Atea Pharmaceuticals, Inc. (NASDAQ:AVIR) Q4 2023 Earnings Call Transcript February 28, 2024
Atea Pharmaceuticals, Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Good afternoon, everyone, and welcome to the Atea Pharmaceuticals Fourth 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: Good afternoon, everyone, and welcome to Atea Pharmaceuticals fourth quarter and full year 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’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 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.
Jean-Pierre Sommadossi: Thank you, Jonae. Good afternoon, everyone, and thank you for joining us. I will begin on Slide 3. Looking back at our substantial progress throughout 2023, I’m proud of the strong operational execution we achieved across our antiviral programs. The 2023 highlights from our COVID-19 program include the ability to leverage global surges to meaningfully advance our Phase 3 SUNRISE-3 study. This was made possible by the expansion of the global footprint and the broadening of the eligibility criteria for high-risk patients. So far in 2024, we continue to observe encouraging enrollment trends for SUNRISE-3. Reflecting the continuing unmet medical need, we were granted Fast Track designation by the FDA for the evaluation of bemnifosbuvir for COVID-19.
We have continued to demonstrate that bemnifosbuvir remain fully active against all variants tested in vitro, including the newest of variants related to the Omicron. The profile for bemnifosbuvir is supported by robust clinical data, including favorable efficacy and safety, with no drug-drug interaction. We believe that bemnifosbuvir has the potential to address the key limitations of curing COVID-19 oral therapies. For HCV, the 2023 highlights include achieving regulatory approvals of a short eight-week treatment for the global Phase 2 trial of the combination of bemnifosbuvir and ruzasvir for the treatment of HCV. The rapid enrollment of the leading cohort, which has led to exciting SVR results that we will review today. We demonstrated in vitro synergy of the combination of bemnifosbuvir and ruzasvir and the compelling potency profile against major HCV resistance mutations.
We are now evaluating several fixed-dose combination tablets in preparation for the Phase 3 program and subsequent commercialization. And we presented and published preclinical and clinical data in support of this program. We believe bemnifosbuvir in combination with ruzasvir can significantly improve upon the current standard of care by offering a differentiated short eight weeks protease inhibitor-free treatment, which has been well tolerated and has limited potential for drug-drug interactions. Moving to Slide 4. Atea vision is focused on the discovery and development of antiviral drugs for the treatment and cure of serious viral diseases where there is a significant unmet medical need and where we can make a huge difference. As you know, we believe that COVID is here to stay.
And the recent winter surge remind us that new dominant variants like JN.1 are thriving despite the latest vaccine booster and treatments. The SARS-CoV-2 virus is accumulating mutations with amino acid substitutions faster than any other endemic RNA virus, highlighting the desperate need for broader and more diversified arsenal of safe, well-tolerated and easy-to-prescribe oral antiviral therapeutics. Our team continues to efficiently execute our global Phase 3 trial, and I’m very pleased to announce today that we have achieved another significant clinical milestone and surpassed enrollment of 1,400 patients, triggering our second interim analysis in the supportive care monotherapy cohort. This is an important milestone, allowing for the data review by the independent DSMB for safety and futility.
For SUNRISE-3, we anticipate several upcoming events, including the first interim analysis in March, the second interim analysis in the second quarter of 2024 and topline results during the second half of 2024. Bemnifosbuvir has the potential to address many of the key limitations of current COVID-19 therapies, including safety, tolerability and drug-drug interactions. Our goal is to deliver best-in-class treatment to the millions of patients for whom the current standard of care is suboptimal or unsuitable. As part of a multipronged approach against COVID-19, we continue to also make progress with our discovery program focused on a highly differentiated second-generation protease inhibitor, and we expect to provide an update midyear. For our Phase 2 HCV program, as stated earlier, we shared new results.
We confirmed a 98% SVR4 post-treatment in the leading cohort of our Phase 2 combination eight-week study. Arantxa will review these results in more details. Our goal for this program is to substantially enhance the current set of care by offering a short eight-week protease inhibitor-free treatment that is well tolerated with low potential risk for drug-drug interaction for all HCV patients. Importantly, we are in a strong financial position to execute our strategy with $578.1 million of cash and cash equivalents as of December 31, with a runway anticipated to 2026. Andrea will provide a detailed update on Atea’s financial position during today’s call. I will now turn the call over to Arantxa for an update on our HCV program.
Arantxa Horga: Thank you, Jean-Pierre. Turning to Slide 6. Despite current treatment options, HCV continues to be a health crisis in the U.S. As Jean-Pierre noted earlier, there are approximately 2.4 million people infected with HCV in the U.S. despite availability of oral treatment. Recent trends indicate there are more new infections and reinfections than cures on a yearly basis. And these statistics highlight the need to improve the HCV treatment landscape. The combination of bemnifosbuvir and ruzasvir has the potential to substantially improve upon the current standard of care by offering a short eight-week protease inhibitor-free treatment with less side effects and a low risk for drug-drug interactions. Based on our market research with KOLs and high prescribers, these attributes are very critical for a new treatment, as you will see on the next slide.
Moving to Slide 7. While the introduction of direct-acting antivirals has transformed HCV treatment, significant unmet needs still exist. In recent quantitative market research conducted by Atea with over 150 U.S. physicians who are high prescribers of Epclusa or Mavyret, only 6% of these physicians reported that there are no unmet needs regarding HCV treatment. Key unmet needs emerging in this research were shorter length of treatment and higher efficacy, particularly in HIV co-infected patients as well as fewer contraindications, as detailed on the right hand of the slide. Please note that currently, approximately 17% of patients do not complete their treatment regimen, making convenient and shorter treatment durations of particular importance to prescribers.
Slide 8 outlines our Phase 2 open-label study of 550 milligrams of bemnifosbuvir in combination with 180 milligrams of ruzasvir once daily for eight weeks. We plan to enroll up to 280 DAA-naive patients across all genotypes. In the initial cohort, sustained virological response, or SVR, at week four was used as the decision criteria to reinitiate enrollment to complete the Phase 2 study. The primary endpoint of the study is SVR at week 12 and this will be reported for all patients at study completion. Slide 9 highlights the patient demographics and baseline characteristics in the leading cohort of the Phase 2 open-label study of bemnifosbuvir and ruzasvir. The patients were DAA-naive with a median age of 47-years-old. This cohort was comprised of non-cirrhotic patients only.
However, please note that 10 patients have cirrhosis stage of F3, a more advanced liver disease stage, which is borderline with cirrhosis. In the second part of the Phase 2 study compensated cirrhotic patients will also be enrolled. Moving to Slide 10, we are excited to share with you today that the final results from the Phase 2 combination study in the leading cohort confirm an SVR4 of 98% post treatment across all genotypes. In January, we reinitiated enrollment to complete this study in up to 280 patients with top line results anticipated in the second half of 2024. Slide 11 shows the on-treatment viral kinetics of individual patient data. By week four, all 60 patients in this cohort had viral load near or below the lower limit of quantification.
Therefore, this very rapid kinetics across all genotypes support an eight-week regimen and compared favorably to Mavyret, which is the only approved eight-week treatment for HCV. On Slide 12, the combination of bemnifosbuvir and ruzasvir were generally safe and well tolerated in this cohort of 60 patients. There were no drug-related serious adverse events, no discontinuation and adverse events were mostly mild. Turning to Slide 13, to summarize our progress in HCV, based on the positive leading cohort data, we reinitiated enrollment in January for the remainder of the Phase 2 trial. To help advance enrollment and achieve representative genotype distribution, we are increasing this study’s footprint to approximately 50 clinical sites in 15 countries.
In addition, over the first half of 2024, we are conducting Phase 1 studies in the U.S. for the selection of the fixed dose combination tablet, which will be evaluated in the Phase 3 program and used for subsequent commercialization. We anticipate that the Phase 3 program will be initiated around the end of this year. Slide 14. Next, we will provide an update on our COVID-19 program. I’ll turn the call over to Janet to discuss our SUNRISE-3 Phase 3 trial.
Janet Hammond: Thanks, Arantxa. Good afternoon, everyone. COVID-19 continues to be an established pathogen of concern according to the World Health Organization. And we believe that COVID-19 will remain an ongoing serious endemic issue. Our goal for COVID-19 is to deliver a safe and effective treatment to millions of patients for whom the current standard of care is not a suitable option. We believe that the compelling preclinical and clinical profile of bemnifosbuvir is differentiated with a low risk for drug-drug interactions, a favorable tolerability and a high barrier to resistance, and has the potential to become the treatment of choice for COVID-19 for millions of patients. Moving to Slide 16. Supported by our extensive global footprint, we are seeing robust enrollment into SUNRISE-3 and patient enrollment has correlated with the latest winter wave.
In particular, we’ve experienced strong enrollment in the U.S. where sites have been responsible for approximately 75% of the patients enrolled to date. The majority of patients globally continue to be enrolled in the monotherapy cohort despite the availability of other oral antivirals. We’re excited to share with you today that SUNRISE-3 surpassed enrollment of 1,400 patients in the monotherapy cohort, triggering the second interim analysis. The DSMB is expected to meet in March for the first interim analysis, and we expect the second interim analysis to occur during the second quarter. Just to remind you, the DSMB reviews are primarily geared towards safety and utility. So far this winter, as predicted by the U.S. CDC, respiratory diseases are showing similar high trends to last year.
The patients most vulnerable to severe COVID infection remain the elderly, the immunocompromised and those with underlying risk factors for severe infection, where oral therapeutics are critical importance to protect against hospitalization and complication. Turning to Slide 17, I’ll now go into detail on our SUNRISE-3 global Phase 3 trial. To start, our inclusion criteria focused on high-risk outpatients with mild or moderate COVID-19, regardless of vaccination status. Symptom onset is five or less days before randomization. The Phase 3 study is randomized, double-blind and placebo-controlled. The study drug either bemnifosbuvir 550 milligrams BID or placebo is administered concurrently with the locally available standard of care. There are two study populations depending on the type of standard of care received.
The supportive care monotherapy cohort comprises the primary analysis population. While the combination cohort is part of the secondary analysis, and includes patients treated with local standard of care, including other compatible COVID-19 antiviral drugs. The primary endpoint for the study is all-cause hospitalization or death through day 29 in the supportive care monotherapy population, which will be approximately 2,200 patients. The secondary endpoints are COVID-19-related hospitalizations and death, medically attended visits and symptom rehabs. Last year, we were granted Fast Track designation for bemnifosbuvir, reflecting the recognized unmet medical need that remains for COVID-19 patients. Overall, we’re seeing strong operational execution for SUNRISE-3 from our clinical team with robust enrollment trends.
I’m now going to hand the call over to John to discuss the marketing opportunity for bemnifosbuvir. John?
John Vavricka: Thank you, Janet. Turning to Slide 19, we know that the U.S. prescription demand for oral antivirals to treat COVID correlates with the infection rates. The demand for oral antivirals in 2023 was very robust with a total of approximately 7.7 million scripts written. Last month, the scripts were approximately 920,000 which reflects the latest winter surge. On the next slide, Slide 20, late last year, the market for COVID-19 oral antivirals began transitioning to traditional payer markets such as Medicare, Medicaid and private commercial insurance. Oral antivirals therapeutics for COVID-19 are expected to remain a multibillion-dollar opportunity for years to come. Projected annual COVID-19 oral antiviral U.S. demand using IQVIA retail prescriptions suggests an estimated annual global market opportunity of over $4 billion to $5 billion, with only two products that each have key limitations.
We believe there is still an unmet need with critical gaps, and there is the opportunity to expand this market to patients due to drug-drug interactions and tolerability with Paxlovid and safety issues with Lagevrio. I’ll now turn the call over to Andrea to discuss Atea’s financials.
Andrea Corcoran: Thank you, John. As Jonae mentioned, earlier this afternoon, we issued a press release containing our financial results for the fourth quarter and full year 2023. The statement of operations and balance sheet are on Slides 22 and 23. There was an increase in R&D expense for the fourth quarter and full year 2023 versus the corresponding period in 2022. The primary driver for the higher expense was the external spend related to our COVID-19 Phase 3 SUNRISE-3 clinical trials and our Phase 2 clinical trial of the combination of bemnifosbuvir and ruzasvir to the treatment of hepatitis C. General and administrative expenses remained relatively flat for the fourth quarter and full year versus the corresponding period in 2022.
Interest income increased for the fourth quarter and full year 2023 versus the corresponding period in 2022. This was the result of investing in higher-yield marketable securities and higher interest rates. At the end of the fourth quarter of 2023, our cash, cash equivalent and marketable securities balance, as Jean-Pierre mentioned, was $578.1 million. Based on our current plans, we are reiterating our cash guidance with a runway through 2026. I’ll now turn the call back over to Jean-Pierre for closing remarks.
Jean-Pierre Sommadossi: Thank you, Andrea. In closing, following a year of solid operational execution across our two clinical programs, our clinical momentum sets us up to a transformational milestone-rich 2024 for both our COVID-19 and HCV program. For COVID-19, we anticipate meaningful clinical milestones beginning in the first quarter of 2024 with the first interim analysis from our global Phase 3 trial, followed by a second interim analysis in the second quarter of 2024. Top line results are expected in the second half of 2024. For HCV, we anticipate completing enrollment of our Phase 2 study and reporting results during the second half of 2024. We have continued to target initiation of a Phase 3 around the end of the year, and we are extremely encouraged by the SVR4 and safety results in the leading cohort.
We are targeting multibillion-dollar markets, each of which are currently comprised of only two primary products. We believe that our product candidates are very differentiated and have the opportunity, if approved, to fill the gap in the current unmet medical needs and become blockbuster products. We are very excited about the opportunities ahead and are confident in our ability to develop and commercialize innovative products and create meaningful shareholder value. In particular, I’m very proud of the team hard work throughout the year. Atea is a company with less than 80 employees, which is conducting two global studies in disease with multibillion-dollar market opportunities with a high degree of efficiency as well as with significant financial discipline.
With that, I will turn the call back over to the operator.
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Q&A Session
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Operator: [Operator Instructions] And our first question will come from Eric Joseph of JPMorgan. Your line is open.
Eric Joseph: Thank you, and thanks for taking the questions. A couple from us. Just on the sizable accrual in patients for SUNRISE-3, do you have visibility in terms of I guess, how those are apportioned across the different study arms, monotherapy versus combo? I guess what visibility do you have in terms of percent to enrollment completion of the monotherapy primary analysis population? And, on the HCV side, just picking up on a comment you made, JP, about potentially being a non-protease-based inhibitor option. What’s the significance of that? Is there sort of a safety advantage that you’d highlight? Or is it more about just being an alternative mechanism compared to the other commercially available eight-week regimen? Thanks.
Jean-Pierre Sommadossi: Thank you, Eric. There is definitely an importance and a differentiation. But let’s start with the COVID-19 questions. Great question. Janet, do you want to give a little bit some granularity to Eric?
Janet Hammond: Sure. Thank you, Eric, for the question. So, in regard to how the patients are apportioned to the combination versus monotherapy, I mean, obviously, first of all, just to say that this is at the discretion of the investigator and prescribers who sees the patient, and they are encouraged to prescribe combination therapy if they believe that is appropriate for the patient, and actually educated quite extensively at our investigation meetings in that regard. And what I think is quite surprising is that the vast majority of patients are actually being assigned to the monotherapy arm. And I think reasons for this probably are really the potential — extensive potential for drug interactions associated with ritonavir in the Paxlovid combination treatment, which I think deters people from prescribing combination therapy to patients.
And then, in regards to your question around when we — if we have any visibility as to when we might complete accrual in the monotherapy arm, no, we don’t. But I can say that enrollment is proceeding well. But of course, we’re very dependent on the fluctuations in COVID cases as they occur. We’ve seen a very strong winter season, but frequently, I think, at least in the past, we’ve observed that that’s followed by some downward trend in the number of cases until we get towards the hotter summer months and people move indoors again. So, we’re somewhat dependent on that, and we’re going to have to see. Thank you.
Jean-Pierre Sommadossi: So, related to the HCV questions, I think with the survey from a third-party really exemplify the importance of a lack of protease inhibitor in the combination treatment especially when we are talking about 40% of HIV infected patients with HCV, where you’re going to have substantial drug-drug interaction if we have — if you have a protease inhibitor. So, it is an important differentiation. John, you want to maybe also expand on that and really — this is not just a gimmick here that we are talking, but really important from a commercial standpoint and then I will ask — I’ll answer from a patient standpoint. John, do you want to address that from a commercial standpoint?
John Vavricka: Sure. So, Eric, from a commercial standpoint, obviously, being protease free is really important to us for the low load drug in our DDI interaction potential. And also — there’s also other advantages such as having a no food effect and also to be able to treat with a shorter treatment duration, particularly important because, as Arantxa mentioned earlier in the presentation, what clinicians are finding is that the shorter time to treat is the better. And to highlight this about — Mavyret has obviously a protease inhibitor. And when you look at the [indiscernible] market shares, even despite being eight weeks versus 12, there’s almost a little bit more than a 10-point share difference in favor of Epclusa. And so that should maybe also tell us some things as well.
Jean-Pierre Sommadossi:
,:
Arantxa Horga: Yes. So, from a medical perspective, I think what we’re trying to develop here is really a best-in-class regimen that combines the best of Epclusa and the best of Mavyret in the sense that it’s an eight-week regimen and without the drug-drug interactions that are actually quite common that Mavyret and protease inhibitors have as a class. And these are common drugs. We’re talking about things like contraceptive, antiretroviral therapy, statins, proton-pump inhibitors, which almost everybody over 40 is on something like that. So, this is very important for the patients as the market research has indicated, but also when we talk to the KOLs on the field and when they were actually trying to redo our protocol and participate in our clinical trial, all of them were very excited that we could actually develop this best-in-class regimen, bringing the best of both — attributes of both regimens.
Jean-Pierre Sommadossi:
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Operator: And one moment for our next question. Our next question will be coming from Maxwell Skor of Morgan Stanley. Your line is open, Maxwell.
Maxwell Skor: Great. Thank you for taking my questions. Given your strong financial position, I was hoping you can elaborate a bit on your capital allocation strategy and how you’re preparing for a potential launch in COVID while advancing your global HCV program? Basically, how should we think about spend over the next several quarters? Thank you.
Jean-Pierre Sommadossi: Andrea, do you want to address the question? Maybe just I’d like to indicate that for the launch, we have actually supply, if we are fortunate to get an approval in the US. But we will not put substantial investment in manufacturing at risk prior to approval. So, we will provide additional information as we get closer to launch. So, with that, [I’ll turn it to] (ph) Andrea.
