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

Thank you very much. We'll continue with the next session. I'm Paul Choi, and I cover the small and mid-cap biotechnology sector here at Goldman Sachs. It's a great pleasure to welcome Vir for this session, and joining us is CEO, Marianne De Backer. We also have Phil Pang, CMO in the audience; and Sung Lee, CFO. What we'll do is some Q&A here and along the way, if you have questions, please e-mail us, and we'll be happy to read your questions anonymously.

Maybe what we'll start with, Marianne, is maybe some sort of high-level questions. Now that you've been in the CEO role for a little bit now. Can you maybe give us your initial impressions of the company? And what -- how you think about the strengths and weaknesses of the company you've joined here? And then what maybe programs or aspects excite you the most and inspire you to take on this role here?

Okay. Thank you, Paul, and thank you, Goldman, for opportunity to present Vir Biotechnology here to people in the room and listening in. So maybe for the people who might not be familiar with Vir Biotechnology, we are an immunology company that is focusing on the prevention, treatment and cure of very serious infectious diseases. And the second half of this year for us will all be about data, data and data. So we have 3 Phase II clinical data readouts coming up. The first one is the prevention for influenza, the PENINSULA trial, which is going to read out midyear. The second one is our functional cure for hepatitis B, which is reading out second half of this year. And then the third one is chronic treatment for hepatitis delta, which is also reading out second half of this year. So a lot of things going on at Vir at this moment in time. And in addition, we just announced that you saw the dosing of the first patient in an additional HBV population, that STRIVE trial, and we are gearing up to an HIV Phase I trial. So a lot going on. And as you say, I have been at Vir for 2.5 months. As you know, for us, it's all about becoming a fully integrated commercial company. And what I have seen is we have incredible talent on the R&D side, on the operations side, obviously, we have a proven platform that has already yielded twice the drugs that went to patients on the market. And finally, we have an incredible balance sheet, right? We have more than $2 billion in cash, so we can really fund our ambition. So I feel really, really good about having joined Vir Biotechnology.

Okay. Great. As you mentioned, this year is a very data-rich year with a lot of Phase II data coming up here across several programs, including influenza, hepatitis B and hepatitis delta. I think maybe the primary interest for investors is probably your VIR-2482 influenza program over the near term. And maybe just starting with timing on PENINSULA, what can you say to us with regard to sort of timing and framing of the PENINSULA data and what we should be focused on?

Okay. Sure. So the PENINSULA trial data will be reading out midyear, so that's coming up very soon. And maybe again to position why are we interested in the prevention of flu? People might think we already have vaccines, right, to prevent influenza. Now if you look at just U.S. alone, there's about 400,000 people every year that get hospitalized with influenza. And on average, 34,000 people that die of influenza. So clearly, there's still a high unmet medical need. And if you look at that from a global level, you have more than 600,000 people dying every year, every flu season. So what we are looking at is how can we achieve a better result, how can we really raise the bar. The issue is that the hospitalizations and deaths are mostly seen in the elderly, in patients above 65 years old. And what you see is that vaccines typically only achieve efficacy any given year, varying somewhere between 10% and 40%. So we have an antibody -- neutralizing antibody that can be administered intramuscularly. And what we try to do is really on top of vaccines, raise that bar and get to a 70% efficacy. That's really what we are aiming to achieve. And the reason why we have confidence in the potential of that antibody are multifold. First, in vitro, we have seen that the antibody neutralizes every single influenza A strain that has been seen over the last 100 years, so since the 1918 through pandemic. Secondly, we have modified the antibody for a longer half-life. So it can really cover the entire flu season. It can really offer protection the entire flu season. So this is a product that doesn't need to be modified every flu season. So you basically have not a necessity for a patient to mount his or her own immune response. We are basically giving the antibody that is necessary for the immune response directly to the patient. And so all in all, together, we have now done a trial PENINSULA in 3,000 participants. Those are actually in people that are between 18 and 64 years old, the first trial and the data are going to be reading out next year. So a very exciting time for us at Vir.

Great. One of the questions we get from investors is that there have been multiple efforts to develop antibodies for influenza in the past, which have had mixed results in those studies. And so how does -- in your mind, what you've done with regard to the PENINSULA study and 2482 maybe differ and probably increase -- potentially increase your chances of success here?

Sure. I do believe this is the first. We are really using a broadly neutralizing antibody in the prophylaxic setting. So what you have seen is that a lot of the antibodies in the past were used in treatment. And in the case of treatment, you have basically people that have been exposed to influenza, are they already exhibiting symptoms and only them, they are giving the antibody. So that bar is much higher than when you give the antibodies preventively and then at the first onset of a patient being exposed to influenza, the antibodies are already there to fight the infection. So we think we have a much better chance of success in this particular setting. The other thing is, I mean, in order to do this, you need a very potent antibody, you need a very broadly neutralizing antibody, and I just talked about the fact that, that is what we have. And you need a half-life extended antibody. So we have been able to bring that all together. And then maybe finally, I mean, this is rather capital-intensive. I mean these are big studies that you need to pull together to show efficacy. So we think that we have now really all the elements to have it [indiscernible].

Okay. Another question we get is understanding just given the disease that it's a respiratory disease, how VIR-2482 potentially act in the long -- in the respiratory tissue relative to serum? Can you maybe help us understand the relationship maybe at a high level between what you've shown preclinically in the serum and how to think about tissue availability for 2482? And then I'll add a follow-up question.

Sure. Yes. So our team has been aiming to understand the level of antibody that you have in the blood, how much of that actually gets to the tissue -- to the lung tissue, upper or lower respiratory tract, that's really what is important. So based on literature data, and also radio-label biodistribution studies in monkeys, our estimate is that above and/or around 25% of what's in the blood also really gets to the tissue. And that's what we have been taking into account and what our team has been taking into account as we were selecting the dose for the trial.

Okay. Maybe elaborating on that a little bit with regard to the preclinical serum. How do you think about sort of what is needed there, I guess, to show clinically meaningful protection, whether it's some measure of EC90 and so forth to protect against influenza A illness? Is there, in your mind, a threshold, I guess, that which you -- your preclinical work shows potential higher or better results?

Not really. I think we really have to -- so this has never been done before, and we really have to see data, and that's what is going to give us insights. Again, something like this in a prophylactic trial has never been done before. So we have to look at the outcome.

Okay. Great. You're also running a separate study of VIR-2482 on top of standard of care in elderly patients. Will this data also be released simultaneously with your upcoming PENINSULA results? And maybe you could comment on what we should look for from this study?

Yes. So that Phase Ib study in the elderly, it's a small study, 85 participants that was aiming to achieve 2 things. First, making sure that the safety in the elderly patients is similar to the participants that we have in our PENINSULA trial, which, as I said, are between 18 and 64 years old. And then secondly also demonstrating that the PK isn't any different in that elderly population. So that's really what we're aiming to achieve there, and the data are going to be available in a similar time frame as the date of opening.

Okay. Great. If you think about PENINSULA and thinking about if it's potentially successful here and you hit your primary end point, how do you think about a Phase III development program? Could you maybe map it out for us what you would like to do? How you think about regulatory interactions, maybe starting with regulatory interactions after your PENINSULA study and then how you think about a Phase III development program?

Yes. Obviously, we are still thinking that's true, and we really haven't finalized our thinking around it. What we can share is that this is likely going to be a large trial. We estimate around 15,000 participants. This is obviously going to be in the high-risk elderly. We are going to look for superiority above vaccines. And yes, I think as to endpoint, it's going to be very similar to what you have seen in the PENINSULA trial. That's probably as much as I can say. Of course, as soon as our data readout, we have everything prepared for interactions with the regulatory agencies, but we have a sort of draft blueprint that we are evaluating.

Just on a related note, you mentioned hospitalizations earlier in the elderly, which is not a focal point for your current PENINSULA study. Is that something you'd consider for your Phase III program as a metric? Would that be of interest to you or is that still TBD?

That is really still to be determined. Yes. And as soon as we have full clarity on the final trial design that we're thinking about, we will obviously share with you all.

Okay. Great. Maybe turning to hep B for a moment. The EASL meeting is coming up in the coming few weeks here. And you'll have several presentations there as well as I think probably at the Liver Meeting as well later this year. Maybe starting with EASL, can you remind us of what data you will have at the upcoming meeting here?

Sure. So we have 5 abstracts at EASL, 1 late-breaker presentation and an other oral presentation. Maybe let me just say again for people who are not as familiar with the diseases that we're trying to tackle. So for hepatitis B, there are about 300 million people in the world that are chronic carriers of hepatitis B. And obviously, that is a disease that leads to viral infection, that leads to liver cirrhosis and liver cancer has a very significant impact. And there's about 1.5 million new cases every year. So this is a disease that we have been, as an industry, aiming to tackle for a while. The treatment at this moment in time is really with oral [indiscernible], which is a chronic treatment. It doesn't give you any functional cure. People have tried with interferon alpha for a year treatment only gives you very low functional cure rates, maybe between 3% and 7%. So what we are aiming to do here with a combination of modalities is to try and reach 30% functional cure rate. And we believe we can do that through a combination of an siRNA, which basically inhibits the virus. It's an siRNA, which basically dices up all the trial scripts of the hepatitis B virus and combine it with a factional antibody 3434. So that combination, we call it a stop-and-clear approach clearing because with 3434, we can clear infected cells from the body. We have seen data actually at the end of last year that we discussed at AASLD at the time that showed that we could achieve a 30% clearance with that -- with interferon plus siRNA and then we could show that all those patients that were serocleared were seroconverted, what that taught us is that the combination of an siRNA with something that awakens the immune system that could really work. And then we have also shown that if you combine 2218, our siRNA with 3434, a neutralizing antibody that you can achieve more than 3 logs drop in HBS antigen. So that is one of the best results that has been shown for short treatment. Now coming back to the data that we're showing at EASL, one is going to be a late-breaker oral presentation showing the combination of 2218 with interferon for 48 weeks, additional follow-on data from what I just mentioned and then off-treatment data. We cannot share more because it's part of the...

Sure, it's embargoed at the moment.

Exactly, it's embargoed. And the other data we are showing is a combination of 2218 with 3434, our antibody. That's what we call our MARCH Part A trial. And again, what we have shown there is very significant log drops of that combination. That was a very short duration of treatment, 4 and 12 weeks. It was really aiming to show that the combination of an siRNA and the antibody is actually safe. And second, that the combination of both is additive. And we were not expecting a function of purely short duration regimens. You will -- you can see the data out there. And then in the second half of this year, we will be sharing data from our '24 for longer duration of treatment of that combination.

Okay. Great. For hepatitis B from your perspective, I guess, what constitutes a functional cure here? You've talked about a couple of different areas, seroreductions but seroconversion and so forth. And so as you think about it and what clinician feedback tells you what are clinicians looking for in terms of a potential functional cure here in this disease area?

Sure. Yes. So we believe that you're not going to be able to achieve functional cure and that you have a combination of modalities. And we strongly believe that you have to inhibit the virus, but you also have to be able to reawaken the immune system and to clear the cells that have already been infected. And so that is what we are trying to do with 2218 and the 3434 combination, this stop-and-clear approach. And again, our target is to achieve 30% functional cure, which means that post end of treatment after 6 months, you're still seeing that level of -- it's basically almost as a remission in disease, right, that's really what you're aiming for. And obviously, it has not been as easy to achieve that, but we think that we really have a shot through the combination of modalities that we are trying, be it with 2218 as an siRNA, with 3434 or with PD-1 and TLR8 and with interferon.

You mentioned earlier that interferon, which also has tolerability issues, achieves like mid- to high single-digit types of success, and you're aiming to do potentially 4x better than that?

Correct.

With your updated data later this year?

Exactly.

Great. I also want to speak a little bit maybe on the landscape as well, too. It's -- there's some competition in hep B going on. And maybe what is your view about the competitive landscape? And could you maybe speak to recent developments in the field, both from an siRNA perspective and other modalities? And then where do you see your asset potentially differentiating relative to the competition?

Sure. Yes. It's a very dynamic space. So we have seen that some are exiting the space because their data was just not convincing enough. And then we have seen some others that are entering Phase III with size-specific selection of patients. So what we have with 2218 as an siRNA, it's very specific technology that allows it to have a better targeted approach and a better ability to be really safe. So -- but an siRNA alone, as I mentioned before, is not going to be enough. And what we learned from seeing what's happening in the competitive space is that the combination with capsids are probably not going to be as relevant as hoped. And again, we really do believe that you need to go for a combination with an immunomodulator. So that is what we are banking on, and we see that some other competitors are starting to think in the same way.

Okay. Great. I want to maybe ask just about hepatitis B market development and sort of the commercial opportunity there. You talked about a fairly large global population of 300 million earlier. And maybe from a U.S. versus other markets, how -- what is your thinking on the opportunity set there? And how do you see the market evolving as these products potentially become commercial stage down the road?

Sure. So I won't give you a number, but I can, of course, tell you that looking at United States and Europe combined, you're still talking about many millions of people that are living with chronic hepatitis B at high risk of developing liver cirrhosis and liver cancer. So if we can come up with a regimen that is a functional cure, and that brings you in that 30% level that would have a tremendous impact, obviously, on patients. So we think there's a very significant commercial opportunity there.

And then maybe in other sort of major patient populations such as China and Asia, how do you think about potential marketing there?

Yes. So, of course, China is an incredibly large market with more than 80 million people living with hepatitis B. So these are very, very significant market as well.

Okay. Great. I want to maybe turn to a program that maybe doesn't get as much attention with Vir relative to, let's say, flu or hep B, which is your hepatitis delta program. Can you maybe just sort of talk about what is the -- what is maybe starting at a high level, staying on the market idea, what is the opportunity there for hepatitis delta?

Yes, I agree with you. It's actually not getting sufficient attention, it's actually the most severe form of viral hepatitis. There's about 12 million people in the world that are infected with hepatitis delta. And when you are infected, co-infected with hepatitis delta, your risk of liver cancer increases fourfold, and your risk of death actually increases twofold. So it's really quite significant. And if you think about how is the disease currency handles, I mean, in the United States, there's really nothing available. In Europe, there is 1 treatment where you have to have daily subcutaneous injection for the rest of your life. So the bar to find something for these patients is relatively low. We are aiming to develop a chronic treatment. We are evaluating our 2218, siRNA, and our antibody 3434 in this setting. And what we're basically aiming to do, the regulatory hurdle here is rather low. It's achieving a twofold reduction in hepatitis delta RNA and then also stabilization basically of liver inflammation of your ALT levels. So that is what we are doing in our SOLSTICE trial. And that initial data is also reading out actually in the second half of this year.

So you bring up an interesting point where the -- you talked about the regulatory hurdle and the regulatory alignment that you've reached on the log reduction as well as the liver enzyme biomarker, these are relatively understandable. And so if 2218 plus 3434 is successful here, can you maybe talk about how you think about next steps after positive SOLSTICE data and that the regulatory path and potential time to market for this combination?

So what I can say is that we are actually aiming to have a once-a-month regimen, and obviously aiming to be at least on par with the treatment option that is already available in Europe, which is about 50% efficacious. That will be a big difference already, again, for patients if we can achieve that. I cannot really go into next steps beyond SOLSTICE, but obviously, we are looking into that because that is, as I mentioned in the beginning, we are aiming to be a fully integrated commercial company, and this will be our first opportunity to really get that done with hepatitis delta treatment.

So is there a scenario maybe if I'm understanding correctly, where SOLSTICE could serve as a registrational study in your mind?

I cannot really comment.

Okay. Great. Maybe in terms of your company at a high level as well, you have a very strong balance sheet. You and your partner, GSK, had a substantial number of sales during the COVID pandemic, which has left you with the enviable cash position. And so how do you think about maybe leveraging that now that you're in the CEO seat and maybe how you think about the deployment of capital on the clinical side versus potential business development?

Yes, we are in an enviable position with $2.3 billion in cash and cash equivalents. Now if you look at what is ahead of us, again, 3 Phase II data readouts preparation, if the data is positive for registrational trials, I don't need to tell you, this is going to be capital-intensive. So our first priority is now really looking at how are we going to deploy that money towards success of moving forward our influenza, hepatitis B and hepatitis delta programs and the other ones, HIV that we're going to start. So that's certainly a first priority. And depending on how the data read out, it also, of course, allows us for a lot of optionality. So we look at things to accelerate our programs, to optimize our technologies. We have, I think, an incredible platform. Our antibody platform has yielded, as I mentioned in the beginning, 2 drugs that are already on the market and several in clinical development that are now working preclinically on an RSV, MPV antibody together with GSK. So there's much more that we can bring with our platform, and we aim to really build on that for the future.

You spoke about resourcing mainly for the clinical side and your internal pipeline. As you look at external opportunities, could you maybe frame how you think about the balance between where you specialize currently in terms of infectious diseases versus potentially other therapeutic categories? Does that interest you? How do you sort of rank order that in terms of the balance sheet as well as the skill set and capabilities you have at Vir?

The only thing I can really share, Paul, is that obviously, we do some scenario thinking, we're all hoping for great data reading out midyear and second half of this year, but we are preparing for every eventuality. And so that also means looking at some opportunities outside of Vir.

I want to maybe touch on our -- a few minutes that we have left here, just on something that also doesn't get as much attention, which is your early-stage efforts in HIV. Could you maybe remind us of what 1111 is and just sort of how you think about your approach to what has been obviously a very large market for HIV treatments and so forth?

Yes. So we are planning for Phase I start trial on VIR-1388, which is basically our next generation following VIR-1111. And this is a program that is funded and supported by the Bill & Melinda Gates Foundation. And remember, this is not an antibody. This is basically using our HCMV platform. So it's a T-cell platform. And what we intend to do is bring in HCMV vector with VIR inserts into humans and then basically elicit an immune response that can combat the HIV infection. So this is very, very new, and we are going to -- looking forward as to what that will bring in the course.

Okay. We're coming up on time here. So thank you, thanks, to Marianne and Vir for joining us today, and we'll end it on that note.

Thank you so much, Paul. It was a pleasure to be here. And I also wanted to maybe say for the people that were listening in, if you remember one thing about Vir Biotechnology is that we are well on track to -- for having 3 significant data readouts on 3 important infectious diseases coming up mid and second half of this year.

Great. Thank you.

Thank you.