Atea Pharmaceuticals, Inc. (AVIR) Earnings Call Transcript & Summary

Good morning, and welcome to the 40th Annual JPMorgan Healthcare Conference. I'm Eric Joseph, senior biotech analyst at the firm. Our next presenting company this morning is Atea Pharmaceuticals and to talk to us a little bit about the company is CEO, JP Sommadossi. Quick programming note, there is a Q&A session following the presentation. Simply click the ask a question button to submit and I'll work those in where appropriate. With that, JP, thanks for joining us. Take it away.

Thank you, Eric, and thank you for the opportunity to present today at your conference. So before we begin, this is our forward-looking statement and further information can be found in our most recent filings. Since the founding of Atea, as we discover breakthrough drugs against RNA viruses. Our platform of purine nucleotide prodrugs and bemnifosbuvir, which is the generic name of AT-527, has unique properties that I will review today, which is allowing us to be at the forefront in the development of combination program as we have planned in pre-COVID with HCV. But now with the evolving nature of COVID-19, it is clear that combination antivirals will be needed as well to also address this very challenging viral disease. So what have we learned with COVID-19 in the past year? Here, we are dealing with a viral disease which is rapidly evolving from variants to variant, as you know, every 3 to 6 months with major pandemic surges, such as Delta last summer and now with Omicron since the last month, which had takeover already 95% and left only 5% with Delta. This virus is rapidly evolving with an increasing rate -- an increased rate of replication in the upper respiratory tract and that's why we have such enhanced transmission. This highly mutated now and rapidly evolving virus is evading both vaccines and monoclonal antibodies. And we urgently need several oral therapeutics with different mechanism of actions, I would call MOA. So one of the protease inhibitor has definitely recently shown some good efficacy. We know quite well historically, and we have learned that over the last 30 years that this class of drug has a low barrier to resistance with rapid development of resistant strains. And especially in immunosuppressed individual, where viral replication may continue for weeks and even months. And let's not forget that most of the variants today, what we have learned, they are very likely generated in those immunosuppressed individuals where this viral replication continued for months at the time. So we know also the nucleotide drugs have been the backbone of successful oral combination regimens against several RNA viral diseases to address this resistance issue but also to enhance the efficacy. So this is the rationale why we believe that our nucleotide bemnifosbuvir is the nuc of choice for a combination with a protease inhibitor for COVID-19 as monotherapy has definitely substantial limitations with such a rapidly evolving virus. Our team has been there many times with development efforts in several combination therapy for RNA viruses, and we believe that we will be able again to deliver the first combination of bemnifosbuvir and the PI for the treatment of COVID-19. So let's move now to the other important program in this company, the hepatitis C. We have actually planned to reinitiate our program this year as we had stopped last year because of COVID and combining bemnifosbuvir with our internal NS5A, which was in Phase I clinical development. However, based on ruzasvir intrinsic potency and being way further advanced in developments, we've decided to in-license from Merck this highly important NS5A, which combined with bemnifosbuvir will definitely accelerate time lines for the clinical development but also and most importantly, for patients, good results in the best-in-class pan-genotypic hepatitis C combination regimen. There is still a major need for improved HCV treatment as I'm going to share with you in this presentation. And I will address this together with a large market opportunity as well. For our third clinical program, dengue fever, we are also progressing very nicely in the clinic with a challenge study conducted in the United States and the global Phase II proof-of-concept trial for the treatment of dengue virus. We anticipate multiple value-driving milestone over the next 18 months from our 3 clinical programs, and we expect actually even a number of key results later this year. We have the financial strength with a cash runway for 4 years to 2025 and the seasoned management team to advance these programs to key clinical and regulatory inflection point. So let's now move to our comprehensive approach for COVID-19. Bemnifosbuvir, as you know, target the viral RNA polymerase being a nuc, and this enzyme is highly conserved and is critical to the viral replication and transcription. Uniquely, this drug actually has a mechanism of action with dual targeted to chain termination, but importantly, without introducing new mutations in the viral genome, especially in the spike protein as molnupiravir, and we know the negative consequences of this action for the life of activity potentially for vaccine and monoclonals. It is -- also inhibits the NiRAN function, which is another function which is critical for the RNA polymerase for its replication and transcription. Thus, providing the potential to create a very high barrier to resistance. Actually, we have not been able to develop resistance in any cell-based assay that we have investigated. And as well, we will -- and we have demonstrated and shared with you again the potent antiviral activity that we see, of course, in variants of concern. Actually, the details of this MOA will soon be available, actually probably by the end of the week in the peer-review publication. In all studies, bemnifosbuvir was shown to be generally safe, well-tolerated. And please note that it is nonmutagenic, there is no reproductive toxicity and is nonteratogenic. This is why we believe that this profile is certainly consistent with bemnifosbuvir being the nuc of choice for combination therapy with a protease inhibitor, and we will review this profile with you in the next few slides. COVID variant of concern are creating new challenges for treatment and prevention. The evolution of this virus would certainly make COVID-19 endemic for years to come. We see in the news in Finland last night, predicting that it will be the major chronic disease in Finland potentially over the next few years. And we will have periodic pandemic surges, like we see today with the Omicron due to those new variants. And we know also that there is increased transmissibility, there is neutralization resistance and disease severity. So as we have seen with the Omicron, where we have more than 30 mutation in the spike protein, there is even some new variants reported with more than 60 mutations, it's clear that we have an efficacy limitation with vaccine and monoclonal antibodies and transmission is really the key factor in the continuous spread of this virus. Actually, probably more than 6,000 variants have been sequenced, as you see in this slide, and this is why we are experiencing the 5th worldwide wave due to Omicron and when we recall it in the United States just last year more than 1 million infected new cases. So as history has shown, and we should learn from that, monotherapy, including protease inhibitors have certainly limitations against RNA viruses due to the emergence of drug resistance. And here, as we see, we have to plan for the long term and not a short and quick fix. When we see the rapid evolution of this virus, combined with the drug-resistant strains, actually, it'll have the potential to lead to super variants, which will be very difficult to control with medical intervention. So this is why we are seeking to mitigate with combination therapy. AT-511,the free base of bemnifosbuvir, as you know, is a potent inhibitor of SARS-CoV-2 replication in vitro and with an EC90 with the original strain of around 0.5 micromole. And as we had anticipated with its mechanism of action, it maintained its potency across all major variants. And we are in the process right now to testing the same cell based assay in the [ NIV ] laboratory lab -- in the lab that we anticipate the same activity in this human cell system, and we expect that we will share data later this [ fall ]. As we have shown in this slide, we believe that based on bemnifosbuvir competitive product profile, it will become the nuc backbone of choice in the combination treatment regimen. Its profile, if I may go over, is orally administered. It is nonmutagenic. Actually, we tried very hard and we failed to create any variants, any resistant strains in vitro. And actually, we are initiating in vitro studies with protease inhibitors to assess the antiviral synergy and as well as additive benefit of such combination, hopefully, to prevent potential resistance that will emerge with protease inhibitors. So let's now move to our clinical development plan in COVID-19. As you know, COVID-19 really remains very much with us. And advancing this important program is a top priority for our company. As I've mentioned, monotherapies will evolve to combination therapies to address these new variants, and our product profile that you see in this slide, which, by the way, complement the previous slide, is well suited for combination treatment of COVID-19. So let me review the full program now in terms of the clinical status. In this extremely rapidly evolving space, we are continuing to adapt our development program to address the need of patients infected with COVID-19. As we have announced on Friday, building on the positive findings for the Phase II clinical studies of bemnifosbuvir in high-risk patients with mild or moderate COVID-19, we plan to initiate a Phase II outpatient study to enrich our data set. But most importantly, we are working in parallel to prepare for a combination trial with protease inhibitors. We are closing out the hospitalized study to focus only on our patients. And we believe to that effect that it is preferable to start a new study rather than going through a complex regulatory process as well as which will include anyway, multiple amendments. Let me recap some of the essential data that we generated in the past year from high-risk patients with COVID-19 treated with bemnifosbuvir. In the Phase II study in hospitalized patient with a rapid and robust antiviral decline, which is critical, as you know, for the value and the immediate health impact of the DAA is really to inhibit rapidly viral replication in the early phase of infection, reduce disease progression and obviously, hopefully affect also and limit transmission, which today, as you know, with the Omicron is a major issue. Bemnifosbuvir, potent antiviral activity was consistent actually across multiple prespecified analysis, and it is expected that -- and based on this mechanism of action, that it was more effective in patients with higher viral load as actually we have also demonstrated. As COVID-19 continues to evolve, we have to think about how to quantify this rise and especially this infections rise and we setup an assay, which is highly quantitative with more than 75% of sensitivity in contrast to the RT-PCR, which measures all form of RNA obtained from the sample regardless of whether it is some intact replicating virus, nonviable virus, [ conservative ] fragment of the virus. And as shown on this slide, again, in the subgroup of high-risk patients enrolled in the MOONSONG Phase II study, this was an outpatient study, we again demonstrated a substantial treatment effect, was very positive. So building on the positive findings from these Phase II clinical studies in high-risk patients with mild-to-moderate COVID-19, let me share now the plan with the outpatient trial, which is expected to enroll up to 200 high-risk patients with mild-to-moderate COVID-19 to enrich our data set, and we are -- this is where we're going to focus, as I already mentioned, our effort is the initiation of a combination trial with a protease inhibitor, but we need some background work, especially in preclinical study to be able to start this combination study. Let's now move to our hepatitis-C program. The market for hepatitis-C is large and growing with a 2020 global HCV market of $4 billion with the U.S. represented about -- representing about 50% of the market. It's important to be aware that despite the availability of direct-acting oral combination treatments, the incidence of HCV continued to increase on a worldwide basis, including in the United States. And you can see in this slide, actually, the number of infected individuals with HCV doubled in the last 5 years. And actually, this is since the introduction of oral treatment. And this is fueled by the opioid crisis and the IV drug use. So we believe that the best-in-class HCV treatment with a shorter treatment duration, but more importantly, with a better convenience has the potential to capitalize on this significant and growing market to achieve blockbuster status. And I'm very pleased to share that we have announced on Friday that we have obtained an exclusive worldwide license from Merck to develop, manufacture and commercialize ruzasvir, a very potent NS5A inhibitor. I've been working on HCV for many years, as you probably know, and I'm very excited about the ruzasvir profile. It is one of the most potent NS5A inhibitor, actually probably one of only two with a highly potent in vitro activity in the single picomole range against all 6 HCV genotype. Extensive clinical studies of ruzasvir conducted by Merck have shown a potent antiviral activity in HCV-infected patients with a solid clinical database more than 1,250 infected patients at daily doses up to 180 milligrams for up to 24 weeks. And we know that's actually very good safety profile, good tolerability, and there was no major related changes in laboratory parameters as well. So in the graph, actually, we moved very rapidly. On the graph in the right, in the recent in vitro study we see that we could demonstrate not just additive benefit but actually substantial synergy between ruzasvir and bemnifosbuvir in inhibiting HCV replication. And that's why we believe that this combination is an ideal once-daily dosing combination regimen. Once again, the key reasons why we in-license ruzasvir despite the fact that we have already an NS5A in-house is its advanced development that really decreased tremendously the clinical development risk and time lines, but also the opportunity to create a best-in-class combination therapy with bemnifosbuvir. And we are going to do the same again with the combination with protease inhibitor for COVID-19. So now let's move to bemnifosbuvir profile in HCV, which was actually, let me remind you, the original program at Atea pre-COVID. So -- and the reason it was, is because bemnifosbuvir actually is the most potent nuc, about 10x more potent than sofosbuvir. It is still fully active against a lot of the -- against sofosbuvir resistant strain. And here, you can see in this slide, and by the way, this is to my knowledge, the only drug that is able to do this even across classes, which is not only the potent response but also the viral kinetics remain consistent across all genotypes, but also in compensated cirrhosis. And this is only possible with this drug. So bemnifosbuvir at 550 milligram once daily. Based on the safety, tolerability and efficacy profile today, we really truly believe that this is an ideal candidate to develop in combination with ruzasvir. So we are really excited about our HCV development plan. And as I said, we believe that there was room to improve and this is what we are going to deliver for patients upon the standard of care and the current market needs a better option. And considering the potency already demonstrated in the clinic with both drug candidate, we truly believe that we will have a best-in-class pan-genotypic regimen for the treatment of hepatitis C. And we will demonstrate with head-to-head in Phase III clinical trials against some of the approved direct-acting combination regimen. A significant data have been generated. We are able to move now rapidly in those large phase II combination study before the end of the year as we are first to synthesize significant amount of drug product. We have access, as you know, and we have large amounts synthesized of bemnifosbuvir. But now we have to synthesize the drug product for ruzasvir to be able to initiate those studies both in compensated and decompensated liver disease, patients with such a liver disease. So let's move down with our third program in the clinic and I'm talking about the dengue fever program. Dengue affects, as you know, 400 million individuals on a yearly basis from Latin America to Southeast Asia and there are closer cases to us in the Southern U.S., Florida. As you know, Puerto Rico is going to be now -- actually well, this viral disease is endemic. There is no medical intervention, and there is a very limited efficacy vaccine with Dengvaxia, well, actually approved a couple of years ago with major -- with major restrictions in the label. Our breakthrough drug candidate, AT-752, again, is a purine nucleotide prodrug, which is also being generated from our platform. It has shown potent in vitro activity against all serotype tested and demonstrated strong efficacy in animal model, which have been actually recently published. Last year, we initiated and successfully completed a randomized double-blind placebo-controlled, single and multiple ascending dose Phase I study to evaluate the safety, tolerability and pharmacokinetics of AT-752 in a healthy subject. In this study, AT-752 was well tolerated in 64 healthy subjects, where we administered either single or multiple doses. No premature discontinuation due to adverse events or severe adverse events were reported and most actually of the adverse events were mild and no changes in laboratory parameters. Based on the Phase I PK data of AT-752 illustrated in this slide, we anticipate that a regimen consisting of 750 milligrams TID, 3 times a day, would rapidly inhibit dengue fever across all serotypes. And we are going to start 2 key studies actually in 2022 for the dengue program. The first one would be a human challenge study, which we are planning in the United States. In this study, healthy volunteers are challenged with a dose of a live dengue virus strain after being dosed with AT-752 or placebo. Subjects are closely monitored within a very controlled clinical setting, allowing assessment of viral load and viral load kinetics between the treatment groups, and results are expected in the second half of this year. The second key study that we are going to initiate this year is a global Phase II proof-of-concept treatment study in patients with dengue fever. And this is going to be a global study in the endemic region of the world with dengue, which will start actually in the second quarter since this will be the rainy season, as you know. This will be a study that will assess the antiviral activity, safety and PK of multiple doses of AT-752 with a primary endpoint of change from baseline in viral load. AT-752 or placebo will be administered orally for 5 days in patients with dengue infection who present within 48 hours of a fever. We anticipate data in the second half of this year. So let's -- in closing now, we are building a pipeline with a vision to be a leading antiviral company. My team and I have been developing drugs for the last 30 years for RNA viruses. And we are excited to be able to contribute to finding transformational solution for COVID-19. With our nuc of choice bemnifosbuvir , we are going to lead the way with a combination approach combining it with an internal and external protease inhibitor asset. This is an exciting time to be also bringing forward groundbreaking program in HCV and dengue, which remain global life-threatening viral diseases. As you have seen, we have multiple value-driving milestones that we anticipate over the next 18 months. And in particular, we anticipate several key inflection point results later this year. We have the financial resources with a cash runway through 2025 and the right team to advance this program successfully. And as always, we thank you for your continued support and we'll be happy with the team to answer any questions you may ask. Thank you.

Okay. Well, thanks for the presentation, JP. Maybe just to start off, picking up on the COVID program and the adjustments for the planned Phase II with bemnifosbuvir. Part of that plan anticipates a reformulated version of the compound. Can you just sort of speak to what some of the changes are there? What additional preclinical work needs to be completed to initiate clinical dosing and whether there may be any sort of healthy volunteer or initial -- or I guess, strict early dosing work, I guess, that needs to be...

That's okay. All what it is, is really a tweaking on the formulation. It's not a major change. We are already studying in a healthy volunteer. It is just to have a formulation that will deliver a faster dissolution rate. And that leading to an increased absorption to hopefully actually even decrease the dosing regimen. So in terms of the total dose. We'll target the same exposure of the active metabolites. And by -- we believe that by having a formulation with faster dissolution, we can achieve that. And so actually, we're -- already in volunteers, we'll have the data next month. So you can see that this is -- we are not going to have any change of our time lines.

Okay, good. In terms of the target exposure that you're...

It's basically what we have reported previously around 200 nanogram per ml of the AT-273, which is the surrogate marker for the triphosphate.

Okay. Great. And in terms of the eligible population for the Phase II, I am trying to just get a sense of -- I mean, at the time that you're conducting the trial, you're going to have pretty high coverage in terms of vaccine exposure. Does that impact the ability to detect the signal? How should we think about eligible patient population in terms of their exposure to either COVID vaccines or prior therapeutics?

Eric, I'm going to let Janet who is our Chief Development Officer to address that question. Janet?

I think it's a very interesting question and I'm not sure that anybody knows the answer exactly because I think it's clearly going to depend on what the circulating strain is, and how many times people have been vaccinated as well as whether they've been vaccinated at all and whether they're boosted. So we're working our way through some of this really just as I think everybody else is too because I think certainly, the standard of care has changed in terms of the fact that we now know that many of the monoclonal antibodies are not going to be efficacious. And so we're just really looking at the whole environment in which we're going to need to study the drug, everything keeps changing as one moves forward. But the plan is to target in a high-risk outpatient population. And we're not at the point really to embark on the next Phase II study in that population quite yet. But this is something, obviously, that we're watching very closely.

Okay. Perhaps geographically, can you just speak to the regions that you think would be in scope for the Phase II? And I'm curious to know whether recruiting from U.S. sites is part of the plan.

No, I think again it is going depend on -- we'd like to have a population where we are able to run a placebo-controlled trial. And I think that's unlikely to encompass the patients that we would want in the U.S. at this time. But again, it's going to be somewhat dependent on access to alternative therapies, but we're initially looking to target areas where conducting a placebo-controlled trial will be more feasible.

Okay. Great. Shifting a little bit to the HCV program. In your presentation, you outlined the -- where the HCV case rates are trending as a result of the opioid epidemic. There are a number of incumbents, obviously, in this space, some of which have now moved to generic. Can you just kind of speak to the unmet need opportunity within HCV that you think could be uniquely addressed with the combination of bemnifosbuvir plus RZR?

Of course, I would like to mention that these are not -- there is no generics. The generics actually will occur not before 2025. This is when both Epclusa and Mavyret will be out of their intellectual property. So John, maybe that's what there may be a misunderstanding in terms of generic in general, so if you want to address that and in the same time, where we see and why we see a significant market with a best-in-class combination regimen. John?

Yes, sure. So Eric, I think the idea of an authorized copy was a way to basically the 2 current brands to pretty much have pricing parity, and it's only an authorized copy that they're allowing. And the pricing has relatively been stable between the 2 products, particularly in the U.S. market, despite even Mavyret having an advantage in terms of dosing duration. Both products equally share approximately 50% market share. When we look at what the market is growing, it is growing, yes, the opioid epidemic. And I'll also remind everybody that obviously, the opportunity to get reinfected is there, and it continues to happen. And so to have a product that would help address these, the changing market dynamics in terms of shorter duration in terms of being pan-genotypic and really having a best-in-class will enable a product such as this to get a considerable share -- respectable share coming in and the market being as of last year, a $4 billion market globally.

Okay. Okay. Obviously, the in-licensing of, excuse me, RZR allows you to move fairly quickly towards a combination with a -- or more quickly with NS5A. The original plan with 777 was for a, I believe, a coformulation -- a coformulated product or combination product. Can you just speak to the ability to -- speak to the potential...

Eric, we can do -- actually, Merck, I stressed already some technology transfer. They've actually done some coformulation with ruzasvir with another name. So we have quite advanced technology that we can move very fast. We will go with 2 separate [ trials ] for the Phase II. We don't know yet for the Phase III we will have the coformulation there. That's not an issue. Definitely, we will have the coformulation to launch the combination. And it's quite straightforward. And as I mentioned, we already have the technology that has been shared by Merck with this previous coformulations.

Is the enhanced formulation work that you're doing with bemnifosbuvir in COVID relevant to HCV?

Absolutely, Eric. You've got it. It's -- it would be exactly the same drug product. So -- and so absolutely, you've got it.

Okay. Great. Great. And picking up on the dengue program, where you'll have data from the human challenge study later this year, two things there, right? One is what would be a meaningful signal in terms of viral load reduction in that type of setting? And secondly, given the strain that you're using, I'm curious to know whether there will be the chance to look at symptom reduction, I guess, is the strain sort of pathogenic at all in exposed patients and will you be able to kind of look at...

[ What we will do ], I'm going to let Janet address that. We will go in parallel with the challenge study and the treatment study, okay? But I'll let Janet to address your questions. Go ahead, Janet.

So I think you've answered them pretty well. I mean I think we're looking for a couple of log reduction in the virus. And I think that it should be able to be seen relatively easily. I think the challenge in dengue in treatment is really getting to the patients quickly enough because the viremia is relatively transient and then a lot of the -- in terms of actually related to the cytokine storm generated by that. But we believe that if we can get the patients early into the trials that that ought to be something that we should be able to show. But the prophylaxis study, I think, and the challenge model will be really informative in guiding our development plan.

Okay. Okay. All right. Prophylaxis bridges an interesting point going back to the COVID opportunity. I mean the prophylaxis use was one application that we thought about around this time last year. How are you thinking about, I guess, prophylactic use of a COVID antiviral at this stage?

I think right now, we are going to concentrate our efforts on treatment. It's clear that prophylactic will require very large clinical studies and we -- our goal and foremost is to start ASAP a combination trial with a protease inhibitor in the treatment for COVID-19. I would not stress enough saying that we cannot afford to get resistant strains to PI with this viral disease. Janet and I have been there for a long time. And it's clear that if we combine all the mutations that we see showed natural evolution in the spike protein and you combine this with resistant strain to PI, where you will have definitely very likely cross-resistance among PI. This is where we are going to create some super variants. So -- and the only way to avoid is combination therapy. We know that. It's a 101 virology. We have been there. It's an RNA virus. It's clear that and as been already reported in the EUA of some products, as we all know, and we have seen public information with in vitro generation with other PIs as well of such [ resistance ], right? So we are working toward that as quick as we can, and we are evaluating and we have been asked to evaluate together with some other sponsors in terms of combination, and we are going to do as quick as we can resolve the preclinical studies that need to be done and [ we'll do ] that hopefully soon and initiate those important studies.

Okay. Great. Well, we'll have to leave it there for time. I want to thank everybody for joining us, everybody in the Atea team. Everybody, have a great morning.

Thank you, Eric, again. Thank you, everyone.