Enanta Pharmaceuticals - Q4 2021
November 21, 2021
Transcript
Operator (participant)
Good afternoon, and welcome to Enanta Pharmaceuticals Fiscal Fourth Quarter and Year-End 2021 Financial Results Conference Call. At this time, all participants are in a listen-only mode. There will be a question-and-answer session at the end of the prepared remarks. Please be advised that this call is being recorded. I would now like to turn the call over to Jennifer Viera, Investor Relations. Please go ahead.
Jennifer Viera (Investor Relations)
Thank you, operator, and thanks to everyone for joining us this afternoon. The news release with our fiscal fourth quarter and year-end financial results was issued this afternoon and is available on our website. On the call today is Dr. Jay Luly, President and Chief Executive Officer, Paul Mellett, our Chief Financial Officer, and other members of Enanta's senior management team. Before we begin with our formal remarks, 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?
Jay Luly (President and CEO)
Thank you, Jennifer, and good afternoon, everyone. Reflecting on our fiscal 2021 year, I am proud of the exceptional advancements we've made across our entire portfolio. By leveraging our years of drug discovery experience and knowledge, we have developed a robust pipeline of small molecule clinical candidates that have the potential to bring new treatment options to patients. Our accomplishments this past year advancing this pipeline puts us in a strong position to help patients and create long-term sustainable value for our shareholders. I continue to be extremely proud and grateful to my colleagues for their collective efforts and dedication to progress our pipeline. We ended our fiscal year strong with continued advancements across our clinical virology portfolio this quarter. Starting with hepatitis B, we are furthering our clinical program with the vision of developing a combination regimen to deliver a functional cure for chronic HBV patients.
EDP-514, our HBV core inhibitor, has been evaluated in two phase I studies in different chronic HBV patient populations. Those who have a high viral load, whom we refer to as viremic patients, and those who are on treatment with a nucleoside reverse transcriptase inhibitor, whom we refer to as NUC-suppressed patients. Recently, we announced final clinical data from both of these trials in conjunction with the liver meeting hosted by AASLD, where we received a Presidential Poster of Distinction for our viremic study. Overall, final data from both studies show that the 200 mg, 400 mg, and 800 mg doses were safe and well-tolerated through 28 days and displayed pharmacokinetics supportive of once-daily dosing.
In viremic patients, treatment with EDP-514 resulted in mean HBV DNA reductions of 2.9, 3.3, and 3.5 logs at 28 days for the 200 mg, 400 mg, and 800 mg cohorts respectively, compared to 0.2 log reduction in the placebo group. Mean HBV RNA reduction in each of the three viremic treatment cohorts was at least two logs compared to a 0.02 log reduction in the placebo group. Taken together, these results demonstrate that EDP-514 has clear clinical evidence of a strong safety profile alone and in combination with a NUC and displays significant antiviral activity over 28 days with a pharmacokinetic profile consistently supportive of once-daily oral dosing.
As recently announced, we discontinued development of EDP-721, an oral HBV RNA destabilizer, based on our recent emerging safety observations in the single ascending dose part of the phase I study. Patient safety is our top priority, and so we decided to discontinue further development of this compound. We are grateful to our principal investigator and his study team and the participants in the phase I study for their commitment to HBV research, as well as our team at Enanta for all their efforts in supporting the discovery, development, and clinical evaluation of EDP-721. We remain committed to developing a functional cure for chronic hepatitis B patients, and we also believe that EDP-514 will be an important component of a successful combination regimen.
We look forward to advance our HBV program with additional mechanisms from internal discovery efforts, external opportunities, or both. I would now like to turn to our respiratory virology programs, where we continue to build a leading oral antiviral treatment portfolio. Our lead RSV program includes our N-protein inhibitor, EDP-938, currently in multiple phase II studies. Our preclinical work developing a compound targeting the RSV L-protein. As a reminder, RSV is a severe respiratory infection associated with significant morbidity and mortality that has no treatments or vaccines available. The virus can cause serious disease in children, the elderly, and the immune-compromised. Our lead molecule, EDP-938 targets the replication of both RSVA and RSVB.
It has shown robust clinical data in a phase II-A challenge study where it was safe and well-tolerated and had significant effects on viral load and reduced symptoms of infection. Currently, EDP-938 is being evaluated in three clinical studies, including RSVP, a phase II-B study in adults with community-acquired RSV infection, RSVTX, a phase II-B study in adult hematopoietic cell transplant recipients, and RSV Peds, a phase II study in pediatric RSV patients. While RSV, like influenza, was significantly suppressed while there were strong mitigation measures in place to control COVID-19, there has been recent increased RSV activity in various regions of the world, including parts of the United States and Europe.
Given this activity, we expect that enrollment in the RSVPEDs study will be complete during the Northern Hemisphere winter season if there is no further significant increase in COVID-19 or mitigation measures in these regions. Assuming this enrollment occurs, we will have data in the first half of 2022. As for RSVTX and RSVPEDs, which were initiated during the pandemic, enrollment is expected to require more than one global RSV season, subject to the uncertainties of the continuing pandemic. Additionally, in RSV, our discovery initiatives are advancing as we work to develop an RSV L inhibitor. L inhibitors are another drug class that block viral replication that could potentially be used alone or in combination with other agents such as EDP-938 to broaden the treatment window or addressable patient population. Our L inhibitor program has continued to progress extremely well this year.
We are confident that we will select an optimal development candidate in this RSV mechanism by year-end. A new L inhibitor candidate, along with EDP-235, would achieve our stated goal of identifying two new clinical candidates among our respiratory discovery programs in 2021. We also continue to pursue our third respiratory discovery program in human metapneumovirus, or HMPV, which was first identified 20 years ago and has worldwide circulation with nearly universal infection by age five. Like with RSV, there are other vulnerable populations, including the elderly, adults with underlying pulmonary disease, and those who are immune-compromised. We are nearing completion of lead optimization of potent nanomolar HMPV inhibitors and hope to select another clinical candidate in the coming months.
Our SARS-CoV-2 program continues to progress as we develop EDP-235, our oral 3CL protease inhibitor specifically designed for the treatment of COVID-19. This quarter, we were excited to present the first preclinical data for EDP-235 at the International Society for Influenza and Other Respiratory Virus Diseases and World Health Organization virtual conference. These data show that EDP-235 demonstrated highly potent antiviral activity against SARS-CoV-2, with pharmacokinetic properties supporting a once-daily oral dosing regimen. In a biochemical assay, EDP-235 inhibited the SARS-CoV-2 protease with an IC50 of 5.8 nanomolar and maintained this activity against proteases from SARS-CoV-2 variants.
EDP-235 potently blocked the replication of SARS-CoV-2 in multiple cellular models, including primary human airway epithelial cells, where an EC90 of 33 nanomolar was observed, positioning EDP-235 among the most potent direct-acting antivirals currently in development for SARS-CoV-2. EDP-235 was also shown to have potent activity across a range of variants as well as other human coronaviruses. Importantly, data demonstrated that EDP-235 has good oral bioavailability without ritonavir boosting and favorable distribution into lung cells as well as other key target tissues. EDP-235 is projected to have a long half-life of 16 hours with an efficacious dose of 100-500 mg once daily in humans.
In summary, the preclinical profile of EDP-235 indicates its potential to be a best-in-class, once-daily oral therapy for the treatment and prevention of COVID-19. While the pandemic may be far from over, we see COVID-19 eventually progressing from the current situation toward a more endemic disease where effective therapeutics will continue to play a significant role. We've completed the IND-enabling preclinical studies of EDP-235 and are eager to advance the candidate into the clinic in early 2022. Lastly, this quarter, we announced the decision to prioritize combination approaches for both of our NASH FXR agonists, EDP-305 and EDP-297, through an out-licensing strategy. NASH is a complex disease that we believe will likely require a combination of multiple mechanisms to provide an optimal treatment regimen.
Therefore, we do not plan to continue development of either program internally, but instead, we'll seek external opportunities to pursue these programs in a combination approach. Before moving to our financials, I'd like to wrap up by reiterating our upcoming milestones. We expect to select a clinical development candidate for our RSV L inhibitor program by year-end. Looking ahead to 2022, we expect multiple milestones, including the initiation of a phase I study of our oral 3CL protease inhibitor, EDP-235 in the early part of the year. We also expect, given the reemergence of RSV in the U.S. and Europe, that enrollment in the RSVP study will be complete during the Northern Hemisphere winter season if there is no further significant increase in COVID-19 in those regions.
Accordingly, we plan to report data from our RSVP study also in the first half of 2022. With that, I'll stop here and turn the call over to Paul to discuss our financials. Paul?
Paul Mellett (CFO)
Thank you, Jay. I would like to remind everyone that Enanta reports on a September 30 fiscal year schedule. Today, we are reporting results for our fourth quarter and fiscal year ended September 30, 2021. For the quarter, total revenue was $23.6 million and consisted of royalty revenue earned on AbbVie's global net HCV product sales. This compares to total revenue of $23.6 million for the same period in 2020. As reported by AbbVie, treated patient volumes remain suppressed versus pre-COVID levels. AbbVie now expects total HCV sales of approximately $1.7 billion for the calendar year 2021. As a reminder, our royalties are calculated on a calendar year basis.
Therefore, royalties in our fiscal first quarter ending December 31 will be calculated at the highest royalty rate for the year, and royalties for our fiscal quarter ending March 31 will be calculated at 10%, our lowest royalty rate tier in our fiscal year. You can review our royalty tier schedule in our 2020 Form 10-K. Moving on to expenses, for the three months ended September 30, 2021, research and development expenses totaled $48.9 million, compared to $36.7 million for the same period in 2020. The increase was due to timing and expansion of our clinical trials in our virology programs. General and administrative expense for the quarter was $8.4 million, compared to $6.7 million for the same period in 2020.
The increase was due to increased headcount and related compensation expense in support of additional research and development activities. Enanta recorded an income tax benefit of $8.8 million for the three months ended September 30, 2021, compared to an income tax expense of $10.7 million for the same period in 2020. For the twelve months ended September 30, 2021, Enanta recorded an income tax benefit of $28.6 million, compared to an income tax expense of $1.1 million for the twelve months ended September 30, 2020. The income tax expense in 2020 was due to a tax valuation allowance charge of $18.3 million recorded against the company's deferred tax assets in the three months ended September 30, 2020.
The income tax benefit in 2021 consists of net loss carrybacks against taxes paid in prior years, which have given rise to a $38 million tax receivable on our balance sheet at September 30, 2021, the final period in which such carrybacks can be made under the 2020 CARES Act. Net loss for the three months ended September 30, 2021 was $24.6 million, or a loss of $1.22 per diluted common share, compared to a net loss of $29.3 million or a loss of $1.46 per diluted common share for the corresponding period in 2020. Enanta ended the quarter with approximately $352.4 million in cash and marketable securities.
We expect that our current cash equivalents in 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 for at least the next two years. Regarding guidance for fiscal 2022, we expect our research and development expense to be between $150 million-$170 million, and our general and administrative expense to be between $35 million-$41 million. Further financial details are available in our press release and will be available in our annual report on Form 10-K when filed.
Jay Luly (President and CEO)
I'd now like to turn the call back to the operator and open up the lines for questions. Operator?
Operator (participant)
Thank you. As a reminder, to ask a question, you will need to press star one on your telephone. To withdraw your question, press the pound key. Please stand by. We compile the Q&A roster. Our first question comes from Brian Abrahams with RBC Capital Markets. You may proceed with your question.
Brian Abrahams (Managing Director and Global Sector Head of Healthcare Research)
Hi, good afternoon guys, and thanks so much for taking my question. I guess my first question's on EDP-235. Sounds like a lot of great progress there. I was wondering if you could talk a little bit more about the IND-enabling tox work that you've done in preparation for this moving into the clinic and I guess how you're thinking about the potential therapeutic window, where you'd you know, the doses that look like they could potentially be effective, I guess where you'd be at either end of that 100 mg-500 mg range, with respect to the cushion in the therapeutic window and then I had a follow-up. Thanks.
Jay Luly (President and CEO)
Hi, this is Jay. Brian, thanks for the question. With EDP-235, we've completed multi-week GLP tox and you know, drove the drug levels to very substantial exposures, ones in which we think based on our predicted clinical dose and all the allometric scaling that we did that we should have a very comfortable safety margin.
Brian Abrahams (Managing Director and Global Sector Head of Healthcare Research)
Great. Do you have plans to explore the potential to test EDP-235 in combination with any other classes? I mean, I guess how important do you think that will be? Is there any preclinical work around that you've done or are planning and any expectations for any sort of drug-drug interactions based on what's known so far about the metabolism?
Jay Luly (President and CEO)
That's a really good question. I mean, I guess it, you know, sort of all depends on how the pandemic twists and turns and where the ultimate, you know, variants of interest and concern might evolve over time. Right now we feel that we've got a very strong virologic profile going after all the major variants of concern today, and that at least in the model systems that we've looked at in terms of resistance to EDP-235, it looks to have a pretty good profile overall. Given the acute nature of the clinical study, you know, being just a few days of treatment, we're not anticipating, you know, resistance, which is one of the reasons why you might, you know, envision combinations.
Certainly combinations couldn't be ruled out, and there's nothing that we've seen in the profile yet today that would preclude them from any DDI or things along those lines. People have, you know, wondered if molnupiravir is, you know, approved and Pfizer's protease inhibitor mightn't they be combined? The answer is, in those instances with those drugs, you know, I'd have to look at all the data to see if DDIs would. I think it's really gonna be driven based on how the virus moves. If one drug is enough, that's what will be used. If we feel, as the virology changes over time, that multi-drugs are desirable, then, you know, combinations can certainly be built.
Brian Abrahams (Managing Director and Global Sector Head of Healthcare Research)
That's really helpful. One more quick one if I could squeeze it in. Just curious how you're thinking now about the potential to achieve functional cure in hepatitis B with five-one-four based regimens, if you think that will require additional novel classes, or if you're still pursuing other destabilizers, or is that class something you're not gonna continue to pursue? Just curious as you kinda think about internal versus external, where you see five-one-four being paired up optimally to potentially achieve that. Thanks.
Jay Luly (President and CEO)
That's a good question. I think probably a core inhibitor plus a NUC would benefit from an additional agent or agents. I mean, that was our thesis. You know, along the way I think you know, Assembly looked at a core inhibitor plus a NUC and ran it out for a year or more. It might not have been the best core inhibitor that they used in that study, but it was still, I think, an interesting study.
Even if you could do something with a NUC and a core over a longer period of time, and that you know certainly remains to be a possibility I guess, I think we'd rather add another agent or agents to bring those you know cure numbers higher and the treatment time to the shortest possible treatment that you could imagine. You know, to that end, you know, we're looking at things internally. You know, we'll widen our view in terms of looking at external opportunities for combinations as well. Out of that I think we'll you know hopefully be able to recast a combination in a good way.
Brian Abrahams (Managing Director and Global Sector Head of Healthcare Research)
Thanks again.
Jay Luly (President and CEO)
You're welcome.
Operator (participant)
Thank you. Our next question comes from Akash Tewari with Jefferies. You may proceed with your question.
Akash Tewari (Global Head of Biopharmaceutical Research)
Hey guys thanks so much. Two on RSV and one on COVID. In the Gilead presatovir phase II study among transplant patients, it was interesting. You saw a signal of efficacy, at least in one of their trials with patients with low lymphocyte counts. When you think about your transplant study, do you plan on stratifying patients based on lymphocyte counts given that signal we've seen? Number two, how are you gonna control for your RSV study for patients who simply lie about when they actually have symptoms? Would you be able to stratify patients based on viral load at time of dose? And if so, what do you expect viral load to be on average if you're dosing patients within two days of symptoms?
Then lastly, on COVID, for EDP-235, what is the % of drug that binds to plasma protein? How do you think it compares versus the other protease inhibitors in development, both for Pfizer and Pardes? Thank you.
Jay Luly (President and CEO)
I may dish a couple of these over to Nathalie with regards to the transplant. I'm not sure that sort of stratification was performed in the RSV-TX study, but I'll defer to Nathalie on that. We can't stratify the RSVP based on livers and non-livers. What was your question with regards to that again, if you could repeat that?
Akash Tewari (Global Head of Biopharmaceutical Research)
I mean, it would be interesting if you could. I guess, well, but can you stratify patients based on kind of viral load at time of dose? Right? Like, correct me if I'm wrong, but you should have. If it's within two days of symptoms, the viral log should be somewhere between two to three. You know, you could identify patients who are likely within two days of symptoms, if you're just looking at viral load. So if, you know, a situation happens where you get a bunch of patients who actually got treatment within four days of symptoms, would the FDA allow you to stratify patients based on viral load at time of dose instead?
Jay Luly (President and CEO)
Well, I'll defer that one to Nathalie right now, and then I'll pick up on the last one about 235.
Nathalie Adda (SVP and Chief Medical Officer)
Hello Akash this is Nathalie. Let me maybe just touch quickly on the transplant question, and then I'll try to address your question about the RSV. Obviously that's a good question referring, you know, to the Gilead transplant study. We did pay attention to the result, and as you mentioned, we did notice specific response when we were looking at lower lymphocyte number. That's how we design our study. If you look at our inclusion criteria, we decided to look at subjects with less than 500 cells for the HCT recipient. There will be obviously possibility to look at subgroup analysis to try to understand our drug in that context too. Now as far as RSV, that's an interesting question about timing.
I think, you know, you could argue that you can be in that same situation in any clinical studies. We don't know exactly why a patient coming in would lie about the symptoms. As you remember, RSVP studies is enrolling subjects who present signs and symptoms within 48 hours. Obviously there is viral load that has been taken at multiple time point, including screening and baseline. We will be certainly able, and that's already the plan, to look at different type of analysis, including, you know, viral load threshold. Have I addressed the question you had on the RSVP?
Akash Tewari (Global Head of Biopharmaceutical Research)
That's super helpful. Thank you. And just on COVID on the for 235, what is the percent of drug which is free versus that's bound to plasma protein? Thanks.
Jay Luly (President and CEO)
I think I lost you, Akash. I do remember the question.
Akash Tewari (Global Head of Biopharmaceutical Research)
Can you hear me?
Jay Luly (President and CEO)
Okay, there you are.
Akash Tewari (Global Head of Biopharmaceutical Research)
Okay. Yeah.
Jay Luly (President and CEO)
With regards to, I don't recall the plasma protein numbers, but one of the way that we look at this, which we think is a good way because, you know, with any plasma protein binding numbers, it's always an equilibrium. Then when you look at intracellular activity, many of the parameters in that equilibrium become really important, on rate and off rate and so on. What we do is we look in a cellular assay. We look at the antiviral activity shift when plasma protein is added. Basically you get a serum adjustment factor that then you build into your calculations when you do the allometric scaling. We do the scaling across multiple species.
We look at the, you know, the serum adjustment to the potency, factor all of that in when we come up with our human predicted doses. That's all embedded in that 100-500 mg taking all of that into effect. One thing that we talked about at the ISIRV conference too, there's a number of other wild cards that you have to consider. You know, when coming up with human dose predictions and one of them that we're not taking into account but could be very favorable for us is the fact that we see tremendously good partitioning of EDP-235 into lung alveolar macrophages.
You know, not only might an alveolar macrophage sort of be a Trojan horse with regards to trafficking virus, but in this instance, we would also be trafficking active drug to the lungs. That's one of the things that we used to study back in our days of looking at community-acquired pneumonia antibiotics, looking at how drugs were taken up by and potentially trafficked by immune cells. We like that profile too. We didn't really even bake that into our dosing projection assumptions, but it does represent upside in the calculations that we've done today. Is that helpful?
Akash Tewari (Global Head of Biopharmaceutical Research)
That's really helpful. Thanks so much.
Jay Luly (President and CEO)
You're welcome.
Operator (participant)
Thank you. Our next question comes from Yasmeen Rahimi with Piper Sandler. You may proceed with your question.
Speaker 13
Hi guys this is just on for Yas. Congrats on the quarter, and I had one question on the COVID-19 asset. We wanted to know that if there's potential to partner this asset, what data would Enanta be looking to generate before seeking partnership?
Jay Luly (President and CEO)
Well hi, this is Jay. You know, thanks for the question. I mean, you know, a partnership on a drug like this, you know, probably is inevitable at some time when you think about it. It's a global, well, it's a global pandemic right now, and it's, you know, presumably will become more epidemic, and then endemic, than pandemic. But no matter, it's very much a global disease infection that we're talking about here. I think it's not a question of if, but it's a question of when. We haven't set any particular when for when that might be.
We're just focused on doing what urgently needs to be done with the drug, which is to get it into healthy volunteers as soon as possible early next year, then to move it into phase II and III studies also next year. You know, any discussions that would come on the continuum between today and some point down the line, you know, would happen, and we would assess them as they, you know, were appropriate.
Speaker 13
Great thank you.
Jay Luly (President and CEO)
You're welcome.
Operator (participant)
Thank you. Our next question comes from Brian Skorney with Baird. You may proceed with your question.
Brian Skorney (Managing Director)
Hey, good afternoon thanks for taking the question. I was hoping to hear thoughts on the clinical development of EDP-235. It seems reasonable to think that Pfizer's protease inhibitor and Merck's molnupiravir are gonna get EUA in the near future. How should we be thinking about development of your PI and strategies to be able to recruit studies here? Do you think placebo-controlled studies will be feasible in some subgroups, or will you expect to do head-to-head studies? Is there a population you think a subgroup that would be feasible to do placebo-controlled? How many days will you be looking at in multiple ascending dose study, and any early thoughts on where you might target in terms of-
Jay Luly (President and CEO)
Brian, can you still hear me?
Brian Skorney (Managing Director)
Number of treatment days for.
Jay Luly (President and CEO)
Okay. Is anyone else having difficulty with the audio? Yeah.
Paul Mellett (CFO)
Yes. It keeps cutting out.
Jay Luly (President and CEO)
It seems like the speaker line or the investor line is.
Nathalie Adda (SVP and Chief Medical Officer)
We could not hear anything. Yeah.
Jay Luly (President and CEO)
Coming in and out. Yeah. Sorry, Brian. I think I.
Nathalie Adda (SVP and Chief Medical Officer)
Brian, can you repeat the question?
Jay Luly (President and CEO)
just appeared.
Brian Skorney (Managing Director)
Sure. Can you hear me now, Jay?
Nathalie Adda (SVP and Chief Medical Officer)
We can, yes.
Jay Luly (President and CEO)
Yeah.
Nathalie Adda (SVP and Chief Medical Officer)
Now we can.
Brian Skorney (Managing Director)
Okay.
Nathalie Adda (SVP and Chief Medical Officer)
It keeps going in and out. Sorry about that.
Brian Skorney (Managing Director)
No problem. So I just wanted to get your thoughts on recruitment of clinical studies for EDP-235 and whether or not you think availability of Pfizer and Merck's drugs would prohibit the running of a placebo-controlled study. Do you think you need to do head-to-head studies, which is sort of the fastest way? And the other question was just on how many days you're looking at in the multiple ascending dose study. Should the SAD be okay? And any thoughts early on how many days you would target in terms of treatment?
Jay Luly (President and CEO)
The treatment days would presumably be five days is what we would be aiming for. With regards to the clinical trial design, it's not clear yet that drugs with EUA, you know, Emergency Use Authorization, would need to be baked into a trial given that they're not fully approved. Maybe I'll let Nathalie comment on that.
Nathalie Adda (SVP and Chief Medical Officer)
Yes. Can you hear me now?
Brian Abrahams (Managing Director and Global Sector Head of Healthcare Research)
Yes.
Nathalie Adda (SVP and Chief Medical Officer)
Hi, Brian. I think your question was about potential study design and emergence of new treatments and how we will position ourselves as far as designing our study and recruitment. Is that the question?
Jay Luly (President and CEO)
Well, it's really.
It, it was just on-
Brian Abrahams (Managing Director and Global Sector Head of Healthcare Research)
Yeah.
Jay Luly (President and CEO)
It was just-
This is just on the feasibility of placebo-controlled studies versus non-inferiority studies.
Nathalie Adda (SVP and Chief Medical Officer)
Well, I mean, I think as probably, you know, many other people who are developing nowadays, you know, drugs.
Jennifer Viera (Investor Relations)
We're having audio technical difficulties.
Nathalie Adda (SVP and Chief Medical Officer)
You know, closely monitoring, you know, possibilities of study design alteration as we are getting into a phase where we will have, you know, more treatment available. I think it's gonna depend which kind of patient population you target for your registration study. Obviously, you know, as you go with higher risk, it might be just unethical not to suggest, you know, to have some standard of care rather than a placebo. In that case, I think, you know, there's a higher chance, obviously, that we will have to do a non-inferiority study design. I think, you know-
Jay Luly (President and CEO)
Nathalie, you cut out, I think or I...
Nathalie Adda (SVP and Chief Medical Officer)
Oh, it's cutting out too?
Jay Luly (President and CEO)
I'm not sure. Now it's fine. I'm not sure what's going on with the sound.
Nathalie Adda (SVP and Chief Medical Officer)
Oh. I'm sorry.
Jay Luly (President and CEO)
No, it, you cut out when you commented.
Nathalie Adda (SVP and Chief Medical Officer)
What should I repeat?
Jay Luly (President and CEO)
It may not be ethical.
Nathalie Adda (SVP and Chief Medical Officer)
I was. Maybe I should repeat that. You know, just saying that it might not be ethical depending on, you know, patient population you are targeting for your, you know, first study, being registered. If you go, you know, after high-risk patient, you know, there's probably a need to have the standard of care, and obviously, you know, that will probably lead us to have a non-inferiority study design. I think, you know, clinical development plan's gonna be a very dynamic, you know, effort right now as we will have to adjust to new data emerging to, you know, the pandemic, the way it's gonna evolve, the patient population availability, obviously, you know, speaking of vaccination versus the non-vaccinated.
I think there's a lot of question up in the air, and we will have to adjust the best with our program.
Brian Skorney (Managing Director)
Great. Thank you.
Nathalie Adda (SVP and Chief Medical Officer)
You're welcome.
Operator (participant)
Thank you. Our next question comes from Roy Buchanan with JMP Securities. You may proceed with your question.
Roy Buchanan (Managing Director and Equity Research Analyst)
Hey, great, thanks for taking the questions. The first one I had is on R&D guidance. It looks like you guys are guiding likely down for spending next year. You know, you're still ramping up RSV. You're going into this SARS-CoV-2 clinical trial, human metapneumovirus. It seems like R&D should possibly be going up. It's just the drop-off in NASH or the delay in the hepatitis B that's resulting in the lower spending expenses? And then I'd kind of like to dig in a little bit on the EDP-235 partnering question, I guess. Have you guys considered maybe monetizing MAVYRET or getting a partner to bring the agent to the market faster?
You know, you have these stocking orders, Pfizer's $2.3 billion, Merck's got over $1 billion, or is this something where, you know, more money is not gonna help you get to market faster? Thanks.
Jay Luly (President and CEO)
Yeah, maybe, I heard the question. I'm not sure.
Nathalie Adda (SVP and Chief Medical Officer)
We're having some audio trouble.
Jay Luly (President and CEO)
I just had someone text me who's listening in and said that they're hearing both sides of the conversations very well, better than some of the participants are.
Roy Buchanan (Managing Director and Equity Research Analyst)
I can hear everything fine.
Jay Luly (President and CEO)
On the guidance, I think I'll let Paul chime in. I think it's about, I mean, R&D guidance for spend is just—I think it's actually the midpoint is maybe $5 million ahead of last year. It's also—But it does, you're correct, it factors in to the fact that we made decisions around NASH in terms of externalizing that cost that we would have otherwise been doing. There's a bit of a factor from, you know, the 721 decision. But, you know, apart from that, it's allowing us to, you know, fire all the shots that we need to on our various programs as we've outlined. So I think it's fairly well-studied that that's a good number for now.
With regards to MAVYRET, you know, as you know, MAVYRET is COVID impacted over the last years of the pandemic, last couple of years. AbbVie has seen that. Gilead has seen that in their pipeline. Royalties, royalty revenue is down over years where it was pre-pandemic. But that said, I think we see the opportunity for that to come back once things normalize a bit more. Hep C patients are not spontaneously curing, and not that many of them are dying over this time period. I think it might be prudent to watch and see how MAVYRET progresses as the pandemic sort of winds its way out.
Certainly at this time, I wouldn't find it necessarily the best time to try to monetize those royalties. What was your last question?
Roy Buchanan (Managing Director and Equity Research Analyst)
It was I mean, I guess the question is really about spending more money on EDP-235 to get it to market faster. You know, you see these large stocking deals for Pfizer and Merck, and those drugs have issues as you pointed out. You know, Merck's combination has a black box warning for DDIs. Molnupiravir is probably not the greatest drug. You know, you said it yourself, you're sitting on this extremely potent specific drug, possibly best in class. Seems like getting it to market as fast as possible would be the best, the ideal situation. Is... You know, if you partner with a big pharma, is that gonna get the drug to market faster, or not, I guess?
Jay Luly (President and CEO)
It possibly could at the right stage, right? Right now it's not a resource constrained pathway that we're in right now. I think, you know, again, as I mentioned, at some point down the line, opening up wider supply channels and negotiations of the types of things that you're talking about, which usually, by the way, come once you've gotten certain amounts of data, you know, will make sense at some point. Right now we're not cash constrained.
Roy Buchanan (Managing Director and Equity Research Analyst)
Okay. Thanks for taking the question.
Jay Luly (President and CEO)
You're welcome.
Operator (participant)
Thank you. Our next question comes from Eric Joseph with JPMorgan. You may proceed with your question.
Eric Joseph (Executive Director of Biotech Equity Research)
Great. Thanks for taking the question. Just a couple on HBV from us. First, I'm wondering if you could put a little more, little bit more context around the nature of the adverse safety event with seven two one and why it might have been missed in the IND with tox work. I'm also curious to know whether there's perhaps a path forward against a target or even with seven two one as a with an alternative route of administration. Could it be administered perhaps like simultaneously safely? Maybe finally, just curious to kinda get some of your additional thoughts on what other HBV targets are of interest as part of a combination strategy with five one four that might also be amenable to oral administration. Thanks.
Jay Luly (President and CEO)
Thanks for the question, Eric. Questions, I guess. The study is the dosing has been completed, but the study's still ongoing. Since we're still actively monitoring the study, we're not commenting on safety results observed. You know, what does it mean for 721? I don't think 721 is gonna go forward. I don't think it's a route of administration question. You know, is it the mechanism? You know, I guess right now, as far as defining next steps, at this point, we're sort of reviewing all the data in order to fully understand these results before deciding on next steps, whether it's with another destabilizer someday or if it's with other mechanisms that we would pursue.
I think independently, you know, we're gonna focus on other mechanisms that could possibly be added to this because you may never understand, you know, what the destabilizer situation was. I'm not gonna bank on that fact. Of course, we'll try to understand it as fully as we can. I think, you know, we were already looking for a third mechanism when we had a core inhibitor plus a nuke out there, effectively a double, not knowing whether or not we would ever need it. That was the destabilizer. Even once we got that one, we were still thinking about other mechanisms beyond, you know, a triple.
Again, not knowing whether we would ever need them, but to be constantly looking, you know, inventing new drugs, in-house and also looking for external mechanisms that we might either be able to bring in or license. Because, again, it's gonna be a combination therapy with more than a couple agents in it. I think that's certainly going to be the case. I mean, there are other mechanisms out there that are oral. You can look at some of the immunomodulatory mechanisms that are out there. I mean, that's certainly an approach that we had been looking at and thinking about and considered. There are still other ones.
Anyway, you know, we'll be reviewing that over the course of time and revamping that HBV strategy with new combinations. Once we've got that sorted internally, we'll start to talk about it publicly.
Operator (participant)
Thank you. Our next question comes from Zegbeh Jallah with ROTH Capital Partners. You may proceed with your question.
Zegbeh Jallah (Senior Analyst)
Hi thanks for taking my questions. I just wanted to quickly follow up on Eric's question about the HBV program. Just notably, his question about why some of the safety signals may have been missed pre-clinically. Is this something that could have been determined pre-clinically? I know you don't wanna say what the exact AEs were, but I was just curious about that.
Jay Luly (President and CEO)
No, it's really kind of hard to explain. I mean, there were other members of this mechanism that had been studied in the past. I mean, Roche had a molecule, they took it into phase I and then disappeared from phase I, but there hasn't really been any public comment with regards to you know what happened there. Arbutus had some molecules or a molecule, I guess, that they had worked on. They did shorter-term safety studies and apparently, I think it looked okay. Then when they got their longer-term safety studies in, they ended up finding a safety signal and then repeating the study and then seeing another signal and then terminating the molecule.
You know, for us to even move to that next step, the bar in our minds was making it at least past the 13-week safety signal that, you know, others had seen at least preclinically. We spent a lot of time engineering 721. We took it through different week safety studies in multiple species, had a very clean profile with regards to safety, any safety observations. It was just an unusual, unexpected finding in a phase I study. I mean, sometimes this happens, it's rare. It's even more rare for Enanta on average, but in this case it did. That's about the sum of it.
Zegbeh Jallah (Senior Analyst)
Thanks Jay. That was really helpful. A follow-up to that, at one point you noted really being interested in the S antigen. I was just wondering, if you were to go and add another candidate, would it be something again against the S antigen?
Jay Luly (President and CEO)
Well, certainly, if we found a desirable target to take that on, that would be, that's not a bad idea. S antigen is one of the things that we obviously need to deal with in some form, either by you know, shutting down the source of its being produced or dealing with it directly, or otherwise compensating with an immune approach that can help overcome that. Any, you know, S antigen modifiers would be something to the extent that we could find an appropriate mechanism to target, would be on our list.
Zegbeh Jallah (Senior Analyst)
Thanks. I just have two more. The first is just thinking about the timeline for the HBV program. You know, I know you have a couple of things in the works in terms of candidates. I was just wondering how far are those from entering the clinic? And then is there anything that you can do to kinda optimize the timeline, meaning move forward with the combo as much as you can before adding in the third agent that may be a little bit behind?
Jay Luly (President and CEO)
I think our priority is gonna be focusing on third agents, you know, right now. Like I said, we'll be focusing on the internal pipeline, as well as external opportunities to do that.
Zegbeh Jallah (Senior Analyst)
Thank you. You're not gonna be limited by, you know, your internal candidates 'cause you could pull something from another company or something like that. That's good to know. Then the last one here is just a high level question, you know, for folks that are a little bit apprehensive now, you know, having, you know, two programs kinda, you know, change a little bit, meaning the NASH and now the HBV program. I like how you said that, you know, this is very rare, at least for the HBV. It's really rare to have something like this happen to Enanta. I think it would just be nice to kinda hear your thoughts on, you know, the robustness of your preclinical work that you typically do across your pipeline.
I guess for folks that may be losing a little bit of confidence, you know, how do you kinda keep, you know, folks confident in what it is that you guys are doing at Enanta?
Jay Luly (President and CEO)
Hey, you know, this is nothing unusual in the industry or in biotech or pharma. This happens every day. It just, I think what's surprising is it rarely happens at Enanta. That's it. It is part of the business. I mean, you'll find preclinical findings sometimes that never manifest themselves in human test results ever. Occasionally you'll find the converse. You know, we pushed six programs together with no safety findings that alter our way of, you know, doing business, including several that are in the clinic now and have been in lots and lots of patients. Again, this is, it's a very unusual, sort of one-off finding and, you know, people should think about it in that way.
You know, that's the nature of the business. We've got a very strong preclinical, you know, compound characterization group at Enanta, you know, looking at DMPK, safety, formulation, on and on and on. I think overall, our track record speaks for itself.
Nathalie Adda (SVP and Chief Medical Officer)
Thanks, Jay, and congrats on the progress.
Jay Luly (President and CEO)
You're welcome.
Operator (participant)
Thank you. Our next question comes from Roanna Ruiz with SVB Leerink. You may proceed with your question.
Roanna Ruiz (Senior Managing Director)
Great. Thanks for fitting me in. One question for HBV. I was curious for 514, which dose are you most likely to advance forward into combination trials considering that we've seen some similar HBV DNA reductions between the 400 mg and the 800 mg doses so far?
Jay Luly (President and CEO)
You know, all the doses look good, actually. We'll make the final decision, you know, when we're gearing up for the ultimate study. When you look at 200, 400, 800, they all had very nice log drops in DNA and RNA if you look at the viremic study. I think a lot of that had to do with the fact that at even the lowest of the three doses, we were already driving around 10 times the adjusted EC90. At 400, we were at 20-fold above that. We drove very high drug exposures very safely over the course of a full month in HBV patients.
Any of them could probably be fine doses to go forward with. I think in a general sense, you try to look at you know, the highest or a you know, a very robust dose just to you know, to make sure in a broad section of patient population that you're exerting a lot of pressure on the virus. You know, so far we've done that even with the lowest dose. As we get closer to a specific combination, we can talk about a specific trial design, but I think they all doses look good.
Roanna Ruiz (Senior Managing Director)
Understood. Makes sense. Thanks.
Jay Luly (President and CEO)
You're welcome.
Operator (participant)
Thank you. Our next question comes from Liisa Bayko with Evercore. You may proceed with your question.
Liisa Bayko (Managing Director)
Hi thanks for taking the question. Okay, just first on hepatitis B for 514 in the liver meeting data, you seem to have an inverse dose response on RNA. I know DNA was pretty tight actually across all the doses. Is that just some functional small numbers or what's the right way to think about, you know, that trend there?
Jay Luly (President and CEO)
It was a very, you know, it was a very small dose response even on the DNA because I think we were nailing it even at the lower dose, and there's probably.
Liisa Bayko (Managing Director)
Yeah.
Jay Luly (President and CEO)
You know, a little bit of wobble thereafter. I'll let Nathalie comment on that further.
Nathalie Adda (SVP and Chief Medical Officer)
Hi, Liisa. Yeah, thank you for your question. I mean, it's true that when you look at the numerical value of the three doses in the viremic patient in particular, it looks like it may be a reverse dose-dependent. I think it's important to note that, you know, it's a small sample size with variability in the, you know, in the HBV RNA, not only at baseline but also throughout the treatment duration. The distribution of the patients in those small studies where you have, you know, six patients per arm who receive the active drug, depending on when they come, you know, into the study with a higher baseline HBV RNA compared to a lower HBV RNA, you know, that can change a little bit, you know, your mean value at the end per cohort.
We look very closely at each individual patient for each cohort, and there's a little bit of a difference in the distribution with the 800 mg, where we had more subjects, we had a higher viral load, not viral load, HBV RNA at baseline compared to the two other arms. If you try to normalize and remove, you know, those subjects where maybe, I'm gonna say outlier compared to the other arm, you know, it comes pretty much even. It is just an artifact, I think, of distribution and variability of the HBV RNA.
Liisa Bayko (Managing Director)
Okay, great. Thank you. Just on timing for RSV, I was looking at the trends in the United States. It actually looks like it's coming down, at least right now, per the CDC. Are you planning to kind of follow patients like globally, Jay, and that's how you can fill it? Like, I'm assuming if it's coming down here, it's probably rising in other parts of the world. Is that the right way to think about it? You know, if you're gonna get RSVP data in 2022, Peds and RSVTX, if we have an increase in cases, could we maybe count on some data from those as well next year? Thanks.
Jay Luly (President and CEO)
I would say it's unlikely for RSVPEDs, the pediatric study and transplant. I think we'll need you know more than one global season or at least yeah more than one. We're heading into one now. This will be the first real season that either of those studies has experienced, assuming that it is a real season this time. You know I look at the numbers that you know you're looking at where you know it spiked a little bit when people started relaxing some of the masks, then it seemed to be coming down a little bit.
Recall that we're at least heading into the beginning of what would normally be a full season that typically peaks in January and February of a given year, at least in the northern hemisphere. We have trial sites all over the world, U.S., EU, Southern Hemisphere, Pan Asia. To the extent that we get into what will hopefully be a fairly normal season, then we're pretty confident we should be able to wrap things up and report out in the first half.
Liisa Bayko (Managing Director)
Okay, great. Can you tell us how many patients you've, like, enrolled thus far of the total anticipated?
Jay Luly (President and CEO)
No, we typically don't give sort of interim post updates because it's a splotchy thing. You know, you'll go through dry spells and then get hot zones and stuff. It's really, you know, what you need to do is just look at it as a whole, and you know, rely on our guidance based on assumptions and the backdrop of the virus. I think you know, we did see an uptick very much so, you know, a little while ago, when the cases were starting to rise. I think that's again very encouraging. We were able to capitalize on that.
Again, to the extent that we have a fairly normal looking season, I think it should be quite doable.
Liisa Bayko (Managing Director)
Great. Thank you very much.
Jay Luly (President and CEO)
You're welcome.
Operator (participant)
Thank you. I'm not showing any further questions at this time. I would now like to turn the call back over to Jennifer Vieira for any further remarks.
Jennifer Viera (Investor Relations)
Thank you to everyone for joining us today. If you have any additional questions, please feel free to contact me by email or call my office. Thank you so much. Have a good night. Bye-bye.
Operator (participant)
Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.