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

I'm Eric Joseph, senior biotech analyst with JPMorgan. Our next presenting company is Atea Pharmaceuticals, and presenting for the company is Jean-Pierre Sommadossi. There's a Q&A after the presentation. If you have a question, we'll bring -- we have mics, we'll bring them around to you. And for those tuning in via the webcast, feel free to submit questions to the portal. So with that, JP, thanks for joining us.

Thank you, Eric. And before I begin, I would like to thank JPMorgan for the opportunity to present today. We have here at the podium, Arantxa, our CMO; and John Vavricka our Chief Commercial Officer, and they will address some of the questions that you may have after the presentation. So we have exciting new updates on our regimen for the treatment of hepatitis C with bemnifosbuvir and ruzasvir and new data as well from our third-party market research supporting the, we believe, large market opportunity. Just a usual forward-looking statement, and I encourage you to look over the latest update with our regulatory filings. So Atea is going to have a very exciting year as we plan to initiate our global Phase III program evaluating the regimen of bemnifosbuvir and ruzasvir during the first quarter of this year. We entered the Phase III program for HCV following positive data that we just reported in part about a month ago. We will share with you some new data as well and showing that this Phase II global study actually demonstrated a 98% cure rate in the primary efficacy analysis with a short 8-week treatment. This very high rate, as you demonstrate really the robust potency of this regimen. And you will see across genotype and meeting our criteria, we have selected a 95% efficacy to move the program towards a global Phase III, which, as I said, we will initiate this quarter. Actually, we are going to meet with the FDA at the end of the month for an end of Phase II meeting, and we anticipate that we will initiate shortly thereafter. We believe that our regimen, if approved, the opportunity to really disrupt the global HCV market, which represent about $3 billion in annual sales. Importantly, we have a quite solid cash balance with almost $455 million at the end of last month. And so this strong financial position put us in a good position to execute and complete our Phase III program as we anticipate that our cash runway will go at least well into 2028. So why do we believe that we have a great value proposition here? You will see with the data that we have a potential best-in-class regimen with robust Phase II results, as I said, 98% efficacy. We have a fixed dose combination tablet that will be ready for the Phase III and will be similar for a commercial launch with large market opportunities and a patent life that is going until 2042. Most importantly, we strongly believe that this regimen now after this very positive Phase II data is derisked. And it's quite well known in the field of antiviral therapies that when you have robust Phase II results, we have historically seen around 75% to 80% probability of success in those Phase III studies. So we are very pleased where we are with a fully derisked program, and we look forward to initiate very rapidly this global Phase III program. So as you know, we have had direct-acting antiviral now for the past decade. And despite the presence of these DAA treatments, we still have really a significant global health care issue with HCV. For someone that has worked in HCV for mostly -- most of my career, it's really humbling to see that you still have 50 million infected individuals worldwide, 1 million new infection annually, 0.25 million deaths. And really in the U.S., we have reached a plateau in the treatment of HCV-infected patients. And this for about -- as you can see, the last 5 years or so. We are very far to cover the new infections have about 160,000 knowly report the annual infections. This is CDC numbers. We still have a pool of almost 4 million infected individuals. And so it's clear that these numbers underscore the need for a new differentiated and optimized therapy. And let's not forget that we talk about oncology, liver cancer treatment. Let's not forget that 70% of liver cancer in the United States in Japan and EU actually are caused by this hepatitis C infection that are going to progress over 15, 20 years into fibrosis and cirrhosis. So this really large burden of untreated HCV disease translates, as you can see in a large untapped commercial opportunity. There's 2 product market. There's no one in clinical development. So the treatment of about 90,000 patients in the United States every year lead to about $1.5 billion in net sales for a $3 billion global market. So we believe that with a best-in-class profile of our regimen with the anticipated removal of some of the barriers that we have seen so far with the payers and hopefully, that the government -- and this is -- there is some consensus across the aisle that we need to eradicate, in the United States, HCV infections. And it's clear that with the availability, hopefully, of this new treatment, we are going to expand the number of patients cured from this severe viral disease. And ultimately, because of a large proportion of these patients will unfortunately develop liver cancer, ultimately will lead to health care cost saving. As you can see here through our third-party market research, an overwhelming majority of U.S. prescriber want improvements to current HCV treatments. About 20% of the patients are not compliant with DAA. This is what the health care prescribers are reporting. Either they don't complete the treatment or they are missing those doses. And you will see that actually in a few minutes, this substantial number was confirmed as well in our Phase II study. It's clear that an ideal HCV treatment should provide high efficacy, short treatment duration. And something very important that we don't talk much is drug forgiveness because even with this non-adjuvants, you will see with our regimen, we are going to -- we are showing in the high 90s of cure rate. So in addition, prescribers prefer a direct-acting antiviral regimen with a low risk of drug-drug interaction as the HCV patient today in contrast to 10 years ago, are taking several concomitant medications. So in this slide now, what you can see is we believe that the regimen of bemnifosbuvir and ruzasvir. So bemnifosbuvir is the most potent HCV nucleotide and ruzasvir, which is a highly potent HCV and S5 inhibitor, which we licensed from Merck. You can see a very rational way that this regimen has the potential for a best-in-class profile. We are talking about short duration, 8 weeks. This is about 90% of patients in the United States. The compensated cirrhosis numbers continue to decline according to the KOLs. And so it's essential that this regimen should have not only short duration, but also very limited drug-drug interaction, no food effect, obviously, pan-genotypic efficacy as well. So in this slide, actually, that's really demonstrate the importance of this drug-drug interaction profile as compared to Mavyret and Epclusa. This with 80% of HCV patients taking concomitant medication, and we are talking about commonly prescribed drugs. So oral contraceptives, statin, put on pump inhibitors, you can see that our regimen is the only one that is really clean for drug-drug interaction. We are still 2 ongoing Phase I studies in normal volunteers with statin and anti mix, but we feel pretty confident that these studies will also show that we have no drug-drug interaction with these medications. So let's move now to the Phase II results a little bit in more details that we have reported the top line just a month ago and as well as the design of what we anticipate will be our Phase III program. So the Phase II was a global study. It was an open label with a single arm of 550 milligram and 180 milligram -- I'm sorry, 550 milligram of bemnifosbuvir and 180 milligram of ruzasvir, once daily for 8 weeks. We enrolled about 275 patients treatment naive patients chronically infected with HCV, including patients with compensated cirrhosis. In this study, we have 2 efficacy populations. So the primary efficacy endpoint was in the per protocol treatment adherent population, which are 213 patients and also a secondary efficacy analysis evaluating the SVR12 in the same population, but including also the non-adherent patients. So that's the 256 patients that very likely will be the one we anticipate will be this efficacy evaluable population will be the one that will be the primary analysis in the Phase III when we will compare on a head-to-head with an approved marketed drug. So you see that when we look at the total enrollment, 275, so we have about a 7% follow-up loss. This is quite high as compared to the data in Phase III 10 years ago. And that's basically a demonstration that this is a difficult patient population, younger today. And so the one that we lost to follow up, obviously, the one that we do not have SVR12 data and so could not be analyzed. So also just a quick remark. It's interesting that regardless of the market research we do and now with a robust Phase II study, still, we have around 20% of nonadherence as measured by pill counts and PK as well. So on the next slide, you see the efficacy, the primary efficacy endpoint that where we show 98% in all the adherent patients after 8-week treatment and 95% was achieved in patients regardless of treatment adherence. And this patient population also included the cirrhotic patients where we had 88% SVR12. What is important to note here is that in the cirrhotic patients on treatment, viral kinetics were definitely slower, but we could see 100% viral clearance at the end of the treatment after 8 weeks. So we feel very strongly that we are going to see very high rate as well in cirrhotic by extending the treatment duration to a 12-week study rather than 8 weeks. And actually, when we analyze the data across genotype in non-cirrhotic, either treatment adherent or non adherent patients, you can see that. Out of 179 patients in the adherent patients, we only lost one patient that did not succeed. So extremely high cure rate in non-cirrhotic patients. I'd like to remind you that this is 90% of the patient population in the United States and also in the 5 EU countries. In Japan, it's a little bit patients with a disease that are more on the late stage. But for the team, what we are really impressed here is when we analyze patients that were also non-adherent and especially with genotype 3, which historically is a genotype that is more difficult to treat I never seen with other DAA 100% success in genotype 3. But most importantly, is having a 98% regardless of adherence. So again, we lost only 1 patient even if we had still about 20% of nonadherence when we compare these genotype 3 patients. From a safety standpoint, the regimen was generally safe, well tolerated, no drug-related severe adverse event. no premature treatment discontinuation, no trend in adverse events or safety laboratory parameter as well. So we are really eager to interact with the regulators, especially with the FDA at the end of the month, so we can promptly advance to Phase II to the Phase III development. It's quite well known that the HCV regulatory pathway is well defined. Clear guidelines have been published from the FDA and other regulators. We anticipate 2 open-label Phase III trials, one conducted in the U.S. and Canada, so in North America and outside North America. We anticipate about 800 patients per trial with head-to-head, very likely against sofosbuvir, Velpatasvir on 8-week of our regimen against 12 weeks in non-cirrhotic head-to-head and 12 weeks for both regimens in cirrhotic patients. This will be a non-inferiority trial within 2 percentage unit -- and if one of the trial will have 3 percentage unit that we can also demonstrate superiority. We have a 90% power. So we feel that we have a very powerful study design, and we look forward, obviously, to see -- get the feedback from the FDA. So let's now review data, the new data from third-party market research supporting really the unique commercial market opportunity. So on this slide, we can see the highly positive reaction to our regimen for the U.S. prescriber. About 90% of this U.S. prescriber were very positive to the profile of bemnifosbuvir and ruzasvir. And this across specialties, as you can see, basically, those are the 4 major specialties we prescribe DAA. And also, please note that this U.S. HCV prescriber base is highly concentrated, only about 6,000 prescribers write 80% of direct-acting antivirals for the treatment of hepatitis C. So we think that this really make it optimal for efficient commercialization. Now from a payer standpoint, the profile also was extremely well received. You can see that we -- our market research actually covered payers that are covering 130 million lives in the United States. And their feedback was this profile was either superior or comparable to Epclusa and Mavyret and definitely, they foresee to include in the formulary, obviously, if approved. So we believe that our regimen should achieve a substantial market share. And based on what we have seen with third entrants in highly entrenched class, but with a differentiated and best-in-class profile, you can see that actually they have been very successful in achieving market share between 35% and 40%. And this is basically what we anticipate with our regimen. So in closing, we believe that this regimen of bemnifosbuvir and ruzasvir has the potential to be a best-in-class profile for the treatment of hepatitis C, if approved. And provide an opportunity to become the most prescribed treatment in the large multibillion-dollar market. We offer potency, convenient, short-term duration, limited drug-drug interaction, no food effect. And I'd like to remind also drug forgiveness because this is the type of drug today that you combine really exceptional drug potency and allowing a very significant drug forgiveness. So we believe that this profile will provide a significant opportunity to address this large burden of untreated HCV disease. And if approved, we believe that this regimen will disrupt the global HCV market today at $3 billion annual net sales. Thank you, and look forward to address any questions you may have, Eric.

Thanks for the presentation. Yes, we do have some time for questions. Just want to pick up on the -- just sort of the remaining or the level of unmet need that remains, right, in the treatment of HCV. Aside from the treatment course or pill burden, what really, at the end of the day, comes down to sort of the challenge of achieving high compliance. What hurdles are there for...

The drug potency that makes the difference. Our differentiation is really we are 10, 20, 30-fold more potent than the nucleotide that is part of the Epclusa regimen. We see that the advance will decrease over time in the treatment duration. So the first months, very good adherence. That's why with a very potent regimen, really, you maximize the drug forgiveness and achieve those 98%, 99%, even if you don't have basically missing doses, not completing treatment duration, and that's what we see from the prescriber. And by the way, talking to the prescriber in this third-party market research, the feedback is that the most they see is in the early 90s percent and not in the really high 90s as we see in our study.

Just you also kind of cited the rate of new infections, I think about 1 million per year. It's been quite -- it's kind of quite a rise recently. What factors do you think contribute to this reinfection -- or not reinfection, but new infection rate? To what extent are some part of those repeat infections in the review? And I guess within all of that, I guess, how -- is there any concentration or geographical localization to those cases?

Arantxa, do you want to address the question?

Yes, it's both patients that were not treated before that continue spreading the virus. And then there is a certain proportion of patients that get reinfected because you don't build immunity. So you can get reinfected multiple times. And that is a little bit harder to evaluate, but it could be around 10%, 20%.

Okay. Are there any genotypic activity gaps among the current standard of care regimens that would be addressed with [indiscernible] ruzasvir?

You see it's the genotype 3. And even actually, we have some genotype 3B in this study, and they were 100% cure. So that's, again, it's the potency of this regimen. And the failure that we have had in the cirrhotic, actually, mostly in genotype 1, we didn't see much failure on genotype 3 cirrhotic. But we anticipate that we will get also in the 97%, 98% regardless of the difference in those patients. And so GT3, we believe, I really the genotype that this regimen will be really very effective as compared to -- it's not that the other one are not. They are still around 94%, 95%, but we think that we can do better than that.

Can you talk about the adherence rate in your Phase II study and sort of the pattern of where there may have been sort of gaps in compliance. Was it -- I guess, was there non-adherence -- how to put this eloquently, I'm not sure. I guess did you have sort of oscillating use of drug, right? Or did patients sort of just fall off of usage and not back to study?

You know the details of this.

Yes. Well, it's a little bit of both, but there is a clear trend that -- and this is for all the antibiotics and antibiotics. You start very strong. And then after a month or 6 weeks, you start forgetting because a lot of these patients think that they're better and they just have a hard time adding to medication. So there is that trend of forgetting more and more towards the last couple of weeks. And then there is also a component of patients that take it for a couple of weeks, then they forget a few doses and then they restart, particularly if they go back to the clinic and see the doctors. So it's what we see with all the antivirals. And with any antiviral or any antibiotic, the more potent the antiviral or antibiotic and the sooner you can drive down the viral load, the better because then it doesn't matter if you don't finish the last couple of weeks. That's why potency is very important.

I mean, in some senses, adherence is almost like a function of the treatment course, right, that you lay out in the protocol, I would think, right? Just given the potency that you're observing in the high SVR rates, as you look to a pivotal study, what about -- I mean what kind of weight do you give to considering a shorter treatment interval, something shorter than 8 weeks to sort of drive adherence rate?

Again, as you know, the patients will get basically a 1-month supply. So at the end of the day, that you have 6 weeks or 8 weeks doesn't matter. Maybe you want to report your interaction with the KOL also suggesting that they don't see any difference between 6 weeks and 8 weeks on the in terms -- in terms of value of the...

I mean it's basically the same. And if you go to 8 weeks, you'll capture almost everybody as you've seen, like 100%. So why would you want to risk for a couple of weeks to lose a couple. It's just not that kind of 6 versus 8 didn't seem to have enough value for them for us to really even push further.