Atea Pharmaceuticals, Inc. (NASDAQ:AVIR) Q2 2024 Earnings Call Transcript

Atea Pharmaceuticals, Inc. (NASDAQ:AVIR) Q2 2024 Earnings Call Transcript August 11, 2024

Operator: Good afternoon, everyone, and welcome to the Atea Pharmaceuticals Second 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 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 Pharmaceutical’s second 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 that we’ll 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; Dr. Arantxa Horga, Chief Medical Officer, Chief Development Officer, Dr. Janet Hammond; Chief 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 risk and uncertainties. These risk 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.

Jean-Pierre Sommadossi: Thank you, Jonae. Good afternoon, everyone, and thank you for joining us. The first half of 2024 was marked by strong operational execution and significant clinical progress. We completed patient enrollment in both the global Phase 3 SUNRISE-3 study of bemnifosbuvir for the treatment of COVID-19 and the global Phase 2 study evaluating the combination of bemnifosbuvir and ruzasvir in treatment-naive HCV infected patients. As you know, COVID is now endemic and, as new variants continue to evolve, they are likely to continue to cause the recurrent surges of cases. Following the winter surge of infections caused by the variant JN.1, we are now experiencing a summer wave across the US, Europe and global location largely driven by new KP and LB.1 variants.

There is a continued unmet need for suitable therapies leaving the most vulnerable people at risk for severe outcomes from infection such as the elderly, immunocompromised and those with underlying risk factors. We look forward to potentially delivering bemnifosbuvir to millions of patients and we expect to report results from SUNRISE-3 in the second half of 2024. Turning now to our Phase 2 for HCV. In June, at EASL, we showcased a potential best-in-class profile of bemnifosbuvir and ruzasvir and the promise of this combination to address the unmet needs of today HCV patients. The demographic of HCV patients has changed over time. Today, patients take multiple concomitant medication and those at the highest risk for HCV are also likely to be poorly adherent with their medications.

We believe that our combination with the low risk of drug-drug interactions, combined with a short treatment duration, has the potential to address these unmet needs. We look forward to reporting the full results of the ongoing Phase 2 study during the fourth quarter of this year. We are currently preparing for the initiation of the Phase 3 program. I am pleased to report today that we have selected a fixed dose combination tablet that achieves comparable drug exposure to individually administered bemnifosbuvir and ruzasvir. This new tablet allows us to decrease the daily pill burden from four tablets to two, which is more convenient obviously for the patient. This new tablet will be used in the Phase 3 program as well as for subsequent commitments.

We are also This new tablet will be used in the phase three program as well as for subsequent commercialization and I will answer will review the data in detail for you. Lastly, with $502 million of cash, cash equivalent and marketable securities at June 30th, we are in a strong financial position to execute our strategy and we anticipate our runway will extend in 2027. With that, I will now turn the call over to Arantxa for an update on our global Phase 2 HCV program.

Arantxa Horga : Thank you, Jean-Pierre. Let’s now review our HCV program and recent highlights. Turning to slide 5, HCV continues to be a recognized healthcare crisis in the US with between 2 million to 4 million people living with HCV and new challenges continue to hinder progress toward eliminating it globally. With the incidence of new infections annually outpacing the rate of those being treated with direct acting antivirals, it is clear that there are still unmet medical needs. Moving to slide 6, the US HCV treatment demand grew roughly 5% in 2023 based on the number of patients treated. The share of the two key treatment options, Epclusa and Mavyret, remains stable. Given the current limitations and prescription trends, we believe a best-in-class profile together with anticipated future government initiatives and improved patient access will increase the number of patients treated.

We believe that the profile of bemnifosbuvir and ruzasvir has the potential to drive the future standard of care. Moving to slide 7, the profile of the patient has changed since the introduction of direct acting antivirals. Today, most US infected patients are younger in age and infections are highest among the age group between 30 to 39 years old. They are recently infected and less than 10% are cirrhotic. A high proportion of the current patients take multiple concomitant medications including HIV medications, antipsychotics, statins, proton pump inhibitors, and in addition, populations at the highest risk for HCV are frequently poorly adherent to their medication due to substance abuse disorders, including opioid use or other drugs and mental health disorders.

For this patient profile, a direct acting antiviral with low risk of drug-drug interactions combined with short treatment duration and no food effect would address these unmet needs and treat more patients successfully. Slide 8 reviews our potential best-in-class regimen which combines the most compelling attributes of current HCV drug treatments. It is protease inhibitor free with a short eight-week treatment duration. Our combination also has a low risk of drug-drug interactions and there is no food effect. Slide 9 reviews the data for the selected fixed dose combination tablet of bemnifosbuvir and ruzasvir that we will be using in our Phase 3 program and for subsequent commercialization. This new tablet allows us to decrease the daily pill count from four tablets to two which is more convenient for the patient.

As you can see from the two graphs, the fixed dose combination drug exposure is comparable to individually administered bemnifosbuvir and ruzasvir. In addition, there is no food effect. In slide 10, we outlined our Phase 2 single-arm open label study of 550 milligrams of bemnifosbuvir in combination with 180 milligrams of ruzasvir once daily for eight weeks. I will discuss the results shortly. In this Phase 2 trial, which is currently ongoing, we involve 275 treatment-naive patients including the leading cohort of 60 patients. The primary endpoint of the study is SVR at week 12 post treatment and safety. Moving to slide 11, as a reminder, the leading cohort of 60 patients were comprised of non-cirrhotic patients only. However, 10 patients had an advanced stage of fibrosis F3 which is borderline with cirrhosis.

This slide shows the untreated viral kinetics of individual patient data from the leading cohort. As you can see, there was a rapid reduction of viral load in all patients within the first week, regardless of baseline viremia and genotypes. By week four on treatment, all 60 patients in the leading cohort had a viral load near or below the lower limit of quantification, and the virus was undetectable. Therefore, these very rapid kinetics across all genotypes support an eight-week regimen and compare favorably to Mavyret, which is the only approved eight-week treatment for HCV. Turning to slide 12, in June, we presented data at EASL from the leading cohort of 60 patients. We are pleased with the results, which showed a high SVR-12 rate of 97% with a short eight-week duration treatment.

Importantly, the only two patients with post-treatment relapse or failure demonstrate the challenge of drug adherence in this patient population, which I’m going to review in further detail. On slide 13, results from the leading cohort also show a SVR-12 rate of 100% in all 13 patients infected with genotype 3, a historically difficult-to-treat genotype of HCV. Data also showed a 98% SVR-12 rate in 43 out of 44 patients with genotype 1. Turning to slide 14, as mentioned earlier, two subjects that were genotype 1b and genotype 2b experienced post-treatment relapse in the leading cohort. This slide shows the viral kinetics, plasma drug levels, and resistance sequencing data of the genotype 1b patient. The viral relapse or failure was due to treatment non-adherence and not due to viral resistance, as indicated by the lack of new mutations.

This was demonstrated by low plasma and inadequate drug levels at week 6 and week 8, and similar viral mutations at baseline and 12 weeks post-treatment. And on slide 15, we see the viral kinetics, plasma drug levels, and resistance sequencing data of the genotype 2b patient. Once again, low plasma and inadequate drug levels at week 6 and week 8, combined with similar viral mutations at baseline and 12 weeks post-treatment. The lack of new mutations indicate that the observed relapse or failure was due to treatment non-adherence rather than viral failure due to resistance. These data further outline the challenge of drug adherence in the current patient population and reinforce the need for short treatment duration and convenience therapy. On slide 16, we see yet another example showing that poor drug adherence in this population remains a challenge.

However, in these two patients that were poorly adherent, the high potency of our combination still led to a positive outcome of achieving SVR-12 or cure. On the next slide, slide 17, 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. Turning to slide 18, to summarize our HCV efforts, in June, we completed enrollment of 275 patients. The study is ongoing, and we expect to report complete SVR-12 results in the fourth quarter of this year. We have selected the fixed dose combination tablet, which will be used in the Phase 3 program and for subsequent commercialization. We are on track with activities to initiate the Phase 3 program around the end of this year, and pending discussions with regulatory agencies, we expect to conduct two studies with at least one having an active comparator.

We are excited about the significant progress and the positive results we have achieved for the HCV program, and look forward to providing more updates throughout the rest of this year. And with that, I will now turn the call over to Janet to discuss our COVID-19 and the global Phase 3 SUNRISE-3 trials.

Janet Hammond: Thanks, Arantxa. Good afternoon, everyone. Turning to slide 20, COVID-19 continues to evolve, and as Jean-Pierre mentioned earlier, we’re now experiencing a summer wave across the US, Europe, and other global locations, which is largely being driven by the new KP and LB.1 variants. Viral wastewater modeling suggests the current US COVID wave currently is around 900,000 new daily infections. High risk populations, such as the elderly, those who are immunocompromised, and those with underlying risk factors, are more likely to become severely ill with COVID-19. There’s a continuing unmet medical need, and our goal for COVID-19 is to deliver a safe and effective treatment that addresses the key limitations of current available therapies.

Slide 21, 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 treatment resistance. We’ve completed several studies evaluating bemnifosbuvir for COVID-19. In the MORNINGSKY trial in outpatients, the risk of hospitalization was 71% lower for bemnifosbuvir versus placebo and 82% in patients over the age of 40 years. In addition, in a Phase 2 study in hospitalized patients, there were no deaths in patients administered bemnifosbuvir in comparison with three deaths in the placebo group. Moving to slide 22, the global Phase 3 SUNRISE-3 trial in hospital enrolled only high-risk outpatients with mild or moderate COVID-19, regardless of their vaccination status.

Symptom onset was five or less days before randomization. This Phase 3 study was randomized, double-blinded and placebo controlled. The study drug, either bemnifosbuvir 550 mg twice a day or placebo, was administered concurrently with the locally available standard of care, including other compatible COVID-19 antiviral drugs at the discretion of the investigator. The primary endpoint of the study is all-cause hospitalization or death through day 29 in the supportive care monotherapy population. Turning to slide 23, in summary, we enrolled 2,221 patients in the monotherapy cohort and only 74 patients in the combination cohort. The high rate of enrollment in the monotherapy cohort shows a clear preference by investigators for a new therapy and highlights the major unmet medical need for new oral COVID-19 treatment options for these high-risk patients.

We look forward to providing the results from our Phase 3 trial during the second half of 2024. I’ll now turn the call over to John to discuss the COVID-19 market opportunity.

John Vavricka : Thanks, Janet. Moving to slide 24, the US prescription demand for oral antivirals to treat COVID-19 highly correlates with the infection rate. Of note, there was an increase of 32% in COVID-19 oral antiviral prescriptions for June 2024 versus June 2023, correlating with the early summer wave related to the KP and LB.1 variants. We are confident the market opportunity for oral antiviral therapeutics for COVID-19 will continue to remain a multi-billion 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 two currently available oral antiviral products. Between feedback from patients and physicians and the available data, it’s clear there is a significant unmet need for an antiviral treatment option that addresses the limitations related to drug-drug interactions and tolerability with Paxlovid and safety concerns with Lagevrio.

We believe in bemnifosbuvir and its potential to meaningfully improve the COVID-19 treatment paradigm and bring tremendous value to patients and physicians. I’ll 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 second quarter of 2024. The statement of operations and balance sheet can be found on slides 26 and 27. As you’ll note, in the second quarter of 2024, there was a marked increase in research and development expenses compared to the prior-year period. This increase was related to the advancement and subsequent completion of patient involvement for both our Phase 3 SUNRISE-3 COVID-19 clinical trial and our Phase 2 HCV trial. For general and administrative expenses, there was a decrease in the quarter compared to the corresponding period in 2023. This decrease was attributable to incurring lower professional fees in the second quarter of 2024.

Interest income in the second quarter of 2024 decreased compared to the second quarter of 2023 due to lower investment balances. During the remainder of 2024, we expect our R&D spend to vary as our SUNRISE-3 and our HCV studies complete and further activities to initiate the HCV program in the fourth quarter of the year. As Jean-Pierre mentioned, at the end of the second quarter of 2024, our cash, cash equivalent and marketable securities balance was $502.2 million. Maintaining our strong financial discipline, strategically focused investment, we project our cash guidance runway into 2027. I’ll now hand the call back to Jean-Pierre for closing remarks.

Jean-Pierre Sommadossi : So in closing on slide 29, I’m very pleased with the significant clinical progress we have made this year across both programs. The multiple key milestones for both programs expected throughout the remainder of 2024 have the potential to drive significant shareholder value and positions Atea for an exciting rest of the year. For our COVID-19 program, we expect to report top line results from SUNRISE-3 in the second half of 2024 and we are targeting the NDA submission around the year end. Additionally, we continue to also make progress with our early-stage discovery program focused on the highly differentiated second generation protease inhibitors and we will provide an update later this year. For HCV, the data presented at EASL demonstrate a potential best-in-class profile that combines, as Arantxa mentioned, the most compelling attributes of current HCV drug treatment through the innovative combination of bemnifosbuvir and ruzasvir.

And we look forward to reporting the full results in 275 patients for our Phase 2 study during the fourth quarter of this year. As a relatively small organization, I’d like to remind, with fewer than 80 employees, I’m extremely pleased with the effort and the achievement of the team, with successful execution on two global studies in multi-million dollar market opportunities and still being very financially responsible. We believe that our product candidates are highly differentiated and have the opportunity, if approved, to address significant unmet medical needs in the current treatment landscape and both have strong blockbuster potential. With that, I will now turn the call back over to the operator.

Q&A Session

Operator: [Operator Instructions]. And our first question comes from the line of Maxwell Skor with Morgan Stanley.

Maxwell Skor: Can you just walk me through the payer dynamic for Hep C? What percent of chronic Hep C patients are on Medicaid? And are these patients prescribed generic Epclusa in general?

John Vavricka: For Hep C, the government supported programs with Medicaid and Medicare, as you would expect, comprise the larger majority from the payer perspective and then followed up by commercial lives. Your question as regards to – from Epclusa, whether it’s the brand or authorized copy, both of those, both the authorized copy and the brand, are still selling products and pretty much are dictated by the dynamics of the various payers. Some have their financial incentives driven off of the wholesale acquisition cost. Others look at just direct net discounts. But both of them do exist depending on the models that the individual payers have.

Jean-Pierre Sommadossi: Just to add, Max, to John, we are talking about authorized copy, not generics. Actually, we all know – or maybe I can share, that the IP so far that is public, both for Mavyret and Epclusa, will go at least until 2036. So we don’t anticipate the entry of so-called generics before 2036 for both approved drugs.

Operator: Our next question comes from the line of Jon Miller with Evercore.

Jonathan Miller: I recently noticed that Pfizer has a next-gen Paxlovid in development with no metallic taste, no ritonavir, higher potency at target, so a lot of the same things that we’ve been talking about bemnifosbuvir in the COVID space. I assume you’ve seen their paper, do you still expect to have a competitive edge versus that sort of a program? And what are your plans to commercialize in the space versus a major player like Pfizer?

Jean-Pierre Sommadossi: Janet, do you want to address the first part? And then John will do the commercial?

Janet Hammond: It is an interesting one. Obviously, they’ve got a long way to go. And we look forward to seeing how the program progresses. Certainly, we believe that having more than one mechanism of action available for patients is going to be important. I think particularly with the substantial uptake that there already is with Paxlovid, I know that it could be a lot higher when you look at the number of cases, but as John mentioned with the commercial uptake that we see, there is significant use of Paxlovid. [Technical Difficulty] use of protease inhibitors. There’s a potential for the generation of resistance and this is much less likely with a nucleoside analog. So, we believe that there’s certainly scope for both in the market case, and I think were there to be more agents, it would be of benefit to everybody. But we’re confident of the profile that we’ve seen with our drug and we look forward to seeing more about that.

John Vavricka: From a commercial perspective, although we don’t comment on partnering discussions, for the US, for our COVID-19 programs, we plan to co-promote with a pharmaceutical company and the criteria for them would have primary care and managed care capabilities and, of course, a commercial infrastructure. So from a competitive standpoint, we would feel very confident from a future partner standpoint.

Operator: And I’m showing no further questions at this time. I would now like to turn the call back to Jean-Pierre for closing remarks.

Jean-Pierre Sommadossi: Thank you all for joining our second quarter of 2024 earnings conference call and thank you as well for your continued support.

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