Earnings Call Transcript
ENANTA PHARMACEUTICALS INC (ENTA)
Earnings Call Transcript - ENTA Q4 2022
Operator, 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, Investor Relations
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?
Jay Luly, CEO
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 virologic 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 six-fold and thirteen-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 twenty-eight-fold multiple for the Omicron variant at even the 200-milligram human dose. As COVID-19 persists, new variants 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 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 whom 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 sixty-five 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 impacts 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 toolkit 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 it 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?
Paul Mellett, CFO
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 twelve 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 twelve months ended September 30, 2021, respectively, due primarily to 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. The 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?
Operator, Operator
Thank you, sir. Our first question comes from Brian Abrahams from RBC Capital Markets. Please go ahead.
Brian Abrahams, Analyst
Good afternoon, and thank you for taking my questions. Congratulations on the progress across all your programs. I’d like to start with the COVID-235 study, part of the SPRINT program. Could you elaborate on the key virological measures you will consider for guiding dose selection moving forward? Additionally, how will you factor in symptoms? How will you account for patient-to-patient variability due to intrinsic immune differences, vaccination data, and prior exposure status in terms of virus elimination, to ensure a standardized evaluation of the different doses compared to placebo?
Jay Luly, CEO
Thank you for the question, Brian. When it comes to the standardized population, we're trying to control for some variables we can, including vaccination status. We're asking participants to have received a vaccine within the past three months, and the same goes for COVID exposure within the last ninety days, since immunity tends to decline after that time frame. We want to avoid including fresh COVID patients or those who have just been vaccinated. Regarding the study design, our main focus is on safety and tolerability as a primary endpoint. We're aiming to gather as much information as possible in the smallest study feasible that would still enable Phase 3 progression. We'll examine various parameters, primarily measuring viral load. As you may know, COVID drugs typically do not show significant changes in viral load, and remdesivir, for example, does not affect it at all. However, protease inhibitors have demonstrated small, modest reductions in viral load, which we will definitely analyze. We'll also assess time to achieve undetectable viral levels and other related metrics. As for clinical symptoms and outcomes, within a small study like this, those aspects are more exploratory. Given the small size and specific patient population, we do not expect to find major results, but we will be looking for trends and measurable indicators to consider for later studies. By integrating all these factors in a compact study, we hope to gather enough information to select our dose between 200 milligrams and 400 milligrams and determine the next steps.
Brian Abrahams, Analyst
Got it. No, that makes a lot of sense. We've recently observed a surge of RSV across the country and globally. To what extent have you been able to leverage that for patient enrollment in the ongoing 938 studies? Are there any changes or adjustments you might consider for site onboarding, the number of sites, or overall protocols to enhance enrollment in light of the current spike?
Jay Luly, CEO
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 has just got up, is the high-risk adult studies. So these are adults who are sixty-five 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 varying 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, Analyst
Got it. I’ll hop back in the queue. Thanks again.
Jay Luly, CEO
You’re welcome.
Operator, 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, Analyst
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, CEO
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, Analyst
Thank you, Jay. I have a question about 323. After we review the Phase I data, what type of information would you like to see that would help decide whether to proceed with it as a monotherapy or in a combination treatment? Could you outline the potential data scenarios for both options? That would be helpful for us. Thank you, and I’ll return to the queue.
Jay Luly, CEO
Our first molecule in the clinic, 938, is a direct-acting antiviral that functions as a replication inhibitor, differing from other approaches like entry inhibitors. We believe that focusing on replication inhibitors is the best strategy to control an active replicating virus in patients. We are committed to RSV and aim to develop multiple approaches over time, which may eventually lead to combination therapies. However, we do not necessarily think a combination strategy will be needed for most patients right away. Another replication inhibitor we are working on is 323, which targets the polymerase enzyme. In our candidate discovery programs, we prioritize finding potent molecules with good safety, pharmacokinetics, and biodistribution, and 323 meets these criteria pre-clinically. As we move into Phase I trials, we hope to confirm these findings in humans, ensuring safety and good pharmacokinetics, especially with once-daily dosing being a goal. We know that 323 has impressive virology and is a very potent picomolar inhibitor of the polymerase. Pre-clinically, it stands out as a strong standalone treatment and could potentially serve as an effective combination partner in the future, especially for patients who may require additional support against the virus, such as those who are immunocompromised. Using two agents instead of one might allow us to treat patients more effectively later in the infection, broadening our treatment window and increasing the addressable patient population. Having a variety of approaches for any disease we strongly support is beneficial. We have been working on RSV for several years, and with the increased attention on treatments for human respiratory viruses during the pandemic, we are excited to have a second molecule in the clinic. Our next steps involve reviewing Phase I data and determining our path forward, which could include either challenge studies or directly targeting patient populations. We are currently considering our options and will provide more details in the future.
Operator, Operator
Thank you. And I show our next question comes from the line of Brian Skorney from Baird. Please go ahead.
Brian Skorney, Analyst
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 thirteen-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, CEO
Sure. I’ll let Tara discuss the viral readouts. Regarding the 200 and 400 milligram doses, it's uncertain what the outcomes will be with these doses, but given our strong multiples, either could meet our expectations. There remains a possibility of observing some response depending on the dose ranges. These are the two doses we selected for evaluation, and that's why we're conducting the study – to determine if any differentiation exists. Shinogi and Pfizer have shown a good reduction in viral load across various patient groups with a five-day treatment window. We can categorize individuals based on their treatment windows, which will not exceed five days. That summarizes my thoughts on that. Tara, would you like to add anything about the viral readouts?
Tara Kieffer, Clinical Trial Manager
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, Analyst
And those are both just nasal swabs?
Tara Kieffer, Clinical Trial Manager
Correct.
Brian Skorney, Analyst
Thank you.
Jay Luly, CEO
Thank you.
Operator, 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, Analyst
Yes, I believe most of the questions have been addressed. However, could you elaborate on the COVID study you've announced? Specifically, what is the main objective of the study? Additionally, regarding the enrollment of lower-risk patients, are you at all concerned that the outcomes might be similar to what you experienced with RSV, where you didn't observe a significant difference in symptom resolution or outcomes since you're not concentrating on a higher-risk group? Could you also discuss your objectives for the study considering the focus on the low-risk patient population? Thank you.
Jay Luly, CEO
Thank you for the question, Liisa. One important factor we will monitor regarding virology is viral load. We know that standard risk patients and high-risk patients exhibit very similar viral loads. However, the outcomes for these different patient groups can vary significantly. This is why assessing symptoms or outcomes in the standard risk population can be more challenging. Nevertheless, when it comes to examining the virus, determining which dose to use, and evaluating safety and tolerability, we should be able to conduct those assessments effectively within this patient group. Once we establish our dosing based on these criteria and progress to Phase 3, we will have the opportunity to explore various outcomes with larger studies. Pfizer has demonstrated that viral loads are quite comparable in both standard and high-risk groups, and Shinobi identified viral load effects within the standard risk population.
Liisa Bayko, Analyst
Thank you.
Jay Luly, CEO
You're welcome.
Operator, 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, Analyst
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, CEO
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 it's 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 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 the 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 its 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 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, Analyst
Okay. Great. Great. I appreciate you taking my question. Thanks.
Jay Luly, CEO
Thank you.
Operator, Operator
Thank you. And I show our next question comes from the line of Roanna Ruiz from SVB Securities. Please go ahead.
Roanna Ruiz, Analyst
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, CEO
Tara, do you want to handle that?
Tara Kieffer, Clinical Trial Manager
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, Analyst
Got it. Makes sense. And…
Tara Kieffer, Clinical Trial Manager
Does it help?
Roanna Ruiz, Analyst
Yes, that helps. Thanks a lot.
Jay Luly, CEO
Good. Thank you.
Operator, Operator
Thank you. And I show our next question comes from the line of Jay Olson from Oppenheimer. Please go ahead.
Jay Olson, Analyst
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 timeframe? 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, CEO
Certainly. The future of the pandemic and how it will evolve over time remains uncertain, particularly regarding the continued roll-out of vaccines. Currently, we seem to be entering an endemic phase, but it may take several years before it is fully established. The regulatory pathway will also be closely monitored as we advance in development, with different assumptions based on potential variant emergence. Our immediate focus is on completing the SPRINT trial and obtaining data in the first half of the year, aiming to move into a Phase 3 study later in the year as swiftly as possible. Emergency use authorization remains a possibility in certain patient populations, but the timing will depend on the program's progress and the surrounding circumstances. Variants are constantly changing; not long ago, we discussed BA.4 and BA.5, and now BQ.1 and 1.1 have emerged, which appear to be less severe than earlier variants. We will closely observe the landscape, which will influence our Phase III enrollment strategies and available regulatory pathways. There remains a significant unmet need for antiviral treatments, with vaccination rates stabilizing and some fatigue setting in. Additionally, the effectiveness of antibodies has been declining, and there is a lack of well-understood mechanism-based therapeutics in development. This represents a substantial market opportunity, particularly for therapies that are not yet approved. We believe 235 has a strong profile in this area, and the need for therapeutics is likely to remain high. Our respiratory portfolio has performed exceptionally well, not just for COVID but also for RSV and human metapneumovirus, which will gain more attention moving forward. Partnering remains a key strategy for us, as addressing a pandemic virus on a global scale is a significant challenge. We aim to maximize the reach of 235 to serve as many patients as possible and will seek a global partner to help achieve this goal.
Jay Olson, Analyst
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, CEO
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, you had things that you could measure very quickly. You had profound changes in viral loads, and those seemed 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. 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, Analyst
That’s super helpful. Thanks for all the color. Appreciate you taking the questions. Thank you, Jay.
Jay Luly, CEO
You're welcome.
Operator, Operator
Thank you. Our next question comes from Roy Buchanan from JMP Securities. Please go ahead.
Roy Buchanan, Analyst
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, CEO
So regarding the RSVP results, I'm not entirely sure about the timing. It's an important study we've conducted, but it's not our top priority in terms of execution at the moment. The data on 235 that I mentioned related to tissue distribution is already partially available, and additional abstracts are being prepared and submitted. We will provide a report once it has been accepted and formally announced.
Roy Buchanan, Analyst
Okay. But we'll see that data before the end of this year?
Jay Luly, CEO
Before the end of 2022?
Roy Buchanan, Analyst
Yes. That's what I heard you say. No?
Jay Luly, CEO
I don't think I said that. If I did, it wasn't intentional. I'm not clear on what you're referring to. Are you asking about the 235 tissue uptake data?
Roy Buchanan, Analyst
Yes.
Jay Luly, CEO
Not this year. Not anymore this year.
Roy Buchanan, Analyst
Okay. Fair enough. All right. And then perhaps to address this alongside the partnering question, how are you planning to fund the Phase 3 for 235? Your expense guidance for R&D is increasing significantly. Does that include the potential start of a Phase 3 for 235 or possibly an initiation for RSV Phase 3s?
Jay Luly, CEO
The guidance pertains to our fiscal year and will be reported for the quarter ending 9/30. We aim to have the SPRINT data available in the first half of the calendar year. Preparations for Phase 3 have been underway for quite some time, including ensuring the CMC drug supply. We have been incurring certain Phase 3-related costs, which we expect to continue until the end of the quarter on 9/30, and these costs are reflected in our guidance.
Roy Buchanan, Analyst
Okay, great. Thank you.
Jay Luly, CEO
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, 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, Investor Relations
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, Operator
Thank you. This concludes the conference. You may now disconnect.