Hello. Welcome to Veer Biotechnology's fourth quarter and full year 2023 financial results and business update call. As a reminder, this conference call is being recorded. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. I will now turn the call over to Sasha Dimuni-Ellis, Executive Vice President, Chief Corporate Affairs Officer. You may begin, Ms. Damuni-Ellis.

Thank you, and good afternoon. With me today are Dr. Marianne DeBacker, Chief Executive Officer, Dr. Phil Pang, Chief Medical Officer, and Sun Li, Chief Financial Officer. Before we begin, I would like to remind everyone that some of the statements we are making today are forward-looking statements under the securities laws. These forward-looking statements involve substantial risks and uncertainties that could cause our clinical development programs, future results, performance, or achievements to differ significantly from those expressed or implied by such forward-looking statements. These risks and uncertainties and risks associated with our business are described in the company's reports filed with the Securities and Exchange Commission including Forms 10-K, 10-Q and 8-K. I will now turn the call over to our CEO

Marianne DeBacker. Thank you Sasha. Good afternoon to everyone on the webcast and thank you all for joining us today. Before we discuss the tremendous progress we made in 2023 and what's ahead in 2024, I want to touch on the announcement we made earlier this week that Phil Pang our Chief Medical Officer has decided to step down at the end of March to spend more time with his family. We have initiated a search for a successor. I want to sincerely thank Phil for his leadership. He leaves a strong clinical development team in place positioning us well for continued success and I wish him the very best. Stepping in as interim chief medical officer is Dr. Kerry Wong, current senior vice president, clinical research. As I reflect on 2023, I'm proud of the clinical progress we have made towards developing a potential treatment for patients with chronic hepatitis delta, a potential functional cure for the millions living with chronic hepatitis B, as well as a differentiated approach to preventing HIV. Our priority is to deliver on our mid-stage clinical pipeline while also refocusing our research and early pipeline to programs beyond infectious disease. We anticipate significant data readouts this year, which build off last year's progress across all our clinical programs. Specifically, already in the first quarter, we anticipate completing the enrollment of approximately 60 participants across two cohorts in SOFTIS, our phase 2 hepatitis delta trial. We attribute this rapid rate of enrollment to the positive clinician and patient interest following the initial data we reported at AASLD last year. In the second quarter we plan to share early virologic and safety data on a subset of these participants. It is important to appreciate that there is a significant underserved patient population in need of a safe, highly efficacious and convenient therapy for treating hepatitis delta. We estimate that there are at least 12 million people diagnosed with this disease and an estimated 60 million or more undiagnosed globally. We aim to develop a best-in-class treatment which we believe will drive increased diagnosis rates and position fear to become the leader in hepatitis Delta. To position us for success we are collaborating with patient advocacy groups and policy makers to improve surveillance and screening. In addition, crucial work is ongoing to understand who and where Delta patients are. These efforts will support a targeted, rapid and successful commercial launch in the future. Switching gears, I will now discuss our functional cure program for chronic hepatitis B, another area of high unmet medical need. Based on the data reported in our ongoing phase 2 trials thus far, we believe our two therapeutic candidates to Debbie Bart and Delapseram have the potential to play a critical role in delivering high functional cure rates for chronic hepatitis B patients. We look forward to reporting end-of-treatment data from the MARCH PAR-B trials at a major medical Congress in the fourth quarter. Finally, in the second half of the year, we are looking forward to sharing initial immunologic proof-of-concept data for year 1388, an HIV T-cell vaccine candidate currently being evaluated in a phase one trial. If the data supports the validity of the platform, it could be a springboard for other indications, including our preclinical therapeutic vaccine for control of pre-cancerous lesions and HPV cancers switching to research we continue to advance antibody therapeutics optimized for increased likelihood of development success thanks to our proprietary platform powered by AI and machine learning our focus is on prophylactic antibodies for influenza A NV, RNC-MPV and COVID-19. In addition, we are developing a cocktail of broadly neutralizing antibodies for an HIV cure. We look forward to sharing more about these programs and the timing of potential IND submissions during the year. On February 21st, VIR and GSK terminated our collaboration to research, develop and commercialize our molecular antibodies targeting the influenza virus under our Definitive Collaboration Agreement that we established in May of 2021. FEAR retains sole right to continue advancing our investigation of therapies for influenza. With that in mind, we are actively pursuing external partnership opportunities for our next generation in influenza A and B antibodies and ADC's. Meanwhile, our respiratory collaboration with GSK continues. Turning to our cash and investments, our financial strength allows us to fund our clinical programs through major inflection points while enabling the flexibility to invest in external innovation opportunities. In evaluating external innovation, we are thoughtful, selective, and strategic with a focus on opportunities capable of augmenting our pipeline and platforms. To recap, we are preparing for a transformational year at WEIR, anticipating critical value inflection points in our programs focused on chronic hepatitis delta, hepatitis B, and HIV. With that, I'll now turn the call over to Phil.

Thank you, Mary Ann.

I want to begin by thanking you, the Board, and all of my VIR colleagues for what has been an honor and privilege to serve as VIR's Chief Medical Officer. VIR has been a family to me as well as an all-consuming passion for the last seven-plus I have full confidence in VIR's future and the ability of our promising clinical programs to impact the lives of millions of patients. Moving on to that pipeline, I'll begin by summarizing the initial results from our Phase II solstice trial, which is on hepatitis delta, that was shared in a late-breaker presentation at ASLD last year and discussed earlier this year. The solstice trial is evaluating Tobbevibart alone and in combination with Alepsiron as a potential chronic treatment for patients living with chronic hepatitis delta. Tildegavar is our investigational neutralizing monoclonal antibody, which has been engineered for enhanced immune engagement. Alebsiran is an investigational HPV-targeted siRNA that reduces hepatitis B surface antigen, which is a protein that the delta virus needs for its life cycle. In our initial data, we observed extraordinarily rapid declines in HDV RNA. Five out of six participants had undetectable HDV RNA, and six out of six were below the lower limit of quantification within 12 weeks of starting combination therapy. Of note, two out of six also achieved ALT normalization. While participant numbers are small, these data were recognized by several hepatologists as one of the most exciting advancements shared at the ASLD conference in 2023. That excitement has meaningfully translated into our ability to rapidly enroll patients, both with and without cirrhosis, ahead of schedule in our solstice study. As a reminder, our stated goal is to enroll approximately 60 participants in solstice by the end of the first quarter. These participants are being enrolled into two groups. The first group is receiving tobevabar monotherapy every two weeks, and a second group is receiving tobevabar plesilepseron combination therapy every four weeks. As of early February, greater than 90% of participants have been dosed. Notably, of the 55 participants who have already been dosed, 24 of them, or 44%, have compensated cirrhosis. We plan to share initial data on a subset of these participants in the second quarter. Specifically, 15 participants per regimen at 12 weeks and 10 participants per regimen at 24 weeks. Should these data be supported, we intend to discuss with regulators on a potential path to registration in the third quarter. Switching to our Phase II program for chronic hepatitis B, Our preliminary data suggests that when a lepsiron was given with polygulated interferon alpha for up to 48 weeks, approximately 26% of participants achieved hepatitis B surface antigen loss at the end of treatment, and 16% maintained hepatitis B surface antigen loss 24 weeks after the end of therapy. Again, although the number of participants treated was small, this was the first sign that our siRNA may have a potential impact on functional cure rates beyond what is possible with PEG interferon alone. In a subsequent trial, when adding tobevibar to a regimen of alepsirone alone for alepsirone plus PEG interferon, we observed an almost three-fold increase in end-of-treatment response rates after only 24 weeks of treatment. These data were the first indication of the potentially important role of an HBV-directed antibody in hepatitis B functional cure. These data are encouraging, and we look forward to sharing end-of-treatment data from the March Part B trial, which is evaluating 48 weeks of the doublet and triplet regimens in the fourth quarter. This will be followed by post-treatment data in the first half of 2025, which will allow us to assess functional cure rates. Turning to what we anticipate will enter the clinic next, VIRS7229 is a next-generation COVID antibody with increased potency, breath, and resistance to viral escape, thanks to AI engineering and optimization. We expect to file a Health Authority application to support a Phase I trial later this year. The development of VIR 7229 through the end of Phase I is supported by BARDA. We look forward to continuing to share our progress over the coming quarters and during an R&D day planned for the end of this year. I will now turn the call over

us on. Thank you, Phil. We're pleased to share our financial results for the fourth quarter of 2023 and the full year. Total revenues in the fourth quarter of 2023 were $16.8 million compared to $49.4 million for the same period in 2022. Total revenues for the full year of 2023 were $86.2 million dollars compared to 1.62 billion dollars in 2022. The primary driver for the year-over-year decline is lower collaboration revenues from Citrovimab. We do not anticipate any meaningful collaboration revenue from Citrovimab in the future and this line item could make a negative contribution to our top line due to the ongoing required investment to support the marketing authorization of citrovimab, which our partner, GSK, leads the efforts in. Turning to operating expenses, cost of revenue for the full year of 2023 was $2.8 million compared to $146.3 million in 2022. The year-over-year decline was driven by lower third-party royalties owed on citrovimab sales. R&D expenses in the fourth quarter of 2023 were $111.9 million, compared to $155.2 million in the same period in 2022. The decrease was primarily driven by the wind down of the Phase II flu study of year 2482 in the fourth quarter of 2023. Included in the R&D expense for the fourth quarter of 2023 is a severance charge of $2.6 million related to the workforce reduction announced in December 2023. R&D expenses for the full year of 2023 were $589.7 million compared to $474.6 million in 2022. The year-over-year increase was primarily driven by the Phase II flu trial, evaluating near 2482, then related manufacturing costs, and to a lesser extent, the advancement of our hepatitis delta and hepatitis B programs. SG&A expenses in the fourth quarter of 2023 were $43.1 million, compared to $38.7 million for the same period in 2022. The increase was primarily driven by higher personnel costs and a severance charge of $1.9 million related to the workforce reduction announced in December of 2023. SG&A expenses for the full year of 2023 were $178 million compared to $161.8 million in 2022. The year-over-year increase was primarily driven by higher personnel. For the fourth quarter of 2023, we reported a consolidated net loss of $116 million compared to a net loss of $101.6 million for the same period in 2022. For the full year of 2023, we reported a consolidated net loss of $615.1 million compared to a net income of $515.8 million in 2022. Moving to the balance sheet, we declined by $108 million quarter over quarter, and we finished the fourth quarter of 2023 with $1.63 billion. Turning to the financial guidance for 2024, we anticipate that the GAAP combined R&D and SG&A expense will be in the range of $650 million to $680 million. Included in this range are non-cash stock-based compensation expense in the range of $105 million to $115 million and restructuring charges for the closing of two R&D sites previously announced in December 2023 in the range of $25 million to $35 million. The restructuring expenses are primarily non-cash. When excluding the non-cash stock-based compensation and restructuring expenses from the GAAP combined R&D and SG&A expense range. The resulting range is $500 million to $550 million, which represents an 18% year-over-year decline at the midpoint. The expected year-over-year decline is driven primarily by, first, the absence of expenses from the phase 2 flu trial evaluating year 2482 and related manufacturing costs in 2024, partially offset by the ramp-up of our hepatitis Delta and Hepatitis B programs in 2024. And second, the cost optimization measures taken in 2023. Approximately three to four percent of the GAAP combined R&D and SG&A expense will be funded by grants. It's important to remember that these grants are recognized as revenue in our income statement. The combined GAAP R&D and SG&A expense guidance does not include the effective gap adjustments caused by events that may occur subsequent to the publication of this guidance, including but not limited to business development activities, litigations, in-process R&D impairments, and changes in the fair value of contingent considerations. Our financial strength allows us to advance the Phase II Hepatitis Delta and Hepatitis B programs through multiple milestones, invest in our core antibody platform, and provide flexibility to evaluate external innovation. We will continue to have a disciplined approach to capital allocation and expense management. I will now turn the call back to Sasha. Thank You Sung. We will now start the Q&A

section. Please limit questions to two per person so that we are able to get to all of our covering analysts. Operator, please open up the line for questions. If you would like to ask a question,

simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Your first question comes from the line of Paul Choi with Goldman Sachs. Your line is open. Hi, everyone. Can you hear me? Hello? Yes.

Hi, this is Khalil calling in for Paul. Thank you so much for taking our question. I guess we'd like to ask about the Tobiberbart-Ellibziran combination cohort without interferon alpha in March Part B at 24 weeks. Is that slightly higher efficacy observed in the cohort without interferon, something you expect to see repeated in the 48-week data? and what would that mean for interferons in place in a future pivotal study?

Thank you for that question, Paul. I will ask our CMO, Phil Kang, to give you deeper insights into that.

Thank you. Yeah, so I think that remember the numbers from the 24-week end-of-treatment data that we showed with the doublet and the triplet are still small numbers. So I would not look much into the fact that the doublet was slightly different from the triplet at 24 weeks. I think that really what we're looking forward to seeing is what happens, as you know, after 48 weeks of the doublet and triplet. So I would say the jury's still out as to what those results are going to be, which we will share with you in the fourth quarter. And I think that that leaves open whether or not interferon will be required. And if it is, I think it will require a slightly higher functional cure rate given the known side effects of interferon. But I think, again, for patients and for providers, it always comes down to risk-benefit, and I think that if we can show a transformational increase in functional cure rates, such as 30% or more, this is something that will be a very important tool for clinicians.

Got it. Thank you so much. And I guess a quick follow-up kind of relating to the pipeline in general. Could you guys give like a potential timeline as to when the company will select any front-runner antibody candidates to enter the clinic and any color and what would drive

that decision of choosing one? Yeah. So just to provide a little clarity, we have a number of candidates entering the clinic in the near term, and that's sort of regardless of platform, whether it's an antibody or a T-cell vaccine. And really what we're always looking for is obviously something that is differentiated and something that we believe can make an impact on patients' lives. So those three candidates are VIR-7229, the next generation COVID antibody I spoke about earlier with its increased breadth and potency, thanks to our AI engineering platform. That also includes VIR-2981, our neuraminidase targeting monoclonal antibody, which is differentiated on three levels. One, it targets both flu A and B. It's more potent than 2482, and has a de-risk mechanism of action by targeting the neuraminidase enzyme. And third, we're very excited about VR1949, which is a potential therapeutic T-cell vaccine that builds on our human cytomegalovirus vaccine vector platform and targets precancerous HPV lesions. But I do want to say and stress that, of course, the first two candidates, 7229 and 2981, we are planning to execute with a partner given the scale of development necessary.

right right all right thank you so much thank you all your next question comes from the line

of jenna wang with barclays your line is open uh hello uh this is eon jenna thank you so much for taking our questions so first of all for phil um best wishes for your next journey and for marianne with phil's departure and now you have focus on specialist disease oncology and immunology What do you think would be the ideal candidate for your next CMO? And for your HDV, could you share your data expectation that you're going to share in the second quarter? And also, did you hear some initial regulatory feedback on the approval pass? And lastly, for your earlier stage pipeline, how will you select the lead antibody candidates and what will drive those decisions? Thank you. Okay, thank you very much, Gina.

I will start with your first question related to a successor to Phil and what we are looking for in the next TMO. First of all, what is going to be really critical is for someone to have a proven track record in advancing therapies really through phase three and having experience bringing therapeutics all the way to market. Needless to say, we have already initiated a search for a successor. And I must say also, you know, since the news has gone out this week, we have received a flood of inquiries. But obviously, we will be very selective in what the profile of that candidate needs to be. We're also looking for someone who has a really in-depth understanding of, you know, the evolving regulatory landscape, deep insights in how to use data and big data for insights into clinical development. So there's a number of things here that need to come together. And as Phil pointed out, we have a very talented leadership team here in our clinical group. So we are also looking for someone who can lead such a team of very talented developers for success, especially focused on our hepatitis B and hepatitis delta programs. Now, switching to your second question, Gina, I understood that was related to hepatitis delta and what data we are expecting in the second quarter, so I will ask Phil to give you more color on that.

Yeah, thank you, Marianne. So, with regard to the data in Q2 around hepatitis delta, you know, to step back first, as we shared both at the conference earlier this year as well as at ASLD, what we showed was data on six patients, and that data, we think, is quite transformative, but it is only six patients. So what we're looking for in Q2 is really to answer three questions. The first is, what happens when we dose more patients with our combination therapy? Will we be able to repeat that type of data? Number two, what will happen when we dose patients who have compensated cirrhosis? And three, what will happen with the long-term durability of those initial six patients? So I think we're excited and looking forward to that data. I think you also asked a question about regulatory feedback and I just wanted to reiterate what we had said earlier this year, which is that the next step will be to take that data, if positive, and put it in front of regulators in the third quarter in an attempt to discuss a path to registration. So that's sort of the path as we see it.

Yes, and Rana, related to your third question, which was related to our early stage pipeline, I think that's still in answering the question of Paul already laid out. We really have three candidates that can enter the clinic in the next 12 to 24 months. It's year 7229, year 2981, year 1949. And so each of those are really progressing very well, and we will be providing more data and information on timing during the course of this year.

Your next question comes from the line of Ruana Ruiz with LeeRank Partners. Your line is open.

Hi, good afternoon. This is Nick Gassick on for Ruana. Thanks for taking our questions. Just first on HDV, could you provide a little more color around how large the market opportunity is in HDV currently? And also, could you discuss what a possible accelerated approval pathway could look like for Tabeva Bart and Alebsiran in HDV? And I have a quick follow-up.

Okay. Thank you, Josh. Let me maybe begin with reminding everyone that Delta is the most severe form of hepatitis. And as you know, I mean, people that are co-infected with Delta progress to liver cancer four times faster and two times faster to death. So there's a tremendous need here, I think, is the first point that I would like to make. And then looking at the prevalence, we estimate that there are about 100,000 patients in the United States and over 200,000 patients in the U5 alone. And we do believe that this is likely a gross underestimate, given that diagnosis is really not optimal at this moment in time. So you can assume that even if you were to access only a modest portion of this population, and if you think about pricing that would reflect really the clinical benefit of a potential transformative therapy, taking that together, we are confident that you would already be looking at a very large and significant market opportunity. And, you know, obviously, we believe that the combination regimen that we have of the Bevy-Bart and Elapseron represents the potential of such a transformative therapy based on the data that we have shown thus far. And of course, in a limited set of patients, but still very impressive, very impressive data.

And with regard to an accelerated approval, if I'll take that one, Marianne? I think that, you know, as we often like to say in the development space, data changes everything, and more data is always better. So I think that when we think about accelerated approval or a rapid path to approval, what's in our favor is the fact that, you know, the unmet need, as Marianne has described, is undoubtable, right? There are hundreds of thousands of patients worldwide who would benefit from a chronic suppressive therapy for Delta. and the fact that there is a lack of good options for many of them is also clear so i think that that all favors a rapid path in in the setting of the right data on the other hand of course our program is still early and we're really waiting for our chance to get in front of regulators and our anticipated goal is goal post is q3 and by then we'll have a subset of data which we've talked about previously which we will share in q2 which is 30 participants through week 12 and 20 participants through week 24 in our two regimens that we are exploring. And to remind you of that, that is the combination of Tobbevart and Alepsaron every four weeks versus just Tobbevart every two weeks.

Thank you, Phil. Jeff, did you have an additional question?

Sorry, this is Nick. Just wanted to follow up on HDV. Curious, what signals you're hoping to see in the upcoming additional data from Solstice And maybe what are some of the gating factors for moving this program into the Phase 3? I guess, like, what would regulators really want to see in this data that support moving into a Phase 3?

Sorry, Josh. Are you referring to hepatitis B or delta?

I can take that one, Marianne. So, I think it's – thank you, Nick. So, you know, as I said earlier, I think it's really a question of, you know, getting in front of them with the, so to answer your first question, there are three things we're looking for in the data. The first thing we're looking for in the data is, you know, does it repeat what we've seen with the original six patients? Second, what will happen when we dose patients who have compensated cirrhosis? And third, how durable it will be. I think that all of that data in terms of numbers will matter to the regulators and be able to reassure them that the six patients, the data on the six patients is not sort of a one-off, but actually something that really is as transformative as we believe it to be. So in terms of gating factors, I can only speak more generally, but once we have the opportunity to sit down with regulators in the third quarter, which is our anticipated goal, we'll be able to discuss with them, one, what the comparator arm would be, two, what the size of the safety database needs to be, and three, what kind of particular endpoints they would be most interested in that they believe would be demonstrative of transformative efficacy. So that's what we're going to be talking about. And then, of course, it's a matter of execution. I will say that, of course, we are planning for success in terms of both trial planning and regulatory interactions. And so we'll continue to do so because this is our most important clinical program and it's first out the gate.

Yeah. So just to maybe add and repeat that already in the second quarter, we will be seeing 12-week data on 30 participants across the two regimens and then 20 participants for the 24 weeks. So that will give us already a lot of insights into the data.

Thank you.

Your next question comes from the line of Eva Privatera with TD Cowan. Your line is open.

Hi, good afternoon. Thank you for taking our questions. Just a couple from us. On the HDV solstice trial, there was some ALT elevations seen with 2218 monotherapy, which came down with the combo. What's the mechanism for that, and what are the kinetics for achieving ALT normalization with suppressing viral RNA?

I'll take that one, Ava. So thank you for the question. I think that it's important to remember that the number of patients dosed with 2218 or Lepseron monotherapy is small, but we did see a couple of patients who did show an ALT signal. This replicates what was seen with other siRNA therapy in hepatitis delta patients. In a larger study known as REF-D, almost 70% of patients did see an ALT signal in patients receiving siRNA who had delta. But it's important to remember that when they gave an siRNA and when we've given our siRNA to hepatitis B patients, we have not seen this. So it does not appear to be something intrinsic to the drug, but some interaction between the drug and hepatitis delta virus itself. So with that in mind, when you look at the data closely, it seems to suggest that on treatment with an siRNA, there is a paradoxical increase in HDV RNA after some duration of therapy. If that is the driving force behind the ALT signal, then it would make sense that driving that HDV RNA down further and preventing the infection of new hepatocytes would be key. And that's exactly what we're intending to do with our monoclonal antibody tobevobart or VR3434. So the idea there is that any kind of fluctuation you would see in HDV RNA that might be driving an ALT signal would be prevented by having a neutralizing antibody like tobevobart. And so far, of course, the numbers are very small. Of the six patients, we did not see any ALT elevations, unlike the 70% of ALT elevations seen with siRNA model therapy by another company. And so that's the thing we'll be looking forward to seeing as to what will happen when we dose these next 30 patients in the combination arm. So to summarize, the mechanism is still not clear, but there are early signals that it is due to changes in HDV RNA, and there are early signals that 3434 or Vibobart can solve for that.

Perfect. Thank you. And another question on the HBV March trial. You've previously shown that high antibody titers were predictive of sustained surface antigen loss. Do you expect to present antibody titer data at the 48 weeks end of treatment data in Q4?

So we have not yet guided to whether or not we will be sharing anti-HBS data along with the actual surface antigen loss, but we will be doing everything we can to provide as much clarity on our results at that time. So, stay tuned. Perfect. Thank you.

Your next question comes from the line of Patrick Trucchio with H.C. Wainwright. Your line is open.

And congrats on all the progress. I have a couple of follow-up questions on Solskis program. So, just first, a clarification around the next data readouts. I'm wondering, first, should we expect the next update or when should we expect the next update on the patient cohort data reported at ASLD 2023, specifically the proportion who achieve ALT normalization, which I understand can take longer than achieving HDV RNA below lower limit of quantification, as well as assessment of the durability of the virologic response. I'm wondering if that update may be part of this data that's coming in the second quarter, or if, you know, maybe we would see the next cut there later this year in the fourth quarter. And then secondly, I'm wondering how we should think about the 44% of patients having compensated cirrhosis. Is this a proportion of patients with compensated cirrhosis consistent with what would be expected in real-world setting for patients with chronic HDV, or how did you decide on that proportion? And then how should we think about these key endpoints, you know, like HPV RNA and normalization of ALT, and as well, the safety profile of the combination regimen in these patients with or without compensated cirrhosis.

All right. Well, Patrick, you're going to challenge my memory to make sure I remember all those questions, but let me start with a compensated cirrhotic question, move on to the endpoint question, and then finish with the durability question. So, with regard to the compensated cirrhosis, it is, you know, the epidemiology on hepatitis delta patients and how many of them have compensated psorosis is not entirely clear but it is certainly a large proportion probably somewhere between you know 30 to 50 percent. Now that was not the reason why we ended up at 44 percent as you can imagine when you're enrolling this trial we actually targeted around 50 percent but you want to move also the trial enrollment as fast as possible. So right now as I said in my prepared remarks there's about 90 percent of the trial has been enrolled. That's why it's at 44%. I expect that number to go up because the only patients left in screening are all patients with cirrhosis. So we'll probably get 44 or maybe even 48% or somewhere around there. But what we really wanted to do was to get at least 10 to 15 patients with cirrhosis per cohort to be able to understand what the kinetics of viral decline is and ensure that there's no obvious safety signals. So that's how the 44% is just sort of the result of where we are in enrollment. With regard to the endpoints, I think it is important to remember that how we think about the endpoints is both historical as well as forward-looking. So there are a few possibilities for the primary endpoint that I want to share with you. The first, of course, is the endpoint that was used by Boveritide, which was a combined virologic and biochemical endpoint. Specifically, that virologic endpoint allowed either a too-long decline or getting to the limit of detection virologically, and then also requiring ALT normalization. But I think when you speak to physicians, providers, and virologists, what they'll say is they're not sure what a two-log decline actually means. For example, if you go from seven logs to five logs, you still have 100,000 copies of the virus in your blood per milliliter, and that obviously does not sound good. So we think, as well as clinicians, that getting to undetectable or below the limit of quantification would be strongly preferred. So then you can imagine a forward-looking endpoint, and I think this is a likely possibility, of requiring patients to get to the low limit of detection or the lower limit of quantification and ALT normalization without allowing patients to achieve just a two-log decline in viral load. That would set a gold standard that I think we could definitely show a meaningful benefit on because it would require everyone to, at the first instance, get to the lower liminal quantification where we would have a possible advantage over the standard of care. So I think those are some of the color I can provide for you around the primary endpoint. And then as far as your third question around durability, I would say that we have actually not guided to the follow-up on those six patients, but as we're going to have nearly 20 participants at 24 weeks, we'll be able to share their kinetics of both viral load decline and ALT changes, which I think will be informative. And we will look into sharing the six patient follow-up data as well in a future guidance call. Great. That's very helpful. Thanks so much.

Your next question comes from the line of Eric Joseph with JP Morgan. Your line is open.

The program, what you expect to be the ultimate treatment duration or kind of paradigm here with the Toby-Elli combination, do you expect it to be finite therapy or chronic treatment? And if it is the former finite interval, I guess, how much sort of off-treatment observation do you think you would sort of hope to have going into discussions with regulators?

So, Eric, sorry, the beginning of your question was a little bit difficult to understand.

In hepatitis delta, is the expected treatment algorithm going to be finite therapy or chronic therapy? If it's finite therapy, how much treatment follow-up do you think you would have going into initial discussions with regulators?

Thank you, Eric. Yes, so what we are aiming to achieve here is a chronic treatment regimen for hepatitis

delta patients.

Do you want to comment further, Phil?

Yeah, so in that framework of chronic viral suppressive therapy, as we currently know it, for example, for other viruses like HIV and for hepatitis B, there is no need for a follow-up therapy as there is not a finite duration therapy. I think one of the questions that can come up is, are we going to be following these patients for 24 or 48 weeks? And of course, we'll follow for both, but the question will be with regulators, is there any precedent for earlier data? And there is with Bivertide, and that's another discussion we'll be having with

regulated. Anything you can share the tolerability profile in among patients receiving the upfront

combo regimen in the QC forward? Yeah, so I think that certainly we're looking forward to the Q2 data from our solstice trial and the patients who have started what we call de novo or immediately on combination therapy without a lead-in, and what we've said is that we'll have about 30 participants between the two arms, actually, between mono and combo at week 12 and 20 participants at week 24. So you divide that into 15 of the patients will be through week 12 and 10 participants through week 24 in the combination arm, and we're looking forward to being able to share that data in Q2.

Okay, great. Thanks for taking the questions.

Thanks, Eric. Your next question comes from the line of Alex Stranahan with Bank of America. Your line is open.

Hey, guys. Thanks for taking our questions. Just a couple from us. You've mentioned in the past about expanding beyond infectious disease into, say, immunology, Are there any areas of immunology or targets, say, CD20, that you see as particularly interesting? And would you say within your core competencies regarding antibodies and siRNA? or would you be more maybe technology agnostic? And one question on how you plan to allocate your 1.6 billion roughly in cash. Maybe if you could break down percent spend on pipeline development, discovery, clinical trials, and investments in your AI machine learning capabilities versus, say, dry powder for investing in external innovation, that'd be great.

Okay, thank you, Alex. But, yeah, I mean, since its inception here has really been a leader in immunology and, of course, initially focused only on really targeting infectious diseases. But what we are really doing now is broadening that vision to, we call it, powering the immune system, which is really, you know, giving patients the ability to empower their immune system to either fight infection, fight cancer. And we do it in two fundamental ways. to our powerful antibody therapeutics, which we generate through AI engineering, and then secondly, through generating unique T-cell responses in vivo with our T-cell-based viral vector platform. So the type of expansion that we're looking at, Alec, is really rooted in our strength as a company and where we have deep expertise, and that is in immunology, virology, and oncology. So we are looking at expanding into viral-associated diseases and then indeed immune targeting, such as in cancer. And we will be sharing more information on our early programs in that area towards the end of the year when we will be holding an R&D day. So with that, I'll maybe ask Sung to comment on our cash position and breakdown.

Yeah, so Alex, thanks for that question. And so, with regard to our $1.6 billion in cash and cash equivalents, the majority of this will be dedicated to the ongoing clinical stage programs of hepatitis delta and hepatitis B. Of course, we have to sort of take this one year at a time, as we have important data readouts in both of those programs this year. So, obviously, we're rooting for success, and that would dictate the capital allocation for subsequent years, but when you look at the immediate year, 2024, we've provided guidance R&D and SG&A expense combined. It's fair to think that more than half of that is dedicated to the development programs, primarily hepatitis delta and hepatitis B. There's amounts that will be invested to uh in our antibody platform and as marianne said in her prepared comments we'll be very opportunistic about tapping into external innovation where it makes sense so we'll be very prudent about that appreciate the color thank you thanks your next question

comes from the line of joseph stringer with needham and company your line is open hi thanks

for taking our questions. Just a follow-up question on the Delta readout in the second quarter. I wanted to focus on the cirrhotic patients. Clearly, safety will be key, but do you anticipate that it would be more challenging to show a treatment effect in these patients relative to the non-cirrhotic patients? And how important from a commercial perspective would it be to show a clinical effect in these patients? Thank you, Joey. I'll take that one

if that's all right, Marianne. So in terms of cirrhosis, first off, I want to just provide a little clarity. We need to distinguish between patients who have what we call compensated cirrhosis and patients who have decompensated cirrhosis. Decompensated patients are obviously much more fragile and have a high one-year mortality. So I think really we are focused on getting our drugs to patients as fast as possible, or our drug candidates to patients as fast as possible. And that will include both compensated cirrhosis, patients with compensated cirrhosis, as well as those who are non-cirrhotic. We think that the, as I said earlier, I think the compensated cirrhosis patients are approximately 30 to 50% of patients currently living with hepatitis delta. That number is obviously a little bit biased, simply because those with compensated cirrhosis are more likely to present to a clinician. In terms of whether or not we expect the efficacy to be any different, I don't see any biological reason why we would expect a different result in cirrhotic patients compared to non-cirrhotic patients from a viral efficacy perspective. From a safety perspective, there's also not any reason to believe that they would be a significant safety signal, I do want to point out that we did do a hepatic impairment study in decompensated child-pew Turcotte B patients or CPTB patients, and there was no evidence to date of a clinically significant change in PK or safety in that small study. So I think that there's, again, no reason to believe there's a concern, but that's why we do the clinical trials, and that's why we're looking forward to seeing what that data looks like in Q2.

Great. Very helpful. Thanks for taking our questions. Thank you, Joey.

Yes, thank you, Joey.

Your next question comes from the line of Michael's with Morgan Stanley. Your line is open.

Hey, guys. Thanks for taking the question. Maybe just a follow-up for Sung. Thanks for giving clarity on how to think about OPEC spend this year, but maybe if I could push you a little bit as we think about moving beyond 2024, for, you know, maybe give us a sense of how to think about it trend-wise. Should we be thinking more flattish spend or should we be thinking, you know, sort of an upward trend? I know a lot will depend on kind of what happens with some of these readouts here, but any comments there would be helpful.

Yeah, thanks for the question, Mike. So, you know, kind of going back to what I said before, the bulk of the capital allocation, if we continue to demonstrate successful data with hepatitis delta and hepatitis B programs, as we have the last 18 months, that would garner the lion's share of capital allocation. So, moving beyond 2024, we would expect hepatitis B, they're still in phase two. As we get into phase three, both of these studies would peak, but that peak would not be reached in 2025. uh the peak would most likely be reached somewhere in the second half of 2026 to 2027 time frame as things progress you know again we have to really take this one year at a time uh because it's dependent on data i might just add though when you look at the guidance for twin we put a lot of information out there to help you think about not only gap operating expenses excluding cost of sale. So both on an OpEx basis and cash utilization basis, we would be significantly lower than 2020, driven by all the cost optimization undertaken last year and coming off the peak of

the year. Got it. That's helpful. Thank you. There are no further questions at this time. I will now turn the call over to Marianne DeBacker for closing remarks. Okay. Thank you, operator.

So, to close, we are eagerly anticipating our multiple data catalysts that really in our mind hold a great promise for patient impact and for value creation. And we are well on our way, as we said, to powering the immune system to transform life. Thank you all for joining us today. And Operator, you may end the call. Thank you.

This concludes today's call. You may now disconnect.