Good morning, and welcome to the Better Therapeutics First Quarter 2022 Financial Results and Business Update Conference Call. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference may be recorded.

[Operator Instructions] I would now like to hand the call over to Kevin Appelbaum, Co-Founder and Chief Executive Officer. Please begin..

Thank you, operator. Good morning, everyone. And welcome to the Better Therapeutics conference call to discuss our first quarter 2022 financial results and business update. Our press release was issued this morning and can be found in the Investors section of our corporate website at bettertx.com. Joining me on the call this morning are Dr.

Mark Berman, our Chief Medical Officer; and Mark Heinen, our Chief Financial Officer. During today's call, the team will provide a business and financial overview of the first quarter of 2022 and provide our outlook for the second quarter of 2022 and beyond. A Q&A session will follow our prepared remarks.

Before we begin and as a reminder, today's discussion will include forward-looking statements related to Better Therapeutics current plans and expectations, which are subject to certain risks and uncertainties.

Actual results may differ materially due to various important factors, including those described in the risk factors section of our most recent SEC filing. These forward-looking statements represent our views as of this call and should not be relied upon as representing our views as of any subsequent date.

We undertake no obligation to publicly update these statements. Better Therapeutics is successfully executing on our strategic priorities in 2022. Most notably, we have made significant progress in validating and advancing the clinical development of our first-in-class prescription digital therapeutic for the treatment of Type 2 diabetes.

I will share more in our progress momentarily, but I want to begin with the headline that with continued positive data, we expect to file a de novo classification request with the FDA in the third quarter of 2022, seeking marketing authorization of BT-001 for the treatment of patients with Type 2 diabetes.

We expect the FDA review to take six to nine months, which keeps us on track to launch this product following FDA authorization in the first half of 2023.

A few weeks ago, we reported that the pivotal trial of BT-001 met its primary efficacy endpoint and demonstrated an excellent safety profile resulting in significant A1c reductions when compared to the current standard of care. Dr.

Berman will review this data in more detail shortly, but the key takeaway is that BT-001 is producing clinically meaningful improvements in A1c with no adverse safety events due to its use.

We expect the benefit of this product relative to risk will be viewed favorably by the FDA, providers and payers and fill an important gap in clinical care that exists today. We've expanded our real-world evidence program to further establish BT-001’s durability of effect and impact on healthcare costs and medication use.

The data generated from this program will be key to securing payer coverage and reimbursement. We have also begun to study the potential of nutritional cognitive behavioral therapy has a potential treatment for fatty liver disease. This condition affects over 64 million adults in the U.S.

resulting in over $100 billion in direct healthcare cost annually, but lacks any effective FDA approved therapeutics. Our progress comes as more and more experts come to the same conclusion that we did when we started Better Therapeutics, that the existing treatment paradigm for cardiometabolic disease is not serving patients as well as it could.

We spend hundreds of billions of dollars every year, dealing with the symptoms of these diseases while doing very little to address the underlying behavioral causes. This approach is failing patients and leaving providers without the tools they need to enact clinical guideline.

That is why it was so important when the American Diabetes Association recently added a recommendation for using mobile apps and digital solutions to facilitate behavior change in treating Type 2 diabetes to its 2022 standard-of-care guidelines.

Upon authorization, BT-001 will be the first digital therapeutic that can be prescribed by physicians to treat Type 2 diabetes by addressing the behaviors that are root causes.

Additionally, the Centers for Medicare & Medicaid Services or CMS established a new healthcare common procedure coding system could become effective in the second quarter of 2022. This code creates a new pathway for the reimbursement of prescription digital therapeutics.

In addition, the Access to Prescription Digital Therapeutics Act of 2022 was introduced and if enacted, will expand Medicare coverage to include PDTs. We view these recent actions as positive indicators for the adoption use and reimbursement of prescription digital therapeutics.

Turning to our outlook for the second quarter of 2022 and beyond, we are on track to achieve multiple clinical and regulatory milestones. First, we expect to complete the pivotal trial of BT-001 and receive final data at the end of June. And we’ll report secondary endpoint data early in the third quarter of 2022.

Second, we expanded the scope of our real world evidence study for BT-001 and expect to report data on the first 250 patients to complete 90 days of treatment in the fourth quarter.

Third, we are gathering pilot data from the BT-001 pivotal study that will inform the initiation of pivotal trials of BT-002 and 003 for the treatment of hypertension and hyperlipidemia, respectively. Pending favorable data and sufficient capital, these studies may commence as soon as the first half of 2023.

Last, we look forward to hosting a key opinion leader webinar concurrent with the ADA Annual Meeting in June. This webinar will explain the use of nutritional CBT as a mechanism of action and describe how its use can fill a known gap in current standard of care guidelines. Dr.

Mark Berman, our Chief Medical Officer will now provide an update on our clinical progress. Mark, over to you..

Thank you, Kevin. We have made excellent progress advancing clinical development of our digital therapeutic platform in the first quarter. In March, we reported positive primary endpoint data from our pivotal trial of BT-001 for the treatment of type 2 diabetes.

As a reminder, the open-label randomized control parallel group study enrolled 669 participants with type 2 diabetes, having a baseline A1c of 8.1%. This is well above the clinical target of 7% or less. And nearly 70% of the study population was taking two or more medications to lower their blood sugar.

Participants were randomized to receive standard of care with or without BT-001. The primary efficacy endpoint was the difference in mean change from baseline in A1c after a 90 days of treatment between the two groups.

The primary efficacy endpoint showed highly statistically significant improvement in A1c between the intervention and the control groups with the difference between groups of 0.4% and a p-value of less than 0.0001.

45% of patients receiving BT-001 demonstrated a reduction in A1c of at least 0.4% with mean improvement of 1.1% versus 27% of the patients in the control group. We believe this demonstrates use of BT-001 significantly improved A1c compared to standard of care alone.

There was a clear dose response between greater engagement in nutritional CBT, and greater reductions in A1c, supporting nutritional CBT as a mechanism of action. Measures of patient engagement, adherence, persistence and satisfaction were all positive and no adverse safety events were attributed to use of BT-001.

Given the clear efficacy signal, this suggests a strong benefit to risk profile for BT-001. The secondary efficacy endpoint for the BT-001 pivotal trial is different in mean change from baseline and A1c between the two groups at 180 days since treatment initiation.

In addition to the secondary endpoint, exploratory endpoints will include a comparison of the change in medications of the two groups. With final data, we will conduct a broad range of subgroup analyses, including the glycemic response and safety signal within diverse demographic and medication use population.

We will also analyze changes in the population with elevated cardiovascular markers. As Kevin mentioned, we are on track to complete the pivotal trial in the second quarter of 2022 and report secondary endpoint data early in the third quarter of 2022.

We were also pleased to have the Durham Veterans Administration Medical Center join Mass General Brigham, Colorado Prevention Center and Catalyst Health System in an ongoing randomized controlled multi-site study to generate evidence supporting payer coverage and reimbursement of BT-001 in type 2 diabetes.

These centers are expected to enroll approximately 1,000 patients for a treatment period of at least 12 months. Change in A1c and healthcare resource utilization will be evaluated at six and 12 months when compared to usual care. Study results we reported on a rolling basis as cohorts of 250 patients complete an incremental 90 days of treatment.

Demonstrating the potential to improve glycemic control and reduce ongoing healthcare costs and medication use within the veteran community is of critical importance. Type 2 diabetes affects nearly 25% of the VA’s patient population and is the largest driver of costs within the VA.

Following the promising primary endpoint data from the BT-001 pivotal trial, we initiated the LivVita liver study. This study is evaluating the feasibility of nutritional CBT to reduce liver fat and improve liver disease biomarkers, and non-alcoholic fatty liver disease or NAFLD and non-alcoholic steatohepatitis or NASH.

This first ever study of nutritional CBT as a potential treatment for NAFLD and NASH is being conducted in collaboration with Arizona Liver Health, a leading liver clinic research center. This single arm interventional cohort study is expected to enroll approximately 20 patients for a treatment period of 90 days.

The primary endpoint is the mean change in percent liver fat, as measured by Magnetic Resonance Imaging Proton Density Fat Fraction or MRI-PDFF. MRI-PDFF is a non-invasive the precise measure of liver health that correlates strongly with the FDA approvable measure of liver biopsy. This study is expected to be completed in the third quarter of 2022.

There are currently no FDA approved therapeutics to treat these diseases. With that, I'll turn the call over to Mark Heinen.

Mark?.

Thank you, Mark. We ended the first quarter with $31.7 million in cash and cash equivalents compared to $40.6 million as of December 31. Under our current operating plan, we have sufficient capital to fund operations into the first quarter of 2023.

Our total operating expenses for the first quarter were $9.3 million, compared to $3 million for the same period in 2021. Research and development expenses for the first quarter were $3.7 million. This compares to $1.4 million for the same period last year.

The year-over-year increase in research and development expenses was primarily due to the costs of advancing research in conjunction with our prescription digital therapeutic BT-001. Sales and marketing expenses for the first quarter were $2 million compared to $43,000 for the same period last year.

This year-over-year increase in sales and marketing expenses was related to pre-launch preparations for BT-001. General and administrative expenses were $3.6 million for the first quarter of 2022 and $1.6 million for the same period in 2021.

The increase in G&A expenses was primarily due to cost of being a publicly traded company, as well as cost to support company growth. Net loss attributable to common shareholders for the first quarter of 2022 was $9.7 million or $0.41 per basic and diluted share.

This compares to net loss attributable to common shareholders of $5.7 million or $0.54 per basic and diluted share for the same period last year. With that, I'll turn the call back over to Kevin for some closing comments.

Kevin?.

Thank you, Mark. Better Therapeutics is built to address an enormous healthcare problem. Each year nearly 0.5 trillion healthcare dollars are spent in the U.S. to treat the symptoms of cardiometabolic diseases, while very little is done to address the behaviors that are the root causes of the disease.

We believe that nutritional CBT delivered a prescription digital therapeutics represents an important new approach for treating a broad range of cardiometabolic diseases starting with type 2 diabetes. Before we move on to Q&A, let me recap some important points that you've heard today.

We're on track to complete the pivotal trial of BT-001 in the second quarter and report secondary endpoint data early in Q3. With continued positive data, we plan to file a de novo classification request with the FDA in the third quarter and anticipate the FDA review process will take about six to nine months.

In one on one meetings, payer response to primary endpoint data is very positive, particularly with respect to the diversity and complexity of the patient population and effective BT-001 incremental to standard of care. With final data, we will complete our health economic models and begin to engage payers in coverage discussions in Q3.

We expanded the scope of our real world evidence study for BT-001, and expect to report data on the first 250 patients to complete 90 days of treatment in the fourth quarter of 2022. We initiated the first ever clinical study evaluating the feasibility of nutritional CBT as a potential treatment for fatty liver disease.

We expect to complete this study in Q3 and report on the primary endpoint in Q4 2022. And last we are gathering the pilot data from the BT-001 pivotal trial that will inform the initiation of pivotal trials of BT-002 and BT-003 for the treatment of hypertension and hyperlipidemia, respectively.

Pending favorable data and sufficient capital, these studies will commence as soon as the first half of 2023. Together, these initiatives reflect in emerging standard of care for the treatment of cardiometabolic diseases built on a foundation of behavioral therapy delivered as prescription digital therapeutics. We're now ready to take your questions.

Thank you..

Thank you. [Operator Instructions] And our first question comes from the line of Thomas Flaten with Lake Street Capital. Your line is open. Please go ahead..

Good morning, guys. Appreciate you taking the questions.

With respect to the cash runway into the first quarter, what does that contemplate in terms of Hercules financing? Is there an incremental draw down in that assumption?.

Mark, you want to take that?.

Sure. Hey Thomas. Good morning. Yes, our intent is to pull the next $5 million on the Hercules agreement down later this year..

Got it.

And with respect to the pre-launch activities and you had some increase in sales and marketing spend, could you talk a little bit about what you're doing between now and approval and then how we should think about spend ramp as we approach an approval date?.

Sure. I'll take the first half of that question, Thomas, and then maybe Mark add a little bit to the second part. We are accounting for the investments we're making in our real world evidence initiatives as a sales and marketing expense.

Those real world evidence studies have ramped up in the first quarter of this year and we'll expect to conduct them over the course of the remainder of the year. The other pre-launch activities are related to payer engagement, medical affairs and marketing activities such as branding, naming and preparing for launch.

But the principal investment over the course of this year will be the generation of real world evidence..

Got it..

Mark?.

Yes. And beyond that, Thomas, we do expect sales and marketing over the next three quarters to continue to increase modestly. We're not providing operating expense guidance at this time, but as we've mentioned, we'll have sufficient capital to get us through or into Q1 of 2023..

Got it. Appreciate it.

And then are there with respect to the read through on, for example, hypertension, could you just give us a sense of what you would need to see in order to feel like you validated the approach? Would you go straight to a pivotal, would you do another pilot study? Can you help us think through how you guys are approaching that?.

Mark, do you want to go first? I can wrap it up..

Sure. We're approaching that, hey, Thomas, on a couple of fronts.

One is do we see a signal in the current data to suggest a broad mechanism of action across multiple cardiometabolic conditions like hypertension and hyperlipidemia? That's something we already know the answer to because we've seen a clear dose response with the behavioral therapy and its results in action on behaviors and A1C.

And then the second is that we're looking to see a degree of change obviously a favorable change in cardiometabolic outcomes in particular amongst those who have elevated baseline measures.

So as we see that and will also understand the variance, which allow us to plan a pivotal, our inclination would be to go straight to a pivotal rather than a subsequent pilot, especially since we've already have prior pilot data in these conditions..

Excellent. Appreciate you taking the questions. Thank you..

Thanks, Thomas..

Thank you. And our next question comes from the line of Charles Rhyee with Cowen. Your line is open. Please go ahead..

Yes, thanks guys for taking the questions here. Kevin, if we submit here in the third quarter for BT-001, you mentioned six to nine months of review.

How quickly upon approval would you expect to be able to launch the product? Any other – I know we're doing sort of pre-launch ramp up in preparation, but once approval, what do you think the timeline would be to actually get into product in the market?.

Yes, thanks Charles. So our plans are based on the assumption that marketing authorization will occur in Q1 and potentially very early in Q1, which would be sufficient to allow us to get to market with first prescription written in Q2 of next year..

Great. And when we talk about the FDA's review process here, obviously great safety profile, significant change in A1C, can you talk a little bit about the matrix that the regulatory – that the regulators use and as well as payers.

When they look at between efficacy versus safety, maybe versus prevalence of, sort of the need for treatment in these types of not just here, but in any disease in general.

But can you talk about what the balance that we typically look for? How do you think this BT-001 stacks up?.

Yes. Great question.

Mark, do you want to go first on this one?.

Yes, happily. I think, generally speaking Charles, amongst both groups, the first question is, is there an unmet need in the population, is this as serious and significant disease that is in need of additional therapeutics? So that with Type 2 diabetes is it clear, yes. Then they're really looking at the benefit to risk ratio.

It's not good enough just to have benefit, but have extraordinary risk. So they're looking at the relationship between benefit and risk. When it comes to the FDA, since their mission is to guard public health in the country, they're going to be more concerned with safety than benefit, but obviously looking at both.

So given that we have, what would be characterized as a extremely safe profile for this therapeutic without any adverse events that are attributed to use of the device. And if you pair that with a strong and clear efficacy signal, we expect the FDA and payers to look at that data and that benefit to risk perspective and see a favorable ratio..

That's helpful. And then when we think about payers, Kevin, our discussions with them, I'm curious as to how your discussions are going, because when we've spoken with payers, they point to, obviously health economic studies is important, because you're looking at substitution effects in cost, but they also really weigh clinical urgency as well.

Obviously, diabetes is a huge problem in the U.S. but maybe talk about their perceptions in your conversations about how they view clinical urgency in this case..

Sure. I'm happy to do that. So following the readout of our primary endpoint data, we had a series of one-on-one meetings with payers and these were mostly regionally dominant and national commercial insurers. The feedback we got was fairly consistent across all payer meetings and intended to focus on several key benefits that they saw on the data.

One was the diversity of the patient population. This is a significant issue and for many payers providing greater access to therapeutics that can address underserved highly diverse patient populations is among the top of their strategic priorities for the current and next year.

So the diversity of the patient population was one key factor that they took note of. The second one was the complexity of the patient population. As Mark mentioned, the majority of the patients involved in our clinical study have multiple co-morbidities, they're on two or more medications for lowering blood sugar.

They've had diabetes for an average of 11 years, yet they have failed to achieve the glycemic target of getting their A1c to seven or below. Payers have confirmed with us that this is the population that drives costs and that they are most concerned about or most motivated to try to address.

In fact, we received several comments from payers that were complimentary of study design, specifically on not focusing on the earliest – newly diagnosed population, but the population where the need is the greatest. And then lastly, there's broad concurrences, there's a gap in clinical care.

That gap is evidence in the fact that despite the use of medications and innovation in medicine, less than 50% of the diabetes population is able to get their blood sugar under control, relying exclusively on pharmacotherapy. So the idea of delivering a prescribable behavioral therapy as an intervention to the diabetes population was well received.

The last point I'll make there, Charles is certainly the first step is to get the end of study data as an FDA authorization, payers will also be looking for real world evidence and what that evidence tells us around durability of effect and impact on cost..

Thanks.

If I could just follow up on our last part, durability effect that's to track patients after they've received treatment and to see if the effect is lasting so I guess, ultimately right, is the idea here that patients over time don't necessarily have to be on BT-001 in perpetuity, because they'll have learned the skills, have be able to change behavior and get their blood sugar under control..

Yes, that's exactly right, Charles and that's what's different around our approach in developing a therapeutic that is not intended to be used for the rest of the patient's life. CBT is a time bounded form of therapy. It tends to deliver optimal results over a treatment period of roughly four to five months.

And that's what we would expect to see in our patients that after one or two cycles of treatment, each one being 90 days in duration. For a significant number of patients, they will have been able to change the behaviors that are causing their diabetes and sustain those behaviors over some period of time..

I would imagine payers would find that very encouraging as well.

Is that fair to say?.

Yes, I think there's two things that payers, three things, payers spark to.

The fact that this is not a chronic treatment and that optimal benefits can be achieved after one or two treatment cycles, the opportunity to treat disease by addressing the root causes, which they quickly understand that if you're able to do that effectively, you're able to reduce the ongoing use of medications.

And it's very easy to ascribe economic benefit to reduce use of medications. And then lastly, it's a form of therapy that can be accessible to the parts of the population that are most in need, complex patient populations and particularly those in lower socioeconomic classes..

Great. Appreciate all the comments. Thank you..

Sure. Thanks for the question..

Thank you. And our next question comes from the line of Keay Nakae with Chardan. Your line is open. Please go ahead..

Thank you.

So Kevin, as we think about you getting ready for a filing, can you characterize how well situated you are to complete all those tasks, given the fact that it's the company's first time going through the exercise and how quickly do you turn it around once you get final data? I imagine you got a lot of it already written down?.

Yes, your imagination is quite accurate.

Mark, do you want to tell Keay about where we are in the process and how we're tackling the remainder of it?.

Yes, absolutely. I mean, given as you point out that this will be our first de novo submission, we have been working on this since the beginning of the year with a lot of expert guidance from consultants and regulatory team that has done multiple related de novo submissions for prescription digital therapeutics.

So we have good guidance and a good team that's been working from the beginning of the year. We also – since we have the primary endpoint data, have the data in hand, which will serve for the bulk of the submission.

So we're working nicely towards milestone, and we have – what we think is an aggressive yet achievable a goal to submit shortly after the day 180 results come out at the end of the second quarter..

Okay, great.

And then with respect to the real world study, I'm wondering if you can give us a sense of what those patient baseline characteristics demographics look like compared to what was in the study?.

Mark, you want to go first, I'll finish up..

Sure. Yes. Well, this is a real world evidence study is ongoing and still recruiting for – so we don't have a full set of baseline characteristics to report, but our expectation is that we'll see very similar demographics because I think the strength of the BT-001 pivotal trial is that we were able to recruit a nationally representative sample.

And in the real world evidence program, we have sites that are spread around the country. And also we have a sense of what their patient population in general looks like. And it does match the general patient population characteristics for type 2 diabetic patients who are not achieving their glycemic target.

So our expectation is that the profiles will be comparable and similar, and therefore the results will be generalizable. And we’ll obviously be eager to share that out once we have the data in hand..

Okay. And maybe switching gears here to the platform, and you talked about plans for 002, 003. Once you get the pilot study data and it’s informative in a way that would perhaps suggest some tweaking of some modules. How quickly are you able to do that? I guess, how much overlap is there between those products and 001.

And is it just changing some of the lessons? Or how do you go about tailoring 002, 003 for the different indications?.

Yes. So I’ll start on that one and then Mark, please follow if you’d like. So the development work for products 002 and 003 is largely complete. And you hit on some of the high points there. You have to modify the fundamental architecture of the – all of our products is similar.

The treatment algorithms, the same way in terms of what inputs do they consider to deliver which outputs. But the lessons are updated to be specific for the targeted indication, the associated skills while the methodology is common, the specific skills themselves will be tailored to the specific indication.

And then certainly the biometric values that we both measure over the course of treatment and incorporate into treatment algorithms is unique for the targeted indication. But relatively speaking, the platform itself allows us to make the modifications I just described in a modular fashion. It’s very efficient and pretty straightforward.

And that work is largely complete right now..

Okay. Very good. That’s helpful. Thank you..

Yes, sure..

Thank you. And our next question comes from the line of Rahul Rakhit with LifeSci Capital. Your line is open. Please go ahead..

Hey guys, thanks for taking the questions.

So I guess with the 180 day readout, what you kind of expect to see in terms of medication change? And going off of that, should we see a reduction in medications? I guess could that affect the net difference that we ultimately see with A1c? Is really, how should we think about comparing what we saw at the 90 day readout versus [Technical Difficulty].

I think we lost Rahul for a second. But I think we got the majority of the question..

Sorry..

I think we got it Rahul. I think we just lost your last few words..

Perfect..

Yes. Raul, that’s a great question. Yes. It’s important to understand that the strength of this study is that it tries to mimic real world conditions and ensure that patients are getting very good quality standard of care.

So in practice, what that means is that the 90 day point when blood sugar values are reviewed by the physician that they’re going to recommend medication changes as is appropriate for the guidelines.

And so that means that there is a high potential to see an increase in medication utilized patient and one would expect to see a greater increases in the control arm given where they ended from a glycemic standpoint at the day 90 point.

So that certainly does have potential to impact the day 180 results, thus our plan to tease out the results, looking at those who had medication changes and those who did not have medication changes. And at the same time, despite that we still expect to see a statistically significant difference between the groups at the day 180.

And of course, we’ll also be looking to see the degree of medication reduction that is observed particularly at the day 180 time point. But we also know that most important will be the A1c change given that it’s a new therapy. We expect that there will be some degree of clinical inertia at play in terms of hesitancy to lower medications.

And given that these patients are on a large number of medications to begin with, we know that it won’t be across the board increases in medications for example, the 90% of the control group that would technically apply to be a candidate for medication increase..

Got it. Okay. All right. That makes sense. Appreciate that. And then just one more. So, as we’re kind of gearing up for this next readout and thinking about what we might see from these – with this pilot data.

Honestly, I guess, what are some reasonable expectations for improvements in blood pressure and lipid levels compared to, I guess, what we see with existing therapies?.

Yes. We want to be cautious, Rahul about setting kind of forward looking projections of what we’re going to see. As Mark mentioned, one of the things that we observe in this population is they’re heavily medicated. They’re heavily medicated not just with antiglycemics medications, but antihypertensive medications.

So, we’re going to have to look deeply into the data to understand, look at parts of the population that whose hypertension was or hyperlipidemia was not well controlled at baseline to understand what impact did BT-001, what impact did nutritional CBT have on their blood pressure and blood lipids.

So the long – the short version of that answer is, we’re going to have to look into the data and into the subgroup analysis to try to get a clean read to see what changes we observe. What we would expect is absent the confounder of medications, we would expect both of those conditions to show meaningful improvements..

Got it. Okay. That also makes sense. All right. Really appreciate the questions, guys. Thanks..

Yes. Thank you..

Thank you. And I’m showing no further questions at this time. And I would like to turn the conference back over to Kevin Appelbaum for any further remarks..

Yes. Thank you, operator. Thank you all for your time today and for continuing to track our progress. We’re proud of our achievement so far this year, and look forward to keeping everyone informed as we continue to execute on our upcoming clinical and regulatory milestones. Please feel free to reach out to us if you have any additional questions.

And again, we thank you for your time..

This concludes today’s conference call. Thank you for participating. You may now disconnect. Everyone, have a great day..