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Enanta Pharmaceuticals Inc (NASDAQ:ENTA)
Q4 2019 Earnings Call
Nov 21, 2019, 4:30 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Enanta Pharmaceuticals Fourth Quarter Financial Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions]

I would now like to hand the conference over to your speaker today, Carol Miceli. Thank you. Please go ahead.

Carol Miceli -- Director of Investor Relations

Thank you, Chantelle [Phonetic], and thanks for joining us this afternoon. The news release with our financial results was issued and is available on our website. On the call today is Dr Jay Luly, President and Chief Executive Officer; Paul Mellett, our Chief Financial Officer and other members of Enanta's senior management team.

Before we begin with our formal remarks, we want to remind you that we will be making forward-looking statements, which may include our plans and expectations with respect to our research and development pipeline and financial projections, all of which involve certain assumptions and risks beyond our control that could cause our actual developments and results to differ materially from those statements. A description of these risks is in our most recent Form 10-Q and other periodic reports filed with the SEC. Enanta does not undertake any obligation to update any forward-looking statements made during this call.

I'd now like to call the -- turn the call over to Dr. Jay Luly, President and CEO.

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

Thank you, Carol. Good afternoon, everyone. We made great progress at Enanta this year, and I'm excited to share with you the plans we have for the year ahead. From our clinical development programs, we announced positive Phase 2a data, for RSV and NASH compounds. We are advancing our first HBV core Inhibitor through a Phase 1a/1b study and our research continues to discover world-class molecules.

This afternoon we announced our newest drug candidate EDP-297, which is our follow-on FXR agonist development candidate for NASH. We are also working on follow-on compounds for RSV and HBV, as well as new compounds in the early stages of discovery that are targeting other mechanisms of action and in some cases other disease areas. We continue to receive substantial royalties from our HCV collaboration with AbbVie and this coupled with our strong cash balance of $400 million is sufficient to fund our business, including our growing clinical development programs for foreseeable future. In fact, since our March 2013 IPO, we have not needed to raise nor have we raised any additional capital.

Before I begin with a review of our development programs, I wanted to thank our talented and dedicated employees who worked tirelessly to bring forward what we believe are some of the most promising compounds for RSV, NASH and HBV in development today.

I'll now begin my review with our most advanced program, EDP-938, our N-protein Inhibitor for respiratory syncytial virus, known as RSV. As a reminder, RSV is a severe respiratory infection associated with significant morbidity and mortality in infants, elderly and immune compromised adults, and a condition for which there is currently no safe and effective therapy.

In June, we announced positive top line results from our Phase 2a human challenge study of EDP-938 in healthy adults infected with RSV. This study yields some of the most promising data to date from an RSV challenge study. EDP-938 demonstrated highly statistically significant reductions in RSV viral load as measured by RT-PCR assay and by plaque assay, as well as in total symptom score and mucus weight. Given these results, we are pleased to announce that we have initiated a Phase 2b study of EDP-938. This study, which we have named RSVP, will focus on adult outpatients with community-acquired RSV.

RSVP is designed to provide further information about EDP-938 in a community-acquired RSV adult population and to better understand the feasibility of DAA therapy in an outpatient setting. We are preparing to conduct further studies in targeted patient populations, such as the immune compromised, the elderly and pediatric populations. The RSVP study is a randomized double-blind, placebo-controlled study that is designed to enroll approximately 70 subjects up to the age of 75 years, randomized to receive either 800 milligrams of EDP-938 or placebo for five days.

The primary objective of this study is to evaluate the effect of EDP-938 on progression of RSV infection by assessment of clinical symptoms measured over the course of the 14-day study observation period. Any viral activity will be evaluated as a key secondary endpoint. Depending upon the severity of the RSV season in North America and the rate of enrollment, our goal is to complete RSVP study in one season and top line data could be announced in the third quarter of calendar 2020. If needed, however, we have plans to continue the study in the southern hemisphere where RSV infection occurs later in the year. Given our promising Phase 2a results in RSV and the non-fusion mechanism of EDP-938, we believe it represents the best chance for success in a therapeutic area that to date has been challenging.

Our next most advanced program is for NASH. In September, Enanta announced top line data from the Phase 2a ARGON-1 study in NASH subjects. The primary endpoint, ALT reduction at week 12, and a key secondary endpoint, reduction in liver fat content as measured by MRI-PDFF at week 12, were met in the 2.5 milligram dosing group. At the 1 milligram dose, also showed -- I'm sorry, the 1 milligram dose showed non-statistical numerical trends on several efficacy markers. Given this overall profile, we plan to further evaluate EDP-305 in ARGON-2, a Phase 2b study that we plan to initiate in the second quarter of calendar 2020.

ARGON-2 will be a randomized double-blind, placebo-controlled 72-week study in approximately 340 subjects with biopsy-proven NASH. The primary endpoint of the study will be improvement of fibrosis without worsening of NASH and/or NASH resolution without worsening of fibrosis. Two doses of EDP-305 have been selected to provide strong target engagement and a balanced profile in terms of efficacy and tolerability. We plan to use doses of 1.5 milligrams and 2 milligrams with the aim of demonstrating stronger biomarker signals of efficacy than seen at one milligram and less pruritus than seen at 2.5 milligrams, which were the doses investigated in ARGON-1.

This study will include a 12-week interim analysis, designed to enhance our ability to seek opportunities more quickly for development of EDP-305 in combinations with other mechanisms in NASH.

Also in our NASH program, Enanta has identified EDP-297 as its follow-on FXR candidate. Preclinical data on EDP-297 reveal a differentiated profile that delivers high target-tissue distribution along with potency greater than that published on any FXR agonist in clinical development today. In preclinical models, EDP-297 delivered the drug preferentially to tissues with FXR receptors, namely liver and intestine, while minimizing drug levels in plasma and skin.

We believe that having a highly potent and highly targeted FX agonist like EDP-297, we allowed for lower [Phonetic] doses and reduced drug levels at non-targeted tissues, thereby potentially reducing pruritus if it's an off-target effect. We expect to initiate a Phase 1 study of EDP-297 in mid-calendar 2020 and plan to have data in the first half of 2021.

Finally, the INTREPID study in PBC is continuing and we expect to have top line data in the second quarter of calendar 2020. Our HBV program is also progressing well. Earlier this year, we initiated a Phase 1a/1b clinical study with our novel class 2 HBV core inhibitor EDP-514.

Part one of this randomized, double-blind, placebo-controlled study aims to evaluate the safety, tolerability and pharmacokinetics of single-ascending doses and multiple-ascending doses of EDP-514 in healthy subjects, while part two will assess the safety and antiviral activity of EDP-514 in nuke suppressed patients with chronic HBV infection.

Nuke-suppressed refers to chronic HBV patients who are being treated with nucleoside analogue therapies, which are the current standard of care. We have completed the SAD portion and are well along in the MAD portion in healthy volunteers, we plan to have that data in the first quarter of calendar 2020.

We then plan to proceed to study EDP-514 in nuke-suppressed HBV patients in calendar Q1, followed by a separate study in viremic HBV patients in calendar Q2. EDP-514 was selected from our lead series of HBV compounds that are characterized by potent antiviral activity and our promising preclinical data support our excitement for this mechanism.

Finally, it's important to mention that drug discovery remains a core strength of this company. We continue to invest substantial resources and research programs to discover backup compounds as well as new compound targeting different mechanisms of action, both in our core areas and in other areas.

Reviewing the broad range of our R&D portfolio makes me very excited about the coming year and I look forward to addressing any questions you may have about it. First though, I will turn the call over to Paul to discuss our financials for the quarter. Paul?

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

Thank you, Jay. I'd like to remind everyone that Enanta reports on a September 30th fiscal year schedule. Today we are reporting results for our fourth fiscal quarter and fiscal year end ended September 30th, 2019. For the quarter, total revenue was $51.3 million and consisted entirely of royalty revenue earned on AbbVie's global HCV product sales of $698 million. This compares to total revenue of $67.2 million for the same period in 2018. The decrease in our royalty revenue quarter-over-quarter was due to lower global HCV product sales reported by AbbVie. Royalty revenue was calculated on 50% of Mavyret sales at a blended royalty rate for the quarter of 15%, and on approximately 30% of VIEKIRA sales at a royalty rate of 10% after adjustments for certain contractual discounts and rebates which has historically have approximated 1.5% of AbbVie's total reported HCV product sales.

During our fourth fiscal quarter, our royalty rate from Mavyret was a blend of our third and fourth royalty tiers of 14% and 17% respectively. Our royalties are calculated on a calendar year basis, therefore royalties for our fiscal first quarter ending December 31 will be calculated at the highest royalty rate 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 2018 Form 10-K. Moving on to our expenses for the three months ended September 30th, 2019, research and development expenses totaled $38.7 million compared to $26.9 million for the same period in 2018. The increase was primarily due to greater clinical cost -- associated with the progression of our wholly owned clinical programs in RSV, NASH, PBC and HBV including our three Phase 2 clinical trials.

General and administrative expense for the quarter was $6.2 million, a slight increase to the comparable quarter in 2018. Enanta recorded an income tax benefit of $0.5 million for the three months ended September 30th 2019 compared to income tax expense of $8.5 million for the same period in 2018.

For the 12-months ended September 30th, 2019, Enanta's effective tax rate benefit was approximately 2% compared to an effective tax rate of approximately 23% for the 12-months ended September 30th 2018. I'd like to note that the drivers of the decrease in the effective tax rate are covered in the press release. Net income for the three months ended September 30th 2019 was $9.2 million or $0.44 per diluted common share compared to net income of $27.4 million or $1.30 per diluted common share for the corresponding period in 2018. Enanta ended the quarter with approximately $400 million in cash and marketable securities, an increase of $75 million from our 2018 fiscal year-end balance of $325 million.

In terms of guidance for fiscal 2020, we expect our research and development expense to be between $155 million and $175 million and our general and administrative expense to be between $27 million and $33 million. Further financial details are available in our press release and will be available in our Annual Report on Form 10-K when filed.

I'd now like to turn the call back to the operator and open up the lines for questions, operator.

Questions and Answers:

Operator

[Operator Instructions] Your first question comes from Brian Abrahams with RBC Capital Markets. Your line is open.

Brian Abrahams -- RBC Capital Markets -- Analyst

Hi, thanks for taking my questions. Congrats on all continued progress. I guess first on the NASH program and ARGON-2, can you talk a little bit more about how you guys selected those doses and maybe some of the data analysis that you did to find what you believe could be a sweet spot there. And I guess -- I'm also wondering if you could also talk more about the interim analysis when that might -- when you might expect to see that and how you would think about positioning this in combination or you're thinking about internal combinations or external combinations, what might be the optimal mechanisms. And then I have a quick follow-up on RSV. Thanks.

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

Sure. Thanks for the questions, Brian. So on ARGON-2, we -- it was actually reasonably straightforward as we indicated on the ARGON-1 data call. We saw a very strong target engagement at 2.5 milligrams, whether you looked at ALT reductions, fat reductions either on an absolute or on a relative scale, GGT reductions looking ALT, C4, FGF-19. I mean the whole profile lined up to show very, very strong target engagement. 1 milligram, we saw some reasonable signs of that, but certainly not as strong as 2.5 milligram. So we looked at those two sort of doses as sort of goalpost. And then started asking ourselves what we like to ultimately achieve, Number 1, obviously we saw a fair amount of pruritus at 2.5 milligrams, not much at all, a 1 milligram and so I think the key is not really driving to a dose that's higher then one in terms of giving better biomarker indications of efficacy, and dose lower than 2.5 milligrams in relations to having a better tolerability profile than 2.5 milligrams.

So we ultimately aimed to -- we came down on 1.5 milligrams and 2 milligrams as reasonable doses. And so, those will be going ahead. And from a timing perspective, that will -- it depend on accrual -- we'll share results with those as the study gets up and going. What we'll do is take information here ultimately from those intermediate doses, which we think might be one or both, I guess, in theory, might be interesting to explore in relation to combinations. And with regards to ideal combination partners, we're not likely to have an internal molecule that will be at that stage to do those combinations with the time other than FXR agents. So we'll be looking at other non-FXR mechanisms out there to do those combination, so stay tuned on that front. Yeah, RSV question.

Brian Abrahams -- RBC Capital Markets -- Analyst

Yeah. And then just on the RSVP study, I -- how important is reductions in hospitalization. I guess what I'm trying to kind of getting it is, do you view this initial population you're going to be testing that the agent in -- a population that you may potentially move forward with for registration or is this just more of a way to get quick proof of concept with real world infection. I guess I'm wondering when we see the data how translatable will the results be to some of the high unmet need groups like pediatrics just given the differences in immune system and viral kinetics there, as well as to -- I mean compromised patients. Thanks.

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

Yeah, well I would certainly put it into the category of, it's a really good proof of concept study in community acquired RSV. I don't know that it ultimately is the largest patient population, but there is still a lot of adults that do get RSV in patients. So it's also -- it's further, it's a way to us to look at conducting a trial on an outpatient setting, which is interesting all by itself.

So I'd say it's a -- not a good -- good and logical step in the progression, it's our ability to kind of get at the feasibility to -- of rapid treatment after a rapid diagnostic that could prevent hospitalizations ultimately. But, so, yeah, it will give us a whole bunch of information in the broad spectrum. Again, we're trying to learn as much about this drug in different patient populations as we can.

Brian Abrahams -- RBC Capital Markets -- Analyst

Makes sense. Thanks so much, Jay.

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

You're welcome.

Operator

Your next question comes from Jay Olson with Oppenheimer. Your line is open.

Jay Olson -- Oppenheimer -- Analyst

Hi, congrats on the progress. And thanks for taking the questions. My first question is did you learn anything at AASLD that changes your view of the opportunity for an FXR in NASH and specifically with regards to the potential to improve upon efficacy, safety or tolerability over other FXR agonist. And then I have a follow-on, if I may.

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

Learned anything at AASLD? I mean I think the one thing that we saw at AASLD was troop FXR had pruritus [Phonetic], I mean that was an interesting -- I guess observation that comes from a sort of a different chemical class and so forth and they hadn't reported too much until they did their dose escalation up into the range where they started seeing a significant efficacy marker movement and then that came in. So that was one aspect to it. I think the other -- I guess maybe that's a good segue to thinking how EDP-297 in terms of our new candidate. We've been working on a follow-on molecule for quite some time as I think everybody sort of listening in is probably aware and we are trying to fine tune a profile, nobody fundamentally understands exactly what's causing the tolerability issue with FXRs -- have been seen today.

So we felt, one of the absent to discrete mechanism, that one could fully understand the best -- next best thing you can do is rash it down [Phonetic] the potency against your intended target super, super well and we certainly did this. Discovery team at Enanta deserves a lot of congratulations in terms of being able to fine-tune that.

The goal is, if you can push harder and harder on FXR, generally speaking, at least you have a chance of improving activity over other receptors. We then came up with a targeting approach, which is aimed at -- the intestine, FXR receptors and the intestine and also in the liver both sites of which have shown places where you can -- FXR agonist can modulate pathways that are important in the pathogenesis of NASH patients.

So we have a very high degree of targeting in those tissues with FXR receptors and we dialed down dramatically the associated plasma levels that you would run into. So that'll help contain things outside in the periphery and in other tissues such as skin, where we -- again, we're focusing on getting drug levels way down. So, we that play out? It will remain to be seen, but we think it's a very interesting approach and worthy of exploration in our next studies. So again, we're aiming to have EDP-297 in the clinic in mid-20.

Jay Olson -- Oppenheimer -- Analyst

Okay, great. And then if I could ask a quick question on EDP-514. Could you just talk about your treatment objectives for the two populations you mentioned, nuke-suppressed HBV patients and viremic HBV patients. What are the goals in those two different patient populations?

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

Yeah. So, maybe I'll hand this question over to Nathalie just to make a couple of quick comments on those studies.

Nathalie Adda -- Senior Vice President and Chief Medical Officer

Hi. Yes, thank you for your question. So I think at that stage, and you see we are looking at the Phase 1a/b study for nuke-suppressed and viremic

patients. And therefore, as you know, we have to go step-wise as we are looking to heavy component [Phonetic] in this population. So we will be looking at safety and tolerability mainly for 28 days of treatment, as well as obviously you know some of the new biomarker, giving us a sense, mainly in the viremic patient for the activity of the drug. So that's the plan for the early stage.

Jay Olson -- Oppenheimer -- Analyst

Okay, great. Thanks for taking the questions.

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

Good, thank you.

Operator

Your next question comes from Yasmeen Rahimi with Roth Capital, your line is open.

Paul -- Roth Capital -- Analyst

Paul on for Yasmeen. Hi team, congrats on the progress this quarter. So we just have two questions today. First, could you just help walk us through the powering for primary endpoint on RSVP, and also we just -- are wondering, could you give us your thoughts on moving 305 into Phase b given the competitive NASH landscape?

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

So maybe I'll start with the second question first and I'll let Nathalie work on the first question for you.

The second question is the NASH landscape is anything but understood right now, we're at an early stage in this whole disease area -- I would sort of call it a 1.0 stage, where -- only now we're beginning to understand what are the most promising mechanisms in NASH and we barely know much about that yet in patients, especially when you're looking at later stage studies with good patient numbers and good readouts. So, we're at the very early stages of understanding what are the most important mechanisms, and then we have even further to go before people will know for sure what are the very best single agents against those single mechanisms.

And then, only then can we really begin to move on to 2.0 and beyond, which will be likely involving combinations of agents. So, I think what we continue to see is EDP-305 does have a very strong profile in FXR agonist, it's generally safe the tolerability profile we know. That profile is not dissimilar from some others. We're trying to see if we can improve upon it. We've also, at least in the ARGON-1 study appear to have seen a good profile of EDP-305 on lipids, and so we're going to again press to the next question, just like in Phase 1, when we made the Phase 1 migration into ARGON-1 study, we had to change our doses to lower doses where we still saw target engagement but avoided pruritus, then in NASH patients we were surprised that everything became more sensitive with our FXR agonist in terms of efficacy and tolerability.

So we're just frame shifting things a bit, but it's a very strong candidate, and we're going to keep that one moving ahead. Again, if we can get some information ultimately to aid us and peeling that off into combinations sooner, we're going to do that and meanwhile in parallel, we will have a follow-on -- that has a very differentiated profile versus any other FXR agonist in development today, in terms of Number one, at least on preclinical data being the most potent one that's out there [Indecipherable], and Number two, having this tissue-targeting component, which again we think is very attractive versus other molecules that we've looked at. So I think now we -- back to the question, I think it was asked, FXR does appear to be one of the mechanisms that can meaningfully move the needle with the fibrosis endpoint. And I think that's going to continue to be an important thing to try to do and and we're obviously heavily engaged in that with our -- with -- both of our molecules.

On the RSVP study, I'll now let Nathalie just make a few remarks about that.

Nathalie Adda -- Senior Vice President and Chief Medical Officer

Okay. So just to make sure I completely understand your question. It's about the justification of the power of the RSVP?

Paul -- Roth Capital -- Analyst

Yeah, just the power -- kind of the primary endpoint..

Nathalie Adda -- Senior Vice President and Chief Medical Officer

Yes, it's obviously a good question, given that it may not be completely entreated. So, I mean obviously you know that we haven't yet used EDP-938 in patients in more real life. And so the expense that we had was based on our challenge study. The nice thing about the challenge study is that you have a placebo arm and therefore we are looking at the treatment effect and compare that to the placebo arm. And as you know, the primary endpoint that we looked at in the RSVP is the total symptom score. So, we pour our [Phonetic] study by looking at the effect in comparison to the placebo arm in the challenge study.

Paul -- Roth Capital -- Analyst

Okay, great. Thanks again for taking my questions.

Operator

Your next question comes from Liisa Bayko with JMP Securities. Your line is open.

Liisa Bayko -- JMP Securities -- Analyst

Hi, thanks for taking my question. Just wanted to understand a little bit more about the study design, how are you thinking about the assumptions behind the powering for the endpoint and then also where are you thinking about like how quickly patients come in into the study, obviously it's important to try to get them in as soon as possible. So, anyway you can try to augment that and do you have a cut-off on -- we only will accept patients with symptoms for this period of time prior to entry. So two questions there?

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

Yes. So, I think Nathalie just answered that question. So the powering came as a result of study in our challenge study and so we can.

Liisa Bayko -- JMP Securities -- Analyst

Do you have [Speech Overlap]

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

Speech Overlap] if you want to, here it again. But the other part is, we're going to try to catch patients in the first 48 hours in this study.

Liisa Bayko -- JMP Securities -- Analyst

Okay. And is that, I mean how do you -- how do you sort of get patients in that early have a window of time, are you doing any specific targeting or -- enrolling these patients?

Nathalie Adda -- Senior Vice President and Chief Medical Officer

Yes, I can take that question. And maybe just briefly say that obviously we are using a certain number of side that have an experience not only in RSV infection but also in the flu and so there are diverse type of site, there could be research site, academic site or family partition [Phonetic] side, they has been selected mainly on their experience with -- dealing with RSV infection. We will be able to see also -- taking big campaign of education and information about our study. And therefore, we hope to link patient with symptoms and bring them to the clinic within the appropriate window.

Liisa Bayko -- JMP Securities -- Analyst

Okay. And then for your new NASH compound, can you maybe give us a little bit more information and how it's differentiated from 305 and also just wanted to better understand the PK, is it linear or does it has a similar profile to 305? Thank you.

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

Well, it's certainly more potent than 305 and more potent than all the other FXR agonists. The other -- with regards to other key differentiations, we talked about the the tissue-targeting, we've enhanced that over 305, we've enhanced it over other FXRs that we've benchmarked against. And so from that perspective, and again, we need to test to 297 to see how that translates, but there is at least an opportunity to drive a wedge in the tolerability signal.

The PK, I think what you might have been referring to was the clinical -- the human clinical PK dose-ranging study that we did on EDP-305 and healthies, which was very linear through the whole range until we got to, I think, it was going from 10 milligrams to 20 milligrams is where the non-linearity in the PK curve crept in. But that was in a dose-ranging study in human clinical studies where you're looking at very low doses, all the way up to very high doses and we haven't obviously gotten that far yet with 297.

Pre-clinical profile -- pre-clinical PK profile on 297 is very strong, I mean, we typically don't put any molecules into the clinic unless we pass that hurdle in a number of different pre-clinical species. So, it's a fairly polished candidate at this point.

Liisa Bayko -- JMP Securities -- Analyst

Okay. Is it the same kind of scaffold, I guess, as EDP-305?

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

We will say more about the structural components of the molecule of the future -- at a future time.

Liisa Bayko -- JMP Securities -- Analyst

Okay, thank you.

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

You're welcome.

Operator

Your next question comes from Eric Joseph with JP Morgan. Your line is open.

Turner -- J.P. Morgan -- Analyst

Hey, good afternoon. This is Turner on for Eric. Thanks for taking the question. I'm just hoping you could help set expectations for the Phase 1 EDP-514 readout in healthy volunteers, as it relates to safety, tolerability, are there any specific AE's that you anticipate? And what are deemed acceptable rates, particularly within the broader core inhibitor class? And lastly, what plasma concentrations correlate with EC90s observed in vitro? Thank you. Or in pre0-clinical models rather? Thank you.

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

So we obviously will report the results when we have them, but we're not -- we don't anticipate anything [Indecipherable] It's a study that we've had up and [Indecipherable] said the SAD component is done, the MAD is well along the way and we'll have the data set in Q1. So there is nothing in our priority that we're expecting out of that study. I don't -- I think you asked what blood levels correlated. Say that again, what's your question?

Turner -- J.P. Morgan -- Analyst

Just curious what plasma levels correlate with the EC90 observed in pre-clinical models?

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

I'd have to get back to you on that. I'm not sure that that's a -- yes, I'd have to get back to you on that.

Turner -- J.P. Morgan -- Analyst

Great, thanks.

Operator

Your next question comes from Patrick Trucchio with Berenberg Capital Markets. Your line is open.

Patrick Trucchio -- Berenberg Capital Markets -- Analyst

Thanks, good afternoon. I have a few follow-ups on EDP-305. So regarding interim readout, we know that changes in liver histology can take some time. So I'm interested in understanding what efficacy and/or safety and tolerability measures will be evaluated in the interim analysis? And how far into the study this analysis will be built-in?

And then secondly, if you can -- can you tell us if in addition to accelerating the development in combinations with other mechanisms, would there also be an opportunity to accelerate the start of the pivotal program for 305 as a monotherapy treatment for NASH?

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

Yeah, so I'll answer the last question first, it wouldn't accelerate that. The idea behind a 12-week interim read is again, it won't examine the primary endpoint. It's really going to be looking at secondary markers of efficacy some like what we've done in Argon-1 in a 12-week study, and also tolerability. So, by that point, we will have looked at 1, 1.5, 2 and 2.5 at 12 weeks, and we will have good directional information, I think, in terms of knowing how we might proceed with that in a combination study.

Patrick Trucchio -- Berenberg Capital Markets -- Analyst

Okay. And then on EDP-938, can you tell us what is the incidence rate of community-acquired RSV infection, what is that? And what additionally relevant inclusion or exclusion criteria should be -- should we be aware of for the trial?

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

Well, the incidence is not quite flu. So, it's a -- I forget the exact numbers, but it's a fraction of what flu is, but still really significant. So, there are a lot of significant number of hospitalizations of elderly and children every year. So, there is a tremendous amount of morbidity associated with this morbidity and hospitalizations.

In terms of exclusion criteria, we obviously want to sample very carefully to make sure people don't have flu, and we'll be doing that with in-office RT-PCR diagnostic where we can rule out flu A, we can rule out flu B and we can rule in RSV. So, it's very impressive, actually, you can do this in about 20 minutes. And so obviously, patients with asthma and COPD would be excluded, but they're -- apart from that, people with stable asthma and treated COPD -- or treated COPD could be allowed. So, we're not bringing in people with really complicated respiratory -- underlying respiratory anthologies that aren't either stable or being treated.

So we'll be on the lookout for that, we will be on the lookout to exclude flu and again, the key in this -- in every other study, I think, among the lessons learned is, you want to try to get to patients quickly. So, that's what we are aimed to do.

Patrick Trucchio -- Berenberg Capital Markets -- Analyst

That's helpful. Thank you very much.

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

You're welcome.

Operator

Your next question comes from Brian Skorney with Baird. Your line is open.

Jack Allen -- Baird -- Analyst

Hi, thank you for taking my questions. This is Jack, dialing in for Brian. Many of my questions have already been asked, but I guess, I have one brief one on the follow-on FXR agonist. I know you spoke a bit about the pruritus side effects and how you're optimizing for, I guess, liver exposure as opposed to skin exposure. How would that play with respect to the lipid side effects that we've seen with some of the FXR agonist? Have you investigated that pre-clinically? And do you see any differences with this follow-on compared to your FXR that's already moved into the clinic or some of the competitors as well? Thank you.

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

Yes, I can speak more about 305. We -- as by way of backdrop with -- in terms of looking at lipids, you can see on mechanistically on paper how one might get an increase in LDL levels by virtue of having reduced C4, because you block the conversion to C4, you can have a backup of cholesterol in the system. What we saw at least pre-clinically in the case of EDP-305 and other kinds of studies will ultimately be doing with 297 is that there was -- we saw what might be, I guess, a compensatory up regulation of LDL receptor, and to the biology is fascinating and actually that was a sort of a differential effect that we saw versus OCA when we looked at them side-by-side pre-clinically. So, we'll be looking at that and other things pre-clinically as we continue to finalize all of our data in 297 and our aim will also be to start to put some of that laid out next year.

Jack Allen -- Baird -- Analyst

Awesome. Thank you so much for taking my questions.

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

You're welcome.

Operator

[Operator Instructions] Your next question comes from Liisa Bayko with JMP Securities. Your line is open.

Liisa Bayko -- JMP Securities -- Analyst

Hi, thanks for taking the follow-up. I actually forgot to ask one of my questions earlier. I was just curious, what are you looking for in the RSV study to move forward into either the elderly or the younger pediatric population? Is it more just a clear safety, do you definitively want to see sort of -- some sort of benefit in this adult population? How are you thinking about kind of the hurdle to move forward into those other populations from this study? Thanks.

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

Yes, I'd say, we want to see -- we continue to see a very good safety and tolerability profiles, we've seen in the past and basic efficacy. These are fundamental things, we're getting to those adult population, we open a timely way. So we want to be able to basically duplicate what we've seen in the challenge.

Liisa Bayko -- JMP Securities -- Analyst

Okay.

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

Obviously, with the community acquired RSV patient population is so-called real-world study.

Operator

Your next question comes from Akash Tewari with Wolfe Research. Your line is open.

Akash Tewari -- Wolfe Research -- Analyst

Hey, guys. Thanks so much. So we've seen Tamiflu get FDA approval by reducing the duration of symptoms by basically a day or a day and a half. Can you give us some color on your discussions with the FDA and kind of what you guys are looking for your adult outpatient study in terms of absolute symptom reduction and I guess some color on those endpoints? And then also, you've kind of -- you alluded today on the call that you're going to have kind of a 20-minute rapid-acting test to detect RSV for your outpatient trial. If we look at prior RSV studies and we think about baseline viral titer at the time of dose, it's about six logs. So, kind of right at the peak of the virus. When you think about your trial and you're trying to get these patients within this 48-hour window, what type of viral titer does that actually translate into? Thanks so much.

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

Yes. So first of all, this -- in terms of discussions with FDA, etc., etc. This is not a registrational study, it's a proof-of-concept study. So -- and further the ultimate registration studies is going to be obviously a very detailed set of discussions around those endpoints and at the appropriate time, those discussions will be had. So it's important to realize what this study is, and what it's not.

The titers are likely to be a bit higher than what we've had in the past in the challenge study, but it's not clear by exactly how much, some of the people in our challenge study were already starting to exhibit symptoms, right? So it's going to be really a spectrum of folks depending upon where in that window they come exactly, where their viral loads are and so forth.

And so, but again, the goal is to get folks not only before the viral load has taken its toll over several days, but also to try to catch things, if you can while it's still an upper airway infection, earlier stage in the process that can only be a more positive approach to treatment. Yes, so we will be lined up with the diagnostics again that are readily available and rapid.

Akash Tewari -- Wolfe Research -- Analyst

Great, thank you so much.

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

You're welcome.

Operator

Your next question comes from Yasmeen Rahimi with Roth Capital. Your line is open.

Paul -- Roth Capital -- Analyst

Thank you. I just have one follow-up and then maybe a little overlap. I think you've said for RSVP, the primary endpoint will be total symptom score and I'm just wondering what -- how does that translate to hospitalization point? Is it possible? I know it's only 14 days of observation, but is there any way to get a granular sense of which way things are going? Thanks again for taking my follow-up.

Nathalie Adda -- Senior Vice President and Chief Medical Officer

This is Nathalie. I just want to make sure I fully understand your question, you mentioned hospitalization, can you just clarify?

Paul -- Roth Capital -- Analyst

Yes. Just hospitalization as in, that's the endpoint typically used in a Phase 3 study.

Nathalie Adda -- Senior Vice President and Chief Medical Officer

Okay, see. So again, I think we have mentioned that it is more like a proof-of-concept study at that stage. We will not be assessing prevention of hospitalization, but Jay mentioned earlier that there would be patient with co-morbidity that are stable obviously with asthma and COPD. And if we can learn from those patient populations about severity or even prevention of hospitalization, obviously, those information will be informed together. But this is not an endpoint at that stage that we will be assessing where we need a larger sample size that can't even change..

Paul -- Roth Capital -- Analyst

Understood. Okay, thank you.

Operator

There are no further questions at this time, I will now turn the call back over to Carol for closing remarks.

Carol Miceli -- Director of Investor Relations

Thank you everyone for joining us today. A new corporate presentation will be posted on our website shortly. And if you have any additional questions, feel free to give us a call in the office. Thank you.

Operator

[Operator Closing Remarks]

Duration: 52 minutes

Call participants:

Carol Miceli -- Director of Investor Relations

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

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

Nathalie Adda -- Senior Vice President and Chief Medical Officer

Brian Abrahams -- RBC Capital Markets -- Analyst

Jay Olson -- Oppenheimer -- Analyst

Paul -- Roth Capital -- Analyst

Liisa Bayko -- JMP Securities -- Analyst

Turner -- J.P. Morgan -- Analyst

Patrick Trucchio -- Berenberg Capital Markets -- Analyst

Jack Allen -- Baird -- Analyst

Akash Tewari -- Wolfe Research -- Analyst

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