Altimmune Inc (ALT) 2019 Q4 法說會逐字稿

Greetings. Welcome to Altimmune Year-end 2019 Conference Call. (Operator Instructions) Please note, this conference is being recorded. I will now turn the conference over to your host, Monique Kosse with LifeSci Advisors. Thank you. You may begin.

Thank you, operator, and thank you, everyone, for participating in today's year-end 2019 earnings conference call. Leading the call today will be Vipin Garg, Chief Executive Officer of Altimmune. Also participating on the call is Will Brown, Chief Financial Officer; Scott Roberts, Chief Scientific Officer; and Scott Harris, Chief Medical Officer. (Operator Instructions)

A press release with the year-end 2019 financial results was issued this morning and can be found on the Investors page of the company's website.

Before we begin, I would like to remind everyone that remarks about future expectations, plans and prospects constitute forward-looking statements for the purposes of the 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, please see the risk factors and other cautionary statements contained in the company's filings with the Securities and Exchange Commission.

I would also direct you to read the forward-looking statement disclaimer in our earnings release issued last night, and now available on our website. Any statements made on this conference call speak only as of today's date, Friday, March 27, 2020. And the company does not undertake any obligation to update any of these forward-looking statements to reflect the 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 rebroadcast on Altimmune's website at www.altimmune.com.

With that, I will now turn the call over to Vipin Garg, Chief Executive Officer of Altimmune. Vipin, please go ahead.

Thank you, Monique. Good morning, everyone, and thank you for joining us as we discuss our 2019 financial results and corporate update. Joining me on the call today is Bill Brown, our Chief Financial Officer, who will review our 2019 financial results; as well as Scott Harris, our Chief Medical Officer; and Scott Roberts, our Chief Scientific Officer. After our discussion, we will open the call for question and answers.

We are joining you today under extraordinary circumstances. As of this morning, Johns Hopkins University reports more than 80,000 confirmed cases of COVID-19 in the U.S. and more than 500,000 cases worldwide. Federal and local governments are resorting to shelter in place and social distancing measures, affecting our day-to-day lives in a way that was unimaginable just a few weeks ago.

All businesses are affected by this pandemic with significant disruption to workforce, clinical trials, supply chain and with significant changes to consumer behavior and demand. This is an uncertain time. And we have taken significant steps to ensure the safety of our employees and to minimize disruption to our business.

First, only our essential laboratory personnel who must be on-site to continue development activities are regularly working on our premises. All other employees are working from home and considering all the tools we put in place to allow for this, we have seen minimal disruption.

Second, we are closely monitoring COVID-19's potential impact on our planned clinical trials. As we have previously discussed, our plans for the year include clinical trials for NasoShield, HepTcell and ALT-801. None of these trials have begun enrollment yet. And as these trial dates approach, we will be working closely with our CROs, clinical trial sites and investigators to make an initial decision on a trial -- to make an initiation decision on a trial by trial basis.

Finally, as Will Brown, our Chief Financial Officer, will discuss later, we entered 2020 with a strong cash position, which allows us flexibility to operate during this uncertain time.

Now let us turn to our COVID-19 vaccine development efforts.

Altimmune is one of several companies that is developing a coronavirus vaccine. We believe that our intranasal vaccine platform technology has the potential to offer specific and substantial benefits to address a pandemic situation.

As we previously announced in February, we have created the initial vaccine in our laboratory and are working towards the initiation of a Phase I clinical trial as early as Q3 of this year. We are calling this vaccine candidate AdCOVID.

I would now like to turn the call over to Scott Roberts, our Chief Scientific Officer, to discuss the progress we have made with this candidate.

Scott?

Thank you, Vipin, and good morning. Altimmune is rapidly progressing the development of our single dose COVID-19 vaccine candidate called AdCOVID. Vaccine candidate is based on the same intranasal vaccine technology used in our other clinical stage vaccine candidates. Altimmune has significant experience in the development of intranasal vaccines for respiratory pathogens, including a seasonal and pandemic influenza vaccine called NasoVAX and a vaccine for inhalation of anthrax called NasoShield. This vaccine technology is especially well suited for pandemic respiratory infections for several reasons, including the fact that single dose intranasal administration of the vaccine is simple, convenient and can be performed by accessory health care personnel or possibly even self administered.

One of the issues we face during a pandemic is that we often do not understand the biology of the new virus, in particular, what type of immunity will be important for the prevention and control of disease. In this context, the broad activation of the immune system following a single dose of our vaccine technology, as demonstrated in our Phase II clinical study with NasoVAX, may be advantageous.

Due to the type of vaccine technology we use, a replication-deficient adenovector system, the fact that -- and the fact that we administer it intranasally, we are able to stimulate not only a strong neutralizing antibody response, but also T-cell responses and in particular, a mucosal immunity response.

Mucosal immunity is a specific type of immunity that can be established in the respiratory tract, but it requires intranasal administration to do so. It represents the first-line of defense against respiratory viruses like the one that causes COVID-19. The broad immune activation of our vaccine technology means that whatever type of immunity is required to prevent infection and disease, it is likely to be stimulated by our vaccine candidates.

Demonstration that a vaccine is safe and immunogenic is only one of several important requirements for an effective pandemic vaccine. Another is to be able to make, distribute and administer the vaccine on a global scale.

Here, the excellent stability profile of our vaccine technology, which can withstand months at room temperature without a loss in activity is important. That level of stability may allow for distribution without refrigeration. And when combined with the simplicity of intranasal administration, several of the hurdles associated with vaccine deployment may be minimized.

There has been much attention given to the speed with which these vaccines can be brought to clinical testing. While speed is important, in fact, it's vital in an initial pandemic response, we believe that the seen attributes such as ease of administration, the number of doses required for protection, breadth of the immune response, including mucosal immunity, and vaccine stability will determine the ultimate success of the product.

Shortly after the genetic sequence of the SARS-CoV-2 virus became available in late January, we designed and created the initial AdCOVID vaccine, expressing an optimized version of the full-length spike protein in less than 4 weeks. While that vaccine is progressing forward, we are creating additional vaccine candidates that express specific portions or subdomains of the spike protein and we'll evaluate these vaccines along with the full-length version for immunogenicity in animal models before selecting the best performing candidate.

One of the advantages of our vaccine technology is that we'll be able to use the same manufacturing process for AdCOVID as we did for both NasoVAX and NasoShield, which saves critical time by avoiding most process development activities.

Our planned development path will put us in position to initiate a Phase I safety and immunogenicity study in Q3 of 2020 with top line data readouts in Q4. Vipin?

Thank you, Scott. All of our employees are working very hard to advance this vaccine candidate. We believe that we have a duty to progress our vaccine development to help address this crisis.

We are working collaboratively with other companies to more efficiently develop our COVID-19 vaccine candidate. We are actively engaged with the World Health Organization, the U.S. government and other organizations.

It is our belief that funding should be made available to all vaccine candidates, all viable vaccine candidates for further testing. The problem is too great to pursue only a few candidates.

I would like to take a few minutes now to discuss our other clinical stage programs. Much planning and effort has been undertaken to begin trials this year. As I said earlier, we will closely monitor each of the programs as their trial dates near.

That being said, I would now like to turn the microphone over to Dr. Scott Harris. Scott?

Thank you, Vipin, and good morning, everyone. I would like to start by updating our callers on the ALT-801 program. As you are aware, ALT-801 is a potent dual GLP-1 glucagon agonist for the treatment of nonalcoholic hepatitis or NASH. The compound was acquired with the acquisition of Spitfire Pharmaceuticals by Altimmune in July 2019. In animal study,

(technical difficulty)

Scott, we have lost you.

His line is still connected.

Let me turn it over to Scott Roberts. Scott, are you able to go through this part of the script?

Yes. So in animal studies with ALT-801, 801 was associated with weight loss of 25% to 40% in diet-induced obese mice and rats, returning them to lean normal weight.

In the Gubra animal model of NASH, ALT-801 was associated with profound reductions in liver fat, improvements in NAFLD activity score, normalization of alanine aminotransferase or ALT and improved [Menten] markers of liver fibrosis, all of which were superior to semaglutide and elafibranor in these models. Dr. Stephen Harrison, a noted expert in the field, commented that these were the best effects that he had observed in NASH animal models.

We are completing GLP toxicology studies and manufacturing scale-up and are planning to dose our first subject in the fourth quarter of 2020. That study, which we expect to conduct in Australia will involve a single ascending dose and multiple ascending dose cohorts of 6 weeks duration...

Scott, you were -- sorry, you blanked out. So Scott Roberts is reading the rest of the script.

That's fine. I'll be available for questions.

Perfect.

The study will be conducted in otherwise healthy overweight and obese sound tiers. At data readout, which is planned to occur around the end of the first quarter of 2021, we expect to see significant loss of weight and reductions in liver fat, validating the drug mechanisms.

Around that time, we plan to file an IND in the U.S. and conduct a parallel arm 12-week Phase Ib study that will expand on these effects.

Our double blinded placebo-controlled trial of HepTcell in chronic hepatitis B is planned to enroll its first patient in the third quarter of 2020 and to read out in the fourth quarter of 2021. This study will be conducted in patients with active or inactive chronic hepatitis B and will be comprised of 6 doses administered at 4-week intervals.

We are highly encouraged by the results of our Phase Ia trial that was completed in 2019, which demonstrated potent immunogenicity against hepatitis B proteins and an excellent safety profile. While we expect to excerpt clear virological effects in this trial, we continue to see HepTcell is ideal for combination therapy with newer and emerging direct-acting antivirals.

Finally, we have a Phase I study in NasoShield to read out in the second half of 2020. Note that we have not begun enrollment as this trial is planned to begin in mid Q2.

With that, I'll turn it back over to Will Brown, who will provide an update on our financials. Will?

Yes. Thank you, Scott, and good morning, everyone. For today's call, I'll be providing an update regarding our 2019 financial results. We ended the year with $37.3 million in cash and short-term investments, which is an increase year-over-year of $3 million.

We have entered 2020 with a good cash position and are closely monitoring our spend to maximize resources towards our programs.

Today, we entered into an equity distribution agreement with JMP Securities, under which we may offer and sale of the $50 million of our common stock for working capital and general corporate purposes.

We also filed a prospectus supplement to cover an initial offering amount under the equity distribution agreement of up to $18.9 million. We feel this is a good corporate housekeeping measure, which gives us optionality in the future.

As Vipin and Scott mentioned, we are closely tracking COVID-19's impact on our ability to conduct clinical trials. Considering that our trials are scheduled to start later in the year, we have flexibility to delay programs if necessary, which will actually add to preserve our cash.

Turning to the income statement. Revenues for 2019 were $5.8 million, which is a reduction of $4.5 million compared to 2018. Our revenue was lower year-over-year, considering large spend for our Phase I NasoShield trial in 2018 compared to primarily nonclinical work performed in 2019. Additionally, the SparVax-L development contract was substantially completed by the end of 2018.

Research and development expenses were $17.8 million for 2019 compared to $18.5 million in the same period last year. The change year-over-year is attributable to lower clinical trial costs in 2019 compared to the prior year, offset by the recognition of $7.8 million of acquired research and development related to the acquisition of our NASH candidate, ALT-801.

2019 G&A expenses of $8.5 million is $1.3 million lower than 2018 due to decreases in compensation, professional services and legal costs offset by an increase in insurance premiums.

As discussed during Q3, we recognized a $1 million impairment related to our SparVax-L anthrax vaccine program. This represents the entire book balance of the IPR&D asset related to this product candidate, which is a legacy program acquired through the merger with PharmAthene.

Net loss attributed to common stockholders for the third quarter was $20.97 million compared to $42.5 million in the same period last year, with net loss per share equaling $1.60 versus $15.16 for 2018.

With that, I would like to turn -- I would like to open the call now for Q&A. Operator?

(Operator Instructions) Our first question is from Liisa Bayko with JMP Securities.

A couple of questions for me. What is it going to cost you to bring the vaccine forward? And are you seeking outside funding? Do you have government funding? So can you just highlight that?

Yes. So Liisa, this is Vipin. So we are initially focused on developing the vaccine to first-in-man trials. So that's really the focus. And that cost is relatively modest to get to that point.

Having said that, we are in discussions with a number of non-dilutive funding sources. And we're hopeful that we'll get funding from third parties to develop this further.

But again, we are fully prepared to take the vaccine forward on our own because the costs are fairly, fairly modest. So we'll work -- continue to work with potential funders as well as -- but move forward full speed ahead and fund it on our own.

And can you talk about sort of time lines from here, let's say, all the way through to having this on the market? What are we talking about?

Yes. As you can imagine, time lines are hard to predict because it is all going to depend upon what kind of posture the FDA will take in terms of accelerating and expediting the development of these vaccines.

Everything that we are seeing so far is sending us very positive signal. The FDA has been very accessible to us as well as to other companies. So we've had a very good dialogue with them.

The question is going to be once we show the first-in-human efficacy or immunogenicity, what's the -- how good is that immunogenicity? And how comfortable people feel to sort of either do -- either given emergency use authorization or some kind of stockpiling order at that point. So look, all of the old rules of drug development are really not applicable here. We just have to see how things develop, but it is quite consumable that if one shows good immunogenicity and relatively good safety that we'll be able to begin stockpiling and manufacturing large amounts of vaccines for human use. So it could be as early as early next year if all of that comes together.

One of the things I would point out about our vaccine platform is that we have already worked with the FDA and have developed 2 other vaccine candidates using exactly the same platform technology. So from a safety perspective, we have a lot of information.

From a manufacturing perspective, as Scott Roberts pointed out, we have a lot of experience. So we can really expedite things in terms of manufacturing large amounts of the vaccine. As well as from a safety perspective, we can provide a lot of comfort to the FDA that we have a lot of safety data.

Let me turn it over to Scott Roberts and would love to hear his thoughts on this.

Well, I think that was a very good explanation of the situation, Vipin. What I would add is that with the platform technology and our experience with it, we're also able to bypass the toxicology studies that would normally be expected. That's our experience.

We've leveraged the toxicology and safety data for one product for another previously and we expect to be able to do so successfully with the AdCOVID. So with all those factors coming together, our familiarity with the platform technology and the types of vaccine attributes that we've talked about on the call here today, I think we're in a good position.

Does that -- where does that put you in terms of timing vis-à-vis some of the other programs that are moving forward for vaccines?

Are you kind of in the middle of the pack, are you ahead of people? Because again, you mentioned that you have quite a bit of experience in this area already as to maybe some others.

Yes. I think with -- there's really a whole -- not a whole lot of specific clarity, except for the very early mRNA technology that's made it into the clinic, the others.

Everybody is saying that they can move quickly. But I think that our technology, the fact that we're able to create the initial vaccine candidate within 4 weeks and providing additional candidates now puts us in very good stead with respect to speed.

But as I pointed out in the discussion earlier, speed is important, but it's not the most critical factor, at least that's our belief. That overall, the vaccine attributes such as the ease of administration, the number of doses required, and that's an important point, a lot of the technologies that are being developed are going to require more than one dose. And if you think about that on the scale of millions or more, people -- that becomes a logistical issue to get people back after a month and it also delays the time at which they'll be protected from infection. So there are a number of attributes that in the long run, will probably be more important than how quickly when it gets to the Phase I study.

Okay. And then just as background. Where do you manufacture your vaccine? What -- can you maybe walk us through the supply chain?

We use -- yes, we use commercial manufacturing organizations. We have strong relationships with a number of them. The advantage of using organizations that have familiarity with the process is important, and that allows us, again, to expedite and de-risk that critical step of producing the clinical trial material.

I think that upon demonstration of immunogenicity and safety, the ability to scale and manufacture a vaccine, such as ours, AdCOVID, globally is quite straightforward. This has been done at very large-scale by large pharma in the past.

The process is very simple, it's bioprocessing 101. And so to be able to do tech transfer to multiple manufacturing sites globally, to supply enough vaccine would be a straightforward proposition.

Okay. So you manage -- so in terms of location, it's global?

It would need to be global if the successful vaccine is moving forward towards deployment.

And in the near term, is it something that's done in the U.S. domestically? Or where are you sourcing locally right now?

We do our manufacturing in the U.S. currently, but we're evaluating all possibilities.

Okay. And then just, I guess, a question strategically for you, Vipin. It seems like maybe this is taking a bit of the front seat for now.

Is that the right way to characterize your efforts? Or is your NASH program still kind of the #1 priority? How do we think about -- I know your efforts...

Well, clearly, Liisa, we have to respond to this crisis. We believe we have a very attractive technology platform that's ideally suited for upper respiratory pathogens like COVID-19 because I just want to remind everybody that, that ours is the only -- not only it's a single dose, but it's the only intranasal vaccine in development. And that's really important because we are actually delivering the vaccine exactly where the virus enters the human body.

So as Scott pointed out, our vaccine has the special kind of immunity that no other vaccine has, which is called the mucosal immunity. And this really provides a barrier at the site of entry where the virus enters the body.

So we think that it could have this extra advantage there. So given this technology platform, I mean, we've always said within the company that our technology is really created for pandemic response.

And that's -- so this -- we have to respond to this challenge because the technology fits so well with some of the attributes that you would be looking for in a pandemic vaccine.

So as a result, we put a lot of focus, a lot of effort on that. As far as our NASH program, ALT-801, we're still very excited about that, and that's moving forward.

Our NasoShield program is ready to go into the clinic. So everything is -- we outsource everything, so it's not like we are manufacturing these things in-house.

So our R&D team is totally focused on COVID-19, but we have other people in the company in terms of regulatory planning, in terms of getting ready for the clinical trials and putting everything in place. The ALT-801 program is -- the manufacturing is going on at a third-party location as well as preclinical testing. So all of those things.

We've not slowed down any of our activities at this point, but we are monitoring. The good news is most of our trials are going to be a little bit later on in the year.

Clearly, that would impact us, depending upon what happens or how long does this pandemic last. But for now, everything is still on time and we can move forward with COVID-19 in addition to other programs that we have within the company.

As you know, we have a strong cash position, so we can fund these programs and move them forward.

So I think we're well positioned right now to keep everything moving forward, but we'll clearly make that decision as we move forward, as we see the impact of the pandemic.

(Operator Instructions) There are no more questions at this time. I would like to turn the conference back over to management for closing remarks.

Well, thank you, everyone, for listening in today. We look forward to speaking to you again on our next earnings call. Thank you.

Thank you. This concludes today's conference. You may disconnect your lines at this time. And thank you for your participation.