Altimmune, Inc. (ALT) Q4 FY2025 Earnings Call Transcript & Summary

Good morning, ladies and gentlemen, and welcome to the Altimmune Year-End 2025 Financial Results Conference Call. [Operator Instructions] As a reminder, this call is being recorded. I'll now introduce your host for today's conference call, Lee Roth, President of Burns McClellan, Investor Relations Adviser to Altimmune. Lee, you may begin.

Thanks, Gigi, and good morning, everyone. Thank you for joining us for Altimmune's Fourth Quarter 2025 Financial Results and Business Update Conference Call. On today's call, you'll hear from Jerry Durso, our Chief Executive Officer; Dr. Christophe Arbet-Engels, Chief Medical Officer; Linda Richardson, Chief Commercial Officer; and Greg Weaver, Chief Financial Officer. Following management's prepared remarks, we'll open the line for the Q&A session. Our fourth quarter and full year 2025 earnings release was issued this morning and can be found on the Investor Relations section of the Altimmune website. Before we begin, I'd like to remind everyone that remarks made 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 review of the risk factors that could affect the company's future results and operations, we refer you to our filings with the SEC. I'd also direct you to read the forward-looking statements disclaimer in our press release issued this morning, which is now available on our website. Any statements made on this call speak only as of today's date, March 5, 2026, 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's date. 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 Mr. Jerry Durso, President and CEO of Altimmune. Jerry?

Good morning, everyone, and thank you for joining us today for our fourth quarter financial results and corporate update. This is my first earnings call since joining Altimmune as CEO in January. I'd like to start with some comments to reinforce why I'm excited about the opportunities ahead of us with pemvidutide. Altimmune is exclusively focused on liver disease, an area where I've spent a good part of my career. Despite a number of therapeutic breakthroughs in the past several years, there remains significant unmet need and treatment gaps among patients living with serious liver diseases like MASH. We believe that pemvidutide has the potential to bring meaningful benefit to people affected by a variety of hepatic diseases. The balance one-to-one agonism of glucagon and GLP-1 in a single molecule achieved with pemvi makes it potentially well suited for the conditions we're targeting. Glucagon's direct effect on the liver can drive reductions in liver fat, inflammation and fibrotic activity, while GLP-1 can mediate weight loss and appetite suppression and may contribute to anti-inflammatory effects. Additionally, pemvi incorporates our proprietary EuPort structure, which slows absorption and is believed to drive improved tolerability, potentially reducing GI and other side effects, which can lead to greater treatment adherence. Importantly, keeping patients on therapy at the right dose is crucial to the management of chronic diseases such as MASH. The data we've generated to date across multiple preclinical and clinical trials, including our Phase IIb MASH study reinforce our belief in the strong therapeutic potential of pemvidutide as well as its ability to stand out among competing therapeutic options, if approved in MASH. As we evolve the pemvi plan, we're focused not only on advancing into Phase III but also ensuring that the potentially unique benefits of pemvi for patients, payers and physicians are addressed in our program with a keen eye to competitive advantages in pemvidutide's targeted product profile. Based on our ongoing discussions with hepatology KOLs and other practitioners, it's clear that clinical practice in MASH is evolving and will continue to evolve as new therapies become available. The prevailing sentiment is that no single therapy will be able to effectively address the needs of all patients. This is already being acknowledged by the industry as a number of companies are pursuing combination strategies to meet the needs of broader segments of the patient population. With pemvi's dual mechanism, we have a combination therapy in a single molecule with the potential to address both the hepatic and metabolic drivers of disease at once, which could differentiate pemvidutide from these multidrug approaches that aim to achieve the same benefits we're providing with a single compound. In our Phase II MASH study, pemvi showed strong and early MASH resolution at just 24 weeks and clear antifibrotic activity at 48 weeks. The key measures were consistently moving in the right direction with important noninvasive markers of fibrosis and inflammation improving as therapy progressed in the trial. In addition to efficacy, patients need a therapeutic regimen that they can adhere to in order to realize the full benefit of treatment. As we've shared the favorable tolerability leading to low discontinuations due to adverse events that we saw in our Phase II MASH trial can be a key differentiator that pemvi may deliver. Likewise, for patients and physicians, the simple dosing aspect of pemvidutide could play an important role. The 1- or 2-step titration scheme will be incorporating into the pemvidutide Phase III trial could prove to be key when compared to the much more complex dosing of other injectable compounds. The potential of pemvi was recently recognized with FDA Breakthrough Therapy designation and MASH. Breakthrough is granted to medicines that are intended to treat a serious or life-threatening condition and have shown preliminary clinical evidence indicating the potential for substantial improvement over available therapies on a clinically significant endpoint. We look forward to proving this out in our upcoming Phase III trial. I hope this gives you some additional perspective into why we're so encouraged about the future of pemvidutide and excited for what's to come. Now as to how we're preparing to deliver on this potential, one of my top priorities since becoming CEO is strengthening Altimmune's foundation to equip us for the continued successful advancement of pemvi and support our strength as a late-stage development company. I'm pleased to report that over the last several months, we've enhanced our team with the addition of new leaders who bring expertise in liver disease, late-stage clinical development, commercial strategy and other key areas. We'll continue to build on to the strong Altimmune team strategically to make sure we're able to deliver. We've also remained focused on strengthening our financial position. The $75 million capital raise completed in January was an important step in our ongoing efforts to prepare for the planned initiation of our Phase III this year. We remain committed to securing access to the capital required to successfully drive our clinical programs and create long-term value. At the end of Phase II meeting with the FDA, which was held in the fourth quarter based on 24-week data from our Phase II MASH study, we received valuable guidance on the Phase III trial and we made excellent progress on the in-depth planning of a major global mass trial like this. We are clear on the overall design elements and the endpoints, and we're now in the process of making the final detailed decisions on the protocol and the full operational plan. Christophe will share more on the trial with you this morning. While we have significant focus on our MASH program, we're also executing well on our other Phase II trials. As a reminder, last fall, we completed enrollment of the Phase II AUD trial ahead of schedule, and we're now on track to report top line data from this study in the third quarter of this year. We're also expecting the complete enrollment of our Phase II trial assessing pemvi and ALD in 2026. Pemvidutide represents a unique and compelling opportunity to improve the lives of people with MASH and other liver conditions. It has the potential to become an important tool for physicians as they look to improve upon the current treatment paradigm. This is a very exciting time for the team at Altimmune. We're moving quickly with intent and focus on bringing pemvidutide to patients and creating long-term value for our shareholders. With that, I'll now turn the call over to Christophe for a clinical update.

Thank you, Jerry. As we shared on our conference call in December, the 48-week data from the IMPACT trials of pemvidutide in MASH which evaluated the 1.2 and 1.8 milligram doses was very encouraging. The 48-week data set, including key noninvasive markers of liver inflammation and fibrosis, weight loss and tolerability and showed strong evidence of anti-fibrotic effect at week 48 following the early MASH resolution shown already at week 24. The 48-week data established a clear dose response that supports our plan to focus on the 1.8 milligram dose in the Phase III trial, while also evaluating the 2.4 milligram dose which could provide additional benefits on both weight loss and most importantly, liver efficacy. We saw substantial improvements both from baseline and from week 24 to week 48 in ELF, liver stiffness with the results achieved at the 1.8 million dose being particularly clinically relevant and comparable to or greater than that observed with the approved MASH product. These measures are clear indicators of antifibrotic activity, and we believe that they will translate into measurable histologic improvement at the 52-week time point in Phase III, which, along with MASH resolution, will be the basis for a potential accelerated approval. In addition to the strong benefit in ELF and liver stiffness results, treatment with pemvidutide demonstrated statistically significant improvement in liver fat content, liver health as measured by ALT and CET1 imaging with particularly impressive results observed in the 1.8 milligram treatment arm. While these NITs tells the story of pemvidutide's robust direct beneficial effect on the liver, the 48-week data also provided evidence of its ability to address metabolic drivers of MASH with patients receiving 1.8 milligram pemvi, achieving 7.5% weight loss at 48 weeks with no plateauing. As noted, the inclusion of a 2.4 milligram dose could result in greater weight loss in the upcoming Phase III trial and be an opportunity for additional efficacy on MASH endpoints for accelerated approval. As Jerry pointed out, adherence to treatment in this chronic disease is currently a substantial challenge. Long-term treatment is key to demonstrating clinical outcomes as well as delivering benefits to patients in the real world. Therefore, safety and tolerability of paramount importance in addition to demonstrating efficacy in MASH. I am very pleased to say that the low treatment discontinuation rate in the 48-week Phase II study were maintained in patients taking pemvi. We attribute these key benefits to the favorable safety and tolerability profile of pemvi with limited GI adverse events despite the absence of titration. The timing of the GI-related adverse events in the IMPACT trial which were predominantly occurring in the first or 2 months of treatment helped inform our plan to introduce a simple one or two step titration depending on the dose in the Phase III program. We expect this to further improve the tolerability profile of what we observed in Phase II study. On the regulatory side, the minutes from our end of Phase II meeting with the FDA which we received in January confirmed our takeaways from the meeting. We are aligned with the agency in all key aspects of the design for the pivotal Phase III study, which will assess pemvidutide in patients with moderate to advanced fibrosis. Participants in the pemvi arms will start at 1.2 milligram and follow a 1- or 2-step monthly titration to either 1.8 or 2.4 milligram dose. The trial's primary population will enroll 990 patients with biopsy-confirmed F2 or F3 MASH, evenly split between placebo, pemvidutide 1.8 milligram and pemvidutide 2.4 milligram and major improvement in either of two primary endpoints, match resolution of fibrosis improvement at 52 weeks with AIM-MASH Assist used to aid the histologic assessment. The 52-week endpoint is designed to support potential accelerated approval with 5-year clinical outcomes data on the liver-related events needed for an eventual final approval. A second cohort following the same dosing and titration parameter will enroll approximately 800 patients with NIT assessed F2 and F3 MASH and measure changes in these noninvasive tests over the same treatment period. This population will support safety and long-term clinical outcome evaluations. In total, we will enroll approximately 1,800 patients in this pivotal study. Other key endpoints in the program will include safety, weight loss and additional potential differentiation attributes such as body composition, quality of weight loss and patients reported outcome. This will be a global trial with sites in North and South America, Europe and Asia. In addition to the alignment with the FDA, we have submitted request for scientific advice to both the European Medicines Agency and the MHRA. We have incorporated learnings from previous programs and believe that our Phase III design is well positioned for these regulatory agencies. Overall, we've made great strides towards preparing to initiate our Phase III trial this year. We are finalizing our protocol and we have aligned with the FDA on the trial design. We have incorporated feedback from key opinion leaders and we look forward to execution of the Phase III study. We will be providing updates on our progress as appropriate. Now looking beyond MASH, pemvi has the potential to address major unmet medical needs in both AUD and ALD because of a similar lever physiopathology to MASH in these indications. And both of those Phase II trials are progressing well. First, RECLAIM our AUD trial completed enrollment in the fourth quarter of 2025 and we look forward to reporting the top line data in Q3 of this year. In addition to patients reported measures of alcohol consumption, the trial will also assess an objective biomarker associated with alcohol intake, pemvi's effect on body weight and safety in this population. For the RESTORE trial in ALD, which will evaluate pemvidutide effect on liver-related noninvasive tests, markers of alcohol consumption and body weight is continuing to enroll, and we expect to complete enrollment later this year. Both trials will further expand the already robust body of evidence for pemvidutide in serious liver disease. And with that, I will turn the call to Linda for a commercial perspective on pemvidutide.

Thanks, Christophe, and good morning, everyone. As we move toward Phase III initiation, establishing the future commercial competitiveness of pemvidutide in MASH remains a primary focus, both in the design of our trial, as Christophe described, and in identifying and addressing unmet needs in the marketplace. Despite early excitement with the first two classes of approved therapies for MASH, it is clear there is significant room for new therapies to address treating gaps and needs. We recently conducted market research with 75 U.S. health care professionals who treat MASH patients to assess unmet needs in the market and satisfaction levels with current and future therapies. I'll share some key insights now. First, we learned that physicians are identifying emerging needs in patient subgroups. This includes options for MASH patients who have discontinued semaglutide for either tolerability or efficacy reasons and now need alternatives. Tolerability failure was seen as an area of high or very high unmet need by the majority of the respondents. Half of all physicians surveyed agreed that there is a higher -- very high unmet need for therapies appropriate for MASH patients at risk for loss of muscle mass. A recent view of the literature shows that nearly one in four patients with MASLD is at risk for additional muscle loss or sarcopenia. And this rate is higher in more advanced MASH patients. In addition, health care professionals in our research see several fundamental limitations with currently approved and potential future therapies, setting up a clear need for potential novel options like pemvidutide. Many physicians acknowledge that the lack of weight loss with FGF21s and resmetirom are limitations of these options. And 44% agree that the tolerability profile of GLP-1 and GLP-1-based therapies cause many patients to drop off. Over 1/3 believe that lengthy titration schemes to improve the tolerability of these drugs creates adherence challenges. A similar number agreed that the loss of lean muscle mass is a concern when initiating GLP-1 or GLP-1/GIP therapy, echoing the concerns regarding sarcopenic patients I mentioned earlier. From our Phase II data seen to date, we believe that pemvidutide and its dual mechanism of action may address many of these unmet needs. Our existing clinical program already shows that pemvi has a favorable tolerability profile relative to current and investigational therapies. This may be highly differentiating and is clearly important in this market where patients must remain on drug therapy to achieve efficacy and weight loss benefits. Furthermore, other MASH therapies have trial designs with long titration schedules using multiple subtherapeutic doses to try to mitigate side effects. As Christophe highlighted, our Phase III trial will start with an active 1.2 milligram dose in each arm and have only one or at most two titration steps to possibly further improve our favorable tolerability profile. The inclusion of a 2.4 milligram dose with a 2-step titration over only 8 weeks should help maintain tolerability and allow us to evaluate potential further increases in efficacy and weight loss. Weight loss is an important element of managing MASH, and it's clear that lean muscle preservation is a growing concern among HCPs. This is an unmet need that we may be able to address as we've seen lean mass preservation in our pemvidutide obesity trial and we'll be generating additional data on this element in our further studies with pemvi and MASH patients. Now I'll share how physicians reacted to our projected product profile in this market research. We developed our projected product profile based on our current data from IMPACT, showing early and significant MASH resolution, anti-inflammatory and fibrosis effects from NITs and included data we anticipate seeing in our Phase III program, such as quality weight loss in the 8% to 10% ranges with lean muscle preservation. HCP surveyed recognized significant promise in our efficacy, including direct action on the liver with our glucagon agonism, metabolic improvements, straightforward titration, quality weight loss that preserves lean muscle mass and pemvi safety and favorable tolerability. In fact, in this market research setting, over 70% reported a very high or high likelihood to prescribe pemvi. Physicians projected using pemvi in 43% of their F2 patients and 51% of F3 three patients. Over 80% saw pemvi as both a first- and second-line option. Pemvidutide's potential efficacy, safety and tolerability profile may allow for use in patients requiring greater efficacy than a GLP-1 alone or providing quality weight loss not seen to certain other classes of drugs like FGF21s and resmetirom. As we add to our understanding of pemvi's clinical performance and data, amplify our storyline regarding our unique combination of attributes, we believe we will be well positioned to enter the MASH marketplace. What we see today and continue to hear from health care professionals certainly signals strong interest in pemvidutide. It is not enough to be differentiated. You must have meaningful differentiation and pemvi's projected profile provides that. I'll now turn it over to Greg to review our financial results.

Thank you very much, and good morning. I'll begin with a brief review of our fourth quarter 2025 P&L. R&D expense in the fourth quarter 2025 was $18.4 million compared to $19.8 million in the same period of 2024. Variance in R&D spend related to the end of the Phase IIb trial in late 2025. Breaking that down further, the Q4 2025 R&D spend included $12.8 million of direct costs related to pemvidutide development, of which $3.1 million was for the IMPACT Phase IIb trial, $7.4 million for the Phase II trials in AUD and ALD and $1.2 million in CMC-related expenses. Fourth quarter 2025 R&D also included $1.3 million in noncash stock-based comp, which is flat in comparison with the same quarter prior year. Moving to G&A. The G&A expenses were $10.5 million and $5.1 million for the quarter's end 12/31 '25 and '24 respectively. The Q4 increase in G&A year-over-year was driven by a onetime noncash and cash stock compensation and payroll charge due to executive transition, which totaled $2.6 million along with increases in professional fees and other compensation-related expense. Fourth quarter 2025 G&A included total noncash stock-based comp of $3.6 million compared to $1.8 million in the prior year period. Net loss for the fourth quarter of 2025 was $27.4 million or $0.27 a share compared to a net loss of $23.2 million or $0.33 a share in the fourth quarter of 2024. Total full year 2025 cash OpEx was approximately $67.5 million, excluding noncash comp of $16 million. We anticipate the use of cash will trend up this year as we approach the launch of the MASH Phase III trial. As Christophe mentioned earlier, we're actively finalizing the last details of the study plan and the other last important details for the Phase III. When ready, we will update you and come back and provide more guidance on the timing of cash flows and related details. Now moving over to the balance sheet. We reported total cash of $274 million at year-end 2025. We've made a great deal of progress in building the financial position, having recorded net proceeds totaling approximately $208 million last year, in a combination of $174 million in net equity capital raised and $35 million in funding of the Hercules tranche loan facility. And in addition, we raised $75 million in a registered direct offering announced in January with Alyeska Investment Group. The proceeds from this offering, along with $8 million raised off of our ATM facility in January, equates to a pro forma cash position today of approximately $340 million. We forecast that our current cash position would provide an operating cash runway into 2028 based on our current expectations for the scope and timing of the MASH Phase III plan along with the cost of both the AUD and ALD Phase II trials. Our intent is on having the cash resources necessary to execute the MASH Phase III trial. We'll continue to be strategic and opportunistic in our approach to securing access to the forecasted capital needed to fund the Phase III and we'll keep you updated on our progress. And with that, I'll turn the call back to Jerry.

Thanks a lot, Greg. As we highlighted today, we've entered 2026 with a great deal of momentum. We've made significant progress as we evolve into a late clinical stage organization and we're committed to further advancing our promising differentiated liver therapy and creating long-term value for our shareholders. So this concludes our formal remarks, and we'd now like to take questions. Operator?

[Operator Instructions] And our first question comes from Roger Song of Jefferies.

Congrats for the update. So first question related to the Phase III. We all see the FDA have some new single pivotal framework. Just curious, have you talked with the FDA about that potential change? And then is that possible you can further save the cost from a Phase III if FDA allow you to do some amendment for the Phase III?

Thanks for the question, Roger. Christophe, maybe you get on one?

Yes. No. So we discussed this -- we haven't discussed this at the end of Phase II meeting. The path for approval for the MASH programs is one single trial for accelerated approval and then all the way to final approval for clinical outcomes. So this doesn't really apply directly for us. That really doesn't change anything from how we're approaching our development program towards approval.

Got it. That makes sense. And then just knowing you're still finalizing the protocol, just any strategical plan you can share at this point in terms of the interim versus the final outcome of alpha split and then different two primary endpoints for the interim, if anything this year.

Yes. Thanks, Roger. A lot of progress there. Maybe Christophe can give the big picture on that.

Yes. So the first is that we are having a fairly standard design for the Phase III, so we have our two primary endpoints as per the FDA guidance, which is MASH resolution without worsening of fibrosis and fibrosis improvement without MASH worsening. And this is how we powered our study. Our study powered more than 90% on this endpoint. And that gives us a sample size that is around 990 patients, so 330 patients per arm. As we highlighted, that power should give us the sufficient patients to reach the approval and the split of the alpha is, as you know, for the accelerated approval, for part one is 0.1 and then the other -- the rest of the alpha goes all the way to the clinical outcome. The last thing is we powered based on our assumptions for the 1.8 milligram dose. So as mentioned, we're very well powered for this. In our trial, we have the option for an upside with the 2.4 milligram dose. And so we're really hoping that we'll see some added benefits there.

And our next question comes from Ellie Merle of Barclays.

This is Jasmine on for Ellie. I have two. So first, from your conversations with the FDA, where does the agency stand now on flexibility to consider NITs as a potentially registrational endpoint? Is the thinking for including the NIT cohort that we could potentially see more flexibility on this in the future that you might be able to amend and use this cohort for approval more quickly? And then secondly, can you talk about your plans in MASH F4 and potential time lines there? .

Thanks, Jasmine. Maybe I'll start and then turn it back to Christophe. On the first question, we did broach the point of end points on NITs in the end of Phase IIb process. The agency at that point said it was premature to consider that, which is why you see the biopsy driven end points. Nonetheless, we'll capture all of that data. So that process at the agency will be ongoing. But again, the -- as we finalize the protocol, you'll see the biopsy-driven endpoint as part of that. Maybe you want to pick up the second half?

Sure. No. I mean in the context of the AIM-MASH Assist approval, we see the agency slowly moving towards that direction. So we've incorporated NITs in our trials, and we've put everything in case they change during the conduct of the study. So we are in a good shape here if they were to go there. The other questions on the F4. I mean, our current focus is clearly on the F2/F3. We believe there is some potential here with the mechanism of actions and the direct effect on the liver to impact the F4. At this point in time, our teams is really dedicated towards the execution of the Phase III and putting all the last pieces in place to start. .

And our next question comes from Yasmeen Rahimi of Piper Sandler.

This is Dominic on for Yas. Congrats on all the updates. So we just had a few here. The first one related to the Phase III for MASH. What are the great limiting steps to kick off that study? And how are you thinking about the time lines for enrollment and top line data?

Okay. Maybe I'll start on the first half and then Christophe can take the second. We're very focused on bringing pemvi to patients as soon as we can. I think we're approaching the preparation on both the financial and the operational fronts. As Christophe outlined, we like where things sit on the clinical side. Good clearance from the FDA. Good insight on our proposal regarding Europe. So all things are moving in parallel. We expect that all will be in line to start the trial as we progress through this year, and we'll narrow the guidance as things come to fruition. Again, the teams are moving quickly here and this parallel approach is going to lead us to initiation of the trial.

Yes. I mean, I can just add to what Jerry said, we are in -- we're preparing everything on the regulatory side. We have alignment with the FDA. We have done our homework on what is expected from the European or the MHRA. We're in good shape here. We don't expect any major changes on our approach. So it's about now execution, getting the team to finalize the last details. Whether it's in our protocols, some of the key aspects of the protocol and then moving forward to be ready to start as soon as possible.

Okay. Great. And then I just have one more question on RECLAIM. We're excited for that trial. What are your thoughts on what you hope to see and what would you consider clinically meaningful on alcohol usage for that?

So this study of the AUD is analyzing the heavy drinking days over a period of 7 days or a week. And we have powered the study to see a fairly conservative change. So hopefully, we'll see that. We are also capturing other endpoints like the zero drinking days, as well as some of those WHO risk because this could be endpoints that will be discussed with the FDA if we move that program forward. So we have -- we're going to look at all these aspects when we get the data and hopefully, we'll see some improvement. As a reminder, the mechanism of action is well suited for this, both on the reward system through the GLP-1 side of it, as well as the direct effect on the liver, which is quite unique compared to what other progress have currently in development. .

And our next question comes from Corinne Johnson of Goldman Sachs.

This is Anupam on behalf of Corinne Johnson. Maybe can you just tell us about the additional financing through the year? And what you are anticipating needing to reach the completion of the Phase III in the MASH program? Any color on that?

Yes. So maybe I'll start on that, and then Greg could pick it up. As we -- I mentioned a couple of times already, including in the prepared remarks, we're preparing on both the financial and the operational side. On the financial side, as Greg outlined, we've improved our position. He referenced roughly $340 million on the balance sheet at the end of February that gives us runway into 2028. We'd like to make further progress as we progress to initiate the trial. We believe we have good line of sight on some options on how we would approach that in parallel to all the good operational work that Christophe and his team is doing. And then we'll access the appropriate tools along the way. Greg, anything else you want to reiterate?

I'll just pick up that thread. I think we have a sense of purpose here in making sure we've got the strength of our resources in hand as we begin the next necessary steps to launch this trial this year. Just basically just have a clear line of sight on what that looks like, how much that's going to take and confident that we'll get there.

And our next question comes from Annabel Samimy of Stifel.

Thanks for all the color on the profile and the physician receptivity. So I just want to ask from a competitive landscape. We'll likely be seeing more data from reta and survo in obesity this year with the full knowledge that this is in obesity. What are some of the key data points that you as a team are looking for that may translate into MASH and could potentially have implications for the competitive landscape on the glucagon agonist front. Maybe you can just give us an idea of how you're thinking about the entire competitive landscape for these specific dual agonists?

Sure. We're always paying attention to what's happening in the marketplace. And we look at ourselves and what we have in terms of great tolerability, quality weight loss that we haven't seen with these other agents. Our simplicity of our titration and tolerability, which we've emphasized is really seen as something quite important. For very obese patients, I think that there is going to be a role for managing that, but that has to be balanced with tolerability and efficacy elsewhere. And the direct-acting effects that we have shown in the ratio that we're showing in the 1:1 ratio, we believe, are very important. If you're talking about the results in obesity, there may be some read over there, of course, but the trial that they're looking at shouldn't read out for quite some time on outcomes. Our trial will be very heavily focused on MASH patients. So that's our focus F2/F3 and the size of the market is such that there are going to be enough patients who need help that there will be ultimately many roles, I think, for pemvidutide, particularly if we deliver on the differentiation and the profile that we just talked about.

I think just maybe one other point Linda touched on, the ratio matters. I think you think about the BI compound, for instance, I mean, obviously, we'll see some additional data from them. But I think the work we've done with our own compound, we believe the balance ratio is part of what's driving some of the elements around the tolerability profile, which again -- we saw a good solid picture in our Phase II without a titration. Now we have the opportunity to put a simple titrate and then maybe move forward on that as well. So we're looking at all of the competitive entrants. It's why we focused on this call, frankly, a lot more detail on the differentiation story because it's how we view the work that we are doing currently executing the Phase III and also really always understanding how we're going to position pemvi to bring the benefit to the patients that need it most.

Yes. And let me -- I just want to correct myself right now. The survodutide study is with their 8:1 GLP glucagon. And that is in the MASH population. I was looking at the retatrutide trial in my head. So I just want to make sure I correct that. Either way, I think the tolerability for survo was going to be quite significant for them. And when you look at the complicated titration schedule, that is going to be of concern as well.

Our next question comes from Patrick Trucchio of H.C. Wainright.

Luis Santos here in for Patrick. Congratulations on all the progress. My question is regarding the MASH noninvasive tests that you are using. So now that you have alignment with the FDA, did they provide any clarity on using it as primary rather than just surrogate as well as the AI biopsy reads for potential accelerated approval?

Christophe?

Yes. So on the discussion with the FDA, so as mentioned, the NITs are not -- are too premature now, and we just want to be really ready on this. However, I mean, the opportunity with our 2 cohorts is actually several fold. Once it's fulfilled some of those -- the requirements for the safety as well as the long-term clinical outcome, but also to enroll a little faster our Phase III trials because we know and we've done that we'll look into it. PIs will be happy to actually have the patients having different options, so the biopsies and the NITs. So that will give us some advantage there, and we're hoping this will be playing in our favor. With regard to the AIM-MASH, this is still a consensus based on the pathology reading. At the end, the pathologist is responsible, where we believe this could help us is actually in reducing variability, potentially if we do the right training, et cetera, having a lower placebo response and trying to play in our favor. So we're putting those pieces into place right now. We're having a lot of discussions with key pathologists and with the AIM-MASH Assist company, PathAI. And we're putting all the pieces of that and getting very close to having a really strong path toward biopsies, but also, as mentioned before, having the flexibility around the NITs in case the FDA changes their mind.

That sounds great. Very quickly, can you update us on your CMC manufacturing readiness. And do you plan to scale for global trial manufacturing supply for both obesity and MASH simultaneously? Or do you plan to partner on that end?

Scot Roberts can take the question. Just one point on the front is that we're focused on MASH trial, okay? We're focused on positioning pemvi as a liver compound.

Yes, that's exactly right. And as far as writing this for the Phase III, we believe that we're there, we're ready to go on that. As far as MASH, a global trial, that's really not an issue for MASH. We were recently developing the process for obesity. We can scale to that size as necessary, but the company is focused on MASH and for those indications in the U.S. and the rest of the world where exactly where we need to be.

And our next question comes from Michael DiFiore of Evercore ISI.

Two for me. I just want to -- the first one, I just want to drill down on a prior question that was asked. Now that you received the FDA minutes, what are the key elements that are fully locked and what is the single biggest remaining variable that you're still optimizing? And secondly, with the request for EU scientific advice now submitted, is there any early read on whether EU feedback could change anything meaningful versus the FDA aligned plan?

Thanks for the questions, Michael. Christophe?

Yes. So on the FDA minutes and the discussion with them, I mean, the -- we are really in the last phases of finalizing our protocol. We have all the elements, like I mentioned, the sample size. We talked to all of our biostatisticians. We have the primary endpoint aligned, the population, et cetera. What we're looking at is finalizing some like, for example, the biopsy is a critical point, and we want to really take the time to do it in the most comprehensive manner and having our A team of pathologists with us. So we're taking the time to do this, the most appropriate way and these are the kind of the last details, some of QC, for example, things like this. So these are really the final stages of those aspects. With regard to the EU, we've worked with regulatory consultants. We have a good understanding. We actually even have biostatisticians that are advising the EMA that worked with us. We've put together all the pieces. So we don't expect anything to hold us back and we -- our protocol and the design of the study shouldn't change based on the scientific advice.

Our next question comes from Jon Wolleben of Citizens.

This is Catherine on for Jon. Two quick ones mostly on the RECLAIM program. Firstly, how are you thinking about the mechanism of action? Like as far as having GLP and glucagon specifically maybe being beneficial over just GLP-1 agonism in the tolerated diseases? And also logistically, how do you guys plan on kind of moving forward on with the Phase III program. Are you guys going to kind of move forward with AUD and then wait for ALD data? Or do you want to kind of see both before moving forward?

Yes. Maybe I'll start with the second question and then Christophe can take the mechanistic one. So we'll -- as we said, we're going to expect the readout on the AUD trial in quarter 3. We'll assess the data and then plan next steps. That would happen immediately upon receipt of the data, no need to wait for ALD. We like the fact that we have a second Phase II going in ALD, but as the enrollment will finish this year, that will be a later readout.

Yes. On the mechanism of action, so it's well recorded in the literature that GLP-1 have a central effect on the reward system and the type of alcohol use that those patients will have. The difference is the direct effect on the liver. They are now more and more -- and recently in January at the NASH-TAG conference, there was clearly a talk talking about the fat in the liver of these patients, but also some elements of early fibrosis. So it would be very suited for these populations to not only treat the alcohol use and the cravings and that reward aspect, but also treat directly the liver because the liver is already substantially damaged. And even with early fibrosis with clearly the dual mechanism of action and the tolerability, I would add in that particular population is extremely suitable for a product like pemvidutide. This population feels good. They are not having -- you don't want to add side effects or complications to them. So they really want to get their liver treated as well as the cravings.

And our next question comes from Andy Hsieh of William Blair.

We have two questions. One is related to the prepared remarks that you made, highlighting that Sema failures might be a potential segment to provide clinical differentiation. So can you tell us a little bit about the exclusion/inclusion criteria regarding the length of the washout period in the upcoming Phase III trial. So that's question number one. Question number two has to do with kind of the pathologist panel that you decided. I'm curious if it's just like a 2-person panel, a 3-person panel. Can you talk about the adjudication process, if you don't mind?

Christophe?

So I'll start with the first one. Clearly, what we hear and what's been presented in the past conferences is that sema is hard to tolerate, that most patients do not reach the MASH effective dose, that the titration is complex for them and that there are a lot of dropouts of treatment after already 6 months to a year. So this is a challenge there. If that's the case for us, clearly, we will accept these patients in our Phase III trials. And we want to be able, if they have not tolerated sema to bring them on board because they will have an options with pemvidutide, again, to have -- and I want to remind you here the extremely strong efficacy we've seen in our Phase II study as well as the tolerability. So both together is a perfect option for this population with a real chance now to address the liver and their metabolic causes for that MASH. With regard to the pathologists, we're still finalizing these details. We are towards the end of this. Our thinking right now is to have -- it has to be a consensus. So we're thinking to have a few pathologists and the reading would be a 2 plus 1 type of reading with the consensus, the plus 1 would be if there is no consensus between the 2 pathologists. Clearly, the advantage here for us is the AIM-MASH Assist if really that decreases the variability and help that consensus, it should also accelerate and streamline the process. And so for us, these 2 aspects, decreasing variability and streamlining the process are good positive perspective to execute our study in the best possible way.

And our next question comes from William Wood of B. Riley Securities.

Two from us, if we may. On your RECLAIM trial, it's focused on drinks per day in alcohol consumption but I was curious if there are any NITs looking at the liver or additional measurements that could read through to either your ALD or Phase III trials since you'll be evaluating the 2.4 mg dose in both the AUD/ALD and then obviously, the Phase III as well as could you provide any color on how far along you are in your ALD trial enrollment? And then I have a second follow-up.

All right. On the AUD, so we don't have too many -- we have the typical liver enzyme, et cetera. We're looking at the heavy drinking days. We're looking at the 0 day of drinking. We're looking at those -- the WHO risk classification, if you wish, and how these patients will change. We also -- since it's a patients-reported outcome, we also have blood tests such as the PEth, which is a little bit like you would see in the HbA1c, which reflects the alcohol impregnation. So we believe that here we have -- and we have all the other markers of the effectiveness of the drug, such as weight loss, et cetera. So we have in our AUD a number of things that will be very helpful to be -- to prepare for discussions with the FDA, granted the data come out positive on this. On the ALD, we are enrolling as per plan. As you know, this is a more severe population. So it will be more difficult to enroll. I mean, we successfully enrolled very rapidly our AUD trial much faster than anticipated. But here on the ALD, we're on track for -- as per planned and moving forward smoothly as -- I can't give you any more forecast on that at this point.

Okay. And then in your Phase III trial, maybe I missed it, but will you be evaluating any cardiovascular benefits? Or maybe how do you plan to assess MACE since you're not conducting a separate CVOT trial.

No, this is great questions first. I mean, we've already seen some great improvements on the lipids. On the inflammation, we clearly have a decrease in inflammation in -- with pemvidutide. We've seen improvement in lipids at week 24 in our latest data similarly at week 48. So we believe there is a real potential here to see some cardiovascular benefits. We will clearly look at this in our Phase III MASH trial. However, the FDA doesn't want us to include this as the clinical outcome for liver-related events. Clearly, these are 2 separated aspects, but we'll have the data built in, in our Phase III.

And our next question comes from Boris Peaker of Titan Partners.

I guess I just want to focus on the muscle preservation and obviously, it's one of the key differentiating element of the drug. I'm just curious, the observed weight loss today, can you comment whether the muscle preservation was stronger at the lower or the higher end of the BMI scale? And what can you potentially do in the Phase III study in terms of enrollment to maximize the impact of this muscle preservation, particularly considering it's a large and international study?

Yes. So the muscle preservation and the lean mass is critical, as you say, because this is something that in that population, that's aging. Our average patient is 55 and older, and that's -- they start losing their bone, their muscles. And so we don't want to add anything to this. So we want to keep the muscles in this population. We've demonstrated some very interesting data already in our GCG trial, and we would like to continue demonstrating this. How we are integrating this in the Phase III, we are actually in some discussions right now, whether it's a full mechanistic study or if it's a sub-study that is put into the trial is something that we're deciding as we are speaking today. Regarding the BMI, I mean, there is no difference between the BMI. It works with all different type of BMI, and it's consistent throughout. That's what we've seen in our GCG study.

Got it. I'm just curious what specific test to biomarkers are you monitoring to better understand this muscle preservation. So is it just a DEXA scan, hand strength, MRI? What were you specifically monitoring? And what do you think you'd need potentially get a claim in the label on some kind of muscle preservation?

Yes. That's -- I mean, that's a complicated question because getting a claim would require some clearly will have MRI. will have this kind of, like you mentioned, the DEXA. We would like to better understand. We have some ideas how this is working as well. We believe that 1:1 ratio is one of the key aspects that could lead to this. So if we can make that link and during our Phase III, clearly, that would be an important distinction and differentiator at launch. So we're putting all these pieces together as we're first -- first we're finalizing that protocol for the MASH and putting the pieces on that lean mass preservation as well in parallel.

I show no further questions at this time. I'd like to turn it over to Jerry Durso for closing remarks.

So thanks, everybody, for joining us today. A lot going on in the company, a lot of progress. We're moving forward towards the Phase III execution. We have work to do, but we're in a good position, and we definitely look forward to providing further updates as we progress. Thanks, everybody, and have a great day.

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