Atea Pharmaceuticals, Inc. (NASDAQ:AVIR) Q2 2023 Earnings Call Transcript

Atea Pharmaceuticals, Inc. (NASDAQ:AVIR) Q2 2023 Earnings Call Transcript August 8, 2023

Atea Pharmaceuticals, Inc. misses on earnings expectations. Reported EPS is $-0.34 EPS, expectations were $0.47.

Operator: Good afternoon, ladies and gentlemen. Welcome to the Atea Pharmaceuticals Second Quarter 2023 Financial Results and Business Update Conference Call. At this time, all participants are in a listen-only mode. Following the formal remarks, we will open the call up for your questions. I would now like to turn the call over to Jonae Barnes, Senior Vice President of Investor Relations and Corporate Communications at Atea Pharmaceuticals. Ms. Barnes, please proceed.

Jonae Barnes: Thank you, operator. Good afternoon, everyone, and welcome to Atea Pharmaceuticals second quarter 2023 financial results and business update conference call. Earlier today, we issued a press release, which outlines the topics we plan to discuss. You can access the press release as well as the slides that we will be reviewing today by going to the Investors section of our website at ir.ateapharma.com. With me from Atea are our Chief Executive Officer and Founder, Dr. Jean-Pierre Sommadossi; Chief Development Officer, Dr. Janet Hammond; Dr. Arantxa Horga, Chief Medical Officer; 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, as outlined on Slide 2, I would like to remind you that today’s discussion will contain forward-looking statements that involve risks and uncertainties. These risks and uncertainties are outlined in today’s press release and in the Company’s recent filings with the Securities and Exchange Commission, which we encourage you to read. Our actual results may differ materially from what is discussed on today’s call. With that, I will now turn the call over to Jean-Pierre.

Jean-Pierre Sommadossi: Thank you, Jonae. Good afternoon, everyone, and thank you for joining us. I will begin on Slide 3. During the first half of the year, we have made considerable progress across our COVID-19 and HCV program. COVID-19 program fast track designation for the development of bemnifosbuvir was granted by the FDA in the second quarter and reflect the continuing unmet medical need that remains for COVID-19 patients. Data to date, including multiple data presentation during the first half of the year, support the favorable efficacy, safety, and lack of drug interaction profile of bemnifosbuvir. We believe that bemnifosbuvir has the potential to address the key limitations of current COVID-19 therapies with the protocol amendment modification that Janet will review today for our Phase 3 SUNRISE-3 trial, we have adapted our protocol to reflect the current status of the pandemic while still remaining on track with our upcoming near-term milestones, which include an interim analysis around the end of the year and top line results from the study anticipated mid-2024.

We continue to target an NDA submission by year-end 2024. As part of a multi-pronged approach against COVID-19, we are advancing a discovery program focused on the second generation protease inhibitor that is highly differentiated and has a clinical profile quite unique and well suited for combination with bemnifosbuvir. We are continuing to make progress with this program and we expect to provide an update around the end of the year. For our HCV program, I’m pleased to report that in June we began dosing patients in our Phase 2 study evaluating the combination of bemnifosbuvir and ruzasvir. This was a significant milestone for Atea and we continue to expect initial results from the leading cohort of approximately 60 patients around the end of the year.

Data presented earlier this year at the International Conference on Antiviral Research support the profile of our HCV combination with in vitro data consistent with a highly competitive profile compared to the current standard of care. Importantly, we are well capitalized and in the strong position to execute on our mission with more than $600 million of cash and cash equivalent. And Andrea will go over the details with you. I will now turn the call over to Janet for an update on our COVID-19 program.

Janet Hammond: Good afternoon, everyone. The World Health Organization’s current classification of COVID-19 is that it is an established pathogen of concern and we believe that COVID-19 will remain an ongoing serious endemic issue. COVID-19 mutates faster than influenza so it’s changing more quickly and therefore better able to evade existing immunity from prior infections. This also causes concerns about the boost of keeping pace with the mutating virus. Today, a recently identified COVID-19 variant Eris or EG.5.1 was reported to be the dominant circulating strain in the U.S. Interestingly, it has key mutations that have been linked to the use of monoclonal antibodies, further highlighting how prone the virus is to continued mutation with the ability to evade even newly generated monoclonal antibodies.

This underscores the important role for direct acting oral antivirals in the treatment of COVID-19. Importantly to note, bemnifosbuvir has a high barrier to resistance due to its unique mechanism of action with the same potency against all variants tested, and we’re confident that this will be consistently maintained as new variants continue to emerge. COVID-19 rates continue to fluctuate globally. Japan has been experiencing its ninth wave and in the last couple of weeks, both the U.S. and Europe are seeing an uptick in infections driven by the heat wave, which are sending people indoors to air conditioned spaces by COVID-19 transmits more easily. Turning to Slide 5, heading into the four, we are facing a situation of waning immunity to both natural infection and the current vaccines, which is further exacerbated by a low booster uptake and the potential for mismatch between circulating strains and available boosters.

Furthermore, in some immunocompromised patients, there is a failure to mount any immune response to the vaccines. The availability and use of oral antivirals is therefore going to be essential, particularly for the elderly immunocompromised and those with underlying risk factors for severe infection. Unfortunately, there is still an unmet need with the currently approved antivirals due to safety concerns and drug-drug interactions with commonly prescribed medications, which limit their use. We believe that the compelling profile of bemnifosbuvir is differentiated because of its low risk of drug-drug interactions and the absence of mutagenicity and embryo-fetal toxicity in preclinical study. Our goal for COVID-19 is to deliver a safe and effective treatment to the millions of patients for whom the current standard of care is not a suitable option.

Moving to Slide 6, taking into account the current COVID-19 environment for SUNRISE-3, we are adapting the eligibility criteria for the high risk patient population and we are also increasing the sample size to recognize the current lower rates of hospitalization and death. The modifications to our study are designed to increase the probability of success in bringing the promising medicine to the patients who need it the most. We have expanded the global footprint of SUNRISE-3, and we are now targeting approximately 330 clinical trial sites in 30 countries. With COVID waves appearing sporadically and somewhat unpredictably across the world, our goal is to position ourselves best, be ready to capture these waves as they arrive in different geographies and at different times.

The protocol amendment has been reviewed by the FDA and we have started to implement these modifications. Importantly, this amendment should not change the timing guidance of the program, and we continue to anticipate top line results mid-2024 and we are targeting a new drug application submission by year end 2024. Slide 7 shows a bit more detail on the latest protocol amendment modifications. On the broadened patient population, we have made a number of modifications to the high risk eligibility criteria. High risk patients are now classified as being at least 70 years old, which is down from the prior 80 being at least 55 years old with a risk factor down from 65 with a risk factor, being at least 50 years old with two or more risk factors, a new criteria and being at least 18 years old and immunocompromised, which is unchanged.

Additionally, we’ve expanded the study to include patients with decreased renal function. We have addressed the lower rates of hospitalization and death by increasing the sample size to approximately 2,200 patients in the supportive care monotherapy arm, and it’s a statistically powered to detect a clinically meaningful reduction in hospitalization or death versus placebo, assuming hospitalization rates of 2% to 3% in this patient population. Lastly, there will now be two interim analysis for the DSMB to review in the supportive care monotherapy arm at approximately 650 and 1,350 patients with initial top line data anticipation mid next year. These notes with the DSMB review, we do not expect to report efficacy results, as these analyses are primarily geared towards safety and futility.

Turning to Slide 8, we are seeing strong operational execution for SUNRISE-3 from our clinical team, and we now have regulatory approvals in approximately two-thirds of the targeted country. Patient enrollment continues and we believe we are well positioned to enroll patients as new variants and waves of COVID-19 infection continue to emerge. In summary, SUNRISE-3 is focusing on the high risk patients and its primary endpoint is all cause hospitalization or death through Day 29in approximately 2,200 patients in the supportive care monotherapy arm. I’ll now hand the call to Arantxa to review our HCV program. Arantxa?

Arantxa Horga: Thank you, Janet. Moving Slide 10, let’s now discuss our hepatitis C program, a combination of bemnifosbuvir and ruzasvir. We believe that this combination has the potential to improve upon the current standard of care by offering a protease inhibitor free shorter duration option for hepatitis C patients with and without cirrhosis. In June, we achieved a major milestone for this program when the first patient was dosed in our Phase 2 trial. There still remains an unmet need for hepatitis C patients. According to the World Health Organization, 58 million people globally have chronic hepatitis C infection and they are approximately 1.5 million new infections that occurred per year. Annually, we lose nearly 300,000 people to hepatitis C related liver diseases and more people continue to be infected and cured despite the availability of the AA treatment options.

The CDC estimates that around 2 million people in the U.S. are infected with hepatitis C and new infections are almost four times as high as they were nearly a decade ago. In addition, the reinfection rate can be in the range of 20% in people who inject drugs. We believe that there is a substantial opportunity to improve upon the current standard of care. As detailed on Slide 11, the combination of bemnifosbuvir and ruzasvir is very potent. It has the potential to be a best-in-class regimen based on its pan-genotypic antiviral potency, low risk for drug-drug interactions, absence of food effect, and the potential for a short treatment duration. We’re targeting eight weeks of therapy and we may explore short-term duration subsequently. This profile, along with the totality of the preclinical data, gives us confidence in the potential for this combination to become the new standard of care.

Recent data presented on our last earnings call, which can be found on our website show that in vitro bemnifosbuvir is at least 10 times more potent than sofosbuvir against all genotype 1A and genotype 3A, NS5A resistance associated variants or RAV. Ruzasvir is a potent NS5A inhibitor. In a replicon assay, ruzasvir has demonstrated a more favorable in vitro profile as compared to bemnifosbuvir and similar antiviral activity to remdesivir, which is the most potent NS5A inhibitor currently. In fact, in the same transient replicon assay, ruzasvir severe was shown to be five to tenfold more potent bemnifosbuvir against all rats. Again, this data can be found on our website. Slide 12 outlines our Phase 2 open-label study of bemnifosbuvir and ruzasvir in hepatitis C patients.

This study is expected to enroll approximately 280 hepatitis C infected antiviral naïve patients across all genotypes, including a leading cohort of approximately 60 patients. Patients will be administered by 150 milligrams of bemnifosbuvir in combination with 180 milligrams of ruzasvir once daily for eight weeks. The primary endpoint of this study are safety and sustained biological response or SVR at week 12 post-treatment. Other biological endpoints include biological failure, SVR at week 24 post-treatment and resistance. Those in patients in this clinical trial is ongoing with initial data from the leading cohort of approximately 60 patients anticipated around the end of this year. And with that, I will now turn the call over to our CFO, Andrea Corcoran to summarize Atea’s financial performance.

Q&A Session

Andrea Corcoran: Thank you, Arantxa. As Janet mentioned in her introductory remarks, earlier today, we issued a press release containing our financial results for the second quarter of 2023. The statement of operations and balance sheet are on Slides 14 and 15. For the second quarter 2023, each of R&D and G&A expenses remain relatively consistent with the second quarter of 2022. As we further our clinical development of both our COVID-19 and HCV clinical programs in 2023, we do anticipate that R&D expenses will increase in a measured way as these programs advance. We are exercising focus financial discipline to manage spend as we invest in these programs. At the end of the second quarter of 2023, our cash, cash equivalents and marketable securities balance was $608.1 million. Based on these current plans, we are reiterating our cash guidance with a runway well into 2026. I’ll now turn the call back over to Jean-Pierre for closing remarks.

Jean-Pierre Sommadossi: Thank you, Andrea. In conclusion, we have already made considerable clinical and operational progress across our COVID-19 and HCV program so far this year. We have also published and presented significant scientific and clinical evidence in support of the potential of our clinical programs among an audience of leading virologists, ID specialists, several scientific conferences this year. With a number of interim analysis and data readout coming over the next year, we will continue to highlight the potential for our programs and execute on our mission to improve the treatment landscape for severe viral diseases. As always, we thank you for your continued interest and support of Atea, and as together we strive to address the unmet medical needs of patients with serious viral interactions. With that operator, we will now open the call up to your questions.

Operator: Thank you. [Operator Instructions] And it comes from Maxwell Skor with Morgan Stanley. Please proceed.

Maxwell Skor: Hi, team. Thank you very much for taking my question. Could you expand a bit on the expected COVID-19 infection rate driving your interim analysis guidance? Specifically, how is enrollment going so far and does your guidance expect a wave in the fall? Thank you very much.

Jean-Pierre Sommadossi: Janet, you want to address that question please?

Janet Hammond: Enrollment I think is in line with the current rate of infections at the moment, we’re very pleased with the progress that we’re making in executing on our geographical footprint. So we are well positioned to take advantage of surges as they occur, and we do expect that there will likely be a surge as we move into the winter month. The infection rate is going to be what it’s going to be. It’s really the hospitalization rate, which is a most paramount importance to us, because that’s the primary endpoint obviously for the trial. I hope that answers your question. Thank you.

Maxwell Skor: Yes, thank you.

Operator: Thank you. [Operator Instructions] All right. It comes from the line of Umer Raffat or Yoon Choi with Evercore.

Jessica Hui: Hi, this is Jessica on for Umer and Yoon. Just two questions for me. So first question is by lowering the age for the SUNRISE trial, does that mean incorporating younger – slightly younger patients means healthier patients, and like how would that affect the placebo arm performance? And then secondly, previous – the previously communicated interim analysis in second half of the year, presumably would’ve given us efficacy data. And now you’re saying the interim analysis is moved to year-end/1Q 24 and no efficacy data will be provided. So are we only getting efficacy data for the first time in mid-2024 now? Thank you.

Jean-Pierre Sommadossi: Okay. Before Janet will further address the question, we always gave a guidance for the end of the year, and we always indicated that it was not leading to an efficacy data analysis by the DSMB. We always indicated a guidance that it was either a safety of utility and as long as the DSMB indicated that we continued the trial, it was a positive step. So we have not changed any guidance related to releaser data or regarding DSMB outcome. Janet, can you address the rest, please?

Janet Hammond: Thank you. Yes. So in regards to lowering age, I don’t think that in this instance, younger is healthier. What we have been experiencing is that we’ve actually had to exclude patients on the basis of the fact that they were too young, but actually we were well qualified patients and potentially we’re going to end up in hospital if untreated. And so what we think is that we have actually probably enhanced our ability to enroll the study effectively by allowing in younger patients, the younger patients as I highlighted with risk factors and depending on the age, the number of risk factors is also contingent on that. So people 50 as and above with too risk factors for progression and people 55 and above with at least one risk factor for progression.

And I think when you look back on the data presented by others at advisory committees and so forth, I think you’ll see that this is actually a good patient population at for particular risk for hospitalization. And of course, it’s placebo controlled as you mentioned, and so it’ll affect both arms equally, but we’re pretty confident that this ought not to force us to enroll more patients for less hospitalizations that actually allow us to do the study and allow patients in who should actually be eligible for enrollment.

Jean-Pierre Sommadossi: And just to reemphasize and you can check our first quarter earnings release and also our annual shoulder meeting and the interim analysis was expected Q4 2023. So Q4 is part of end of the year. So we were basically a little bit more detail here, but we have not changed any of our guidance.

Operator: Does that answer the question?

Jessica Hui: Yes. Sorry, I was on mute. Thank you very much.

Operator: You’re welcome. [Operator Instructions] Okay, it comes from the line of Tim Lugo with William Blair.

Unidentified Analyst: Hi team. This is John on for Tim. Thanks so much for taking our questions. Maybe just two from us. So first for the HCV program, can you remind us of what data you’re planning to release for the leading cohort this year? What should we be looking for in those data and are you planning on making any adjustments to the protocol following those results? And secondly, can you remind us of the current HCV resistance associated variance landscape and how important is the pan-genotypic activity of your combo versus the short duration or other aspects of the profile?

Jean-Pierre Sommadossi: Sure. Arantxa, you like to address the first question, please, and then I will take the second one.

Arantxa Horga: Yes. So regarding the leading cohort we’re looking at safety, tolerability and efficacy as well. And that we are expecting to have that ready by around the year end.

Jean-Pierre Sommadossi: So we’re going to resistance, actually, we’re working very hard to try to find a emergency resistance after 16, 18 passages with bemnifosbuvir and still have a very difficult time to find anything that key mutation signature for bemnifosbuvir on HCV that’s further demonstrating a high bio resistant of this drug against HCV and I should say in the same way with other RNA viruses. But with that said and this is in our website, you see that as compared to sofosbuvir that is losing some GT3 potency with some rat [ph] our drug basically does not dodge. So the EC90 remain exactly the same around 20 nanomole, EC50 around 2 nanomole, which is 10 to 50 times more potent than sofosbuvir regardless of [indiscernible] and including the 282 mutation, which is the key signature for sofosbuvir.

We – I think by the end of the year, we will have probably a very defined molecular mechanism. It’s a Merck prong as we have shown with against Coronavirus. We have some very interesting data that are confirmed now that that bemnifosbuvir is targeting several key molecular sites and not just chain termination like sofosbuvir, but also other molecular sites that are critical for HCV replication will probably share we definitely would share with the suite by the end of the year. And we are very pleased with ruzasvir when we compare the feature against grazoprevir. And we know that progress grazoprevir, it’s an excellent NS5A, but it is combined with a protease inhibitor, and we all know the issues of protease inhibitors in terms of drug-drug interaction through the fact resistance and all.

So that’s why we feel very strongly that we have a potential best-in-class regimen. And as Arantxa has indicated, we feel very confident that the eight weeks will be very effective. And then after depending on the whole kinetics, actually, I think that I mentioned in previous call that Alan Paulson [ph] with the really the leading expert on vowel kinetics is going to work with us and to determine if we can go even to shorter duration than eight weeks, which will be obviously very transformational for an HCV combo.

Unidentified Analyst: Thanks so much.

Jean-Pierre Sommadossi: You’re welcome.

Operator: Thank you. [Operator Instructions] And it comes from Roanna Ruiz with Leerink Partners. Please proceed.

Nik Gasic: Hi everybody, good afternoon. This is Nik Gasic on for Roanna Ruiz. Thanks for taking our questions. Maybe first on your COVID-19 program, I guess given the evolving landscape, what’s the new bar for efficacy in the upcoming Phase 3 trial, and what sort of reduction in hospitalizations and deaths would you consider clinically meaningful? And then I have a quick follow-up on the enrollment criteria.

Jean-Pierre Sommadossi: Janet, you want to take the question, please?

Janet Hammond: So yes, I think I mean, it’s an interesting question. I think it needs to be clinically meaningful, and I think it’s obviously also determined to some extent by the variance of the circulating variant. And I think that has changed over time. I think just to remind you the treatment response rate or protection against hospitalization with Paxlovid during the Omicron variant time was between 58% and 78%. And we anticipate our efficacy to be competitive with what they have been able to show.

Nik Gasic: Very helpful. Also notice that you mentioned, that you’re allowing enrollment of patients with decreased renal function. Now, I’m curious what degree of renal impairment are you allowing and do you anticipate needing to modify the dose of bemnifosbuvir in these patients?

Jean-Pierre Sommadossi: Janet?

Janet Hammond: So we’re in the process of working through our renal study, which is part of the normal NDA package, and we have now enrolled patients and established the pharmacokinetics on patients with creatinine clearance is down to 30. And so patients who have those types of levels of renal dysfunction are eligible now to be enrolled in our trial. And looking at other nucleoside analogs that have been used for the treatment of COVID, we don’t think that we’re going to need to modify the dose. But we’re in the process still of understanding that as we work our way through patients with further levels of renal decompensation.

Nik Gasic: Got it. Thanks, Janet. One more if I may. Thinking about your longer-term plans for bemnifosbuvir, what’s your outlook on possible partnerships in COVID-19 both in the U.S. or maybe outside of the U.S.?

Jean-Pierre Sommadossi: John, you want to take it? And I will add a little twist after, but go ahead John.

John Vavricka: Sure. So I think for we still remain consistent and what we have been projecting, and that is for ex-U.S. markets we’ll be looking for partnerships and for the U.S. market, we will likely be looking to co-promote with an appropriate partner and those activities continue. JP?

Jean-Pierre Sommadossi: Yes. Basically look as you know, it’s so far the COVID market is 90% in the U.S. We are – we have a strong balance sheet. And really the rational why we go well into 2026 and not further than that, it’s because we already account for a robust launch ourself if needed. So we are obviously, as Andrea indicated, very careful about our balance sheet and how we are going to spend with our programs. But in the same time, we have the muscle especially in the U.S. obviously as John indicated, not outside the U.S. but especially in the U.S., we’re still is 90% with $8 billion. We have the muscle to go out with a very robust launch. And that’s why basically you see our runway to only three years and not longer than that with $600 million.

Nik Gasic: Helpful. Thank you.

Operator: Thank you. And I don’t see any questions in the queue. I will turn the call back to Jean-Pierre Sommadossi for his final comments.

Jean-Pierre Sommadossi: Thank you again for joining us today, and I appreciate obviously your support. Thank you.

Operator: Thank you, ladies and gentlemen. With that, we conclude today’s program. You may now disconnect.