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

Good morning. I'm Eric Joseph, senior biotech analyst with JPMorgan. Our next presenting company is Atea Pharmaceuticals, and presenting on behalf of the company is CEO, J.P. Sommadossi. There is a Q&A after the presentation. [Operator Instructions] So thank you.

Eric. Appreciate it. Good morning. And before I begin, I would like to thank JPMorgan for the opportunity to present today. We have some exciting news update for both, clinical program, COVID-19 and HCV that I'm pleased to share with you today. And before I begin, the usual forward-looking statement and we encourage you for further information to found in our most recent regulatory filings. So Atea mission is focused on the discovery and development of antiviral drugs for the treatment, cure and prophylaxis of serious viral diseases where there is a significant unmet medical need or where we can make a huge difference. Unfortunately, COVID is here to stay. And the recent holiday surge that we see in the United States, in Europe and other countries really with the new dominant variants like the JN.1, really continue to increase in numbers in hospitalization, unfortunately, some deaths as well despite the latest booster and treatment. And maybe with boosters in around 18% in the U.S., less than 15% in Europe and other countries. That's probably why we are in this current situation. You know that this virus is accumulating with major mutations with amino acid substitution that are faster than any of the endemic RNA viruses that we know. And that's why we really need a broad and more diversified arsenal of safe and well-tolerated oral therapeutics. Our team continues to efficiently execute our Global Phase III trial, and I'm very pleased today to announce that we have achieved a significant clinical milestones as we have surpassed enrollment well over 650 patients in the monotherapy arm. These milestones allow for the first-interim analysis by the independent DSMB, which we anticipate will be this March. So let me remind you that SUNRISE-3 is the only Phase III program in the United States, evaluating a new oral therapeutics, exclusively for the treatment of high-risk patients with a clinical endpoint being hospitalization or death at day 29, which we believe is the key and strong end point to determine the value of this antiviral therapeutics in high-risk patients and to protect them obviously for hospitalization and death. And actually, we are very pleased also that despite the availability of some standard of care, more than 60% of the patients have been enrolled actually in the United States with around 20 U.S. clinical sites. So we believe that bemnifosbuvir has the potential to address the key limitations of the current COVID-19 therapies, including safety, tolerability and drug-drug interaction. And our goal is to deliver best-in-class treatment to the millions of patients for whom the current standard of care, we believe is substantive. So as a part of self or multipronged approach, we are in the early discovery/development of a second-generation protease inhibitor, highly differentiated with essentially a single dose of [ PI ] which we believe we are going to be in a position to give you an update sometimes in the near future, probably in a quarter or so. For our HCV program, we are very excited to share recent positive initial data from our 60-patient lead-in cohort of our Phase II combination study of bemnifosbuvir and ruzasvir. You may have seen from the press release we issued on Monday at 2 p.m. after the market close that we can demonstrate a high rate of 98% of sustained viral response to essentially a cure after week 4 in the first 52 patients. And this really, significantly again exceed the efficacy criterion that we had selected a 90% to continue the study. So our goal with this program is to substantially enhance the current standard of care by offering a short 8-week treatment, well tolerated with limited drug-drug interaction based on the recent market research that we executed in late November, you will see from more than 150 U.S. physician those are the key criteria that they are looking for in new standard of care. We have strong conviction in our strategy, execution capability that you have seen in the past year with an experienced management team and the opportunities ahead to create meaningful value for our shareholders. So as I said, we are advancing those late-stage clinical program with multibillion dollar commercial market opportunities. COVID-19 anti-viral market is here to stay. It's not going to go anywhere. And we anticipate for at least for the next 5 years or so and longer a projected of about $4 billion to $5 billion. And I'm going to go over in some details of that market later in my presentation. We have, as you know, only two oral antiviral therapeutics today. And we know the key challenges that they have with drug-drug interaction, tolerability and safety. For the HCV, we have also a very large market opportunity, again, with a growing population with the opioid crisis, the injection drug abuse in the United States, with HCV reinfection in about 15% to 20%. And actually, it's important to know that today, on a yearly basis in the United States, we have more new infections that cure actually. So a market around $3.5 billion where, as I said, despite the two treatment options, there is still a large underserved patient population that we believe we are going to have a significant impact with our drug combination and potentially expand the market with this very unique combination and very potent, as you will see in a few minutes. So with all that, we are fortunate to be well capitalized to achieve all those major inflection points. You'll see actually -- we anticipate that 2024 will be a transformational year for the company, and we'll share with you all the key inflection point at the end of the presentation with a cash runway through 2026. And as of September 30, we had still $595 million in cash and cash equivalents, which put us in a strong position to execute in all those key inflection points on those key -- on those two clinical programs. So let's review now our Phase II HCV program with the initial results from the lead-in cohort 60 patients as I have mentioned. Just before that, just to remind you that, as I said before, treatment options, we continue to have a health crisis in the United States. There was a target of eradicating the HCV by 2030, which, as you kind of operation, I'm sure that will not be achieved. We're still having 2.4 million infected individuals in the United States. And actually, as I said, with an increase on a yearly basis, this is a 400% increased prevalence just in the last 10 years despite the availability of oral treatment. So we believe that with the unique target profile that we have, so a short 8-week treatment, lower daily pill burden, potential for fewer side effects, low risk for drug-drug interaction and no food effect, we believe that we have the opportunity to address this health crisis, but also to have a product that would become a blockbuster. So the -- and as I've just mentioned before, based on the market research with KOL and high prescribers that you will see in the next slide. We believe that these attributes are really critical for a new treatment that basically illustrated in this slide. We all know that the introduction of direct-acting antiviral really transformed the HCV treatment, but still significant unmet new need still exists. You can see we were really surprised. This is more than 150 U.S. health care provider from all discipline, from various pathologists, infectious disease and others, only 6% of them reported that there was no unmet needs in HCV treatment. Actually, we were really surprised to see that 17% of patients according to those prescribers do not complete the treatment. And this reinforced the need of short-term treatment and especially with a higher efficacy in the HCV, HIV co-infected, which represent about 40% of the HIV population and that you can [indiscernible] a combination with limited drug-drug interactions. So [indiscernible], no protease inhibitor on board will be absolutely needed to have a limited impact, and you can see the -- all the classes of drug on the right side that have a negative impact on this 8-week treatment, which includes a PI and which is the only approved 8-week treatment. So let's go now in detail a little bit on our Phase II open-label study which combined 550 milligram of bemnifosbuvir and 180 milligram of ruzasvir this once daily for 8 weeks. This study is expected to enroll a total of 280 patients, and they are all direct-acting antiviral naive across all genotypes, including the lead-in cohort that I'm going to share with you. So what's -- we are evaluating in this 60 patients, safety, tolerability, the SVR sustained virological response at week 4 post treatment. The primary end point is an SVR at week 12. But we know historically that there is a very good validation between SVR at week 4 and SVR at week 12. And this was a decision end point that allow us to accelerate, obviously, the timeline for completing the Phase II study. What kind of patients did you enroll? Mostly, actually from Europe with not surprising I mean age around 48, 49 years old as I have said, all direct-acting antiviral naive, non-cirrhotic patient only because we didn't want to put any compensated cirrhosis obviously at risk before we demonstrate the efficacy of this combination. But in the same time, you can know that we had about 10 patients out of those 60 with a late-stage fibrosis of F3, which is borderline with cirrhosis. So this data that I'm going to share with you bode well now to enroll compensated-cirrhosis patient as well, which will be enrolled in the second part of this study. So this is what we had hoped to see, which is a very rapid inhibition of viral replication. And we do show you some kinetics, probably the best viral kinetics that you have ever seen for a treatment of -- for HCV. 100% at the end of treatment, will achieve basically a PCR negativity. And you can see that 98% have achieved an SVR4 and the only patient that did not achieve SVR4, actually, we have quite detailed measurement of lower pill consumption and inadequate PK drug level, especially in the last 2 weeks. So we are very pleased that this 98% actually is way above our efficacy criterion that we had decided at the beginning of 90%, so to continue the study. And we anticipate to reinitiate enrollment of the rest of the 220 patients sometime this month, and we anticipate top line results in the third quarter of this year. So this is something that for someone who has been in HCV research for the last 30 years, this is really what we had hoped to see which is regardless of the baseline viral loading, the usual, the mean median is around [ 10 6 ] so 1 million, 2 million, 5 million copy. You can see that even patients with 10, 20, 30 million copies actually within 4 weeks, they all either at near or below the limit of quantitation, which is a 15 copy per ml, which is a standard assay. The only few patients that did not achieve at the maximum of 30 copy per ml, which actually when we compare to Mavyret in the clinical -- on the clinical trials, this shows a very favorable profile as compared to the only approved 8-weeks treatment for HCV. So there's very rapid kinetics. And this is, you can see across genotype and the obviously, an important one is genotype. So there is no difference regardless of the late stage of the fibrosis. There is no difference in terms of genotype. Obviously, this is 50 patients, but we feel that -- if we confirm with the 280 patients we'll have a very robust efficacy profile and then that I will share with you the safety that is pretty remarkable. So as I said, very rapid kinetics across genotype. And now we can demonstrate definitely that this regimen is an 8-week regimen. So in safety, actually nothing remarkable. All patients, 60 patients have completed the 8-week treatment period. Generally safe, well tolerated, no SAEs, no discontinuation, mostly mild, no adverse event, grade 1 and nothing else and good safety as well in laboratory parameters. So based on the positive data with this cohort, as I said, which are on track to exceed the efficacy threshold of SVR greater than 90%. So we plan to reinitiate this month in about 15 countries, 50 clinical sites. We are working right now so to expand that geographic footprint. Also, we have started in the United States, Phase I studies for the selection of the best fixed dose combination tablet, which will be obviously evaluated in the Phase III program and use subsequently for commercialization. So just to remind you, we hope to start this phase III before the end of the year. We anticipate and obviously, we will have to finalize with the regulatory authorities including the FDA, very likely one study head-to-head against a competitor, probably in the 1,000 patients for the 2 arm. And also importantly, because we believe that especially in the HIV, HCV co-infected patients, there was significant unmet medical need there. We anticipate to have a Phase III also in that patient population with our new combination. So now let's review COVID-19 program and a new update on our global Phase III SUNRISE-3. We believe that there's still critical gaps and I'm sure that if you just read the tweet, the news, it's clear that there is major limitations with the current antiviral treatment options for COVID-19. Drug-drug interaction. So the patients that need to take this drug cannot take it. Tolerability issue, maybe take once, but you are not going to take twice and safety concern as well for the two current products. We believe that our drug has compelling, preclinical and clinical profile, is differentiated with low risk of drug-drug interaction, safe. Now this drug has been in more than 800 patients between the two indications. Favorable profile, as I said, distinct MOA. And we believe that there is all the characteristics here to become a treatment of choice for the millions of people with COVID-19. You can see just with the news and what's amazing is the JN.1, for example, as in -- lately in the last months that really has caused the surge that we see in the United States was rapid, as I said was rapid mutations and the JN.1 in the months basically has become the dominant strain that you can see in this slide. So we have caught basically in a perpetual game of catch-up, who was trying to update booster all the time which I don't think a lot of people unfortunately take. And that's really underscore the important role for direct-acting oral antiviral, which target the conserved genes as compared to monoclonal. And this is just to give you another example with some latest data with the EG.5. which is now is becoming a limited infection strain, but we're basically evaluating JN.1. But essentially, this drug remains potent against any of the Omicron sub-variants or the other variants of concern, as you can see and that these results really make us very confident that this drug candidate will remain fully active regardless of the future variance that we are going to have in the future. So supported by our extensive global footprint. I'd like to remind you that we have about 300 clinical sites in about 30 countries. We see very promising enrollment now in SUNRISE-3, which you won't be surprised, correlate with the current winter surge, especially in the United States, as I said, where we have about 60% of the patient to date. And the majority of patients actually continue to be enrolled in the monotherapy arm, which I'd like to remind you that this is where we are going to have the primary endpoint to evaluate the efficacy of this drug. So as the CDC has predicted, we see that we have actually a higher trend than as compared to last year. And the most vulnerable to severe COVID infection as you know, remain the elderly, the immunosuppressed individual and those with underlying risk factors to severe infection. And basically, this, the patient population that are enrolled in our trial. So just to remind you about the SUNRISE-3, there was two interim analysis for a DSMB review at 650 patients and 1,350 patients in the monotherapy arm, and we anticipate and we are on target for a top line data for the second half of this year. And as I said, I'm very pleased, and this demonstrates the really execution capabilities of our team, of our clinical and regulatory team in contrast to other even company, which are bigger than we are, but we have been able to involve in this high-risk population in a very fast time line. We have surpassed the 650 patients. We can tell you we are in the 100s right now. I know that the clinical team is going to be bad on me. But so you can see that we feel really that we are going to be on target for the second interim analysis in the second quarter, as you will see in those timelines at the end of the presentation. So this is the only Phase III program, as I said, that evaluate a new oral antiviral for the treatment of high-risk patients with the primary endpoint being all-cause hospitalization or deaths through day 29. Total of 2,200 patients. You know that we have to expand the size of the trial sometimes in August because, as you know, we are well aware that the rate of hospitalization is not anymore what it used to be when we designed the trial and we anticipate now a rate of 2% to 3%. And with 2,200 patients, we feel that we have sufficient statistical power to demonstrate a difference with placebo. So just to remind you as well, this drug got the fast-track designation for bemnifosbuvir and obviously, recognizing the unmet medical needs that were made for COVID-19 patients. So it's a 550 milligram b.i.d. 1:1 randomization against placebo. Just to remind you that we had already demonstrated the efficacy with other variants of concern, especially Beta and Delta with a 71% reduction of hospitalization. And in both high risk and low risk and actually when we were evaluating patients above 40 years old we achieved even 82% reduction. So what about the market? Because there is numbers floating everywhere. I'm sure that Eric has basically some ideas and the way he sees it. But I think what we believe I'd say, is that script represent demand. And so what we can see in 2023, we have essentially 580,000 scripts have been basically delivered every month as an average for a total of 7 million of script for the 2023. And that's okay, obviously, from Atea script. So you see also nothing surprising. More than 90% is the Paxlovid as compared to probably about 10% of Lagevrio. So a pretty robust market. And we foresee that and being conservative, because if we take 2023, 7 million, you multiply it by $1400, that's $10 billion. So we like to stay conservative, and we believe that $4 billion to $5 billion with only two products that have key limitation is definitely a great opportunity for Atea with the profile that we have with bemnifosbuvir. We know that last year the market has been transitioned to traditional payers with Medicare, Medicaid and private commercial. And we believe that the profile of our drug should attract really a good response from those payers. So we -- summarize, we believe that there is still a major unmet need, critical gaps with the two oral treatments, either drug-drug interaction, tolerability and safety with Lagevrio. So in closing, after a year and that's what we had announced actually last year more than last year, that you have been a transition year and with a lot of execution that were critical to put us in a position like we are now for a transformation -- for a transformational milestone-rich 2024 for both our COVID-19 and HCV program. And this is really due to a solid execution of our team. So we anticipate for COVID-19, as you see, every quarter, quite of, I would say, a challenge. First-interim analysis, the date is already set up in March for the 650 patients. We truly believe, hopefully, I don't wish that COVID stay longer, but based on the number, we know that it's going to stay probably at least until the end of February, early March, we definitely should get to those 1,350, 1,400 very rapidly for a second-interim analysis. And when we talk about 1,400 patients, now we start to get a real size that we want to see for a total of 2,200 patients. I'd like to remind you that the DSMB will evaluate futility and safety. But especially on the second-interim analysis, a continuation by the DSMB will trigger really a very positive note, we believe, for this program. So for HCV, we anticipate completing enrollment of our Phase II study by midyear, with final results in Q3, and we are on target to initiate obviously, pending interaction with the regulatory authorities of our Phase III in HCV. So we are very excited about the opportunities ahead, confident that with our ability to develop, commercialize. I'm not going to -- we can go through some questions. Obviously, those two major programs would require some partnership that we will have after a key inflection point in terms of data. We know that we are not going to build a primary care sales force that's clear and [indiscernible] U.S. also in HCV. And so I would like to take this opportunity to thank our talented and dedicated team that really laid the foundation for a successful 2024. Thank you again for JPMorgan for asking us and for your continued interest and support to our company. Thank you.

We have some time for questions, and I can start. Just -- just coming back to -- following up on your points made about the commercial landscape in COVID-19. As the market shifts to more of a conventional payer market, what are you -- how do you understand the incremental cost burden or the shifting cost burden to patients to the extent that it is the case? And the importance that price may have on not only access, but really demand across these anywhere else?

Okay. With the profile that we have, obviously, we are going to discuss. But we feel that we have a best-in-class profile. I've never seen gaining traction by lowering the price. Actually, you've seen as an inferior drug, especially in the United States. But I think between the Lagevrio price and the Paxlovid price, there is definitely a range here that we believe will be very positive for the company and very attractive, as I said, for a major pharma because we are not going to develop a sales force and so we used to have a partner, as you know. It's clear that in Europe, the market is very limited. And the U.S. still remains 90% of the market. So we will see how we can basically maximize the launch of this drug with a partner that will basically realize the value. But in terms of the pricing, look, between 1,000 and 1,400, we like what we see.

Could you give us a census to what the hepatitis C market has evolved to in terms of patients who are naive or who may have already seen NS5As or Bs and how that may play into because [ bemni ] seems a little bit stronger.

Actually, it may not be obvious, but the two treatment option that we have today are only for chronic infections. What we anticipate in the Phase III is, we will enroll new infections and chronic infections, okay, especially today with the unmet need or new infection and reinfection you just see what is really unique with this drug is we combine the best of the other two options, which is short duration, lack of drug-drug interaction and good safety and tolerability profile. And that's basically what the KOL with our clinical team interacting with [indiscernible]. You have seen the market research we did and we are going to expand that. And we are going to expand to the payors as well because we need to get the feedback also from the payers. Now we were awaiting the data. I think as soon as we have a size of 280 patients, we will engage with the payer to see and get the feedback as well.

Given how robust your activity is seeing SVR for nearly all patients so far is there an opportunity to perhaps go shorter in the treatment window? Is that something that is like feasible and worth perhaps exploring the Phase II.