Altimmune, Inc. Q4 FY2023 Earnings Call

Thank you, Michelle, and good morning, everyone. Thank you for participating in Altimmune's Full Year and Fourth Quarter 2023 Financial Results and Business Update Conference Call. Members of the Altimmune team joining me on the call today are Vipin 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 lean mass preservation data and our full year and fourth quarter 2023 financial results was issued this morning and can be found on the Investor Relations section of the company's website. Before we begin, I'd 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. For a discussion of some of the risks and factors that could affect the company's future results and operations, please see the risk factors and other cautionary statements contained in the company's filings with the SEC. I'd also direct you to read the forward-looking statement disclaimer in our 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, Wednesday, March 27, 2024, 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 Garg, Chief Executive Officer of Altimmune.

Thank you, Rich, and good morning, everyone. We appreciate you joining us today for a discussion of our year-end and fourth quarter 2023 financial results and business update. We are excited about the 2023 achievements with pemvidutide, our GLP-1/glucagon dual receptor agonist, which is in development for the treatment of obesity and MASH, two important clinical indications. Altimmune achieved key milestones in the development of pemvidutide last year, including compelling positive data from our 48-week MOMENTUM Phase II obesity trial and initiation of the impact biopsy-driven Phase IIb trial in MASH. We're also extremely pleased with the results of our body composition analysis from the MOMENTUM Phase II obesity trial of pemvidutide, showing that 74.5% of weight loss came from fat, and only 25.5% from lean mass. Our Chief Medical Officer, Scott Harris will review these results in greater detail shortly. The MOMENTUM trial showed that subjects receiving pemvidutide had a mean weight loss of 15.6%, and over 30% of subjects achieved 20% or more weight loss on the 2.4 milligram dose of pemvidutide at week 48, along with robust reductions in BMI and serum lipids, as well as improvements in blood pressure without imbalances in cardiac events, arrhythmias or clinically meaningful increases in heart rate. In addition, the impressive body composition data further distinguishes pemvidutide from other compounds in development for the treatment of obesity. Turning to our impact biopsy-driven Phase IIb MASH trial, we are looking forward to announcing the top line 24-week results anticipated in the first quarter of 2025. We are confident this trial will be successful considering the positive results from our 24-week Phase Ib trial of pemvidutide in subjects with MASLD, where a greater than 75% relative reduction in liver fat content was achieved at the 1.8 milligram and 2.4 milligram dosages at 24 weeks, along with robust reductions in ALT and cT1, both biomarkers of liver inflammation. A recently completed preclinical study demonstrating direct anti-fibrotic activity of pemvidutide provides evidence of the potential second mechanism for reducing fibrosis in MASH patients. With that, I will 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 tell you about the compelling body composition analysis from the MOMENTUM trial, which showed that 74% of weight loss came from adipose tissue, and only 25.5% due to lean mass, comparable to the effects historically associated with diet and exercise programs. These data are among the best results achieved with incretin-based obesity drugs. With an increasing number of anti-obesity candidates in development, there is growing evidence emphasis on the type and quality of weight loss where the ability to preserve lean body mass has been viewed as an important differentiator in the treatment of patients with obesity. Excessive lean mass loss has been associated with negative outcomes such as sarcopenia and bone fractures, especially in women and the elderly. Additionally, we saw the participants in MOMENTUM preferentially lost visceral fat over subcutaneous fat, an important result, as visceral fat, like hepatic fat content, increases metabolic dysfunction and is highly associated with increased cardiovascular risk. We expect to present a complete analysis of these body composition data at an upcoming scientific meeting. Keep in mind that these favorable body composition data only add to the improvements we observed in the serum lipid profile. We're up to 20% reduction in total cholesterol, 21% reduction in LDL cholesterol and nearly 56% reduction in triglycerides were observed in MOMENTUM participants with elevated baseline serum lipids. This strengthens our view that pemvidutide has the ability to treat not only obesity but its key morbidities like cardiovascular disease and MASH. Recall that in our MOMENTUM Phase II obesity trial, subjects receiving 2.4 milligrams of pemvidutide had a mean weight loss of 15.6%, and over 30% of these subjects achieved 20% or more weight loss at week 48. What was equally exciting is that the 2.4 milligram weight loss curve remained linear with no indication of plateauing at week 48. Along with the previously mentioned effects on serum lipids, pemvidutide also demonstrated improvements in blood pressure without imbalances in cardiac events, arrhythmias, or clinically meaningful increases in heart rate. Glucose homeostasis was maintained with no significant changes in fasting glucose or hemoglobin A1C. Dr. Louis Aronne, lead investigator for the MOMENTUM trial will present the results of this trial at an upcoming scientific conference. Now let me talk about the IMPACT biopsy-driven Phase IIb trial. Approximately 190 subjects with or without diabetes are being randomized 1:2:2 to 1.2 milligrams, 1.8 milligrams, or 1.8 milligrams of pemvidutide placebo administered weekly for 24 weeks. The key endpoints will be MASH resolution or fibrosis improvement after 24 weeks of treatment with subjects followed for an additional 24 weeks for assessment of safety and additional biomarker responses. Enrollment is going well, and we expect to have top line results of the IMPACT trial in the first quarter of 2025. We believe that the rapid rate of enrollment reflects the eagerness of MASH patients to achieve significant weight loss in addition to treatment of their liver disease. This past fall, we also reported that FDA granted Fast Track designation for pemvidutide for the treatment of MASH based on the robust and rapid reduction in liver fat content and biomarkers of liver inflammation observed in our Phase Ib trial. We look forward to working closely with the agency in the development of pemvidutide for this important indication. Finally, turning to our Phase II clinical trial of HepTcell and chronic hepatitis B, the overall response in the recently completed trial was insufficient for further development so we are stopping all further development. With that, I will now turn the call over to Dr. Scot Roberts, our Chief Scientific Officer, to discuss some recent preclinical findings.

Thanks, Scott. Good morning, everyone. I'd like to tell you about two studies that we've recently completed. The first represents an important development related to the therapeutic mechanism of pemvidutide for NASH. We now have evidence for a direct anti-fibrotic effect of pemvidutide in reducing liver fibrosis. The preclinical model used chemical treatment to induce fibrosis as opposed to more typical mass models based on obesity and high liver fat content. The chemical model allows for the separation of direct anti-fibrotic effects from the activity following potent defatting of the liver by pemvidutide. The data showed a significant 33% reduction in the amount of fibrosis after only two weeks of pemvidutide treatment in the presence of continued chemical exposure. These data bolster our optimism about obtaining a successful 24-week readout in the IMPACT trial in the first quarter of 2025. In a separate unrelated study, we demonstrated that pemvidutide treatment increased the efficiency of an important process called reverse cholesterol transport. RCT is the process by which excess cholesterol is removed from tissues and eliminated from the body. It is widely understood that LDL can cause the accumulation of cholesterol in the arteries, leading to atherosclerosis and increased risk for cardiovascular events. In the study, we demonstrated that pemvidutide treatment was able to increase the amount of cholesterol eliminated by the liver by 300% while lowering serum cholesterol levels. Clinically, we have shown that pemvidutide not only lowers serum LDL cholesterol by up to 21%, but also shifts the size of LDL particles towards larger particle sizes that cannot enter the vasculature easily. The demonstration of increased RCT activity, along with reductions in serum lipids and liver fat, supports a potentially broad role for pemvidutide in improving cardiovascular risk in addition to its robust weight loss effects. I will now hand the call over to Rich Eisenstadt to give an update on our fourth quarter financial results.

Thank you, Scot, and good morning, everyone. For today's call, I will be providing a brief update on Altimmune's full year and fourth quarter 2023 financial and operating results. More comprehensive information will be available in our Form 10-K to be filed with the SEC later today. Altimmune ends the fourth quarter of 2023 with approximately $198 million of cash, cash equivalents, and short-term investments, compared to $184.9 million at the end of 2022. We project our existing cash funds us into the first half of 2026, which fully funds our IMPACT trial and MASH, including the anticipated Q1 2025 readout of top line 24-week biopsy data. Turning to the income statement, revenue was negligible in the fourth quarter and full years 2023 and 2022. Any revenue reported during such periods was for indirect rate adjustments on a government contract that we are closing out. Research and development expenses were $16.9 million in the fourth quarter of 2023 compared to $19.2 million in the same period of 2022. Approximately $11.4 million of this total for the fourth quarter of 2023 were direct expenses for the conduct of our clinical programs, including $10.3 million in direct costs related to development activities for pemvidutide, and $1.1 million in direct costs related to development activities for HepTcell. R&D expense in the fourth quarter of 2022 included $13.4 million in direct expenses associated with the development of pemvidutide and $1.9 million in direct expenses related to HepTcell development activities. Research and development expenses were $65.8 million in full year 2023 compared to $70.5 million in the prior year. In full year 2023, we incurred $35.8 million in direct costs associated with the IMPACT and MOMENTUM trials for pemvidutide, and $6.6 million in direct costs associated with the HepTcell campaign. General and administrative expenses were $4.3 million and $3.8 million in each of the fourth quarters of 2023 and 2022. For the full year 2023, general and administrative expenses were $18.1 million versus $17.1 million for full year 2022. The $1 million increase was primarily due to increased stock compensation expense, as well as additional labor-related costs in 2023. An impairment loss on intangible assets of $12.4 million was recognized during the fourth quarter of 2023 related to the acquired in-process research and development asset associated with HepTcell. As previously discussed, the overall response in the Phase II trial is deemed to be insufficient to warrant further advancement in clinical trials, and as a result, we have stopped any further development related to HepTcell. Our quarterly noncash operating expenses for the fourth quarter was $15.1 million, including the IP R&D write-off or $2.6 million for just the recurring expenses. For the full year, total noncash operating expenses was $23.8 million or $11.3 million for just the recurring items. I apologize. Net loss for the three months ended December 31, 2023, was $31.6 million or $0.54 net loss per share compared to a net loss of $21.7 million or $0.43 net loss per share for the fourth quarter of 2022. The increase in net loss in the quarter was primarily attributable to the $12.4 million noncash impairment charge, partially offset by $2.3 million lower research and development expenses. Net loss for the year-end December 31, 2023, was $88.4 million or $1.66 net loss per share compared to $84.7 million or $1.81 net loss per share for the year ended December 31, 2022. The increase in net loss for the year is primarily attributed to the noncash impairment charge, partially offset by lower research and development expenses in 2023 and a $4.5 million increase in interest income earned on our cash equivalents and short-term investments. I will now turn the call back over to Vipin for his closing remarks.

Thank you, Rich. Operator, that concludes our formal remarks. We would like to open the line to take questions. Could you please instruct the audience on Q&A procedure?

Our first question comes from Yasmeen Rahimi with Piper Sandler.

I think the first question we have been receiving is about the ongoing favorable product profile of pemvidutide, and many investors want to know more about the current status of your discussions regarding the parts. The second question is whether you have engaged with the agency about the Phase III design for obesity and what that might entail. Lastly, considering the impressive lean mass preservation results at week 48, how can we expect this magnitude to improve over time in patients? Thank you for the opportunity to ask these questions.

Scott, do you want to take the questions first, and I will come back to the partnering question.

Okay, Yasmeen, so I'll take your second and third questions, and then Vipin will answer the partnering discussions. So our plan is to have a meeting with the agency in the second half of this year to discuss our Phase III program in obesity. And at that time, we'll have final conclusions about the design of the program and the trials. But the template for this has been established with other programs, and we think that we would have a similar development program in Phase III. Regarding the body composition data and the results that we saw at week 48, yes, the results are compelling and among the best in class for incretin agents and very similar to the percentage of lean mass seen with healthy weight loss, with diet and exercise, and this is what obesity experts are emphasizing, is to get the lean loss down to avoid the comorbidities of losing lean mass. As you may be aware from the bariatric and weight loss literature, the percentage of weight loss that is lean mass decreases over the course of time. So whereas we were at 25.5% at week 48, there's potential to go to even lower numbers, the subjects were followed out to week 68 to week 72.

Yes. Yes. In terms of partnering discussions, the status of partnering discussions, we are having robust discussions with companies that are both scientific and technical in nature as well as business-related discussions. As you can imagine, each company has their own particular focus, but they're all appropriate, they all appreciate pemvidutide comprehensive and differentiated profile. So overall, we are pleased with the scientific and business discussions to date, and we will update as things develop in the future.

Our next question comes from Seamus Fernandez with Guggenheim.

Appreciate the opportunity to ask questions here. The partnering discussions, Vipin, you mentioned scientific and technical discussions but also business discussions. It seems to me, this is predominantly a business discussion at this point. So I'm just trying to better understand the commentary of differentiating those two. If there are scientific and technical discussions, what are the scientific and technical debates that remain for pemvidutide in the context of an obesity program? And in the past, on partnering, you've commented that, perhaps, there will be a separation of the opportunity for obesity being with a partner, but perhaps having NASH or MASH move forward exclusively with Altimmune. Do you still believe that, that is a realistic partnering discussion given the fact that we've now seen hint that tirzepatide has an opportunity potentially to impact fibrosis? And we have another competitor molecule in servidutide that's likely to present data in the near term with regard to their own potential fibrosis benefits and both programs have a very robust obesity program, either planned or well underway.

Yes, Seamus. There’s a lot to discuss. Let me address your questions one at a time, and feel free to follow up if I haven’t fully answered everything. Regarding our discussions with partners, different companies have varying focuses, but everyone acknowledges the cardiovascular benefits of pemvidutide. This focus on obesity with cardiovascular advantages is driving these discussions, especially concerning lipid profiles, serum lipids, liver fat content, and blood pressure. We believe that these factors combined will have a significant impact, not only in terms of weight loss but also on cardiovascular outcomes. This is a key driver in our conversations, and we are encouraged because we believe this value proposition is being understood and appreciated. The question now is whether this partnership is centered on obesity, cardiovascular health, MASH, or a combination of all. As for MASH, we are progressing with the program, and we expect to have our Phase IIb data ready in the first quarter of 2025, which will further advance that program. We are clearly differentiated in both obesity and MASH, and we stand apart from other glucagon programs as well. Maybe, Scott, you could provide additional comments on that.

Yes, Seamus. We're encouraged by the results with the other compounds in MASH. You mentioned tirzepatide and also servidutide. We believe that the effects seen with servidutide are due to the glucagon component. And we'd remind you that molecule is heavily biased to GLP-1 away from glucagon, and there's not as much glucagon in the molecules, and our molecule where we have one to one. We feel so confident about the potency of our molecules that we're actually willing to break from the pack, read out the endpoint of 24 weeks. The other compounds are reading at considerably longer periods of time. Also with regards to servidutide, reminds you that the adverse event dropout rate in that trial was very, very high despite the fact they titrated for 20 weeks. So we don't think the tolerability profile with our compound is comparable. But we think that based on all of our biomarkers, all of the data that we generated up to date, we're going to have a very, very potent readout and the confidence that we could actually read that out of 24 weeks rather than 48 weeks represents our confidence in the molecule.

Great. And maybe just a follow-up on the MASH program. Can you just remind me the doses? My recollection was that the plan was to explore only up to the 1.8 milligram dose. But where we saw more meaningful weight loss in the obesity program was at the 2.4 milligram dose. So just wanted to see where the sort of dose range is going? And then you mentioned weight loss in MASH patients, but my recollection is that there was very limited weight loss in the NASH sort of Phase Ib/II program that you ran previously out to 12 weeks. Just trying to get a better understanding because I my recollection is you explore the 1.8-milligram dose there, but we didn't see much weight loss and that, I guess, was partially attributed to the patient population recruited but just trying to get a better understanding of how this Phase II will differ from your initial Phase Ib/II program?

Right, Seamus. So we're seeing a different dose response curve for liver fat than we are for weight loss. With weight loss, we're seeing increasing weight loss with increasing doses of drug. And in fact, we believe that if we were to go to even higher doses of pemvidutide in the future, even greater weight loss would be achieved, very happy with the weight logistics we've achieved in the obesity program. We think it's very telling along with the other effects that Vipin described, but we have the opportunity to go higher because the dose response curve in obesity continues as you go up. When you get 70.5% plus liver fat reduction at 1.8 milligram dose, there's really very little place to go further with the 2.4 milligram dose in the dose response. So that's the way the trial was designed, looking at the 1.2 milligram and 1.8 milligram doses. We always have the opportunity to add that on Phase III. That's always a possibility that exists for us, but right now in the Phase II design, we're going to be looking only at the 1.2 milligram and 1.8 milligram doses.

Our next question comes from Roger Song with Jefferies.

Great. Thanks for sharing the new data and the update and taking our questions. So another question related to the partnership, maybe a little bit more specific. Can you let us know how much discussion is contingent upon this more detailed Phase II obesity MOMENTUM data, at the words, your Phase II MASH data kind of upcoming? And just remind us the discussion is a combination of both programs moving forward or will different partners have different interest in certain programs?

Yes, Roger. I would say the good news is that most of our partnership discussions are actually focused on both obesity and MASH program. Most of the players that are looking at pemvidutide are interested in both because they're very related indications that you can imagine. So it's going to be hard to separate them anyway. But in terms of developing and commercializing a product, it's a very similar pathway. So the good news is that most of our partnership discussions are focused on both of those programs. So we think ultimately, our ideal partner would be a multinational player that has the ability to develop both obesity and MASH and commercialize in both of these and really take this program forward in parallel. So we're in good shape from that perspective. The partners are clearly getting the message in terms of the value proposition, the differentiation that pemvidutide brings. And therefore, we're very excited about those discussions.

Got it. And then another question. It seems that muscle preservation is very compelling, which is interesting. How do you think pemvidutide can be differentiated in terms of maintenance or rebound mechanisms, given that it focuses more on liver lipids compared to GLP-1, which primarily operates through a hypocaloric mechanism?

Yes, that's a great question, Roger. Scott, do you want to take that?

Yes, Roger. We feel that every time we generate data, we're showing the really incredible differentiating effect with glucagon compared to other mechanisms. So we're very familiar with GLP-1 and GIP, and those drugs have very nice effects on weight loss, and they also have other benefits that have been seen in clinical trials that are ongoing or soon to be completed. Glucagon brings a whole different dimension here. That's extremely valuable for not only achieving weight loss but maintaining weight loss, healthy weight loss, and having long-term effects in cardiovascular outcomes. So we really think in that sense, glucagon is a game changer. We've seen, as you've mentioned, the effects on serum lipids and liver fat. And now on top of that, we're seeing a very potent effect on preserving lean body mass as people lose weight. This has been a very important point of differentiation and discussion in the obesity circle for the last two years because now, people are turning away from the absolute amount of weight loss to the quality of the weight loss. And that's important, especially for long-term maintenance. So the ability to hit a certain number acutely doesn't really matter if someone stops the drug and regains the weight or regains the weight that's mainly fat or not lean. So we think this could be an incredibly important mechanism for maintenance. As you know, there was a suggestion in the obesity data at the 2.4 milligram dose that the weight loss was continuing in an aggressive manner at 48 weeks. We think this would also represent a fundamental effect of glucagon on intermediary metabolism and energy expenditure that could continue in the future basically changing the metabolic balance and having, in that score, real differentiation from the GLP-1s and the GIPs. We don't have that data at this point. It certainly would be of great interest to study this going forward, and it's something that we're strongly considering in our Phase III program.

The other thing I would add is, this preservation of lean mass has important implications for continued weight loss and for maintaining the weight loss because I think everybody appreciates that because of the sheer amount of muscle that people have, it represents the lion's share of where calories are spent. So by maintaining more lean mass, more muscle, we maintain more of an engine to burn those calories and to reduce weight.

Our next question comes from Liisa Bayko with Evercore.

I think most of my questions have been answered, but maybe if you could give us a little more, I guess, color on some of the kind of feedback you're getting from potential partners as it relates to dose and Phase III strategy? And I just wanted to confirm that your plan is to wait for a partner before proceeding into Phase III for obesity?

Yes, Liisa. I mean as you can imagine, partners are looking to differentiate going forward. I mean, if you are a third or fourth or fifth company launching a drug in the obesity space, the idea of having yet another GLP-1 or even a GLP-1/GIP without differentiation, it's going to be difficult. So therefore, we believe having the mechanism adding addition of the glucagon mechanism is very attractive, particularly to new players getting into the obesity space because, again, differentiation is going to be the key to commercially to successfully launch a product in obesity space going forward. So we are really very encouraged by the fact that, that's what partners are focusing on. Scott talked about the quality of weight loss. That has become a very important component of our conversations because, again, if you're looking longer term, the conversation is now going to shift from just losing weight initially for whatever, 48 to 72 weeks. So how do you maintain that weight loss? And what is the maintenance schedule and what's the quality of weight loss at that point? So I think on both of those fronts, we bring a very differentiated approach or a very differentiated product. So we are very encouraged by those discussions, particularly by the fact that the partners are actually getting it and focusing on it.

How are they thinking about your titration schedule? I know you're only doing that for the highest dose or the lower doses you have. Is there any interest in the low dose? Like what is the thinking on kind of your dosing approach? And how much of a differentiating feature is no dose titration? Or might you actually consider dose titrating to even improve tolerability more?

Yes, it's an important feature that all three doses we discuss—1.2, 1.8, and 2.4 milligrams—are active. At 1.2 milligrams, some patients are losing 20% or more of their body weight, and many are losing 10% or more. Therefore, 1.2 milligrams is a potent dose for many patients. We plan to advance all three doses into Phase III trials for approval. This allows doctors the flexibility to choose the lowest dose of 1.2 milligrams for patients. The tolerability at this dose is similar to a placebo, meaning dose titration is unnecessary. Doctors can start patients at this dose, monitor their weight loss, and if more weight loss is needed, they can increase to 1.8 and then 2.4 milligrams. This simplicity in dosing is appreciated as the market shifts towards primary care, where doctors prefer to avoid complex dose titration. This feature significantly differentiates pemvidutide.

Yes. Ease of prescription is extremely important. Physicians don't have the time to monitor patients through titration to give it to physician extenders or to hire them, to spend money on that. And also with each escalation, many times, you have to get approval from insurance companies to escalate. And in all of these titration schemes with other drugs, you're starting in drugs that are not on approved or necessarily effective doses. Patients here would start in the 1.2 milligram dose, Liisa, and that's an active dose, and that will be an approved dose, which has a tolerability similar to placebo. And I think for primary care, to have a mean of 10% weight loss in the 48 weeks and longer with longer therapy with all the benefits is a real win, but we also offer the option of going to higher doses in patients who want to lose more weight.

Our next question comes from Corinne Jenkins with Goldman Sachs.

I guess maybe, the partnership has obviously been a huge focus. But as you think about timelines or kind of goals for the management team, I guess, is there anything you can share with respect to when you'd hope to have something established? And then maybe you could comment, too, on whether you'd like to have something in place by the time you get to Phase III conversations with the FDA later this year? And the other question that we had was just, how many patients were included in the body composition analysis? And is that something you've looked at in or are just curious how many patients and how robust that data set is?

Yes. Corinne, 106 subjects participated in the study, and we have baseline week 48 data on 70 patients. And we've looked at the data; its statistical significance is extremely high. So we really feel that this is quality data, and we look forward to presenting it in greater detail at a scientific meeting later this year.

And Corinne, in terms of the timelines, as you know, those of us who have done deals, it's very difficult to sort of lay out a timeline, but our focus has been always to have a partner in place before we start Phase III towards the second half of this year. It would be nice to have a partner alongside with us when we have our end of Phase II meeting. It's not critical because it's pretty standard at the end of Phase II meeting for obesity program. So we're very comfortable having that conversation with the FDA, but it would be nice to have a partner alongside with us, and we'll see if that's going to be possible.

Our next question comes from Mayank Mamtani with B. Riley.

I appreciate the comprehensive update here. Just a few more precise technical follow-ups there. So regarding the liver fat normalization data up to 79%, which is a little higher than what you saw in Apple study, but still, what's the sample size? And I assume it's a pooled analysis from top dose levels? Could you please clarify that?

The liver fat data comes from the body composition study, where patients underwent MRI scans and received an MRI-PDFF during the liver scans. We are observing a very high rate of liver fat normalization, which appears to be similar to what we found in patients from the NAFLD study, who initially had much higher liver fat levels. In the NAFLD study, the average liver fat was around 22% to 23%, whereas in this study, it is approximately 5%. Therefore, the threshold for normalization is lower.

Got it, Scott. And a related question I have on the body fat composition data, the methodology used here, you just clarified that MRI-based, but there are additional approaches like DEXA or BOD POD that could be helpful to also compare against what we have for semaglutide. Are those analysis being conducted and could be presented in the future? Or was that not part of the protocol?

Well, MRI is the preferred technique for body composition. We think that many experts think the DEXA is not a good surrogate for the specificity and sensitivity of MRI. So that's the technique we relied on for this study.

Okay. Understood. And then on the IMPACT MASH trial execution, any color you can provide on pace of enrollment and if you'd expect later in the year doing a placebo-controlled study could be impacted now that an approved MASH therapy is on the market? And to the prior commentary you had that some of the approved drugs will start showing more effective anti-fibrotic effect than we've seen before. Anything on the MASH trial execution through the course of the year we should be aware of?

Yes. So enrollment in the trial is going quite well. And the feedback we get from investigators and their subjects is that they prefer to come into their trial because patients can lose weight. So faced with the possibility of choosing amongst different trials available to them in the community, we're seeing patients come into our trial because this trial offers weight loss and also potent effects. We believe that this reflects the commercial potential of the drug when these drugs are being offered. We're seeing resmetirom recently being approved, but there's no weight loss associated with that. And we think head-to-head, we're going to do extremely well in that regard. Regarding the other benefits of the drug, remind you that we're seeing class-leading effects on liver fat reduction and other biomarkers of inflammation, which is going to allow us to actually read out and differentiate from the pack in this area by reading out on fibrosis improvement in 24 weeks, and we think that we can do that. But repeatedly, the effects of glucagon here are being shown to be very differentiating and very valuable, especially with regards to the quality of the changes that are being seen, especially in the weight loss front. And we look forward to generating more data in the future.

And Scot, you may want to talk about the direct anti-fibrotic effect that we are seeing.

Sure. But actually, before I get there, I just wanted to reaffirm that we're in the sweet spot, when it comes to MASH, we're in this sweet spot. Scott just talked about resmetirom and also the FGF21s are doing great jobs on directly acting on the liver but there's no weight loss associated with those. With drugs like tirzepatide, they're hitting MASH resolution, but the liver defatting of a straight GLP or GLP/GIP is just not that great. And that's why we believe the fibrosis endpoint wasn't hit. So here, we have a direct acting agent that can defat the liver very quickly and control inflammation very quickly, but we also have the weight loss. And you don't find those two qualities in the competitors that are out there. As far as the direct anti-fibrotic effect, we think that we talked about here today are exciting and really offer a second mechanism that could certainly push things along for F2F3, which is our intended population and is the population in our IMPACT study, but also may have implications for late-stage fibrosis F4, for example. So we're continuing to look at that and try to understand the mechanisms by which this is occurring, but we're excited about the data, and we think that it certainly adds to the value of pemvidutide for MASH.

And just maybe staying with you, Scot, final question on that preclinical anti-fibrotic study data you report, I think 33% level fibrosis in less than two weeks. In the same experiment, chemical experiment with incretin and non-incretin drugs, are you able to comment on what you've seen? And then also lastly, an update on the oral formulation of pemvidutide, I believe you were pursuing a couple of technologies there. Is there any early data emerging that you can talk about of the overall peptide format. And thanks again for taking our question.

Sure. As far as MASH drugs are concerned, there aren't many studies focusing on the non-steatotic, non-obese model. It's challenging to determine whether we're reducing liver fat, which accounts for the anti-fibrotic effects, or if there's a direct activity at play. For instance, lanafibinor has conducted a similar study to ours and shows comparable fibrosis reduction effects. Lanafibrinor is demonstrating anti-fibrotic effects in clinical settings and is currently in Phase III trials. There isn't much available in this field, but this data point is significant. Regarding the oral formulation, we’re making good progress. In our in vivo studies, we're detecting a substantial fraction of pemvidutide levels that we achieve clinically, specifically at the 1.8 milligram or 2.4 milligram doses. We know the levels we should reach, and we are attaining a significant portion of that with these drugs. We believe we are moving in the right direction and are currently evaluating two different approaches, both showing promise. We hope to announce that one of these candidates will enter IND development by the end of the year.

Our next question comes from Jonathan Wolleben with JMP.

A couple of follow-ups on the body composition study. I'm wondering if you could give some context for how what you're seeing with pemvidutide compares to semaglutide and tirzepatide? And if you expect to see similar changes with other dual and triple agonists that include glucagon work this is specific to pemvidutide?

Yes, Jonathan. So in the same analysis, I remind you that we were at 25.5%, semaglutide is at 40%. So compared to semaglutide, we're clearly preserving more lean mass. Within the semaglutide prescribing information, the higher rate of bone fractures in women in the elderly is highlighted, we believe that that's associated with the lean mass loss, and it emphasizes the importance of preserving lean mass as people lose weight and to get as close to the ratio seen with diet and exercise, which is about 25%, and we've achieved that. The tirzepatide data has only been presented in abstract form. It's a bit difficult to see the exact number, but we believe it's at about 26%. So clearly, we're in that class of the leading drugs in this space. And renitutide reported out a lean ratio, in other words, how much lean was being lost compared to body weight, of about 37% to 38% in a recent trial. Now we believe that the effects that we're seeing are being driven by glucagon. We would point out that we believe that we have more glucagon in our molecule in our formulation, and that's why we're differentiating on the body composition, so we think the more we've done, the better in a variety of areas, including reduction of lipids, reduction of liver fat, and now better preservation of lean mass.

And our last question comes from Patrick Trucchio with H.C. Wainwright.

Just first a clarification on the lean mass data. I'm wondering if how the lean mass preservation and body composition compared across dose levels of pemvidutide or if it was consistent across doses? And then separately, I'm wondering if the updated preclinical or clinical data reported today has impacted the way you're thinking about a potential Phase III program in obesity in terms of trial design, such as dosing titration or endpoints? And separately, can you tell us how the data reported today would be expected to read through to the IMPACT program?

Patrick, I'll take that. The total loss ratio we quoted at 25.5% was consistent across all dose groups, meaning we achieved that ratio regardless of the dose, with 25% across all three doses. The data on body composition makes us consider incorporating this into a Phase III design. The most significant change we've made in the program thus far has been dose reduction, which we believe will greatly enhance the tolerability of the compound in Phase III. We have the flexibility to explore longer titrations, although that decision hasn't been made with our partner yet. Currently, we don't feel the need for longer dose titration. As Vipin mentioned, especially at the 1.2 milligram dose, it stands out against other compounds, particularly in primary care. However, for the future program, there is potential to testing higher doses if we decide to pursue that, as all evidence suggests it would lead to higher weight loss. Nonetheless, I want to stress that we are very satisfied with the fixed 15.6% weight loss we achieved at 48 weeks, which could increase further with longer treatment durations. The endpoints for these studies are largely defined by the FDA for both the non-diabetes and diabetes trials. We are considering whether to conduct a study that includes body composition, but we also have other avenues to explore that we can discuss later. Regarding the MASH program, we've always been confident in our ability to differentiate from other drugs. The anti-fibrotic potential of pemvidutide has been highlighted, and we believe the glucagon content of the molecule will enhance its effects. We expect to show statistical significance at 24 weeks of treatment rather than 48 weeks. The anti-fibrotic data discussed by Scot also strengthens our confidence in achieving the fibrosis endpoint, as we're addressing fibrosis through both reducing liver fat and providing a direct anti-fibrotic effect, which is crucial as well.

Yes. Just only one thing I would add to that, that in terms of looking at the Phase III plans, I mean, as you know, for Phase III, we're going to need thousands of patients, particularly for a safety database. So that gives us the opportunity to actually have multiple patient populations that we can test, we can study under the Phase III program, particularly given the differentiation of pemvidutide. For instance, we might be able to have a subpopulation looking at high serum lipids and show that benefit and try to get that on the label. So those are the kind of discussions and considerations that we are going through in terms of how we designed the Phase III program.

This concludes the question-and-answer session. I'd like to turn the call back over to Vipin Garg for the closing remarks.

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 for your participation. This does conclude the program. You may now disconnect. Good day.