Earnings Call Transcript - ENTA Q1 2022

Operator, Operator

Good afternoon and welcome to the Enanta Pharmaceuticals Fiscal First Quarter 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 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 first quarter 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 and 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. Enanta had a very productive fiscal first quarter of 2022, as we made significant progress in our RSV and COVID-19 programs, building a strong foundation for important inflection points to come this year. Today, I'll update you on our clinical development programs for respiratory syncytial virus, SARS-CoV-2 and hepatitis B virus, all of which have the goal of providing safe and effective oral antiviral treatment for viral diseases impacting broad patient populations. I will additionally comment on our ongoing discovery efforts and progress in human metapneumovirus. Enanta has a successful and proven history of discovering and developing antiviral treatment as demonstrated by glecaprevir, the HCV protease inhibitor component in Mavyret, a leading treatment for chronic hepatitis C virus. We have expanded and leveraged this long and deep experience in virology, discovering small molecule therapeutics for multiple viruses, recently expanding our respiratory virology pipeline by developing a coronavirus protease inhibitor for SARS-CoV-2 and an L-inhibitor for RSV. The pandemic has made it clear that viruses can cause serious disease, which makes our work especially significant. With that backdrop, today, I will start by detailing progress in our respiratory virology programs, where we continue to build an industry-leading treatment portfolio. Our most advanced RSV program is our N-Protein inhibitor EDP-938, which has Fast Track designation and is currently in three Phase 2 studies in multiple patient populations. Additionally, we continue our leadership in RSV with the announcement of a clinical candidate in our RSV L-inhibitor program EDP-323. As a reminder, RSV is a severe respiratory infection associated with significant morbidity and mortality. The virus can cause serious disease in children, the elderly, and the immune compromised and there are no treatments or vaccines available for the virus, which was first characterized in 1956. We are excited by the potential of EDP-938, which is a potent inhibitor of the RSV N-protein that has shown robust clinical data in a Phase 2a challenge study, where it was not only safe and well-tolerated, but also demonstrated significant effects on viral load and reduced symptoms of infection. In this human challenge study of EDP-938, we met the primary endpoint of viral load reduction and also a key secondary endpoint of total symptom score. In order to confirm our findings outside of a challenge study, we conducted the RSVP study to evaluate EDP-938 in an adult outpatient population infected with community-acquired RSV and to provide us additional information on symptom alleviation and viral load decline. Following a period of decreased RSV transmission, due to social distancing measures, late last year, there was an uptick in RSV activity in various regions of the world, including parts of the United States and Europe, which allowed us to complete enrollment beyond our initial target of 70 patients. We are on track to report top line data from RSVP next quarter. Our broad clinical development program includes two key Phase 2 studies of EDP-938, evaluating its safety and efficacy in young children and hematopoietic cell transplant recipients with RSV infections. Our clinical trial named RSVP in the Phase 2 study in pediatric RSV patients and the trial RSVTx is a Phase 2b study in adult hematopoietic cell transplant recipients with RSV. Data from these two studies will confirm the doses to be used in subsequent pivotal studies in this population. These studies, which were initiated after RSVP are expected to extend at least into 2023. We are monitoring RSV globally and we'll be providing further updates as the incidence rates of RSV are examined. This quarter we are pleased to announce that we broadened our footprint in RSV by introducing EDP-323, a potent RSV L-inhibitor. EDP-323 targets the RSV L-Protein, which is a viral polymerase that contains multiple enzyme activities, required for RSV replication. Preclinical data demonstrate nanomolar potency across the major RSV subtypes, RSV-A and RSV-B and good absorption and plasma exposure across multiple different species. We envision EDP-323 as a standalone treatment or for use in combination with other agents such as EDP-938 to potentially broaden the treatment window or expand the addressable RSV patient population. We expect to initiate a Phase 1 study of EDP-323 in the second half of this year. I'm proud of the work we have done thus far in RSV and I'm excited by the potential of our broad development program, allowing us to extend our leadership in the development of treatments for respiratory viruses. Turning to SARS-CoV-2, we're also excited by the promise of EDP-235, our oral coronavirus 3CL protease inhibitor, also known as a main protease inhibitor, specifically designed for the treatment of COVID-19. EDP-235 is on track to begin dosing subjects this month. This first-in-human, single and multiple ascending dose-ranging study will determine the safety, tolerability, and pharmacokinetics of EDP-235 in healthy participants. In preclinical studies, EDP-235 demonstrated highly potent antiviral activity against SARS-CoV-2 and pharmacokinetic properties, supporting a once-daily oral dosing regimen without the need for a boosting agent such as ritonavir, all which leads to the potential of EDP-235 as a best-in-class compound. Specifically, EDP-235 potently blocks the replication of SARS-CoV-2 in multiple cellular models, including primary human airway epithelial cells with an EC90 of 33 nanomolar. Importantly, EDP-235 has shown potent antiviral activity in vitro across a range of currently circulating SARS-CoV-2 variants including Omicron and Delta, giving it pan-genotypic potential. Furthermore, EDP-235 has potent activity against other human coronaviruses, enabling the potential for a pan-coronavirus treatment including possibly coronaviruses that may infect human populations in the future. EDP-235 has also shown excellent exposure after oral administration without ritonavir boosting and favorable distribution in the key target tissues including the lung in preclinical models. This positions EDP-235 among the most potent direct-acting antivirals currently in development for SARS-CoV-2 infection, with the potential for convenient once-daily dosing. With our Phase 1 study starting this month, assuming supportive data, we would advance EDP-235 to the next stage of clinical development in the second half of 2022. We also continue to pursue our respiratory virus discovery program in human metapneumovirus or hMPV, a virus that was first identified 20 years ago and now circulates worldwide with nearly universal infection by age 5. Like with RSV, there are a number of vulnerable populations, including children, 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 plan to select a clinical candidate in the second half of this year. Moving to Hepatitis B, we remain committed to our vision of developing a combination regimen to deliver a functional cure for chronic HBV patients. EDP-514, our HBV core inhibitor with Fast Track designation has been evaluated in two Phase 1b studies in different chronic HBV patient populations. Those who have a high viral load, whom you 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. Last year, we presented data demonstrating that EDP-514 has clear clinical evidence of a good safety profile alone and then in combination with NUC and displays significant antiviral activity over 28 days with a pharmacokinetic profile, consistently supportive of once-daily dosing orally putting EDP-514 among the best core inhibitors currently in development. We remain focused on evaluating internal and external opportunities for additional compounds with alternative mechanisms to develop in combination with EDP-514, as we believe that a core inhibitor such as EDP-514 will ultimately be an important component of a successful combination regimen. Before moving to the financials, I'd like to wrap up by reiterating our upcoming milestones. We expect multiple catalysts, including the start of dosing in our Phase 1 study of our oral 3CL protease inhibitor, EDP-235 this month. If supported by Phase 1 results, we plan to advance EDP-235 to the next stage of clinical development for the treatment of COVID in the second half of this year. We plan to report top line data from the RSVP study of EDP-938 next quarter. Finally, we look forward to initiating a Phase 1 study for EDP-323, our RSV L-inhibitor and nominating a human metapneumovirus clinical candidate in the second half of this year. With that, I'll stop here and 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 30th fiscal year schedule. Today, we are reporting results for our first fiscal quarter ended December 31, 2021. For the quarter, total revenue was $27.6 million and consisted entirely of royalty revenue earned on AbbVie's global HCV product sales of $427 million. This compares to total revenue of $31.7 million for the same period of 2020. As reported by AbbVie, treated patient volumes remain suppressed compared to pre-COVID levels. Royalty revenue was calculated on 50% of Mavyret sales at a blended royalty rate for the quarter of 13% and on approximately 30% of VIEKIRA sales at a royalty rate of 10% after adjustments for certain contractual discounts, rebates, and set-offs, which are now approximately 2.7% of AbbVie's total reported HCV product sales. As a reminder, our royalties are calculated on a calendar year basis, therefore royalties for our fiscal first quarter ending December 31st are calculated at the highest royalty rate for the year. And royalties for our fiscal quarter ending March 31st will be calculated at 10%, our lowest royalty rate tier in our fiscal year. You can review our royalty tier schedule in our 2021 Form 10-K. Recently, AbbVie reported their global HCV sales were $1.7 billion in calendar 2021 and guided to $1.7 billion for Global HCV sales in calendar 2022. Moving on to our expenses, for the three months ended December 31, 2021, research and development expenses totaled $48.5 million compared to $36.7 million in the same period in 2020. The increase was primarily due to the timing of manufacturing in support of the company's clinical studies in our virology programs. General and administrative expense for the quarter was $9.5 million compared to $7.4 million for the same period in 2020. This increase was primarily due to increased headcount in compensation expense. Enanta recorded a minor income tax benefit related to the release of the state tax reserve for the three months ended December 31, 2021, compared to an income tax benefit of $3.3 million for the same period in 2020. Enanta recorded a larger income tax benefit in 2020 than in 2021, due to the provisions of the CARES Act of 2020, which enabled us to carry back our prior-year tax losses to offset taxable income in prior years. This provision does not apply to periods ending after September 30, 2021. Net loss for the three months ended December 31, 2021 was $30.1 million or a loss of $1.48 per diluted common share compared to a net loss of $8.3 million or a loss of $0.41 per diluted common share for the corresponding period in 2020. Enanta ended the quarter with $347.7 million in cash and marketable securities. Enanta expects that its current cash, cash equivalents, and marketable securities as well as continuing royalty revenue will be sufficient to meet the anticipated cash requirements for its existing business and development programs for at least the next two years. Further financial details are available in our press release and will be available in our quarterly report on Form 10-Q when filed. I'd now like to turn the call back to the operator and open up the lines for questions. Operator?

Operator, Operator

Our first question comes from Brian Abrahams of RBC Capital. Your line is open.

Brian Abrahams, Analyst

Thanks for taking my questions. I have a couple regarding 235. I'm interested in the recent developments concerning other protease inhibitors in the field. How do you view the overall competitive landscape for 235? Are you considering focusing initially on patients who cannot take ritonavir, or are there other specific sub-populations you plan to target? I'm also curious about the healthy volunteer study that is set to begin this month. What are your plans for presenting the safety and pharmacokinetic data, which will be crucial for evaluating the drug's potential and its likelihood of success? Thank you.

Jay Luly, President and CEO

Thanks, Brian. Hi, this is Jay. So yes, the Phase 1 in healthy is about to begin, be a standard SAD and MAD and we plan to harvest that data here in the first half and as with all of our other studies, once we've got that data in hand, we'll find the appropriate mechanism to put it out. Regarding the field in N-protease, I would describe it as very early yet. There are a few entrants in the space, but as we are not only in virals, but in lots of other disease areas, it's not necessarily the first one in, it's the high quality molecules that ultimately stand the test of time. So again, I think we've built some advantages and with EDP-235 from a positive standpoint, from a PK standpoint, from a tissue-targeting standpoint and overall, we think the profile is a strong one that you compete very well over the longer timeframe. Regarding trials beyond the Phase 1 healthy study, of course, we'll be getting into key patient populations. There will be standard risk, high risk, post-exposure prophylaxis, et cetera, and we would anticipate tapping into all of those opportunities. Thank you.

Operator, Operator

Thank you. Our next question comes from Eric Joseph of JPMorgan. Your question please.

Unidentified Analyst, Analyst

Hi, good afternoon. This is Hannah on for Eric. Thanks for taking the questions. Just a few from us. So first, just wanted to get your thoughts on the severity of RSV symptoms in patients and how they're like compared this season versus the prior season, given the loss in seasonal margins. Just wondering if there's any reason to think we might see more severe symptoms in patients this year and then also based on any unblinded looks at patient baselines entering the RSVP study. How should we be thinking about median age during the study, are there any pre-specified subgroup analysis by age or other risk factors? Thank you.

Jay Luly, President and CEO

So I, maybe I'll let Nathalie comment on some of these, but again, I don't think there's necessarily anything special about this RSV season versus prior ones, but I'll let Nathalie chime in.

Nathalie Adda, Clinical Research

Thank you, Jay. So your question I think was about the symptoms of RSV infection and whether they were worse than before. We, I mean obviously even though we don't have access to unblinded data, we can monitor our current ongoing study and even the study that just completed, we have not observed any worsening of the symptoms; patients have presented themselves in the clinic as far as we are concerned.

Unidentified Analyst, Analyst

All right. And so you don't have any data on median age entering the study at this current time?

Nathalie Adda, Clinical Research

Sorry, I'm not sure I understood your question, what age?

Jay Luly, President and CEO

Median age.

Unidentified Analyst, Analyst

Median age.

Nathalie Adda, Clinical Research

Median age. We haven't logged the database yet, they are being collected, so I don't have the median age, but if you look at the eligibility criteria, it's from 18 to 75 years old and so we would expect, I would say something along the line of 50.

Unidentified Analyst, Analyst

Okay. And I'm just wondering based on or assuming success in the RSVP trial, could you describe what next steps would look like for a pivotal program, specifically how would a program in general adults be prioritized relative to pediatric and transplant populations and would either of these trials be getting factors to and the Phase 2 discussions with the FDA?

Jay Luly, President and CEO

So we're going to focus post-RSVP on high-risk patient populations and they fall mainly into three buckets: the peds, transplant, and then other adult populations that are at higher risk. So those will be the basic patient populations that we'll be targeting, two of the three of which we've got ongoing now.

Operator, Operator

Thank you. Our next question comes from Yasmeen Rahimi of Piper Sandler. Please go ahead.

Yasmeen Rahimi, Analyst

Hi team, thank you so much for the update. Two questions for you. A frequent question from a lot of our clients is just to understand how big the RSVP outpatient population is, adult population is, so can you maybe share with me some of the market research that Enanta has done, how big is this addressable market? And then the second question I have is in regards to the L-protein Inhibitor entering the clinic in the second half of 2022, what is the strategy there, like which patient population would you be prioritizing this? Are you going to go into the peds or immunocompromised or would you try it all populations? So thanks for answering my questions.

Jay Luly, President and CEO

You're welcome. So Yasmeen, regarding the RSVP patient populations, which consists of otherwise healthy adults, this stage is beneficial as a bridge from our challenge study to other adult and pediatric populations, but it’s not our main focus. Instead, we are concentrating on the three high-risk groups I mentioned earlier. That said, our drug could still be relevant for otherwise healthy adults presenting with RSV. However, in terms of approval and identifying critical markets for registration, our focus will be on pediatric, transplant, and higher-risk adult populations. Regarding the L-protein, we are committed to tackling RSV significantly. Currently, there are no approved treatments, and we aim to be among the first drugs to secure approval in RSV within a reasonable timeframe. Our interest in human respiratory viruses predates the pandemic, driven by a significant unmet medical need from a therapeutic perspective. When assessing such situations, we typically leverage our strengths, and having an inhibitor like 938 is advantageous, as it has a high barrier, is potent, and allows for once-daily dosing. We’ve already shown a strong antiviral effect, indicating that it should perform well as a standalone treatment. Additionally, we are exploring other direct-acting antiviral mechanisms, particularly L-protein, as a promising target for replication. Depending on our approach, we might consider L-protein as a single agent for different patient populations or combine it with other treatments for severe cases, such as severely immunocompromised patients who may struggle with existing therapies. By potentially widening the treatment window for patients using combination therapies, we can enhance the addressable market, which would significantly increase our market opportunity. There are various ways to utilize multiple treatment options, and we will investigate these as we progress. However, 323 is looking strong; it’s very potent and has great pharmacokinetics. We anticipate entering the clinic in the second half of the year and tracking what we hope will be a successful pathway with our N-protein and EDP-938.

Yasmeen Rahimi, Analyst

Thank you, Jay and if I may ask a follow-up question to the remarks you had. So I think the question from a lot of investors will come in, how do we take the RSVP study and understand its translation in the more vulnerable populations. So have you been able to provide some clarity on how this study could really de-risk RSVP and RSVTx.

Jay Luly, President and CEO

It's a step-wise de-risking. I think actually one of the most significant de-risking events for EDP-938 happened in Phase 1 healthy, when we established that a really potent molecule with a high barrier to resistance could be administered safely and could deliver very nice drug exposures. So that gave us great confidence going into our first RSV infection study, the so-called challenge model, where you know it performed incredibly well. All of that said, that wasn't a virus that had been administered to patients, volunteers under a controlled setting, but it was still a real virus and real patient population. But, so to demonstrate good viral kinetics and good safety in that setting was further de-risking than taking a step further and doing it with a real-world virus, a real-world infection, I should say, so that people are catching the strain that's going around presenting in a very natural way to treat and then we treat them. So I think it's yet another de-risking step along an evolution. Rarely in clinical medicine or clinical investigations do we have such checkpoints to establish that a new drug is actually doing what you had hoped for it to do, and granted that every patient population is slightly different and we'll explore those as we do. But again, I think the profile of the drug, the fact that it's a really potent antiviral and it appears to be working in every setting that we've put it in bodes well.

Operator, Operator

Thank you. Our next question comes from Roy Buchanan of JMP Securities. Please go ahead.

Roy Buchanan, Analyst

Hey, great, thanks for taking the questions. I guess start on EDP-235, it sounds like the next trial is going to be after the Phase 1 is going to be treating patients in the second half of the year, maybe a Phase 2, 3, just curious if you guys plan to run multiple Phase 1s in addition to the one that you're going to start this month and if so, what those might be.

Jay Luly, President and CEO

Well, I mean you're always doing other kinds of ancillary studies along the way in development, such as DDI studies. Is that what you were thinking of?

Roy Buchanan, Analyst

Yes. Anything. Sure.

Jay Luly, President and CEO

Yes, those types of studies are the main ones. Once you have the SAD/MAD data and understand your exposure and tolerability, you can determine your dosing parameters for Phase 2. You want to ensure that Phase 2-3 progresses smoothly. However, there are always additional studies conducted in parallel, such as drug-drug interaction studies, which will be beneficial for special patient populations in the future.

Roy Buchanan, Analyst

Okay, great. And then I had one on 514, I guess, just curious maybe if you can speculate if that could be back into the clinic this year. And what about, I guess how are you guys thinking about the combos, maybe there are some less ideal agents out there that you could partner with just to get more data on the compound, what about running maybe a longer combination trial with just a NUC, some mentioned to us that might be something worth exploring, anything like that? Thanks.

Jay Luly, President and CEO

No. Those are all good questions. To answer your first question about the likelihood of being in the clinic this year, I won't say it's impossible. However, we are primarily focused on 514, which has shown compatibility with NUC. We've conducted a one-month study with this two-drug combination and observed positive interactions between the two drugs, good safety profiles, and effective antiviral results. Now we are looking to add an ideal third ingredient. We thought we had that sorted out previously, but that is no longer certain. Therefore, we are exploring both internal and external options for a potential strong third component. I prefer not to pursue less ideal candidates, as that wouldn’t be a wise use of resources. Regarding your question about conducting a longer trial with a core and a NUC, that's not high on our agenda, though I know key opinion leaders believe it could work over time. It would require patience to conduct those studies and await data after a significant duration. These are intriguing studies that might be worthwhile in the future, but our main focus now is identifying a promising third agent that could help us reach a functional cure in a more reasonable timeframe.

Operator, Operator

Thank you. Our next question comes from Zegbeh Jallah of ROTH Capital. Your question please.

Zegbeh Jallah, Analyst

Good afternoon, thanks for taking my questions and really helpful updates. I think we just have a few, the first one is in the Phase 2a RSV study, you had symptom improvement that was being evaluated as a secondary endpoint, and you did show some impressive reduction in nasal mucus. But I think I was just kind of curious about symptom improvement being a primary endpoint for the Phase 2b study and if you're going to be looking at nasal mucus, how important is that endpoint to patients and is it likely that you'll be looking at some additional symptom measures for the Phase 2b study?

Jay Luly, President and CEO

Yes, that's a good question, Zegbeh. In the Phase 2a study, known as the Challenge study, virology was the primary endpoint while symptom score was the secondary. There are various data points to consider, but I found mucus weight to be one of the most interesting endpoints in my career, and it actually aligned well with other data. Moving forward to later stage trials, it will be intriguing to see how viral loads develop, but symptom scoring will be more critical for registration. We will be observing several symptoms that contribute to the overall score. Performing mucus secretion analysis in the challenge study was straightforward because the patients were in a controlled setting, making it easy to collect and weigh samples. However, in an outpatient setting, that process is not practical. From RSVP onward, this will be challenging, but we will have plenty of other endpoints to evaluate.

Zegbeh Jallah, Analyst

Thanks. And then, I'm sure you get this one a lot, but just kind of curious about the five-day treatment period for the RSVP study. I know you use the same, the treatment period in the prior study, but we're just wondering is that really long enough or based on the MOA of an inhibitor, it's likely that no additional benefits could be gained from treating longer?

Jay Luly, President and CEO

You can't truly know the answer without conducting a study, but what we discovered in this patient population that we believe will closely reflect the challenge setting suggests that it should be sufficient. In the immune-compromised setting, specifically among hematopoietic cell transplant recipients, they are significantly suppressed during the first year post-transplant. For these patients, who lack a fully functioning immune system, we are extending the dosing duration to 21 days in that study. There may be specific groups of patients where it's beneficial to have the flexibility to dose longer, but the ultimate objective is to establish a convenient dosing schedule that is effective and appealing. Generally, the shorter the treatment duration, the higher the compliance and the better the overall product profile will be.

Zegbeh Jallah, Analyst

Got it. Was thinking that, yes, I was partly related to also being cautious of the burden to patients and then the last one here is just about the combo strategy, so if you were to do a combo with the N and L, do you start with the N-inhibitor and then follow with the L or do you just onboard both of them at the same time? And then I'm just going to squeeze in a question here for Paul, regarding Mavyret revenues, 2021 revenues came in lower than what AbbVie guided to at the beginning of the year, which was $2 billion and I think it came in at $1.7 billion and they've guided modestly for 2022 at about that $1.7 billion and so I was just wondering how we should be thinking about the cadence of revenues beyond 2022 and how that has factored into your projections, but I think you said a runway for the next two years.

Paul Mellett, CFO

Regarding what happens after 2022, it really depends on the COVID pandemic situation. You are correct that AbbVie has guided for calendar 2022 at $1.7 billion, indicating an expectation of a flat year in 2021 without any relief from the COVID suppression impact. What occurs after that is uncertain, especially with potential variants and the possibility of a follow-on Omicron. The two-year guidance we provided on cash was based on our current cash balances, our research and development and general administrative guidance for fiscal 2022, and our AbbVie HCV royalties for the upcoming fiscal year. Considering the entire situation, we believe we have at least a two-year cash run rate.

Jay Luly, President and CEO

And to answer your other question, Zegbeh, if we were doing a combination study, we would add the drugs together at the same time.

Operator, Operator

Thank you. Our next question comes from Jay Olson of Oppenheimer. Your line is open.

Jay Olson, Analyst

Thank you for the update and congrats on the progress. I think there has been some discussion about using Merck's Molnupiravir together with other antivirals in a combination approach to treat COVID. Is that something you would consider with EDP-235 and if so which drugs would you consider combining it with? And then if I could ask a financial question, assuming AbbVie's guidance of $1.7 billion in 2022 sales indicates that Mavyret is stabilizing, would that support a level of royalties that could continue to support Enanta's operating expenses for the foreseeable future?

Jay Luly, President and CEO

I think as Paul sort of just outlined, the $1.7 billion that they're guiding for the year is pretty much where they came in now and that's what's built into our forecasts. We model based on their guidance and we do see that as propelling the cash runway for that two-year, at least the two-year period based on current cash and anticipated royalty revenue. Regarding your question about combos, there is no indication right now that you need combos. It is an acute viral infection, we have potent antivirals that appear to be from what we can see with antiviral drugs going after COVID that five-day treatments are sort of the norm, much like we had already established in our RSV study. So I would say that there could be the need for combinations down the road, but we don't see that need yet, but nonetheless, we're anticipating that having more mechanisms rather than fewer down the road can be a valuable thing. So we're not just working on protease in-house here and when the pandemic started, we started multiple different programs and we're hoping to harvest other agents of other mechanisms over time. So stay tuned on that front. But in any event, to your direct question, I don't see the need at this time to be doing those combination studies; I'm not sure what you'd be trying to establish.

Operator, Operator

Thank you. Our next question comes from Brian Skorney of Baird. Please go ahead.

Luke Herrmann, Analyst

This is Luke Herrmann on for Brian. Thanks for taking my question. And thinking about RSV development strategy from earlier questions, it seems like you're leaning towards the higher-risk RSV populations for the initial registrational path. In a situation that RSVP readout positively, do you think the RSVP then RSVTx studies might serve as pivotal for those indications and otherwise, what can we expect a pivotal program to look like and would you choose to move it forward yourself? Thank you.

Jay Luly, President and CEO

Yes. So again, I think once you have the data for RSVP, we'll have that information and of course we'll have that discussion with the agency, that could inform how the future of the development program looks like on the path to registration. But at this time, we are not currently expecting that those two studies are necessarily registration studies. Is that helpful?

Luke Herrmann, Analyst

Yes. Thank you.

Jay Luly, President and CEO

Yes. I'm sorry, did you have another question?

Luke Herrmann, Analyst

It was just other, if those weren't registrational, what would pivotal development look like, if you could speculate at all?

Jay Luly, President and CEO

Yes, I think the FDA, I mean I think the FDA and EMA, both want to I think focus on high risk as they expedient path to approval, so I think that's what we need to do.

Operator, Operator

Thank you. Our next question comes from Roanna Ruiz of SVB Leerink. Your line is open.

Roanna Ruiz, Analyst

Great. Thanks. So I wanted to circle back to your COVID asset, so for 235, do you have any thoughts on what percentage of patients, out of the total eligible patient pool for antivirals might be really fully unable to take an antiviral that has ritonavir boosting, maybe possibly due to drug-drug interactions or things like that?

Jay Luly, President and CEO

It's challenging to provide that exact number right now; it may be more appropriate to direct that question to Pfizer. However, I will emphasize that there is a significant portion of the medications that are affected by ritonavir dosing. It's essential to consider what other medications patients are taking and understand the potential impact of ritonavir. You may need to discontinue certain medications, reduce dosages, or make other adjustments. In some cases, ritonavir can lower the effectiveness of other drugs, requiring an increase in their dosages to counteract that. There are various factors to consider, and whenever a patient is on multiple medications, it's a critical issue that doctors must understand and communicate to patients while developing a safe treatment plan. Our goal is to avoid that complication altogether.

Roanna Ruiz, Analyst

Yes. Makes sense. And then a quick one for your RSV programs, I was curious for the Phase 2 studies in pediatric and transplant patients, are there any other strategies or levers that you can pull to further accelerate enrollment of those trials and what are you tracking to help you make that kind of decision, if you want to apply those additional strategies?

Jay Luly, President and CEO

Yes. We're constantly exploring new strategies. Additionally, we are improving our approach to selecting trial sites. It's important to adapt our protocols to ensure they are convenient for the parents of pediatric participants, which can enhance enrollment by reducing barriers, such as extensive blood draws or other factors that might discourage participation. During the pandemic, transplant recipients have been particularly cautious due to their immune-suppressed conditions, which introduces unique challenges. Similar to our experience with RSVP, which was affected by the pandemic, we need to be prepared with the right sites and resources for when the situation improves and to capitalize on trial enrollment. We're focused on optimizing enrollment in every possible way without compromising the integrity of the study.

Operator, Operator

Our next question comes from Liisa Bayko of Evercore ISI. Your line is open.

Liisa Bayko, Analyst

Hi, thanks for taking my question. Just wanted to get a sense, you all have Phase 1 data for the COVID program, looks like in the second quarter, that's kind of come before or after, do you think the RSV data and then how quickly would you be able and prepared to go into Phase 2/3 with your COVID program from wrapping up the Phase 1?

Jay Luly, President and CEO

I can't specify which data will be available first. We will soon start dosing 235 and progress through the various study cohorts. It’s likely that both sets of data will be available by the second quarter, but I cannot determine the exact order at this time. Additionally, we are preparing for the Phase 2/3 steps following Phase 1 to ensure drug supply and site readiness. We aim to move quickly and expect to start in the second half, so stay tuned for updates.

Liisa Bayko, Analyst

Okay, is that part of your guidance assumption? I'm looking at R&D, as you reported around $49 million this year. It seems like you have a lot happening in your pipeline, and you're guiding for $150 million to $170 million. How do we align the numbers with all these ongoing studies?

Jay Luly, President and CEO

Sure. Now, there is wind-down cost and so forth associated with some of the NASH studies, et cetera, et cetera, they won't be obviously carried through for the rest of the year, but I think the plan is still intact and encompasses what we're aiming to do with these various programs.

Liisa Bayko, Analyst

Okay. I have a couple of questions about RSVP. Is the strain used in the challenge study representative of the different viruses? You mentioned the strains circulating right now, so how similar or different can the strains for RSV be compared to what you observed in the challenge study? As I recall, your strain had one of the higher viral loads when I looked at other challenge studies.

Jay Luly, President and CEO

Yes. I'm sorry to interrupt, Liisa, but I believe it's a standard virus that has been used to establish the strains and has appeared in multiple challenge studies. It may vary a bit based on when individuals decided to dose; we waited until the viral load reached a specific threshold rather than waiting a certain number of days post inoculation. In that challenge study, we inoculated participants with the virus and monitored their viral load twice a day using RT-PCR, allowing the viral loads to rise until they reached about three logs, if I remember correctly, before we started dosing. If you dose sooner, you would be dealing with a lower viral load, which is likely the variable here. Ultimately, it's a genuine virus, but you do need to enter the real world, where you might encounter slightly different strains such as RSV-A or RSV-B, along with various subtypes. This is why we conducted extensive research on clinical isolates before starting the study; we didn’t rely solely on lab strains. We collected geographically diverse samples from different patients across seasons and tested our drug against them, which showed that it performed consistently well against the clinical outcomes. This variability represents real-world infection, and that's something RSVP will be examining. We’ve attempted to limit risks as much as possible prior to embarking on this study.

Liisa Bayko, Analyst

Okay, I have one final question. You mentioned that you started dosing at around three logs, which I see from your graph aligns with your trials. How does this relate to when patients begin to show symptoms? I know there's a window of opportunity for treatment within two days of symptom onset, but since you started dosing at three logs of viral load, how does that connect to the onset of symptoms?

Jay Luly, President and CEO

We're showcasing the sites on our corporate deck available on our website, which likely includes what you're asking about. In the challenge study, by the time participants reached three logs, they were already starting to show at least one symptom. When we consider real-world studies, particularly in our RSVP trial, we recognize that it's unlikely for patients to visit a doctor or participate in a study within 24 hours of experiencing symptoms. Typically, individuals take some time before seeking medical attention, so we can reasonably expect to catch a patient within 48 hours in real-world settings. In fact, this was a key aspect of the RSVP study, where we aimed to identify RSV patients within 48 hours of symptom onset, which we successfully achieved. For flu treatments, it's essential to reach patients within the first 48 to 72 hours for effectiveness. We don't yet know the precise window for RSV but anticipate it may be more lenient than flu's narrow timeframe. We are gaining insights into COVID as well, which seems to allow for a five-day treatment window. As for RSV, these factors will be clarified through subsequent studies. We set the 48-hour timeframe for the RSVP trial because we didn't have enough information to justify extending it; we made the conservative choice, assuming it would be similar to flu. Ultimately, we determined that capturing patients within 48 hours is both practical and reasonable.

Operator, Operator

Thank you. At this time, I'd like to turn the call back over to Jennifer Viera for any closing remarks. Ma'am?

Jennifer Viera, Investor Relations

Thank you to everyone for joining us today. If you have additional questions, feel free to reach out and contact us by email or give us a call at the office. Thanks so much. Have a good night. Bye-bye.

Operator, Operator

This concludes today's conference call. Thank you for participating. You may now disconnect.