Atea Pharmaceuticals, Inc. (NASDAQ:AVIR) Q1 2023 Earnings Call Transcript

Atea Pharmaceuticals, Inc. (NASDAQ:AVIR) Q1 2023 Earnings Call Transcript May 8, 2023

Atea Pharmaceuticals, Inc. beats earnings expectations. Reported EPS is $-0.43, expectations were $-0.48.

Operator: Good afternoon, ladies and gentlemen. Welcome to the Atea Pharmaceuticals’ First Quarter 2023 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 turn the call over to Jonae Barnes, Senior Vice President of Investor Relations and Corporate Communications at Atea Pharmaceuticals. Ms. Barnes, please proceed.

Jonae Barnes: Thank you, operator. Good afternoon, everyone, and welcome to Atea Pharmaceuticals’ first quarter 2023 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.ataepharma.com. With me today from Atea are Chief Executive Officer and Founder; Dr. Jean-Pierre Sommadossi; Chief Development Officer; Dr. Janet Hammond; Chief Medical Officer, Dr. Arantxa Horga, Financial Officer and Executive Vice President of Legal, Andrea Corcoran; and our Chief Commercial Officer, John Vavricka. They will all be available for the Q&A portion of today’s call.

Before we begin the call and 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 will now turn the call over to Jean-Pierre.

Jean-Pierre Sommadossi: Thank you, Jonae. Good afternoon, everyone and thank you for joining us. As you will see on Slide 3, we have had a busy start of the year with progress across our COVID-19 and HCV program. I will begin with a few highlights from our COVID-19 program. First, we remain laser focused on the execution on our global SUNRISE-3 study, where I’m pleased to report that as of today, we have a broad geographic footprint with regulatory approvals in over 50% of the targeted countries. Just last month, we were excited to receive from the U.S. FDA, a fast track designation for Bemnifosbuvir for treatment of COVID-19, which has the potential to expedite the development of Bemnifosbuvir. We presented multiple data sets of scientific meetings, including CROI, ICAR and ECCMID, each of which highlighted Bemnifosbuvir clinical efficacy and favorable safety profile, including a compelling drug interaction profile.

Finally, we continue to make progress advancing our second generation protease inhibitor. Turning to HCV, we remain on target for the first patient 2b dose in our phase 2 combination trial this quarter. And we continue to expect initial results from our first cohort of 60 patients by year-end. Data recently presented the ICAR support our combination profile, and new in vitro results indicate a highly compelling antiviral profile compared to the current standard-of-care. Moving to Slide 4, as I mentioned, we had a large presence at the major Antiviral medical meetings during the first quarter. Some of the key highlights of our current program include the full results in the MORNINGSKY trial, presented showing a 71% reduction in risk of hospitalization, with benefits review as compared to the placebo in the MORNINGSKY trial was a subset showing 82% reduction in risk in patient over 40-years old.

Low risk of drug-drug interactions with commonly prescribed medicine for COVID-19 and HCV, which we believe is a key feature of the drug. Slide 5 outlines the data presented and medical meetings beyond our COVID-19 program. At ICAR were presented HCV combination data showing the Bemnifosbuvir portal individual synergistic antiviral activity and in vivo preclinical safety without adverse indirect interactions. In addition, we presented data AGNC 2023 on the AT-752 for dengue. While as you know, with deprioritize our dengue program and the development of AT-752 in February 2023, we are exploring opportunistic ways to continue to move this program forward. Moving now to Slide 6. AT-511 the three bay’s of Bemnifosbuvir has been shown to be a potent inhibitor of SARS-CoV-2 in vitro, new results demonstrated that AT-511 also, I suppose, an antiviral activity against the source code to micron civilian XBB.

This is consistent with the privacy demonstrated in vitro potent antiviral activity against other variants of concern and of interest including alpha, beta, gamma, epsilon delta, and various all Omicron sub variant BA1, BA2, BA4 and BA5 and now the XBB. I will now turn the call over to Janet.

Photo by National Cancer Institute on Unsplash

Janet Hammond: Thank you. Turning to Slide 8, the COVID market dynamics continue to shift and the U.S. COVID-19 Public Health Emergency is set to expire this week. Last Friday, the World Health Organization declared the end to the global health emergency. They also went on to say that COVID as a virus is here to stay, which is highlighted by the fact that globally nearly 2.8 million new cases and over 17,000 deaths were reported in the last 28-days. One fact remains, there is still a large unmet medical need for the treatment of COVID-19. We are experiencing waning immunity with both vaccines and natural infection exacerbated by the lower booster uptake, with only approximately 17% of the U.S. population having received a booster and in some patient populations, there is also a failure to mount any immune response to vaccines.

Moreover, the limitations of currently available oral antiviral are considerable due to safety concerns and drug-drug interactions with commonly prescribed medications, such as seizure medications, antipsychotics, anticoagulants and more. This significantly limits the use of these drugs in high risk elderly and immunocompromised patients who are the most vulnerable and most likely to have the most severe cases of COVID. As a result of this remaining unmet medical need and emergency use authorization is still available assessment criteria for assurance on that. Turning to Slide 9, as Jean-Pierre mentioned earlier, we are seeing strong operational execution from our clinical team. The global SUNRISE-3 geographical footprint now has regulatory approvals in over 50% of the targeted countries and patient enrollment continues.

COVID-19 continues to evolve with new variants and waves such as what we are experiencing with the Omicron sub variant XBB 1.16, the there we are showing again good in vitro pregnancy with Bemnifosbuvir. Our goal is to enroll patients from circulating waves by being well positioned with our extensive global footprint as new variants and waves of infection merge. SUNRISE-3 is focusing on high risk patients that are at the greatest risk for disease progression to severe COVID-19 maybe into hospitalization or mortality. Its primary endpoint is all caused hospitalization all day through day 29 in at least 1400 patients from the monotherapy cohort. I will now turn the call back to Jean-Pierre to review our HCV program.

Jean-Pierre Sommadossi: Thank you, Janet. Moving now to our Hepatitis C program of a fixed dose combination of benefits Bemnifosbuvir and Ruzasvir. We believe that our combination has the potential to improve upon the current standard-of-care by offering a put it in a bit of three shorter duration options for HCV patients with and without cirrhosis. Being the positive is a highly potent and genotypic with demonstrated clinical antiviral activity. In addition Ruzasvir is potent NS5 inhibitor as shown grown genotypic in vitro antiviral activity with EC50 lower that 10 against all genotypes with demonstrated clinical antiviral activity. Naturally occurring NS5A resistant variants have emerged and can impact the effectiveness of currently available HCV treatments.

We recently profiled the antiviral activity of both Bemnifosbuvir and Ruzasvir against a panel of previous NS5A resistance associated variants selected in vitro or identifying HCV patients who have failed treatment who is the current standard-of-care. We are pleased to share this data with you now, supporting that we have the potential for best-in-class regiment. As outlined on Slide 11, recent data show the Bemnifosbuvir retain high potency in vitro being at least 10 times more potent than sofosbuvir against all HCV genotype 1A and genotype 3A, NS5A resistance associated variance or we call it rise. In addition, as you will see on Slide 12 Ruzasvir is also a potent NS5A inhibitor. In the rapid NS5A Ruzasvir has demonstrated a move forth favorable in vitro efficacy profile as compared to the Ruzasvir and similar antiviral activity to velpatasvir, which is the most potent NS5A inhibitor currently approved.

In fact, and as outlined on Slide 13, in the same replica effect Ruzasvir was shown to be five to 10 fold more potent number velpatasvir against RAF HCV genotype 1A, and a difficult to treat genotype 3A. Turning to Slide 14. In summary, the combination of Bemnifosbuvir and the Ruzasvir is very important, and has the potential to be the best-in-class regiment based on its pain, genotypic antibiotic, antiviral potency, low risk for drug-drug interaction, absence of food effects, and potential for short treatment duration. Indeed, we are targeting eight weeks of therapy with the potential for even a shorter duration. This profile, along with the totality of the preclinical data, give us greater confidence in the potential of this combination to become the new standard-of-care.

As you will see, on Slide 15 normally diagnosed HCV cases in the U.S. increased 400% between 2010 and 2020. And as just mentioned, this is an area where we believe that Bemnifosbuvir and Ruzasvir combination can be especially effective, given its potential for short treatment duration with a highly compelling profile. According to WHO 58 million people globally have chronic HCV infection and approximately 1.5 million new infections occurring every year. We lose nearly 300,000 people to HCV related liver disease each year. And this has become such a problem even in the U.S. when the U.S. government has recently proposed an HCV program with the goal to eliminate HCV. This is important because it recognize this resurgence and acknowledges the need for new effective treatment options.

On Slide 16, we outline our phase 2 open label study of Bemnifosbuvir and Ruzasvir in HCV patients. This study will enroll approximately 280 HCV infected direct acting antiviral naive patients across all genotypes, including a leading cause of approximately 60 patients. Patients who will be administered 550 milligrams any positive in combination with 180 milligram versus via was daily for eight weeks. The primary endpoint of the study of safety affecting and sustained virologic response or SVR at week 12 post treatment. Although virologic endpoints include virologic failure, as we are with 24, post treatment and resistance. Regulatory submissions for the initiation of this global trial ongoing and dosing of patient in this clinical trial is expected to begin this quarter.

In initial data for the leading cohort of approximately 60 patients is anticipated around the end of the year. With that, I will now turn the call over to our CFO, Andrea Corcoran to our financial updates.

Andrea Corcoran: Thank you Jean-Pierre. As Jonae mentioned in her introductory remarks earlier today, we issued a press release containing our financial results for the first quarter of 2023. The statement of operations and balance sheet can be found on Slide 18 and 19. First quarter of 2023 each of R&D and G&A expenses remained relatively consistent with the first quarter of 2022. As we further our clinical development of both our COVID-19 and HCV clinical programs in 2023. We do anticipate that R&D expenses will increase in a measured way as these programs advance. We are exercising focused financial discipline to manage spend as we invest in these programs. At the end of the first quarter of 2023, our cash, cash equivalents and marketable security balance was $620.5 million. Based on our current plans, we are reiterating our cash guidance with a run rate into 2026. I will now turn the call back over to Jean-Pierre for closing remarks.

Jean-Pierre Sommadossi: Thank you, Andrea. In conclusion, we have already made notable clinical and operational progress across our COVID-19 and HCV program so far this year. We also presented significant, scientific and clinical evidence in support of the potential of our clinical programs among an audience of leading virologist and infectious disease specialists at several scientific conferences. We believe this data continue to validate our approach and will enhance our development efforts as we advance our global clinical trials. We look forward to reporting our continued progress throughout the year. As always, we thank you for your continued interest and support of Atea as together we strive to address the unmet medical needs of patients with serious viral infections. With that operator, we will now open the call up to your questions.

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Q&A Session

Operator: Our first question comes from Eric Joseph with JP Morgan.

Unidentified Analyst: Hi, it is Billy on for Eric. We just had one question. We recently heard from Pfizer about that guarantee borrowers which doesn’t need return events. I wonder what your thoughts are on this in terms of competitive landscape? Thanks.

Jean-Pierre Sommadossi: Well, we have not seen any data scientific conference. We, as everyone got only a feedback from the earning call. So it is clear that it looks quite interesting. But it is clear that we will need a lot more data to address were either the potency, the safety and what we expect with this new generation.

Unidentified Analyst: Thank you.

Operator: Our next question comes from Maxwell Skor with Morgan Stanley.

Maxwell Skor: Hi thank you for taking my questions I just want to ask are you on track to report interim analysis from the SUNRISE-3 study in the second half of 2023? And also, I believe you stated on a prior call that you have not committed to reporting on the primary and secondary endpoints for this trial. But could you give any additional details regarding what we can expect after the interim? Thank you.

Jean-Pierre Sommadossi: Janet, do you want to address the question?

Janet Hammond: Yes, thank you. So with regard to further – on track, I think our guidance has not changed. And then with regard to the interim analysis, it does provide us the opportunity to reestimate sample size and increase our population if that is the necessary in order to achieve the primary endpoint. And the primary endpoint is the all cause hospitalization and mortality in the patient population. And currently, for statistical analysis, we are projecting that ultimately, we will need 1300 patients in the standard-of- care monotherapy arm, and the remainder of patients of the 1500 will be incorporated into the combination with a current total estimate of 1500 patients. But the primary endpoint is really just for the monotherapy patients and at the present time, that is the anticipated population we would need but that is what the interim analysis is designed to help us with it to be sure that we upsize and study if necessary, depending on hospitalization.

Maxwell Skor: Okay, thank you.

Operator: Our next question comes from a line of John Miller with Evercore ISI.

John Miller: Hi, thank you very much for taking my questions guys. Two quick ones from me. One, obviously, the state of emergency is scheduled to lapse, but you seem very confident that EUA will still be available. Can you talk a little bit more about how the regulatory environment how you EUAs will be around if there isn’t a state of emergency to support those? And then secondly, on that interim data analysis from SUNRISE and the sizing of the primary endpoint, how will the high likely percent of seropositive in a patient that baseline impact placebo rates of hospitalization? Obviously, we just saw this afternoon and other companies stumble on efficacy for their COVID treatment because placebo patients did better than expected due to baseline zero positivity. So I’m wondering where you’re getting your estimate of baseline of placebo arm hospitalization rates and whether in a higher number of seropositive patients at baseline my impact with estimates?

Jean-Pierre Sommadossi: Janet, maybe you want to start with the second question first. And then we will get to the first one. Go ahead Janet.

Janet Hammond: Sure. Thank you. It is an interesting question. I think that where we are is that, obviously, we are going to have to see what the overall hospitalization rate is and this is the one of the points for the interim analysis is to determine what the hospitalization rate is and whether we need to upsize the study in order to have a sufficient rate of hospitalization, but not unblinding that. But just understanding what that hospitalization rate is. And so that is the idea behind the adaptive design. I think with regard to seropositive. It is an interesting, but I think a moving target isn’t that we know that for the most part, almost everybody has seen COVID at this time, and therefore is likely to be seropositive.

We believe that in the more vulnerable patient population, that antibody F effectiveness probably wins over time more quickly than for others. And I think there have been some interesting articles, actually, in the last week or two, again, looking at the efficacy of the Omicron booster, and that sort of thing and again, I think demonstrating that there is very rapid waning immunity to the vaccine as well as to natural infection. And I think as the virus continues to evolve with new strains coming through, it is likely that immune evasion is likely to continue. But it is impossible, obviously to predict with any certainty what the hospitalization rate is likely to be as a result, and that is really the basis for why we have designed the study in that way.

I think, firstly, from the point of the population, which is the most vulnerable to hospitalization. So I think it is likely to be higher in that patient population. And then secondly, gave us to Canada study and numbers necessary to accommodate a lower hospitalization rate.

Jean-Pierre Sommadossi: On the first question, as we have always indicated, we are targeting an NDA. And if the UAE the data will be sufficient in the – that would be wonderful. But let’s not forget that what we are targeting is an NDA, as we had indicated also, that the FDA has indicated in writing that this trial SUNRISE-3 will be sufficient for a an NDA filing. Janet, do you want to add anything?

Janet Hammond: No, I think you have covered as well. Thank you.

Operator: Our next question comes from a line of Tim Lugo with William Blair.

Tim Lugo: Thanks for taking the questions. Maybe I will switch to HCV. So you mentioned the ability to reduce the dosing for but not the severe? What kind of dose regimen do you think you can achieve and the ongoing Phase 2 going to inform that?

Jean-Pierre Sommadossi: Look that is a good question Tim. We want to have a better view with the clinical data on the leading course. We have a collaboration with as you know, is the goal on viral kinetics and that is where the analysis of those viral kinetics will really help us in determining our short we can go in terms of treatment duration.

Tim Lugo: You said that at the end of this phase 3.

Jean-Pierre Sommadossi: Yes basically what we will do is obviously feel that we have a very good profile with eight weeks, better than the standard-of-care as you know the great safety especially you see the difference when we are talking now, with the NS5A, a very inside – the field as I’m sure you open the – is very different now than six or seven years ago when those in those NS5A events actually were not as extensive as they are today. And we believe that this is going to play a major role in the differentiation of our combination, a lot more potent against any of those variants as compared to a for example. So and we will see as soon as we have the vowel kinetics even shoulder we can go them the eight weeks.

Tim Lugo: Thank you so much.

Operator: Our next question comes from Roanna Ruiz with SVB Securities.

Unidentified Analyst: Hi, this is (Ph) on for Roanna Ruiz. Couple from us on Bemnifosbuvirfor COVID. So congrats on getting Fast Track designation for Bemnifosbuvir. First, we understand its implications for potential NDA, but does the Fast Track designation provide advantages for potential – submission? And secondly, what proportion of the monotherapy population in SUNRISE-3 do you expect will be coming from the U.S. and is that representative of the full enrollment, so interim and full? Thank you.

Jean-Pierre Sommadossi: Janet.

Janet Hammond: So I think that the Fast Track designation ought to allow us to have a close and collaborative data exchange and discussion with FDA as we proceed with the clinical trial and our submission. So I think there is a possibility that it will allow things to go more rapidly than otherwise. And certainly, I think, obviously, familiarity with the data might help in FDA determination of whether the data are worthy of an emergency use authorization, but that is obviously sometime down the road. And we will have to see and it is obviously FDA discretion. And then with regard to the proportion of patients receiving monotherapy in the U.S., and in comparison to elsewhere, I think it is early days to comment on what that is going to look like.

But I’m certainly I think the population that we are studying in our trial is a population that is particularly vulnerable to COVID. And I think for that reason, interestingly, often ineligible for the currently available treatments within the U.S. and elsewhere. And so we continue to see a good representation of patients requiring monotherapy both here and abroad.

Unidentified Analyst: Great, thank you so much.

Operator: That concludes today’s question-and-answer session. I would like to turn the call back to Jean-Pierre Sommadossi for closing remarks.

Jean-Pierre Sommadossi: Thank you again for joining us today.

Operator: This concludes today’s conference call. Thank you for participating. You may now disconnect.