, in contrast to other approaches that have been tried in the past and in the present, I guess, in terms of entry inhibitors. So we're focusing on replication inhibitors. We – again, we believe that that's the best way to shut down an active replicating virus in a patient who is presenting. And so to that end, we didn't want to just have one such class in hand. We're very committed to RSV over time, and we want to have multiple different approaches over time. Someday, you might think about combining them. Again, there's no reason, not priority to believe that in the overwhelming majority of patients you would need to have a combination strategy, but we would like to have that possibility for a few different reasons that, I can articulate in just a second. But 323 is another replication inhibitor. It goes after the polymerase enzyme, and what we do in any of our candidate discovery programs. We're always focused on finding very potent molecules with good safety, and good pharmacokinetics, and good biodistribution. And so 323 check's all of those boxes pre-clinically. And so Phase I as is our usual approach, is really just hopefully recapitulating all of those kinds of bits of data in a human Phase I setting. So we'll be looking for, of course, good safety. We'll be looking for good PK. All of our, again, preclinical predictions support that, it should have good oral PK once-daily dosing, something we also are always aiming for here. And then we know that, the molecule has extraordinarily good virology. It's very, very potent. It's a picomolar inhibitor of this polymery. So pre-clinically, we believe it's…

Thank you. And I show our next question comes from the line of Brian Skorney from Baird. Please go ahead.

Hey, good afternoon everyone. Thanks for taking my questions. I had a few quick ones on the 235 SPRINT study. I guess since you're at seven and 13-fold EC90s for the Omicron variant, are you expecting any dose response on viral load? And it seems like it would be overkill in terms of shutting down the virus. I'm just wondering what, if anything, you expect to see in terms of differences between the dose? And then I noticed on clinical trials, you have a couple of different measures of viral load. Can you just discuss how you're measuring RNA viral load versus infectious viral load? And then finally, how do you think of the number of days of symptoms you're enrolling days, I think, five days is where you're cutting off. Is that too many to catch separation of the different curve compared to placebo. Just trying to think through the time course of viral load evolution here and if there's a risk that you're capturing a lot of patients in the decline phase? Thanks.

Sure. Maybe I'll let Tara comment on the viral readouts. So what I would say is on the 200 and 400 milligram doses, we may or may not see -- we may see -- well, there's all kinds of but, right, when you look at two doses. But it's possible that given the strong multiples we have that either of those two doses does what we need it to do. Or there is still a possible that you might see some dose range or dose response and something. These are the two reasonable doses that we chose to evaluate this and it's exactly why we're running the study just to see if we can differentiate, if there any differentiating to be done here. The five-day piece Shionogi and Pfizer have shown good viral load dropped in various patient populations with a five-day treatment window. You can obviously stratify people depending upon what their actual window was, but it won't be more than five days. So that's what I would say about that. And then, Tara, do you want to comment on the viral readouts?

Sure, Jay. This is Tara, Brian. So we'll be looking at the viral load, the RNA and that will be done by PCR. And that's primarily what a lot of other companies have readout on their programs. We'll also be looking at infectious virus, and that will be done through culture. So this is actually looking at live infectious virus that is still in the samples. So we'll be looking at both of those readouts.

And those are both just nasal swabs?

Correct.

Thank you.

Thank you.

Thank you. One moment, while we compile our next question. And our next question comes from the line of Liisa Bayko from Evercore ISI. Please go ahead.

Yes. I think most of the questions have been answered, but maybe just on the COVID study that you announced, can you explain sort of, I guess, the overall goal here? And do you – what are you trying to learn from the study? And in terms of enrolling the more kind of lower-risk patients, are you concerned at all that you have a similar outcome than you did in RSV, where you kind of don't see any necessary kind of separation in terms of resolution of symptoms or any outcomes, just given that you're not focusing or enriching the study for sort of that higher risk group? So could you comment on -- and what your objectives are of the study in light of the focus there on the low-risk patient population? Thanks.

Sure. Thanks for the question, Liisa. So one of the key reads that we'll be watching for on the viral logic side of the table is viral load. And one of the things that we know is standard risk patients and high-risk patients have very similar viral loads. What happens after that to those various patient populations differs. But this is why, if you're looking at symptoms or outcomes, some of those things, those would be harder to measure in this so-called standard risk patient population. So -- but again, when bringing it back to looking at the virus, trying to figure out which dose you're going to use, looking at safety and tolerability, those are the kinds of things that you should be able to do quite adequately in this patient population. And then once we've got our dose based on all those parameters, again, going into Phase 3, you can broaden out and look at many different outcomes, and we'll have obviously larger-powered studies to look at those kinds of things. So, yes, so Pfizer's shown that it's -- the viral loads are very similar standard risk or high risk and Shinobi saw viral load effects in that standard risk population.

Thank you.

You're welcome.

Thank you. One moment while we compile our next question. And our next question comes from the line of Eric Joseph from JPMorgan. Please go ahead.

Hi, good evening and thanks for taking the questions. I was just thinking about this phenomenon of viral rebound seen with Pfizer's paxlobid. I'm just wondering sort of what your understanding is behind that phenomenon and whether SPRINT offers the opportunity kind of looking at a similar but I'm going to at least assess for it in the post-treatment follow-up period. Are you looking at viral load beyond, let's say, two weeks? And then as it relates to RSV and the potential for kind of thinking through potential combinations with 938 and 323. I guess, practically speaking, what would be sort of the first opportunity to really explore that potential? Is there a useful true clinical model that would kind of inform the potential for additive benefit through combinations? Thanks.

Yes. So, two good questions. So, the rebound thing is interesting. I mean, it does seem to be certainly a real phenomenon, although you can get rebound even in people who don't take paxlobid, and its just part of the natural course in patients. Some will resolve, you think you're better and then you rebound in, but that phenomenon has definitely been observed in protease-treated patients to-date. And part of the -- the thing that we've been wondering about is, well, why is that? And clearly, there must be some little pocket of virus that's not fully taken care of. Ideally, you want to beat the virus down to a low enough level in whatever tissue you need to beat it down in and then get it down to sufficiently low levels that the immune system can kind of come in and mop things up and help you out. So, our speculation is that among the possibilities there could be a little reservoir virus hiding somewhere and that you need to further extinguish it. And so do you do that by treating for longer days? I think that's one parameter that will be sorted out over time. But the other intriguing possibility is one that potentially EDP-235 could have an advantage on. And that is higher tissue uptake in terms of uptake into key target organs such as lung tissue, where we've demonstrated at least pre-clinically, drug concentration out of the plasma and into the tissue at least in lung tissue of four to one concentration. So, that wasn't observed with another protease inhibitor that's out there. And so we've looked not only at lung tissue, but we've looked at many other tissues as well that are potential reservoirs for virus. And some of our concentration goes up even higher…

Okay. Great. Great. I appreciate you taking my question. Thanks.

Thank you.

Thank you. And I show our next question comes from the line of Roanna Ruiz from SVB Securities. Please go ahead.

Great. Thanks. Afternoon everyone. So a quick question on the SPRINT trial. I was curious on the clinical symptoms secondary analysis. Specifically, are you going to focus in on a key set of symptoms similar to what we saw with Shionogi’s late-stage trial data, or will you plan to be a bit more broad in your exploration of different symptoms of COVID?

Tara, do you want to handle that?

Sure. Hi, Roanna, it's Tara. So we'll certainly look at all the symptoms in our trial, and then we'll have the ability to do analysis of specific subsets. So to your point, looking at those five symptoms that Shionogi was able to show an effect on. So we'll be able to do both, and we'll also be able to learn this way with the comprehensive data set, how best to move into later studies as well.

Got it. Makes sense. And…

Dose it help?

Yes, that helps. And for -- I want to ask about 938 for the RSVHR study, do you expect to see a good balance of different high-risk patients being enrolled like across COPD, asthma, et cetera? And I'm not sure if I missed this, but do you have any input on what you think the sequence of readouts might be between your different RSV trials, like RSVPEDs, RSVTx and RSV HR?

Yeah. So the readouts on those will just need more data through season of RSV to really tell. There are such different patient populations, PEDs, there's -- just three very different patient populations. And so I think we just need more information to know what we'll pull ahead. With regards to your question about, are we worried about too much enrichment of one patient population or another? Is that what you asked? I mean, for example, we are capping those older age 65 and asthma at 20%. This will help enrich for the more high-risk COPD and congestive heart failure patients. So it won't be just completely filled up with asthmatics if that is what you're getting at in your question. Is that helpful?

Yeah. That's helpful. Thanks a lot.

Good. Thank you.

Thank you. And I show our next question comes from the line of Jay Olson from Oppenheimer. Please go ahead.

Hey. Congrats on the progress, and thanks for taking the questions. At a very high level, how long do you anticipate it will take to get regulatory approval for 235? So are we talking about a couple of years, or is it going to be several years? And how will COVID treatment dynamics evolve over that time frame? And then what are your latest thoughts about a potential partnership for the development and commercialization of 235? And then I have a follow-up question on 514, if I could, please. Thank you.

Sure. So those are some big questions, actually, the future of the pandemic and how that will play out over time is, one, that's continued to vaccine. Clearly, we're -- at least for now, we seem to be getting into an endemic phase. Maybe we're at the beginning of the end of the pandemic phase shifting toward endemic, that even that's going to be probably several years away before it's truly in the endemic phase. I think the trends in terms of regulatory pathway that's available, I think that's also going to be something that will be looked at carefully as we progress through development. There's different assumptions depending upon what variants that might emerge. But right now, our focus is on finishing up SPRINT and having data in the first half, moving into a Phase 3 study in the back half of the year, and conducting that as expeditiously as we can. I think EUA is still an option as far as we are aware, at least in certain patient populations. And so -- but will that be the case later? Really you really need to let it play out in terms of the timing of the program, juxtapose the backdrop of the environment that's going on. One of the interesting things about the variants is they're changing all the time. It was not that long ago that, we were talking about BA.4 and BA.5. Within the last few weeks BQ.1 and 1.1 have all been taken over and immersively, the – they don't seem to be as lethal as certainly some of the earlier variants, which is good, but these things can switch all around. So yeah, we'll just be watching the landscape and that's going to dictate a lot of how our Phase III enrolls in what…

Great. Thank you. That's super helpful. And then on 514, can you talk about what sort of mechanisms do you plan to combine with 514? And will it be an existing antiviral treatment or something in clinical or preclinical development? And will it be something in your own pipeline or something external? And what are your latest thoughts on seeking a partner for 514?

Yeah. So the right combination, hep B is – it's a slow story to play out in terms of combination therapy. I mean, combination, when we're working on hep C, combination therapy, even though all combination therapy takes a while, combination therapy was fairly straightforward by comparison and as much as the trials were much shorter, you had things that you could measure very quickly. You had profound changes in viral loads and those seem to correlate with getting to basically a cure. And all of those rules are slightly different than HPV. And so I think we're still at the stage where the right combo is not yet known yet. We know that nukes and core inhibitors do useful things in terms of reducing viral load, not only the DNA that nukes do well, but you can also, with the core inhibitor, reduce DNA and RNA. So I think we're going to need something that will adequately address the s-antigen reduction component of this, might you need an immune modulator in the mix. I mean, these are all things that other people are starting to do combinations on and get data readouts on. But it's not perfectly clear yet what that best asset class would be. And so we're being a little bit patient here. We're thinking and doing a little bit internally, and we're looking externally as well. And ultimately, we'll pool the right assets. I hope that we'll be able to do that at some point to really get back on the triple combination horse that we really want to be on. But in the meantime, the spend on clinical trials isn't going to happen until we're clear on that. Is that helpful?

That’s super helpful. Thanks for all the color. Appreciate you taking the questions. Thank you Jay.

You're welcome.

Thank you. [Operator Instructions] And I show our next question comes from the line of Roy Buchanan from JMP Securities. Please go ahead.

Hey, thanks for taking the question. I had a follow-up on the 235 comment, around the higher tissue uptake. Jay, you said you're going to have more data on that topic this year? Is that going to be a publication or a meeting presentation? And then relatedly, for 938, any near-term plans to publish the RSVP results?

So the RSVP results, I'm not sure what the timing is on that quite perfectly honest. I'm not sure what that timing is. It's an important study to have conducted. It's not the most important thing we're doing right now in terms of execution. The 235 data that I referred to in tissue distribution, as you know, some of it's been out there and other abstracts are being written and submitted. So Steve tune’s on that front. We just -- we will report once we've been accepted and announced a confirmed entry for that.

Okay. But we'll see that data before the end of this year?

Before the end of 2022?

Yes. That's what I heard you say. No?

I don't believe I said that. If I did, I didn't mean it -- I didn't meant to say that. Not sure about what you're talking about. Are you talking about 235 tissue uptake data -- is that what you?

Yes.

Not this year. Not anymore this year.

Okay. Fair enough. All right. And then maybe kind of answer this with the partnering question. But how are you thinking about funding the Phase 3 for 235? Your expense guidance for R&D is going up quite a bit. Are you -- does that bake in starting a Phase 3 for 235 possibly start-up for RSV Phase 3s?

Yes. So, the guidance is our fiscal year guidance that will go out through the quarter in the 9/30 and so again, we're aiming to have the SPRINT data in the first calendar half. And so any Phase 3 -- I mean, we've been doing preparations for Phase 3 for quite some time. The CMC drug supply, all the rest, you don't wait until the last minute. So, we've been, if you will, incurring certain Phase 3-related costs right now. And we would expect those to continue up through the quarter of 9/30, and those are included in that number.

Okay, great. Thank you.

Yes. So, it's a conservative thing, if there were a partnering change, then obviously, that changes bunches of things. But anyway, so conservatively, we've modeled it that way.

Thank you. I'm showing no further questions in the queue. This concludes our Q&A session. At this time, I would like to turn the conference back over to Jennifer Viera for closing remarks.

Thank you, everyone, for joining us today. If you have additional questions, please feel free to contact us by e-mail or call the office. Have a great evening.

Thank you. This concludes the conference. You may now disconnect.