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Enanta Pharmaceuticals Inc  (NASDAQ:ENTA)
Q4 2018 Earnings Conference Call
Nov. 26, 2018, 4:30 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good afternoon. My name is Deidra, and I will be your conference operator today. At this time, I would like to welcome everyone to the Enanta Pharmaceuticals Fourth Quarter Financial Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. (Operator Instructions) Thank you.

I would now like to turn the call over to our host, Ms. Carol Miceli. Ma'am, you may begin your conference.

Carol Miceli -- Director of Investor Relations

Thank you, Deidra, and thanks for joining us this afternoon. The news release with our 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, including plans and expectations with respect to our product candidates and financial projections, all of which involve certain assumptions, risks and uncertainties that are beyond our control and could cause our actual developments and results to differ materially from these statements. A description of these risks and uncertainties is in our most recent Form 10-Q and other periodic reports filed with the SEC. In addition, 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 R. Luly -- President, Chief Executive Officer and Director

Thank you, Carol. Good afternoon, everyone, and thank you for joining us today. Our goal for the past several years is to become a leader in the field of viral infections and liver diseases through investing in and diversifying into other disease areas with significant unmet need and market opportunity, all without the necessity of additional dilutive equity financing. I'm proud to say that we've accomplished many of our objectives. Specifically, in the past year we've advanced all our wholly owned programs and currently have three Phase II clinical trials ongoing in RSV, NASH and PBC and the clinical study of our first HBV candidate is expected to begin next year. Enanta's scientific expertise has been validated by our partner of HCV protease inhibitor program, which has resulted in two approved products marketed by AbbVie, including MAVIRET, currently the leading HCV drug treatment in the world.

Royalties from our Abbvie collaboration have provided a strong financial foundation to fund our wholly owned in-house efforts. As we have significantly grown our clinical pipeline, we have kept our financial resources strong with ongoing royalties and a cash balance of $325 million while continuing to discover new compounds and advancing our wholly owned programs in the clinic, which I will now discuss.

One of our most exciting near-term opportunities is EDP-938, our product candidate for respiratory syncytial virus, or RSV. EDP-938 is a potent non-fusion inhibitor targeting the N protein in RSV, and the only N inhibitor in clinical development today.

EDP-938 works by inhibiting the replication process of the virus and as a result has the potential to be more effective when used at later stages of RSV infection than fusion inhibitors.

Recently, we successfully completed a Phase I study of EDP-938 and are quite pleased with the safety and pharmacokinetic profile of this first-in-class compound. The Phase I results were presented at the 11th International Respiratory Syncytial Virus Symposium earlier this month and demonstrated that EDP-938 was generally safe and well-tolerated over a broad range of single and multiple doses, with a good pharmacokinetic profile suitable for a once- or twice-daily oral dosing.

An important observation to note is that mean trough levels in the Phase I study were approximately 30 times higher than the EC90 of EDP-938 against RSV-infected human cells tested in vitro. In general, achieving drug concentrations at a significant multiple over the antiviral EC90, a measure of potency for the compound, is crucial to the success of progressing an effective anti-viral drug.

In October, Enanta initiated a Phase IIa human challenge study in healthy adults inoculated with RSV. This randomized, double-blind, placebo-controlled human challenge study will enroll up to 114 healthy adult subjects, who will be randomized into one of two drug dosing arms or a placebo arm and dosed for five days. Primary and secondary outcome measures include changes in viral load measurements and changes in baseline symptoms. Given the relatively short dosing duration of this study, we expect to announce preliminary data in the third calendar quarter of 2019.

Moving to NASH and PBC, enrollment continues for our two Phase II clinical trials in NASH and PBC with EDP-305, our FXR agonist candidate. Both studies are 12-week randomized, double-blind, placebo-controlled studies evaluating the safety, tolerability, pharmacokinetics and efficacy of EDP-305 in subjects with NASH and PBC. We anticipate sharing initial data starting with NASH in mid-2019. Recruitment in PBC has been challenging due to multiple clinical trials attempting to access a very limited number of available patients for this potential second-line therapy in an orphan indication. We will continue to provide further updates on PBC enrollment in the coming months.

In NASH, we're accumulating data and building on our extensive preclinical knowledge of our FXR agonist EDP-305. Earlier this month, two preclinical posters from the lab of Dr. Bryan Fuchs at Massachusetts General Hospital were presented at the Liver Meeting. One poster demonstrated that in a rat model of cirrhosis and hepatocellular carcinoma, or HCC, EDP-305 reduced serum markers of the liver injury, fibrosis, ascites development, HCC development and mortality. The second poster demonstrated reduced fibrosis progression in a rat model of NASH cirrhosis, suggesting EDP-305 may have potent anti-fibrotic effects in late-stage liver disease.

We have a long-term commitment to NASH and we are identifying new follow-on FXR agonist leads from continuing our ongoing discovery work in non-FXR mechanisms, anticipating the likely need for a combination therapy in this indication.

Lastly, I'm very excited to highlight our announcement of the selection of EDP-514 as our first development candidate from our HBV program. EDP-514 is a core inhibitor, also referred to as a capsid assembly modulator or a core protein allosteric modulator. These are a new class of HBV inhibitors that can disrupt the assembly and replication of this virus at multiple steps in the viral lifecycle. Based on our preclinical data, we believe EDP-514 has best-in-class potential for the core inhibitor mechanism. In 2019, we plan to present this compelling preclinical data and initiate a Phase I clinical study of EDP-514, which will include a Phase Ib portion in chronic HBV patients.

In addition, we are exploring other anti-HBV approaches as we believe that it may be necessary to utilize multiple mechanisms for the treatment of HBV. Enanta had a strong 2018 and I'd like to thank our dedicated employees who work tirelessly to achieve our goals. I'd also like to thank the patients and their families that are participating in our clinical trials, and I look forward to providing more updates in 2019.

I'll stop here and turn the call over to Paul to discuss our financial results for the quarter. Paul?

Paul J. Mellett -- Senior Vice President, Finance and Administration, and Chief Financial Officer

Thank you, Jay. I'd like to remind everyone that Enanta reports on a fiscal year schedule. Our year-end is September 30, and today we are reporting results for our fourth fiscal quarter and year ended September 30, 2018.

For the three months ended September 30, 2018, total revenue was $67.2 million and consisted entirely of royalty revenue. This compares to a total revenue of $75.9 million for the same period in 2017, which included $65 million in milestone payments. The increase in royalty revenue in the current quarter was due to an increase in royalties earned on AbbVie's $862 million in global sales of HCV regimens, including royalties on 50% of the $839 million of MAVIRET sales in the quarter.

Total royalty revenue for fiscal 2018 was approximately $192 million. I will remind you that AbbVie is eligible to earn annually tiered -- Enanta is eligible to earn annually tiered double-digit royalties on 50% of AbbVie's global net HCV sales of MAVIRET. This means that our average royalty rate for a given royalty year will restart at the lowest rate in our quarter ending March 31 and will be highest in our quarter ending December 31. In the quarter ending September 30, our royalty rate reached the 17% (ph) tier, which is also the rate at which we would expect to earn our royalties in the quarter ending December 31.

Moving on to our expenses, for the three months ended September 30, 2018, research and development expenses totaled $26.9 million compared to $16.5 million for the same period in 2017. The increase was primarily due to greater preclinical and clinical costs associated with the progression of our wholly owned R&D programs in NASH, PBC, RSV and HBV. General and administrative expense for the quarter was $5.8 million versus $5.1 million for the comparable quarter in 2017.

Enanta recorded income tax expense of $8.5 million for the three months ended September 30, 2018, compared to an income tax expense of $18.4 million for the same period in 2017. Enanta's effective tax rate for fiscal 2018 was approximately 23% compared to approximately 34% in fiscal 2017, primarily due to the US Tax Cuts and Jobs Act enacted in December, 2017. Enanta's effective tax rate for fiscal 2018 also reflects the impact of the non-cash revaluation charge against deferred tax assets due to the reduced federal corporate income tax rate.

Net income for the three months ended September 30, 2018, was $27.4 million or $1.30 per diluted common share, compared to a net income of $36.5 million or $1.86 per diluted common share for the corresponding period in 2017.

Enanta ended the quarter with approximately $325 million in cash and marketable securities, an increase of approximately $31 million to our 2017 fiscal year-end balance of $294 million. We expect that these cash resources as well as our continuing royalty revenue will be sufficient to meet our anticipated cash requirements for the foreseeable future.

In terms of guidance for fiscal 2019, we expect our research and development expense to be between $135 million and $155 million, our general and administrative expense to be between $27 million and $33 million, and our effective tax rate to be approximately 21%. Further details are available in our press release and will be available in our Form 10-K for the quarter when filed.

I'd now like to turn the call back to Jay.

Jay R. Luly -- President, Chief Executive Officer and Director

Now on our sixth year since we became a public company, I'm proud that in that time we've had two out-licensed products approved as part of cures for HCV, a major disease worldwide. We have built our internal programs in RSV, NASH, PBC and HPV from scratch. We have discovered and brought two clinical -- to the clinic, two new compounds from these programs and we are developing more compounds that we plan to bring to the clinic starting in the new year. And all of that work is still being funded through non-dilutive financing.

I'll now turn the call back to the operator to open up the lines for Q&A. Operator?

Questions and Answers:

Operator

(Operator Instructions) Our first question comes from Brian Abrahams with RBC Capital Markets.

Brian Abrahams -- RBC Capital Markets -- Analyst

Hi. Thanks for taking my question. It's (ph) my first questions are on the RSV program and 938. I was curious (ph) if you could -- as we look toward the results of the challenge study and then the development path beyond, can you talk a little bit about your views on the predictiveness of the challenge study for a real-world trial given some of the differences, the intrinsic differences there, and maybe what this unique class might offer in that regard? And then as you think about next steps, I am sort of wondering what groups of patients you might be considering investigating the drug in subsequently and how you think about prioritizing that? And then I had a follow-up on hep B.

Jay R. Luly -- President, Chief Executive Officer and Director

Sure. Thanks for the question, Brian. So I think when it comes to the translation of the challenge study, which is a Phase IIa study to Phase IIb, clearly the things that we're looking at are -- whether it's Phase IIa, IIb, Phase III, whether it's on the market, the things in this indication I think you really have to look at are the fundamentals of the virology and the targeting of the target organ, which in this case is the lung. So Phase IIa, obviously we're looking in humans who have been infected with the RSV virus. We're setting their dosing, people with one of two doses, which we, I think, have picked pretty carefully. And what that really allows you to do is in a reasonable real-world setting, although it's not a perfectly real-world setting, look at what the drug does on viral load during the time course of the infection. We'll be looking at the viral kinetics extremely carefully from the time we start dosing folks. And out of that we'll also actually be measuring signs and symptoms. So this information, which is a fairly standard Phase IIa, I think actually is some of the best information you can do in a reasonably controlled environment before going out and then looking at one of the other patient populations, which is another part of your question, I know we'll get to. So in terms of that translation, there aren't many examples of it, quite honestly. I think the main ones that I think people can point to in terms of fusion of basically the challenge studies that have moved on to Phase IIb populations are Gilead's fusion inhibitor which had some issues I think at that next stage. It's our belief that a lot of that might have to do with the mechanism rather than the translation of going from a Phase IIa to a IIb.

The other opportunity that we did have, but I'm not sure that we do have anymore, to see that translation occur is with the J&J-Alios nuke that was stopped in Phase IIb trials. Phase IIb trials were stopped on them within the last several weeks. I believe that was a preclinical finding that led to the stop there. So those would have been -- that would have been a very interesting study to see the data results from because that was a non-fusion approach slightly different than the one we're taking. But importantly, not a fusion inhibitor. And -- so there is -- the world is really lacking in this type of data. But I think, fundamentally, if you think about the science and the scientific underpinnings in the study, having good pressure on the virus, having good activity against clinical isolates, and we've got a lot of good activity against many different clinical isolates from a variety of territories for both type A and type B, I would say there is a very good chance of translation. I would say it's probably much higher than in many Phase II settings where you make that sort of a change.

So the other thing I think you get out of this is safety profiles. As you know we looked in Phase I for a seven-day treatment duration and we had a very clean safety profile. So we don't expect anything different in that in Phase II and beyond. But we'll certainly get a look at that at five days of treatment in that study. So that's another good thing. So we will be again targeting the right organism at the right tissue and the right species in this study and I think that goes a long way.

In terms of which patient populations we would think about targeting, I'll remind you, I think you already know. But the top three are looking at children, the younger vulnerable to this infection, almost every child before age two is infected, and then the elderly, it's very common in elderly people who become hospitalized or just otherwise elderly people who have greater susceptibility to respiratory tract infections and then the third class would be in immune compromised settings where these patients are incredibly vulnerable to RSV infections and the consequences can actually be quite severe. So just in terms of prioritizing those, I expect over time we will be in all three of those studies or in all three of those patient populations and with different studies. But I think the prudent path that we're likely to be taking is starting with an adult population and we'll have more to discuss about that in early 2019.

Brian Abrahams -- RBC Capital Markets -- Analyst

That's really helpful. And then just a follow-up on the HBV. If you could maybe expand a little bit more on the differences and similarities between 514 and 367 with respect to things like genotype coverage, potency, selectivity and metabolism, and then how you think about -- or how the recent FDA draft guidance on hep B development might influence your development path and which populations, naive, monotherapy combinations that you might think about exploring down the line? Thanks.

Jay R. Luly -- President, Chief Executive Officer and Director

I think that was 13 questions. So with EDP-514, what we had stated earlier this year when we put out the prototype 367 that we were going to give ourselves a few more quarters' work through substantial part of the rest of the year, trying to see if we had something in-house that was even better than 367, which was a very well-rounded molecule. And without getting into all those items point by point today, we do plan to present this data at a scientific conference in 2019, we will have opportunities to put out a lot of detail around it. But what I can say today is that we believe it's an extremely good capsid inhibitor. It is better than 367. So if you use that as a benchmark virologically and some other dimensions that we haven't put all the data out and some of the DM PK parameters and just from pretty much every vantage point, we continue to drill down and optimize. So 514 is -- it's a very strong candidate. But in particular, we are pleased with the DM PK profile and the virologic profile are very strong.

Related to the clinical trial design, again as we get closer to this, and I would expect earlier in the new year, we will lay out more details about the timing, when we'll be in studies and what those studies will look like. Although, as I mentioned a bit earlier, it will -- even in Phase I and the Ib portion, we do plan to get into HPV patients. So stay tuned on that.

Operator

And our next question comes from Yasmeen Rahimi with the ROTH Capital Partners.

Yasmeen Rahimi -- Roth Capital Partners, LLC -- Analyst

Hi, team. A few questions on RSV and then one question on NASH. So, Jay, can you kind of walk us through of the dose selection in the RSV challenge study given the phenomenal PK Phase I data? In my view, you had quite a lot of freedom to push the doses even higher. And then, secondly, RSV challenge study seemed quite simplistic in theory, however it is quite finessing in getting it correct. Are there elements of the RSV challenge protocol that you and the team have sort of optimized and that have been contributing to the failure in other trials? And then I have two more follow-ups.

Jay R. Luly -- President, Chief Executive Officer and Director

Sure. Well, regarding to the failure of others, I mean, some people have failed at this stage. There are examples of fusion inhibitors that weren't very potent and they didn't work in the challenge study. And then there were examples where people moved -- that were successful in challenge and then moved on. We already discussed that, I guess, on that on the last question. There's just not a lot of data points out there. So fundamentally, what we wanted to do is pick strong doses. Again, I think the challenge study lends itself to so much exploration would be pretty easy to get in there and bogged -- get bogged down in a million different variations on exploring dosing dynamics as opposed to coming up with a solid set that we believe we've powered very strongly for the two endpoints that we've selected.

And so the doses that we chose were at the higher range. So we explored in Phase I a full range of doses and we went in with high doses from the Phase I really so that we could press the multiple of an EC90 really hard. I mean, other people who have come in and done these challenge studies might have a three-year or a fivefold multiple. What we did was we picked doses that we think based on the exposures of looking at trough levels either at 12 hours or at 24 hours where we are going to have around 30x the EC90. The other -- so that's we think is tremendous amount of pressure. The more pressure you put on the virus, more pressure there is to kill it, kill it quick, to avoid resistance and so forth. We think time is actually very important in RSV. So the sooner you can treat probably the better, and the sooner you can get to steady state, probably the better, and the sooner you can get a significant multiple of EC90 hammering that virus, probably the better.

So we went in and we looked at human primary cells. These are human bronchial epithelial cells. We looked at the Memphis strain of the virus, the M37 strain, that's the one that we're actually using in the challenge study, and we did a very careful virology to understand that and then looked at all the PK curves, etc., etc., from our Phase I study and came up with those two doses.

So the first dose, as you probably know, is 600 milligrams, once a day. The other comes in with a loading dose of 500 and then follows with 300 BID. And even without the loading dose, just looking at the BID dosing, we know we get very substantial trough levels and high multiples against the EC90. So, we're using a very, very relevant human cell type and great PK. So I think it will be an extremely exciting dataset to get. We expect, again, the timing on that is in calendar Q3.

Yasmeen Rahimi -- Roth Capital Partners, LLC -- Analyst

Great. And then two quick questions. Are there any regulatory obstacles that are unique in RSV clinical development in children versus taking it into the elderly or the immunocompromised?

Jay R. Luly -- President, Chief Executive Officer and Director

I'm sorry, are there are any regulatory what?

Yasmeen Rahimi -- Roth Capital Partners, LLC -- Analyst

Obstacles. Is there any element of development that's unique that you have to show for before you can take it into children versus taking it easily (ph) or into the elderly versus immunocompromised?

Jay R. Luly -- President, Chief Executive Officer and Director

Nothing in particular. I mean it's standard regulatory development path for peds (ph) in terms of dose selection etc. So nothing special, I mean it's -- peds are peds. I think just from our perspective, what we're wanting to do is just get more adult experience before heading into the peds, so I just think it's a prudent course. I mean, you do have to think about other considerations once you're -- in infants, you have to play around with your doses to get them right. Children are a little bit of moving targets during their development time frame. So from that perspective, I don't want to suggest that dosing infants is the same path it is for healthy or otherwise healthy adults. The path is a little bit different. But we're going to get -- we've got good experience in Phase I, we're getting even more on our well-tolerated challenge study and we'll get Phase IIb going on in an adult population or populations, and then we'll gradually phase in the children as well.

Operator

And our next question comes from Liisa Bayko with JMP Securities.

Liisa Bayko -- JMP Securities LLC -- Analyst

Hi. Thanks for taking my question and congratulations on all the progress, guys.

Jay R. Luly -- President, Chief Executive Officer and Director

Thank you.

Liisa Bayko -- JMP Securities LLC -- Analyst

I wanted to just drill down a little bit more on RSV. What have you done in your preclinical setting to sort of test the sort of initiation of therapy? Second, just (ph) one big thing, how quickly do you find out you have RSV in reality and how soon do you need to start to treat the (inaudible)? And maybe you can speak to what you've observed in any animal model testing in that regard, sort of when starting up therapy and how that impacts the outcome, if at all.

Jay R. Luly -- President, Chief Executive Officer and Director

Sure. So as I mentioned earlier, with any viral infection, the sooner you get to treatment more likely the better the outcome is going to be. So it's going to be a spectrum. And what do we know about the virus? Generally speaking, in a typical viral infection, you have the infection, the virus will build up over the course of a few days, it will sort of peak and then have a sort of a slow decline, it will come down probably over the course of around 10 days or so.

Now the late stage of that course is when other things, if you haven't treated the infection, or if the infection is particularly severe, you're going to get an inflammatory component toward the back end of that time period. So the real goal here is to get the drug on board as soon as possible and sort of deal with it when it's primarily a viral infection rather than a viral infection and an inflammatory sort of a syndrome cascade of sorts. And so that's why -- so to answer your specific question, we don't have perfect animal modeling for this. We did a limited amount of animal modeling to sort of duplicate what some others have done in a nonhuman primate model. This is the African green monkey model. And the dosing in that I would say, while efficacy in that model has been predictive of success in human challenge studies, human challenge study that we're doing right now sort of picks that up and carries it the next step. So again we infect people, we let the viral titers climb very high and then we come in and intervene after a few days and after, I think, no more than five days. So it's in that sort of a time frame that you have a window.

Now when patients present, they've likely been infected for a few days because the viral load builds up and then you become symptomatic and then you take action upon being symptomatic. And then it's -- the day you become symptomatic, the day after, the day after that, when you present to a physician, that's going to be a slightly different situation at each one of those days because, again, the further you get from the initial infection on that continuum, the harder it is likely to be able to treat.

Now, the reason we focused on non-fusion inhibitors is because we believe that the maximum efficacy with a fusion inhibitor is going to be expressed very, very, very early in the course of the infection, as soon as you possibly can get it in there. Because once the cells become infected, you are no longer helping that cell. In fact, you will turn that cell into a replication factory and you may stop the infection of other cells. But at some point you get such a viral burden going on that it's later and later it's too late for that.

So what we want to be able to do with our non-fusion approach, which is the N-protein inhibitors, is to go and sort of address no matter where you are on that cascade, you're going to have infected cells and we can get in there with our drug and shut down that virus pretty quickly. So what we are hoping to have is an efficacy at a wider berth of days and also starting at a later day than you might with some other mechanisms that target purely viral entry.

So I don't know if that's helpful. Again, I think there is only so much modelling you can do in a nonhuman species. I think, we did the right experiments to build confidence that the next step should be as de-risked as we could reasonably make it, and then just go in and do the human experiment.

Liisa Bayko -- JMP Securities LLC -- Analyst

Okay. That's helpful. I guess, do you have any market research that tells you kind of when the typical range is when people are diagnosed in terms of duration? Is there any understanding of that or I guess there's not, you don't really know when you would have gotten that?

Jay R. Luly -- President, Chief Executive Officer and Director

Yeah. You don't really know when you've been infected.

Liisa Bayko -- JMP Securities LLC -- Analyst

Okay. All right.

Jay R. Luly -- President, Chief Executive Officer and Director

It's one of those things.

Liisa Bayko -- JMP Securities LLC -- Analyst

I guess the viral titers, is that one way to look at it?

Jay R. Luly -- President, Chief Executive Officer and Director

Yeah, but once they come up they kind of -- they are up there for a while. I mean, if you do --

Liisa Bayko -- JMP Securities LLC -- Analyst

Okay.

Jay R. Luly -- President, Chief Executive Officer and Director

-- obviously, if you have a substantial viral load, you've been infected for a few days anyway. And again, we're trying to catch up. We know we're not going to get there before -- treat people before they are symptomatic. But on the other hand, as soon as they become symptomatic, I think there are several days with a non-fusion inhibitor anyway to work with before you get, sort of, late into that inflammatory piece. So that's the window.

Liisa Bayko -- JMP Securities LLC -- Analyst

Okay. And then just for the hepatitis B core inhibitor, can you maybe compare and contrast your core inhibitor to some of the others that are out there? I think of, obviously, Assembly, I think J&J, also Arbutus. Maybe you can compare and contrast in terms of the important metrics, like potency and anything else that's notable, and also potency across genotypes? Thanks, Jay.

Jay R. Luly -- President, Chief Executive Officer and Director

Yeah. You're welcome. We will have a lot of a tremendous amount of data. I mean, you saw much data we've built upon 367 and your note this morning, I think summarized that very well. What you can expect is equally robust type of data set, but with a molecule that looks even better. And we did quite a few cross comparisons, probably as many or more than a lot of other people have reported to make it easy for people to see that, even with 367. So, it's a very strong profile. I mean, I hope that we can someday show that it's a best-in-class or if not, it's one of the very, very, very strong contenders and becomes -- it's a base that we basically want to cover. We want to have a good core inhibitor onto which we can add other therapies such as nukes and then other mechanisms as required to get yourself to a functional cure. So we think 514 has the profile to definitely sort of be a ticket to the show, so to speak. And we'll have a lot of data next year. We are just not ready to put it out today and so we will -- but we will have a big data load next -- in 2019, the usual places.

Operator

(Operator Instructions) Your next question comes from Eric Joseph with JPMorgan.

Eric Joseph -- JPMorgan -- Analyst

Hey guys, thanks for taking the questions. Just a follow-up on RSV and the infant pediatric opportunity. I'm just wondering how much additional dosing work would be needed ahead of a potential trial there and when you might look to do that? Is there something that could be done in parallel to the healthy challenge study or would it take place after or after an active infection study in the adult population?

Jay R. Luly -- President, Chief Executive Officer and Director

Yeah, so we'll -- as I mentioned earlier, we'll go from the challenge study -- we will go into adults after that. And then, with time, we will bring on the children. And regarding that we will follow the recent FDA guidance for now. So I think there'll be other studies that we will use to look at pharmacokinetics, etc. But it's -- I think it's actually reasonably straightforward.

Eric Joseph -- JPMorgan -- Analyst

Okay. And I'm just looking for a little more color from your opening remarks around PBC enrollment and INTREPID. You expect to provide an update in the coming months. But I'm just wondering if there is -- should we be reading that as any flexibility to anticipated data timelines and whether you're seeing any -- I guess, to what extent you're seeing any impact from commercial Ocaliva, whether that's been a headwind to enrollment? Thanks.

Jay R. Luly -- President, Chief Executive Officer and Director

Yes, it's hard to know, all those different pieces -- I mean PBC is definitely slower than NASH. I think, given the recruiting dynamics that we see, it's difficult for us to get sort of a specific timing at the moment. But what I would say is based on sort of current trends, unlike NASH where we're targeting for data starting in mid-'19. I think it's probably less likely that we're going to have data in PBC in '19.

One other thing, we're watching the PBC market opportunity very closely as we are doing this. And I think it's clear that PBC today is, for the market, is aimed at a second-line therapy and an orphan indication for which there is a recently approved drug Ocaliva and for which generic fibrate competition may be a viable competitor sooner rather than later. So PBC is clearly a very, very small market compared to NASH, which NASH is our principal focus. So we're just -- we'll keep a high eye on the whole thing, but it has definitely been a challenge.

Eric Joseph -- JPMorgan -- Analyst

Great. Thanks for taking the questions.

Jay R. Luly -- President, Chief Executive Officer and Director

You're welcome.

Operator

Next question comes from Jay Olson with Oppenheimer.

Jay Olson -- Oppenheimer -- Analyst

Hi, thanks for taking the question. Maybe if I could just ask a follow-up question about EDP-305 in NASH. Can you just talk about whether or not you think pruritus and LDL cholesterol increases are potentially on-target side effects for an FXR agonist, and how likely you think it would be to sort of design an FXR agonist that doesn't have those side effects?

Jay R. Luly -- President, Chief Executive Officer and Director

Yeah. Really interesting question, Jay. So, as you know, we've looked at this a lot. We thought about it a tremendous amount. We've interrogated this in Phase I in some detail. As we dosed up, so obviously -- let me back up. So obviously Ocaliva has seen pruritus, they have seen LDL increases. We went in with that knowledge going into our Phase I as did everyone else. We found that at the very high doses, where we had sort of maxed-out exposures in a nonlinear way, we did see pruritus, but we didn't see increases in LDL. And we had done a lot of mechanistic work trying to understand why those LDL increases perhaps weren't seen. And we -- as you know, we looked at LDL receptor levels and the regulation of LDL receptor and found some differential effects there that potentially explain what we saw with EDP-305, which was no LDL increase versus what Intercept saw with their increases.

So I thought I had some understanding of this account going into the Liver Meeting. I think neither Novartis nor Gilead had described pruritus changes in their Phase I work, but they did see it to varying degrees in their Phase II studies that they showed just a couple of weeks ago. So I'm not sure -- I don't think anybody fully understands the pruritus question yet, exactly what is causing that. So we're thinking about that and other properties as we work on our follow-on FXRs. We continue to dig around in that area and we have constructed a few series and we're doing some further tests in-house. But right now I -- I came away from the Liver Meeting having looked at some of the other people's data sets as being a little bit confused. I think some of the -- it appears that Novartis -- it appears that Novartis and maybe Gilead are changing their doses around now. So Novartis seems to be dosing higher in the future and at least in the combination studies, I believe with Gilead, they seem to be dosing down from their dose that they saw some of their data at the Liver Meeting. So time will tell, still relatively early days, but we're getting more and more data sets to look at and to scratch our heads on. But again, so far so good with 305, and again we're pointing toward mid next year for our data set to start reading out.

Jay Olson -- Oppenheimer -- Analyst

Okay, great. Thank you. That's very helpful. Any thoughts on a target product profile for EDP-305?

Jay R. Luly -- President, Chief Executive Officer and Director

Well, again, we think three -- so, one thing we did come away from the Liver Meeting is that FXR and some of the data on FGF19, which is part of the path that FXR exerts, are still probably two of the strongest mechanisms when it comes to looking at fibrosis in a NASH patient. So from that vantage point and knowing what we need to try to accomplish in NASH therapy, I view that an FXR mechanism could still be a very critical one in the overall makeup of a combination. So what I want to come up with is a very strong FXR, we're very committed to this even with our ongoing research and thinking about how to think about generations of these things. So that we, at the end of the day, come up with a molecule that can demonstrate some of the solid anti-fibrotic activity that has been seen with Ocaliva but with a -- a bit of a better tolerated package and one that's readily combinable with other agents. So high level, that's the profile.

Jay Olson -- Oppenheimer -- Analyst

That's super helpful. Thank you so much for taking the questions.

Jay R. Luly -- President, Chief Executive Officer and Director

You're welcome.

Operator

(Operator Instructions) And we have no further questions at this time.

Carol Miceli -- Director of Investor Relations

Thank you everyone for joining us today. If you have any additional questions, feel free to give us a call in the office.

Operator

This does conclude today's conference call. Thank you for your participation. You may now disconnect.

Duration: 52 minutes

Call participants:

Carol Miceli -- Director of Investor Relations

Jay R. Luly -- President, Chief Executive Officer and Director

Paul J. Mellett -- Senior Vice President, Finance and Administration, and Chief Financial Officer

Brian Abrahams -- RBC Capital Markets -- Analyst

Yasmeen Rahimi -- Roth Capital Partners, LLC -- Analyst

Liisa Bayko -- JMP Securities LLC -- Analyst

Eric Joseph -- JPMorgan -- Analyst

Jay Olson -- Oppenheimer -- Analyst

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