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

Hi, everyone. I am Ellie Merle. I'm one of the biotech analysts here at UBS. I'm very excited to have Altimmune here with us for a fireside chat. Joining us from Altimmune is Vipin Garg, Chief Executive Officer; and Scott Harris, Chief Medical Officer, who just joined us from coming down Mount Kilimanjaro after quite the adventure. Thank you both for joining us. Maybe just to start off, can you give us a high-level overview of the company and some of your recent progress.

Absolutely. Well, thank you for inviting us. Altimmune is developing a GLP-1 glucagon dual agonist for obesity, for MASH, but we're looking at other metabolic diseases as well. As you know, GLP once everybody is talking about the sort of the next frontier in treatment of obesity. As this market grows and evolves, there will be need for additional mechanisms of action. And that's exactly what pemvidutide is designed to do by combining GLP-1 with glucagon, GLP-1 is for appetite suppression and glucagon is for energy expenditure. So by combining these two features, we believe we can have a more efficient way to lose weight, but also additional benefits treating comorbidities of obesity. Because glucagon has a direct impact in the liver, we're having a reduction in liver fat really metabolizing fat faster. And that's going to have benefit on serum lipid and we'll talk about the data. We're seeing that from all of our studies, not only we are able to get significant weight loss but patients are getting class-leading reduction in triglycerides in LDL cholesterol in liver fat and so on. So we believe that by combining these effects, we'll be able to address some of the comorbidities of obesity much better than GLP once alone.

Absolutely. And there's a lot of talk and we'll talk about obesity as well as MASH. But just in terms of the MASH based around having a direct effect on the liver, particularly potentially a direct antifibrotic effect now, there's been a lot of discussion around the incretins and the effects of weight loss, which can benefit MASH, but something that I know we've spoken about in the past is some of the potential effects that glucagon could have specifically on the liver. So could you elaborate on this? And where you see some of the metabolic benefits on the liver?

Sure. So time and time again, study after study, the one factor that predicts MASH resolution of fibrosis improvement, which are the endpoints in a MASH trial is the reduction of liver fat. The more liver fat reduction you have, the higher the likelihood of hitting those endpoints. And we have class-leading liver fat reduction. So with regards to the incretins like tirzepatide and semaglutide those are GLP-1 and GIP and those agonists do not have direct effects on the liver. Their effects on liver fat are entirely mediated indirectly through weight loss. So the effects are slow. For example, at 24 weeks, we had 76% liver fat reduction with semaglutide, it was about 30% to 35%. So you'll get there eventually, but the effects are slow. And consequently, when trials were done, they had to be done over much longer durations. You'll notice that with semaglutide in the ESSENCE trial, the study duration was 72 weeks. That's even longer than the tirzepatide duration of 48 weeks. And also, the effect is very modest. And if you look at the trial design, instead of using the number of patients that you would have seen and the resmetirom trial, they increased substantially. Because if you have an effect, you can show statistical significance if you go long enough and have enough patients. Fast forward to pemvidutide, we believe that we have one of the most potent drugs, if not the most potent drug for MASH based on liver fat reduction. And the fact that in animal studies, we've actually seen a direct antifibrotic effect of pemvidutide that's independent of that liver fat reduction. So we have 2 shots on goal here. And we are actually reading out that study not at 72 weeks or 48 weeks, but at 24 weeks. And we think that, that earlier readout the ability to hit stat sig at 24 weeks will be clearly representative of the potency of the drug. Now other drugs have hit 24 weeks fibrosis improvement, like the FGF21s and they have liver fat reduction in the range of about 65% at 24 weeks. So we beat that right from the get-go. So we believe that we have a better chance of hitting that fibrosis improvement endpoint at 24 weeks. But in addition, we have something that they do not have, which is body weight loss. And body weight loss is a huge motivation for patients with MASH. In our trial, which called the IMPACT trial, which we'll read out in the second quarter, that trial enrolled probably faster than any other MASH trial to date. And the reason was is that patients who came to the trial wanted to lose weight. We think that tells you about the market appeal of the drug and lined up against the FGF21s, people who want to lose weight will use pemvidutide. So we'd be the only incretin agent to read out at 24 weeks in any end point plus, we'd be the only agent at all to have both effects on MASH and weight loss at 24 weeks. So we think that when we get to NDA, we may have the best drug in development for MASH.

Yes. Very interesting study. And before we go more into some of the specifics on the clinical data and what you've seen so far us, just going back to this mechanism, you mentioned that you think it could have an independent effect on fibrosis in the liver, but then also we see this very potent effect from glucagon in terms of specific liver fat reduction. Tell us a little bit more about what you think the biology behind this is?

Well, on the fat side, it's clear that glucagon inhibits liver fat synthesis and also accelerates beta oxidation of fatty acids. We saw, for example, in 1 study, the ketone body production, which is representative of a fatty acid breakdown went up by a factor of 6, not to what you would call ketotic ranges, but clearly, a very healthy fasting range. And that's the very nature of glucagon to basically shift body metabolism from burning carbohydrate to burning fat, which is very beneficial, not only in terms of overall metabolism, but we think is the underlying mechanism for the lean mass preservation that we're seeing because the substrate is synthesized, carbohydrates is also breaking down to amino acids. We're not exactly certain of what the effects of glucagon are on fibrosis. It's known that glucagon is anti-inflammatory in the liver, for example, when livers are harvested for liver transplants and they're transported from one site to another, they're packed in glucagon to preserve them be further put into the recipient. So we think that there's something analogous to that.

Interesting. And a question that's come up in the space around glucagon has been around safety and tolerability. We've seen some data from survodutide and MASH. Maybe what's your perspective, high level on the safety tolerability profile of glucagon?

Right. Well, as you're aware, Ellie, we just recently completed a very extensive end of Phase II meeting with the FDA, and in that, meaning they see all of your data. They see all of the completed studies, the study reports and actually see the raw data as well, and no safety signals are identified in that discussion, whether it be cardiovascular or anything else. And in fact, they complemented us in an innovative program. We can talk more about the actual studies in a minute and told us agreed with our plans to go with 4 efficacy trials. So we believe that, that's a very strong confirmation of the safety profile of the compound going forward. And it's what we've reported in every trial to date that we've PR-ed on, and the FDA agreed with that impression.

You've highlighted sort of the balance between GLP-1 and glucagon with your molecule. Can you talk about sort of why that matters and specifically how your molecule compares to survodutide?

Right. So survodutide has a ratio of GLP-1 to glucagon of 8:1. So it's much more heavily biased towards GLP-1. Our molecule is 1:1. We believe in the potency and the value of that glucagon effect. And this molecule is designed to give the maximum amount of glucagon yet maintain glucose homeostasis, which we've done repeatedly in all of our clinical trials. And the FDA actually agreed with that. So as you are aware, we're not lowering hemoglobin A1c. There are other drugs that can be used to do that. But in the obesity population, only 20% of diabetics of patients that obesity or diabetes and half of those are well controlled. So in a well-controlled diabetic population or nondiabetic population, this drug is absolutely ideal. But we're not seeing deviations in glucose control that would raise any concerns about safety. And in fact, in our pivotal studies, we're including a number of diabetics in order to further show the safety of pemvidutide in a whole variety of patients.

And I think on the surface, there was some reaction to some of the survodutide data. And thinking that some of maybe the high discontinuation rates or some of the tolerability had to do with the glucagon component. Why do you think that's not the case?

No. The tolerability rates were probably were what you see with GLP-1-based agents. They were predominantly gastrointestinal, nausea and vomiting. Now, regarding that, the adverse event discontinuation rates that we saw in that trial were typical for Phase II. They were just shy. They're about 19%. I'm talking about adverse event discontinuation rates. If you look at the tirzepatide Phase II program was 25% and the semaglutide program was 30%. And across the board in the recent Phase II readouts, orforglipron, retatrutide, et cetera, we've seen similar Phase II adverse event discontinuation rates. The philosophy of Phase II is to test what you can do with your drug and then make modifications. And we've seen this with the semaglutide program and the tirzepatide programs, where in their case, they adjusted the dose titration that got those adverse event rates down. Now we have tremendous optionality here for one thing in that trial, we had a rigid dosing regimen, it does not allow people to dose reduce. We are doing that going forward. We think that's going to make a huge difference. And in addition, in our Phase III program, we've elected to extend the titration of the 2.4 milligram dose to 8 weeks and to titrated the 1.8-milligram dose for 4 weeks. And we think the combination of the dose reduction and also the allowance for dose titration, that the adverse event profile, the pemvidutide will either be class leading or very competitive I want to emphasize that, that 1.2 milligram dose, which produced a 10% weight loss had adverse event discontinuation rates similar to placebo. We think it's an excellent drug for primary care because docs can prescribe it without titrating up to it. In other words, you start with an approved dose of drug, which is not the case for semaglutide or tirzepatide. You go through phases of nonapproved doses and also produces 10% weight loss. And we're not intending to titrate at that dose. We don't see the need for it, and we see a very, very big opportunity in primary care that 1.2 milligram dose. In reality, what docs do is they start the lowest dose. They see how the patient does. If you're not getting enough weight loss, they increased it to 1.8. And then if there's not enough weight loss with that after several weeks ago to 2.4. This titration regimen we used in clinical trials is artificial. It's not used in clinical practice. And in reality, it stepwise increased 1.2, 1.8, 2.4 and we want to emphasize that we intend to get all 3 of those doses approved in our registration program. And that's important, and that will contrast with drugs and other sponsors that have unapproved doses in their titration regimen.

Yes. The other thing I wanted to point out is that pemvidutide has a unique PK profile because of the modification of the molecule that's been designed in the molecule the EuPort domain that we use in building the drug itself. It not only it extends the half-life and protects the drug from proteolysis, but beyond that, it has other benefits. It's got lower Cmax compared to other drugs in development or approved drugs as well as higher Tmax. So the entry of the drug into the bloodstream is slowed down. A lot of the tolerability or even safety issues are driven from Cmax, a quick peak in the concentration of the drug. If you can lower that if you can reduce that Cmax and extend the Tmax, you should see improved safety profile, and that's exactly what we are seeing. Just to emphasize the point, I mean, we believe that pemvidutide is the most best tolerated drug out there in terms of an incretin-based therapy because all of our data so far was without titration and without dose reduction. And in spite of that, our profile was very similar to existing compounds. Going forward, our goal is to get each one of the three dosage approved, 1.2, 1.8 and 2.4. And that gives a lot of flexibility. The physician can start the patient on an active dose at 1.2 and then increase it as necessary if the patient needs to lose more weight or they need more activity from the molecule.

Absolutely. And there's certainly a lot of different development avenues between obesity and MASH. I don't want to maybe delineate in terms of which trials we're talking about. But maybe first, before we dive into the clinical development strategy and the data you've seen, just high level, how do you think about the prioritization? I mean you could theoretically be very different price points on the market on the different cost structures for developing and commercializing.

Yes. And it's becoming clear that the first generation of drugs for MASH are really setting a very low bar. They are statistically better than placebo, but really very modest effect. If you look at -- even Rezdiffra that's already approved and compared that to semaglutide and tirzepatide very modest effect. So there's a lot of runway there. There's a lot of opportunity to improve. If you have a more potent drug, which we believe we have, you should get much better, much faster effect and much longer the benefit itself compared to placebo should be much greater. So that's what we hope to show. I think we are very nicely set up in MASH. The market is developing. There are companies ahead of us that are building the market. And we come behind them with a better molecule with more potent activity and safety profile that would be highly desirable. So that's really the strategy in MASH is to go full speed ahead with MASH, we're going to move forward with that. For obesity, our strategy remains to continue to seek a partner. And because, again, that's a huge market in the end to commercialize that drug effectively for obesity. We're going to need a partner. So we've decided that we will continue to look for a partner for obesity. But for MASH full speed ahead, we can progress MASH on our own. And you make a good point. I mean, ultimately, MASH, the best way to treat MASH is really have both direct effect in the liver as well as people losing weight at the same time. So if we can bring that combined benefit, that should actually be priced much more premium to just obesity. So we'll have to evaluate that as it develops, but we're very excited about both of these opportunities. In addition, we think because of the glucagon benefits of the molecule, there's opportunity to develop pemvidutide for additional indications. And we are also looking at that. We are planning to file our first up to 3 INDs by the end of this year, and we'll talk more about that and we got clearance from the FDA to move forward.

Well, since it's a readout that's coming out next year in the second quarter. Let's talk about the design of your Phase IIb in MASH.

The trial is 190 subjects and the randomization is 2:1 to 2, placebo, 1.2 milligrams and 1.8 milligram. So if you look at the sample sizes of the 2 primary treatment groups, the placebo and the 1.8 milligrams, that's about 76 per arm. That's very robust for a MASH trial. We've seen successful readouts with sample sizes in the 50s and 60s. So we have invested more subjects than in other trials in order to have a greater probability of success. The treatment duration is 48 weeks, but we're actually, as we mentioned before, reading out the endpoints at 24 weeks. And also, as I mentioned before, this will be the first incretin agent to read out in a biopsy endpoint at 24 weeks. Yet we're following all subjects for 48 weeks to look at their biomarker responses, their safety and also their weight loss at the end of 48 weeks. We're very happy with the way the study has gone. As I mentioned before, it's been one of the fastest enrolling studies in MASH. We think that speaks to the attractiveness of the compound and commercial potential and we're on track to read out the study in the second quarter of next year.

And what's the reader methodology that you're using? And I know there has been some modifications towards the end around rereading. Can you walk us through the reader methodology?

Right. So we have a number of advisers in the program, and we've also benefited from seeing how other companies have done that and what's benefited the readouts. And decrease the variability of the biopsy results. So one of the things we did is we've given very clear instructions to the readers on how to interpret the biopsies. What is the balloon hepatocyte can differ very greatly in the eyes of pathologists how to read fibrosis. So giving them clear rules decrease the will decrease the variability, and we've seen that as well. We are also advised that there can be a drift in the way pathologists see the biopsies over the course of the trial and that there might be some bias early on when they're enrolling patients, they know, they're trying to make eligible for the trial. And then efficacy at the end, there's a tendency to under-read the biopsy early on and overread it later. So the way that you deal with that is you take all the biopsies at the end of the trial, you shuffle them and you give them back to pathologists in a blinded fashion. And with that, the experience has shown that's the best way to look at the biopsies. We instituted this. We had originally intended to read out in the first quarter, and then we decided to implement this. And with the time that was involved to do that, we made the very slight adjustment to go back into the second quarter to allow that process to unfold.

Makes sense. And something that I don't quite understand, but it seems like we've seen in a handful of trials as a weight loss medication in MASH is a higher placebo rate. What are your expectations for your trial, both on MASH resolution and fibrosis for the placebo?

Well, I wouldn't say that deals directly with the mechanism of action, I think it probably deals more directly with how the biopsies are read. For example, in the ESSENCE trial. If I recall correctly, the placebo response rate for fibrosis improvement was in the low to mid-20s. My understanding is that they do not have a consensus panel read with that similar to what we're doing or they didn't reread the biopsies. So consequently, how rigorously you read the biopsy controls your placebo rate. And if you don't do it, we think not the drug mechanism. But the mix is on the readout determines your placebo rate.

Interesting. Any color on some of the statistical assumptions?

Well, the most important part here is that we hit stat sig at 24 weeks. That itself is going to be very meaningful. Companies have -- analysts have said, try to line up the treatment responses but there was no way that a drug like semaglutide could hit stat sig in 24 weeks. It just wouldn't happen. So it's a very, very clear statement of the potency of the compound to be able to do it. And as I mentioned, we'd be the first incretin to be able to do that at 24 weeks.

And if you wait for 72 weeks or 48 weeks, the effect size would be even greater. So if you can already hit statistical significance at 24 weeks. If you project out to 72 weeks, you should have significantly higher effect than the drug that is just barely hitting statistical significance at 72 weeks.

Absolutely. Let's talk about the clinical data that we've seen so far from pemvidutide, specifically walk us through the trials that you've already run and what we've seen in terms of weight loss as well as safety tolerability.

Well, let me focus on the MOMENTUM trial because it's the largest trial that we've completed to date. As you know, the MASH trial is 190 subjects, but it's currently ongoing and we're blinded to those results. But in the MOMENTUM trial, the 2.4 milligram dose at week 48, we have a 15.6% weight loss. But the trajectory of weight loss indicated there was a lot more weight to lose. So if we're going to the 68 to 72 weeks of the tirzepatide and semaglutide trials, we would have seen very competitive weight loss with that. We saw a very prominent reduction in serum lipids in patients with elevated lipids at baseline, we saw a 21% reduction of LDL cholesterol. We saw that effect preserved in patients who were taking statin therapy. And as you're aware, there's a big unmet need in the statin treatment population because only about 50% of patients actually hit their LDL goals. So if you have a therapy, that's a weight-loss therapy very attractive to patients since compliance with statins may not be ideal. And to combine the two together to get a synergistic effect to drive down LDL-cholesterol that would be very attractive. And actually, the FDA made a comment they found that was a very attractive proposition. And that's actually the design of VELOCITY-2, our second pivotal trial in the pivotal program to look at LDL-cholesterol reductions in people who have elevated LDL at baseline, a subset of which we're already taking statins. Although not in the MOMENTUM trial in previous trials in patients with fatty liver and MASLD we saw a 76% relative reduction in liver fat, with over 50% of subjects actually achieving normalization, and these are really excellent statistics. On the safety side, the adverse event profile was typical for a Phase II compound, and we believe that with the dose reduction and the dose titration that we've talked about that this compound will be extremely competitive if not class leading on safety and tolerability by the time of that readout occurs. As Vipin mentioned, we were in the same range as other compounds in Phase II despite not respectively allowing dose titration or dose reduction and the mere fact that we can keep up the other compounds despite those restrictions really talks to the -- of the tolerability of the compound.

Great. And then maybe just turning to the recent interactions with the FDA and potential designs for Phase III in obesity. Yes, just walk us through some of the recent FDA feedback.

So as I mentioned before, in end of Phase II meeting is a very extensive meeting with the agency. You put all of your data out there. We had 521 completed subjects. We actually have 190 in the ongoing MASH trial as well. And they take a look at the data for all of the safety of the compound, they dig in, they have the primary data, and they tell you what they think. And what they told us is that they did not see any safety signals in the compound. They did not give us any specific safety directions. They agreed with our proposal to go with 4 pivotal studies orientated towards efficacy. Those studies will comprise 5,000 subjects. It aligns with the FDA guidance and obesity for the number of exposures needed for 1 year. The first of the study will be the largest study VELOCITY-1 will be a study in nondiabetics, very similar to the step of their SURMOUNT trials and that will be a weight loss study in nondiabetics. But the other 2, 3 studies will have diabetics in them. As I mentioned, VELOCITY-2 is looking at subjects with elevated cholesterol -- LDL cholesterol at baseline. VELOCITY-3 is actually a study in patients with fatty liver. Fatty liver is known to be associated with cardiovascular comorbidities and represents ectopic fat in the body, which can deposit in many other tissues in the body. So the treatment of MASLD is extremely important. And then VELOCITY-4 looks at lean mass preservation but it also focuses on function and subjects, particularly the elderly and individual who are more apt to the morbidities of lean mass loss such as individuals with sarcopenia at baseline.

Yes. One of the things that's noteworthy about the design of the trial is that right from the very beginning, we were not trying to duplicate what other obesity trials have done in the past because of the mechanism we wanted to bring out or leverage the benefits of glucagon. So it was unknown to us, would the FDA agree to that, would buy into that strategy as opposed to doing similar trials have been done with tirzepatide and semaglutide was refreshing to see they actually complemented us on that. That's really where we think the obesity field is going. Going forward, there's going to be a lot more emphasis on treating multiple comorbidities of obesity and different mechanisms are going to be required to achieve that goal. Incretins of GLP-1s and GLP1 GIPs are excellent at treating diabetic patients with obesity because they're addressing a very important comorbidity of obesity diabetes, but they're not really addressing as effectively serum lipids and dyslipidemia and liver fat. That's where glucagon comes in. So we think that's sort of the next set of comorbidities that we need to address, and that's exactly what pemvidutide is designed to do.

And yes, I think that absolutely makes sense in terms of potential development strategy. You've mentioned that you wouldn't bring obesity forward on your own. How should we think about the timing around the potential partnership? Are you waiting for the MASH data.

Well, obviously, MASH data, let me just back up and first at the end of Phase II meeting is an important -- very important value-creating milestone for derisking milestone for pemvidutide for Altimmune and even for our potential partners. So we'll see how that plays out as people become -- as we expose them to the design of the trial. Now the program is all set. Now we know what needs to be done and what would it take to get the drug to registration. So I think that should help going forward. But beyond that, our strategy hasn't really changed. We'll continue to seek a partner centered around obesity, but we are going to move full speed ahead with MASH. We think we can develop that on our own. And that's why we're looking at these additional indications as well. Those are also indications that we can develop and even commercialize on our own. So our goal is to continue to create value. And ultimately, even -- it will be good even for a partner to see that progress, and they may be even more interested as we bring together all of these additional indications.

Yes. And let's talk a little bit more about some of those additional indications as well that you think you can develop on your own?

So again, the focus is to leverage glucagon, both combination of GLP-1 glucagon. So these are all obesity-related indications. We'll still look at obesity as one of the endpoints. But the focus is going to be on comorbidities of obesity. We've not gone out and talked about what these indications are. We're waiting to complete our FDA interaction. As I said, we'll file -- we plan to file first of up to 3 INDs this quarter. We'll get feedback from the FDA. And then next year, we'll prepared to -- these are all going to be Phase II type studies. So these are not -- I'm going to go all the way back to one of the benefits of having this end of Phase II meeting is that the safety profile of pemvidutide is all set at this point even for MASH, that should help us. but even for these additional indications. So in the first half of next year, we plan to file additional INDs and we'll discuss more as we have more information.

Great. And with AASLD this weekend, and we'll be getting the first Phase III readout from a GLP-1 in the space. What are you looking to see in terms of some of the full data from the ESSENCE study? And I guess also anything else that we should be focused on an at AASLD?

The initial readout for the ESSENCE study came in exactly as we would have predicted. The effects were modest. They were helped by the fact that they dosed for as long as 72 weeks, the longer you dose, the better the effect, Vipin brought that out. Also they overpowered the study, the number of subjects in the study. If you have a small treatment effect if you have enough subjects, you'll be able to show it whether it's clinically meaningful or not. Look, we think it's in advance. We think that with GLP-1 agents, because of their indirect effects in the way it all treated long enough, you're going to see these effects. But they would not have seen these effects at 48 weeks or 24 weeks. So consequently, the effects are there. But when you combine a GLP-1 with a direct-acting mechanism, you have much greater potency in the liver, much greater effects in fibrosis. So we believe that with pemvidutide, we can treat all phases of MASH. Not only the early phases where you want to get weight loss but the later phases where you need to reduce fibrosis. So we think that we could take all comers and that we're not pigeonholed into any one phase like a GLP-1 like semaglutide might be, we can go all the way up to F4.

And in terms of a cash away perspective, remind us sort of where you stand from that perspective.

Yes. So we just announced that at the end of third quarter, we had approximately $139 million. That's sufficient cash to go into -- well into the first half of 2026 and really achieve all of these milestones. Obviously, the MASH data readout would have been completed by that time. Even the additional indication that we are talking about will be able to initiate them and have data on some of them by that time.

Great. And yes, with that, we can close it out. But thank you both so much for joining us.

Thank you for having us.

Thank you.