Enanta Pharmaceuticals, Inc. (NASDAQ:ENTA) Q2 2023 Earnings Call Transcript May 8, 2023

Enanta Pharmaceuticals, Inc. beats earnings expectations. Reported EPS is $-1.79, expectations were $-1.98.

Operator: Good afternoon, and welcome to Enanta Pharmaceuticals Fiscal Second Quarter Ended March 31, 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 prepared remarks. Please be advised that these call is being recorded. I would now like to turn the conference over to Jennifer Viera, Investor Relations. Please go ahead.

Jennifer Viera: Thank you, operator, and thanks to everyone for joining us this afternoon. The news release with our fiscal second quarter 2023 financial results was issued this afternoon and is available on our website. A news release with top line data from our SPRINT clinical trial was also issued this afternoon and can be found on our website as well. Slides from today’s webcast will be available on our website after the call ends. On the call today are Dr. Jay Luly, our President and Chief Executive Officer; Dr. Scott Rottinghaus, our Chief Medical Officer; Paul Mellett, our Chief Financial Officer; and Dr. Tara Kieffer, our Senior Vice President of New Product Strategy and Development. Before we begin with our formal remarks, we do 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-K 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, Jay?

Jay Luly: Thank you, Jennifer, and good afternoon, everyone. At Enanta our goal has always been to develop curative therapies for patients in need. That effort continues today with our announcement of the top line data from our Phase 2 SPRINT study of EDP-235, our 3CL protease inhibitor in development as an oral once-daily treatment for COVID-19. I’ll let Dr. Scott Rottinghaus, our Chief Medical Officer, present the data in a minute, but I will highlight a few key points, which support our belief that EDP-235 could play an important role in the treatment of COVID-19. First, the trial met its primary endpoint, demonstrating a favorable safety and tolerability profile. In addition, we are excited that the SPRINT data show that EDP-235 had an impact on clinically meaningful endpoints. Scott’s presentation will go through this in detail. With that, I’ll turn the call over to Scott. Scott?

Scott Rottinghaus: Thank you, Jay. As Jay stated, EDP-235 met the primary endpoint and was generally safe and well tolerated. We saw a dose dependent symptom improvement with EDP-235 treatment compared to placebo. However, we did not see an effect on virologic endpoints likely because of the rapid viral decline in the placebo arm of this immunologically experienced standard risk population. As a reminder, this slide shows the study design of SPRINT, which was a randomized, double-blind, placebo-controlled Phase 2 clinical trial of EDP-235 in approximately 200 adults with mild or moderate COVID-19, who did not have risk factors for progression to severe disease. Patients were treated with EDP-235 at doses of 200 milligrams, 400 milligrams or placebo once daily for five days.

We randomized 231 patients in a one to one to one fashion. The safety population included all patients randomized. We followed the patients out to day 33. And as you can see, 95% to 97% of the patients completed the study. The ITTC population of 190 patients is a modified intention to treat population that constitutes our primary efficacy analysis population. It includes all patients who are confirmed to have a positive PCR for SARS-CoV-2 at baseline. Demographics and based on characteristics were well balanced between the arms. We had a young patient population with a median age of about 40 years. Most patients were white and Hispanic. Three quarters were enrolled within three days of symptom onset. Baseline viral load was about five logs across arms.

The majority of patients had vaccinated against COVID and about 95% were seropositive, indicating a high degree of baseline immunity against COVID. This is consistent with recent estimates from the CDC showing a high degree of seropositivity in the US population. The next slide summarizes the adverse events that we saw in the study. Among our 231 patients, only 10 adverse events were reported. While there were numerically more adverse events reported on 400 milligrams, but on the other arms, the frequency was still low at 6.4% compared to placebo at 2.6%. There were no serious adverse events or discontinuations due to adverse events. Most adverse events were mild in severity. The adverse event that was graded as severe in this table was a fall and resulting arthralgia that was judged by the investigator not to be related to study drug.

This slide shows the specific adverse events. As you can see, no specific pattern of adverse events was identified. The two have had toxicities were asymptomatic, transient elevations of transaminases. The one in 200 milligrams with a mild grade 1 elevation and the other in 400 milligrams, I’ll discuss more on the next slide. Laboratory values were generally unremarkable, but there are two specific call-outs. The patient I just mentioned, who is receiving EDP-235 at the 400-milligram dose reported concomitant use of alcohol and acetaminophen. He had ALT at the upper limit of normal at baseline and experienced asymptomatic ALT elevation up to 12 times the upper limit of normal on study day six. His AST was five times the upper limit of normal.

GTT was elevated at baseline and increased further to four times the upper limb normal. Bilirubin and alkaline phosphatase were normal. The patient remained asymptomatic and all labs returned to normal and follow-up, except for GGT, which remained mildly elevated, but consistent with baseline. The second laboratory observation is a transient and dose-dependent elevation in total cholesterol and triglycerides with EDP-235. Both total cholesterol and triglycerides then trended toward normal after treatment. Wrapping up safety, there was a low frequency of adverse events and most were mild in severity. There were no serious adverse events or discontinuations due to adverse events. Laboratory values were generally unremarkable apart from the patient with transaminase elevations and the lipid trends that I just discussed.

Moving to PK. EDP-235 achieved target exposures and the results were consistent with what we saw in Phase I. Plasma drug levels were seven and 12 times higher than the EC90 of Omicron for the 200-milligram and 400-milligram dosing levels. Mean and median pre-dose concentrations of EDP-235 on day five are shown in the table. Now for efficacy. Let’s start with the total symptom score in the full efficacy analysis population, the ITTC. As a reminder, the total symptom score comprises all 14 symptoms as defined by the FDA for evaluating drugs to treat COVID. They’re listed on the right-hand side of the slide. You can see here that there is a dose-dependent trend favoring EDP-235 with statistical significance being achieved at multiple time points as indicated by the asterisks, with a p-value of less than 0.05.

Statistical significance was observed as early as the first time point evaluated, which was one day after the first dose. While the baseline total symptom score of the 400-milligram dose was slightly higher than the others, a rapid, early and sustained improvement in symptoms was observed compared to placebo. For contextualization, this slide shows our EDP-235 data that I just showed you, next to data from another protease inhibitor in citrovir . We’ve chosen citrovir for contextualization because it’s the only antiviral with a sufficiently robust data – symptom data set in the public domain. Our Phase II study looked at the 14 symptoms I just discussed in 190 patients, and the change from baseline in total symptom score is graphed here out to 10 days.

And citrovir’s Phase IIb study of 341 patients looked at the same symptoms, except for taste and smell, and these data are grafted out to day 6. As you can see, dose-dependent trends and symptomatic improvement were observed for both antivirals. As you may remember, the protocol stratified patients at randomization into two groups: those with less than three days of symptoms and those with greater than three days of symptoms. We pre-specified an analysis of the patients who were randomized within three days of symptom onset. You’ll recall from the demographic slide that this population includes about three quarters of the patients in the study. In this population, EDP-235 at 400 milligrams showed statistically significant reductions in total symptom score compared to baseline at all time points after treatment.

We interrogated our data set with the goal of identifying a subset of the FDA-specified 14 symptoms that better reflect the clinical manifestations at current COVID-19 variants and the treatment effect on these symptoms. Shionogi performed a similar analysis identifying fivie symptoms from their Phase IIb study, which were subsequently used as a primary endpoint in their Phase III. As shown here, we identified a subset of six symptoms, including shortness of breast, sore throat, stuffy runny nose, chills or shivering, feeling hotter feverish and headache. This figure shows an analysis of these six symptoms in the pre-specified population of patients enrolled within three days of symptom onset. EDP-235 at the 400-milligram dose demonstrated an even greater improvement in symptom score at all time points.

Now, let’s move to looking at time to symptom improvement. While our prespecified endpoint of time to improvement for all 14 symptoms did not show a difference between the active and placebo arms analysis of the six symptoms from the last slide showed a statistically significant difference in the ITT population. Furthermore, as shown on this slide, this difference was even greater among patients who were enrolled within three days of symptom onset. You can see that the hazard ratio for the difference of EDP-235 at the 400-milligram dose versus placebo is 1.9 with a p-value of 0.006. Median time to improvement for these six symptoms was shortened by two days. Specifically, patients receiving placebo improved in five days, while patients receiving 400 milligrams of EDP-235 improved in three days.

Moving to virologic end points. This graph shows change from baseline in viral RNA as measured by nasopharyngeal swabs. No difference was demonstrated between patients treated with EDP 235 and placebo likely due to the rapid viral decline observed in the placebo arm. The mean baseline viral load in this study population was approximately five logs and a precipitous decrease in viral RNA was observed in all study arms, indicating that this highly immune population rapidly cleared virus from the nose. To understand this further, we performed an additional analysis of patients with a baseline viral load greater than five logs, and this represented about half of the study population. We saw a viral load decline of 0.4 logs at day three in both EDP-235 treatment groups compared to placebo.

This 0.4 log decline was sustained at day five in the 400-milligram arm. For more contextualization, this slide compares the viral RNA change from baseline in the placebo arms of other direct-acting antiviral COVID studies. You can see here that the decline seen in the placebo arm of the SPRINT study was more rapid than in any other study. This may not be surprising given a highly immune population in which this study was conducted, as evidenced by recent CDC data from a nationwide seroprevalence study showing the high prevalence of natural and hybrid immunity, which continues to grow over time. Details of these data can be found in the appendix of the slides posted to our website. In summary, EDP-235 was generally safe and well tolerated. There was a low frequency of adverse events, and most were mild in severity.

There were no serious adverse events or discontinuations due to adverse events. EDP-235 showed a dose-dependent improvement in total symptom score. Among patients enrolled within three days of symptom onset, there was a statistically significant improvement in the total symptom score for EDP-235 at 400 milligrams at all time points, starting at one day after dosing. There was no difference between treatment arms and placebo for viral RNA decline in this highly immune population that was able to rapidly clear SARS-CoV-2 from the nose. However, an additional analysis of patients with a baseline viral load greater than five logs showed a viral RNA decline of 0.4 logs at day three in both EDP-235 treatment groups compared to placebo. In conclusion, we’re excited to see the EDP-235 at the 400-milligram dose had a significant effect on symptoms in the SPRINT study, suggesting that we have the potential to affect clinically meaningful endpoints moving forward in development.

That concludes my presentation of the data. With that, I’ll turn the call back to Jay. Jay?

Jay Luly: Based on the positive SPRINT data, we are focusing on partnership opportunities for Phase 3 and on the potential for a Phase 2 study in acute or long COVID that could further demonstrate the efficacy of EDP-235. We look forward to providing an update on our plans in the coming months. I also want to note, we continue to progress our research program to develop SARS-CoV-2 papain-like protease or PLpro inhibitors. Beyond COVID-19, our patient-centric approach continues with our industry leading respiratory virology treatment portfolio. With RSV specifically, we are advancing a broad program, which includes EDP-938, the most advanced and protein inhibitor in clinical development as well as EDP-323, our novel oral therapeutic targeting RSV protein RNA polymerase.

We are monitoring RSV epidemiology to evaluate the impact on trial enrollment and timing for data readouts and our ongoing Phase 2 studies of EDP-938, and we expect enrollment to continue throughout 2023. Meanwhile, we are wrapping up our ongoing Phase 1 study of EDP-323. We look forward to reporting top line data for EDP-323 next month. This quarter, we also announced that the FDA granted fast track designation to EDP-323, underscoring its potential as a once-daily oral therapeutic for the treatment of RSV. As a reminder, the Phase 1 study is a double-blind, placebo-controlled, first-in-human study that will enroll approximately 80 healthy subjects and is evaluating the safety, tolerability and pharmacokinetics of orally administered single and multiple doses of EDP-323.

Beyond our clinical RSV programs, we are particularly excited by the potential of our novel broader spectrum antiviral research program targeting both RSV and human metapneumovirus, or hMPV, with a single agent. Both of these viruses have a severe impact on several vulnerable patient populations, such as children, the elderly adults within cardiopulmonary disease and those who are immune compromised. Our preclinical data in support of this program showed that our prototype dual inhibitor demonstrated potent nanomolar activity against multiple genotypes strains of both viruses in a range of cell types. We’re making progress in the optimization of our potent dual inhibitors and aim to select a clinical candidate in the fourth quarter of 2023.

Before I turn the call over to Paul to provide an update on our financials, I want to comment on the $200 million royalty sale transaction we closed two weeks ago. The additional non-dilutive funding has increased our financial flexibility and extended our cash runway. With that, I’ll turn the call over to Paul.

Paul Mellett: Thank you, Jay. Before I provide details on our second quarter financial results, I also want to take a moment to comment on our royalty sales transaction, which we announced in April. This transaction involved the sale of 54.5% of our future global royalties we earned on net sales of MAVYRET beginning in July 2023, through June 2032, with total payments capped at 1.42 times the purchase price. In exchange, the purchaser, OMERS paid us $200 million upfront. We are excited to partner with OMERS, which is one of the Canada’s largest defined benefit pension plans. This sale not only secures us additional non-dilutive funding but also gives us increased financial flexibility and retained economics. Please note that Enanta retains 45.5% of all royalties until the cap is hit, at which point, 100% of all further royalties revert to Enanta.

Now let’s turn to our quarterly results. For the quarter, total revenue was $17.8 million and consisted of royalty revenue earned on AbbVie’s global MAVYRET net product sales. This compares to total revenue of $18.7 million for the same period in 2022. The decrease was due to lower patient volumes in 2023 compared to 2022. Moving on to our expenses. For the three months ended March 31, 2023, research and development expenses totaled $43.5 million compared to $42.1 million for the same period in 2022. The slight increase was primarily due to the timing of clinical trial expenses in our virology programs. General and administrative expense for the quarter was $13.8 million compared to $10.5 million for the same period in 2022. The increase was due to increased stock-related compensation expense and legal fees associated with our patent infringement suit against Pfizer.

Net loss for the three months ended March 31, 2023, was $37.7 million or a loss of $1.79 per diluted common share compared to a net loss of $33.6 million or a loss of $1.63 per diluted common share for the corresponding period in 2022. Enanta ended the quarter with approximately $225 million in cash and marketable securities before giving effect of the royalty sale transaction. We expect that our current cash, cash equivalents to term long-term marketable securities, along with the $200 million in cash we received on the sale of our portion of MAVYRET royalties as well as our retained portion of royalty revenue will continue to be sufficient to meet the anticipated cash requirements of our existing business and development programs into calendar 2026.

Further financial details are available in our press release and will be available in our report on Form 10-Q when filed. I’d now like to turn the call back to the operator and we’ll open up the lines for questions. Operator?

Q&A Session

Operator: Thank you. One moment for our first question, that comes from Yasmeen Rahimi with Piper Sandler. Please proceed.

Yasmeen Rahimi: Hi, team. Thank you so much for all the details from SPRINT. I guess maybe now with this data on hand, like what are the next steps, right? Like how soon can you meet with the agency and get insight in regards to the Phase design? And maybe given that there was quite a bit of variability in the viral load and maybe not differences were depicted in the total symptom score. Like do you think those data points could impact or may or may not impact the discussions with potential partners? So — if you could maybe highlight whether they have a deep appreciation to those variabilities and nuances and then I’ll jump back in the queue. And thank you for allowing me to ask my questions.

Jay Luly: Hi, this is Jay. So, maybe I’ll let Scott fill in some of the — a little bit of the details. But I think we’ll be progressing our data set, taking it to the agency as a matter of course, of finishing up the study. We’ll be also in the context of data, the viral load bid, which we can talk a lot more about. But at the end of the day, the agency doesn’t approve any of the COVID drugs based on viral load. It’s based on some other endpoints. So, if you’re looking at a standard risk patient population, it’s going to be based on symptoms, if you’re going to be looking at a high-risk patient population, it’s going to be on hospitalization and death. And so I think, in particular, that’s why we were really pleased to see the statistically significant improvements in the total symptom score and on the time to improvement.

So, those are both really important metrics that that could be viewed as clinically — highly clinically relevant. So, Scott, anything to add on that or?

Scott Rottinghaus: Yes, Yasmeen, thanks for that question. I mean, just to reiterate, we’re so excited about the strong data in symptoms, and we do expect that to form the basis of a discussion with regulators to look at next steps in terms of Phase 3 design. While the virology data are mixed, as you say, I do think we have an opportunity here given the symptom data. So, we are very excited and looking forward to moving this to next steps.

Jay Luly: I think one of the other things that’s clear is that the patient population over time since the beginning of the pandemic has changed dramatically as has the virus. And so good for the humans, the seropositivity that we’re building up over time, either through vaccination or through natural infection or both giving you hybrid immunity. This is only built and built and built over time. And in every sort of consecutive study population that people are looking at. And for that reason, and as you saw the data, just even looking at the placebo curves in the slide deck — and again this slide deck will be posted at the end of the call. But when you look at all those placebos from all the various studies, it becomes clear that over time, the viral load drops have happened more quickly and more dramatically as time has gone on at least as you can measure viral loads in the nose, which is obviously the compartment that can easily be interrogated, what’s happening in the rest of the body and the rest of the tissues from a virologic standpoint, much more difficult to assess.

But we know that our drug has great tissue penetration, high potency, good exposures, high multiples of EC90s and has had a very significant effect on symptoms, which, again, we think compares very well to any other study that’s been done in this patient population. So I think that’s an interesting next study. I think the question I think you asked, Yas, was next plans, I mean we’ll be thinking about other kinds of studies, there’s things you could think about, and I’m talking about Phase 2s now that you could conduct in long COVID or in another patient population. I think we want to think about what any such study might look like. And at the same time, obviously, it’s thinking about the future with Phase 3. Our plan has always been to engage a partner for late-stage development, the commercialization strategy and ultimately, the launch.

I think with this positive SPRINT data, we see a broad opportunity for 235 in multiple different treatment paradigms for COVID. You can think of standard risk, high-risk, prophylaxis, long COVID. So really in order to realize this vision, we feel a pharma partnership would better enable us to get the best registration program and to achieve that optimal label. So that’s going to be our focus in terms of Phase 3. I don’t know if you I think you dropped off the call — but.

Yasmeen Rahimi: No, that was great. That was great. Thank you so much.

Jay Luly: Okay. You’re welcome.

Operator: Thank you. One moment for our next question please. It comes from the line of Brian Abrahams with RBC Capital Markets. Please proceed.

Brian Abrahams: Hey good afternoon guys. Thanks for taking my questions. And thanks, too, for all the detailed SPRINT data, really, really helpful. I guess, my first question is — when you think about a potential go-forward dose here, I guess, how confident are you that some of the symptomatic benefits that you’re seeing are indeed dose-dependent versus maybe related to a slightly higher baseline for the 400-milligram arm. I guess, I’m curious at the end of day five, how 400 and 200-milligram patients compared in terms of where they got to on an absolute basis on symptom score and how you’re thinking about the go-forward dose?

Jay Luly: Yeah. I think the go-forward dose is going to be 400. I mean that stood out in so many ways. There were slight differences in baseline. But what happened there is that within the first — really in the first 24 hours, the 400-milligram dose brought things down very quickly and basically lined up with the other patient population. So there’s clear evidence that, that 400-milligram moved very quickly and efficaciously in the right direction.

Scott Rottinghaus: And I would point out that — sorry, Brian, I was just going to point out also that in addition to the decrease in total symptom score, if you look at those specific symptoms, you see an improvement in time to improvement. And so we have multiple different avenues of evidence that point to the fact that this is really a real dose-dependent improvement in efficacy. And yes, we feel quite confident in it.

Brian Abrahams: Got it. And to what do you attribute the TSS symptom signals that you’re seeing here, given that there isn’t a measurable antiviral effect. Is this related to maybe sort of like an unmeasurable effect that’s going on in terms of viral clearance in a different reservoir or some sort of additional benefit on anti-inflammatory benefit?

Scott Rottinghaus: Yes. Key, key question, Brian. So we think it’s the compartment that we’re measuring, right? Everybody looks at the nose that’s where we can easily access and check, but we know that these patients have 95% zero positivity. You can look at some of the background information that we put in our deck as well. The whole population is becoming really strong in terms of hybrid immunity and ability to clear this virus. Now that having been said, we do believe when you see these systemic symptoms, in particular, there are clearly other reservoirs of virus throughout the body that we can’t necessarily access to measure efficiently. But we do know that our drug has excellent tissue distribution, excellent tissue penetration. And we believe that, that’s what potentially sets it apart — and that’s what’s allowing us to get a therapeutic effect on symptoms, whereas we don’t see so much on virus in the nasal farings.

Brian Abrahams: That makes sense. And if I could squeeze one more quick one in. Wondering if you could maybe talk a little bit more about the triglyceride and total cholesterol effects that you’re seeing in terms of, I guess, how long you follow those patients and how close to their baselines, did they return. Does that imply anything in terms of how you might think about future studies in higher risk patients who may have concurrent hyperleukemia baseline? Thanks.

Scott Rottinghaus: Yes, absolutely. So obviously, we’ll follow patients very closely in terms of lipids going forward. But we saw within 14 days, the triglycerides had returned entirely to normal. And within 14 days, the total cholesterol was well on its way. It’s a little delayed from a metabolic perspective, of course, so we have every reason to believe that these cholesterol changes are mild and very manageable. So yes, we think that we can monitor them and manage them pretty effectively, particularly given that this drug is for acute and not chronic use.

Brian Abrahams: Great. Thanks again.

Jay Luly: I think the other thing that’s interesting on that front is Shionogi saw some of these findings as well. And so I guess it bakes and with a very sort of a different chemical class, and so it could make the question is that some exposure is something that you will see with protease inhibitors, and that’s an outstanding question. But I think we’re all finding the stuff out as more and more protease inhibitors have gather clinical information. Also — on the folks that looking at other mechanisms, even that measuring viral load changes in the nose has not always yielded findings. I mean earlier in the pandemic, a Gilead drug, remdesivir, failed to demonstrate viral load changes in the nose. Other people have demonstrated viral use in the nose, but not something else, other.

So, this is why the FDA doesn’t want to use viral loads as an approvable end point. When we did look at a sub-patient population that had viral loads higher than the — mean of five. We did see about a half a log change in this still experienced patient population. So, it’s just getting — I think it’s just getting harder and harder to find that in this otherwise healthy standard risk patient population with the current variants in the current state of immune education that patients have.

Operator: Thank you. And it comes from the line of Roy Buchanan with JMP Securities. Please proceed.

Roy Buchanan: Hey great. Thanks for taking the questions. Most have been answered. A couple of quick ones. Just I noticed that drug-drug interaction studies had completed I know they’re not the most exciting, but anything you can tell us about the drug-drug interaction profile of 235? And then just any potential alternative explanations for the lack of viral load effect. I guess maybe you guys have gone through it already, the tissue distribution of the virus, et cetera. Does anything else you guys can think of? And then just really quickly, EDP-514, what’s the status of—

Jay Luly: Maybe we will — we will just focus on the first question first. So, I think in relation to — well, first of all, there’s — I think we’ve kind of explained what we can really tell you about viral load in the nose today. I think we’ve addressed that a couple of different times. No further thoughts now certainly. And then with regards to the DDI studies that are ongoing, ritonavir has a very substantial load of baggage with it in terms of hitting all kinds of P450s and transporters and all kinds of stuff. So, it’s fair to assume that we don’t — we have nothing close to a ritonavir like profile when it comes to DDIs. So, we think it will be a competitive profile going forward. I’m sorry, you can go on to the next question, if you have one brief one. I think you said 514, if you’re still on, Roy. If not, maybe you’ll come back in the queue.

Operator: Roy?

Roy Buchanan: Yes, sorry, 514. Just the status of searching for additional candidates to combine with that. You considered out-licensing 514 in addition to in-licensing something else? Thanks.

Jay Luly: I think we’d be open-minded in any way to bring together a marriage of the right combination. And to that end, I think there’s more data readouts that are going to come out in the area of hep B — it’s still a little tricky to know exactly what that right combination might be for us or anybody else. So our plan is to continue to watch other data sets, think about other mechanisms, follow the literature closely and looking at external assets that could be combined, and we’re agnostic as to whether we export our asset or import and other. But we just want to make sure it’s the right combination.

Roy Buchanan: Great. Thanks.

Operator: Thank you. One moment for our next question. Again, it comes from the line of Akash Tewari with Jefferies. Please proceed.

Unidentified Analyst: Hi. This is Amy on for Akash. Thanks so much for taking our question. So Shionogi also had a high prior vaccinated patients in their Phase II trials in the range of mid- to high 80% range and believe they showed a half log to one log benefit over on viral load over placebo. What are the major differences between your Phase II and prior COVID antivirals that would attribute to a potentially more aggressive placebo?

Jay Luly: I was going to say either one1 of us can take that. The Shionogi study was run in Japanese patients, Asian patients. Clearly, with — at a time that they had less exposure to natural infection. So we would expect a much — and I don’t have these data for either population yet but we’d expect a much lower rates of nuclear capsid positivity among that population than among our population. So we can see here in the year 2023 again, that populations have very high hybrid immunity. So it’s challenging to find any patients much less a population that has a baseline viral load of seven logs like Shionogi did in order to show that drop in viral load. I don’t know if Tara, you had anything to add to that?

Tara Kieffer: Yes. I think the terminology of seropositivity is somewhat heterogeneous in terms of what provides that seropositivity, whether it’s to vacation or natural infection. And we’re seeing data coming out of the CDC now that in the US, the percentage of people with hybrid immunity, meaning they have had it through both vaccination and/or natural infection is increasing, probably provides somewhat better immunity, and that’s probably borne out in the difference in baseline viral load between the two studies. We know that, that is a major factor in seeing these viral load declines. So yes, the Shionogi study had a baseline viral load of seven, which was two logs higher than what we had in SPRINT.

Jay Luly: And we’ve got just as an appendix to the slide deck that we presented today, which again should be on our website soon. If it’s not already there, has a little bit of supplemental information about seropositivity and also percent of patients or percent of the population that have been previously infected as measured by nucleocapsid antibodies. So I think those trends are pretty interesting. So if you extrapolate them backward into Japan at that time in place, I think you would get a sense that it likely was a bit of a different patient population.

Unidentified Analyst: Great. Thank you so much.

Operator: One moment for our next question. It comes from the line of Liisa Bayko with Evercore ISI. Please proceed.

Liisa Bayko: Hi, there. How are you doing?

Jay Luly: Good.

Liisa Bayko: I guess, first question, do you think showing an RNA change is important in terms of partnering discussions, like how important is that? I know you’ve got symptoms, and that’s going to be important for Phase 3, but just wondering how much of a — how important that would be to potential partnering discussions?

Jay Luly: Well, I mean, again, you have to look at the totality of any data set. I think at the end of the day, people want to make sure you have sort of signs of a registration path forward and symptoms certainly help to provide that. The viral load data, I mean, again, it’s the — it’s the — again, it was never powered on virology. And it was surprising to us when we saw the placebo, especially when we laid our placebo against every other placebo that’s been done in a comparable study, just how disadvantaged our patient population treatment arm was in terms of demonstrating that. But it’s — I think it’s a sign of the times in terms of, again, sort of immune training of patients as well as the evolution of the virus.

Liisa Bayko: Okay. And so do you think, if you were able to tap into some of these other viral reservoirs and I know that’s not possible to do, but just theoretically, you would see the change, or I guess, I was trying to make the linkage between like a change in symptoms and actual viral reduction, whether or not you can see it as a different — detects — I understand it’s a different question.

Jay Luly: Yeah. No. I mean, I suspect you would, but again, accessing those compartments, whether it’s the heart, the liver, lungs, other tissues. These are reservoirs — I mean, the virus has been found in the brain, right? So I mean, there’s all kinds of places you could go and look, but I think that, that’s a — it becomes a challenge. Obviously, sort of in long COVID, for example, I mean, long COVID, that’s probably a subset, maybe even a good subset of patients out there that still have virus fermenting in various other tissues. It might not be the nose. The folks continue to swab negatively. But when you look at some of the symptoms and the drivers of some of the symptoms that are exhibited in long COVID, there are very likely patient populations that could have reservoirs of that.

And that’s something we’re thinking hard about. Are there interesting ways to go interrogate that and sort that out? But too early to call whether or not we would do a smaller Phase 2 study to explore and exploit some of those kinds of reservoirs a virus with 235.

Liisa Bayko: Okay. And does, I guess, natural immunity or vaccination disproportionately reduced virus in the nasal passage, or why would it be different, I guess, than other reservoirs?

Tara Kieffer: Liisa, I think that’s a good question. Certainly, hybrid immunity, we think from at least some of the data that’s out there provides better — could provide additional protection. The nose is where the virus first enters and then continues to spread and replicate in other parts of the body, and that just appears to be where it’s being cleared. And patients have mucosal immunity built up that can contribute to the clearance at least in the nasal compartment.

Liisa Bayko: That makes sense.

Jay Luly: And particularly — yeah, I was just going to say Liisa, particularly associated with natural infection. You get the mucosal immunity that you wouldn’t necessarily get to the same degree with vaccination.

Liisa Bayko: Okay. That makes sense. Yeah, I get that. And then — my associate Seema , who’s sitting with me here raised a good point about rebounds. I think that was something that you were going to be exploring. Could you comment at all on if you’ve seen any difference in rebounds, if you check for that or if you will be checking or what’s the plan there?

Jay Luly: Yeah, nothing yet, Liisa. We have looked grossly and haven’t seen differences between arms and we’re working on getting those analyses done properly.

Liisa Bayko: Okay. And then just as we think about next steps, are those predicated on finding a partnership, or is that something you’d be willing to take on yourself, like how are we thinking about the gating factors for development…

Jay Luly: I don’t think any Phase 2 study would be gating in a different population like long COVID or something like that, that’s not gated. And in fact, is built into the financial guidance that Paul talked about, we would be able to do that and still have cash into calendar 2026. But I do believe that as it relates to Phase 3, these are bigger, much more expensive trials that ultimately, I think you do want to have a partner engaging on the trial design, how you would set those up and then push them forward with dispatch and importantly, gaining a launch partner. We’re not — we’ve never planned on commercializing in COVID, but rather to do — we’ve said this since the beginning of the time, our plan has always been to find a late stage partner and commercialization launch partner for this. So I think that is going to be our current plan for progressing Phase 3.

Liisa Bayko: Okay. Thanks a lot.

Jay Luly: You’re welcome.

Operator: Thank you. One moment for our next question please. And it comes from the line of Brian Skorney with Baird. Please proceed.

Brian Skorney: Hey, good afternoon everyone. Thanks for taking my question. Question — I’m just wording in the press release as it relates to sort of the prespecified protocol. You talked about total symptoms score and then you talked about 14 targeted COVID-19 symptoms. Can you just help me understand, are these different arrays of symptoms that you’re evaluating here? And when I pull up the protocol that’s posted on clinicaltrials.gov number three and four, the ones symptoms may say proportion of COVID-19 on sometimes and change from base line COVID-19 symptoms, is that the TSS or is that the 14 targeted COVID-19 symptoms?

Jay Luly: It’s the same. Yes. So, the way we get it is we have the 14 symptoms and each 1 is graded by the patient on a scale of zero, one, two or three and then add up the score, and that’s the score. So, total symptom score and all 14 symptoms, we mean to be the same thing. Does that help?

Brian Skorney: I guess I’m having trouble understanding the line where you say, well, no differences observed in time to improvement of 14 targeted COVID-19 symptoms. Is that basically the — there’s no difference in observed time to improvement in the TSS? I just — I don’t really understand the distinction which we look at.

Jay Luly: I see what you mean. So, we have a different a different evaluation for the time to improvement. So, for the time to improvement, you have to — you had to have all of your symptoms either absent or mild — and anything that was present or anything that was absent at baseline needs to still be absent, and that has to be the case for two days. And that has to be the case with all 14 symptoms, all right? So, that’s what I mean by time to improvement of all 14 symptoms. And then when I say to take a selected group of those symptoms, then that’s looking at just those symptoms specific. And the selected symptoms have given us a greater degree of power to detect the difference with placebo because those symptoms seem to persist more in placebo and go away more quickly with EDP-235.

Brian Skorney: Okay. Thanks. That makes sense.

Operator: Thank you. And it comes from the line of Ed Arce with H.C. Wainwright. Please proceed.

Thomas Yip: Hi, good afternoon everyone. It’s Thomas Yip asking a couple of questions for Ed. Thank you for taking my questions. So, just trying to figure with COVID-19 entering endemic phase, what the estimate to be the market opportunity, both in US and ex-US markets and especially given how they’re in latest performance with the inventory write-down that they just reported?

Jay Luly: Sorry, could you repeat? I mean you’re asking what the market opportunity is for COVID Therapeutics?

Thomas Yip: Yes, because as COVID-19 asset transgression from a pandemic into an endemic phase and for treatment as well. How do you look at the COVID-19 treatment market going forward?

Tara Kieffer : Sure. So, I think what we can look at is what the guidance has been provided in terms of revenue from the drugs that are currently available, looking at remdesivir, molnupiravir and paxlovid, I think combined, it’s around $10 billion market size. And so if you look at information that they just released on their quarterly revenue. They were guiding to $8 billion in revenue to 2023, and they actually reported $4 billion just in Q1. So we do believe that there is a good market and still a lot of use for antivirals in this indication.

Thomas Yip : Thank you for the essential information. Perhaps two more questions from us. You mentioned in the press release that a long COVID will be a possibility, how does that aptly compare to COVID and an endpoints in the study that brand that could suggest potential in COVID?

Jay Luly: Yes. Well, long COVID is very different than acute COVID. It has different clinical manifestations and a diverse patient population. That said, there are maybe common elements in a subset that could be a patient population that could benefit from an antiviral. And so again, as I mentioned a minute ago, we’re going to look and think about that and any plans for any next study where we to do one and long COVID, we’ll design or give further details around the design at that point. So it’s premature for us to comment on it today.

Thomas Yip : Got it. Just one last one from us with the 323 switching gears to 323 with the Phase 1 data expected next month. Can you remind us what is — what will be the next step is that challenge study ? And if so, can you give us some preliminary thoughts on what that study will look like?

Jay Luly: Yes. So 323 again, our polymerase inhibitor, super potent, great clinical PK and safety, took it into Phase 1 study in healthy, MAD, SAD study. That’s the data that we’ll report out next month. Top line would have safety, tolerability and PK. From that, it will allow us to derive what sorts of multiples we have of protein adjusted EC90, which are the hallmarks of efficacy surrogates that you can measure in a Phase 1 study even in healthy patient population. So I think the logical next step, assuming positive data there would be a challenge study. And from that standpoint, we’ve had a very successful challenge study for EDP-938 in the past. Again, one could look at that to get insights as to how we might be thinking about progressing 323, assuming positive data. And we’ll have more details on data and next steps when we release it next time.

Thomas Yip : Understood. Thank you so much again for taking our questions.

Jay Luly: You’re welcome.

Operator: Thank you. One moment for our next question please. And it comes from the line of Roanna Ruiz with SVB Securities. Please proceed.

Roanna Ruiz: Great. Thanks. Some of my questions were already asked, but maybe a quick one on 235. I was curious if your outlook on time to possible approval for that asset has changed at all? Especially considering the Phase 3 and possibly an addition Phase 2 that you might run?

Jay Luly: Well, again, a Phase 2 would be supportive perhaps of a different indication. I think the wildcard there is in the context of a partner. I mean, obviously, one of the reasons we’re seeking partner would be the potentially the time to approval could be accelerated by the strength and resources of a global pharma partner helping us to execute. So yeah. I think right now, I would assume that it’s going to be a lot driven by a partner in terms of moving that time either forward or backward, I’d say.

Roanna Ruiz: Yeah, understood. And then last one from me. I was curious. In the individuals where you saw elevated cholesterol or triglycerides, was there any trends or commonalities among them that could help you identify them proactively in some of the data that you’ve seen so far?

Jay Luly: Thanks, Roanna. So nothing specifically. We’ve gone through it at a population basis. There weren’t any substantial outliers who didn’t already have really high lipids at baseline. So we haven’t detected anything specific or any patterns in terms of outliers. It was just a general population trend.

Roanna Ruiz: Got it. Helpful. Thanks again.

Jay Luly: Thank you.

Operator: Thank you. One moment for our next question please. And it comes from the line of Hannah Adeoye with JPMorgan. Please proceed.

Hannah Adeoye: Hi. This is Hannah on for Eric Joseph. Thanks for taking the question. So just acknowledging that there are a number of details left to be finalized as it relates to a pivotal study design, given the fact that you have observed treatment benefit in non-high risk mild to moderate COVID patients? How are you thinking about the target patient population for the therapy? And then just secondly, with Pfizer announcing plans to develop a next-gen COVID antiviral PAXLOVID that won’t be using ritonavir boosting. Just wanted to get your sense of how you’re thinking about the impact that might have and it might have on bearing on potential partnership discussions for EDP-235?

Jay Luly: Yeah. No, I mean, we’ve always assumed there are going to be multiple players in the COVID space. I mean that’s not different than — so I think with regards to Pfizer’s next molecule, we’ll see what data they can achieve with that one. I mean, we know what they have with PAXLOVID. I think we know what Shionogi has, and apart from Pfizer and Shionogi, I would say we’ve got the other one. So at least right now, the space, I think, is still favorable given the size of the market and what a protease can add to the overall treatment landscape in COVID. I’m sorry, what was the other part of your question?

Hannah Adeoye: Just your thoughts on targeted patient population for the therapy since the safety study .

Jay Luly: Yes. No, the patient population. I mean, again, I think we’re thinking broadly about it. Standard risk, the high-risk patient population, which fits sort of a different risk profile — prophylaxis long COVID. I mean there’s nothing that I would see that would necessarily be not to be considered in a broad development program.

Hannah Adeoye: Okay, thanks for taking the questions.

Jay Luly: You’re welcome.

Operator: Thank you. And with that, I’ll turn the call back to Jennifer Viera for final comments.

Jennifer Viera: Thank you, everyone, for joining us today. Please note that we will have these slides on our website as well as our updated corporate presentation. If you have any additional questions, feel free to contact us by e-mail or call the office. Thank you, and have a great night.

Operator: Thank you, ladies and gentlemen, for participating in today’s conference. You may now disconnect.