Atea Pharmaceuticals, Inc. Q1 FY2021 Earnings Call

Good afternoon, ladies and gentlemen. Welcome to the Atea Pharmaceuticals First Quarter 2021 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Following the formal remarks, we will open the call up for your questions. I would now like to turn the call over to Jonae Barnes, Senior Vice President of Investor Relations and Corporate Communications of Atea Pharmaceuticals. Please proceed.

Thank you, Operator. Good afternoon, everyone. And welcome to Atea Pharmaceuticals first quarter 2021 financial results conference call. Earlier today, we issued a press release which outlines the topics we plan to discuss. You can access the press release, as well as the slides that we’ll be reviewing today on the call by going to the Investors Relations section then the Event & Presentations area of our website at ir.ateapharma.com.

Thank you, Jonae. Good afternoon, everyone, and thank you for joining us today. We continue to make meaningful progress in our mission to discover and develop antiviral drugs for the treatment and prophylaxis of severe viral diseases. Our pure nucleotide prodrugs have pharmacological properties that are uniquely suited for the treatment and prevention of these viral diseases. Our drug candidates are designed to target viral polymerase—RNA polymerase, a highly conserved enzyme critical to the life cycle replication of these viruses. We believe our platform offers many advantages, including potent and selective antiviral activity, convenience of administration, and scalable manufacturing, all essential when targeting millions of patients worldwide. As we reported on our last conference call, we have been very active so far this year in publishing and presenting preclinical and clinical results for AT-527. A recap of our scientific communications is on slide three and includes publishing a manuscript highlighting important in vitro activity of our AT-527 against SARS-CoV-2 in Antimicrobial Agents and Chemotherapy. We presented favorable Phase 1 results in March at the Conference on Retroviruses and Opportunistic Infections or CROI. These results validate the modeling from our preclinical animal models, which predict that the drug's lung levels should consistently be above the EC90 level of 0.5 micromolar. Since the respiratory tract is the initiation site of the SARS-CoV-2 replication, these data demonstrate the potential for AT-527 to achieve meaningful drug levels in the lungs.

Thank you, Jean-Pierre. On slide five, I’ll begin with an overview of the ways AT-527, our lead product candidate, may address the challenges that currently exist with the treatment and prevention of COVID-19. We believe that oral direct-acting antivirals or DAAs can play an essential role in the treatment of COVID-19 with their ability to rapidly inhibit viral replication in the early phase of infection and potentially reduce disease progression, which for COVID-19 would lead to a meaningful impact on global health. We believe that based on the favorable profile, it has the potential to accelerate time to recovery, prevent or shorten hospitalization, and reduce medically attended visits. It also has the potential to reduce the transmission of the virus and hopefully can impact long-term COVID sequelae. DAAs may be used in pre- and post-exposure prophylaxis. These are all key objectives that we aim to evaluate in the clinical program for AT-527 as we are conducting globally with our partner Roche. We view the use of a DAA as complementary to COVID vaccines. This is a similar treatment paradigm to influenza. We believe that a multi-pronged approach including both prevention and treatments will be essential for the challenges that we will continue to face with the SARS. Moving to slide six, as summarized, we expect it to be an eventful year for AT-527 as highlighted by the multiple global clinical trials we plan to conduct with our partners, Roche. Throughout 2021 and beyond, we will be delivering a series of data readouts that will form our roadmap to a near-term NDA submission and product launch.

Thank you, Janet. As Jonae mentioned in her introductory remarks, earlier this afternoon we issued a press release containing our financial results for the first quarter of 2021. The statement of operations and the balance sheet as of March 31, 2021 are on slides 13 and 14. For the first quarter of 2021, the increase in research and development expenses compared to the first quarter of 2020 was principally driven by an increase in external clinical development and manufacturing expenses incurred primarily in conjunction with the advancement of AT-527 for the treatment of COVID-19 and, to a lesser extent, AT-752, which as you’ve heard, is being developed for dengue fever. These expenses included our share of costs incurred by Roche and increases in internal spend primarily due to an increase in personnel-related expenses. The increase in general and administrative expenses was primarily due to the expansion of our organization and consists principally of an increase in payroll and personnel-related expenses. I’m pleased to report that we ended the first quarter with an exceptionally strong balance sheet to support our clinical development programs. As of the end of the first quarter, cash and cash equivalents were $833.8 million. We anticipate our current cash run rate will take us through 2023 to advance each of our pipeline programs. Apart from our financial results, I would also like to note that the IPO lockup recently expired, and previously restricted shares became available for trading beginning on April 28th. As expected, we experienced an increase in trading volume around this event, which continues.

Thank you, Andrea. 2021 is off to a strong start, highlighted by the initiation of the global Phase 3 MORNINGSKY trial of AT-527 in mild to moderate COVID-19 patients in the outpatient setting. This was a significant milestone and represents a major advancement toward our goal of providing an easily administered and widely available antiviral to help in the fight against this global pandemic. We look forward to sharing interim virology data from the Phase 2 program for AT-527 later this quarter and reporting data from our Phase 1a study of AT-752, which is being developed for the treatment and prophylaxis of dengue fever in the second half of 2021. We continue to make progress with the other drug candidates in our antiviral pipeline and expect to report progress on these programs later this year. We remain steadfast in our mission to advance these important programs to the benefit of patients worldwide. We have the right people, the right programs, and the right partner to bring these potentially lifesaving drugs to market. Importantly, we have the financial resources to support this mission. With that, Operator, we will now open the call up to questions.

Thank you, sir. Your first question is from Eric Joseph from J.P. Morgan. Your line is open.

Hi. Thank you. Good evening. Thanks for taking the questions. Just hoping you could provide a bit of an update on enrollment progress in the Phase 2 trials, reiterating timelines for data updates later this quarter, or even should we anticipate a full enrollment of both the outpatient and hospitalized studies where it should be expected or a partial number and if it’s the latter, maybe you can kind of guide expectations there and then I have a follow-up?

So thank you for the question. We’re not anticipating that either study will have completed enrollment. We will, I believe, have a substantial number of patients that we will be able to report data on, and we are hoping that this will provide a trend in our understanding of the viral connection associated with the drug in our hospitalized study. As I mentioned earlier, the outpatient study has considerably expanded its footprint, and sites are coming on stream all the time now. So we anticipate that the enrollment will move forward pretty expeditiously.

Okay. That’s really helpful. And as it relates to the Phase 3 MORNINGSKY trial, could you talk about the geographic distribution of participating sites currently and what gating factors remain to facilitate approvals or the initiation of sites in the U.S.? Is there a minimum or do you anticipate a minimum number of patient participation in the U.S. to facilitate registration there? Thank you.

So, the study is open in countries in Europe at the moment, and we are seeing other countries opening up around the world as the CTA gets approved, including Japan, and there are more countries still to come. We are making good progress with the FDA, and we anticipate that we will be able to enroll patients in the U.S. in the foreseeable future once we’ve resolved the issues around that with them. So, we anticipate that there should be representation from the U.S. in the study.

Okay. Thanks for taking the questions. I’ll hop back in the queue.

Your next question is from Matthew Harrison from Morgan Stanley. Your line is open.

Great. Good afternoon. Thanks for taking the questions. I guess, two for me. First, on the first dosing cohort, assuming that’s what we get in terms of interim data, can you just maybe help us think about what you know from drug levels and exposure about what you think is reasonable to expect in terms of viral load decline in those patients? And then, I guess, separately, given some of the enrollment issues that you faced with these initial studies, can you just talk about your confidence around being able to enroll the Phase 3 quickly? Thanks.

So the confidence around enrolling the Phase 3 study is really that—I think it’s a very similar population to the outpatient study. We’re looking for patients with mild to moderate COVID-19. I think it’s a lot less interventional, I would say, than the Phase 2 study, which makes it a lot more patient-friendly for people to want to participate. We’re not collecting the pharmacokinetics, etc., and all of the viral loads that we are collecting in the Phase 2 studies. So from that perspective, we’re pretty confident that this ought to be considerably easier for patients and has a significantly larger footprint, because it’s a less intense and less specialized study. So we believe that that study will actually enroll considerably faster and we have more than 150 sites identified for that study. So we anticipate that it ought to be able to go pretty quickly. With regard to the Phase 2 studies, the dose selected for those studies was based on experience with our dosing of AT-527 in hepatitis C and the modeling derived from that, and also from some preclinical modeling that we have and also the Phase 1 study that we conducted in December, which again corroborated the data that we already had in support of the dose that we have already selected for that. And so we’re pretty confident that the dose ought to be the correct dose in order to see a good antiviral effect. And by good antiviral effect, we’re anticipating that we would like to see something in the range of what has been seen with the antibodies and also with monoperivir, and in seeing approximately a lung drop in viral load in the first few days in our study.

Great. Thanks very much.

Thank you.

Your next question is from Jonathan Miller from Evercore. Your line is open.

Hey, guys. Thanks for taking the question. Two for me, how should I think about population or inclusion criteria for the post-exposure prophylaxis trial starting later this year? Is this going to be similar to the mAbs or a little bit different? How broad is the utility for that indication? And then secondly, what’s your latest thoughts on the cadence of demand for an oral antiviral in 2022, for instance, given the pandemic course so far this year and where you see ahead?

So I’ll answer the first question and then, John, perhaps you might want to answer the second. So with regard to the inclusion criteria for our prophylaxis study, we’re still actually working on that protocol. So I can’t really comment or give you too much in the way of specifics. But we believe that we anticipate that we will enroll patients down into their teens in our Phase 3 study. So we anticipate a broad population. We believe that the drug interaction profile for our drug is going to be pretty benign, so we would anticipate that this would allow for many patients or people infected with the disease to qualify to take the drug. John, over to you.

Sure. So as far as for the ongoing demand for this year and into next year, we continue to see a need for both an oral antiviral and for a vaccine for a couple of reasons. One is the vaccination rates are obviously varying, particularly in the United States, due to the introduction of various variants that we continue to see evolve. And with that, we see that most companies have said that there will likely be a need for a booster. So for all of those reasons, we continue to see that the need will continue.

I think what's important also, just to add to that, John, is that with our Phase 3, we will also follow up with a study that will evaluate the impact of direct-acting antivirals such as AT-527 on the long-term sequelae, which, as you know, is becoming a major issue for 30% to 40% of individuals that got COVID-19. So, that will further emphasize, if the data are positive, the importance of DAAs also to deal with the long-term sequelae of the disease.

And Jonathan, one thing I forgot to mention, of course, was that we really started asking about post-exposure prophylaxis. And in this case, you’re seeing testing ramp up around the world. And with that, I think you’ll see a lot of asymptomatic cases that will be identified, opening up for direct-acting antivirals as well.

Makes sense. One more maybe factual question, do you have plans for interim analyses in the Phase 3 and just what might those look like?

Janet?

We will determine whether we need to do an interim analysis at some point. I think the protocol is written flexibly at the present time, but I don’t think I can really comment further.

Thank you very much.

Your next question is…

Thank you very much for your attention, and we appreciate it. Thank you very much.

This concludes today’s conference call. Thank you for participating. You may now disconnect.