AVIR - NASDAQ

Good afternoon, everybody, and welcome to Atea Pharmaceuticals' fourth quarter 2024 Financial Results and Business Update Conference Call. At this time, all participants are in a listen-only mode. Following the formal remarks, we will open the call up for your questions. I would now like to hand the call over to Jonae Barnes, Senior Vice President, Investor Relations and Corporate Communications at Atea Pharmaceuticals. Miss Barnes, please proceed.

Good afternoon, everyone, and welcome to Atea Pharmaceuticals' Fourth Quarter and Full Year 2024 Financial Results and Business Update Conference Call. Earlier today, we issued a press release which outlines the topics we plan to discuss. You can access the press release as well as the slides that we will be reviewing today by going to the Investors section of our website at ir.ateapharma.com. With me today from Atea are our Chief Executive Officer and Founder, Dr. Jean-Pierre Sommadossi, Chief Development Officer, Dr. Janet Hammond, John Vavricka, our Chief Commercial Officer, Dr. Arantxa Horga, our Chief Medical Officer, and Chief Financial Officer and Executive Vice President of Legal, Andrea Corcoran. They will all be available for the Q&A portion of today's call. Before we begin the call, and as outlined on slide two, 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 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 will now turn the call over to Jean-Pierre.

Thank you, Jonae. Good afternoon, everyone, and thank you for joining us. I will begin on slide three. We made significant progress last year advancing our HCV program with the regimen of bemnifosbuvir and ruzasvir. In December, we reported positive results from our global phase two trial which demonstrated a 98% cure rate in the primary efficacy analysis with a short eight-week treatment. The very high SVR rate demonstrates the robust potency across HCV genotypes. We believe our regimens, if approved, have the opportunity to become a best-in-class hepatitis C treatment and disrupt the global HCV market of approximately $3 billion in annual net sales. The very positive phase two results helped to support a successful end-of-phase two meeting with the FDA which occurred this past January. In addition to the substantial progress that we have made, business updates include recent steps we have taken to further enhance shareholder value. This includes the retention of Evercore, a global investment bank, to assist us in the exploration of strategic partnerships related to our phase three HCV program. We also took cost-cutting actions to enhance efficiency in the management of infrastructure expenditures which Andrea will discuss in further detail. In February, we announced the appointment of a new independent director, Arthur Kirsch, who brings decades of financial and strategic advisory experience to our board of directors. Moving to slide four. Based upon the encouraging results to date, together with the successful outcome of the FDA meeting, we are initiating the global phase three program evaluating the regimen of bemnifosbuvir and ruzasvir and expect enrollment to begin next month. We believe that our phase three program is de-risked with a compelling value proposition. Furthermore, robust phase two results for antiviral therapies have historically led to a high probability of success in phase three studies. In addition, we will be showing today results from a multiscale modeling approach that confirm the high likelihood of success of our phase three program. With $454.7 million of cash, cash equivalents, and marketable securities as of December 31, 2024, we are in a strong financial position to execute and complete our phase three HCV program. As we anticipate, our cash runway would extend into 2028. Moving to slide five. HCV continues to be a significant global healthcare issue despite the availability of direct-acting antivirals for the past decade. The unrelenting high rate of HCV infections, which is outpacing the stagnant number of patients being treated, underscores the need for a new differentiated and optimized therapy. I would like to point out that we still have a very large number of untreated HCV patients of between 2.4 to 4 million in the United States. And let's not forget that in the United States, 70% of liver cancer is a consequence of HCV disease progression. Therefore, the lack of treatment of these HCV patients has a profound impact not only on patients' lives but also with the associated healthcare hospitalization costs. On slide six, the large burden of untreated HCV disease translates into a large untapped commercial opportunity. Currently, in the United States, out of the 160,000 new infections every year, only approximately 100,000 patients are treated. Last year, for example, these US treated patients resulted in approximately $1.5 billion in net sales. And globally, the market continues to approximate $3 billion. We believe that the best-in-class profile of our regimen, together with the anticipated removal of access barriers and future government initiatives, can dramatically expand the number of patients cured in the United States from this severe viral disease. With that, I will now turn the call over to Janet to review the profile of our regimen and the global phase three program. Janet?

Thanks, Jean-Pierre. On slide seven, our potential best-in-class regimen is the only one that combines attributes today's HCV patients need. Our regimen combines bemnifosbuvir, which is the most potent nucleotide for HCV yet to have been developed, and ruzasvir, which is a highly potent HCV and HIV NS5A inhibitor. This regimen is differentiated from the approved treatments. It offers a highly personalized pan-genotypic therapy with a short treatment duration along with a low potential for drug-drug interaction and can be taken with or without food. All these attributes address the needs of the prescriber and the patient. Slide eight illustrates that only our regimen has a preferred drug-drug interaction profile. Since approximately 80% of HCV patients are taking concomitant medications, the drug-drug interaction profile of HCV therapy is of particular importance to both patients and prescribers for ease of use. As detailed on this slide, the regimen of bemnifosbuvir and ruzasvir has the cleanest drug-drug interaction profile with commonly prescribed medications such as oral contraceptives, statins, and proton pump inhibitors. On slide ten, I'm excited to share an update for our phase three program. In January, we had a successful end-of-phase two meeting with the FDA. Following the meeting and at the request of the FDA, we submitted the final phase three protocol, which will also be submitted to other regulatory agencies. We are currently in the process of opening up clinical sites and we are targeting over 250 sites worldwide. As Jean-Pierre stated earlier in the presentation, we are initiating the phase three program and expect enrollment to begin in April. On slide eleven, our global HCV phase three program consists of two randomized open-label phase three trials comparing the regimen of bemnifosbuvir and ruzasvir to the regimen of sofosbuvir and velpatasvir in patients with chronic HCV infection. Each trial will enroll approximately 800 treatment-naive patients both with and without compensated cirrhosis. Patients will be stratified by genotype and cirrhosis status, and patients with HIV co-infection will be allowed. For non-cirrhotic patients, which represent more than 90% of patients in the US, eight weeks of bemnifosbuvir and ruzasvir will be compared with twelve weeks of sofosbuvir and velpatasvir. For cirrhotic patients, twelve weeks of bemnifosbuvir and ruzasvir will be compared with twelve weeks of sofosbuvir and velpatasvir. The primary endpoint for both trials encompasses sustained virologic response twelve weeks after treatment or SVR12 in each arm and is HCV RNA less than the lower limit of quantitation twenty-four weeks from the start of treatment. Measurement to twenty-four weeks from the start of treatment is selected to ensure the primary endpoint occurs at the same relative time point from the start of treatment in all patients. With that, I'll now turn the call over to Dr. Arantxa Horga for a review of the global phase two HCV study results. Thank you, Janet. On slide twelve, I would like to remind you that our global phase two study was a single arm of 550 milligrams of daily dose with 180 milligrams of ruzasvir, once daily for eight weeks. This phase two trial enrolled 275 treatment-naive patients chronically infected with HCV, including patients with compensated cirrhosis. In the study, we have two efficacy populations. The primary efficacy endpoint was in the treatment-adherent population. A secondary efficacy analysis assessed SVR12 in the same population, but also included non-adherent patients. We had 17% of patients who did not take the study medication or were non-adherent in our phase two study, and this non-adherence rate is similar to what was reported in our third-party market research. Moving to slide thirteen, the primary efficacy endpoint demonstrates a 98% SVR12 rate in all adherent patients after eight weeks of treatment. And a 95% SVR12 rate was achieved in patients regardless of treatment adherence. This patient population also includes cirrhotic patients, where the SVR12 was 88%. In these cirrhotic patients, on-treatment virokinetics was slower, but it is important to note that 100% viral clearance was achieved at the end of treatment. Therefore, we can expect twelve weeks of treatment in cirrhotic patients to achieve very high SVR rates. Slide fourteen shows that the overall non-cirrhotic treatment adherence population SVR12 was almost 100%, with only one failure in 179 patients. In genotype three, it was 100%, which is a genotype historically hard to treat. Robust potency and drug forgiveness were demonstrated in non-cirrhotic patients with the regimen achieving 97% SVR12 in the overall population and 98% in genotype three, even with 20% of these patients being non-adherent. On slide fifteen, the regimen of bemnifosbuvir and ruzasvir was generally safe and well-tolerated, with no drug-related severe adverse events or premature treatment discontinuation. Similarly, there were no trends observed in adverse events or safety laboratory parameters. Let's now review new modeling data on slide sixteen. The phase two data was further evaluated in a multiscale model of HCV infection and treatment to confirm the effectiveness of bemnifosbuvir and ruzasvir. A similar approach has been previously validated and published to evaluate other DAA regimens against HCV. In this model, the population estimate for the time to achieve HCV RNA less than the lower limit of quantification in the plasma was approximately twelve to sixteen days, while the corresponding time to achieve cure was approximately seven to eight weeks. Therefore, this model provides further support for a high likelihood of success for the regimen being evaluated in phase three, with durations of eight weeks in non-cirrhotic patients and twelve weeks in cirrhotic patients. I will now turn the call over to Andrea to discuss Atea's financials.

Thank you, Dr. Horga. As Jonae mentioned, earlier today, we issued a press release containing our financial results for the fourth quarter and full year 2024. The statement of operations and balance sheet can be found on slides eighteen and nineteen. In 2024, R&D expenses declined quarter over quarter, but increased year over year. The full year increase was primarily driven by higher 2024 external spend related to our COVID-19 phase three Sunrise-3 trial as well as our phase two HCV trial. For SG&A, expenses in 2024 and 2023 were similar quarter over quarter and year over year. Interest income quarter over quarter and year over year decreased due to lower investment balances. In 2025, substantially all our external R&D spend will be related to the advancement of our phase three program. As Jean-Pierre mentioned, at year-end 2024, our cash, cash equivalents, and marketable securities balance was $454.7 million. Continuing our strong financial discipline, we project cash guidance runway into 2028. Moving to slide twenty. As noted in our press release today, we announced a reduction of our workforce by approximately 20-25% in early January. This action is intended to enhance efficiency in the management of infrastructure expenditures and is expected to result in a cost savings of approximately $15 million through 2027. Additionally, we also announced that Arthur Kirsch has joined our board of directors. His extensive financial and strategic advisory experience will further strengthen the Atea board as we advance our strategic priorities. We believe that Arthur's proven track record of executing and overseeing transactions will be invaluable as we pursue opportunities to enhance shareholder value. I'll now turn the call back over to Jean-Pierre for closing remarks.

Thank you, Andrea. In closing, we believe that our global phase three HCV program is de-risked with a high compelling value proposition. This is based on substantial preclinical and mostly clinical data, a well-characterized regulatory pathway, optimized manufacturing processes, a durable multibillion-dollar market, and a long patent runway. We believe that the regimen of bemnifosbuvir and ruzasvir, with its potential best-in-class profile for the treatment of hepatitis C, if approved, provides an opportunity to become the most prescribed treatment and disrupt the global HCV market of approximately $3 billion in annual net sales. Before opening the call to your questions, I would like to thank our talented and dedicated Atea employees. Our team's relentless pursuit of excellence drives our dedication to advancing oral antiviral therapeutics for patients worldwide affected by severe viral diseases. With that, I will turn the call back over to the operator.

Thank you. To ask a question at this time, please press. And our first question comes from the line of Isabella Camaj with JPMorgan. Your line is open. Please go ahead.

Hi. This is Isabella on for Eric. Just two questions from us here. First, following your meeting with the FDA, are there any specific callouts that they've guided for in the phase three trial design? And then second, what can we expect in terms of the scope of your phase two readout later this half?

Janet, you want to address the first one, and then Dr. Horga will address the second question? Janet?

Thank you, Jean-Pierre. Yes. So with regards to the meeting with the FDA, no, I do not think there are really any specific callouts. They are fully aligned with our approach of going forward with two open-label phase three trials. I think it's somewhat unconventional to run an open-label trial, but I think given the circumstances, the different properties of the drugs, and the population that we are studying, this is completely in agreement with them, and they did not really have any substantive comments around the conduct of the trial.

Dr. Horga?

Yes. I think the question, Isabella, was about the phase two readouts. So we are expecting to present data this summer at EASL in May. And so you will have additional data there in terms of the efficacy and safety and all the other details of the process of the protocol of the study.

Great. Thank you.

Thank you. And one moment for our next question. Our next question comes from the line of Andy Hsieh with William Blair. Your line is open. Please go ahead.

Oh, great. Three questions from us, if you do not mind. One is on the trial design for the phase three program. I'm curious if you have an estimated number of cirrhotic patients across those two trials. Are they going to be strictly controlled, or is this kind of an estimation based on global and US epidemiology? That's question number one.

Let's take it one question at a time, if you do not mind. So, Janet, you address it, please?

So yes. So there are estimates. We have target numbers of cirrhotic patients that we would like to see enrolled in the trial. But the number of cirrhotic patients, I think, generally worldwide, has declined with the advent of direct-acting antiviral therapies. I think particularly so in the US, they are harder to find than they were when the earlier direct-acting antiviral trials were conducted. But we do anticipate seeing somewhere in the order of just north of 10% probably in our trial, and that's what we are aiming for.

I see. Is there an ability for you to adjust that number if you are seeing maybe a little bit lower or a little higher as the trial is enrolled?

Yes. I think so. You know, as I said, we are setting targets, not absolute numbers. So we do have some flexibility in there. And, obviously, if we can achieve more and get greater experience, I think that will be important. But I do not think there are absolute requirements around that. We want to have sufficient patients enrolled with cirrhosis to be able to justify having that population in our label. But I think we will certainly do the best we can to have enough, but there is flexibility there.

That's helpful. Second question has to do with the modeling, which is very unique on slide sixteen. So I'm curious if you were to plot this with Epclusa, would you expect those two lines to be right-shifted for Epclusa across the non-cirrhotic population?

This model has been developed by Dr. Alan Perelson from Los Alamos. And please check their publications with other direct-acting antivirals for HCV.

Okay. That's helpful. Okay. That's actually, so sorry for the confusion. There's just two questions from us, but thanks for your input.

You're very welcome. Thank you for the questions.

I'm showing no further questions, and I would like to hand the conference back over to Jean-Pierre for closing remarks.

Thank you to all of you for joining our fourth quarter 2024 earnings conference call. And thank you for your continued support.