ALT - NASDAQ

Good day, ladies and gentlemen, and welcome to the Altimmune, Inc. Third Quarter 2023 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. [Operator Instructions] As a reminder, this call is being recorded. I would now like to introduce your host for today's conference call, Rich Eisenstadt, Chief Financial Officer of Altimmune. Rich, you may begin.

Thank you, Olivia, and good morning, everyone. Thank you for participating in Altimmune's third quarter 2023 financial results and business update conference call. Members of the Altimmune team joining me on the call today are Vipin Garg, our Chief Executive Officer; Scot Roberts, our Chief Scientific Officer; and Scott Harris, our Chief Medical Officer. Following the prepared remarks, we will hold a question-and-answer session. A press release with our third quarter 2023 financial results was issued this morning and could be found on the Investor Relations section of the company's website. Before we begin, I'd like to remind everyone that remarks about future expectations, plans and prospects constitute forward-looking statements for purposes 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. For a discussion of some of the risks and factors that could affect the company's future results and operations, please see the risk factors and other cautionary statements contained in the company's filings with the SEC. I would also direct you to read the forward-looking statement disclosure in our press release issued this morning, and now available on our website. Any statements made on this conference call speak only as of today's date, Tuesday, November 7, 2023, 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 replay on Altimmune's website. With that, I will now turn the call over to Dr. Vipin Garg, our Chief Executive Officer of Altimmune. Vipin?

Thank you, Rich, and good morning, everyone. We appreciate you joining us today for the discussion of our third quarter 2023 financial results and business update. We are excited about the continued advancement of our lead product candidate, pemvidutide, a GLP-1/glucagon dual receptor agonist, in development for both obesity and NASH. With the last dosing of the last subject completed this past September in our Phase 2 MOMENTUM trial of pemvidutide and subjects with obesity and over weight. We remain on target to announce top line 48-week results this quarter. Recall, the MOMENTUM interim data showed weight loss of 10.7% at the 2.4 milligram dose after only 24 weeks of treatment. These robust reductions in body weight, together with the effect of pemvidutide on serum lipids and blood pressure without arrhythmias or without clinically meaningful increases in heart rate or other cardiovascular signals suggest that, if approved, pemvidutide may be an important treatment option for patients with obesity, especially those with NAFLD or dyslipidemia. It is important to point out that these two conditions are prevalent in approximately 70% of the obesity population. In our NASH program, we recently announced that the FDA has granted Fast Track Designation to continue for the treatment of NASH. Fast Track Designation is designed to facilitate the development and expedite the review of new drugs intended to treat serious conditions and address unmet medical needs. NASH is a growing public health concern, and there are currently two or two treatments. The FDA decision was informed in part by the results of Altimmune’s Phase 1b randomized placebo-controlled trials of pemvidutide in subjects with non-alcoholic fatty liver disease. The relative reductions in liver fat content of up to 76% combined with significant weight loss were achieved. The efficacy and safety of pemvidutide in NASH is being evaluated in impact our Phase 2b randomized placebo-controlled biopsy-driven trial. Given the compelling trade data on our Phase 1b trials, we expect to achieve significant rates of NASH resolution and fibrosis improvement and data readout, which is anticipated in Q1 2025. As also announced, new clinical data the anti-inflammatory and anti-fibrotic effects of pemvidutide will be presented at a Late-Breaking abstract at AASLD. We refered to a prior press release posted at our website and the details of that and inflation. Finally, we expect to have a data readout from our Phase 2b clinical trial of HepTcell in chronic hepatitis B in the first quarter of 2024. Recall that this trial is designed to show evidence of antiviral effects against hepatitis B virus and establish the role of HepTcell in combination therapies for the treatment of this significant progress of pemvidutide pemphigoid and HepTcell and the upcoming results of these ongoing trials. With that, I'll now turn the call over to our Chief Medical Officer; Dr. Scott Harris to discuss our 2024. Scott?

Thank you, Vipin, and good morning, everyone. I will start off with our Phase 2 MOMENTUM trial of pemvidutide in obesity. The MOMENTUM trial enrolled 391 subjects with obesity or overweight with at least one comorbidity but without diabetes. Dr. Louis Aronne from Weill Cornell Medical School, a leading authority in obesity and obesity clinical trials, is serving as the principal investigators. Subjects were randomized 1:1:1:1 to 1.2 milligrams, 1.8 milligrams, 2.4 milligrams pemvidutide or placebo administered weekly for 48 weeks in conjunction with diet and exercise. A pre-specified interim analysis was performed when 160 subjects completed 24 weeks of treatment. Weight losses of 10.7% at the 2.4 milligram dose and 9.4% at the 1.8 milligram dose were achieved compared to a 1.0 weight loss in subjects receiving placebo. Approximately 50% of the subjects achieved at least 10% weight loss and approximately 20% of subjects achieved at least a 15% weight loss by week 24 at the 2.4 and 1.8 milligram doses. Significant improvements are positive trends in cardiometabolic risk factors were observed. Importantly, these effects were achieved without arrhythmias, clinically meaningful heart rate increases or other safety signals. These results are impactful in view of the data readouts from other compounds in the obesity space. In 24 weeks, the placebo-adjusted weight loss achieved by semaglutide in tirzepatide were approximately 8% and 12%, respectively, with pemvidutide occupying the middle of this range at approximately 10% weight loss. It should also be pointed out that at the 24-week time point, the magnitude of LDL cholesterol reduction on pemvidutide treatment with several fall better than that achieved by semaglutide or tirzepatide in a similar population at the conclusion of their trials, but at 68 and 72 weeks, respectively. We believe that it is the action of the glucagon receptor agonism present in pemvidutide, but not in semaglutide or tirzepatide that leads to the improved effects on lipids and differentiates pemvidutide. The important reductions in lipid-based cardiovascular risk factors suggest that pemvidutide has the potential to achieve even greater reductions in cardiovascular risk than those observed in the recently completed select cardiovascular outcomes trial. Of important note, pemvidutide has not been associated with minimal heart rate increases in any of our trials to date. By contrast, other GLP-1-based multi agonist containing glucagon, have been associated with these increases and in one case, arrhythmias. This may prove to be an important differentiator as cardiac effects may be -- may not be tolerated in a population with higher cardiovascular risk, such as elderly individuals or individuals with pre-existing cardiovascular disease. We see the obesity marketplace is becoming highly segmented based on these different patient needs and profiles, with pemvidutide fulfilling the need for the large segment with elevated lipids or liver fat content, which we estimate to be approximately 70% of the obesity marketplace. Pemvidutide may also provide the opportunity to initiate or established therapy without dose titration, which we believe may be a highly attractive option to primary care physicians as the obesity market grows beyond specialty clinical settings. We believe pemvidutide's profile may be an ideal treatment for many patients and physician segments and may ultimately capture a significant portion of the obesity market. We look forward to the top line 48-week results from the MOMENTUM trial later this quarter. It should be noted that the placebo-adjusted weight loss achieved by semaglutide and tirzepatide at 48 weeks were approximately 12% and 17% respectively. And based on our analysis of the 24-week interim data, we believe that pemvidutide could achieve weight loss in the mid-teens at the 48-week time point. As discussed previously by Dr. Aronne, our lead investigator in the MOMENTUM trial, this represents an important benchmark for a reversal of most, if not all, of the key morbidities of obesity. Importantly, it should be pointed out that semaglutide and tirzepatide exhibited continued weight loss from week 48 through weeks 68 and 72, respectively, and that the weight loss curves generated in recent trials with glucagon-containing compounds suggests that the weight loss with pemvidutide may continue beyond the 48-week time point. This gives us confidence that the weight loss beyond the -- that weight loss beyond the mid-teens could be achieved, the subjects were to be treated for longer durations. We're optimistic about the pending results and look forward to ongoing discussions with FDA about the design of our Phase 3 program, which we hope to commence with a partner in the second half of 2024. Now, let me talk about our IMPACT Phase 2b NASH trial. This biopsy-driven NASH trial is being conducted at approximately 60 sites in the US with Dr. Stephen Harrison, Medical Director of Pinnacle Research; and Adjunction Professor of Medicine, Oxford University serving as the principal investigator. We are planning for approximately 190 subjects both with and without diabetes to be enrolled. Subjects were randomized pemvidutide 1.2 milligrams, pemvidutide 1.8 milligrams or placebo in a 1:2:2 ratio and will be stratified for fibrosis stage in the presence or absence of diabetes. Therefore, approximately 38 subjects are expected to receive pemvidutide 1.2 milligrams, 76 subjects pemvidutide 1.8 milligrams, and 76 subjects placebo. This trial will enroll subjects with a BMI of at least 27 kilograms per meter squared, a liver fat content of at least 10% -- 8% as measured by MRI-PDFF and NAFLD score of at least 4 on a pretreatment biopsy in either F2 or F3 fibrosis with at least 50% of subjects required to have F3 fibrosis. The primary efficacy endpoints of the IMPACT trial will be the dual endpoints of achieving either NASH resolution with no worsening of fibrosis or fibrosis improvement with no worsening of NASH, with the primary treatment comparison being the 1.8-milligram dose versus placebo. Secondary endpoints will include achievement of both NASH resolution and fibrosis improvement, liver fat reduction by MRI-PDFF, corrected T1 response rate, serum lipids, and other noninvasive markers of disease. Importantly, weight loss will also be assessed as a key endpoint as we believe this will be an important differentiator with respect to the majority of NASH therapeutics in development. All efficacy endpoints will be evaluated week-24 of treatment and subjects will continue to be dosed and followed for an additional 24 weeks to a total of 48 weeks for safety and additional biomarker responses. As a reminder, the 24-week data from our NAFLD trials suggests that greater than 75% relative reduction in liver fat at 24 weeks with over 50% of subjects achieving the high bar of normalization of liver fat at the 1.8-milligram dose. We also achieved significant reduction in serum ALT in MRI-based corrected T1 imaging, both important markers of NASH improvement. As Vipin mentioned, new clinical data on the anti-inflammatory and antifibrotic effects of pemvidutide will be presented as a late-breaking abstract at AASLD. We believe that a robust reduction in NASH activity, combined with fibrosis improvement and leading meaningful weight loss will be essential for a competitive product in the NASH marketplace. Also, as we have previously -- announced, we have completed the enrollment in our Phase 2 multicenter clinical trial of HepTcell in patients with chronic hepatitis B. Chronic hepatitis B continues to represent a serious unmet need in the United States and worldwide and represents a significant commercial opportunity. HepTcell is an immunotherapeutic designed to activate T cells to fight the hepatitis B virus infection. The HepTcell trial was designed to enroll 80 subjects with an active chronic hepatitis B and low hepatitis B surface antigen. The primary endpoint of this trial is one large reduction or clearance of the hepatitis B surface antigen. We expect to announce the results of this trial in the first quarter of 2024 once all subjects complete the six-month treatment period. It is general to believe that an effective therapy for chronic hepatitis B will require both direct-acting antivirals and immunotherapy and we believe that HepT cell is highly differentiated and may provide a functional cure of chronic hepatitis B infection when combined with novel direct-acting antivirals. I will now hand the call over to Rich Eisenstadt to give an update on our third quarter financial results. Rich?

Thank you, Scott, and good morning again. For today's call, I will be providing a brief update on Altimmune's third quarter 2023 financial and operating results. More comprehensive information will be available in our Form 10-Q to be filed with the SEC later today. Autoimmune ended the third quarter of 2023 with approximately $140.8 million of cash, cash equivalents and short-term investments compared to $184.9 million at the end of 2022. Research and development expenses were $18.4 million in the third quarter of 2023 compared to $20.3 million in the same period in 2022. Approximately $12 million of this total for the third quarter of 2023 were direct expenses for the conduct of our clinical programs, including $10.4 million in direct costs related to development activities for Pemvidutide and $1.6 million in direct costs related to development activities for HepTcell. We anticipate -- we anticipated a brief and small increase in research and development expenses during the ramp-up of our IMPACT trial as we completed the in-life portion of our MOMENTUM trial. Looking ahead, we expect the increase in expenses related to IMPACT trial will be offset in part by reductions in expenses as the MOMENTUM trial winds down. General and administrative expense were consistent period-over-period at $4.5 million for the three months ended September 30, 2023 and 2022. Approximately $2.9 million for our quarterly operating expense is non-cash expense, primarily stock compensation. Interest income was $1.9 million in the third quarter of 2023 and compared to $1.1 million in the same period in 2022. Net loss for the three months ended September 30, 2023, was $20.7 million or $0.39 net loss per share compared to a net loss of $23.5 million or $0.48 net loss per share for the third quarter of 2022. We estimate that our existing cash funds us through the 24-week biopsy results from our IMPACT Phase 2b NASH trial expected in the first quarter of 2025. Operator, that concludes our formal remarks, and we would like to open the lines to take questions. Could you please instruct the audience on the Q&A procedure?

Certainly. [Operator Instructions] And our first question coming from the line of Yasmeen Rahimi from Piper Sandler. Your line is open.

Good morning team and thank you so much for all the great updates. To the extent you can comment on and for the MOMENTUM data, like I know it's set for this quarter, enrollment finished in September. Any chance this is going to potentially come around this month or next month. So to the extent you could provide a little bit color on when in this quarter, we should be expecting it? I know in the past -- second question is, in the past, you guys have spoken about also at the top line to provide some modeling analysis to be able to look at the curve of weight loss. I just wanted to make sure that's still occurring as we head into the top line data. And then maybe the third question is just some cadence on given that impact has a weight loss in a really desirable product profile, what is the enthusiasm among sites and patients as they have eligibility to be part of the study. So I appreciate if you could tackle those three for me, and I'll jump back into the queue.

Thanks Yasmeen. Thank you for the questions. Scott -- Scott Harris, you want to take please?

Yes, I can take those. So Yasmeen, the guidance that we can provide at the current time is that we finish enrollment. We finished dosing in September. There's obviously a safety follow-up period after that of approximately four weeks. There's time for data clearing -- data cleaning. So as we said, we're really headed towards readout this quarter. And at this time, that's about as much information as I can provide. But I think the arithmetic is there. And you can do the calculation based on the information in the public domain. Regarding the modeling analysis, yes. As I said, weight loss is expected to continue beyond 48 weeks based on the shape of the curve of other compounds, particularly glucagon containing compounds, and we will model that and try to provide what weight will us would look like had patients been followed for the 68 to 72 weeks of other compounds. I would emphasize there's been a great deal of enthusiasm from not only patients, but also sites and in particular, Dr. Louis Aronne who is the principal investigator in the trial. As he echoed during the reading of our 24-week weight loss, he thinks that this is an extremely important drug based on its differentiated profile, the fact that the marketplace will be segmented with different needs for weight loss, serum lipids, lipid fat reduction. These particularly interested in an absence of the need to dose titrate, because he feels very strongly that the great majority of this marketplace will move to primary care in the absence of really the need to achieve bariatric surgery type weight loss in patients. We think this sights feel and patients feel as well based on the reactions that this is going to be a very successful product.

Yes, Scott, there was also a question about the enrollment of the IMPACT trial based on the weight loss properties. Could you elaborate on that as well?

Yeah, sure. So we're seeing very brisk enrollment in IMPACT. We're very pleased with it and the comments reading from patients and investigators is that you've got the drug out there. In NASH trials, that's not only treating NASH, which for most patients is invisible. They have a condition in the liver, what they're really coming to the trial for is the weight loss. And we think that their reaction in the IMPACT trial will reflect the uptake of pemvidutide in the marketplace when it finally gets approved.

Okay. Thank you so much. I'll jump back in the queue.

Thank you. And our next question coming from the line of Corinne Jenkins with Goldman Sachs. Your line is open.

Hi. This is Omari Art [ph] for Corrine. So our first question is, what do you view as a successful outcome for the 48-week momentum readout with respect to weight loss? And then what can you contextualize for us how that position is kind of due type given both the safety and efficacy considerations?

Oh. Thank you, Omari. I'll answer both of those questions. Yeah. So, Omari, we -- as we've said, we feel comfortable that we could achieve weight loss in the mid-teens, which as Dr. Aronne pointed out is key for moving most of not all the comorbidities of obesity. And we feel comfortable that we'll be in that range. And that also we'll continue to see weight loss beyond that. So if you recall, the weight loss achieved by tirzepatide and semaglutide at 48 weeks was less than it achieved at 48 weeks, at 72 weeks, or 68 and 72 weeks. Now we'll continue to see weight loss, or would have continued to see weight loss beyond the 48 week time point. And as I mentioned in my response to Yasmin, we'll model that for investors and estimate what we think the weight loss would be at extended time points. We see this drug extremely well positioned in the obesity marketplace, especially fitting the segment of patients who need to get further reduction in their serum lipids, reduction in their liver fat content, both important risk factors for cardiovascular disease, but most importantly, achieving it safely. And I want to emphasize that we have not seen the heart rate increases, at least not seen meaningful heart rate increases with pemvidutide or arrhythmias that's been seen in other compounds, especially the compounds, the dual agonists that contain glucagon. So we think the safety profile, the good solid weight loss, the effects on serum and hepatic lipids, and especially in primary care, which we believe is going to dominate the obesity marketplace in the future, the convenience of not having a dose titration, at least at the 1.8-milligram dose.

Thank you. One moment for our next question. And our next question coming from the line of Roger Song with Jefferies. Your line is now open.

Great. Congrats for the progress and thanks for the update. A few questions from us. So the first one is regarding the -- assuming the momentum Phase 2 data meeting your expectation. And how -- what is your current thinking around the Phase 3 design? Particularly around the dosing and the titration given, we see a little bit higher discontinuity due to AE in Phase 2, which is similar to other Phase 2, but in Phase 3, you probably want to lower that rate for Phase 3. Just remind us what is your current thinking for the design portion? And second question is related to the partnership. So I think on the call, you mentioned you will start a Phase 3 in second half next year with the partner, maybe just can you give us some color around the partner discussion at this point, particularly with the momentum 48-week data, how and when will trigger additional discussion to make this material? Thank you.

Roger, I'll answer the first question, and then hand…

Scott, do you want to take the first question? Yeah, go ahead.

Yeah. Roger, I'll answer the first question, and then I'll turn the microphone over to Vipin for the second question. So the ultimate design of the Phase 3 trial will be set in discussion with partners, and also in discussions with the FDA. We anticipate having an end of Phase 2 discussion with FDA in 2024 based on the results of MOMENTUM trial. We see all of the current doses as being viable going forward. The 1.2 and 1.8 milligram doses are given without dose titration and currently, the 2.4 milligram dose is given with a very short, four-week titration. That's about one-fifth duration of tirzepatide dosing and even lower than the prolonged titrations that are being used beyond half a year in other programs, or will be used in Phase 3 programs. So we see those doses moving forward. As you mentioned, there was a higher than we expected adverse event discontinuation rate at the 2.4 milligram dose. But as you pointed out, it was the same if not less in the adverse event discontinuations that have been seen in other Phase 2 programs like the semaglutide program in tirzepatide Phase 2 programs, and that they made the necessary adjustments going into Phase 3 to get their adverse events down towards where they are right now in the single digits. We have a lot of opportunity to do that. We have, as you said, we could modify dose titration, but a very important difference from the other trials is that we did not allow dose reduction. And as I mentioned before, in the tirzepatide and semaglutide trials, as much as 30% of those patients either never got up to the highest dose or dose reduce once they got there. And consequently, you can see that by putting a dose reduction scheme or more flexibility in the up titration in our study, our studies, we really think that we can get that adverse event rate down even without having to dose titrate any further than we are right now. Vipin, would you like to answer the second question about the partnership?

Yeah. Thanks, Scott. So Roger, as we have said before, obviously, this 48-week data is very fast moving our partnership discussions forward with we've already received with people discussing out there, and our goal is to be Phase 3 ready by the second half of next year, and that gives us enough time, plenty of time to also line up a partner to initiate that Phase 3 program. So that's really what we are executing to, we feel that with the data that we are expecting at 48-week read out that would give us the best opportunity to line up a partner to move forward into Phase 3.

Excellent. Thank you. That’s it from us.

Thank you. And our next question coming from the line of Mayank Mamtani from B. Riley. Your line is open.

Hi. This is William Wood on for Mayank today. Congratulations on the -- on your quarter. So, a couple of questions from us. Thinking about your upcoming Phase 2 momentum top line readout, are there any data sets that you've recently prioritized and decided to include possibly body composition or lean muscle?

Yes. William, the readout that we're going to have this quarter will be, in many ways, similar to the parameters that we read out before 24 weeks. So let me repeat that. It will include body weight loss to include waist circumference. It will include serum lipids. It will include a readout on vital science, which we think are very important and differentiating. And will include glycemia control and also report on adverse events within data included on the discontinuations. We also expect to have data on reduction in liver fat. We are doing body composition measurements to this trial. At this point, we do not think that we're going to have them for the top line results, because they require more analysis than just liver fat analysis. So that additional readout on, say, lean body mass will probably come sometime after the top line results.

Got it. And then you mentioned and you've previously reported that you have a presentation coming up at AASLD this weekend or early next week. You mentioned, it's just going to be new data on anti-inflammatory and anti-fibrotic properties of pemvi. Do you think you could go into a little bit more color on what we may expect to see and how we should view that data speeding into the FDA decision granting you FTD and then obviously, your IMPACT trial?

Thank you, William. I cannot discuss the data in that poster, because it's embargoed by AASLD roles as late-breaking abstracts. But as you can see, the FDA saw all of the data, including the data that -- the additional data that we'll present. Additional data on not only anti-inflammatory properties of pemvidutide but even more importantly, the anti-fibrotic properties of pemvidutide, and they are aware of all that when they saw the Fast Track application and granted that designation to Altimmune. We believe that pemvidutide with its very high reduction in liver fat content and class-leading effects on anti-inflammatory markers will result in important improvements of fibrosis and the abstract will highlight the observations that we've made to-date on the latter point.

Appreciate it. And then one last quick one. Your IMPACT trial is enrolling F2/F3 patients. I believe you said 50% have to be F3. Given the difficulties we've seen recently in at F4 at the current time, do you foresee pemvi trying to be run in that F4 population?

It's a great question, William. That's something we're obviously taking a very, very good look at. We haven't made any announcements on that to-date. Right now, we're concentrating on the F2, F3 population, but we're certainly taking a very good look at cirrhosis and the possibility of engaging that population in a separate clinical trial.

Appreciate it. Thanks very much for taking our question and congratulations again.

Thank you.

Thank you. And our next question coming from the line of Jonathan Wolleben with JMP Securities. Your line is open.

Hey. Thanks for taking the questions. I guess two for me. I want to follow-up from an earlier question. How do you think about an acceptable tolerability profile then in the upcoming little readout given the kind of tweaks Scot, you just discussed you could make going into Phase 3? And then can you also discuss the differentiation from pemvi to the other GLP-1 glucagon dual agonist, Merck and BI compound, either structurally or even from the data we've seen, we've gotten pretty good datasets from all three at this point. I think that would be helpful to hear? Thanks.

Yeah. So we have to point out that any tolerability data that's been generated to date has been in the absence of dose titration. And the fact that we can achieve comparable safety and tolerability is really -- it's a complement to the drugs, and we believe that arises from the pharmacokinetics of pemvidutide with a slow entry into the bloodstream. Remember that at the 1.2 milligram and 1.8 milligram doses, the adverse event rates leading to discontinuation were low. And again, the 1.8% was given without dose titration and still achieved a 9.4% weight loss at that point in time, which was as good as semaglutide at the same time point when you look at it on a placebo-adjusted basis. Obviously, there is a lot of opportunity to tweak the dosing any way we wish in order to get that profile down even better than it is right now. And as I mentioned before, Jonathan, we think we can get that to -- without adjusting the dose titration by simply allowing for dose reduction in future trials. So we're obviously optimistic about that. Regarding the other compounds, starting from the structural viewpoint, as one knows that in addition to the ePort domain, which we think is unique and conveys special pharmacokinetics to the drug we also have a 1:1 ratio of GLP-1 to glucagon agonism, which is the highest concentration of glucagon and the glucagon dual agonist that are available today in contrast. The Merck has announced that it's about 2:1 biostores GLP-1 and the Boehringer compound, pemvidutide is about 8:1. We believe that it's the higher glucagon content that conveys the properties that we've seen. But it's also important to note that these compounds have both been associated with heart rate increases and that we're not seeing these heart rate increases in our program. And we think that's a very important differentiator. We've not seen any liver fat data with the Borger compound. Some discussion has taken place around meetings that they're not seeing changes in serum lipids. We think that reflects the low glucagon compound content in that compound. And the Merck data, they are seeing relatively comparable reductions in liver fat which we speak to the glucagon activity in both compounds

Thanks for the color, Scot.

Thank you. And our next question coming from the line of Patrick Trucchio with H. C. Wainwright. Your line is open.

Good morning, everyone. This is Louis for Patrick. Thank you for taking our questions. I'm going to change gears here and talk a little bit about the HepTcell and the way that the field has been looking at immunomodulation as an accepted necessity and HBV cure for –due to HBV cure. So can you talk about how your treatment is progressing towards the functional cure that could achieve this mechanism -- this immunomodulation mechanism where others don't have that?

Sure. I appreciate the question there. What we've already demonstrated with HepTcell is that the therapeutic, which is it's a T cell immunotherapeutic meant to boost the T cell response over the resistance it has to have seen the HPV antigen. We've demonstrated in our Phase 1 studies that it's very safe and that it's able to significantly increase the T cell response to HBV antigens. And so the next step we felt it was important since this is going to be used as a combination therapy most likely with direct acting antivirals like siRNA or monoclonal antibodies or oligonucleotides and against the surface antigen, for example to show that they come on at activity on its own. And so that's what this Phase 2 study that's currently ongoing, and we'll report out in the first quarter of next year is meant to show. The advantages of HepTcell have to do with the focus of the T cell response against antigens that are known to be important for functional response. And that is the polymerase antigen and the core antigen. The epitopes that were selected and represented in HepTcell are highly invariant. They're hydrophobic in nature. And so they're unlikely to mutate in response to the immune pressure that will be generated. So what we have is an immunotherapeutic that's expected to be active against all of the circulating genotypes of HBV. And with combination with the adjuvant that we are using IC31, which is preclinically looked very encouraging. And in our Phase I study was shown to be important for these T cell responses. We feel that we're going to be able to generate a very robust response with surface antigen and other measures of HBV replication. That will then set us up for purging discussions with companies that have these direct antivirals and allow us to do the Phase 2 studies in combination therapies.

That sounds great. And do you plan to stratify patients based on surface antigen at baseline. We've seen that with the Betty [ph] Phase 3 program. Can you discuss more the baseline characteristics of the Phase 2 trial? And if you're successful, if you're going to implement that threshold of surface antigen in the baseline going forward?

Sure. That's a great question. And that's really one of the unique design elements of the Phase 2 study that's currently ongoing and report out here shortly, is that we've selected patients that are referred to as inactive carriers. And so basically, these folks have low surface antigen levels compared to many chronically infected individuals. And we felt that, that would represent a population that has received direct acting antivirals, has had the surface antigen reduced by the mechanisms that I referred to earlier and then created a better environment for the immunotherapeutic to work and boost the T-cell response. So going forward, we don't see selecting patients with low surface antigens. We think that the combination therapy, the first part of that with the direct acting -- direct acting antivirals will accomplish that goal, and then HepTcell will work as it is in this study. So, the study is really meant to look forward towards the combination studies and how the patients would present themselves for treatment with HepTcell.

Sounds great. Can you just remind me quickly, is this with or without interfering and do you plan to have an arm with and without interferon in that combination setting?

So the current study does not include interferon in the treatment regime. Going forward, I think that there's any number of combination approaches that can be envisioned and that's something that we'll talk more about as we get a little further down the road.

Sounds good. Thank you, so much.

Thank you. And as there are no further questions in the queue at this time, I will now turn the call back over to Dr. Vipin Garg for any closing remarks.

Thank you, everyone for participating today. We appreciate the opportunity to share our results and outlook with you, and thank you for your continued interest. Have a nice day.