Vir Biotechnology, Inc. (VIR) Earnings Call Transcript & Summary

All right. Great. We can get started. I'm -- good morning. I'm Eric Joseph, senior biotech analyst with JPMorgan. Our next presenting company is Vir and presenting on the part of the company is CEO, George Scangos. [Operator Instructions] So with that, George?

Okay. Good morning, everybody. Thanks, Eric, and thanks to JPMorgan for inviting us. And I'm glad to see the conference back this year after a couple of years of hiatus. Vir was founded in late '16, started operations at the beginning of '17 with a single goal to provide better prevention and better treatment for serious infectious diseases around the globe. We were happily moving forward on [indiscernible] flu on hepatitis B, on HIV, and then along came COVID, right? And because we could, we jumped on COVID. And in a matter of 15 months, we brought forward sotrovimab, COVID antibody, which has now been given to over 2 million patients around the world. So while we were an all-out sprint mode for COVID, we managed to keep our other programs going into managed to build the company. And so we've made a remarkable amount of progress, I think, in a relatively short period of time. For a 6-year-old company to be where we are now, I think, is quite remarkable. I'm going to tell you a little bit today about where we've come from, our -- what we expect to happen this year and a little bit more about the long-term value drivers in the company. Before I start, I will be making comments about things we expect to happen in the future. And of course, things may turn out differently from our expectations. So for a full view of the risk, you should see our regulatory filings, and they're also posted on our website. And I think all of this legal lease can be just broken down to say, anything that hasn't happened yet, may not. So look, infectious diseases are -- I don't think you need to remind anybody today that infectious diseases are an ongoing threat, right, that they are a serious threat to our health, to our economic security and to society. That was true in 1918 in the pandemic, and it was true in 1919, '20, '21 in the COVID pandemic. And so what Vir's doing, I think, is more important than ever. That's why Vir was founded to lead the charge to get to a world where infectious diseases are no longer a major threat. So why should you care about Vir and a lot of biotech companies around? Number one, I'd say we have a proven track record. We have brought forward treatments that have benefited large numbers of patients around the world, starting with Ebola. We created 1 of the 2 approved treatments for Ebola, reduces mortality of that disease by a substantial amount, and of course, COVID with sotrovimab. As a small company to have done that already, I think, is quite remarkable. Just getting started, we have major clinical trial programs going on this year in hepatitis B, HBV, hepatitis delta and flu. These are meaningful, well-controlled, well-designed Phase II trials. We'll have data from all of those over the course of this year. Behind those -- and of course, we have our COVID antibodies are next-gen COVID antibodies. So there are 4 programs that I'll talk about in some detail, but we're more than a four-trick pony. We've got a rich pipeline of preclinical assets that are coming forward, and I'll talk more about that later in the presentation that we think can provide sustainable long-term growth for the company. And thanks to sotrovimab, we have about $2.7 billion in cash, which is enough to get us through all of the major inflection points and run the company for several years. So we're sitting here in, I think, very good shape right now. This year, this is a particularly interesting time for Vir and its investors, right? Because of the Phase II data that we're going to generate this year from 3 major programs. Together, these programs represent market opportunities of over $17 billion. They represent a lot of lives saved and a lot of lives whose quality is improved, a lot of avoided health care costs because of the reduced hospitalization. So pretty excited about what's coming this year. So let's talk about these individually. Now I'll start with HBV. Today, this is a disease that affects about 300 million people around the world. The goal for HBV is to find a functional cure that is not to eliminate the virus but to induce the immune system to regain control over the virus, keep the virus from replicating and prevent the progression to hepatocellular carcinoma, cirrhosis, liver failure that is -- occurs all too frequently in HBV-treated patients. The best efforts so far have led to a functional cure rate of about 7%. That is obviously grossly inadequate, and we need to do better, and we can do better. A successful program here, which -- and our goal in the first case is to achieve a functional cure rate of at least 30%. That represents a major market opportunity and major opportunity to save a lot of lives around the world. We have a multiple Phase II trials going on. We have 2 unique assets in this space. One is an siRNA called 2218 and the other is an antibody directed against HBV S-antigen. This antibody is a dual function. It both is a potent entry inhibitor, so block entry of the virus into cells and its Fc region has been engineered to engage the immune system and induce an immune response that can protect the patients from HBV. To get into assess some preliminary data in our trial where we combined 2218, the siRNA with alpha interferon, the 5th cohort had about a 31% seroclearance rate. These are patients who -- whose level of circulating viral antigens went below the level of detection. Functional cure is defined -- regulatory defined as achieving -- I mean viral antigen levels below the lower level of detection and maintaining that for 6 months after treatment. So this 31% is among the best numbers that anyone's gotten. The numbers aren't big, 4 out of 13. So obviously, that's not exactly 31%, but it's still a significant number. The interesting thing here is that all 4 of those patients seroconverted. So they were able to generate their own immune response against the virus. And so we believe that, that seroconversion is certainly necessary and hopefully indicates that those patients will remain negative for 6 months after treatment. We'll have those data over the course of this year. We also have done a trial with the siRNA and with our antibody 3434. That resulted in a -- almost a 3-log decline in the level of circulating viral proteins. As far as I know, that's the largest viral decline that anybody has seen in any hep B trial. And so we've got 2 separate trials here. And when we piece these together, it makes us quite hopeful that we'll be able to generate positive data in the March trial, which we're currently conducting, which is to test the 2218 siRNA with the antibody together with and without alpha interferon added. That trial is ongoing, and we're going to have data from that trial over the course of this year. So we're hopeful that the addition of the antibody, which is a remarkable antibody, actually, can -- will and we know that it will induce an additional drop in the level of S-antigen, and we're hopeful that will increase the number of people who achieve seroclearance. And because it engages the immune system, we're hopeful that we will reduce lead to functional cure. Pretty excited about this trial. I think it's a really interesting trial. We'll have data from it over the course of this year. If we look at hepatitis delta, hepatitis delta is the most severe form of hepatitis. Patients who are infected with hepatitis delta have a much higher incidence of hepatocellular carcinoma, much higher incidence of liver failure. The goal -- the regulatory goal for the treatment of hepatitis delta is achieved at least a 2-log drop in the level of circulating viral DNA. We are optimistic that either of these assets, the siRNA or the antibody alone, we'll be able to achieve that, and we are testing that, and we're testing those in combination to assess the impact on hepatitis delta. We think this is about a $2 billion market opportunity, should it succeed. And again, we'll have data from the Phase II trial this year. So pretty exciting. Let me turn now to flu. As you all know, I'm sure the flu vaccine is only partially efficacious. It's efficacy ranges anywhere from 10% in the worst years to about 60% in the best years. But it doesn't get above 60%. There are immunological reasons why that -- why to explain that. But in the patients who need the protection the most, that is elderly patients and -- especially elderly patients with comorbidities, congestive heart failure, COPD, the vaccine efficacy is always lower. And those patients, if you're over 65 with COPD or CHF or just over 75, period, and you get flu, you have about a 1 in 3 chance of being hospitalized. And that's in the presence of the vaccine. So those patients need better prevention from flu. And we think we have a way to do that. We have an antibody VIR-2482 that neutralizes every strain of flu A that's arisen since the 1918 pandemic and neutralizes a lot of flu strains that have never been in humans and are [ no ] avian strains that are circulating, including all the strains that are circulating this year. We've extended the half-life of this antibody. And we believe that a single dose of this antibody in the fall should be able to provide protection throughout the flu season, for the 6 months of the flu season. We are currently testing that in a clinical trial, Phase II trial, and that trial is ongoing. And it's a 3,000-person trial. There are 2 doses of 2482, together with the placebo group, so with 1,000 patients per arm. And frankly, a few months ago, I thought there were 3 risks to this program. One is, of course, does the antibody work? And we won't know definitively the answer to that question until we get the results, of course. But we're encouraged by the fact that it's clear that monoclonal antibodies can protect people from respiratory viruses. That's clear from COVID and it's clear from RSV. So flu could for some strange reason be different, but we're optimistic that the monoclonal antibody can provide protection from flu. We know that neutralization of the virus is a good surrogate for actually clinical protection, and we know that this antibody is a good neutralizer of the viral strains. So in terms of the risk that the antibody will work, we think that's quite reasonable. The other risk is that we wanted to enroll 3,000 patients in 2 months. That's a heavy lift. We did it. The trial was fully enrolled, and we announced the enrollment of the trial just before the holidays. And the third risk was that there wouldn't be enough flu so that would get enough cases to be able to make any definitive answer. There seems to be, unfortunately, for us all, plenty of flu this year. And so the trial is fully enrolled. There's a lot of flu. We're going to get an answer. And we'll have those data late spring, early summer, as [ soon as ] the flu season is over. The target population for here, the elderly and the -- especially elderly with comorbidities, is tens of millions of people. This is not a niche market, right? This is a huge need here and a huge opportunity. And the market potential for this is well over $5 billion a year. So very excited about the potential of this program as well. I can't give a talk on Vir without talking about COVID and sotrovimab. So look, together with GSK, we are very happy, actually proud to have delivered over 2 million doses of sotrovimab to patients around the world. It's been authorized or approved in over 40 countries around the world. and it continues to be used in 40 countries around the world with the exception of the U.S. Because it's approved and being used around the world, we are gathering real-world data to assess the continued efficacy of sotrovimab against the currently circulating variants as well as preclinical data. And we'll make those public as the year goes on. In addition to sotrovimab, now that we've had some time, we have identified some remarkable next-generation antibodies that we are bringing forward for the treatment of COVID. The ideal antibodies would be highly potent, so that it can be administered in a small dose because convenient dose subcu or IM, they would be very broad, and they will be very hard for the virus to escape. And we and others, I think if you talk to any of the antibody companies, it's been relatively easy to find broad antibodies. It's been relatively easy to find potent antibodies. It's been extremely difficult to find antibodies that are both, broad and potent. We now have some. And we have quite remarkable antibodies moving forward that we'll bring in into development now and bring forward. And we believe they will have staying power through many generations of variants. Happy to talk more in detail about those, if there are any questions. Just a quick view of the pipeline. We talk about our programs, but there are multiple trials here. As you can see, there are 4 different clinical trials going on for HBV. So the 1 that I talked about, but we have a trial with a company called Brii to test the siRNA in conjunction with the T-cell vaccine. We have a clinical collaboration with Gilead, to test our molecules together with some of their molecules. There's no commercial arrangement with Gilead. It's just putting together our assets and theirs to see if we can make a difference. And then at the bottom, we see in the yellow, 2 programs that we have, which are using a CMV as a vaccine vector to try and elicit an immune response that will be protective for HIV. And this has generated data in primates. It protects monkeys from SIV. And so this will have some early clinical data coming from this program this year as well. Behind us, we have many opportunities of very interesting molecules coming through our research pipeline. We have, obviously, many broadly neutralizing antibodies, incredible machine to generate these antibodies, not only against COVID-19. We now have a new antibody that protects not only against flu A, but flu A and B. We have an antibody that neutralizes both, RSV and MPV, that will enter development soon in collaboration with GSK. We have an agreement with the Gates Foundation to use broadly neutralizing HIV antibodies with modified Fc regions as a potential cure for HIV. And we have programs on malaria and actually remarkable antibodies that can rescue animals that are more [ burned ] with rabies. No commercial opportunity there, but certainly a health need in many parts of the world, and we'd like to find a way to bring those forward. In addition, we've been doing CRISPR screening to identify cellular targets that are necessary for the replication of a variety of viruses, especially respiratory viruses. And with that, we've found genes, proteins, which are necessary for the replication of COVID, for flu, for RSV and rhinovirus. And some of the targets we found actually are able to inhibit multiple viruses. There are now multiple programs in medicinal chemistry, both in Vir and in GSK with whom we're collaborating on this, and we expect to bring some of those as well. The T-cell vaccine, Vir now is focused on HIV. We think there's a real opportunity in HPV and HPV cancers. And then finally, since we know a great deal about the epitopes that are recognized by antibodies that are very broad and recognized not only all strains of COVID but other coronaviruses as well. Those same epitopes are the ones that you would like to include in a vaccine that would be broadly protective, again, not only against COVID, but potentially the next coronavirus pandemic well. And we think we have insight into how to make those, and we are actively testing those molecules. So again, some catalysts coming up this year. There are a lot of them. I don't expect you to read this slide. This slide will be on our website if you want to look at it in more detail, because the point is that the few catalysts that I talked about, we think, are major drivers. There are many more catalysts that are going to be present and occur over the course of this year. So just to come back to the beginning. I think we've got -- we've proven our ability to execute to bring forward medicines that help patients and deliver them around the world. A lot of catalysts coming this year, really deep research pipeline that can provide growth over the long term and the financial strength to fund these programs for several years. So we're sitting here, I think, in a really interesting position, really excited about this year and the future years. So with that, thank you all for listening, and I think we'll open it up for Q&A now. I have several Vir colleagues here today including Phil Pang, our Chief Medical Officer; and Head of R&D; and Howard Horn, our CFO. And so if you ask me any really tough questions, I'm just going to pass it to them. Thank you.

So yes, I can get started with questions. The first place I'd like to start is really around, well, actually, starting with HBV. I'll come back to flu in a moment. But with HBV, the data that you presented so far in the March study is really impressive with having PEG interferon on board. Obviously, in March, you're evaluating multiple regimens with and without PEG Interferon. I'm curious to know whether -- to what extent having PEG is part of an ultimately approved regimen might impact the addressable chronic hepatitis B population? I guess, is there a population that might be contraindicated for PEG Interferon?

Thank you. So I think there's a couple of aspects here, which is understanding the balance between safety and efficacy. And of course, with a pegylated interferon alpha in the regimen, there is a greater tolerability concerns and some safety concerns and as you mentioned some concerns about who would be eligible. But I think, as you know, with 300 million people at risk, there's going to be potentially different segments that respond to different treatments. But of course, I think the barrier to efficacy will become higher, the more concerning there is around safety. So I think that there's -- what we're trying to do is provide something for everyone. It may not be the same thing for everyone. But I think that there's certainly reason to believe that 2218 and 3434 could be that for everyone, which would be interferon-free, but we certainly wouldn't want to leave efficacy on the table by not at least exploring what would happen if Interferon-alpha could be.

As part of your sort of market forecasting of the size of the opportunity with -- in chronic hepatitis B, just can you just talk about sort of the pricing assumptions going into that forecast? I guess how do you think about the value for a functionally curative regimen in CHP relative to maybe other -- I guess, is there analogies looking at HBV that sort of inform what pricing might look like in this indication?

Yes, I think it's way too early to actually talk about price. And number one, if we achieve 90% function of cure, that has more value than if we achieve a 30% function of cure. So a lot of the sensible price will be dependent on the data. What we do know is that there are 300 million patients worldwide, but millions in the developed world that can pay. And it's a very large market, a very large market opportunity. So if we achieve a greater than 30%, a meaningful function of cure, there clearly will be a market and the higher the function of cure rate, obviously, the more valuable the therapy is, right?

It's a with having 3434 onboard the antibody, it's a significant amount of, I guess, protein that we administered, all right? I guess, would the market will be constrained by the quantity of antibody that can produce in the -- annually?

So actually, the dose of the 3434 antibody, which is, of course, not just a neutralizing antibody, but a vaccinal antibody, an antibody that can act as a T-cell vaccine. The doses is relatively small that we're using, 300 milligrams subcutaneous once a month. So we actually don't think that the quantity of actual antibody is going to be limiting in any way from either a cost of goods or a manufacturing capacity perspective.

Okay. I mean I guess as you're looking at small molecule approaches to address more number of infectious diseases, but particularly within HBV, I guess can you elaborate a little bit on the -- or shed a little light on the type of targets within the HBV life cycle that are sort of, of interest to you and where small molecule approaches might play well?

Well, look, the ultimate treatment for HBV is a sterilizing cure to get rid of the cccDNA that's circulating in the hepatocytes. So again, we are looking using our functional genomics approach for cellular targets whose inhibition would lead to the loss of the cccDNA. That's a recently initiated program, and I can't tell you what we'll find there. But that, I think, is the ultimate goal for HPV therapy.

Maybe just shifting to the flu program and Phase II Peninsula data expected late spring, summer timeframe. I guess as designed, the study excludes patients that have received the flu vaccine within the current season, any reservations? Or I guess, how do you -- how do investors get comfortable with the like -- 2484 ultimately being providing protective benefit on top of flu options, assuming that both might be used concurrently in the commercial space?

So I think that the goal of the Phase II is, of course, proof of concept. We're trying to demonstrate in a dose-ranging study that the antibody actually does what it's supposed to do, and you want to measure the absolute effect size. So that's why it's a placebo-controlled study and that's why patients are not receiving the vaccine. What you have to believe is that the antibody, which is, of course, you're giving the patient the immune system will also work in the elderly population, and there's no reason we believe that, that would not be the case. So that's 1 thing, though, you do need to believe between Phase II and Phase III, where we move from a low-risk population in Phase II to a high-risk population, as George alluded to in Phase II. In terms of whether or not there might be some interaction between the vaccine and the antibody, there's not really a biological reason to believe that would be the case. And if you look at COVID, the way they looked at the vaccine plus antibody, there was also nothing that was concerning. And we believe that, in fact, it might be additive to one another because of course, the antibody should work in those in whom the vaccine also was not able to be efficacious. So in Phase III, this will be a superiority study to vaccine and we have every reason to believe that there's a strong path forward there biologically.

And the dose regimens that you're evaluating in Peninsula, have you sort of disclosed what those are? Or perhaps is there a way that we should sort of think about them in relation to sotrovimab in COVID-19?

Yes. So we have not yet disclosed the dose, but we are looking at a low dose and a high dose, which can be basically bracketing the long ends of what we believe is reasonable. And really, the answer is remember that we're going to be giving the dose or we gave the dose in October, we're going to be seeing what happens to that concentration in the bloodstream over the next 6 months. So you have 2 doses, both of which are declining over time, and you can actually build a model, showing what the exact dose response model -- a dose response curve looks like, and therefore, be able to choose the dose in Phase III. It could be that our low dose is actually too much. And in a happy world that protects everyone, or it could be that it's somewhere in between, then we'll be able to share some more of that detail soon.