Enanta Pharmaceuticals, Inc.
Annual Report 2024

Plain-text annual report

Annual Report 2024 We are proud to report that 2024 was marked by progress toward accomplishing many of our goals. We made strides in advancing our clinical-stage candidates for respiratory syncytial virus (RSV) as well as leveraging our proven expertise in medicinal chemistry to expand our discovery efforts in immunology. Both our pipeline and R&D efforts underscore our commitment to discovering and developing novel, best-in-class medicines to transform the lives of patients with curative therapies. Our development programs in virology are focused on RSV, an area of significant unmet need with no therapies currently available. We have two clinical-stage candidates for the treatment of RSV — zelicapavir (EDP-938), an N-protein inhibitor, and EDP-323, an L-protein inhibitor. In December, we announced positive data from a first-in-pediatrics Phase 2 study evaluating zelicapavir in both hospitalized and non-hospitalized children aged 28 days to 36 months with RSV. Prior to that, in September, we reported positive data from a Phase 2a challenge study of EDP-323. We believe the results for EDP-323 are among the strongest ever reported in an RSV challenge study, raising the high bar set by zelicapavir, and demonstrating the potential for our leading clinical candidates in RSV to be developed as once-daily single agents or in combination for specific high-risk populations. Looking forward, we expect to report results from RSVHR, our ongoing Phase 2b study of zelicapavir in adults with RSV infection who are at high risk of complications, in the third quarter of 2025. In 2024, we expanded our pipeline into an adjacent area, immunology, where we are concentrating on diseases with high unmet medical need, validated targets and a clear clinical development path. We made notable progress as we focused on designing and developing highly potent and selective, oral small molecule inhibitors for the treatment of inflammatory diseases. Specifically, in November, we announced the selection of EPS-1421, a novel, potent and selective oral inhibitor of KIT, designed to treat chronic spontaneous urticaria and other mast cell- driven indications by depleting mast cells, thereby addressing a primary driver of these diseases. We plan to conduct scale-up activities and IND enabling studies for EPS-1421 in 2025. We also introduced a second immunology program aimed at developing an oral treatment of type 2 immune-driven diseases. Specifically, we are focused on discovering oral STAT6 inhibitors for atopic dermatitis, and other January 2025 At Enanta, we are dedicated to our mission of discovering and developing groundbreaking small molecule drugs for diseases with significant unmet need. To Our Shareholders, indications, by blocking the IL-4/IL-13 signaling pathway, thereby addressing a primary driver of these diseases. Enanta’s prototype inhibitors in development demonstrate potent activity and high selectivity for STAT6 over other STATs in both biochemical and cellular assays. We continue to evaluate multiple compounds in preclinical studies and expect to select a development candidate in the second half of 2025. Operationally and financially, we ended 2024 in a solid position. As of September 30, 2024, Enanta had $248 million in cash, cash equivalents and marketable securities, in addition to a pending net operating loss refund of approximately $30 million from the Internal Revenue Service. This cash position is enhanced by the ongoing portion of royalty revenue from AbbVie’s sales of MAVYRET®/MAVIRET®, which remains a leading treatment for hepatitis C virus. In 2023, we monetized 54.5% of our royalties, and as such we still receive 45.5% of all royalties. Through prudent cash management, combined with our ongoing royalties, we are able to support our programs into fiscal year 2027. This provides us with a strong foundation as we execute our clinical and corporate goals, working to deliver improved value to all our stakeholders — patients, caregivers, physicians, and shareholders. As we turn the corner on 2024 and look ahead to 2025, I believe we are in a strong position on multiple fronts — financially, scientifically, clinically and operationally. We enter the new year with a continued focus on advancing our programs in a capital efficient manner and will also evaluate partnering opportunities. We look forward to reporting on the next milestones in 2025, including announcing data from our RSVHR trial, further progressing our KIT and STAT6 programs, and continuing to expand our immunology portfolio. In closing, I would like to recognize the patients and caregivers involved in our ongoing and completed studies. I would also like to acknowledge our employees for their dedication and hard work in the past year. And again, I’d especially like to thank you, our shareholders. We owe you our sincere gratitude for the opportunity to execute our mission of developing transformative medicines and appreciate your support to do so. Sincerely, Jay R. Luly, Ph.D. President and Chief Executive Officer x UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended September 30, 2024 OR ☐ TRANS R ITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 001-35839 ENANTA PHARMACEUTICALS, INC. (Exact name of registrant as specified in its charter) DELAWARE 04-3205099 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification Number) 4 Kingsbury Avenue Watertown, Massachusetts 02472 (617) 607-0800 (Address, including zip code, and telephone number, including area code, of registrant’s principal executive offi f ces) Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading Symbol(s) Name of each exchange on which registered Common Stock, par value $0.01 per share ENTA NASDAQ Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defin f ed in Rule 405 of the Securities Act. Yes ☐ No ☒ Indicate by check mark if the registrant is not required to fil f e reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for f such shorter period that the registrant was required to fil f e such reports), and (2) has been subj u ect to such filin f g requirements for f the past 90 days: Yes ☒ No ☐ Indicate by check mark whether the registrant has submitted electronically every I r nteractive Data File required to be submitted pursuant to Rul R e 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for f such shorter period that the registrant was required to submit such files): Yes ☒ No ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated fil f er,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act: Large accelerated file f r ☐ Accelerated filer ☐ Non-accelerated filer ☒ Smaller reporting company ☒ Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised fin f ancial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrant has file f d a report on and attestation to its management’s assessment of the effe f ctiveness of its internal control over fin f ancial reporting under Section 404(b) of the Sarba r nes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting fir f m that prepared or issued its audit report. ☐ If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the fil f ing refle f ct the correction of an error to previously issued financial statements. ☐ Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers dur d ing the relevant recovery period pursuant to §240.10D-1(b). ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rul R e 12b-2 of the Exchange Act): Yes ☐ No ☒ The aggregate market value of the registrant’s common stock held by non-affi f liates of the registrant as of the last business day of the registrant’s most recently completed second fiscal quarter, March 31, 2024, based on the last reported sale price of the registrant’s common stock of $17.46 per share was $347,379,533. The number of shares of the registrant’s Common Stock, $0.01 par value, outstanding as of November 5, 2024 was 21,194,326 shares. DOCUMENTS INCORPORAT R ED BY REFERENCE Information for f Part III of this Form 10-K will either (i) be incorporated by reference to portions of the registrant’s Defin f itive Proxy Statement for f its 2025 Annual Meeting of Stockholders, or (ii) if the Defin f itive Proxy is not filed with the Securities and Exchange Commission within 120 days afte f r the registrant’s fiscal year end of September 30, 2024, it will be provided by amendment to this Form 10-K. As used in this Form 10-K, “Enanta,” “the Company,” “we,” “our,” and “us” refer to Enanta Pharmaceuticals, Inc., and “MAVYRET/MAVIRET” refers to AbbVie’s HCV regimen consisting of tablets of glecaprevir/pi / brentasvir, except where the context otherwise requires or as otherwise indicated. MAVYRET®, MAVIRET®, VIEKIRA PAK®, VIEKIRAX® and EXVIERA R ® are trademarks of AbbVie, Inc. NOTE REGARDING FORWARD LOOKING STATEMENTS This Annual Report on Form 10-K contains for f ward-looking statements concerning our business, operations and financial performance and condition, as well as our plans, objectives and expectations for our business operations and fin f ancial performance and condition. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking statements. In some cases, you can identify f f or f ward-looking statements by terminology such as “aim,” “anticipate,” “assume,” “believe,” “contemplate,” “continue,” “could,” “due d ,” “estimate,” “expect,” “goal,” “intend,” “may,” “objective,” “plan,” “predict,” “potential,” “positioned,” “seek,” “should,” “target,” “will,” “would,” and other similar expressions that are predictions of or indicate fut f ur t e events and fut f ur t e trends, or the negative of these terms or other comparabl a e terminology. These for f ward-looking statements include, but are not limited to, statements about overall trends, royalty revenue trends, research and clinical development plans, liquidity and capital needs and other statements of expectations, beliefs, fut f ur t e plans and strategies, anticipated events or trends and similar expressions. These forward-looking statements are based on our management’s current expectations, estimates, forecasts and projections about our business and the industry i r n which we operate and our management’s beliefs and assumptions. These forward-looking statements are not guarantees of fut f ur t e performance or development and involve known and unknown risks, uncertainties and other factors that are in some cases beyond our control. As a result, any or all of our forward-looking statements in this Annual Report on Form 10-K may turn out to be inaccurate. Factors that may cause actua t l results to differ materially from current expectations include, among other things, those listed under “Risk Factors” and discussed elsewhere in this Annual Report on Form 10-K. These for f ward-looking statements speak only as of the date of this Annual Report on Form 10-K. Except as required by law, we assume no obligation to upda u te or revise these for f ward-looking statements for any reason, even if new infor f mation becomes availabl a e in the future. You should, however, review the fac f tors and risks we describe in the reports we will file from time to time with the SEC afte f r the date of this Annual Report on Form 10-K. ENANTA PHARMACEUTICALS, INC. ANNUAL REPORT ON FORM 10-K For the year ended September 30, 2024 INDEX Item No. Page Summary of Principal Risk Factors .......................................................................................................... 1 PART I 1. Business .................................................................................................................................................... 3 1A. Risk Factors............................................................................................................................................... 32 1B. Unresolved Staff Comments ..................................................................................................................... 56 1C. Cybersecurity Risk Management and Strategy......................................................................................... 56 2. Properties .................................................................................................................................................. 57 3. Legal Proceedings..................................................................................................................................... 57 4. Mine Safety Disclosures ........................................................................................................................... 57 PART II 5. Market for the Company’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities ....................................................................................................................................... 58 6. Reserved.................................................................................................................................................... 59 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations................... 60 7A. Quantitative and Qualitative Disclosures about Market Risk................................................................... 70 8. Consolidated Financial Statements and Suppl u ementary Data................................................................... 70 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure................... 71 9A. Controls and Procedures ........................................................................................................................... 71 9B. Other Information ..................................................................................................................................... 71 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections...................................................... 71 PART III 10. Directors, Executive Officers and Corpor r ate Governance........................................................................ 72 11. Executive Compensation........................................................................................................................... 72 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. 72 13. Certain Relationships and Related Transactions, and Director Independence ......................................... 73 14. Principal Accounting Fees and Services................................................................................................... 73 PART IV 15. Exhibits and Financial Statement Schedul d es ............................................................................................ 74 16. Form 10-K Summary ................................................................................................................................ 76 Signatures.................................................................................................................................................. 77 [THIS PAGE INTENTIONALLY LEFT BLANK] 1 SUMMARY OF PRINCIPAL RISK FACTORS This summary b r riefly f states the principal risk i s a k nd uncertainties facing our business that could aff a ect f our common stock, which are only a l select portion of t o hose risks. A more complete statement of t o hose risks and uncertainties is set for f th in the Section 1A “Ri “ sk i Factors” r of this repor e t. This summary is qualifie f d in its entirety b t y t b hat more complete statement. You should careful f ly read the entire statement and “Risk Fac F tors” when consider d ing the risk i s a k nd uncertainties as part of y o our evaluation of a o n investment in our common stock. • We will require substantial additional funding to achieve our goals. If we do not generate sufficient fun f ding from our existing collaboration and any future collaborations, we will need to obtain additional funding to support our operations. A failure to obtain fun f ding when needed could for f ce us to delay, limit, reduce or terminate some or all of our product development effo f rts. • Our revenues for f the next several years are substantially dependent upon AbbVie’s success selling MAVYRET/MAVIRET, which includes our protease inhibitor, glecaprevir, for f the treatment of HCV. • AbbVie may continue to experience lower sales volume in fut f ur t e quarters, primarily due to a reduc d tion in diagnoses and treatment rates of HCV. • AbbVie’s MAVYRET/MAVIRET regimen will have to continue to compete successfully against other products and therapi a es for HCV, including competition for exclusive arrangements with third-party payors and governmental entities as well as price competition, both in the U.S. and in other markets worldwide. • Beginning afte f r June 30, 2023, 54.5% of our reported revenues represent payments that go directly to OMERS following our April 2023 sale of that portion of our MAVYRET/MAVIRET royalties earned through June 30, 2032, subj u ect to a cap on aggregate payments to OMERS equal to 1.42 times the purchase price. • Any fur f ther changes in royalty revenue earned under our AbbVie agreement or in the level of expenses associated with our clinical development programs, or both, will cause our results of operations to flu f ctuate from period to period. If AbbVie continues to experience lower sales volumes in future quarters combined with research and development expenses in support of our advancing programs, we expect to have continuing operating losses for f the for f eseeable future. • Many of the preclinical and clinical development activities required for f our product candidates must be contracted out to contract research organizations, or CROs, at significant expense. We expect these expenses to increase subs u tantially in the coming years if we are abl a e to advance any of our compounds into registrational clinical studi t es, as well as any impact of inflation, the combination of which will likely result in continuing operating losses. • There are many companies developing potential therapies for RSV, SARS-CoV-2, type 2 immune and mast- cell-driven diseases and other virology and immunology indications, which may result in others discovering, developing or commercializing products befor f e we do or doing so more successful f ly than we do. • In most of the disease areas currently the subject of our research and development efforts, there are other companies with product candidates that are more advanced than ours. • If we are not “fir f st to market” or suffi f ciently diffe f rentiated with one of our product candidates in one or more of our targeted disease indications, such as COVID-19, our competitive position could be compromised because it may be more diffi f cult for us to obtain marketing appr a oval for f that product candidate and/or market acceptance of that product candidate as a fol f low-on competitor. • Clinical drug development for f viral infec f tions and immunology indications involves a lengthy and expensive process with uncertain timelines, uncertain outcomes and evolving clinical endpoints for regulatory approvals. If clinical trials of any of our proprietary product candidates are prolonged or delayed, we may be unable to commercialize our product candidates on a timely basis. • None of our product candidates in our clinical development pipeline has yet to advance beyond Phase 2 clinical trials. • Changes in regulatory r r equirements, policies and guidelines, including guidelines specifically addressing requirements for f the development of treatments for f RSV, SARS-CoV-2 or other virology and immunology 2 indications could also delay the time required to reach regulatory a r ppr a oval of one or more of our product candidates. • The results of clinical trials are inherently uncertain. The results of preclinical studies and early clinical trials of our product candidates may not be predictive of the results of later-stage clinical trials, if any, including sufficient efficacy and an acceptable safet f y and tolerability profile. • Several companies in the disease areas we are seeking to address have suffe f red significant setba t cks in advanced clinical trials due to adverse safet f y profiles or lack of effi f cacy, notwithstanding promising results in earlier studi t es. • Clinical trials involving our product candidates may be suspended or terminated at any time for f a number of safety-related reasons. For example, administering any product candidate to humans may produce undesirabl a e side effe f cts not identifie f d in preclinical studi t es. • We may choose to test any of our clinical candidates preclinically and/or clinically in combination with other compounds with different mechanisms of action. Any adverse results from such testing may have adverse consequences for the further development potential of not only the combination but also the clinical candidate itself as a monotherapy a or in combination with other mechanisms of action. • We may delay or terminate the development of a product candidate at any time if we believe the perceived market or commercial opportunity does not justify further investment. • We could be unsuccessful in obtaining or maintaining adequate patent protection for f one or more of our product candidates. • We are competing to develop intellectua t l property in areas of small-molecule drug r development that are highly competitive. • We cannot be certain that patents will be issued or granted with respect to our patent applications that are currently pending, or that issued or granted patents will not later be found f to be invalid and/or unenfor f ceable, be interpreted in a manner that does not adequately protect our products, or otherwise fail to provide us with any competitive advantage. • We cannot be certain that we were the fir f st to file patent applications on our product candidates or for f their uses, or that our product candidates will not infringe patents that are currently issued or that are issued in the future. • We rely on third parties to manufacture our clinical drug supplies, monitor, support, conduct and/or oversee clinical trials of our product candidates that we develop independently. 3 PART I ITEM 1. BUSINESS BUSINESS Overview We are a biotechnology company that uses our robust, chemistry- r driven approach and drug discovery capa a bi a lities to discover and develop small molecule drugs r with an emphasis on virology and immunology. Virology gy We discovered glecaprevir, the second of two antiviral protease inhibitors discovered and developed through our collabor a ation with AbbVie for the treatment of chronic infec f tion with hepatitis C virus r , or HCV. Glecaprevir is co- formulated as part of AbbVie’s leading brand of direct-acting antiviral, or DAA, combination treatment for HCV, which has been marketed under the tradenames MAVYRET® (U.S.) and MAVIRET® (ex-U.S.) (glecaprevir/pi / brentasvir) since 2017. Our active development programs in virology are foc f used on respiratory s r yncytial virus r , or RSV, the most common cause of bronchiolitis and pneumonia and leading cause of U.S. hospitalization in young children and a significant cause of respiratory i r llness in older adul d ts, with estimates suggesting that on average each year RSV leads to three million hospitalizations globally in children under 5 years old and 177,000 hospitalizations in the U.S. in adults over the age of 65. We also have development programs in virology for the following disease targets: • SARS-CoV-2, the virus that causes COVID-19, with estimates suggesting that COVID-19 continues to have a disease burden greater than influenza, including persistent cases of infect f ion often referred to as long COVID and hospitalization and death among the elderly and those with comorbidities, while new variants continue to emerge on a regular basis; and • Hepatitis B virus r , or HBV, the most prevalent chronic hepatitis, which is estimated by the World Health Organization to affect f close to 300 million individuals worldwide. Immunology gy In immunology, we are designing and developing highly potent and selective, oral small molecule inhibitors for the treatment of inflammatory disease by targeting key mechanisms of immune response. Our initial foc f us has been on mechanisms involved in an overactive type 2 immune response, which is the reaction of the body's immune system when the body detects infect f ions or allergens and sends out immune cells to fight them. An overactive response is a primary r driver of a number of infla f mmatory d r iseases. Our initial immunology targets involve the fol f lowing mechanisms of immune response: • The receptor tyrosine kinase, known as KIT, which is critical for regulating mast cell activity; and • STAT6, a transcription fact f or uniquely responsible for interleukin-4 (IL-4)/interleukin-13 (IL-13) cell signaling, the fac f tors that play important roles in regulating the responses of lymphocytes, myeloid cells, and non-hematopoietic cells within the immune system. These mechanisms are implicated, along with others, in several diseases, and it is not uncommon for f an effi f cacious treatment for one disease to be tested and approved for f other immunology indications. We currently plan to focus our immunology drug r development efforts on the following disease indications: • Chronic spontaneous urticaria, or CSU, a severely debilitating, chronic infla f mmatory skin disease manifes f ted by hives, angioedema, which is swelling of soft tissues, or both, but with no identifie f d triggers, which has an estimated global prevalence of between 0.5% – 1% of the population, resulting in appr a oximately 1.75-3.5 million people with this condition at any given time in the U.S. alone; and • Atopic dermatitis, or AD, a chronic dermatological disease characterized by dry, r red, inflamed, irritated and itchy skin with significant quality of life impacts such as leading a limited lifes f tyle, avoidance of social 4 interactions and a reduced range of activities, with AD affe f cting 7.3% of the US adult population, of whom ~40% have moderate to severe disease. As of September 30, 2024, we had $248.2 million in cash, cash equivalents and short-term marketable securities. We believe that our existing cash, cash equivalents, and short-term marketable securities as of September 30, 2024 as well as the cash flo f ws from our retained portion of future HCV royalties will enable us to fund our operating expenses and capital expenditure requirements into fis f cal 2027. We have based this estimate on assumptions that may prove to be wrong, and we could exhaust our availabl a e capital resources sooner than we expect. See “Liquidity and Capital Resources.” Because of the numerous risks and uncertainties associated with clinical development and commercialization, we are unabl a e to accurately predict the timing or amount of increased expenses or when, or if, we will be able to achieve or maintain profita f bi a lity. Until such time, if ever, as we can generate subs u tantial revenue sufficient to achieve profit f ability, we expect to finance our operations through a combination of equity offe f rings, non-dilutive financings, collabor a ations, strategic alliances or licensing agreements. We may be unabl a e to raise additional funds f or enter into such other agreements or arrangements, when needed, on fav f orable terms, or at all. If we are unabl a e to raise capital or enter into such agreements as, and when, needed, we may have to significantly delay, scale back or discontinue the fur f ther development and commercialization effo f rts of one or more of our produc d ts, or may be forced to reduce or terminate our operations. Our Who W lly- l Owned Pro P gr o ams Our primary wholly-owned research and development programs are in virology and immunology. RSV. In virology, we have two clinical stage product candidates for f RSV – zelicapavir (formerly EDP-938) and EDP-323. Both of these compounds are replication inhibitors that work by shutting down replication and the production of new virions, as opposed to the other mechanism in development of fus f ion inhibition that only blocks viral entry. r Zelicapavir, which has Fast Track designation fro f m the U.S. Food and Drug Administration, or FDA, is a potent inhibitor of the RSV N- protein for f both major subgr u oups of RSV, referred to as RSV-A and RSV-B. Zelicapavir is being studied in two Phase 2 studi t es, each in a different high risk patient population. EDP-323, which also has a Fast Track designation from f the FDA, is an inhibitor of the RSV L-protein for both major subgr u oups of RSV that has recently completed a Phase 2 challenge study. t • Zelicapavir - N-p N rotein Inhibitor Can C didate: We have studi t ed zelicapavir in two Phase 2 studies that were p p designed to be proof-o f f-concept and exploratory s r tudies in otherwise healthy young adul d ts (not at high-risk for serious outcomes with RSV) to understand the viral response in the context of RSV infection. With these studi t es, zelicapavir has demonstrated a fav f orable safety profil f e, consistent with that observed in over 500 subj u ects exposed to zelicapavir to date. We believe that zelicapavir has the greatest potential to show optimal effi f cacy in high-risk populations since these patients have reduced RSV immunity, which manifests in a higher and longer dur d ation of viral load and greater disease severity, allowing a bigger window to realize the full potential of zelicapavir. Based on its growing safet f y profile, we are continuing to evaluate zelicapavir in high- risk populations, including pediatric patients and high-risk adul d ts, all of which have significant unmet need:  Pediatri t c Stu S dy of Zelicapav a ir: RSVPEDs is a Phase 2 study t of zelicapavir in 96 pediatric patients, aged y f p >28 days to <36 months. This dose-ranging, randomized, double-blind, placebo-controlled study, t is evaluating multiple ascending doses for fiv f e days in two age cohorts to determine safet f y, tolerabi a lity, and pharmacokinetics, as well as a second part evaluating antiviral activity at the selected dose. In August 2024, we announced completion of enrollment of the RSVPEDs study. t We anticipate reporting topline data in December 2024.  High- i Risk i Adul d ts Study of Zelicapavir: We also have an ongoing Phase 2b study in high-risk adul d ts, g y f p including those who are older than 65 years of age and those who have asthma, chronic obstruc r tive pulmonary disease, or COPD, or congestive heart fai f lure. Approximately 180 patients will be treated with zelicapavir or placebo for f five days with a primary endpoint of time to resolution of RSV lower respiratory t r ract disease symptoms. Enrollment is progressing and we are targeting enrollment completion in the current Northern Hemisphere RSV season, with topline data expected in 2025. • EDP- D 323 - L-protein Inhibitor Can C didate: Our second clinical RSV candidate, EDP-323, is a novel, oral, p direct-acting antiviral selectively targeting the RSV L-protein, a viral RNA R -dependent RNA polymerase enzyme that contains multiple enzymatic activities required for f RSV replication. EDP-323 has sub-nanomolar potency against RSV-A and RSV-B in vitro and protected mice in a dose-dependent manner fro f m RSV infection as demonstrated by both virological and pathological endpoints. EDP-323 is not expected to have cross-resistance to other classes of inhibitors and has the potential to be used alone, or in combination with other RSV mechanisms, to broaden the treatment window or addressabl a e patient populations. In September 5 2024, we announced positive topline results for EDP-323 in a Phase 2a challenge study t of healthy adults infected with RSV. Treatment with EDP-323 achieved highly statistically significant (p=<0.0001) reductions in both viral load and clinical symptoms compared to placebo. Overall, EDP-323 was generally well tolerated and demonstrated a fav f orable safety profile f that was comparabl a e to placebo over 5 days of dosing through Day 28 of follow-up. There were no serious adverse events and no discontinuations of EDP-323. COVID-19. We leveraged our expertise in developing protease inhibitors to discover compounds specifically designed to target the SARS-CoV-2 virus r and potentially other coronaviruses. We selected EDP-235, an oral inhibitor of the coronavirus 3CL protease, also refer f red to as 3CLpro or the main coronavirus protease, or Mpro, for f clinical development. In addition to nanomolar activity against all SARS-CoV-2 variants tested to date, EDP-235 has potent antiviral activity against other human coronaviruses, enabling the potential for f a pan-coronavirus treatment, including possibly coronaviruses that may infect f human populations in the fut f ur t e. Furthermore, EDP-235 has good tissue distribution, and is proje o cted to have four times higher drug levels in lung tissue compared to plasma. • SPRI P NT I Study of EDP- D 235: In May 2023, we reported topline results from a Phase 2 clinical trial of EDP-235 in non-hospitalized, symptomatic patients with mild to moderate COVID-19 who were not at increased risk for developing severe disease, which was the only study population permitted by the FDA. EDP-235 met the primary endpoint of the trial and was generally safe a f nd well-tolerated.  A dose-dependent improvement in total symptom score was observed with EDP-235 treatment compared to placebo, which achieved statistical significance (p<0.05) in the 400 mg treatment group at multiple time points, starting as early as one day after the fir f st dose.  An analysis of a subset of six symptoms showed a two-day shorter time (5 days to 3 days) to improvement in patients receiving EDP-235 400 mg who were enrolled within three days of symptom onset (p<0.01).  No effe f ct on virologic endpoints as measured in the nose was detected due to the rapid viral decline in the placebo arm of this highly immunologically-experienced, standard risk population.  In the subset of patients who were nucleocapsid seronegative (indicating no recent natur t al infection with SARS-CoV-2), a viral load decline was observed at day five in the 400 mg group of 0.8 log overall and 1 log in the patients with symptom onset within three days befor f e treatment with EDP-235. We will continue to focus on potential collabor a ations to progress EDP-235, as we will not advance this candidate into Phase 3 studies on our own. Immunology. We are designing and developing highly potent and selective, oral, small molecule inhibitors targeting the following mechanisms of immune response: • KIT Inhibitors. We have a preclinical stage program to develop oral KIT inhibitors to treat CSU and potentially other indications by depleting mast cells, thereby addressing a primary driver of these diseases. We have discovered novel, potent and selective oral KIT inhibitors, which are in preclinical development. In the four f th quarter of 2024, we selected our lead development candidate, EPS-1421. This candidate demonstrates potent nanomolar activity in both binding and cellular func f tion assays and is highly selective for f KIT versus other kinases. This inhibitor also demonstrates strong in vitro and in vivo ADME properties. We expect to conduct scale-up activities and IND-enabling studies for this program in 2025. • STAT6 Inhibitors. We have a discovery stage program to develop oral inhibitors of the signal transducer and activator of transcription 6 transcription factor, known as STAT6, for f the treatment of type 2 immune driven diseases, initially focusing on AD and potentially other indications by blocking the IL-4/IL-13 signaling pathway, thereby addressing a primary driver of these diseases. We have discovered novel, potent and selective oral STAT6 inhibitors, which are being optimized in the discovery stage. Our prototype inhibitors demonstrate potent activity and high selectivity for STAT6 over other STATs in both biochemical and cellular assays. Our prototype inhibitors also demonstrate systemic in vivo target engagement afte f r ex vivo IL-4 stimulation. We are continuing to evaluate multiple compounds in preclinical studi t es. We expect to conduct lead optimization activities in this program in 2025. We have utilized our internal chemistry a r nd drug r discovery capabilities to generate all of our development-stage programs. We continue to invest subs u tantial resources in research programs to discover compounds targeting new disease areas. 6 Our Out-L t icensed Pro P ductst HCV. Two protease inhibitors developed through our Collabor a ative Development and License Agreement with AbbVie have been clinically tested, manufact f ur t ed, and commercialized by AbbVie as part of its combination regimens for HCV. We have received the ful f l $330.0 million of contractua t l milestone payments under the agreement related to clinical development and commercialization regulatory a r ppr a ovals of these regimens in majo a r markets, and we continue to earn royalties on sales of the second generation regimen. Glecaprevir is the HCV protease inhibitor we discovered that was developed by AbbVie in a fix f ed-dose combination with its NS5A inhibitor, pibrentasvir, for f the treatment of chronic HCV. This patented combination, currently marketed under the brand names MAVYRET® (U.S.) and MAVIRET® (ex-U.S.), is referred to in this report as MAVYRET/MAVIRET. This regimen is a once-daily, all-oral, fix f ed-dose, ribavirin-free treatment for HCV genotypes 1-6, or GT1-6, which is referred to as being pan-genotypic. In the U.S., EU and Japan it is approved as an 8-week treatment for patients with and without compensated cirrhosis and new to treatment. Today, these patients are estimated to represent the majo a rity of HCV patients in over 50 countries where MAVYRET/MAVIRET is sold by AbbVie and where MAVYRET/MAVIRET remains the only 8-week pan-genotypic HCV treatment. The first protease inhibitor developed through this collabor a ation, paritapr a evir, is part of Abbvie’s initial HCV regimens, which have been almost entirely replaced by MAVYRET/MAVIRET. Since August 2017, subs u tantially all of our royalty revenue has been derived from AbbVie’s net sales of MAVYRET/MAVIRET. Our ongoing royalty revenues fro f m this regimen consist of annually tiered, double-digit, per-product royalties on 50% of the calendar year net sales of the 2-DAA glecaprevir/pi / brentasvir combination in MAVYRET/MAVIRET. The annual royalty tiers return to the lowest tier for f sales on and afte f r each January 1. In April 2023, we sold 54.5% of our fut f ur t e MAVYRET/MAVIRET royalties for f a $200.0 million cash payment, subject to a cap of total royalties sold equal to 1.42 times the cash payment. Our Strategy Our primary objective is to become a leader in the discovery and development of small molecule drugs r with an emphasis on first-in-disease treatments for f RSV and best-in-class small molecule treatments for f diseases with significant unmet medical needs in immunology. Our strategy includes the following key elements: • Adva d nce clinical development of n o ovel virology product candidates for RSV. V We have ongoing clinical studi t es of two compounds discovered in our research program in RSV, a viral infection for f which there is currently no availabl a e effective treatment and as such there exists a substantial unmet medical need. • Adva d nce our preclinical immunology portfol f io of novel, o l ral inhibitors of targets f t or f the treatme t nt of type y 2 infl n ammatory dise i ases. We have ongoing discovery and preclinical effo f rts targeting multiple mechanisms of the immune response, including KIT, addressing mast cell driven diseases, with an initial foc f us on CSU. We also have a discovery stage program targeting the STAT6 pathway, with an initial foc f us on AD. • Invest in research and development of c o ompounds m in new disease areas. We are continuing to invest resources in our research programs in our effo f rts to identify a f nd advance additional novel compounds that have the potential to address significant unmet medical needs in new disease areas. We may also explore clinically other virologic or immunologic diseases where our assets could play a role. In addition, we may seek to augment our product candidate pipeline through the acquisition or in-licensing of external assets and/or technologies in one or more of our disease areas of focus. • Collaborate or out-license, where and when appropriate, with pharmaceutical partners t r o accelerate the development and commercialization of o o ur proprietary compounds and/or / create combination the t rapi a es. We may choose to collabor a ate with other companies to accelerate the global clinical development of one or more of our product candidates. We are also prepared to join for f ces, where and when appr a opriate, with collaborators with compounds targeting other mechanisms of action in diseases where there is the potential for better treatments with combination therapi a es, as we did in HCV. Our decisions regarding our proprietary programs will be based on the results of our clinical studi t es and the potential for collabor a ations, including combinations with one or more drugs r targeting other mechanisms of action in these diseases. • Continue to use our existing resources and future cash flow from our AbbVie V collaboration to fund f our research and development activities. We believe our existing financial resources as well as the cash flows from f our retained portion of fut f ur t e HCV royalties will enable us to fund our research and development programs into fiscal 2027. These resources will allow us to continue to advance compounds in clinical development and to progress the most promising candidates at least through proof-o f f-concept trials. Further development of any compound as a monotherapy a or in combinations with other therape a utic agents when we believe such combinations will provide the most promising opportunities will require additional fin f ancial resources. 7 Our Research and Development Pipeline The fol f lowing tabl a e summarizes our product development pipeline in our virology and immunology programs: *Fixed-dose antiviral combination contains glecaprevir and AbbVie's NS5A inhibitor, pibrentasvir. Marketed by AbbVie as MAVYRET® (U.S.) and MAVIRET® (ex-U.S.). **Continued development dependent on partnering. ***Initial indications. Potential fut f ur t e indications include asthma, chronic inducible urticaria (CIndU), eosinophilic esophagitis (EoE), prur r igo nodularis (PN) and others. Our RSV Program Backgr k ound and Overview of R o SV Respiratory s r yncytial virus r , or RSV, is a virus that infect f s the lungs and is the most common cause of bronchiolitis and pneumonia in young children and a significant cause of respiratory i r llness in older adul d ts, with estimates suggesting that on average each year RSV leads to three million hospitalizations globally in children under 5 years old and appr a oximately 177,000 hospitalizations in the U.S. in adults over the age of 65. There are currently no safe and effective therapi a es for RSV infection. Synagis, a prophylactic, monoclonal antibody-based treatment is approved for f infants considered at high risk for RSV infection; however, studies have found that most young children with RSV infect f ion were previously healthy, and thus would not normally be prescribed this prophylactic treatment. AstraZeneca and Sanofi ( f BEYFORTUS®) have long-acting monoclonal antibody products recently approved for f prophylaxis use in all infants and for those at risk up t u o 24 months of age and Merck (clesrovimab) a has a similar antibody that has completed Phase 3 development. A maternal vaccine has been approved for f inje n ction in women at 32-36 weeks (U.S.) & 24-36 weeks (EU) of pregnancy dur d ing September through January (ABRYSVO®/Pfizer). In addition, two RSV vaccines have been appr a oved in adults older than 60 years old (ABRYSVO®/Pfizer and Moderna/mRESVIA®) and approved RSV vaccine for f adul d ts over 50 years of age (GSK/A K REXVY®). While prophylaxis options have recently become availabl a e, there is still significant unmet need for safe a f nd effe f ctive antiviral treatments in patients at high-risk for serious outcomes of RSV. The adoption of vaccines in the elderly population is likely to be sub-optimal, especially as they are often only recommended with shared clinical decision-making. For perspective, universally recommended vaccines in this population have peak adoption rates from ~35% (shingles) to ~55% (flu). However, even with adoption, breakthrough infections will still occur, as vaccine efficacy is not complete. In the pediatric population, both the maternal vaccine and the prophylactic antibody approaches provide only passive immunity, which only lasts for a limited period of time and will just shift t f he time of fir f st RSV infect f ion to the next season. Similarly, uptake of these options will not be optimal and breakthrough infections will still occur in the population that does receive them. Finally, the antibody approach has a low barrier to the development of viral resistance. Thus, despite these options for prophylaxis, antiviral treatments are urgently needed. Scientif t ic f Backgr k ound RSV is a single-stranded, negative-sense RNA R virus. There are two major subgr u oups of RSV, designated RSV-A and RSV- B, each of which contains numerous genotypes. Both groups are viewed as capable of causing RSV infec f tions that can result in hospitalization. The RSV genome consists of ten genes that encode for 11 proteins, namely NS1, NS2, N, P, M, 8 SH, G, F, M2-1, M2-2, and L. The F and G proteins are the predominant target proteins for f RSV vaccines. Similarly, small molecule therapeutics have foc f used primarily on the F (or fus f ion) protein, while some effo f rts have targeted the N (nucleocapsid) and L (contains viral RNA polymerase) proteins. Fusion inhibitors work by blocking viral entry, a mechanism that may be less ideal when treatment begins at a time when massive amounts of viral replication is already ongoing. Additionally, fus f ion inhibitors have been generally shown to have a lower barrier to the development of viral resistance when in clinical use. Replication inhibitors (e.g., N and L inhibitors) work by blocking viral replication at its source, stopping the production on new virions. They have demonstrated a higher bar to the emergence of viral resistance. While most companies are developing potential appr a oaches geared toward the F-protein (or fus f ion protein, responsible for mediating viral entry o r f RSV into host cells), we are foc f used on mechanisms, such as the N-protein and L-protein inhibitors, that target the replication process of RSV directly. Competit t iv t e Landscape a Several companies are seeking to develop antiviral treatments for f RSV infec f tion in adult and pediatric patients. Ark Biosciences and Shionogi have compounds in clinical development. There are several prophylaxis options on the market or in development. AstraZeneca/Sanofi ( f BEYFORTUS®) and Merck (clesrovimab – P a hase 3 complete) are developing long-acting monoclonal antibodies for prophylaxis use in infan f ts, and Pfiz f er has an appr a oved maternal vaccine (ABRYSVO®), all of which provide passive, short-term immunity to infants. Sanofi i f s also evaluating a vaccine in infants and toddlers (RSV vaccine – Phase 3). There are also two approved RSV vaccines for f adul d ts over 60 years of age (Pfizer/ABRYSVO® and Moderna/mRESVIA®) and one approved RSV vaccine for adul d ts over 50 years of age (GSK/AREXVY®). Zelicapav a ir, O r ur N-Pr - otei t n I i nh I ibitor t Through our internal chemistry e r ffor f ts, we identifie f d our lead clinical candidate, zelicapavir (formerly EDP-938). During preclinical studi t es, zelicapavir demonstrated a greater than 4-log reduc d tion in viral load in an animal model challenged with RSV. Further, zelicapavir maintained nanomolar antiviral potency across all clinical isolates tested in vitro, as well as virus r that was resistant to fusion inhibitors. The compound inhibited RSV at a post-entry r r eplication step and maintained its activity in vitro when given 24 hours post infect f ion. It was also shown to have a high barrier to viral resistance. In addition, combination studies of zelicapavir with other types of RSV inhibitors, such as fus f ion inhibitors, showed synergistic antiviral effe f cts. We have studi t ed zelicapavir in two Phase 2 studies that were designed to be proof-o f f-concept and exploratory s r tudies to understand the viral response better in the context of RSV infection. These studies were conducted in otherwise healthy adul d ts (not at high-risk for serious outcomes with RSV) infec f ted with RSV. Data from these studi t es demonstrated that zelicapavir was safe a f nd well-tolerated. Based on the growing safety profil f e of zelicapavir and diffe f rences in the range of the course of RSV infec f tion in higher risk populations, which have always been our target populations, we have continued 9 the development of zelicapavir in patients at high-risk for developing severe infection leading to hospitalization or death. We believe zelicapavir has the greatest potential to show optimal efficacy in these high-risk populations with significant unmet need, since these patients have reduc d ed RSV immunity, which manifests in a higher and longer dur d ation of viral replication and greater disease severity, allowing a bigger window to realize the full potential of zelicapavir. There are now two Phase 2b stud t ies of zelicapavir is in high-risk populations, including pediatric patients and high-risk adul d ts, all of which have significant unmet need. • Pediatric Study of Zelicapavir: RSVPEDs is our Phase 2 study t in 96 pediatric patients, aged >28 days to <36 months. This dose-ranging, randomized, double-blind, placebo-controlled study, is evaluating multiple ascending doses for fiv f e days in two age cohorts to determine safet f y, tolerabi a lity, and pharmacokinetics, as well as a second part evaluating antiviral activity at the selected dose. In August 2024, we announced completion of enrollment of the RSVPEDs study. We anticipate reporting topline data in December 2024. • High-Risk Adults Study of Zelicapavir: We also have a Phase 2b study t in high-risk adul d ts, including those who are older than 65 years of age and those who have asthma, chronic obstruc r tive pulmonary disease, or COPD, or congestive heart fai f lure. Approximately 180 patients will be treated with zelicapavir or placebo for f five days with a primary endpoint of time to resolution of RSV lower respiratory tract disease symptoms. Enrollment is progressing and we are targeting enrollment completion in the current Northern Hemisphere RSV season with topline data in 2025. EDP- D 323, Our RSV L-Pr - otei t n I i nh I ibitor: In addition to our N-protein inhibitor, zelicapavir, our second clinical candidate for RSV is EDP-323, a novel oral, direct- acting antiviral selectively targeting the RSV L-protein, a viral RNA-dependent RNA polymerase enzyme that contains multiple enzymatic activities required for f RSV replication. EDP-323 has sub-nanomolar potency against RSV-A and RSV- B in vitro and has protected mice in a dose-dependent manner fro f m RSV infection as demonstrated by both virological and pathological endpoints. EDP-323 is not expected to have cross-resistance to other classes of inhibitors and has the potential to be used alone, or in combination with other RSV mechanisms, to broaden the treatment window or addressabl a e patient populations. We completed a Phase 1 clinical study t of EDP-323 in June 2023. This randomized, double-blind, placebo-controlled, first- in-human Phase 1 study t enrolled healthy volunteers to evaluate the safely, tolerability and pharmacokinetics of oral EDP- 323 over a range of single ascending dose (SAD ranging from 50 to 800 mg, n=50) and multiple ascending doses (MAD ranging from 200 to 800 mg for seven days, n=32) in fasted and fed f states. Overall, EDP-323 was generally safe and well- tolerated up t u o 800 mg for up t u o seven days, where most adverse events (AEs) were mild, and there were no serious or severe AEs. There was one study t discontinuation due to syncope, in the SAD/FE group, which was deemed unlikely to be related to EDP-323. In the MAD phase, three AEs deemed possibly related to EDP-323 were mild, with two headaches and one gastrointestinal event. There were no discontinuations due to AEs in the MAD phase. EDP-323 displayed pharmacokinetics supportive of once daily dosing without regard to food. EDP-323 doses ranging from 200 to 800 mg once-daily resulted in strong EC90 multiples against both RSV-A and RSV-B strains. Specifically, EDP-323 administered once daily for seven days resulted in C24 (C-trough) concentrations at steady state of 11- to 44-fold over the protein adju d sted EC90 (0.3 nM) against both RSV-A and RSV-B strains. 10 In September 2024, we announced positive top-line results for EDP-323 in a Phase 2a human challenge study. t This study t was a randomized, double-blind, placebo-controlled, human challenge study t of 142 healthy adult participants inoculated with RSV. Randomized participants (n=141) received either a once-daily (QD) 600 mg dose of EDP-323 for fiv f e days (high dose, n=47), a single 600 mg loading dose on day one followed by a 200 mg once-daily (QD) dose of EDP-323 for four days (low dose, n=47), or placebo for fiv f e days (n=47). The intent-to-treat-infect f ed population (ITT-I) was defin f ed as all randomized participants receiving challenge virus and at least one dose of study drug r with confir f med RSV infection. EDP-323 demonstrated a rapid and sustained antiviral effe f ct. A highly statistically significant reduc d tion (p<0.0001) was observed for f the primary effi f cacy endpoint of area under the curve, or AUC, for f viral load as measured by qRT-PCR in the ITT-I population for f each of the EDP-323 dosing groups as compared with placebo. Specifically, EDP-323 lowered viral load AUC by 85% in the high dose arm and 87% in the low dose arm compared to placebo. There was no statistically significant diffe f rence between the two EDP-323 dosing groups. Primary E r ffi E cacy Endpoint: 85-87% Decrease in Viral Load AUC b U y q b RT-P T CR A highly statistically significant reduc d tion (p<0.0001) was observed for f the secondary effi f cacy endpoint of AUC for f infectious viral load as measured by quantitative culture in the ITT-I population for f each of the EDP-323 dosing groups, with a reduc d tion in viral culture AUC by 98% in the high dose arm and 97% in the low dose arm compared to placebo. There was no statistically significant diffe f rence between the two EDP-323 dosing groups. 11 Secondary E r ff E ic f acy E c ndpoi E nt: 97-98% Decrease in Viral Load AUC b U y V b ir V al Culture For the secondary effi f cacy endpoint of AUC for f total symptom score, a highly statistically significant reduc d tion (p<0.0001) was observed in the ITT-I population for f each of the EDP-323 dosing groups, with a symptom reduction of 66% in the high dose arm and 78% in the low dose arm compared to placebo. There was no statistically significant diffe f rence between the two EDP-323 dosing groups. Secondary E r ff E ic f acy E c ndpoi E nt: 66-78% Reduction in Symptoms EDP-323 demonstrated favorabl a e pharmacokinetics, suppor u tive of once-daily dosing. Mean trough plasma concentrations were maintained at 16-fold above the protein-adjusted EC90 with the low dose, and 35-fold above the protein-adjusted EC90 with the high dose, for both RSV A and B strains. In addition, EDP-323 demonstrated a fav f orable safety profil f e over a 5-day dosing period and through 28 days of follow-up. Adverse events, or AEs, were similar between EDP-323 dosing groups and placebo. There were no serious adverse events, no severe adverse events, and no adverse events leading to treatment discontinuation or study withdrawal. 12 EDP- D 323 Safet f y P t rofile o Our Immunology Programs In immunology, we are designing and developing highly potent and selective, oral small molecule inhibitors for the treatment of inflammatory disease by targeting key mechanisms of driving immune response. Our initial focus has been on diseases driven by an overactive type 2 immune response. Type 2 immune responses are characterized by the overproduction of interleukin-4 (IL-4), interleukin-5 (IL-5), interleukin-13 (IL-13), and Immunoglobulin E (IgE), through the activation of T helper 2 (Th2) cells, CD4+ T cells, B cells, and innate cellular response consisting of mast cells, ILC2s, eosinophils, basophils, and IL-4 and/or IL-13-activated macrophages. This immune response is a cruc r ial part of the body’s defense mechanism; however, an overactive response is the primary driver of a number of infla f mmatory diseases, including AD, urticarias, asthma, eosinophilic esophagitis (EoE), prur r igo nodularis (PN), chronic rhinosinusitis with nasal polyps (CRSwNP), as well as some forms of chronic obstruc r tive pulmonary disease (COPD) and other conditions. Our initial targets include the receptor tyrosine kinase, known as KIT, which is critical for regulating mast cell activity. KIT inhibitors may have potential in the treatment of CSU and other mast-cell-driven diseases. We are also targeting STAT6, a transcription fac f tor responsible for IL-4/IL-13 signaling, which drives a Th2 dominant phenotype. STAT6 inhibitors may have potential in the treatment of AD and other type 2 immune driven phenotypes. 13 Background and Overview of CSU CSU is a severely debilitating, chronic infla f mmatory skin disease with no identifie f d triggers. Clinical manifestations include hives, angioedema, or both. Hives are variable in size and shape a and are characterized by swelling, itchiness, and/or a burning sensation. Angioedema is characterized by pronounced deep tissue swelling along with tingling, burning, tightness and sometimes pain. Patients with CSU also experience symptoms beyond skin manifestations, including sleep distur t ba r nces, fat f igue, irritabi a lity, anxiety and depression and can affe f ct performance at work or school. CSU is typically a self-l f imiting disorder, persisting for 2–5 years although some reports estimate that more than half of patients suffe f r for f more than 5 years. CSU may also recur afte f r months or years of ful f l remission. CSU impacts twice as many women as men, with an estimated global prevalence between 0.5% – 1% of the population, which means that at any given time in the U.S. alone approximately 1.75-3.5 million people are experiencing this condition. The peak age of diagnosis is during the core years of working age, 20 – 40 years old. Standard of care treatment for CSU is antihistamines, however in approximately half the patients, symptom alleviation is not adequate. There is a substantial unmet need for an efficacious oral agent as only a minority of these uncontrolled cases are treated with one indicated biologic (<28%), which does not fully relieve symptoms for most patients, likely in part due d to impacting only IgE-dependent activation pathways. Scientif t ic f Backgr k ound Our appr a oach to treating CSU is to directly target mast cells which are the root cause of pathology in multiple diseases. Mast cells are tissue-resident immune cells (e.g., skin, lung or GI) that can be activated through various cell surface receptors, resulting in a signaling cascade that leads to degranulation and release of tryptase, histamine and other inflammatory mediators. This release of infla f mmatory mediators fro f m mast cells and subsequent propagation of a type 2 inflammatory response has been implicated in multiple infla f mmatory d r iseases, including chronic urticaria, prurigo nodularis, eosinophilic esophagitis, asthma, and AD. Current therapi a es modulate only a small subset of either mast cell stimulants or the downstream mediators of infla f mmation that mast cells produce (e.g., antihistamines), but do not address the underlying cause of disease, as they do not directly affe f ct mast cells themselves. We are targeting mast cells by inhibiting KIT, a central regulator of mast cell development and activation. KIT provides pro-survival signals critical to mast cell survival and, therefor f e, the inhibition of KIT signaling leads to rapid mast cell inactivation and depletion through apo a ptosis, thereby directly reducing the quantity of mast cells availabl a e to drive pathology. Clinical proof of concept for f this approach has been demonstrated with positive phase 2 data for f an anti-KIT monoclonal antibody in CSU. Data suggest the potential for f best-in-disease efficacy with the mechanism, and a reasonabl a e safety profil f e. Competit t iv t e Landscape a There are a number of diffe f rent mechanisms being explored for the treatment of CSU, including inhibitors of IL-4R, IgE, Brut r on’s tyrosine kinase, or BTK, SIGLEC-6, and MRGPRX2. Specifically for KIT inhibitors, there are companies with antibodies in development, including Celldex (barzolvolimab - a Phase 3) and Jasper (briquilimab - a Phase 1b/2a), as well as companies with oral, small molecules in early clinical development (Third Harmonic and Blueprint) or preclinical development (Arcus and Alivexis). There are two oral MRGPRX2 R inhibitors in early clinical development for f urticaria from Incyte (INCB000262 - Ph2 CSU and Ph1b chronic inducible urticaria (CIndU)) and Evommune (EVO756 - Ph2 CIndU), in addition to oral MRGPRX2 molecules in preclinical development (Septerna). Our KIT K program We have a preclinical stage program to develop oral KIT inhibitors to treat CSU and potentially other indications by depleting mast cells, thereby addressing a primary driver of these diseases. We have discovered novel, potent and selective oral KIT inhibitors and, in the four f th quarter of 2024, we selected our lead development candidate, EPS-1421. This candidate demonstrates potent nanomolar activity in both binding and cellular func f tion assays and is highly selective (>500x) for KIT versus other kinases. This inhibitor also demonstrates strong in vitro and in vivo ADME properties, with a good pharmacokinetic, or PK, profile f across multiple preclinical species, and a low potential for f drug- r drug r interactions. We expect to conduct scale-up activities and IND-enabling studies for this program in 2025. Background and Overview of AD AD is a chronic dermatological disease characterized by dry, r red, inflamed, irritated and itchy skin, and has significant quality of life i f mpacts such as leading a limited lifes f tyle, avoidance of social interactions and impacted activities. The disease affects an estimated 7.3% of the US adult population and approximately 40% of those have moderate to severe disease. The majority (>90%) of moderate to severe patients are treated with an IL-4/IL-13 monoclonal antibody (e.g., DUPIXENT® (dupi d lumab) a ) despite modest effi f cacy, while a minority (<10%) are treated with an oral janus kinase, or JAK inhibitor (e.g., RINVOQ® (upa u dacitinib)) due to safety concerns (black box warning for f serious infections, mortality, malignancy, MACE, and thrombosis). Thus, there is a significant need for an efficacious and safe o f ral agent. 14 Scientif t ic f Backgr k ound Dysregulation of the Th2 immune response drives many allergic and autoimmune diseases, including AD and asthma, which is characterized by an overproduction of IL-4 and IL-13. STAT-6 is a transcription factor predominantly expressed in immune and epithelial cells that is responsible for IL-4/IL-13 signaling, which results in a Th2 dominant phenotype. Evidence for STAT6 as a key driver of AD and asthma is the presence of STAT6 gain-of-fu f nction variants resulting in severe AD and STAT6 loss-of-fu f nction variants protect against type 2 high asthma. Furthermore, clinical validation of this pathway exists in a number of immunology indications from anti-IL-4/13 monoclonal antibodies and JAK inhibitors, which block the IL-4/13 signaling pathway. Our STAT6 inhibitor program offe f rs the potential for f an “oral Dupixent”, as it directly blocks IL-4/IL-13 signaling, reduces infla f mmation in Th2 driven preclinical models and no oral therapi a es selectively targeting this pathway are currently availabl a e. Competit t iv t e Landscape a The moderate-severe AD treatment landscape a is dominated by biologics targeting the IL-4 and/or IL-13 pathway (e.g., DUPIXENT® (dupi d lumab) a and ADBRY® (tralokinumab-ldrm)), with JAK inhibitors (e.g., RINVOQ® (upa u dacitinib) and CIBINQO® (abr a ocitinib)) as the only oral option. Multiple oral mechanisms are in development, including inhibitors of MRGPRX2, IRAK4 R , STAT6, RAS R P and PKM2. The latest stage oral assets are in Ph2 (Incyte MRGPRX2 – Ph2a; Sanofi/K f ym K era IRAK4 – Ph2). For STAT6 inhibitors specific f ally, companies with oral assets in development include Kymera (KT-621 – Phase 1) and Sanofi/ f Recludix (preclinical). Our STAT6 program We have a discovery stage program to develop oral STAT6 inhibitors to treat AD and potentially other indications by blocking the IL-4/IL-13 signaling pathway, thereby addressing a primary driver of these diseases. We have discovered novel, potent and selective oral STAT6 inhibitors, which are being optimized in the discovery stage. Our prototype inhibitors demonstrate potent activity and high selectivity for STAT6 over other STATs in both biochemical and cellular assays. Our prototype inhibitors also demonstrate systemic in vivo target engagement afte f r ex vivo IL-4 stimulation. We are continuing to evaluate multiple compounds in preclinical studi t es. We expect to conduct lead optimization activities in this program in 2025. Our Out-Licensed HCV Protease Inhibitor Products Backgr k ound and Overview of H o CV H Market HCV is a virus that is a common cause of viral hepatitis, an infla f mmation of the liver. HCV is typically contracted by contact with the blood or other body fluids of another individual infec f ted with HCV. HCV is a leading cause of chronic liver disease, including cirrhosis, liver failure and cancer, and the leading cause of death fro f m liver disease in the United States. HCV disease progression occurs over a period of 20 to 30 years, with the majority of HCV-infec f ted individuals generally exhibiting no majo a r symptoms in the early stages of the disease. Therefor f e, until a major symptom is diagnosed, many individuals are unaware they are infec f ted and live undiagnosed without seeking treatment. For that reason, combined with the new availabi a lity of effe f ctive treatments for f HCV, the United States Centers for Disease Control and Prevention, or CDC, issued new guidelines in 2013 recommending screening for f all Americans born between the years 1945 and 1965 so that HCV-infected individuals will be aware of their condition and can consider treatment options. An estimated 58 million people worldwide are chronically infected with HCV and have an increased risk of eventua t lly developing liver cirrhosis or liver cancer. Approximately 290,000 people die every y r ear fro f m HCV-related liver diseases. According to the CDC, the incidence rate of acute HCV has increased 15% since 2019, with an estimated 66,700 new infections in 2020, the most recent year for which the CDC has published data. During 2020, 41 states reported a total of 107,300 newly identifie f d chronic HCV cases in 2020, corresponding to 40.7 chronic HCV cases per 100,000. HCV- associated deaths during 2020 increased 4% (3.45 deaths per 100,000 people), compared to 2019 (3.33 deaths per 100,000 people). We believe that the chronically infected population remains significantly untreated, even with the introduc d tion of several new treatment regimens beginning in 2013. The appr a oved treatments for f HCV have provided significant benefit to HCV patients. To date, these treatments have cure rates appr a oaching 100% in several subpopulations. Medical practice defin f es a “cure” as the point at which there is no quantifia f bl a e virus r in a patient’s blood for a sustained period of time after cessation of therapy, a which is often referred to as a sustained virologic response, or SVR. For AbbVie’s MAVYRET/MAVIRET regimen, the majority of chronic HCV patients only require 8 weeks of treatment compared to 12 weeks with other HCV regimens, including Gilead’s EPCLUSA® and HARVONI® in almost all HCV genotypes. Since the introduction of Gilead’s Harvoni® and AbbVie’s VIEKIRA P R AK® in late 2014, the reported worldwide sales of the leading HCV therapi a es have declined from $23 billion in 2015 to $3.2 billion in 2023. Through the fir f st nine months of calendar 2024, reported worldwide net sales were $2.3 billion. HCV sales have declined since their peak in 2015 due to 15 payers obtaining additional discounts, competitive market dynamics and a decline in the number of patients treated annually afte f r the initial wave of diagnosed chronic HCV patients who had urgency for treatment. Despite the high numbers of HCV patients that have been successful f ly treated, there remains a large population of chronic HCV-infect f ed patients who have yet to be treated with one of the newer “high cure” regimens. In addition, and as noted above, new HCV infect f ions (principally in association with IV drug r use) are an ongoing target population for f treatment. COVID-19 has also impacted new HCV patient volumes, HCV diagnoses, HCV prescriptions and sales of MAVYRET/MAVIRET worldwide. While new HCV infections are continuing, at this time it is uncertain when and the extent to which treatment of new HCV patients and revenues will return to pre-COVID-19 levels. Our Out-L t icensed Pro P ducts i t n A i bbVie V ’s Marketed t Therapies Gleca l pr a eviri - Our protease inhibitor, glecaprevir, which is part of the latest HCV regimen fro f m AbbVie, was developed by AbbVie in combination with pibrentasvir, AbbVie’s second NS5A inhibitor. This co-formulated combination, marketed under the tradenames MAVYRET® (U.S.) and MAVIRET® (ex-U.S.), contains two novel DAAs that target and inhibit proteins essential for f the replication of HCV. MAVYRET/MAVIRET is appr a oved in the U.S., EU, Japa a n and numerous other countries globally as an 8-week, pan-genotypic, fixed-dose combination treatment, dosed once-daily as three oral tabl a ets, taken with food, for chronic HCV patients without cirrhosis and new to treatment. MAVYRET/MAVIRET is also approved as a treatment for patients with specific f treatment challenges, including those GT-1 patients not cured by prior treatment experience with either a protease inhibitor or an NS5A inhibitor (but not both), and in patients with limited treatment options, such as those with severe chronic kidney disease, or CKD, or those with genotype 3 chronic HCV. MAVYRET/MAVIRET is appr a oved for f use in patients across all stages of CKD with any of the majo a r HCV genotypes (GT1-6). The app a rovals of MAVYRET/MAVIRET are suppor u ted by data fro f m nine registrational studies in AbbVie’s clinical development program, which evaluated more than 2,300 patients in 27 countries across all major HCV genotypes (GT1-6) and special populations: • 8 weeks f k or f treatment-n t aïve, ï non-cirr i ho r tic patie t nts: t In November 2016, results from several Phase 3 studies of this combination demonstrated 97.5% of chronic HCV infected patients without cirrhosis and new to treatment across all majo a r genotypes (GT1-6) achieved sustained virologic response at 12 weeks post-treatment, refer f red to as SVR12, with just 8 weeks of MAVYRET/MAVIRET treatment. • 8 weeks f k or f GT-3 T : Data from AbbVie’s ENDURANC R E-3 study were presented at the 2017 ILC, demonstrating that 95% of patients with challenging-to-treat, genotype 3, or GT3, chronic HCV infection, without cirrhosis and new to treatment, achieved SVR12 afte f r 8 weeks of treatment with MAVYRET/MAVIRET. • 8 weeks f k or f compensated cirrhosis: Based on data fro f m AbbVie’s EXPEDITION-8 study, t which demonstrated that with 8 weeks of MAVYRET treatment, 100 percent (n=273/273) of genotype 1, 2, 4, 5 and 6 patients achieved a sustained virologic response 8 weeks after treatment (SVR8) per protocol analysis. Based on this data and a second cohort of the study t in GT3 chronic HCV-infect f ed patients, MAVYRET is now approved for f all genotypes with compensated cirrhosis in the U.S. • 12 weeks w k ith c t hronic kidney dise i ase: Results were also presented fro f m AbbVie’s EXPEDITION-4 study t in chronic HCV patients with chronic kidney disease, or CKD, in which 98% of patients (n=102/104) across all majo a r genotypes (GT1-6) achieved SVR12 with 12 weeks of treatment with MAVYRET/MAVIRET. Parita i pr a eviri - The first protease inhibitor developed through our collabor a ation with AbbVie, paritaprevir, is part of AbbVie’s 3-DAA regimen approved for f the treatment of genotype 1 and 4 HCV patients. This 3-DAA combination was sold as VIEKIRA P R AK® (paritapr a evir/r r itonavir/ombitasvir/d r asabuvir) in the U.S. fro f m December 2014 to December 2018, and as VIEKIRAX®+EXVIERA R ® in most other jurisdictions, for f non-cirrhotic patients and those with early stage, or compensated, cirrhosis. These regimens have been almost entirely replaced by MAVYRET/MAVIRET. Collaboration and License Agreement with AbbVie We entered into a Collaborative Development and License Agreement with Abbott Laboratories in November 2006 to develop and commercialize HCV NS3 and NS3/4A protease inhibitors. The agreement, which was amended in January and December 2009, was then assigned to AbbVie Inc. on January 1, 2013 in connection with Abbott’s transfer of its research- based pharmaceuticals business to AbbVie. Under the agreement, we have granted AbbVie an exclusive, worldwide, royalty-bearing license, including a right to grant sublicenses, to specified intellectua t l property, including several issued U.S. patents, relating to protease inhibitors. We also granted AbbVie access to our drug r discovery capabilities in the HCV NS3 and NS3/4A protease inhibitor fie f ld. AbbVie granted us a co-exclusive (together with AbbVie), royalty-free, fully paid license, without the right to grant sublicenses, to certain of AbbVie’s intellectua t l property, AbbVie’s interest in joint intellectua t l property and improvements discovered by AbbVie, for f the purpos r e of allowing us to conduct certain 16 development and commercialization activities in the United States relating to protease inhibitors. AbbVie is responsible for and has funded all costs associated with the development, manufac f turing and commercialization of paritaprevir, glecapr a evir and any other compounds under this agreement. Under the agreement, we are eligible to receive milestone payments and royalties with respect to these compounds. So long as a product candidate is being developed or commercialized under the agreement, we undertake not to conduct any activity, or grant licenses to a third party, relating to protease inhibitors. A joint steering committee was establ a ished under the agreement with review and oversight responsibilities for all research, development and commercialization activities. The joint steering committee is comprised of three of our senior personnel and three senior personnel fro f m AbbVie; however, AbbVie has fin f al authority to make all decisions regarding development and commercialization activities. The research program and the evaluation period, which was perfor f med by both parties, ended in June 2011. The fir f st commercialized compound was paritapr a evir with the second commercialized compound, glecaprevir, approved in 2017 and marketed under the tradenames MAVYRET® (U.S.) or MAVIRET™(ex-U.S.). Under this collabor a ation we have received $396 million in payments fro f m AbbVie for f license payments, proceeds fro f m a sale of prefer f red stock, research fundi f ng payments and milestone payments. We also receive annually tiered, double-digit royalties per protease inhibitor product developed under the agreement, which range from ten percent up t u o twenty percent, or on a blended basis from the low double digits up t u o the high teens. However, if a product is determined to be a combination product, as is the case for f both glecaprevir and paritapr a evir, the net sales of the combination product are adju d sted on a country-by-country and product-by-product basis to reflect a good faith determination of the relative value of each pharmaceutically active ingredient, based on the estimated fair market value. This means that a portion of AbbVie’s worldwide annual net sales of a combination product or regimen is fir f st allocated to one of our protease inhibitors and then that royalty-bearing portion is multiplied by the annually tiered royalty rates to determine our actua t l royalty for the protease product in that regimen in a given period. Under the terms of our agreement, as amended in October 2014, 50% of AbbVie’s net sales of MAVYRET/MAVIRET are allocated to glecaprevir. Beginning with each January 1, the cumulative net sales of a given royalty-bearing protease inhibitor product start at zero for purpos r es of calculating the tiered royalties on a product-by-product basis. Under this collabor a ation, we have received royalty payments from AbbVie totaling $924 million through September 30, 2024. Further details of these tiered royalties are set forth in Note 7 in Notes to Consolidated Financial Statements included in this report, which are incorporated herein by this reference. Royalties owed to us under the agreement can be reduced by AbbVie in certain circumstances, including (i) if AbbVie exercises its right to license or otherwise acquire rights to intellectua t l property controlled by a third party where a product could not be legally developed or commercialized in a country without the third-party intellectua t l property right, (ii) where a product developed under the collabor a ation agreement is sold in a country and not covered by a valid patent claim in such country, or (iii) where sales of a generic product are equal to at least a specified percentage of AbbVie’s market share of a product in a country. AbbVie’s obligation to pay royalties on products developed under the agreement expires on a country-by-country and product-by-product basis upon the later of (i) the date of expiration of the last of the licensed patents with a valid claim covering the product in the applicable country, and (ii) ten years after the fir f st commercial sale of the product in the applicable country. Our intellectua t l property existing as of the effe f ctive date of the agreement remains our property. Any intellectua t l property jointly developed is jointly owned. We will have the unilateral right to enforce our patent rights on any covered product following the fir f st commercial sale of such product, as will AbbVie. In the event of infri f ngement related to any of our patents, we will have the fir f st right and option to initiate legal proceedings or take other actions. In the event of infringement related to any AbbVie patents, AbbVie will have the fir f st right and option to initiate legal proceedings or take other actions. In the event of infri f ngement of a joint patent right, we will discuss with AbbVie whether to initiate legal proceedings or take other actions. AbbVie will have the obligation to defen f d at its sole expense any actions brought against either party alleging infringement of third-party rights by reason of the activities conducted under the agreement and we will have the right to obtain separate counsel at our own expense. Additionally, AbbVie, at its sole expense, will be responsible for all trademark prosecution. Subj u ect to the exceptions described abo a ve, a party’s rights and obligations under the agreement continue until: (i) such time as AbbVie is no longer developing a product candidate or (ii) if, a f s of the time AbbVie is no longer developing any product candidates, AbbVie is commercializing any other protease inhibitor product, such time as all royalty terms for f all covered products and all co-development terms for all co-developed products have ended. Accordingly, the fin f al expiration date of the agreement is currently indeterminable. 17 Either party may terminate the agreement for f cause in the event of a material breach, subj u ect to prior notice and the opportunity to cure, or in the event of the other party’s bankrupt r cy. Additionally, AbbVie may terminate the agreement for f any reason upon specified prior notice. If we terminate the agreement for f cause or AbbVie terminates without cause, any licenses and other rights granted to AbbVie will terminate and AbbVie will be deemed to have granted us (i) a non-exclusive, perpetua t l, fully paid, worldwide, royalty-free license, with the right to subl u icense, under AbbVie’s intellectua t l property used in any product candidate and (ii) an exclusive (even as to AbbVie), perpetua t l, fully paid, worldwide, royalty-free license, with the right to subl u icense, under AbbVie’s interest in joint intellectua t l property rights to develop product candidates resulting fro f m covered compounds and to commercialize any products derived fro f m such compounds. Upon our request, AbbVie will also transfer f to us all rights, title and interest in any related product trademarks, regulatory f r il f ings and clinical trials. If AbbVie terminates the agreement for our uncured breach, the royalty payments payable by AbbVie may be reduc d ed, the licenses granted to AbbVie will remain in place, we will be deemed to have granted AbbVie an exclusive license under our interest in joint intellectua t l property, AbbVie will continue to have the right to commercialize any covered products, and all rights and licenses granted to us by AbbVie will terminate. Royalty Sale Agreement In April 2023, we entered into a royalty sale agreement with an affi f liate of OMERS, a Canadian public employee pension fund, pursuant to which we were paid a $200.0 million cash purchase price in exchange for 54.5% of our future quarterly royalty payments on net sales of MAVYRET/MAVIRET, afte f r June 30, 2023, through June 30, 2032, subj u ect to a cap on aggregate payments to OMERS equal to 1.42 times the purchase price. For accounting purpos r es, we will continue to record 100% of HCV royalties earned under the AbbVie agreement as royalty revenue in our consolidated statements of operation. The $200.0 million received in April 2023 was recognized on our consolidated balance sheets as a liabi a lity which will be reduc d ed by the payments made to OMERS over the term of the Agreement. We will recognize imputed interest expense over the life o f f the royalty sale agreement based on our estimated future MAVYRET/MAVIRET royalties. Other Programs for f Out-Licensing in Virology Our SARS-CoV-2 Program Backgr k ound and Overview of S o AR S S-CoV-2 Severe acute respiratory syndrome coronavirus 2, or SARS-CoV-2, is the virus r that causes COVID-19 (coronavirus disease 2019), the respiratory i r llness responsible for the COVID-19 pandemic. SARS-CoV-2 is the seventh known coronavirus to infect people, afte f r 229E, NL63, OC43, HKU1 K , MERS-CoV, and the original SARS-CoV. Patients at higher risk for f developing severe complications from COVID-19 include the elderly and those with underlying medical conditions like cardiovascular disease, diabetes, chronic respiratory disease, or cancer. As of October 2023, the World Health Organization estimated nearly 7 million deaths have been caused by COVID-19. There are also many patients who experience continuing effe f cts of COVID-19, ofte f n refer f red to as “long COVID”. While vaccines that reduce the severity of COVID-19 are availabl a e, uptake has not been optimal. In addition, breakthrough infection occurs in many cases because the vaccines are not completely effe f ctive or their effe f ct diminishes over time, especially against emerging variants. Thus, there remains an urgent need for effect f ive, safe and well-tolerated, conveniently-dosed, once-daily oral antiviral treatments. Scientif t ic f Backgr k ound All coronaviruses have a single-stranded, positive-sense RNA R (+ssRNA R ) genome, which is the largest known genome for f an RNA virus r . The overall structur t e of the SARS-CoV-2 genome is shared with other betacoronaviruses, namely MERS- CoV and SARS-CoV. The 3C-like protease, or 3CL protease (also known as 3CLpro or the main protease, or Mpro), is essential for f viral replication, and is a highly attractive target for f the development of direct-acting antiviral agents. Competit t iv t e Landscape a For COVID, there are two oral antiviral treatments for f non-hospitalized, high-risk patients with SARS-CoV-2 infection: PAXLOVID™, a 3CL protease inhibitor (nirmatrelvir) boosted with ritonavir (full approval), and LAGEVRIO™ (molnupiravir), a polymerase inhibitor (Emergency Use Authorization). There are no oral direct acting antivirals for f the treatment of SARS-CoV-2 in late-stage global clinical trials. EDP- D 235, Our Lead, Oral, 3 l CL Protea t se Inhibito i r 18 We leveraged our expertise in developing protease inhibitors to discover compounds specifically designed to target the SARS-CoV-2 virus and potentially other coronaviruses. We selected EDP-235, an oral inhibitor of the coronavirus 3CL protease, also referred to as 3CLpro or the main coronavirus protease, or Mpro, for f clinical development. In addition to nanomolar activity against all SARS-CoV-2 variants tested to date, EDP-235 has potent antiviral activity against other human coronaviruses, enabling the potential for f a pan-coronavirus r treatment, including possibly coronaviruses that may infect human populations in the fut f ur t e. Furthermore, EDP-235 has good tissue distribution, and is proje o cted to have four times higher drug levels in lung tissue compared to plasma. In May 2023, we reported topline results from a Phase 2 clinical trial of EDP-235 in non-hospitalized, symptomatic patients with mild to moderate COVID-19 who were not at increased risk for developing severe disease. EDP-235 met the primary endpoint of the trial and was generally safe and well-tolerated. A dose-dependent improvement in total symptom score was observed with EDP-235 treatment compared to placebo, which achieved statistical significance (p<0.05) in the 400 mg treatment group at multiple time points, starting as early as one day afte f r the first dose. An analysis of a subset of six symptoms showed a two-day shorter time (5 days to 3 days) to improvement in patients receiving EDP-235 400 mg who were enrolled within three days of symptom onset (p<0.01). No effe f ct on virologic endpoints as measured in the nose was detected due to the rapid viral decline in the placebo arm of this highly immunologically-experienced, standard risk population. However, in the subset of patients who were nucleocapsid seronegative (indicating no recent natur t al infection with SARS-CoV-2), a viral load decline was observed at day five in the 400 mg group of 0.8 log overall and 1 log in the patients with symptom onset within three days befor f e treatment with EDP- 235. We will continue to focus on potential collabor a ations to progress EDP-235, as we will not advance this candidate into Phase 3 studi t es on our own. Our HBV Program Backgr k ound and Overview of H o BV H Hepatitis B virus r , or HBV, is a potentially life- f threatening liver infection. It is estimated that close to 300 million people worldwide are chronically infected, and 15-40% of patients with chronic HBV infection develop chronic liver disease, including cirrhosis, liver cancer, or liver decompensation. HBV is a leading cause of chronic liver disease and liver transplantation. Current approaches to treatment include interferon therapy a and/or inhibitors of HBV nucleoside reverse transcriptase, which suppr u ess the virus but require lifel f ong therapy and rarely result in full eradication of the virus fro f m the liver. Treatment with interferon offers modest cure rates, and is accompanied by serious side effe f cts, including flu-like symptoms, fat f igue, headache and nausea. New treatments that can provide functional cures to chronically-infec f ted patients are urgently needed. Scientif t ic f Backgr k ound HBV is a partially double-stranded DNA virus with a complex life cycle. There are multiple mechanisms associated with HBV replication that could potentially be targeted with new drugs. Mechanisms under study for HBV include entry r inhibitors, core inhibitors or caps a id assembly modulators (CAMs), siRNA/ R ASO targeting the HBV S antigen, and immune modulators (eg; TLRs, PD-L1s, therape a utic vaccines, etc). These new HBV mechanisms are being studi t ed with nucleoside inhibitors and in combination with each other, with the goal of achieving a func f tional cure for f a significant number of HBV patients. We believe that HBV, like HIV and HCV, will be optimally treated with multiple agents that have diffe f rent mechanisms, and therefore seek to develop a combination regimen. We initially focused on inhibitors of the HBV core protein, as it plays a critical role in viral replication, intracellular traffic f king, and maintenance of chronic infect f ions. Core inhibitors are replication inhibitors that have been shown to act at multiple steps in the HBV lifecy f cle; preventing proper uncoating, nuclear import, assembly, and recycling as well as potentially impacting other viral processes. This approach is suppor u ted by clinical validation, demonstrating reduc d tion of viral RNA R and DNA in chronic HBV patients in Phase 2 clinical studi t es. Competit t iv t e Landscape a While there are antiviral medications prescribed for HBV that can suppr u ess HBV DNA, they generally have low cure rates, resulting in the need for lifel f ong treatment. Many companies are seeking to develop new HBV drugs r that alone or in combination with other mechanisms could lead to a func f tional cure for f HBV. Vir, GSK, Arbut r us t , and Roche have multiple combination regimens under investigation in later stage clinical studi t es. In addition, a number of companies have Phase 1 or earlier stage HBV programs. EDP- D 514 Our lead clinical candidate for f the treatment of chronic infec f tion with HBV is EDP-514, a core inhibitor that displays potent anti-HBV activity in vitro at multiple points in the HBV lifecy f cle. Two Phase 1b studi t es of EDP-514 demonstrate the 19 compound is safe with strong antiviral activity in two different chronic HBV patient populations – those who have a high viral load and those who are on a treatment with a nucleoside reverse transcriptase inhibitor. Our goal has been to develop a combination therapy a approach, including existing approved treatments such as a nucleoside reverse transcriptase inhibitor, or NUC, with EDP-514 and one or more other mechanisms, which could lead to a func f tional cure for f patients with chronic HBV infect f ion. Advancement of this program is dependent upon our accessing another compound that could be developed with EDP-514 for such a treatment regimen. Drug Discovery We have internally discovered all of the compounds in our research and development programs. Our scientists have expertise in the areas of medicinal chemistry, r molecular virology, pharmacology, and toxicology with highly developed sets of skills in compound generation, target selection, screening and pharmacology, preclinical development and lead optimization. We are utilizing these skills and capabilities in our discovery and development of small molecule drugs r with an emphasis on virology and immunology indications. We focus on virology and immunology indications representing large and growing market opportunities with significant unmet medical needs. Our selection of a particular therapeutic target within those disease indications takes into consideration the experience and expertise of our scientific f team and includes our ability to generate robust medicinal chemistry s r truc r ture-activity relationships to assist lead optimization and secure relevant intellectua t l property rights. Once we have identifie f d lead compounds, they are tested using in vitro and in vivo pharmacology studi t es and in vivo research models of antiviral or antibacterial effi f cacy. Business Development We also regularly examine opportunities to in-license compounds and technologies to complement our existing internal discovery programs. In addition, we engage from time to time in discussions with third parties to out-license intellectual property that no longer fits f in our strategic priorities for f our internal research and development programs. For example, in December 2022 we out-licensed one of our antibiotic compounds in exchange for a $1.0 million up- u front fee and future milestone payments and royalties. Competition We are engaged in segments of the pharmaceutical industry t r hat are highly competitive and rapi a dly changing. Many large pharmaceutical and biotechnology companies, academic institut t ions, governmental agencies and other public and private research organizations are commercializing or pursuing the development of products that target HCV, RSV, SARS-CoV-2, HBV, CSU, AD and other virology and immunology indications that we may target now or in the fut f ur t e. Many of our competitors have subs u tantially greater commercial infra f structur t es and fin f ancial, technical and personnel resources than we have, as well as drug candidates in late-stage clinical development. We will not be able to compete successful f ly unless we are able to: • design and develop products that are superior to other products in the market; • attract qualifie f d scientific f , medical, regulatory, r sales and marketing and commercial personnel; • obtain patent and/or other proprietary protection for f our processes and product candidates; • obtain required regulatory a r pp a rovals; or • collabor a ate with others in the development and commercialization of new products. Establ a ished competitors may invest heavily to quickly discover and develop novel compounds that could make our product candidates obsolete. In addition, any new product that competes with an appr a oved product must demonstrate compelling advantages in effi f cacy, convenience, tolerability and safet f y, or some combination of these factors, to overcome competition and to be commercially successful f . We expect AbbVie’s MAVYRET/MAVIRET to continue to face intense competition due d to existing appr a oved products in the HCV market. AbbVie’s MAVYRET/MAVIRET regimen currently faces competition in various world markets and subpopul u ations of HCV fro f m Gilead’s Epclusa® (a fixed dose combination of sofos f buvir and velpatasvir), Vosevi® (a triple combination therapy a of sofosbuvir, velpatasvir and voxilapr a evir approved by the FDA for f specified sofosbuvir -treatment failures and NS5A-inhibitor treatment failures) and Harvoni® (a fixed-dose combination of sofos f buvir and ledipasvir); and to a lesser extent - Merck’s Zepatier® (a fixed-dose combination of grazoprevir and elbasvir). Gilead launched authorized generic versions of Epclusa and Harvoni through its subs u idiary, Asegua Therapeutics, LLC, which have had an impact on 20 the competitive landscape. For example, the state of Louisiana selected Asegua as their HCV subs u cription model pharmaceutical partner to provide the state with unrestricted access to its direct-acting antiviral medication. Other competitive products in the for f m of other treatment methods or a vaccine for f HCV may render MAVYRET/MAVIRET obsolete or noncompetitive. MAVYRET/MAVIRET will face competition based on its safet f y and effe f ctiveness, reimbursement coverage, price, patent position, AbbVie’s marketing and sales capabilities, and other factors. If MAVYRET/MAVIRET faces f competition fro f m generic products other than authorized generic versions by the manufac f turer of the branded product (i.e. Gilead and Asegua Therapeutics), our collabor a ation agreement provides that the royalty rate applicable to our protease product contained in the regimen is reduc d ed significantly by a specified percentage on a product-by-product, country-by-country basis. If AbbVie is not able to compete effectively against its competitors in HCV, our business will not grow and our financial condition, operations and stock price will suffer. RSV, COVID-19, HBV, CSU, and AD represent competitive therape a utic areas. For RSV, there are currently no safe and effe f ctive therapi a es for already established RSV infect f ion. Several companies are seeking to develop antiviral treatments for f RSV infect f ion in adult and pediatric patients. Ark Biosciences, Gilead and Shionogi all have compounds in clinical development. There are several prophylaxis options on the market or in development. AstraZeneca/Sanofi ( f BEYFORTUS®) and Merck (clesrovimab – P a hase 3 complete) are developing long-acting monoclonal antibodies for prophylaxis use in infants, and Pfizer has an appr a oved maternal vaccine (ABRYSVO®), all of which provide passive immunity to infants. Sanofi i f s also evaluating a vaccine in infants and toddlers (RSVt vaccine – Phase 3). There are also two appr a oved RSV vaccines for f adul d ts over 60 years of age (Pfizer/ABRYSVO® and Moderna/mRESVIA®) and one approved RSV vaccine for adul d ts over 50 years of age (GSK/AREXVY®). For COVID, there are two oral antiviral treatments for f non-hospitalized, high-risk patients with SARS-CoV-2 infection: PAXLOVID™, a 3CL protease inhibitor (nirmatrelvir) boosted with ritonavir (full approval), and LAGEVRIO™ (molnupiravir), a polymerase inhibitor (Emergency Use Authorization). There are no oral direct acting antivirals for f the treatment of SARS-CoV-2 in late-stage global clinical trials. While there are antiviral medications prescribed for HBV that can suppr u ess HBV DNA, they generally have low cure rates, resulting in the need for lifel f ong treatment. Many companies are seeking to develop new HBV drugs r that alone or in combination with other mechanisms could lead to a func f tional cure for f HBV. Vir, GSK, Arbut r us t , and Roche have multiple combination regimens under investigation in later stage clinical studi t es. In addition, a number of companies have Phase 1 or earlier stage HBV programs. For CSU, there are a number of diffe f rent mechanisms being explored, including inhibitors of IL-4R, IgE, BTK, SIGLEC-6, and MRGPRX2 R . Specifically for f KIT inhibitors, there are companies with antibodies in development, including Celldex (barzolvolimab - a Phase 3) and Jasper (briquilimab - a Phase 1b/2a), as well as companies with oral, small molecules in early Phase 1 development (Third Harmonic and Blueprint) or preclinical development (Arcus and Alivexis). For AD, the moderate-severe AD treatment landscape is dominated by biologics targeting the IL-4 and/or IL-13 pathway (e.g., DUPIXENT® (dupi d lumab) a and ADBRY®(tralokinumab-ldrm)), with JAK inhibitors (e.g., RINVOQ®(upa u dacitinib) and CIBINQO® (abr a ocitinib)) as the only oral option. Multiple oral mechanisms are in development, including inhibitors of MRGPRX2, IRAK4 R , STAT6, RAS R P and PKM2. The latest stage oral assets are in Ph2 (Incyte MRGPRX2 – Ph2a; Sanofi/K f ym K era IRAK4 – Ph2). For STAT6 inhibitors specific f ally, companies with oral assets in development include Kymera (KT-621 - Phase 1) and Sanofi/ f Recludix (preclinical). If we are not able to develop new products that can compete effe f ctively against our current and fut f ur t e competitors, our business will not grow and our financial condition, operations and stock price will suffe f r. Intellectual Property As part of our business strategy, we actively seek patent protection for f our product candidates in the United States and certain majo a r for f eign jurisdictions and fil f e additional patent appl a ications, when appr a opriate, to cover improvements to our compounds. We also rely on trade secrets, internal know-how, technological innovations and agreements with third parties to develop, maintain and protect our competitive position. Our abi a lity to be competitive will depend on the success of this strategy. Each of our majo a r research and development programs for f RSV as well as our out-licensed products for HCV and our SARS-CoV-2 and HBV assets, typically has several pending patent claims and issued patents in the program area containing claims to compounds, methods of use and processes for f synthesis. However, only a few of the issued patents 21 and/or pending patent applications cover the lead product candidates in a given program. We also have patent appl a ications pending for earlier stage immunology programs. RSV, SARS-C S oV C -2 V , HBV. H Our patent portfol f io directed to N-and L-protein inhibitors for RSV, protease inhibitors for SARS- CoV-2 and core inhibitors for HBV, includes issued U.S. patents or pending U.S. patent applications, or both, as well as numerous foreign patent applications. We expect that our existing patents and patent applications (assuming patents are ultimately issued), will provide patent coverage in the U.S., if and when a compound is approved by the FDA, until at least 2038 for each of our compounds currently in clinical development. HCV NS3 N Protease Inhibitor Program. The patent portfol f io directed to the HCV protease inhibitor program with AbbVie includes U.S. patents and for f eign patents, as well as pending applications. The issued U.S. composition-of-m f atter patent covering paritapr a evir is expected to expire in 2031. The issued U.S. composition-of-m f atter patent covering glecaprevir is expected to expire in 2032. AbbVie is a joint owner of a number of patents and patent appl a ications. AbbVie also has rights to some or all of these patents and patent applications pursuant to its collaboration agreement with us. We may obtain patents for certain compounds many years befor f e we obtain marketing approval for f products containing such compounds. Because patents have a limited life, f which usually begins to run well befor f e the first commercial sale of the related product, the commercial value of the patent may be limited. However, we may be abl a e to appl a y for f patent term extensions in the United States and in a number of European and other countries, compensating in part for f delays in obtaining marketing appr a oval, but we cannot be certain we will obtain such extensions. It is also very important that we do not infringe patents or other proprietary rights of others. If we do infringe such patents or other proprietary rights, we could be prevented from developing or selling products or from using the processes covered by those patents, could be required to pay subs u tantial damages, or could be required to obtain a license from the third party to allow us to use their technology, which may not be availabl a e on commercially reasonabl a e terms or at all. If we were not able to obtain a required license or develop alternative technologies, we may be unabl a e to develop or commercialize some or all of our products, and our business could be adversely affected. Further, the existence of issued patents does not guarantee our right to practice the patented technology or commercialize the patented product. Third parties may have already or could obtain rights to patents that could be used to prevent or attempt to prevent us from commercializing our product candidates. If these other parties are successful f in obtaining valid and enfor f ceable patents, and establishing our infringement of those patents, we could be prevented from commercializing our product candidates unless we were abl a e to obtain a license under such patents, which may not be availabl a e on commercially reasonabl a e terms or at all. Much of our scientific f capabilities depend upon u the knowledge, experience and skills of key scientific f and technical personnel. To protect our rights to our proprietary know-how and technology, we endeavor to require all employees, as well as our consultants and advisors, when fea f sible, to enter into confid f entiality agreements that require disclosure and assignment to us of ideas, developments, discoveries and inventions made by these employees, consultants and advisors in the course of their service to us. We may be unabl a e to obtain, maintain and protect the intellectua t l property rights necessary to conduct our business, and we may be subject to claims that we infringe or otherwise violate the intellectua t l property rights of others, which could materially harm our business. For more infor f mation, see “Risk Factors—Risks Related to Our Intellectua t l Property Rights.” Government Regulation Government authorities in the United States, at the fed f eral, state and local level, and in other countries extensively regulate, among other things, the research, development, testing, manufac f ture, quality control, approval, labe a ling, packaging, storage, record-keeping, promotion, advertising, distribution, post-approval monitoring and reporting, marketing and export and import of products such as those we develop. Any pharmaceutical candidate that we develop must be appr a oved by the FDA before it may be legally marketed in the United States and by the appr a opriate foreign regulatory a r gency before f it may be legally marketed in for f eign countries. United Sta S tes Drug D u evelopm l ent Pro P cess In the United States, the FDA regulates drugs r under the Federal Food, Drug r and Cosmetic Act, or FDCA, and implementing regulations. Drugs are also subject to other fed f eral, state and local statut t es and regulations. The process of obtaining regulatory a r ppr a ovals and the subs u equent compliance with appropriate federal, state, local and for f eign statut t es and regulations require the expenditure of subs u tantial time and fin f ancial resources. Failure to comply with the appl a icable United States requirements at any time during the product development process, approval process or after approval, may subject an applicant to administrative or judicial sanctions. FDA and other governmental sanctions could include refusal to appr a ove pending applications, withdrawal of an approval, a clinical hold, enforcement letters, product recalls, product seizures, total 22 or partial suspension of production or distribution, inju n nctions, fin f es, refus f als of government contracts, restitution, disgorgement or civil or criminal penalties. Any agency or judicial enforcement action could have a material adverse effec f t on us. The process required by the FDA befor f e a drug may be marketed in the United States generally involves the following: • Completion of preclinical labor a atory t r ests, animal studies and for f mulation studies according to Good Labor a atory P r ractice, or GLPs, or other applicable regulations; • Subm u ission to the FDA of an Investigational New Drug r Application, or an IND, which must become effe f ctive before human clinical trials may begin; • Performance of adequate and well-controlled human clinical trials according to the FDA’s current Good Clinical Practice, or GCPs, to establish the safety and efficacy of the proposed drug r for its intended use; • Subm u ission to the FDA of a New Drug r Application, or an NDA, for a new drug product; • Satisfactory c r ompletion of an FDA inspection of the manufact f ur t ing faci f lity or facilities where the drug is to be produced to assess compliance with the FDA’s current Good Manufac f turing Practice standards, or cGMP, to assure that the faci f lities, methods and controls are adequate to preserve the drug’s identity, strength, quality and purity; • Potential FDA audit of the nonclinical and clinical trial sites that generated the data in support of the NDA; and • FDA review and approval of the NDA. The lengthy process of seeking required appr a ovals, which can ofte f n take anywhere from six months from the time the NDA is filed if there is a priority review for a breakthrough therapy to at least ten months for a standard review, and the continuing need for compliance with applicable statut t es and regulations, require the expenditure of subs u tantial resources. There can be no certainty that approvals will be granted. Before testing any compounds with potential therape a utic value in humans, the product candidate enters the preclinical testing stage. Preclinical tests include labo a ratory evaluations of product chemistry, r toxicity and for f mulation, as well as animal studies to assess the potential safet f y and activity of the product candidate. The conduct of the preclinical tests must comply with GLP and other fed f eral regulations and requirements. The sponsor must subm u it the results of the preclinical tests, together with manufac f turing information, analytical data, any availabl a e clinical data or literature and a proposed clinical protocol, to the FDA as part of the IND. The IND automatically becomes effective 30 days after receipt by the FDA, unless the FDA places the clinical trial on a clinical hold within that 30-day time period. In such a case, the IND sponsor and the FDA must resolve any outstanding concerns before the clinical trial can begin. The FDA may also impose clinical holds on a drug at any time before or during clinical trials due to safety concerns or non-compliance. Accordingly, we cannot assure that subm u ission of an IND will result in the FDA allowing clinical trials to begin, or that, once begun, issues will not arise that result in suspension or termination of such trial. Clinical trials involve the administration of the product candidate to healthy volunteers or patients having the disease being studi t ed under the supe u rvision of qualifie f d investigators, generally physicians not employed by or under the trial sponsor’s control. Clinical trials are conducted under protocols detailing, among other things, the objectives of the clinical trial, dosing procedur d es, subject selection and exclusion criteria, and the parameters to be used to monitor subject safety. Each protocol must be subm u itted to the FDA as part of the IND. Clinical trials must be conducted in accordance with the FDA’s GCP requirements. Further, each clinical trial must be reviewed and approved by an independent institut t ional review board, or IRB, at or servicing each institut t ion at which the clinical trial will be conducted. An IRB is charged with protecting the welfar f e and rights of trial participants and considers such items as whether the risks to individuals participating in the clinical trials are minimized and are reasonabl a e in relation to anticipated benefits. The IRB also appr a oves the informed consent for f m that must be provided to each clinical trial subject or his or her legal representative and must monitor the clinical trial until it is completed. Human clinical trials prior to approval are typically conducted in three sequential phases that may overlap or be combined: • Phase 1. The drug r is initially introduced into healthy humans and tested for safet f y, dosage tolerance, absorption, metabol a ism, distribution and excretion. In the case of some products for severe or life- f threatening 23 diseases, especially when the product may be too inherently toxic to ethically administer to healthy volunteers, the initial human testing is often conducted only in patients having the specific f disease. • Phase 2. The drug r is evaluated in a limited patient population to identify p f ossible adverse effects and safety risks, to preliminarily evaluate the effic f acy of the product for f specific targeted diseases and to determine dosage tolerance, optimal dosage and dosing schedul d e for f patients having the specific disease. • Phase 3. Clinical trials are undertaken to further evaluate dosage, clinical effi f cacy and safet f y in an expanded patient population at geographically dispersed clinical trial sites. These clinical trials, which usually involve more patients than earlier trials, are intended to establish the overall risk/b k enefit f ratio of the product and provide an adequate basis for f product labeling. Generally, at least two adequate and well-controlled Phase 3 clinical trials are required by the FDA for f approval of an NDA. Post-appr a oval studies, or Phase 4 clinical trials, may be conducted after initial marketing appr a oval. These studies are used to gain additional experience fro f m the treatment of patients in the intended therape a utic indication and may be required by the FDA as part of the approval process. Progress reports detailing the results of the clinical trials must be subm u itted at least annually to the FDA and written IND safety reports must be subm u itted to the FDA by the investigators for f serious and unexpected adverse events or any finding from tests in labor a atory a r nimals that suggests a significant risk for f human patients. Phase 1, Phase 2 and Phase 3 clinical trials may not be completed successful f ly within any specified period, if at all. The FDA, or the sponsor or its data safety monitoring board, may suspend a clinical trial at any time on various grounds, including a fin f ding that the research patients are being exposed to an unacceptabl a e health risk. Similarly, an IRB can suspend or terminate approval of a clinical trial at its institut t ion if the clinical trial is not being conducted in accordance with the IRB’s requirements or if the drug r has been associated with unexpected serious harm to patients. Concurrent with clinical trials, companies usually complete additional animal studies and develop additional inform f ation about the chemistry a r nd physical characteristics of the drug r as well as finalize a process for f manufac f turing the product in commercial quantities in accordance with cGMP requirements. The manufact f ur t ing process must be capable of consistently producing quality batches of the product candidate and, among other things, must include methods for testing the identity, strength, quality and purity of the final drug. Additionally, appr a opriate packaging must be selected and tested, and stabi a lity studi t es must be conducted to demonstrate that the product candidate does not undergo unacceptabl a e deterioration over its shelf life. f U.S. Review and Appr A oval Processes The results of product development, preclinical studi t es and clinical trials, along with descriptions of the manufact f ur t ing process, analytical tests conducted on the chemistry o r f the drug, r proposed labe a ling and other relevant infor f mation are subm u itted to the FDA as part of an NDA requesting appr a oval to market the product. The submission of an NDA is subject to the payment of subs u tantial user fees f by the appl a icant; a waiver of such fees f may be obtained under certain limited circumstances. In addition, under the Pediatric Research Equity Act, or PREA, an NDA or suppl u ement to an NDA must contain data to assess the safet f y and effe f ctiveness of the drug r for the claimed indications in all relevant pediatric subpopul u ations and to suppor u t dosing and administration for each pediatric subpopul u ation for f which the product is safe a f nd effe f ctive. The FDA may grant deferrals for submission of pediatric data or ful f l or partial waivers. The FDA reviews all NDAs subm u itted befor f e it accepts them for f filing and may request additional infor f mation rather than accepting an NDA for filin f g. Once the submission is accepted for f filing, the FDA begins an in-depth review of the NDA. Under the goals and policies agreed to by the FDA under the Prescription Drug r User Fee Act, or PDUFA, the FDA has ten months in which to complete its initial review of a standard NDA and respond to the appl a icant, and six months for a priority NDA. The review clock for f an NDA may be extended if a majo a r amendment is submitted dur d ing the review cycle. In addition, the FDA does not always meet its PDUFA goal dates for standard and priority NDAs. Afte f r the NDA subm u ission is accepted for filin f g, the FDA reviews the NDA to determine, among other things, whether the proposed product is safe a f nd effe f ctive for f its intended use and whether the product is being manufact f ur t ed in accordance with cGMP to assure and preserve the product’s identity, strength, quality and purity. In addition to its own review, the FDA may refer app a lications for novel drug products or drug r products that present diffi f cult questions of safety or effi f cacy to an advisory committee, typically a panel that includes clinicians and other experts, for review, evaluation and a recommendation as to whether the app a lication should be appr a oved and under what conditions. The FDA is not bound by the recommendations of an advisory committee, but it considers such recommendations careful f ly when making decisions. During the appr a oval process, the FDA also will determine whether a Risk Evaluation and Mitigation Strategy, or REMS, is 24 necessary to assure the safe u f se of the drug. If the FDA concludes that a REMS is needed, the sponsor of the NDA must subm u it a proposed REMS; the FDA will not approve the NDA without a REMS, if required. Before approving an NDA, the FDA will inspect the facilities at which the product is to be manufact f ur t ed. The FDA will not approve the product unless it determines that the manufact f ur t ing processes and facilities are in compliance with cGMP requirements and are adequate to assure consistent production of the product within required specifications. Additionally, before approving an NDA, the FDA will typically inspect one or more clinical sites to assure compliance with GCP. If the FDA determines that the appl a ication, manufact f ur t ing process or manufac f turing facilities are not acceptabl a e, it will outline the deficiencies in the submission and often will request additional testing or infor f mation. The NDA review and appr a oval process is lengthy and diffi f cult, and the FDA may refuse to approve an NDA if the applicable regulatory c r riteria are not satisfie f d or may require additional clinical data or other data and information. Even if such data and infor f mation is subm u itted, the FDA may ultimately decide that the NDA does not satisfy the criteria for f approval. Data obtained fro f m clinical trials are not always conclusive and may be susceptible to varying interpr r etations, which could delay, limit or prevent regulatory a r ppr a oval. The FDA will issue a “complete response” letter if the agency decides not to approve the NDA. The complete response letter usually describes all of the specific defic f iencies in the NDA identified by the FDA. The deficiencies identifie f d may be minor, for f example, requiring labe a ling changes, or majo a r, for example, requiring additional clinical trials. Additionally, the complete response letter may include recommended actions that the app a licant might take to place the appl a ication in a condition for f approval. If a complete response letter is issued, the applicant may either resubm u it the NDA, addressing all of the deficiencies identifie f d in the letter, or withdraw the application. If a product receives regulatory a r ppr a oval, the appr a oval may be limited to specific diseases and dosages or the indications for use may otherwise be limited, which could restrict the commercial value of the product. Further, the FDA may require that certain contraindications, warnings or precautions be included in the product labeling. In addition, the FDA may require Phase 4 testing, which involves clinical trials designed to fur f ther assess a product’s safet f y and effe f ctiveness and may require testing and surveillance programs to monitor the safety of approved products that have been commercialized. Expe x dite i d Developm l ent and Review Programs The FDA has four f programs intended to expedite the development and review of new drugs addressing unmet medical needs or treating serious or life- f threatening conditions: fas f t track, breakthrough therapy, priority review, and accelerated approval, in addition to emergency use authorization, or EUA, in situations such as the COVID-19 pandemic. The FDA “fas f t track” program is intended to expedite or facilitate the process for f reviewing new products to treat serious or life- f threatening conditions and address unmet medical needs. Fast track designation appl a ies to the combination of the product and the specific indication for f which it is being studi t ed. Under the fast track program, the sponsor will have more frequent interactions with the FDA during drug development, and may also subm u it sections of the NDA on a rolling basis to the FDA for review befor f e submitting the complete application. Fast track does not guarantee that a product will be reviewed more quickly or receive FDA approval. The FDA “breakthrough therapy” program is intended to expedite the development and review of drugs r for serious or life- threatening conditions. Preliminary c r linical evidence must show that the drug may have subs u tantial improvement over existing therapi a es on one or more clinically significant endpoints. Although the drug does not have to address an unmet medical need, designation of breakthrough therapy status carries all the “fas f t track” program featur t es. Additionally, the breakthrough therapy program entitles the sponsor to earlier and more frequent interaction with the FDA review team regarding development of nonclinical and clinical data, and allows the FDA to offe f r product development and regulatory r advice necessary to shorten the time for product appr a oval. The breakthrough therapy status does not guarantee a quicker development or review of the product, and does not ensure FDA appr a oval. The FDA also has a “priority review” program for products offe f ring significant improvement in the treatment, diagnosis or prevention of a disease. The goal of the priority review program is to shorten the review period to six months from the ten months required for f standard review. Any drug r with breakthrough therapy, accelerated approval designation, or fast track can be granted priority review if it meets the necessary c r riteria. The FDA “accelerated app a roval” program is intended to expedite the development and review of products with the potential to treat serious or life- f threatening illnesses and provide meaningful f therapeutic benefit f over existing treatments. The program allows approval of a product on the basis of adequate and well-controlled clinical studi t es establ a ishing that the product has an effe f ct on a surrogate endpoint that is reasonabl a y likely to predict a clinical benefit, or on the basis of an effe f ct on a clinical endpoint that can be measured earlier than survival or irreversible morbidity. As a condition of appr a oval, the FDA generally requires that a sponsor of the product perform adequate and well-controlled post-marketing clinical studi t es to establ a ish safet f y and effi f cacy for the approved indication. Failure to conduct such studies or failure of the stud t ies to establ a ish required safet f y and effi f cacy may result in revocation of appr a oval. The FDA also requires, as a condition for 25 accelerated appr a oval, pre-approval of promotional materials, which could adversely impact the timing of the commercial launch or subsequent marketing of the product. The FDA may also allow the use of unappr a oved medical products, or unappr a oved uses of appr a oved medical products, under an emergency use authorization, or EUA, to diagnose, treat, or prevent serious or life-threatening diseases or conditions when certain statut t ory c r riteria have been met, including that there are no adequate, appr a oved, and availabl a e alternatives. An EUA is a mechanism to faci f litate the availability and use of medical countermeasures during public health emergencies, such as the COVID-19 pandemic. Once subm u itted, the FDA will evaluate an EUA request and determine whether the relevant statut t ory c r riteria are met, taking into account the totality of the scientific f evidence about the drug that is available to FDA. EUAs can be terminated, revoked or reissued, depending on the state of the public health emergency and new data about the drug. Post-A t ppr A oval Requirements Any drug products for which we receive FDA approvals are subject to continuing regulation by the FDA. Certain requirements include, among other things, record-keeping requirements, reporting of adverse experiences with the product, providing the FDA with updated safet f y and effi f cacy information on an annual basis or more frequently for specific events, drug r suppl u y chain requirements, product sampling and distribution requirements, complying with certain electronic records and signature requirements and complying with FDA prescription drug r promotion and advertising requirements. These promotion and advertising requirements include, among others, standards for f direct-to-consumer advertising, prohibitions against promoting drugs for uses or in patient populations that are not described in the drug’ r s appr a oved labeling (known as “off-label use”), rul r es for conducting industry- r sponsored scientific f and educational activities and promotional activities involving the internet. Failure to comply with FDA requirements can have negative consequences, including the immediate discontinuation of noncomplying materials, adverse publicity, enforcement letters from the FDA, mandated corrective advertising or communications with doctors, and civil or criminal penalties. Although physicians may prescribe legally availabl a e drugs for off-label uses, manufact f ur t ers may not market or promote such off-label uses. We rely, and expect to continue to rely, on third parties for f the production of clinical and commercial quantities of our product candidates. Manufactur t ers of our product candidates are required to comply with applicable FDA manufac f turing requirements contained in the FDA’s cGMP regulations. These regulations require, among other things, quality control and quality assurance as well as the corresponding maintenance of comprehensive records and documentation. Drug r manufac f turers and other entities involved in the manufac f ture and distribution of appr a oved drugs are also required to register their establishments and list any products they make with the FDA and to comply with related requirements in certain states. These entities are further subject to periodic unannounced inspections by the FDA and certain state agencies for f compliance with cGMP and other laws. Accordingly, manufac f turers must continue to expend time, money and effo f rt in the area of production and quality control to maintain cGMP compliance. Discovery of problems with a product after approval may result in serious and extensive restrictions on a product, manufact f ur t er or holder of an appr a oved NDA. These restrictions may include suspension of a product until the FDA is assured that quality standards can be met, continuing oversight of manufac f turing by the FDA under a “consent decree,” which frequently includes the imposition of costs and continuing inspections over a period of many years, as well as possible withdrawal of the product fro f m the market. In addition, changes to the manufact f ur t ing process generally require prior FDA approval befor f e being implemented. Other types of changes to the approved product, such as adding new indications and additional labeling claims, are also subject to further FDA review and approval. The FDA also may require post-marketing testing, known as Phase 4 testing, as well as risk minimization action plans and surveillance to monitor the effe f cts of an app a roved product or place conditions on an approval that could otherwise restrict the distribution or use of the product. U.S. Patent Term Restor t atio t n and Marketin t g Exc E lusivity i Drug Price Com C pe m tition and Patent Term Restoration Act of 1984 Depending upon the timing, duration and specifics of the FDA approval of the use of our product candidates, some of our United States patents may be eligible for f limited patent term extension under the Drug r Price Competition and Patent Term Restoration Act of 1984, commonly refer f red to as the Hatch-Waxman Amendments. The Hatch-Waxman Amendments permit a patent restoration term of up to five years as compensation for f patent term lost during fed f eral regulatory r r eview preceding the FDA regulatory r r eview process. However, patent term restoration cannot extend the remaining term of a patent beyond a total of 14 years fro f m the product’s appr a oval date. The patent term restoration period is generally one-half the time between the effective date of an IND and the subm u ission date of an NDA plus the time between the submission date of an NDA and the app a roval of that appl a ication. Only one patent applicable to an approved drug is eligible for the extension and the appl a ication for f the extension must be subm u itted within 60 days of approval, prior to the expiration of the patent. The United States Patent and Trademark Office, in consultation with the FDA, reviews and appr a oves the application 26 for any patent term extension or restoration. In the fut f ur t e, we may appl a y for f restoration of patent term for f one of our currently owned or licensed patents to add patent life b f eyond its current expiration date, depending on the expected length of the clinical trials and other factors involved in the filing of the relevant NDA. However, there is no guarantee that any such application will be approved. Federal Food, F Drug and Cosmetic Act, or FDCA Market exclusivity provisions under the FDCA, which are independent of patent status t and any patent related extensions, can also delay the subm u ission or the app a roval of certain applications of other companies seeking to refer f ence another company’s NDA. If the new drug r is a new chemical entity subj u ect to an NDA, the FDCA provides a five-year period of non-patent marketing exclusivity within the United States to the first appl a icant to obtain appr a oval of an NDA for a new chemical entity. A drug r is a new chemical entity if the FDA has not previously approved any other new drug r containing the same active moiety, which is the molecule or functional group of a molecule responsible for the action of the drug r subs u tance. During the exclusivity period, the FDA may not accept for review an abbr a eviated new drug r application, or ANDA, or a so-called Section 505(b)(2) NDA, subm u itted by another company for another version of such drug r where the applicant does not own or have a legal right of reference to all the data required for f approval. However, such an application may be submitted after four years if it contains a certification of patent invalidity or non-infringement to one of the patents listed with the FDA by the innovator NDA holder. The FDCA also provides three years of marketing exclusivity for f an NDA, or supplement to an existing NDA if new clinical investigations, other than bioavailabi a lity studi t es, that were conducted or sponsored by the appl a icant are deemed by the FDA to be essential to the approval of the application, for example, new indications, dosages or strengths of an existing drug. This three-year exclusivity covers only the conditions associated with the new clinical investigations and does not prohibit the FDA fro f m appr a oving ANDAs for drugs containing the original active agent. Five-year and three-year exclusivity will not delay the subm u ission or approval of a full NDA. However, an applicant submitting a full NDA would be required to conduct or obtain a right of reference to all of the preclinical studi t es and adequate and well-controlled clinical trials necessary to demonstrate safet f y and effe f ctiveness. Othe t r U.S U . H S ea H lthcare Laws and Com C pl m ia l nce Require i mentst In the United States, our activities are potentially subj u ect to regulation by various federal, state and local authorities in addition to the FDA, including the Centers for Medicare & Medicaid Services (formerly the Health Care Financing Administration), other divisions of the United States Department of Health and Human Services (e.g., the Office of Inspector General), the United States Department of Justice and individual United States Attorney offi f ces within the Department of Justice, state attorney generals and state and local governments. At such time as we market, sell and distribute any products for which we obtain marketing appr a oval, it is possible that our business activities could be subject to scrut r iny and enforcement under one or more federal or state health care fra f ud and abuse laws and regulations. These fraud and abus a e laws include: • The fed f eral Anti-Kickba k ck Law, which prohibits, among other things, knowingly or willingly offer f ing, paying, soliciting or receiving remuneration, directly or indirectly, in cash or in kind, to induce or reward the purchasing, leasing, ordering or arranging for or recommending the purchase, lease or order of any health care items or service for which payment may be made, in whole or in part, by federal health care programs such as Medicare and Medicaid; • The fed f eral civil False Claims Act, which prohibits, among other things, individuals or entities fro f m knowingly presenting, or causing to be presented, a false or fra f udulent claim for payment of government funds or knowingly making, using or causing to be made or used, a false record or statement material to an obligation to pay money to the government or knowingly concealing or knowingly and improperly avoiding, decreasing or concealing an obligation to pay money to the federal government; • The fed f eral Health Insurance Portabi a lity and Accountability Act of 1996, or HIPAA, which imposes criminal liability for knowingly and willful f ly executing a scheme to defraud any healthcare benefit f program, knowingly and willfully embezzling or stealing fro f m a health care benefit f program, willful f ly obstruc r ting a criminal investigation of a health care offen f se, or knowingly and willful f ly making false statements relating to healthcare matters; • The fed f eral Physician Payment Sunshine Act, being implemented as the Open Payments Program, requires certain pharmaceutical manufact f ur t ers to engage in extensive tracking of payments and other transfers of value to physicians and teaching hospitals, and to subm u it such data to the Centers for Medicare and Medicaid Stud t ies, or CMS, which will then make all of this data publicly availabl a e on the CMS website; and 27 • Analogous state laws and regulations, including state anti-kickba k ck and fal f se claims laws, which may appl a y to items or services reimbursed under Medicaid and other state programs or, in several states, apply regardless of the payer, as well as other state laws that require pharmaceutical companies to report expenses related to the marketing and promotion of pharmaceutical products, prohibit certain gifts or payments to health care providers in the state, and/o d r require pharmaceutical companies to implement compliance programs or marketing codes of conduct. Violations of fraud and abuse laws may be punishable by significant criminal and/or civil sanctions, including fines and civil monetary penalties, the possibility of exclusion fro f m fed f eral health care programs (including Medicare and Medicaid) and corpo r rate integrity agreements, which impose, among other things, rigorous operational and monitoring requirements on companies. Similar sanctions and penalties also may be imposed upon executive offic f ers and employees, including criminal sanctions against executive offi f cers under the so-called “responsible corporate officer” doctrine, even in situations where the executive officer did not intend to violate the law and was unaware of any wrongdoing. Given the penalties that may be imposed on companies and individuals if convicted, allegations of such violations ofte f n result in settlements even if the company or individual being investigated admits no wrongdoing. Settlements often include significant civil sanctions, including fines and civil monetary penalties, and corpor r ate integrity agreements. If the government was to allege or convict us or our executive offi f cers, employees or consultants of violating these laws, our business could be harmed. In addition, private individuals have the abi a lity to bring similar actions under some of the fraud and abus a e laws described above. Our activities could be subject to challenge for the reasons discussed above and due d to the broad scope of these laws and extensive enfor f cement of them by law enforcement authorities. Further, federal and state laws that require manufact f ur t ers to make reports on pricing and marketing infor f mation could subject us to penalty provisions. In addition, pricing and rebate programs must comply with the Medicaid rebate requirements of the Omnibus Budget Reconciliation Act of 1990 and the Veterans Health Care Act of 1992, each as amended. If products are made availabl a e to authorized users of the Federal Supply Schedul d e of the General Services Administration, additional laws and requirements apply. Under the Veterans Health Care Act, or VHCA, drug r companies are required to offer certain pharmaceutical products at a reduc d ed price to a number of fed f eral agencies including the United States Department of Veterans Affa f irs and United States Department of Defense, the Public Health Service and certain private Public Health Service—designated entities in order to participate in other fed f eral funding programs including Medicare and Medicaid. Recent legislative changes purpor r t to require that discounted prices be offe f red for f certain United States Department of Defense purchases for its TRICARE program via a rebate system. Participation under the VHCA requires submission of pricing data and calculation of discounts and rebates pursuant to complex statut t ory f r or f mulas, as well as the entry into government procurement contracts governed by the Federal Acquisition Regulations. In order to distribute products commercially, we must comply with state laws that require the registration of manufac f turers and wholesale distributors of pharmaceutical products in a state, including, in certain states, manufact f ur t ers and distributors who ship products into the state even if such manufact f ur t ers or distributors have no place of business within the state. Some states also impose requirements on manufact f ur t ers and distributors to establish the pedigree of product in the chain of distribution, including some states that require manufac f turers and others to adopt new technology capa a bl a e of tracking and tracing product as it moves through the distribution chain. Several states have enacted legislation requiring pharmaceutical companies to establish marketing compliance programs, file periodic reports with the state, make periodic public disclosures on sales, marketing, pricing, clinical trials and other activities, and/or register their sales representatives, as well as to prohibit pharmacies and other healthcare entities fro f m providing certain physician prescribing data to pharmaceutical companies for f use in sales and marketing, and to prohibit certain other sales and marketing practices. All of our activities are potentially subj u ect to fed f eral and state consumer protection and unfai f r competition laws. Europe o / Rest of W o or W ld Government Regulat l io t n In addition to regulations in the United States, we will be subj u ect to a variety of regulations in other jurisdictions governing, among other things, clinical trials and any commercial sales and distribution of our products. Whether or not we obtain FDA approval for f a product, we must obtain the requisite approvals from regulatory a r uthorities in foreign countries prior to the commencement of clinical trials or marketing of the product in those countries. Certain countries outside of the United States have a similar process that requires the subm u ission of a clinical trial appl a ication much like the IND prior to the commencement of human clinical trials. In the European Union, for example, a clinical trial application, or CTA, must be subm u itted to each country’s national health authority and an independent ethics committee, much like the FDA and IRB, respectively. Once the CTA is approved in accordance with a country’s requirements, clinical trials may proceed. The requirements and process governing the conduct of clinical trials, product licensing, pricing and reimbursement vary frf om country to country. In all cases, the clinical trials are conducted in accordance with International Confer f ence on 28 Harmonisation (ICH) / WHO Good Clinical Practice standards and the appl a icable regulatory r r equirements and the ethical principles that have their origin in the Declaration of Helsinki. To obtain regulatory a r pp a roval of an investigational drug under European Union regulatory s r ystems, we must submit a marketing authorization appl a ication to the European Medicines Agency, or the EMA. The application used to fil f e an NDA in the United States is similar to that required in the European Union, with the exception of, among other things, country- specific document requirements. For other countries outside of the European Union, such as countries in Eastern Europe, Latin America or Asia, the requirements governing the conduct of clinical trials, product licensing, pricing and reimbursement vary from country to country. In all cases, again, the clinical trials are conducted in accordance with GCPs and the applicable regulatory r requirements and the ethical principles that have their origin in the Declaration of Helsinki. If we fail to comply with applicable foreign regulatory r r equirements, we may be subject to, among other things, fin f es, suspension or withdrawal of regulatory approvals, product recalls, seizure of products, operating restrictions and criminal prosecution. Pharma r ceutical Cov C erage, P e ri P cing i and Reimb i urse r ment Significant uncertainty exists as to the coverage and reimbursement status t of any product candidates for f which we obtain regulatory a r ppr a oval. In the United States and markets in other countries, sales of any products for which we receive regulatory a r ppr a oval for f commercial sale will depend in part on the availability of reimbursement from third-party payors. Third-party payors include government health administrative authorities, managed care providers, private health insurers and other organizations. The process for f determining whether a payor will provide coverage for a drug r product may be separate from the process for f setting the price or reimbursement rate that the payor will pay for f the drug product. Third- party payors may limit coverage to specific drug products on an approved list, or formulary, r which might not include all of the FDA-approved drug products for a particular indication. Third-party payors are increasingly challenging the price and examining the medical necessity and cost-effectiveness of medical products and services, in addition to their safety and effi f cacy. In recent years, both the Federal and State governments are increasingly considering and adopting laws that exert greater influence over the price of prescription drugs. For example, a number of states are increasingly using more aggressive price control tools such as Prescription Drug Affordability Boards that have the authority to conduct affordabi a lity reviews and establ a ish uppe u r payment limits. The Inflation Reduc d tion Act passed by Congress in 2022 (discussed below), authorized the Centers for Medicare and Medicaid Services, or CMS, to begin negotiating the prices on certain drugs r based on factors such as research & developments costs and the health economic impact of a particular therapy. We may need to conduct expensive pharmaco-economic studi t es to demonstrate the medical necessity and cost-effe f ctiveness of our products, in addition to the costs required to obtain the FDA appr a ovals. Our product candidates may not be considered medically necessary or cost-effective. A payor’s decision to provide coverage for a drug r product does not imply that an adequate reimbursement rate will be approved. Adequate third-party reimbursement may not be availabl a e to enabl a e us to maintain price levels suffi f cient to realize an appr a opriate return on our investment in product development. In certain circumstances, we may need to negotiate discounts on a drug r product in order to ensure adequate formulary a r ccess for f patients. In 2003, the United States government enacted legislation providing a partial prescription drug benefit f for Medicare recipients, which became effect f ive at the beginning of 2006. Government payment for f some of the costs of prescription drugs r may increase demand for f any products for which we receive marketing appr a oval. However, to obtain payments under this program, we would be required to sell products to Medicare recipients through private prescription drug plans that contract with the fed f eral government and adhere to certain minimum requirements. The Patient Protection and Affo f rdable Care Act, as amended by the Health Care and Education Reconciliation Act, collectively known as the Affo f rdable Care Act, or ACA, subs u tantially changed the way healthcare is financed by both governmental and private insurers, and significantly impacted the pharmaceutical industry. r Since its adoption, the ACA contains a number of provisions, including those governing enrollment in federal healthcare programs, reimbursement changes and fraud and abus a e, which have affected existing government healthcare programs and have resulted in the development of new programs, including Medicare payment tied to performance. Additionally, the Affo f rdable Care Act: • increased the minimum level of Medicaid rebates payabl a e by manufac f turers of brand-name drugs r from 15.1% to 23.1%; • required collection of rebates for drugs paid by Medicaid managed care organizations; • required manufact f ur t ers to participate in a coverage gap d a iscount program, under which they must agree to offer f 50% point-of-sale discounts off negotiated prices of applicable brand drugs to eligible beneficiaries dur d ing their 29 coverage gap p a eriod, as a condition for f the manufact f ur t er’s outpa t tient drugs to be covered under Medicare Part D, beginning January 2011; and • imposed a non-deductible annual fee f on pharmaceutical manufac f turers or importers who sell “branded prescription drugs r ” to specified federal government programs. Ten states have not implemented the provisions of the ACA that involve the expansion of Medicaid eligibility to low- income adul d ts. While the United States Supreme Court recently rejected the latest challenge to the constitutionality of the ACA, it is possible that other legislative effor f ts may seek to modify it. In addition, other legislative changes have been proposed since the Affo f rdable Care Act was enacted, and other judicial challenges to the ACA are pending in the lower courts. There has been increasing legislative and enfor f cement interest in the United States with respect to drug pricing practices. For example, the Inflation Reduc d tion Act of 2022, or IRA, R introduc d es some of the most significant changes to Medicare payment for f prescription drugs since the ACA. Among its many provisions, the IRA a R uthorizes the Medicare program to negotiate pricing for f certain high-cost and/or high-volume drugs, including physician-administered and self-a f dministered drugs r , that have been on the market for f a minimum amount of time without generic competition. Each year, beginning with calendar year 2026, the Secretary of the Department of Health and Human Services will implement a negotiated price, known as the “Maximum Fair Price”, or MFP, that will be made public and appl a y to the drug’ r s Medicare utilization if the drug r is among the top 10 drugs r with the highest Medicare spending. Manufact f ur t ers who fail to offe f r the MFP, or fail to come to the table to negotiate afte f r the Secretary h r as determined their drug is eligible for negotiation, will incur an excise tax of up t u o 95% for each sale of the drug in the United States. Depending on the share of Medicare spending each year that is attributed to MAVYRET or any other drug r we may develop or out-license, and whether or not those drugs become eligible for Medicare negotiation, those drugs and our revenue may be adversely impacted by this provision. The IRA also requires manufact f ur t ers, beginning in 2023, to rebate the Medicare program for Medicare utilization of Part B and Part D drugs r that have price increases faster than the rate of infla f tion. The benchmark to which price increases are compared varies depending on the drug. Although manufac f turers are generally familiar with inflation rebates under the Medicaid program, where they have existed for f decades, the IRA represents the fir f st time that the Centers for Medicare and Medicaid Services, or CMS, has extended infla f tion rebates to the Medicare program. The IRA also redesigns the Medicare prescription drug benefit f in several important ways, beginning in calendar year 2024. First, the IRA places an annual out-of-pocket cap on Medicare beneficiary c r ost sharing amounts, which will take effect in calendar year 2025 before the ful f l benefit f redesign. Previously, benefic f iaries’ out-of-pocket costs were uncapped, even if heavily subsidized. Second, the IRA requires that manufac f turers share in the cost of prescription drugs throughout the prescription drug r benefit, beginning in calendar year 2025. Previously manufact f ur t ers only needed to offer discounted pricing for f a single phase of the prescription drug benefit f . As described above, in calendar year 2025, the IRA introduc d es a new $2,000 out-of-pocket maximum in the Part D program for benefic f iaries. Finally, the IRA s R hifts the majo a rity of liabi a lity in the “catastrophic phase”—the phase of the prescription drug benefit f that only the costliest of Medicare benefic f iaries enter—to the private Part D plans, thereby encouraging them to better manage costs. Previously, the Federal government incurred the vast majo a rity of liabi a lity during the catastrophic phase. Together, these changes to the Medicare prescription drug r benefit will create new pricing dynamics for payers and manufactur t ers. The United States Congress is also considering legislation that would dramatically reform the business model of the pharmacy benefit f management, or PBM, industry. r In general, the principal PBM business model relies on rebate payments from pharmaceutical manufactur t ers to PBMs (acting as agents of insurers) in exchange for administrative tasks such as formulary d r evelopment, development of pharmacy networks, and plan benefit design. The proposed legislation would replace the rebate model with a model that relies on up- u front discounts and would potentially significantly alter the relationship between manufact f ur t ers and PBMs. As noted above, state legislatur t es are also increasingly considering and adopting laws that exert greater influence over the price of prescription drugs. In recent years, many states have passed cost transparency and pharmaceutical pricing laws. These laws often require manufac f turers to report certain product infor f mation or other financial data to the state. States are expected to continue their foc f us on pharmaceutical pricing and will increasingly move to more aggressive price control tools such as Prescription Drug Affordability Boards that have the authority to conduct affordability reviews and establ a ish upper payment limits. Different pricing and reimbursement schemes exist in other countries. In the European Union, governments influ f ence the price of pharmaceutical products through their pricing and reimbursement rules and control of national healthcare systems that fund a large part of the cost of those products to consumers. Some jurisdictions operate positive and negative list systems under which products may only be marketed once a reimbursement price has been agreed. To obtain reimbursement or pricing appr a oval, some of these countries may require the completion of clinical trials that compare the cost-effectiveness of a particular product candidate to currently availabl a e therapi a es. Other member states allow companies to fix their own 30 prices for medicines but monitor and control company profits f . The downward pressure on healthcare costs in general, particularly prescription drugs r , has become very intense. As a result, increasingly high barriers are being erected to the entry of new products. In addition, in some countries, cross-border imports from low-priced markets exert a commercial pressure on pricing within a country. The marketabi a lity of any drug candidates for f which we receive regulatory a r ppr a oval for f commercial sale may suffer f if the government and third-party payers fail to provide adequate coverage and reimbursement. In addition, emphasis on managed care in the United States has increased and we expect will continue to increase the pressure on pharmaceutical drug r pricing. Coverage policies and third-party reimbursement rates may change at any time. Even if fav f orable coverage and reimbursement status t is attained for one or more products for which we receive regulatory a r ppr a oval, less favorable coverage policies and reimbursement rates may be implemented in the fut f ur t e. Research and Development Our research and development expenses were $131.5 million, $163.5 million and $164.5 million for f the fis f cal years ended September 30, 2024, 2023, and 2022, respectively. Manufac f turing We do not have our own manufact f ur t ing capabilities, except with respect to limited amounts of active pharmaceutical ingredients needed for preclinical development. To date, we have relied on third-party manufact f ur t ers, including manufac f turers in China, for supply of active pharmaceutical ingredients and ingredients for f use in clinical trials of our product candidates. We also expect that in the fut f ur t e we will rely on such manufac f turers to produce commercial quantities of any product candidates that we commercialize ourselves. Manufact f ur t ing for f glecaprevir is conducted by AbbVie. Wherever possible, we seek to identify multiple suppl u iers for raw materials and key intermediaries to be used in our manufac f turing process. Sales and Marketing We currently do not have any commercialization or sales and marketing capabilities, and currently have no fixed plans to invest in or build such capabilities internally. We have partnered our protease inhibitor compounds for HCV with AbbVie. We may also partner or collaborate with, or license commercial rights to, other larger pharmaceutical or biopharmaceutical companies to support the development of one or more of our wholly-owned product candidates through late-stage clinical development and, if successful f , commercialization. However, we still retain all commercial rights to our independent programs and we will continue to evaluate our alternatives for commercializing them once they are more advanced in their clinical development. Our Corporate Information We are a Delaware corporation, incorporated in 1995. Our principal executive offices are located at 4 Kingsbury A r venue, Watertown, Massachusetts 02472, and our telephone number is (617) 607-0800. Our web site address is http://w / ww.enanta.com. Segment Infor f mation We provide segment infor f mation in Note 2 to our Consolidated Financial Statements included in Item 8 of this report. We are incorpor r ating that infor f mation into this section by this refer f ence. Human Capital Resources As of September 30, 2024, we had 131 full-time employees, 65 of whom hold Ph.D. or M.D. degrees and an additional 30 of whom hold a master's degree or other post-gradua d te degree. We consider the intellectua t l capital of our employees to be an essential driver of our business and key to our future prospects. Historically we have had relatively low turnover of employees, but as the number of biotechnology and pharmaceutical companies in the Boston area has increased, we have experienced an increase in the number of employees leaving for f other opportunities. Given our financial resources and our track record, we continue to be able to fill the vacated positions. We also monitor our compensation programs closely and provide what we consider to be a very c r ompetitive mix of compensation and insurance benefits f for all our employees, as 31 well as participation in our equity programs. None of our employees is subj u ect to a collective bargaining agreement or represented by a trade or labor union. We consider our relations with our employees to be good. Available Infor f mation Our Internet website address is http://www.enanta.com. Through our website, we make available, fre f e of charge, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments to those reports, as well as proxy statements, and, from time to time, other documents as soon as reasonabl a y practicable afte f r we electronically file such material with, or fur f nish it to, the Securities and Exchange Commission, or SEC. These SEC reports can be accessed through the “Investors” section of our website. The infor f mation found f on our website is not part of this or any other report we file f with or furnish to the SEC. In addition, the SEC maintains an Internet website that contains reports, proxy and infor f mation statements, and other information regarding Enanta Pharmaceuticals, Inc. and other issuers that file f electronically with the SEC. The SEC’s Internet website address is http://w / ww.sec.gov. 32 ITEM 1A. RISK FACTORS RISK FACTORS Our business faces f significant risks and uncertainties. Certain factors may have a material adverse effect on our business prospects, financial condition and results of operations, and you should careful f ly consider them. Accordingly, in evaluating our business, we encourage you to consider the fol f lowing discussion of risk factors, in its entirety, in addition to other information contained in or incorporated by reference into this Annual Report on Form 10-K and our other public filings with the SEC. Other events that we do not currently anticipate or that we currently deem immaterial may also affe f ct our business, prospects, financial condition and results of operations. Risks Related to Our Business We will i require substan t tial additio i nal fund f in d g to a t chieve our goals. l A fai f lu i re to obtai t n t i hi t s f i un f ding i when needed d couldl force us to d t el d ay l , l y imit, l reduce or terminate s t ome or all of our product developm l ent effo e rts. t We will continue to expend subs u tantial resources discovering and developing our proprietary product candidates. These expenditures will exceed our royalty revenues fro f m our AbbVie collabor a ation and will include costs associated with research and development, preclinical manufac f turing of product candidates, conducting preclinical experiments and clinical trials and obtaining regulatory a r pp a rovals, as well as commercializing any products later appr a oved for f sale. Our future capital requirements depend on many fac f tors, including: • the number and characteristics of our research and development programs; • the scope, progress, results and costs of researching and developing our product candidates on our own, including conducting advanced clinical trials; • our ability to establ a ish new collabor a ations, licensing or other arrangements, if any, and the financial terms of such arrangements; • the amount of our retained portion of royalties generated fro f m MAVYRET/MAVIRET sales under our existing collabor a ation with AbbVie; • delays and additional expenses in our clinical trials; • the cost of manufac f turing our product candidates for f clinical development and any products we successfully commercialize independently; • opportunities to in-license or otherwise acquire new technologies and therapeutic candidates • costs associated with prosecuting our patent infringement suit regarding use of a coronavirus 3CL protease inhibitor in Paxlovid, Pfizer’s antiviral treatment for COVID-19; • the timing of, and the costs involved in, obtaining regulatory a r ppr a ovals for any product candidates we develop independently; • the cost of commercialization activities, if any, of any product candidates we develop independently that are approved for f sale, including marketing, sales and distribution costs; • the timing and amount of any sales of our product candidates, if any, or royalties thereon; • the costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing patents, including any litigation costs and the outcomes of any such litigation; and • potential fluctuations in foreign currency exchange rates. Accordingly, we will need to obtain additional fundi f ng to suppor u t our operations. Additional funds f may not be availabl a e if and when we need them, on terms that are acceptabl a e to us, or at all. Our abi a lity to raise fun f ds will depend on financial, economic and market conditions and other factors, many of which are beyond our control. If adequate funds are not availabl a e to us on a timely basis, we may be required to delay, limit, reduc d e or terminate preclinical studi t es, clinical trials or other research and development activities for f one or more of our product candidates. Our revenues are depe e nden d t upo u n royalty l revenues der d ived from AbbVie V ’s net sales l of its MAVYRET Y /M T AVI M RET I regi e me i n for f HCV, which inc i ludes our protea t se inhibito i r, gleca l pr a evir. i If AbbVie V is unable t l o m t aint i ai t n s i ales l of this 33 regi e me i n at or above current levels o l f s o ales l , o s ur roya o lty revenues, as well as our retai t ne i d cash portion of r o oyalti l es, w s ill be adverse r ly affe f cted t .d AbbVie’s MAVYRET/MAVIRET regimen continues to be a leading HCV treatment in the U.S. and several market geographies in developed countries where it is appr a oved. While commercialization of this regimen is exclusively in AbbVie’s control without any required input from us, we believe it is possible that prices will decline fur f ther due to payors obtaining additional discounts or competitive market dynamics. For example, the states of Louisiana and Washington have negotiated a blanket price for one of the HCV drug r companies to treat all patients in one or more state programs (e.g., Medicaid). Gilead has been awarded the contract in Louisiana and other states and AbbVie has been awarded the contract in Washington and other states. In addition, Gilead has been able to access the Medicaid market at a lower price point to build its market share by using an authorized generic version of its HCV regimen branded as Epclusa®. It is unknown whether these programs or other programs that states may adopt could have any further impact on MAVYRET/MAVIRET sales. There may also be fluctuations in AbbVie’s market share over time due to these and other competitive actions by Gilead. In addition, in light of continued fis f cal crises experienced by several countries in the European Union and Japa a n, governments have announced or implemented measures to manage and reduc d e healthcare expenditures. AbbVie may experience global pricing pressure for its MAVYRET/MAVIRET regimen fro f m such measures, which may be refle f cted in larger discounts or rebates on its regimens or delayed reimbursement. Also, private and public payors may choose to exclude AbbVie’s MAVYRET/MAVIRET regimen from their for f mulary coverage lists or limit the types of patients for f whom coverage will be provided. Any such change in formulary c r overage, discounts or rebates or reimbursement for MAVYRET/MAVIRET would negatively affect the demand for f this regimen and our royalty revenue derived from f its sales. In addition, AbbVie has the right to make decisions regarding the commercialization of licensed products without consulting us. For example, in 2018 AbbVie entered into a royalty-free licensing agreement with the Medicines Patent Pool to accelerate access to generic versions of MAVYRET/MAVIRET in 99 low- and middle-income countries and territories. AbbVie may also make decisions with which we do not agree. If AbbVie acts in a manner that is not in our best interest, then it could adversely affect our royalty revenues. We and AbbVie V face substantia t l compe m titi i on in the marke r ts for HCV H drugs, g and the t re are many c n ompan m ies devel d opi l ng i poten t tial therapies for RSV and other vira i l inf i ec f tions, a s s well a l s for f CSU, AD and other immunology o dise i ases, w s hich may r a esult i l n o i thers d r is d covering i , d g ev d elopi l ng i or commercializing products b t efor f e we do o d r doi d ng i so more successful f ly l than we do. The pharmaceutical and biotechnology industries are intensely competitive and rapi a dly changing. Many large pharmaceutical and biotechnology companies, academic institut t ions, governmental agencies and other public and private research organizations are commercializing or pursuing the development of products that target viral infect f ions, including HCV, RSV and immunology diseases, including CSU and AD, as well as SARS-CoV-2 and HBV assets and other viral infections or diseases that we may target in the future. Many of our competitors have subs u tantially greater commercial infrastructur t e and greater financial, technical and personnel resources than we have, as well as drug candidates in late-stage clinical development. In all the disease areas currently in the foc f us of our research and development efforts, there are other companies with product candidates that are more advanced than ours. Our competitors may succeed in developing these product candidates or others and obtaining regulatory a r ppr a oval befor f e we can do so with any of our product candidates. If we are not “fir f st to market” with one of our product candidates in one or more of these disease indications, our competitive position could be compromised because it may be more diffi f cult for us to obtain marketing appr a oval for f that product candidate and market acceptance of that product candidate as a fol f low-on competitor. In addition, any new product that competes with an approved product typically must demonstrate compelling advantages in effi f cacy, convenience, tolerabi a lity or safety, or some combination of these factors, to gain regulatory a r ppr a ovals, overcome price competition and be commercially successful f . RSV, CSU and AD, as well as COVID-19 and HBV, represent competitive therapeutic areas. For RSV, there are currently no safe and effective therapi a es for already established RSV infection. Several companies are seeking to develop antiviral treatments for f RSV infec f tion in adul d t and pediatric patients. Ark Biosciences and Shionogi have compounds in clinical development. There are several prophylaxis options on the market or in development. AstraZeneca/Sanofi ( f BEYFORTUS®) and Merck (Clesrovimab – P a hase 3 complete) are developing long-acting monoclonal antibodies for prophylaxis use in infan f ts, and Pfiz f er has an appr a oved maternal vaccine (ABRYSVO®), all of which provide passive immunity to infants. Sanofi is also evaluating a vaccine in infan f ts and toddlers (RSVt vaccine – Phase 3). There are also two approved RSV vaccines for f adul d ts 34 over 60 years of age (Pfizer/A r BRYSVO® and Moderna/Mresvia®) and one approved RSV vaccine for adults over 50 years of age (GSK/AREXVY®). For CSU, there are a number of diffe f rent mechanisms being explored, including inhibitors of IL-4R, IgE, BTK, SIGLEC-6, and MRGPRX2 R . Specifically for f KIT inhibitors, there are companies with antibodies in development, including Celldex (barzolvolimab - a Phase 3) and Jasper (briquilimab - a Phase 1b/2a), as well as companies with oral, small molecules in early clinical or preclinical development, including Third Harmonic, Blueprint, Arcus, and Alivexis. For AD, the moderate-severe atopic dermatitis treatment landscape is dominated by biologics targeting the IL-4 and/or IL- 13 pathway (e.g., DUPIXENT® (dupi d lumab) a and ADBRY® (tralokinumab-ldrm)), with JAK inhibitors (e.g., RINVOQ® (upa u dacitinib) and CIBINQO® (abr a ocitinib)) as the only oral option. Multiple oral mechanisms are in development, including inhibitors of MRGPRX2, IRAK R 4, STAT6, RASP and PKM2. The latest stage oral assets are in Ph2 (Incyte MRGPRX2 – Ph2a; Sanofi/K f ym K era IRAK4 – Ph2). For STAT6 inhibitors specifically, companies with oral assets in development include Kymera (KT-621 – Phase 1) and Sanofi/R f ecludix (preclinical). In the chronic HCV market, we expect AbbVie’s MAVYRET/MAVIRET to continue to face intense competition due d to existing appr a oved HCV products. AbbVie’s MAVYRET/MAVIRET regimen currently faces competition in various world markets and subpopul u ations of HCV fro f m Gilead’s Epclusa® (a fixed dose combination of sofos f buvir and velpatasvir), Vosevi® (a triple combination therapy a of sofosbuvir, velpatasvir and voxilapr a evir approved by the FDA for f specified sofosbuvir treatment failures and NS5A-inhibitor treatment failures) and Harvoni® (a fixed-dose combination of sofos f buvir and ledipasvir); and to a lesser extent - Merck’s Zepatier® (a fixed-dose combination of grazoprevir and elbasvir). Gilead launched authorized generic versions of Epclusa and Harvoni through its subs u idiary, Asegua Therapeutics, LLC, which have had an impact on the competitive landscape a . For example, the state of Louisiana selected Asegua as their HCV subs u cription model pharmaceutical partner to provide the state with unrestricted access to its direct-acting antiviral medication. Other competitive products in the for f m of other treatment methods or a vaccine for f HCV may render MAVYRET/MAVIRET obsolete or noncompetitive. MAVYRET/MAVIRET will face competition based on its safet f y and effe f ctiveness, reimbursement coverage, price, patent position, AbbVie’s marketing and sales capabilities, and other factors. If MAVYRET/MAVIRET faces f competition fro f m generic products other than authorized generic versions by the manufac f turer of the branded product (e.g., Gilead and Asegua Therapeutics), our collabor a ation agreement provides that the royalty rate applicable to our protease product contained in the regimen is reduc d ed significantly by a specified percentage on a product-by-product, country-by-country basis. If AbbVie is not able to compete effectively against its competitors in HCV, including any generic products, our business will not grow and our financial condition, operations and stock price will suffer. For COVID, there are two oral antiviral treatments for f non-hospitalized, high-risk patients with SARS-CoV-2 infection: PAXLOVID™, a 3CL protease inhibitor (nirmatrelvir) boosted with ritonavir (full approval), and LAGEVRIO™ (molnupiravir), a polymerase inhibitor (Emergency Use Authorization). There are no oral direct acting antivirals for f the treatment of SARS-CoV-2 in late stage global clinical trials. While there are antiviral medications prescribed for HBV that can suppr u ess HBV DNA, they generally have low cure rates, resulting in the need for lifel f ong treatment. Many companies are seeking to develop new HBV drugs r that alone or in combination with other mechanisms could lead to a func f tional cure for f HBV. Vir, GSK, Arbut r us t , and Roche have multiple combination regimens under investigation in later stage clinical studi t es. In addition, a number of companies have Phase 1 or earlier stage HBV programs. If we are not able to develop new products that can compete effe f ctively against our current and fut f ur t e competitors, our business will not grow and our financial condition, operations and stock price will suffe f r. We have not dev d elope l d ind i ep d endently t any a n ppr a oved products a t nd we have limited t clin l ical developm l ent exp e erience, which makes it d i if d fi f cult to assess our ability i to develop l and commercialize our product candid d at d es t . AbbVie has been responsible for all of the clinical development of our HCV protease inhibitor products. We have not yet demonstrated an ability to address successful f ly many of the risks and uncertainties associated with late-stage clinical development, regulatory a r pp a roval and commercialization of therape a utic products such as the ones we plan to develop independently. For example, to execute our business plan for f the development of our independent RSV programs, we will need to successful f ly: • execute clinical development of our product candidates and demonstrate acceptable safety and efficacy for them alone or in combination with other drugs or drug r candidates; • obtain required regulatory a r ppr a ovals for the development and commercialization of our product candidates; 35 • develop and maintain any fut f ur t e collabor a ations we may enter into for any of these programs; • obtain and maintain patent protection for f our product candidates and freedom from infri f ngement of intellectua t l property of others; • establ a ish acceptabl a e commercial manufac f turing arrangements with third-party manufact f ur t ers; • build and maintain robust sales, distribution and marketing capabilities, either independently or in collabor a ation with future collabor a ators; • gain market acceptance for our product candidates among physicians, payors and patients; and • manage our spending as costs and expenses increase due to clinical trials, regulatory a r ppr a ovals and commercialization. If we are unsuccessful in accomplishing these objectives, we may not be able to successful f ly develop and commercialize our product candidates and expand our business or continue our operations. If we are not successful f in developi l ng i zelicapav a ir or EDP- D 323, or disc i overing and developi l ng i KIT and STAT T 6 i T nhi i bito i rs,s or in obtai t ni i ng i a partner to advance EDP- D 235 or EDP- D 514, or in disc i overing fur f ther product candid d at d es t , o s ur abilit i y t t ot expan x d our busine i ss and achieve our strateg t ic objectiv t es will i be impai m re i d. Much of our internal research is at preclinical stages. Research programs designed to identify p f roduct candidates require subs u tantial technical, financial and human resources, whether or not any product candidates are ultimately identified. Our research programs may initially show promise in identifyi f ng additional potential product candidates, yet fai f l to yield product candidates for f clinical development or commercialization for f many reasons, including the fol f lowing: • the research methodology used may not be successful f in identifyi f ng additional potential product candidates; • competitors may develop alternatives that render our product candidates less commercially viable or obsolete; • competitors may obtain intellectua t l property protection that effectively prevents us fro f m developing a product candidate; • a product candidate may, on further study, be shown not to be an effe f ctive treatment in humans or to have harmful side effects or other characteristics that indicate it is unlikely to be effective or otherwise does not meet applicable regulatory c r riteria; and • a product candidate may not be capable of being produced in commercial quantities at an acceptabl a e cost, or at all. Additional drug candidates that we may develop will require significant research, preclinical and clinical studi t es, regulatory r approvals and commitments of resources before they can be commercialized. We cannot give assurance that our research will lead to the discovery of any additional drug candidates that will generate additional revenue for us. If we are unabl a e to identify additional compounds suitabl a e for f preclinical and clinical development, we may not be able to obtain suffi f cient product revenue in future periods, which likely would result in significant harm to our financial position and adversely impact our stock price. If we fail to attr t act and keep senior manage a ment and key scientif t ic f personnel, we may b a e unable t l o s t uccessful f ly l develop o our product candid d at d es t , c s onduct our clinical trials and commercialize i our product candid d at d es t . Our success depends in part on our continued abi a lity to attract, retain and motivate highly qualified management, clinical and scientific f personnel. We are highly dependent upon our senior management, particularly Jay R. Luly, Ph.D., our Chief Executive Offi f cer and President, Yat Sun Or, Ph.D., our Senior Vice President, Research and Development and Chief Scientific f Offi f cer, and Scott T. Rottinghaus, M.D., our Senior Vice President and Chief Medical Offi f cer, as well as other employees and consultants. Although none of Drs. Luly, Or, or Rottinghaus has infor f med us to date that he expects to retire or resign in the near future, the loss of the services of any of these individuals or one or more of our other members of senior management could delay or prevent the successful f development of our product candidates. While we have not historically experienced unique difficulties attracting and retaining qualifie f d employees, we could experience such problems in the future. For example, competition for f qualifie f d personnel in the biotechnology and pharmaceutical fields is intense. In addition, we will need to hire additional personnel as we expand our clinical development and ultimately seek regulatory approvals and prepare for commercial activities. We may not be able to attract and retain quality personnel on acceptabl a e terms. 36 We may e a ncounter t diffi i culties exp e anding i our ope o rations successful f ly l to advance our product candid d at d es t . As we seek to advance our product candidates through clinical trials, we will need to expand our development, regulatory, r manufac f turing, marketing and sales capabilities or contract with third parties to obtain these capa a bi a lities. As our pipeline expands, we expect that we will need to manage additional relationships with various strategic partners, suppl u iers and other third parties. Futur t e growth will impose significant added responsibilities on members of management. Our fut f ur t e fin f ancial performance and our ability to commercialize our product candidates and to compete effectively will depend, in part, on our ability to manage any fut f ur t e growth effectively. To that end, we must be able to manage our development efforts and clinical trials effe f ctively and hire, train and integrate additional management, administrative and sales and marketing personnel. We may not be able to accomplish these tasks, and our failure to accomplish any of them could prevent us from successful f ly growing our company. Risks Related to Development, Clinical Testing and Regulatory Approval of Our Product Candidates Clin l ical drug developm l ent inv i olves l a len l gthy t and expe e nsive process with i uncertai t n t i ime t lines and uncertain outcomes. Any o n ngoing i or future clin l ical trials of our product candid d at d es t may f a ai f l t i o d t em d onstra t te suffi u cient safet f y a t nd effi f cacy. I y fI clin l ical trials of any o n f o o ur proprietary product candid d at d es t are prolonged or delaye a d or fai f l, i we may b a e unable t l ot commercialize our product candid d at d es t on a time t ly basis or ever.r Clinical testing is expensive and, depending on the stage of development, can take a substantial time period to complete. Its outcome is inherently uncertain, and failure can occur at any time dur d ing clinical development. None of our product candidates in our pipeline, other than glecaprevir, which was clinically developed by AbbVie, has yet to advance beyond Phase 2 clinical trials. Any ongoing or future clinical trials of our product candidates may fail to demonstrate suffi f cient safety and efficacy. Moreover, regulatory a r nd administrative delays for f any product candidate in our pipeline may adversely affe f ct our or any fut f ur t e collabo a rator’s clinical development plans and jeopardize our or any fut f ur t e collabor a ator’s ability to attain product appr a oval, commence product sales and compete successful f ly against other therapies. Clinical trials can be delayed for f a variety of reasons, including delays related to: • reaching an agreement on acceptabl a e terms with prospective contract research organizations, or CROs, and clinical trial sites, the terms of which can be subj u ect to extensive negotiation and may vary s r ignificantly among different CROs and trial sites; • failure of third-party contractors, such as CROs, or investigators to comply with regulatory r r equirements; • failure to obtain on a timely basis, or at all, the necessary approvals from regulators or institutional review boards, or IRBs, to commence a clinical trial at a prospective trial site, or their suspension or termination of a clinical trial once commenced; • difficulty in recrui r ting suitabl a e patients to participate in a trial; • the broader impact of COVID-19 and other viruses on the incidence of RSV; • seasonality and variations in the incidence of infection year to year (e.g., RSV) affe f cting enrollment in clinical trials; • difficulty in having patients complete a trial or return for post-treatment follow-up; • clinical sites deviating fro f m trial protocol or dropping out of a trial; • problems with drug r product or drug substance storage and distribution; • having to add new clinical trial sites; • our inability to manufact f ur t e, or obtain fro f m third parties, adequate suppl u y of drug product suffi f cient to complete our preclinical studi t es and clinical trials; • changes in governmental or regulatory a r dministration; • lack of clear guidance or changes in regulatory r r equirements, policy and guidelines, including guidelines specifically addressing requirements for the development of treatments for f RSV, COVID-19 or HBV infec f tion; • difficulty in obtaining and maintaining adequate insurance coverage; • program discontinuations or clinical holds for a program of a competitor, which could increase the level of regulatory s r crut r iny or delay data review or other response times by regulators with respect to one of our programs in the same class as the competitor’s program; or 37 • varying interpr r etations of data by the FDA, the EMA and similar foreign regulatory a r gencies. We could also encounter delays if a clinical trial is suspended or terminated by us, by the IRBs of the institut t ions in which such trial is being conducted, by any Data Safet f y Monitoring Board, or DSMB, for f such trial, or by the FDA, the EMA or other regulatory a r uthorities. Such authorities may impose such a suspension or termination due d to a number of fact f ors, including failure to conduct the clinical trial in accordance with regulatory r r equirements or our clinical protocols, inspection of the clinical trial operations or trial site by the FDA or other regulatory a r uthorities resulting in the imposition of a clinical hold, unfor f eseen safety issues or adverse side effects, failure to demonstrate a benefit f from using a drug, changes in governmental regulations or administrative actions or lack of adequate funding to continue the clinical trial. In addition, delays can occur due to safety concerns arising fro f m trials or other clinical data regarding another company’s product candidate in the same compound class as one of ours. If we or any fut f ur t e collabor a ators experience delays in the completion of, o f r termination of, any clinical trial of one of our product candidates, the commercial prospects of the product candidate will be harmed, and our ability to commence product sales and generate product revenues fro f m the product candidate will be delayed. In addition, any delays in completing our clinical trials will increase our costs in the long term and slow down our product candidate development and approval process. Any of these occurrences may harm our business, financial condition and prospects significantly. In addition, many of the fac f tors that cause, or lead to, a delay in the commencement or completion of clinical trials may also ultimately lead to the denial of regulatory a r ppr a oval of our product candidates. Zelicapav a ir or EDP- D 323, or any o n ther product candid d at d e e t merging fro f m our current research programs, may h a ave undes d irable s l ide e d ff e ec f ts which may delay o a r prevent marke r ting appr a oval or, i r f a i ppr a oval is received, r d equire i our product candid d at d e t t o b t e take t n off o the marke r t, require us to i t nc i lude safe a ty warnings or othe t rwise limit l sales. In our RSV program, we are developing inhibitors of the N-protein and L-protein. No inhibitor of the RSV N- or L-protein has progressed beyond a Phase 2 clinical trial, so we are not yet able to assess the potential liabilities of an N-protein or L- protein inhibitor in large scale studies or in the general population. In addition, the principal target populations in RSV, namely infants, the elderly, and the immunocompromised, represent sensitive or high-risk patient populations that could be more prone to adverse effects of therapy. If any of our product candidates receives marketing approval and we or others later identify undesirable or unacceptable side effects caused by such products: • regulatory a r uthorities may require the addition of labeling statements, specific warnings, a contraindication or field alerts to physicians and pharmacies; • we may be required to change instruc r tions regarding the way the product is administered, conduct additional clinical trials or change the labeling of the product; • we may be subject to limitations on how we may promote the product; • the product may be subj u ect to additional distribution restrictions under a REMS, if required by the FDA; • sales of the product may decrease significantly; • regulatory a r uthorities may require us to take our approved product off the market; • we may be subject to litigation or product liabi a lity claims; and • our reputation and our stock price may suffe f r. Any of these events could prevent us from achieving or maintaining market acceptance of the affe f cted product or could subs u tantially increase commercialization costs and expenses, which in turn could delay or prevent us fro f m generating significant revenue from the sale of any product we may develop. If we are require i d to s t uspe s nd or disc i ontinue clin l ical trials due to s t ide e d ffe e cts o t r other safe a ty risk i s a k ssociated t with i our product candid d at d es t , o s r if w i e are required to conduct studies on the lon l g-term effe f cts a t ssociated with t t he t use of a o ny of those product candid d at d es t , t s he t n commercializatio t n any of those product candid d at d es t could b l e del d ay l ed or halted t .d Clinical trials involving our produc d t candidates may be suspended or terminated at any time for f a number of safet f y-related reasons. For example, we may voluntarily suspend or terminate clinical trials if at any time one of our product candidates, or a combination therapy a including any of them, presents an unacceptabl a e safet f y risk to the clinical trial patients. In addition, IRBs or regulatory a r gencies may order the temporary d r iscontinuation or termination of clinical trials at any time if they believe that the clinical trials are not being conducted in accordance with applicable regulatory r r equirements, including if they present an unacceptable safety risk to patients. Administering any product candidate to humans may produce undesirabl a e side effects. The existence of undesirabl a e side effects resulting fro f m any of our product candidates, or a combination therapy a including any of them, could cause us or regulatory a r uthorities, such as the FDA or EMA, to interrupt, 38 delay or halt clinical trials of our product candidates and could result in the FDA or EMA or other regulatory a r gencies denying further development or app a roval of our product candidates for f any or all targeted indications. This, in turn, could prevent us fro f m commercializing our product candidates. Results of earlie l r clini i cal tri t als m l ay not be predictiv t e of t o he t results of later-stage t clin l ical trials. To date we have only tested our product candidates through initial Phase 2 studies. The results of preclinical studi t es and these early clinical trials of our product candidates may not be predictive of the results of later-stage clinical trials, if any. In addition, results of Phase 3 clinical trials in one or more ethnic groups are not necessarily indicative of results in other ethnic groups. Product candidates in later stages of clinical trials may fai f l to show the desired safety and efficacy results despite having progressed through preclinical studi t es and initial clinical trials. For example, several companies engaged in clinical development in the disease areas we are also engaged in have suffe f red significant setba t cks in advanced clinical trials due to adverse safet f y profiles or lack of efficacy, notwithstanding promising results in earlier studies. Similarly, future clinical trial results may not be successful f for these or other reasons. Product candidate development risk is heightened by any changes in the planned clinical trials compared to the completed clinical trials. As product candidates are developed through preclinical studi t es and early-stage and late-stage clinical trials towards appr a oval and commercialization, it is customary t r hat various aspects of the development program, such as manufac f turing and for f mulation, are altered along the way in an effo f rt to optimize processes and results. Such changes carry the risk that they will not achieve these intended objectives. Any of these changes could make the results of planned clinical trials or other fut f ur t e clinical trials we may initiate less predictable and could cause our product candidates to perform differently, which could delay completion of clinical trials, delay approval of our product candidates and/or jeopardize our ability to commence product sales and generate revenues. The regulat l or t y a r ppr a oval processes of t o he t FDA, D the EMA E and other comparable f l or f eign i authorities are lengthy, h time i - consuming and inherently t unpr n edic d table, l and if w i e are ultima l tely unable t l o o t btai t n t i im t ely r l egulat l or t y a r pp a roval for f our product candid d at d es t , o s ur busine i ss will i be substantia t lly harmed.d The regulatory a r ppr a oval process is expensive and, while the time required to gain FDA and for f eign regulatory a r ppr a oval is uncertain, it may take years. Regulatory approvals are unpredictabl a e and depend upon numerous factors, including the subs u tantial discretion of the regulatory a r uthorities. In addition, approval policies, regulations, or the type and amount of preclinical and clinical data necessary t r o gain appr a oval may change during the course of a product candidate’s clinical development and may vary a r mong jurisdictions. We may be required to undertake and complete certain additional preclinical studi t es to generate toxicity and other data required to support the subm u ission of a New Drug r Application, or NDA, to the FDA or comparabl a e appl a ication to other regulatory a r uthorities. AbbVie obtained all regulatory a r ppr a ovals for its paritapr a evir-containing regimens and for f MAVYRET/MAVIRET, which contains glecaprevir. We have not obtained regulatory a r ppr a oval by ourselves for any of our wholly-owned product candidates and it is possible that none of our existing product candidates or any of our future product candidates will ever obtain regulatory a r ppr a oval. Furthermore, approval in the United States by the FDA does not ensure approval by regulatory a r uthorities in other countries or jurisdictions, and approval by one foreign regulatory a r uthority does not ensure approval by regulatory a r uthorities in other foreign countries or by the FDA. Our product candidates could fail to receive regulatory a r ppr a oval for f many reasons, including the fol f lowing: • the FDA, the EMA or other comparabl a e for f eign regulatory a r uthorities may disagree with the design or implementation of our clinical trials; • we may be unabl a e to demonstrate to the satisfaction of the FDA, the EMA or other comparabl a e for f eign regulatory a r uthorities that a product candidate is safe and effective for f its proposed indication; • the results of clinical trials may not meet the level of statistical significance required by the FDA, the EMA or other comparabl a e for f eign regulatory a r uthorities for f approval; • we may be unabl a e to demonstrate that a product candidate’s clinical and other benefits outweigh its safety risks; • the FDA, the EMA or other comparabl a e for f eign regulatory a r uthorities may disagree with our interpretation of data from preclinical studi t es or clinical trials; • the data collected from clinical trials of our product candidates may not be sufficient to support the subm u ission of an NDA or other submissions or to obtain regulatory a r ppr a oval in the United States or elsewhere; • the FDA or comparable foreign regulatory a r uthorities may fail to approve the manufac f turing processes or facilities of third-party manufact f ur t ers with which we contract for clinical and commercial supplies of any of our product candidates; and 39 • the appr a oval policies or regulations of the FDA, the EMA or other comparabl a e for f eign regulatory a r uthorities may significantly change in a manner rendering our clinical data insufficient for f approval. We cannot be assured that, afte f r spending subs u tantial time and resources, we will obtain regulatory a r ppr a ovals in any desired jurisdiction. Even if we were to obtain appr a oval, regulatory a r uthorities may grant appr a oval contingent on the performance of costly post-marketing clinical trials or may approve a product candidate with a label that does not include the labeling claims necessary or desirabl a e for f the successful f commercialization of that product candidate. Significant clinical trial delays could allow our competitors to obtain marketing appr a oval befor f e we do or could in effect shorten the patent protection period during which we may have the exclusive right to commercialize our product candidates. In addition, it may ultimately not be possible to achieve the prices intended for f our product candidates. In many foreign countries, including those in the European Union, a product candidate must be approved for f reimbursement before it can be approved for f sale in that country. Any of the for f egoing scenarios could materially harm the commercial prospects for f our product candidates and our business. The regulat l or t y p r athw t ay for appr a oval of a the t rape a utic t treatment for f COVID- I 19 such as EDP- D 235 is contin t ually evolving and may result in unexpe x cted t or unfo n reseen challe l nges and lon l ger tim t elin l es than seen for earlier COV C ID V -19 vaccine i s and the t rape a utic t s. Initial COVID-19 vaccines, therapeutic antibodies and other therapeutics that demonstrated positive results in clinical trials have moved rapidly through the FDA regulatory r r eview and emergency use authorization, or EUA, process, as well as the review and authorization process in a number of other jurisdictions, including the EU when there were no adequate, approved, and available alternatives. The speed at which all parties acted to create and test many therapeutics for f COVID- 19 was unusual. The end of the pandemic, however, may have changed those dynamics. Evolving priorities within the FDA or the regulatory a r uthorities in other jurisdictions, including changes based on new data regarding potential therapeutics of others, and new variants of the virus, may significantly affe f ct the regulatory t r imeline for f further authorizations or approvals for therape a utics such as EDP-235. Accordingly, it is still uncertain what will be the timelines or regulatory p r rocesses required for f the authorization or app a roval of new treatments for f COVID-19, including EDP-235. Even if we receive regu e latory approval for any of our product candid d at d es t we develop l indepe e nden d tly, w y e will b l e subje b ct to ongoing i FDA o D blig l atio t ns and continu i ed regu e latory review in othe t r jurisdictio t ns, w s hich may r a esult i l n s i igni g fi i cant additi i onal expe x nse. Addi d tio i nally, o y ur product candid d at d es t , i s f a i ppr a oved, c d ould be subject to labeling and othe t r restrictions and marke r t withdrawal and we may be subject to penaltie t s if w i e or our collaborator t s f r ai f l t i o c t ompl m y w l ith regu e latory requirements or expe x rience unanticipat i ed t problem l s with o t ur products. t Any regulatory a r ppr a ovals that we receive for f our product candidates we develop independently may be subject to limitations on the appr a oved indicated uses for which the product may be marketed or subj u ect to certain conditions of approval, or may contain requirements for f potentially costly post-marketing testing, including Phase 4 clinical trials, and surveillance to monitor the safety and efficacy of the product candidate. In addition, if the FDA approves any of our product candidates, the manufact f ur t ing processes, labeling, packaging, distribution, adverse event reporting, storage, advertising, promotion and recordkeeping for f the product will be subj u ect to extensive and ongoing regulatory r r equirements. These requirements include subm u issions of safety and other post-marketing information and reports, as well as continued compliance with current good manufact f ur t ing practices, or cGMP, and good clinical practices, or GCP, for f any clinical trials that we or our collabor a ators conduct post-approval. Later discovery of previously unknown problems with a product, including adverse events of unanticipated severity or frequency, or with third-party manufact f ur t ers or manufact f ur t ing processes, or fai f lure to comply with regulatory r r equirements, may result in, among other things: • restrictions on the marketing or manufact f ur t ing of the product, withdrawal of the product fro f m the market or voluntary o r r mandatory product recalls; • fines, warning letters or holds on any post-approval clinical trials; • refusal by the FDA to appr a ove pending applications or suppl u ements to approved appl a ications filed by us, or suspension or revocation of product license approvals; • product seizure or detention, or refusal to permit the import or export of products; and • inju n nctions or the imposition of civil or criminal penalties. 40 We cannot predict the likelihood, nature or extent of government regulation that may arise fro f m fut f ur t e legislation or administrative action, either in the United States or abr a oad. If we, or AbbVie in the case of any licensed HCV product, are slow or unabl a e to adapt a to changes in existing requirements or the adoption of new requirements or policies, or if we or AbbVie are not able to maintain regulatory c r ompliance, our product candidates or AbbVie’s licensed HCV products may lose any marketing approval that may have been obtained and we may not achieve or sustain profit f ability, which would adversely affect our business. We may d a el d ay l or terminate t t he t developm l ent of a o product candid d at d e a t t any time i if we believe the perceived market or commercial oppor o tunity i does not justif t y f f ur f ther investme t nt, w t hich could m l ater t ially harm our business and adverse r ly affe f ct our stock price. Even though the results of preclinical studi t es and clinical trials that we have conducted or may conduct in the future may suppor u t fur f ther development of one or more of our product candidates, we may delay, suspend or terminate the future development of a product candidate at any time for strategic, business, financial or other reasons, including the determination or belief that the emerging profil f e of the product candidate is such that it may not receive regulatory r approvals in key markets, gain meaningful f market acceptance, otherwise provide any competitive advantages in its intended indication or market or generate a significant retur t n to stockholders. Such a delay, suspension or termination could materially harm our business, results of operations or financial condition. Risks Related to Commercialization of Our Product Candidates Unfa n vorable p l ricing i regu e lations, third-par - ty reimbursement practic t es or health l care refo e rm initia t tives in the Uni U te i d Stat t es t could h l arm o r ur busine i ss. The regulations that govern marketing appr a ovals, pricing and reimbursement for new drug r products vary widely from country to country. In the United States, the Patient Protection and Affo f rdable Care Act, as amended by the Health Care and Educ d ation Affordability Reconciliation Act of 2010, collectively refer f red to as the ACA, has significantly changed the way healthcare is fin f anced by both governmental and private insurers. While we cannot predict what impact on federal reimbursement policies this law or any amendment to it will continue to have in general or specifically on MAVYRET/MAVIRET or any product or regimen that we may commercialize, the ACA or any such amendment may result in downward pressure on pharmaceutical reimbursement, which could negatively affect market acceptance of new products. In addition, several states have not implemented the provisions of the ACA that involve the expansion of Medicaid-eligibility for low-income adults. While the United States Supreme Court recently rejected the latest challenge to the constitutionality of the ACA, it is possible that other legislative efforts may seek to modify it. We cannot predict what effe f ct any legislation may have on us or on AbbVie’s sales of MAVYRET/MAVIRET. In addition, other legislative changes have been proposed since the Affo f rdable Care Act was enacted. There has been increasing legislative and enforcement interest in the United States with respect to drug r pricing practices. Most recently, the Inflation Reduc d tion Act of 2022, or IRA, R which, among other provisions, included several measures intended to lower the cost of prescription drugs and related healthcare refor f ms. Specifically, the Act authorizes and directs the Department of Health and Human Services, or DHHS, to set drug price caps a for certain high-cost Medicare Part B and Part D qualifie f d drugs, with the initial list of drugs r selected in August 2023, and the first year of maximum price applicability to begin in calendar year 2026. The Act further authorizes the DHHS to penalize pharmaceutical manufact f ur t ers that increase the price of certain Medicare Part B and Part D drugs r faster than the rate of infla f tion. Finally, the Act creates significant changes to the Medicare Part D benefit design by cappi a ng Part D benefic f iaries’ annual out-of-pocket spending beginning in calendar year 2025. We cannot be sure whether additional or related legislation or rul r emaking will be issued or enacted, or what impact, if any, such changes will have on the royalty revenue we receive from MAVYRET/MAVIRET or revenue from any of our drug r candidates, if approved for f commercial use, in the fut f ur t e. If any fur f ther healthcare refor f m measures adopted in the fut f ur t e result in additional downward pressure on the price that AbbVie receives for MAVYRET/MAVIRET, this would adversely affect our future revenues, and the price of our common stock could be materially adversely affected. Our abi a lity to commercialize any product candidate successful f ly, as well as AbbVie’s continued commercialization of MAVYRET/MAVIRET, will also depend in part on the extent to which reimbursement for these products and related treatments will be availabl a e fro f m government health administration authorities, private health insurers and other organizations. Government authorities and third-party payors, such as private health insurers and health maintenance organizations, decide which medications they will pay for f and establish reimbursement levels. A primary t r rend in the U.S. healthcare industry i r s cost containment. Government authorities and third-party payors have attempted to control costs by limiting coverage and the amount of reimbursement for f particular medications. In the case of HCV, limitations of coverage have recently been used to limit access to HCV treatments for f only those patients with more advanced fibrosis. Increasingly, third-party payors are requiring that drug companies provide them with predetermined discounts fro f m list prices and, in many cases involving HCV drugs, seeking discounts in exchange for greater patient access to a particular HCV drug. In addition, there are private and public payors challenging the prices charged for medical products. We cannot be sure that reimbursement will be availabl a e for f any product that we may commercialize and, if reimbursement is availabl a e, the level of 41 reimbursement. In addition, reimbursement may impact the demand for, or the price of, M f AVYRET/MAVIRET or any product candidate for which we may obtain marketing appr a oval. If reimbursement is not availabl a e or is availabl a e only to limited levels, we may not be able to successful f ly commercialize any product candidate for which we may seek marketing approval. There may be significant delays in obtaining reimbursement for newly approved drugs, and coverage may be more limited than the purpos r es for which the drug is appr a oved by the FDA or comparabl a e authorities in other jurisdictions. Moreover, eligibility for reimbursement does not imply that any drug will be paid for in all cases or at a rate that covers our costs, including research, development, manufactur t e, sale and distribution. Interim reimbursement levels for new drugs r , if applicable, may also be insufficient to cover our and any collabor a ator’s costs and may not be made permanent. Reimbursement rates may vary according to the use of the drug r and the clinical setting in which it is used, may be based on reimbursement levels already set for lower cost drugs r and may be incorporated into existing payments for other services. Net prices for f drugs r may be reduc d ed by mandatory discounts or rebates required by government healthcare programs or private payors and by any fut f ur t e relaxation of laws that presently restrict imports of drugs r from countries where they may be sold at lower prices than in the United States. Third-party payors often rely upon Medicare coverage policy and payment limitations in setting their own reimbursement policies. AbbVie’s inability to continue to obtain coverage and profitabl a e payment rates from both government-funded and private payors for f MAVYRET/MAVIRET, or our inability to obtain the same for any product candidate that we develop, could have a material adverse effect on our operating results, our ability to raise capital needed to commercialize products and our overall financial condition. In general, the United States and several other jurisdictions are considering a number of legislative and regulatory p r roposals to change the healthcare system in ways that could affect our ability to sell our products profit f ably. Among policy makers and payors in the United States and elsewhere, there is significant interest in promoting changes in healthcare systems with the stated goals of containing healthcare costs, improving quality and/or expanding access to healthcare. In the United States, the pharmaceutical industry h r as been a particular foc f us of these efforts and has been significantly affected by majo a r legislative initiatives. We expect to experience pricing pressures in connection with the sale of any products that we develop or that are being commercialized under our collabor a ation with AbbVie. The implementation of cost containment measures or other healthcare refor f ms may limit our ability to generate revenue, maintain profitabi a lity or commercialize our product candidates. Foreign g g overnm r ents tend to impo m se stri t ct price controls, l which may adverse r ly affe f ct our fut f ure profi o ta i bility i .y In most foreign countries, particularly in the European Union and Japa a n, prescription drug pricing and/or reimbursement is subj u ect to governmental control. In those countries that impose price controls, pricing negotiations with governmental authorities can take considerable time afte f r the receipt of marketing appr a oval for f a product. To obtain reimbursement or pricing appr a oval in some countries, we may be required to conduct a clinical trial that compares the cost-effectiveness of our product candidate to other availabl a e therapi a es. Some countries require approval of the sale price of a drug r before it can be marketed. In many countries, the pricing review period begins afte f r marketing or product licensing approval is granted. In some for f eign markets, prescription pharmaceutical pricing remains subj u ect to continuing governmental control even after initial appr a oval is granted. As a result, we (or AbbVie in the case of MAVYRET/MAVIRET) might obtain marketing appr a oval for f a product in a particular country, but then be subj u ect to price regulations that delay the commercial launch of the product, possibly for f lengthy time periods, and negatively impact the revenues that are generated fro f m the sale of the product in that country. If reimbursement of MAVYRET/MAVIRET or of any of our product candidates is unavailable or limited in scope or amount, or if pricing is set at unsatisfactory l r evels, or if there is competition fro f m lower priced cross-border sales, our results of operations will be negatively affe f cted. If i f n t i he t future, w e e are unable t l o e t stabl t is l h our own sales l , m s arke r ting and dist i ri t bution capabilitie i s or enter t into licensing i or collaboratio t n agr a eements for the t se purposes, w s e may not be successful f in commercializi i ng i any p n roduct candid d at d es t . We do not have a sales or marketing infra f structur t e and have no sales, marketing or distribution experience. We will seek to either build our own commercial infra f structur t e to commercialize any products if and when they are approved, or enter into licensing or collabor a ation agreements where our collabor a ator is responsible for commercialization, as in the case of our collabor a ation with AbbVie, or where we have the right to assist in the fut f ur t e development and commercialization of such products. To develop internal sales, distribution and marketing capabilities, we will have to invest significant amounts of fin f ancial and management resources, some of which will be committed prior to any confir f mation that any of our proprietary product candidates will be approved. For product candidates for f which we decide to perform sales, marketing and distribution functions ourselves, we could face f a number of additional risks, including: • our inability to recrui r t and retain adequate numbers of effe f ctive sales and marketing personnel; 42 • the inabi a lity of sales personnel to obtain access to physicians or persuade adequate numbers of physicians to prescribe any products; • the lack of complementary products to be offe f red by sales personnel, which may put us at a competitive disadvantage relative to companies with more extensive product lines; and • unfor f eseen costs and expenses associated with creating an independent sales and marketing organization. Where and when appropriate, we may elect to utilize contract sales for f ces or distribution partners to assist in the commercialization of our product candidates. If we enter into arrangements with third parties to perform sales, marketing and distribution services for f our products, the resulting revenues or the profita f bi a lity from these revenues to us are likely to be lower than if we had sold, marketed and distributed our products ourselves. In addition, we may not be successful f in entering into arrangements with third parties to sell, market and distribute our product candidates or may be unabl a e to do so on terms that are favorable to us. We likely will have little control over such third parties, and any of these third parties may fail to devote the necessary resources and attention to sell, market and distribute our products effe f ctively. If we do not establ a ish sales, marketing and distribution capabilities successful f ly, either on our own or in collabor a ation with third parties, we will not be successful f in commercializing our product candidates. Commercial success of o o ur product candid d at d es t depe e nds u d pon u sign i ific f ant marke r t acceptance among phys h icians, p s atie t ntst and healthcare payors o r f a o ny resulting appr a oved drug.g Zelicapavir, EDP-323, and any other product candidate that we may develop in the fut f ur t e, whether as part of a combination therapy or as a monotherapy, a are subject to market acceptance among physicians, healthcare payors, patients and the medical community. The degree of market acceptance of any product candidate for which we obtain appr a oval for f commercial sale, will depend on a number of fact f ors, including: • the efficacy and safet f y of treatment regimens containing one of our product candidates, as demonstrated in clinical trials, and the degree to which these regimens represent a clinically meaningful f improvement in care as compared with other available therapies; • the clinical indications for which any treatment regimen containing one of our product candidates become approved; • acceptance among physicians, major operators of clinics, payors and patients of any treatment regimen containing one of our product candidates; • the willingness of the target patient population to try new therapi a es and of physicians to prescribe these therapies; • the potential and perceived advantages of treatment regimens containing one of our product candidates over alternative treatments; • the cost of treatment of regimens containing one of our product candidates in relation to the cost of alternative treatments; • the availabi a lity of adequate reimbursement and pricing by third parties and government authorities and successful f negotiation of fav f orable agreements with payors by us or any collabor a ator of ours, as well as the impact of any agreements among any of the foregoing and one or more of our competitors limiting access to our product in fav f or of one or more competitive products; • the continued longevity of any market for f which we develop a drug; • the levels of fundi f ng provided by government-funded healthcare for f treatment of any disease for f which we develop a drug; r • the relative convenience and ease of administration of any treatment regimen containing one of our product candidates compared to competitive regimens; • the prevalence and severity of adverse side effects, whether involving the use of treatment regimens containing one of our products candidates or similar, competitive treatment regimens; and • the effectiveness of our sales and marketing efforts. 43 If treatment regimens containing one of our product candidates are approved and then fail to achieve market acceptance, we may not be able to generate signific f ant additional revenue. Further, if new, more fav f orably received therapi a es are introduc d ed afte f r any such regimen achieves market acceptance, then we may not be able to maintain that market acceptance over time. Risks Related to Our Dependence on Third Parties We may n a ot be successful f in establis l hing i new product collaboratio t ns, w s hich could a l dverse r ly affe f ct our ability i to develop l and commercialize one or more of our product candid d at d es t . If w I e are unsuccessfu s l in m i aint i ai t ni i ng i or forming allia l nces on favorable t l er t ms r , o s ur busine i ss may n a ot succeed.d We may seek to enter into additional product collabor a ations in the fut f ur t e, including alliances with other biotechnology or pharmaceutical companies, to enhance and accelerate the development and commercialization of one or more of our product candidates. For example, our continued development of EDP-235 and EDP-514 are dependent on establ a ishing collabor a ations. We fac f e significant competition in seeking appr a opriate collabor a ators and the negotiation process is time- consuming and complex. Moreover, we may not be successful f in our effo f rts to establish other product collabor a ations or other alternative arrangements for f any product candidates and programs because our research and development pipeline may be insuffi f cient, our product candidates and programs may be deemed to be at too early of a stage of development for f collabor a ative effort and/or third parties may not view our product candidates and programs as having the requisite potential to demonstrate safet f y and effi f cacy. Even if we are successful f in our effo f rts to establish product collabor a ations, the terms that we agree upon u may not be favorable to us and we may not be able to maintain such product collabor a ations if, f f or f example, development or appr a oval of a product candidate is delayed or sales of an approved product are disappoi a nting. If our existing collabor a ation agreement with AbbVie is terminated, or if we determine that entering into other product collabor a ations is in our best interest but we either fail to enter into, experience a delay in entering into, or fai f l to maintain, such collabor a ations: • the development of certain of our product candidates may be terminated or delayed; • our cash expenditures related to the development of certain of our product candidates would increase significantly and we may need to seek additional fin f ancing; • we may be required to hire additional employees or otherwise develop expertise, such as clinical, regulatory, r sales and marketing expertise, which we do not currently have; • we will bear all of the risk related to the development of any such product candidates; and • the competitiveness of any product candidate that is commercialized could be reduc d ed. We intend to rely on third-par - ty manufa u cturers t r o p t roduce our dev d elopm l ent-stage t product candid d at d e s t uppl p ie l s and any n commercial suppl p ie l s of a o ny approved product candid d at d es t . Any failure by a b third-par - ty manufac f turer to p t roduce acceptable s l uppl p ie l s for f us may d a el d ay l or impair o i ur abili i ty i to initiate o t r compl m et l e o t ur clin l ical trials or sell any r n esulti l ng i product.t We do not currently own or operate any manufact f ur t ing faci f lities. We plan to continue to work with third-party contract manufac f turers to produce suffi f cient quantities of any product candidates for f preclinical testing, clinical trials and commercialization. If we are unabl a e to arrange for such a third-party manufact f ur t ing source for any of our product candidates, or fail to do so on commercially reasonabl a e terms, we may not be able to successful f ly produce, develop and market one or more of our product candidates, or we may be delayed in doing so. Reliance on third-party manufac f turers entails risks to which we would not be subj u ect if we manufact f ur t ed product candidates ourselves, including reliance on the third party for regulatory c r ompliance and quality control and assurance, volume production, the possibility of breach of the manufac f turing agreement by the third party because of factors beyond our control (including a fai f lure to synthesize and manufact f ur t e our product candidates in accordance with our product specifications), shutdowns of manufactur t ing sites or other supply chain constraints, and the possibility of termination or nonrenewal of the agreement by the third party at a time that is costly or damaging to us. In addition, the FDA and other regulatory authorities require that our product candidates be manufact f ur t ed according to cGMP and similar fore f ign standards. Pharmaceutical manufactur t ers and their subcontractors are required to register their facilities and/or products manufac f tured at the time of subm u ission of the marketing appl a ication and then annually thereafte f r with the FDA and certain state and foreign agencies. They are also subject to periodic unannounced inspections by the FDA, state and other for f eign authorities. Any subsequent discovery of problems with a product, or a manufact f ur t ing or laboratory f r aci f lity used by us or our collabor a ators, may result in restrictions on the product or on the manufac f turing or labor a atory f r aci f lity, including marketed product recall, suspension of manufactur t ing, product seizure, or a voluntary w r ithdrawal of the drug from f the market. Any failure by our third-party manufact f ur t ers to comply with cGMP or failure to scale up m u anufact f ur t ing processes, 44 including any fai f lure to deliver sufficient quantities of product candidates in a timely manner, could lead to a delay in, or failure to obtain, regulatory a r ppr a oval of any of our product candidates. We plan to rely on third-party manufact f ur t ers to purchase fro f m third-party suppl u iers the materials necessary t r o produce our product candidates for f our clinical studi t es. There are a small number of suppliers for certain capi a tal equipment and materials that we plan to use to manufact f ur t e our drugs r . Such suppliers may not sell these materials to our manufact f ur t ers at the times we need them or on commercially reasonabl a e terms. Moreover, we currently do not have any agreements for the production of these materials. Although we do not intend to begin a clinical trial unless we believe we have a suffi f cient supply of a product candidate to complete the clinical trial, any significant delay in the supply of a product candidate or the material components thereof for an ongoing clinical trial due d to the need to replace a third-party manufac f turer could considerably delay completion of our clinical studi t es, product testing and potential regulatory a r ppr a oval of our product candidates. If our manufac f turers or we are unabl a e to purchase these materials after regulatory a r ppr a oval has been obtained for f our product candidates, the commercial launch of our product candidates would be delayed or there would be a shortage in suppl u y, which would impair our ability to generate revenue from the sale of our product candidates. Contract manufact f ur t ers may not be able to manufact f ur t e our product candidates at a cost or in quantities or in a timely manner necessary to develop and commercialize them. If we successful f ly commercialize any of our product candidates, to meet our projected needs we may need to find third parties that will increase their scale of production, or we may have to establ a ish or access large-scale commercial manufac f turing capabilities. We may require additional funds f , personnel and other resources to build, lease or operate any manufact f ur t ing faci f lity. A portion of o o ur research and a portion of o o ur manufac f turing i of certain key i e nt i er t me r diates t used in the manufac f ture of the activ t e pharmaceutical ingredie d nts f t or f our product candid d at d es t takes place in China thr t ough u third-par - ty researchersr and manufac f turers. A sign i ific f ant dis d rupt u io t n in t i he t operation of t o ho t se researchers o r r manufac f turers, o s r a trade war, geopolit l ic t al unrest, legi e sl i at l io t n (su ( ch as the propos o ed BIOS I ECU S RE U Act), sanctio t ns or othe t r regulat l or t y r r equire i ments, t or an epidem d ic in China, such as the COV C ID V -19 pandemic, c c ould materially l adverse r ly affe f ct our business, fina i ncial conditi d on and results l of operations. Although manufact f ur t ing for f MAVYRET/MAVIRET is being conducted by AbbVie, we have relied on third parties located in China to manufact f ur t e and supp u ly certain key intermediates used in the manufact f ur t e of our active pharmaceutical ingredients, or API, for our current product candidates, and we expect to continue to use such third party manufact f ur t ers for f such intermediates for f any product candidates we develop independently. Any disrupt r ion in production or inabi a lity of our manufac f turers in China to produce adequate quantities to meet our needs, whether as a result of a natur t al disaster, pandemic or other cause, could impair our ability to operate our business on a day-to-day basis and to continue our research and development of our product candidates. We also use contract researchers in China to conduct a portion of our research for f our early-stage programs. Any disrupt u ion in the team conducting that research could cause delays in one or more of our research programs and could require us to curtail one or more programs, at least until we could contract for that research to be done elsewhere. For example, either of these risks could be triggered by an epidemic such as the outbr t eak of COVID-19 in the Wuhan region of China or the series of so-called “lock-downs” in China when strict quarantine requirements were imposed on large population areas in response to new incidents of COVID infection. Our contract manufact f ur t ers in China, which are not located in the Wuhan region, managed to avoid any material delays in their abi a lity to deliver API and other services through extraordinary e r ffor f ts, including temporarily housing staff in the manufact f ur t ing faci f lity. Furthermore, since these researchers and manufac f turers are located in China, we are exposed to the possibility of product supply disrupt u ion and increased costs in the event of changes in the policies of the United States or Chinese governments, geopolitical unrest or unstabl a e economic conditions in China. For example, a trade war could lead to tariffs on the chemical intermediates we use that are manufact f ur t ed in China. In addition, our contract manufact f ur t ers and researchers in China may be subject to U.S. legislation, sanctions, trade restrictions and other foreign regulatory r r equirements, which could increase the cost or reduce the supply of material availabl a e to us or delay or prevent the procurement or supply of such material. Any of these matters could materially and adversely affect our business and results of operations despite our ongoing effo f rts to mitigate these risks. For example, the recently proposed BIOSECURE Act that was passed by the U.S. House of Representatives in September 2024, as well as a substantially similar bill in the U.S. Senate, target U.S. government contracts, grants, and loans for f entities that use equipment and services from certain named Chinese biotech companies, and authorize the U.S. government to name additional Chinese biotechnology companies of concern. If these bills become law, or similar laws are passed, they would have the potential to severely restrict the abi a lity of companies to work with certain Chinese biotechnology companies of concern without losing the abi a lity to contract with, or otherwise receive funding from, the U.S. government. Any recall of the manufactur t ing lots or similar action regarding our API used in clinical trials could delay the trials or detract fro f m the integrity of the trial data and its potential use in fut f ur t e regulatory f r ilin f gs. In addition, manufac f turing interrupt u ions or failure to comply with regulatory r r equirements by any of these manufac f turers could significantly delay clinical development of potential products and reduc d e third-party or clinical researcher interest and support of proposed 45 trials. These interrupt r ions or failures could also impede commercialization of our product candidates and impair our competitive position. Further, we may be exposed to fluctuations in the value of the local currency in China. Futur t e appreciation of the local currency could increase our costs. In addition, our labor a costs could continue to rise as wage rates increase due to increased demand for f skilled laborers and the availabi a lity of skilled labor declines in China. We rely on third parties to m t onitor t , s r uppor p t, conduct and/o d r oversee clin l ical trials of our product candid d at d es t that we develop l indepe e nden d tly a l nd, i d n s i ome cases, t s o m t aint i ai t n r i egulat l or t y f r ile f s for f those product candid d at d es t . If w I e are not able t l ot maintain or secure agreements with i such third parties on acceptable t l er t ms r , i s f t i he t se third parties do n d ot perfor f m t r he t ir services as required, i d f g i eopol o itic l al unrest disru i pt u s a t ctiv t ity a t t a number of o o ur clin l ical trial sites, or if these thi t rd i parties fail to time i ly transfer f any r n egulat l or t y i r nf i or f ma r tion held by them to us, w s e may not be able t l o c t onduct our clini i cal tri t als i l n i a tim t ely m l anner, obtai t n r i egulat l or t y a r ppr a oval for, or commercializ l e, our product candid d at d es t . We rely on CROs, hospitals, clinics, academic institut t ions and other third-party collabor a ators who are outside our control to monitor, suppor u t, conduct and/or oversee preclinical and clinical studi t es of our product candidates. We also rely on third parties to perform clinical trials of our product candidates if and when they reach that stage. As a result, we have less control over the timing and cost of these studi t es and the ability to recrui r t trial subj u ects than if we conducted these trials wholly by ourselves. If we are unabl a e to maintain or enter into agreements with these third parties on acceptabl a e terms or engagement is terminated, we may be unabl a e to enroll patients on a timely basis or otherwise conduct our trials in the manner we anticipate. Additionally, although no situations to date have caused a significant disrupt r ion in our clinical trial operations, geopolitical unrest or a pandemic could disrupt u a number of our clinical trial sites and cause one or more of our clinical trials to be delayed. In the case of zelicapavir, we paused recrui r tment and dosing as a result of the COVID-19 pandemic in March 2020, but we were able to resume the studies in July 2020. The pause in these studies, as well as the absence of RSV in the population generally, delayed enrollment of these studies, and it is uncertain whether any of our other ongoing studi t es may be subject to further disrupt u ions. In addition, there is no guarantee that these third parties will devote adequate time and resources to our studi t es or perform as required by a contract or in accordance with regulatory r requirements, including maintenance of clinical trial information regarding our product candidates. If these third parties fai f l to meet expected deadlines, fai f l to timely transfer f to us any regulatory i r nfor f mation, fail to adhere to protocols or fai f l to act in accordance with regulatory r r equirements or our agreements with them, or if they otherwise perform in a substandard manner or in a way that compromises the quality or accuracy of their activities or the data they obtain, then clinical trials of our product candidates may be extended, delayed or terminated, or our data may be rejected by the FDA or regulatory r agencies. To the ext e en t t we elect to enter int i o a t dditio i nal lic l ensing i or collabor l atio t n agr a eements t t o p t artner our product candid d at d es t ,s our dep d endence on such relat l io t nships i may a a dverse r ly affe f ct our business. Our commercialization strategy for f some of our product candidates may depend on our ability to enter into collabor a ation agreements with other companies to obtain access to other compounds for use in combination with any of our product candidates or for f assistance and fundi f ng for the development and potential commercialization of any of these product candidates, similar to what we have done with AbbVie. Supporting diligence activities conducted by potential collabor a ators and negotiating the financial and other terms of a collabor a ation agreement are long and complex processes with uncertain results. Even if we are successful f in entering into one or more additional collabor a ation agreements, collabor a ations can involve greater uncertainty for us, as we may have limited or no control over certain aspects of our collaborative programs. We may determine that continuing a collabor a ation under the terms provided is not in our best interest, and we may terminate the collabor a ation. Our collabor a ators could delay or terminate their agreements with us, and our product candidates subj u ect to collabor a ative arrangements may never be successful f ly commercialized. Further, our collaborators may develop alternative products or pursue alternative technologies either on their own or in collabor a ation with others, including our competitors, and the priorities or foc f us of our collaborators may shift s f uch that our programs receive less attention or resources than we would like, or they may be terminated altogether. Any such actions by our collabor a ators may adversely affect our business prospects and ability to earn revenue. In addition, we could have disputes with our collabor a ators, such as the interpr r etation of terms in our agreements. Any such disagreements could lead to delays in the development or commercialization of any potential products or could result in time-consuming and expensive litigation or arbitration, which may not be resolved in our favor. Even with respect to programs that we intend to commercialize ourselves, we may enter into agreements with collabor a ators to share in the burden of conducting clinical trials, manufac f turing and marketing our product candidates or products. In addition, our ability to appl a y our proprietary technologies to develop proprietary compounds will depend on our abi a lity to establ a ish and maintain licensing arrangements or other collabor a ative arrangements with the holders of proprietary rights to such compounds. We may not be able to establ a ish such arrangements on fav f orable terms or at all, and our collaborative arrangements may not be successful f . Risks Related to Our Intellectual Property Rights 46 We are compe m ting i to develop l intellectual prope o rty i t n a i reas of small- l molecule drug developm l ent tha t t are high i ly competitiv t e. We could b l e unsuccessfu s l in o i btai t ni i ng i or maintaining adequate p t aten t t protectio t n for f one or more of o o ur product candid d at d es t . Our commercial success will depend, in large part, on our ability to obtain and maintain patent and other intellectua t l property protection with respect to our product candidates. We cannot be certain that patents will be issued or granted with respect to our patent applications that are currently pending, or that issued or granted patents will not later be found f to be invalid and/o d r unenfor f ceabl a e, be interpreted in a manner that does not adequately protect our products, or otherwise provide us with any competitive advantage. The patent position of biotechnology and pharmaceutical companies is generally uncertain because it involves complex legal and factua t l considerations. The standards appl a ied by the United States Patent and Trademark Offi f ce and for f eign patent offi f ces in granting patents are not always applied uniformly or predictabl a y. For example, there is no uniform worldwide policy regarding patentable subj u ect matter or the scope of claims allowabl a e in biotechnology and pharmaceutical patents. Consequently, patents may not issue fro f m our pending patent applications. As such, we do not know the degree of fut f ur t e protection that we will have on our proprietary products and technology, if any, and a failure to obtain adequate intellectual property protection with respect to our product candidates and proprietary technology could have a material adverse impact on our business. In addition, certain of our activities in the past have been funded, and others may in the fut f ur t e be funde f d, by the United States federal government. For example, the preclinical and early clinical development of the lead antibiotic product candidate in our former antibiotic program, which we are no longer developing, was funde f d under a contract with NIAID, an entity of the United States fed f eral government. When new technologies are developed with United States fed f eral government funding, the government obtains certain rights in any resulting patents, including a nonexclusive license authorizing the government to use the invention for f non-commercial purpos r es. These rights may permit the government to disclose our confid f ential infor f mation to third parties and to exercise “march-in” rights to use or allow third parties to use our patented technology. The government can exercise its march-in rights if it determines that action is necessary because we fail to achieve practical application of the United States government-funded technology, or because action is necessary to alleviate health or safety needs, to meet requirements of federal regulations or to give prefer f ence to United States industry. r In addition, United States government-funded inventions must be reported to the government and United States government funding must be disclosed in any resulting patent appl a ications. In addition, our rights in such inventions are subject to certain requirements to manufact f ur t e products in the United States. Clai l ms i that our product candid d at d es t or the sale o l r use of our products i t nf i ri f ng i e the t paten t t or other intellectual prope o rtyt righ i ts of third parties could result in costly t litigatio t n or could require substan t tial time and money to resolve, even if litig t atio t n is a i voided d .d Our commercial success depends upon our ability to develop, manufact f ur t e, market and sell our product candidates and use our proprietary technology without infringing the intellectua t l property rights of others. We cannot guarantee that our product candidates or any uses of our product candidates do not and will not in the fut f ur t e infri f nge third-party patents or other intellectua t l property rights. Third parties might allege that we or our collabor a ators are infringing their patent rights or that we have misappropriated their trade secrets, or that we are otherwise violating their intellectua t l property rights, whether with respect to the manner in which we have conducted our research or to the composition, use or manufact f ur t e of the compounds we have developed or are developing with our collaborators. Such third parties might resort to litigation against us or other parties we have agreed to indemnify, f which litigation could be based on either existing intellectua t l property or intellectua t l property that arises in the future. It is also possible that we fai f led to identify, f or may in the future fail to identify, f relevant patents or patent appl a ications held by third parties that cover our product candidates. Other patent appl a ications in the United States and several other jurisdictions are published appr a oximately 18 months afte f r the earliest filing for which priority is claimed, with such earliest filing date being commonly refer f red to as the priority date. Furthermore, publication of discoveries in the scientific f or patent literatur t e often lags behind actua t l discoveries. Therefore, we cannot be certain that we or our collabor a ators were the first to invent, or the first to fil f e patent appl a ications on, our product candidates or for f their uses, or that our product candidates will not infringe patents that are currently issued or that are issued in the future. In the event that a third party has also fil f ed a patent application covering one of our product candidates or a similar invention, we may have to participate in an adversarial proceeding, known as an interference, declared by the U.S. Patent and Trademark Office or its foreign counterpa r rt to determine priority of invention. Additionally, pending patent applications which have been published can, subj u ect to certain limitations, be later amended in a manner that could cover our products or their use. In order to avoid or settle potential claims with respect to any patent or other intellectua t l property rights of third parties, we may choose or be required to seek a license from a third party and be required to pay license fees or royalties or both, which could be substantial. These licenses may not be availabl a e on acceptabl a e terms, or at all. Even if we were able to obtain a license, the rights may be nonexclusive, which could result in our competitors gaining access to the same intellectua t l property. Ultimately, we could be prevented from commercializing a product, or be forced, by court order or otherwise, to 47 cease some or all aspects of our business operations, if, as a result of actua t l or threatened patent or other intellectua t l property claims, we are unabl a e to enter into licenses on acceptabl a e terms. Further, we could be found f liable for significant monetary damages as a result of claims of intellectua t l property infri f ngement. For example, we have received, and may in the fut f ur t e receive, offers to license and demands to license from third parties claiming that we are infringing their intellectua t l property or owe license fees and, even if such claims are without merit, there can be no assurance that we will successful f ly avoid or settle such claims. In addition, if AbbVie licenses or otherwise acquires rights to intellectua t l property controlled by a third party in various circumstances, for f example, where a product could not be legally developed or commercialized in a country without the third-party intellectua t l property right, it is entitled under our collaboration agreement to decrease payments payable to us on a product-by-product basis and, in certain cases, on a country-by-country basis. Any of the foregoing events could harm our business significantly. Defending against claims of patent infri f ngement, misappropriation of trade secrets or other violations of intellectua t l property rights could be costly and time consuming, regardless of the outcome. Thus, even if we were to ultimately prevail, or to settle at an early stage, such litigation could burden us with substantial unanticipated costs. In addition, litigation or threatened litigation could result in significant demands on the time and attention of our management team, distracting them from the pursuit of other company business. Claims that our product candidates or the sale or use of our future products infringe, misappropriate or otherwise violate third-party intellectua t l property rights could therefore have a material adverse impact on our business. Issued patents c t overing one or more of our product candid d at d es t could b l e fou f nd invalid or unenfor f ceable i l f c i hallenged in court, includin d g as a result of counterclaims fil f ed l agains i t us in c i onnectio t n with our effo e rts t t o e t nfor f ce our int i el t le l ctual property r t ight g s a t gai a ns i t thi t rd i parties. Despite measures we take to obtain patent and other intellectua t l property protection with respect to our product candidates and proprietary technology, any of our intellectua t l property rights could be challenged or invalidated. For example, if we were to initiate legal proceedings against a third party to enforce a patent covering one of our product candidates, the defendant could counterclaim that our patent is invalid and/or unenfor f ceable, as has been asserted by Pfiz f er in our patent infringement suit regarding Paxlovid, Pfiz f er’s antiviral treatment for COVID-19. In patent litigation in the United States and in some other jurisdictions, defen f dant counterclaims alleging invalidity and/or unenfor f ceability are commonplace. Grounds for a validity challenge could be an alleged failure to meet any of several statut t ory r r equirements, for example, lack of novelty, obviousness or non-enablement. Grounds for an unenfor f ceability assertion could be an allegation that someone connected with prosecution of the patent withheld relevant information fro f m the United States Patent and Trademark Offi f ce, or the app a licable foreign counterpa r rt, or made a misleading statement, dur d ing prosecution. Although we believe that we have conducted our patent prosecution in accordance with the dut d y of candor and in good fai f th, the outcome following legal assertions of invalidity and unenfor f ceabi a lity during patent litigation is unpredictabl a e. With respect to the validity question, for example, we cannot be certain that there is no invalidating prior art, of which we and the patent examiner were unaware during prosecution. If a defen f dant were to prevail on a legal assertion of invalidity and/or unenfor f ceability, we would lose at least part, and perhaps a all, of the patent protection on a product candidate. If a defendant were to prevail on a legal assertion of invalidity and/or unenfor f ceability, other than in litigation like the Pfiz f er case, which does not cover EDP- 235, we would lose at least part, and perhaps a all, of the patent protection on a product candidate. Even if a defendant does not prevail on a legal assertion of invalidity and/or unenfor f ceability, our patent claims may be construe r d in a manner that would limit our ability to enfor f ce such claims against the defendant and others. Any loss of patent protection could have a material adverse impact on one or more of our product candidates and our business. Enforcing our intellectual property rights against third parties may also cause such third parties to file f other counterclaims against us, which could be costly to defend and could require us to pay substantial damages, cease the sale of certain products or enter into a license agreement and pay royalties (which may not be possible on commercially reasonabl a e terms or at all). Any effo f rts to enfor f ce our intellectua t l property rights are also likely to be costly, as has been and may continue to be the case with the Pfizer suit, and may divert the efforts of our scientific f and management personnel. Intellectual prope o rty l t it l ig t atio t n may lead to unfa n vorable p l ublicity that harms our repu e tation and causes the marke r t price of our common stock to declin l e. During the course of any intellectua t l property litigation, there could be public announcements of the results of hearings, rulings on motions, and other interim proceedings in the litigation. If securities analysts or investors regard these announcements as negative, the perceived value of our products, programs or intellectua t l property could be diminished. Accordingly, the market price of our common stock may decline. Such announcements could also harm our reputation or the market for f our future products, which could have a material adverse effect on our business. 48 Intellectual prope o rty r t ight g s d t o n d ot necessarily i protec t t us fro f m all poten t tial thr t eats to our compe m titive advantage a .e The degree of fut f ur t e protection afforded by our intellectua t l property rights is uncertain because intellectua t l property rights have limitations, and may not adequately protect our business, or permit us to maintain our competitive advantage. The following examples are illustrative: • others may be abl a e to make compounds that are similar to our product candidates but that are not covered by the claims of the patents that we own or have exclusively licensed; • we might not have been the fir f st to make the inventions covered by the issued patents or pending patent applications that we own or may in the fut f ur t e exclusively license, which could result in the patent applications not issuing or being invalidated afte f r issuing; • we might not have been the fir f st to file patent applications covering certain of our inventions, which could result in the patent appl a ications not issuing or being invalidated after issuing; • others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our intellectua t l property rights; • it is possible that our pending patent applications will not lead to issued patents; • issued patents that we own may not provide us with any competitive advantages, or may be held invalid or unenforceabl a e, as a result of legal challenges by our competitors; we may obtain patents for certain compounds many years befor f e we obtain marketing appr a oval for f products containing such compounds, and because patents have a limited life, f which may begin to run r prior to the commercial sale of the related product, the commercial value of our patents may be limited; • our competitors might conduct research and development activities in countries where we do not have patent rights and then use the information learned fro f m such activities to develop competitive products for sale in our majo a r commercial markets; • we may fai f l to develop additional proprietary technologies that are patentabl a e; • the laws of certain foreign countries may not protect our intellectua t l property rights to the same extent as the laws of the United States (e.g., in March 2022, the Rus R sian government adopted a decree allowing Russian local entities and individuals to use inventions, utility models and industrial designs held by owners from “unfri f endly states” without the consent fro f m the owner and liabi a lity for compensation), or we may fail to apply for f or obtain adequate intellectua t l property protection in all the jurisdictions in which we operate; and • the patents of others may have an adverse effec f t on our business, for example, by preventing us from f marketing one or more of our product candidates for f one or more indications. Any of the afor f ementioned threats to our competitive advantage could have a material adverse effect on our business. Unfa n vorable o l utco t mes in i i nt i el t le l ctual prope o rty l t itig l atio t n could limit our research and developm l ent activ t ities and/o d r our abili i ty i to commercialize certain products. t If third parties successful f ly assert their intellectua t l property rights against us, we might be barred fro f m using certain aspects of our technology or barred fro f m developing and commercializing certain products. Prohibitions against using certain technologies, or prohibitions against commercializing certain products, could be imposed by a court or by a settlement agreement between us and a plaintiff. f In addition, if we are unsuccessful f in defending against allegations that we have infringed, misappropriated or otherwise violated patent or other intellectua t l property rights of others, we may be for f ced to pay substantial damage awards to the plaintiff. f There is inevitabl a e uncertainty in any litigation, including intellectua t l property litigation. There can be no assurance that we would prevail in any intellectua t l property litigation, even if the case against us is weak or flawed. If litigation leads to an outcome unfav f orable to us, we may be required to obtain a license from the intellectua t l property owner to continue our research and development programs or to market any resulting product. It is possible that the necessary l r icense will not be availabl a e to us on commercially acceptabl a e terms, or at all. Alternatively, we may be required to modify or redesign our products to avoid infri f nging or otherwise violating third-party intellectua t l property rights. This may not be technically or commercially feasible, may render our products less competitive, or may delay or prevent the entry of our products to the market. Any of the foregoing could limit our research and development activities, our ability to commercialize one or more product candidates, or both. Most of our competitors are larger than we are and have subs u tantially greater resources. They are, therefore, likely to be able to sustain the costs of complex intellectua t l property litigation longer than we could. In addition, the uncertainties associated with litigation could have a material adverse effec f t on our ability to raise the funds f necessary t r o conduct our 49 clinical trials, continue our internal research programs, in-license needed technology, or enter into strategic partnerships that would help us bring our product candidates to market. In addition, any fut f ur t e intellectua t l property litigation, interfer f ence or other administrative proceedings will result in additional expense and distraction of our personnel. An adverse outcome in such litigation or proceedings may expose us or any fut f ur t e strategic partners to loss of our proprietary position, expose us to significant liabi a lities, or require us to seek licenses that may not be availabl a e on commercially acceptabl a e terms, if at all, each of which could have a material adverse effe f ct on our business. Confid f en d tiality i agreements with i empl m oy l ees and thi t rd i parties may not prevent unautho t rize i d dis d clos l ure of t o ra t de secretst and other proprietary info n rmatio t n. In addition to patents, we rely on trade secrets, technical know-how and proprietary information concerning our business strategy and product candidates to protect our competitive position in the fie f ld of each of our antiviral product candidates and our NASH compounds. In the course of our research and development activities and our business activities, we ofte f n rely on confid f entiality agreements to protect our proprietary information. Such confid f entiality agreements are used, for example, when we talk to vendors of laboratory o r r clinical development services or potential strategic partners. In addition, each of our employees is required to sign a confid f entiality agreement and invention assignment agreement upon u joining our company. We take steps to protect our proprietary information, and our confid f entiality agreements and invention assignment agreements are careful f ly drafte f d to protect our proprietary interests. Nevertheless, there can be no guarantee that an employee or an outside party will not make an unauthorized disclosure of our proprietary confid f ential inform f ation. This might happe a n intentionally or inadvertently. It is possible that a competitor will make use of such infor f mation, and that our competitive position will be compromised, in spite of any legal action we might take against persons making such unauthorized disclosures. In addition, to the extent that our employees, consultants or contractors use intellectua t l property owned by others in their work for us, disputes may arise as to the rights in related or resulting know-how and inventions. Trade secrets are diffi f cult to protect. Although we use reasonabl a e efforts to protect our trade secrets, our employees, consultants, contractors, business partners or outside scientific f collabor a ators might intentionally or inadvertently disclose our trade secret infor f mation to competitors or our trade secrets may otherwise be misappropriated. Enforcing a claim that a third party illegally obtained and is using any of our trade secrets is expensive and time consuming, and the outcome is unpredictabl a e. In addition, courts outside the United States sometimes are less willing than United States courts to protect trade secrets. Moreover, our competitors may independently develop equivalent knowledge, methods and know-how. Our collabor a ators may have rights to publish data and other infor f mation to which we have rights. In addition, we sometimes engage individuals or entities to conduct research relevant to our business. The abi a lity of these individuals or entities to publish or otherwise publicly disclose data and other information generated during the course of their research is subj u ect to certain contractua t l limitations. These contractua t l provisions may be insuffi f cient or inadequate to protect our confid f ential information. If we do not apply for f patent protection prior to such publication, or if we cannot otherwise maintain the confid f entiality of our proprietary technology and other confid f ential infor f mation, then our ability to obtain patent protection or to protect our trade secret infor f mation may be jeopardized, which could adversely affect our business. Changes in p i aten t t law l could d l im d inish the t value of p o aten t ts in general, thereby i b mp i airi i ng i our abilit i y t t o p t rotect our products. t As is the case with many other biopharmaceutical companies, our success is heavily dependent on intellectua t l property, particularly patents. Obtaining, maintaining and enforcing patents in the biopharmaceutical industry i r nvolves both technological complexity and legal complexity. Therefore, the process of obtaining, maintaining and enforcing biopharmaceutical patents is costly, time-consuming and inherently uncertain. In addition, recent legislative and judicial developments in the United States and elsewhere have in some cases narrowed the protection afforded to patent owners, made patents more diffi f cult to obtain, or increased the uncertainty regarding the ability to obtain, maintain and enfor f ce patents. For example, Congress recently passed patent refor f m legislation, and may pass patent reform legislation in the future. The United States Supr u eme Court has ruled on several patent cases in recent years, and in certain circumstances has narrowed the scope of patent protection available or otherwise weakened the rights of patent owners. In addition to increasing uncertainty with regard to our ability to obtain patents in the fut f ur t e, this combination of events has created uncertainty with respect to the value of patents, once obtained. Depending on decisions and actions by the United States Congress, the fed f eral courts, the United States Patent and Trademark Office, and their respective for f eign counterpa r rts, the laws and regulations governing patents could change in unpredictabl a e ways that could weaken our ability to obtain new patents or to maintain and enforce our existing patents and patents that we might obtain in the future. Risks Related to Our Industry If pr f oduct liabili i ty i lawsuits i are brought g agains i t us, we may i a nc i ur substantia t l lia l bili i tie i s and may b a e require i d to l t imit l commercializatio t n of o o ur product candid d at d es t . 50 We face an inherent risk of product liabi a lity as a result of the clinical testing of our product candidates, and we will fac f e an even greater risk if we commercialize any product candidates. For example, we may be sued if any of our product candidates, including any that are developed in combination therapi a es, is alleged to cause inju n ry or is found to be otherwise unsuitabl a e dur d ing product testing, manufactur t ing, marketing or sale. Any such product liabi a lity claims may include allegations of defects in manufact f ur t ing, defects in design, a fai f lure to warn of dangers inherent in the product, negligence, strict liability and a breach of warranties. Claims could also be asserted under state consumer protection acts. If we cannot successful f ly defend ourselves against product liabi a lity claims, we may incur subs u tantial liabi a lities or be required to limit commercialization of our product candidates. Even successful f defense would require significant fin f ancial and management resources. There is also risk that third parties we have agreed to indemnify c f ould incur liability. Regardless of the merits or eventual outcome, liabi a lity claims may result in: • decreased demand for f our product candidates or any resulting products; • inju n ry to our reputation; • withdrawal of clinical trial participants; • costs to defen f d the related litigation; • a diversion of management’s time and our resources; • subs u tantial monetary awards to trial participants or patients; • product recalls, withdrawals or labeling, marketing or promotional restrictions; • loss of revenue; • the inabi a lity to commercialize our product candidates; and • a decline in our stock price. Our inabi a lity to obtain and retain sufficient product liabi a lity insurance at an acceptabl a e cost to protect against potential product liabi a lity claims could prevent or inhibit the commercialization of products we develop. We currently carry product liabi a lity insurance covering our clinical studi t es. Although we maintain such insurance, any claim that may be brought against us could result in a court judgment or settlement in an amount that is not covered, in whole or in part, by our insurance or that is in excess of the limits of our insurance coverage. Our insurance policies also have various exclusions, and we may be subj u ect to a product liabi a lity claim for f which we have no coverage. We will have to pay any amounts awarded by a court or negotiated in a settlement that exceed our coverage limitations or that are not covered by our insurance, and we may not have, or be abl a e to obtain, suffic f ient capital to pay such amounts. Our int i er t nal compu m ter sys s tems, o s r tho t se of our colla l borator t , C r RO C s or other contra t ctor t s o r r consultants, t may f a ai f l o i r suffe f r security i breaches, w s hich could r l esult i l n a i material disru i pt u io t n of d o eve d lopm o ent progr o ams for f our product candid d at d es t . Despite the implementation of security measures, our internal computer systems and those of our collabor a ators, CROs, and other contractors and consultants are vulnerabl a e to damage fro f m computer viruses, unauthorized access, natural disasters, pandemics, terrorism, war and telecommunication and electrical fai f lures. Information security risks have significantly increased in recent years in part due to the prolifer f ation of new technologies, the increased sophistication and activities of organized crime, hackers, terrorists and other external parties, including foreign state actors as well as remote working for many businesses. As cyber threats continue to evolve, we may be required to expend significant additional resources to continue to modify or enhance our protective measures or to investigate and remediate any information security breaches. While we have not experienced any such system fai f lure, accident or security breach to date, if such an event were to occur and cause interrupt u ions in our operations, it could result in a material disrupt r ion of our independent drug r development programs. For example, the loss of clinical trial data fro f m ongoing or future clinical trials for any of our product candidates could result in delays in regulatory a r ppr a oval efforts and significantly increase costs to recover or reproduce the data. Our information security systems are also subj u ect to laws and regulations requiring that we take measures to protect the privacy and security of certain information we gather and use in our business. For example, HIPAA and its implementing regulations impose, among other requirements, certain regulatory a r nd contractua t l requirements regarding the privacy and security of personal health information. In the European Union, the General Data Protection Regulation, or GDPR, is even more restrictive with respect to all personal infor f mation, including information masked by a coding system. In addition to HIPAA and GDPR, numerous other fed f eral and state laws, including, without limitation, state security breach notific f ation laws, state health information privacy laws and fed f eral and state consumer protection laws, govern the collection, use, disclosure and storage of personal infor f mation. To the extent that any disrupt r ion or security breach were to result in a loss of or damage to data or applications, or inappr a opriate disclosure of confid f ential or proprietary information or personal health 51 information, we could incur subs u tantial liabi a lity, our reputation would be damaged, and the fur f ther development of our product candidates could be delayed. Our relat l io t nships i with i custom t ers a r nd third-par - ty payors i r n t i he t United t Stat t es t and elsewhere will i be subject to applic l ablel anti-kickback, fraud and abuse and other health l care laws and regulat l io t ns, w s hich could e l xpos e e us to c t rimi i na i l sanctio t ns,s civil p i enaltie l s, contra t ctual dam d ages, repu e tational harm a r nd dimin i ished profi o ts i and fut f ure earni r ng i s. g Healthcare providers, physicians and third-party payors in the United States and elsewhere play a primary role in the recommendation and prescription of any product candidates for f which we obtain marketing appr a oval. Our fut f ur t e arrangements with third-party payors and customers may expose us to broadly applicable fraud and abus a e and other healthcare laws and regulations that may constrain the business or fin f ancial arrangements and relationships through which we market, sell and distribute our products for which we obtain marketing approval. Restrictions under appl a icable federal, state and foreign healthcare laws and regulations include the fol f lowing: • the fed f eral healthcare anti-kickba k ck statut t e prohibits, among other things, persons from knowingly and willfully soliciting, offe f ring, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward either the refer f ral of an individual for f , or the purchase, order or recommendation of, a f ny good or service for which payment may be made under fed f eral and state healthcare programs such as Medicare and Medicaid; • the fed f eral False Claims Act imposes criminal and civil penalties, including civil whistleblower or qui tam actions, against individuals or entities for knowingly presenting, or causing to be presented, to the federal government, claims for payment that are fal f se or fraudulent or making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government; • the fed f eral Health Insurance Portabi a lity and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act, imposes criminal and civil liability for f executing a scheme to defraud any healthcare benefit program and also imposes obligations, including mandatory contractua t l terms, with respect to safeguarding the privacy, security and transmission of individually identifiable health information; • the fed f eral false statements statute prohibits knowingly and willfully falsifyi f ng, concealing or covering up a material fact or making any materially fal f se statement in connection with the delivery o r f or payment for healthcare benefit f s, items or services; • the fed f eral transparency requirements under the Patient Protection and Affo f rdable Care Act of 2010 require manufac f turers of drugs r , devices, biologics and medical suppl u ies to report to the Department of Health and Human Services infor f mation related to physician payments and other transfers of value and physician ownership and investment interests; • analogous state laws and regulations, such as state anti-kickback and fal f se claims laws, may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers, and some state laws require pharmaceutical companies to comply with the pharmaceutical industry’ r s voluntary c r ompliance guidelines and the relevant compliance guidance promulgated by the federal government in addition to requiring drug r manufac f turers to report inform f ation related to payments to physicians and other healthcare providers or marketing expenditures; and • analogous anti-kickback, fra f ud and abus a e and healthcare laws and regulations states, as well as in for f eign countries. Effo f rts to ensure that our business arrangements with third parties will comply with applicable healthcare laws and regulations will involve subs u tantial costs. It is possible that governmental authorities will conclude that our business practices may not comply with current or future statut t es, regulations or case law involving applicable fraud and abus a e or other healthcare laws and regulations. If our operations are found f to be in violation of any of these laws or any other governmental regulations that may appl a y to us, we may be subject to significant civil, criminal and administrative penalties, damages, fines, exclusion fro f m government funded healthcare programs, such as Medicare and Medicaid, and the curtailment or restructur t ing of our operations, which could have a material adverse effect on our business. If any of the physicians or other providers or entities with whom we expect to do business, including our collabor a ators, are found f not to be in compliance with appl a icable laws, they may be subj u ect to criminal, civil or administrative sanctions, including exclusions from government funded healthcare programs, which could also materially affe f ct our business. Risks Related to Our Common Stock Our stock price has been, and is likely t l o c t ontinue to be, v e olat l il t e, l and thus t our stockho k lder d s c r ould incur substan t tial losses. 52 Our stock price has been volatile and could be subject to wide fluctuations in response to various factors, many of which are beyond our control. From October 1, 2019 through September 30, 2024, the daily closing price of our common stock on the NASDAQ Global Select Market has ranged fro f m $8.18 to $97.37. The stock market in general and the market for f biopharmaceutical companies, and for f those developing potential therapi a es for viral infections in particular, have experienced extreme volatility that has often been unrelated to the operating performance of particular companies. As a result of this volatility, you may not be able to sell your holdings of our common stock at or above your purchase price, if at all. The market price for our common stock may be influenced by many factors, including: • results from or delays of clinical trials of our product candidates, as well as results of regulatory r r eviews relating to the appr a oval of our product candidates; • the results of our effo f rts to discover or develop additional product candidates; • new products, product candidates or new uses for existing products or technologies introduced or announced by our competitors and the timing of these introduc d tions or announcements; • market expectations about and response to the levels of sales or scripts achieved by, or the announced prices or discounts for f , AbbVie’s MAVYRET/MAVIRET regimen or competitive HCV drugs r ; • failure of AbbVie’s MAVYRET/MAVIRET regimen to maintain its sales levels; • our dependence on third parties, including our collaborators, CROs, manufact f ur t ers, clinical trial sponsors and clinical investigators; • regulatory, r political or legal developments in the United States or other countries; • developments or disputes concerning patent applications, issued patents or other proprietary rights; • the recruitment or departur t e of key scientific f or management personnel; • our ability to commercialize our product candidates we develop independently, if appr a oved; • the level of expenses related to any of our product candidates or clinical development programs; • actua t l or anticipated changes in estimates as to fin f ancial results, development timelines or recommendations by securities analysts; • period-to-period variations in our financial results or those of companies that are perceived to be similar to us; • market conditions in the pharmaceutical and biotechnology sectors; • sales of common stock by us or our stockholders in the fut f ur t e, as well as the overall trading volume of our common stock; • changes in the structur t e of healthcare payment systems or other actions that affe f ct the effective reimbursement rates for f treatment regimens containing our products or for competitive regimens; • general economic, industry a r nd market conditions and other factors that may be unrelated to our operating performance or the operating performance of our competitors, including changes in market valuations of similar companies; and • the other factors described in this “Risk Factors” section. A sale o l f a o substantia t l number of s o hares of o o ur common stoc t k in t i he t public l market could c l ause the marke r t price of our common stock to drop sign i ific f antly, l even if our business is d i oi d ng i well. Sales of a subs u tantial number of shares of our common stock in the public market could occur at any time. These sales, or the perception in the market that the holders of a large number of shares intend to sell shares, could reduc d e the market price of our common stock. As of September 30, 2024 we had 21.2 million shares of common stock outstanding. In addition, as of September 30, 2024, we had 5.2 million and 0.6 million shares of common stock that are subject to outstanding options and restricted stock unit awards, respectively, under our outstanding equity plans eligible for sale in the public market to the extent permitted by the provisions of various vesting schedul d es, and Rule 144 under the Securities Act. If these additional shares of common stock are sold, or it is perceived that they will be sold, in the public market, the trading price of our common stock could decline. If securitie i s or ind i ustry a r nalysts d t o n d ot publis l h research, or publis l h ina i ccurate o t r unfav f orable r l esearch about our busine i ss, our stock price and trading i volume would l l ik l ely d l ecl d in l e. 53 The trading market for our common stock will depend in part on the research and reports that securities or industry a r nalysts publish abo a ut us or our business. For example, when those analysts are unabl a e to predict accurately the demand and net sales of AbbVie’s HCV regimens, our reported revenues have often been lower than the so-called “market consensus” of our projected revenues, which has at times negatively affected our stock price. When one or more of the analysts who cover us downgrades our stock or publishes inaccurate or unfav f orable research about our business, our stock price has declined. If one or more of these analysts cease coverage of our company or fai f l to publish reports on us regularly, demand for f our stock could decrease, which might cause our stock price and trading volume to decline. In addition, if too few f securities or industry a r nalysts cover our company, the trading price for f our stock would likely be negatively impacted. Provisions in our corpor r ate c t harter t documents and under d Delaware law could make an acquisitio t n of u o s, which may be benefi e cial to our stockho k lder d s, r more diffi i cult and may prevent attempts by our stockho k lder d s t r o r t eplace or remove our current manage a ment.t Provisions in our corporate charter and our bylaws may discourage, delay or prevent a merger, acquisition or other change in control of us that stockholders may consider fav f orable, including transactions in which they might otherwise receive a premium for f their shares. These provisions could also limit the price that investors might be willing to pay in the fut f ur t e for f shares of our common stock, thereby depressing the market price of our common stock. In addition, because our board of directors is responsible for appoi a nting the members of our management team, these provisions may fru f strate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors. Among other things, these provisions: • establ a ish a classified or staggered board of directors such that not all members of the board are elected at one time; • allow the authorized number of our directors to be changed only by resolution of our board of directors; • limit the manner in which stockholders can remove directors fro f m the board; • establ a ish advance notice requirements for f stockholder proposals that can be acted on at stockholder meetings and nominations to our board of directors; • require that stockholder actions must be effe f cted at a dul d y called stockholder meeting and prohibit actions by our stockholders by written consent; • limit who may call stockholder meetings; • provide that the state courts or, in certain circumstances, the federal courts, in Delaware shall be the sole and exclusive for f um r for certain actions involving us, our directors, offi f cers, employees and stockholders; • provide our board of directors with the authority to designate the terms of and issue a new series of prefer f red stock without stockholder app a roval, which could be used to institute a “poison pill” that would work to dilute the stock ownership of a potential hostile acquirer, effe f ctively preventing acquisitions that have not been approved by our board of directors; and • require the app a roval of the holders of at least 66 2/3% of the votes that all our stockholders would be entitled to cast to amend or repeal certain provisions of our charter or bylaws. Moreover, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corpor r ation Law, which prohibit a person who owns 15% or more of our outstanding voting stock from merging or combining with us for a period of three years after the date of the transaction in which the person acquired in excess of 15% of our outstanding voting stock, unless the merger or combination is appr a oved in a prescribed manner. Any provision in our corporate charter or our bylaws or Delaware law that has the effe f ct of delaying or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our common stock and could also affect the price that some investors are willing to pay for our common stock. Our employm o ent agr a eements w t ith our exe e cutive off o ic f ers m r ay require us to p t ay severance benefi e ts i to any o n f t o ho t se persons who are terminated t in connection with a change of c o ontrol of us, w s hich could h l arm o r ur fina i ncial conditi i on or results. Our executive offi f cers are parties to employment agreements that provide for aggregate cash payments of up t u o approximately $6.4 million for f severance and other non-equity-based benefits in the event of a termination of employment in connection with a change of control of our company. The payment of these severance benefits could harm our company’s financial condition and results. In addition, these potential severance payments may discourage or prevent third parties from f seeking a business combination with us. 54 Because we do n d ot anticipat i e p t aying cash div d iden d ds on our common stock for the t foreseeable f l ut f ure, investors in our common stock may n a ever receive a return on the t ir investme t nt.t You should not rely on an investment in our common stock to provide dividend income. We do not anticipate that we will pay any cash dividends to holders of our common stock for f the for f eseeabl a e fut f ur t e. Instead, we plan to retain any earnings to maintain and expand our existing operations. Accordingly, investors must rely on sales of their common stock afte f r price appreciation, which may never occur, as the only way to realize any return on their investment. As a result, investors seeking cash dividends should not invest in our common stock. Our ability i to use fut f ure net operating i loss carryfo y rwards, r s esearch and developm l ent tax t credit d carryfo y rwards, a s nd certain othe t r tax t attr t ibutes t may b a e limite l d. Our abi a lity to utilize fut f ur t e net operating loss carryforwards (“NOLs”) generated as well as research and development tax credit carryforwards may be limited under Section 382 of the Internal Revenue Code (“IRC”) or appl a icable state tax law. The Section 382 limitations apply if an “ownership change” occurs. Generally, an ownership change results from transactions that increase the ownership of 5% stockholders in the stock of a corpor r ation by more than 50% in the aggregate over a three-year period. We have evaluated whether one or more ownership changes under Section 382 have occurred since our inception and have determined that there have been such changes through September 30, 2022. Although we believe that these ownership changes have not resulted in material limitations on our ability to utilize existing NOL carryforwards and research and development tax credit carryforwards, our ability to utilize future NOLs and research and development tax credit carryforwards may be limited due d to future ownership changes or for f other reasons. As a result, we may not be able to take full advantage of NOL carryforwards and research and development tax credit carryforwards for U.S. federal and state income tax purpos r es. We are a smalle l r reporting compan m y, n and any decisi i on on our part to c t ompl m y o l nly w l ith r t educed repor e ting i and dis d clos l ure requirements applic l able t l o s t uch compan m ies could make our common stock less attr t active to investors. As of March 31, 2024, we qualifie f d as a “smaller reporting company,” as defined in the Exchange Act of 1934, as amended, or the Exchange Act. For as long as we continue to be a smaller reporting company, we may choose to take advantage of exemptions from various reporting requirements appl a icable to other public companies that are not smaller reporting companies, including, but not limited to, reduc d ed disclosure obligations regarding executive compensation in our periodic reports and proxy statements and only being required to provide two years of audited fin f ancial statements in annual reports. We will remain a smaller reporting company so long as, as of March 31 of the preceding year, (i) the market value of our common stock held by non-affi f liates, or our public float, is less than $250.0 million; or (ii) we have annual revenues less than $100.0 million and either we have no public float or our public float is less than $700.0 million. If we take advantage of some or all of the reduc d ed disclosure requirements availabl a e to smaller reporting companies, investors may find our common stock less attractive, which may result in a less active trading market for our common stock and greater stock price volatility. For so long as we are a smaller reporting company and are not classified as an “accelerated filer” or “large accelerated filer” pursuant to SEC rules, we will be exempt from the auditor attestation requirements of Section 404(b) of the Sarba r nes-Oxley Act. General Risk Factors If we fail to comply with i enviro i nmental, health l and safet f y l t aw l s and regu e lations, w s e could become subject to f t in f es or penalties or incur costs that could h l ave a material adverse r effe f ct on the success of o o ur busine i ss. We are subject to numerous environmental, health and safet f y laws and regulations, including those governing laboratory r procedur d es and the handling, use, storage, treatment and disposal of hazardous materials and wastes. Our operations involve the use of hazardous and fla f mmable materials, including chemicals. Our operations also produce hazardous waste products. We generally contract with third parties for f the disposal of these materials and wastes. We cannot eliminate the risk of contamination or injury f r ro f m these materials. In the event of contamination or injury r r esulting fro f m our use of hazardous materials or our or third parties’ disposal of hazardous materials, we could be held liabl a e for f any resulting damages, and any liabi a lity could exceed our resources. We also could incur significant costs associated with civil or criminal fines and penalties. We may incur subs u tantial costs to comply with current or fut f ur t e environmental, health and safet f y laws and regulations. These current or future laws and regulations may impair our research, development or production effo f rts. Failure to comply with these laws and regulations also may result in substantial fin f es, penalties or other sanctions. We maintain workers’ compensation insurance to cover us for f costs and expenses we may incur due to inju n ries to our employees resulting fro f m the use of hazardous materials. This insurance may not provide adequate coverage against 55 potential liabi a lities. We do not maintain insurance for f environmental liabi a lity or toxic tort claims that may be asserted against us in connection with our storage or disposal of hazardous or radioactive materials. Our ins i urance polic l ies are expe x nsive and only protec t t us fro f m spe s cifi i ed busine i ss risk i s, k which will l l ea l ve us expos x ed to sign i ific f ant unins i ured liabili i tie i s. We do not carry insurance for f all categories of risk that our business may encounter. Some of the policies we currently maintain include general liabi a lity, employment practices liability, property, auto, workers’ compensation, cybersecurity, products liability and directors’ and officers’ insurance. We do not know, however, if we have adequate levels of coverage for any liability we may incur, or whether we will always be able to continue to maintain such insurance. Any significant uninsured liability may require us to make subs u tantial payments, which would adversely affect our financial position and results of operations. Furthermore, any increase in the volatility of our stock price, or changes in the insurance market generally, may result in us being required to pay substantially higher premiums for our directors’ and officers’ liability insurance than those to which we were previously subj u ect and may even cause one or more of our underwriters to be unwilling to insure us. If we fail to maintain an effe f ctiv t e sys s tem of i o nt i er t nal control over fina i ncial reporting, we may n a ot be able t l o a t ccurately repor e t our fina i ncial results l or prevent fra f ud. A d s a result, s t tockho k lder d s c r ould lose confid f en d ce in our fin f ancial and other public l repor e ting, which would harm our business and the tra t ding i price of o o ur common stock.k Effe f ctive internal controls over fin f ancial reporting are necessary for us to provide reliabl a e fin f ancial reports and, together with adequate disclosure controls and procedur d es, are designed to prevent fraud. Any fai f lure to implement newly required or improved controls, or diffi f culties encountered in their implementation, could cause us to fail to meet our reporting obligations. In addition, any testing by us conducted in connection with Section 404 of the Sarba r nes-Oxley Act of 2002, or any subsequent testing by our independent registered public accounting fir f m, may reveal defic f iencies in our internal controls over fin f ancial reporting that are deemed to be material weaknesses or that may require prospective or retroactive changes to our financial statements or identify o f ther areas for f further attention or improvement. Infer f ior internal controls could also cause investors to lose confid f ence in our reported fin f ancial information, which could have a negative effect on the trading price of our common stock. Our inf i or f ma r tion tech t nology o system t s, or those used by o b ur CROs or other contra t ctor t s o r r consultants, t may f a ai f l o i r suffe f r othe t r breakdowns, c s yb c er-a r ttacks, k or info n rmatio t n security breaches, w s hich could a l dverse r ly affe f ct our business. We are increasingly dependent upon information technology systems, infrastructur t e, and data to operate our business. We also rely on third party vendors and their infor f mation technology systems. Despite the implementation of security measures, our recovery systems, security protocols, network protection mechanisms, and other security measures and those of our current or future CROs or other contractors and consultants are vulnerabl a e to system fai f lure, interrupt u ion, compromise, or damage from data corrupt u ion, breakdown, computer hacking, malicious code (such as computer viruses or worms), fraudulent activity, employee misconduct, theft, f or error, denial-of-service attacks, telecommunication, and electrical failures, natural disasters, public health epidemics, such as the COVID-19 pandemic, cyber-attacks by sophisticated nation- state and nation-state supported actors, or other system attacks, disrupt r ion, or accidents. We receive, generate and store significant and increasing volumes of personal health data and other confid f ential and proprietary information. There can be no assurance that we, or our collaborators, CROs, third-party vendors, contractors and consultants, will be successful f in effo f rts to detect, prevent, protect against or fully recover systems or data from all breakdowns, service interrupt u ions, attacks or breaches. The costs to respond to a security breach and/or to mitigate any security vulnerabi a lities that may be identifie f d could be significant, our effo f rts to address these problems may not be successful f , and these problems could result in unexpected interrupt u ions, delays, cessation of service, negative publicity, and other harm to our business and our competitive position. Remediation of any potential security breach may involve significant time, resources, and expenses. Despite our best effo f rts, our network security and data recovery measures and those of our vendors may still not be adequate to protect against such security breaches and disrupt u ions, which could cause harm to our business, financial condition and results of operations. Any cybersecurity incident could adversely affect our business, by leading to, for example, the loss of confid f ential information or other intellectua t l property, demands for ransom or other forms of blackmail or the unauthorized disclosure of personal, confid f ential or proprietary information of our employees, clinical trial participants, customers and others. We could be subject to regulatory actions taken by governmental authorities, litigation under laws that protect the privacy and security of personal infor f mation, or other for f ms of legal proceedings, which could result in significant investigations, liabi a lities or penalties. We may not have adequate insurance coverage for security incidents or breaches. The successful f assertion of one or more large claims against us that exceeds our availabl a e insurance coverage, or results in changes to our insurance policies 56 (including premium increases or the imposition of large deduc d tible or co-insurance requirements), could have an adverse effe f ct on our business. In addition, we cannot be sure that our existing insurance coverage and coverage for errors and omissions will continue to be availabl a e on acceptabl a e terms or that our insurers will not deny coverage as to any fut f ur t e claim. Use of s o ocial media d could g l ive rise to l t ia l bilit i y o t r reputat t io t nal harm. r We and our employees use social media to communicate externally. There is risk that the use of social media by us or our employees to communicate about our product candidates or business may give rise to liability, lead to the loss of trade secrets or other intellectua t l property or result in public exposure of personal infor f mation of our employees, clinical trial patients, customers, and others. Furthermore, negative posts or comments about a us or our product candidates in social media could seriously damage our reputation, brand image, and goodwill. Any of these events could have a material adverse effec f t on our business, prospects, operating results, and fin f ancial condition and could adversely affect the price of our common stock. We maintain our cash at fin f ancial instit t utio t ns, o s ft o en t in balan l ces that exceed federally insured lim l its. The majority of our cash is held in accounts at U.S. banking institutions. Cash held in depository accounts may exceed the Federal Deposit Insurance Corpor r ation (“FDIC”) standard deposit insurance limit of $250,000. If such banking institutions were to fail, such as Silicon Valley Bank when the FDIC took control in March 2023, we could lose all or a portion of those amounts held in excess of such insured amounts. In the fut f ur t e, access to our cash in amounts adequate to finance our operations could be significantly impaired if the financial institutions with which we have arrangements encounter liquidity constraints or fai f lures. Any fut f ur t e limitation on timely access to our funds or any material loss that we may experience in the fut f ur t e could have a material adverse effe f ct on our financial condition and could materially impact our ability to pay our operating expenses or make other payments. ITEM 1B. UNRESOLVED STAFF COMMENTS None. ITEM 1C. CYBERSECURITY RISK MANAGEMENT AND STRATEGY We have continued to invest in an evolving state-of-t f he-art cybersecurity framework of tools, processes, training, and people designed to effic f iently assess, identify, f and remediate material risks that could affect business operations, fin f ancials, or public reputation. Our multi-layered approach to cybersecurity involves regular network monitoring, vulnerabi a lity scanning, advanced threat detection, and incident response capabilities against recognized cyber threats to our business and stakeholders, including ransomware, data breaches and insider threats. We regularly update our security measures, as necessary, to ensure we address all new threats and technologies, using the National Institute of Standards and Technology (“NIST”) Framework as a guide, when app a ropriate and relevant to our business. As further protections, we utilize encryption, access control mechanisms and secure cloud infrastructur t es, and we invest in extensive user training. All users regularly undergo upda u ted cybersecurity awareness training in an ongoing effort f to reduce the risk of human error contributing to any potential security incidents. All users are also subject to simulated phishing emails with real time feedba d ck for a more continuous layer of training. We have retained a seasoned virtual Information Security Offi f cer (“vISO”) to assist and guide our IT organization in maintaining and evolving a comprehensive and robust cyber security environment. Monthly meetings review all fac f ets of our current status t against appr a opriate NIST standards, review any incidents, and review the results of ongoing simulated phishing exercises to identify c f ertain users who may need extended training. In addition, as part of our annual security review, we hire a third-party network penetration testing fir f m to provide simulated probing and subsequent reporting. We use the results of these annual tests to improve the strength and flexibility of our network’s security. Our Incident Response Plan (“IRP”) has evolved with our cyber environment and consists of a set of state-of-t f he-art-tools capable of monitoring, reporting and alerting, as well as regular reviews. The IRP also sets forth guidelines on how to triage, assess the severity and materiality of findings, and remediate and escalate findings to upper management in a timely manner, as necessary. In addition, as part of our overall risk mitigation strategy, we also maintain cyber insurance coverage. However, such insurance may not be sufficient to cover us against all possible claims related to security breaches, cyber- attacks and other related breaches. Our current environment contains no known risks from cybersecurity threats that could materially impact our business operations, fin f ancials, or public reputation. 57 Cybersecurity Governance and Oversight The Board of Directors has assigned the Audit Committee to be responsible for reviewing our cybersecurity risk management and strategy program and is presented, at least annually, with a review of our environment and reported incidents. Part of our IRP also calls for the elevation of any necessary incidents to uppe u r management in a timely manner whenever they occur. We have also formed a steering committee, composed of IT staff a f nd relevant business leaders responsible for the Company’s material infor f mation, including commercially sensitive data. The goals of this steering committee include overseeing our annual material risk assessment and documenting and reporting to senior management. The steering committee also reviews changes to procedur d al and other controls. We have also for f med a risk register subc u ommittee to review and for f mally discuss any critical risks identified during our vISO annual assessment of our cyber environment. ITEM 2. PROPERTIES Our corpor r ate headquarters is located in Watertown, Massachusetts, where we lease appr a oximately 73,000 square feet of offi f ce and laboratory s r pace under the 4 Kingsbury A r venue Agreement. We also lease appr a oximately 38,000 square feet of additional office space located at 400 Talcott Avenue in Watertown, Massachusetts. Both property leases expire in September 2034. ITEM 3. LEGAL PROCEEDINGS Information with respect to legal proceedings is included in Note 13 of the Notes to Consolidated Financial Statements contained in Part II, Item 8 of this Annual Report on Form 10-K, which is incorpor r ated herein by reference. ITEM 4. MINE SAFETY DISCLOSURES Not appl a icable. 58 PART II ITEM 5. MARKET FOR THE COMPANY'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market and Stockholder Information Our common stock has been listed on The NASDAQ Global Select Market under the symbol “ENTA” since March 21, 2013 and we had 17 stockholders of record as of November 12, 2024. The fol f lowing tabl a e shows the high and low sales price for f our common stock as reported by The NASDAQ Global Select Market for f the quarterly periods in the fis f cal years ended September 30, 2024 and 2023: Fiscal 2024 High Low First Quarter................................................................................................... $ 11.07 $ 8.08 Second Quarter............................................................................................... $ 17.76 $ 9.24 Third Quarter.................................................................................................. $ 17.80 $ 11.28 Fourth Quarter................................................................................................ $ 17.24 $ 9.90 Fiscal 2023 High Low First Quarter................................................................................................... $ 54.20 $ 39.60 Second Quarter............................................................................................... $ 62.06 $ 38.16 Third Quarter.................................................................................................. $ 41.45 $ 19.91 Fourth Quarter................................................................................................ $ 22.15 $ 11.03 We have never declared or paid cash dividends on our common stock, and we do not expect to declare or pay any cash dividends for the foreseeable future. 59 Perfor f mance Graph(1) The fol f lowing graph shows a comparison from September 30, 2019 through September 30, 2024 of cumulative total return on assumed investments of $100.00 in cash in each of our common stock, the NASDAQ Composite Index and the NASDAQ Biotechnology Index. Such returns are based on historical results and are not intended to suggest future performance. Data for f the NASDAQ Composite Index and the NASDAQ Biotechnology Index assume reinvestment of dividends. COMPARISON OF FIVE YEARS CUMULATIVE TOTAL RETURN Among Enanta Pharmaceuticals, Inc., the NASDAQ Composite Index, and the NASDAQ Biotechnology Index (1) This performance graph shall not be deemed to be “soliciting material” or to be “file f d” with the SEC for purpos r es of Section 18 of the Securities and Exchange Act of 1934, as amended, or otherwise subject to the liabilities under that Section, and shall not be deemed incorporated by reference into any filing of Enanta Pharmaceuticals, Inc. under the Securities Act of 1933, as amended. ITEM 6. [RESERVED] 60 ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERAT R IONS You should read the following discussion and analys l is of fi f nancial condition and results of operations together with our consolidat d ed financial statements a t nd related notes included elsewhere in this Annual Repor e t on For F m 10-K. This disc i ussion and other parts of this Annual Repor e t on For F m 10-K contain for f ward-l d ooking statements t t hat involve risks and uncertainties, such as statements r t egarding our plans, objectives, exp e ectations, intentions, and projections. Our actual results could diffe f r materially from those discussed in these for f ward-l d ooking statements. t Factors t r hat could cause or contribute to such differences include, but are not limited to, those discussed in the “Risk Fac F tors” section of t o his A i nnual Repor e t on For F m 10-K. Overview We are a biotechnology company that uses our robust, chemistry- r driven approach and drug discovery capa a bi a lities to discover and develop small molecule drugs r with an emphasis on virology and immunology. Virology gy We discovered glecaprevir, the second of two antiviral protease inhibitors discovered and developed through our collabor a ation with AbbVie for the treatment of chronic infec f tion with hepatitis C virus r , or HCV. Glecaprevir is co- formulated as part of AbbVie’s leading brand of direct-acting antiviral, or DAA, combination treatment for HCV, which has been marketed under the tradenames MAVYRET® (U.S.) and MAVIRET® (ex-U.S.) (glecaprevir/pi / brentasvir) since 2017. Our active development programs in virology are foc f used on respiratory s r yncytial virus r , or RSV, the most common cause of bronchiolitis and pneumonia and leading cause of U.S. hospitalization in young children and a significant cause of respiratory i r llness in older adul d ts, with estimates suggesting that on average each year RSV leads to three million hospitalizations globally in children under 5 years old and 177,000 hospitalizations in the U.S. in adults over the age of 65. We also have development programs in virology for the following disease targets: • SARS-CoV-2, the virus that causes COVID-19, with estimates suggesting that COVID-19 continues to have a disease burden greater than influenza, including persistent cases of infection often referred to as long COVID and hospitalization and death among the elderly and those with comorbi r dities, while new variants continue to emerge on a regular basis; and • Hepatitis B virus r , or HBV, the most prevalent chronic hepatitis, which is estimated by the World Health Organization to affe f ct close to 300 million individuals worldwide. Immunology gy In immunology, we are designing and developing highly potent and selective, oral small molecule inhibitors for the treatment of inflammatory disease by targeting key mechanisms of immune response. Our initial foc f us has been on mechanisms involved in an overactive type 2 immune response, which is the reaction of the body's immune system when the body detects infect f ions or allergens and sends out immune cells to fight them. An overactive response is a primary r driver of a number of infla f mmatory d r iseases. Our initial immunology targets involve the fol f lowing mechanisms of immune response: • The receptor tyrosine kinase, known as KIT, which is critical for regulating mast cell activity; and • STAT6, a transcription fac f tor uniquely responsible for interleukin-4 (IL-4)/interleukin-13 (IL-13) cell signaling, the factors that play important roles in regulating the responses of lymphocytes, myeloid cells, and non-hematopoietic cells within the immune system. These mechanisms are implicated, along with others, in several diseases, and it is not uncommon for f an effi f cacious treatment for one disease to be tested and approved for f other immunology indications. We currently plan to focus our immunology drug r development efforts on the following disease indications: • Chronic spontaneous urticaria, or CSU, a severely debilitating, chronic infla f mmatory skin disease manifes f ted by hives, angioedema, which is swelling of soft tissues, or both, but with no identifie f d triggers, which has an estimated global prevalence of between 0.5% – 1% of the population, resulting in appr a oximately 1.75-3.5 million people with this condition at any given time in the U.S. alone; and • Atopic dermatitis, or AD, a chronic dermatological disease characterized by dry, r red, inflamed, irritated and itchy skin with significant quality of life impacts such as leading a limited lifes f tyle, avoidance of social interactions and a reduced range of activities, with AD affe f cting 7.3% of the US adult population, of whom ~40% have moderate to severe disease. 61 As of September 30, 2024, we had $248.2 million in cash, cash equivalents and short-term marketable securities. We believe that our existing cash, cash equivalents and short-term marketable securities as of September 30, 2024, as well as the cash flo f ws from our retained portion of future HCV royalties will enable us to fund our operating expenses and capital expenditure requirements into fis f cal 2027. Our Who W lly- l Owned Pro P gr o ams Our primary wholly-owned research and development programs are in virology and immunology. RSV. In virology, we have two clinical stage product candidates for f RSV – zelicapavir (formerly EDP-938) and EDP-323. Both of these compounds are replication inhibitors that work by shutting down replication and the production of new virions, as opposed to the other mechanism in development of fus f ion inhibition that only blocks viral entry. r Zelicapavir, which has Fast Track designation fro f m the U.S. Food and Drug Administration, or FDA, is a potent inhibitor of the RSV N- protein for f both major subgr u oups of RSV, referred to as RSV-A and RSV-B. Zelicapavir is being studied in two Phase 2 studi t es, each in a different high risk patient population. EDP-323, which also has a Fast Track designation from f the FDA is an inhibitor of the RSV L-protein for both major subgr u oups of RSV that has recently completed a Phase 2 challenge study. t • Zelicapavir - N-p N rotein Inhibitor Can C didate: We have studi t ed zelicapavir in two Phase 2 studies that were p p designed to be proof-o f f-concept and exploratory s r tudies in otherwise healthy young adul d ts (not at high-risk for serious outcomes with RSV) to understand the viral response in the context of RSV infection. With these studi t es, zelicapavir has demonstrated a fav f orable safety profil f e, consistent with that observed in over 500 subj u ects exposed to zelicapavir to date. We believe that zelicapavir has the greatest potential to show optimal effi f cacy in high-risk populations since these patients have reduced RSV immunity, which manifests in a higher and longer dur d ation of viral load and greater disease severity, allowing a bigger window to realize the full potential of zelicapavir. Based on its growing safet f y profile, we are continuing to evaluate zelicapavir in high- risk populations, including pediatric patients and high-risk adul d ts, all of which have significant unmet need:  Pediatri t c Stu S dy of Zelicapav a ir: RSVPEDs is a Phase 2 study t of zelicapavir in 96 pediatric patients, aged y f p >28 days to <36 months. This dose-ranging, randomized, double-blind, placebo-controlled study, t is evaluating multiple ascending doses for fiv f e days in two age cohorts to determine safet f y, tolerabi a lity, and pharmacokinetics, as well as a second part evaluating antiviral activity at the selected dose. In August 2024, we announced completion of enrollment of the RSVPEDs study. t We anticipate reporting topline data in December 2024.  High- i Risk i Adul d ts Study of Zelicapavir: We also have an ongoing Phase 2b study in high-risk adul d ts, g y f p including those who are older than 65 years of age and those who have asthma, chronic obstruc r tive pulmonary disease, or COPD, or congestive heart fai f lure. Approximately 180 patients will be treated with zelicapavir or placebo for f five days with a primary endpoint of time to resolution of RSV lower respiratory t r ract disease symptoms. Enrollment is progressing and we are targeting enrollment completion in the current Northern Hemisphere RSV season with topline data expected in 2025. • EDP- D 323 - L-protein Inhibitor Can C didate: Our second clinical RSV candidate, EDP-323, is a novel oral, direct- p acting antiviral selectively targeting the RSV L-protein, a viral RNA-dependent RNA polymerase enzyme that contains multiple enzymatic activities required for f RSV replication. EDP-323 has sub-nanomolar potency against RSV-A and RSV-B in vitro and protected mice in a dose-dependent manner fro f m RSV infection as demonstrated by both virological and pathological endpoints. EDP-323 is not expected to have cross-resistance to other classes of inhibitors and has the potential to be used alone, or in combination with other RSV mechanisms, to broaden the treatment window or addressabl a e patient populations. In September 2024, we announced positive topline results for EDP-323 in a Phase 2a challenge study t of healthy adults infected with RSV. Treatment with EDP-323 achieved highly statistically significant (p=<0.0001) reductions in both viral load and clinical symptoms compared to placebo. Overall, EDP-323 was generally well tolerated and demonstrated a fav f orable safety profile f that was comparabl a e to placebo over 5 days of dosing through Day 28 of follow-up. There were no serious adverse events and no discontinuations of EDP-323. COVID-19. We leveraged our expertise in developing protease inhibitors to discover compounds specifically designed to target the SARS-CoV-2 virus r and potentially other coronaviruses. We selected EDP-235, an oral inhibitor of the coronavirus 3CL protease, also refer f red to as 3CLpro or the main coronavirus protease, or Mpro, for f clinical development. In addition to nanomolar activity against all SARS-CoV-2 variants tested to date, EDP-235 has potent antiviral activity against other human coronaviruses, enabling the potential for f a pan-coronavirus treatment, including possibly coronaviruses that may infect f human populations in the fut f ur t e. Furthermore, EDP-235 has good tissue distribution, and is proje o cted to have four times higher drug levels in lung tissue compared to plasma. 62 • SPRI P NT I Study of EDP- D 235: In May 2023, we reported topline results from a Phase 2 clinical trial of EDP-235 in non-hospitalized, symptomatic patients with mild to moderate COVID-19 who were not at increased risk for developing severe disease, which was the only study population permitted by the FDA. EDP-235 met the primary endpoint of the trial and was generally safe a f nd well-tolerated.  A dose-dependent improvement in total symptom score was observed with EDP-235 treatment compared to placebo, which achieved statistical significance (p<0.05) in the 400 mg treatment group at multiple time points, starting as early as one day after the fir f st dose.  An analysis of a subset of six symptoms showed a two-day shorter time (5 days to 3 days) to improvement in patients receiving EDP-235 400 mg who were enrolled within three days of symptom onset (p<0.01).  No effe f ct on virologic endpoints as measured in the nose was detected due to the rapid viral decline in the placebo arm of this highly immunologically-experienced, standard risk population.  In the subset of patients who were nucleocapsid seronegative (indicating no recent natur t al infection with SARS-CoV-2), a viral load decline was observed at day five in the 400 mg group of 0.8 log overall and 1 log in the patients with symptom onset within three days befor f e treatment with EDP-235. We will continue to focus on potential collabor a ations to progress EDP-235, as we will not advance this candidate into Phase 3 studies on our own. Immunology. We are designing and developing highly potent and selective, oral, small molecule inhibitors targeting the following mechanisms of immune response: • KIT Inhibitors. We have a preclinical stage program to develop oral KIT inhibitors to treat CSU and potentially other indications by depleting mast cells, thereby addressing a primary driver of these diseases. We have discovered novel, potent and selective oral KIT inhibitors, which are in preclinical development. In the four f th quarter of 2024, we selected our lead development candidate, EPS-1421. This candidate demonstrates potent nanomolar activity in both binding and cellular func f tion assays and is highly selective for f KIT versus other kinases. This inhibitor also demonstrates strong in vitro and in vivo ADME properties. We expect to conduct scale-up activities and IND-enabling studies for this program in 2025. • STAT6 Inhibitors. We have a discovery stage program to develop oral STAT6 inhibitors for the treatment of type 2 immune driven diseases, initially foc f using on AD and potentially other indications by blocking the IL- 4/IL-13 signaling pathway, thereby addressing a primary driver of these diseases. We have discovered novel, potent and selective oral STAT6 inhibitors, which are being optimized in the discovery stage. Our prototype inhibitors demonstrate potent activity and high selectivity for STAT6 over other STATs in both biochemical and cellular assays. Our prototype inhibitors also demonstrate systemic in vivo target engagement afte f r ex vivo IL-4 stimulation. We are continuing to evaluate multiple compounds in preclinical studi t es. We expect to conduct lead optimization activities in this program in 2025. We have utilized our internal chemistry a r nd drug r discovery capa a bi a lities to generate all of our development-stage programs. We continue to invest subs u tantial resources in research programs to discover compounds targeting new disease areas. 63 The fol f lowing tabl a e summarizes our product development pipeline in our virology and immunology programs: *Fixed-dose antiviral combination contains glecaprevir and AbbVie's NS5A inhibitor, pibrentasvir. Marketed by AbbVie as MAVYRET® (U.S.) and MAVIRET® (ex-U.S.). **Continued development dependent on partnering. ***Initial indications. Potential fut f ur t e indications include asthma, chronic inducible urticaria (CIndU), eosinophilic esophagitis (EoE), prur r igo nodularis (PN) and others. Our Royalty l Revenue Col C la l boratio t n and Roya o lty Sale Agreement Our royalty revenue is generated through our Collabor a ative Development and License Agreement with AbbVie, under which we have discovered and out-licensed to AbbVie two protease inhibitor compounds that have been clinically tested, manufac f tured, and commercialized by AbbVie as part of its combination regimens for f HCV. Glecaprevir is the HCV protease inhibitor we discovered that was developed by AbbVie in a fix f ed-dose combination with its NS5A inhibitor, pibrentasvir, for f the treatment of chronic HCV. This patented combination, currently marketed under the brand names MAVYRET® (U.S.) and MAVIRET® (ex-U.S.), is referred to in this report as MAVYRET/MAVIRET. The first protease inhibitor developed through this collabor a ation, paritapr a evir, is part of AbbVie’s initial HCV regimens, which have been almost entirely replaced by MAVYRET/MAVIRET. Since August 2017, subs u tantially all of our royalty revenue has been derived fro f m AbbVie’s net sales of MAVYRET/MAVIRET. Our ongoing royalty revenues fro f m this regimen consist of annually tiered, double-digit, per-product royalties on 50% of the calendar year net sales of the 2-DAA glecapr a evir/p r ibrentasvir combination in MAVYRET/MAVIRET. The annual royalty tiers return to the lowest tier for f sales on and after each January 1 r . In April 2023, we entered into a royalty sale agreement with an affi f liate of OMERS, a Canadian public employee pension fund, pursuant to which we were paid a $200.0 million cash purchase price in exchange for 54.5% of our future quarterly royalty payments on net sales of MAVYRET/MAVIRET, afte f r June 30, 2023, through June 30, 2032, subj u ect to a cap on aggregate payments to OMERS equal to 1.42 times the purchase price. For accounting purpos r es, we continue to record 100% of HCV royalties earned under the AbbVie agreement as royalty revenue in our consolidated statements of operations. The $200.0 million received in April 2023 was recognized on our consolidated balance sheets as a liabi a lity, which will be reduced by the payments made to OMERS over the term of the Agreement. We recognize imputed interest expense over the life o f f the royalty sale agreement based on our estimated fut f ur t e MAVYRET/MAVIRET royalties. Financial Operations Overview We are currently funding all research and development for f our wholly-owned programs, which are targeted toward the discovery and development of novel compounds. As of the date of this report, we are conducting two Phase 2b studies of zelicapavir and have recently completed a Phase 2a human challenge study t of EDP-323, both of which are in our virology program. We also are conducting preclinical discovery research effo f rts in immunology . As a result of the timing of our clinical and preclinical development programs, we expect our research and development expenses will fluctuate fro f m period to period. However, in the next 12 months, we expect our external research and development expenses generally to decrease since we will not conduct any further development of EDP-235 into Phase 3 studi t es and we made important adju d stments to reduc d e our spending significantly in 2024. 64 To date, we have funde f d our operations primarily through royalty payments received under our collabor a ation agreement with AbbVie, a $200.0 million payment received in April 2023 from our royalty sale agreement, and our existing cash, cash equivalents, and short-term marketable securities. We believe that our existing cash, cash equivalents and short-term marketable securities as of September 30, 2024, as well as the cash flo f ws from our retained portion of fut f ur t e HCV royalties, will enable us to fund our operating expenses and capital expenditure requirements into fis f cal 2027. Revenue Our revenue is primarily derived fro f m our collabor a ation agreement with AbbVie and AbbVie’s sales of MAVYRET/MAVIRET, an 8-week treatment regimen for f chronic HCV. During the year ended September 30, 2023, we also generated $1.0 million of license revenue from an upf u ro f nt payment related to a license agreement for f one of the antibacterial compounds we are no longer developing. The fol f lowing tabl a e is a summary o r f revenue recognized for the years ended September 30, 2024, 2023, and 2022: Years Ended September 30, 2024 2023 2022 (in thousands) Revenue Royalty revenue ........................................................... $ 67,635 $ 78,204 $ 86,160 License revenue............................................................ — 1,000 — Total revenue.................................................................... $ 67,635 $ 79,204 $ 86,160 As disclosed abo a ve regarding our OMERS royalty sale agreement, we only retain 45.5% of the cash payments from f royalties on net sales of MAVYRET/MAVIRET occurring afte f r June 30, 2023 through June 30, 2032, subj u ect to a cap on aggregate payments to OMERS equal to 1.42 times OMERS’ purchase price. Internal Programs As our internal product candidates are currently in Phase 1 or Phase 2 clinical development, we have not generated any revenue from our own product sales. We do not expect to generate any revenue from product sales derived from f these product candidates for f at least the next several years. Operatin t g Expe E nses Our operating expenses are comprised of research and development expenses and general and administrative expenses. Research and Developm o ent Exp E enses Research and development expenses consist of costs incurred to conduct basic research, such as the discovery and development of novel small molecules as therape a utics, as well as any external expenses of preclinical and clinical development activities. We expense all costs of research and development as incurred. These expenses consist primarily of:f • third-party contract costs relating to research, formulation, manufact f ur t ing, preclinical study, t and clinical trial activities; • personnel costs, including salaries, related benefits, and stock-based compensation for f employees engaged in scientific f research and development func f tions; • allocated fac f ility-related costs; • labor a atory c r onsumabl a es; and • third-party license fees. At any given time, we have later stage programs in clinical development as well as several active early-stage research and drug r discovery projects. Our internal resources, employees and infra f structur t e are utilized across multiple projects, including our early-stage discovery projects. As such, we report infor f mation regarding costs incurred based on our programs (i.e., disease area) rather than on a proje o ct specific basis. All indirect costs are allocated to programs based on headcount and square footage of our facilities. We expect that our research and development expenses will fluctuate fro f m period to period as we advance our research and development programs. However, in the next 12 months, we expect our external research and development expenses generally to decrease since we will not conduct any further development of EDP-235 into Phase 3 studies and we made important adju d stments to reduc d e our spending significantly in 2024. To date, we have not identified 65 any significant impact of infla f tion on spending in research and development, but it is uncertain whether there will be inflationary impacts in future periods. Our research and drug discovery and development programs are in early stages; therefor f e, the successful f development of our product candidates is highly uncertain and may not result in approved products. Completion dates and completion costs can vary significantly for each product candidate and are difficult to predict. Given the uncertainty associated with clinical trial enrollments and the risks inherent in the development process, we are unabl a e to determine the dur d ation and completion costs of the current or future clinical trials of our product candidates or if, or to what extent, we will generate revenue from the commercialization and sale of any of our product candidates. We anticipate that we will make determinations as to which development programs to pursue and how much funding to direct to each program on an ongoing basis in response to the preclinical and clinical success and prospects of each product candidate, as well as ongoing assessments of the commercial potential of each product candidate. General and Admi d nist i rative Expe x nses General and administrative expenses consist primarily of personnel costs, which include salaries, related benefits and stock- based compensation, of our executive, fin f ance, business and corporate development and other administrative func f tions. General and administrative expenses also include allocated faci f lity-related costs not otherwise included in research and development expenses, directors’ and offi f cers’ liabi a lity insurance premiums, professional fees f for auditing, tax, and legal services, patent expenses and litigation expenses associated with prosecuting our patent infringement suit. We expect that general and administrative expenses may increase in the long term. To date we have not experienced a significant impact of inflation on general and administrative expenses, but we anticipate infla f tion may impact future periods. Othe t r Inc I ome (Ex ( pe x nse) Other income (expense) consists of interest expense, interest and investment income, net and the change in fair value of our outstanding Series 1 nonconvertible prefer f red stock. Interest expense consists of the interest expense and amortization of debt issuance costs associated with the royalty sale agreement with an affiliate of OMERS. Interest income consists of interest earned on our cash equivalents and marketable securities balances. Investment income consists of the amortization or accretion of any purchased premium or discount, respectively, on our marketable securities. The change in fair value of our Series 1 nonconvertible prefer f red stock relates to the remeasurement of these financial instrum r ents from period to period as these instrum r ents may require a transfer of assets because of the liquidation preference feat f ur t es of the underlying instrument. Income Tax B a enefit f (Expe E nse) Income tax benefit f (expense) is based on our best estimate of taxabl a e net income (loss), appl a icable income tax rates, net research and development tax credits and carryforwards, net operating loss carrybacks and interest earned on such refunds f , changes in valuation allowance estimates and defer f red income taxes. Critical Accounting Policies Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of our consolidated financial statements and related disclosures requires us to make estimates and assumptions that affe f ct the reported amount of assets, liabi a lities, equity, revenue, costs and expenses, and related disclosures. We believe that the estimates and assumptions involved in the accounting policies described below may have the greatest potential impact on our consolidated financial statements and, therefor f e, consider these to be our critical accounting policies. We evaluate our estimates and assumptions on an ongoing basis. Actual results may diffe f r fro f m these estimates under diffe f rent assumptions and conditions. See also Note 2 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K for f information about a these critical accounting policies as well as a description of our other significant accounting policies. 66 Research and Developm l ent and Pharma r ceutic t al Drug Manufa u cturing Accrualsl We have entered into various contracts with third parties to perform research and development and pharmaceutical drug r manufac f turing. These include contracts with contract research organizations, or CROs, clinical manufact f ur t ing organizations, or CMOs, testing laboratories, research hospitals and not-for-profit organizations and other entities to support our research and development activities. We expense the cost of each contract as the work is performed. When billing terms under these contracts do not coincide with the timing of when the work is performed, we are required to make estimates of our outstanding obligations to those third parties as of period-end. Our accrua r l estimates are based on a number of fact f ors, including our knowledge of the research and development programs and pharmaceutical drug r manufact f ur t ing activities and associated timelines, invoicing to date, and the provisions in the contract. Significant judgments and estimates are made in determining the accrue r d balances at the end of any reporting period. Actual results could diffe f r fro f m our estimates. Liabili i ty i Related to t t he t Sale of Future Roya o ltie t s We accounted for the $200.0 million payment from OMERS as a liabi a lity on our consolidated balance sheets because (1) under the royalty sale agreement, OMERS will receive a portion of our royalty payments up to a capped amount of 1.42 times the original payment to us, and (2) we have significant continuing involvement in the generation of cash flo f ws under the AbbVie Agreement. Interest expense for f the liabi a lity related to the sale of future royalties will be recognized using the effe f ctive interest rate method over the term of the royalty sale agreement. The liabi a lity related to the sale of future royalties and the related interest expense are based on our current estimates of future royalties, which we determine by using third-party forecasts of MAVYRET/MAVIRET sales. Third-party for f ecasts are upda u ted periodically based on the latest pricing, market share, and patient data. Changes in the amount or timing of estimated royalties will affe f ct the interest rate utilized in calculating the liabi a lity related to the sale of future royalties. Results of Operations Years Ended September 30, 2024 2023 2022 (in thousands) Revenue............................................................................ $ 67,635 $ 79,204 $ 86,160 Research and development............................................... 131,476 163,524 164,522 General and administrative .............................................. 57,850 52,887 45,482 Interest expense................................................................ (10,940) (5,148) — Interest and investment income, net................................. 14,770 11,360 1,573 Change in fair value of Series 1 nonconvertible prefer f red stock............................................................... 73 — 83 Income tax benefit f (expense) ........................................... 1,743 (2,821) 433 Net loss............................................................................. $ (116,045) $ (133,816) $ (121,755) Comparison of the Yea Y rs Ended Sep S tember 30, 2024 and 2023 Revenue We recognized revenue of $67.6 million and $79.2 million dur d ing the years ended September 30, 2024 and 2023, respectively. The decrease in revenue year-over-year was primarily due to AbbVie’s lower reported HCV sales as compared to the comparabl a e period in 2023. Our royalty revenues eligible to be earned in the future will depend on AbbVie’s HCV market share, the pricing of the MAVYRET/MAVIRET regimen and the number of patients treated. In addition, at the beginning of each calendar year (the second quarter of our fiscal year), our royalty rate resets to the lowest tier for f each of our royalty-bearing products licensed to AbbVie. Beginning with the quarter ended September 30, 2023, 54.5% of our quarterly royalty payments on net sales of MAVYRET/MAVIRET that are included in our total revenue are paid to OMERS through June 30, 2032, subj u ect to a cap on aggregate payments equal to 1.42 times the purchase price. The $200.0 million received in April 2023 was recognized on our consolidated balance sheets as a liabi a lity which will be reduc d ed by the payments made to OMERS over the term of the royalty sale agreement. We will continue to record 100% of HCV royalties earned under the AbbVie Agreement as royalty revenue in our consolidated statements of operations since the AbbVie Agreement has not been amended and is independent of our agreement with OMERS. 67 Research and devel d opm l ent expe e nses Years Ended September 30, 2024 2023 (in thousands) R&D programs: Viro i logy o RSV ................................................................................................... $ 86,367 $ 78,120 COVID-19......................................................................................... 4,625 66,082 HBV................................................................................................... 371 6,974 Total Vir V ology.................................................................................. $ 91,363 $ 151,176 Immunology o KIT .................................................................................................... 19,822 — STAT6............................................................................................... 4,691 — Total Immu I nology............................................................................ $ 24,513 $ — Othe t r Pro P gr o ams NASH ................................................................................................ 605 4,095 Early discovery.................................................................................. 14,995 8,253 Total Other Programs ..................................................................... $ 15,600 $ 12,348 Total research and development expenses .......................................... $ 131,476 $ 163,524 Research and development expenses for f the year ended September 30, 2024 decreased by $32.0 million compared to the same period in 2023. Virology The costs in our virology program decreased by $59.8 million primarily due to a decrease in costs associated with our COVID-19 program as we stopped fur f ther internal development and will only progress the program in the context of a collabor a ation. The decrease was offs f et by an increase in costs for f our RSV clinical programs as we had two ongoing Phase 2b studi t es of zelicapavir and initiated and completed a challenge study t for EDP-323 during the fiscal year ended September 30, 2024. Costs associated with HBV decreased as we continued to wind down this program pending our identific f ation of a potential partnering compound for EDP-514. Immunology The costs in our immunology programs increased by $24.5 million as this is a new therape a utic area of focus for f the company. Other Programs Other program costs increased by $3.3 million as we foc f used on early-stage drug r discovery programs, offs f et by a decrease in costs for f our NASH program as we continued to wind down this program. General and administrativ t e exp e enses General and administrative expenses increased by $5.0 million for f the year ended September 30, 2024, compared to the same period in 2023, due to an increase in legal expenses related to our patent infringement suit against Pfizer. Othe t r inc i ome (ex ( pe x nse) Changes in components of other income (expense) were as fol f lows: Interest expe x nse Interest expense increased by $5.8 million for f the year ended September 30, 2024, as compared to the same period in 2023, due to the timing of the royalty sale agreement entered into during April 2023 with an affi f liate of OMERS. Interest and investme t nt income, net Interest and investment income, net, increased by $3.4 million for f the year ended September 30, 2024, as compared to the same period in 2023. The increase was due to an increase in average invested cash due d to receipt of $200.0 million from f OMERS in April 2023 as well as changes in interest rates year over year. 68 Income tax b a enefit f (expe e nse) During the year ended September 30, 2024 we recorded an income tax benefit f of $1.7 million representing interest recorded on a pending federal tax refund. The income tax expense dur d ing the year ended September 30, 2023 was driven by the receipt of $200.0 million from the royalty sale agreement, which was taxabl a e for f federal and state purpos r es and partially offs f et by utilization of fed f eral net operating losses and research and development tax credit carryforwards as well as a deduction for for f eign derived intangible income. Comparison of the Yea Y rs Ended Sep S tember 30, 2023 and 2022 For a discussion of our results of operations for the year ended September 30, 2023, as compared to the year ended September 30, 2022, see Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations—Comparison of the Years Ended September 30, 2023 and 2022 included in our Annual Report on Form 10-K for f the fis f cal year ended September 30, 2023. Liquidity and Capital Resources We fund our operations with cash flo f ws from our retained portion of our royalty revenue and our existing financial resources. At September 30, 2024, our principal sources of liquidity were cash and cash equivalents and short-term marketable securities of $248.2 million. The fol f lowing tabl a e shows a summary of our cash flows: Years Ended September 30, 2024 2023 2022 (in thousands) Cash provided by (used in): Operating activities ...................................................... $ (78,764) $ (103,154) $ (84,782) Investing activities ....................................................... 58,235 (53,578) 54,897 Financing activities ...................................................... (27,626) 198,126 20,033 Net (decrease) increase in cash, cash equivalents and restricted cash............................................................ $ (48,155) $ 41,394 $ (9,852) Net cash used in o i pe o rating activ t ities Cash used in operating activities was $78.8 million for the year ended September 30, 2024 as compared to cash used in operating activities of $103.2 million for the same period in 2023. The decrease in cash used in operating activities was primarily driven by lower research and development payments, offs f et by lower cash receipts associated with our AbbVie agreement as we now only retain 45.5% of cash royalties fol f lowing the royalty sale agreement with OMERS. Net cash provided by ( b us ( ed in) i n nv i esting i activitie t s Cash provided by investing activities was $58.2 million for the year ended September 30, 2024 as compared to cash used in investing activities of $53.6 million for f the same period in 2023. Our cash provided by investing activities increased $111.8 million, driven by timing of purchases, sales and matur t ities of marketabl a e securities in 2024 compared to 2023. This increase was partially offs f et by increased capital expenditures in fis f cal 2024 for the buildout of our new offic f e and labor a atory s r pace at 4 Kingsbury A r venue. Net cash provided by ( b us ( ed in) f n in f ancing i activitie i s Cash used in financing activities was $27.6 million for the year ended September 30, 2024 as compared to cash provided by financing activities of $198.1 million for the same period in 2023. Our cash used in fin f ancing activities decreased $225.8 million, driven primarily by the timing of receipt of $200.0 million from OMERS for f our royalty sale agreement executed in April 2023. Year Ended Sep S tember 30, 2023 For a discussion of our cash flo f ws for the year ended September 30, 2023, see Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Cash Flows included in our Annual Report on Form 10-K for f the fis f cal year ended September 30, 2023. 69 Fundin d g Require i mentst As of September 30, 2024, we had $248.2 million in cash, cash equivalents and short-term marketable securities. We believe that our existing cash, cash equivalents and short-term marketable securities as of September 30, 2024, as well as the cash flo f ws from our retained portion of future HCV royalties will enable us to fund our operating expenses and capital expenditure requirements into fis f cal 2027. However, our projection of the period of time through which our financial resources will be adequate to suppor u t our operations is a for f ward-looking statement that involves risks and uncertainties, and actua t l results could vary m r aterially. Our fut f ur t e capital requirements are diffi f cult to forecast and will depend on many factors, including: • the number and characteristics of our research and development programs; • the scope, progress, results and costs of researching and developing our product candidates on our own, including conducting advanced clinical trials; • our ability to establ a ish new collabor a ations, licensing or other arrangements, if any, and the financial terms of such arrangements; • the amount of our retained portion of royalties generated fro f m MAVYRET/MAVIRET sales under our existing collabor a ation with AbbVie; • delays and additional expenses in our clinical trials; • the cost of manufact f ur t ing our product candidates for f clinical development and any products we successfully commercialize independently; • opportunities to in-license or otherwise acquire new technologies and therape a utic candidates; • costs associated with prosecuting our patent infringement suit regarding use of a coronavirus 3CL protease inhibitor in Paxlovid, Pfiz f er's antiviral treatment for COVID-19; • the timing of, and the costs involved in, obtaining regulatory a r ppr a ovals for any product candidates we develop independently; • the cost of commercialization activities, if any, of any product candidates we develop independently that are approved for f sale, including marketing, sales and distribution costs; • the timing and amount of any sales of our product candidates, if any, or royalties thereon; • the costs involved in preparing, filing, prosecuting, maintaining, defending and enfor f cing patents, including any litigation costs and the outcomes of any such litigation; and • potential fluctuations in foreign currency exchange rates. Off-B f alance Sheet Arrangements We do not engage in any off-balance sheet financing activities. We do not have any interest in entities refer f red to as variabl a e interest entities, which include special purpos r e entities and other structur t ed finance entities. Recently Issued Accounting Pronouncements A description of recently issued accounting pronouncements that may potentially impact our financial position and results of operations is set for f th in Note 2 to the consolidated financial statements included in this Annual Report on Form 10-K. Contractual Obligations and Commitments Facility Leases As of the date of this report, we lease space in Watertown, Massachusetts, under three separate lease agreements with one landlord. In May 2022, we entered into a ten-year lease for f new laboratory a r nd offi f ce space in Watertown, Massachusetts, adjacent to our 400 Talcott Avenue premises at Arsenal on the Charles at 4 Kingsbury A r venue since our lease for f offi f ce and laboratory r space at 500 Arsenal Street was to expire on September 1, 2027. The construc r tion of the facility shell was completed and we gained access to the building to construc r t tenant improvements dur d ing the three months ended March 31, 2024. Upon gaining access to the 4 Kingsbury A r venue building, we capitalized a right-of-use asset and lease liabi a lity of appr a oximately $32 million on our consolidated balance sheets which reflects our fixed base rent payments, net of appr a oximately $15 70 million of a tenant improvement allowance provided by the landlord, over the 10-year term of the lease. The 4 Kingsbury r Avenue lease ends September 30, 2034. In conjunction with the commencement of our lease at 4 Kingsbury A r venue during the three months ended March 31, 2024, we adju d sted our 500 Arsenal Street lease liabi a lity to shorten the expiration date fro f m September 2027 to the date the 4 Kingsbury A r venue building became ready for f our occupa u ncy. This resulted in a decrease in the lease liabi a lity and right-of- use asset on our consolidated balance sheets by appr a oximately $9.0 million. The rent commencement date for f our 4 Kingsbury A r venue lease was September 12, 2024, and we moved into the space in November 2024 at which time our lease at 500 Arsenal Street expired. The second lease for f offi f ce space located at 400 Talcott Avenue commenced on September 24, 2018 for a term of six years. In May 2022, we amended this lease to expand the rented space and extend the lease term through June 1, 2034. We spent approximately $6.3 million in capital expenditures for f the additional space, which primarily relate to tenant improvements. We received a tenant improvement allowance fro f m the landlord of $2.5 million. In July 2024, we amended our lease agreement to confirm alignment with the lease end date of our 4 Kingsbury A r venue lease at September 30, 2034. Total estimated minimum lease payments for f the next 5 years and thereafte f r under our existing facility and leased equipment agreements are $8.7 million in 2025, $8.5 million in 2026, $8.7 million in 2027, $9.0 million in 2028, $9.3 million in 2029, and $50.6 million thereafte f r. Prefer f red Sto S ck As of September 30, 2024, we had 1.9 million outstanding shares of Series 1 nonconvertible prefer f red stock, all of which we classified as a long-term liability on our consolidated balance sheet and recorded at fair value of $1.4 million. The fai f r value of the prefer f red stock was measured based on significant inputs not observabl a e in the market, which represented a Level 3 measurement within the fair value hierarchy. The fai f r value of these instrum r ents represents less than 10% of liabi a lities as of September 30, 2024. The Series 1 nonconvertible prefer f red stock issued would require the payment of $2.0 million in the event of a qualifyi f ng merger or sale of the company. OMERS M Agre g ement In April 2023, we entered into a royalty sale agreement with an affi f liate of OMERS, pursuant to which we were paid a $200.0 million cash purchase price in exchange for 54.5% of our future quarterly royalty payments on net sales of MAVYRET/MAVIRET after June 30, 2023, through June 30, 2032, subj u ect to a cap o a n aggregate payments equal to 1.42 times the purchase price. The $200.0 million received in April 2023 was recognized on our consolidated balance sheets as a liabi a lity which will be reduced by the payments made to OMERS over the term of the Agreement. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Interest Rate Risk i We had cash, cash equivalents and short-term marketable securities of $248.2 million and $369.9 million at September 30, 2024 and 2023, respectively, which consisted of cash, money market funds f , corpor r ate bonds, commercial paper and treasury r notes. Interest income is sensitive to changes in the general level of interest rates; however, due d to the natur t e of these investments, a change in market interest rates of 1% would not be expected to have a material impact on our financial condition or results of operations for either period. Foreign E g xc E hange Risk As we continue to progress our wholly-owned programs into clinical development, we will conduct clinical trials and clinical manufac f turing outside of the U.S. and thus will face exposure to movements in for f eign currency exchange rates, primarily the British Pound and Euro, against the U.S. Dollar, arising fro f m our accounts payable and accrued expenses. During fiscal 2024 and 2023, the impact of for f eign currency exposure was immaterial and thus did not have a significant impact on our consolidated financial statements. Our operations may become subj u ect to more significant flu f ctua t tions in foreign currency exchange rates in the fut f ur t e if we continue to contract with vendors outside of the U.S. ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Our consolidated financial statements, together with the report of our independent registered public accounting fir f m, appear on pages F-1 through F-25 of this Annual Report on Form 10-K. 71 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. ITEM 9A. CONTROLS AND PROCEDURES Disclosure Controls and Procedures and Internal Control over Financial Reporting Evaluation of D o isclosure Cont C rols and Procedur d es We maintain disclosure controls and procedur d es that are designed to ensure that infor f mation required to be disclosed in the Company’s reports under the Securities Exchange Act of 1934, as amended, or the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such infor f mation is accumulated and communicated to management, including our Chief Executive Officer (CEO) and Chief Financial Offi f cer (CFO), as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedur d es, no matter how well designed and operated, can provide only reasonabl a e assurance of achieving the desired control objectives, as the Company's are designed to do, and management necessarily was required to appl a y its judgment in evaluating the risk related to controls and procedur d es. In connection with the preparation of this Form 10-K, as of September 30, 2024, an evaluation was performed under the supe u rvision and with the participation of our management, including the CEO and CFO, of the effe f ctiveness of the design and operation of our disclosure controls and procedur d es (as defin f ed in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on that evaluation, our CEO and CFO concluded that our disclosure controls and procedur d es were effe f ctive at a reasonabl a e assurance level as of September 30, 2024. These conclusions were communicated to the Audit Committee. Management’s Repor e t on Int I ernal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over fin f ancial reporting as defined in Rul R e 13a-15(f) and Rul R e 15d-15(f) under the Exchange Act. Our internal control system is designed to provide reasonabl a e assurance to the Company’s management and Board of Directors regarding the preparation and fair presentation of published fin f ancial statements. All internal control systems, no matter how well designed, have inherent limitations. Therefor f e, even those systems determined to be effe f ctive can provide only reasonabl a e assurance with respect to fin f ancial statement preparation and presentation. Our management has assessed the effe f ctiveness of our internal control over fin f ancial reporting as of September 30, 2024. In making this assessment, management used the criteria set for f th by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in its 2013 Internal Control—In — tegr e ated Framework. r Based on this assessment, our management has concluded that as of September 30, 2024, our internal control over fin f ancial reporting is effe f ctive. Changes in Int I ernal Control over Financial Reporting There were no changes in our internal control over fin f ancial reporting that occurred dur d ing the quarter ended September 30, 2024 that have materially affe f cted, or are reasonabl a y likely to materially affe f ct, our internal control over fin f ancial reporting. ITEM 9B. OTHER INFORMATION None. ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS Not appl a icable. 72 PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORAT R E GOVERNANCE Portions of the response to this item are incorporated herein by reference to the discussion responsive thereto in the Company’s Defin f itive Proxy Statement relating to the 2025 Annual Meeting of Stockholders, also refer f red to as the 2025 Proxy Statement, which will be filed within 120 days afte f r September 30, 2024. We have adopted a Code of Business Conduct and Ethics (the code of ethics) that appl a ies to all of our employees, offic f ers and directors. The code of ethics is availabl a e on our website at http://www.enanta.com. In addition, if we make any subs u tantive amendments to the code of ethics or grant any waiver, including any implicit waiver, fro f m a provision of the code to any of our executive officers or directors, we will disclose the natur t e of such amendment or waiver as required by applicable law on our website or on a Form 8-K. ITEM 11. EXECUTIVE COMPENSATION The response to this item is incorpor r ated herein by reference fro f m the discussion responsive thereto in the 2025 Proxy Statement, which will be filed within 120 days afte f r September 30, 2024. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The response to this item is incorpor r ated herein by reference in part fro f m the discussion responsive thereto in the 2025 Proxy Statement, which will be filed within 120 days afte f r September 30, 2024. The fol f lowing tabl a e provides infor f mation about the securities authorized for issuance under the Company’s equity compensation plans as of September 30, 2024: Equity Compensation Plan Information (in thousands, except per share infor f mation) Plan Category Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted average exercise price of outstanding options, warrants and rights Number of securities remaining available for f future issuance under equity compensation plans (excluding securities refle f cted in column (a)) (a) (b) (c) Equity compensation plans appr a oved by security holders (1) ............................................ 5,796 (2)$ 41.69 2,164 (3) Equity compensation plans not approved by security holders ................................................ — — — Totals ........................................................... 5,796 2,164 (1) Consists of the Company’s 2019 Equity Incentive Plan, the Company's 2024 Inducement Stock Plan, the Company’s 2012 Equity Incentive Plan, as amended, and the Company’s Employee Stock Purchase Plan. (2) Consists of shares of the Company’s common stock issuable upon exercise of outstanding options issued under the Company’s 2019 Equity Incentive Plan, the Company's 2024 Inducement Stock Plan and the Company’s Amended and Restated 2012 Equity Incentive Plan. (3) Consists of shares of the Company’s common stock reserved for fut f ur t e issuance under the Company’s 2019 Equity Incentive Plan, the Company's 2024 Inducement Stock Plan and the Company’s Employee Stock Purchase Plan. 73 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANS R ACTIONS, AND DIRECTOR INDEPENDENCE The response to this item is incorpor r ated herein by reference fro f m the discussion responsive thereto in the 2025 Proxy Statement, which will be filed within 120 days afte f r September 30, 2024. ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES The response to this item is incorpor r ated herein by reference fro f m the discussion responsive thereto in the 2025 Proxy Statement, which will be filed within 120 days afte f r September 30, 2024. 74 PART IV ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (a) 1. FINANCIAL STATEMENTS The fin f ancial statements are included under Part II, Item 8 of this Report. 2. FINANCIAL STATEMENTS SCHEDULE Schedules are omitted because they are not applicable, or are not required, or because the infor f mation is included in the consolidated financial statements and notes thereto. 3. EXHIBITS – The exhibits are listed below under Part IV, Item 15(b) of this Report. (b) EXHIBITS Incorporated by Reference Exhibit Number Exhibit Description Form Date Exhibit Number File Number Filed Herewith 3.1 Restated Certific f ate of Incorpor r ation of Enanta Pharmaceuticals, Inc. 8-K 03/28/2013 3.1 001-35839 3.2 Amended and Restated Bylaws of Enanta Pharmaceuticals, Inc. (as amended and restated in August 2015). 8-K 08/18/2015 3.2 001-35839 4.1 Specimen certific f ate evidencing shares of common stock. S-1/A 02/05/2013 4.1 333-184779 4.2 Specimen certific f ate evidencing shares of Series 1 Non- Convertible Prefer f red Stock 10-K 12/11/2017 4.3 001-35839 4.3 Description of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934 10-K 11/27/2019 4.3 001-35839 10.1# Form of Indemnific f ation Agreement for directors and offi f cers. S-1/A 02/05/2013 10.7 333-184779 10.2# Amended and Restated Employment Agreement between the Company and Jay R. Luly, Ph.D., dated as of March 4, 2013. S-1/A 03/05/2013 10.5 333-184779 10.3# Form of Amended and Restated Employment Agreement for Executive Offi f cers other than the Chief Executive Offi f cer. S-1/A 03/05/2013 10.17 333-184779 10.4† Collabor a ative Development and License Agreement between the Company and Abbott Laboratories, dated November 27, 2006; as amended by a First Amendment to Collaborative Development and License Agreement dated January 27, 2009 and a Second Amendment to Collabor a ative Development and License Agreement dated December 9, 2009 (assigned to AbbVie Inc. as of January 1, 2013). 8-K 02/05/2021 10.1 001-35839 10.5† Third Amendment to Collabor a ative Development and License Agreement between the Company and AbbVie dated October 20, 2014. 8-K 02/05/2021 10.2 001-35839 10.6 Fourth Amendment to Collabor a ative Development and License Agreement between the Company and AbbVie dated as of March 3, 2015. 10-Q 05/08/2015 10.1 001-35839 75 10.7 Royalty Purchase Agreement between Enanta Pharmaceuticals, Inc. and OCM Life Sciences Portfolio LP dated as of April 25, 2023 8-K 04/27/2023 10.1 001-35839 10.8 Lease Agreement between Company and Athena Arsenal, LLC, dated as of September 24, 2018. 10-K 11/29/2018 10.10 001-35839 10.9 First Amendment to Lease Agreement made as of May 12, 2022 by and between ARE-MA Region No. 75, LLC and the Company. 8-K 05/17/2022 10.2 001-35839 10.10 Lease Agreement made as of May 12, 2022 by and between ARE-MA Region No. 75, LLC and the Company. 8-K 05/17/2022 10.3 001-35839 10.11# 2012 Equity Incentive Plan (As adju d sted to reflect the application of the 1-for-4.31 reverse stock split of the Company’s common stock effe f cted on March 1, 2013). 10- K/A 01/06/2017 10.14 001-35839 10.12# Form of Incentive Stock Option Agreement under 2012 Equity Incentive Plan. S-1/A 03/05/2013 10.13 333-184779 10.13# Form of Non-Statut t ory S r tock Option Agreement under 2012 Equity Incentive Plan. S-1/A 03/05/2013 10.14 333-184779 10.14# Form of Non-Statut t ory S r tock Option Certific f ate for f directors under 2012 Equity Incentive Plan. S-1/A 03/05/2013 10.15 333-184779 10.15# Form of Performance Share Unit Certificate under 2012 Equity Incentive Plan. 10-K 12/11/2017 10.18 001-35839 10.16# Form of Relative Total Stockholder Retur t n Unit Certific f ate under 2012 Equity Incentive Plan. 10-K 12/11/2017 10.19 001-35839 10.17# Employee Stock Purchase Plan. S-1/A 02/05/2013 10.16 333-184779 10.18# 2019 Equity Incentive Plan (As amended March 2024) 8-K 03/12/2024 10.1 001-35839 10.19# Form of Notice of Grant of Non-Statut t ory S r tock Option under 2019 Equity Incentive Plan. 10-Q 05/10/2019 10.2 001-35839 10.20# Form of Notice of Grant of Non-Statut t ory S r tock Option for Directors under 2019 Equity Incentive Plan. 10-Q 05/10/2019 10.3 001-35839 10.21# Form of Relative Total Stockholder Retur t n Unit Certific f ate under 2019 Equity Incentive Plan. 10-Q 05/10/2019 10.4 001-35839 10.22# Form of Performance Share Unit Certificate under 2019 Equity Incentive Plan. 10-Q 05/10/2019 10.5 001-35839 10.23# Form of Notice of Restricted Stock Unit Award under 2019 Equity Incentive Plan. 10-K 11/25/2020 10.27 001-35839 10.24# Amended and Restated Employment Agreement dated as of Februa r ry 8, 2024 by and between the Company and Nathaniel S. Gardiner, effe f ctive April 1, 2024 10-Q 05/08/2024 10.2 001-35839 10.25# 2024 Inducement Stock Incentive Plan S-8 05/08/2024 99.2 333-279217 10.26# Form of Notice of Grant of Non-Statut t ory S r tock Option under 2024 Inducement Stock Incentive Plan X 10.27# Form of Notice of Grant of Restricted Stock Unit Award under 2024 Inducement Stock Incentive Plan X 76 10.28# Form of Performance Share Unit Certificate under 2024 Inducement Stock Incentive Plan X 10.29# Form of Relative Total Stockholder Retur t n Unit Certific f ate under 2024 Inducement Stock Incentive Plan X 10.30 Second Amendment to Lease Agreement, dated as of July 26, 2024, between ARE-MA REGION NO. 75, LLC and the Company X 10.31 Third Amendment to Lease Agreement, dated as of September 13, 2024, between ARE-MA REGION NO. 75, LLC and the Company X 19.1 Amended and Restated Securities Trading Policy X 21.1 Subs u idiaries of the Company. X 23.1 Consent of PricewaterhouseCoopers LLP, Independent Registered Publ u ic Accounting Firm. X 31.1 Certific f ation of the Chief Executive Offi f cer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934. X 31.2 Certific f ation of Chief Financial Officer pursuant to Rul R e 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934. X 32.1 Certific f ation of the Chief Executive Offi f cer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarba r nes-Oxley Act of 2002. X 97.1 Amended and Restated Compensation Clawback Policy X 101.INS XBRL Instance Document - The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document X 101.SCH Inline XBRL Taxonomy Extension Schema with embedded Linkbases document 104 Cover Page Interactive Data File (for f matted as Inline XBRL with applicable Taxonomy Extension information contained in Exhibit 101) # Management contract or compensatory plan, contract or agreement. † Confid f ential treatment granted as to portions of this Exhibit. The confid f ential portions of this Exhibit have been omitted and are marked by asterisks. †† This Exhibit has been filed separately with the commission pursuant to an appl a ication for f confid f entiality treatment. The confid f ential portions of this Exhibit have been omitted and are marked by asterisks. ITEM 16. FORM 10-K SUMMARY None. 77 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has dul d y caused this report to be signed on its behalf by the undersigned, thereunto dul d y authorized, this 27th day of November, 2024. ENANTA PHARMACEUTICALS, INC. By: /s/ Jay R. Luly, Ph.D. Jay R. Luly, Ph.D. Chief E e xecu E tive Offic O er Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the fol f lowing persons on behalf of the Company in the capacities and on the dates indicated. Signature g Title Date /s/ Jay R. Luly, Ph.D. Jay R. Luly, Ph.D. President and Chief Executive Offi f cer and Director (Principal Executive Offic f er) November 27, 2024 /s/ Paul J. Mellett Paul J. Mellett Chief Financial and Administrative Offi f cer (Principal Financial and Accounting Offic f er) November 27, 2024 /s/ Bruce L.A. Carter, Ph.D. Bruc r e L.A. Carter, Ph.D. Director November 27, 2024 /s/ Mark G. Foletta Mark G. Foletta Director November 27, 2024 /s/ Yujiro S. Hata Yujir u o S. Hata Director November 27, 2024 /s/ Kri K stine Peterson Kristine Peterson Director November 27, 2024 /s/ Lesley Rus R sell, MB. Ch.B., MRCP Lesley Russell, MB. Ch.B., MRCP Director November 27, 2024 /s/ Terry Vance Terry Vance Director November 27, 2024 [THIS PAGE INTENTIONALLY LEFT BLANK] F-1 ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA ENANTA PHARMACEUTICALS, INC. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Report of Independent Registered Publ u ic Accounting Firm (PCAOB ID 238) F-2 Consolidated Balance Sheets F-4 Consolidated Statements of Operations F-5 Consolidated Statements of Comprehensive Loss F-6 Consolidated Statements of Stockholders’ Equity F-7 Consolidated Statements of Cash Flows F-8 Notes to Consolidated Financial Statements F-9 F-2 Report of Independent Registered Public Accounting Firm To the Board of Directors and Stockholders of Enanta Pharmaceuticals, Inc. Opinion on the t Fina i ncial Sta S tementst We have audited the accompanying consolidated balance sheets of Enanta Pharmaceuticals, Inc. and its subs u idiary (the “Company”) as of September 30, 2024 and 2023, and the related consolidated statements of operations, of comprehensive loss, of stockholders' equity and of cash flo f ws for each of the three years in the period ended September 30, 2024, including the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the fin f ancial position of the Company as of September 30, 2024 and 2023, and the results of its operations and its cash flo f ws for each of the three years in the period ended September 30, 2024 in confor f mity with accounting principles generally accepted in the United States of America. Basis f i or f Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting fir f m registered with the Publ u ic Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. fed f eral securities laws and the appl a icable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits of these consolidated fin f ancial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonabl a e assurance about a whether the consolidated financial statements are free of material misstatement, whether due d to error or fra f ud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over fin f ancial reporting. As part of our audits we are required to obtain an understanding of internal control over fin f ancial reporting but not for the purpos r e of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedur d es to assess the risks of material misstatement of the consolidated financial statements, whether due d to error or fra f ud, and performing procedur d es that respond to those risks. Such procedur d es included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonabl a e basis for our opinion. Critical Audit M i at M te t rs The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subj u ective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Research and Developm o ent and Pharmaceutical Drug Manufac f turing Accrualsl As described in Notes 2 and 6 to the consolidated financial statements, the Company has entered into various contracts with third parties to perform research and development and pharmaceutical drug r manufact f ur t ing. When billing terms under these contracts do not coincide with the timing of when the work is performed, management is required to make estimates of outstanding obligations to those third parties as of period end. Within accrue r d expenses and other current liabi a lities, total accrue r d research and development expenses and accrued pharmaceutical drug r manufactur t ing amounted to $3.1 million and $0.9 million as of September 30, 2024, respectively. The accrual estimates are based on a number of fact f ors, including management’s knowledge of the research and development programs and pharmaceutical drug r manufac f turing activities and associated timelines, invoicing to date, and the provisions in the contract. Significant judgments and estimates are made in determining the accrue r d balances at the end of any reporting period. The principal considerations for our determination that performing procedur d es relating to research and development and pharmaceutical drug r manufactur t ing accrua r ls is a critical audit matter are the significant judgment by management in developing the accrua r l estimates, as the estimates are based on a number of fact f ors, including management’s knowledge of the research and development programs and pharmaceutical drug r manufac f turing activities and associated timelines, invoicing to date, and the provisions in the contracts, which in tur t n led to a high degree of auditor judgment, subj u ectivity and effort in performing procedures F-3 and evaluating management’s significant assumptions related to progress towards completion of the research and development programs and pharmaceutical drug r manufac f turing activities. Addressing the matter involved performing procedur d es and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedur d es included, among others (i) testing management’s process for f developing estimates based upon the progress of the research and development programs and pharmaceutical drug r manufact f ur t ing activities; (ii) evaluating the appropriateness of the method used by management to develop the estimates; (iii) reading research and development and pharmaceutical drug r manufact f ur t ing contracts on a test basis; (iv) evaluating the completeness and accuracy of data used by management; and (v) evaluating the reasonabl a eness of significant assumptions related to the progress towards completion. Evaluating management’s assumptions related to progress towards completion of the research and development programs and pharmaceutical drug r manufac f turing activities included evaluating whether the assumptions were reasonabl a e considering the associated timelines, invoicing to date and the provisions in the contracts. /s/ PricewaterhouseCoopers LLP Boston, Massachusetts November 27, 2024 We have served as the Company’s auditor since 1999. F-4 ENANTA PHARMACEUTICALS, INC. CONSOLIDATED BALANCE SHEETS (in thousands, except per share data) September 30, September 30, 2024 2023 Assets Current assets: Cash and cash equivalents................................................................................. $ 37,233 $ 85,388 Short-term marketable securities....................................................................... 210,953 284,522 Accounts receivable .......................................................................................... 6,646 8,614 Prepaid expenses and other current assets......................................................... 12,413 13,263 Income tax receivabl a e........................................................................................ 31,999 31,004 Short-term restricted cash.................................................................................. 608 — Total current assets........................................................................................ 299,852 422,791 Property and equipment, net.................................................................................. 32,688 11,919 Operating lease, right-of-use assets....................................................................... 40,658 22,794 Long-term restricted cash...................................................................................... 3,360 3,968 Other long-term assets........................................................................................... 94 803 Total assets .................................................................................................... $ 376,652 $ 462,275 Liabilities and Stockholders' Equity Current liabilities: Accounts payable .............................................................................................. $ 8,002 $ 4,097 Accrue r d expenses and other current liabilities.................................................. 13,547 18,339 Liability related to the sale of future royalties .................................................. 34,462 35,076 Operating lease liabi a lities .................................................................................. 1,524 5,275 Total current liabi a lities .................................................................................. 57,535 62,787 Liability related to the sale of future royalties, net of current portion .................. 134,779 159,429 Operating lease liabi a lities, net of current portion.................................................. 53,943 21,238 Series 1 nonconvertible prefer f red stock ................................................................ 1,350 1,423 Other long-term liabi a lities ..................................................................................... 231 663 Total liabi a lities............................................................................................... 247,838 245,540 Commitments and contingencies (Note 13) Stockholders' equity: Common stock; $0.01 par value per share, 100,000 shares authorized; 21,194 and 21,059 shares issued and outstanding at September 30, 2024 and September 30, 2023, respectively............................................................ 212 211 Additional paid-in capi a tal.................................................................................. 451,340 424,693 Accumulated other comprehensive gain (loss) ................................................. 302 (1,174) Accumulated defic f it .......................................................................................... (323,040) (206,995) Total stockholders' equity.............................................................................. 128,814 216,735 Total liabi a lities and stockholders' equity....................................................... $ 376,652 $ 462,275 The accompanying notes are an integral part of these consolidated financial statements. F-5 ENANTA PHARMACEUTICALS, INC. CONSOLIDATED STATEMENTS OF OPERAT R IONS (in thousands, except per share data) Years Ended September 30, 2024 2023 2022 Revenue Royalty revenue................................................................................. $ 67,635 $ 78,204 $ 86,160 License revenue ................................................................................. — 1,000 — Total revenue ................................................................................. 67,635 79,204 86,160 Operating expenses: Research and development ................................................................ 131,476 163,524 164,522 General and administrative................................................................ 57,850 52,887 45,482 Total operating expenses ............................................................... 189,326 216,411 210,004 Loss from operations ............................................................................. (121,691) (137,207) (123,844) Other income (expense): Interest expense ................................................................................. (10,940) (5,148) — Interest and investment income, net .................................................. 14,770 11,360 1,573 Change in fair value of Series 1 nonconvertible prefer f red stock....... 73 — 83 Total other income, net.................................................................. 3,903 6,212 1,656 Loss before income taxes....................................................................... (117,788) (130,995) (122,188) Income tax benefit f (expense)............................................................. 1,743 (2,821) 433 Net loss .................................................................................................. $ (116,045) $ (133,816) $ (121,755) Net loss per share, basic and diluted...................................................... $ (5.48) $ (6.38) $ (5.91) Weighted average common shares outstanding, basic and diluted........ 21,157 20,969 20,603 The accompanying notes are an integral part of these consolidated financial statements. F-6 ENANTA PHARMACEUTICALS, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (in thousands) Years Ended September 30, 2024 2023 2022 Net loss....................................................................................................... $ (116,045) $ (133,816) $ (121,755) Other comprehensive income (loss): Net unrealized gains (losses) on marketable securities............................ 1,476 2,550 (3,342) Total other comprehensive income (loss) .......................................... 1,476 2,550 (3,342) Comprehensive loss.................................................................................... $ (114,569) $ (131,266) $ (125,097) The accompanying notes are an integral part of these consolidated financial statements. F-7 ENANTA PHARMACEUTICALS, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (in thousands) Accumulated Retained Additional Other Earnings Total Common Stock Paid-In Comprehensive (Accumulated Stockholders' Shares Amount Capital Income (Loss) Deficit) Equity Balances at September 30, 2021............................... 20,238 $ 202 $ 351,033 $ (382) $ 48,576 $ 399,429 Exercise of stock options ........................................... 517 6 21,256 — — 21,262 Vesting of restricted stock units, net of withholding ..... 36 — (1,229) — — (1,229) Stock-based compensation expense............................. — — 26,969 — — 26,969 Other comprehensive loss .......................................... — — — (3,342) — (3,342) Net loss.................................................................... — — — — (121,755) (121,755) Balances at September 30, 2022............................... 20,791 208 398,029 (3,724) (73,179) 321,334 Exercise of stock options ........................................... 124 1 2,207 — — 2,208 Vesting of restricted stock units, net of withholding ..... 144 2 (3,759) — — (3,757) Stock-based compensation expense............................. — — 28,216 — — 28,216 Other comprehensive income ..................................... — — — 2,550 — 2,550 Net loss.................................................................... — — — — (133,816) (133,816) Balances at September 30, 2023............................... 21,059 211 424,693 (1,174) (206,995) 216,735 Exercise of stock options ........................................... 16 — 147 — — 147 Vesting of restricted stock units, net of withholding ..... 119 1 (295) — — (294) Stock-based compensation expense............................. — — 26,795 — — 26,795 Other comprehensive income ..................................... — — — 1,476 — 1,476 Net loss.................................................................... — — — — (116,045) (116,045) Balances at September 30, 2024............................... 21,194 $ 212 $ 451,340 $ 302 $ (323,040) $ 128,814 The accompanying notes are an integral part of these consolidated financial statements. F-8 ENANTA PHARMACEUTICALS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Years Ended September 30, 2024 2023 2022 Cash flows fro f m operating activities Net loss................................................................................................... $ (116,045) $ (133,816) $ (121,755) Adju d stments to reconcile net loss to net cash used in operating activities: Stock-based compensation expense ................................................... 26,795 28,216 26,969 Depreciation and amortization expense.............................................. 2,336 2,371 2,973 Non-cash interest expense associated with the sale of fut f ur t e royalties (135) 5,148 — Non-cash royalty revenue.................................................................. 2,350 (10,318) — Premium paid on marketabl a e securities.............................................. — (73) (846) Amortization (accretion) of premiums (discounts) on marketable securities........................................................................................... (1,138) (2,856) 1,171 Loss on disposal of property and equipment ...................................... 16 150 — Change in fair value of Series 1 nonconvertible prefer f red stock ......... (73) — (83) Change in operating assets and liabi a lities: Accounts receivabl a e........................................................................ 1,968 11,704 3,258 Prepaid expenses and other current assets........................................ 850 182 743 Income tax receivabl a e ..................................................................... (995) (2,286) 8,537 Operating lease, right-of-use assets.................................................. 6,096 4,598 4,776 Other long-term assets..................................................................... 709 (107) (604) Accounts payable............................................................................ (414) (1,151) (4,634) Accrue r d expenses ........................................................................... (5,646) (2,558) (1,477) Operating lease liabi a lities ................................................................ 4,994 (2,567) (3,706) Other long-term liabilities ............................................................... (432) 209 (104) Net cash used in operating activities.................................................. (78,764) (103,154) (84,782) Cash flows fro f m investing activities Purchase of marketable securities............................................................ (307,282) (373,391) (171,446) Proceeds fro f m matur t ities and sale of marketable securities ...................... 383,465 328,871 228,468 Purchase of property and equipment........................................................ (17,948) (9,058) (2,125) Net cash provided by (used in) investing activities............................. 58,235 (53,578) 54,897 Cash flows fro f m fin f ancing activities Payments on royalty sale liabi a lity, net of imputed interest........................ (27,479) — — Proceeds fro f m the exercise of stock options............................................. 147 2,208 21,262 Proceeds fro f m the sale of future royalties ................................................ — 200,000 — Payments for debt issuance costs............................................................. — (325) — Payments for settlement of share-based awards........................................ (294) (3,757) (1,229) Net cash provided by (used in) fin f ancing activities ............................ (27,626) 198,126 20,033 Net increase (decrease) in cash, cash equivalents and restricted cash . (48,155) 41,394 (9,852) Cash, cash equivalents and restricted cash at beginning of period............. 89,356 47,962 57,814 Cash, cash equivalents and restricted cash at end of period ...................... $ 41,201 $ 89,356 $ 47,962 Supplemental disclosure of cash flow information Cash paid for taxes.............................................................................. $ 241 $ 4,899 $ — Cash paid for interest .......................................................................... $ 11,710 $ 1,987 $ — Cash received fro f m tenant improvement allowances............................ $ 9,358 $ 1,994 $ — Supplemental disclosure of noncash infor f mation: Purchases of fix f ed assets included in accounts payable and accrue r d expenses.............................................................................. $ 5,597 $ 424 $ 1,215 Operating lease liabi a lities arising from obtaining right-of-use assets .... $ 23,960 $ 3,817 $ 23,910 The accompanying notes are an integral part of these consolidated financial statements. F-9 ENANTA PHARMACEUTICALS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands, except per share data) 1. Nature of the Business Enanta Pharmaceuticals, Inc. (collectively with its subs u idiary, the “Company”), incorporated in Delaware in 1995, is a biotechnology company that uses its robust, chemistry- r driven approach and drug discovery capabilities to discover and develop small molecule drugs r with an emphasis on virology and immunology. The Company discovered glecapr a evir, the second of two antiviral protease inhibitors discovered and developed through its collabor a ation with AbbVie for the treatment of chronic infect f ion with hepatitis C virus r , or HCV. Glecaprevir is co-formulated as part of AbbVie’s leading brand of direct-acting antiviral, or DAA, combination treatment for HCV, which has been marketed under the tradenames MAVYRET® (U.S.) and MAVIRET® (ex-U.S.) (glecaprevir/pi / brentasvir) since 2017. The Company is subj u ect to many of the risks common to companies in the biotechnology industry, r including but not limited to, the uncertainties of research and development, competition fro f m technological innovations of others, dependence on collabor a ative arrangements, protection of proprietary technology, dependence on key personnel and compliance with government regulation. Product candidates currently under development will require significant additional research and development efforts, including extensive preclinical and clinical testing and regulatory approvals, prior to commercialization. These efforts require significant amounts of capital, adequate personnel and infrastructur t e, and extensive compliance reporting capabilities. 2. Summary of Signific f ant Accounting Policies Basis of Presentation The accompanying consolidated financial statements include those of the Company and its subsidiary, Enanta Pharmaceuticals Security Corporation, afte f r elimination of all intercompany accounts and transactions. The accompanying consolidated financial statements have been prepared in confor f mity with accounting principles generally accepted in the United States of America (“GAAP”). Certain prior period amounts have been reclassified to confor f m to the current year presentation. Any refer f ence in these notes to applicable guidance is meant to refer f to the authoritative GAAP as found f in the Accounting Standards Codification and Accounting Standards Update (“ASU”) of the Financial Accounting Standards Board (“FASB”). Use of Estimates The preparation of consolidated financial statements in confor f mity with GAAP requires management to make estimates and assumptions that affe f ct the reported amounts of assets and liabi a lities, the disclosure of contingent assets and liabi a lities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant estimates and assumptions reflected in these consolidated financial statements include, but are not limited to, management’s judgments with respect to its revenue arrangements; liabi a lity related to the sale of future royalties; valuation of stock-based awards and the accrual of research and development expenses. Estimates are periodically reviewed in light of changes in circumstances, fac f ts and experience. Cash Equivalents and Marketable Securities The Company considers all short-term, highly liquid investments with original maturities of ninety days or less at acquisition date to be cash equivalents. Marketable securities with original maturities of greater than ninety days and remaining matur t ities of less than one year from the balance sheet date are classified as short-term marketable securities. Marketabl a e securities with remaining matur t ities of greater than one year from the balance sheet date are classified as long-term marketable securities. The Company classifies all of its marketable securities as availabl a e-for-sale. The Company continually evaluates the credit ratings of its investment portfol f io and underlying securities. The Company invests in accordance with its investment policy and invests at the date of purchase in securities with a rating of A3/A- or higher according to Moody’s or S&P or A- by Fitch. The Company reports availabl a e-for-sale investments at fai f r value as of each balance sheet date and records any unrealized gains or losses as a component of stockholders’ equity. The cost of securities sold is determined on a specific identific f ation basis and realized gains and losses are included in other income (expense) within the consolidated statements of operations. When the fair value is below the amortized cost of a marketabl a e security, an estimate of expected credit losses is made. The credit-related impairment amount is recognized in the consolidated statements of operations. Credit losses are recognized through the use of an allowance for f credit losses account in the consolidated balance sheet and subsequent improvements in expected credit losses are recognized as a reversal of an amount in the allowance account. If the Company has the intent to sell the security or it is more likely than not that the Company will be required to sell the security prior to recovery of its amortized cost basis, then the allowance for f the credit loss is written-off and the excess of the amortized cost basis of the asset over its fair value is recorded in the consolidated statements of operations. There were no credit losses recorded during the years ended September 30, 2024, 2023, and 2022. F-10 Restricted Cash As of September 30, 2024 and 2023, the Company had outstanding letters of credit collateralized by a money market account totaling $3,968, to the benefit f of the landlord of the Company’s building leases. A total of $608 is classified as short-term restricted cash and $3,360 is classified as long-term restricted cash as of September 30, 2024 based on the lease term end date of the Company's faci f lity lease agreements. As of September 30, 2023, $3,968 was classified as long-term restricted cash. Concentration of Credit Risk and of Significant Customers and Suppliers Financial instrum r ents that potentially expose the Company to concentrations of credit risk consist primarily of cash, cash equivalents, short-term and long-term marketable securities and accounts receivabl a e. The Company has all cash and investment balances at one accredited fin f ancial institut t ion, including cash in amounts that exceed federally insured limits. The Company does not believe it is subj u ect to unusual credit risk beyond the normal credit risk associated with commercial banking relationships. The Company has historically generated the majo a rity of its revenue from its collabor a ative research and license agreements. As of September 30, 2024 and 2023, accounts receivabl a e consisted of amounts due d from the Company’s principal collabor a ator (see Note 7). The Company is completely dependent on third-party manufac f turers for product supply for f preclinical and clinical research activities. The Company relies and expects to continue to rely exclusively on several manufact f ur t ers to supply the Company with its drug supply requirements related to these activities. These research programs would be adversely affected by a significant interrupt u ion in the suppl u y fro f m these third-party manufac f turers. Fair Value Measurements Certain assets and liabi a lities are carried at fair value under GAAP. Fair value is defin f ed as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liabi a lity in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observabl a e inputs and minimize the use of unobservabl a e inputs. A fai f r value hierarchy is based on three levels of inputs that are used to measure fai f r value, of which the fir f st two levels are considered observable and the last is considered unobservabl a e: • Level 1—Quoted prices in active markets for identical assets or liabi a lities. • Level 2—Observabl a e inputs (other than Level 1 quoted prices) such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for f identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observabl a e market data. • Level 3—Unobservabl a e inputs that are suppor u ted by little or no market activity and that are significant to determining the fair value of the assets or liabi a lities, including pricing models, discounted cash flow methodologies and similar techniques. The Company’s instrum r ents that are carried at fair value are cash equivalents, short-term and long-term marketable securities and the Series 1 nonconvertible prefer f red stock. The carrying values of accounts receivabl a e, prepaid and other assets, accounts payable and accrue r d expenses approximate their fai f r value due to the short-term nature of these assets and liabi a lities. Property and Equipment Property and equipment are stated at cost less accumulated depreciation. Depreciation expense is recognized using the straight-line method over the following estimated useful lives: Labor a atory a r nd offi f ce equipment 5 years Leasehold improvements Shorter of life o f f lease or estimated useful f life Purchased softw f are 3 years Computer equipment 3 years Furniture 7 years Expenditures for f repairs and maintenance of assets are charged to expense as incurred. Costs of major additions and betterments are capitalized and depreciated on a straight-line basis over their useful f lives. Upon retirement or sale, the cost and related accumulated depreciation of assets disposed are removed fro f m the accounts and any resulting gain or loss is included in other income (expense) in the consolidated statements of operations. Leases The Company accounts for f a contract as a lease when it has the right to control the asset for f a period of time while obtaining subs u tantially all of the asset’s economic benefits. The Company determines if an arrangement is a lease or contains an embedded lease at inception. For arrangements that meet the definition of a lease, the Company determines the initial classific f ation and measurement F-11 of its right-of-use asset and lease liabi a lity at the lease commencement date and thereafte f r if modified. The lease term includes any renewal options that the Company is reasonabl a y assured to exercise. The present value of lease payments is determined by using the interest rate implicit in the lease, if that rate is readily determinable; otherwise, the Company uses its estimated secured incremental borrowing rate for that lease term. The Company’s policy is to not record leases with an original term of 12 months or less on its consolidated balance sheets and recognizes those lease payments in the consolidated statements of operations on a straight-line basis over the lease term. In addition to rent, the leases may require the Company to pay additional costs, such as utilities, maintenance and other operating costs, which are generally referred to as non-lease components. The Company has elected to not separate lease and non-lease components. Only the fix f ed costs for f lease components and their associated non-lease components are accounted for as a single lease component and recognized as part of a right-of-use asset and lease liabi a lity. Rent expense for f operating leases is recognized on a straight-line basis over the reasonabl a y assured lease term based on the total lease payments and is included in operating expense in the consolidated statements of operations. Impairment of Long-Lived Assets The Company reviews long-lived assets, primarily property and equipment and right-of-use assets, for f impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverabl a e. Factors that the Company considers in deciding when to perform an impairment review include significant underperformance of the business in relation to expectations, significant negative industry o r r economic trends, and significant changes or planned changes in the use of the assets. If an impairment review is performed to evaluate a long-lived asset for f recoverabi a lity, the Company compares for f ecasts of undiscounted cash flows expected to result from the use and eventual disposition of the long-lived asset to its carrying value. An impairment loss would be recognized when estimated undiscounted future cash flo f ws expected to result from the use of an asset are less than its carrying amount. The impairment loss would be based on the excess of the carrying value of the impaired asset over its fair value, determined based on discounted cash flows. To date, the Company has not recorded any impairment losses on long-lived assets. Liability Related to the Sale of Future Royalties In April 2023, the Company entered into a royalty sale agreement with an affiliate of OMERS, pursuant to which the Company was paid a $200,000 cash purchase price in exchange for 54.5% of the Company’s fut f ur t e quarterly royalty payments on net sales of MAVYRET/MAVIRET. The Company recognized the $200,000 received fro f m OMERS as a liabi a lity on its consolidated balance sheets because the $200,000 will be paid back to OMERS up t u o a 1.42 cappe a d amount and the Company has significant continuing involvement under the AbbVie Agreement. Interest expense for f the liabi a lity related to the sale of future royalties is recognized using the effective interest rate method over the term of the royalty sale agreement. The liabi a lity related to the sale of future royalties and related interest expense are based on current estimates of fut f ur t e royalties, which the Company determines by using third-party forecasts of MAVYRET/MAVIRET sales. The Company periodically assesses the forecasted sales and to the extent the amount or timing of future estimated royalty payments is materially different than previous estimates, the Company will account for any such change by adju d sting the liabi a lity related to the sale of future royalties and prospectively recognizing the related non-cash interest expense. Revenue Recognition The Company’s revenue has been generated primarily through collabor a ative research and license agreements. The terms of these agreements contain multiple deliverables, which may include (i) licenses, (ii) research and development activities, and (iii) participation in joint research and development steering committees. The terms of these agreements may include nonrefunda f bl a e upfro f nt license fees, payments for f research and development activities, payments based upon u the achievement of certain milestones, and royalty payments based on product sales derived fro f m the collabor a ation. The Company recognizes revenue to depict the transfer f of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. The Company receives sales-based royalties for which the license is deemed to be the predominant item to which the royalties relate and thus the Company recognizes sales-based royalties as the underlying sales are earned. Research and Development Costs Included in research and development costs are wages, stock-based compensation and benefit f s of employees performing research and development, third-party license fees and other operational costs related to the Company’s research and development activities, including facility-related expenses and external costs of outside contractors engaged to conduct both preclinical and clinical studi t es and manufact f ur t e quantities of product for f preclinical and clinical studi t es. The Company expenses the cost of each contract as the work is performed. F-12 Upfront payments and milestone payments made for the licensing of technology are expensed as research and development in the period in which they are incurred. Advance payments for f goods or services to be received in the fut f ur t e for f use in research and development activities are recorded as prepaid expenses. The prepaid amounts are expensed as the related goods are delivered or the services are performed. Research and Development and Pharmaceutical Drug Manufac f turing Accruals The Company has entered into various contracts with third parties to perform research and development and pharmaceutical drug r manufac f turing. This includes contracts with contract research organizations (“CROs”), clinical manufact f ur t ing organizations (“CMOs”), testing laboratories, research hospitals and not for profit organizations and other entities to suppor u t our research and development activities. When billing terms under these contracts do not coincide with the timing of when the work is performed, the Company is required to make estimates of outstanding obligations to those third parties as of period end. The accrua r l estimates are based on a number of fac f tors, including the Company’s knowledge of the research and development programs and pharmaceutical drug r manufac f turing activities and associated timelines, invoicing to date, and the provisions in the contract. Significant judgments and estimates are made in determining the accrued balances at the end of any reporting period. Actual results could diffe f r fro f m our estimates. Patent Costs All patent-related costs incurred in connection with filing and prosecuting patent appl a ications are recorded as general and administrative expenses as incurred. Stock-Based Compensation The Company measures all stock options and other stock-based awards granted to employees at fair value on the date of grant. The Company uses the Black-Scholes option-pricing model in the valuation of its stock options. The fair value of restricted stock units with service-based and perfor f mance-based vesting is based on the fai f r value of the stock on the date of grant. The Company uses the Monte-Carlo model to calculate the fai f r value on the date of grant of market-based awards. The fair value of service-based awards is recognized as stock-based compensation expense over the requisite service period, which is generally the vesting period of the respective award. For awards with graded vesting, the straight-line method of expense recognition is appl a ied to all awards with service-only based conditions. The Company uses the graded-vesting method to record the expense of awards with both service-based and performance-based vesting conditions, commencing once achievement of the performance condition becomes probabl a e. The Company classifie f s stock-based compensation expense in the consolidated statements of operations in the same manner in which the award recipient’s payroll costs are classified. The Company accounts for f stock-based compensation expense related to forfei f tures as the for f feitur t es occur. Income Taxes The Company accounts for f income taxes using the asset and liabi a lity method, which requires the recognition of defer f red tax assets and liabi a lities for f the expected future tax consequences of events that have been recognized in the financial statements or in the Company’s tax retur t ns. Defer f red taxes are determined based on the difference between the fin f ancial reporting and tax basis of assets and liabi a lities using enacted tax rates in effe f ct in the years in which the differences are expected to reverse. Changes in defer f red tax assets and liabi a lities are recorded in income tax expense. The Company assesses the likelihood that its deferred tax assets will be recovered fro f m fut f ur t e taxable income and, to the extent it believes based upon the weight of availabl a e evidence, that it is more likely than not that all or a portion of defer f red tax assets will not be realized, a valuation allowance is establ a ished through a charge to income tax expense. The realization of defer f red tax assets is dependent upon the Company’s ability to generate future taxabl a e income dur d ing the periods in which those temporary d r iffe f rences become deductible. Potential for f recovery of deferred tax assets is evaluated by estimating the future taxabl a e profits expected and considering prudent and feas f ible tax planning strategies. Uncertain tax positions represent tax positions for which reserves have been establ a ished. The Company accounts for f uncertainty in income taxes recognized in the consolidated financial statements by appl a ying a two-step process to determine the amount to be recognized. First, the tax position must be evaluated to determine the likelihood that it will be sustained upon u external examination by the taxing authorities. If the tax position is deemed more likely than not to be sustained, the tax position is then assessed to determine the amount of benefit to be recognized in the financial statements. The amount that may be recognized is the largest amount that has a greater than 50% likelihood of being realized upon ultimate settlement. Income tax expense includes the effe f cts of any resulting tax reserves, or unrecognized tax benefit f s, that are considered appr a opriate as well as the related net interest and penalties. Net Income (Loss) per Share Basic net income (loss) per common share is computed by dividing the net income (loss) by the weighted average number of shares of common stock outstanding for the period. Diluted net income (loss) per common share is computed by dividing net income (loss) by F-13 the weighted average number of common shares outstanding for the period, including potential dilutive common shares assuming the dilutive effe f ct of outstanding stock options and unvested restricted stock units. For periods in which the Company reported a net loss, diluted net loss per common share is the same as basic net loss per common share, since dilutive common shares are not assumed to have been issued if their effect is anti-dilutive. The Company reported net losses for each of the years ended September 30, 2024, 2023, and 2022. The Company excluded the following potential common shares, presented based on amounts outstanding at each period end, from the computation of diluted net loss per share for the periods indicated because including them would have had an anti-dilutive effect: Years Ended September 30, 2024 2023 2022 (in thousands) Options to purchase common stock ....................................... 5,184 4,365 3,993 Unvested rTSRUs R .................................................................. 92 81 101 Unvested PSUs....................................................................... 92 81 101 Unvested restricted stock units .............................................. 428 411 219 Segment Data The Company manages its operations as a single segment for the purpos r es of assessing performance and making operating decisions. The Company is a biotechnology company foc f used on discovering and developing small molecule drugs, with an emphasis on treatments for f viral infect f ions. Revenue is generated exclusively from transactions occurring with partners located in the United States, and all assets are held in the United States. Comprehensive Income (Loss) Comprehensive income (loss) includes net income (loss) as well as other changes in stockholders’ equity that result from transactions and economic events other than those with stockholders. The Company’s only element of other comprehensive income (loss) is unrealized gains and losses on available-for-sale marketabl a e securities. Going Concern In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Sta S tements - t Going Conc C ern (Subt ( opic 205-40) (“ASU 2014-15”). The Company adopted this standard as of September 30, 2017. The standard requires the Company to assess its ability to continue as a going concern one year beyond the date of filin f g and, in certain circumstances, provide additional foot f note disclosures. Based on a detailed cash for f ecast incorpor r ating current research and development activities and related spending plans, the Company believes that its current cash, cash equivalents and short-term marketable securities on hand at September 30, 2024 will enable us to fund our operating expenses and capital expenditure requirements for f at least the next twelve months beyond the date of issuance of these consolidated financial statements. The amount of capital availabl a e will depend on the Company’s management of its existing cash, cash equivalents and short-term marketable securities, as well as the cash flo f ws from our retained portion of fut f ur t e HCV royalties. If the Company should require financing beyond these resources to fund its research and development efforts, it may not be able to obtain fin f ancing on acceptabl a e terms, or at all. Recently Issued Accounting Pronouncements In November 2023, the FASB issued ASU 2023-07, Segm e ent Reporting (To ( pi o c 280) ("ASU 2023-07"), which requires public entities to disclose information about a their reportabl a e segments’ significant expenses and other segment items on an interim and annual basis. Publ u ic entities with a single reportabl a e segment are required to appl a y the disclosure requirements in ASU 2023-07, as well as all existing segment disclosures and reconciliation requirements in ASC 280 on an interim and annual basis. This amendment is effective for the Company in the fiscal year beginning October 1, 2024, and interim periods within the fis f cal year beginning October 1, 2025, on a retrospective basis with early adoption permitted. This accounting standard will require additional disclosures about segment information, however, the Company does not expect ASU 2023-07 to have a material impact on the Company’s consolidated financial position or results of operations. In December 2023, the FASB issued ASU 2023-09, Income Taxes a (Topi T c 740) ("ASU 2023-09"), which requires public entities, on an annual basis, to provide disclosure of specific categories in the rate reconciliation, as well as disclosure of income taxes paid disaggregated by jurisdiction. ASU 2023-09 is effe f ctive for f the Company in the fis f cal year beginning October 1, 2025, with early adoption permitted. The Company is currently evaluating the potential impact that ASU 2023-09 may have on its financial statement disclosures. In November 2024, the FASB issued ASU 2024-03, Income Statement – Repor e ting Comprehensive Inc I ome – Expe x nse Disaggregation Disc i losures (Subt ( opic 220-40) ("ASU 2024-03"), which requires public entities to provide disaggregated disclosure of income statement expenses. Publ u ic entities are required to disaggregate, in a tabular presentation, each relevant expense caption on the face of F-14 the consolidated statements of operations such as the fol f lowing expenses: purchases of inventory, r employee compensation, intangible asset amortization, and depreciation. ASU 2024-03 is effe f ctive for f the Company in the fis f cal year beginning October 1, 2027, with early adoption permitted. The Company is currently evaluating the potential impact that ASU 2024-03 may have on its financial statement disclosures. 3. Fair Value of Financial Assets and Liabilities The fol f lowing tabl a es present infor f mation about a the Company’s fin f ancial assets and liabi a lities that were subj u ect to fair value measurement on a recurring basis as of September 30, 2024 and 2023 and indicate the fair value hierarchy of the valuation inputs utilized to determine such fai f r value: Fair Value Measurements at September 30, 2024 Using: Level 1 Level 2 Level 3 Total (in thousands) Assets: Cash equivalents: Money market funds f ................................... $ 33,448 $ — $ — $ 33,448 Marketable securities: U.S. Treasury n r otes..................................... 210,953 — — 210,953 244,401 — — 244,401 Liabilities: Series 1 nonconvertible prefer f red stock ..... — — 1,350 1,350 $ — $ — $ 1,350 $ 1,350 Fair Value Measurements at September 30, 2023 Using: Level 1 Level 2 Level 3 Total (in thousands) Assets: Cash equivalents: Money market funds f ................................... $ 55,357 $ — $ — $ 55,357 U.S. Treasury n r otes..................................... 29,755 — — 29,755 Marketable securities: U.S. Treasury n r otes..................................... 236,782 — — 236,782 Corporate bonds.......................................... — 26,435 — 26,435 Commercial paper....................................... — 21,305 — 21,305 321,894 47,740 — 369,634 Liabilities: Series 1 nonconvertible prefer f red stock ..... — — 1,423 1,423 $ — $ — $ 1,423 $ 1,423 Cash equivalents as of September 30, 2024 consist of money market funds f that are readily convertible to cash and with less than 90 days until maturity. Cash equivalents as of September 30, 2023 consist of money market funds f and U.S. treasury n r otes that are readily convertible to cash and with less than 90 days until maturity. During the years ended September 30, 2024, 2023, and 2022, there were no transfers between Level 1, Level 2 and Level 3. The fai f r value of Level 2 instruments classifie f d as marketabl a e securities were determined through third-party pricing services. The pricing services use many observabl a e market inputs to determine value, including reportabl a e trades, benchmark yields, credit spreads, broker/dealer quotes, bids, offe f rs, and current spot rates. The outstanding shares of Series 1 nonconvertible prefer f red stock as of September 30, 2024 and 2023 are measured at fair value. These outstanding shares are fin f ancial instruments that might require a transfer of assets because of the liquidation fea f tures in the contract and are therefor f e recorded as liabi a lities and measured at fair value. The fai f r value of the outstanding shares is based on significant inputs not observabl a e in the market, which represent a Level 3 measurement within the fai f r value hierarchy. The Company utilizes a probabi a lity-weighted valuation model, which takes into consideration various outcomes that may require the Company to transfer f assets upon liquidation. Changes in the fair values of the Series 1 nonconvertible prefer f red stock are recognized in other income (expense) in the consolidated statements of operations. F-15 The recurring Level 3 fair value measurements of the Company’s outstanding Series 1 nonconvertible prefer f red stock using probabi a lity-weighted discounted cash flo f w include the fol f lowing significant unobservabl a e inputs: Series 1 nonconvertible preferred stock Range September 30, Unobservable Input 2024 2023 Probabi a lities of payout 0%-65% 0%-65% Discount rate 9.00% 7.25% The fol f lowing tabl a e provides a rollfor f ward of the aggregate fai f r value of the Company’s outstanding Series 1 nonconvertible prefer f red stock for f which fai f r value is determined by Level 3 inputs: Series 1 Nonconvertible Prefer f red Stock (in thousands) Balance, September 30, 2021 ..................................................................................... $ 1,506 Change in fair value.................................................................................................. (83) Balance, September 30, 2022 ..................................................................................... 1,423 Change in fair value.................................................................................................. — Balance, September 30, 2023 ..................................................................................... 1,423 Change in fair value.................................................................................................. (73) Balance, September 30, 2024 ..................................................................................... $ 1,350 In April 2023, the Company entered into a royalty sale agreement with an affiliate of OMERS, pursuant to which the Company was paid a $200,000 cash purchase price in exchange for 54.5% of future quarterly royalty payments on net sales of MAVYRET/MAVIRET, afte f r June 30, 2023, through June 30, 2032, subj u ect to a cap o a n aggregate payments equal to 1.42 times the purchase price. The Company accounted for the upfro f nt payment as a liabi a lity related to the sale of fut f ur t e royalties. The carrying value of the liabi a lity related to the sale of future royalties app a roximates fai f r value as of September 30, 2024 and 2023 and is based on current estimates of fut f ur t e royalties expected to be paid to OMERS over the next 10 years, which are considered Level 3 inputs. See Note 8 for a rollforward of the liabi a lity. 4. Marketable Securities As of September 30, 2024 and 2023, the fai f r value of availabl a e-for-sale marketabl a e securities, by type of security, was as follows: September 30, 2024 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Credit Losses Fair Value (in thousands) U.S. Treasury n r otes..................................................... 210,267 686 — — 210,953 $ 210,267 $ 686 $ — $ — $ 210,953 September 30, 2023 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Credit Losses Fair Value (in thousands) Corporate bonds............................................................ $ 27,127 $ — $ (692) $ — $ 26,435 Commercial paper......................................................... 21,305 — — — 21,305 U.S. Treasury n r otes....................................................... 236,880 12 (110) — 236,782 $ 285,312 $ 12 $ (802) $ — $ 284,522 As of September 30, 2024 and 2023 marketable securities consisted of investments that matur t e within one year. F-16 5. Property and Equipment, Net Property and equipment, net consisted of the fol f lowing as of September 30, 2024 and 2023: September 30, 2024 2023 (in thousands) Labor a atory a r nd offi f ce equipment............................................................................. $ 15,701 $ 15,891 Leasehold improvements ......................................................................................... 13,975 13,804 Purchased softw f are................................................................................................... 1,093 1,444 Furniture................................................................................................................... 3,117 2,290 Computer equipment................................................................................................ 1,101 962 Construc r tion in progress .......................................................................................... 22,748 1,273 57,735 35,664 Less: Accumulated depreciation and amortization .................................................. (25,047) (23,745) $ 32,688 $ 11,919 As of September 30, 2024, construc r tion in progress related primarily to leasehold improvements for f the new labor a atory and office space located at 4 Kingsbury A r venue in Watertown, Massachusetts. Depreciation and amortization expense for f property and equipment, was $2,336, $2,371 and $2,973 for the years ended September 30, 2024, 2023, and 2022, respectively. 6. Accrued Expenses and Other Current Liabilities Accrue r d expenses and other current liabilities consisted of the fol f lowing as of September 30, 2024 and 2023: September 30, 2024 2023 (in thousands) Accrue r d payroll and related expenses ................................................. $ 6,570 $ 7,037 Accrue r d research and development expenses ..................................... 3,087 6,120 Accrue r d professional fees f .................................................................... 1,332 1,632 Accrue r d pharmaceutical drug r manufac f turing ..................................... 930 3,083 Accrue r d other ...................................................................................... 1,628 467 $ 13,547 $ 18,339 7. Collaboration Agreements AbbVie Collaboration The Company has a Collabor a ative Development and License Agreement (as amended, the “AbbVie Agreement”), with AbbVie to identify, develop and commercialize HCV NS3 and NS3/4A protease inhibitor compounds, including paritapr a evir and glecaprevir, under which the Company has received license payments, proceeds fro f m a sale of prefer f red stock, research fundi f ng payments, milestone payments and royalties totaling appr a oximately $1,320,000 through September 30, 2024. Since the Company satisfied all of its performance obligations under the AbbVie Agreement by the end of fis f cal 2011, all milestone payments received since then have been recognized as revenue when the milestones were achieved by AbbVie. The Company is receiving annually tiered royalties per Company protease product ranging from ten percent up t u o twenty percent, or on a blended basis from ten percent up t u o the high teens, on the portion of AbbVie’s calendar year net sales of each HCV regimen that is allocated to the protease inhibitor in the regimen. Beginning with each January 1, the cumulative net sales of a given royalty-bearing protease inhibitor product start at zero for f purpos r es of calculating the tiered royalties on a product-by-product basis. The following tabl a e details the royalty tiers associated with cumulative calendar year net sales allocated to each royalty-bearing product as provided in the AbbVie Agreement: Calendar Year Net Sales Royalty Tier (in thousands) (%) up to $500,000 10% from $500,000 up to $750,000 12% from $750,000 up to $1,000,000 14% from $1,000,000 up to $2,500,000 17% greater than or equal to $2,500,000 20% F-17 Royalties owed to the Company under the agreement can be reduced by AbbVie in certain circumstances, including (i) if AbbVie exercises its right to license or otherwise acquire rights to intellectua t l property controlled by a third party where a product could not be legally developed or commercialized in a country without the third-party intellectua t l property right, (ii) where a product developed under the collabor a ation agreement is sold in a country and not covered by a valid patent claim in such country, and (iii) where sales of a generic product are equal to at least a specified percentage of AbbVie’s market share of its product in a country. AbbVie’s obligation to pay royalties on a product developed under the agreement expires on a country-by-country basis upon u the later of (i) the date of expiration of the last of the licensed patents with a valid claim covering the product in the applicable country, or (ii) ten years afte f r the first commercial sale of the product in the applicable country. Subj u ect to certain exceptions, a party’s rights and obligations under the agreement continue until (i) such time as AbbVie is no longer developing a product candidate or (ii) if, a f s of the time AbbVie is no longer developing any product candidates, AbbVie is commercializing any other protease inhibitor product, such time as all royalty terms for f all covered products have ended. Accordingly, the fin f al expiration date of the agreement is currently indeterminable. Either party may terminate the agreement for f cause in the event of a material breach, subj u ect to prior notice and the opportuni t ty to cure, or in the event of the other party’s bankrupt r cy. Additionally, AbbVie may terminate the agreement for f any reason upon specified prior notice. If the Company terminates the agreement for cause or AbbVie terminates without cause, any licenses and other rights granted to AbbVie will terminate and AbbVie will be deemed to have granted the Company (i) a non-exclusive, perpetua t l, fully-paid, worldwide, royalty-free license, with the right to subl u icense, under AbbVie’s intellectua t l property used in any product candidate, and (ii) an exclusive (even as to AbbVie), perpetua t l, fully-paid, worldwide, royalty-free license, with the right to subl u icense, under AbbVie’s interest in any joint intellectual property rights to develop product candidates resulting fro f m covered compounds and to commercialize any products derived fro f m such compounds. Upon the Company’s request, AbbVie will also transfer f to the Company all right, title and interest in any related product trademarks, regulatory f r il f ings and clinical trials. If AbbVie terminates the agreement for the Company’s uncured breach, the milestone and royalty payments payabl a e by AbbVie may be reduced, the licenses granted to AbbVie will remain in place, the Company will be deemed to have granted AbbVie an exclusive license under the Company’s interest in joint intellectua t l property, AbbVie will continue to have the right to commercialize any covered products, and all rights and licenses granted to the Company by AbbVie will terminate. 8. Liability Related to the Sale of Future Royalties In April 2023, the Company entered into a royalty sale agreement with an affiliate of OMERS, pursuant to which the Company was paid a $200,000 cash purchase price in exchange for 54.5% of future quarterly royalty payments on net sales of MAVYRET/MAVIRET, afte f r June 30, 2023, through June 30, 2032, subj u ect to a cap o a n aggregate payments equal to 1.42 times the purchase price. Because the royalty sale agreement will be paid back to OMERS up to a capped amount as well as the Company’s significant continuing involvement in the generation of fut f ur t e cash flo f ws under its AbbVie Agreement, the Company recorded the proceeds fro f m the transaction as a liability on its consolidated balance sheets which will be amortized as interest expense in the consolidated statements of operations under the effe f ctive interest rate method over the life o f f the royalty sale agreement. The Company will continue to record the ful f l amount of royalties earned on MAVYRET/MAVIRET sales as royalty revenue in the consolidated statements of operations. The Company’s liabi a lity related to the sale of fut f ur t e royalties is estimated based on for f ecasted worldwide MAVYRET/MAVYRET royalties to be paid to OMERS over the course of the royalty sale agreement. This estimate requires significant judgment, including the amount and timing of royalty payments up until the end of the royalty sale agreement, which is estimated to be the stated term of June 30, 2032. As royalties are earned by OMERS, the liabi a lity is reduced on the Company’s consolidated balance sheets. At September 30, 2024, the estimated future cash flows resulted in an effective annual imputed interest rate of approximately 6.87%. The fol f lowing tabl a e summarizes the activity of the liabi a lity related to the sale of fut f ur t e royalties: F-18 Liability related to the sale of future royalties (in thousands) Balance - September 30, 2022 .................................................................................................... $ — Proceeds fro f m sale of fut f ur t e royalties....................................................................................... 200,000 Debt issuance cost..................................................................................................................... (325) Royalty payabl a e to royalty purchaser........................................................................................ (10,318) Interest expense, net of capitalized interest of $0 ..................................................................... 5,148 Balance - September 30, 2023 .................................................................................................... $ 194,505 Royalty payabl a e to purchaser.................................................................................................... (7,960) Payments on royalty sale liabi a lity ............................................................................................. (28,916) Interest expense, net of capitalized interest of $672 ................................................................. 11,612 Balance - September 30, 2024 .................................................................................................... $ 169,241 9. Stockholders’ Equity The Company is authorized to issue 100,000 shares of common stock at a par value of $0.01 per share. Each share of common stock entitles the holder to one vote on all matters subm u itted to a vote of the Company’s stockholders. Common stockholders are entitled to receive such dividends as may be declared by the board of directors, if any. The Company also is authorized to issue 5,000 shares of prefer f red stock at a par value of $0.01 per share, of which 2,000 shares are designated as Series 1 Nonconvertible prefer f red stock and 3,000 shares are undesignated and unissued. 10. Series 1 Nonconvertible Preferr f ed Stock The Company’s Certifif cate of Incorporation authorizes the issuance of up to 2,000 shares of Series 1 nonconvertible prefer f red stock at a par value of $0.01 per share. Holders of Series 1 nonconvertible prefer f red stock are not entitled to receive dividends. In the event of any liquidation, deemed liquidation, dissolution or winding up of the Company, the Series 1 nonconvertible prefer f red stockholders are entitled to receive in preference to all other stockholders, an amount equal to $1.00 per share, adjusted for f any stock dividends, stock splits or reclassifications. Series 1 nonconvertible prefer f red stockholders will not be entitled to vote unless required by the Company pursuant to the laws of the State of Delaware. The Company may redeem the Series 1 nonconvertible prefer f red stock with the approval of the holders of a majority of the outstanding shares of Series 1 nonconvertible prefer f red stock at a redemption price of $1.00 per share. The Company must redeem the stock within 60 days of such election. Shares that are redeemed will be retired or canceled and not reissued by the Company. As these shares qualify as a derivative, they are classifie f d as a liabi a lity on the Company’s consolidated balance sheet. As of September 30, 2024 and 2023, 1,930 shares of Series 1 nonconvertible prefer f red stock were issued and outstanding. For the years ended September 30, 2024, 2023, and 2022, the remeasurement of the Series 1 nonconvertible prefer f red stock resulted in non- cash gain of $73, $0 and $83, respectively, which was recorded in other income (expense) in the consolidated statements of operations. The total fai f r value of the Series 1 nonconvertible prefer f red stock was $1,350 and $1,423 as of September 30, 2024 and 2023, respectively. 11. Stock-Based Awards The Company grants stock-based awards, including stock options, restricted stock units and other unit awards under its 2019 Equity Incentive Plan (the “2019 Plan”), which was appr a oved by its stockholders on Februa r ry 28, 2019 and amended in March 2021, March 2022, and March 2023 and its 2024 Inducement Stock Incentive Plan (“2024 Inducement Plan”). The Company also has outstanding stock option awards under its 2012 Equity Incentive Plan (the “2012 Plan”), but is no longer granting awards under this plan. The Company’s 2019 Plan permits the Company to sell or issue awards of common stock or restricted common stock or to grant awards of incentive stock options or nonqualifie f d stock options for the purchase of common stock, restricted stock units, performance units, stock appr a eciation rights or other cash incentive awards, to employees, members of the board of directors and consultants of the Company. The number of shares of common stock that may be issued under the 2019 Plan is subj u ect to increase by the number of shares forfeited under any options forfeited and not exercised under the 2019 Plan or any predecessor plans such as the 2012 Plan. Pursuant to the Company's 2024 Inducement Plan, the Company may grant non-statut t ory s r tock options, stock appreciation rights, restricted stock, restricted stock units and other stock-based awards to persons who (i) were not previously an employee or director of the Company or (ii) are commencing employment with the Company fol f lowing a bona fide period of non-employment, in either case as an inducement material to the individual’s entering into employment with the Company and in accordance with the requirements of Nasdaq Stock Market Rul R e 5635(c)(4). As of September 30, 2024, 1,978 shares remained availabl a e for f future awards under the 2019 Plan and 2024 Inducement Plan. Options granted to employees under the 2019 Plan and the 2024 Inducement Plan generally vest over four f years and to non-employee directors over one year, and expire afte f r ten years. As required under the equity plans, the exercise price for awards granted is not to F-19 be less than the fai f r value of common shares on the date of grant. Restricted stock units with service-based vesting conditions generally vest over four f years. Stock Option Valuation The fai f r value of each stock option award is determined on the date of grant using the Black-Scholes option-pricing model. The volatility has been determined using the Company’s traded stock price to estimate expected volatility. The expected term of the Company’s options has historically been determined utilizing the “simplified” method for awards that qualify as “plain-vanilla” options. The risk-free interest rate is determined by refer f ence to the U.S. Treasury y r ield curve in effect at the time of grant of the award for f time periods approximately equal to the expected term of the award. The expected dividend yield is zero due d to the fact f that the Company has never paid cash dividends and does not expect to pay any cash dividends in the for f eseeabl a e fut f ur t e. The relevant data used to determine the value of the stock option awards are as follows, presented on a weighted average basis: Years Ended September 30, 2024 2023 2022 Risk-free interest rate.............................................................. 4.45% 3.88% 1.72% Expected term (in years)......................................................... 6.01 6.04 6.04 Expected volatility .................................................................. 52% 48% 47% Expected dividends................................................................. 0% 0% 0% Weighted average grant date fair value .................................. $ 5.43 $ 22.71 $ 33.22 The fol f lowing tabl a e summarizes stock option activity, including aggregate intrinsic value for f the year ended September 30, 2024: Shares Issuable Under Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term in years Aggregate Intrinsic Value (in thousands) (in thousands) Outstanding as of September 30, 2023.................. 4,365 $ 52.68 5.9 $ — Granted.................................................................. 1,365 9.99 Exercised............................................................... (16) 8.99 Forfeited................................................................ (530) 42.05 Outstanding as of September 30, 2024.................. 5,184 $ 42.67 6.3 $ 1,416 Options vested and expected to vest as of September 30, 2024.............................................. 5,184 $ 42.67 6.3 $ 1,416 Options exercisable as of September 30, 2024...... 3,482 $ 50.73 5.1 $ 250 The aggregate intrinsic value of options is calculated as the diffe f rence between the exercise price of the options and the fair value of the Company’s common stock. The following tables summarize additional exercise and grant date infor f mation: Years Ended September 30, 2024 2023 2022 (in thousands) Aggregate intrinsic value of stock options exercised ............. $ 93 $ 3,295 $ 17,650 Proceeds to Company from stock options exercised .............. $ 147 $ 2,208 $ 21,262 Market and Perfor f mance-Based Stock Unit Awards The Company awards both performance share units (“PSUs”) and relative total stockholder retur t n units (“rTSRUs R ”) to its executive offi f cers. The PSUs vest and result in issuance, or settlement, of common shares for f each recipient, based upon u the recipient’s continued employment with the Company through the settlement date of the award and the Company’s achievement of specified research and development milestones. The requisite service period of the PSUs is generally two years. The fai f r value of PSUs is based on the fai f r value of the stock on the date of grant, which is determined to be the closing price of the Company's common stock. Stock-based compensation expense for f PSUs is recorded in the statements of operations over the service period, commencing when it is probabl a e that the specified research and development milestone is achieved. The rTSRUs vest and result in the issuance of common stock based upon u the recipient’s continuing employment with the Company through the settlement date of the award and the relative ranking of the total stockholder retur t n, or TSR, of the Company’s common stock in relation to the TSR of the component companies in the NASDAQ Biotech Index over two specifie f d periods that are two years apart, based on a comparison of average closing stock prices in specified periods noted in the award agreement. The number of F-20 market-based rTSRUs R awarded represents the target number of shares of common stock that may be earned; however, the actua t l number of shares that may be earned ranges from 0% to 150% of the target number, depending on the award agreement and the year of the award. The Company used a Monte Carlo model to estimate the grant-date fai f r value of the rTSRUs. Stock-based compensation expense for f rTSRUs R is recorded in the statements of operations over the service period regardless of whether the market condition is achieved. Assumptions and estimates utilized in the calculation of the fai f r value of the rTSRUs include the risk-free interest rate, dividend yield, expected volatility based on the historical volatility of publicly traded peer companies and the remaining performance period of the award. The table below sets for f th the weighted average grant date fair value assumptions used to value the rTSRUs R : Years Ended September 30, 2024 2023 2022 Risk-free interest rate.............................................................. 4.40% 4.19% 0.94% Dividend yield......................................................................... 0% 0% 0% Expected volatility .................................................................. 74% 77% 80% Performance period (years)..................................................... 2.00 2.03 1.97 The fol f lowing tabl a e summarizes PSU and rTSRU a R ctivity (at target) for the year ended September 30, 2024: PSUs rTSRUs Shares Weighted Average Grant Date Fair Value per Share Shares Weighted Average Grant Date Fair Value per Share (in thousands, except per share data) Unvested at September 30, 2023............................ 81 $ 58.58 81 $ 45.82 Granted.................................................................... 55 9.69 52 10.48 Vested ..................................................................... (25) 68.67 — — Cancelled ................................................................ (19) 51.14 (41) 47.25 Unvested at September 30, 2024............................ 92 $ 27.98 92 $ 25.09 The total fair value of PSUs and rTSRUs R vested during the years ended September 30, 2024, 2023, and 2022 were $307, $8,103, and $1,414, respectively. Restricted Stock Units The fol f lowing tabl a e summarizes the restricted stock unit activity for the year ending September 30, 2024: Restricted Stock Units Weighted Average Grant Date Fair Value per Share (in thousands, except per share data) Unvested at September 30, 2023 ............................................................... 411 $ 51.78 Granted....................................................................................................... 175 9.27 Vested......................................................................................................... (122) 52.54 Cancelled.................................................................................................... (36) 25.03 Unvested at September 30, 2024 ............................................................... 428 $ 36.37 The total fair value of restricted stock units vested during the years ended September 30, 2024, 2023, and 2022 were $1,228, $2,590, and $2,427, respectively. F-21 Stock-Based Compensation Expense The Company recorded the fol f lowing stock-based compensation expense for f the years ended September 30, 2024, 2023, and 2022: Years Ended September 30, 2024 2023 2022 (in thousands) Research and development ..................................................... $ 7,389 $ 9,551 $ 9,728 General and administrative ..................................................... 19,406 18,665 17,241 $ 26,795 $ 28,216 $ 26,969 Years Ended September 30, 2024 2023 2022 (in thousands) Stock options ............................................................................ $ 15,342 $ 19,784 $ 19,615 rTSRUs R ..................................................................................... 1,243 1,893 1,597 PSUs ......................................................................................... 4,087 542 2,628 Restricted stock units................................................................ 6,123 5,997 3,129 $ 26,795 $ 28,216 $ 26,969 As of September 30, 2024, the Company had an aggregate of $31,039 of unrecognized stock-based compensation cost, which is expected to be recognized over a weighted average period of 2.0 years. 12. Leases The Company has three real estate leases for properties located in Watertown, Massachusetts. The first lease, for f offi f ce and laboratory r space at 500 Arsenal Street, the second lease, is for offic f e space located at 400 Talcott Avenue and the third lease for f offi f ce and labor a atory s r pace is located at 4 Kingsbury A r venue. Lease payments for f the Company's real estate leases include fixed lease payments that escalate over the terms of the leases and require the Company to pay certain operating expenses based on actua t l costs incurred. Operating expenses that are not fixed in nature t are expensed in the period incurred and included in variabl a e lease costs. The leases do not include any restrictions or covenants that had to be accounted for under the lease guidance. In May 2022, the Company entered into its lease agreement for 4 Kingsbury A r venue with its existing landlord, adja d cent to its 400 Talcott Avenue premises. Construc r tion of the facility shell was completed by the landlord and the Company gained access to the building to construc r t tenant improvements dur d ing the three months ended March 31, 2024. The estimated minimum lease payments for the 4 Kingsbury A r venue facility total $76,470 over the ten-year term. The lease also contains a tenant improvement allowance of $15,205. The Company recorded a right-of-use asset of $32,499 and lease liabi a lity of $31,939 upon commencement of the lease during the year ended September 30, 2024. The Company moved its lab o a perations from 500 Arsenal Street into the newly construc r ted 4 Kingsbury A r venue facility in November 2024. In conjunction with the new lease agreement at 4 Kingsbury A r venue, the Company amended its 500 Arsenal Street lease to shorten the term of the lease fro f m September 2027 to November 2024. The Company remeasured the lease term and remaining lease payments for f the 500 Arsenal Street fac f ility during the year ended September 30, 2024 when the Company gained access to the 4 Kingsbury r Avenue facility. The Company recorded an adjustment to the right-of-u f se asset and lease liabi a lity for 500 Arsenal Street of $9,322 during the year ended September 30, 2024. The Company leases units of equipment over eighteen-month lease periods commencing upon u shipment of each unit. The lease agreements contain options to terminate the leases early or to extend the leases for successive six-month periods, however these options were not included in the right-of-use assets and lease liabi a lity as they were not reasonabl a y certain of being exercised. The equipment leases require the Company to pay for certain consumable and peripheral equipment supplies based on actua t l costs incurred. As these costs are not fixed in natur t e, they are expensed in the period incurred and included in variabl a e lease costs. The components of lease expense for the Company’s real estate and equipment leases were as fol f lows: Years Ended September 30, 2024 2023 2022 (in thousands) Operating lease cost................................................................................................... $ 10,574 $ 6,230 $ 6,294 Variable lease cost ..................................................................................................... 4,720 5,352 2,375 $ 15,294 $ 11,582 $ 8,669 F-22 Suppl u emental disclosure of cash flo f w infor f mation related to the Company's operating leases included in cash flo f ws used in operating activities in the consolidated statements of cash flows were as fol f lows: Years Ended September 30, 2024 2023 2022 (in thousands) Cash paid for amounts included in the measurement of operating lease liabi a lities... $ 8,283 $ 6,586 $ 4,966 Tenant improvement allowance received .................................................................. $ 9,358 $ 1,994 $ — Operating lease liabi a lities arising from obtaining right-of-use assets........................ $ 23,960 $ 3,817 $ 23,910 The weighted-average remaining lease term and discount rate were as follows: September 30, 2024 2023 Weighted-average remaining lease term - operating leases (in years) ........................................ 9.8 6.5 Weighted-average discount rate - operating leases ..................................................................... 8.8% 7.2% As the Company’s leases do not provide an implicit rate, the Company utilized its incremental borrowing rate based on infor f mation availabl a e at the lease commencement date, which represents an internally developed rate that would be incurred to borrow, on a collateralized basis, over a similar term, an amount equal to the lease payments in a similar economic environment. Future annual minimum lease payments relating to the Company's lease liabi a lities as of September 30, 2024 were as follows: Years ended September 30, p , (in thousands) 2025.................................................................................................................................................................. 8,701 2026.................................................................................................................................................................. 8,467 2027.................................................................................................................................................................. 8,721 2028.................................................................................................................................................................. 8,983 2029.................................................................................................................................................................. 9,252 Thereafter......................................................................................................................................................... 50,595 Total fut f ur t e minimum lease payments............................................................................................................. 94,719 Less: imputed interest ...................................................................................................................................... (33,003) Less: tenant improvement allowance............................................................................................................... (6,249) Total operating lease liabi a lities ........................................................................................................................$ 55,467 September 30, Included in the balance sheet: 2024 2023 (in thousands) Current operating lease liabi a lities ................................................................................. $ 1,524 $ 5,275 Operating lease liabi a lities, net of current portion.......................................................... 53,943 21,238 Total operating lease liabi a lities..................................................................................... $ 55,467 $ 26,513 The Company is required to maintain security deposits of $92 in connection with the real estate lease of 400 Talcott Avenue, which is included in other long-term assets on the Company's consolidated balance sheets. In addition, the Company is required to maintain letters of credit for f certain of its leases, collateralized by money market accounts of $3,968, which amounts are classified as short-term and long-term restricted cash on the consolidated balance sheets. 13. Commitments and Contingencies Litigation and Contingencies Related to Use of Intellectual Property From time to time, the Company may become subj u ect to legal proceedings, claims and litigation arising in the ordinary c r ourse of business. Except as described below, the Company currently is not a party to any threatened or pending litigation. However, third parties might allege that the Company or its collaborators are infringing their patent rights or that the Company is otherwise violating their intellectua t l property rights. Such third parties may resort to litigation against the Company or its collabor a ators, which the Company has agreed to indemnify. f With respect to some of these patents, the Company expects that it will be required to obtain licenses and could be required to pay license fees or royalties, or both. These licenses may not be availabl a e on acceptabl a e terms, or at all. A costly license, or inabi a lity to obtain a necessary l r icense, would have a material adverse effect on the Company’s fin f ancial condition, results of operations or cash flows. The Company accrue r s contingent liabi a lities when it is probabl a e that fut f ur t e expenditur t es will be made and such expenditures can be reasonabl a y estimated. F-23 In June 2022, the Company announced that it filed suit in the United States District Court for f the District of Massachusetts on June 21, 2022, against Pfizer, Inc. seeking damages for infri f ngement of U.S. Patent No. 11,358,953 (the ’953 Patent) in the manufac f ture, use and sale of Pfizer’s COVID-19 antiviral, Paxlovid™(nirmatrelvir tablets; ritonavir tablets). The United States Patent and Trademark Offi f ce awarded the '953 Patent to the Company in June 2022 based on the Company's July 2020 patent application describing coronavirus protease inhibitors invented by the Company. The Company is seeking fai f r compensation for f Pfiz f er’s use of a coronavirus protease inhibitor claimed in the ‘953 patent. On May 28, 2024, the Company and Pfizer each filed motions for summary judgment and a hearing on the motions was held on July 31, 2024. The timing for a ruling on each of the motions for summary judgment is currently uncertain. The Company records all legal expenses associated with the patent infri f ngement suit as incurred in the consolidated statements of operations. Indemnific f ation Agreements In the ordinary c r ourse of business, the Company may provide indemnific f ations of varying scope and terms to customers, vendors, lessors, business partners, and other parties with respect to certain matters including, but not limited to, losses arising out of breach of such agreements or from services to be provided to the Company, or from intellectua t l property infri f ngement claims made by third parties. In addition, the Company has entered into indemnific f ation agreements with members of its board of directors and its executive offi f cers that will require the Company, among other things, to indemnify t f hem against certain liabi a lities that may arise by reason of their status or service as directors or officers. The maximum potential amount of future payments the Company could be required to make under these indemnific f ation agreements is, in many cases, unlimited. To date, the Company has not incurred any material costs as a result of such indemnific f ations. In addition, the Company maintains directors’ and officers’ insurance coverage. The Company does not believe that the outcome of any claims under indemnific f ation arrangements will have a material effect on its financial position, results of operations or cash flows, and has not accrue r d any liabi a lities related to such obligations in its consolidated financial statements as of September 30, 2024 and 2023. 14. Income Taxes Income before income taxes for f all periods presented is fro f m domestic operations, which are the Company’s only operations. During the years ended September 30, 2024, 2023, and 2022, the Company recorded income tax benefit f (expense) as follows: Years Ended September 30, 2024 2023 2022 (in thousands) Current income tax (expense) benefit: Federal.................................................................................................... $ 1,936 $ (2,522) $ — State........................................................................................................ (193) (299) 449 Deferred income tax (expense) benefit: f Federal.................................................................................................... — — (16) State........................................................................................................ — — — Income tax (expense) benefit..................................................................... $ 1,743 $ (2,821) $ 433 A reconciliation of the U.S. federal statutory income tax rate to the Company’s effective tax rate is as follows: Years Ended September 30, 2024 2023 2022 Federal statutory income tax rate........................................................... (21.0)% (21.0)% (21.0)% State taxes, net of federal benefit f ....................................................... (2.7) (2.7) (2.9) Change in valuation allowance.......................................................... 10.6 36.6 30.8 Federal research and development tax credit..................................... (2.2) (4.6) (4.6) Share-based compensation................................................................. 5.0 2.2 (0.8) State research and development tax credit......................................... (0.7) (0.9) (1.5) Foreign derived intangible income .................................................... — (7.0) — Interest on net operating loss carryback claim................................... (1.2) (0.8) — Change in deferred tax rate................................................................ 10.6 (0.1) (0.1) Other .................................................................................................. 0.1 0.5 (0.3) Effe f ctive income tax rate ....................................................................... (1.5)% 2.2 % (0.4)% The effective tax rates dur d ing the years ended September 30, 2024 and 2023 differ fro f m the U.S. federal statutory rate primarily due to the ful f l valuation allowance maintained on the Company’s net deferred tax assets. Changes in the valuation allowance for f deferred tax assets during the years ended September 30, 2024, 2023, and 2022 are as fol f lows: F-24 Years Ended September 30, 2024 2023 2022 (in thousands) Valuation allowance, beginning of year............................................. $ (115,120) $ (67,726) $ (29,298) Increase recorded to valuation allowance............................................ (12,124) (47,394) (38,428) Valuation allowance, end of year ....................................................... $ (127,244) $ (115,120) $ (67,726) Net defer f red tax assets as of September 30, 2024 and 2023 consisted of the following: September 30, 2024 2023 (in thousands) Deferred tax assets: Capi a talized research and development................................................................. $ 49,921 $ 34,855 Liability related to the sale of future royalties ..................................................... 36,200 46,560 Tax credit carryforwards ...................................................................................... 18,793 15,549 Share-based compensation ................................................................................... 14,551 16,974 Operating lease liabi a lity ....................................................................................... 13,058 6,485 Net operating loss carryforward........................................................................... 7,274 43 Accrue r d compensation ......................................................................................... 1,387 1,318 Accrue r d expenses................................................................................................. 50 495 Unrealized loss ..................................................................................................... — 189 Other temporary d r iffe f rences................................................................................. 161 214 Total defer f red tax assets................................................................................... 141,395 122,682 Valuation allowance............................................................................................. (127,244) (115,120) Net defer f red tax assets.......................................................................................... 14,151 7,562 Deferred tax liabi a lities: Operating lease, right-of-use assets.................................................................. (8,627) (1,525) Depreciation ..................................................................................................... (4,362) (5,456) Prepaid expenses .............................................................................................. (999) (581) Unrealized gain ................................................................................................ (163) — Total defer f red tax liabilities ................................................................................. (14,151) (7,562) Net defer f red income tax assets (liabi a lities) .............................................................. $ — $ — As of September 30, 2024, the Company had fed f eral net operating loss carryforwards of $28,679 which do not expire and state net operating loss carryforwards of $19,840, which may be availabl a e to offse f t fut f ur t e taxable income and expire at various dates beginning in 2032. As of September 30, 2024, the Company also had fed f eral and state research and development tax credit carryforwards of $13,909 and $6,866, respectively, which may be availabl a e to reduc d e fut f ur t e tax liabi a lities and expire at various dates beginning in 2042 and 2035, respectively. Utilization of the federal and state net operating loss carryforwards and research and development tax credit carryf r or f wards may be subj u ect to a substantial annual limitation under Sections 382 and 383 of the Internal Revenue Code (“IRC”) of 1986, and corresponding provisions of state law, due d to ownership changes that may have occurred previously or that could occur in the fut f ur t e. These ownership changes may limit the amount of net operating loss and research and development tax credit carryforwards that can be utilized annually to offs f et future tax liabi a lities. In general, an ownership change, as defin f ed by Section 382, results from f transactions that increase the ownership of 5% stockholders in the stock of a corpor r ation by more than 50% in the aggregate over a three-year period. The Company completed a review of the changes in ownership through September 30, 2022 and determined that the transactions have not resulted in an ownership change during the year ended September 30, 2022, as defined by Section 382. The impact of the historical ownership changes have been reflected within our deferred tax assets shown in the tabl a e above a . Although the Company believes that these ownership changes have not resulted in material limitations on its abi a lity to use these net operating losses and credit carryforwards, its ability to utilize these and fut f ur t e net operating losses and credit carryforwards may be limited due d to future ownership changes or for f other reasons. As a result, the Company may not be able to take full advantage of its carryforwards for U.S. fed f eral and state tax purpos r es. F-25 The Company has evaluated the positive and negative evidence bearing upon u its ability to realize the deferred tax assets, which are comprised primarily of net operating loss carryforwards, research and development tax credit carryforwards and stock compensation expense. The Company considers it more likely that it will not have sufficient taxable income in the fut f ur t e that will allow it to realize all of its existing defer f red tax assets. This is due to the fact f the Company continues to progress its wholly-owned research and development programs and its declining royalty revenues fro f m its Collabor a ation Agreement with AbbVie. As a result, the Company continued to record a valuation allowance as of September 30, 2024 against its deferred tax assets to reduce a portion of the Company’s defer f red tax assets for which the Company does not believe it is more likely than not these will be realized. The Company files tax returns as prescribed by the tax laws of the jurisdictions in which it operates. In the normal course of business, the Company is subj u ect to examination by fed f eral and state jurisdictions, where applicable. The Company’s tax years in the U.S. are still open under statute from 2020 to the present. Earlier years may be examined to the extent that tax credit or net operating loss carryforwards are used in fut f ur t e periods. During the year ended September 30, 2024, the Company received notice of examination by the Internal Revenue Service (“IRS”) for the years ending September 30, 2018 and September 30, 2019. The Company received and agreed to a notice of proposed adju d stment from the IRS in October 2024, resulting in an additional refund f of $871 related to the year ended September 30, 2019. The Company has not received notice of examination by any other jurisdictions for any other tax year open under statute. Beginning in October 1, 2022, the Tax Cuts and Jobs Act of 2017 (the “Tax Act”) eliminated the Company’s option to deduc d t research and development expenditures currently and requires taxpayers to amortize them over fiv f e years for domestic research expenditures and over fif f te f en years for f foreign research expenditures, pursuant to IRC 174. The most significant impact of this provision is an increase to the current taxabl a e income for f the year ended September 30, 2023, the tax year in which the provision took effe f ct for the Company. In response to the COVID-19 pandemic, the CARES Act was signed into law in March 2020. The CARES Act lifte f d certain deduction limitations originally imposed by the Tax Act. Under the CARES Act, the Company was permitted to carryback net operating losses for up t u o fiv f e years for f losses generated in fis f cal 2018 through fiscal 2021. Net operating loss carrybacks were previously prohibited under the Tax Act. The CARES Act also eliminated the 80% of taxabl a e income limitations by allowing corporate entities to fully utilize net operating loss carryforwards to offs f et taxabl a e income in fis f cal years 2018, 2019 or 2020. In addition, the CARES Act made qualifie f d improvement property eligible for f 15-year cost-recovery and 100% bonus depreciation. The enactment of the CARES Act resulted in a $28,721 income tax benefit f related to a federal net operating loss carryback at the previously enacted 35% rate in the Company’s consolidated financial statements dur d ing the year ended September 30, 2021. As of September 30, 2024 and 2023, the Company had an income tax receivabl a e of $31,999 and $31,004, respectively, which includes interest receivable of $3,292 as of September 30, 2024. Uncertain tax positions represent tax positions for which reserves have been establ a ished. The Company’s policy is to record interest and penalties related to uncertain tax positions as part of income tax expense. Total interest related to uncertain tax positions recorded as a liabi a lity on the Company’s consolidated balance sheets were $11 and $3 as of September 30, 2024 and 2023, respectively. A reconciliation of the beginning and ending amount of uncertain tax positions is summarized as follows: September 30, 2024 2023 (in thousands) Beginning Balance...................................................................................................... $ 1,056 $ 226 Additions based on tax positions for the current period .......................................... — 882 Reductions for tax positions due to laps a e of statute of limitations .......................... (11) (156) Additions (reductions) for f tax positions of prior periods......................................... (140) 104 Ending Balance........................................................................................................... $ 905 $ 1,056 The Company does not expect that its uncertain tax position will materially change within the next twelve months. 15. 401(k) Plan The Company has a 401(k) plan. This plan covers substantially all employees who meet minimum age and service requirements. During the years ended September 30, 2024, 2023, and 2022, the Company recognized $1,697, $1,784, and $1,596, respectively, of expense related to its contributions to this plan. [THIS PAGE INTENTIONALLY LEFT BLANK] MANAGEMENT TEAM Jay R. Luly, Ph.D. President, Director and Chief Executive Officer Tara L. Kieffer, Ph.D. Chief Product Strategy Officer Matthew P. Kowalsky, J.D. Chief Legal Officer and Corporate Secretary Brendan Luu Chief Business Officer Paul J. Mellett Chief Financial and Administrative Officer Yat Sun Or, Ph.D. Chief Scientific Officer Scott T. Rottinghaus, M.D. Chief Medical Officer BOARD OF DIRECTORS Bruce L. A. Carter, Ph.D. Non-Executive Chairman of the Board, Enanta Pharmaceuticals, Inc. Former President and Chief Executive Officer, ZymoGenetics, Inc. Mark G. Foletta Former Chief Financial Officer, Amylin Pharmaceuticals, Inc., and other companies Yujiro S. Hata Founder and Chief Executive Officer,  IDEAYA Biosciences, Inc. Jay R. Luly, Ph.D. President and Chief Executive Officer, Enanta Pharmaceuticals, Inc. Kristine Peterson Former Chief Executive Officer, Valeritas, Inc. Lesley Russell, MBChB, MRCP Former Chief Medical Officer, Cephalon, Inc., and other companies Terry C. Vance Private consultant and former biotechnology venture capital investor Corporate Headquarters Enanta Pharmaceuticals, Inc. 4 Kingsbury Avenue Watertown, MA 02472 Investor Inquiries Investor inquiries (including requests for a copy of Enanta’s Annual Report on Form 10-K, available free of charge) should be directed to: Enanta Pharmaceuticals, Inc. 4 Kingsbury Avenue  Watertown, MA 02472 Attention: Investor Relations Phone: 617-744-3848 Email: ir@enanta.com The 2024 Annual Report on Form 10-K and other investor information are available in the Investors section of Enanta’s website at www.enanta.com. Independent Registered Public Accounting Firm PricewaterhouseCoopers LLP 101 Seaport Boulevard, Suite 500 Boston, MA 02210 Corporate Counsel Foley Hoag LLP Seaport West 155 Seaport Boulevard Boston, Massachusetts 02210 Transfer Agent Computershare Investor Services 462 South 4th Street, Suite 1600 Louisville, KY 40202 Stock Listing NASDAQ Global Select Market: ENTA Website www.enanta.com Enanta Pharmaceuticals, Inc. 4 Kingsbury Avenue Watertown, MA 02472 www.enanta.com

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