Q2 2023 Vir Biotechnology Inc Earnings Call

August 3, 2023

Hello.

Welcome to Vir, but biotechnologies second quarter, 2023 financial results and business update call.

As a reminder, this conference call is being recorded.

At this time all participants are in a listen only mode.

After the speaker's presentation, there will be a question and answer session.

I will now turn the call over to Sasha to Mooney outlet.

Executive Vice President Chief Corporate Affairs Officer you.

You may begin Mr. Moody Atlas.

Thank you and good afternoon with me today are married the backer Chief Executive Officer, Dr. Phil Peng Chief Medical Officer sung Lee Chief Financial Officer.

Before we begin I would like to remind everyone that some of the statements. We're making today are forward looking statements under the securities laws. These forward looking statements involve substantial risks and uncertainties that could cause our clinical development programs future results performance or achievements to differ significantly from those expressed or <unk>.

Implied by such forward looking statements. These.

These risks and uncertainties and risks associated with our business are described in the Companys reports filed with the Securities and Exchange Commission, including forms 10-K, 10-Q and 8-K.

I will now turn the call over to our CEO Mary Anne's about her.

Thank you Sasha.

Good afternoon, and welcome to <unk> Technologies' first earnings call.

<unk> CEO of year and I'm pleased to welcome you all here today.

I joined here four months ago, and everyday since I'm reminded of how well our lives, but my commitment over the past 30, plus years to bring new medicines to patients.

There is one of those unique company that's used its ingenuity and the discovery of neutralizing antibody in the fight against COVID-19, and this during the very first time since the pandemic.

This was achieved in just 15 months and broth to nearly 2 million people around the world.

Before that spirits drug discovery engine has already yielded an antibody to treat Ebola now.

Now recognized by the World Health organization price impact.

After four months of learning about differentiating capabilities platforms pipeline and strong partnerships I could not be more adaptive to lead this team of passionate and driven professionals.

Always have you had a goal in mind serving patients.

Yeah.

Today and over the next few quarters I will share more about our focused efforts to drive our pipeline and our science forward.

We hope you take away and understanding of our strategy, our development program and the ability to execute.

Infectious diseases continue to pose a major threat to global health economic security and to society as a whole.

Just last month, they are talking to are patients living with chronic hepatitis b.

Reminded of the deep personal impact such a disease have on not just the individual but also on their families and their communities.

We aim here adhere to address these needs with a broad range of drug candidates and additional data to come this year.

First I want to touch on our recently announced phase two peninsula trial evaluating <unk> 248 to four flu prophylaxis, which missed its primary endpoint.

Sales will share more details momentarily.

It is important to remember that in the world of drug development and clinical trials unexpected outcomes are not uncommon.

That is exactly why we take multiple approaches and have a broad pipeline.

Seasonal flu affects about 1 billion people around the world.

It's up to 650000 lives each year.

Is a significant unmet need that once our attention and we will follow the data in guiding our next steps.

We do remain interested in this area and we have 2981.

Preclinical candidate, which has a differentiated mechanism of action to <unk> covering both influenza, a and b and maybe a more efficacious alternative to vaccines.

Second viewer is working on the potential functional cure for the more than 300 million people living with chronic hepatitis b worldwide.

Current standard of care is lifelong therapy, which decreases but does not eliminate the risk of cirrhosis or liver cancer.

At first we aim to achieve a functional cure, meaning allowing control of the virus without such chronic medical therapy.

This is akin to remission and further reduces the risk of debilitating disease progression.

<unk> is focused on regimens such as combining an antibody with a <unk> designed to stop the virus and clear the infection.

We expect a data readout from part B of our ongoing March phase II trial in the fourth quarter, which we hope will get US again, one step closer to a functional cure for chronic hepatitis b.

Third I want to highlight with various working on to address chronic hepatitis delta, which affects more than 12 million people worldwide and imposes a four times greater risk of liver cancer compared to chronic hepatitis b alone.

No doubt around 5% to 15% of patients with chronic hepatitis B are co infected with hepatitis Delta virus and the World Health organization considered chronic hepatitis delta to be one of the most severe forms of viral hepatitis.

Our goal is convenience once or twice monthly injections with transformative efficacy.

Initial data from our clinical trial pulses are expected in the fourth quarter.

We also expect to report significant progress in the discovery of new drug candidates using our proprietary antibody and T cell platforms, which are yielding a robust pipeline that is optimized through AI and our unique data science capabilities.

Currently about 90% of our pipeline Leverages data science tools, which enable us to discover.

And develop drug candidate with the highest chance of success of becoming medicines that could benefit patients in need.

Going forward all our antibodies will be optimized using this approach Phil will touch on the preclinical programs that have the potential for IND filings within the next 24 months.

Yeah.

Lastly, we have a strong balance sheet that allows us the financial flexibility to fuel our development programs and grow our antibody platform.

We are taking measures to continuously evaluate and judiciously allocate this capital to maximize value for our shareholder.

As part of this process and under my leadership, we made the decision to phase out our small molecule platform.

This is the first step as we continue to advance our core capabilities and scientific prowess.

The combination of all the strengths we have year adhere makes this a very exciting time.

I am confident in our ability to advance our development programs and potentially impact the lives of many patients.

I'll now turn the call over to Chief Medical Officer, Phil <unk> to provide more details on our pipeline.

Thank you Mary Anne before speaking to our future research and ongoing development efforts I want to address the top line data from our influence our phase two clinical trial. This trial failed to demonstrate a statistically significant difference between those who received 2042 and placebo.

Specifically, our 200 milligrams, which was the highest through severe 2040 <unk> to talk to you.

As a song statistically significant reduction in influenza.

At least 60%.

Interestingly in this same group, an approximate 57% reduction in influence.

With illness was defined according to CDC criteria.

More analysis is going to be needed to address why this study was unsuccessful.

We are looking at the data from the perspective of how different symptoms, the duration and severity might influence outcomes and understanding drug concentrations time to infection and the sequence of the actual viruses.

We're exposed to will also be important.

As far as next steps any other significant development of your 2042 will be guided by these analyses to be clear. However, we will not be initiating phase III trial.

In the Influencer space as Mary Anne noted, we are continuing our efforts on your 2000 1981, an investigational neuraminidase targeting monoclonal antibody.

It covers not just <unk>, but also <unk> and <unk>.

Some animal models it has shown markedly greater potency.

The characteristics of your 2981 counterparty was recently published in nature.

Because of your 2981 has a different mechanism of action.

Marketing the enzymatic activity of the intermediaries not stem all the hemoglobin, we believe in its potential to provide people wondered illness.

As we learn more from our peninsula trial.

We apply relevant findings the ongoing development of your 2009.

More broadly as Mary Anne noted earlier.

Platform beer has already resulted in a medicine for COVID-19 in just 15 months.

Only single counterparty capable of treating Ebola.

So while this setback previewed 2042, if I'm fortunate it doesn't change our perspective on our platforms ability.

Densify potentially best in class antibodies and to then leverage data science and AI.

To further engineering.

Specifically, we can enhance antibody binding potency.

<unk> half life develop ability and stability.

Even more broadly we've recognized the importance of a fully integrated data strategy from research all the way from product development I believe with disability will continue to be differentiated your gear.

We have 24 publications and numerous patents and awards related to our data <unk> achievements.

Now, let's turn to chronic hepatitis b.

Unlike the current standard of care, which requires taking antiviral medicines for the rest of one's life and it does not eliminate the risk of cirrhosis or liver cancer. Our goal is a functional cure.

After completing a functional cure therapy, there should be no need for further treatment.

Also be a further reduction in the risk of liver complications.

Our functional cure hypothesis is based on a novel widely accepted belief with chronic hepatitis B is an immunologic disease caused by a virus.

As such we believe the combination for Antivirals alone are not enough.

Instead, we believe functional cure requires a combination of antivirals with immunologic agents.

We call our approach stop and clear.

We stop the virus from replicating and clear already in fact itself by immuno stimulation.

This is a fundamentally different hypothesis, we feed through clinical trials.

Our clinical development pathway has been as follows.

We began with phase one and phase Iia studies exploring different combinations of Antivirals and immuno modulator.

For specifically using small quartz new studies, we are able to explore broad space of possibilities to help identify the right combination dose duration frequency and population.

In the studies, we have made two major advances towards a functional cure for chronic hepatitis b.

Highlight why we believe we can succeed.

One <unk>.

In June we showed that we could achieve a durable off treatment response, and 16% of participants who received <unk> 2008, our ethylene urinating and calculated interferon alpha for 48 weeks.

While the sample size was small and the confidence intervals March.

Noting the interferon Alpha hormone is generally talk to result in an off treatment response, only three 7% of the time.

Two.

At the <unk> conference in 2022, we showed that a short course of your Q2, one eight with $34 34 resulted in nearly three <unk> knockdown and hepatitis b surface antigen.

This is a viral protein there is a measure of our rig activity.

Debris antiviral activity with attitude and no new safety signals were observed.

Our next development step has been to build upon these observations last summer we started part b of our phase II <unk> study, which is exploring the combination of your 2218, and <unk> 30, 434 with or without Pegylated interferon Alpha for durations 24 40 weeks.

We expect 2% end of treatment data for the 24 week cohorts in the fourth quarter.

Let me now direct your attention to chronic hepatitis Delta.

For chronic hepatitis Delta the only treatment approved which is only available in some parts of the world and not the U S requires lifelong daily subcutaneous injections and has 45% chance of benefiting the patient.

<unk> is a highly efficacious treatment the only needs to be administered once or twice a month.

Because hepatitis Delta requires the surface antigen protein from hepatitis B we.

We can target using our existing chronic hepatitis b assets.

Year to 218, and <unk> 34 to 34.

And evil, we shared the preclinical data demonstrating their potent antiviral activity against hepatitis Delta.

Our phase II clinical trial is now underway evaluating <unk> 2218, and beer $34 34 individually foreign combination with one another in a small cohort of hepatitis Delta patients.

We expect to present data from this trial in the fourth quarter.

Okay.

It is worth noting that because hepatitis delta is a potential orphan disease with high unmet medical need the regulatory path where treatment for delta maybe accelerated.

Turning now to our early stage pipeline, we've already highlighted 2091 or <unk> antibody.

I will now touch on other key FX based on our proprietary monoclonal antibody platform.

First Lear, 80, 190, which in vitro can neutralize both RSV or respiratory syncytial virus and human Metapneumovirus. Both of these viruses pose a serious threat to incomes and immuno compromised.

Second Veer $72 29, our next generation COVID-19, monoclonal antibody, which in vitro is differentiated by both extreme breadth and potency against a broad spectrum of historical and currently circulating variance.

With respect to our T cell platform.

Which is based on human cytomegalovirus, we're advancing two assets.

<unk> thousand 288 is our novel next generation HIV vaccine, which will soon be entering the clinic.

Unlike beer 11, 11, which was deliberately attenuated by creating a replication defect near 13 88 does not have that reputation defect and we believe can be more immunogenic.

We anticipate dosing our first patient in Q3 this year.

<unk> 1949 is a potentially therapeutic vaccine against HPV associated cervical and head and neck dysplasia and cancer.

And as the second half of it and our T cell platform based on each D&B.

We look forward to sharing more about these R&D in the future.

I will now turn the call over to Chief Financial Officer sung Lee.

Thank you Phil we're pleased to share our financial results for the second quarter of 2023.

Total revenues were $3 8 million compared.

Compared to negative $46 million for the same period a year ago.

Recall that in 2022, the company recorded a revenue constraint related to <unk> and the amount of $397 $4 million, which caused the total revenues in collaboration revenue in the second quarter of 2020 to be negative.

Specific to such drove them out in the second quarter of 2023 collaboration revenue was negative $13 $8 million, mainly due to the drilling that sales being more than offset by manufacturing cost and expenses to support activities in countries, where <unk> continues to have a marketing authorization.

Going forward and barring a reauthorization of that drove a map in the U S. We believe collaboration revenues will be at minimal levels and potentially make a negative contribution to our top line due to the ongoing required investments to support the marketing authorization, which our partner GSK.

The upper zone.

Turning to operating expenses.

R&D expenses in the second quarter of 2023 were $171 9 million compared to $115 1 million in the same period in 2022.

Included in the 2023 amount is a noncash charge of $10 $7 million related to the impairment of legacy in process R&D and consolidation of our labs.

The year over year growth in R&D expenses was primarily driven by investments in the phase II study peninsula for <unk> 2482, and manufacturing activities in anticipation of initiating a phase III study.

While the costs associated with the Peninsula study will ramp down in the next few quarters. We are currently evaluating the impact of the phase III manufacturing capacity and supply for <unk> 2482.

We expect to communicate more on this with our third quarter results.

SG&A expenses in the second quarter of 2023 were $47 1 million compared to $41 6 million for the same period in 2022.

The year over year growth was primarily driven by higher personnel costs to support the overall growth of the business.

For the second quarter of 2023, we reported a consolidated net loss of $194 8 million compared to a net loss of $76 5 million for the same period in 2022.

Turning to the balance sheet.

We ended the second quarter of 2023 with cash and investments of $1 9 billion compared to $2 4 billion at the end of 2022.

As communicated previously we made a payment of $273 6 million in the second quarter to our collaborator GSK, which comprise the majority of cash utilization during the quarter.

This payment primarily relates to the amount reserved in 2022 for excess that drove enough supply and manufacturing capacity due to reduced demand expectations for <unk> drove a map.

There remains a balance of $69 $7 million related to this reserve, which we expect a payment of approximately $41 8 million to GSK in the third quarter of 2023.

As I conclude I would like to make a few comments about our financial position and capital allocation.

As Mary Anne stated earlier in the call, we are making decisions and taking actions to become more focused which has resulted in the discontinuation of our small molecule platform.

We are well capitalized to see our current phase III programs in hepatitis B and hepatitis Delta through the end of phase II and beyond.

And we also have the balance sheet strength to pursue further innovation by investing in our core antibody platform.

And finally, you can expect us to be strong stewards of capital and have a disciplined approach to capital allocation and expense management.

Now I'll turn the call back to Sasha.

Thank you son, we will now start the Q&A section.

These limit questions to two per person. So that we are able to get to all of our covering analysts.

Operator, please open up the line.

Okay. Our first question comes from Gena Wang from Barclays.

Your line is open.

Thank you I have two questions regarding the flu 24 82 program.

So first regarding the peninsula study.

So why the design didn't have a lower bond over 30%.

Pfizer and <unk> studies, if we use 30% lower bound to study with looked like underpowered could that be the reason leading to the failure and the second question is with the negative top line.

You terminate.

482.

And also the working flu and also any read through to the other.

Via program, so antibody platform.

Thank you Gina really appreciate that chance to.

Answer to your questions and let me begin with your first question with regards to the design of the Peninsula trial.

So the first thing I want to say is is that the real short answer is that it was a well powered study and we need to think of it in the context of the fact that our desire was to show an efficacy beyond that traditional vaccines. So when you think about how to power study, it's not just about demonstrating statistical significance, but it's about demonstrating.

Clinical significance in the context of that.

And so for example, we could have powered study to demonstrate that a 10% effect size was was statistically significant however of course as you know gena that wouldn't have been clinically meaningful given the vaccines that are currently out there.

This is in contrast to vaccine flu trials, which do have a desire to.

That basically powered the study for clinical significance and statistical significance to a lower bound confidence interval of 30%.

But I would like to remind you that with regard to monoclonal antibodies.

Both RSV and Covid neither of them used such a flu vaccine specific endpoint. So I think that we were definitely well powered to ask the question and answer the question could we achieve transformative efficacy and unfortunately, we did not.

With regard to the <unk>.

Other aspects of 2042, I really want to point to the fact that we are undergoing more analysis right now as to why the study was unsuccessful and we are looking at it from many different angles, including different symptoms. The PK time to infection in a number of the other things I talked about earlier on this call and really we need to be guided by those results in that analysis.

And that data to really decide what next to do but clearly as I said earlier also we're not going to be embarking on a phase III.

And then finally with regard to your question about read through I would say that I think then Maryann said it best when she said that.

We've already had two successes with our antibody platform.

Ebola antibody the only single antibody to treat ensure a butler as well as <unk>, which was brought to market in less than 15 months. So I don't think theres any read through on our ability to really design and identify a successful medicines using this antibody platform.

Thank you Phil I would just add that Gina obviously, we want to be very strategic about how we allocate our capital and as Phil pointed out we are not going to rush into any next steps, we really want to do a thorough analysis of the data and then really be guided by that outcome as to what to me.

Are we doing that.

Thank you.

Alright. Our next question is from Paul Choi from Goldman Sachs.

Your line is open.

Hi, Thank you good afternoon, everyone.

My first question is.

If we think about stripping out the one time true up for the excess of trove of Mab.

Supply manufacturing to GSK and.

There's a couple of moving parts there still.

If we strip that out if we look at maybe the year ago Opex is that sort of normalized rate that you would think.

Equity normal here going forward and what does that imply for your your cash runway.

If you can prepare I'm just say, how how long your cash balance will go through.

And then secondly on Hep B.

For the two to one 834 to 34.

Remind us.

Peg.

Data set that will be coming up in the.

Later later this year can you maybe level set expectations on how we should think about potential efficacy. There is there a potential for synergy or should we potentially think about it largely is additive and also what can you say on potential tolerability of the regimen given again, if your onsite historical.

Thank you.

Okay. Thank you very much Paul maybe the first question on cash runway.

I'll.

Give us some more information there yes, Paul Thanks for your question. So I think you had a couple of questions. There on basically operating expense nor.

Normal levels as last year comparable and the implications for our cash runway going forward. So when you think about our operating expense and specifically R&D expense for the last several quarters. The last three or four quarters, it's been heavily driven by the investment in the flu phase III study the peninsula.

In addition to that.

We also invested in manufacturing activities for an anticipated phase III study in flu. So these have been the primary drivers of our R&D operating expense for the last several quarters now going forward, obviously I go back to the prepared comments I made on.

<unk>.

The ramping down of the Peninsula study in the next few quarters.

There are some variables here, where we have an ongoing phase III study in hepatitis B and hepatitis Delta.

We're going to get to some important data readouts in quarter four this year so.

Pending the readouts of those data that could be a big swing factor for where our opex trajectory will be in the future and certainly has implications for our cash utilization as well, but I just wanted to make a clarification here.

The cash utilization when you go from Q1 to Q2 is not indicative of a run rate.

As I mentioned in my prepared comments, there was a $273 6 million payment to GSK related to a liability booked last year. So I think you have to really canceled out noise out and then you kind of understand what our true cash utilization has been and it's been averaging somewhere.

Most to $120 million per quarter in each of the quarters. This year so far.

And then going forward.

Coming back to something I said before the cash utilization will largely depend on the data readouts for hepatitis Delta in hepatitis B, but just to finish answering your question with $1 $9 billion of cash and investments were really in a good position here to fund not only to the end of phase II for those programs.

But also through phase III.

Thank you sung and then Paul related to your question on our.

Chronic hepatitis B functional cure program as you rightly pointed out in fourth quarter of this year, we will be reporting data combining <unk> rsi RNA with three <unk> antibody plus minus interferon Alpha <unk>.

24 weeks of treatment.

So and we have actually come from.

Promising data that we have seen and have announced at CES earlier. This year. So I would in fact failed to talk a little bit more about what we have seen as the signals of efficacy and also added David.

Thank you Mary Anne So Paul Great to talk to you again and before we get going here as Maryann mentioned and I think it's important to say where before we can talk about what's going to be new just wanted to reiterate what we've seen most recently at the last two liver Congresses, So as Mary Anne noted in.

At <unk> last year, we saw that a short course of the SA RNA to one 8% and 34% 34 was additives, but that duration was only 4% and 13 weeks and so what we're looking for that's going to be new and <unk> in the fourth quarter. This year is the <unk>.

The 24 week data of combining the two of these drugs together, we're also going to be looking at these two drugs together with the addition of interferon Alpha and I think all of that together is what will be new along with of course, new data from hepatitis Delta.

Operator.

Can you go to the next question.

Okay. Our next question comes from Rosanna Ruis Ruiz from Leerink partners.

Great. Thanks, Hello, everyone. So maybe first question on Delta virus.

What specific measures could you disclose in the phase two solstice trial, and what's the efficacy bar that youre looking for.

Thank you for that question, Brian I will ask <unk> to give you some more details on that.

Thank you Mary Anne and thank you your honor so with regard to our Delta trial solstice remember at equal. This last year. This last June actually sorry. This past June we just showed that in preclinical models 34, 34, our FC enhanced monoclonal antibody was able to knockdown the adverse.

Titus Delta virus or the RNA from the virus and we also showed that two to 108 Rsi RNA could do the same and that when combined in an animal they were additive and their behavior. So now we're looking at solstice, which also began in may.

Or are these part of this spring and we're asking ourselves the question $2 34 to 34 alone.

One eight alone and what what's going to happen. If you add the two of these drugs together in terms of their ability to knockdown hepatitis Delta RNA virus. So that's what we're looking forward to seeing ad.

In the fourth quarter of this year as you know the efficacy bar.

Is rather the bar for getting approval is a two log reduction in hepatitis Delta RNA and normalization of <unk>, which has only seen 45% of the time with the only currently available drug and that drug requires daily subcutaneous injections, what we're hoping for is transformative efficacy along.

With maybe having only an injection once or twice a month. So I think that that can be very differentiating for us now in terms of what we're going to actually see in terms of data as I mentioned it will be the monotherapy and the combination but this is early data from a small cohort. So we want to be a strictly be able to see are they actual anti virals and patients and thats, what we look.

Forward to seeing.

Yes.

Quarter after next year, yes.

Okay, Great and I have one follow up.

Yes, maybe bigger picture could you give us a sense of what your strategic priorities for the company will be in 2024, and I guess thinking about flu hepatitis.

Delta virus HBV and all the programs you have going on or some of them going to shift to like higher focus next year and like what should we be following more closely along those lines.

Yes, thank you for that question.

As mentioned before as it relates to our fuel program.

Next steps are going to be a really going to be determined by further analysis of the data, but our near and intermediate term.

Focus is really on our clinical programs.

Connick hepatitis B and chronic hepatitis Delta those are really.

Our top priority, we will also bringing.

HIV program into the clinic in the next.

This quarter.

So our focus capital allocation and really being all around.

To ensure that as fast and as efficiently as possible vehicle program sales programs towards data.

Yes.

Got it thanks.

Okay.

Our next question comes from Eric Joseph from Jpmorgan.

Hi, good afternoon, thanks for taking the questions just one or two on <unk>.

<unk>.

Just trying to get a better sense of the update you might see from March part B in the fourth quarter, whether we should expect.

But really the types of patient numbers I guess, we should anticipate in whenever you should expect readouts across the different four different treatment regimens and then I'm also curious to get a sense from you guys.

Of what.

Level of.

S antigen clearance wood.

Support. The addition of 34 34 being additive to.

What you've reported so far from you on trial.

2018, plus plus peg that.

The Dublin alone. Thanks.

Okay.

Alright, so Eric Thanks for the question, so I would like to begin by stating.

Let's level set to what was shown at Eagle and a diesel what we showed was that 48 weeks of 2218, DSA Arnie with interferon Alpha was able to result in an off treatment response and about 16% of patients six months. After the end of treatment that was preceded by an on treatment zero.

Terence as you referred to earlier of around 30%. So basically 30% of patients had an entrepreneur response, and then 16% had a continued off treatment response with 48 weeks of Q2, one eight plus interferon alpha.

What we're going to be seeing add in.

In the fourth quarter of this year is of course, the 24 week on treatment data from the triplet and doublet and so what we should be looking for is is that two to one eight plus $34 34.

It gets us to patients who have a zero clearance and remember when you give two 234 34 for only four or 13 weeks, we did not see any patient with zero clearance. So therefore, the goal will obviously be to see more patients or a number of patients with zero clearance and whether or not we can match or exceed the 30% we saw with Ford.

Eight weeks of the prior doubled.

Other thing Thats important to look forward to.

As of course, adding interferon onto that combination of 2218, and 34 34 and seeing how much better we can do with that now going back to Paul's earlier question about Tolerability clearly interferon Alpha has some tolerability issues of gift, giving for a long period of time, but that's in the context of low efficacy if we can achieve.

<unk> rates greater than 30, or 40%. We think that this is something that patients will really be.

Keen to understand better and appreciate given the fact that living with a chronic diseases as Marion alluded to in the prepared remarks, something we've heard a lot from patients is something that they want.

Yes.

Yeah as it relates to enrolment the timing right on track.

Our expectation.

Okay.

It would be too.

Would it be premature.

In the fourth quarter to see any.

Post treatment follow up her akshay good follow up for patients, but only received the 20 or 24 week regimen.

So Eric at this time, all we've guided to is the on treatment data from the 24 week arms.

And we are definitely looking forward to that information along with as I alluded to earlier with where one off the chronic hepatitis Delta. So I think those are going to be the two exciting.

Datasets that we hope to be able to share in the fourth quarter.

Excellent thanks, very much looking forward to it.

Our next question comes from Eva Privitera from TD Cowen.

Hi, good afternoon, thanks for taking our questions.

Just to follow up on the prior question for the Triple combination with data in the second half what rate of on treatment zero clearance.

I'd get you excited or be indicative of the off treatment clearance.

Yes, so to answer that question I think again context is important for 2218, plus interferon alone for only 24 weeks, we saw only a 5% rate of zero clearance on treatment.

Think anything beyond that is biological proof of principle that $34 34, when added to 220, <unk> and interferon is moving the needle and of course, if you can get there without interferon and <unk> plus 34, 34, I think that that would also be quite impressive. So I think both of those things are.

Important steps forward and then of course, the higher the entre and response rate. The more excited we will be in terms of whether or not this is going to be able to make a meaningful difference for patients.

But what delta between what Delta would you anticipate between the on treatment and me and the off.

Off treatment is there any way to know.

Well I think one of the exciting things that we saw at Eagle was one of the first times that there was a predictor of off treatment response now granted it was a small cohort of patients, but we demonstrated.

In that small cohort of patients the patients who several converted not just steel cleared with zero converted two anti F antibodies at high levels greater than 100, or 200 that they were the ones most likely to have an off treatment response. So certainly we're going to be looking at that metric in our studies to see what the off treatment response will be.

Clearly in our studies it went from 30% down to 16%, but really I think it's going to be guided by which patients.

Mountain anti as response and what level of anti ask response that big market.

And we'll look forward to seeing what that data looks like.

Great. Thank you very much.

Our next question comes from Michael <unk> with Morgan Stanley .

Hey, guys. Thanks for taking the question maybe just another follow up on March part B data expected later this year.

Just based on what you've seen so far in.

In terms of some of the other studies from part a et cetera.

Do you think 24 weeks will be enough or do you think you may have to go to 48 weeks.

And is this a situation where longer term tends to be better or could there be a reason why longer would not be better for some reason.

And then maybe your thoughts on the need for peg interferon or not thanks.

Great. So that sounded I think like a three part question, Mike. So let me make sure I get all three parts.

So the reason for <unk>.

Longer being better biologically is of course.

Just on historical precedent that when you give peg interferon alpha for 24 versus <unk> 48 versus even 72 weeks you do get a better response, even if it's still low single digits. So that's why longer has been historically better.

Of course that that's balanced by what I think Paul was alluding to earlier when he talked about Tolerability, which is the issue is is that the longer you get calculated interferon alpha more more side effects accumulated for the patient. So you are trying to find a balance between those two things because in the end, it's really going to come down to efficacy in at once.

I was once jokingly told efficacy as always along with safety really where the balance gets where the rubber hits. The road. So I would say that if we can demonstrate a 24 week cure that is similar to the 48 week. Joe We'll of course go into 24 weeks, because I think that that would allow patients to have a shorter course of interferon.

On therapy, but really if it's a delta of a meaningful efficacy Delta then we'll have to decide as we look forward to talking to patients and talking to providers, what exactly would be most desirable in that group. So that's really the balance between longer is better from an efficacy perspective and longer being less ideal for.

AC safety Tolerability perspective.

Did that answer your question Mike.

Makes sense and then.

Your thoughts on the need for for Peg I guess shorter with peg that might work, but longer maybe it doesn't make sense.

So I would say that the let me answer that in two ways, let me answer that from a biological perspective.

And then from a patient perspective from a patient perspective, I think that is.

It is really going to depend on what the efficacy is so imagine European right now and someone says I'm going to give you a year long course of therapy is going to have some side effects, but you only have a one in 20 chance of it actually benefiting you at all most people say you know I'm not willing to roll the die in that in that circumstance. However, if you were to.

Come back to that same patient.

To give you a year of therapy, but if I do it in combination with these other drugs I could increase your chance of cure to one and three a one and one.

Wanted to I think thats, a very different story. So I don't think it's just about absolute duration I think it's about efficacy in the context of that duration as far as the biological need for interferon I think there are things in favor of suggesting why it might be necessary and I think the fact that it is the only known way to cure hepatitis.

<unk> right now, but it's been approved is one interesting point, but I think it points more broadly to the need for an immune modulator to really achieve a functional cure which is really a.

Immunologically induced remission.

So one of the aspects of our peer 34 34 that we're really excited about is the fact that it's not just a neutralizing antibody. It hasnt modified FC domain, which allows us to act as a potential therapeutic vaccine and is that aspect of <unk> 34, 34, which we believe may allow us to act as a substitute or alternative to interferon alpha.

So of course, the jury's still out on that we're going to see what 24 weeks looks like on treatment. This coming Q4, and then we'll of course have what 48 weeks without treatment look like next year.

That's helpful. Thank you.

Yeah.

Alright. Our next question comes from Joseph Stringer from Needham and company.

Yeah.

Hi, Thanks for taking our questions.

First on the HIV program.

Were previously evaluating here 11 11 in phase one trials, what's different about <unk> 88, and what gives you confidence that this.

T cell vaccine is the right approach.

What are the timelines around initial data and then secondly.

Given our current cash balance what are your thoughts on external BD, what's your appetite for bringing in.

External assets, whether they be earlier late stage.

Yes.

Thank you.

Sure. So maybe I'll start with the last question.

First.

And obviously, we are in a very unique position, where we have a strong.

Balance sheet that will allow us to really advance our critical phase two and phase one assets.

Next our stages.

Of inflection.

It also offers us the opportunity to remain opportunistic and if we.

The assets are opportunities out there that can really strengthen our pipeline and our capabilities with MTR. Biotechnology then of course, we will take advantage of that.

First question related to the differentiation of year 11, 11, <unk> 13, 88, maybe Kelly you can take that one thanks Maryann. So Joseph we are on track to dose our first patient this quarter in Q3 with VR $13 88, which as you noted is a protein.

Lactic HIV vaccine.

In terms of what's different about it compared to zero 11, 11, I think that obviously, we need to wait for the results in humans, but at least we can say in tissue culture. At the biggest difference is is that beer 11, 11 was deliberately attenuated, which means we made it less able to replicate in tissue culture, because we wanted to really get some basic.

Understanding of how this vector which is based on human CMV behaves and people. We now have the opportunity with 13 88 based on that 50 information from here 11, 11 to take what we call. It the less attenuated virus into the clinic. So this virus at least in tissue culture is able to replicate.

A little bit better and therefore, we believe can be more immunogenic in humans. So I think that thats really the big difference and there is of course, some some other minor differences in terms of some other deletions or concessions we have made but that's the key difference between <unk> 11, and 13 88.

Thank you Phil and then maybe if you could comment a little bit more about our cash position.

Position.

Yes happy to.

Joe This is Sean.

No.

I mentioned earlier I think there was a question.

About our cash runway, so with $1 9 billion on the balance sheet. It gives us a lot of financial flexibility and as Mary Anne said earlier, certainly to fund our COO.

Current development programs, which are broadly in phase two in HIV, obviously is in phase one, but we can get to the next inflection points for all of those programs should the data support it. So it's a real fortunate position to be and just to reiterate again.

I really want to make this clarification because I do think.

Some information might've been misunderstood we did have a large payment to GSK during the second quarter and that certainly is.

We don't consider that to be part of our run rate.

Okay.

Great. Thank you for taking my question.

Yeah.

Okay.

Alright. Our next question comes from Patrick <unk> from H C. Wainwright.

Thanks, Good afternoon, I have a couple of follow up questions on HBV program. So first one just wondering if you can talk about the bar for regulatory success in HBV, specifically, if you'd need to demonstrate a 30% sustained clearance of HBV surface antigen.

Six months after treatment is harder to achieve approval for rate below this can be sufficient for approval in the setting of HBV and then can you talk about the potential for demonstrating a partial curing HBV.

What's the latest around how this is being defined as if it could at some point become.

Part of maybe a regulatory bar for approval in the setting of HBV treatment.

And then separately with the preclinical pipeline candidates unveiled today, how should we think about the remaining preclinical work that remains and potential timing for filing are behind us.

Excellent. Thank you so much.

Thanks, Phil.

Perhaps you can start with talking a bit about our preclinical pipeline definitely Marianne so Patrick in terms of your third question I think that it.

It really is an exciting time for <unk> I already mentioned to you with the last question $13 88, which is the HIV prophylactic vaccine that is going to be entering the clinic. This quarter I didn't want to actually add a note to that which is to say that it is based on human cytomegalovirus as I noted earlier and human Cytomegalovirus is one of the most.

Immunogenic vectors that has ever been described sometimes up to 20% of your T cells can be mounted against that vector and importantly, it generates type of T cell known as an effective memory mucosal T cell, which is quite important we believe in the prevention of diseases like.

Diseases like HIV, but also allows us to use it in other diseases, such as human Papilloma virus and that is another thing that is going to be entering the clinic in the next 24 months.

Basically a therapeutic Keystone vaccine called Vir $19 49, which is for the <unk> for the control of precancerous lesions caused by human Papilloma virus. So both of those things are quite unique.

Unique and exciting for gear in terms of the respiratory franchise and the antibody platform. We've already talked about your 2000 1981, our neuraminidase targeting monoclonal antibody that has activity not just against influenza a but influenza b. We also have <unk> hundred 90, which I touched on earlier, which is uniquely able to.

Neutralized not just RSV, but human Metapneumovirus and also gear $72 29 in next generation COVID-19, monoclonal antibody that has really shown.

Quite broad activity and quite potent activity against historical and current strains. So we really have a broad set of things that we believe will that can make a huge patient impact in the future that will be entering in the clinic in the next couple of years.

Going backwards, then to your questions around HBV in terms of.

Partial cure I think that this is a in area. That's what I would say evolving in regulatory science as you know the guidelines for the EU and the U S somewhat different and so right now that is going to be something we need to follow as you know whether or not you could achieve.

<unk>, who do not require treatment because their DNA is suppressed but there <unk> HBV surface antigen is still present is sort of a middle ground that people are still unclear on so certainly that is a fallback position one could always take but I think the important thing as you said is truly to achieve an HBV functional cure.

Which is as you define loss of surface antigen six months. After the end of treatment with regard to what the bar is I actually don't think 30% is a regulatory bar I think 30% is a gross estimate of what was what we would consider clinically meaningful to patients and that obviously always comes with context, what do I mean by that.

Patrick So for example, if you were able to achieve a functional cure of let's say, 20%, but you were able to do it with.

A simple set of injections that had very minimal side effects and very well tolerated I think people would be willing and patients more importantly would be certainly willing to give that a try because which are offered to patients is I'm going to give you a regimen that may have that is extremely well tolerated that has a one in five chance of being.

Really benefiting you versus on the other hand, if it is for example in interferon containing regimen I think that the functional cure rate would probably have to be higher because of course, then they have to balance the tolerability concerns with the with the with the chance to benefit. So I think 30% is more of a a ballpark over the thumb estimate many clinicians will give.

I don't think its a regulatory bar I think it is a a contextual.

Is there a rule of thumb and contract is going to really matter.

Thank you so much thank.

Yes.

Yes, just to reiterate what we have focused today is on discussing dose preclinical candidates for which we could potentially expect line even in the next 24 months.

Thank you.

Thank you so much.

Yes.

If there are no other questions I will now turn the call back over to Dr. Marianne de backer.

Thank you operator, and thank you all again for your attention today.

Thereby technologies 25 routes and dynamic company. That's I believe is poised for significant growth and most importantly for patients impact.

I am thrilled to lead <unk> into what I believe will be the next transformational trajectory as we build on the progress that we have achieved so far.

I feel confident that we have the internal scientific expertise and a passion to power. Our mission forward. So thank you all for joining US here today, we really appreciate your time and your interest in <unk> technology. Thank you.

Operator, you might you may ethical.

This concludes the meeting you may now disconnect.

[music].

Hello, welcome to Vir, but biotechnologies second quarter, 2023 financial results and business update call.

As a reminder, this conference call is being recorded.

At this time all participants are in a listen only mode.

After the speaker's presentation, there will be a question and answer session.

I will now turn the call over to Sasha to Mooney Ellis.

Executive Vice President Chief Corporate Affairs Officer you.

You may begin Mr. Mooney Atlas.

Thank you and good afternoon with me today are maryann to backer, Chief Executive Officer, Dr. Phil Peng, Chief Medical Officer, and sung Lee Chief Financial Officer.

Five by such forward looking statements.

These risks and uncertainties and risks associated with our business are described in the Companys reports filed with the Securities and Exchange Commission, including forms 10-K, 10-Q and 8-K.

I will now turn the call over to our CEO Marianne de backer.

Thank you Sasha.

Good afternoon, and welcome to <unk> Technologies' first earnings call.

Maryann tobacco CEO over here and I'm pleased to welcome you all here today.

I'm joined here four months ago, and everyday since I'm reminded of how well our lives, but my commitments over the past 30, plus years to bring new medicines to patients.

There is one of those unique companies that use the ingenuity and the discovery of neutralizing antibody in the fight against COVID-19, and destroying the very first time of the pandemic.

This was achieved in just 15 months abroad to nearly 2 million people around the world.

Before that spirits drug discovery engine has already yielded an antibody to treat Ebola.

Now recognized by the World Health organization for its impact.

After four months of learning about various differentiating capabilities platforms pipeline at <unk>.

Throat partnerships I could not be more enthusiastic to lead this team of passionate and driven professionals will always have the ankle in mind.

Patients.

Okay.

Today and over the next few quarters I will share more about our focused efforts to drive our pipeline and our science forward.

We hope you take away and understanding of our strategy, our development program and the ability to execute.

Infectious diseases continue to pose a major threat to global health economic security and to society as a whole.

Just last month, they are talking to are patients living with chronic hepatitis b.

Just remind us of the deep personal impact such a disease has on not just the individuals but also on their families and their communities.

We aim here at <unk> to address these needs with a broad range of drug candidates and additional data to come this year.

First I want to touch on our recently announced phase two peninsula trial.

The weightings here 248 to four flu prophylaxis, which missed its primary endpoint.

Phil will share more details momentarily.

It is important to remember that in the world of drug development and clinical trials unexpected outcomes are not uncommon.

That is exactly why we take multiple approaches and have a broad pipeline.

Seasonal flu affects about 1 billion people around the world It creeps up to 650000 lives each year.

<unk> is a significant unmet need that once our attention and we will follow the data and guiding our next steps.

We do remain interested in this area and we have 2981.

Preclinical candidate.

Which has a differentiated mechanism of action to appears to have <unk> covering both influenza, a and b and maybe a more efficacious alternative to vaccines.

Second viewer is working on the potential functional cure for the board of 300 million people living with chronic hepatitis b worldwide.

Current standard of care is lifelong therapy, which decreases but does not eliminate the risk of cirrhosis or liver cancer.

At first we aim to achieve a functional cure, meaning allowing control of the virus without such chronic medical therapy.

This is akin to remission and further reduces the risk of debilitating disease progression.

Various focus on regimens such as combining an antibody with a sigh army designed to stop the virus and clear the infection.

We expect a data readout from part B of our ongoing large phase III trial in the fourth quarter, which we hope will get US again, one step closer to a functional cure for chronic hepatitis b.

Third I want to highlight with various working off to address chronic hepatitis Delta.

That's more than 12 million people worldwide and imposes a four times greater risk of liver cancer compared to chronic hepatitis b alone.

No doubt around 5% to 15% of patients with chronic hepatitis B are co infected with hepatitis Delta virus.

And the World Health organization considered chronic hepatitis delta to be one of the most severe forms of viral hepatitis.

Our goal is convenience once or twice monthly injections with transformative efficacy.

Initial data from our clinical trial solstice are expected in the fourth quarter.

Currently about 90% of our pipeline Leverages data science tools, which enable us to discover and develop drug candidates with the highest chance of success of becoming medicines that could benefit patients in need.

Going forward all our antibodies will be optimized using this approach Phil will touch on the preclinical programs that have the potential for IND filings within the next 24 months.

Yeah.

Lastly, we have a strong balance sheet that allows us the financial flexibility to fuel our development programs and grow our antibody platform.

We are taking measures to continuously evaluate and judiciously allocate this capital to maximize value for our shareholder.

As part of this process and under my leadership, we made the decision to phase out our small molecule platform.

This is the first step as we continue to advance our core capabilities and scientific prowess.

The combination of all the strengths we have year adhere makes this a very exciting time.

I am confident in our ability to advance our development programs and potentially impact the lives of many patients.

I'll now turn the call over to Chief Medical Officer, Phil <unk> to provide more details on our pipeline.

Thank you Mary Anne.

Before speaking to our future research and ongoing development efforts I want to address the topline data for the phase two clinical trial. This trial failed to demonstrate a statistically significant difference between those who received 2042 and placebo.

Specifically, our 200 milligrams, which was the highest dose of your 2014 to talk to you.

As a song statistically significant reduction in influenza owners of approximately 16%.

Interestingly in this same group an approximate 57% reduction.

August was observed with illness was defined according to CDC criteria.

More analysis is going to be needed to address why this study was unsuccessful.

And towards close to will also be important.

As far as next steps any other significant development of your 2042 will be guided by these analyses to be clear. However, we will not be initiating phase III trial.

In the Influencer space as Mary Anne noted, we are continuing our efforts on your 2000 1981, an investigational nor him introduce targeting monoclonal antibody.

It covers not just <unk>, but also will be in some animal models. It is sean markedly greater potency.

The characteristics of your 2009 to 81 counterparty was recently published in nature.

Because of your 2000 1981 has a different mechanism of action.

Getting the enzymatic activity from the <unk> days not stem all the hemoglobin, we believe in its potential to provide people $100.

As we learn more from the Peninsula trial, we will certainly apply relevant findings the ongoing development of your 2009 with viewpoint.

More broadly as Mary Anne noted earlier I don't want a platform beer has already resulted in our Edison for COVID-19 in just 15 months and the only single counterparty capable of treating Ebola.

So while the setback from <unk> 42 is unfortunate it doesn't change our perspective on our platforms ability to identify potentially best in class antibodies and does that leverage data science and AI to further engineered.

Specifically, we can enhance antibody binding potency Dr function half-life develop ability and stability.

Even more broadly we've recognized the importance of a fully integrated data strategy from research all the way through product development and believe with disability will continue to be differentiated tiered gear.

We have 24 publications and numerous patents and awards related to our data science achievements.

Now, let's turn to chronic hepatitis b.

Unlike the current standard of care, which requires taking antiviral medicines for the rest of <unk> life and does not eliminate the risk of cirrhosis or liver cancer.

<unk> is a functional cure.

After completing a functional cure therapy, there should be no need for further treatment.

Also be a further reduction in the risk on liver complications.

Our functional cure hypothesis is based on a novel widely accepted belief with chronic hepatitis B is an immunologic disease caused by a virus.

As such we believe the combination of Antivirals alone are not enough.

Instead, we believe functional cure requires a combination of antivirals with immunologic agents.

We call our approach stop unclear.

We stop the virus from replicating and clear already infected cells by immuno stimulation.

This is a fundamentally different hypothesis, we seek to prove in our clinical trials.

Our clinical development pathway has been as follows.

We began with phase one and phase III studies that are exploring different combinations of anti virals and immuno modulator.

But specifically using small quartz from these studies, we are able to explore broad space of possibilities to help identify the right combination dose duration frequency and population.

In the studies, we have made two major advances towards a functional cure for chronic hepatitis b.

Highlight why we believe we can succeed.

One <unk>.

In June we showed that we could achieve a durable off treatment response, and 16% of participants who received <unk> eight our ethylene urinating and calculated interferon alpha for 48 weeks.

While the sample size was small and the confidence intervals March.

Noting the interferon Alpha hormone is generally talk to result in an off treatment response, only three 7% of the time.

Two.

At the <unk> conference in 2022, we showed that a short course of your Q2, one eight with $34 34 resulted in nearly a three <unk> knockdown and hepatitis b surface antigen.

This is a viral protein there is a measure of virus activity no.

<unk> antiviral activity with attitude and no new safety signals were observed.

We expect 2% end of treatment data for the 24 week cohorts in the fourth quarter.

Let me now direct your attention to chronic hepatitis Delta.

For chronic hepatitis Delta the only treatment approved which is only available in some parts of the world and not the U S requires lifelong daily subcutaneous injections and has only a 45% chance of benefiting the patient.

<unk> is a highly efficacious treatment the only needs to be administered once or twice a month.

Because hepatitis Delta requires the surface antigen protein from hepatitis B, we can target delta using our existing chronic hepatitis b assets.

2218, and <unk> 34 to 34.

And easel, we shared the preclinical data demonstrating their potent antiviral activity against hepatitis Delta.

Our phase two clinical trial is now underway evaluating vir 2218, and <unk> 34 to 34 individually Lauren combination with one another in a small cohort of hepatitis C patients.

We expect to present data from this trial in the fourth quarter.

Okay.

It is worth noting that because of hepatitis Delta is a potential orphan disease with high unmet medical need the regulatory path where treatment for delta maybe accelerated.

Turning now to our early stage pipeline, we've already highlighted 2091, our neuraminidase flu antibody.

I will now touch on other key FX based on our proprietary monoclonal antibody platform.

First we're 80 190, which in vitro can neutralize RSV or respiratory syncytial virus and human Metapneumovirus. Both of these viruses pose a serious threat to incomes and immuno compromised.

Second <unk> $72 29, our next generation COVID-19, monoclonal antibody, which in vitro is differentiated by both extreme breadth and potency against a broad spectrum of historical and currently circulating variants.

With respect to our T cell platform.

Which is based on human cytomegalovirus, we're advancing two assets.

<unk> 13, 88 is our novel next generation HIV vaccine, which will soon be entering the clinic.

Unlike Vir 11, 11, which was deliberately attenuated by creating a replication defect near 13 88 does not have that reputation defect and we believe can be more immunogenic.

We anticipate dosing our first patient in Q3 this year.

Mir $19 49.

<unk> therapeutic vaccine against each PV associated cervical and head and neck dysplasia and cancer.

And as the second half of it and our T cell platform based on each CMV.

We look forward to sharing more about these <unk> in the future.

I will now turn the call over to Chief Financial Officer suddenly.

Thank you Phil we're pleased to share our financial results for the second quarter of 2023.

Total revenues were $3 8 million.

Compared to negative $46 million for the same period a year ago.

Specific to set drove them out in the second quarter of 2023 collaboration revenue was negative $13 $8 million, mainly due to <unk> sales being more than offset by manufacturing cost and expenses to support activities in countries, where <unk> continues to have a marketing authorization.

Going forward and barring a reauthorization of the drove a map in the U S. We believe collaboration revenues will be at minimal levels and potentially make a negative contribution to our top line due to the ongoing required investments to support the marketing authorization, which our partner GSK.

The upper zone.

Turning to operating expenses.

R&D expenses in the second quarter of 2023 were $171 9 million compared to $115 1 million in the same period in 2022.

Included in the 2023, <unk> is a noncash charge of $10 $7 million related to the impairment of legacy in process R&D and consolidation of our labs.

While the costs associated with the Peninsula study will ramp down in the next few quarters. We are currently evaluating the impact of the phase III manufacturing capacity and supply for <unk> 2482.

We expect to communicate more on this with our third quarter results.

SG&A expenses in the second quarter of 2023 were $47 1 million compared to $41 6 million for the same period in 2022.

The year over year growth was primarily driven by higher personnel costs to support the overall growth of the business.

For the second quarter of 2023, we reported a consolidated net loss of $194 8 million compared to a net loss of $76 5 million for the same period in 2022.

Turning to the balance sheet.

We ended the second quarter of 2023 with cash and investments of $1 9 billion compared to $2 4 billion at the end of 2022.

As communicated previously we made a payment of $273 6 million in the second quarter to our collaborator GSK, which comprise the majority of cash utilization during the quarter.

This payment primarily relates to the amount reserved in 2022 for excess that drove enough supply and manufacturing capacity due to reduced demand expectations for <unk> drove a map.

There remains a balance of $69 $7 million related to this reserve, which we expect a payment of approximately $41 8 million to GSK in the third quarter of 2023.

As I conclude I would like to make a few comments about our financial position and capital allocation.

As Mary Anne stated earlier in the call, we are making decisions and taking actions to become more focused which has resulted in the discontinuation of our small molecule platform.

We're well capitalized to see our current phase III programs in hepatitis B and hepatitis Delta through the end of phase II and beyond.

We also have the balance sheet strength to pursue further innovation by investing in our core antibody platform.

And finally, you can expect us to be strong stewards of capital and have a disciplined approach to capital allocation and expense management.

Now I'll turn the call back to Sasha.

Thank you son, we will now start the Q&A section.

Please limit questions to two per person. So that we are able to get to all of our covering analysts.

Operator, please open up the lines.

Okay. Our first question comes from Gena Wang from Barclays.

Your line is open.

Thank you I have two questions regarding the flu 24 82 program.

So first regarding the peninsula study.

Why the design.

Didn't have a lower bound over 30% like Pfizer and Madonna studies, if we use 30% lower about study with looked like underpowered could that be the reason leading to the failure and the second question is with the negative top line.

You terminate.

482.

And also the work in flu and also any read through to the other via.

Via program, so antibody platform.

Thank you Gina really appreciate the chance to.

Answer to your questions and let me begin with your first question with regards to the design of the potential the trial.

So the first thing I want to say is is that.

The short answer is that it was a well powered study and we need to think of it in the context of the fact that our desire was to show an efficacy beyond that traditional vaccines. So when you think about how to power study, it's not just about demonstrating statistical significance, but it's about demonstrating clinical significance in the context of that.

And so for example, we could have powered study to demonstrate that a 10% effect size was statistically significant however of course as you know gena that wouldn't have been clinically meaningful given the vaccines that are currently out there.

This is in contrast to vaccine flu trials, which do have a desire to.

Basically we powered the study for clinical significance and statistical significance to a lower bound confidence interval of 30%.

But I would like to remind you that with regard to monoclonal antibodies.

Both RSV and Covid neither of them used such a flu vaccine specific endpoint. So I think that we were definitely well powered to out to ask the question and answer the question could we achieve transformative efficacy and unfortunately, we did not.

With regard to the <unk>.

Other aspects of 2042, I really want to point to the fact that we are undergoing more analysis right now as to why this study was unsuccessful and we're looking at it from many different angles, including different symptoms. The PK timed to infection in a number of the other things I talked about earlier on this call and really we need to be guided by those results in that analysis.

And that data to really decide what next to do but clearly as I said earlier also we're not going to be embarking on a phase III.

And then finally with regard to your question about read through I would say that I think then Maryann said it best when she said that.

We've already had two successes with our antibody platform.

Ebola antibody the only single antibody to treat ensure Ebola as well as <unk>, which was brought to market in less than 15 months. So I don't think theres any read through on our ability to really design and identify a successful medicines using this antibody platform.

Thank you Phil I would just add you know obviously, we want to be very strategic about how we allocate our capital and as Phil pointed out we are not going to rush into any next steps, we really want to do a thorough analysis of the data and then really be guided by that outcome as to what's the angle.

Victoria.

Thank you.

Alright. Our next question is from Paul Choi from Goldman Sachs.

Your line is open.

Hi, Thank you good afternoon, everyone.

My first question is.

If we think about stripping out the one time true up for the excess of trove of Mab.

Supply and manufacturing to GSK and.

There's a couple of moving parts there still.

If we strip that out if we look at the maybe the year ago Opex is that sort of normalized rate that you would think.

Would be normal here going forward and what does that imply for your cash runway.

You can prepare I'm just say.

Hey, how how long your cash balance will go through.

And then secondly on Hep B.

For the two to one 834 to 34.

Plus or minus.

Peg data set that will be coming up in the.

Challenges. Thank you.

Okay. Thank you very much Paul maybe the first question on cash runway of song you couldn't.

Give us some more information there yes, Paul Thanks for your question. So I think you had a couple of questions. There on basically operating expense nor.

In addition to that we.

The ramping down of the Peninsula study in the next few quarters.

There are some variables here, where we have an ongoing phase III study in hepatitis B and hepatitis Delta.

We're going to get to some important data readouts in quarter four this year so.

Pending the readouts of those data.

That could be a big swing factor for where our opex trajectory will be in the future and certainly has implications for our cash utilization as well, but I just wanted to make a clarification here.

The cash utilization when you go from Q1 to Q2 is not indicative of a run rate.

As I mentioned in my prepared comments, there was a $273 6 million payment to GSK related to a liability book last year. So I think you have to really canceled that noise out and then you kind of understand what our true cash utilization has been and it's been averaging somewhere.

Close to $120 million per quarter in each of the quarters. This year so far.

And then going forward just coming back to something I said before the cash utilization will largely depend on the data readouts for hepatitis Delta hepatitis B, but just to finish answering your question with $1 $9 billion of cash and investments were really in a good position here to fund not only to the <unk>.

End of phase II for those programs, but also through phase III.

Thank you sung and then Paul related to your question on our.

Chronic hepatitis B functional cure program as you rightly pointed out in fourth quarter of this year rebuilding reporting data combining <unk> our <unk>.

Sorry, RNA with three plus fees for our antibody plus minus interferon Alpha <unk>.

24 weeks of treatment.

So and we have actually some really promising data that we have seen and have announced at CES earlier. This year. So I would in fact failed to talk a little bit more about what we have seen as the signals of efficacy and also additives.

Of the SA RNA to one 8% and 34 34 was additives.

But that duration was only 4% and 13 weeks and so what we're looking forward to it's going to be new and <unk> in the fourth quarter. This year is.

The 24 week data combining the two of these drugs together, we're also going to be looking at these two drugs together with the addition of interferon Alpha and I think all of that together is what will be new along with of course, new data from hepatitis Delta.

Operator.

Can we go to the next question.

Okay. Our next bill.

Graham.

<unk> relief from Leerink partners.

Great. Thanks, Hello, everyone.

Maybe first question on Delta virus.

Specific measures could you disclose in the phase II solstice trial, and what's the efficacy bar that youre looking for.

Thanks for that question Brian .

Oscar sale to us to give you somewhat detail for that.

Thank you Mary Anne and thank you your honor so with regard to our adult trial solstice remember at easily. This last year. This last June actually sorry. This past June we just showed that in preclinical models 34, 34, our FC enhanced monoclonal antibody was able to knockdown the hepatitis delta virus or the <unk>.

From the virus and we also showed that two to one eight rsi RNA could do the same and that when combined in an animal they were additive and their behavior.

So now we're looking at solstice, which also began in the early part of this spring and we're asking ourselves. The question $2 34 to 34 loan 2218 alone and what what's going to happen. If you add the two of these drugs together in terms of their ability to knockdown hepatitis Delta RNA virus. So that's what we're looking forward to seeing ad.

In the fourth quarter of this year as you know the efficacy bar is.

<unk>.

Rather the bar for getting approval is a two log reduction in hepatitis Delta RNA and normalization of ALC, which has only seen 45% of the time with the only currently available drug and that drug requires daily subcutaneous injections, what we're hoping for is transformative efficacy along with maybe having only.

An injection once or twice a month, so I think that that could be very differentiating for us now in terms of what we're going to actually see in terms of data as I mentioned it will be the monotherapy and the combination but this is early data from a small cohort. So we want to be as quickly be able to see or are they actual anti virals and patients and thats, what we look forward to seeing.

Yes.

Okay.

Quarter after next year, yes.

Okay great.

A follow up.

Yes, maybe bigger picture could you give us a sense of what your strategic priorities for the company will be in 2024, and I guess thinking about flu hepatitis.

Delta virus HBV and all the programs you have going on or some of them going to shift to like higher focus next year and like what should we be following more closely along those lines.

Yes, thank you for that question.

As mentioned before as it relates to our flu program of what next steps are going to be a really going to be determined by further analysis of the data, but our near and intermediate term.

Focus is really on our clinical program.

Sonic hepatitis B.

Hepatitis Delta those are our.

Our top priorities, we will also bringing HIV program into the clinic in the next.

This quarter, so I'll focus capital allocation and really being all around.

To ensure that as fast and as efficiently as possible.

Gas sales programs.

Alex data.

Yes.

Got it thanks.

Okay.

Our next question comes from Eric Joseph from Jpmorgan.

Hi, good afternoon, thanks for taking the questions.

One or two on HBV.

Just trying to get a better sense of the update you might see from March part B in the fourth quarter, whether we should expect.

Well really the types of patient numbers I guess, we should anticipate and whether we should expect readouts across the different four different treatment regimens and then I'm also curious to get a sense from you guys.

What.

Level of.

<unk> clearance wood.

We support the addition of 34 34.

It is too.

What you've reported so far from the <unk> trial.

2018, plus plus peg.

The Dublin alone.

Sure.

Okay.

Thank you.

Alright, so Eric Thanks for the question, so I would like to begin by stating.

Let's level set to what was shown at Eagle and a diesel what we showed was that 48 weeks of 2218, DSI RNA with interferon Alpha was able to result in an off treatment response and about 16% of patients six months. After the end of treatment that was preceded by an on treatment zero.

As you referred to earlier of around 30%. So basically 30% of patients had an entrepreneur response, and then 16% had a continued off treatment response with 48 weeks of Q2, one eight plus interferon alpha.

What we're going to be seeing ad.

In the fourth quarter of this year is of course, the 24 week on treatment data from the triplet and doublet and so what we should be looking for is is that two to one eight plus $34 34.

It gets us to patients who have a zero clearance and remember when you get to 234 34 for only four or 13 weeks, we did not see any patient with zero clearance. So therefore, the goal would obviously be to see more patients or a number of patients with zero clearance and whether or not we can match or exceed the 30% we saw with <unk>.

Eight weeks of the prior doubled.

The other thing Thats important to look forward to.

Of course, adding interferon onto that combination of $2 28, and 34 34 and seeing how much better we can do with that now going back to Paul's earlier question about Tolerability clearly interferon Alpha has some tolerability issues that gift, giving for a long period of time, but thats in the context of low efficacy if we can achieve functional.

Cure rates greater than 30, or 40%, we think that this is something that patients will.

Keen to understand better and appreciate given the fact that living with a chronic diseases.

Marion alluded to in the prepared remarks, something we've heard a lot from patients is something that they want.

Yes.

Yeah as it relates to enrolment the timing right on track as to.

Our expectation.

Okay.

Would it be too.

Sure.

Would it be premature at in the fourth quarter to see any.

Post treatment follow up our akshay good follow up for patients, but only received the 'twenty or 'twenty four week regimen.

So Eric at this time, all we've guided to is the on treatment data from the 24 week arms.

And we are definitely looking forward to that information along with as I alluded to earlier with where one off the chronic hepatitis Delta. So I think those are going to be the two exciting.

Datasets that we hope to be able to share in the fourth quarter.

Excellent thanks, very much looking forward to it.

Yes.

Our next question comes from Eva Privitera from TD Cowen.

Hi, good afternoon, thanks for taking our questions.

Just to follow up on the prior question for the Triple combination with data in the second half what rate of on treatments zero clearance would get you excited or be indicative of the off treatment clearance.

Yes, so to answer that question I think again context is important for 2218, plus interferon alone for only 24 weeks, we saw only a 5% rate of zero clearance on treatment. So I think anything beyond that is biological proof of principle that $34 34 when.

Added to 220 interferon is moving the needle and of course, if you can get there without interferon into to what a plus 34 34, I think that that would also be quite impressive. So I think both of those things are.

Important steps forward and then of course, the higher the Onstream in response rate. The more excited we will be in terms of whether or not this is going to be able to make a meaningful difference to patients.

But what delta between what Delta would you anticipate between the on treatment and me and.

Off treatment is there any way to know.

Well I think one of the exciting things that we saw at Eagle was one of the first times that there was a predictor of off treatment response.

It was a small cohort of patients, but we demonstrated in that small cohort of patients the patients who sell converted not just steel cleared but zero converted two anti F antibodies at high levels greater than 100, or 200 that they were the ones most likely to have an off treatment response, so certainly we're going to be looking at.

That metric in our studies to see what the off treatment response will be clearly in our studies. It went from 30% down to 16%, but really I think it's going to be guided by which patients.

Mountain anti S response, and what level of anti <unk> response that big month.

And we'll look forward to seeing what that data looks like.

Great. Thank you very much.

Yeah.

Okay.

Our next question comes from Mike <unk> with Morgan Stanley .

Hey, guys. Thanks for taking the question maybe just another follow up on March part B data expected later this year.

Just based on what you've seen so far do you.

In terms of some of the other studies from part a et cetera.

Do you think 24 weeks will be enough or do you think you may have to go to 48 weeks.

And is this a situation where longer term tends to be better or could there be a reason why longer would not be better for some reason.

And then maybe your thoughts on the need for peg interferon or not thanks.

Great. So that sounded I think like a three part question, Mike. So let me make sure I get all three parts.

So the reason for.

Longer being better biologically is of course.

Just on historical precedent that when you give peg interferon Alpha <unk> 24 versus <unk> 48 versus even 72 weeks you do get a better response, even if it's still low single digits. So that's why longer has been historically better of course.

That's balanced by what I think Paul was alluding to earlier when he talked about Tolerability, which is the issue is is that the longer you get pegylated interferon alpha the more the more side effects accumulated for the patient. So you are trying to find a balance between those two things because in the end, it's really going to come down to efficacy.

Once I was once jokingly told efficacy as always.

Along with safety really where the balance gets where the rubber hits. The road. So I would say that if we can demonstrate a 24 week sure that is similar to the 40%. We will of course go with the 24 weeks because I think that that would allow patients to have a shorter course of interferon therapy, but really if it's a delta.

At a meaningful efficacy Delta then we will have to decide as we look forward to talking to patients and talking to providers, what exactly would be most desirable.

That group. So that's really the balance between longer is better from an efficacy perspective and longer being less ideal from AC safety Tolerability perspective.

Did that answer your question Mike.

Makes sense and then your thoughts on the need for for Peg I guess shorter with peg might work, but longer maybe it doesn't make sense.

So I would say that the demand for that in two ways, Let me answer that from a biological perspective.

And then from a patient perspective from a patient perspective, I think that it is.

It is really going to depend on what the efficacy is so imagine European right now and someone says I am going to give you a year long course of therapy is going to have some side effects that you only have a one in 20 chance of it is it actually benefited you at all most people say I'm not willing to roll the die and Thats in that circumstance. However, if you were at.

To come back to that same patient.

To give you a year of therapy, but if I do it in combination with these other drugs I could increase your chance of cure to one and three years of one one and.

Wanted to I think thats, a very different story. So I don't think its just about absolute duration I think it's about efficacy in the context of that duration.

As far as the biological need for interferon I think there are things in favor of suggesting why it might be necessary I think the fact that it.

It is the only known way to cure hepatitis B right now, but it's been approved is one interesting point, but I think it points more broadly to the need for an immune modulator to really achieve functional cure, which is really a.

Immunologically induced remission.

So one of the aspects about 3434 that we're really excited about is the fact that it's not just a neutralizing antibody. It hasnt modified FC domain, which allows us to act as a potential therapeutic vaccine and if that aspect of 334 34, which we believe may allow us to act as a substitute or an alternative to interferon alpha.

So of course, the jury's still out on that we're going to see what 24 weeks looks like on treatment. This coming Q4, and then we will of course have what 48 weeks without treatment look like next year.

That's helpful. Thank you.

Okay.

Alright. Our next question comes from Joseph Stringer from Needham and company.

Hi, Thanks for taking our questions from US first on the HIV program. You were previously evaluating your 11 11 in phase one trials.

What's different about 13, 88, and what gives you confidence that this T cell vaccine is the right approach.

What are the timelines around initial data and then secondly.

Given our current cash balance what are your thoughts on external BD, what's your appetite for bringing in.

External assets, whether they be earlier late stage.

Yes.

Thank you.

Joe maybe I'll start with the last question.

First.

Obviously, we are in a very unique position, where we have a strong.

Balance sheet that will allow us to redirect funds are critical phase two and phase one assets for the next stages.

Of inflection.

It also offers us the opportunity to remain opportunistic.

<unk> assets are opportunities out there that can really strengthen our pipeline and our capabilities with MTR. Biotechnology then of course, we will take advantage of that.

For your first question related to the differentiation of <unk> 11, 11, <unk> 13, 88, maybe Phil you can take that one thanks Maryann.

Joseph we are on track to dose our first patient this quarter in Q3 with VR 13, 88, which as you noted is a prophylactic HIV vaccine.

In terms of what's different about it compared to <unk> 11, 11, I think that obviously, we need to wait for the results in humans, but at least we can say in tissue culture. At the biggest difference is is that <unk> 11, 11 was deliberately attenuated, which means we made it less able to replicate in tissue culture, because we wanted to really get some.

Basic understanding of how this vector which is based on human CMV behaves people.

We now have the opportunity with 13 88 based on the safety information from here 11, 11 to take what we call. It the less attenuated virus into the clinic. So this virus at least in tissue culture is able to replicate.

A little bit better and therefore, we believe can be more immunogenic in humans. So I think that that's really the big difference and there is of course, some other minor differences in terms of some other deletions or concessions we have made but that's the key difference between <unk> 11, and 13 88.

Thank you Phil and then maybe if you could comment a little bit more about our cash.

Physician.

Yes happy to do that Joe This is Sean so.

I mentioned earlier I think there was a question.

About our cash runway, so with $1 9 billion on the balance sheet. It gives us a lot of financial flexibility and is very uncertain earlier certainly to fund our.

I really want to make this clarification because I do think.

Some information might've been misunderstood we did have a large payment to GSK during the second quarter and that certainly is.

We don't consider that to be part of our run rate.

Okay.

Great. Thank you for taking my question.

Yeah.

Alright, our next question comes from Patrick <unk>.

H C Wainwright.

What's the latest around how this is being defined and if it does at some point become.

Part of it maybe a regulatory bar for approval in this setting of HBV treatment.

And then separately with the preclinical pipeline candidates unveiled today, how should we think about the remaining preclinical work that remains and potential timing for filing are behind us.

Excellent. Thank you so much.

I think so.

Fab spending can start with talking a bit about our preclinical pipeline definitely Marianne so Patrick in terms of your third question I think that it.

It really is an exciting time for <unk> I already mentioned to you with the last question <unk> 88, which is the HIV prophylactic vaccine that is going to be entering the clinic. This quarter I did want to actually add a note to that which is to say that it is based on human cytomegalovirus as I noted earlier and human Cytomegalovirus is one of the most.

Immunogenic vectors that has ever been described sometimes up to 20% of your T cells can be monitored against that vector and importantly, it generates type of T cell known as an effective memory mucosal T cell, which is quite important we believe in the prevention of diseases like.

Diseases like HIV, but also allows us to use it in other diseases, such as human Papilloma virus and that is another thing that is going to be entering the clinic in the next 24 months.

Basically a therapeutic Keystone vaccine called Vir $19 49, which is for the <unk> for the control of precancerous lesions caused by human Papilloma virus. So both of those things are quite unique.

Unique and exciting for gear in terms of the respiratory franchise and the antibody platform. We've already talked about Vir 2091, our neuraminidase targeting monoclonal antibody that has activity not just against influenza a but influenza b. We also have beer 80, 190, which I touched on earlier, which is uniquely able to.

To neutralized not just RSV, but human Metapneumovirus and also gear $72 29 in next generation COVID-19, monoclonal antibody that has really shown.

Going backwards bent to your questions around <unk> HBV in terms of.

<unk>, who do not require treatment because their DNA is suppressed, but theyre HP HBV surface antigen is still present is sort of a middle ground that people are still unclear on so certainly that is a fallback position one could always take but I think the important thing as you said is truly to achieve an HBV functional cure.

Which is as you defined loss of surface antigen six months. After the end of treatment with regard to what the bar is I actually don't think 30% is a regulatory bar I think 30% is a gross estimate of what was what we would consider clinically meaningful to patients and that obviously always comes with context, what do I mean by that.

Patrick So for example, if you were able to achieve a functional cure of let's say, 20%, but you were able to do it with.

You I don't think its a regulatory bar I think it is a a contextual.

Is there a rule of thumb and context is going to really matter.

Thank you so much thank you.

Yes, just to reiterate what we have focused chip today is on discussing dose preclinical candidates for which we could potentially expect line even in the next 24 months.

Thank you.

Thanks, so much.

Alright, if there are no other questions I will now turn the call back over to Dr. Marianne de backer.

Thank you operator, and thank you all again for your attention today.

<unk> technology is the 25 <unk> and dynamic company. That's I believe is poised for significant growth and most importantly for patients impact.

Im thrilled to lead <unk> into what I believe will be the next transformational trajectory.

We build on the progress that we have achieved so far.

Operator, you might you may ethical.

This concludes the meeting you may now disconnect.

Q2 2023 Vir Biotechnology Inc Earnings Call

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