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

Hi, everyone. Thank you for joining us today at the fireside chat for Altimmune. I'm very pleased to welcome the President and CEO, Vipin Garg, along with the Chief Medical Officer, Scott Harris. Before we get into the questions, a reminder of our research disclosure. For important disclosures, please see Morgan Stanley research disclosure website at www.morganstanley.com/researchdisclosures. And if you have any questions, please reach out to your Morgan Stanley sales representative.

With that, we begin the Altimmune fireside chat, and we are excited to have you here. So for those who do not know the story of Altimmune, can you give us a brief background of yourselves and a brief background of the company at a higher level and what you're currently focused on?

Absolutely. Well, thank you for having us. We appreciate it. I'm Vipin Garg, President and CEO of Altimmune; and my colleague, Dr. Scott Harris, our Chief Medical Officer. Happy, excited to tell you about Altimmune. So we are developing a GLP-1 glucagon dual receptor agonist for the treatment of serious liver diseases such as MASH. We'll talk more about that. But really, the idea is this -- the drug is called pemvidutide is rationally designed to have both direct effects in the liver as well as have metabolic benefits of the drug. So glucagon works directly in the liver, has direct effect in the liver, whereas GLP-1 provides metabolic components such as weight loss, mainly through weight loss. The best way to treat MASH is really to go to treat the liver, have a direct acting agent in the liver as well as lose weight at the same time. About 80% -- over 80% of patients with MASH have -- are either overweight or have obesity. And really, MASH is a disease of obesity. So the best way to treat MASH is to not only treat the liver, but also to remove the original insult or the injury that actually caused the disease to begin with. So you'll see that everything we are working on relates to serious liver diseases where it would be beneficial to [ defect ] the liver. Pemvidutide has very profound reduction in liver fat, liver inflammation, liver fibrosis and on top of that has weight loss. Pemvidutide also has a highly differentiated PK profile that improves tolerability, and we'll talk more about that. We are in the middle of our 48-week Phase IIb trial for MASH. We recently read out a 24-week endpoint in that. That's really the primary endpoint of the study, and we'll talk more about that. I'm very excited to now have 48-week data coming out in the fourth quarter of this year. We're also preparing for an end of Phase II meeting with the FDA in the fourth quarter of this year and then prepare for our Phase III trials in MASH in 2026.

Thank you. With that, we can expand on the MASH discussion for pemvi. So you recently reported a 24-week result from the IMPACT Phase IIb trial. What are the key learnings? And how did this reinforce your conviction about pemvi's potential to disrupt the MASH treatment landscape?

Well, thanks, and thanks for having us here. So let me just go over the basic design of the trial. So it's a 48-week trial. We had 212 patients enrolled. We had 3 treatment arms, placebo, 1.2 milligrams of pemvidutide and 1.8 milligrams of pemvidutide. The treatment is for 48 weeks. We're following patients out to that time point to monitor their noninvasive tests, which, as you know, from recent discussions with the FDA have really risen to prominence there. So we're following noninvasive test through week 48 and also body weight and weight loss. And the primary endpoint of the study is based on the biopsy, which is done at week 24. We would note also that the 1.2 and the 1.8 milligrams of pemvidutide were administered without any dose titration, which is unique among incretin class agents, and we'll talk about the importance of that in a minute. So at the biopsy endpoint at week 24, we saw class-leading MASH resolution. The anti-inflammatory aspects of this compound were really robust and were really amazing. That MASH resolution we saw was exceeding MASH resolution seen by other compounds at 48 and 72 weeks. All of the activity is built upfront. There were a lot of other readouts of anti-inflammatory activity such as ALT levels MRI-PDFF, which is a measure of liver fat content and also an MRI-based imaging technique called corrected T1 or CT1, which measures liver inflammation. And in all of these noninvasive tests of inflammation and MASH activity, we were class-leading. And this MASH resolution drives fibrosis improvement. And we also saw great changes in fibrotic activity, whereas we didn't meet the endpoint read manually by the pathologists, we did by the computer AI-based algorithms. I think everyone would agree, the computer is more accurate than the pathologist reading. Europe has already accepted the standard. There's an application from the company that has produced this technique in front of the FDA. We're hopeful that the FDA is going to act on that in the fourth quarter. And if that's the case, we'll have met the approvability for fibrosis improvement in the United States as well at week 48. But the noninvasive test results that we saw were also class-leading at just 24 weeks. So this supported the very robust anti-inflammatory and antifibrotic activity of the molecule, and we're going to continue to follow those to week 48, where we expect these to grow. So there's been a lot of discussion at the FDA recently about the use of noninvasive tests for evaluating patients with MASH, something very important happened about a week ago where the FDA accepted the application of a company called Echosens, which produces FibroScan, which is a measure of transient elastography or VCTE, and they accepted a letter of intent [indiscernible] surrogate endpoint. This has not happened before. And it shows that the FDA is extremely interested in moving ahead with noninvasive tests and that the level of evidence has also risen to that level. Now that process could be as long as 6 to 16 months. We really don't know. But when we look at the prospect of being able to go into Phase III using noninvasive tests, I think that based on noninvasive tests, we'll probably have the most antifibrotic molecule that's out there with a high probability of success and using these noninvasive tests would allow us to conduct much smaller trials, trials that would execute faster and also get us to NDA faster and also cost considerably less. So we're really excited about the readout, as Vipin mentioned, we have another readout coming up as a catalyst in the fourth quarter. We're meeting with the FDA in the fourth quarter to discuss the Phase III program. Part of that will be a discussion about taking our study and designing it in such a way that we can flip it from biopsy-based endpoints to noninvasive test-based endpoints in the trial. We get agreement from the FDA that we can do that and make that switch over during the course of the trial if FDA approves these knits.

That's great. Are there any specific areas that you'd like to seek alignment on with the FDA during the end of Phase II meeting as it relates to dose regimen and endpoints?

Right. So taking the last one first. As I mentioned before, we want to get agreement on the FDA that we can move -- that we can design a trial such that we have all the noninvasive tests that they need and that we can flip that switch in the middle of the trial if that conversion to take place. Dose-wise, we achieved really remarkable dose with only 1.8 milligrams of pemvidutide, which is not the highest dose we've employed in clinical trials. At the 2.4 milligram dose in the prior trial, the weight loss at 2.4 milligrams is 40% more than 1.8. That means that we had employed the 2.4 milligram dose in our trial, we would have seen weight losses of about 8% and then you can hypothesize what that result would be at the end of 1 year of treatment, very competitive as good as other compounds in development. So one thing about pemvidutide is that it combines the direct effects in the liver, which are potent with very, very good weight loss. And the combination is very important for MASH patients because they die of cardiovascular complications up until the point they develop cirrhosis, they die of the cardiovascular complications before they die of the MASH complications. So the agreement will be to align on the endpoints to align on the doses. In addition, we want to get alignment on the size of the Phase III program. Typically, match programs have been about 1,800 patients. We recognize that we're coming into this discussion with 600 patients in obesity. So we hope to have a discussion with the FDA to reduce the size of the study, and we also have some innovative design features that I can't talk about until the FDA gives us a go-ahead on it, but that would also shrink the time required to conduct the trial.

Sounds good. And for the 24-week results that you reported, are there any key learnings that is likely to inform the Phase III trial design as a whole?

Yes. I mean one thing I didn't mention was that we had essentially no adverse event discontinuations, which is unique among all drugs for MASH and also recognize that we accomplished that without dose titration. And hepatologists are now facing the approval of semaglutide that was approved last week or about 2 weeks ago, and they're facing the use of this compound or adding into their clinical practice. But they'll tell you when they see patients on semaglutide, they're not seeing them on the 2.4 milligram dose. Obesity specialists are used to titrating very slowly over the course of a year, 1.5 years to get up to that level and many patients stop before the 2.4 milligram dose. Hepatologists are really not interested in titrating. So what you're going to see here is a lot of patients taking semaglutide who because of titration are not getting up to that 2.4 milligram dose, which is the only dose that we know works in MASH. In contrast to the 1.2 milligram and 1.8 milligram doses we have here, because they're so well tolerated, it can -- we can give them the dose needed for the treatment of MASH starting on day 1. So the tolerability of the compound here, the impressive tolerability was really a tremendous learning from the study. We learned about the very, very potent anti-inflammatory effects and the fibrotic effects were very potent as well.

Yes. Looking back at the 24-week readout, there are really 4 key messages that came out of that. We are clearly showing direct effect in the liver. We're showing significant weight loss, excellent tolerability, actually class-leading tolerability for any MASH treatment out there and no dose titration. You put that together, that really makes a very compelling story for MASH. It's really a complete solution for the treatment of MASH.

And on that, for the ongoing 48-week trial, is there anything we can extrapolate from the 24-week data to the 48?

Absolutely. Scott, do you want to?

Yes. Well, Nano will be able to project the noninvasive test at week 48, and we'll see the growth of that. I remind you that if this is the basis of approval in the future for MASH resolution and fibrosis improvement that we will have some of the most potent knits that are out there. We'll also be able to see the weight loss at week 48, which will grow over the course of time. And then just the continued tolerability of the compound. The dropout rate in our trial was very low in the first 24 weeks. That's typically where dropouts occur. This is one of the fastest enrolling MASH trials to date. Patients really like this drug. Docs like prescribing it. So we had no problem getting people who wanted to come into the study. We think that says a lot about the uptake of the drug once it's on the marketplace.

Excellent. And on the study, the participant that enrolled for the Phase IIb that were in biopsy stage F2 and F3.

Exactly.

What are the plans to include the F4 stage participant in future studies?

Yes. We'll have that discussion with the FDA. That's a program that we are very interested in. And we think that we would have a very high probability of success in F4 based on all of the data that we've seen so far.

Got it. Are there any key questions that still need to play out in the MASH arena?

Well, it's just the beginning of drug approvals in the MASH space. We just have a second -- we now have 2 drugs. We have Rezdiffra, which is a direct acting agent in the liver. We've got semaglutide recently approved, which is more working through the metabolic component through weight loss. So I think the key question is that if you combine these 2 effects, both effect in the liver and the metabolic components, what is the benefit of that? And that's really what we need to -- what we would like to emphasize that really the ideal treatment is the combination of these 2 approaches, and that's what needs to be played out. Our discussions with KOLs and prescribers, it clearly show that doctors want their patients to lose weight in addition to improving their liver health. So they really are interested in that. And that makes sense because the large proportion of patients with MASH have -- would benefit from losing weight. So really, that's the unique advantage of pemvidutide. It's combining these 2 mechanisms in a single molecule.

Got it. And still in that space, we've seen strong data from the FGF21 analog class. And what can we learn from the success of those drugs? And how can the mechanism of [ pemvi ] be differentiated?

And once again, they're emphasizing the need for direct effect in the liver. FGF21 works very effectively in the liver. So that's there. And that's what we are delivering as well through the glucagon component. But again, FGF21s have no weight loss. So there's already a lot of discussion about combination therapies, combining FGF21 with GLP-1, so you can have both of these benefits. But why would you want to use 2 drugs if you can have a single drug do the same thing. It's very complicated to do combination therapy, 2 different PK profiles, 2 different tolerabilities, could be even 2 different administration -- mode of administration. So we think it's a much better solution to have a single drug doing both of these -- delivering both of these mechanisms.

Got it. And with that, we can actually talk about the obesity program. And you recently had a successful end of Phase II meeting with the FDA and agreed on the design of the Phase III registrational program for pemvi. What would you highlight about the Phase III trial design and the expected benchmark for success?

Okay.

Well, let me quickly review the results of the Phase II study because they're important. The drug was well tolerated. The weight loss that was achieved at the 2.4 milligram dose at 48 weeks of 15.6%. But if you look at the trajectory of the curve, there was a lot more weight loss to be there. And if you take it out to the -- excuse me, the tirzepatide time point at week 68 or the semaglutide time point at week 72, the weight loss would have been extremely competitive. We maintained glycemic control. There were no cardiac adverse events of any note. We certainly didn't see any arrhythmias, which has been a problem with some other programs. The overall increase in heart rate was [ meanial ], no more than what's seen with any other GLP-1. So we came out of that study with 600 exposures, and we had a meeting with the FDA where they agreed that there were no safety signals in the program. There was no need, for example, for cardiac outcomes trial, which has been placed on other sponsors in the obesity space as well. So a great deliverable from that program in addition to efficacy with tolerability and safety, which we carry forward now into our MASH program as well as our program in alcohol liver disease and AUD. So I think we established very clearly in discussion with the FDA in November of last year that pemvidutide was safe and it would be safe across the indications for which it's being pursued. Now we had a robust meeting with the agency. We announced 4 different trials. One of them was in lean mass preservation. Another important feature of pemvidutide is that when weight loss occurs, the amount of loss that comes from lean mass is lower than other incretins. So that's very important because of the high rates of bone fractures and falls in people over the age of 60, particularly postmenopausal women. And in fact, in the semaglutide program, they saw a higher rate of bone fractures. Their -- what we call lean loss ratio, which is the amount of lean mass loss divided by the amount of total weight loss was about 40%. That's been seen in several other studies, and it's not really been fully explained, but it's a real concern. And they have a warning in their prescribing information about the higher rate of bone fractures in elderly and the women. Even retatrutide, which has gotten a lot of attention was 38%. When you lose weight naturally, if all of us here went in the diet, the amount of lean loss is the ratio of the total weight loss will be about 25%. So that gives you a perspective. Now pemvidutide was 21.9%. So there's been a lot of attention given to the fact that this compound through glucagon preserves lean mass. Now that's very important in our MASH program because patients with advanced liver disease have sarcopenia. They have low muscle mass. And if you give them a GLP-1 like semaglutide, that could be -- have a very critical effect on their health. So we immediately come into a program like F4 with really good safety just based on the compound itself, plus the fact that we don't inflict damage on their metabolic balance, their muscle mass, and that's very important as well. But we actually created 4 studies. We call them VELOCITY. One of them looked at the reduction of LDL cholesterol in people with elevated levels at baseline. FDA was very excited about that because they saw a synergy between pemvidutide and statins because we got very good LDL lowering effects greater than 20% in people with elevated levels, and we saw it even in patients taking statin therapy. So there's been a real problem with statins and the ability to reach LDL goals with statins in compliance with it. But FDA saw the possibility of driving compliance through the desire of people to get weight loss and then taking the 2 compounds together to get to their goals.

And I would just add that internally, we are focusing on really treating serious conditions that result from obesity rather than going after pure obesity. As you can see, we have lots of data that pemvidutide produces very significant weight loss, and we have a lot of data on safety profile of the drug. So the question is how do we take that and how do we create maximum value from that. We think the way to do it is to go after serious liver diseases rather than pure obesity marketplace. And that's really what we are doing. We're bringing in the weight loss benefit to liver diseases across MASH, AUD, ALD, people with overweight and obesity have poor outcomes. So they will all benefit from losing weight. So all of these trials, we have a Phase II trial going on in AUD, one in ALD. Across all of these trials would be reporting on weight loss as well. So for instance, in MASH, even though our main indication or our primary indication would be treatment of MASH, weight loss would be an important secondary endpoint, and we hope to have that on the label.

Yes, that's very excellent. Thanks for touching on the AUD and ALD programs. We would like to understand how pemvi fits in the treatment landscape for that, those 2 major disease areas.

Absolutely, Scott.

Well, AUD, alcohol use disorder and ALD, alcoholic liver disease are both areas of huge unmet need. Alcoholism is an all-time high in the United States. Alcohol related obesity is actually -- excuse me, related comorbidities has actually doubled because obesity worsens the outcome in alcohol use disorder and alcoholic liver disease. So with the epidemic of obesity, we're seeing more complications in AUD and ALD. So it makes a lot of sense to have a drug that treats both AUD and obesity, ALD and obesity. So the literature on GLP-1 effects on alcohol craving intake is well established. We have our own data in animal model showing a very dramatic reduction in the intake of alcohol -- free intake of alcohol by animals given pemvidutide. We're now conducting a Phase II study in alcohol use disorder. The study kicked off in May of this year, and we hope to read out in the second half of 2026. But that IND passed, and we're conducting that study and we're very happy with the way it's going. So that reduction in alcohol intake is probably driven predominantly, at least as far as we know by GLP-1s. But what glucagon gives you is the potential to heal any injury in the liver due to fat because the pathology of alcohol liver disease is almost identical to that of MASH. It's basically fat-driven inflammation going to fibrosis and cirrhosis. And we know the effects of pemvidutide on that sequence, liver fat, liver inflammation and fibrosis. So it's very attractive to think that the GLP-1 in alcohol liver disease would reduce the craving whereas the glucagon would heal the liver damage that occurred. So that trial was kicked off in July of this year and is also enrolling. We haven't updated the Street yet and what we think the completion date of that trial is as the enrollment is a bit too early to know at this point in time. But it's key to note that we've got agreement from the FDA to assess the liver damage in ALD with a knit. And that knit is VCTE, vibration controlled transient elastography or FibroScan, which is the same knit that was in the headlines a week ago because of the letter of intent in MASH. So it means that there's an endpoint here that's being recognized across 2 indications. There's a lot of data to show that VCTE is the primary assessment for liver damage and fibrosis in alcohol liver disease, and we have agreement to use it as the primary endpoint in the ALD trial and to read out on that. And we'll do that after the trial itself is 48 weeks. But like the IMPACT trial, we'll read that out at 24 weeks based on the knit. And I think based on the NIT results, the VCTE results that we saw in the IMPACT trial, we're very optimistic about a positive readout in ALD as well.

I just wanted to point out, we recently got fast track status for AUD as well, just a few couple of weeks ago. So we're the only drug in development that has fast track status for AUD.

Yes. On that note, I wanted -- you've been upfront about your intentions to partner pemvi with ahead of the Phase III trial for obesity. Can you discuss your business development plan? Has anything changed?

No. I mean, as far as obesity is concerned, as I've mentioned, our focus is not to go primarily after obesity as the main indication. In our partnership discussion, that's clearly an option that our partner can pursue. But we think we bring much more value by going after serious liver diseases. Also, there's going to be tremendous pricing pressure on obesity drugs as more and more drugs get approved. Already with just 2 drugs, we are seeing a significant price war out there. Whereas if you are going after a serious disease that results from obesity, it's a totally different value proposition. So we plan to stick with that strategy and really move forward full speed ahead in MASH and then we'll look forward to getting the data from AUD and ALD as well. As Scott lined up earlier with MASH, we are expecting the 48-week data, very important milestone coming up as well as the end of Phase II meeting with the FDA coming up. So looking forward to then really talking about our Phase III program next year.

Thanks, Vipin. Thanks, Scott. Thanks for joining us here at Morgan Stanley for the conference.

Well, thank you very much. Thank you for having us.