Atea Pharmaceuticals, Inc. (NASDAQ:AVIR) Q1 2024 Earnings Call Transcript

Atea Pharmaceuticals, Inc. (NASDAQ:AVIR) Q1 2024 Earnings Call Transcript May 14, 2024

Atea Pharmaceuticals, Inc. misses on earnings expectations. Reported EPS is $-0.75276 EPS, expectations were $-0.61.

Operator: Good afternoon, everyone, and welcome to the Atea Pharmaceuticals First Quarter 2024 Financial Results and Business Update Conference Call. [Operator Instructions] 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, and good afternoon, everyone, and welcome to Atea Pharmaceuticals First Quarter 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 we’ll be reviewing today by going to the Investors section of our website at ir.ateapharma.com.

With me today from Atea are Chief Executive Officer and Founder; Dr. Jean-Pierre Sommadossi; Dr. Arantxa Horga, Chief Medical Officer, Chief Development Officer; Dr. Janet Hammond, Chief Financial Officer and Executive Vice President of Legal; 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’ll now turn the call over to Jean-Pierre.

Q&A Session

Jean-Pierre Sommadossi: Thank you, Jonae. Good afternoon, everyone, and thank you for joining us. 2024 is off to a strong start, with the tremendous clinical progress we have made across our program for COVID-19 and HCV, as you can see on Slide 3. I will begin first with an overview of our bemnifosbuvir program for the treatment of COVID-19.

Trends observed in 2024 provide further evidence that COVID is endemic and is here to stay. Variants continue to evolve, and this winter, we experienced a surge of infections caused by the variant JN.1. Our strong operational execution led to the rapid and successful enrollment of the only global Phase III trial exclusively conducted in the high-risk patients ahead of our guidance.

We randomized 2,221 patients into the supportive monotherapy cohort and only 74 patients into the combination therapy cohort with 77% of total patients enrolled in the United States. Strikingly, the clear preference by the investigators to enroll high-risk patients in the monotherapy cohort highlights the continued unmet medical need for new oral COVID-19 treatment options for these high-risk patients.

We believe that bemnifosbuvir has the potential to address many of the key limitations of current COVID-19 therapies, including safety, durability and drug-drug interactions. We look forward to potentially delivering bemnifosbuvir to millions of patients for whom the current standard of care is not an optimal option. We anticipate top line results from SUNRISE-3 in the second half of 2024.

Turning now to our Phase II program for hepatitis C. Building off the positive 98% SVR4 rate from the leading cohort of 60 patients, we look forward to multiple key near-term milestones for this program. We are very excited about the upcoming presentation at EASL next month, which will showcase the preclinical and new Phase II efficacy data from this leading cohort.

We also look forward to reporting complete SVR12 results from this ongoing study during the second half of 2024. In addition, we are preparing for the initiation of a Phase III study which we anticipate around the end of this year. We are currently finalizing the selection of the fixed dose combination tablets which will be used in the Phase III program, as well as for commercialization.

bemnifosbuvir is the most potent nucleotide inhibitor for hepatitis C treatment. And ruzasvir is a highly potent NS5A inhibitor. We believe that the demonstrated synergistic effect of this combination can substantially improve upon the current standard of care for all patients, in fact, with hepatitis C, including those who are the hardest to treat.

And Arantxa will review our HCV program in greater detail next. Importantly, we are in a strong financial position to execute our strategy with $541.5 million of cash, cash equivalents and marketable securities at March 31, with our runway now anticipated into 2027.

This is based on completing patient enrollment for SUNRISE-3 ahead of schedule and our ongoing financial discipline. Andrea will provide a detailed update on Atea financial position during today’s call.

With that, I will now turn the call over to Arantxa for an update on our global Phase II HCV program.

Maria Horga: Thank you, Jean-Pierre. Turning to Slide 5. Despite the availability of treatment options, HCV continues to be a health care crisis in the U.S. HCV is a viral disease with unmet medical needs, including the need for a shorter treatment duration, fewer contraindications and less potential for drug-drug interactions. New and reinfection rates annually exceed cure rates in the U.S. were over 2 million individuals are estimated to be infected.

Moving to Slide 6. We believe that a combination of bemnifosbuvir and ruzasvir has the potential to be a best-in-class treatment regimen by being protease inhibitor-free with a short 8-week treatment duration. It also has a low risk of drug-drug interactions and there is no food effect. The proprietary market research we have conducted and KOL feedback to date supports our high confidence in this combination therapy, which has the potential to address these remaining unmet needs.

Turning to Slide 7. The U.S. HCV market demand grew roughly 5% in 2023, based on the number of patients treated, with a market share of the 2 key HCV treatment options Epclusa and Mavyret remaining stable. With an estimated 2 million plus people in the U.S. living with chronic HCV, there is a large number of patients to be treated. The patient pool continues to be replenished with approximately 100,000 new chronic cases each year.

We believe that the best-in-class profile of bemnifosbuvir and ruzasvir, together with the anticipated future government initiatives and removal of access barriers, including certain constraints by payers will increase the number of patients [ cared for ] this severe viral disease.

Slide 8 outlines our Phase II single-arm open-label study of 550 milligrams of bemnifosbuvir in combination with 180 milligrams of ruzasvir once daily for 8 weeks. We plan to enroll up to 280 treatment-naive patients across all genotypes, including the leading cohort of 60 patients.

From the initial 60-patient cohort, sustained biological response or SDR at week 4 post treatment was used as the decision criterion to continue enrollment to complete the Phase II study. As a reminder, the primary endpoint of the study is SVR week 12 post treatment and safety.

Slide 9. Before we review this slide, I want to provide a brief background on the patient demographics and baseline characteristics in the leading cohort of 60 patients. It was comprised of non-cirrhotic patients only. However, 10 patients had an advanced stage of fibrosis, F3, which is borderline with cirrhosis. These final results from the leading cohort were 98%, as [ their core ] plus treatment across all genotypes involved.

Slide 10 shows the on-treatment viral kinetics of individual patient data from the leading cohort. By week 4, on treatment, all 60 patients in the leading cohort had viral load near or below the lower limit of quantification. Therefore, these very rapid kinetics across all genotypes support an 8-week regimen and compared favorably to Mavyret, which is the only approved 8-week treatment for HCV.

Turning to Slide 11. The combination of bemnifosbuvir and ruzasvir was generally safe and well tolerated in the leading cohort. There were no drug-related serious adverse events, no discontinuations and adverse events were mostly mild.

Moving to Slide 12. To summarize our HCV efforts supported by positive leading cohort data, we initiated patient enrollment in January for the remainder of the Phase II trial. We expect to enroll up to a total of 280 patients at 50 clinical sites across 15 countries, including the U.S.

Looking ahead, we are very excited about upcoming data presentations at EASL , including the new Phase II efficacy data from the leading cohort. We expect to report complete Phase II SVR12 results in the second half of this year. Additionally, over the first half of 2024, we’re conducting Phase I studies in the U.S. for the selection of the best 6-dose combination tablet, which will be evaluated in the Phase III program and used for subsequent commercialization. We anticipate that the Phase III program will be initiated around the end of this year.

Slide 13 Next, I’ll turn the call over to Janet to provide an update on our COVID program.

Janet Hammond: Good afternoon, everyone. Slide 14. To reiterate Jean-Pierre’s earlier remarks, COVID-19 continues to be an established pathogen of concern with significant unmet need despite the availability of approved vaccines and antiviral treatment options.

New variants continue to quickly evolve and the most recent family of variants, nicknamed FLiRT after their mutations include KP2, which is now the dominant variant overtaking JN.1 in the United States. Our goal for COVID is to deliver a safe and effective treatment for the millions of patients for whom the current standard of care is not an optimal option.

bemnifosbuvir has a robust target profile, with a low risk for drug-drug interactions, favorable safety and tolerability and a distinct mechanism of action with a high barrier to resistance. In the therapeutic area with a $4 billion plus market opportunity and only 2 anti-viral products approved, we believe bemnifosbuvir’s compelling clinical profile and overall value proposition presents a strong opportunity for potential market expansion and uptake.

Moving to Slide 15. In the first quarter, we completed enrollment in SUNRISE-3, our global Phase III trial evaluating bemnifosbuvir for COVID-19 in high-risk patients. SUNRISE-3 is currently the only Phase III program exclusively in high-risk patients with hospitalization rather than symptom alleviation as the primary endpoint through Day 29.

The secondary endpoint measure patient outcomes through day 60 post treatment. I’m pleased to report that patient enrollment finished ahead of our guidance. This is a significant achievement and demonstrates our strong operational execution in preparation to be ready to capitalize on the JN.1 variant search. We enrolled 2,221 patients in the monotherapy cohort and only 74 patients in the combination cohort.

We were surprised to see such a high rate of enrollments in the monotherapy cohort. The care preference by investigators to enroll patients in the monotherapy cohort highlights the major unmet medical need for new oral COVID-19 treatment options for these high-risk patients. In particular, we experienced strong enrollments in the U.S. where sites were responsible for 77% of all the patients enrolled.

Turning to Slide 16. I will now review our SUNRISE-3 global Phase III trial. This trial enrolled high-risk outpatients with mild or moderate COVID-19, regardless of vaccination status. Symptom onset was 5 or less days before randomization. As a reminder, this Phase III trial was randomized, double-blind and placebo-controlled. The study drug either bemnifosbuvir 550 milligrams BID or placebo was administered concurrently with the low [ be ] available standard of care, including other compatible COVID-19 drugs at the discretion of the investigator.

The primary endpoint for the study is all-cause hospitalization or death through Day 29 in the supportive care monotherapy population. The secondary endpoints are COVID-19-related hospitalizations and death, medically attended visits and symptom relapse through Day 60 post treatment. With a fast track designation, recent supportive data presented at [ Esk Smith ] and stronger-than-expected enrollment trends, specifically seen in the monotherapy cohort. We are pleased with the execution and look forward to providing the results from our Phase III trial during the second half of 2024.

Slide 17. I’ll now hand the call to John to discuss the market opportunity for COVID-19.

John Vavricka: Thanks, Janet. Turning to Slide 18. The U.S. prescription demand for oral antivirals to treat COVID highly correlates with infection rates. We believe the market opportunity for oral antiviral therapeutics for COVID-19 will continue to remain a multibillion-dollar opportunity for the long run. This is supported by IQVIA’s retail prescription data, indicating between $4 billion and $5 billion of annual revenues between the only 2 approved oral anti-viral products.

A significant unmet need still exists with limitations due to drug-drug interactions intolerability with Paxlovid and safety concerns with Lagevrio. We believe in bemnifosbuvir and its potential to greatly improve the treatment landscape and bring meaningful value to patients and physicians.

I will now turn the call over to Andrea to discuss Atea’s financials.

Andrea Corcoran: Thank you, John. As Jonae mentioned in her introductory remarks, earlier today, we issued a press release containing our financial results for the first quarter of 2024. The statement of operations and balance sheet are found on Slides 20 and 21.

There was a marked increase in research and development expenses for the first quarter of 2024 compared to the corresponding period in 2023. This increase was primarily driven by higher external spend related to the completion of enrollment of our SUNRISE-3 clinical trial and advancement of our HCV Phase II clinical trial.

G&A expenses remained relatively consistent for the first quarter of 2024, compared to the first quarter of 2023. Interest income also remained relatively consistent for the first quarter of 2024 compared to the corresponding in 2023 due to investing in higher yield marketable securities and higher interest rates.

During 2024, we anticipate our quarter-over-quarter R&D spend to vary as we complete SUNRISE-3 and our HCV Phase II study, and then engage in activities to initiate the HCV Phase III program in the fourth quarter of this year. At the end of the first quarter of 2024, our cash, cash equivalent and marketable securities balance was $541.5 million. With patient enrollment completed ahead of schedule for SUNRISE-3 and our ongoing financial discipline, we now project our cash guidance runway into 2027.

I’ll now hand the call back to Jean-Pierre for closing remarks.

Jean-Pierre Sommadossi: Thank you, Andrea. In closing, we have made meaningful progress in the first quarter as the result of strong execution across both programs for COVID-19 and HCV. Our current momentum positions Atea for an exciting year ahead.

Indeed, we have multiple key milestones for both programs expected this year, which have the potential to drive significant shareholder value. For COVID-19, they include the top line results from SUNRISE-3 in the second half of 2024 and an NDA target submission expected around year-end. These milestones follow recent faster-than-expected enrollment of almost 2,300 patients in our global Phase III study exclusively in the high-risk patients as Janet reminded us.

As part of a multipronged approach against COVID-19, we continue to also make progress with our discovery program focused on the highly differentiated second-generation protease inhibitor, and we expect to provide an update for this program later this year.

For HCV, in the first quarter based on the positive 98% SVR4 results in the leading cohort of 60 patients, we are now completing enrollment for up to 220 additional patients in the ongoing Phase II study. As Arantxa mentioned, we are extremely excited to showcase preclinical and new Phase II efficacy results in support of our HCV program at EASL next June — next month.

Looking ahead, complete SVR12 results of all patients enrolled in the Phase II study are anticipated in the second half of 2024. And we are optimistic that these results will reflect the strong SVR4 efficacy data that we have reported. We are targeting Phase III program initiation around the end of this year.

I’m always impressed with the Atea team effort, considering that we are a company with less than 80 employees, successfully carrying out 2 global studies in diseases with a multibillion-dollar market opportunity with great efficiency and financial discipline, as Andreas has shared with us.

We believe that our product candidates are highly differentiated and have the opportunity if approved to fill significant unmet medical needs in the current treatment landscape with strong blockbuster potential.

With that, I will turn the call back over to the operator.

Operator: [Operator Instructions] Our first question comes from the line of Eric Joseph with JPMorgan.

Unknown Analyst: It’s Billy on for Eric. I know before you’ve mentioned about how the HCV trial, you’re being rolling [ cirrhotic ] patients. I was just wondering kind of on a percentage basis, how sizable this would be of the 220 patients?

Jean-Pierre Sommadossi: All right, Arantxa, so can you answer the question, please?

Maria Horga: Yes. Well, it depends on how many we enroll. We have targets in the protocol. And our target would be to enroll at least 10% — between 10% and 20%. And it’s a target, we will see.

Unknown Analyst: Okay. And then kind of looking a bit further ahead with the HV trial. What exactly — how would you describe the pathway for registration for this? And is this something you’d look potentially to do yourselves or look for a partner to progress?

Jean-Pierre Sommadossi: Okay. First, as you anticipate, we will have to have an end of Phase II meeting with the regulators. We anticipate that we will need 2 trials, 2 Phase III trials. We anticipate that one of the 2 very likely will be against a comparator, since we anticipate that this trial will be including HCV, HIV co-infected patients, very likely because of the drug-drug interactions with Mavyret. We anticipate that the regulators will agree with us that it will be a head-to-head against Epclusa.

But obviously, I cannot speak for the regulators. And we anticipate, as you have heard from Andrea, we have a very strong balance sheet. And for the Phase III clinical program, we have been in a strong position to execute ourself the Phase III program. And we have already operations in many countries in terms of regulatory approval for the Phase II, which is [ get set ] to move into the Phase III program, including the United States.

So we anticipate that we will do ourselves the Phase III program.

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

Maxwell Skor: I was wondering if you would provide any thoughts on Shionogi’s recent Phase III update, which they missed on the primary and their intention to meet with the FDA. Also, which secondary end points in the SUNRISE-3 trial, would you call out as particularly important given the competitive landscape?

Jean-Pierre Sommadossi: Thank you, Janet?

Janet Hammond: Thank you. So with regard to the Shionogi Phase III trial, I think our information is much the same as yours. I think to some extent, symptom endpoint has been a case which has not been successful for companies developing end trial drugs in this space. And so I think some of the things which are different from that trial than ours were really, I think, first and foremost, that they selected to go after this as a primary endpoint.

I think there were — it pains to point out that they did succeed on a subset of their symptoms. However, it’s obviously disappointing to see them failing on that key primary endpoint. We, as I mentioned, are focusing on hospitalization because we have strong proof of principle on that from our MORNINGSKY study. And our population is different from that in that we enrolled exclusively high-risk patients where hospitalization continues to be a problem.

However, I think that obviously, hospitalization hasn’t been as common as it was previously, which is also good. So I think in regard to secondary endpoints, we have endpoints which are comparable to what others have in terms of looking for reductions in viral loads in patients looking also for potential evidence of viral rebound.

This is something which has been described, I think, both in placebo and increased patients, and we have a commitment to look at that. Also looking for evidence of emergence of resistance and also looking for hospitalizations and Medicare tend visits all the way through Day 60. So I think those are the key endpoints that we’re interested in.

Operator: Our next question comes from the line of Umer Raffat with Evercore ISI.

Jonathan Miller: It’s Jon on for Umer. I would like to start with the expectations that you did to Phase IIIs internally. So does your current runway guidance to 27% include 2 Phase IIIs for HCV? And then secondly, obviously, you need to have that meeting with the FDA, but do you have a sense of what the time line for the registrational program could be if your assumptions of a trial [ in 2027 ] are all true, how long do you think those trials would take to run?

And then just lastly on the EASL data that will — coming up later this month. We’re going to include new data on the lead in cohort. Is that going to include long-term SVR, like SVR12 for that lead-in cohort or just fuller details of SVR4?

Jean-Pierre Sommadossi: Thank you, Jon. Just to address your second part of the question, we were presenting new Phase II efficacy data. As you know, the embargo for abstracts [ live ] from May 22, and we would be excited to present the data on June 5. We cannot say more than that, not to break the embargo on the EASL. Andrea, can you go over in terms of the finance for the budget in terms of what we include to go all the way to 2027. So then I will take over the regulatory part.

Andrea Corcoran: Yes, Jon. So in answer to your question, our guidance does anticipate that we will have 2 Phase III trials, and they will be completed during that window of time for — with our existing resources.

Jean-Pierre Sommadossi: And regarding time lines, let us complete the end of the Phase II and the agreement with the regulators, obviously, first in the U.S. and in Europe, but this here would be a global trial, so we have to deal with several regulators. So I think we will have a better view in 2025 and share what we see as time lines, Jon.

Jonathan Miller: Makes sense. Just one final one, I guess, on SUNRISE. You’re guiding to data in the second half. But fair to assume that since you’ve got full enrollment, and it’s a 1-month primary endpoint, that’s going to be on the early side in the second half rather than the later side?

Jean-Pierre Sommadossi: Janet?

Janet Hammond: I think as we mentioned, we’ve enrolled approximately 2,300 patients in the trial. So there’s a considerable amount of data that needs to be cleaned. And we said the second half of the year. And when we’re nearer to knowing exactly when that is, we’ll provide I think more specific guidance. So I think that’s the best I can do for now.

Jean-Pierre Sommadossi: And don’t forget, Jon, we need to go to 60 days also, not just 30 days. And obviously, there was a significant cleanup. But I said some numbers today, we are talking about just for symptom, I think 700,000 reports. So, just to put an example, it’s pretty major.

Operator: Our next question will come from the line of Tim Lugo with William Blair.

Tim Lugo: And I know you mentioned you didn’t want to break the EASL embargo. Can you discuss, though, the kind of what broadly the fixed dose combo in HCV looks like? I know bemnifosbuvir being dosed at 550 mg once a day and ruza is 180 once a day. Is the fixed dose roughly a combination of those? What does the pill burden look like? And also yes. And let’s just start there.

Jean-Pierre Sommadossi: Sure. Look, it will be a tablet. And we don’t want to have a huge tablet to 1.2, 1.3 gram. So we believe that 2 tablets will be the ideal formulation once a day, obviously. And again, we have several formulations. We have excellent data in dog under several conditions. We have completed already one fixed dose combination.

We anticipate to have 1 or 2 more. Actually, the next one will start in the next couple of weeks. So as you can see, we want to maximize. Our goal is to get very close to 100% drug exposure for both bem and ruzasvir without any food effect. Basically, that’s our goal, Tim.

Tim Lugo: Okay. That makes a lot of sense. And can we expect some data, maybe not on EASL, but in the decompensated cirrhotics? I know that, that seems could be a real unmet need?

Jean-Pierre Sommadossi: Well, you’re right, for decompensated cirrhotics. Arantxa, you want to address that question?

Maria Horga: So we are now enrolling [ decompensated ] cirrhotics in Phase II, but the plan for the compensated cirrhotics will be something that we’ll do later.

Jean-Pierre Sommadossi: Yes. Look, Tim, as you can appreciate, okay? And I think that right now, Mavyret is not indicated in decomp because of the presence of the PI, as you know. We will have — and you anticipate that, you know that, that unfortunately, there will be some [ dusk ] in the Phase III with decompensated patients.

So it’s clear that we want to complete the Phase III trial and then very likely, very shortly after, it will be head-to-head against Epclusa. That patient population cannot ethically have a placebo control study. So definitely something that we look forward to move rapidly because of the need of those patients.

Operator: [Operator Instructions] Next question comes from Roanna Ruiz with Leerink Partners.

Rosa Chen: This is Rosa on for Roanna Ruiz. A couple of questions on HCV. Do you have a sense for how large of a safety database you’ll need for registration? And thinking about the decompensated cirrhosis patients that was mentioned, can you give us a sense of the percentage of these patients as they make up like the total HCV population?

Jean-Pierre Sommadossi: Arantxa, you want to address the question, please?

Maria Horga: Yes. So regarding the safety database for a combination antiviral like this, usually, it’s around 1,000 patients at the recommended dose and length of treatment. So that’s roughly what the Phase III program will have to have plus what we already enrolled in Phase II.

And the second question was the percentage of decompensated. I cannot give you the exact percentage in the United States, but it’s really less and less, and it’s really quite few. There is some still in usually a strong Asian country. But in the United States, it represents a really small amount of patients with HCV right now.

Rosa Chen: Got it. And then thinking about current rates of hospitalization for COVID-19, are you guys still using the assumption of like maybe 2% to 3% currently?

Eric Joseph: Janet?

Janet Hammond: So what we’re thinking about it really in terms of achieving a statistically significant difference in hospitalizations. And we are powered for something around 50% of which is comparable to what others have seen. I think our assumptions on hospitalization are probably a little lower than that, but that is — I think hospitalizations will have decreased. And you’ll recall, we did actually expand our [ sites ] about a year ago, I suppose, to accommodate some of that.

Andrea Corcoran: Got it. And then the last one on your cash runway. Does your current assumption include partnering out your COVID program as the only option? Or would you consider — or does that build in launching your it yourself potentially for COVID?

Jean-Pierre Sommadossi: Andrea?

Andrea Corcoran: So it does anticipate that we will have a partner for COVID-19 but nonetheless, we do anticipate that there will be some initial commercialization activities in which we individually will engage.

Jean-Pierre Sommadossi: Including large-scale manufacturing, if I may add.

Operator: I’m currently showing no further questions at this time. I’d like to hand the conference back to Mr. Jean-Pierre Sommadossi for closing remarks.

Jean-Pierre Sommadossi: Again, thank you all for joining our first quarter 2024 earnings conference call, and thank you for your continued support. Thank you.

Operator: This concludes today’s conference call. Thank you for your participation. You may now disconnect. Everyone, have a wonderful day.