Atea Pharmaceuticals Inc (AVIR) 2022 Q3 法說會逐字稿

Good afternoon, ladies and gentlemen. Welcome to the Atea Pharmaceuticals Third Quarter 2022 Financial Results and Business Update Conference Call. (Operator Instructions)

I will now turn the call over to Jonae Barnes, Senior Vice President of Investor Relations and Corporate Communications at Atea Pharmaceuticals. Ms. Barnes, please proceed.

Thank you, operator. Good afternoon, everyone, and welcome to Atea Pharmaceuticals third quarter 2022 financial results and business update conference call. Earlier today, we issued a press release which outlines the topics we plan to discuss. You can access the press release as well as the slides that we'll be reviewing today by going to the Investors section of our website at ir.ateapharma.com.

With me today from Atea are Chief Executive Officer and Founder; Dr. Jean-Pierre Sommadossi; Chief Development Officer; Dr. Janet Hammond; Chief Financial Officer and Executive Vice President of Legal, Andrea Corcoran; and our Chief Commercial Officer, John Vavricka. They will all be available for the Q&A portion of today's call.

Before we begin the call, as outlined on Slide 2, I would like to remind you that today's discussion will contain forward-looking statements that involve risks and uncertainties. These risks and uncertainties are outlined in today's press release and in the company's recent filings with the Securities and Exchange Commission, which we encourage you to read. Our actual results may differ materially from what is discussed on today's call.

With that, I'll now turn the call over to Jean-Pierre.

Thank you, Jonae. Good afternoon, everyone, and thank you for joining us. We have a number of updates to review with you today that demonstrate the considerable progress we have made so far this year across our 3 clinical programs.

Turning to Slide 4. As we assessed a COVID-19 landscape with the rapid increase in dominance of multiple new variants in different regions of the world, combined with social dynamics back to near pre-pandemic norms. Epidemiologists' today that COVID-19 will persist with multiple waves as we currently see today.

The warning durability associated with vaccines and natural infection. And the low uptake in the number of people receiving the Omicron booster vaccine was only less than 10% in the U.S. currently would continue to cause large numbers of impacted individuals and reinforced the need for new direct acting all antivirals.

Looking forward, as we start enrollment of SUNRISE-3, our global Phase 3 registrational trial. These ongoing waves with variants not susceptible to currently available preventive tools should enable timely enrollment of patients for this trial. Pandemic COVID-19 waves can be life sweetening to dose at high risk over 65 years old, particularly to those with risk factors causing increased hospitalization and thus. New oral antivirals, with improved profiles, are urgently needed due to the limitations of the current antiviral options.

In addition to relapse and safety concerns, the major issue of drug-drug interaction between Paxlovid and a commonly prescribed life-saving drugs lead to a major unmet need among patients that have risk for severe disease.

With Bemnifosbuvir, we have the potential to address many of these limitations. And it is our top priority to deliver this drug candidate as fast as possible.

Turning to Slide 5. Our SARS-CoV-2 variants continued to split up. We are confident that Bemnifosbuvir will remain fully active against ongoing and future new variants based on the consistent potent in vitro antiviral activity that has been demonstrated against variants of concern.

Indeed, our most recent dataset demonstrated in vitro antiviral activity against Omicron's sub-variants BA4 and BA5, similar to the potency observed with Alpha, Beta, Gamma, Epsilon, Delta and Omicron sub-variant BA1 and BA2.

I will now turn the call over to John to review the oral antiviral market opportunity for COVID-19. John?

Good afternoon, everyone. Turning to Slide 6. While initial COVID-19 revenues were driven by advanced government purchases, we believe the COVID-19 antiviral market will remain a very large market opportunity for years to come.

Our Paxlovid, Lagevrio are each multibillion-dollar product despite the limitations, which -- prescribing hesitancy.

And turning to Slide 7. Over the next year, the U.S. Department of Health and Human Services has suggested, and we anticipate the U.S. market will transition from advanced government purchases to more traditional channels, which we expect will continue to be a multibillion-dollar opportunity.

Projected annual COVID oral antiviral demand using IQVIA retail prescriptions suggest an estimated annual market between $10 billion and $20 billion. Beyond that, we believe there is an opportunity to expand this market by simplifying prescribing for patients where Paxlovid drug-drug interaction is a concern.

There are several important classes of commonly prescribed drugs that limit the ability to safely prescribe Paxlovid, including seizure medication, antipsychotics, anticoagulants more. Additionally, the government is expected to move beyond advanced purchases to recurring stockpile purchases once oral antivirals against COVID-19 are fully approved.

I'll now hand the call over to Janet. Janet?

Good afternoon. Turning to Slide 8. Our COVID-19 strategy is focused on the current highest unmet medical need. We're targeting the most vulnerable patient populations who are at the greatest risk for disease progression to severe COVID-19 or mortality and for whom there are the fewest treatment options available currently.

Bemnifosbuvir results to date demonstrated very favorable profile, including clinical benefits, its safety and tolerability and the low risk for drug-drug interactions. This profile should allow Bemnifosbuvir to become a cornerstone of Mono and Combination Oral Therapy for the treatment of COVID-19.

Our combination antiviral cohort in the SUNRISE 3, trial will inform our future development strategy. And we are at the forefront of developing combination therapy for specific populations such as the immunocompromised.

Bemnifosbuvir has already demonstrated additive benefit in vitro in combination with authorized direct acting antivirals, including protease inhibitors. And we continue to advance our internal protease inhibitor programs for combination therapy with Bemnifosbuvir.

Moving to Slide 9. The statistics show unequivocally that hospital rates and deaths from COVID-19 remain highest in the population which we found to study. And these are the primary endpoint for the SUNRISE 3 trial.

In the U.S., alarmingly, COVID-19 is now the third leading cause of death after heart disease and cancer with hundreds still dying daily. According to the CDC, approximately 75% of COVID-19 deaths are in patients 65 years of age or older. The CDC has also stated that 50% of hospitalized patients, over-65 have had at least 3 shots of vaccine with rates of hospitalization a further 3x higher in unvaccinated adults.

It's important to note that in immunocompromised patients, rate of hospitalization in excess of 20% have continued to be reported with Omicron.

Moving to Slide 10. Let's now review our COVID-19 study design for SUNRISE 3, our Phase 3 registrational trial that will assess Bemnifosbuvir as both mono and combination antiviral therapy. This global Phase 3 trial is a randomized, double-blind, placebo-controlled study, which will evaluate Bemnifosbuvir or placebo administered along with the local standard of care.

We expect to enroll at least 1,500 high-risk patients with mild or moderate COVID-19. Patients will be randomized 1:1 to receive either Bemnifosbuvir 550 milligrams or placebo twice daily for 5 days. 2 study cohorts defined by the type of standard of care the patients received will be studied.

The first cohort is a monotherapy cohort, which will be comprised of patients receiving supportive care and this represents the primary analysis population. The second cohort is a combination antiviral cohort that will be comprised of patients who are receiving a compatible antiviral against COVID-19 as part of their locally available standard of care.

The primary endpoint of the study is all-caused hospitalization or death through day 29 in at least 1,300 patients from the monotherapy cohort. You will recall; we have already evaluated hospitalization in the MORNINGSKY trial. And Bemnifosbuvir showed a 71% reduction in hospitalization versus placebo.

Importantly, in addition, the subgroup analysis showed an 82% reduction in patients over the age of 40.

Moving to Slide 11. SUNRISE 3 will focus on high-risk patients that are at the greatest risk for disease progression to severe COVID-19 or mortality. This includes patients 8 years or older, patients 65 or older with one or more major risk factors for severe COVID-19 or immunocompromised patients over 18, all regardless of vaccination status.

The study is expected to have a large global footprint with up to 300 sites in 25 countries, which will include the United States, Europe, Japan and also the rest of the world. We will imminently begin enrollment of the SUNRISE 3 trial in the United States. And we have submitted or are in the process of submitting clinical trial applications in other countries.

Turning to Slide 12. Let's now review our Dengue program. Dengue is the most prevalent mosquito-borne viral disease globally and affects almost 400 million individuals on a yearly basis. Dengue is endemic in over 100 countries and more than half of the world's population is at risk.

Despite all of this, there are no currently approved treatment options for Dengue. DEFEND-2 is a randomized Phase 2 proof-of-concept study in patients with dengue fever that is enrolling in dengue endemic areas. It is designed to assess antiviral efficacy, safety and the pharmacokinetics of multiple doses of AT-752 with a primary endpoint of change in dengue virus viral load from baseline.

AT-752 or placebos are administered early for 5 days and up to 60 patients in 3 cohorts may be studied. Our second dengue study is a human challenge model that has been conducted in the United States.

In this study, healthy volunteers are dosed with AT-752 or placebo and then administered a live dose of dengue virus. Subject to closely monitored within a very controlled setting, allowing assessment of viral load and the viral kinetics between the treatment groups.

We expect to complete enrollment of the Challenge study and enrollment of the first cohort of 20 patients in the DEFEND-2 study around the year-end with results to follow. Additionally, I would like to mention that we presented results from the AT- 752 Phase 1 study in 65 healthy volunteers last week at the American Society of Tropical Mentone and Hygiene 2022 Annual Meeting.

These data demonstrated that AT-752 was generally safe and well tolerated without drug-related serious adverse events or discontinuations. Drug CASM levels above the in vitro EC90 were rapidly achieved. Based on these data, we anticipate that AT-752 has the potential to rapidly inhibit dengue virus replication across all serotypes 1 through 5.

Turning now to our hepatitis C program. As shown on Slide 13, our HCV combination program looks very promising and has the potential to improve on the current standard of care. Our HCV combination profile includes the potential for a convenient and short duration protease inhibitor free treatment and the possibility for the first Ruzasvir 330 were decompensated disease.

We believe Ruzasvir in combination with Bemnifosbuvir provides the opportunity to create a best-in-class pan-genotypic HCV therapy. Clinical trial applications will be submitted around the end of the year with the initiation of the Phase 2 clinical trial to follow.

With that overview, I'll now hand the call over to Andrea to review our financial information.

Thank you, Janet. As Jonae mentioned in her introductory remarks, earlier today, we issued a press release containing our financial results for the third quarter of 2022. The statement of operations and balance sheet are on Slide 17 and 18.

R&D expenses decreased by $38.1 million from $43.0 million for the 3 months ended September 30, 2021, to $4.9 million for the 3 months ended September 30, 2022. The decrease in R&D expenses was primarily due to the elimination of the cost share arrangement with Roche, our former COVID-19 program collaborator and includes a credit in the amount of $14.5 million related to the closed out by Roche of certain clinical trial activities that were previously the subject of the cost-sharing arrangement.

General and administrative expenses remained relatively consistent at approximately $11.9 million for the 3 months ended September 30, 2021, and $11.4 million for the 3 months ended September 30, 2022.

Also in Q3, we recorded interest and other earnings on our cash reserves in the approximate amount of $4.4 million. And we expect to receive a tax refund of approximately $3.7 million associated with the 2021 tax returns.

In closing, with $665 million in cash, cash equivalents and marketable securities at quarter end, we are pleased to reiterate our cash guidance with a runway through 2025.

I'll now turn the call back over to Jean-Pierre for closing remarks.

Thank you, Andrea. This year, we have made substantial progress advancing our 3 clinical candidates, which will take us to a pivotal year in 2023. Our team is operating with a sense of urgency because there is an immediate need for new oral treatment options for COVID-19.

We will immediately begin the enrollment of our global SUNRISE 3 trial with the goal to deliver safe and effective oral direct antiviral to patients as quickly as possible.

In addition, we soon expect enrollment completion of the Challenge study and the first cohort of different tool for Dengue with results to follow and the initiation of our Phase 2 combination program in HCV.

I would like to take the opportunity to thank the entire Atea's team for their tireless dedication to our mission of transforming the treatment of several viral diseases and without you none of this progress will be possible.

With that, operator, we will now open the call up to your questions.

(Operator Instructions) Our first question comes from the line of Ms. Hannah Adeoye with JPMorgan, Hannah?

This is Hannah on for Eric, just a few from us. So first, can you speak to just the rationale behind doing this in Challenge study? And what questions do you think is going to address separate from that of the inpatient NV study? And how informative do you think that human trial might be in you're seeing on the clinical activity of AT-752? And then also, can you characterize the data sets that we might be seeing from both Phase 2 Studies? Should we anticipate data from exploratory endpoints as well? And when might we expect update on subsequent cohorts?

Janet, do you want to take the questions?

Yes. So in regard to the rationale for the Challenge study, we think it's very complementary to the treatment study and has provided us with a really good idea of how AT-752 performs in Dengue.

As mentioned, the patients or the volunteers in the Challenge study are administered a live dose of Dengue, but on the background of either treatment with 752 or placebo. And so I think here, we really have a good example of the natural biokinetic study of infection in the placebo patients, the potential for protection against infection altogether, but also, I think, a good glimpse of whether 752 is efficacious against the infection.

And so I think together, we get a good sense of what happens in a dengue infection and also what is likely to happen if the drug is administered (inaudible) [00:20:41]. So I think altogether, the 2 studies together should give us a very good understanding of how 752 performed against the dengue virus and allow us to make the decisions around whether we need further cohorts and what type of dosing we're looking at for those in terms of treatment durations and so forth.

So I think they're going to be very informative. It's unfortunately a disease which is not all that well understood. And so I think having some real world evidence in this I think will be very important for us.

And with regards to when we'll have datasets available. As we mentioned, we plan to complete the Challenge study as well as the initial cohort of patients in the Phase 2 trials by year-end. And then we will analyze and incorporate those data. And that will allow us to make decisions around what questions, if any, we need to answer as you'd plan the enrollment of subsequent cohorts if they're needed.

Okay. So you won't, getting data this year from any of those programs?

Well, we've never committed to the data as indicated. It's going to be early next year as we have indicated many times. So at the same time, what I would like to reiterate what Janet was saying is that we are going to be the pioneer for the treatment of dengue.

So far, as you know, there is not a single direct acting antiviral that has been successful. Everyone has failed. So we are the pioneer both in terms of treatment duration. The -- how long do we need, and we are right now for 5 days. We have 2 weeks for the prophylactic.

We are learning from the experts in the field that there may be some rebound from the disease itself. So it's -- as Janet has indicated, we are waiting to have both studies to make sense of both studies, a highly complementary, as proof of concept and understand how we are going to move forward into larger studies.

Our next question comes from the line of Matthew Harrison of Morgan Stanley.

So what level of a low reduction of dengue is lineally meaningful or other kinetics more important?

Janet?

So it's an interesting question, I didn't know the answer to it necessarily. I think we're going to learn a lot, as I said, from having both the patients on the placebo group as well as on the active in the prophylactic study. And also in this treatment study, I think, to be able to compare and contrast.

We know that the viral node declined very rapidly naturally after a couple of days. But what we're interested to see is whether we can get it to come down more quickly.

But some of what you're asking, I think we don't really know the answer because as there are no effective therapies. I don't think it's possible really to make that assessment yet.

Our next question comes from the line of Umer Raffat with Evercore.

A couple of questions, if I may. First, we saw Gilead post the Phase 3 trial of their oral Remdesivir pill. And there's a couple of things that stand out versus your trial design.

First, Gilead is using almost 2x the powering. And second, they're limiting the trial to patients with at least 4 months or more since the last vaccine dose. Maybe if you could speak to those dynamics in those 2 dimensions, as you thought about your trial design, number one.

And secondly, back on dengue, perhaps just to pick up on the prior question. If the viral load truly is declining so rapidly after a couple of days, is that consistent in patients that do end up getting hospitalize too? Because I got to imagine some sort of hospitalization endpoint is what leads to ultimate utilization and perhaps even approval?

And if you could also speak to the human Challenge study that you were attempting to run, there's only 12 patients. I didn't hear you say much on that. Where do we stand on that?

Janet?

So with regards to the Gilead Phase 3 trials, I haven't seen the study design. So I can't comment on how their population compares to us. So with regard to the powering, I'm really unable to comment.

With regard to the more than 4-month requirements into the last vaccination, again, I don't know where they are doing that study. But I can say that for our study, we have a truly global footprint, as I mentioned, in more than 25 countries.

And I think you'll be very aware of the fact that not everybody is getting the same vaccines and not everybody getting them on the same schedule. So we think that in order to allow the study to enroll the most pragmatic way is really to allow patients to come in regardless of vaccination status if they get COVID-19 because that's really what we care about.

And we'll see what the hospitalization rates are like. Unfortunately, I think in the patient population that we're planning to study in this study; the immune response to the vaccine can be quite limited anyway. So we think that many of these patients are unfortunately still going to be fairly susceptible to COVID-19.

And you'll recall, I mentioned on the call around the data for 50% of patients over the age of 65 being hospitalized, having had at least 3 shots of vaccine in the U.S. And so I think we're still likely, unfortunately, to see a fairly good representation of patients being hospitalized with even if they have been vaccinated.

And again, it's a pragmatic approach in order to be able to help us to take the study forward and we'll have to see how that translates.

With regards to viral load and the rapidity of the declines, we know that the viral load does decline rapidly. And I think to some extent, we don't yet know how that translates into the need for hospitalization. What we do know is that if patients are repeatedly infected with Dengue, what really causes the hospitalization is the infection leading to cytokine storm.

And how cytokine storm relates to rapidity of decline in viral load, I think, is uncertain. I think the main thing is that it's important to eradicate the virus as quickly as possible to help reduce the transfers for that path of immune response. But again, I think this is really the front end of the learning curve for everybody with therapeutics for Dengue.

Well, I'm sorry, just to add, and then I'll let you add to the Challenge. Just to add to Janet about the viral load, Umer, there has been the only correlation have been made that would appear to suggest that viral load are important for severity of the disease is that the 2 strain, this strain, Dengue 1 and Dengue 2, are the one with the highest viral load than the other one that basically causing the majority of severe disease.

So that's where there was some kind of correlation, but nothing very more direct than that. I'll let Janet address the Challenge part also. Janet?

With regard to the Challenge study, we're still in the process of enrolling the cohort -- the 12 patients into that cohort. So there isn't much more that I can provide in the way of an update. But we anticipate that wrapping up fairly shortly now.

Our next call will come from the line of Tim Lugo with William Blair.

So the combination of patients that you're going to be getting out of SUNRISE 3, is it safe to assume that those are going to be mostly elderly and immune compromise? Or is that more of just the geographic kind of, I guess, division between who would receive combination therapy and who wouldn't?

Janet?

So I think it really is going to depend on the prescriber to some extent. Some of it will be geographic in terms of access to good antivirals are available and standard of care in an area.

I think for many patients, particularly in the United States, it's likely that patients will be limited to monotherapy if there are significant drug interactions, preventing them from getting packs COVID.

But and they are still also able to be prescribed Bemnifosbuvir, although that doesn't seem to be much that is prescribed. So I think it's likely, I mean we anticipate that there will be more combination use really across the board in certain areas of the world.

But I think, again, the unmet need seems to be even in those areas that the profile of the drugs that are currently available rather causes some reluctance in prescribing of that.

Okay. And do you have a sense of rebound? I know that's obviously very topical, the popular stress a lot. But do we really have any good data on rebound rate for oral therapy antiviral?

Janet?

Yes. I think you're probably reading the same research here that I am. And quite honestly, I think it's perplexing still. The rates seem to be variable. One has also of patients not perceiving therapies who also experienced relapse. So I think it's difficult to be certain and the anecdotal experience that one has of people experiencing relapsed or rebound and what is written in the literate also seem to be somewhat divergent -- so no, I don't have a good idea yet.

Our next question will come from the line of Nik Gasic with SVB Securities.

This is Nik Gasic on Roanna Ruiz SVB securities. First off, for the new Phase 3 COVID-19 program, I was just curious, are you planning to feature both the primary and secondary endpoint data in the interim analysis? And if so, when do you expect to share these results?

Janet?

So we're anticipating that we'll have results from the interim analysis in the second half of next year. And I don't think we've discussed whether we're going to showcase data from both primary and secondary endpoints, so I can't answer that today.

Got it. And then one follow-up on the COVID-19 program. Are you planning to stratify results based on individual patients or status?

Janet?

I'm sorry, based on what is individual patients?

Dose status.

No. We're not going to state based on anything. And I think the serious testaments will take a little while to get. So no, we will not be doing that.

Got it. That's very helpful. And then a couple of questions on Dengue, if you don't mind. Are there any adverse events or safety signals you're watching for, in particular, at some of the higher doses of 752 maybe GI related for the 2 ongoing clinical trials?

Sure. The dose that we selected for our clinical trials with 752 is safe and well tolerated. And no, we don't believe that there will be a GI signal of the dose to group selected.

That's very helpful. And lastly, how might, I guess, broader availability of Takeda's new and vaccine, I guess, impact the landscape for new therapeutics in this space? And maybe what implications could this have for the development of 752 in the future?

Janet, do you want to address or John?

So I can start and then perhaps John, you might like to take over. So I think that the vaccine is unfortunately following on the heels of Avastin, which led to some severe adversary actions. And so I think there, was the concerns initially, that's about vaccine upticks.

I think that may be a problem unfortunately for people. And I think the population is largely intended for is starting with children really, which makes a lot of sense, but I think leaves a large unmet need for many people who live in dengue-endemic areas.

And certainly, I think, secondly, the question is around the durability of the vaccine and people who don't live in dengue-endemic areas, potentially visiting dengue in endemic areas and needing something shorter term for treatment or prevention.

So I think the awareness to the back team may actually drive people being more aware of the need for therapy. John, I'll hand it over to you.

Yes. So I think a lot was said. So obviously, in the endemic areas, we welcome the fact that they could have a vaccine because there's been nothing there. But there is durability specifically looking at the created vaccine after 3 years, it is starting to come down.

Given the past experience in those areas with the Sanofi vaccine and the disappointment by many of those countries, it's going to be interesting to see what the uptake is there. But for like wealthier countries where it might be more of a travelers market particularly if you look at the travelers market in the United States, a lot of travelers are reluctant to get a vaccine, particularly as serious before they travel.

We saw with Hepatitis A. We saw it with others. So -- and oral prophylactic for prophylaxis of travel is really would be the preferred there. And then, of course, even with the military and so forth, where maybe you're not going to be able to schedule.

So I was just saying that -- and particularly for the travels-related market and oral prophylactic would be preferred than getting a vaccination for dengue fever.

(Operator Instructions) If there are no further questions, I would like to turn the call back over to Mr. JP Sommadossi for his closing comments. JP?

Thank you again for joining us today. Thank you.

Thank you for your participation in today's conference call. This concludes the call. You may now disconnect.