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

Good afternoon, everybody, and welcome to Atea Pharmaceuticals' Fourth Quarter 2024 Financial Results and Business Update Conference Call. [Operator Instructions] I would now like to hand the call over to Jonae Barnes, Senior Vice President, Investor Relations and Corporate Communications at Atea Pharmaceuticals. Ms. Barnes, please proceed.

Thank you, operator. Good afternoon, everyone, and welcome to Atea Pharmaceuticals' Fourth Quarter and Full Year 2024 Financial Results and Business Update Conference Call. Earlier today, we issued a press release, which outlines the topics we plan to discuss. You can access the press release as well as the slides that we'll be reviewing today by going to the Investors section of our website at ir.ateapharma.com. With me today from Atea are our Chief Executive Officer and Founder, Dr. Jean-Pierre Sommadossi; Chief Development Officer, Dr. Janet Hammond; John Vavricka, our Chief Commercial Officer; Dr. Arantxa Horga, our Chief Medical Officer; and Chief Financial Officer and Executive Vice President of Legal, Andrea Corcoran. They will all be available for the Q&A portion of today's call. Before we begin the call and as outlined on Slide 2, I would like to remind you that today's discussion will contain forward-looking statements that involve risks and uncertainties. These risks and uncertainties are outlined in today's press release and in the company's recent filings with the Securities and Exchange Commission, which we encourage you to read. Our actual results may differ materially from what is discussed on today's call. With that, I'll now turn the call over to Jean-Pierre.

Thank you, Jonae. Good afternoon, everyone, and thank you for joining us. I will begin on Slide 3. We made significant progress last year in advancing our HCV program with the regimen of bemnifosbuvir and ruzasvir. In December, we reported positive results from our global Phase II trial, which demonstrated a 98% cure rate in the primary efficacy analysis with a short 8-week treatment. The very high SVR rate demonstrates the robust potency across HCV genotypes. We believe our regimens, if approved, has the opportunity to become a best-in-class hepatitis C treatment and disrupt the global HCV market of approximately $3 billion in annual net sales. The very positive Phase II results helped to support a successful end-of-Phase II meeting with the FDA, which occurred this past January. In addition to the substantial progress that we have -- in addition to the substantial clinical progress, business updates include recent steps we have taken to further enhance shareholder value. This includes the retention of Evercore, a global investment bank, to assist us in the exploration of strategic partnership related to our Phase III HCV program. We also took cost-cutting actions to enhance efficiency in the management of infrastructure expenditures, which Andrea will discuss in further details. In February, we appoint -- we announced the appointment of a new independent director, Arthur Kirsch, who brings decades of financial and strategic advisory experience to our Board of Directors. Moving to Slide 4. Based upon the encouraging results to date, together with the successful outcome of the FDA meeting, we are initiating the global Phase III program evaluating the regimen of bemnifosbuvir and ruzasvir and expect enrollment to begin next month. We believe that our Phase III program is derisked with a compelling value proposition. Furthermore, robust Phase II results for antiviral therapies have historically led to a high probability of success in Phase III studies. In addition, we would be showing today results from a multi-scale modeling approach that confirm the high likelihood of success of our Phase III program. With $454.7 million of cash, cash equivalents and marketable securities as of December 31, 2024, we are in a strong financial position to execute and complete our Phase III HCV program as we anticipate our cash runway will extend into 2028. Moving to Slide 5. HCVs continue to be a significant global health care issue despite the availability of direct-acting antiviral for the past decade. The unrelenting high rate of HCV infections, which is outpacing the stagnant number of patients being treated, underscore the need for a new, differentiated and optimized therapy. I would like to point out that we still have a very large number of untreated HCV patients of between 2.4 million to 4 million in the United States. And let's not forget that in the United States, 70% of liver cancer is a consequence of HCV disease progression. Therefore, the lack of treatment of these HCV patients has a profound impact not only on patient's life, but also with the associated health care hospitalization costs. On Slide 6, the launch burden of untreated HCV disease translates into a large untapped commercial opportunity. Currently in the United States, out of the 160,000 new infections every year, only approximately 100,000 patients are treated. Last year, for example, these U.S.-treated patients resulted in approximately $1.5 billion net sales. And globally, the market continued to approximate $3 billion. We believe that the best-in-class profile of our regimen, together with the anticipated removal of access barrier and future government initiatives, can dramatically expand the number of patients cured in the United States from this severe viral disease. With that, I will now turn the call over to Janet to review the profile of our regimen and the global Phase III program. Janet?

Thanks, Jean-Pierre. On Slide 7, our potential best-in-class regimen is the only one that combines the required attributes to treat today's HCV patients. Our regimen combines bemnifosbuvir, which is the most potent nucleotide for HCV yet to have been developed and ruzasvir, which is a highly potent NS5A inhibitor. This regimen is differentiated in the approved treatment. It offers a highly potent pan-genotypic therapy with a short treatment duration, along with a low potential for drug-drug interaction and can be taken with or without food. All these attributes address the needs of the prescriber and the patient. Slide 8 illustrates that only our regimen has a preferred drug-drug interaction profile. Since approximately 80% of HCV patients are taking concomitant medications, the drug-drug interaction profile of HCV therapies is of particular importance to both patients and prescribers for ease of use. As detailed on this slide, the regimen of bemnifosbuvir and ruzasvir has the cleanest drug-drug interaction profile with commonly prescribed medications such as oral contraceptives, statins and proton pump inhibitors. On Slide 10, I'm excited to share an update for our Phase III program. In January, we had a successful end-of-Phase II meeting with the FDA. Following the meeting and at the request of the FDA, we submitted the final Phase III protocol, which also will be submitted to other regulatory agencies. We're currently in the process of opening up clinical sites, and we're targeting over 250 sites worldwide. As J.P. stated earlier in the presentation, we're initiating the Phase III program and expect enrollment to begin in April. On Slide 11, our global HCV Phase III program consists of 2 randomized open-label Phase III trials comparing the regimen of bemnifosbuvir and ruzasvir to the regimen of sofosbuvir and velpatasvir in patients with chronic HCV infection. Each trial will enroll approximately 800 treatment-naïve patients, both with and without compensated cirrhosis. Patients will be stratified by genotype and cirrhosis status, and patients with HIV coinfection will be allowed. For non-cirrhotic patients, which represents more than 90% of patients in the U.S., 8 weeks of bemnifosbuvir and ruzasvir will be compared with 12 weeks of sofosbuvir and velpatasvir. For cirrhotic patients, 12 weeks of bemnifosbuvir and ruzasvir will be compared with 12 weeks of sofosbuvir and velpatasvir. The primary endpoint for both trials encompasses sustained virologic response 12 weeks after treatment or SVR12 in each arm and is HCV RNA less than the lower limit of quantification 24 weeks from the start of treatment. Measurement at 24 weeks from the start of treatment is selected to ensure the primary endpoint occurs at the same relative time point from start of treatment in all patients. With that, I'll now turn the call over to Arantxa for a review of the global Phase II HCV study results. Arantxa?

Thank you, Janet. On Slide 12, I would like to remind you that our global Phase II study was a single arm of 550 milligrams of bemnifosbuvir with 180 milligrams of ruzasvir once daily for 8 weeks. This Phase II trial enrolled 275 treatment-naïve patients chronically infected with HCV, including patients with compensated cirrhosis. In the study, we had 2 efficacy populations. The primary efficacy endpoint was in the treatment-adherent population. A secondary efficacy analysis assessed SVR12 in the same population, but also included nonadherent patients. Of note, we had 17% of patients who did not take the study medication or were nonadherent in our Phase II study, and this nonadherent rate is similar to what was reported in our third-party market research. Moving to Slide 13. The primary efficacy endpoint demonstrates a 98% SVR12 rate in all adherent patients after 8 weeks of treatment, and a 95% SVR12 rate was achieved in patients regardless of treatment adherence. This patient population also includes cirrhotic patients where the SVR12 was 88%. In the cirrhotic patients, on-treatment viral kinetics was lower, but it is important to note that 100% viral clearance was achieved at the end of treatment. Therefore, we can expect that 12 weeks of treatment in cirrhotic patients should lead to very high SVR rates. Slide 14 shows that the overall non-cirrhotic treatment-adherent population, SVR12 was almost 100%, with only 1 failure in 179 patients. In genotype 3, it was 100%, which is a genotype historically hard to treat. The robust potency and drug forgiveness was demonstrated in non-cirrhotic patients regardless of drug adherence, with the regimen achieving 97% SVR12 in the overall population and 98% in genotype 3, even with 20% of these patients being nonadherent. On Slide 15, the regimen of bemnifosbuvir and ruzasvir was generally safe and well tolerated with no drug-related severe adverse events or premature treatment discontinuations. Similarly, there were no trends observed in adverse events or safety laboratory parameters. Let's now review new modeling data on Slide 16. The Phase II data was further evaluated in a multi-scale model of HCV infection and treatment to confirm the effectiveness of bemnifosbuvir and ruzasvir. A similar approach has been previously validated and published to evaluate other DAA regimens against HCV. In this model, the population estimate for the time to achieve HCV RNA less than the lower limit of quantification in the plasma was approximately 12 to 16 days, while the corresponding time to achieve cure was approximately 7 to 8 weeks. Therefore, this model provides further support for a high likelihood of success for the regimen being evaluated in Phase III with durations of 8 weeks in non-cirrhotic patients and 12 weeks in cirrhotic patients. I will now turn the call over to Andrea to discuss Atea's financials.

Thank you, Arantxa. As Jonae mentioned, earlier today, we issued a press release containing our financial results for the fourth quarter and full year 2024. The statement of operations and balance sheet can be found on Slides 18 and 19. In 2024, R&D expenses declined quarter-over-quarter but increased year-over-year in 2024. The full year increase was primarily driven by higher 2024 external spend related to our COVID-19 Phase III SUNRISE-3 trial as well as our Phase II HCV trial. For G&A, expenses in 2024 and 2023 were similar quarter-over-quarter and year-over-year. Interest income quarter-over-quarter and year-over-year decreased due to lower investment balances. In 2025, substantially all our external R&D spend will be related to the advancement of our Phase III program. As Jean-Pierre mentioned, at year-end 2024, our cash, cash equivalent and marketable securities balance was $454.7 million. Continuing our strong financial discipline, we project cash guidance runway into 2028. Moving to Slide 20. As noted in our press release today, we announced a reduction of our workforce by approximately 20%, 25% in early January. This action is intended to enhance efficiency in the management of infrastructure expenditures and is expected to result in a cost savings of approximately $15 million through 2027. Additionally, we also announced that Arthur Kirsch has joined our Board of Directors. His extensive financial and strategic advisory experience will further strengthen the Atea Board as we advance our strategic priorities. We believe that Arthur's proven track record of executing and overseeing transactions will be invaluable as we pursue opportunities to enhance shareholder value. I'll now turn the call back over to Jean-Pierre for closing remarks.

Thank you, Andrea. In closing, we believe that our global Phase III HCV program is derisked with a high compelling value proposition. This is based on substantial preclinical and mostly clinical data, a well-characterized regulatory pathway, optimized manufacturing processes, a durable multibillion-dollar market and a long patent runway. We believe that the regimen of bemnifosbuvir and ruzasvir with its potential best-in-class profile for the treatment of hepatitis C, if approved, provide an opportunity to become the most prescribed treatment and disrupt the global hepatitis C market of approximately $3 billion in annual net sales. Before opening the call to your questions, I would like to thank our talented and dedicated Atea employees. Our team with relentless pursuit of excellence drive our dedication to advancing oral antiviral therapeutics for patients worldwide affected by severe viral diseases. With that, I will turn the call back over to the operator.

[Operator Instructions] And our first question comes from the line of Bella Camaj with JPMorgan.

This is Bella on for Eric. Just 2 questions from us here. First, following your meeting with the FDA, are there any specific call-outs that they've guided for in the Phase III trial design? And then second, what can we expect in terms of the scope of your Phase II readout later this half?

Janet, do you want to address the first one, and then Arantxa will address the second questions. Janet?

Thank you, J.P. Yes. So with regards to our meeting with the FDA, no, I don't think really any specific call-out. They are fully aligned with our approach of going forward with 2 open-label Phase III trials. I think it's somewhat unconventional to run open-label trials. But I think given the circumstances of the different properties of the drugs in the population that we are studying, this is completely in agreement with them, and they didn't really have any substantive comments around the conduct of the trial.

Arantxa?

Yes. I think the question from Bella was about the Phase II readout. So we are expecting to present data this summer at -- [ published in ] May. And so you'll have additional data there in terms of the [ data from ] safety and all the other details of the protocol of the study.

Our next question comes from the line of Andy Hsieh with William Blair.

Okay. Three questions from us, if you don't mind. One is on the trial design for the Phase III program. I'm curious if you have an estimated number of cirrhotic patients across those 2 trials. Are they going to be strictly controlled? Or this is kind of an estimation based on global and U.S. epidemiology? So that's question number one.

Janet? Let's do by one question at a time, if you don't mind. So Janet, can you address those questions, please?

So yes, so they are estimates. We have target numbers of cirrhotic patients that we'd like to see enroll in the trial. But the number of cirrhotic patients, I think, generally worldwide has declined with the advent of direct-acting antiviral therapies. I think particularly so in the U.S., they're harder to fin than I think they were when the earlier direct-acting antiviral trials were conducted. But we do anticipate seeing somewhere in the order of just north of 10% probably in our trial, and that's what we're aiming for.

I see. Is there an ability for you to adjust that number if you're seeing maybe a little bit lower or a little bit higher as the trial is enrolling?

Yes, I think so. As I said, we're having -- we're setting targets, not absolute numbers. So we do have some flexibility in there. And obviously, if we can achieve more and get greater experience, I think that will be important. But I don't think there are absolute requirements around that. We want to have sufficient patients enrolled with cirrhosis to be able to justify having that population in our label. But I think we're certainly going to do the best we can to have enough, but it -- there is flexibility there.

That's helpful. Second question has to do with the modeling, which is very unique on Slide 16. So I'm curious, if you were to plot this with Epclusa, would you expect that those 2 lines to be right-shifted for Epclusa across the non-cirrhotic and cirrhotic population?

This model has been developed by Dr. Alan Perelson from Los Alamos. And please check, there is publications with other antiviral -- direct antiviral for HCV.

[Operator Instructions] I'm showing no further questions. And I would like to hand the conference back over to Jean-Pierre for closing remarks.

Thank you for all of you for joining our fourth quarter 2024 earnings conference call, and thank you for your continued support.

This concludes today's conference call. Thank you for participating, and you may all disconnect. Everyone, have a great day.