Earnings Call Transcript - ENTA Q4 2020

Operator, Operator

Good afternoon and welcome to Enanta Pharmaceuticals fiscal fourth quarter and year-end 2020 financial results 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, Senior Director, Investor Relations. Please go ahead.

Jennifer Viera, Senior Director, Investor Relations

Thank you, operator, and thanks to everyone for joining us this afternoon. The news release with our fiscal fourth quarter and 2020 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 development 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. Throughout 2020, we made meaningful advances across our pipeline. And today I’m excited to review this progress and to share our plans for multiple catalysts in 2021. Looking ahead, we believe that we are in a unique position to leverage our years of drug discovery experience to deliver new medicines to patients. Not only do we have a robust and growing internal portfolio, which I'll review momentarily, but our efforts are informed by our previous successes, including the discovery of two products, which are currently marketed by AbbVie as part of its leading treatment for chronic HCV infection. In the beginning of the year, we announced our program for human metapneumovirus or hMPV. And in March, we began working to find a treatment for COVID-19. I'm proud and appreciative of my colleagues for their efforts in rapidly responding to the pandemic and for the nimble and creative thinking they applied to translate our extensive experience in virology, notably respiratory virology, to fight this global challenge. Taking a step back by focusing on these two respiratory viruses combined with our work in respiratory syncytial virus, we're establishing our position as one of only a few biotechnology companies explicitly developing a broad portfolio of respiratory virus treatments. We also advanced our hepatitis B compound EDP-514, a novel core inhibitor that displays potent anti-HBV activity in vitro at multiple steps in the HBV lifecycle. In February, we announced positive results from part one of our Phase 1a/1b clinical study of EDP-514 in healthy subjects, which supported further evaluation of once daily dosing in part two of the study in chronic HBV patients treated with marketed nucleoside reverse transcriptase inhibitors, which we refer to as NUC-suppressed patients, as well as in chronic HBV infected patients with high viral load not currently on treatment, which we refer to as viremic patients. Moving to our NASH program, the past quarter was also marked by the initiation of two clinical studies: ARGON-2, our Phase 2B study evaluating our first FXR agonist EDP-305 in subjects with liver biopsy proven NASH and a first-in-human study of EDP-297, a highly potent and targeted FXR agonist that is a follow-on FXR candidate. As we move forward towards the remainder of 2020 and beginning of 2021, we look forward to initiating two new Phase 2 trials for our program in respiratory syncytial virus, or RSV. Now let’s look at that portfolio programs in a bit more detail. I'll begin with our virology focused programs, more specifically, our respiratory virus programs, RSV, hMPV, and SARS-CoV-2. I'll start with RSV, where we are developing EDP-938, a potent non-persistent inhibitor of RSVa and RSVb. RSV is a severe respiratory infection associated with significant morbidity and mortality in infants, the elderly, and immunocompromised adults and a condition for which there is currently no safe and effective therapy. In an average year in the U.S., RSV infection leads to around two million outpatient visits among children younger than five years old and hospitalizations of more than 57,000 children under age five and about 177,000 older adults. Our Phase 2b, double-blind placebo-controlled study of EDP-938 will be designed to enroll approximately 70 subjects up to the age of 75 years, randomized to receive either 800 milligrams of EDP-938 or placebo for five days. Starting here in the Southern Hemisphere, recruitment in that study has been affected by the ongoing COVID-19 pandemic and related shutdowns and social distancing measures, which have reduced some incidence of flu and RSV. So as placebo-controlled, we've previously said, we are hopeful that the 2021 Northern Hemisphere RSV season will allow us to finish enrollment in RSVP, but that will be dependent on RSV being as prevalent as in a normal season. To that end, we are reactivating close to 50 of our existing RSV clinical sites in North America. These sites are prepared with our PCR machines to diagnose patients for RSV and to rule out flu and COVID-19 in the same day, which should make enrollment as efficient as possible. In addition, we're working to set up about an equal number of sites in six different European countries by year-end and are also planning to add sites in the Asia Pacific territories in 2021. As we know, COVID-19 is unpredictable, and the rate of enrollment in this trial will continue to depend on the prevalence of RSV infections and the precautions that people are taking for COVID-19 as the winter progresses in the northern hemisphere. Considering that respiratory viruses often have hot spots, we are prepared with many geographically dispersed sites to identify and enroll as many patients as possible in this RSV season. Assuming we can complete enrollment in the second quarter of 2021, our goal remains to record data in the third quarter of 2021. We also plan to initiate two additional Phase 2 studies with EDP-938. One, an adult transplant patient by the end of 2020 and another in pediatric patients in the first quarter of 2021. The adult transplant study, named RSV-TX, will be a Phase 2b randomized, double-blind placebo-controlled study to evaluate the effect of EDP-938 in adult hematopoietic cell transplant recipients, with an acute RSV infection of the upper respiratory tract. The pediatric trial, named RSVP, will be a Phase 2 randomized double-blind placebo dose-ranging study to evaluate EDP-938 regimens in hospitalized or non-hospitalized infants and children aged 28 days to 24 months, who test positive for RSV based on an approved diagnostic assay. Our goals for both of these studies are to enroll during 2021 and 2022, subject to the potential impact of COVID-19 on the incidence of RSV infections and activities at trial sites. Turning to our other two respiratory virus treatments in development, hMPV and HBV, a virus that causes respiratory infections similar to RSV and SARS-CoV-2, we have discovered several potent molecules. For SARS-CoV-2, we’re leveraging our expertise in direct acting antiviral mechanisms to discover new compounds to treat COVID-19 using a combination of drugs and target screen and drug design. The advantage of this discovery approach is that you can make potent purpose-built inhibitors against multiple different targets. While we are encouraged that the vaccine could be available soon, we still see a need for an oral treatment for those in various patient populations who are nonetheless infected with COVID-19. Regarding HBV and hMPV, since announcing our new drug discovery efforts in January, we've been optimizing nanomolar inhibitor leads against those viruses. We are hoping to finalize a clinical candidate selection for each program next year. Let's move on to our hepatitis B program with EDP-514, our lead core inhibitor currently being tested in chronic HBV patients who are NUC-suppressed and in viremic HBV patients. In February, we announced positive results from Part one of the Phase 1a/1b clinical study of EDP-514 in healthy subjects, which allowed us to initiate Part 2 in chronic NUC-suppressed HBV patients. These encouraging data, which highlighted positive safety and tolerability, as well as pharmacokinetics suitable for once daily dosing, were presented in a poster presentation in August at the Digital International Liver Conference sponsored by the European Association for the Study of Liver or EASL. Part two of the Phase 1a/1b study, which is now ongoing, is designed to evaluate the safety, tolerability, pharmacokinetics, and any viral activity of orally administered multiple ascending doses of EDP-514 versus placebo in up to 24 randomized NUC-suppressed patients over a 28-day period. Barring any further significant COVID-19 disruptions, we plan to have preliminary data on part two in the second quarter of 2021. Also, on our HBV program in July, we initiated a Phase 1b clinical trial in viremic HBV patients. This randomized, double-blind, placebo-controlled Phase 1b study in viremic chronic HBV patients not currently on therapy has a similar design to the one in NUC-suppressed HBV patients, with plans to enroll twenty-four subjects at our clinical trial sites in Hong Kong and Taiwan, which are both areas with a large unmet need for HBV treatment. We expect preliminary data from this trial in the second quarter of 2021. And finally, we continue our HBV efforts in search of a novel oral agent against a different HBV mechanism that could be combined with EDP-514 in an all-oral triple regimen. Progress against that has been strong this year. We'll have further details around this new program and our oral HBV triple strategy early next year. Shifting gears to our work in non-alcoholic liver disease, we are currently focused on NASH, where we are conducting clinical trials on EDP-305, our first FXR agonist. Based on data from ARGON-1, which was highlighted in an oral presentation at EASL in August, we initiated recruitment in ARGON-2 in July. ARGON-2 is a Phase 2B randomized, double-blind, placebo-controlled 72-week study in approximately three hundred and forty subjects with biopsy-proven NASH with fibrosis. The primary endpoint is improvement of fibrosis, without worsening of NASH and/or NASH resolution without worsening of fibrosis. We're using EDP-305 doses of 1.5 milligrams and 2.0 milligrams, which we believe will favorably balance strong, efficacious target engagement with tolerability. We're additionally developing EDP-297 follow-on FXR candidates to NASH with potentially best-in-class potency and targeted effects. We presented two posters demonstrating that treatment with EDP-297 significantly reduced fibrosis progression and improved liver function in a rat model of NASH. We are encouraged by EDP-297's clinical profile, which shows wide target tissue distribution in the liver and intestine versus plasma and skin. In September, we announced the initiation of a phase 1 randomized double-blind, placebo-controlled first-in-human study designed to assess the safety, tolerability, and pharmacokinetics, including food intake effects of orally administered EDP-297 in approximately 74 healthy adult subjects. The study includes two phases of single ascending dose space and their own six cohorts, including a two-part food effect cohort and a multiple ascending dose stage enrolling three cohorts. We look forward to reporting clinical data in the second quarter of 2021. By mid-year 2021, we expect to have important new insights for both EDP-305 and EDP-297, which will inform next steps across our NASH program. We will know whether the tissue targeting and potency design elements we introduced in EDP-297 will allow us to better leverage FXR agonist compounds without encountering tolerability challenges. Around the same time, we expect that ARGON-2 will provide us an interim analysis at 12 weeks of treatment on a subset of patients to enhance our ability to prioritize our FXR agonist compounds and seek opportunities for development quickly for one or both of them in combination with other mechanisms for NASH. We are encouraged by the efficacy demonstrated by FXR agonists for NASH with fibrosis, a disease with high unmet need, and believe that this mechanism has promise as a potential therapeutic. We've accomplished all of this while still managing the impact of COVID-19 on our lives and business. I'm continually impressed by the team we have built and their ability to maneuver around the challenges we have been presented. I want to thank our very talented and committed employees who have worked tirelessly during the pandemic. Their dedication is evidenced by the progress we've been able to make this year. I'd like to conclude my remarks by emphasizing a few key points. We made significant progress during our fiscal year, despite the multitude of challenges presented by the COVID pandemic, including the initiation of four new clinical trials, two for our EDP program, two for our HBV program, and two for our NASH program concurrent with conducting our ongoing Phase 2 trials for RSV. Here we are on schedule to initiate RSV-TX, an adult transplant patient study later this quarter, RSV in pediatric patients in the first quarter of 2021. We were also successful in moving our HBV trial in viremic patients forward, as well as in progressing our Phase 1b trial in HBV patients who are suppressed, with preliminary data expected in the second quarter of 2021. Finally, we look forward to advancing our candidates in NASH with the ARGON-2 trial and the EDP-297 Phase 1 study. Looking toward 2021, we are poised for an exciting year with multiple data readouts anticipated across our pipeline. I'll stop here and turn the call over to Paul to discuss the financials for the quarter. Paul?

Paul Mellett, CFO

Thank you, Jay. I'd like to remind everyone that Enanta reports on a September 30th fiscal year schedule. Today, we are reporting results for our fourth quarter in fiscal year ended September 30th, 2020. For the quarter, total revenue was 23.6 million and consisted entirely of royalty revenue earned on global HCV products sales of 414 million. This compares to total revenue of 51.3 million for the same period in 2019. The decrease in our royalty revenue was due to lower global HCV product sales, as reported by AbbVie, as treated patient volumes have remained below pre-COVID levels. AbbVie now expects total HCV sales of approximately 1.9 billion for the calendar 2020 as treatments remain below pre-COVID levels. Royalty revenue was calculated on 50 percent of average sales at a blend of our first and second royalty tiers of 10 and 12 percent, respectively, and on approximately 30 percent of accuracy at that royalty rate of 10 percent after adjustments for certain contractual discounts, rebates, and set-offs, which are now just over two percent of our total reported HCV sales. 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 rates of the year, and royalties for our fiscal quarter ending March 31 will be calculated at 10 percent, which is our lowest royalty rate this year. You can review our royalty tier schedule in our 2019 Form 10-K. Moving on to our expenses, for the three months ended September 30th, 2020, research and development expenses totaled 36.7 million, compared to 38.7 million for the same period in 2019. This decrease was primarily due to the timing of our clinical studies year-over-year and COVID-19 related delays in two clinical studies that are now ongoing. General and administrative expenses for the quarter were 6.7 million, compared to 6.2 million for the same period in 2019. Enanta reported income tax expense of 10.7 million for the three months ended September 30th, 2020, compared to an income tax benefit of 0.5 million for the same period in 2019. The income tax expense in 2020 was driven by a non-cash valuation allowance recorded against our deferred tax assets of approximately 18 million, which was partially offset by 7.3 million of NOL carrybacks and R&D tax credits. For the 12 months ended September 30th, 2020, Enanta’s effective tax benefit was approximately 3% compared to an effective tax rate of approximately 2% for the 12 months ended September 30th, 2019. I'd like to note that the drivers of the decrease in the effective tax rate are covered in the press release. Net loss for the three months ended September 30, 2020 was 29.3 million or a loss of 1.46 per diluted common share compared to net income of 9.2 million or 44 cents per diluted common share for the corresponding period in 2019. The net loss for 2020 was due to the decrease in HCV royalties earned under our AbbVie agreement, which were adversely affected by the COVID-19 pandemic. At the end of the quarter, we had approximately 490 million in cash and marketable securities, an increase of approximately 419 million from our 2019 fiscal year end balance of 400 million. Notwithstanding our current level of operating losses, our existing cash balances, together with our ongoing royalties, are expected to be sufficient to fund our operations for the foreseeable future. Regarding guidance for fiscal 2021, we expect our research and development expense to be between 145 million and 165 million, and our general and administrative expense to be between 27 million and 33 million. Further financial details are available 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, Operator

Your first question comes from Roy Buchanan from JMP Securities. Please go ahead.

Roy Buchanan, Analyst

Hi, Greg. Thanks for taking the questions. I had a few on the RSV program. So, for RSV, it sounds like there are more sites versus the last quarter in terms of adding Asian sites in 2021? Does the Northern Asian season mimic in North America and can you provide any specifics on the potential Asian site with China included?

Jay Luly, President and CEO

Hi, this is Jay. In terms of Asia and different countries, it’s slightly different seasons. Some are actually almost year-round. So, in the broader perspective, you know, when we work with Northern Hemisphere, U.S. and Canada, and we look at Europe and we think if we can build on Asia, that will be getting coverage for, you know, maybe nine or seven months a year. And so, I think, you know, specifically, we'll come back later with, you know, other Asian countries and in particular that we're picking up. That’s the plan is to continue to add in the wake of the 2021 timeframe. Of course, in the meantime, we'll have lots of North American sites on board. You recall we were pointing out, you know, dozens of them previously. So, we'll have approaching 50 North American sites and hopefully at least that many more by the end of the year. So really kind of all this stuff is coming together for many, many states.

Roy Buchanan, Analyst

So, are any of the North American sites yet open? Do you have any feedback from those sites?

Jay Luly, President and CEO

It's just coming up, you know, but what we can tell is, you know, if you recall last year, the season came early and this year versus last year, it's a little quiet so far this year. We’ll just have to keep an eye on that side of the screen. But in general, the rates and those stats by region are, you know, pretty quiet right now. We’ll just have to wait and see as the season progresses. And with the backdrop of COVID and social distancing and the like, you know, what's the difference?

Roy Buchanan, Analyst

Ok, great. I had a couple on the new Phase 2 trials, if you don't mind. So far as the RSV study, how many patients are you planning on? The endpoint is progression to lower respiratory tract infection. And from that trial, do you have investigators lined up? I guess any kind of similar to the last question, just how are they doing in the current situation and the feasibility of starting the trial?

Jay Luly, President and CEO

I'm sorry, are you talking about the PED study? You know, so the PED study is aimed to start in the next quarter. We're aiming for about 90 patients total. And so, I think those are the main points in terms of the study itself. You know, part one is going to be safety and peak. The other part, too, will be looking at the actual virus. So, change, change and RSV sharing with one of the things that we're looking out for here to be given name 380 or placebo for five days. And, you know, we'll be looking at cohorts up to 24 months of age.

Roy Buchanan, Analyst

Okay, great. Then one last one on the transplant. So how many safety plans do you have for that one? Are you also including Europe and is there any information on the current RS transplant setting, either in the U.S. or elsewhere? Thanks.

Jay Luly, President and CEO

I don't think so. The sites will come online at numerous sites; it will be a global study that will have sites on all the obvious sorts of territories where you will be looking at 938 versus placebo for 21 days, and we’ll be doing it a little bit longer because the patients are, you know, obviously immunocompromised. There aren't a lot of statistics on this specific patient population, so this could set up a lot of the centers during the normal season.

Operator, Operator

Your next question comes from the line of Bryan Scotney from Barrett. Please go ahead.

Unidentified Analyst, Analyst

Hi, thank you. This is Jack dialing in for Bryan. Thanks for taking our questions. We just have one quick one. We're wondering about your updated thoughts regarding the opportunity for inhibitors in light of the disappointing news from the assembly and their core plus new regimen and the sustained viral response data we saw there. I know you're looking at the triple combination internally as well, but we were just wondering what your thoughts were? Thank you.

Jay Luly, President and CEO

Yes, so it’s an interesting data set. You might have to hand it to them for doing the study, which was looking at a core inhibitor plus a new class time. So, the question is, could a core pose a new class time getting to a functional cure? And again, nobody knew the answer to that question. They looked at different time points over the course of the investigations, three months and six months, a year, and so forth. The results that were produced in this initial study weren't particularly positive. There could be a lot of different reasons there. It’s either the new capacity or plus more time. It's possible that the first generation core inhibitor wasn't, you know, as effective. Among the reasons why they're working on ADP-514, our core inhibitor, is roughly ten times more potent than the one that you're referring to in that study. Another possibility, of course, is the core of the new plus a third agent that actually, you know, could be the strategy to get you there. Just applying enough pressure on the virus and from different angles and from different stages of mechanistic intervention. All along, we've been working on multiple different mechanisms. So, we’d have something in addition to a new core inhibitor, and we're making pretty good progress on that front. Earlier next year, we'll have more to discuss regarding our progress in that area and also on our strategy of coming up with a potential triple combination. For us, we're highly focused on all oral treatments. As you know, historically, people have used interferon as an injectable treatment that leads to very, very low cure rates. Others have been using some RNA approaches to add injectables to oral agents, which is an interesting approach some others are taking. We're focused and committed to creating all oral approaches, and if we can come up with that, we think, in the end, having oral therapies could offer significant advantages overall. So, we are highly focused on all oral agents and hopefully with the addition of a new strategy.

Operator, Operator

And your next question comes from the line of Akash Tewari from Wolfe Research. Please go ahead.

Unidentified Analyst, Analyst

Hi. This is Emily on for Akash. Thanks so much for taking your questions. We just heard several on RSV and then one on HBV. So, if you're starting with your Phase 2b cell transplant, do you have any data supporting the safety of longer-term dosing with EDP-938? And then why did you set the symptom onset cutoff to be three days instead of two days like you did for outpatient adults? And then on the RSV outpatient trial, how many patients are currently enrolled in this trial? And is there any way to modify it into a Phase 2/3 registrational trial? Additionally, how are you ensuring that patients will be dosed within the right time window? Lastly, I have one last question on HBV. One hypothesis on why the core inhibitor failed is that the drug doesn't completely stop the formation of new CPC DNA. We were just wondering about the in vitro or in vivo potency of EDP-514 to specifically inhibit EDP DNA formations. Thank you.

Jay Luly, President and CEO

Well, let's start with the first one. So, we chose three days versus two days in terms of transplant because we believe that patients may still be within the therapeutic window. You know, flu drugs are often utilized within those time frames, and we certainly have all the talks in place to support this type of study progressing forward. As for the RSV outpatient trial, we don't discuss ongoing recruitment except to set targets for where we are. So, it's going to be clear, RSVP is not a registrational study but will support the entire program. We need to ensure that patients arrive with symptoms within the 48-hour timeline, and it's challenging given the new atmosphere with social distancing and COVID-19.

Unidentified Analyst, Analyst

Okay. Great. Thank you. And one last question about hepatitis B; we were just wondering what the in vitro and in vivo potency of EDP-514 is specifically on inhibiting DNA formation?

Jay Luly, President and CEO

In terms of CPC DNA formation, as I recall the in vitro potency was around 30 nanomolar or so. Again, this is something that you determine in vitro at the time of conception, so 30 nanomolar sticks in my mind.

Operator, Operator

Your next question comes from the line of Yasmeen Rahim from Piper Sandler. Please go ahead.

Yasmeen Rahim, Analyst

Hi team, I have two questions. The first question is, what do we know about the viral kinetics? Obviously, RSV is different between hospitalized pediatric patients versus immunocompromised patients. How do we really capture its efficacy in the next stage of development? Commenting on that would be helpful. The second question is, recently at the meeting, we saw data from another agonist that had very encouraging biomarker data but failed to achieve histological benefits. How do we think about the myth of correlation, especially as we consider data for the first and second-generation agonists?

Jay Luly, President and CEO

Sure, so starting with the second question first, I think it's really important to stick to a longer exposure to see the true effects in studies. Differences often arise from shorter durations in various levels of success in terms of trying to demonstrate an effect on fibrosis. The key is that when patients present with upper airway infections, they often have a high viral load initially. Our ultimate goal is to prevent upward progression to lower airway infections where inflammation heightens. But I can’t specifically point out data right now on that. Longer treatment duration is warranted in that patient population.

Yasmeen Rahim, Analyst

Thank you so much for answering my questions.

Operator, Operator

Your next question comes from the line of an indiscernible speaker. Please go ahead.

Unidentified Analyst, Analyst

Hi, thanks for taking my question. I have two quick ones for you. The first one is, given you've been really busy with multiple studies, do you think that they could hamper the enrollment of the ongoing Phase 2b study? What are some of the risks that you think could positively impact the studies that mention increased costs associated with some studies and potential delays?

Jay Luly, President and CEO

So was your first part of the question about competing for enrollment between our studies?

Unidentified Analyst, Analyst

Yes, just competing for enrollment. Do you not expect that to be a problem?

Jay Luly, President and CEO

No, I think they require significant internal resources but target different patient populations, so I don't expect any challenges there. The question on COVID is significant because we do know that, for example, in the Southern Hemisphere, respiratory virus cases were significantly reduced due to mitigation strategies, such as lockdown and social distancing. We also have to consider how those measures might impact our trials and patient enrollment. We’ll just have to navigate those situations as they arise.

Unidentified Analyst, Analyst

Makes sense. Just a quick follow-up here about the timeframe expected in mid-2021? How much data would you like to have to be competitive during that timeframe?

Jay Luly, President and CEO

For us, we expect to have solid data by then. We are on track for several important readouts, including the Phase 2b study, and we’re hopeful that both the targets and our testing for interim analysis will provide us timely insights into our progress.

Operator, Operator

Your next question comes from the line of Eric Joseph from JP Morgan. Please go ahead.

Eric Joseph, Analyst

Good evening. Thanks for taking the questions. From our recent interactions with KOLs, there is a lot of interest in pursuing combination regimens, and you talked about exploring some FXR modalities in NASH. What's your latest thinking on the role of combination mechanisms to potentially partner with either EDP-305 or EDP-297? Do you have a sense of whether development of combination regimens would be feasible as an initial registration strategy?

Jay Luly, President and CEO

No, thanks for the question. Combinations are indeed interesting. FXR appears to interact positively with pro-fibrotic processes, so there is a rationale for using it as part of a combination strategy. We're generating important data around Phase 2 trials and likely building this into our discussions for future regulations. It’ll allow us to tailor potential combination approaches as we gather more insights. So yes, there's a valid reason to explore combinations for our future studies.

Eric Joseph, Analyst

Great. And just a follow-up on HBV; any insight regarding the potential for an oral regimen, can you share on what the third leg of the combination might look like? Would you consider any protease inhibitors, for instance?

Jay Luly, President and CEO

We're not ready tonight to unveil that, but stay tuned. We expect to have updates on our progress soon. We're working diligently in the background, and I believe we’ll have more details by early next year.

Operator, Operator

Your next question comes from the line of an analyst from RBC Capital Markets. Please go ahead.

Unidentified Analyst, Analyst

Starting on NASH, I was wanting to speak broadly about your views on the evolving regulatory landscape and how you might incorporate that into the development program. Are there additional non-invasive tests you may explore to ensure easily translatable methods for identification of patients, or have you thought about accelerated approval endpoints?

Jay Luly, President and CEO

Thanks for the question. Everyone is focused on getting rid of biopsies since there is a genuine push towards non-invasive testing. We believe this will be where the landscape evolves heading into registration studies. As for accelerated approval endpoints, while the details remain murky, there are encouraging signs that methods will allow for broader applicability.

Unidentified Analyst, Analyst

Got it. And then on the earlier stage respiratory programs, such as human metapneumovirus and SARS-CoV-2, could you talk about the potential timelines for development once you select lead candidates? How does the success of vaccines for COVID-19 impact your prioritization?

Jay Luly, President and CEO

We've seen promising news on the vaccine front. However, we don't know the efficacy rates broadly across various patient populations yet. The treatment remains vital, as some will need viable therapeutics. We maintain strong hope regarding our human respiratory virus portfolio and are prioritizing those programs, aiming to have candidates ready for future trials. We target candidate selections for further development next year.

Unidentified Analyst, Analyst

Great. Thanks so much.

Jay Luly, President and CEO

You're welcome.

Operator, Operator

Your last question comes from the line of Jay Olson from Oppenheimer. Please go ahead.

Jay Olson, Analyst

Hey, guys, thanks for taking our questions. We have two. The first question is about GSK's RSV vaccine, which they announced today was moving into a Phase 3 study. If that vaccine is eventually successful, would it have any long-term impact on your view of the market opportunity for an RSV therapeutic? Second question is about NASH.

Jay Luly, President and CEO

Yes, that approach has been tried before with a maternal vaccine and had promising results in Phase 2. The degree of compliance in broad vaccinations is an important consideration. Ultimately, it may just delay the inevitable as children usually contract RSV infections regardless. The need for a robust therapeutic agent still holds true whether a vaccine is successful or not.

Jay Olson, Analyst

Great. Thank you. And then, second question is about NASH, and we're wondering if the CRLs that Intercept received and then the subsequent work they’re doing to resubmit their NDA have any impact on your own development plans for FXR agonist in NASH. Specifically, would you consider targeting a narrower NASH patient population with advanced fibrosis?

Jay Luly, President and CEO

I think we just need to fully understand the situation regarding the CRL. There’s no immediate impact of their current activities on our ongoing operations. It’s vital for all companies in this space to keep an eye on these developments as we continue on our set path without interruption.

Operator, Operator

I will now turn the call back over to Jennifer Viera for closing remarks.

Jennifer Viera, Senior Director, Investor Relations

Thank you, everyone, for joining us today. If you have any additional questions, please feel free to give us a call or send me an email. Thanks so much. Have a good night. Bye-bye.

Operator, Operator

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.