ALT - NASDAQ

Good morning, ladies and gentlemen, and welcome to the Altimmune, Inc. year-end 2025 financial results conference call. After the speakers' presentation, there will be a question-and-answer session. You will then hear an automated message advising your hand is raised. To withdraw your question, please press 1-1 again. As a reminder, this call is being recorded. I will now introduce your host for today's conference call, Lee Roth, President of Burns McClellan, Investor Relations Advisor to Altimmune, Inc. Lee, you may begin.

Thanks, Gigi, and good morning, everyone. Thank you for joining us for Altimmune, Inc.'s fourth quarter 2025 financial results and business update conference call. On today's call, you will hear from Jerry Durso, our Chief Executive Officer; Christophe Arbet-Engels, Chief Medical Officer; Linda Richardson, Chief Commercial Officer; and Greg Weaver, Chief Financial Officer. Following management's prepared remarks, we will open the line for the Q&A session. Our fourth quarter and full year 2025 earnings release was issued this morning and can be found on the Investors section of the Altimmune, Inc. website. Before we begin, I would like to remind everyone that remarks made about future expectations, plans, and prospects constitute forward-looking statements for purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. Altimmune, Inc. cautions that these forward-looking statements are subject to risks and uncertainties that could cause our actual results to differ materially from those indicated. For a review of the risk factors that could affect the company's future results and operations, we refer you to our filings with the SEC. I also direct you to read the forward-looking statements disclaimer in our press release issued this morning, which is now available on our website. Any statements made on this call are only as of today's date, 03/05/2026, 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 call is being recorded and will be available for audio replay on the Altimmune, Inc. website. With that, it is now my pleasure to turn the call over to Mr. Jerry Durso, President and CEO of Altimmune, Inc. Jerry?

Good morning, everyone, and thank you for joining us today for our fourth quarter financial results and corporate update. This is my first earnings call since joining Altimmune, Inc. as CEO in January. I would like to start with some comments to reinforce why I am excited about the opportunities ahead of us with PEMB. Altimmune, Inc. is exclusively focused on liver disease, an area where I have spent a good part of my career. Despite a number of therapeutic breakthroughs in the past several years, there remains significant unmet need and treatment gaps among patients living with serious liver diseases like NASH. We believe that PEMB has the potential to bring meaningful benefit to people affected by a variety of hepatic diseases. The balanced one-to-one agonism of glucagon and GLP-1 in a single molecule achieved with PEMB makes it potentially well-suited for the conditions we are targeting. Glucagon's direct effect on the liver can drive reductions in liver fat, inflammation, and fibrotic activity, while GLP-1 can mediate weight loss and appetite suppression and may contribute to anti-inflammatory effects. Additionally, PEMB incorporates our proprietary U-port structure, which slows absorption and is believed to drive improved tolerability, potentially reducing GI and other side effects, which can lead to greater treatment adherence. Importantly, keeping patients on therapy at the right dose is crucial to the management of chronic diseases such as NASH. The data we have generated to date across multiple preclinical and clinical trials, including our Phase IIb MATCH study, reinforce our belief in the strong therapeutic potential of PEMB, as well as its ability to stand out among competing therapeutic options if approved in NASH. As we evolve the PEMB plan, we are focused not only on advancing into Phase III, but also ensuring that the potentially unique benefits of PEMB for patients, payers, and physicians are addressed in our program with a keen eye to competitive advantages in PEMB’s targeted product profile. Based on our ongoing discussions with hepatology KOLs and other practitioners, it is clear that clinical practice in NASH is evolving and will continue to evolve as new therapies become available. The prevailing sentiment is that no single therapy will be able to effectively address the needs of all patients. This is already being acknowledged by the industry as a number of companies are pursuing combination strategies to meet the needs of broader segments of the patient population. With PEMB's dual mechanism, we have a combination therapy in a single molecule, with the potential to address both the hepatic and metabolic drivers of disease at once, which could differentiate PEMB from these multidrug approaches that aim to achieve the same benefits we are providing with a single compound. In our Phase II MATCH study, PEMB showed strong and early NASH resolution at just 24 weeks and clear antifibrotic activity at 48 weeks. The key measures were consistently moving in the right direction, with important noninvasive markers of fibrosis and inflammation improving as therapy progressed in the trial. In addition to efficacy, patients need a therapeutic regimen that they can adhere to in order to realize the full benefit of treatment. As we have shared, the favorable tolerability, leading to low discontinuations due to adverse events that we saw in our Phase II MATCH trial, can be a key differentiator that PEMB may deliver. Likewise, for patients and physicians, the simple dosing aspect of PEMB could play an important role. The one- or two-step titration scheme we will be incorporating into the PEMB Phase III trial could prove to be key when compared to the much more complex dosing of other injectable compounds. The potential of PEMB was recently recognized with FDA Breakthrough Therapy designation in NASH. Breakthrough is granted to medicines that are intended to treat a serious or life-threatening condition and have shown preliminary clinical evidence indicating the potential for substantial improvement over available therapies on a clinically significant endpoint. We look forward to proving this out in our upcoming Phase III trial. I hope this gives you some additional perspective into why we are so encouraged about the future of PEMB and excited for what is to come. Now as to how we are preparing to deliver on this potential, one of my top priorities since becoming CEO is strengthening Altimmune, Inc.'s foundation to equip us for the continued successful advancement of PEMB and support our strength as a late-stage development company. I am pleased to report that over the last several months, we have enhanced our team with the addition of new leaders who bring expertise in liver disease, late-stage clinical development, commercial strategy, and other key areas. We continue to build onto the strong Altimmune, Inc. team strategically to make sure we are able to deliver. We have also remained focused on strengthening our financial position. The $75 million capital raise completed in January was an important step in our ongoing efforts to prepare for the planned initiation of our Phase III this year. We remain committed to securing access to the capital required to successfully drive our clinical programs and create long-term value. At the end-of-Phase II meeting with the FDA, which was held in the fourth quarter based on 24-week data from our Phase II MATCH study, we received valuable guidance on the Phase III trial and we made excellent progress on the in-depth planning of a major global NASH trial like this. We are clear on the overall design elements and the endpoints and we are now in the process of making the final detailed decisions on the protocol and the full operational plan. Christophe will share more on the trial with you this morning. While we have significant focus on our MATCH program, we are also executing well on our other Phase II trials. As a reminder, last fall, we completed enrollment of the Phase II AUD trial ahead of schedule, and we are now on track to report top-line data from this study in the third quarter of this year. We are also expecting to complete enrollment of our Phase II trial assessing PEMB in ALD in 2026. PEMB represents a unique and compelling opportunity to improve the lives of people with NASH and other liver conditions. It has the potential to become an important tool for physicians as they look to improve upon the current treatment paradigm. This is a very exciting time for the team at Altimmune, Inc. We are moving quickly with intent and focus on bringing PEMB to patients and creating long-term value for our shareholders. With that, I will now turn the call over to Christophe for a clinical update. Thank you, Jerry. As we shared on our conference call in December, the 48-week data from the IMPACT trials of PEMB and MATCH, which evaluated the 1.2 mg and 1.8 mg doses, was very encouraging.

The 48-week dataset, including key noninvasive markers of liver inflammation and fibrosis, weight loss, and tolerability, showed strong evidence of antifibrotic effect at week 48 following the early NASH resolution shown already at week 24. The 48-week data established a clear dose response that supports our plan to focus on the 1.8 mg dose in the Phase III trial, while also evaluating the 2.4 mg dose, which could provide additional benefits on both weight loss and, most importantly, liver efficacy. We saw substantial improvements both from baseline and from week 24 to week 48 in ELF and liver stiffness, with the results achieved at the 1.8 mg dose being particularly clinically relevant and comparable to or greater than that observed with the approved NASH product. These measures are clear indicators of antifibrotic activity, and we believe that they will translate into measurable histologic improvement at the 52-week time point in Phase III, which, along with NASH resolution, will be the basis for potential accelerated approval. In addition to the strong benefit in ELF and liver stiffness results, treatment with PEMB demonstrated statistically significant improvement in liver fat content and liver health as measured by ALT and cT1 imaging, with particularly impressive results observed in the 1.8 mg treatment arm. While these NITs tell the story of PEMB's robust direct beneficial effect on the liver, the 48-week data also provided evidence of the ability to address metabolic drivers of NASH, with patients receiving 1.8 mg PEMB achieving 7.5% weight loss at 48 weeks with no plateauing. As noted, the inclusion of a 2.4 mg dose could result in greater weight loss in the upcoming Phase III trial and be an opportunity for additional efficacy on NASH endpoints for accelerated approval. As Jerry pointed out, adherence to treatment in this chronic disease is currently a substantial challenge. Long-term treatment is key to demonstrating clinical outcomes as well as delivering benefits to patients in the real world. Therefore, safety and tolerability are of paramount importance in addition to demonstrating efficacy in NASH. I am very pleased to say that the low treatment discontinuation rates in the 48-week Phase II study were maintained in patients taking PEMB. We attribute these key benefits to the favorable safety and tolerability profile of PEMB with limited GI adverse events despite the absence of titration. The timing of the GI-related adverse events in the IMPACT trial, which were predominantly occurring in the first one or two months of treatment, informs our plan to introduce a simple one- or two-step titration depending on the dose in the Phase III program. We expect this to further improve the tolerability profile over what we observed in the Phase II study. On the regulatory side, the minutes from our end-of-Phase II meeting with the FDA, which we received in January, confirmed our takeaways from the meeting. We are aligned with the agency on all key aspects of the design for a pivotal Phase III study, which will assess PEMB in patients with moderate to advanced fibrosis. Participants in the PEMB arms will start at 1.2 mg and follow a one- or two-step monthly titration to either the 1.8 mg or 2.4 mg dose. The trial's primary population will enroll 990 patients with biopsy-confirmed F2 or F3 NASH, evenly split between placebo, PEMB 1.8 mg, and PEMB 2.4 mg, and measure improvements in either of two primary endpoints: NASH resolution or fibrosis improvement at 52 weeks, with an AI-assisted tool used to aid the histologic assessment. The 52-week endpoint is designed to support potential accelerated approval, with five-year clinical outcome data on liver-related events needed for an eventual final approval. A second cohort, following the same dosing and titration parameters, will enroll approximately 800 patients with NIT-assessed F2 and F3 NASH and measure changes in these noninvasive tests over the same three treatment periods. This population will support safety and long-term clinical outcome evaluations. In total, we will enroll approximately 1,800 patients in this pivotal study. Other key endpoints in the program will include safety, weight loss, and additional potential differentiation attributes such as body composition, quality of weight loss, and patient-reported outcomes. This will be a global trial with sites in North and South America, Europe, and Asia. In addition to the alignment with the FDA, we have submitted requests for scientific advice to both the European Medicines Agency and the MHRA. We have incorporated learnings from previous programs and believe that our Phase III design is well positioned for these regulatory agencies. Overall, we have made great strides toward preparing to initiate our Phase III trial this year. We are finalizing our protocol, and we have aligned with the FDA on the trial design. We have incorporated feedback from key opinion leaders and we look forward to execution of the Phase III study. We will be providing updates on our progress as appropriate. Now looking beyond NASH, PEMB has the potential to address major unmet medical needs in both AUD and ALD because of a similar liver physiopathology to NASH in these indications, and both of those Phase II trials are progressing well. First, RECLAIM, our AUD trial, completed enrollment in 2025 and we look forward to reporting the top-line data in Q3 of this year. In addition to patient-reported measures of alcohol consumption, the trial will also assess an objective biomarker associated with alcohol intake, PEMB's effect on body weight, and safety in this population. For the RESTORE trial in ALD, which will evaluate PEMB's effect on liver-related noninvasive tests, markers of alcohol consumption, and body weight, it is continuing to enroll, and we expect to complete enrollment later this year. Both trials will further expand the already robust body of evidence for PEMB in serious liver disease. And with that, I will turn the call to Linda for a commercial perspective on PEMB.

Thanks, Christophe, and good morning, everyone. As we move toward Phase III initiation, establishing the future commercial competitiveness of PEMB in NASH remains a primary focus, both in the design of our trial, as Christophe described, and in identifying and addressing unmet needs in the marketplace. Despite early excitement with the first two classes of approved therapies for NASH, it is clear there is significant room for new therapies to address treatment gaps and needs. We recently conducted market research with 75 U.S. healthcare professionals who treat NASH patients to assess unmet needs in the market and satisfaction levels with current and future therapies. I will share some key insights now. First, we learned that physicians are identifying emerging needs in patient subgroups. This includes options for NASH patients who have discontinued semaglutide for either tolerability or efficacy reasons and now need alternatives. Tolerability failure was seen as an area of high or very high unmet need by the majority of the respondents. Half of all physicians surveyed agreed that there is a high or very high unmet need for therapies appropriate for NASH patients at risk for loss of muscle mass. A recent review of the literature shows that nearly one in four patients with MASLD is at risk for additional muscle loss or sarcopenia, and this rate is higher in more advanced NASH patients. In addition, healthcare professionals in our research see several fundamental limitations with currently approved and potential future therapies, setting up a clear need for potential novel options like PEMB. Many physicians acknowledge that the lack of weight loss with FGF21s and resmetirom are limitations of these options, and 44% agree that the tolerability profile of GLP-1 and GLP-1-based therapies causes many patients to drop off. Over one-third believe that lengthy titration schemes to improve the tolerability of these drugs creates adherence challenges. A similar number agreed that the loss of lean muscle mass is a concern when initiating GLP-1 or GLP-1/GIP therapy, echoing the concerns regarding sarcopenic patients I mentioned earlier. From our Phase II data seen to date, we believe that PEMB and its dual mechanism of action may address many of these unmet needs. Our existing clinical program already shows that PEMB has a favorable tolerability profile relative to current and investigational therapies. This may be highly differentiating and is clearly important in this market where patients must remain on drug therapy to achieve efficacy and weight loss benefit. Furthermore, other NASH therapies have trial designs with long titration schedules using multiple subtherapeutic doses to try to mitigate side effects. As Christophe highlighted, our Phase III trial will start with an active 1.2 mg dose in each arm and have only one or at most two titration steps to possibly further improve our favorable tolerability profile. The inclusion of a 2.4 mg dose with a two-step titration over only eight weeks should help maintain tolerability and allow us to evaluate potential further increases in efficacy and weight loss. Weight loss is an important element of managing NASH. It is clear that lean muscle preservation is a growing concern among HCPs. This is an unmet need that we may be able to address. As we have seen lean mass preservation in our PEMB obesity trial, we will be generating additional data on this element in our further studies of PEMB in NASH patients. Now I will share how physicians reacted to our blinded product profile in this market research. We developed our projected product profile based on our current data for IMPACT, showing early and significant NASH resolution, anti-inflammatory and fibrosis effects from NITs, and included data we anticipate seeing in our Phase III program, such as quality weight loss in the 8% to 10% range with lean muscle preservation. HCPs surveyed recognized significant promise in our efficacy, including direct action on the liver with our glucagon agonism, metabolic improvements, straightforward titration, quality weight loss that preserves lean muscle mass, and PEMB safety and favorable tolerability. In fact, in this market research setting, over 70% reported a very high or high likelihood to prescribe PEMB. Physicians projected using PEMB in 43% of their F2 patients and 51% of F3 patients. Over 80% saw PEMB as both a first- and second-line option. PEMB's potential efficacy, safety, and tolerability profile may allow for use in patients needing greater efficacy than a GLP-1 alone or providing quality weight loss not seen in certain other classes of drugs like FGF21s and resmetirom. As we add to our understanding of PEMB's clinical performance and data, and amplify our storyline regarding our unique combination of attributes, we believe we will be well positioned to enter the NASH marketplace. What we see today and continue to hear from healthcare professionals certainly signals strong interest in PEMB. It is not enough to be differentiated; you must have meaningful differentiation, and PEMB's projected profile provides that. I will now turn it over to Greg to review our financial results.

Thank you very much, and good morning. I will begin with a brief review of our fourth quarter 2025 P&L. R&D expense in the fourth quarter of 2025 was $18.4 million compared to $19.8 million in the same period of 2024. The variance in R&D spend related to the end of the Phase IIb trial in late 2025. Breaking that down further, the Q4 2025 R&D spend included $12.8 million of direct costs related to PEMB development, of which $3.1 million was for the IMPACT Phase IIb trial, $7.4 million for the Phase II trials in AUD and ALD, and $1.2 million in CMC-related expenses. Fourth quarter 2025 R&D also included $1.3 million in noncash stock-based compensation, which is flat in comparison with the same quarter prior year. Moving to G&A, the G&A expenses were $10.5 million and $5.1 million for the quarters ended 12/31/25 and 12/31/24, respectively. The Q4 increase in G&A year-over-year was driven by a one-time noncash and cash stock compensation and payroll charge due to executive transition, which totaled $2.6 million, along with increases in professional fees and other compensation-related expenses. Fourth quarter 2025 G&A also included total noncash stock-based compensation of $3.6 million compared to $1.8 million in the prior year period. Net loss for 2025 was $27.4 million, or $0.27 per share, compared to a net loss of $23.2 million, or $0.33 per share, in 2024. Total full-year 2025 cash OpEx was approximately $67.5 million, excluding noncash compensation of $16 million. We anticipate the use of cash will trend up this year as we approach the launch of the NASH Phase III trial. As Christophe mentioned earlier, we are actively finalizing the last details of the study plan and the other last important details for Phase III. When ready, we will update you and provide more guidance on the timing of cash flows and related details. Now moving over to the balance sheet, we reported total cash of approximately $274 million at year-end 2025. We made a great deal of progress in building the financial position, having recorded net proceeds totaling approximately $208 million last year, in a combination of approximately $174 million in net equity capital raised and $35 million in funding off the Hercules tranche loan facility. In addition, we raised $75 million in the registered direct offering announced in January with Al Eskan Investment Group. The proceeds from this offering, along with $8 million raised off of our ATM facility in January, equate to a pro forma cash position today of approximately $340 million. We forecast that our current cash position would provide an operating cash runway into 2028 based on our current expectations for the scope and timing of the NASH Phase III plan, along with the cost of both the AUD and ALD Phase II trials. Our intent is on having the cash resources necessary to execute the NASH Phase III trial. We will continue to be strategic and opportunistic in our approach to securing access to the forecasted capital needed to fund Phase III, and we will keep you updated on our progress. And with that, I will turn the call back to Jerry.

Thanks a lot, Greg. As we highlighted today, we have entered 2026 with a great deal of momentum. We have made significant progress as we evolve into a late clinical-stage organization, and we are committed to further advancing our promising, differentiated liver therapy and creating long-term value for our shareholders. This concludes our formal remarks. We will now open for questions. Operator?

Thank you. To withdraw your question, please press 1-1 again. Our first question comes from Roger Song of Jefferies. Your line is open.

Excellent. Congrats for the update, and thank you for taking our questions. So first question related to the Phase III. We all see the FDA have some new single pivotal framework. Just curious, have you talked with the FDA about that potential change, and then is that possible you can further save the cost from the Phase III if FDA allow you to do some amendment for the Phase III? Thank you.

Thanks for the question, Roger. Christophe, maybe you get on that one?

Yes. No. So we have not discussed this at the end-of-Phase II meeting. The path for approval for the NASH programs is one single trial for accelerated approval and then all the way to final approval for clinical outcomes. So this does not really apply directly for us. That is new. It does not change anything in how we are approaching our development program towards approval.

Got it. That makes sense. And then just knowing you are still finalizing the protocol, just any statistical plan you can share at this point in terms of the interim versus the final outcome of alpha split and then different two primary endpoint for the interim, if anything. Thank you.

Yes. Thanks, Roger. A lot of progress there. Maybe Christophe can give the big picture on that.

Yes. So the first is we are having a fairly standard design for the Phase III. We have our two primary endpoints per the FDA guidance, which are NASH resolution without worsening of fibrosis and fibrosis improvement without NASH worsening. And this is how we have powered our study. Our study is powered more than 90% on these endpoints, and that gives us a sample size that is around 990 patients, so 330 patients per arm. As we highlighted, that power should give us sufficient patients to reach the approval. And the split of the alpha is, as you know, for the accelerated approval, for part one, 0.1, and then the rest of the alpha goes all the way to the clinical outcome. The last thing is we have powered based on our assumptions for the 1.8 mg dose. So as mentioned, we are very well powered for this. In our trial, we have the option for an upside with the 2.4 mg dose, and so we are really hoping that we will see some added benefit there.

Thank you so much.

Thanks, Roger.

Thank you. And our next question comes from Ellie Merle of Barclays. Your line is open.

Hi. This is Jasmine on for Ellie. Thank you for taking our questions. I have two. So first, from your conversation with the FDA, where does the agency stand now on flexibility to consider NITs as a potentially registrational endpoint? Is the thinking for including the NIT cohort that we could potentially see more flexibility on this in the future, that you might be able to amend and use this cohort for approval more quickly? And then secondly, can you talk about your plans in NASH F4 and potential timelines there? Thanks.

Thanks, Jasmine. Maybe I will start and then turn it back to Christophe. On the first question, we did broach the point of endpoints on NITs in the end-of-Phase II process. The agency at that point said it was premature to consider that, which is why you see the biopsy-driven endpoints. Nonetheless, we will capture all of that data, so that process at the agency will be ongoing. But again, as we finalize the protocol, you will see the biopsy-driven endpoint as part of that. Maybe you want to pick up the second—sure—second half.

In the context of the AI-assisted approval, we see the agency slowly moving towards that direction. So we have incorporated this in our trials, and we have put everything in case they change during the conduct of the study. So we are in good shape here if they were to go there. The other question is on the F4. I mean, current focus is clearly on the F2, F3. We believe there is some potential here with the mechanism of action and the direct effect on the liver to impact the F4. At this point in time, the team is really dedicated towards the execution of the Phase III and putting all the last pieces in place to start.

Okay. Thank you.

Thanks, Jasmine.

Our next question comes from Yasmeen Rahimi of Piper Sandler. Your line is open.

Hi. This is Dominic on for Yasmeen. Congrats on all the updates, and thank you for taking our question. So we just had a few here. The first one related to the Phase III for NASH. What are the rate-limiting steps to kick off that study? And how are you thinking about the timelines for enrollment and top-line data?

Okay. Maybe I will start on the first half and then Christophe can take the second. We are very focused on bringing PEMB to patients as soon as we can. I think we are approaching the preparation on both the financial and the operational fronts. As Christophe outlined, we like where things sit on the clinical side. Good clearance from the FDA. Good insight on our proposal regarding Europe. So all things are moving in parallel. We expect that all will be in line to start the trial as we progress through this year, and we will narrow the guidance as things come to fruition. Again, the teams are moving quickly here, and this parallel approach is going to lead us to initiation of the trial.

Yes. I mean, I can just add to what Jerry said. We are preparing everything on the regulatory side. We have alignment with the FDA. We have done our homework on what is expected from the European or the MHRA. We are in good shape here. We do not expect any major changes in our approach. It is about now execution, getting the team to finalize the last details, whether it is in our protocols, some of the key aspects of the protocol, and then moving forward to be ready to start as soon as possible.

Okay. Great. Thank you. And then I just have one more question on RECLAIM. We are excited for that trial. What are your thoughts on what you hope to see, and what would you consider clinically meaningful on alcohol usage for that? Thank you so much.

So this study on the AUD is analyzing the heavy drinking days over a period of seven days or a week. And we have powered the study to see a fairly conservative change, so hopefully we will see that. We are also capturing other endpoints like the zero drinking days as well as some of those WHO risk categories because this could be endpoints that will be discussed with the FDA as we move that program forward. So we are going to look at all these aspects when we get the data, and hopefully we will see some improvement. As a reminder, the mechanism of action is well suited for this, both on the reward system through the GLP-1 side of it, as well as the direct effect on the liver, which is quite unique compared to what other programs have currently in development.

Great. Thank you.

And our next question comes from Corinne Johnson of Goldman Sachs. Your line is open.

Hi. This is Anupam on behalf of Corinne Johnson. Maybe can you just tell us about the additional financing through the year and what you are anticipating needing to reach the completion of the Phase III in the NASH program? Any color on that?

Yes. So maybe I will start on that, and then Greg could pick it up. Thanks. I mentioned a couple of times already, including in the prepared remarks, we are preparing on both the financial and the operational side. On the financial side, as Greg outlined, we have improved our position. He referenced roughly $340 million on the balance sheet as of February. That gives us runway into 2028. We would like to make further progress as we progress to initiate the trial. We believe we have good line of sight on some options on how we would approach that in parallel to all the good operational work that Christophe and his team are doing. And then we will access the appropriate tools along the way. Greg, anything else you want to reiterate?

I will just pick up that thread. I think we have a sense of purpose here in making sure we have the strength of our resources in hand as we begin the next necessary steps to launch this trial this year. Just basically, we have a clear line of sight on what that looks like, how much that is going to take, and we are confident that we will get there.

Okay. Thank you.

Thank you.

And our next question comes from Annabel Samimy of Stifel. Your line is open.

Hi, thank you for taking my question. Thanks for all the color on the profile and the physician receptivity. So I just want to ask from a competitive landscape, we will likely be seeing more data from Retta and Serva in obesity this year with the full knowledge that this is in obesity. What are some of the key data points that you as a team are looking for that may translate into NASH and could potentially have implications for the competitive landscape on the glucagon agonist front? Maybe you could just give us an idea of how you are thinking about the entire competitive landscape for these specific dual agonists. Thanks.

Sure. We are always paying attention to what is happening in the marketplace. And we look at ourselves and what we have in terms of great tolerability, quality weight loss that we have not seen with these other agents, our simplicity of our titration and tolerability, which we have emphasized, is really seen as something quite important. For very obese patients, I think that there is going to be a role for managing that, but that has to be balanced with tolerability and efficacy elsewhere. And the direct-acting effects that we have shown in the ratio that we are showing, in the one-to-one ratio, we believe are very important. If you are talking about the results in obesity, there may be some read-over there, of course, but the trial that they are looking at should not read out for quite some time on outcomes. Our trial will be very heavily focused on NASH patients. So that is our focus—F2, F3—and the size of the market is such that there are going to be enough patients who need help that there will be ultimately many roles, I think, for PEMB, particularly if we deliver on the differentiation in the profile that we just talked about.

I think—and just maybe one other point Linda touched on—the ratio matters. I think when you think about the BI compound, for instance, I mean, obviously we will see some additional data from them. But I think the work we have done with our own compound, we believe the balanced ratio is part of what is driving some of the elements around the tolerability profile, which, again, we saw a good solid picture in our Phase II without a titration. Now we have the opportunity to put a simple titration and maybe move forward on that as well. So we are looking at all of the competitive entrants. It is why we focused on this call, frankly, a lot more detail on the differentiation story because it is how we view the work that we are doing currently executing the Phase III and also really always understanding how we are going to position PEMB to bring the benefit to the patients that need it the most.

Yes. And let me—I just want to correct myself right now. The cirmidutide study is with their eight-to-one GLP/glucagon that is in the NASH population. I was looking at the retitutri trial in my head. So I just want to make sure I correct that. Either way, I think the tolerability for Serva was going to be quite significant for them. And when you look at the complicated titration schedule, that is going to be of concern as well.

Okay. Great. Thank you very much. Thank you.

And our next question comes from Patrick of H.C. Wainwright. Your line is open.

Good morning. Luis Santos here in for Patrick. Congratulations on all the progress. My question is regarding the NASH noninvasive tests that you are using. So now that you have alignment with the FDA, did they provide any clarity on using it as primary rather than just surrogate, as well as the AI biopsy reads for an accelerated approval. Christophe?

Yes. So on the discussion with the FDA, as mentioned, the NITs are too premature now, and we just want to be really ready on this. However, the opportunity with our two cohorts is actually several fold. One, it fulfills some of the requirements for the safety as well as the long-term clinical outcome, but also to enroll a little faster our Phase III trials because we know, and we have done that, that PIs will be happy to actually have the patients having different options—so the biopsies and the NITs—so that will give us some advantage there, and we are hoping this will play in our favor. With regard to the AI assist, this is still a consensus based on the pathology reading. At the end, the pathologist is responsible. Where we believe this could help us is actually in reducing variability, potentially, if we do the right training, etc., having a lower variance and trying to play in our favor. So we are putting those pieces into place right now. We are having a lot of discussions with key pathologists and with the AI assist company, and we are putting all the pieces of that and getting very close to having a really strong path toward biopsies, but also, as mentioned before, having the flexibility around the NITs in case the FDA changes their mind.

That sounds great. Very quickly, can you update us on your CMC readiness? And do you plan to scale for global trial manufacturing supply for both obesity and NASH simultaneously, or do you plan to partner on that end?

Yes. M. Roberts can take the question. Just one point on the front is that we are focused on the NASH trial. Okay? We are focused on positioning PEMB as a liver compound.

Yes. That is exactly right. And as far as readiness for the Phase III, we believe that we are there. We are ready to go on that. As far as NASH, a global trial—that is really not an issue. For NASH, you know, we were originally developing the process for obesity. We can scale to that size as necessary, but the company is focused on NASH. And for those indications in the U.S. and the rest of the world, we are exactly where we need to be.

Great. Thank you so much. Thanks.

Thank you. And our next question comes from Michael DiFiore of ISI. Your line is open.

Hi, guys. Thanks so much for taking my questions. Two for me. The first one, just want to drill down on a prior question that was asked. Now that you received the FDA minutes, are the key elements fully locked, and what is the single biggest remaining variable that you are still optimizing? And secondly, with the request for EU scientific advice now submitted, is there any early read on whether EU feedback could change anything meaningful versus the FDA-aligned plan? Thank you.

Thanks for the questions, Michael. Christophe?

Yes. So on the FDA minutes and the discussion with them, we are really in the last phases of finalizing our protocol. We have all the elements, like I mentioned—the sample size, we talked to all of our biostatisticians, we have the primary endpoints aligned, the population, etc. What we are looking at is finalizing some—like, for example, the biopsy is a critical point, and we want to really take the time to do it in the most comprehensive manner and having our A-team of pathologists with us. So we are taking the time to do this the most appropriate way, and these are the kind of last details—some of the QC, for example, things like this. So these are really the final stages of those aspects. With regard to the EU, we have worked with regulatory consultants. We have a good understanding. We actually even have biostatisticians that are advising the EMA that work with us. We have put together all the pieces, so we do not expect anything to hold us back. And our protocol and the design of the study should not change based on the scientific advice.

Great. Thank you.

Thanks, Michael.

Thank you. And our next question comes from John Wolleben of Citizens. Your line is open. John, your line is open.

Hello. This is Catherine on for John. Hi. Are you hearing me?

Yes. Hi, Catherine. Thank you. Two quick ones, mostly on the RECLAIM program. Firstly, how am I speaking about the mechanism of action, like as far as having GLP and glucagon, specifically maybe being beneficial over just GLP-1 agonism, in the alcohol-related diseases? And also, logistically, how do you guys plan on moving forward with the Phase III program? Are you guys going to move forward with AUD and then wait for ALD data, or do you want to see both before moving forward? Thank you.

Yes, maybe I will start with the second question and then Christophe can take the mechanistic one. So as we said, we are going to expect the readout on the AUD trial in quarter three. We will assess the data and then plan next steps. That would happen immediately upon receipt of the data. No need to wait for ALD. We like the fact that we have a second Phase II going in ALD, but as the enrollment will finish this year, that will be a later readout.

Yes. On the mechanism of action, it is well recorded in the literature that GLP-1 has a central effect on the reward system and the type of alcohol use that those patients will have. The difference is the direct effect on the liver. There are now more and more—and recently in January at the MASH-TAG conference—there was clearly a talk discussing the fat in the liver of these patients, but also some elements of early fibrosis. So it would be very suited for these populations to not only treat the alcohol use and the cravings and that reward aspect, but also treat directly the liver because the liver is already substantially damaged and even with early fibrosis. Clearly the dual mechanism of action, and the tolerability, I will add, in that particular population is extremely suitable for a product like PEMB. This population feels good. They are not having—you do not want to add side effects or complications to them. So they really want to get their liver treated as well as the cravings.

Thank you so much.

Mhmm.

Mhmm. Thank you. And our next question comes from Andy Hsieh of William Blair. Your line is open.

Thanks for taking our questions. We have two questions. One is related to the prepared remarks that you made, highlighting that SEMA failures might be a potential segment to provide clinical differentiation. So can you tell us a little bit about the exclusion/inclusion criteria regarding the length of the washout period in the upcoming Phase III trial? So that is question number one. Question number two has to do with the pathologist panel that you decided. I am curious if it is just a two-person panel, three-person panel. Could you talk about the education process if you do not mind? Thank you.

So I will start with the first one. Clearly, what we hear and what has been presented in the past conferences is that SEMA is hard to tolerate, that most patients do not reach the NASH-effective dose, that the titration is complex for them, and that there are a lot of dropouts of treatment after already six months to a year. So this is a challenge there. If that is the case, for us, clearly, we will accept these patients in our Phase III trials. And we want to be able, if they have not tolerated SEMA, to bring them on board, because they will have an option with PEMB, again, to have—and I want to remind you here the extremely strong efficacy we have seen in our Phase II study as well as the tolerability. So both together are a perfect option for this population with a real chance now to address the liver and their metabolic causes for that NASH. With regard to the pathologists, we are still finalizing these details. We are towards the end of this. Our thinking right now is to have—it has to be a consensus. So we are thinking to have a few pathologists, and the reading would be a two-plus-one type of reading with the consensus; the plus one would be if there is no consensus between the two pathologists. Clearly, the advantage here for us is the AI assist. It really decreases the variability and helps that consensus. It should also accelerate and streamline the process. And so for us, these two aspects—decreasing variability and streamlining the process—are good positive perspectives to execute our study in the best possible way.

That is helpful. Thank you.

Thank you. And our next question comes from William Wood of B. Riley Securities. Your line is open.

Thank you so much for taking our questions. Two from us, if we may. On your RECLAIM trial, it is focused on drinks per day and alcohol consumption. But I was curious if there are any NITs looking at the liver or additional measurements that could read through to either your ALD or Phase III trials. You will be evaluating the 2.4 mg dose in both the AUD and ALD, and then obviously the Phase III. As well as, could you provide any color on how far along you are in your ALD trial enrollment? And then I have a second follow-up.

Alright. On the AUD, we do not have too many. We have the typical liver enzymes, etc. We are looking at the heavy drinking days, we are looking at the zero day of drinking, we are looking at the WHO risk classification, if you wish, and how these patients will change. We also, since it is a patient-reported outcome, have blood tests such as the PEth test, which is a little bit like you would see in the HbA1c, which reflects the alcohol impregnation. So we believe that here we have—and we have all the other markers of the effectiveness of the drug such as weight loss, etc. So we have in our AUD a number of things that will be very helpful to prepare for discussions with the FDA, granted the data come out positive on this. On the ALD, we are enrolling as per plan. As you know, this is a more severe population, so it will be more difficult to enroll. We successfully enrolled very rapidly our AUD trial, much faster than anticipated. But here on the ALD, we are on track as per plan and moving forward smoothly. I cannot give you any more forecast on that at this point.

Okay. And then in your Phase III trial, maybe I missed it, but will you be evaluating any benefits, or maybe how do you plan to assess MACE since you are not conducting a separate CVOT trial?

No. This is a great question. First, we have already seen some great improvements on the lipids. On the inflammation—we clearly have a decrease in inflammation with PEMB. We have seen improvement in lipids at week 24 and similarly at week 48. So we believe there is a real potential here to see some cardiovascular benefits. We will clearly look at this in our Phase III NASH trial. However, the FDA does not want us to include this as the clinical outcome for liver-related events. Clearly, they are two separate aspects, but we will have the data built in our Phase III.

Okay. Okay. Thank you. Thank you.

And our next question comes from Boris Peaker of Titan Partners. Your line is open.

Great. Thanks for squeezing me in. I guess I just want to focus on the muscle preservation, and obviously it is one of the key differentiating elements of the drug. Just curious—the observed weight loss to date, can you comment whether the muscle preservation was stronger at the lower or the higher end of the BMI scale? And what can you potentially do in the Phase III study in terms of enrollment to maximize the impact of this muscle preservation, particularly considering it is a large and international study?

Yes. So the mass preservation and the lean mass is critical, as you say, because this is something that in that population that is aging—our average patient is 55 and older—and they start losing their bone and their muscles, and so we do not want to add anything to this. So we want to keep the muscles in this population. We have demonstrated some very interesting data already in our VCT trial. And we would like to continue demonstrating this. How we are integrating this in the Phase III—we are actually in some discussions right now, whether it is a full mechanistic study or if it is a sub-study that is put into the trial. It is something that we are designing as we are speaking today. Regarding the BMI, there is no difference between the BMI networks. It is all different types of BMI, and it is consistent throughout. That is what we have seen in our VCT study.

Got it. I am just curious. What specific tests or biomarkers are you monitoring to better understand this muscle preservation? So is it just a DEXA scan, hand strength, MRI? What are you specifically monitoring, and what do you think you would need to potentially get a claim in a label on some kind of muscle preservation?

Yes. That is a complicated question because getting a claim would require some—clearly, we will have MRI. We will have the DEXA. We would like to better understand—we have some ideas how this is working as well. We believe that one-to-one ratio is one of the key aspects that could lead to this. So if we can make that link during our Phase III, clearly, it would be an important distinction and differentiator at launch. So we are putting all these pieces together as we are—first, we are finalizing that protocol for the NASH and putting the pieces on that lean mass preservation as well in parallel.

Great. Thank you very much for taking my questions.

Thank you,

Thank you. I show no further questions at this time. I would like to turn it over to Jerry Durso for closing remarks.

So thanks, everybody, for joining us today. A lot going on in the company, a lot of progress. We are moving forward towards the Phase III execution. We have work to do, but we are in a good position. And we definitely look forward to providing further updates as we progress. Thanks, everybody, and have a great day.