Enanta Pharmaceuticals, Inc. (NASDAQ:ENTA) Q4 2022 Earnings Call Transcript

Enanta Pharmaceuticals, Inc. (NASDAQ:ENTA) Q4 2022 Earnings Call Transcript November 21, 2022

Enanta Pharmaceuticals, Inc. beats earnings expectations. Reported EPS is $-1.27, expectations were $-1.35.

Operator: 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.

Jennifer Viera: 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?

Photo by Roberto Sorin on Unsplash

Jay Luly: 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 similar between high and standard risk populations. Thus, we believe enrolling from a larger pool of standard risk patients will be a more efficient way to collect this information. We are aiming to report results from SPRINT in the first half of 2023. As previously reported data from the Phase I study of EDP-235 demonstrated it was generally safe and well tolerated up to 400 milligrams for seven days, with strong exposure multiples over the EC90, which is a measure of potency.

Specifically, it is a concentration of the drug that results in 90% inhibition of viral replication in vitro. Adverse events were generally mild and infrequent. 200 milligrams of EDP-235 taken once daily resulted in mean trough plasma levels at steady state that were threefold and sevenfold over the plasma protein adjusted EC90 for the Alpha variant and Omicron variant, respectively, while 400 milligrams resulted in levels that were 6-fold and 13-fold over the plasma protein adjusted EC90 for the respective variants. Importantly, these target exposure multiples were achieved without the need for ritonavir boosting and its associated drug-drug interactions. Based on preclinical studies, EDP-235 is projected to have four times higher drug levels in lung tissue compared to plasma, which would be expected to drive up to a 28-fold multiple for the Omicron variant at even the 200-milligram human dose.

As COVID-19 persists, a new variant arise that can circumvent immunity from vaccination, previous infection or monoclonal antibody treatments. We are committed to developing EDP-235 as a convenient and easily prescribed antiviral, which continues to show strong activity against all COVID-19 variants tested to date. Beyond the COVID-19, we are also encouraged by the progress we have made in our respiratory syncytial virus or RSV program. RSV is a virus that represents a significant unmet need as it can result in a severe respiratory infection and is associated with significant morbidity and mortality in children, the elderly and other high-risk populations. While RSV was mitigated for some time due to social distancing measures during the pandemic, RSV infections are now on the rise in the US and the need for a treatment remains high, as there are no targeted therapeutics currently available.

We are pursuing a robust RSV program, which includes EDP-938, the most advanced and protein inhibitor in clinical development today as well as EDP-323, a novel oral therapeutic targeting the RSV L-protein RNA polymerase. We are currently evaluating EDP-938 in high-risk populations, including pediatric patients, adult hematopoietic cell transplant recipients and other high-risk adults, all of which have a significant unmet need. Last month, we initiated RSV HR, a Phase IIb study in adults with acute RSV infection, who are at high risk of complications, including those over 65 years of age and/or those with congestive heart failure, COPD or asthma. The study is a randomized, double-blind, placebo-controlled multicenter global study designed to evaluate the effect of EDP-938 compared with placebo on the progression of RSV infection.

Approximately 180 patients will be treated with 800 milligrams of EDP-938 or placebo for five days and then evaluated over the next 28 days. The primary endpoint for the study is time to resolution of RSV, lower respiratory tract disease symptoms through Day 33. Our other studies of EDP-938, namely RSVPEDs, a Phase 2 study in pediatric RSV patients and RSVTx a Phase 2b study in adult hematopoietic cell transplant recipients with RSV are ongoing. We believe EDP-938 has the potential to deliver a potent oral antiviral treatment for all populations at high risk from RSV infection. We’ll continue to monitor the RSV trends during this Northern Hemisphere season to enable us to better evaluate timing for data. This quarter, we also began dosing in our Phase 1 randomized, double-blind, placebo-controlled study of EDP-323 in healthy adult subjects.

The study will evaluate the safety, tolerability and pharmacokinetics of orally-administered single and multiple doses of EDP-323, our novel oral therapeutic targeting the RSV L-protein RNA polymerase. EDP-323 is supported by promising preclinical data presented this quarter at the 12th International RSV Symposium, which showed that EDP-323 inhibited polymer activity in vitro and also inhibited the virus-induced cytopathic effect of both RSV-A and RSV-B strains. In a rodent RSV infection model, treatment with EDP-323 was associated with improved lung histopathology and dose-dependent reductions in pro-inflammatory cytokines. We believe EDP-323 could serve as a standalone treatment or may be used in combination with other agents such as EDP-938, potentially broadening the treatment window or addressable patient populations for RSV.

Moving on to our respiratory discovery program in Human Metapneumovirus, or hMPV, which is a virus that is similar to RSV and impact several vulnerable populations, including the elderly, adults with underlying pulmonary disease and those who are immune compromised. This quarter, we presented preclinical data at the 12th Annual RSV Symposium, highlighting advancements in hMPV detection, quantification and growth methods for the generation of an improved tool kit for the in vitro characterization of multiple hMPV strains. Our goal is to select a development candidate for hMPV next year. Turning to Hepatitis B. Our goal remains to develop a functional cure for chronic HBV patients. We continue to evaluate internal and external opportunities for additional candidates to develop in combination with EDP-514 as we believe the ultimate cure for this infection will involve combination therapy.

Our commitment is based on the continued high unmet need for this disease, which is a global public health threat and the world’s most common serious liver infection, making that the primary cause of liver cancer, also known as hepatocellular carcinoma, or HCC, the second leading cause of cancer deaths in the world. We believe that a core inhibitor such as EDP-514 could ultimately be an integral component of a successful combination regimen. Finally, I’d like to wrap up by highlighting our near-term clinical milestones for the first half of next year. We look to progress SPRINT as quickly as we can through Phase 2 and to report data in the first half of 2023. Further, we expect to have data from our Phase 1 study of EDP-323, our RSV L-inhibitor also in the first half of 2023.

With that, I’ll turn the call over to Paul to discuss the financials. Paul?

See also Bill Gates Net Worth, Investments and Holdings and 15 Countries with Highest Interest Rates.

Paul Mellett: 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 is still to a refund of $28.7 million for the tax losses carried back in 2021 to offset taxable income in prior years. Net loss for the three months ended September 30, 2022, was $26.3 million or a loss of $1.27 per diluted common share compared to a net loss of $24.6 million or a loss of $1.22 per diluted common share for the corresponding period in 2021. Enanta ended the quarter with approximately $278.5 million in cash and marketable securities. We expect that our current cash, cash equivalents and short-term and long-term marketable securities as well as our ongoing royalty revenue will continue to be sufficient to meet the anticipated cash requirements of our existing business and development programs into the fourth quarter of our fiscal 2024.

Regarding guidance for fiscal 2023, we expect our research and development expense to be between $210 million to $230 million and our general and administrative expense to be between $46 million to $52 million. Further financial details are included in our press release and will be available in our annual report on Form 10-K when filed. I’d now like to turn the call back to the operator and open up the lines for questions. Operator?

Q&A Session

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

Brian Abrahams: 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?

Jay Luly: 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.

Brian Abrahams : 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?

Jay Luly: 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.

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

Jay Luly: You’re welcome.

Operator: 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.

Yasmeen Rahimi : 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.

Jay Luly: 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.

Yasmeen Rahimi: 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.

Jay Luly : 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 a good stand-alone molecule on its own right, it’s potentially a good combination partner down the road, again, thinking about different patient populations, ones that might need an extra little support in terms of drug pressure on the virus, maybe in highly immune suppressed patients, for example or — and/or just reading a more normal patient by maybe able to reach a little bit later in the stage of infection by using two agents rather than one and translating that into patient value. It’s potentially widening the treatment window that you might have to come after a person once they present with the infection. So, however, many days of a window — treatment window you might have with one drug, maybe two drugs would just widen up that opportunity, therefore, increasing the addressable patient population.

So these are the kinds of things that we’re looking for, again, it’s always better to have multiple different approaches on any area or any disease indications that you feel very strongly done. And as you know, we’ve been championing RSV for quite a number of years, starting with the earliest discovery efforts a long time ago. And I think now the pandemic, the attention is very high on human respiratory viral treatment. And we’re very pleased to have a second molecule now in the clinic. So next steps, we’ll get the Phase 1 data. We’ll look at it, and then we’ll think about our next steps carefully once we have that data in hand. And you could go a couple of different routes. You could go into a challenge study or you could go directly into a patient population.

And we’re, obviously, thinking about that thing right now, and we’ll have more details at a future time.

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

Brian Skorney: 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.

Jay Luly: 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?

Tara Kieffer: 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.

Brian Skorney: And those are both just nasal swabs?

Tara Kieffer: Correct.

Brian Skorney: Thank you.

Jay Luly: Thank you.

Operator: 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.

Liisa Bayko: 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.

Jay Luly: 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.

Liisa Bayko: Thank you.

Jay Luly: You’re welcome.

Operator: 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.

Eric Joseph: 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.

Jay Luly: 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 than that. So we’ll have more data on that topic coming out this year. But we’re hoping that 235, owing to it’s really good potency, really good drug exposures after QD administration, as Brian Skorney mentioned, we’ve got very nice multiples at either of our doses against the Omicron variant. And then you add on top of that, the potential of having good tissue uptake where the virus might be hiding out, a little harder to treat. So we’re hoping that, that could all add up to having some impact on rebound and we will certainly be looking at that in our study, because we’ll be dosing for five days and then we have a 28-day follow-up. So we’ll have a chance to watch these people out to Day 3. So that’s an intriguing hypothesis that we’ll be testing.

The other question that you had, I think, was about RSV. We have 938 obviously advancing in three high-risk patient trials right now. We have 323 proceeding nicely in a Phase 1 study, it will be ready to look at in virally-infected people, hopefully, soon enough. And you asked, I think the specific question on how could you look at that as a combination. And one of the possibilities that could be thought about is doing that in a challenge study. We already have a fantastic challenge study data with 938. One could do a challenge study with 323 and also look at the combination of the two to see what parameters one might be able to improve. So you asked what would be the earliest way that you could look at that. That is probably the earliest, quickest way to get interesting data about combinations.

Eric Joseph: Okay. Great. Great. I appreciate you taking my question. Thanks.

Jay Luly : Thank you.

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

Roanna Ruiz: 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?

Jay Luly : Tara, do you want to handle that?

Tara Kieffer : 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.

Roanna Ruiz: Got it. Makes sense. And

Tara Kieffer : Dose it help?

Roanna Ruiz: 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?

Jay Luly: 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?

Roanna Ruiz: Yeah. That’s helpful. Thanks a lot.

Jay Luly: Good. Thank you.

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

Jay Olson: 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.

Jay Luly: 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 patient population, what regulatory pathways are available to us at that time.

There’s still an unmet €“ huge unmet need for antivirals. The vaccination rates have probably stabilized to a great degree and there’s some vaccination fatigue out there. The antibodies also continue to be losing efficacy. And many of them, as you know, have dropped off in terms of being effective so far, and there really aren’t that many therapeutics that are mechanism-based and well understood that are going forward. So this is a really large market opportunity. It’s going to be one pretty much going forward and one in which there aren’t €“ I would submit that, the optimal therapies are not yet approved. We look at 235 as having a very strong profile in that regard. So that part, I think the need for therapeutics will be very high. It’s been extraordinarily well too, as you know, with our respiratory portfolio, not just in COVID, but obviously, the breadth of all the RSV set that we just have been talking about this evening as well as human metapneumo.

Again, human metapneumo something you’re going to continue to hear more and more about as these things are being under the spotlight increasingly. Partnering is still the plan. Again, this is going after a pandemic virus on a global scale is the bigger than we are, and it’s our goal to really maximize 235 globally to the greatest patient base we could possibly serve and in order to achieve that, we will be seeking a global partner in our efforts here.

Jay Olson: 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?

Jay Luly: 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?

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

Jay Luly: You’re welcome.

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

Roy Buchanan: 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?

Jay Luly: 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.

Roy Buchanan: Okay. But we’ll see that data before the end of this year?

Jay Luly: Before the end of 2022?

Roy Buchanan: Yes. That’s what I heard you say. No?

Jay Luly: 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?

Roy Buchanan: Yes.

Jay Luly: Not this year. Not anymore this year.

Roy Buchanan: 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?

Jay Luly: 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.

Roy Buchanan: Okay, great. Thank you.

Jay Luly: 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.

Operator: 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.

Jennifer Viera: 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.

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