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

Good day, ladies and gentlemen, and welcome to Altimmune, Inc. Second Quarter 2024 Financial Results Conference Call. [Operator Instructions] As a reminder, this call is being recorded. I would now like to introduce your host for today's conference call, Lee Roth of Burns McClellan, Investor Relations Advisors to Altimmune.

Thanks, Gigi. Good morning, everyone. Thank you for participating on the Altimmune Second Quarter 2024 Financial Results and Business Update Conference Call. Members of the Altimmune team joining me today are Vipin Garg, our Chief Executive Officer; Scott Harris, our Chief Medical Officer; Ray Jordt, our Chief Business Officer; Andrew Shutterly, our acting Chief Financial Officer; and Scot Roberts, our Chief Scientific Officer. Following prepared remarks from Vipin, Scott Harris and Andrew, we’ll hold a Q&A session. As a reminder, our press release with our Q2 2024 financial results was issued this morning and can be found on the IR section of the company's website. Before we begin, I'd like to remind everyone that remarks about future expectations, plans and prospects constitute forward-looking statements for purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. Altimmune cautions that these forward-looking statements are subject to risks and uncertainties that could cause our actual results to differ materially from those indicated. For a discussion of some of the risks and the factors that could impact the company's future results and operations, please refer to the risk factors and other cautionary statements contained in our filings with the SEC. I'll also direct you to read the forward-looking statement disclaimer in our press release issued earlier today and now available on our website. Any statements made during this call speak only as of today's date, Thursday, August 8, 2024, and the company does not undertake any obligation to update any of these forward-looking statements to reflect events or circumstances that occur on or after today. As a reminder, this call is being recorded and will be available for audio replay on the Altimmune website. With that, it's now my pleasure to turn the call over to Dr. Vipin Garg, Chief Executive Officer of Altimmune.

Thanks, Lee. Good morning, everyone, and once again, thank you for joining us for our second quarter corporate update. In the second quarter and throughout the first half of the year, we continued to strengthen the rationale for pemvidutide as a highly differentiated therapeutic with significant potential in a variety of metabolic diseases. We are continuing to advance our key strategic clinical and operational priorities that are excited for the milestones that are approaching in both our obesity and MASH programs. The quarter was highlighted by important data presentations at 2 of the most prominent medical meetings in our space. The American Diabetes Association or ADA's 84 scientific sessions and the European Association for the Study of the Liver or EASL Congress. At the ADA meeting in June, we presented updated data on the effects of pemvidutide on body composition from our Phase 2 MOMENTUM obesity trial that demonstrated a class-leading preservation of lean mass among increasing agents. The preservation of lean mass and the quality of weight loss is becoming increasingly important for the treatment of obesity and for the safety and long-term maintenance of weight loss. In addition, we presented data during the ease of Congress that highlighted the disease-modifying potential of pemvidutide in MASH and reinforces our confidence in achieving both the MASH resolution and fibrosis endpoint in our Phase 2b IMPACT trial. We remain engaged in discussions regarding a global strategic transaction for pemvidutide, involving a variety of possible structures. We are intently focused on identifying and securing a partner with the right vision, resources and commitment to help us realize the full potential of pemvidutide in obesity, MASH and other metabolic conditions. In parallel, we intend to create additional value by completing the IMPACT study and pursuing additional indications for which pemvidutide especially well suited. Finally, we continue to prepare for the end of Phase 2 meeting with the FDA to review our registrational program for obesity. The outcome of this meeting will confirm the patient population, we believe, will benefit most from the differentiated profile of pemvidutide. With that, I'll now turn the call over to our Chief Medical Officer, Dr. Scott Harris to provide additional updates and discuss our plans.

Thank you, Vipin. To provide a bit more information at some of the points you discussed, I'd like to turn to the data presented at recent scientific meetings. At the ADA meeting, Dr. Louis Aronne, one of the foremost experts in obesity and metabolic disease and principal investigator in our MOMENTUM obesity trial, presented data showing that pemvidutide led to nearly 16% weight loss at 48 weeks, with a direct trajectory suggesting additional weight loss with continued treatment. Dr. Aronne also presented updated body composition analysis that showed class-leading preservation of lean mass among incretin agents with only 21.9% of weight loss attributed to lean mass, while 78.1% of weight loss was associated with fat loss. Available data on other incretin-based weight loss agents have shown that lean mass loss can account for as much as 40% of the total weight loss. The preservation of lean mass is becoming an increasingly important consideration in the management of obesity as loss of lean mass has been associated with higher rates of bone fractures, reduced physical function and mortality. The data presented at ADA also demonstrated that pemvidutide has pronounced effects in serum lipids associated with cardiovascular risk. In a subset of subjects with dyslipidemia, pemvidutide treatment led to a 55.8% reduction in triglycerides, 20% reduction in total cholesterol and 17.4% reduction in LDL cholesterol at the 2.4 milligram dose. Since dyslipidemia affects as many as 70% of obesity patients, we believe that pemvidutide could benefit a significant segment of the obesity population. While significant cardiovascular benefits of weight loss were observed with GLP monotherapy in the recent SELECT trial, the effects on lipids were not clinically meaningful. We believe that with the robust reductions of serum lipids and liver fat observed with pemvidutide, we can achieve even greater degrees of cardiovascular benefit in this population. The narrative in the obesity space is evolving towards higher-quality weight loss, safe and effective maintenance and weight loss and the ability to directly address the comorbidities associated with obesity. We believe that pemvidutide with its excellent preservation of liver mass and its robust reductions in serum lipids and liver fat is well positioned compared with other agents. We will share a comprehensive package of these data with the FDA as part of our upcoming end of Phase 2 meeting. We look forward to feedback from the FDA on our unique and differentiation driven approach to a Phase 3 program designed for obesity. We will provide an update on the outcome of this meeting when the dialogue with the FDA is complete. Turning to MASH. We presented data at the EASL Congress from a quantitative model that would predict a high likelihood of success in the upcoming IMPACT trial. In addition, an analysis of data in our Phase 1 trial of metabolic-associated steatotic liver disease, also known as MASLD, demonstrated that higher proportions of subjects receiving pemvidutide achieved improvements in FibroScan-aspartate aminotransferase or FAST score, MRI-PDFF and alanine aminotransferase compared with subjects receiving placebo. This suggests that significant rates of mass resolution and fibrosis improvement may be achieved in the IMPACT Phase 2b MASH trial. We also presented data on the ability of pemvidutide the lower serum lipid species associated with dyslipidemia in MASH, which reminds us that cardiovascular benefits of the primary cause of mortality in match patients. In addition, we recently published our results from the 12-week trial of pemvidutide in MASLD, metabolic associated liver disease in the Journal of Hepatology, establishing the differentiated effects of pemvidutide in the treatment of MASLD and MASH. The safety and tolerability profile of pemvidutide was highlighted by the low 2.9% rate of adverse event discontinuations in this trial. With respect to impact, our enrollment is progressing well. If the 24-week efficacy endpoints are achieved, we believe the results could be transformative for the MASH therapeutic space as we would demonstrate for the first time with rapid improvement in mass resolution and fibrosis improvement with an incretin agent in a 24-week time frame. Finally, as we have discussed before, we are continuing to evaluate additional indications for pemvidutide, that leverage the benefits of glucagon and that, we believe, will create additional value that will be attractive to strategic partners or allow us to develop on our own. We envision pursuing up to 3 additional indications for pemvidutide in our areas of greatest unmet medical need, and we expect to provide more details later this year. With that, I'll now turn the call over to our acting Chief Financial Officer, Andrew Shutterly, to review our financial results for the second quarter.

Thank you, Scott, and good morning again, everyone. For today's call, I'll be providing a brief update on Altimmune's Second Quarter 2024 Financial and Operating Results. A more comprehensive information will be available in our Form 10-Q to be filed with the SEC later today. Altimmune ended the second quarter of 2024 with approximately $164.9 million of cash, cash equivalents and short-term investments compared to $198 million at the end of 2023. We project that our existing balance will fund us into the first half of 2026, which fully funds our IMPACT trial in MASH, including the expected Q1 2025 readout of top line biopsy data. Turning to the income statement. Revenue was negligible in the second quarter of 2024 and 2023. Any revenue reported during such period was for indirect rate adjustments on a government contract that we're closing now. Research and development expenses were $21.2 million in the second quarter of 2024 compared to $13.3 million in the same period in 2023. Approximately $14.8 million of this total for the second quarter of 2024 were direct expenses for the conduct of our clinical programs, including $13.8 million in direct costs related to development activities for pemvidutide and $1 million in direct costs related to the wind down and closing of HepTcell as announced on March 27, 2024. R&D expenses in the second quarter of 2023 included $5.6 million in direct expenses associated with the development of pemvidutide and $1.8 million in direct expenses related to HepTcell development activities. General and administrative expenses were $5.6 million in the second quarter of 2024 versus $4.8 million in the second quarter of 2023. The increase was due primarily to a $1 million increase in stock compensation expense caused by the modification of stock awards, partially offset by a $0.3 million reduction in insurance expenses. Our quarterly noncash operating expenses for the second quarter of 2024 was $4.4 million, all of which were recurring expenses. Net loss for the 3 months ended June 30, 2024, was $24.6 million or $0.35 net loss per share compared to a net loss of $16.1 million or $0.32 net loss per share for the second quarter of 2023. The increase in net loss in the quarter is primarily attributable to the $7.9 million increase in research and development expenses as we continue to execute the IMPACT Phase 2b trial in MASH. I'll now turn it back over to Vipin for his closing remarks.

Thank you, Andrew. We are optimistic about the next steps for pemvidutide and are looking forward to the opportunities that lie ahead. With multiple upcoming milestones, we believe that we are well positioned for an exciting second half of the year and early 2025. Operator, that concludes our formal remarks, and we would like to open the lines to take questions.

[Operator Instructions]. Our first question comes from the line of Yasmeen Rahimi from Piper Sandler.

This is Liam Hiester on for Yas. Just a few quick questions. So, the first one, if you could kindly talk about the response rate in fibrosis and MASH resolution that you believe to be competitive in the MASH space. Secondly, what are your expectations for the dose response across the 1.2 milligram to 1.8-milligram dosing for biopsy endpoints. And then third, going into the end of Phase 2 meeting with the FDA, what are some key questions you plan to discuss with them? And if you can provide any color on which patient population you are considering for Phase 3 would be great.

Well, thanks for the questions, Liam. So, regarding the response rates for fibrosis and MASH resolution, it really depends on the placebo response that you see. So, if you have a 30% placebo response, you're going to expect a much higher rate of, say, MASH resolution or fibrosis improvement. And consequently, with a low placebo response rate, you'd expect to lower. So, to actually talk about response rates is difficult in that setting. Even looking at the delta over placebo really depends on where you start, as I just mentioned. The most important thing is that statistical significance is achieved. And I believe that we'll see not only statistical significance but meaningful response rates in both endpoints. Regarding your second question on the dose response, in MASH, in the IMPACT trial, we believe that the 1.8-milligram dose will be the superior dose, same as we saw the dose response in the MOMENTUM trial. And to remind you that the endpoints in MASH are driven predominantly by a reduction in liver fat. And the reduction in liver fat at the 1.8-milligram dose was substantially higher than the reduction of the 1.2 milligram dose. And we think that the endpoints in the MASH trial will follow that same pattern as well. Lastly, regarding the end of Phase 2 meeting, the key questions that we're asking the FDA are about our study design, which we intend to bring out the differentiated profile of pemvidutide on lipids, liver fat and body composition because we believe that this will differentiate pemvidutide in the marketplace. So, we are constructing our end of Phase 2 program, and Phase 2 interaction with the FDA in the Phase 3 program to basically bring out a target product profile that will be commercially attractive and very differentiating from the other compounds in the space.

[Operator Instructions]. Our next question comes from the line of Roger Song from Jefferies.

This is [indiscernible] on for Roger. Maybe following up on endpoints for your potential Phase 3 program. You discussed body fat, lipids, and liver, how are some ways you could differentiate or measure those end points in a way that are more nuanced or detailed than other companies can. And then secondly, perhaps on potential partnerships, what are some attractive collaboration structures you're exploring? And at this point, do you match results at all factor into those partnership discussions?

Thanks, [ Coby ]. I'll take the first question about the endpoints of the Phase 3 trial, and I'll ask Vipin to answer the second question about the collaborations. So, we think that the endpoints are fairly clear because they represent meaningful clinical changes. For example, serum lipids are a clear surrogate for cardiovascular risk, and there's been a very strong association of liver fat with not only cardiovascular outcomes, but outcomes in a variety of other organs such as the kidney. So, we believe that simply demonstrating improvement of those endpoints will be very meaningful. As we mentioned, we also have class-leading preservation of lean mass among the incretin agents either approved or in development. And we think that's extremely important as a stand-alone because the loss of lean mass has been associated with loss of physical function fractures and also, in some cases, mortality. Many of these end points would take far larger trials to demonstrate, but we believe that they stand on their own as surrogates and are clinically meaningful. Vipin?

So, with regards to the structure, I can't really get into the specific details of the structures, but we are open to multiple different structures. The focus is to get full value for the asset. As you know, pemvidutide is basically pipeline in a product. We have got 2 major indications that we are pursuing. So, we want to make sure we are able to capture the upside on both of those indications. So, there are so many different ways to capture that value and structure the deal, so we are able to get full value for the asset.

[Operator Instructions]. Our next question comes from the line of Seema Sheoran from Evercore.

This is Seema on for Lisa. As you're expecting Phase 2 MASH data in first quarter, can you expand on how the enrollment is going and when you expect it to be complete? And my second question is on oral pemvidutide. You have mentioned that you plan to announce a candidate by year-end. Is that still the case? And what are some of the characteristics of this candidate that you are looking for?

Thanks, Seema. I'll answer the first question. I'll ask Scot Roberts to address the oral candidates. So, enrollment is going extremely well. We've been told that we're enrolling this trial faster than any other mass trial, and that represents the fact that the trial is attractive to patients because of the weight loss that it offers. So, screening has not been a problem. We do intend to complete screening in the near future, and then we can provide you an update on the estimated date of the announcement of the trial results, which we still believe will be in the first quarter of 2025. Scot, did you want to address the question about the oral formulation?

Sure. Seema, thanks for the question. Our efforts on the oral formulation are continuing. We've actually expanded the number of types of formulations, we're looking at prototype formulations. We're still hopeful that we can nominate one of these formulations for form of development by the end of the year. I think that the oral formulation, there's an important point that I do want to [indiscernible] is that success with pemvidutide, the peptide as an oral formulation is really [Technical Difficulty] different we're seeing with the small molecule oral formulations, which are obviously working. But the amount of weight loss and the overall potency, the adverse event profile of pemvidutide is well established and an oral formulation that delivers the peptide into the blood at equivalent concentrations to what [Technical Difficulty] the same profile. So, we're really very differentiated with respect to small molecules, which are clearly active, but not really pushing the levels of weight loss that you see with subcutaneous peptides and also have higher rates of adverse events, as you know. So, we still think this project is extremely valuable. The goal is to achieve a pemvidutide like clinical profile with the oral formulation. So, we'll update you as we know further advances there.

[Operator Instructions]. Our next question comes from the line of Corinne Jenkins from Goldman Sachs.

This is Omari Baruti on for Corinne. So, I have a couple of questions. In the past, you wanted to have done partnership prior to seeking regulatory approval. Does that remain an aim? And how would you think about executing next steps as provided by the agency [indiscernible] partner? And then second, what is your wish list as you approach the Agency for alignment on an end of Phase 2 meeting and prepare for future studies?

I'm sorry, can you repeat your first question?

Sure. So, in the past, you had wanted to establish a partnership prior to inventory improvement. Does that remain an aim? And how would you want to think about executing against next steps provided by the agency without a partner?

So, in terms of partnership prior to approval, look, our goal has always been to have a partner lined up before we start the Phase 3 development in obesity. In MASH, it's a different story. We think we can take it forward on our own in MASH. And part of the reason we are looking at these additional indications, that gives us additional flexibility even in obesity related indications. So, we'll see what feedback we get from the FDA at the end of Phase 2 meeting as well as we have other interactions planned with the FDA to discuss the additional indications that we are evaluating. And once we have that information, we'll be able to make a better decision as to how to move forward.

Omari, this is Scott. I'm going to ask you to repeat the second question because I didn't hear it. The audio quality wasn't good enough. Could you please repeat the question?

What is your wishlist as you approach the agency for alignment in to Phase 2 meeting and prepare for future sites?

Well, I think this was partially addressed previously. So, we believe that we have a highly differentiated compound. We believe that the obesity marketplace is going to segment with different patient needs. We stressed repeatedly that 70% of the marketplace is dyslipidemic or high liver fat. So consequently, rather than saying, this is a program for the treatment of obesity. We're going to highlight that this is a program for the treatment of subjects with obesity, with high serum lipids, high liver fat and also people who might be subject to the effects of excessive lean muscle loss. So, what differentiates our end of Phase 2 discussion from others that may have preceded it, is that we're not going in and saying, this is an approval for obesity. We're saying this is an approval for obesity, focusing on the key attributes of pemvidutide that create our target product profile, which we will use to commercialize the compound. And we think that differentiation will not only be attractive in the marketplace but for potential partners as well.

[Operator Instructions]. Our next question comes from the line of Mayank Mamtani from B. Riley Securities.

This is actually William on for Mayank. Congratulations on the nice quarter. Just a couple of questions from us. The first, I'm just curious about the discontinuation rate variance that you've seen from prior Phase 2 trials. Whether it be in MOMENTUM and diabetes, maybe even in your NAFLD-earlier trial. Where are you expecting to land in your Phase 2 IMPACT trial and maybe what you've been seeing so far?

Thank you, William. So, we believe that pemvidutide, at the completion of studies will prove itself to be the best tolerated incretin agent, either approved or in development. We believe that based on the pharmacokinetics of the compound with the slow entry of drug into the bloodstream. And remember that any discontinuation rates we're seeing are essentially without any dose titration, which is really in stark contrast to other agents with titrating now up to 32 weeks. Our longest titration period was 4 weeks. And also, those adverse event discontinuation rates that were observed, were observed without allowing for dose reduction, which was employed in as many as 30% of patients in the semaglutide and tirzepatide trials. So, we have tremendous optionality in improving the tolerability of the compound going into Phase 3, and we'll have those discussions with the agency and get their feedback about the breast approach. Previously, we had 0 adverse event discontinuations in our diabetes trial. And as we announced on the call today and in the publication of Journal of Hepatology, the adverse event discontinuation rate in subjects who received pemvidutide in that trial was only 2.9%. And again, with the odd stack against the compound because of the relative absence of dose titration and also not allowing for dose reduction. Now going forward, we have lots of options. One is to extend the titration period. We can get the feedback from the agency on that proposal. Although we believe that, that 1.2 milligram dose, which produces 10% weight loss in clinical trials doesn't need to be dose-titrated and can be administered straight off without dose titration, achieving as much as 10% weight loss in that population. So, for primary care, that's a very, very attractive dose to give. But we're also going to look for approval of the 1.8 and 2.4 milligrams, as we've discussed in other discussions with the community. But in addition, we are now allowing for dose reduction, which is something that had been employed in other trials and that we're going to employ going forward. And it also mimics real life use of these drugs. So consequently, we believe that we have a great adverse event discontinuation rate shown mainly in the diabetes and the NAFLD population. We have lots of tools in our tool tests for improving it further. We saw on development of semaglutide and tirzepatide, 25% to 30% adverse discontinuation rates in their Phase 2 trials, which became single dissects in Phase 3, we believe that likewise, by employing the tools that are commonly used between Phase 2 and Phase 3 to adjust the dose, we're going to have really nice adverse event discontinuation rates in our Phase 3 program when it's finally read out.

And then just one extra, you've got a couple of presentations coming up at EASD. Specifically on the muscle data, you'll be presenting data on the VAT, SAT and TAT. I'm just curious what exactly we may be expecting, all doses? Maybe just give us a little color on where, or what we should be expecting as far as the muscle data? And then also, if you could just remind me, have you or do you have any plans to look into a functional benefit given that you're showing the least amount of lean muscle lean muscle mass loss in your patients?

Thanks for the question, William. So, the details on the muscle, the VAT, the SAT and the TAT, will all come out in the presentation that we plan to make it easel. So, stay tuned. There's some preliminary information out there, but we'll give a much more detailed presentation at that meeting in Madrid in September. But again, at this point in time, we're leading in lean mass preservation among the incretin agents, and we think that's extremely important. Functional benefit is extremely important. And that's a discussion that we're having with the agency right now in the design of a Phase 3 trial. So, stay tuned. We hope to announce on that in the near future.

Congratulations again.

Our next question comes from the line of Jon Wolleben from Citizens JMP.

Two questions for me. One, piggybacking on the last. Do we have any data, literature or thoughts on the body composition changes and how those translate to anything clinically. And any thoughts on how the differences you're seeing if it's a 30% versus 40% fat loss, what could that mean? Do you think that's a meaningful enough difference to translate to some clinical or functional change?

Thanks, Jonathan. So, there's limited data on the effects of changes in body composition to these functional measures that William just asked about. We know that in population studies that low lean body mass is associated with poor outcomes, higher morbidity and mortality, and there's a wealth of data talking about that. Getting to not the actual amount of lean mass that you have, but the change, the best data that we have is from 2 studies. One is, The Look AHEAD Trial of Weight Loss, where lean mass loss was associated with bone fractures. And this was also seen in the semaglutide SELECT trial, where they had a 40% loss of lean mass in that trial, a higher rate of pelvic and hip fractures that actually made it into the semaglutide label. So, this is the data that we have. I think that we're going to be really developing and presenting a lot of new important data that we hope will substantiate those benefits. But we do believe that preservation of lean mass is extremely important. And I think we also have to look at the functional measures as was asked by William, and that's a discussion that we'll have with the agency in the near future. And in terms of the meaningful differences, we know that visceral fat and liver fat are associated with cardiovascular risk. And we're seeing very prominent reductions of both here with pemvidutide. So that, combined with the reduction of serum lipids, not only the typical lipoproteins, but all the cardio inflammatory lipids that we presented at the EASL and the ADA meeting is going to result in an improved cardiovascular profile. We know that in the recent SELECT trial, there was a 20% reduction in MACE events associated with weight loss alone. But as I mentioned, the reduction of serum lipids with that agent is minimal. With semaglutide, generally around 3%. Reduction in total cholesterol or LDL cholesterol, maybe as high as 5% of these studies. That compares to the approximate 20% effects that we're getting with pemvidutide. So, on top of the benefit that was seen with semaglutide in the SELECT trial, we think we can do even better when a cardiovascular outcomes trial was conducted.

And my second question is, if a partnership doesn't take shape, how are you thinking strategically about potentially moving Pemvidutide forward yourself? It seems like an obesity Phase 3 program might be too large, but you mentioned 3 additional indications that could make sense. Can you talk a little bit about, if a partnership doesn't take place, the potential path forward for pemvidutide?

First of all, let me say, Jonathan, that we continue to be optimistic that we will have a partner lined up, particularly after we have the outcome from the end of Phase 2 meeting because we're looking at some very interesting trial designs that we think will be very attractive to a partner. The name of the game here is to try to differentiate the idea of being fourth or fifth incretin-based agent for obesity, how you're going to differentiate yourself? So, I think that's what we are focused on. In our partnership discussions, it's encouraging to see that our partners are also focused on that, and they're getting the message. We're hearing it from a number of potential players but they're looking for a differentiated asset in the obesity space. So that's exactly what we are working on. So, stay tuned. We're very bullish about our plans for a unique Phase 3 trial designed for pemvidutide, for obesity. In addition, as we have mentioned multiple times, we are looking at additional indications that we can execute on our own. So that we're approaching it from multiple angles. But first and foremost, we believe that we have a very differentiated asset, and it will be attractive to a partner.

Thank you. At this time, I would now like to turn the conference back over to Vipin Garg for closing remarks.

Thank you, everyone, for joining our call today. As always, we greatly appreciate this opportunity to share our meaningful developments and results with you and would like to thank you for your ongoing support. Have a wonderful rest of your day.

This concludes today's conference call. Thank you for participating. You may now disconnect.