Virios Therapeutics, Inc. (NASDAQ:VIRI) Q1 2024 Earnings Call Transcript

Virios Therapeutics, Inc. (NASDAQ:VIRI) Q1 2024 Earnings Call Transcript May 11, 2024

Virios Therapeutics, 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 morning, and welcome to the Virios Therapeutics Incorporated First Quarter 2024 Earnings Call. At this time, all participants have been placed on a listen-only mode. Please be advised that today’s call is being recorded at the company’s request. At this time, I’d like to turn the call over to Angela Walsh, Senior Vice President of Finance and Treasurer for Virios Therapeutics. Please proceed, Angela.

Angela Walsh: Good morning, everyone, and thank you for joining us on today’s conference call. We are pleased to be with you today to discuss Virios Therapeutics’ first quarter financial results, and to provide a corporate update. Please note that our financial results press release is now available on our website. Before we begin, I’d like to remind everyone that statements made during this conference call will include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which involve risks and uncertainties that can cause actual results to differ materially from the information expressed or implied by these forward-looking statements. For more information regarding such risks and uncertainties, please see the risk factors outlined in the company’s filings with the SEC.

Any forward-looking statements are made only as of today, and we disclaim any obligation to update these forward-looking statements other than as required by law. Please see the forward-looking statements section in our financial results press release issued this morning for more information. Now it is my pleasure to turn the call over to our CEO, Greg Duncan.

Greg Duncan: Thank you very much, Angela. The team and I are excited to convey a few key progress highlights from the first three months of this year as the first part of today’s update. First, let’s start with the ongoing investigator-initiated Bateman Horne Center Long-COVID Phase 2 study. Clearly, this ongoing study is important to Virios Therapeutics shareholders. However, we can’t forget it’s also important to the millions of patients who are suffering from the symptoms of Long-COVID illness. It seems each week new research highlights the growing burden of Long-COVID illness. Recently published scientific literature demonstrate a growing belief that reactivation of previously dormant herpesviruses, the target of our therapies, notably an Epstein-Barr virus and Herpes simplex 1 may be triggering Long-COVID illness in at least a portion of those suffering from Long-COVID sequelae.

The Center For Disease Control or CDC, as you may know it, estimates that approximately 7% of the U.S. population representing approximately 23 million U.S. citizens have suffered from Long-COVID symptoms at some point, since the beginning of the pandemic. The CDC further estimates that 3.4% of U.S. adults are presently right now suffering from active Long-COVID sequelae, representing 11.2 million potential patient targets. That’s patient targets here just in the U.S. Unfortunately, there are no FDA approved Long-COVID treatments. We believe valacyclovir and celecoxib or IMC-2 as we call it has the potential to be a market leading option to address this major need for millions of patients worldwide. The ongoing BHC-202 study is a 3-arm study comparing two dose levels of the valacyclovir/celecoxib combination versus placebo over 12 weeks to treat their symptoms of Long-COVID illness.

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Q&A Session

I’m pleased to report that patient enrollment is going well and has surpassed the 50% enrollment level. Encouragingly and consistent with prior research, a planned preliminary safety analysis of the BAC-202 study data indicates that the combination of valacyclovir and celecoxib has been very well tolerated to date with no serious adverse events reported and only a few transient or temporary treatment emergent adverse events being reported throughout the study. This Phase 2 trial follows on from the previous proof-of-concept study results we’ve reported last year featuring the combination of valacyclovir and celecoxib as a potential new treatment for Long-COVID. In this study, as you may recall, IMC-2 demonstrated clinical and statistical improvement in Long-COVID patients’ fatigue, orthostatic intolerance, anxiety, and pain, as well as an improvement in overall health as compared with age, gender, duration of illness and previously vaccinated matched-control patients.

These results are particularly important for several reasons, most notably given the current dearth of treatments available to address patients’ Long-COVID symptoms. Furthermore, we believe these data validate our approach to addressing the reactivation of secondary herpesviruses rather than targeting the SARS-CoV-2 virus itself as a unique approach to treating Long-COVID patient symptoms. This approach and these data may explain why treatments like Paxlovid that specifically target the SARS-CoV-2 virus have failed to date to exhibit benefits in treating Long-COVID symptoms. We also now know that the risk of developing Long-COVID increases with each acute infection and that COVID vaccines do not prevent patients from progressing from Long-COVID illness.

In short, there’s a major need to advance new therapies like IMC-2 in the hopes of addressing this emerging health problem. Top-line results from this landmark study are expected in the second half of 2024 and in our view represent a significant value inflection opportunity for Virios shareholders on the near term horizon. On a related Long-COVID program note, Virios’ global patent for IMC-2 covering combination antiviral treatment of both Long-COVID as well as Alzheimer’s disease was recently published. This enables the company to streamline the process for obtaining patent protection globally. If ultimately granted, this will provide us with intellectual property protection for use of IMC-2 in both treating Long-COVID and Alzheimer’s disease until approximately 2044.

Moving beyond the IMC-2 Long-COVID program, I also wanted to share that discussions are ongoing as we seek a partner to advance our second development candidate IMC-1, a fixed dosage combination of famciclovir and celecoxib into Phase 3 development for the treatment of fibromyalgia. In particular, we are evaluating opportunities with partners who are focused on developing and commercializing non-opioid pain treatments. And finally, the company continues to actively explore complementary opportunities that can build shareholder value through strategic partnerships, collaborations, or other forms of transactions. In particular, we are assessing both pain and anti-infective development candidates as potential complements to our focus with IMC-1 and IMC-2.

Now I will turn it back over to Angela to discuss our quarter one financial update.

Angela Walsh: Thank you, Greg. With respect to our income statement, as a development stage biotechnology company, we do not generate revenue during the three months ended March 31, 2024 or during the year ago quarter. We reported research and development expenses of $0.3 million for the first quarter of 2024 as compared to $0.5 million for the first quarter of 2023. The $0.2 million decrease was due to decreases in expenses for toxicology studies of $0.1 million and regulatory consulting cost of $0.1 million. In addition, we reported general and administrative expenses of $1 million for the first quarter of 2024 as compared to $1.1 million for the first quarter of 2023. The $0.1 million decrease quarter-over-quarter was due to a decrease in insurance expenses associated with being a public company.

Finally, we reported a net loss of $1.3 million for the first quarter of 2024 as compared to a net loss of $1.5 million for the year ago quarter. The lower net loss was primarily due to the decreases in research and development and operating costs that I just discussed. As of March 31, 2024, we had $2.4 million in cash as compared to $3.3 million as of December 31, 2023. We expect our current capital to fund operations into the fourth quarter of 2024. At this time, I will turn the call back over to Greg, who will moderate the Q&A session of the call. Greg?

Greg Duncan: Thank you, Angela. Holly, we are now ready for questions.

Operator: Thank you. Ladies and gentlemen, the floor is now open for questions. [Operator Instructions]. Thank you. We have a question on the line from David Bautz with Zacks Small-Cap Research. Your line is live.

David Bautz: Hey, good morning, everyone, and thanks for taking the questions this morning. Greg, I’ll start with, for the 202 study, what — can you remind us again what kind of data are we, should we be expecting when those results are released? And do you expect them to be released, basically through a press release? Or is this going to be at a scientific meeting?

Greg Duncan: Hi, David. Greg here. And thank you for the question. So the design of a Phase 2 study, the BHC-202 study is quite similar to the prior trial and that is by design. And it is consistent with the discussions we’ve had with the FDA regarding what would be required to advance a drug, potentially the first drug to treat Long-COVID sequelae or symptoms as we speak to them. The primary endpoint in that study is fatigue. It is to the best of our knowledge, the first time FDA has agreed with using fatigue as a primary endpoint and we’re excited about that for two reasons. Number one, this combination, famciclovir and valacyclovir when used with celecoxib either as IMC-1 or IMC-2 as we call it, has consistently shown in both fibro clinical research and in Long-COVID clinical research significant reduction in fatigue.

Three point change is considered clinically meaningful. We’ve seen between a three and a seven point change across all of those three studies. And as a consequence, we believe frankly that this may be the symptom that best responds to treatment with this particular combination. So the primary endpoint for this 12-week study is fatigue. The secondary endpoints include orthostatic intolerance. You may know this as orthostatic hypotension when people get dizzy, when they get up quickly or when they move. Unfortunately, that happens for patients in this particular category with this illness all day long. And this is arguably as debilitating as the fatigue itself. So fatigue, orthostatic intolerance, pain will be assessed, we’ll also look at pain, anxiety and overall global health.

So those outcomes, as I referenced in my earlier remarks are the ones we were so excited to see improved in the first BHC, the 201 study. And that led us to progress to this double blind placebo controlled trial. And we are very hopeful and encouraged by past performance and are looking to read out those results in the second half of this year. It is pretty material, so I think we’ll probably announce those results directly, at least top line from Virios Therapeutics. And certainly, we’ll be looking and are exploring what might be the best scientific venue, Dave, to announce those results to make sure that the entire scientific community, not just the investment community is aware of those results.

David Bautz: Okay. Great. And so assuming positive results, what do you envision as the next step for that program? Do you think you’ll be doing a Phase 2b? Do you think you can go to a Phase 3? Maybe you can talk about, kind of how you foresee things moving there?

Greg Duncan: Yes, I think with positive results and remember, the goal of this trial is to help design not necessarily the endpoints per se, those will be consistent. We’ve agreed that with FDA. We want to progress with the same endpoints as the destination for assessing patient care. What this trial will do is it will allow us to assess the effect size. So how many patients will we need to see a particular effect on fatigue, orthostatic, intolerance, et cetera. So the inputs from this study will dictate the design for the next study, which we believe will likely be a Phase 2b study. I’m not sure we could go directly to a Phase 3, but ultimately, now that we’ve scoped out the parameters that are required to get a drug approved, we would certainly design the study even as a Phase 2b in a way that’s consistent with Phase 3 and decide what else might be required beyond that study, which we would hope to begin executing towards the beginning of next year that will be the rough time.

David Bautz: Okay. And, so it sounds like you’re holding off on the fibromyalgia program until you get a partner there. Do you think you could move the Long-COVID program on your own or would you also want to partner that program?

Greg Duncan: Certainly, we will choose the path that is most value enriching for shareholders and expeditious to get to the endpoints. So we feel comfortable we can execute the IMC 201 COVID program independently, but there are companies we know that have an interest in the space, I think, David, the fatigue people had for COVID vaccines is now waning. And I think as I referenced again in my earlier remarks, the scientific community is seeing, it seems to me on a weekly basis, new research highlighting the role of reactivation of secondary viruses. And so I think this disease, which is really frankly pretty well known on Main Street is now coming back into focus for the scientific community on Wall Street. And so our hope is that there’s great interest in this in general, and we certainly wouldn’t rule out potential partnership. It’s the right economics, the efficient way to deliver value for Virios shareholders emerge following report out of those results.

David Bautz: Okay, great. Thanks for taking the questions this morning.

Greg Duncan: Of course, of course.

Operator: Thank you. [Operator Instructions]. Okay. As we have no further questions at this time, I will hand it back to Mr. Duncan for any closing comments you may have.

Greg Duncan: Thank you very much, Ali. And thank you for the team for participating, and thank you to those of you who dialed in or clicked in on the webcast. In short, just to summarize that BHC-202 study, the 3-arm study is enrolling well. We’ve passed the 50% enrollment level, and we’re very excited about top-line results for the second half of this year, both for Virios shareholders, but also because as we articulated, there are literally millions of people who are suffering today here in the U.S. And probably tens, if not 100s of millions worldwide if that epidemiology data in other countries is the same in the U.S., patients really need something to treat this particular disease. That preliminary safety analysis of the data indicates that the combination of valacyclovir and celecoxib has been very well tolerated and that’s very consistent with what we’ve observed through the clinical development of both of our assets.

We published our global patent earlier this year, and I’m pleased to tell you that discussions are ongoing as we seek a partner with advanced IMC-1 into Phase 3 development for the treatment of fibromyalgia. And I should mention, as I mentioned earlier, just to close-up, we continue to explore other complementary opportunities to build shareholder value. In particular, we’re looking at other potential pain opportunities and/or anti-infectives with a focus on antivirals to complement IMC-1 and IMC-2. We appreciate your time and attention this morning, and we’ll report out the progress on all of those matters in a very timely manner. Thank you, and have a great day.

Operator: Thank you. This concludes today’s conference call. You may disconnect your lines at this time and we thank you for your participation.