Atea Pharmaceuticals, Inc. (NASDAQ:AVIR) Q4 2022 Earnings Conference Call February 28, 2023 4:30 PM ET

Company Participants

Jonae Barnes - Senior VP, Investor Relations & Corporate Communications
Jean Sommadossi - Founder, Chairman & CEO
Andrea Corcoran - CFO & Executive VP, Legal
Janet Hammond - Chief Development Officer
Arantxa Horga - Chief Medical Officer

Conference Call Participants

Roanna Ruiz - SVB Leerink
Jessica Hui - Evercore

Operator

Good afternoon, ladies and gentlemen. Welcome to the Atea Pharmaceuticals' Fourth Quarter and Full Year 2022 Financial Results and Business Update Conference Call. At this time, all participants are in a listen-only mode. Following the formal remarks, we will open the call up for your questions. [Operator Instructions] Please be advised that today’s conference is being recorded.

I’d now like to turn the call over to Jonae Barnes, Senior Vice President of Investor Relations and Corporate Communications at Atea Pharmaceuticals. Ms. Barnes, please proceed.

Jonae Barnes

Thank you, operator. Good afternoon, everyone, and welcome to Atea Pharmaceuticals' fourth quarter and full year 2022 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.ataepharma.com.

With me today from Atea are Chief Executive Officer and Founder; Dr. Jean-Pierre Sommadossi; Chief Development Officer; Dr. Janet Hammond; Chief Medical Officer, Dr. Arantxa Horga, Financial Officer and Executive Vice President of Legal, Andrea Corcoran; and our Chief Commercial Officer, John Vavricka. They will all be available for the Q&A portion of today's call.

Before we begin the call, 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.

Jean Sommadossi

Good afternoon, everyone. And thank you for joining us, as you will see on slide 3. this year, we are poised to continue the meaningful progress made across our advanced clinical development programs following strong execution in 2022. Clinical efficacy results from the MORNINGSKY trial informed now of Phase 3 SUNRISE-3 trial of Bemnifosbuvir for the treatment of COVID-19, which was initiated in the first quarter of 2022. We anticipate an interim analysis from the SUNRISE-3 trial in the second half of this year, followed by completion of enrollment by year end.

We also made meaningful progress, advancing our preclinical second generation protease inhibitor program, and we anticipate filing an IND for clinical candidates around the end of the year. With our HCV program, we completed preclinical and manufacturing work needed for the initiation of a Phase 2 combination trial of Bemnifosbuvir and Ruzasvir in the second quarter. With our Dengue program, we conduct the two proof-of-concept studies for AT-752 and the results will be shared with you today.

Let's now move to COVID-19. Turning to slide 5, Bemnifosbuvir is on all nucleotides pro drug, the target viral RNA polymerase, a highly conserved enzyme critical to viral replication and transcription. We believe that Bemnifosbuvir profile addresses the key limitations of current therapies. It has low risk of drug-drug interactions, and maybe co-administered with commonly prescribed drugs for high risk COVID-19 patients, a key limitation of Paxlovid. Scientific presentation demonstrating Bemnifosbuvir lack of drug-drug interactions were presented last week at the Conference on Retroviruses and Opportunistic Infections, also called CROI. The US COVID-19 Public Health Emergency is set to expire on May 11. And the market dynamics with COVID continue to show. Based on the [inaudible] there are very limited treatment tools available, which essentially only packs lobbied for our patients or Veganuary or remdesivir for hospitalized patients. The last thing of the public health emergency is going to make it even order for this patient population to assess diagnostic and treatment. This is likely to lead to further morbidity and mortality. I'm particularly in the most vulnerable.

Moving to slide 6, we believe COVID-19 will continue to remain endemic throughout the world, and particularly impact the patient population that we are studying in SUNRISE-3. We believe that all therapeutics will remain a multibillion dollar opportunity for years to come and projected annual COVID-19 all anti vial US demand using COVID retail prescriptions suggest the current estimated annual market opportunity over $10 billion. Beyond that, we believe that there is an opportunity to expand this market to patients with drug-drug interactions associated with Paxlovid concern, limiting and complicating prescribing. This includes commonly prescribed drugs, such as seizure medications, antipsychotic, anticoagulants, and more. Let me remind you, the Paxlovid currently as 90% of the prescription market share and there is still a significant unmet medical need as less than 30% of COVID-19 patients are being prescribed an all antiviral.

Turning to slide 7, as we are moving to a traditional payer market, it is clear that we will have to demonstrate a value proposition of the impact of Bemnifosbuvir against COVID. This will be achieved by using a primary endpoint of decrease in hospitalization and death. We believe that this will be the key consideration for drug reimbursement for COVID therapies in the future. This is why we are targeting the most vulnerable patient populations in SUNRISE-3, who are at the greatest risk for disease progression to severe COVID-19 or mortality. And for whom they have limited treatment options. Let's keep in mind that CMS estimates on average cost approaching $22,000 per hospitalization, and approximately 70% of COVID-19 related of hospitalized patients were covered under Medicare.

Moving to slide 8, let's now review our innovative SUNRISE-3 trial. Our Phase 3 registration trial which is evaluating Bemnifosbuvir’s monotherapy and as combination antiviral therapy. Involvement continuing this global Phase 3 randomized double blind placebo controlled study, which will evaluate Bemnifosbuvir placebo, administered at the same time, as locally available standard of care. Patients will be randomized one to one to receive either Bemnifosbuvir at 550 milligrams twice daily or placebo. We expect to enroll at least 1,500 high risk patients with mild or moderate COVID-19. Two study cohort defined by the type of standard of care the patients receive would be sudden. The first cohort is a monotherapy cohort that would be comprised of patient receiving supportive care, which represent the primary analysis population. The second cohort is a combination antiviral cohort that would be comprised of patients who are receiving a compatible antiviral against COVID-19 as part of the standard of care. The primary endpoint of the study is all-cause hospitalization or death through day 29 in at least 1,300 the patient from the monotherapy cohort. You will recall that we have already evaluated hospitalization in the MORNINGSKY trial and Bemnifosbuvir show that 71% reduction in hospitalization versus placebo. And importantly in addition, a subgroup analysis show that 82% reduction in patients over 40 years old.

SUNRISE-3 we are focused on high risk patients that are at the greatest risk for disease progression to severe COVID-19 or mortality. The study is expected to have a large global footprint with up to 300 clinical sites in 25 countries, including the United States, Europe, Japan, and the rest of the world.

Moving out to Hepatitis C program, which we believe has the potential to become a best-in-class combination with the potential to improve upon the current standard of care by offering a shorter duration, protease inhibitor free treatment for patients with HCV.

Slide 10 outlines our Phase 2 open label study of Bemnifosbuvir and Ruzasvir in HCV patients. The study will involve approximately 280 HCV infected direct-acting antiviral naive patients across all genotypes, including a leading cause of approximately 60 patients. Patients will be administered 550 milligrams Bemnifosbuvir in combination with 180 milligram Ruzasvir once daily for eight weeks. The primary endpoints of the study are safety, and sustained biological response or SVR at week 12 post treatment. Other biologic endpoints include biologic failure, as we are at week 24 post treatment and resistance. Regulatory submissions for the initiation of the trial ongoing and dosing a patient in this clinical trial is expected to begin during the second quarter. Initial data from the leading cohort of approximately 60 patients is anticipated around the end of the year.

Turning to slide 12, I will not provide an update on our program for AT-752 intervention against Dengue. We are being a pioneer in the development of our known antiviral therapeutic for dengue. Our proof-of-concept study DEFEND-2 demonstrated that AT-752 treatment led to a faster resolution of fever, which is the major clinical sign of Dengue. However, DEFEND-2 also highlights the need for better diagnostics to identify patients earlier in the course of the disease. And also the need for a large sample size to account for the high variability for treatment and for prophylaxis as well. To address these factors, robust Phase 2 study will require long clinical timelines with major associated costs, which has led to the business decision to deprioritize the Dengue program.

Turning to slide 13. as you may recall, we have been conducted two studies to assess the efficacy of AT-752 during the treatment and prevention of Dengue fever. First, the DEFEND-2 Phase 2 clinical trial randomized, placebo control in Dengue and Dengue carriers. It involved patients with dengue fever within 48 hours of the onset of fever, and the diagnosis of dengue confirmed was a positive and that's one antigenemia test. The primary endpoint of this trial was changed in Dengue viral load from baseline was an exploratory analysis, looking at the changes viremia. And that's one level and fever. In the first cohort of DEFEND-2, we enrolled 21 patients in India, Thailand, and the Philippines. We have also been conducting a human infection challenge trial under USIND. The healthy subjects were treated on day one with AT-752 placebo. And then injected with a live attenuated strain of dengue type one on the following day. Subject with dose with AT-752 placebo for a total of 14 days. Subject were then monitored for symptom viremia. And that's one level in safety.

Let's move to slide 14. This schematic depicts our understanding of the time course of Dengue illness. As you can see, there is a lag between infection and viremia and viremia precedes the development of symptoms and signs. Our study was designed to enroll patients around basics of infection and based on the data that we will now review patients likely presented later in the course of the disease at enrollment. On slide 15, you can see that the viral load changes over time to day seven, as measured by PCR. Placebo patients are depicted in red, and AT-752 patients on the rise in blue. Please notice that the study enrolled patients with all four serotypes of Dengue and it is well known that the viral kinetics of each serotype are quite different. At enrollment, patients presented late in the quarter with disease with high variability and low viremia level at baseline particularly in the placebo arm, which had three patients with viremia levels below the lower level of quantification. As a consequence, the primary endpoint of change in bowel decline, as you can appreciate from baseline is un-variable.

Moving to slide 16, platelets are a biomarker of Dengue progression. You can see in this slide; the trajectory of platelet counts from baseline through day 7 for both the AT-752 treatment of and placebo. Consistent with the viremia data at baseline platelets were already low or below the lower limit of normal in the majority of patients further demonstrating late presentation of disease at enroll.

Turning to slide 17, as I have mentioned, the fever is the major clinical sign of Dengue. This slide demonstrates the time to resolution of fever defined as a temperature of 37 degrees Celsius or less sustained for 24 hours and maintain to, day 5. In a pre-specified expiratory endpoint, in patient who presented with body temperature above 37 degrees Celsius, the median time to fever resolution was four days in the AT-752 arm and greater than five days in the placebo arm. Slide 18 shows the change in body temperature for those patients who presented with a temperature of more than 37 degrees Celsius at baseline. In a post hoc analysis, there was a difference in body temperature change from baseline of 0.9 degrees Celsius at day three in favor of the AT-752 as compared to the placebo. Also, at day 3, 100% of patients who presented with baseline body temperature above 37 degrees Celsius had a reduction in body temperature below that baseline levels in the AT-752 arm versus only 33% of patients in the placebo arm.

Moving to slide 19 The safety profile of AT-752 was favorable in the study. And there were no drug related SAEs. And adverse events were largely mild to moderate and occur a similar frequency with those in the placebo group. Two non-drug related SAEs, which were hospitalization due to thrombocytopenia and disease progression to severe Dengue occurred, one out of seven in placebo, and one out of 14 in the AT-752 arm. Other non-serious adverse events were mostly mild and moderate, self-limiting, and occurred in comparable frequency in active and placebo arm.

Turning to slide 20 The human infection challenge study was also a randomized, double blind placebo control trying evaluating AT-752 dose of 750 milligram TID where dosing was initiated prophylactically 24 hours ahead of subject receiving an injection of attenuated live Dengue 1 Virus. The available results in five healthy volunteers were uninterpretable due to the high variability observed in terms of viremia, antigenemia, and the onset and severity of symptoms. In addition, they were much lower drug exposures than those observed in the Phase 1 with normal volunteers, and in DEFEND-2 study with treatment patients very likely to due to a lack of dosing compliance.

For this type of study, it is clear that a much larger sample size of greater than 50 healthy volunteers will be needed to account for this is high variability. I will now turn the call to Andrea Corcoran, our CFO to review our financial update.

Andrea Corcoran

Thank you, Sommadossi. As Jonae mentioned in her introductory remarks earlier today, we issued a press release containing our financial results for the fourth quarter and full year 2022. Those statements of operations and balance sheet can be found on slides 22 and 23. Our balance sheet remains strong with cash, cash equivalents and marketable securities of $646.7 million at December 31, ‘22, compared to $764.4 million at December 31, ‘21. R&D expenses were $27.5 million and $81.9 million for the fourth quarter and full year 2022 respectively, compared to $57.8 million and $167.2 million for the corresponding period in 2021. The decrease in R&D expense was primarily due to the elimination of the cost share arrangement with Roche. In addition, in Q4, ‘21, we recorded a $25 million expense due to the upfront payment related to our in license of Ruzasvir from Merck. G&A expenses remained relatively consistent at $12.4 million and $48.7 million for the fourth quarter and full year 2022 compared to $13.2 million and $45.8 million for the corresponding period in 2021.

Interest income and other was $5.6 million and $11.2 million for the fourth quarter and full year 2022 compared to less than $0.1 million and $0.2 million for the same period in 2021. The increase was primarily the result of investing in higher yields marketable securities, and higher interest rates. For 2023, our R&D spend will be driven principally by spending on clinical trials, including primarily our SUNRISE-3 Phase 3 clinical trials for COVID-19 and our hepatitis C Phase 2 study at the combination of Bemnifosbuvir and Ruzasvir. In enclosing, due to the de-prioritization of our program for dengue, we are extending our cash guidance into 2026. I'll now turn the call back over to Sommadossi for closing remarks.

Jean Sommadossi

Thank you, Andrea. In closing on slide 25, we have a busy year ahead of us as we continue to advance our antiviral programs to fight serious viral diseases, especially for patients with limited treatment options. Importantly, we are well capitalized to fund our program through key inflection points and beyond to the finish line with an extended cash runway now until 2026 due to de- privatization of our Dengue program. With that, operator, we will now open the call up to your questions.

Question-and-Answer Session

Operator

[Operator Instructions]

Our first question comes from Matthew Harrison of Morgan Stanley.

Unidentified Analyst

Hi, this is Deep for Matthew. Thanks for taking my question. So I want to ask would you consider to license out your Dengue program since you deprioritize this one? Thanks.

Jean Sommadossi

I'm sorry, can you repeat the question?

Unidentified Analyst

Oh, sure. Would you consider to license out your dengue program?

Jean Sommadossi

Well, look, as you know, there is some nonprofit agency and government agency and other sub parties as well that have the potential to be interested in the collaboration partnership. We are not giving our guidance on and one if this could happen, but certainly we are interested in discussing with third parties

Operator

Our next question comes from Tim Lugo of William Blair.

Unidentified Analyst

Hi, this is John on for Tim. Thanks so much for taking our questions. So maybe two from us. So I'm wondering if you could maybe just give us some color commentary on your confidence in enrollment of the SUNRISE study? I mean, obviously, we're seeing a lot more apathy towards COVID and we are seeing less reporting that's going on. Seeming to show that seems like trends are going in our favor. But it's sometimes it's a little hard to tell with the lower reporting. So you could just tell us something about what you're seeing coming through, especially in the higher risk populations.

Jean Sommadossi

Yes, Janet?

Janet Hammond

Thank you, John. Yes, enrollment is continuing in SUNRISE. And we're making good progress, we filed a clinical trial in all targeted countries for regulatory approval. And we are continuing to see enrollment, but we're not going to provide specific numbers at this point. And but we will continue to report as the year goes through.

Unidentified Analyst

Maybe just one more from us. So I'm seeing some articles now coming out that viral rebound is more common than we initially might have thought, regardless of treatment with an antiviral, such as Paxlovid. Wondering if you maybe have any updated thoughts about this, or the time course is just too short? Is this maybe fixed with a combination? And maybe how you're thinking about this longer term?

Jean Sommadossi

Janet, you want to address the question?

Janet Hammond

Yes, thank you. Yes. We've been watching the reports also with some interest and there seems to be a variety of theories, I think so really, you'd have to call in as to what the cause for viral rebound, maybe. And it's something that we're certainly watching in our study, we're going to be collecting biological samples, and also continuing to watch patients for symptoms of rebound, as well as just plain viral rebound as we conducted a study. And so we hope to get some further clarity and information on that. But I think the jury's probably still out as to exactly what happens here. Whether it's very specific, whether it's dependent on viral load and a much higher viral load, and perhaps needing longer times to care. It's still something I don't think we fully understand. But thank you for the question.

Jean Sommadossi

If I may just add, it sounds like you have some post hoc analysis on some trial. There was rebound, highly depended on the age of the patients. And so we hope that the with our high risk patient population, actually, mostly in the elderly, we're going to really evaluate, as Janet indicated, those potential rebounds and the impact of the combination.

Operator

This question comes from Roanna Ruiz of SVB Securities.

Roanna Ruiz

Great. Thanks, and afternoon, everyone. Appreciate you walking us through the Dengue results. So I'll start there. I was curious if you could clarify which factors seem to contribute the most to the unavailable results for DEFEND-2 sourcing different things like it may possibly trial execution, maybe there were some placebo arm trends that were difficult to interpret. And were you able to garner anything about the possible the potency of 752 in this trial.

Jean Sommadossi

I'm going to let the Arantxa but in terms of potency as I have indicated, I'm going to let Arantxa that, let's not forget that fever is the major clinical sign of dengue. So Arantxa why don't you address the question, please?

Arantxa Horga

Yes, thank you. Thank you for the question. So -- might contributed through the viral [inaudible] unavailable. I think the main reason is that the patients tend to come later in the course of the disease. And as you can see in the slide a lot of them particularly in the placebo have already either low or undetectable viral by the time, they come to you and they come to you later. It's not unusual. We mandate 40 hours fever criteria but patients sometimes have a hard time identifying really when the fever started exactly. And so they probably came later, presented later by the time we were able to enroll them. Another factor is that the test that we use for enrollment NS1 antigen is an antigen test. And as you seen with COVID antigen tests are not often very sensitive. They're not as sensitive as PCR but sites don't have PCRs available. So we will need to develop better more sensitive diagnostic tests if we want to advance programs like this. So those are contributing factors.

And with regards to the efficacy question, I think what we have seen in this data is a resolution of fever that is factoring more rapidly active and as you know fever is being clinical sign for dengue. In fact, it's called dengue fever. And so we think that the resolution, faster resolution of fever, even considering such a small data set, is quite interesting and promising a signal in this trial.

Roanna Ruiz

Got it. Thanks for clarifying. And another question on the COVID program. So could you remind us, what do you want to see in the SUNRISE-3 interim to encourage you to move forward and if we fast forward and get positive final results, do you still think EUA is on the table with the FDA?

Jean Sommadossi

Janet?

Janet Hammond

So we're planning to do an interim analysis when we achieve enrollment of 60% of the patient population in the study. And as you know, the primary endpoint is proportion of patients who require hospitalization. So we're looking to see something to suggest that we're going to an overall hospitalization rate in the patient population of ideally 4% to 6% is what we're anticipating. And we still think that actually in the patient population that we're going after in the study, that this is not an unreasonable number. And there have actually been some recent articles coming out, I think, in support of that. So that's where we plan to be there.

Operator

This question comes from the line of Umer Raffat of Evercore ISI.

Jessica Hui

Hi. This is Jessica Hui on for Umar. Just one question. We're trying to reconcile the SUNRISE-3 study design with that of a competitor oral COVID antiviral especially in light of the announcement last month that the COVID public health emergency will end in May. Specifically, the FDA took issue with a placebo controlled study in the US. So I just want to confirm that in the SUNRISE-3, the randomized monotherapy population will still include US patients. And you don't expect the FDA to want you to change your trial design?

Jean Sommadossi

The short answer is no. But Janet wanted to expand on my answer.

Janet Hammond

Sure. Yes, the answer is no. The FDA has endorsed and reviewed our Phase 3clinical trial. And I think, as we described, patients are being randomized to drug or placebo on top of what is the available standard of care for the patient where they are. And actually, I think, as Jean Sommadossi mentioned in his remarks, there actually are significant number of people, and actually, particularly unfortunately, in the most vulnerable patient population, people who are unable to take Paxlovid because of drug interactions. And so for patients such as these, our drug is administered on standard of care, which would not include a direct acting antiviral. We do allow patients to have access to direct acting antivirals monoclonal antibodies if those were to be considered to be effective. And patients are allowed to be vaccinated also. But many patients, we believe, will actually not be taking anything other than our drug or placebo because of these circumstances.

Operator

We have another question from Roanna Ruiz of SVB Securities.

Roanna Ruiz

Hey, thanks for taking that extra question. I just want to circle back about the possibility of an EUA for Bemnifosbuvir. Do you have any updated thoughts on that?

Jean Sommadossi

Janet?

Janet Hammond

I'm so sorry. I realized as soon as I finished that I hadn't gone to your question completely. Yes. So we believe that an emergency use authorization is still possible. I think it's at the discretion of the Health and Human Services to allow four EUAs even with the passing or the lapsing of the pandemic health emergency. So we believe it will be data driven and depending on what we see as to whether such a thing might be possible. But we believe it is still possible, should we have good results, even at the interim analysis.

Operator

Thank you. That concludes our Q&A segment. I'll now turn it back over to Atea Pharmaceuticals team for any closing remarks.

A - Jean Sommadossi

Again, thank you all for joining us today.

Operator

And thank you for your participation in today's conference. This does conclude the program. You may now disconnect.