Earnings Call Transcript - AVIR Q1 2023

Operator, Operator

Good afternoon, ladies and gentlemen. Welcome to the Atea Pharmaceuticals’ First Quarter 2023 Financial Results and Business Update 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 at Atea Pharmaceuticals. Ms. Barnes, please proceed.

Jonae Barnes, Senior Vice President of Investor Relations and Corporate Communications

Thank you, operator. Good afternoon, everyone, and welcome to Atea Pharmaceuticals’ first quarter 2023 financial results and business update 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 will be reviewing today by going to the Investors section of our website at ir.ateaPharma.com. With me today from Atea are Chief Executive Officer and Founder; Dr. Jean-Pierre Sommadossi; Chief Development Officer; Dr. Janet Hammond; Chief Medical Officer, Dr. Arantxa Horga; Financial Officer and Executive Vice President of Legal, Andrea Corcoran; and our Chief Commercial Officer, John Vavricka. They will all be available for the Q&A portion of today’s call. Before we begin the call and as outlined on Slide 2, I would like to remind you that today’s discussion will contain Forward-Looking Statements that involve risks and uncertainties. These risks and uncertainties are outlined in today’s press release and in the Company’s recent filings with the Securities and Exchange Commission, which we encourage you to read. Our actual results may differ materially from what is discussed on today’s call. With that, I will now turn the call over to Jean-Pierre.

Jean-Pierre Sommadossi, CEO

Thank you, Jonae. Good afternoon, everyone, and thank you for joining us. As you will see on Slide 3, we have had a busy start of the year with progress across our COVID-19 and HCV program. I will begin with a few highlights from our COVID-19 program. First, we remain laser-focused on the execution of our global SUNRISE-3 study, where I’m pleased to report that as of today, we have a broad geographic footprint with regulatory approvals in over 50% of the targeted countries. Just last month, we were excited to receive from the U.S. FDA a fast track designation for Bemnifosbuvir for the treatment of COVID-19, which has the potential to expedite the development of Bemnifosbuvir. We presented multiple data sets at scientific meetings, including CROI, ICAR, and ECCMID, each of which highlighted Bemnifosbuvir's clinical efficacy and favorable safety profile, including a compelling drug interaction profile. Finally, we continue to make progress advancing our second-generation protease inhibitor. Turning to HCV, we remain on target for the first patient 2b dose in our phase 2 combination trial this quarter. We continue to expect initial results from our first cohort of 60 patients by year-end. Data recently presented at ICAR supports our combination profile, and new in vitro results indicate a highly compelling antiviral profile compared to the current standard of care. Moving to Slide 4, as I mentioned, we had a large presence at the major antiviral medical meetings during the first quarter. Some of the key highlights of our current program include the full results in the MORNINGSKY trial, presented showing a 71% reduction in risk of hospitalization; with benefits reviewed as compared to the placebo in the MORNINGSKY trial, there was a subset showing an 82% reduction in risk in patients over 40 years old. Low risk of drug-drug interactions with commonly prescribed medicine for COVID-19 and HCV, which we believe is a key feature of the drug. Slide 5 outlines the data presented at medical meetings beyond our COVID-19 program. At ICAR, we presented HCV combination data showing the Bemnifosbuvir's potent individual synergistic antiviral activity and in vivo preclinical safety without adverse drug interactions. In addition, we presented data at AGNC 2023 on the AT-752 for dengue. While, as you know, we deprioritized our dengue program and the development of AT-752 in February 2023, we are exploring opportunistic ways to continue to advance this program. Moving now to Slide 6. AT-511, the three-day active Bemnifosbuvir, has been shown to be a potent inhibitor of SARS-CoV-2 in vitro. New results demonstrated that AT-511 also exhibits antiviral activity against the SARS-CoV-2 Omicron variant XBB. This is consistent with the previously demonstrated in vitro potent antiviral activity against other variants of concern and interest, including alpha, beta, gamma, epsilon, delta, and various Omicron subvariants BA1, BA2, BA4, BA5, and now the XBB. I will now turn the call over to Janet.

Janet Hammond, Chief Development Officer

Thank you. Turning to Slide 8, the COVID market dynamics continue to shift, and the U.S. COVID-19 public health emergency is set to expire this week. Last Friday, the World Health Organization declared the end of the global health emergency. They also noted that COVID as a virus is here to stay, which is highlighted by the fact that globally nearly 2.8 million new cases and over 17,000 deaths were reported in the last 28 days. One fact remains: there is still a large unmet medical need for the treatment of COVID-19. We are experiencing waning immunity with both vaccines and natural infections, exacerbated by the lower booster uptake, with only approximately 17% of the U.S. population having received a booster. In some patient populations, there is also a failure to mount any immune response to vaccines. Moreover, the limitations of currently available oral antivirals are considerable due to safety concerns and drug-drug interactions with commonly prescribed medications, such as seizure medications, antipsychotics, anticoagulants, and more. This significantly limits the use of these drugs in high risk elderly and immunocompromised patients who are the most vulnerable and most likely to have the most severe cases of COVID. As a result of this remaining unmet medical need, emergency use authorization is still available assessment criteria for assurance on that. Turning to Slide 9, as Jean-Pierre mentioned earlier, we are seeing strong operational execution from our clinical team. The global SUNRISE-3 geographical footprint now has regulatory approvals in over 50% of the targeted countries and patient enrollment continues. COVID-19 continues to evolve with new variants and waves such as what we are experiencing with the Omicron subvariant XBB 1.16, the most recent data shows good in vitro synergy with Bemnifosbuvir. Our goal is to enroll patients from circulating waves by being well positioned with our extensive global footprint as new variants and waves of infection emerge. SUNRISE-3 is focusing on high-risk patients who are at the greatest risk for disease progression to severe COVID-19, which may lead to hospitalization or mortality. Its primary endpoint is all-cause hospitalization up to day 29 in at least 1400 patients from the monotherapy cohort. I will now turn the call back to Jean-Pierre to review our HCV program.

Jean-Pierre Sommadossi, CEO

Thank you, Janet. Moving now to our hepatitis C program with a fixed-dose combination of Bemnifosbuvir and Ruzasvir. We believe that our combination has the potential to improve upon the current standard of care by offering a shorter duration option for HCV patients, with and without cirrhosis. Bemnifosbuvir is a highly potent and genotypic drug with demonstrated clinical antiviral activity. Additionally, Ruzasvir is a potent NS5 inhibitor, as shown by its in vitro antiviral activity with an EC50 lower than 10 ng/mL against all genotypes with proven clinical efficacy. Naturally occurring NS5A resistant variants have emerged and can impact the effectiveness of currently available HCV treatments. We recently assessed the antiviral activity of both Bemnifosbuvir and Ruzasvir against a panel of previous NS5A resistance-associated variants selected in vitro or identified in HCV patients who have failed treatment with the current standard of care. We are pleased to share this data with you now, supporting that we have the potential for a best-in-class regimen. As outlined on Slide 11, recent data show that Bemnifosbuvir retains high potency in vitro, being at least 10 times more potent than sofosbuvir against all HCV genotype 1A and genotype 3A resistance-associated variants. As you will see on Slide 12, Ruzasvir is also a potent NS5A inhibitor. In rapid NS5A Ruzasvir has demonstrated a more favorable in vitro efficacy profile as compared to the previous NS5A inhibitors and similar antiviral activity to Velpatasvir, which is the most potent NS5A inhibitor currently approved. In fact, as outlined on Slide 13, in the same reproducibility analysis, Ruzasvir was shown to be five to ten-fold more potent than Velpatasvir against difficult to treat HCV genotypes 1A and 3A. Turning to Slide 14. In summary, the combination of Bemnifosbuvir and Ruzasvir is very promising and has the potential to be a best-in-class regimen based on its potent antiviral activity, low risk for drug-drug interactions, absence of food effects, and potential for short treatment duration. Indeed, we are targeting eight weeks of therapy with the potential for even a shorter duration. This profile, along with the totality of the preclinical data, gives us greater confidence in the potential of this combination to become the new standard of care. As you will see on Slide 15, newly diagnosed HCV cases in the U.S. increased 400% between 2010 and 2020. This is an area where we believe that the Bemnifosbuvir and Ruzasvir combination can be especially effective, given its potential for short treatment duration and a highly compelling profile. According to WHO, 58 million people globally have chronic HCV infection, and approximately 1.5 million new infections occur every year. We lose nearly 300,000 people to HCV-related liver disease each year. This has become such a problem that the U.S. government has recently proposed an HCV program with the goal to eliminate HCV. This is important because it recognizes this resurgence and acknowledges the need for new effective treatment options. On Slide 16, we outline our phase 2 open-label study of Bemnifosbuvir and Ruzasvir in HCV patients. This study will enroll approximately 280 HCV-infected patients who are naive to direct-acting antivirals across all genotypes, including a leading cohort of approximately 60 patients. Patients will be administered 550 milligrams of Bemnifosbuvir in combination with 180 milligrams of Ruzasvir daily for eight weeks. The primary endpoint of the study is safety and sustained virologic response or SVR at week 12 post-treatment. Although virologic endpoints will include virologic failure, we are in a good position to assess this at 24 weeks post-treatment and for resistance. Regulatory submissions for the initiation of this global trial are ongoing, and dosing of patients in this clinical trial is expected to begin this quarter. Initial data for the leading cohort of approximately 60 patients is anticipated around the end of the year. With that, I will now turn the call over to our CFO, Andrea Corcoran for our financial updates.

Andrea Corcoran, CFO

Thank you, Jean-Pierre. As Jonae mentioned in her introductory remarks earlier today, we issued a press release containing our financial results for the first quarter of 2023. The statement of operations and balance sheet can be found on Slide 18 and 19. In the first quarter of 2023, both R&D and G&A expenses remained relatively consistent with the first quarter of 2022. As we further our clinical development of both our COVID-19 and HCV clinical programs in 2023, we do anticipate that R&D expenses will increase in a measured way as these programs advance. We are exercising focused financial discipline to manage spending as we invest in these programs. At the end of the first quarter of 2023, our cash, cash equivalents, and marketable security balance was $620.5 million. Based on our current plans, we are reiterating our cash guidance with a run rate into 2026. I will now turn the call back over to Jean-Pierre for closing remarks.

Jean-Pierre Sommadossi, CEO

Thank you, Andrea. In conclusion, we have already made notable clinical and operational progress across our COVID-19 and HCV programs so far this year. We also presented significant scientific and clinical evidence in support of the potential of our clinical programs among an audience of leading virologists and infectious disease specialists at several scientific conferences. We believe this data continues to validate our approach and will enhance our development efforts as we advance our global clinical trials. We look forward to reporting our continued progress throughout the year. As always, we thank you for your continued interest and support of Atea as together we strive to address the unmet medical needs of patients with serious viral infections. With that, operator, we will now open the call up to your questions.

Operator, Operator

Our first question comes from Eric Joseph with JP Morgan.

Unidentified Analyst, Analyst

Hi, it is Billy on for Eric. We just had one question. We recently heard from Pfizer about that guarantee borrowers which doesn’t need return events. I wonder what your thoughts are on this in terms of the competitive landscape? Thanks.

Jean-Pierre Sommadossi, CEO

Well, we have not seen any data from the scientific conference. We only got feedback from the earnings call. So, it is clear that it looks quite interesting. But it is clear that we will need a lot more data to address either the potency, safety, and what we expect with this new generation.

Unidentified Analyst, Analyst

Thank you.

Operator, Operator

Our next question comes from Maxwell Skor with Morgan Stanley.

Maxwell Skor, Analyst

Hi, thank you for taking my questions. I just want to ask are you on track to report interim analysis from the SUNRISE-3 study in the second half of 2023? And also, I believe you stated in a prior call that you have not committed to reporting on the primary and secondary endpoints for this trial. But could you give any additional details regarding what we can expect after the interim? Thank you.

Jean-Pierre Sommadossi, CEO

Janet, do you want to address the question?

Janet Hammond, Chief Development Officer

Yes, thank you. So with regard to further - on track, I think our guidance has not changed. And then with regard to the interim analysis, it does provide us the opportunity to reestimate sample size and increase our population, if that is necessary in order to achieve the primary endpoint. The primary endpoint is the all-cause hospitalization and mortality in the patient population. Currently, for statistical analysis, we are projecting that ultimately, we will need 1300 patients in the standard-of-care monotherapy arm, and the remainder of patients will be incorporated into the combination group, totaling an estimated 1500 patients. The primary endpoint is primarily focused on the monotherapy patients. That is what the interim analysis is designed to help us with—to ensure we can upsize the study if necessary, depending on hospitalization rates.

Maxwell Skor, Analyst

Okay, thank you.

Operator, Operator

Our next question comes from a line of John Miller with Evercore ISI.

John Miller, Analyst

Hi, thank you very much for taking my questions guys. Two quick ones from me. One, obviously, the state of emergency is scheduled to lapse, but you seem very confident that EUA will still be available. Can you talk a little bit more about how the regulatory environment will be regarding EUAs if there isn’t a state of emergency to support those? And then secondly, on that interim data analysis from SUNRISE and the sizing of the primary endpoint, how will the high likely percent of seropositive patients at baseline impact placebo rates of hospitalization? Obviously, we just saw this afternoon another company stumble on efficacy for their COVID treatment because placebo patients did better than expected due to baseline seropositivity. So I’m wondering where you’re getting your estimates of hospitalization rates in the placebo arm and whether a higher number of seropositive patients at baseline might impact your estimations?

Jean-Pierre Sommadossi, CEO

Janet, maybe you want to start with the second question first, and then we will get to the first one. Go ahead, Janet.

Janet Hammond, Chief Development Officer

Sure. Thank you. It is an interesting question. I think that where we are is that, obviously, we are going to have to see what the overall hospitalization rate is. This is one of the points for the interim analysis: to determine what the hospitalization rate is and whether we need to upsize the study to have a sufficient rate of hospitalization. Without unblinding, we need to understand what that hospitalization rate is, and that is the idea behind the adaptive design. With regard to seropositive, it is an interesting, but a moving target. Almost everybody has seen COVID at this time and therefore is likely to be seropositive. We believe that in the more vulnerable patient population, the antibody effectiveness probably varies over time. There have been some interesting articles in the last week or two that have looked at the efficacy of the Omicron booster and demonstrated rapid waning immunity both from vaccines as well as from natural infections. As the virus continues to evolve with new strains, immune evasion is likely to continue. However, it is impossible to predict with absolute certainty what the hospitalization rate is likely to be, and that is really the basis for why we have designed the study in that way to target the most vulnerable populations. So, I believe it is likely to be higher in that patient population. Additionally, we need the necessary numbers to accommodate a lower hospitalization rate.

Jean-Pierre Sommadossi, CEO

On the first question, as we have always indicated, we are targeting an NDA. If the EUA data will be sufficient, that would be wonderful. But let’s not forget that what we are targeting is an NDA, as we had also indicated that the FDA has written that this trial, SUNRISE-3, will be sufficient for an NDA filing. Janet, do you want to add anything?

Janet Hammond, Chief Development Officer

No, I think you have covered it well. Thank you.

Operator, Operator

Our next question comes from a line of Tim Lugo with William Blair.

Tim Lugo, Analyst

Thanks for taking the questions. Maybe I will switch to HCV. So you mentioned the ability to reduce the dosing for patients who are not severe. What kind of dose regimen do you think you can achieve and will the ongoing Phase 2 inform that?

Jean-Pierre Sommadossi, CEO

Look, that is a good question, Tim. We want to have a better view with the clinical data on the leading cohort. We have a collaboration with our partners, focusing on viral kinetics, and that is where analyzing those viral kinetics will help us determine how short we can go in terms of treatment duration.

Tim Lugo, Analyst

You said that at the end of this phase 2.

Jean-Pierre Sommadossi, CEO

Yes, basically, what we will do is assess that we have a very good profile with eight weeks, if not better than the standard of care. As you know, the NS5A landscape has changed significantly, and we believe that this will play a major role in differentiating our combination. We anticipate stronger potency against any of those variants as compared to previous standards. We will assess this as soon as we have the viral kinetics data.

Tim Lugo, Analyst

Thank you so much.

Operator, Operator

Our next question comes from Roanna Ruiz with SVB Securities.

Unidentified Analyst, Analyst

Hi, this is Rosa Chen on for Roanna Ruiz. A couple of questions for us on Bemnifosbuvir for COVID. So congrats on getting Fast Track designation for Bemnifosbuvir. First, we understand its implications for potential NDA, but does the Fast Track designation provide advantages for potential submission? And secondly, what proportion of the monotherapy population in SUNRISE-3 do you expect will be coming from the U.S., and is that representative of the full enrollment, both interim and full? Thank you.

Jean-Pierre Sommadossi, CEO

Janet.

Janet Hammond, Chief Development Officer

So I think that the Fast Track designation should allow us to have a close and collaborative exchange of data and discussions with the FDA as we proceed with the clinical trial and our submission. I think it has the potential to facilitate a more rapid process than otherwise. Additionally, I think, certainly, familiarity with the data might help the FDA's determination of whether the data are worthy of an Emergency Use Authorization, but that is obviously down the road. We will have to see, and it is ultimately FDA discretion. Regarding the proportion of patients receiving monotherapy in the U.S., compared to elsewhere, it is early to comment on that. However, the population studied in our trial is particularly vulnerable to COVID, and for that reason, many patients are often ineligible for currently available treatments within the U.S. and abroad. Thus, we continue to anticipate a good representation of patients requiring monotherapy both here and internationally.

Unidentified Analyst, Analyst

Great, thank you so much.

Operator, Operator

That concludes today’s question-and-answer session. I would like to turn the call back to Jean-Pierre Sommadossi for closing remarks.

Jean-Pierre Sommadossi, CEO

Thank you again for joining us today.

Operator, Operator

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