Altimmune Inc (ALT) 2020 Q1 法說會逐字稿

Thank you for standing by. This is the conference operator. Welcome to the Altimmune Inc. First Quarter 2020 Earnings Conference Call. (Operator Instructions) The conference is being recorded. (Operator Instructions) I would now like to turn the conference over to Monique Kosse of LifeSci Advisors. Please go ahead.

Thank you, operator, and thank you, everyone, for participating in today's first quarter 2020 earnings conference call. Leading the way today will be Vipin Garg, Chief Executive Officer of Altimmune. Also participating on the call today is Will Brown, Chief Financial Officer; Scott Roberts, Chief Scientific Officer; and Scott Harris, Chief Medical Officer. After the prepared remarks, we will open up the call for a question-and-answer session.

A press release with the first quarter 2020 financial results was issued last night 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 purpose of safe harbor provisions under the Private Securities Litigation Reform Act of 1995. Altimmune cautions that these forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those indicated. Including those related to COVID-19 and its impact on our business operations, clinical trials and results of operations. For a discussion of some of the risk 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, Thursday, May 14, 2020, and the company does not undertake any obligation to update any of these forward-looking statements to reflect events or circumstances that occur on or after today's date.

As a reminder, this conference call is being recorded and will be available for audio 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 Q1 2020 financial results and corporate update. Joining me on the call today is Will Brown, our Chief Financial Officer, who will review our Q1 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 Q&A.

We have all watched, in recent months, the historic impact of COVID-19 on both our businesses and our personal lives. Our thoughts and prayers go out to all of those fighting this disease, including both our healthcare workers and those infected. Most of our employees continue to work remotely with the exception of our lab personnel who continue their important COVID-19 vaccine development work. Despite operating under these conditions, we have made significant strides this year to advance our development programs. And today, we will be providing you an update on our progress, both on our vaccines and our liver disease product candidates.

We advanced our COVID-19 vaccine candidate AdCOVID into preclinical testing at the University of Alabama at Birmingham. This is an important milestone for this program as we continue to be hopeful that our COVID-19 vaccine candidate will have a significant impact on the disease. We believe the attributes of our platform technology are ideally suited for a pandemic. And as a confirmation, the World Health Organization published a Target Product Profile for an ideal COVID-19 vaccine candidate that closely aligns with the clinically proven profile of our vaccine technology. Namely, a single dose, noninjectable vaccine that can be shipped without refrigeration and provides a rapid and long-lasting immunity.

Regarding NasoShield, our anthrax vaccine program. We anticipate starting our Phase Ib trial next month. NasoShield, like all of our vaccine candidates, is designed as a single dose, intranasal vaccine and is secured by a $133.7 million contract grant with BARDA, most of which should be available if BARDA exercises its option at the conclusion of the Phase Ib trial. These options take the program to the end of Phase II development, at which time it may be possible to begin stockpiling the vaccine under an emergency use authorization.

Continue to advance ALT-801, our GLP-1/glucagon dual agonist toward the clinic with our IND-enabling studies and product manufacturing. We are very excited about the potential of this program in a head-to-head comparison of our compound in the preeminent mouse model, we saw more than double the weight loss compared to semaglutide and greater improvement in histological measures of fatty liver, liver inflammation and fibrosis. This is important as Novo Nordisk recently announced their successful Phase II trial, where they met their primary endpoint of resolution of NASH and no worsening of fibrosis. However, we believe that ALT-801 can do better and has the potential to achieve best-in-class profile, not only for GLP-1 derived therapeutics, but NASH drugs as a whole.

Finally, we have completed the manufacturing activities of HepTcell and are finalizing the IND, which we expect to file next week. The planned trial is a 6-month course of treatment and chronically infected hepatitis B patients with clinical sites in the U.S., Canada and Europe. As disclosed in the press release, we will wait to initiate this study until the impact of COVID-19 on the trial can be better understood.

I would now like to turn the call over to Scott Roberts, our Chief Scientific Officer, who will fully update you on the progress we have made with AdCOVID; and Scott Harris, who will discuss our clinical plans for ALT-801 and NasoShield. Scott?

Thank you, Vipin, and good morning. As we previously shared with you, we have created several vaccine candidates against COVID-19 and have now progressed them to preclinical testing with our collaborators at the University of Alabama at Birmingham, where the vaccine candidates will be thoroughly characterized for immunogenicity against the SARS-CoV-2 virus.

One of the features that differentiates AdCOVID from other COVID-19 vaccines in development is the broad immunity that can be induced following a single intranasal dose. Based on preclinical and clinical data obtained with our other platform vaccines, we expect strong activation of multiple arms of the immune system that does not only include neutralizing antibody, but also cellular immunity and, importantly, mucosal immunity that can block the virus at the site of infection.

UAB is a world-class institution for studying the immunology of vaccines, especially vaccines directed against the viral pathogens, and we are excited about our collaboration on this project.

While the work to understand AdCOVID will continue and become increasingly more sophisticated, the core group of experiments to be included in our IND submission will be completed by the end of Q2 and selection of the vaccine candidate to progress forward into clinical testing in Q4 of this year will be made at that time. In addition to the differentiated immunogenicity profile of AdCOVID, our other attributes of the platform may be equally important. As Vipin mentioned, the WHO published a target product profile that, in many ways, perfectly describes our vaccine platform technology. As you may know, a Target Product Profile, or TPP, identifies the minimally acceptable attributes of a drug product as well as the preferred attributes. If one compares a number of the important preferred attributes that WHO would like to see in a COVID-19 vaccine, AdCOVID is expected to meet or exceed almost all of the preferred characteristics, including single-dose protection, a rapid and durable immune response and avoidance of injections and an enhanced product stability, including the ability to store the vaccine without refrigeration for months. We believe that the product characteristics and immunogenicity of AdCOVID will be significantly better than many of the vaccines being developed and will be an important contribution to the pandemic response.

With that, I will turn the call over to Scott Harris, who will provide a clinical update on our programs. Scott?

Thank you, Scott, and good morning, everyone. As Vipin mentioned, we are on track with IND-enabling studies and manufacturing to commence dosing in our first-in-man clinical trial for ALT-801, our GLP-1 glucagon dual agonist for NASH. We are currently looking to commence this trial in Australia in the fourth quarter of this year. The initial trial will include 6 weeks of dosing in overweight and obese volunteers with fatty liver, defined as an MRI-PDFF of greater than 10%. We expect to have a readout on body weight loss and reduction in liver fat towards the end of the first quarter of 2021. This will be a value-driving event for investors as it will place ALT-801 squarely in the forefront of NASH development.

At this point, we may elect to initiate a separate program in the treatment of obesity. We expect ALT-801 to be well tolerated and achieve weight loss and improvement of liver fat in the Phase I trial without the need to dose titrate for GI intolerability, which has impacted the GLP-1 development program space.

As a conclusion of this first in-human trial, we plan to initiate a 12-week trial in patients with NASH as defined by noninvasive markers. We expect a data readout on this trial toward the middle of 2021 and rapidly transition to a full Phase IIb biopsy-driven trial based on NASH endpoints at that time.

We have had a great deal of interest in the recently announced preliminary trial results from the 72-week semaglutide Phase II trial, which demonstrated remarkable improvements in NASH, but only modest changes in liver fibrosis. We need to see the full readout from that trial, but we suspect the tolerability of semaglutide administered in high doses up to 3 to 7x higher than the prescribing dose resulted in sufficient intolerability to limit drug's effectiveness. We feel confident that the improved efficacy in the pharmacokinetic profile of ALT-801 compared to semaglutide in our preclinical studies, will translate to improved weight loss and tolerability and that weekly dosing with ALT-801 will demonstrate superior results and more convenience than semaglutide when our trials are conducted.

I wanted to comment briefly on our NasoShield vaccine for anthrax. We anticipate our NasoShield program will start Phase Ib trial in June and that we will have a data readout in November on both immunogenicity and safety. If NasoShield is shown to be safe and effective, we expect to release the remainder of the $133.7 million contract with BARDA and to move forward to a Phase II trial and stockpiling on the strategic reserve.

And with that, I'll turn it back over to Vipin Garg. Vipin?

Thank you, Scott. It's truly remarkable the progress we have made in recent months, especially considering the extraordinary circumstances in which we are working. It is a testament to our dedication and commitment to our mission and to our shareholders.

With that, I will turn the call over to Will Brown, our Chief Financial Officer, who will provide an update on our financials. Will?

Thank you, Vipin, and good morning, everyone. For today's call, I'll be providing an update regarding our first quarter 2020 financial results. Our cash and short-term investments balance is $33 million at March 31, 2020, representing a $4.3 million cash burn for the quarter. Since quarter end, we have received net proceeds of approximately $600,000 under our ATM. Additionally, with the March 27 CARES Act provision that allows the carryback of net operating losses, we plan to carry back our 2019 and 2018 tax losses to claim a $2.9 million cash refund. Following this refund, we will have the opportunity to carry back our 2020 losses during 2021 to claim an additional $1.8 million refund. Finally, the CARES Act established the paycheck protection program, and the company received a $632,000 forgivable loan, which we will use to retain employees, maintain payroll and for rent and utilities all in accordance with the terms of the CARES Act.

Turning to the income statement. Revenues for Q1 were $2.2 million, which is a reduction of $740,000 compared to Q1 2019. Our revenue was lower year-over-year considering clinical trial and preclinical work performed in 2019 compared to clinical trial start-up activities performed in 2020. Research and development expenses were $7.2 million for 2020 compared to $3.2 million in the same period last year. The increase year-over-year is attributable to development expenses incurred with ALT-801 as we perform IND-enabling preclinical studies and begin manufacturing.

As a reminder, this program was acquired in July 2019 and contains stock-based milestone payments. We carry a liability on our balance sheet for the fair market value of these noncash payments. And during the quarter, we recognized $1.75 million in expense for an increase in the fair market value of the liability due to an increase in our stock price and an increase in the probability of success. Also contributing to the R&D increases are higher spend due to increased employee compensation costs and the development of AdCOVID. We saw a decrease in spend for NasoShield due to the cycle of product development.

Q1 2020 G&A expenses, up $2.3 million, is approximately $300,000 higher than Q1 2019 due to an increase in compensation and legal costs, offset by an increase in insurance premiums. Our income tax benefit for the quarter was $3.2 million, which represents the $2.9 million refund discussed above in the Q1 portion of our 2020 net loss, which we expect to file a refund claim for next year.

Net loss attributed to common stockholders for the first quarter was $3.9 million compared to $2.6 million in the same period last year, with net loss per share equaling $0.26 in Q1 2020 versus $0.27 per share in Q1 2019.

Now I would like to open the call for questions and answers. Operator?

(Operator Instructions) Our first question comes from Yasmeen Rahimi with Roth Capital Partners.

So the first question is, team, can you share with us what type of preclinical studies are currently underway for AdCOVID? Specifically, have you begun already your challenge studies? And when should we be expecting the results from those studies? And then I have a number of follow-ups.

Scott Roberts?

Sure. Thank you for your questions. Our preclinical studies have begun with the University of Alabama at Birmingham. And consistent with the immune profile that is -- has been demonstrated with our platform vaccines. We'll be looking at multiple arms of the immune system in those preclinical studies. So we'll be looking for antibody responses, which is what most people think about. And certainly, will likely be an important part of the immune response, both total antibody and the antibody that is able to neutralize the virus. And so that will be important. We'll also be looking at the induction of cellular immunity. And this is an activation of T cells that can kill infected cells and stop the spread of infection in the host that way. And so those folks at the University of Alabama are expert at that type of assay. We'll be looking that specifically where that's directed and how efficient that response is.

And then also -- and really what separates us from a lot of the other -- all the other vaccines that are being developed for COVID-19, is the mucosal immunity aspect. And so we'll be looking at the induction of this special type of immunity that can block infection at the site of where the virus tries to gain access to the host, in the nose and the respiratory tract. And we'll be looking at the special type of antibody that's developed. They're called IgA. So because we know our vaccines can induce all of these aspects of the immune system, we'll be looking at all of those aspects in our preclinical studies.

And then can you maybe share with us what are the rate-limiting steps for scaling up manufacturing at this point? And then the last question is, can you tell us where you are in terms of your time line on completing your tox package for ALT-801?

Sure. Well, let's start at the end there. With respect to the tox package, one of the benefits we have, given our clinical experience with our vaccine platform and the very nature of the vaccine platform is we will not have to do or certainly are not anticipating doing toxicology studies prior to a Phase I study. This has already been borne out in our previous studies. And the FDA is comfortable with the vector system. And therefore, we won't have to repeat those studies before entry into Phase I. So that's a clear advantage and will help.

As far as the manufacturing, one of the things that we're doing is making sure that we derisk and give ourselves the best possible chance to see positive data quickly in our clinical study. And so to that end, we obtained a license for the PER.C6 cell line from Johnson & Johnson, actually the Janssen subsidiary. And we'll be using that cell line for our manufacturing. Now that's the same cell line that we've used for other products, and we're able to broaden our license with Janssen so that we could include that for AdCOVID. And this will certainly help because we're very used to using that cell line. It's an excellent cell line. The FDA is very comfortable with that cell line. So by taking steps like that, we've built in the success into our vaccine.

Scott, I just wanted to clarify -- sorry, I was referring to the tox package for ALT-801 for the NASH program, where it is in regards to time line on finishing that.

Oh, that's fine. Sorry about that. Sure. So that program is going -- that program is on track and proceeding well. We expect to have the tox package complete for IND in the fall, and that will allow us to enter the clinical trials later at the end of the year there. So everything is on track with that. We're seeing the sort of information we'd like to see and no other problems. So we're very much on track with that and looking forward to getting that IND in.

Our next question comes from Jim Molloy with Alliance Global Partners.

I guess my questions -- or some of them are around -- a lot of companies are seeing some pretty good delays on our non-COVID work and really just the COVID stuff going forward. Can you talk a little bit to your thoughts on what sort of potentials for delays on your trials for ALT-801 or HepTcell going forward and sort of -- or are they mitigated by how you've set up the trial site design?

Yes. Jim, thanks for the question. As you can imagine, we are actively monitoring the situation. The good news is that many of our studies are Phase I type studies that are a single-center Phase I unit studies. But as far as HepTcell is concerned, that is -- that's a multinational, multicenter study that's going to last 6 to 9 months. So clearly, that's where it's most critical for us to sort out the COVID-19 situation, and that's exactly what we are doing we're monitoring the situation. We want to make sure if we start the study, we are able to complete it. So therefore, we are delaying the start of that study, even though we're filing the IND next week. So we should be ready to start enrollment as early as in June-July time frame. But depending upon the COVID-19 situation, we will decide the exact start date of that study.

With that, let me ask Scott Harris to sort of fill in more details.

Thanks, Vipin. I think you characterized it quite well. I don't know that we're going to be seeing any practical delays at this point. We're just monitoring the situation sensitive to the ability of sites to recruit patients and enroll on the safety and the welfare of patients and staff. So we're moving ahead with all of the regulatory activities that will be necessary for conducting the trial full speed. When we actually pull the trigger on letting patients come in will depend on a live analysis of the condition in each of the sites in each of the countries, and we're looking at that very carefully right now.

And Scott, on ALT-801 and the HepTcell -- sorry, and NasoShield.

Right. And as you mentioned, Vipin, the NasoShield study is a Phase I study, and we anticipate that starting in June and moving ahead. And we've critically looked at that and feel that that June date will happen. At this point, we don't anticipate any delays for ALT-801. It will be a Phase I study. And I think the same considerations that apply to the NasoShield will also apply to the ALT-801 program. But obviously, we're going to carefully monitor the situation in Australia, and we've created contingency plans in case other sites or other locations of the study needed.

Then follow-up on ALT-801. Is there any readthrough, I know the differing mechanism of action, but any readthrough on the genesis of elafibranor, a Phase III failure, basically, they just reported out that informs how you guys will look at ALT-801's trial design? And any mistakes that you guys won't make? And then on the obesity, what do you -- what sort of change in obesity, do you need to see the trigger that, "All right, we'll try an obesity trial in this," out of the Phase I trial in ALT-801?

So Jim, as you know, elafibranor is an entirely different mechanism. It depends on a mechanism called PPAR, and there are different subtypes. There's alpha, there's delta and there's gamma. And probably the gamma is the most effective mechanism, but it has the most side effects. And there's still a debate about whether delta can be effective and elafibranor was predominantly a delta.

As you know, they did a Phase II study, which failed to meet its primary endpoint. We rejiggered the program based on a post hoc analysis. Those of us experienced in drug development would not have moved into Phase III. So I think it's simply a failure of the drug and the mechanism. And I think it has -- reflects in no way upon not only the efficacy of ALT-801 but other drugs and other drug classes.

Could you rephrase your second question? I'm sorry. I didn't quite retain that.

Quite all right. Now just a question of what sort of magnitude of weight loss would you need to see or want to see? Or what are the triggers that you want to see in the 801 Phase I trial that will say, "All right, let's run an obesity trial." I know you've mentioned in the prepared remarks, you'll wait to see the Phase I data for potentially starting an obesity trial in '21

Right. Well, I feel confident that we're going to beat other drugs. And as you know, the GLP-1s are achieving 5% to 6%, but you have side effects. So I would start by saying just to beat those numbers without side effects would be a real positive. And we showed in our animal data that we got 2.5x the weight loss on semaglutide, and we think our PK profile is far superior to semaglutide. So we feel very confident that we're going to get good levels of weight loss. I would say that the first trial will only be 6 weeks, so it will only be a partial readout of the kind of weight loss we could get up to, say, 12 weeks or 24 weeks. But we will follow-up with that 6-week trial with an immediate 12-week trial that will be in a NASH population that I think will give us better metrics to the amount of weight loss we're going to obtain.

Last question on the AdCOVID trial. Will you be looking to get nondilutive funding to run the AdCOVID? I know it's quite a bit being an offer out there for the pandemic. And then can you talk a little bit about any risks of ADE with the AdCOVID antibodies, the convention neutralizing antibodies rather than binding antibodies are perhaps not an issue.

Let me take the first part of your question, Jim. So of course, we are in discussions with a number of potential nondilutive funding sources and those discussions are progressing well, but these things take time. At the moment, our focus is to get that preclinical data and get ready for the Phase I studies. We think once we have the -- once we have the information, that's going to sort of drive the program forward, there will be plenty of sources of nondilutive funding. So we are engaged with all of them, and we'll keep you posted as we make progress on that front. With regards to ADE, Scott Roberts, do you want to take that question?

Sure. I'm happy to. Jim, so the issue with the ADE, or more broadly immune enhanced disease, seems to really relate to an ineffective immune response, an immune response that's there but not quite strong enough. And that's where the immune complexes can accumulate and form in the lungs and create some problems, at least that's what's been seen in the past. So until we get into the clinic, obviously, you've got to do the work, but there's certainly no expectation that we'll see anything like that. All of the data from our previous vaccines show very strong immune responses against the antigens.

And in addition, there's been a preclinical work looking at this with a similar sort of approach out of Oxford. And they're showing that -- where they specifically look for and did not see it. And so I think that there's a growing consensus that, that may not be as much of an issue with the SARS-CoV-2 as it has been with some few viruses in the past such as Dengue. But that's something we'll have to keep an eye on and certainly do the studies to look at that carefully, but we're not anticipating a problem.

Our next question comes from Liisa Bayko with JMP Securities.

Neil on for Liisa. Just a question on the readthrough for semaglutide. It seems like the data was kind of a good scenario for you guys in the sense that it validated GLP-1 with a pretty good results in NASH resolution, but there's still kind of room for improvement on the fibrosis front. Do you think it was a matter of just not enough weight loss? Or was it a matter of the lack of glucagon [on-site] directly to the liver kind of a combination of both?

Scott Harris?

Thanks for the question. The information that was provided in the conference call was incomplete, and there really wasn't a lot of information provided on things such as weight loss. I would agree with you that, more than likely, the intolerability of semaglutide at the doses they gave, which just to remind you, was 3 to 7x the prescribing dose. Because they literally gave up to 0.4 milligrams per day, which is the daily dose -- excuse me, a weekly dose, they gave it daily to up to 7x higher. And we think that intolerability translated into discontinuations and dropouts, and that affected the weight loss. And I think that probably read through to the fibrosis, but we're going to have to wait for the full data readout to actually see that. We think that we can achieve better levels of weight loss with better levels of tolerability, even without looking at the glucagon effects on the liver. But clearly, the addition of the glucagon coupled with the superior weight loss they're going to achieve could have really very remarkable effects on liver fat and that we think would translate into NASH resolution as well as fibrosis. This is all seen in our animal models, as Vipin mentioned. So I think we're very bullish on our ability to achieve the changes across the spectrum of histology of NASH, not only the reduction of liver fat and the resolution of NASH inflammation, but also fibrosis, we think we can achieve that based on our mechanism.

(Operator Instructions) This concludes the question-and-answer session. I would like to turn the conference back over to Vipin Garg for any closing remarks.

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

This concludes today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.