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

Before we begin, we'd like to remind everyone that this event is only for Jefferies' clients. Members of the media and the press are not authorized to be on this call. If you work for the media or the press, please disconnect from the call now. The content presented on this conference call is proprietary to and are subject to the copyrights of Jefferies or third parties. Further, as a matter of legal compliance, we remind you that you must not attempt to elicit from any speaker at this event, any material nonpublic information or other confidential information. And accordingly, the speaker may decline to respond to any question his or her for discussion. We may not publish or otherwise publicly disclose the name of or otherwise identified the speakers from [ Jefferies from material ] writing. Please note, this call is being recorded. By attending this event, you agree to all these restrictions. And with that, I'll hand over to Roger to begin the call.

Excellent. Thank you, Carolyn. Good afternoon, everyone. This is Roger Song, one of seniors who cover Biotech at Jefferies here. It's my pleasure to welcome the management team from Altimmune, CEO, Vipin Garg; and CMO, Scott Harris and the CSO, Scot Roberts. Welcome, gentlemen.

Thank you. Thank you. Pleasure to be here.

Awesome. And I thank everyone on the call joining this. And I think this will be highly informative and interactive conversation. And hopefully, we can have a very robust discussion here. Yes. So I think Altimmune, you just kind of released earnings last week and with some very interesting data. And then we may start from there to talk about your pemvidutide recent data and how meaningful that is, and then we can go into your Phase III kind of a preparation. And obviously, you have ongoing discussion with potential partners. And there, we talk about this GLP-1 and glucagon agonist landscape. So -- and we can go from there. How about that?

Sounds good. Sounds good.

All right. So maybe Vipin or Scott, you want to highlight a few things from last week this body compensation data, which looks very promising and honestly, a little bit surprising to a lot of people. What's there? And then how promising that data look like and what gives you confidence that Pemvidutide will be highly differentiated in this very competitive space.

Well, thank you, Roger. So lean body mass preservation is a critical topic now and obesity is we -- as we move from the absolute amount of weight loss to the quality of the weight loss payers and experts are now recognizing that the quality of weight loss is as important, if more important than the quantity of weight loss. And there are a number of aspects to that. We've highlighted that in Pemvidutide. We have very robust reductions in serum lipid exceeding 20% LDL reduction in people with that elevated levels to start. We have very robust class-leading effects on liver fat reduction, liver fat being associated with cardiovascular risk and our safety and convenience, but now -- on top of that, we've added another effect, which likes the liver fat and the lipids corresponds, we believe directly to the glucagon component in the model, which is preservation of molecule preservation of lean body mass. And there are studies that show that loss of lean body mass is associated with mortality in various comorbidities. In the prescribing information of one of the approved incretins, it actually lists a higher rate of bone fractures in women and in the elderly that one would associate with lean body mass loss. So this is a critical importance. People are naturally going to lose weight -- lose lean body mass when they lose weight. It's known. It's been reported for years. And typically, with what you might call healthy weight loss or non-pharmacologic weight loss, it's about 25%. And it happens with the all forms of weight loss. So the goal has always been to bring down pharmacologic weight loss to out to about 25%, and that's exactly what we did. So in the study, we did an mRNA-based study, MRI and DEXA are very comparable. So the measure that I'm going to talk about, this can be compared to DEXA studies because they're both good. We're looking at relative mean to total or fat loss, okay? So we did an mRNA-based study. We chose it because you just get that much more information with MRI that you get on top of DEXA. You get the liver fat content. And you can mitigate a much better assessment of this role in the subcutaneous adipose tissue. Visceral fat is extremely important because it relates directly also to cardiac risk. So we have all of this data, and we'll be reporting the majority of it in a meaning at some to be chosen later in the year. But in the strict ratio, of the lean loss to the total loss, we are at 25.5%. And that's among the class leading effects and also imparable to what you would have with a diet and exercise. As you mentioned before, we believe that's related directly to glucagon. And we believe the mechanism is that glucagon fundamentally changes the metabolism in the body. It ships energy burn from carbohydrate to fat recognize that an important substrate of carbohydrate burn is muscle, providing the amino acids for the carbohydrate synthesis or then breakdown. So by fundamentally shifting metabolism, we have data from this from other studies, shifting away from carbohydrate to fat metabolism, we believe that's fundamentally changing the story here and body composition and preserving lean mass. The other thing I would add to that, Roger, is we saw 25.5% at the end of 48 weeks, but we know that ratio that I just quoted goes down with time. We know that from bariatric surgery study. So we compare to a somewhat similar number with tirzepatide at the end of the 72 weeks. So our goal in the future might be to repeat that measurement at a longer time point to show even better preservation than healthy weight loss.

Excellent. I think that's a very good overview. I think, yes, as I mentioned earlier, it's a little bit kind of -- it's absolutely a good kind of data and a little bit surprising and as you talk a little bit about the mechanism, we can drill down a little bit in a moment. So -- but before we talk about the details and -- can you remind us how many patients you conducted this kind of the DEXA kind of study for mRNA and why you not do that for the entire program because I believe you have over 300 people on the treatment?

Yes. This was designed to be a substudy Roger, it's a small number. And we're reporting all the data when we get to -- and when we report the full results late during the year at one of the scientific meetings.

Okay. You reported that everyone has this baseline and the 48-week data, 48-week scan, all of them and -- but not...

Only in the sub-study itself, which comprised approximately 1/4 of the patients.

Any criteria to select those 1/4 patient and...

No. It's just people who consented to be in this study.

So you're not like the company had no selection for who will be in the study, just the patient consent to be part of the sub study?

Exactly.

Got it. 1/4. Okay. Good. And then so for this -- you mentioned this MRI DEXA study how -- and you also -- we can contextualize and help us to contextualize this compared to other incretin like semaglutide 40-ish percent kind of lean mass loss and [ steatohepatitis ] similar to you, but at [ 72 ] weeks, and another GGG retatrutide ought to be higher at 37%, 38%. How is your measurement comparable to others, how we can make an apple-to-apple comparison?

As I mentioned before, for this measure, which is relative change of lean to total, it's very comparable between MRI and DEXA. Now there are other advantages on top of that, as I mentioned, that MRI offers for example, a much better approximation of visceral fat subcutaneous fat and also liver fat and also fat in other areas such as epicardial fat for hep F and also renal sinus fat for renal disease. So MRI on the measure that we just reported, MRI index are comparable. So we would say that our numbers are very comparable to the numbers reported by the other studies.

Got it. So you did both or you did just...

Just the MRI, the studies that you quoted use DEXA. There's a lot of information out there that MRI and DEXA on the relative lean loss ratio are quite comparable and highly correlated.

Got it. So other incretin that used DEXA study, you use MRI, but you believe the measurement is pretty comparable between MRI and DEXA.

Well, I would say...

Total fat and total lean. Yes.

Total fat and total lean.

I would say the DEXA is the silver standard, and I would say MRI is the gold standard. The reason other sponsors have been used MRI is that it's a more expensive study, thus requires more time from the patient. So this is a commitment we made to get a bit of a quality study. And we think it is the standard that should be used in future studies.

Got it. Got it. Okay. So you are the only use the MRI. Got it.

Let me qualify that they've used MRI for things like as visceral fat. But to the extent that they report out on that with DEXA, that's not a very accurate way of assessing it.

Yes. So mRNA also have the benefit you can separate or differentiate the visceral versus superficial fat and that's more accurate way to measure the fat?

Right. The liver fat, muscle, muscle fat -- all of that's much better delineated with MRI. So you get a lot more information.

Got it. Okay. Good. That's very helpful. And then you mentioned for the muscle -- lean muscle preservation potentially can be lean muscle loss can kind of a decline over time. So what's the degree of the decline you're expecting to see. Right now, you're already reaching a pretty optimal kind of degree and how much lower you can expect to see?

I don't think that's a number that we can give you what we can say historically, if you look at the bariatric surgery literature that there's persistent declining for up to 1 year, 1.5 years. So we believe that there's really the potential here to see even better results with longer durations of treatment.

Got it. Okay. Good. All right. Maybe, Scott, you can chime in here is related to the mechanism. So which is -- I heard some other [ KOL ] talk about this -- the study is a little bit surprised the result from the glucagon, the Pemvidutide is a little bit kind of very surprising to them because, initially, they think with glucagon, you increase the energy expenditure potentially will have more lean mass loss. And so how surprising this is to you and with the mechanism. Maybe just give us a little bit more about the mechanism why you think this is mechanistic driven and the potential can you replicate this in the future?

Yes. So as I mentioned before, looking on fundamentally changes metabolism. As you mentioned, it increases energy expenditure. That's synergistic with the calorie deprivation, deprivation of the GLP-1s, but it fundamentally also shifts metabolism away from carbohydrate and toward fat, more efficient fat burning for energy stores -- for energy needs. So although there might be higher energy expenditure is coming from a different source. -- we believe glucagon fundamentally changes that.

And there's plenty of fat around to be used as an energy source, you know, our earlier clinical studies documented this shift in metabolism. We saw a significant increase, a sixfold increase in ketone bodies, which are the remnants of burning fat, the beta oxidation, which left over as a ketone body. And so we saw a nice increase in that as expected. And we saw a commensurate decrease in the amount of palmitate that was in the blood. And palmitate is the fatty acid that synthesize when the body wants to make fatty acids and turn it into fat triglycerides, eventually. So we see this decrease in the de novo synthesis, the making of new fab and an increase in the amount of burning of fat, so all of that is consistent within the known biology of glucagon with a shift away from using carbohydrates into using lipids. So it fits together that way for us.

Okay. Very fascinating. Okay, good. So that's very good. And then -- and also another data point, we know that before, but this time, you gave us sort of the detail is the liver fat normalization. So you're getting towards around 79%. Remind us what's the baseline of this liver? I believe in your NAFLD Phase Ib data, the degree of the liver fat reduction is a little bit even higher, but the baseline probably is higher [ as well ]?

So in the NAFLD study, Roger, that you're referring to, the baseline liver fat was very high. It was intended that way. So on average, it was about 23%. So the opportunity to see a change there was much greater. In that study, despite where we started, which was at the highest point of any study that had preceded us, we normalize liver fat meaning less than 5% in over 50% of people. So we believe that's the best result yet seen for normalization of liver fat. Now in this study, the mean liver fat was 5% and that's the upper limit of normal. So it's very difficult to look at a relative change when you're not starting with very much, but what we showed is close to 80% of subjects normal -- who had elevated liver fat, normalized it.

Got it. So they are getting on average, it's the upper limit of the liver fat, but you give them back to the normal range. So what's the normal range we're talking about?

We'll be getting on less than 5%. So you see half of the subjects this is data well-known for the obesity population, half the subjects, who are obese have fatty liver. And fatty liver is defined at 5%. So about 50% of the subjects were above 5% and 50% of the subjects were below. And in the 50% of subjects were above, we normalized that liver fat got them to less than 5% in 80% of the subjects.

Okay. So the normalization is -- yes, go ahead.

Well, I was just going to add. I mean, so we've seen a number of subjects go to 0% liver fat and the number go to 2%, 3%, 4%, 4% less than 5%. So it's all a normal range, why just some go to 0 and some just get well below 5%. I mean, we don't really know that, but all of them are coming down below that. They no longer have MASLD. They no longer have a disease. Fatty liver disease, they are below that. So that's really the way to think about it. And so that's why normalization for this group that don't have a lot of fat in their liver. Normalization is really the key parameter to think about percent, as Scott indicated, if the bottom is one and you start at 5%, you can go down by 80%. But if you start at 2, you can only go down by 50%. So -- but so that's why normalization is more important. And that's what we've done, taking 80% of the people that have MASLD and they no longer have that at the end of the study. We think that's very strong. So this 80% o

So this 80% of the -- yeah, go ahead, Vipin.

I was just going to point out that it's really important to focus on -- in terms of the absolute reduction in liver fat, it's important to focus on the NAFLD study. The obesity patient population is really not the ideal population for that. All you can do is look at how many people are below 5%. They were started above 5%. So the bar is relatively low. So we would point people to NAFLD data that we have produced multiple times now, where we are showing very profound liver fat reduction literally removing the liver fat at being above 20%, down to well below 5%, and that really shows that the drug is working. So I would say the similar trend is continuing with the obesity patients, but it's a different patient population. They don't have as high liver fat as you would see in the NAFLD patient population.

Yes. I think the point is for NAFLD, they start high, you still get them down way below 5%, which is normalized?

That is correct. That is a much higher...

Yes. So that's NAFLD. And for the obesity, they start relatively low, but they -- some of them are [ still be ] above 5%, you also get them back below 5%, to get to the normal range, right?

And then number-wise, it's 80% is coming from -- the 80% of those around 50% people starting with higher than 5%, you get those 50% -- 80% of those 50% get down to below 5%.

That's right.

That's correct.

All right. Good. And then so outside of this Phase II MOMENTUM study, additional body compensation, you also report 2 very interesting preclinical data points. So 1 is the fibrosis, which is as we will go into the MASH population, which is very important. Just remind us of what data you have seen and also this reverse cholesterol transport seems you're adding some mechanistic reason, why you lipid benefit is pretty significant?

Sure. So with respect to the fibrosis study, where we demonstrated that pemvidutide does have a direct effect in reducing fibrosis. And by direct effect, I mean, not reducing fat, which we know is a driver of liver fibrosis. And so -- as you know, many of the studies, the vast majority of studies that look at drugs for MASH, do it in models that whether they're diet induced obesity or methycholine deficient. They all end up with like a fatty liver. And so when they show antifibrotic effects, it's -- you're unclear on whether or not there was a direct effect with the agent or whether it was just lowering the liver fat. And by doing that, lowering the inflammation in the fibrosis that when the liver always naturally heals itself and so you can reverse it that way. And so we've shown that and that vessel data for us, and now we have the clinical data that we can reduce liver fat in a very dramatic way and best-in-class really would say, liver fat reduction in the clinic and preclinically. And what we also saw in those experiments is that some of the markers for stellate cell activation. Stellate cells are the cells that lay down the fibrosis, the conversion of fibrosis. We're moving in the right direction and suggesting that there was possibly a direct effect out there. So we did this study in which we used a chemical with the carbon tetrachloride to cause injury to the liver to cause fibrosis. And to ask in the absence of excess liver fat, to ask, can we reduce fibrosis in that setting in a direct fibrotic model? So we did that study, and in fact, that's what we saw. So no liver fat to speak of, liver injury, significant fibrosis we maintained the presence of the chemical to continue to insult the liver, while we are treating with pemvidutide for just 2 weeks and we saw this a significant decrease in the [indiscernible] collagen, which is fibrosis. We saw approximately about 33% decrease in the amount. So that was pretty exciting for us because now we really have 2 mechanisms. We have the defatting of the liver that a lot of agents can do with a beta [indiscernible] what have you. And we also have a direct antifibrotic effect in the liver.

33% reduction of the fibrosis score, that's the...

Of the amount of collagen. So we used a same term, but it's typical for preclinical models to do that -- to actually look at the amount of collagen that's in the liver, we see that significant reduction in the amount of collagen. So that amount of reduction, that's a standard way of measuring. At that amount of reduction, it was similar to what we've seen, for example, with Lanifibranor. So a lot of drugs haven't been through this model. Lanifibranor has, and our data are comparable with those. And if we'd look at their Phase II biopsy-driven data, it looks encouraging for antifibrotic effects. So I think that, that's one data point. And the other thing is this relationship that we have 2 mechanisms now. We can defat and have direct effects. When we look at the total amount of fibrosis reduction in a fatty liver model like a diet-induced obesity model, we see approximately twice the amount of fibrotic effect as we see in this chemical model, leading us to believe that this direct antifibrotic effect is a significant component, a significant addition to the mechanism of antifibrosis and reducing fibrosis, but the liver defatting also is an important contribution. And so what we now have is an understanding clinically, we've shown that we have the defatting and that will -- we're very confident about our impact data because of that. But now we have this preclinical data supporting that there's another mechanism that's a lot more difficult to show with clinical studies.

Got it. Yes, it's very difficult to key them out, defatting the fibrotic. But in the preclinical you come up with this model...

That's why we're back to a preclinical model type to address this question. That's exactly right.

Yes. Got it. Okay. Good. And then how about the reverse cholesterol transporter? What the...

That's a very interesting story. So obviously, one of the advantages of pemvidutide because of its glucagon component and a significant -- I will recall that this is balanced 1:1 with GLP-1 is that it can move lipids and change lipid metabolism. What we saw in your significant decreases in LDL decrease and total cholesterol decrease. Even more so when these patients -- this is in the clinic when these patients had elevated levels to begin with. Early on, we realized that the mechanism of glucagon and the way that works in the liver could have effect on proteins and enzymes that are involved in lipid metabolism and cholesterol. And so we wanted to take a look at pemvidutide's effect on this thing called reverse cholesterol transport. So reverse cholesterol transport is a very important component of lipid metabolism that we all do. And it's the way that we're going to remove excess cholesterol from tissues and bring it back to the liver for it to be disposed of. And that's important because atherosclerotic disease, that is artery disease, plaques in the arteries is caused by excess cholesterol deposition in the arteries. And so if you can remove that, and this is what reverse cholesterol transport does is it grabs the extra cholesterol, puts it into a [ macrophage ] and then [ macrophage ] can transfer it to LDL and HDL and then it can be disposed of that way. And so that was the process we looked at. And what we saw was a 300% increase in the amount of cholesterol that was ending up in the thesis. That's where it goes when it's eliminated. And these animals that were treated with Pemvidutide over the vehicle-treated controls. So clear evidence that we're lowering plasma LDL in the model, we lowered at 28%. That's a par with what we see in the clinic. So a very good model that way. And then we also see that the cholesterol is being eliminated from the body. But there's other -- because Pemvidutides play tropic, we also have other mechanisms. We know that we are inhibiting the enzyme that makes cholesterol that's the HMG-CoA reductase, that's the target of statins. We know that we're driving that, the protein levels of that key enzyme making cholesterol down. And there's evidence from other studies that glucagon can actually increase the expression of an enzyme that turns cholesterol into bile acids. That bile acid is another way to get rid of cholesterol, they end up in the feces also. So really working at it from a number of different ways. We're really talking about improving cholesterol metabolism decreasing LDL, and what we expect this will do is translate to improved cardiovascular risk, especially as it relates to atherosclerotic disease.

Excellent. Excellent. Okay. So we talk a lot about the glucagon the benefit and probably very unique to pemvidutide, but we also know from [ investors ] and even some other company talk about the glucagon seems they have some concern, particularly related to the cardiovascular risk before maybe even some kind of liver kind of a signal there. How do you think pemvidutide as 1:1 GLP versus the glucagon will potentially address that? I know you have [ UPRO ] kind of domain and potentially you can -- with all the different mechanism, why you think pemvidutide does not have that concern as seen by other glucagon containing agent?

Well, Roger, you're probably referring to the high rate of arrhythmias and the pretty staggering heart rate increases that we're seeing with retatrutide in their recent Phase II study and just to refresh people's memories. The rate of cardiac arrhythmias was 14%. That's very high. They saw ventricular extrasystoles. It's a predecessor of ventricular tachycardia. You saw heartblock. There you saw conduction system delays. These are not things that you see very often to have them all in 1 trial is very important. And as I mentioned before, the 14% rate of arrhythmia is quite high. In contrast, we had a 2% rate of arrhythmias. And quite frankly, that was less than our placebos had it. We think that, that may be related to the prominent heart rate increases that we're seeing -- we're not seeing. Across the board with glucagon, if you look at all the programs, there are greater heart rate increases with glucagon than you see with GLP-1 or GLP. So to refresh people's memory with semaglutide. And tirzepatide is about 2 to 3 beats per minute. So that's also what we're seeing with our compound. But in contrast with other programs that contain glucagon, they're seeing upwards of 10, 12 beats per minute and we think the explanation for this is the pharmacokinetics of the compound. You mentioned the EuPort domain. That is an alkyl chain [ polar ] alkyl chain with a glycosidic linkage which gives clarity to the molecule and facilitate the forming [ my cells ] under the skin after injection. We believe that slows entry of the molecule into the bloodstream consequently, what we have is a curve that's flattened. The peak is lower, about 2 to 3x less than a drug like semaglutide and about 3x longer to get to that peak. Slower entry, slower peak in a comparable area under the curve. And we think that the pharmacokinetic characteristics of the compound explaining the difference from the effects that are being seen in other glucagon containing molecules.

Got it. So mostly it's related to the pharmacokinetic kind of a phenomenon. You have a longer Tmax and slower into the blood stream, but you still have the receptor coverage for the AUC. So that's why you see the efficacy by not seeing those kind of cardiovascular.

Exactly. And that mechanism is what we believe. I think more important than that is that consistently in all of our studies, momentum in all of the prior studies, we're seeing heart rate increases of anywhere between 0 and 2 beats per minute. This is a reproducible observation. It's not just in one trial. We've now exposed over 520 subjects to pemvidutide, not including the current running impact MASH trail that we'll talk about in a minute. So we have a good deal of experience with pemvidutide and enough to say that it is not associated with just heart rate increase or cardiac toxicity.

Yes. How about the ratio GLP-1 and glucagon? Is that something to do with this kind of more balanced TEF the cardiovascular kind of signal?

Well, it's occurred even with compounds that haven't had balance. And there could be various aspects to it. But when you look at retatrutide, for example, remind you, our time to maximum concentration is about 70 hours. Their time to maximum concentration is only 14. And when they give that drug, were hit at hour 14, there's a large peak associated relatively a lot higher than ours. So the ratio is not as important as the amount in the bloodstream in an acute period of time. One would assume that the arrhythmias we're seeing are in association with that peak, but that's not been reported. The benefit of the 1:1 ratio is 2 things. Number one, it allows us to give the most potent dose of glucagon, which is accounting from the effects that we keep describing. The serum lipid effects, the serum fat effects and now on top of this, the body composition effects. These are all the direct results of [ non-glucagon ] but sufficient or potent amounts of glucagon. And then the second thing is that we designed it to be balanced with GLP-1 to have no net effects in glucose control. And again, across all of our studies, we're not seeing a meaningful effect on glycemic control, meaning that we can use it in any population, including diabetics.

Excellent. Awesome. Yes, that -- we spend a fair amount of time to talk about the fundamentals because that's important, when you have the conversation, I believe -- on the earnings call, you talked about a lot of the partnership come discussion is related to the scientific discussion. I believe these are the conversations you have been having with your partners, how critical are those, while the competition data, those mechanistic data in your partnership discussion, you can characterize for us?

I can sort Vipin, you can chime in. It's very important. Look what the marketplace is looking for and what partners are looking for is differentiation. Is your molecule differentiated, right? So up until now, it's been a race to the greatest weight loss even if people didn't need to lose more than 10% or 15% body weight, we see going above 15% is actually being a niche market because the core of the market is a good enough amount of weight loss. Experts think it's 15%. And to get the other benefits for treating obesity because it's not just the treatment of obesity, it's weight management and also long-term management. So the fact they were able to add one more check box to differentiation, I think, is really exciting. Vipin, do you want to add to that?

Yes, I just wanted to say that, look, everybody is looking for differentiation. If you're going to be the third, fourth or fifth player in obesity, it's not going to help to have yet another GLP-1 or GLP-1 GIP. And the only claim you can make is you got 0.5% more weight loss than somebody else. That's not what's going to drive the new products in this area. It's going to be more about comorbidities that come with obesity. Can you improve those? What is the ultimate outcome that you're looking for that the patient will benefit from. So everybody is looking for differentiation. Clearly, there are going to be multiple mechanisms of actions that would have a role to play, and we think glucagon is going to be one of them. It's not an answer for everybody and for every obese patient, neither our GLP-1 and GIPs it's going to be segmentation. The market is going to a segment, where certain patient population would benefit more from GLP-1s and GIPs. The others will benefit more from glucagon containing compounds. So we think we have perhaps the best glucagon containing GLP-1 glucagon dual agonist and all of the data that we've been talking about, that's what people are focusing on. It's really looking at cardiovascular potential cardiovascular benefit of a drug like this down the line, as you do outcome studies with them. And looking at the surrogate for that is all of the lipid profiling data that we are generating, we are also generating even additional lipidomics data that we're going to talk about in the future. We think that really differentiates or distinguishes pemvidutide from other GLP-1 glucagon compounds.

Keep in mind that when you look at the entire obesity population, about 70% have some form of dyslipidemia, whether it's high LDL or cholesterol, total cholesterol or excess fat in their liver. These are all associated with increased risk for cardiovascular disease. And only 20%, which is really where the GLPs and the GLP, GIPs are really strong are for diabetic obese patients. And so we have a specialty compound, but it's aimed at the largest segment of the obesity population.

I agree. Okay. Good. All right. So let's quickly move on to the next topic, which is your Phase III kind of obesity program. I understand your preparing the end of Phase II meeting in second half. Maybe just remind us what are the key points you are preparing for the meeting, particularly the total number, the sample size, the dosing regimen, maybe some of the specific kind of population you're considering et cetera?

Let me just say, Roger, obviously, we can't go through the specifics of our Phase III design at this point, but we're going to provide generally how we are thinking about it. And at the appropriate time, we'll provide more details when they -- obviously, once we have talked to the FDA. So Scott -- on that background, perhaps it would be helpful to provide some more background, Scott.

Yes. Roger, we can talk in general terms. Typically in a Phase III obesity program, you have about 5,000 subjects. And the reason you have that is for safety. And typically, sponsors address that by doing anywhere from 3 to 4 trials. And we think we'll be in the same neighborhood, there seems to be expectation of a trial without diabetes, one with diabetes and one with another indication. For example, in one of the programs you're using osteoarthritis and another they're using another disease. So that's something that we're in consideration right now. Obviously, it's something that we're also discussing with partners in terms of what they would prefer in a Phase III program, but we expect to have anywhere between 3 to 4 studies, spread out over about 5,000 patients with about 3,500 being pemvidutide and about 1,500 being placebo, and we expect to study all 3 doses in Phase III, the 1.2 to 1.8 and the 2.4 milligram doses, remember that there are people getting the 1.2 milligrams, who lose as much as 20% or even 25% body weight. It's a potent dose of drug. It's a great dose starting dose for the treatment of patients in the clinic, excellent for primary care because there's no titration involved. It makes easy for the patient to get in and out of the doctor's office and come back for a follow-up without titrating the patient up in the nuisance of that. And we've been very, very happy with the tolerability profile of the compound. The 1.2 milligram dose has an adverse event profile, very similar to placebo. Similar rate of adverse event dropout. So it's a great dose. We also believe that we can maintain what we're doing at the 1.8 and 2.4 milligram doses going forward. But there is an opportunity to get even better tolerability should we decide that we're going to give some more titration, say it's the 2.4 milligram dose and that's something that we're discussing with potential partners as well. And it basically comes down to what you want to achieve and recognize that in practice, if you did go to a longer titration that would basically be taken care of by the doses that you'd already given at 1.2 and 1.8 milligrams over a number of weeks. So I think that, in a nutshell, summarizes what we're going to be doing, and we're going to discuss this with the agency as we announced in the second half of the year. And I think it will be a very robust discussion that will take us forward into Phase III.

Got it. Yes. Particularly on the tolerability side. Remember, your tolerability is with very limited or some of those even no titration, you certainly can improve upon that. And so for others, maybe they have like a couple of weeks, even a couple of months titration for the injectables. Another thing...

Roger 5 months. One of the programs, the [ border ] program, they're now going to 8 months of titration. So we compare adverse event rate, adverse event discontinuation, a fair comparison would be, if we were to titrate that long or reverse it, if they gave the drug without titration. When they did that in the early semaglutide study, the adverse event dropout rate was 30%. Right? So I think that we believe that we have the best tolerability profile under the circumstances that we're giving it and that it can only improve if we decided to titrate it even longer and that's kind of a commercial vision for the product, and we're sorting through that right now in order to finalize our study designs for Phase III.

Yes. And I remember you also allowed the down titrate in your Phase III, which is not allowed in the Phase II, that potentially can also kind of improve upon the -- improve the tolerability as well.

Let me be clear about that all of the other compounds, all have allowed dose reduction, all. We decided that we didn't need it. That, we would move ahead without allowing dose reduction. So if someone was taking semaglutide, how to get to the 2.4 milligram dose, but got to the 1.8 and couldn't tolerate going any higher, they could stop at 1.8. If they got to 2.4 and they weren't tolerated, they could drop down to 1.8 or 1.2. The number of percentage of people affected by that in the semaglutide and tirzepatide programs was about 30% in each study. Those patients would have probably had adverse event dropouts, had they been forced to go up to the highest dose and stay there. So consequently, we're seeing single-digit adverse event discontinuations in those programs in Phase III, there probably would have been in excess of 30% has that been imposed. We decided we didn't needed it because we had not seen adverse event rates higher than about 4% to 8% in our prior studies. But the obesity population proved to be somewhat different. So as we go forward in all of our programs, we are going to allow down titration or reduction of the dose.

Yes. Got it. Another thing also coming from investors discussion in the past is the diabetes, right? Since you have Phase I data in the diabetes and the weight loss is pretty good compared to other in [indiscernible], including the other glucagon containing agent, but you are not reducing the glycemic measures in HbA1C, et cetera, but you have stabilized them, right? You're not really kind of changing that much. So how should we think about this diabetic population can be either obesity or maybe diabetic MASH population, how you be able -- the pemvidutide can address that diabetic population?

Right. Well, as you know, Roger, we've never -- we never planned to primarily treat diabetes. This drug is not designed to lower blood sugar. It's designed to maintain it. Now that being said, over the course of time, as you start getting more weight loss, you get reduction of the insulin resistance that comes with being obese, and we are seeing some downward trends. But the drug is not designed to treat diabetes and remind you that of the obesity population, only 20% of subjects are diabetic, the remainder or not. And in fact, the great majority of the subjects have dyslipidemia or fatty liver, the GLP-1 space started as diabetes drugs. So that's always been the bias of GLP-1s. But unfortunately, that's not the correct bias. The correct bias should be for the treatment of the lipids in the liver fat. And now we have body composition improvements as well. So if you have a patient, who is diabetic and you need to get better glucose control, there are better drugs out there. But that's not our target population. Our target population would be patients who have high liver fat, patients who have high lipids, patients who cannot afford to lose lean mass, the elderly population women with bone disease. I mean this is a very, very large population. And in that population, if -- even if they are diabetic, we maintain glucose control. We don't lose it. It means that for patients with stable diabetes on or off therapy, we can maintain that and see the beneficial effects of drug administration.

Yes. So I understand your Phase III potentially will still study in those diabetic obesity population for your Phase III. But what will be the goal? Because for those patients, is that acceptable you're not lowering the HbA1c or the blood glucose? Or you need to show the same thing in order to get that into the label.

Well, we'd like to get as [ function ] to label as possible. We believe that with larger studies and/or longer durations of treatment, we will see a drop in hemoglobin A1c, but it's not going to be by the same mechanism of the GLP-1s. The GLP-1 drugs work directly to lower blood sugar acutely. They also have a component of decreasing body weight over time and improving insulin sensitivity or vice versa reducing resistance. It's very hard to show a change in a population with a hemoglobin A1c that starts averaging about 5.5%, 5.6%. You need many more patients or longer duration, and we think that we will show that over time. We demonstrated 15.6% weight loss at week 48. We thought about the possibility of would it be of any value to go longer than 48 weeks. I'm not saying that we're doing that, but I raised it as a theoretical possibility for development in a Phase III program. And if we did that, I think that we see very excellent weight reduction because, as you know, the weight loss was still -- the curve was still very steep. There is still a great deal of weight loss left in the drug at the end of 48 weeks. So at the 72 weeks, I think we're going to be in tirzepatide territory. And I think we would also see a much more meaningful change in hemoglobin A1c.

Got it. Yes. Potentially, you can do a longer trial, particularly for the diabetes [ Type 2 ] patient population, you will start to see the HbA1c. But you think it's acceptable for the diabetic obesity population, even early on, you don't really lower the HbA1c. It's okay, and then they will start to kind of get some benefit over time and for achievement...

To be very clear, most diabetics do not die of their diabetes. They don't die of their blood sugar control. I want to make that very clear. They die of cardiovascular disease. That's what they die of. They die of the metabolic syndrome. They die of the lipids, they get heart attacks and strokes. That's what they predominantly die. Now with blood glucose, you do get microangiopathic changes in the eye, in the kidney, you get some neuropathy. And this can all be related to blood sugar and blood sugar is not well controlled. Over time, you will see those side effects. But diabetics, a rise in -- a stable hemoglobin A1c, even theoretically arise is not going to immediately hurt someone. What's going to hurt someone is an LDL elevation that's maintained without bringing it down liver fat, which is a clear risk market for cardiovascular disease, not coming down, let alone its effects on NASH. So we think we have the best drug for diabetics. We will say this drug is not designed to bring down blood sugar, but there are many other drugs, who are doing that in a diabetic population with stable glucose control with without therapy, but they have the other comorbidities of obesity, we think pemvidutide is an excellent drug.

And just to be very clear, Roger, our goal in the Phase III diabetic population is not to show control of diabetes. It's maintaining their blood glucose. So they will be on concomitant medication, where they are being treated for their diabetes and then pemvidutide will show the weight loss without disrupting their glucose control.

Yes, yes. You're coming to this trial for your diabetic obesity Phase III, those HbA1c is under control. And then you just try to maintain them with the concomitant kind of drugs for diabetes?

That's right, Roger.

Got it. Okay. Good. Let's talk a little bit about your partner discussion. I know you cannot disclose much, but let's focus on a few topics you may be able to tell us a little bit more. One is maybe we can summarize first, what is real -- the overall addressable market for pemv? And I think we mentioned a few things here. Obesity with NASH, obesity with dyslipidemia, maybe even for some of them are you can address post diabetic versus in diabetics, some of them you want to focus one or the other. So will be the -- in your partnership discussion, how do your potential partner view pemvidutide in the overall addressable market?

Well, I think we've been going through those numbers during the conversation here already, Roger. I mean, look, we know it's about 40% to 45% of the population is considered obese. And could benefit from a treatment of that, as we said, about 20% have diabetes. So there is a very large remaining patient population that doesn't have diabetes. And of that total population, about 70% have dyslipidemia. So that would be directly addressable by pemvidutide. When we say dyslipidemia, it includes MASH patients as well, which is a smaller proportion of the obese patient population. So when you combine all of that together, this is actually the largest segment of the overall our patient population, that's addressable with the drug like -- with pemvidutide, then would be just the diabetes. So -- and that speaks to the enormous size of this market. It doesn't matter, which subsegment you look at, you're going to come up with very large numbers. So I think that's really not the issue here. The question is, can you can you really make a significant change to these comorbidities and when we do outcome studies, we think because of our lipid profile, we're going to have even better outcomes than what we are already seeing with the GLP-1-based compounds, with the existing therapies that are on the market that are essentially really having minimal impact on lipids, but our people are losing weight. It just really a knock-on effect of losing wait as opposed to having a direct impact on serum lipids and liver fat. And I would say speaking to partnering, the important thing for us is that people get it. That's the message. Those are the companies that are attracted towards this asset because they're looking for that differentiation, how they're going to go out and tell the doctor, why should they use pemvidutide versus something else that's already on the market. And that's the hook. That's really the benefit of using pemvidutide, that they can address this very large patient population that perhaps would be better addressed with a glucagon containing agent compared to GLP-1 or GLP-1/GIPs.

And I understand the obesity overlap with diabetes, seems the majority of them are non-diabetic. And how about the MASH population, maybe obesity MASH? How did that overlap with diabetes? Because in your Phase II trial for the MASH trial, you seem to include both with or without diabetes population, will pemvidutide can address both diabetic and nondiabetic MASH.

You want to take that, Scott?

Yes. So Roger, if you look at the MASH population as a whole in the United States, at least, about 45% of the patients, who have MASH are diabetic. In our studies of liver fat reduction, the MASLD study, we did, and we talked about it earlier, the population that had the 23% liver fat. We saw the same reduction in liver fat in diabetics as we saw in patients without diabetes. And that's pretty much been the observation across studies of diabetics versus nondiabetics. In the MASLD study, the glucose control was excellent. So we think going into NASH, they both NASH patients with and without diabetes are very good candidates to pemvidutide.

Got it. 45% of the MASH is diabetes, but your liver fat reduction in those population actually is similar to nondiabetic MASH population.

Exactly.

And we also saw the great weight loss, as you mentioned earlier, Roger, in that diabetic population, which is something you don't always see with these types of agents. So that was reassuring also.

Yes, yes, yes. As you can control -- yes, go ahead.

Let me add to that, Roger. We did a 12-week study in diabetes with the level of weight loss actually placebo-adjusted be tirzepatide at week 12. So we think that we can maintain excellent weight loss in not only nondiabetics, but diabetics and that there might not be the kind of drop off that have been seen in other compounds.

Got it. Okay. Good. And then so for the partner discussion, how should we characterize them in bucket, they are interested in both or their interest in diabetes -- obesity and the MASH or they're interesting in [ volume 1] ? And on the other dimension is these are already have certain incretin or obesity pipeline or some of them there don't have any pipeline currently, but they are looking into entering this space.

Yes. So I think the answer to that question is really all of the above. It depends upon, who you're talking to. The good news is that most people who are interested in obesity are interested in cardiometabolic diseases are interested in MASH as well. So it's a question of certain partners are probably more focused on obesity than MASH at the moment, but that's not to say they're not interested in MASH. And others are interested in more MASH but also interested in obesity. But most of our discussions at least right now are driven by obesity opportunity as being the #1 get ready for Phase III. Obviously, that's a closer indication and then MASH to follow, but that's not to say that there's no interest in MASH. There is significant interest in MASH as well. And that's a good thing because we want to make sure we capture value not only for obesity, but also for the MASH indication because that's also a very large market, and we think we have a very good drug for MASH as well. So it's important to find a partner that's interested in both of these indications and is willing to invest in both of these indications to move them forward as quickly as possible.

Yes. Yes. I remember your ideal partner is going to take both indications. If you sign a partnership, you're taking both indications moving forward, right?

Right. Right.

You already generate most of the data, I think, including this MOMENTUM body composition, diabetes and NAFLD data, but you haven't have this Phase II MASH data, which is a 26-week biopsy, how critical you need that data to convince your partnership or those partners are waiting for that data at all?

So for most partners we are talking to today, that's not the case, but that's not to say that there are companies out there who would be very interested in looking at that data. So there are -- there's a segment of companies that would want to see that data, but there are many who are, as I said, we're very focused on obesity and obesity and long is enough of a driver to move the discussions forward.

Okay. Good. Good. So -- and maybe lastly before we wrap this up, is your NASH readout is a 26-week biopsy. And we're looking at the other NASH trial, they seem looking at little bit longer about 1 year kind of for the biopsy data. So what gives you the confidence you think you can hit that with your current data and the mechanism?

Yes, Roger, we have a lot of data to suggest we're going to hit that endpoint, both endpoints, both NASH resolution and fibrosis improvement at 24 weeks. The first is this endpoint we're hit with other drugs with potent liver fat reduction. That would be 89 Biosdrug and [ Kowa's ] drug of efruxifermin. And to remind you, they were in the range of 60% to 68% liver fat reduction, we were at 76%. And there's a very, very close correlation between the reduction in liver fat and the improvement of fibrosis. And there's other companies in the 60% to 68% range. We're able to achieve both endpoints at 24 weeks. We think we have a better chance. We also have the best-in-class anti-inflammatory markers like CT1 and ALT and that's also portends liver fibrosis, so other improvement there are now finally, the data that Scott talked about, which is very exciting is that there is a -- there is reason to believe that pemvidutide has a direct antifibrotic effect separate from its effects on the liver fat. So 3 major reasons to think that we're going to see -- hit that endpoint of 24 weeks and mind you, we would be the only incretin tin in development right now, our post approval that is able to achieve a fibrosis improvement endpoint at 24 weeks. In fact, it will be the only drug reading out of 24 weeks. We believe that shows -- if we can hit that endpoint in 24 weeks, while others have to wait a year, I think it's a statement about the potency of the drug.

Yes. Look forward to that data. If that hits absolutely is further differentiated pemvidutide. Okay. Thank you, gentlemen. I think it's a very, very good conversation here, and we're on top of the hour, and thank you, everyone, joining the call and really appreciate the time again. And take care, we're going to talk to you again.

Thank you, Roger. Thank you for hosting us. It was wonderful. Thank you.

Thank you.