Atea Pharmaceuticals, Inc. (NASDAQ:AVIR) Q1 2021 Earnings Conference Call May 13, 2021 4:30 PM ET

Company Participants

Jonae Barnes - Senior Vice President, Investor Relations and Corporate Communications
Jean-Pierre Sommadossi - Founder, Chairman and CEO
Janet Hammond - Chief Development Officer
Andrea Corcoran - Chief Financial Officer and Executive President, Legal
John Vavricka - Chief Commercial Officer

Conference Call Participants

Eric Joseph - J.P. Morgan
Matthew Harrison - Morgan Stanley
Jonathan Miller - Evercore
Tim Lugo - William Blair

Operator

Good afternoon, ladies and gentlemen. Welcome to the Atea Pharmaceuticals First Quarter 2021 Financial Results 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 question.

I would now like to turn the call over to Jonae Barnes, Senior Vice President of Investor Relations and Corporate Communications of Atea Pharmaceuticals. Please proceed.

Jonae Barnes

Thank you, Operator. Good afternoon, everyone. And welcome to Atea Pharmaceuticals first quarter 2021 financial results 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 on the call by going to the Investors Relations section then the Event & Presentations area of our website at ir.ateapharma.com.

With me today from Atea, our Founder, Chairman and Chief Executive Officer, Jean-Pierre Sommadossi; Chief Development Officer, Janet Hammond; Chief Financial Officer and Executive President of Legal, Andrea Corcoran; Chief Commercial Officer, John Vavricka will also be available for the Q&A portion of today’s call.

On the call today, Jean-Pierre will provide a recap of our recent scientific publications and presentations for AT-527. Janet will review our clinical progress for AT-527 for the treatment of COVID-19 and AT-752 for the treatment of dengue fever, Andrea will provide a financial update and Jean-Pierre will review the upcoming milestones.

Before we begin the call, I’d like to remind you that today’s discussion will contain forward-looking statements that involve risks and uncertainties as mentioned on slide two. 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-Pierre Sommadossi

Thank you, Jonae. Good afternoon, everyone, and thank you for joining us today. We continue to make meaningful progress of our mission to discover and develop antiviral drugs for the treatment and prophylaxis of severe viral diseases.

Our pure nucleotide prodrugs have pharmacological properties that are uniquely suited for the treatment and prevention of these viral diseases. Our drug candidates are designed to target viral polymerase -- RNA polymerase, a highly conserved enzyme critical to the life cycle replication of these viruses.

We believe our platform offers many advantages, including potent and selective antiviral activity, convenience of all administration and scalable manufacturing, all essential when targeting millions of patients worldwide.

As we reported on our last conference call, we have been very active so far this year, in publishing and presenting preclinical and clinical results for AT-527, a recap of our scientific communications is on slide three and include publishing a manuscript highlighting important in vitro activity of our AT-527 against SARS-CoV-2 in Antimicrobial Agents and Chemotherapy.

We presented favorable Phase 1 results in March at the Conference on Retroviruses and Opportunistic Infections or CROI. These results validate the modeling from our preclinical animal models, which predict the drug of lung levels should consistently be above the EC90 level of 0.5 micromolar. Since the respiratory tract is the initiation site of the SARS-CoV-2 replication, these data demonstrate the potential for AT-527 to achieve meaningful drug levels in the lungs.

We were also invited to present supportive data on AT-527 as a treatment for COVID-19 at the International Conference on Antiviral Research or ICAR. The overview included Phase 1 results, as well as preclinical data and the underlying mechanistic rationale supporting [Audio Gap].

In addition, we have worked very diligently to elucidate the dual mechanism of action of AT-527 and the molecular model and unique interactions with AT-9010, the active triphosphate metabolite of AT-527 against SARS-CoV RNA polymerize. A manuscript of this important data is currently prepared on biomarkers and has been submitted for peer review.

This growing body of preclinical and clinical evidence in support of our antiviral platform is comparing and encourages us to accelerate and expand our development pipeline in a variety of difficulty to treat viral diseases.

Let me now turn the call over to Janet, who will review our clinical development programs. Janet?

Janet Hammond

Thank you, Jean-Pierre. On slide five, I’ll begin with an overview of the ways AT-527, our lead product candidate may address the challenges that currently exists with the treatment and prevention of COVID-19.

We believe with oral direct-acting antivirals or DAAs can play an essential role in the treatment of COVID-19 with their ability to rapidly inhibit viral replication in the early phase of infection and potentially reduce disease progression, which for COVID-19 would lead to a meaningful impact on global health.

We believe that based on 85 to 70 profile, it has the potential to accelerate time to recovery, prevent or shorten hospitalization, and reduce medically attended visits. It also has the potential to reduce the transmission of virus and hopefully can impact long-term COVID sequelae.

DAAs maybe use in pre- and post-exposure prophylaxis. These are all key objectives that we aim to evaluate in the clinical program for AT-527 as we are conducting globally with our partner Roche.

We view the use of a DAA as complementary to COVID vaccines. This is a similar treatment paradigm to influenza. We believe that a multi-pronged approach including both prevention and treatments will be essential for the challenges that we will continue to face with the SARS.

Moving to slide six, as summarized, we expect it to be an eventful year for AT-527 as highlighted by the multiple global clinical trials we plan to conduct with our partners, Roche. Throughout 2021 and beyond, we will be delivering a series of data readouts that will form our roadmap to a near-term NDA submission and product launch.

We expect interim biology data from the Phase 2 program later this quarter and we expect results from the global Phase 3 trial in the second half of the year. In addition, we anticipate initiating a prophylaxis study.

Moving to slide seven, in April, we were excited to announce the initiation of the Phase 3 MORNINGSKY trial, a global multi-center trial evaluating AT-527 in mild or moderate COVID-19 patients in an outpatient setting.

This trial is being conducted with our partner, Roche and is currently enrolling patients outside of the United States. We anticipate we will enroll approximately 1,400 adults and adolescents with mild to moderate COVID-19.

Patients with or without risk factors will be randomized within five days of symptom onset. At the time of enrollment patients must be stable and not require hospitalization. The primary endpoint evaluating the efficacy of AT-527 compared with placebo, will measure the time to alleviation or improvement of COVID-19 symptoms.

Other efficacy endpoints will include the number of patients requiring medically attended visits or hospitalization for COVID-19. Additionally, among other secondary and exploratory endpoints, the study will also identify and/or evaluate biomarkers that are predictive of an antiviral response to AT-527.

Moving to slide eight, in tandem with the Phase 3 program, we are continuing to make progress with the ongoing Phase 2 study in hospitalized patients. We expect to report interim virology data on a meaningful number of patients from this study later this quarter.

I would like to highlight some of the features of our study in the hospitalized setting, which is a placebo-controlled study with strict inclusion criteria, such as requiring patients to have been hospitalized within five days or less of symptom onset. In addition, our study includes only patients with moderate COVID-19 who require no or minimal respiratory support.

You will recall that this is a Phase 2 proof-of-concept study and is not statistically part. We consider this Phase 2 trial to be a study where we will be able to obtain proof-of-concept for antiviral efficacy and supportive data for dosage, and most importantly, confirm the safety profile of the drug, which was the main reason for conducting this study in a monitored hospital setting.

Moving to slide nine, the Phase 2 outpatient trial is evaluating safety, PK and PD and antiviral activity of AT-527 compared with placebo. For continuing supportive data, the safety and tolerability is important in the outpatient setting. This is the same setting for the Phase 3 trial and it is the target population where we anticipate the majority of the drug will be used, if approved.

Once again, this is a Phase 2 proof-of-concept study and is not statistically powered. The footprint of this trial is expanding globally, which should alleviate enrollment challenges initially encountered with the U.K. sites.

Let’s now turn to AT-752, our program for the treatment in prophylaxis of dengue fever on slide 11. In March, we initiated a randomized, double-blind, placebo-controlled, single- and multiple-ascending dose Phase 1a study to evaluate the safety, tolerability and pharmacokinetics of AT-752 in healthy subjects. Subject enrollment continues to advance.

The Phase 1a study is anticipated to roll out just -- enroll up to 60 patients. The objective of the study is to establish the safety and tolerability of AT-752 and also to support dose selection for future settings of AT-752 as a treatment in prophylaxis of dengue fever. We expect to report data from the Phase 1 study in the second half of the year.

With that overview, I’ll now turn the call over to Andrea for a review of the financial.

Andrea Corcoran

Thank you, Janet. As Jonae mentioned in her introductory remarks, earlier this afternoon, we issued a press release containing our financial results for the first quarter of 2021. The statement of operations and balance sheet as of March 31, 2021 are on slides 13 and 14.

For the first quarter 2021, the increase in research and development expenses in comparison to the first quarter of 2020 was principally driven by an increase in external clinical development and manufacturing expenses incurred primarily in conjunction with the advancement of AT-527 for the treatment of COVID-19 and to a lesser extent AT-752, which as you’ve heard, is being developed for dengue fever. These expenses included our share of costs incurred by Roche and increases in internal spend primarily due to an increase in personnel related expenses.

The increase in general and administrative expenses was primarily due to expansion of our organization and consists principally in an increase in payroll and personnel related expenses. I’m pleased to report that we ended the first quarter with an exceptionally strong balance sheet to support our clinical development programs.

As of the end of the first quarter, cash and cash equivalents were $833.8 million. We anticipate our current cash run rate will take us through 2023 to advance each of our pipeline programs.

Apart from our financial results, I would also like to note that the IPO lockup recently expired and previously restricted shares became available for trading beginning on April the 28th. As expected, we experienced an increase in trading volume around this event, which continues.

I’ll now turn the call back over to Jean-Pierre for closing remarks.

Jean-Pierre Sommadossi

Thank you, Andrea. 2021 is off to a strong start highlighted by the initiation of the global Phase 3 MORNINGSKY trial of AT-527 mild to moderate COVID-19 patients in the outpatient setting. This was a significant milestone and represents a major advancement toward our goal of providing an easily administered and widely available all antiviral to help in the fight against this global pandemic.

We look forward to sharing interim virology data from the Phase 2 program for AT-527 later this quality and reporting data from our Phase 1a study of AT-752, which is being developed for the treatment and prophylaxis of dengue fever in the second half of 2021.

We continue to make progress with the order drug candidates in our antiviral pipeline and export -- and expect to report progress on these programs later this year. We remained steadfast in our mission to advance these important programs to the benefit of patients worldwide. We have the right people, the right programs and the right partner to bring this potentially lifesaving drugs to market. Importantly, we have the financial resources to support this mission.

With that, Operator, we will now open the call up to questions.

Question-and-Answer Session

Operator

Thank you, sir. [Operator Instructions] Your first question is from Eric Joseph from J.P. Morgan. Your line is open.

Eric Joseph

Hi. Thank you. Good evening. Thanks for taking the questions. Just hoping you could provide a bit of an update on enrollment progress in the Phase 2 trials, your reiterating timelines for data update later this quarter or even should we anticipated a full enrollment of both the outpatients and hospitalized studies where it should be expect of a partial number and if it’s the latter, maybe you can kind of guide expectations there and then I have a follow up?

Jean-Pierre Sommadossi

Janet?

Janet Hammond

So thank you for the question. We will -- we’re not anticipating that either study will have completed enrollment. We will I believe have a substantial number of patients that we will be able to report data on and we -- we are hoping that this will be able to provide a trend in our understanding of the viral connection associated with the drug in our hospitalized study.

As I mentioned earlier, the outpatient study has considerably expanded its footprint and sites are coming on stream really all the time now. So we anticipate that the enrollment will move forward pretty expeditiously.

And actually, the design of that study allows for us to explore different doses. So they will -- there will be cohorts of patients that we will look at. And we will have data we believe from Roche on a -- on an initial cohort from that first that dose in cohort to report by the end of the second quarter.

Eric Joseph

Okay. That’s really helpful. And as it relates to the Phase 3 MORNINGSKY trial, could you talk about the geographic distribution of participating sites currently and what gating factors are remaining to facilitate approvals or the initiation of sites in the U.S. Is there a minimum or do you anticipate a minimum number of patients -- patient participation in the U.S. to facilitate registration there? Thank you.

Janet Hammond

I’m sorry, Eric. I didn’t hear -- do I anticipate -- what I didn’t hear what you said?

Eric Joseph

A minimum number of U.S. patient participation to facilitate registration with FDA?

Janet Hammond

So, the -- in fact the study is open in countries in Europe at the moment and we are seeing other countries opening up around the world with as the CTA gets approved, including Japan and there are more countries still to come.

We are making good progress with the FDA and we anticipate that we will be able to enroll patients in U.S. in the foreseeable future once we’ve resolved the issues around that with them. So we anticipate that there should be representation of U.S. in the study. Yeah.

Eric Joseph

Okay. Thanks for taking the questions. I’ll hop back in queue.

Operator

Your next question is from Matthew Harrison from Morgan Stanley. Your line is open.

Matthew Harrison

Great. Good afternoon. Thanks for taking the questions. I guess, two for me. First, on the first dosing cohort, assuming that’s what we get in terms of interim data, can you just maybe help us think about what you know from drug levels and exposure about what you think is reasonable to expect in terms of viral load decline in those patients? And then, I guess, separately, given some of the enrollment issues that you faced with these initial studies, can you just talk about your confidence around being able to enroll the Phase 3 quickly? Thanks.

Janet Hammond

So the confidence around enrolling the Phase 3 study is really that -- I think it’s a very similar population to the -- an outpatient study. We’re looking for patients with mild to moderate COVID-19.

I think it’s a lot less interventional, I would say, than the Phase 2 study, which I think makes it a lot more patient-friendly for people to want to participate. We’re not collecting the pharmacokinetics, et cetera, and all of the viral loads that we are collecting in the Phase 2 studies.

So from that perspective, we’re pretty confident that this ought to be considerably easier for patients and has a significantly larger footprint, because it’s a less intense and less special study. So we believe that that study will actually enroll considerably faster and we have more than 150 sites identified for that study. So we anticipate that it ought to be able to go pretty quickly.

With regard to the Phase 2 studies, the dose selected for those studies was selected on experience with our dosing of AT-527 in hepatitis C and the modeling derived from that, and also from some preclinical modeling that we have and also the Phase 1 study that we conducted in December, which again, collaborate the data that we already had in support the dose that we have already selected for that.

And so we’re pretty confident that the does ought to be the correct dose and in order to see a good antiviral effect. And by good antiviral effect, we’re anticipating that we would like to see something in the range of what has been seen with the antibodies and also with monoperugia [ph] and in seeing approximately a lung drop in a viral load in the first few days in our study.

Matthew Harrison

Great. Thanks very much.

Jean-Pierre Sommadossi

Thank you.

Operator

Your next question is from Jonathan Miller from Evercore. Your line is open.

Jonathan Miller

Hey, guys. Thanks for taking the question. Two for me, how should I think about population or inclusion criteria for the post-exposure prophy trial starting later this year? Is this going to be similar to the mAbs are a little bit different? How broad is the utility for that indication? And then secondly, are there -- what’s your latest thoughts on the cadence of demand for an oral antiviral in 2022, for instance, given the pandemic course so far this year and where you see ahead?

Janet Hammond

So I’ll answer the first question and then, John, perhaps you might want to answer the second. So with regard to the inclusion criteria for our prophylaxis study, we’re still actually working on that protocol. So I can’t really comment or give you too much in the way of specifics. But we believe that we anticipate that we will enroll patients down into their teens in our Phase 3 study. So we anticipate a broad population. We believe that the drug interaction profile for our drug is going to be pretty benign so we would anticipate that this would allow for many patients or people infected with the disease to qualify to take the drug. John, over to you.

Jean-Pierre Sommadossi

John?

John Vavricka

Sure. So as far as for the ongoing demand for this year and into next year, we continue to see a need for both an oral antiviral and for a vaccine for a couple of reasons. One is the vaccination rates are, obviously, vary, particularly in the United States, to the introduction of various the variant that we continue to see evolve. And with that even the need that most companies have said that will likely need -- be a need for a booster. So for all of those reasons we continue to see that there the need will continue.

Jean-Pierre Sommadossi

I think what’s important also, just to add to that, John, is that our -- with our Phase 3, we will also follow-up study that will evaluate the impact of direct-acting antivirals such as AT-527 on the long-term sequelae, that as you know, is becoming a major issue in 30% to 40% of individuals that got COVID-19. So, that will even emphasize if the data are positive, the importance of DAA also to deal with the long term sequelae of disease.

John Vavricka

And Jonathan, one thing I forgot to mention, of course, there was that, we really started asking about post-exposure of prophylaxis. And in this case, you’re seeing testing ramp up around the world. And with that, I think, you’ll see a lot of asymptomatic cases that will be identified opening up for a direct-acting antivirals as well.

Jonathan Miller

Make sense. One more maybe factual question, do you have plans for interim analyses in the Phase 3 and just what might those look like?

Jean-Pierre Sommadossi

Janet?

Janet Hammond

We will determine whether we need to do an interim analysis at some point. I think the protocol is written flexibly at the present time but I don’t think I can really comment further.

Jonathan Miller

Thank you very much.

Operator

Your next question is…

Jean-Pierre Sommadossi

Thank you.

Operator

Your next question is Tim Lugo from William Blair. Your line is open.

Tim Lugo

Thanks for taking the question and congratulations on the progress. For MORNINGSKY, I understand patients are within five days of symptoms. But I don’t see any language about risk factors similar to a Phase 2 program. Can you just maybe clarify the decisions on not kind of enriching for a risk factor? And also how much sequence data will you be collecting in the trial? I understand it’s going to be easier to run, so you don’t want to be cumbersome. But it does seem like there’s a risk if you’re assuming mAb, like trial and behavior, whereas when the mAb trials are run, obviously, the genetic makeup of circulating virus right now is significantly different. So maybe just touching on that?

Janet Hammond

Yeah. Thank you. So with regard to risk factors, we believe that the profile of our drugs allows us to look for a broad patient base to treat. And so the MORNINGSKY study is designed to enroll up to 40% of patients with mild to moderate COVID-19 without risk factors. And at least 40% -- and I should say, instead of up to I should have said at least, and at least 40% of patients with risk factors and then the remaining 20% will fall where they may.

So we plan to capture both populations in that study, really to understand how the drug works in both populations and we think that’s important. And as Jean-Pierre mentioned already, we think that a direct-acting antiviral has considerable benefits for people with and without risk factors potentially.

And then with regard to sequencing, we plan to sequence all patients on entry to the study and there are other time points during the study when they will undergo sequencing. So we do plan to have that information available, but not as the same degree of intensity that we’re doing in the Phase 2 studies, obviously.

Tim Lugo

Oh! Great to hear. And maybe just touching upon sequencing and the variance of concern, can you maybe globally just talk about targeting the RNA polymerase versus some of the other classes of antivirals out there and what should be a relatively conserved target?

Jean-Pierre Sommadossi

Tim, from what we see today, actually, unfortunately, India is going to be a breeding ground for variance. And so far the variants from India that have been reported do not affect the neuron function and do not affect at least what we have seen so far any of the amino acid or our drug by the India DRP [ph] active site.

So we continue to believe that our drug should be very potent against all variants. As Janet has indicated in the past, the Phase 2 hospitalized patient is enrolling patients in South Africa, in Brazil and Eastern Europe, where there is significant variance percentage.

Finally, the NID [ph] contract lab as the variance are now in the sub, as I say, we anticipate that they would evaluate AT-511 the free base of AT-527 in in vitro system. So, I cannot promise that we will have also the in vitro data by the end of June, together with the interim virology data, but definitely we will have a very early in the sub-quarter, which obviously will be important to demonstrate also for our Phase 3 and as soon as we hope to have the Indian variants available, we’ll do the same.

And lastly, all our Phase 2 especially the hospitalized patient with the global interest, we have full sequencing at baseline and also after treatment.

Tim Lugo

Thank you for the color.

Operator

I’m showing no further questions at this time. I would now like to turn the conference back to Jean-Pierre Sommadossi.

Jean-Pierre Sommadossi

I am sorry. So thank you very much for your attention and we appreciate. Thank you very much.

Operator

This concludes today’s conference call. Thank you for participating. You may now disconnect.