Altimmune, Inc. (ALT) Earnings Call Transcript & Summary

[Audio Gap] The company's efforts in developing pemvidutide, which is kind of a cool product, and it's really, I think, one that you should be paying attention to, there's been a tremendous resurgence of interest in the obesity space with the success of Wegovy, which looks like it's already reached $1.6 billion if you kind of use the run rate on past quarter sales. So pretty impressive just 3 quarters into the launch, and this has really rejuvenated a lot of investor interest in the area. And I think if you're paying attention to that, you ought to know Altimmune. And so that's why we're hosting these guys today for our Hump Day Lunch.

So Vipin and Scott, maybe you can just start by telling us a little bit more about pemvidutide. How did you come to get this product? What's the structure? Why have you designed it in this way? And what's the target profile based on the structure?

Absolutely. I can get started and then Scott can jump in to tell you more about the structure. First of all, thank you for your invitation. We are excited to be talking to folks, letting them know about the company and updating them. So pemvidutide back in -- at the end of 2018, we made a decision to expand our product portfolio, and we have internal expertise in peptide chemistry. We had another peptide-based product that we are developing for hepatitis B. So we had a liver disease expertise as well as expertise in peptides. So it made sense to look for a product out there that was a peptide, but also had implications in liver diseases. And we were very fortunate to actually find pemvidutide. It was formerly known as ALT-801. We acquired a small company in California that had developed this really a virtual company. And we were surprised that such a product was available because when we looked at the preclinical data package, it was really, really compelling in terms of the efficacy of this molecule. It's a unique drug. It's a dual receptor agonist for GLP-1 and glucagon, and it has equal balance for both of these receptors. There have been other attempts at GLP-1 glucagon to a receptor agonist by others. But in most cases, those molecules were more biased towards GLP-1. This is really the first molecule that's perfectly balanced for both of these activities. And we think that is very important. As you know, we've completed our Phase I trial. We have excellent data on weight loss, perhaps the best-in-class data in just in 12 weeks as well as a very compelling liver fat reduction data that we have shown. Scott, maybe you want to talk more about the molecule itself?

Sure, Vipin. Well, thanks, Liisa, for having us on the call today. So as Vipin mentioned, it's a 29 amino acid peptide. It has agonisms for both GLP-1 and glucagon that are balanced. It's 1:1 and that's why...

Why is that important? Can you just express why that 1:1 balance is important?

Right. So based on studies they came out of Merck about 10 years ago, the optimal balance of both weight loss pharmacodynamic effects as well as glucose control, were achieved with that 1:1 balance. Recognizing that GLP-1 drives down glucose that's used as an anti-hyperglycemic whereas glucagon traditionally raises glucose. Although it stimulates insulin secretion with the traditional teaching is that glucagon raises blood sugar in response to low blood sugar. However, when you have the balance, you maintain blood sugar and we showed that in our Phase I studies. And actually, in preclinical models, we actually control blood sugar as well as semaglutide did. And we're looking at that carefully right now as we move into a wider population such as diabetics, but right now, it looks like we're having really good glucose control. And in fact, we're having a drop in insulin resistance. And what that means is that over the course of time with weight loss, we're going to have drops in hemoglobin A1c because of the drop of insulin resistance. Another important part of the molecule is the EuPort side chain, which slows the entry of the compound in the bloodstream as well as extends its half life to enable weekly dosing. But regarding slowing the entry of the bloodstream, we think that plus the takeaway from the reliance on GLP-1 to induce the weight loss because we have glucagon component. We think that plus the glucagon component is accountable for its better tolerability, and that's why we are confident about going into the clinic without dose titration. The last thing I'll add, Liisa, is that it's clear that GLP-1 monotherapy has had an enormous impact on obesity and weight reduction. But the effect appears to plateau at 15% at 1 year. And in fact, it doesn't get any better after the first year based on the studies that have been done by Novo all the way out to 2 years. So companies have been looking for the additional activity or agonists or compound to add to the GLP-1 monotherapy. And we think that glucagon is the perfect addition because GLP-1 drives down appetite, whereas glucagon increases energy expenditure back to the original paradigm of diet and exercise.

Great. So tell us a little bit more about your target product profile. Do you have a certain amount of weight loss you think you need to achieve to be competitive. What about the kind of the convenience factor with -- I know you're trying to kind of avoid dose titration and tolerability. Those are kind of 3, I think, key themes. Do you have any specific target product profiles with those.

So regarding the weight loss, as you know, we were at 10% -- actually greater than 10% weight loss in 12 weeks. And based on the trajectory of the curves, which we've had on slides on our website, we think we can achieve much more going forward. The key thing will be to beat semaglutide, at least in the nondiabetic population. We think we could also do that in the diabetic population. And to beat it at 48 weeks, and that's what we're keeping our eyes on. And we think the fact that we've already had more than 10% weight loss in 12 weeks, we really think we can beat that at 48 weeks and achieve an upwards of 20%, maybe even top that. Some have speculated, we could do that even earlier 24 weeks or beyond that. But I think that based on the potency of glucagon here, which appears to have the greatest effect in weight loss in our compound a greater effect than the GLP-1 component. I think we can achieve that. As you've highlighted, the absence of dose titration is extremely important. For one thing, we have a more rapid rate of weight loss than semaglutide. That's important to patients who want to see rapid effects. That increases their satisfaction, their ability to be partners in the weight loss and actually assume activities, they are going to increase their weight loss over the duration of dosing. But more than that primary care physicians do not have the time to maintain dose titration and to enforce it. And as obesity treatment moves from specialty care to primary care that's going to be extremely important. As we said previously, we think we have a better tolerability profile being that we're one of the few compounds of any they're actually proceeding without dose titration, and we think that speaks to the glucagon component and EuPort side chain.

Is there more data coming from this Phase I study to kind of really explore that sort of longer-term weight loss effect. The Phase I study was in New Zealand, correct?

Well, it was in Australia. Well, the data -- the study is over -- went to 12 weeks. That was as long as we could dose based on our toxicology at the time. As everyone is aware from our press release, as we've now completed chronic tox, and we have unlimited duration of dose going forward, which is why we've instituted 1-year studies. But yes, that Phase I study was done with only a limited amount of toxin, we can't really dose more in that study.

Just to get back to that study. So it was a single center in Australia, and I just want to kind of talk a little bit more about how to interpret the data based on the fact that these patients were a little bit lighter, little bit younger, kind of a little bit more homogeneous than a typical kind of U.S. population -- obese population. Can you maybe kind of expand upon like how to think about and also they were nondiabetic. I wanted to point that out, too. So how do we think about extrapolating kind of this nice 12-week weight loss of 10% to really a broader population?

Right. Well, as you know, Liisa, the subjects in the study had a BMI averaging about 30 and then most of the obesity studies or even the NASH studies, the average BMI comes in about 34, 35. That actually works to our favor because the higher the BMI, the greater the percentage weight loss. So if anything, we disadvantaged ourselves by studying lighter patients and could predict greater weights of -- and greater amounts of weight loss going forward. The population also had an average age of about 30. And that would compare to an average age of about 45 in most of the other studies that I just mentioned. But many studies have shown that age doesn't really affect weight loss. And in fact, you get better weight loss with greater age. So once again, we may have actually worked against ourselves going forward to that population. Regarding the diabetics or the absence of diabetics in the trial, you're correct. Traditionally, diabetics have lost less weight than nondiabetics in these clinical trials. But we have an entirely different mechanism of drug. We're not a GLP-1 monotherapy, we're actually a monotherapy with GLP-1 that combines with glucagon. And it is quite possible that, that new additional mechanism of action would have greater importance to diabetics and perhaps allow diabetics to lose more weight. Now that's just a hypothesis, that's not proven yet. We'll look for the data, but it is an interesting speculation. We can actually achieve better weight loss in diabetics than with GLP monotherapy alone.

As you kind of go into your next series of studies and you will have patients with higher BMI, we can talk about that in a second. And you've got fixed dosing. How do we think about -- why don't you have done a lesser concentration might we expect a different kind of profile on that regard because you'll have like less mgs per kg on board. Can you maybe explain how you think about that aspect?

Yes. The pharmacokinetic model that we've done and also some data that we posted previously and the relationship BMI to weight loss did not show that effect. In other words, even in heavier patient, the rate of weight loss was maintained or even greater. So that's not a concern to us going forward.

And I think you also talked about the compartments, right, like plasma and liver kind of relatively the same.

Right. And I don't want to get nerdy with details about compartmental modeling, but I would say that based on our very detailed pharmacokinetic analysis, we're not anticipating any loss of effect in heavier patients.

One thing that you've really been telling about this molecule is tolerability. And so I've done a lot of work. We've done a lot -- my team and I have done a lot of work really trying to evaluate how does the data look so far on GI tolerability, mainly nausea, vomiting, diarrhea and of course, ultimately culminating and discontinuations as a result of those things. And it seems like there's still kind of a relatively high rate of some of these events yet there doesn't seem to be any discontinuations thus far. I think pemvidutide look the same at kind of an early stage, which was good. Can you maybe talk about sort of how we should be thinking about interpreting this early GI data? And what gives you confidence that you're really going to be differentiated on GI tolerability?

Sure, Liisa. So nausea and vomiting and these other GI symptoms are all patient-reported outcomes. And on the gastroenterologist, we spent the greater part of 20 years doing gastrointestinal research in drug development and reporting on these symptoms and their patient reported, meaning they're highly variable and dependent on who the patient is, how the question is asked in the context in which the study is done. In that regard, Phase I studies always have more patient reported outcome related adverse events like GI tolerability than later stage such as Phase II and Phase III. We actually saw then the tirzepatide data where the adverse event profile in Phase I was pretty bleak, got somewhat better in Phase II and got much better in Phase III. So the paradigm has been, as you move from Phase I going forward, to later Phase studies, the rates of adverse events and the severity of the adverse events drop simply because of the method of reporting and the nature of the study. The important thing to emphasize as well, Liisa, is that an actual number of adverse events or an incidence percentage doesn't tell you anything about the duration of the adverse event and the impact on the patient. For example, there's no difference in an adverse event table between a subject reports 1 hour of nausea 1 day that they otherwise would have forgotten about, but we're asked -- we're not -- have been a nausea that asked last for a week and requires the patient to break daily activities or take medications. And the highly variable across clinical trials. so the only thing we have to compare across trials of these numbers. It doesn't really say very much. The one thing that unifies the reporting across the trials is the discontinuation rate. It's a firm statement by the patient that the benefit of the trial does not exceed or it's not commensurate with the problems with staying in the trial, meaning the adverse events. And that process has actually been advocated by key people such as Juan Pablo Frias, who's involved in the tirzepatide program, Dan Drucker who is probably the father of GLP-1 therapy, but the only thing you can really rely on here were adverse event discontinuations. And we've stressed in our program that we had 0% adverse event discontinuations in our Phase I trial, and that's much less than other programs that have reported an upwards of 25% adverse event discontinuations. And we did that without dose titrating. So we're extremely pleased with the adverse event profile right now.

I did notice pemvidutide also had a similar kind of 0 dropouts at its early stage, it looks like. But then that obviously changes as you get to longer-duration study. Okay. So we're looking forward to more data from your program. I know you've got some NAFLD data. I had some questions that came in on this, so I'm just going to ask them. One was, why did you put the NAFLD time line? And actually, why are you developing NAFLD? It seems like obesities maybe got an easier or less expensive path, less risky certainly too. Maybe you can comment on those 2 things.

Yes. So right now, we still feel there's value in developing in NASH. We agree that obesity is an easier indication to work in. The trials are shorter, the enrollment is faster and the endpoint is more secure without an invasive biopsy. So we do feel that obesity is our lead indication, and we're moving that much more swiftly going forward and more likely file if we were to go to an NDA stage, file that well in advance of the NASH NDA. But there's still separate value as advised to us in pursuing NASH. And the example of that is the fact that despite Novo and Lilly having advanced of obesity programs that are either approved or about to be approved, they're still entering late-stage trials in NASH. So I think that's an acknowledgment that it is important to develop NASH. And I apologize, I had some noise during the first part of your question, and I'm not sure I captured that.

It was just -- the question was about pushing back that time lines for this upcoming NAFLD 12-week...

Yes. Before you answer that, Scott, let me just jump in here and just talk about NASH versus obesity. Because it's really important to understand that, to be very clear, obesity is our a lead horse at this point. We're moving forward with Phase II with obesity. But the data that we saw from our Phase I studies in the liver fat reduction was so compelling. Nobody has shown that kind of data. So this sort of puts this molecule in a class by itself. So it's really important for us to substantiate that in a separate study, and that's what we're doing right now during the NAFLD study. Based on that data, we'll decide how compelling that data is to move forward with NASH. Right now, we're preparing a Phase II NASH study. But based on the data, if the data continues to be as good as we have seen so far then it would make sense to pursue NASH because we could be the lead compound in that space as well. .

And Liisa, regarding the first question, we're operating in a COVID environment. Lots of things have slowed down. In particular, our ability to get MRI scheduled in order to deliver that assessment there was a bottleneck because of long waits in imaging centers and then to analyze the MRIs, we have to rely on that staff. And there's just been delay across the industry in many trials. And I think we saw that in their trials. The delay we feel is not substantial. We'll have the data in the third quarter.

Yes. In fact, we've done extremely well, given the circumstances to really push the trial and get the enrollment at 90% where we are today, and we should be closing it very soon. So really, it's not going to matter whether it's a few weeks delayed the data. It's really what the data shows, the quality of the data, and that's what we're really excited about.

These patients, how are they assessed for NAFLD.

Liisa, they have to have at least 10% liver fat content by MRI-PDFF.

I see. Okay. And do you know what is on average that you kind of look, but, yes, all right, I guess you don't know because...

I don't have that number in front of me, but I suspect that we're going to see an average of about 19% or 20%. And in our Phase I study, we had subjects with 19% liver fat and they drop below the limit of detection, some of them hadn't been seen before in other studies with that same type of patient.

Amazing. We're excited for obesity study. It's about to kind of start imminently, right, in the next couple of weeks here, it looks like?

By the end of the month.

Right. And so is this like mainly now going to be a U.S.-based study. Can you tell us a little bit more about kind of who these people are going to be, what's the cutoff for obesity, BMI cutoff? And are you trying to get certain types of patients into the study? How many centers where are they located?

Right. So this will be a U.S.-only based study. I would imagine as we do studies in the future we'll go more global, but there's plenty of resources and patients, unfortunately, here in the U.S. And in fact, these trials enroll very, very quickly. We're assuming a very quick time line. In fact, we're kind of looking a little more the opposite of how to slow things down rather than speed them up. Speeding it up is not going to be a problem. We're looking at the number of our sites right now. We think it will probably be in the range of about 25, but the final decision isn't made. There are sites, many sites clamoring to get into this trial. But on the other hand, we get more enrollment per site, we're going to get better quality. The BMI cutoff is set by the FDA and the guidance that was published in the first decade of this century. I can't remember if it was 2007 or 2009. But the patients to be put into these trials either have to have a BMI of 30 or greater or they can have as low as 27 if they have an established comorbidity of obesity, such as cardiovascular disease, and that's exactly what we're enrolling in this trial.

And you're not enrolling diabetics. Can you maybe explain why that is? It feels like that's a really important population within the...

Right. So it's just a simple population to work at this -- work through at this point. We are getting that data in diabetics in both our NAFLD study as well as a 12-week diabetes study that we're in the process of conducting right now.

I think one thing I forgot...

The other thing I would mention, Liisa, that diabetics only account for about 20% of the obese -- patients with obesity. So yes, it is important to study that, and we are studying it, but really, the bulk of the patient population is nondiabetics here.

Really, when you get into that like higher BMI group, with about 30, about 20%.

By 20%.

Yes. About 20% are diabetics.

Maybe. Just for some reason, I always thought it was more. That's good to know. Okay.

It is higher in the NASH population because NASH patients -- diabetics tend to have more NASH than nondiabetics. But according to the CDC, about 20% of the American population is obese as diabetes. It's no more than that.

You've been talking about -- one thing I ought to mention earlier when we're talking about the target product profile, one differentiation that you had talked about with some of the metabolic benefits that you were seeing in the kind of early study that you already reported out on. I was just kind of wondering, how does this compare to some of the other. Like how does it compare to semaglutide to tirzepatide? And there's -- there are many drugs actually in development because there's been such a resurgence in this area. How does your molecule pemvidutide sort of compare on these aspects?

Right. Well, let me focus in on lipids. So the reduction in serum lipids that we see with this drug and previously, we talked about hepatic lipids, but with serum lipids the drop is striking. We're seeing reductions of triglycerides and LDL in the range of 35% to 40%. That's the kind of reduction that you get with statins. And with GLP-1 monotherapy, such as semaglutide, you generally don't get very much of a change. It's only about 10%, sometimes even less. And what counts for the difference, Liisa, is the glucagon component. Studies have shown through the years the glucagon has striking effects in serum lipids. So in addition to the benefits of weight loss alone on lipids. And we've seen that somewhat with the semaglutide program. We also have the very beneficial effect of glucagon here, and that's extremely important. We're also seeing reductions in systolic and diastolic blood pressure as you've imagined. In our Phase I study, we did not see an increase in heart rate with that. We were pretty struck by that because typically, one would expect it. It is possible that we will see some of that in the future. But at least at the starting point, we're not seeing a dramatic increase of heart rate that might raise some concerns of cardiovascular risk. And that reduction in blood pressure, which was actually seen a norm intensive individuals, to translate very strongly to an obese population that has a hypertension and may even offer the possibility of stopping or reducing the hypertensive meds.

Is it the glucagon component that contributes to increased heart rate?

GLP-1 will do it as well as well as glucagon. So one would have surmised that the 2 together would have led to an even greater increase in heart rate than you might see with GLP-1 monotherapy alone. But again, we didn't see it in our Phase I study. Now could that be small numbers it's possible. But at least we're not starting from a point of having much accelerated heart rate and I would imagine the final heart rate elevations that we do see it will be very modest and inconsequential.

What degree of increase in heart rate would be something where it'd be sort of like we have to think about lowering the dose or kind of what threshold starts to become concerning?

It's really not the heart rate, Liisa. That's what's called the rate pulse product is when you multiply the heart rate times to systolic blood pressure. And that's the real amount of work that the heart is doing in its injection. And actually, that decrease in our study based on the product, the heart rate and the systolic blood pressure. And I think that as long as you stay below a rate pressure product of 10,000, which is considered normal, we're going to be fine, and I'm pretty confident we're going to be there, if not reduce that and reduce the cardiovascular risk associated with that.

I'm sure you're tracking the competition as actively as we are. Who do you consider to be kind of the up and comers that you really is trying to kind of because where you are in development, you kind of -- Wegovy is out there now, but pretty soon, we're going to have to double time with some other products. Do you see those as kind of your like competitive set? Or who have you got your eye on?

Well, in general sense, yes, but actually no, because semaglutide is GLP-1 monotherapy, we've already stated the limitations of that, recognize that GIP, which is the other component of tirzepatide is not pharmacologically active in humans by itself. Many studies are done through the years that when GIP was administered, it had no effects or inconsequential effects in humans. But when combined with GI -- GLP-1, it appears to be synergistic. And Dan Drucker hypothesized that it simply increases the effects of GLP-1 on its receptor. So what it does is it causes a super GLP-1, and it works by mainly reducing appetite. We have an entirely different mechanism here. We have the glucagon component on the liver for liver fat reduction. We have the much more robust reduction in serum lipids, and we have the blood pressure control. I also think because of the glucagon, we're going to see much greater weight loss. So we think that we could be first in class, both in obesity and NASH.

Yes. And I would just add, Liisa, that in terms of competition, the first wave was GLP-1 monotherapy. Most people are now moving to some sort of combination, whether it's GIP or glucagon. As I mentioned at the very beginning, there was lots of attempts by people to develop a GLP-1 glucagon dual agonist, but none of them were balanced. In fact, some of them had gross in balance 7:1, 15:1 and so on. So we are really the first drug out there that has this 1:1 balance -- and the question is in terms of going into the next generation of incretin, what is the right combination in GIP, which doubles up on GLP-1? Or is it a different mechanism of action. In this case, glucagon that we are bringing to the table. So far, everything we are seeing, there is really no liability of having glucagon and we're seeing all sorts of benefits. And that's really what's driving the profile of the drug.

Okay. So we've got some interesting data readouts in the third quarter, are going to get to initial NAFLD data. That's 12 weeks, about 24 weeks at the end of the year. You're sharing your obesity study. We hope to get 12-week data for that at the end of the year. And of course, then that rolls into next year for the full 48-week data. And I think it's really going to help to kind of solidify some of kind of the product target profile components that you're going for. So really excited to see that data. Kind of brings -- well, the next question, you're going to have a pretty robust data set fast forward a year from now, like how far are you prepared to take -- by the way, you're also going to start NASH study? I forgot that I mentioned that at the end of the year. So how far are you prepared to take this product? These are big markets, right? Obesity trumps NASH and NASH itself is a big market. How far do you want to take this? What's the activity like in terms of, if you could describe, I don't know, like in terms of pharma, that kind of thing.

Yes. So that's a great question, Liisa. First of all, let me say we're very early in development. We're seeing great data. But as you said, we need to further substantiate these observations. And that's precisely what we are doing. All these studies have been designed to produce sort of additional validity around this molecule. And once we have done that, I mean I can name a dozen companies that would be interested in an asset like this. This is a mega blockbuster class. So it's not just the blockbusters that we use to talk about, it's really the next level. So there's no question that there are companies out there that would be interested in an asset like this. We think all of the data that we're going to generate during 2022 would really help us in terms of getting a compelling valuation around this asset. And that's really our goal. So I can't tell you exact timing of that. But all I can tell you that people are interested. They're tracking us. And as more data becomes available, those conversations will become more concrete. And obviously, we'll be updating folks as we get more information. But we're very excited about the prospect of doing a partnership with one of the large pharmas that's interested in this space and maybe even a bigger strategic transaction. So time will tell, but it's all going to be data-driven and I think we're well positioned over the next 12 to 18 months to generate all that data and be in a great shape.

Okay. Excellent. I know your molecular waiting potency make your compound well suited for oral. And I know you've been working on oral formulation. Can you just comment on the status of that? And is that kind of a pipe dream? Or is that something you're really actively working on?

Yes. So as you know, it is difficult to get a good oral peptide. Even semaglutide, I mean there is a, as doc says, there is an oral version of it on the market. But the bioavailability is fairly poor. So I mean -- so we have started that. That's a second-generation molecule for us. We're actually working with multiple technologies. We'll start to get animal data by the end of the year. And we are hoping that we will get good results from that. So the best answer is that we're doing, we're following multiple tracks to come up with an oral alternative looking at some proprietary technology, and we expect to have more information on that by the end of the year.

That would be really cool. So we look forward to keeping up with you on that. I just want to end with everyone's favorite topic, cash. You've given some kind of guidance. Can you review what that is? And what are some of your assumptions to kind of like what your cash runway is. You did a great job in getting some -- being able to finance for COVID with actually COVID asset. And so I think that was a really great opportunity for you guys, and we've been able to deploy that against pemvidutide. So I guess now the question is like what's the runway and what are some of your assumptions there.

Yes. So as we just reported, we have a strong cash position. We've got about approximately $190 million as of the end of 2021. And that, if we were to do every single study, the way we have laid it out, including the 2 Phase II trials, 1 for obesity and 1 for NASH. We have sufficient cash to do all of those studies. So the time will tell in terms of which -- how many of those studies will do, but we are well positioned to do that. And really, our goal is to be in a position to generate all this critical data without having to raise additional cash. So this cash, as we've guided would easily last us through the end of 2023, including doing both of the Phase II studies. So from that perspective, we're well positioned. Ultimately, if the data is good, there's going to be a lot of activity around these assets and we feel that we'll be able to do a transaction that would be very, very meaningful.

Okay. Great. We haven't touched on hep T cell, but I think we're going to pause there. We can do another Hump Day Lunch to talk about that. I think really the emphasis has been on obesity and pemvidutide and of course, NASH, and it's very exciting opportunity. So we're going to leave it there because I've actually -- I've only gone 5 minutes over this time. So I'm really trying to get this down to 30 minutes. And I think we did a good job in hitting all the key points. Anything else you want to leave the audience with, Vipin, Scott?

No, I think you asked all the good questions. I would just reemphasize that we've got very exciting 12 to 18 months coming up with lots of data. both in obesity and NASH as well as in hepatitis B, and we look forward to updating everybody as those data become available.

Fantastic. Well, we're excited. So we'll be keeping up with you. Thanks for joining everyone for this Hump Day Lunch, and we'll see you next week.

Thanks.

Thanks, Scott, bye-bye.