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

All right. Good afternoon, everyone, and thanks for joining us at the Morgan Stanley Global Healthcare Conference. I'm Mike Ulz, one of the biotech analysts here. And it's my pleasure to introduce the team from Vir Biotechnologies, including Marianne De Backer, CEO; as well as Mark Eisner, CMO. But before we get started, I just need to read a quick disclaimer for important disclosures. Please see the Morgan Stanley research disclosure website at www.morganstanley.com/researchdisclosures. And if you have any questions, please reach out to your Morgan Stanley sales representative. With that, Marianne and Mark, thanks for joining us today. And maybe I'll hand it over to you, Marianne, to make some introductory comments for people that might not be familiar with your story.

Yes. Thank you, Mike. Thank you for hosting us today. So yes, for people not as familiar with Vir Biotechnology, we are a company that is at a clinical stage immunology-focused company. What we really try to do is harness the power of the immune system to address certain diseases in infectious diseases and in cancer. And we have 4 clinical stage programs. Our hepatitis delta program is in registrational trials. We announced earlier this year that actually each of the 3 trials within the ECLIPSE program have -- are now enrolling patients. That is going really well. And that registrational program is really built on very strong data from our SOLSTICE Phase II trial where we could show that when treating patients with hepatitis delta infection after 36 weeks, already 64% of the patients in their blood, the delta virus could no longer be detected. So very, very great efficacy, very promising for obviously, a registrational trial. Our other 3 programs in the clinic are earlier stage. The Phase I T-cell engager programs. It's a portfolio that we acquired from Sanofi last year. And the T-cell engagers are very specific in the sense that they are masked. So as you know, T-cell engagers, especially in the field of solid tumors have been hampered by often a problematic toxicity profile. And our masked T-cell engagers, and we showed data earlier this year in January for our HER2 program and our PSMA program showed really promising efficacy combined with a great safety profile. And that's really what we are aiming to achieve with those programs. Beyond that, we have a very powerful platform that is actually combining our ability to come up with great antibody therapeutics or T-cell engagers and combining it with masking. And so we acquired the rights to that PRO-XTEN masking platform from Sanofi for the entire field of oncology and infectious disease. And then finally, just to say we're very well capitalized. At the end of the second quarter, we had $892 million in cash, and we have a projected cash runway until mid-2027.

Great. Thanks for that introduction. And maybe we can start with the T-cell engager platform, and you mentioned you acquired the program from Sanofi. So maybe just remind us of the rationale behind that deal and kind of how that deal came to fruition.

Sure. Yes. So we brought in that deal about a year ago. I think it's going to be exactly a year ago, actually today or tomorrow. And the whole idea was Vir has always been a company that is -- that was very strong in understanding how the immune system fights disease. And of course, its history was mostly focused on fighting infections. But we were really looking for a platform and ideally clinical stage assets that would build on that strength of, again, harnessing the power of the immune system to fight disease. And those 3 clinical stage T-cell engagers that we acquired from Sanofi, we thought looked incredibly promising. And as I mentioned, the platform is highly differentiating, and we have the rights for the entire field of oncology and infectious diseases. We paid $100 million upfront to acquire the entire portfolio and platform. And we also had the very unique opportunity to bring over 50 employees, 5-0, who were prior Amunix employees. And so people who were deeply familiar with the platform, who had been working on developing the programs, who have been working on how to manufacturing these mass T-cell engagers. So we really not just got the assets and the platform, but sort of all the expertise that is really needed to be successful came on board. And I must say now a year later, the transition could not have been more swift and smooth. I mean everything has been transitioned over from Sanofi to us. We have taken on sponsorship and everything just was executed in a very, very efficient way.

Great. And maybe you can talk a little bit about just the PRO-XTEN platform. Just give us a quick background there, how it's differentiated maybe from some of the competitors out there?

Yes. I'll start, and Mark, please chime in. So the PRO-XTEN platform is unique in the sense that it really use steric hindrance as a way to shield the binding site. So if you look at your T-cell engagers, you have your CD3 site binding the T-cell and then you have your PSMA or HER2, EGFR that you're binding the tumor-associated antigen. And what we do is really mask both sites of the molecule, both the CD3 binding site and the tumor-associated antigen binding site with an XTEN mask, which is basically a hydrophilic polypeptide. And it's forming a sort of balloon around the T-cell engager. And we have engineered it such that it can be cleaved off in a certain environment. So we have protein cleaved on linkers. So basically, what happens is that this mask molecule can enter into the bloodstream of the patient, nothing much happens until it really reaches the tumor microenvironment where the proteases that are active in the tumor are going to cleave off the masks. And at that moment in time, the molecule is going to get activated. The great thing about this masking is also that the XTEN mask extends the half-life. So we have half-lifes of our molecules for the HER2 program, 5 to 6 days for our PSMA program, 8 to 10 days, which is, of course, very beneficial. And as soon as the masks are cleaved off, the half-life is very short. And so any potential toxicity can be avoided. So I think it's a very unique way to mask molecules. It's not based on affinity-based mask. It's really steric hindrance. The great thing about the platform is that it's a plug and play. So we do not, every time that we want to mask, a T-cell engager have to come up with a whole new way of masking. We can just take exactly the same XTEN with the same protease-cleavable linkers and apply these to the different molecules. So we have that same mask on our HER2 program, PSMA program and our EGFR program that we just dosed the first patient in July. And we're also working on preclinical programs that, again, can really deploy that same mechanism. The whole idea about the masking is, of course, to be able to achieve a very good therapeutic index. So because you are shielding the binding and you avoid masking in healthy tissue, you can -- you have the opportunity to really push the dose and combine great efficacy with ideally a great safety profile. And finally, the mask itself, the XTEN mask has been -- is being used actually in a molecule that is already on the market, [ Saltuvio]. So from that perspective, the mask itself has been highly derisked, which is, of course, a big benefit for us in clinical development.

A lot of advantages to the platform. I guess, maybe drilling down a little bit into the dual mask versus maybe a single mask and what's the difference there? How does that manifest in the study, for example?

Sure. So I think it's important because if you take our PSMA molecule, for example, PSMA is actually expressed pretty widely in normal tissue, albeit at very low expression levels. So by masking the CD3 part of the molecule, as Marianne said, and the PSMA part, it really protects the molecule in the normal circulation in the normal tissue. And it's only when it gets into the tumor microenvironment that the proteases cleave off the linkers, release the masks and it can form an immune synapse between the tumor cell, the T-cell and kill the tumor cells. So I think it's really very important for the therapeutic index that we're able to achieve. And I think with the PSMA program and the HER2 program now together proof points and validation for the platform, which is why we're excited to get into the clinic in our EGFR program, and we're excited about our next-generation targets in research as well.

Maybe we can talk about some of the data you've generated so far with the PSMA program in VIR-5500, you shared some Phase I data earlier this year. So Marianne referred to it a little bit earlier, very promising. Maybe you can give us some details there?

Sure. So yes, so back in January, we presented data on the program, both the HER2 and the PSMA program, and what we showed is that although we were a very early stages of dose escalation in patients with very late-line metastatic castration-resistant prostate cancer, the median number of prior lines of therapy with 4 to 5, so very heavily pretreated patients. But despite that, we were able to show PSA declines in all the patients specifically in 12 patients who are receiving therapeutically relevant doses of 120 mgs per kilo or higher and PSA 50 responses in 58% and 1 out of 12 by 8% of PSA 90. So impressive responses given that we're early in dose escalation. So we're very pleased about that. There was 1 patient in particular that our -- one of our investigators, Professor de Bono presented that how the PSA 90 response that was sustained for at least 12 weeks at that time, [ stability ] as well. And the safety was very favorable. I mean 25-ish percent of cytokine release syndrome in all Grade 1, Grade 2, so very tolerable despite the fact we weren't using any steroid or anti-IL-6 prophylaxis and a very low incidence of Grade 3 or higher treatment-related adverse events. So showing a very promising therapeutic index, very promising benefit risk, giving us confidence to go subsequently to really push the dose escalation in both Q week and Q3 week, which as Marianne alluded to, because of the half-life of 8 to 10 days, we are able to interrogate Q3 redosing too. So we're in the process of dose escalation. It's going very well, and we're really looking forward to continuing to generate those data.

How much you can talk about just the doses you tested initially and then maybe just how you're thinking about escalation and maybe how high you go?

So at the time of our last presentation, we had gone up to 1,000 micrograms per kilogram. We were imminently going into 2,000 likes per kilo. We're not really talking yet about what specific doses have followed out, but it's been multiple months since then, and we're continuing to make really good progress on the dose escalation.

And I guess the question that you love getting the most, I guess, is when do we get the next update? Or how do you think about that?

Yes. So it's important to understand that dose escalation is still ongoing. So we haven't achieved any MTD. There is no DLT, obviously. So we're still in dose escalation. As Mark said, we evaluating weekly and Q3 weekly dosing. So we -- again, we would have an opportunity to put partial data out there. Ideally, I think we put a meaningful package out there where we have determined what the dose is going to be for the next step of the program. We are still sort of debating that, and we haven't excluded sharing data still this year. At the same time, we are not waiting for that to play out. We are actually quite imminently going to dose in the first line cohort for a combination with VIR-5500 with an ARPI. And that's in the pre-taxane metastatic CRPC. So -- and that will be at a dose that is in an efficacious range. So we are sort of not letting that exploration in earlier lines being determined by sort of determining our final dose on the current late-line monotherapy evolution.

When you think about dose escalating in terms of how high you would like to go, do you want to hit an MTD and you start to see some tolerability, then you start adding some sort of these -- I forget what -- corticosteroids...

Sure. No, it's a really good question. And we work really closely with our investigators to examine all of the dose escalation cohorts when we have a complete or we have adequate data on each cohort, 3 patients minimum. And it's not -- it's a lot of clinical judgment involved. It's not necessarily the case to reach MTD or drug limiting toxicities. I mean that certainly would be any reason why one might discontinue going higher, but we're really looking to characterize the therapeutic index, find a dose that can get to deep and durable responses with acceptable safety. So there's a lot of clinical judgment that goes into that. And we're very privileged to work with world-class investigators, along with our team to help have those discussions and make those decisions to benefit our patients.

Since we're talking about timing, you also have the HER2 program. You also shared initial data in January and you're continuing to dose escalate. Should we think about those updates on those programs will probably at different times? Or will you try and sort of share them together?

Yes. So the first update that we provided in January was sort of our PSMA program and our HER2 program. At the same time, it was the first time post again doing the deal with Sanofi that we were sharing the data. Going forward, that doesn't necessarily need to be the case, right? We want to put data out there when it makes sense for each of the programs individually. For the HER2 program, we have completed monotherapy escalation, but we're still in full dose escalation in the combination with pembro. So we don't have that full data set at this moment in time.

Maybe you can give us a little flavor of the initial sort of Phase I data and what you saw there and what was so exciting there?

All right. So 5818, our HER2-targeted program what we presented, it's a basket trial design. So there's a number of different HER2-positive tumor types. And we had a 50% overall number of patients who reach tumor shrinkage. I think what was particularly exciting in the metastatic colorectal cancer cohort of 6 patients. We had 2 or 32% achieved a partial response, which is really quite impressive for early-stage data, given how heavily pretreated these patients were and how limited their other treatment options are. We had 1 patient who actually maintained a response for more than 18 months. And what's also interesting about that patient is they started on a low dose of 60 mgs per kilo, and we -- the investigator escalated the dose all the way up to 600 over a number of months. And the tumor shrinkage initially declined and was maintained by the intra-patient dose escalation, so showing a dose response relationship within that patient. So I think that was really impressive. Again, the safety was quite good. I mean, the cytokine release syndrome Grade 1, Grade 2, limited a number of Grade 3 treatment-related adverse events. So again, favorable profile to move forward. And we've continued to escalate the dose in monotherapy, and now we're done escalating in monotherapy Q1 and Q3 week. We're continuing to dose escalate in combination with pembrolizumab to test the hypothesis, whether a checkpoint inhibitor can affect the safety and efficacy of our molecule. And we're in the monotherapy setting, we're currently doing an extensive evaluation of our data, exposure response, dose response, looking to define what the go-forward dose can be for an expansion cohort and also what expansion cohort we would choose. I mean colorectal, I mentioned, is appealing because we've generated significant data there, but this is a significant ongoing internal discussion that we're having.

Maybe we can shift to 5525, that's your EGFR. I think you just initiated the Phase I study that you mentioned earlier. Maybe just talk about the design there.

Sure. Yes, it's a basket trial design, and it's including patients who have high EGFR-expressing tumors such as non-small cell lung cancer, head and neck metastatic colorectal and also systemic severe cutaneous in cancer as well, squamous cell carcinoma as well. It's a dose escalation design. It's a [ bouyant ] design like the other ones. I think what's really important to note is that we -- we're leveraging our learnings from the platform and the other 2 programs and are going to be able to -- we anticipate being able to escalate into therapeutically relevant doses very quickly. So I think that's going to be important. And trying to get to some safety and efficacy readouts that will be relevant as soon as possible. So I think a really exciting program. These are diseases with high unmet medical need, they're common tumor types where I think we can potentially make a difference. Maybe one other thing to note is that as opposed to TKIs or other antibodies targeting EGFR, our molecules used EGFR as an address. So we're basically able to target these tumors regardless of any mutational status in the EGFR or downstream mutations in KRAS or BRAF, those really don't matter. We're just targeting tumors that express EGFR in bringing the T-cell engaged into the tumor in the microenvironment. So I think we're excited about that prospect. And then just lastly, because of, Marianne mentioned some of the unique properties of our platform with the steroid hindrance mechanism, the cleavable linkers and half-life extenders we think that we have a really compelling proposition in the EGFR space. And we're really looking forward to generating those data.

And then just in terms of the data and disclosing it, what's sort of the thought process there? Is it something similar to where you've been with the other programs where you gave sort of an early update and then a later update or how should we think about that?

Yes, that is likely going to be the case. Again, it's a little bit early, of course, because we just dosed the first patient. But yes, that is probably a good way to think about it.

Just in terms of indications for the EGFR program, are there any specific ones you're sort of prioritizing over others at this point?

Yes. I mean I think we've designed the study to focus on tumors that are, by nature, high EGFR-expressing tumors. So I think we -- it's a basket design. So we'll test the hypothesis that our molecule can have relevant terminal responses in those tumors. I think there's a lot of biomarker work that we have planned to further drill down on that. But since it's such early days, it's hard to get more specific at this point.

I mean we have selected in contrast to the HER2 trial for indications as Mark mentioned. And so I think for now that is sort of the focus of the study.

Maybe you can switch to hepatitis delta, and you shared some data previously from a Phase II study. So maybe you can talk a little bit about why that data is so positive?

Yes. I think just to take a moment about some mechanism of action. So tobevibart is our monoclonal antibody against surface antigen. So it blocks the entry of delta virus that had surface antigen on its viral envelope into the podocyte. It also optimizes the viral code and it engages in immune response. Elebsiran is siRNA that knocks down all of the HBV viral transcripts, including that for surface antigen, which is necessary for Delta to form is viral envelope. So we're tackling the virus via 2 distinct mechanisms of action. What we presented so far is through week 36, we last presented this at AASLD last year, where we were having very good antiviral responses in the mid-40% range, 80% in the rollover cohort at week 60. So -- and this is target not detected or complete suppression of the virus. So very, very compelling end of viral responses. We're going to present the 48-week complete data set at AASLD this year in November. So I think that will continue to reinforce the very, very deep and profound viral efficacy that we're seeing. We're also knocking down hepatitis B surface antigen production by 3 logs, which I think it's highly significant because we're essentially starving the delta virus of what it needs to form a viral envelope. So I think that's very therapeutically important data. It's really very well tolerated. We do have some flu-like symptoms that are seen in some patients, but generally with the first dose, very tolerable and really very low incidence of other treatment-related adverse events. So again, really looking forward to presenting those data, the 48-week data at AASLD.

As you mentioned, you showed the promising data, I guess, next sort of question is what's this market opportunity look like? How do you address it?

Yes. So it's a rare disease. It's estimated at about 60,000 patients here in the United States. There's no treatment on the market for patients that get diagnosed with delta. In Europe, there's about double that kind of patient population and there's just one drug on the market bulevirtide. So what we have shown, as Mark mentioned, is that already after 36 weeks of treatment, we see 64% of target not detected. So really the virus disappeared, no longer being detectable in the bloodstream. You know, bulevirtide has shown 12% after 48 weeks. So we think that from an efficacy perspective, we do have a superior regimen and also our regimen for the combination of tobevibart and elebsiran is a monthly regimen, which is, of course, for patients highly convenient in contrast to bulevirtide which is -- it's a daily injection. I think there's quite a bit of work that needs to be done, especially in the United States for diagnosing the disease. I think the good news is that we are really learning from what is happening in Europe. So in Europe, so you cannot have delta infection unless you have hepatitis B infection. It's a co-infection. And in Europe, patients that get diagnosed with hepatitis B gets more and more reflex testing. So they automatically get tested also for hepatitis delta. So a lot of key opinion leaders, important people in this space are really working very hard to get the guidelines also adjusted in the United States. There's, of course, already the CDC guideline to get tested for hepatitis B and if we could get that reflex testing into the guidelines in the United States, that will be a big step forward. The testing for delta itself is really not complicated. It's an antibody test, it's a PCR test, it's just a matter of getting patients diagnosed. And of course, because there is no treatment available to patients here today, there is no incentive. There's no impetus to get anyone tested, right? So we really hope to turn that around by bringing a regimen to the market that is actually very efficacious and also convenient for our peers.

Maybe you can talk about just your Phase III program. You've got all 3 studies now up and running. Maybe just walk us through those.

Sure. And yes, Marianne, thanks for correcting me. 64% is the right number at 36 weeks, and we really expect to be able to reach complete viral suppression in the majority of patients over time. The ECLIPSE program is divided into 3 studies, the global studies and they each have slightly different names. So ECLIPSE 1 is a randomized trial, tobevibart, elebsiran versus a deferred treatment period, which will show what our regimen can do compared to control of no treatment at all. And then those patients on the deferred arm will switch over after 12 weeks to our combination regimen. This is a really important trial because in North America and other countries where bulevirtide is either not approved or not easily accessible or available. This trial will provide very clear evidence about what our regimen can do in terms of suppressing the virus and achieving the composite endpoint of ALT normalization and target now detected. ECLIPSE 2 is addressing the specific question of bulevirtide treated patients who are still viremic, as Marianne said, even after 48 weeks the majority of patients continue to be viremic with bulevirtide. So we're randomizing those patients to either switch to our combination regimen or continue on bulevirtide for 24 weeks with an endpoint of target not detected. So we'll be able to show in a switch study population, what our drug regimen can do in terms of suppressing the viral replication much, much further, much deeper. And then finally, ECLIPSE 3, which is a study that's designed primarily for payer access and pricing considerations ex U.S. It's a head-to-head study of tobevibart and elebsiran compared to bulevirtide with the endpoint of target not detecting at 48 weeks. So there, we aim to show superiority of our combination regimen versus bulevirtide at 48-week period. It's important to note that ECLIPSE 1 and ECLIPSE 2 are the core part of our registrational package for filing in U.S. and E.U. and ECLIPSE 3 will generate really critical data that will also support the value proposition, particularly for pricing access considerations.

Yes. And enrollment is going really, really well. And for ECLIPSE 1, our primary completion date is at the end of 2026, and for ECLIPSE 2, I mean, maybe important to mention that, that has a 24-week endpoint. So there's a possibility that could sort of read out at a similar time.

Yes. We're really happy with how well it's enrolling. And I think it reflects the engagement of our investigators, the strength of the science behind this regimen and the unmet need around the world for our regimen.

Okay. Great. And maybe I can ask the last few minutes here, just a couple of sort of macro questions that are topical that we've been asking all the companies at the conference. So maybe 2 different questions. I'll start with the first. So with China's rise in biotech innovation, how are you thinking about your competitive position here and will this influence your R&D strategy?

Yes. So obviously, it is unequivocally so that we see that China is not just very quickly copying a lot of the innovation maybe that gets published out of U.S. and elsewhere, but also making innovations beyond that, right? So I think that switch from China being maybe more doing me-too signs to really becoming an innovator has been very clear. I think you see it in many shapes and forms, a lot of the deals that large pharmas entering into. I think it's 30% to 40% now are with Chinese biotechs, you see also VCs fishing more in the Chinese pond, so to speak. And then you know that some investigator-initiated trials in China, I mean they can be done in a way that is certainly much faster and also cheaper. So -- and obviously, the China government has been significantly investing in this area for a long time. It has been a top priority from a government perspective. So I think you see all that dynamic developing and certainly biotech in China is getting very strong. So I think it's really important, again, for ourselves to stay ahead of the game. I think we are in a field with mass T-cell engagers that is really at the tip of the spear of innovation. And we have this important plug-and-play platform, strong IP protected that we can continue, of course, also to innovate. And I think that's what is really important is that you continue to innovate on your innovation so that you can really stay ahead of competition, not just in China, but of course, generally.

Makes sense. Maybe we can move to the second question. How are you currently leveraging AI or thinking about AI's future disruption potential in the field?

Yes, I'll start, and Mark, please chime in. So we have consistently using AI for quite some time now in the design of new antibody therapeutics and also T-cell engagers. So the same way that you're using your large language models, we are using, of course, like protein models to come up. Initially, we isolate antibody therapeutics out of either human subject or animal models. And then for further optimization, it can be affinity, potency, developability, whatever it might be. We use a selection of a number of different AI models combined with our internal data set to come up with just data molecule. And again, that has been pretty amazing to see. I mean I do believe that we have some of the best protein engineers in the world, there's just new proposals that the AI models come up with that our team would not necessarily come up with. And again, it's not just -- you asked the AI model to come up with a proposal. It's still a process where you get proposals of what an optimized sequence would look like, then you have to do still your wet experiment, test them and feed it back into the system. And you go through a number of these continuous improvement leads to come up with really powerful molecules. So that is where we have seen an impressive impact on our drug discovery efforts already. Other areas where we're using AIs, everything that is related with competitive intelligence, obviously. And then in our regulatory filings, maybe, Mark, you can.

Yes. No. I mean we're using it and evaluating it as a way to write regulatory documents that are required. I think it's well suited to assimilating data and at least writing a good first draft of documents like that. We have an internal LLM chat bot that we use for searching and decision-making and things of that nature. We're using it for accelerating statistical programming, things of that nature. I mean, we're really evaluating it in multiple different fronts from a clinical development perspective. And we have a kind of concerted effort across the company to really see where we can apply it most efficiently.

Yes. And it's not a stand-alone thing, right? It's sort of incorporated in all those activities that we do.

Okay. Great. Looks like we're out of time. So why don't we end it there. Thanks so much, Marianne and Mark. Really appreciate your time today.

Thank you, Mike, Appreciate it. Thank you.