Good day, ladies and gentlemen, and welcome to the Altimmune, Inc. Q1 Earnings Conference call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session, and instructions will follow at that time. If anyone should require operator assistance, please let us know. As a reminder, this call is being recorded. I would now like to introduce your host for today's conference call, Richard Eisenstadt, Chief Financial Officer of Altimmune. Richard, you may begin.

Thank you, Katy. And good morning, everyone. Thank you for participating in Altimmune's First Quarter 2022 Earnings Conference Call. Members of the Altimmune team joining me on the call today are Vipin K. Garg, our Chief Executive Officer, Scot Roberts, our Chief Scientific Officer, and Scott Harris, our Chief Medical Officer. Following the prepared remarks, we will hold a question-and-answer session. A press release with our first-quarter 2022 financial results was issued this morning and can be found on the Investor Relations section of the company's website. Before we begin, I would like to remind everyone that remarks about future expectations, plans, and prospects constitute forward-looking statements for purposes of Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. Altimmune cautions that these forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those indicated, including those related to the ongoing conflict in Ukraine, COVID-19, and the impact on our business operations, clinical trials, and results of operations. For a discussion of some of the risks and factors that could affect the company's future results, please see the risk factors and other cautionary statements contained in the company's filings with the SEC. I would also direct you to read the forward-looking statement disclosure in our earnings press release issued this morning, and now available on our website. Any statements made on this conference call speak only as of today's date, Thursday, May 12th, 2022. And the company does not undertake any obligation to update any of these forward-looking statements to reflect events or circumstances that occur on or after today's date. As a reminder, this conference call is being recorded and will be available for audio replay on Altimmune's website. With that, I will now turn the call over to Dr. Vipin K. Garg, Chief Executive Officer of Altimmune.

Thank you, Richard, and good morning, everyone. We appreciate you joining us today for a discussion of our first-quarter 2022 financial results and business update. We continue to advance multiple clinical trials for our lead product candidate, pemvidutide, a GLP-1 glucagon dual receptor agonist, and are excited about reporting important data from these trials in the second half of 2022. Last month, we announced the initiation of the 48-week Phase 2 MOMENTUM trial of pemvidutide in subjects with obesity or who are overweight. That trial is ongoing at multiple sites in the United States with Dr. Louis Aronne, professor of clinical medicine at Weill Cornell Medical School, and a leading authority in obesity and obesity clinical trials, serving as the principal investigator. Dosing has commenced, and a planned interim analysis to assess changes in body weight after 24 weeks of treatment is expected to read out in the fourth quarter of 2022. Enrollment in the Phase 1b non-alcoholic fatty liver disease (NAFLD) trial has been completed, and data readouts for weight loss and liver fat reduction at 12 weeks of treatment are expected in the third quarter of 2022. In addition, a double-blind placebo-controlled 12-week extension of the NAFLD trials has been initiated, with an expected data readout on weight loss at 24 weeks in the fourth quarter of 2022. We believe that the 24-week weight loss readout from the NAFLD extension trial will provide a valuable read through to the Phase 2 MOMENTUM obesity trial. A 12-week trial to characterize effects of pemvidutide on glucose control in diabetic subjects who are overweight and obese is also ongoing. This trial will further expand on the findings from our Phase 1 trial, in which decreased insulin resistance and maintenance of glucose control were observed in an obese and overweight patient population that included subjects with prediabetes. Given the increasing competitive obesity space, it is important to highlight the potential differentiating features of pemvidutide. First, we believe we will be able to achieve weight loss comparable to the results of pediatric surgery, confirming the benefit of adding glucagon agonism to GLP-1 monotherapy. Based on more than 10% weight loss after only 12 weeks, we expect the level of weight loss to be greater and more rapid than other agents in development, increasing patient satisfaction with treatment. In addition, we believe that the absence of dose titration will represent a major advantage in the minds of prescribers, simplifying patient management in the first months of therapy. Finally, we believe that the robust reduction of serum lipids observed in our Phase 1 study could translate into cardiovascular benefits with long-term use, further increasing the value proposition of pemvidutide treatment. I want to emphasize that our focus continues to be on obesity as the lead indication for pemvidutide. While we believe that our ongoing NAFLD trial will deliver the best liver fat reduction data in clinical trials to date and add significant value to pemvidutide, we are not planning to initiate a 52-week biopsy-driven NASH trial at the current time. We believe this decision will create additional flexibility in the development of the obesity indication without forfeiting the value of pemvidutide in the NASH indication, and puts us in a good position to evaluate various strategic options for the continued development of pemvidutide. The findings of our preclinical studies in the relevant mouse model were published last month, and we are excited about the clinical data that we have generated, which we plan to present at international meetings throughout this year. We are pleased to announce that pemvidutide abstracts have been accepted as oral presentations at the 5th Global NASH Congress, the 82nd Annual Meeting of the American Diabetes Association, and the 2022 Meeting of the European Association for the Study of the Liver. We hope to announce the publication of these study results in peer-reviewed journals in the near future. Turning to HepTcell, enrollment in our Phase 2 clinical trial in chronic hepatitis B subjects is ongoing with an expected study readout in the first half of 2023. We're excited about the progress of pemvidutide and HepTcell, and the results of ongoing trials. We expect 2022 to be an important year for Altimmune with three major readouts representing potential significant value drivers for the company. With that, I'll now turn the call over to our Chief Medical Officer, Dr. Scott Harris, to discuss our data and clinical plans.

Thank you, Vipin, and good morning, everyone. First, let me talk about the Phase 2 MOMENTUM trial of pemvidutide in obesity. We expect this trial will enroll approximately 320 non-diabetic subjects with either obesity or overweight, with at least one obesity-related complication. Subjects will be randomized one-to-one to receive either 1.2 milligrams, 1.8 milligrams, 2.4 milligrams of pemvidutide or placebo, administered weekly for 48 weeks. The primary endpoint of the MOMENTUM trial is the relative percent change in body weight at 48 weeks compared to baseline, with additional readouts including metabolic and lipid profiles, cardiovascular measures, and glucose homeostasis. Dr. Louis Aronne from Weill Cornell Medical College, a leading authority in obesity and obesity clinical trials, is serving as the principal investigator. An interim analysis is planned to assess changes in body weight after 24 weeks of treatment, with an expected readout in the fourth quarter of 2022, and a 48-week readout in the middle of 2023. As Vipin mentioned, we completed enrollment in our Phase 1b NAFLD clinical trial of pemvidutide and expect a data readout in the third quarter of 2022. This trial is designed to assess the effects of pemvidutide on liver fat and body weight in subjects with obesity or overweight with NAFLD, defined as a 10% or greater liver fat content as measured by MRI-PDFF. Non-diabetic and diabetic subjects were randomized to pemvidutide 1.2 milligrams, 1.8 milligrams, 2.4 milligrams, or placebo over 12 weeks of treatment. The primary endpoint of this trial is the reduction in liver fat by MRI-PDFF, but a key secondary endpoint is weight loss at the end of 12 weeks of treatment, as we believe that obesity is the key driver of NAFLD and NASH. Based on the results of our Phase 1 clinical trial, we expect to achieve a robust reduction in liver fat content and again show significant weight loss in subjects after 12 weeks of treatment. We have also initiated a 12-week extension for subjects who complete the initial 12 weeks of treatment. This will permit subjects to receive treatment for up to 24 weeks and allow us to compare the weight loss achieved by pemvidutide to the weight loss achieved by semaglutide and tirzepatide at 24 weeks of treatment. We expect data readout on the 24-week weight loss endpoint in the fourth quarter of 2022. Later this year, we also expect to have the results of two additional Phase 1 studies to evaluate the effects of pemvidutide on glucose control in people with diabetes and its potential for drug-drug interactions. We are rapidly building the pemvidutide clinical development program and expect to have accrued safety data in over 200 subjects receiving one or more doses of pemvidutide in clinical trials by the fourth quarter of 2022. I want to highlight the robust effects of pemvidutide on serum lipids that were demonstrated in our first-in-human clinical trial, which could have important implications for cardiovascular risk. It's well established that NASH and NAFLD patients often come with cardiovascular comorbidities associated with obesity, which include myocardial infarction, stroke, and heart failure. Pemvidutide treatment for 12 weeks resulted in robust reductions of total cholesterol, LDL cholesterol, and triglycerides, elevated levels of which are associated with increased risk for cardiovascular disease. We will be presenting these findings in an oral presentation at the American Diabetes Association meeting this coming June. We are also making continued progress in the enrollment of our Phase 2 clinical trial in patients with inactive chronic hepatitis B and expect to read out the results of this trial in the first half of 2023. Recall that virologic effects of HepTcell are being evaluated in chronically infected patients to enable the combination of HepTcell with novel direct-acting antivirals as part of combination therapy for chronic hepatitis B. I will now hand the call over to Richard Eisenstadt to give us an update on our first-quarter financial results.

Thank you, Scott. And good morning again everyone. For today's call, I'll be providing a brief update on Altimmune's first quarter 2022 financial and operating results. More comprehensive information will be available in our Form 10-K to be filed with the SEC later today. I also will provide some guidance on our expenses for 2022. Altimmune ended the first quarter of 2022 with approximately $180 million in cash and cash equivalents compared to $190.3 million at the end of 2021. Turning to the income statement, revenue was minimal in the first quarter of 2022 compared to $800,000 in the same period in 2021. Our change in revenue for the quarter was primarily due to discontinuation of development activities for our T-COVID and other programs, and it will be minimal going forward. Research and development expenses were $15.1 million in the first quarter of 2022 compared to $11.9 million in the same period in 2021. The expenses for the quarter ended March 31, 2022, included $10.8 million in direct costs related to the development activities for pemvidutide and $2.5 million in direct costs related to development activities for HepTcell. As a reminder, we will owe one last development milestone of $3 million payable in common shares of the company within 60 days following dosing of the first patient in the Phase 2 trial pemvidutide, which occurred in April, subsequent to quarter-end and will be reflected in the Q2 balance sheet. General and administrative expenses were $4.4 million in the first quarter of 2022, as compared to $3.8 million in the same period in 2021. The year-over-year change was primarily attributable to increased stock compensation expense. The net loss for the three months ended March 31, 2022, was $19.4 million or $0.44 net loss per share compared to $14.9 million or $0.38 net loss per share for the first quarter of 2021. We currently estimate that our research and development expenses for full-year 2022, including the $15.1 million reported in Q1, will be approximately $75 million. G&A expenses for the full-year 2022 are anticipated to be approximately $19 million. Approximately $8.5 million of these operating costs are for non-cash expenses, including stock compensation and depreciation and amortization. With the added financial flexibility afforded by the delay in the initiation of a Phase 2 trial of pemvidutide in NASH, our existing cash not only fully funds us through NAFLD and the 48-week MOMENTUM obesity trial datasets, but we currently estimate that our cash is sufficient to allow us to operate well into 2024. I will now turn it back over to Vipin for his closing remarks.

Thank you, Richard. Operator, that concludes our formal remarks, and we would like to open the line to take questions. Would you please instruct the audience on the Q&A procedure?

Thank you. Our first question will come from Seamus Fernandez with Guggenheim Partners.

Thanks, guys, and congrats on the quarter. Obviously, good management and execution around the expenses. Can you help us understand a little bit, obviously, it's great to see the NASH study really more incorporated into potential strategic options going forward, but maybe you could just give us a little bit of clarity along those lines? How far into 2024 do you think the cash would likely take us? Just wanted to get a sense of that payment that you mentioned, Richard. Just wanted to get a little bit of clarification on the number that you mentioned there that's going to be paid, I think in the second quarter. I missed the absolute number I couldn't hear if it was 16 or 60, to be honest. And then the second question is really for Scott Harris, can you just help us understand what exactly you're looking to understand from these other Phase 1 studies in the context of the diabetic patient population and why the company's conducting those? I think those are some important questions. And then just my final question, Vipin, as you think strategically about the market opportunity here, obviously, you've mentioned the competitive landscape. But in the context of the size of this market opportunity, can you just help us better understand what you think the level of strategic interest is likely to be, and when that becomes a key discussion point for the company based on the data that you're bringing forward? Thanks.

Well, thank you, Seamus. Lots of questions there. We'll try to address them one by one. Let me just set the stage in terms of our rationale behind the NASH delay and the NASH study, the 52-week biopsy-driven study. As you know, we've got a number of studies ongoing that will be generating a significant amount of data in terms of liver fat reduction, and we think that's going to be sufficient to drive the value proposition for people to draw the line. We'll also be getting data from other companies and players in the NASH space during 2022. So we've put all that together, we think we'll have enough information to convince a strategic partner of the value proposition that we bring to NASH, which we think will be substantial. Given that, we want to focus on obesity, generate as much data as we can, and maintain financial flexibility. Driven by that, we've decided to essentially postpone at this point the initiation of a Phase 2 NASH study, which as you know are very long, so you're not going to see anything out of that study until sometime in 2024, even if we start that study right now. So, it was given all of those considerations we felt we would still be able to retain the upside value of the NASH indication in our discussions. I'm pretty sure that a strategic partner would want to pursue both the obesity and NASH indications, just like other large pharma players are doing in this space. So there's no question that pemvidutide will play a role in NASH treatment ultimately; it's just a matter of timing. So that's the rationale that we're using. With that, let me just turn it over to Richard to talk about your questions about the funding and financing, and how long will that last.

Sure. Thanks, Vipin. Thanks for the questions, Seamus. We didn't provide specific guidance on how deep into 2024 we'll get; we believe it will be sufficient. We should have approximately a year's cash when we have the data or completion of the MOMENTUM trial. So I hope that helps; of course, a lot of changes as time goes on, depending on what the data looks like and additional studies that you may or may not need to do. Regarding the payout for the Spitfire program, the amount is $3 million; I'm sorry for the confusion on that. It gets paid within 60 days following the achievement of the milestone. It will be paid in shares, and there's a preset formula that indicates that it will likely result in the issuance of approximately 850,000 common shares of the company.

Perfect. That's super helpful. And then just a last question on the diabetes patients and maybe just an update. If you guys are willing to provide us general color on how the MOMENTUM study is recruiting so far and how you're feeling in terms of that tracking to providing an interim look, whether it'd be at the full patient population or part of the patient population in the fourth quarter. Thanks.

Scott, do you want to take the diabetes first?

Sure. Thank you, Seamus, for the question. I'll take the diabetes part first and then I'll finish with some comments about the MOMENTUM study. As you know, within the obesity population, 80% of that population does not have diabetes. You're well aware that what really controls glucose chronically in this population is the weight loss that was shown in the STEP trials. The change in hemoglobin A1C at 52 weeks is predominantly driven by the weight loss. Over the long run, we think that this drug will have excellent applications in diabetics. Also in our Phase 1 study, we saw no perturbations in glucose control measured by fasting blood sugar hemoglobin A1C. In fact, as you would have expected with the weight loss that was observed, we actually had a reduction of insulin resistance that bodes quite well for the results of what we're going to see in 52 weeks, either in a non-diabetic population or a diabetic population. I think we felt the obligation at this point to study the effects of pemvidutide acutely on aspects of glucose control that are typically studied in more intense Phase 1 studies such as continuous glucose monitoring and the like. We really couldn't do that in our current studies without making them too complicated. So we elected to conduct a committed study in diabetics, and that's what we're trying to get out of the study right now.

I'll answer the second question about the MOMENTUM study, and I'm happy to backfill on the answer I just gave you on obesity. So the MOMENTUM study is going quite well. We're very enthusiastic about enrollment. We think it's going to enroll very quickly, like most obesity studies do. We have 25 extremely enthusiastic investigators. The best guidance I can give you is we'll provide you with an update when the enrollment in the study completes and tell you what our plans are right now. We're optimistic that we'll have a very meaningful readout at the end of the year.

And Seamus, to your question about strategic thinking and the process going forward, look, the whole obesity space is maturing. I think the latest data is helping. There's growing awareness, and there will be a lot of interest from multiple players in this space. That's how we see it. What we are trying to do is generate important data that will put us in the best position to do a robust partnership transaction around this asset. A lot of the studies, we've said it many times, we are doing these studies because we think they would add value in our strategic partnering discussions. There are multiple players out there that are going to want to play in this space, and we just want to be ready for that.

Excellent, thanks so much. Appreciate it.

Thank you. Our next question will come from Yasmeen Rahimi with Piper Sandler Companies.

Good morning, team. And thank you for taking my questions. I'm going to go one by one. Maybe a good place to start off would be, can you comment on the 1b NAFLD study, what you're seeing in regards to discontinuation rates, how many data safety monitoring committees have you had? And what your expectations on in terms of GI tolerability? Anything safety-related to the 1b that you've been previewed to during this time could be helpful for us. And then I have a few more.

Thanks for the question, Yasmeen. As you know, we continue to be blinded in the study, and I can't give you data that we don't have. I will tell you that from the safety point of view, we're extremely pleased, as we've said before, with the safety profile and tolerability of the compound in that study as well as the other studies that we're conducting right now. There is no official data monitoring committee for the study; you wouldn't expect it with a Phase 1 study. However, we have a safety committee that reviews the data from the study in a blinded fashion on a regular basis, and those meetings have not identified any issues to date, consistent with what I've said before. Regarding the GI tolerability, we think it's only going to improve going forward. Remember that with Phase 1 studies, the tolerability profile of the compound is less optimistic than it would be in Phase 2 and Phase 3. The reason is, number one, there's less known about the compound at that time, there's more heightened concern about anything that you see. Investigators are heavily attuned to asking patients questions repeatedly.

Subjects are admitted to the unit for much of the time, so they are under constant surveillance. They come back weekly. That's very different from a Phase 2 environment like the MOMENTUM study when patients will be coming back, say, every two to four weeks and not being well monitored constantly. It was well shown in the tirzepatide and semaglutide programs that when they went from Phase 1 to Phase 2, they had a tremendous reduction in their adverse events. So we are very happy with the tolerability profile that we had with pemvidutide in our Phase 1 program; we had no adverse event discontinuations. We think it's only going to get better going forward.

Thanks, Scott. I just wanted to clarify on the commentary you made. One; do you get notified when a discontinuation occurs in this study or the MOMENTUM study, and have you been notified?

Yes. I mean, we are notified. I am not free to speak on this on a specific basis other than to say that we're very happy with what we're seeing right now.

Got it. And then when you made the remarks that safety to GI tolerability could be looking more favorable in our Phase 2 study, are you saying that the Phase 1b NAFLD study GI profile could be given the protocols more similar to that 1b obese dataset that we have seen, or the execution of the 1b more like the Phase 2 momentum? Could you clarify, please?

I think that clearly as we go from Phase 1 to Phase 3, the tolerability profile of the compound improves, so one would expect based on that that the tolerability in Phase 2 might even be better than in 1b. But once you get the patients out of the Phase 1 unit and you know more about the compound and have more confidence from the investigators with what you've seen, it gets better. We expect that the tolerability in the Phase 1b study will be better than it was in the first-in-human study, and that will progressively get better going forward.

Thank you. For my last question, could you provide more details on what we should anticipate from the interim analysis? What factors influence your choice between selecting 20 or 30 patients per arm? Now that we've been in the study for about a month and a half to two months, could you help us understand the size of the interim analysis? I appreciate you taking my questions.

Happy to answer that for you, Yasmeen. As you know, we're right now in the beginning of May. We still have a long way to go with a very rapid recruitment. We simply are going to have to look at the data at the time that we have to do the cut-off and make that decision about whether it's a complete set or if it's an incomplete set? How many patients are in it? Based on our current projections, we think that the number of subjects included in the interim analysis, if not the complete set, will be meaningful enough to be convincing regarding the data that's being seen. That's the best guidance I can give you until we see how enrollment is going.

And when do you make that decision? When is that time period? Is this in July then, or at what time?

Yeah. Probably in that timeframe, the middle of the year.

Okay. Great. Thank you.

You're welcome.

Thank you. Our next question will come from Liisa Bayko with Evercore ISI.

Hi there, how are you?

Good morning, Liisa.

Can you hear me? Good morning.

Yeah.

I wanted to quickly ask about the obesity study that excludes diabetics. Can you share why you are not at a stage where you can include diabetics now? I'm aware of an earlier study, but I'm just curious why you aren't including everyone.

Thanks for the question, Liisa. Well, typically in obesity studies, if you look at the STEP program, the SURPASS program, the SURMOUNT program, in these Phase 2 obesity studies and Phase 3, diabetics and non-diabetics are not included. I believe the agency would want it that way as well. So consequently, you have to choose one or the other, and we think that the more meaningful readout is going to be in the non-diabetics. Obviously, at some point we will do an obesity chronic study, but that Phase 2 study right now is in non-diabetics. We think that taking the lead, given the precedent with STEP 1 and also SURMOUNT 1 which are non-diabetics, just makes sense that we matched up by doing non-diabetics in MOMENTUM.

Yeah, the recent tirzepatide data was all non-diabetic.

Exactly.

Do you see the tirzepatide data as kind of your new benchmark in a way?

Yes. We've obviously been looking at the whole landscape in obesity, and let me first say that it's really validating that the dual agonism approach is becoming more validated now. We clearly see benefits over just a pure GLP-1 approach. The first benchmark was the 15% to 20% range; we have just crossed the 20% mark. Tirzepatide, as you know, has about 20% to 22% weight loss, and that's great because I think the interest in multi-agonism is going to grow with this as well. We now know what GLP-1 and GIP can do. The question is, what can glucagon combined with GLP-1 do? Obviously, we have some data at this point. To put things in perspective, tirzepatide showed about 20% to 22% after 72 weeks. We have shown 10% weight loss after just 12 weeks, one-sixth the time of the tirzepatide data. So we feel very comfortable that we will be able to at least meet, perhaps, surpass that number as we go towards 48 weeks. In our 48-week study, we could already be approaching those numbers, so we feel very good about our prospects based on our Phase 1 data.

Yeah Liisa, I'll add to Vipin's comments that we're extremely excited by the prospect of delivering these results. Without dose titration, we think this is a very, very important commercial advantage, both for patient satisfaction and for physicians prescribing who do not want to be involved in managing complex dose titration. It's well established that the meaningful aspects of weight loss have to be translated into lipids to reduce cardiovascular risk, and we think we have a superior profile based on the inclusion of glucagon over the monotherapy or dual therapy that includes GIP but not glucagon.

It appears that you are experiencing significant weight loss initially. I assume this won't be a linear progression, so it will probably start to plateau. How do you see the progression of this trend, and do you believe the early results indicate potential for sustained weight loss in the long term?

Sure. This is Scot Roberts. When we look at the totality of the data out there, including the STEP studies and the SURPASS studies, we see a relationship between the initial slope of the weight loss and where the final weight loss ends up. We're encouraged because of that, as right now we have the greatest rate of weight loss, certainly through 12 weeks. Will that slope eventually change over a year? I think that's likely. But if you look at the data, there is a relationship there; at least we believe strongly that the bottom is really set by the initial rate.

Interesting; it probably helps and encourages people to stay on drugs and everything, right?

They are saying more of that goes to the dose titration. In fact, they're getting the full dose right out of the gate and so it happens rapidly. They feel good about that. There seems to be this relationship where the weight loss is already set by the initial slope.

Could you provide details on your spending for the HepTcell program and whether there will be an opportunity for a decision on continuing that spending before the readout next year? The main investment value appears to be in the obesity program, and HepTcell seems to be a challenging area with uncertain commercial potential. I’m curious if there is a possibility for an early assessment to determine if the program is worth the investment based on the spending involved.

Yeah, that's a good question, Liisa, and we track that all the time. We think towards the end of the year we'll be able to determine. I think the main driver is going to be the rate of enrollment; it's a very difficult trial to enroll, particularly in the COVID setting, because these are international studies and COVID keeps flaring up in different parts of the world, so things shut down. We hear you, and at this point, as you can do the math, the most significant spend or the majority of the spend is on pemvidutide. We think there is value in finishing that study because without that study we cannot make the argument about combining HepTcell with another antiviral. We need that data, but we'll evaluate that at the end of the year. If we need additional flexibility, clearly, that's a lever we can pull at that point.

Okay. Thank you, guys.

Thank you. Our next question will come from Mayank Mamtani with B. Riley Securities.

Good morning, team. Thanks for taking our question. So for conference data presentation this quarter, could you talk to what we should focus on in terms of understanding the differentiating attributes of pemvidutide, but also maybe specifically at ADA of what might be the datasets that weren't part of Lilly's outlined press release, just things that you're looking out for at ADA? And then I will couple of follow-ups.

Scott.

So Mayank, thanks for the question. We'd highlight the differentiating features. Number one, the potential to achieve even higher levels of weight loss with pemvidutide than the other compounds that have been studied. As Scott mentioned in his reply earlier, the rate of weight loss initially leads us to believe that the final weight loss we will achieve will be higher; we're very optimistic about that. Second, we think the absence of dose titration is extremely important because we think that's right there where the pen hits the prescription pad. Physicians are going to prefer this much more to regimens that they have to follow over five visits with a physician extender or some other kind of help. In the primary care setting, when the primary care doctor has eight minutes in front of the patient to manage this, it's really not feasible, and it's only going to get worse. Finally, we think we differentiate strongly on lipids because the effects of GIP in GLP-1 are mediated indirectly through weight loss. The lipids are mainly a hepatic event, and we have tremendous reductions in liver fat. This also represents the mechanism for the serum lipids; that's why the serum lipids decrease so much. We think that for lipid reduction, which is what physicians are going to focus on, they're going to see pemvidutide as having superior attributes. We're seeing effects on lipids that are similar to statins and fibrates in terms of reduction in total cholesterol, LDL cholesterol, and triglycerides. Regarding ADA, there are going to be other compounds being presented at that time. I'm expecting to see some data from a retailer on their dual and triple agonists. We'll have to wait and see if and what they present. We will be on the podium presenting the results of our Phase 1 trial. Sam Klein, who is an extremely well-known name in obesity research from WashU, will be presenting that, and we're really looking for a great session.

Great. Thanks for that color. Now that you have some cost savings from the 52-week NASH study and you talk about this broad guided metabolic benefit. I was just curious, maybe it's still early days, but we are hearing about ingredient therapies getting to see the outcome trials. Is that part of your plan? Any initial discussions, and is that in any way beginning to inform how you may think about the Phase 3 trial design, 2022, 2024 onwards?

Thank you for the question, Mayank. As you know, CV outcome trials are typically conducted after a product is approved, and right now, we are focusing on surrogate markers which should be highly predictive of outcomes. The primary marker we are examining is lipids, as it is the best indicator of cardiovascular risk available. Currently, without an outcome trial, which is still some time away, our attention is on the lipid levels, and the results are looking very promising.

Yeah, the other part I would just add, Mayank, is that once we have the Phase 2 data, our focus would then shift to immediately having an end of Phase 2 meeting with the FDA, so that would be another important milestone. That's really going to be our first substantive discussion with the FDA on the Phase 3 plan for pemvidutide for obesity.

That's a good question regarding momentum. With the addition of 25 sites, can you share how these sites compare to other studies in terms of patient enrollment per month and how that ramps up from screening to dosing? Are there any concerns about competitive enrollment or challenges with running placebo-controlled trials in the future? Additionally, is the absence of titration a significant factor in enrollment, rather than just focusing on real-world prescriptions later?

Thanks, Mayank. There are several parts of that question. Let me try to hit on them, and if I don't backfill slowly, please ask your question again. Regarding the sites that we have in the trial, each of those sites are accomplished sites in obesity, each with a track record, not only on enrollment but on rapid enrollment, but also retention, which is very important because we're focusing on that. There is a tremendous amount of investigator enthusiasm. We emphasize that investigators want to be in this space, and patients really want to be in these studies. There's always a challenge in these studies to keep people in the studies, particularly the placebo groups. The enthusiasm in the investigator and the enthusiasm that is given to the patient to stay in the trial with lots of attention, help with their lifestyle, and management of the like, is extremely important. The ability to keep the placebos in the trial is important as well. None of these sites have competitive studies, and we don't think that the titration or the absence of it is any issue; if anything, it's a plus because patients are looking forward to more rapid weight loss when they come into the program. That's why they're coming in as the potential for more rapid weight loss and the greater weight loss.

Harris, thanks for taking our question.

Sure.

Thank you. Our next question will come from Jonathan Welandon with JMP Securities LLC.

Thanks for taking the question and congrats on the progress. I guess, I have a little question on just wanting to focus on obesity, which we appreciate, but also understanding the opportunity in NAFLD. It seems more in your hands than someone else's, and how do you have these discussions with strategies if you are successful in obesity? Won't that, pardon the pun, eat into a NAFLD opportunity? Just wondering how someone else would think of how pemvidutide could be used in NASH if you're out there in obesity as well.

Yeah. No, that's a good question, Jonathan. Let me just say this; we've always said that the path to treating NASH is through obesity. If you look at other players that are working in the GLP-1 space or GLP-1 and GIP space, they're all following both obesity and NASH. We think the data that we have generated so far on FLD speaks for itself, and the data we will generate will be sufficient to connect the dots between obesity and NASH. So proceeding with obesity doesn't exclude us from pursuing NASH. Whoever we partner with ultimately will value NASH in addition to the obesity indication. That would be the ideal way for us to proceed with both those indications in parallel. We will be ready to execute a Phase 2 NASH study as soon as possible. We are making all the preparations; we're not putting the pen down. We're just not going to undertake major expense and start the study, but we'll be ready to pull the trigger on that, which we think has value. So we are preparing for all that needs to be done in order to start that study as quickly as possible.

Got it. I guess to that, Richard, I kind of missed in the prepared remarks the 2022 guidance. I was hoping you could run through that one more time.

Sure. I want to address the operating cost guidance, Jonathan. We project R&D expenses for the year to be about $75 million, which includes the $15 million we've spent in Q1. Additionally, G&A expenses are around $19 million, with approximately $8.5 million of that being non-cash.

Very helpful. Thanks again.

Thank you. Our next question will come from Patrick Trucchio with H.C. Wainwright & Co., LLC.

Good morning, team. This is an analyst on for Patrick. I have a couple of questions regarding the HepTcell program. First, what do you consider to be the ideal antivirals to use in combination with HepTcell, and what is the current status of potential collaboration on HepTcell? I have two follow-up questions after that.

You will take that?

Yeah, Scott?

I believe that from a combination perspective, agents that effectively reduce surface antigens are the most promising candidates. We are considering RNA type inhibitors as they are the natural choices. While there are other agents, such as different nucleic acid approaches and capsids, that might be useful, our main focus is on significantly reducing surface antigens to create a better opportunity for HepTcell to activate those T-cells.

Okay, great. So to look forward to the data readout for the first half are we basically anticipating for clearances surface antigen initial dataset?

Yes. I think in terms of your questions about partnering status, that goes hand-in-hand. We've got initial discussions with folks pending the data. It's really a question of who we combine with and it's for them as well as for us, which is the best combination, and that would only be determined after we have the data.

Okay, great. That's really helpful to know. And then the last question about HepTcell. Will we have a new functional cure rate in the initial data, or will we wait for another six months to fully assess, and what rate of functional cure would you anticipate in this trial?

Scott.

Yeah, the trial's really not set up to look at a functional cure. This is meant to look at a neurological endpoint. We think that that's the data we need to take the next important step in the program. So it's really not focused on functional cures. Certainly, we'll be looking for that, but we will not go beyond that. Again, the study is focused on the neurological endpoints, validating the approach, and setting us up then for a combination study that I think everybody understands is really going to be the successful path forward.

Great. Thank you so much.

Thank you. It appears we have no further questions at this time. I would now like to turn the program back over to our presenters for any additional or closing remarks.

Yes. Thank you, everyone for participating today. We appreciate this opportunity to share our results and outlook with you, and thank you for your continued interest. Have a nice day.

Thank you, ladies and gentlemen. This concludes today's event. You may now disconnect.