AVIR - NASDAQ

Good morning, and welcome to the Atea Pharmaceuticals First Quarter 2022 Earnings Conference Call. Currently, all callers have been placed in a listen-only mode to prevent any background noise. And following management’s prepared remarks, the call will be opened for your questions. . Please be advised that today’s call is being recorded. I will now turn the call over to Jonae Barnes, Senior Vice President of Investor Relations and Corporate Communications at Atea Pharmaceuticals. Please proceed.

Good morning, everyone, and welcome to Atea Pharmaceuticals' first quarter 2022 financial results conference call. This morning, we issued a press release which outlines the topics we plan to discuss, including newly released data for Bemnifosbuvir for the treatment of COVID-19. You can access the press release, as well as the slides that we'll be reviewing today, by going to the Investor 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. We 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 morning, everyone, and thank you for joining us today. We have a lot of new information to review this morning. This includes exciting new data for Bemnifosbuvir showing for the first time, clinical benefits in a meaningful number of patients in the Phase 3 MORNINGSKY Trial, and also in the Phase 2 hospitalized study. These new results are very important for the future direction of the program, and definitely indicate clinical benefit for COVID-19 patients treated with Bemnifosbuvir. The results, as I said, show a meaningful reduction in hospitalization in a very broad patient population treated in the outpatient setting, and also clinical benefits in high-risk hospitalized COVID-19 patients, and Janet will go over the details with you in a few minutes. In addition, new in vitro data demonstrate the broad antiviral activity of Bemnifosbuvir across variants of concern, including the Omicron variant. These results leave us particularly encouraged that we are well positioned to meet the challenges of this global pandemic, and support the next chapter of our clinical development program. Beyond COVID-19, we have made significant progress across other pipeline programs, including the initiation of a global Phase 2 study and the Human Challenge Trial with AT-752 for the treatment of dengue. We are advancing this drug candidate as a potential first antiviral treatment for dengue fever. Don't forget that this is the most prevalent mosquito-borne viral disease with a large global disease burden. Additionally, we continue with preparation for the initiation of our upcoming Phase 2 study in hepatitis C, evaluating the combination of two highly potent direct-acting antiviral against hep C, Bemnifosbuvir and Ruzasvir, which we recently in-licensed from Merck. I will now turn the call over to Janet to review in details, the very encouraging new clinical results for Bemnifosbuvir in COVID-19, and to provide and to provide an update on our program for the treatment of dengue and hepatitis C as well.

Thank you, Jean-Pierre. Good morning, everyone. Turning to Slide 4, I'll begin with the results from the MORNINGSKY Study. As you will recall, MORNINGSKY was a randomized, double-blind, multi-center, placebo-controlled Phase 3 trial, evaluating the efficacy, antiviral activity, safety, and pharmacokinetics of Bemnifosbuvir, in adult and adolescent patients with mild to moderate COVID-19 randomized in a 2:1 ratio. Patients received either Bemnifosbuvir 550 milligrams twice daily or placebo for five days. As we previously announced, the study was closed out in December 2021, prior to its completion. Moving to Slide 5, MORNINGSKY was closed out with a sample size of 207 efficacy-evaluable patients, that represented a broad patient population across both age groups and geographies, with approximately 50% of patients being high-risk and 50% of standard risk. The study enrolled 28% of patients who were already vaccinated, and 56% of the patients in the study were seropositive at baseline. The primary endpoint of the study was the time to alleviation of symptoms, which became particularly challenging to meet, owing to the difficulty in finding a series of symptoms which are consistent across all of the variants, and the populations. The primary endpoint of time to alleviation of symptoms was not achieved in the MORNINGSKY Study, and there was no difference in the viral kinetics, which was a secondary endpoint. With that said, hospitalizations and deaths are currently the preferred endpoints by the regulatory agencies, including the FDA, and we are very encouraged to see that Bemnifosbuvir arm showed a 71% lower risk of hospitalization, in comparison with placebo. In this study, Bemnifosbuvir 550 milligrams BID, was generally safe and well tolerated. There were no drug-related serious adverse events. Adverse events leading to treatment discontinuation were 3% for the Bemnifosbuvir arm, in comparison with 7% for placebo. And there were no GI-related events which led to treatment discontinuation. Turning to Slide 6. The data in the chart illustrates the key secondary endpoint of hospitalizations and deaths. As I just noted, data from MORNINGSKY showed the risk of hospitalization was 71% lower in the Bemnifosbuvir arm, in comparison with placebo, with a P value equal to 0.047 unadjusted and exploratory. We’re very encouraged with this outcome, especially because of the broad population studied, and the results were consistent in both the standard and the high-risk patients. It's worth noting that other direct-acting antivirals have demonstrated a reduction in hospitalization in predominantly unvaccinated high-risk patients. So, the achievement in this broader group of patients, makes this efficacy result particularly robust. Turning now to results from our Phase 2 study of high-risk hospitalized patients on Slide 7. The global Phase 2 trial in the hospital setting, was a randomized, double-blind, placebo-controlled, multi-center study to evaluate Bemnifosbuvir in patients with moderate COVID-19. Study objectives were to assess safety, tolerability, and clinical and antiviral efficacy. Patients were randomized within five days of symptom onset to receive either Bemnifosbuvir 550 milligrams twice daily, or placebo BID dose for five days. The key inclusion criteria for this study were adult patients 18 years of age or older, with risk factors such as obesity, diabetes, and hypertension. On Slide 8, I’m pleased to report that the final analysis from the Phase 2 hospitalized study in 83 high-risk patients, suggests potential clinical benefits. The overall rate of disease progression was low, which had an impact on our ability to assess the primary endpoint. While the overall rate of event was low, the progression of respiratory insufficiency was 7.5% for Bemnifosbuvir, in comparison to 10% on placebo. The respiratory events associated with progression were less severe in the Bemnifosbuvir-treated patients, in comparison with those receiving placebo. Notably, in this study, there were no deaths in patients receiving Bemnifosbuvir, in comparison with three deaths reported in the placebo arm. I’m pleased to report that the final virology results were consistent with the previously reported interim data. In this study, Bemnifosbuvir was generally safe and well tolerated, with no drug-related serious adverse events, and there were no adverse events leading to treatment discontinuation. Our overall assessment of the new data reported today, suggests clinical benefits for Bemnifosbuvir at 550 milligrams BID in the treatment of COVID-19. We're planning to present the full results of the MORNINGSKY Trial and the Phase 2 hospitalized study at an upcoming scientific meeting. Turning to Slide 9, we were very encouraged by new data demonstrating AT-511, which is the free base of Bemnifosbuvir, remains fully active against the Omicron variant. As previously reported, AT-511 is a potent inhibitor SARS-CoV-2 in vitro, and has previously demonstrated antiviral activity against all variants of concern, including Alpha, Gamma, Epsilon, and Delta. Slide 10 outlines our next steps for the Bemnifosbuvir COVID-19 clinical development program. We believe that the MORNINGSKY results we announced today, have the potential to accelerate our COVID-19 program. With 207 patients evaluable for efficacy, the size of the MORNINGSKY Study is in the range of a Phase 2 study. And as a result, we're no longer planning to conduct the Phase 2 monotherapy outpatient study that was discussed in the first quarter of this year. Based on the data to-date, Bemnifosbuvir 550 milligrams BID is efficacious, generally safe and well tolerated, and has a favorable GI tolerability profile. In addition, Bemnifosbuvir non-mutagenic, and non-teratogenic, and there was no dose adjustments necessary for co-administration with drugs that are CYP3A substrates, since there is a low risk of drug-drug interactions, and there were also no sero contraindications. We’re pursuing regulatory interactions in the near-term to review our data package for Bemnifosbuvir and to discuss the next steps in the clinical program for COVID-19. Turning now to our dengue fever program. As noted on Slide 12, we've initiated a randomized Phase 2 proof-of-concept study in patients with dengue fever. The study is designed to assess antiviral activity, safety, and pharmacokinetics of multiple doses of AT-752, with a primary endpoint of a change in dengue virus viral load from baseline. AT-752 or placebo will be administered orally for five days in up to 60 patients with dengue infection who present within 48 hours of a fever. We expect to report initial results from this study later in the year. We also initiated a second dengue study as outlined on Slide 13, which is a Human Challenge Study 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. Subjects are closely monitored within a highly controlled setting, allowing assessment of viral load and the viral kinetics between the treatment groups. We anticipate results in the fourth quarter of this year. Turning now to our hepatitis C program. As shown on Slide 15, our HCV combination development plan looks very promising, and we believe that there is still room to improve on the current standard of care. We believe Ruzasvir, in combination with Bemnifosbuvir, provides the opportunity to create a best-in-class pan-genotypic HCV therapy. We’re currently manufacturing Ruzasvir for trial supplies for our Phase 2 study, and we're assessing first clinical trial design - firm clinical trial designs, but expect the Phase 2 combination program, and then - and anticipate starting the study in the second half of the year. With that as overview, I will now hand the call over to Andrea to review our financial information. Andrea?

Thank you, Janet. As Jonae mentioned in her introductory remarks, this morning we issued a press release containing our financial results for the first quarter of 2022. The statement of operations and balance sheet can be found on Slides 17 and 18. For the first quarter 2022, the increase in R&D expenses in comparison to the first quarter of 2021, was primarily due to the expansion of our organization, and reflected in increase in payroll and personnel-related expenses, including salaries, benefits, and stock-based compensation expense, offset by a decrease in external research and development expenses. The increase in G&A expenses quarter-over-quarter, was primarily due to the expansion of our organization, and reflected an increase in payroll personnel-related expenses, salaries, benefits, stock-based compensation expense, and other G&A related expenses. Importantly, we entered the quarter with a strong balance sheet of $705.5 million to support our clinical development programs. The cash expenditures during the quarter included payment of amounts that were previously recorded as accrued expenses, including a payment to Merck in the amount of $25 million in connection with the license of Ruzasvir, and a payment in the amount of $10.4 million in connection with the cost-share arrangement with Roche. Please recall that on our earnings call in February, we had expected to incur residual costs from Roche associated with the wind-down and closeout of the MOONSONG, MORNINGSKY, and MEADOWSPRING Trials. We also expect to incur certain residual costs from Roche in the second quarter. We are reiterating today 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. We trust today’s update was informative and conveyed our confidence and enthusiasm for our clinical programs moving forward. As illustrated in Slide 20, COVID-19 continues to spread and cause morbidity and mortality, and this underscore the ongoing need for better treatment options due to the limitations of current therapies, such as relapse, drug-drug interaction, potential safety and efficacy concern, and potential for resistance. To show clean efficacy of vaccines and lack of natural immunity against Omicron variants, is creating another upsurge in cases globally, and is expected to cause a surge in cases in the US this fall and winter, as the White House has announced more than 100 million infections expected in the fall and winter ‘22, ’23. Given Bemnifosbuvir’s unique MOA, broad spectrum antiviral activity against all variants of concern, and the new clinical results, we believe that we can deliver a safe, non-mutagenic, non-teratogenic oral antiviral for both mono and potential combination therapy for COVID-19, regardless of the evolving variants. The efficacy, safety, and tolerability results support the next chapter of our clinical development program, as we evaluate next steps to address the current gaps in treatment. We have an exciting year ahead of us as we continue to advance our antiviral programs to fight severe viral diseases with limited treatment options. Importantly, as Andrea shared with you, we remain well capitalized to achieve these important inflection points with the cash runway through 2025. We remain confident in our strategy and steadfast in our mission to bring access to all DAA antivirals to patients around the globe. As always, we thank you for your continual loyalty and support of Atea. With that, Operator, we will now open the call up to your questions.

We'll take our first question from Eric Joseph with JPMorgan.

Hi. Good morning. This is Hannah on for Eric. Thanks for taking the questions. So, just from us, how do the MORNINGSKY results and Phase 2 hospitalized study results, inform your thinking about the dose and formulation of AT-527 moving forward? Is it still likely that you will continue to pursue a revised formulation with a potential protease inhibitor combination? And then also, why wait for input from drug agencies at this point rather than moving forward with a revised Phase 3 design? Is cash on hand currently sufficient to run another pivotal trial? Thank you.

Okay, so that's many questions, but let's do one at a time. Janet, if you’d like to start. I may make some comments on the formulation. Why don't you start on the clinical questions related?

Yes. So, thank you very much. So, firstly, in regard to the MORNINGSKY dose, we’re very confident that the 550 milligrams BID dose of Bemnifosbuvir, is the right dose to take forward into further clinical trials. It’s shown both efficacy and a good tolerability profile, and we are moving forward with an optimized formulation, which we have been testing in Phase 1 clinical trials most recently, and we look forward to sharing that data later in the year. We anticipate proceeding with both monotherapy and combination therapy with a protease inhibitor. We think it's essential to have input from the regulators and as the environment continues to change. And so, having their input as to how they view from comparative standard of care, et cetera, I think will be critical for ensuring that our study is relevant in the landscape as it continues to evolve. And then with regard to the cash, I turn it back over to Andrea and JP.

So, just to reiterate, as Janet mentioned, we have an optimized formulation, we expect with full CMC by the end of the second quarter. We already start on Phase 1, as Janet indicated. We will share with the Street very likely in Q3. But we are ready to go with the new formulation, with the optimized formulation regardless of the clinical trials. That will be the next step. Andrea, you want to comment on the cash?

Yes, sure. The cash is more than adequate to fund the pivotal trials for the COVID-19 and other programs.

Great. Thank you. And then just looking towards the upcoming data presentations, can we expect variant sequencing data and potentially any additional subgroup analysis in these readouts?

Janet?

Yes. You can expect both variant sequencing and some subgroup analyses. Yes.

Okay, great. Thank you. Thanks for taking the questions.

Thank you. Our next question will come from Matthew Harrison with Morgan Stanley.

Hi. I'm Steve asking for Matthews. I want to ask further about the potential combination, because you just mentioned you're going to do some PKPD study. I want to ask any other, I mean, color you can give us about, what other potential partners you're going to collaborate. Thank you.

Well, just first of all, we are evaluating ourself some external, so external potentially in licensing, as well as internal efforts on the PI. So, we are very happy to collaborate with any interested parties. But ultimately, our preference would be to have our own PI, either through external in-licensing or internal effort.

Okay, thanks.

Thank you. Our next question will come from Umer Raffat with Evercore.

Hi, guys. Thanks for taking my question. And I want to start by saying congratulations on the strength of the data on hospitalization. I guess, in the same breath, I'm also a little confused on a few things. Number one, had Roche seen this data at the time they terminated the collaboration? And number two …

It's a very good question, Umer. Roche ended the collaboration prior to the MORNINGSKY results. This was prior to. Okay, great. And then also, JP, can you speak to the pace of recruitment in the trial? Because it doesn't seem as robust as we were seeing in the Pfizer and Merck studies. And also, can you remind me …

Yes, it's a very good question, Umer. I’ll let Janet to answer the difficult question. I answer the easy one. Go ahead, Janet.

So, Roche was responsible for the Phase 3 trial leadership and operational execution, and the recruitment was disappointing. There seemed to have been some operational issues there. Sites were still being opened, and enrollment was anticipated to have increased substantially in the last couple of quarters of last year. But yes, it’s disappointing that there weren't more patients.

Okay. And I guess the third one is in the seronegative population, how did the primary endpoint look in the seronegative population? As well as, as you think about this new trial that you're starting up, can you - do you think you guys can wrap it up before the EUA is gone? I think that's the real question.

Janet?

So, we're going to present the sub-analysis at a scientific meeting later in the year. So, I'm afraid I'm going to leave you on the edge of your seat with regard to that one. And I don't know about the EUA and how long that's likely to be around, so we'll have to see, but we hope to go as fast as we can.

Okay. Thank you very much. I'll be in touch with some more. Thank you, guys.

Thank you. Our next question will come from Tim Lugo with William Blair.

Hi, this is John on for Tim. Thanks so much for taking our question and congrats on the new data. So, I was just wondering, given the availability of other oral antivirals, how you're thinking and looking at how feasible it'll be to enroll a Phase 3 study, even with supply constraints out there, and what strategies are you looking at to enroll the study? Thanks.

Sure. Janet, can you address the question please?

So, we’re cognizant of the landscape. And I think as Jean-Pierre mentioned, the White House is indicating that they're anticipating perhaps up to 100 million infections this coming fall and winter. And certainly, the virus seems to show no evidence of going away. So, we think there are going to be plenty of patients out there. And we believe that Bemnifosbuvir has considerable advantages over the current existing direct-acting antivirals. So, we certainly see there’s a role for it. It’s really going to be a question of discussing with regulators how best to design a study that is going to be suitable to demonstrate what it can do, and we look forward to talking to them very shortly.

Okay, great. And maybe just one follow up. So, given the strength of the data today, do you think you have more leverage to go potentially seek an external partner for a combination study?

Well, as I said, John, we welcome any potential interest but, but it's clear that we will favor internal PI. We are evaluating actually several external opportunities as we speak, and some more advanced than other. And also, we have some interesting data from the internal efforts that definitely we’ll share with the Street before the end of the year. Our goal with those efforts is to generate a best-in-class PI. I know that this is a buzzword, but we believe there is quite some room for those of us, like Janet and I, who have actually actively, were actively involved with PI, both in the HIV and the HCV world, we would like to see PI sub more potency with long uprate rather than quick uprate like the paxlovid, which may lead to relapse, as you know.

Okay, great. Thanks again, and congrats on the data.

Thank you. Our next question will come from Roanna Ruiz with SVB Securities.

Hi, good morning. This is Nik Gasic on for Roanna. Thanks for taking our questions. I guess I'll start with COVID-19. You talked a bit about design considerations for upcoming trials. I'm just curious. Is assessing hospitalizations and death still a feasible endpoint at this stage, given the evolving landscape? And would you consider the use of locally available treatments like together with Bemnifosbuvir on future trials?

Janet?

So, unfortunately, yes, we believe that hospitalizations and deaths are still endpoints. I think, as you know, there's been varied uptake of the vaccine. Then, of course, there are some patients who, in spite of being vaccinated, don't generate an adequate immune response. So, in particular, the high-risk groups of patients we believe are placed where hospitalizations and deaths will continue to be a problem. So, that's really, I think, the - going to be the primary focus of where we're going to be going. And then, certainly, yes, I think any treatment that we provide in the context of a clinical trial, will need to be on the top of the best available standard of care. And that of course does increase the sample size, but it's going to be important. But we look forward to talking this all through with the regulators and being certain we have a good study design.

Got it. And just on dengue with 752, could you discuss your rationale for challenging patients with the dengue virus after they received 752, as opposed to waiting like a certain period of time to administer treatment? And maybe just how many days after they've received 752, are patients being challenged?

So, the patients are challenged within 24 hours of being given 752, but I think the purpose really of the study is more of a pre-exposure - a prophylaxis study, not a pre-exposure, just a prophylaxis study, which I think is a very good way of demonstrating the activity of the drug in that patient population. It's challenging to get patients who have dengue fever in the window in which I think there is the maximal opportunity of demonstrating antiviral effect. And so, we believe that this is a nice shortcut really to being able to see proof of mechanism of the drug in the viral infection. And so, we look forward to doing this study in prophylaxis, as well as doing a study looking at different doses, a dose-finding study in patients with dengue out in the field. So, I think with both, we have a pretty robust Phase 2 program.

Got it. And then just one more for me on dengue, this time for the proof-of-concept. Are you planning to roll higher risk patients with comorbidities in this trial? Like, what's the therapeutic window like for an antiviral like 752? And maybe what are you hoping to learn from this trial, or like what magnitude of viral load reduction would be clinically meaningful? Thank you.

Janet?

So, I think what we hope to see is that patients who are treated early, are able to avoid developing a cytokine storm, which is what happens with dengue fever. And I think, obviously, the change in the viral load depends to some extent on where you start, but we hope to see that we are able to reduce viral loads to first to undetectable pretty shortly. And then the window for treatment is generally within about 48 hours of the onset of infection. So, it’s a pretty short window, but people get sick pretty quickly. So, we hope that we'll be able to identify and treat them within that time period.

Great. Thank you very much, Janet. Thanks for taking our questions.

Thank you. Our next question is a follow-up from Umer Raffat with Evercore.

Hi, guys. This is actually Jon. I figured I'd hop on and ask as well. I was going to ask another follow-up about dengue actually, and I'm thinking about the next steps in development there. Of the two trials you're running, what are the key endpoints for advancement for this program? And do you think it's going to be easier to demonstrate virological benefit for dengue than it has been for COVID?

Janet?

So, I think - I mean, I think what we want to be able to show is that we have a well-tolerated and efficacious drug, which is able to drop viral loads to the point where we obtain clinically meaningful benefits for patients. And we think we should be able to see that, at least get a glimpse of what that should look like in this initial study. And we're very confident from the animal models that we do have a highly efficacious drug for dengue fever and probably for other flavor viruses also. But the proof of the pudding will be in what we see in the upcoming study, and I think it will evolve and our understanding as we move through those trials.

Just to add an additional comment, Jon, I think the major difference between COVID and dengue regarding virology, is that you have a viremia with dengue. As Janet has indicated, we have seen decreased viremia in the small animal model. I think that the challenge, especially with NAC for COVID and anti - demonstrating antiviral activity, is that you - there was no viremia, as you know, Jon, and you are measuring in the nasal pharynx, the viral load, which very likely does not reflect where you have the major issue in terms of clinical effect, which is in the lungs with COVID. So, that's where you do kind of an extrapolation from one organ to another. And definitely, we believe because of the mechanism faction, and you see the same with Remdesivir. We are looking some individual models, Jon, now that hopefully we will be able to address this difference in term of lack of antiviral activity in the nasal pharynx. At least when I say lack is inconsistent, because we have demonstrated antiviral activity, as you know. In our hospitalized patients, we have shown also antiviral activity in high-risk patients in the MOONSONG with the infectivity assay, the infectivity in viremia assay, but it's inconsistent. And so, we are looking to try to figure out a little bit with some in vitro systems. We have some hypothesis that we're trying to evaluate right now. But ultimately, what you want, obviously, is clinical benefits as we have demonstrated with Bemnifosbuvir, even in the very broad patient population. As I'm sure you can appreciate that we believe that we are the first one that did in 50% low-risk, 50% high-risk, and vaccinated individuals, which is more the reality today as compared to previous studies with auto DAAs.

Thank you. This concludes the Q&A portion of today's call. I would now like to turn the call back over to Jean-Pierre Sommadossi, for any additional or closing remarks.

Again, thank you so much for your attention and thank you for joining us today.