Enanta Pharmaceuticals Inc (ENTA) 2014 Q2 法說會逐字稿

Good morning. My name is Terese, and I will be your conference operator today. At this time, I would like to welcome everyone to the Enanta Pharmaceuticals financial results conference call.

(Operator Instructions)

As a reminder, this call is being recorded Monday, May 12, 2014. Thank you. I would now turn the conference over to our host, Carol Miceli, Director of Investor Relations. Go ahead, Carol.

Thank you, Terese, and good morning, everyone, and welcome to Enanta Pharmaceuticals' second fiscal quarter financial results conference call. That news release of our financial results was issued this morning at 7:30 AM, and is available on our website at www.Enanta.com. You can also listen to the webcast or replay by going to the investors section of our website.

On the call today is Dr. Jay Luly, President and CEO; Paul Mellett, Chief Financial Officer; and Dr. Yat Sun Or, Chief Scientific Officer.

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 regulatory and commercial development for our product candidates, milestone payments and financial projections, all of which involve certain assumptions, risks and uncertainties that are beyond our control, and could cause our actual results to differ materially from these statements.

A description of these risks can be found in our most recent 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 would now like to turn the call over to Dr. Jay Luly, President and CEO.

Thank you, Carol.

I would like to welcome everyone this morning to Enanta Pharmaceuticals' midyear and second fiscal quarter financial results conference call. On today's call we will discuss our financial results for the quarter, provide an update on our clinical stage hepatitis C pipeline, and review progress with our early-stage proprietary development programs for HCV and drug-resistant bacterial infections.

There has been much progress during the quarter. Recent regulatory filings made by AbbVie with the FDA and the European Medicines Agency for the three direct-acting antiviral or 3-DAA regimen, containing our partner candidate ABT-450, are major milestones that we are excited to discuss.

But before we going to detail about the progress with our pipeline programs, I would like to stop here and turn the call over to Paul Mellett, our Chief Financial Officer, for a review of our second-quarter financial results. Paul?

Thank you, Jay.

I would like to remind everyone that Enanta reports on a fiscal year schedule. Our fiscal year end is September 30, and we are reporting results for our second fiscal quarter ended March 31, 2014.

Looking at our balance sheet, Enanta ended the quarter with approximately $102 million in cash and marketable securities, as compared to $112 million at our September 30, 2013 fiscal year end. We expect that our current cash, cash equivalents and marketable securities will be sufficient to meet our anticipated cash requirements for at least the next 24 months.

Moving on to our statement of operations, I would like to point out that our revenue is generated from two primary sources, collaboration revenue earned under our agreements with AbbVie and Novartis, as well as research and development funding earned under our contract with the National Institutes of Allergy and Infectious Diseases or NIAID, a division of the NIH.

Our revenue for the second fiscal quarter ended March 31, 2014 was $2.2 million, compared to $1.2 million for the three months ended March 31, 2013. For the six months ended March 31, 2014, revenue was $3.1 million, compared to revenue of $29.1 million for the same period of 2013. For the second quarter and six months ended March 31, 2014, revenue consisted entirely of research and development funding earned under our contract with NIAID.

The change in revenue year over year for the six-month periods was primarily related to the timing and amount of milestones and other payments from collaborations. We expect that our revenue in the near-term will continue to be substantially dependent on our collaborations with AbbVie and Novartis, and we expect the timing and amount of milestones and other payments to vary significantly from period to period.

Research and development expense was $4.7 million and $3.7 million for the second fiscal quarters ended March 31, 2014 and 2013, respectively. For the six months ended 2014, research and development totaled $9 million, compared to $8.5 million for the same period in 2013. The increase year over year is due primarily to increased pre-clinical costs associated with our proprietary research programs, which include our internal HCV programs, as well as the antibiotic program with NIAID.

We expect that our research and development expenses will increase in the future, as we advance our two independent HCV programs and our antibiotic program for MRSA into clinical development. In our fiscal year ending September 30, 2014, we expect to incur approximately $30 million of expenses associated with research and development, which is exclusive of expenses incurred by our collaborators in developing our licensed product candidates ABT-450, ABT-493 and EDP-239.

General and administrative expense was $2.6 million for the quarter ended March 31, 2014, and $1.5 million for the same quarter in 2013. For the six months ended March 31, 2014, general and administrative expense was $4.7 million, compared to $2.6 million for the same period of 2013. The increase in G&A is due primarily to higher stock-based compensation expense, as well as additional expenses incurred as a result of operating as a public company.

Net loss for the second quarter was $5.2 million, compared to $3.7 million in the second quarter of 2013. For the six months ended March 31, 2014, net loss was $10.6 million, compared to net income of $18.2 million for the same period in 2013.

I would like to remind you that we recently earned a total of $40 million in milestone payments from our partner AbbVie for the US and EU marketing applications submissions, and these payments are expected to be reflected in our June 30 financial results for our fiscal third quarter. Further financial details will be available when we file our Form 10-Q for the quarter later today.

I now would like to turn the call back to Jay.

Thanks, Paul.

Before I begin my discussion, I would like to take this opportunity to welcome Nat Gardiner to the Enanta Management team. This morning we announced the appointment of Nat as our new General Counsel. Nat's strategic counsel has been invaluable to Enanta over the years, and we are thrilled that he has permanently joined our team.

Today I will be covering our pipeline program in three parts. First, our clinical stage hepatitis C programs; second, our proprietary bicyclolide antibiotics; and finally pre-clinical programs.

Hepatitis C virus affects an estimated 150 million people worldwide and causes approximately 350,000 deaths per year. We believe that there are large populations still undiagnosed and untreated, and more therapies are needed to treat the various genotypes in patient populations who have been nonresponders to current treatment. We are pursuing validated targets that represent a broad approach to the disease, and that specifically address the urgent unmet medical needs among hepatitis C patients.

We have three clinical stage molecules in our two partnered hepatitis C programs, our most advanced is with AbbVie, and the other is with Novartis. Each program has made great progress.

Our collaboration with AbbVie includes protease inhibitors ABT-450 and ABT-493. Regimens containing 450 as well as 493 have generated a high level of interest among hepatitis C community and industry observers, and we at Enanta are excited by that.

We have previously spoken about three waves of opportunity for product launches created by our relationships. The first wave, for those of you that are not familiar with Enanta, is our lead protease inhibitor ABT-450 partnered with AbbVie, and part of the 3-DAA regimen that consists of ritonavir-boosted protease inhibitor ABT-450, AbbVie's NS5A inhibitor ABT-267, and AbbVie's non-nucleoside polymerase inhibitor ABT-333. The regimen is in all-oral interferon-free treatment developed for patients with chronic genotype 1 hepatitis C infections.

The 3-DAA regimen has advanced significantly this year. On the regulatory front, we reached a major milestone in the Company's development history when our partner, AbbVie, recently submitted a new drug application to the US FDA, and also submitted marketing authorization applications to the European Medicines Agency.

And as Paul mentioned earlier, these submissions triggered a total of $40 million in milestone payments to Enanta from our partner AbbVie. In addition to the regulatory filing milestones I just mentioned, Enanta is also eligible to receive an additional $155 million in approval milestone payments.

AbbVie has announced that they expect a US approval from the 3-DAA regimen this year, followed by a European approval in early 2015. Following approval on commercialization, Enanta will also be eligible to receive double-digit royalties on worldwide revenue allocable to the collaboration's protease inhibitor.

It has also been a very busy season for data presentations on the 3-DAA regimen. Detailed positive data from several Phase III studies conducted by our partner AbbVie, showing high SVR cure rates and good tolerability were presented at several key medical meetings. For a more thorough look at the data, please review the press releases on our website, and the recent publications of five of these Phase III studies in the New England Journal of Medicine.

In addition to the 3-DAA regimen, our partner AbbVie is also developing a 2-DAA regime, consisting of protease inhibitor ABT-450 and AbbVie's NS5A ABT-267. This regimen has recently advanced into Phase III studies in Japan, the second largest HCV market globally. We consider this regimen our second wave of opportunity.

The successful progression of our lead protease inhibitor over the last several years validates Enanta's rich drug discovery capabilities in infectious disease, which we look forward to further illustrating not only with updates on this call, but in the future as other candidates advance through development.

Let's move on to ABT-493, which is our third wave of opportunity within the AbbVie collaboration. ABT-493 is another protease inhibitor identified in our collaboration. 493 is being designed to offer a pan genotypic interferon-free and ritonavir-free once-daily dosing regimen for HCV patients, and is expected to be co-formulated with AbbVie's next generation NS5A inhibitor ABT-530.

Promising data were recently presented at the CROI meeting, in which 493 demonstrated a substantially improved in vitro profile, compared to earlier generation protease inhibitors, and it displayed potent broad genotypic activity in a range of genotypes from 1 through 6. AbbVie recently guided that they will initiate a Phase IIb study in the middle part of this year, with potential commercialization of this regimen in the 2017 timeframe.

Our agreement with AbbVie regarding 493, includes an option where we can share in funding, the development and commercialization of this next-gen program in the United States, in return for a percentage of the US profits. Outside of the US, we would receive up to $40 million in approval milestones, and double-digit royalties on ex-US net sales allocable to 493.

On the other hand, if we choose not to opt in, Enanta is eligible to receive up to $80 million in approval milestone payments, plus double-digit royalist royalties on worldwide net sales allocable to 493. Our timeline for the decision to opt in or not is for a period of time after we have received Phase IIa data. We intend to carefully consider the strategic and financial implications of exercising this option.

Turning to our Novartis partnership for EDP-239, our NS5A inhibitor, Novartis is completing proof-of-concept studies in HCV patients, and is expected to advance into combination studies in healthy volunteers during this quarter. EDP-239 is expected to be dosed with alisporivir, Novartis' cyclophilin inhibitor. We are very excited about the prospect for this regimen, as an NS5A cyclophilin inhibitor combo has shown impressive in vitro data to date.

For our proprietary programs in HCV, we have targeted 2014 to select pre-clinical candidates to advance in one or both of our internal cyclophilin and nucleotide polymerase programs, both of which are fundamental, validated targets in hepatitis C. Both of these mechanisms share high barriers to resistance, and scarcity of clinical stage inhibitors in the development landscape.

In addition to our HCV programs, we have an ongoing interest in antibiotics, and have invented a new class of macrolide antibiotics called bicyclolides for the treatment of multi-drug-resistant bacteria. Our bicyclolides are designed to overcome resistance, and they possess a significantly improved target product profile over existing macrolide therapies.

We are very pleased to have initiated a Phase I study evaluating our bicyclolide candidate EDP-788, which will ultimately be targeted toward patients with MRSA infections, or MRSA, which stands for methicillin-resistant staph aureus. Our focus in this area is on developing intravenous and oral treatments for hospital and community-acquired MRSA infections. The number of community-acquired cases of MRSA has been increasing in recent years. We hope that our bicyclolide meets an urgent need for drugs that are effective against drug-resistant gram-positive organisms, while maintaining a good safety profile.

With our infectious disease assets advancing solidly, and our expertise in drug discovery validated, we are now turning our focus to expanding our pipeline beyond HCV. We are evaluating a few pilot programs in other infectious disease areas in which we feel there is a commercial and medical need, where we aim to improve upon the current standard of care. This work is in its initial phase, and we will provide additional information later this year.

I would like to wrap up our formal comments by reminding everyone that we have a number of clinical and financial milestones to look forward to in the remainder of calendar 2014. Within our partnered HCV program with AbbVie, the upside opportunity for Enanta around anticipated regulatory approvals and commercial launches is significant.

AbbVie expects to receive US approval this year and EU approval in early 2015 for their 3-DAA HCV regimen. If those both submissions are approved, Enanta is entitled to receive the vast majority of the $155 million in approval milestones provided for in the contract.

We anticipate that AbbVie will advance our next-generation protease inhibitor ABT-493 into Phase IIb clinical trials in mid 2014. And in our NS5A program, we expect Novartis will complete single agent proof-of-concept studies, and will perform combination studies in healthy volunteers with EDP-239 combined with their cyclophilin inhibitor alisporivir during the second half of 2014. Once these studies are completed, the next step would be initiation of Phase II combination studies in HCV patients, which will trigger a $15 million milestone payment.

Finally, we remain enthusiastic about the prospects of advancing at least one internally-developed private proprietary HCV candidates into IND-enabling studies this calendar year.

So this ends our prepared remarks. I would like to now open the call to Q&A. Operator?

Thank you. (Operator Instructions)

Our first question comes from Geoff Meacham with JPMorgan.

It's actually Mike in for Geoff. Thanks for taking the question. Can you maybe share your thoughts broadly on pricing in Hep C in the 3-D regimen, and sort of what are the key drivers behind that decision? And the secondly, there has been a lot of sort of payer pushback on Gilead sovaldi price. Has that in any way sort of changed your thinking on price? Thanks.

Sure. Thank you, Mike So around pricing as you know, AbbVie's ultimately going to be on ABT-450 related regimens setting the price, and we anticipate that that will happen sort of on the eve of launch. So it's a little premature to get into that, in any granular detail.

There has been a lot of discussion openly around HCV pricing. And certainly these regimens have and can and probably will command a premium pricing, just because of the medical benefit they give, and the pharmacoeconomic benefit they give to payers and patients. So we expect the regimen to continue to fall in that premium pricing category.

Again, we are talking about high -- very high cure rates in12 weeks or less with current therapies, versus what was provided for with past regimens, often with cure rates that were almost half of what they are today. So I think ultimately, this will all settle down, and we will continue to see attractive pricing.

We also think that with regards to our regimen, the regimen that we have with AbbVie, the 3-DAA regimen, the results have been incredibly strong in difficult-to-treat patient populations, such as experienced patients in cirrohtics, and we think that this is where the medical benefit is really the most amazing versus offerings in the past. And so, as patients open up toward all-oral therapies and warehouse patients come forward, we expect to see many of the most advanced cases and the sickest patients coming forward for these.

So we think this regimen is very, very well-placed with very strong data sets to support the treatment, and hopefully cure of that very severe patient population. So all that, I think together speaks for a very, very strong marketing opportunity.

Great. Thank you.

Thank you. Your next question come from Howard Liang with Leerink.

Thanks very much. On the second-generation protease inhibitor ABT-439, can you talk about the -- the [particulars of] Phase 2a, what is the design of Phase 2a? Is that a 12 week trial, and then should we expect SVR data before AbbVie moves into Phase 2b?

Yes. So thanks for the question, Howard. So as you know, so ABT-493 is the next-generation protease inhibitor. And where it currently sits -- maybe that's the best way to speak -- where it currently sits is, it's in finishing up monotherapy studies for ABT-493, and also monotherapy studies for ABT-530, which is its 2b combination partner -- that's AbbVie's next-gen NS5A -- so they are each in single agent studies in HCV patients.

Those are short-term treatment duration, just a few days of therapy. And then what we are going to do, it has also been announced that Phase 2b studies are going to be initiated mid this year. So we will be using data sets that we are accumulating now, and propelling into Phase 2b mid this year.

The combination studies have been done in healthy volunteers already. So combination studies in HCV patients in Phase 2b would be the next step.

Is there a plan to present the data so far from single agent?

Yes. There is a -- as you know the single agent data first came out at CROI. So we are a little bit in arrears of getting some of the data out.

There is such a wealth of data coming out of the Phase 3 program, with all the Phase 3 studies, and some of the other studies that have been around the more advanced regimens. But we did put some data out on ABT-493 -- the virology part of it at CROI, and we expect at future meetings -- we haven't decided quite yet which venues, but we have all the data sets that are being put together for future meetings. So you can look forward to a very regular stream of updates on the next-gen program going forward.

Great. Just maybe one more question on your early stage HCV program, regarding the [nuc] and the cyclophilin inhibitor, which one is more advanced? And I think I might have missed it, I think you said your -- advanced one is program 714. Does that mean that they will move into the clinic?

Yes. So before -- I know before you got into banking, you were in the industry. So the challenge with clinical candidates is you are never really done, until you are done.

You have 20 boxes to check, and if you haven't checked the 20th box, you're not done. And sometimes when you check a box, two other boxes become unchecked.

And so, it's iterative. And as much as I would love to be able to legislate it, you really can't. You let the science drive you.

Now that said, I would say we have got more boxes checked on the cyclophilin side than on the nuc. But sometimes science comes together, and then the remainder of each of those boxes can get checked very quickly, or one that is behind a little bit can pass the others. So but right now, just sort of handicapping all of that, I would say our cyclophilin programs program is a little bit closer.

Then once that's done, we will propel into the IND-enabling studies. If we are successful in doing that this year, then it takes a few quarters to accomplish that, before you can then get into the clinic. So just a little bit of a general guideline around that.

But that's about the resolution of it. Right now, we are very encouraged by it. We like the cyclophilin mechanism.

It's a host targeted approach, which is very different than pretty much every company in the industry is taking, other than our other partner, Novartis. And as we announced this morning, we are embarking upon combination studies with NS5A and cyclophilin.

So what we -- Novartis has the most advanced cyclophilin inhibitor in the industry. We are pleased to be their partner with our NS5A molecule. We know that those two mechanisms make a great combination.

And so in a way, our program with Novartis will begin to foreshadow some of the results that we may be able to start to deliver with our own cyclophilin inhibitor. And we will be looking actively at the point, we get the candidate, to create other combinations using our cyclophilin inhibitor.

So it will really round out a variety of different approaches we are taking now. We have, obviously two clinical stage assets in HCV with AbbVie that are being pursued in three different product regimens.

We have one now in combination with Novartis that is going to be pushing forward, and we still have two unpartnered HCV assets ourselves which we can double up, or probably more likely take each of them out forward into yet even more combinations. So for those who are counting companies with various combinations in play, we think Enanta's doing really good on that score.

Thank you very much.

You're welcome.

Your next question comes from Brian Skorney with Robert W. Baird.

Good morning. This is Morgan on for Brian. I just had a quick question, with something that AbbVie mentioned on their call, they said they have a big focus right now on the treatment guidelines. I was wondering if you had discussed anything with them on that, in terms of what their plan is?

Yes. So we have frequent discussions with AbbVie, and we are very, very close with them. But I probably really shouldn't comment on things that they have commented on, in regards to that.

Again, on the treatment guidelines, probably -- with 450 containing regimens, again, AbbVie will have the -- I would defer you to really, reading that message from what AbbVie says. That's probably the best way to say it.

Okay. Thanks.

You're welcome.

Your next question comes from Lisa Bayko with JMP Securities.

Hello, thanks for taking my questions. I just want to turn attention to your pipeline a little bit. Could you maybe give us a sense of the specific areas of focus, or as granular as you would like to get right now, are you moving outside of infectious disease, or will those continue to be a theme? Thanks a lot.

Thanks for the question, Lisa. So we have built the last decade of the business around infectious disease, and we like the area. We like the focus. There is certainly a lot of synergies we derive from having a focus -- in that focus. And I will say that we are beginning to pilot a few new areas in infectious disease.

Those areas that we are looking at -- it is a combination of technical analysis and maybe feasibility studies in the lab. It is also commercial analysis, looking for market opportunities, competitive landscape and figuring out how we fit in there, and can we really make a strong business driver out of one of these new areas?

So it is -- a few of those that are being explored. We are also looking at ways in which, if there are ways that we can sort of get one step removed from something that we have a core strength in, that might be the way in which we would maybe tiptoe into a new area outside of infectious disease.

So one way for example, is in the cyclophilins. We think the platform there is interesting. We have great chemical expertise there, in terms of molecular surgery on the molecules in that space.

We have a great command of the intellectual property, have stayed in that area, begun to carve out areas in there. We think that is an area where, as you know -- and don't read too much into this -- but that mechanism first came into prominence in transplantation, and then later has been found to be interesting in hepatitis C.

So could there be other areas that one might branch into? These are all things that we are thinking about exploring, analyzing and so forth. But we don't want to quite give guidance on what the specifics of those would be, until we have really cemented all of those elements of the analysis. I think that is sort of the critical next step, but it's very active.

Great. Thank you.

You're welcome.

(Operator Instructions).

Your next question comes from Ravi Mehrotra with Credit Suisse.

Good morning. Thanks for taking my question. This is Koon actually, asking a question on behalf of Ravi. I had two questions in particular. So the first is, I just wanted to get your thoughts on potentially shortening the duration with your second-gen ABT-493 regimen.

And then the other question I had, was regarding the Phase 2a data, regarding your opt in decision for 493. When the complete Phase 2a data is available, could you maybe elaborate on the factors that you would consider in making your decision to opt in? Thanks.

Okay. Sure. So the next-gen regimen, it's positioned a little bit behind our first couple of offerings that are going to be going forward. And part of the reason that it is positioned behind, is because the other ones were in advanced, and we came up with product profile for things we were looking for in a next-generation product. And so, we worked on that product profile.

We derived molecules and advanced the winners, both in our protease inhibitor program, as well as AbbVie's NS5A program. And so, we have now a next-gen next-gen combo going forward. So we are really excited by that, because it will really be an opportunity to -- maybe before I get into the profile, just think about the timing of the launch, and this will help create some perspective I think, for how we are thinking about this.

So we anticipate four product launches during four years time now. So later in 2014, we expect the US launch on the 3-D regimen. Early 2015, we expect the approval and launch of the 3-D regimen. ¶ In 2016, we expect the 2-D regimen in Japan. And then 2017, would be the time frame for the approval and launch of the next-gen.

So in advance of the next-gen approval and launch, we are anticipating three other approvals and launches, each of which are associated with milestones and royalties. So if you look about it, at the competitive landscape, certainly we will have our offering out there, Gilead will have some, and maybe there will be another company or two by that time that has come in. And so, we really wanted to have a profile that was competitive for all times, against various of these -- very optimized other regimens.

So we have built in a number of factors, one of which is a very, very good virology pan genotypic profile, very good activity against key resistant mutants, which is also important to have in a next-generation profile. It's ritonavir-free, doesn't require boosting.

We will look and prove hopefully over time, that it doesn't need ribavirin. But until we have actually done those comparative studies, that is something we hope to be able to show. So we are expecting that it has a good chance of being ribavirin fee.

We also expect that it could be a 12 week or less regimen from a standpoint of timing. So getting to your duration question, what could this look like? We believe it has a good chance of trimming down the treatment duration as well, and you can expect that to be part of how we go about characterizing this combination.

How low can you go is the -- one of the questions in the industry? We are pretty satisfied with the cure rates we are seeing in 12 weeks.

Obviously, if you can shave that off without giving up anything on efficacy -- and I underscore that, because I think we are going to see sort of maybe a frenetic state in the industry, of people looking for a shaving weeks off treatments. Because especially for later comers, because in many ways that is all they have to work with, because they are further behind, and the cure rates of the regimens in front of them are very, very high, and the tolerability and safety is quite good. So from that dimension you might think that cure rate -- or I am sorry, curation might be the final frontier.

And we, as well as others of course, are going to be tapping into that duration question, and looking as far as we can reasonably go. But the good news is, we have got very good cure rates already, in a very good reasonable timeframe. And we believe that the focus really is on the cure rates. And -- but we will ask those questions in our Phase 2 (inaudible) program.

Regarding our opt in, a very interesting question. There are lots of factors to be thinking about there.

One is -- there -- each option is actually a very good option for Enanta. I mean, we can -- the default is we do not opt in, and we get approval milestones. We will get $80 million in approval milestones on that program, and we will get a double-digit worldwide royalty on the protease. So that is not a bad outcome.

The other -- the flip though is, if we do opt in, we get slightly reduced milestones. So we will get $40 million in milestones if we opt in, and those are approval milestones in the ex-US, and we will get a double-digit royalty ex-US, just like we would otherwise.

But in the US, we have the opportunity to co-develop the molecule. So we -- in order to do that, though we need to co-fund R&D expense. We need to co-fund commercialization expense, and exchange for that, we get a portion of the profits from the product, as opposed to a double-digit royalty.

So you can expect, there is a fair number of moving parts and assumptions that one needs to make in there, in analyzing this and thinking about R&D costs, commercialization costs, time frames to market et cetera, et cetera. And so, we will think about it carefully as time comes on here, and really ultimately make a decision in terms of, what is the best way to deploy capital? And we can choose to pay R&D dollars in this activity.

It brings us to the commercialization stage company in 2017 time frame. Or we could alternatively deploy that same capital in other ways, just take the more passive route, which would still be economically for the Company, very, very attractive.

And then, use those R&D dollars to augment the pipeline with things that we could ultimately --ultimately commercialize, and maybe even solely commercialize ourselves. So these are a combination of financial and strategic questions that we will be mulling over the next month.

Thank you.

Thank you. We have a follow up question coming from Howard Liang with Leerink.

Thanks. Just a follow-up on the opt in decision, what would be your assumption in terms of whether -- for the follow-on version, whether you need [basically] an active comparator or basically a single arm study to get approval?

Yes, it is a very good question. I think looking that far ahead, and it is -- you can say, well, if we are going to be in Phase 2b this year -- it's probably mid this year, it's probably not a question for this year. It's probably one for after that.

But I think it's going to be very interesting. You raise a good question about, now that -- or not now, but presumably in the not so distant future, there will be a couple of all-oral regimens on the market, one from Gilead and one from AbbVie and Enanta, and will those needs to be used as active comparators in studies or not, now that there will be new standards of care?

And that is a question that I don't think we can quite answer yet. It will be one, in which there will be obviously a lot of discussions with FDA, and other regulatory bodies in terms of doing that.

I would say that there is an advantage for us, if that is required, because we certainly have a very good regimen of our own that we control, to be able to use that as an active arm. So that is an advantage that we have, really versus most of the other companies who would be faced with that same possibility.

So how that will play out is going to be very interesting to watch. And we will see how the regulators evolve in their decision-making on that score. But I think we just don't know yet.

I have if a couple of follow-up questions, on 493 in terms of the profile. You mentioned its resistant profile is superior, but can you talk about what is most important from your perspective? What resistant mutations are most important to control, whether -- it seems like very good activity against R155, and has good activity D168, but it's probably not as potent there. I don't know if you think that is a liability.

And second, is how is this compound metabolized?

So I think the R155 is one of the key mutants. I mean, we looked at a panel of several of them, as well as several genotypes.

So when you are looking at a, say a genotype 1 mainly product, it is one set of criteria for just the wild type virus obviously, and then you have various resistant mutants. But then when you amplify, you need to have activity against the wild type, those resistant mutants and against genotype 1, and then you start layering on questions about all the other genotypes.

It becomes a little bit of a whack a mole, because you -- again you come back, you optimize one number, and you change another number and so on and so forth. So it is a -- you have to look at it sort of on balance. It's got a very good profile against most of the key genotype 1 resistant mutants for sure.

Yes, some are going to be better than others, but the 155 is a really important mutation,168 too. And I think you just need to look at it, and balance with that.

And the other thing that's equally important in all of this is, is what are the characteristics of the marriage partner in the combination? And that is where 530 comes in, and 530 was a next-generation NS5A optimized by AbbVie. It has a very good profile as well.

So net-net, it's a very, powerful combination. There is always going to be something that is slightly less potent than the other, in terms of one of these variants. But the question is will that really come into play, once you have the combination actively going on it?

You have got to get into the viral kinetics and a whole bunch of other questions. We think it's a very strong and competitive profile but we will have Phase 2 data soon enough, and we will really be able to fully characterize it.

And the metabolism?

I'm sorry, the metabolism. I -- off the top of my head, I don't recall. And the other part of it is, I don't believe we have disclosed that publicly yet.

And if we -- and before we disclose some of those kinds of details, we would we and AbbVie would agree on the content, and the venue for release of that information. So I am not prepared to comment on that today.

Okay. Thank you.

And at this time, I am not showing any further questions. I will turn it back over to you, Jay.

Good. Well, thank you very much. I would like to conclude by reminding everyone that Enanta's HCV partnering strategy has provided us multiple opportunities for commercial success in the highly competitive and global HCV space. This strategy has positioned Enanta to be one of a select few companies, with the potential to benefit from these new all-oral interferon-free regimens for hepatitis C genotype 1 starting 2014.

We have several product candidates, each of which is being developed within different combination regimens, offering a diversification of combination types, and offering multiple shots on goal. We are well-positioned to advance our own internally developed bicyclides for drug-resistant bacterial infections, as well as compounds for hepatitis C, and other disease areas in which we choose to pursue research.

And finally, we are in very strong financial position, currently having at least two years of cash, and partners providing non-dilutive funding that include significant potential milestone and royalty payments.

Thank you, everyone for taking the time to join us on the call today. Feel free to contact us in the office if you have any further questions. We look forward to providing additional updates in the near future.

Thank you. Ladies and gentlemen, thank you for joining today's conference. Thank you for your participation. You may now disconnect.