Q3 2024 Atea Pharmaceuticals Inc Earnings Call

Speaker Change: Good afternoon, everyone. And welcome to the Atea Pharmaceuticals third quarter 2024 financial results and business update conference call. At this time, all participants are in a listen only mode.

Speaker Change: Following the formal remarks, we will open the call up for your questions. I would now like to turn the call over to Jonae Barnes, Senior Vice President of Investor Relations and Corporate Communications at Atea Pharmaceuticals. Ms. Barnes, please proceed.

Jonae Barnes: Thank you, Operator. Good afternoon, everyone, and welcome to Atea Pharmaceutical's third quarter 2024 Financial Results and Business Update conference call.

Jonae Barnes: Earlier today, we issued a press release which outlines the topics we plan to discuss.

Jonae Barnes: You can access the press release as well as the slides that we'll be reviewing today by going to the investor section of our website at ir.ateapharma.com. With me today from Atea, our Chief Executive Officer and Founder, Dr. John Pierce-Samadosi.

Case Development Officer, Dr. Janet Hammond.

Jonae Barnes: John Vavricka, our Chief Commercial Officer, Dr. Aranja Horga, our Chief Medical Officer, and Chief Financial Officer and Executive Vice President of Legal, Andrea Corcoran. They will all be available for the Q&A portion of today's call.

Speaker Change: Before we begin the call, and as outlined on slide two, I would like to remind you that today's discussion will contain forward-looking statements that involve risk and uncertainties.

Speaker Change: 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: Thank you, Jonae. Good afternoon everyone and thank you for joining us. I will begin on slide three. It has been a busy year so far and our team has executed on two large global clinical programs on time and on budget.

Jean-Pierre: Unfortunately, as we reported in September, we did not have the desired outcome for Sunrise 3 as we had hoped for.

Jean-Pierre: COVID-19 variants are constantly evolving as you know and the natural history trended toward milder disease which has resulted in fewer hospitalizations and deaths.

of particular importance in contrast to our prior studies.

Jean-Pierre: Hospitalization due to severe respiratory disease, including pneumonia, was not observed in Sunrise 3.

Jean-Pierre: Therefore, it is quite difficult for a direct acting antiviral to demonstrate a significant impact on the cause of the disease.

Jean-Pierre: I am proud of our team rigorous execution of this trial and we thank the study participants and the investigators.

Jean-Pierre: Our efforts are now concentrated on our global HCV program, and we remain on track to report top-line results from our Phase II study in early December.

Jean-Pierre: We then anticipate holding an End of Phase II meeting with the FDA early next year and initiating the Phase III program shortly thereafter.

Jean-Pierre: For someone who has worked in HCV for most of my career, the unrelenting high rate of HCV infections in the U.S.

Jean-Pierre: underscore the need for new innovative therapies for today's patients, particularly for those with substance abuse disorder and comorbidities.

Jean-Pierre: Injection drug use accounts for about 30% of new HCV cases globally and approximately actually 60% in the U.S.

Jean-Pierre: where between 2 and 4 million people are estimated to be infected with HCV.

Annually, HCV diagnosis in the U.S. outpace treatment rates.

Jean-Pierre: That's less than a third of those diagnosed with HCV receive timely treatment.

Speaker Change: We believe that our combination with its potential best-in-class profile has the ability to address current treatment challenges and unmet needs and to play a major role in the eradication of HCV in the U.S.

Speaker Change: We also continue to make progress with our early stage discovery program, evaluating a highly differentiated second generation protease inhibitors, which is targeting RNA respiratory viruses.

Importantly, with $492.8 million of cash,

Speaker Change: Cash equivalent and marketable securities as of September 30th We are in the strong financial position to execute and complete our HCV program phase 3

Speaker Change: Our HCV phase 3 program, and we anticipate our runway to extend well into 2027.

Speaker Change: With that, I will now turn the call over to Janet to review our Phase 3 readiness for the HCV program and the profile to today's HCV patients. Janet?

Thanks Jean-Pierre. Turning to slide 4.

Janet: We believe that our Global Phase III Ready HCV program is de-risked with a compelling value proposition.

Janet: This is based on the substantial pre-clinical and clinical data already generated on Benioff-Osservier and Rusevier both alone and in combination.

Janet: Furthermore, our program has a potential best-in-class profile, and all that with a long IP runway.

Janet: Let's review the activities underway to initiate our Global Phase III program.

Janet: For manufacturing, our fixed-dose tablet is ready for the Phase 3 Global Program. Our API and manufacturing processes have been optimized and we are already prepared for commercial-scale production.

There is a clear regulatory pathway with HCV.

Janet: We are planning an end-of-Phase II meeting with the FDA early next year to finalize our Phase III program and expect to conduct two global Phase III studies with an active comparator starting early next year.

Janet: Leveraging the work and relationships already existing from our Phase 2 study, we have global clinical trial sites that are prepared and excited to participate in our Phase 2 program.

Janet: Additionally, our contract research organization and central labs are already engaged in start-up activities ahead of the Phase 3 initiation.

Janet: The branded treatments, EPCLUSA, including its authorized copy, and Mavrit, also have long-patterned runways with IP protection to 2036, which should allow for stable pricing in the foreseeable future for the HCV market.

Janet: On slide 6, the profile of today's HCV-infected patients has shifted since the introduction of direct-acting antivirals.

Janet: Now, the majority of U.S. infected patients are younger, and HCV infections predominate in patients in the age group between 20 to 49 years, with less than 10% of HCV patients being cirrhotic.

Janet: This is because the progression to cirrhosis from HCV infection normally takes about 20 years and since patients have been trending younger, they have not been infected for an extended length of time yet.

Janet: The patients who are at the highest risk for HCV in 2024 are frequently poorly adherent to their medications, due to substance abuse disorders, including opioid use or other drugs, and many have mental health disorders.

Janet: In addition, a high proportion of the current patients take multiple concomitant medications, including HIV medications, hormonal contraceptives, vaccines, and progen pump inhibitors.

Janet: For this patient profile, a direct-acting antiviral combination with a low risk of drug interactions, no food effect, combined with a short treatment duration is clearly beneficial. We believe that the target profile of our combination has the potential to address these unmet needs.

Janet: It may also treat more patients successfully and could expand the number of patients cured.

Speaker Change: I'll now have the call over to John to review the antiviral market opportunity for HCV, John?

John: Thank you, Janet. Turning to slide seven, today's patient profile presents new challenges and requires an improved drug profile.

John: First, treatment adherence is a challenge. Patients who use drugs are often unable to get into medical care and maintain treatment adherence due to chaotic life circumstances.

John: In fact, healthcare professionals have reported that 17% of patients fail to complete a full course of therapy.

John: An ideal HCV therapy should provide high efficacy with a short length of therapy.

John: Secondly, a longitudinal analysis of HCV patients showed 80% of patients who initiated direct acting antiviral therapy are often on medications for other medical conditions.

John: and an ideal HCV therapy should allow patients to take concomitant medications without drug interaction risk.

John: Finally, taking these medications with food may be an issue. In particular, patients who use drugs consider food requirements with therapy challenging.

John: And ideally, CV therapy should not be dependent on taking with or without food.

John: Neither CLUSA nor Maviret can address all these challenges. Maviret has a short duration of therapy, but is hampered by its drug-drug interaction profile, and it needs to be administered with food.

John: and Ibclusa has a long treatment, a long duration of therapy which limits its convenience.

John: Slide 8 outlines the current HCV market in the United States. HCV continues to be recognized health care crisis in the US with between 2 and 4 million living with HCV and new challenges continue to hinder the progress towards eliminating it globally.

John: The U.S. HCD commercial market is expected to remain large, with net sales of approximately $1.5 billion.

John: The market demand grew roughly 5% in 2023 versus 2022 based on the number of patients treated. With the market shares of the two key ACV treatment options, IBCLUSA and Maviret remaining stable.

John: And for the first half of 2024, we have seen a slight increase in pricing with stable market share.

John: Also interesting to note is the U.S. patient pool continues to be replenished with approximately 100,000 new chronic cases each year.

John: We believe future U.S. government initiatives and the removal of certain constraints by payers and other access barriers combined with the best-in-class profile has the potential to expand the number of patients cured from this severe viral disease.

Speaker Change: With that, I will now turn the call over to Arantxa for review of our Global Phase II HCV Study.

Thank you, John.

Arantxa: On slide 10, we would like to remind you of the outline of our Phase II single-arm open-label study of 550 mg of beniphosphobir in combination with 180 mg of rusesvir once daily for 8 weeks.

Arantxa: This Phase II trial, which is nearing completion, enrolled 275 treatment-naïve patients, including the leading cohort of 60 non-cerotic patients. We are looking forward to reporting the top-line results in early December.

Arantxa: Slide 11 reviews how we will be reporting the efficacy analysis of the study population for the Phase II trial.

Arantxa: The primary efficacy analysis of the study is sustained biological response at 12 weeks post-treatment, or SBR-12.

Arantxa: in the per-protocol treatment adhering population as measured by pill count and confirmed by adequate drug exposures.

Arantxa: A secondary efficacy analysis will assess SBR-12 in the per-protocol population regardless of treatment adherence. This is also referred to as the efficacy evaluable population and includes patients in the analysis whether or not they were treatment adherent.

We will report data in both populations.

Turning to slide 12.

Arantxa: At ESOL, we presented data from the leading cohort of 60 patients.

We are very pleased with these results.

Arantxa: which show a high SDR-12 rate of 97% with a short eight-week duration of treatment.

Arantxa: Importantly, the only two patients with post-treatment relapse or failure illustrate the challenge of drug adherence in this patient population.

Arantxa: The viral relapse or failure was due to treatment adherence as demonstrated by inadequate drug levels and not due to viral resistance as confirmed by the lack of new viral mutations.

Moving to slide 13.

Slide 14

In summary,

Arantxa: All 60 patients in the leading cohort completed the 8-week treatment period. The combination treatment of Benifazfavir and Ruzavir was generally safe and well-tolerated, with no drug-related severe adverse events or premature treatment discontinuities.

Arantxa: I would also like to mention that next week, there are three poster presentations at ASLD Delivery Meeting 2024, which include additional safety and resistance data for beniphosphobia and modeling data on the leading cohort from the phase two study.

Arantxa: In addition, an integrated population pharmacokinetic model was developed to simultaneously characterize the pharmacokinetic profile of beniphosphobia and its metabolites.

Arantxa: This data will be presented at the American College of Pharmacometrics Conference on November 11th.

Speaker Change: I will now turn the call over to Andrea to discuss Atea's financials.

Andrea Corcoran: Thank you, Arendza. As Jonae mentioned, earlier today, we issued a press release containing our financial results for the third quarter of 2024. The statement of operations and balance sheet are on slides 16 and 17.

Andrea Corcoran: In the third quarter of 2024, R&D expenses decreased compared to the prior year period.

Andrea Corcoran: This net decrease in 2024 is primarily driven by lower 2024 COVID-19 spending offset by higher 2024 spending related to our HCV Phase 2 clinical trial.

Andrea Corcoran: Interest income for the 2024 quarter decreased compared to the prior year period due to lower investment balances.

Andrea Corcoran: For the remainder of 2024, we expect R&D spend will be principally related to the completion of the HCV Phase 2 study and startup activities associated with our anticipated global HCV Phase 3 program.

Andrea Corcoran: At the end of the third quarter of 2024, our cash, cash equivalent and marketable securities balance was $482.8 million. Continuing our strong financial discipline, we project our cash guidance runway well into 2027.

Speaker Change: I'll now hand the call back to Jean-Pierre for closing remarks.

Jean-Pierre: Thank you, Andrea. We are eagerly awaiting the top-line results from our Phase II HCV study, which, as we have mentioned, is expected in early December, so just about a month from now.

Jean-Pierre: The combination of Benifazur and Erizozvir represent a potential best-in-class profile that combines the most compelling attributes of current HCV drug treatments such as convenience, short duration, and low risk for drug-drug interaction.

Jean-Pierre: We believe that our combination is highly differentiated and has the opportunity to address significant and medical needs of today's HCV patient.

Jean-Pierre: We are looking forward to initiating our Phase III development program early next year.

Jean-Pierre: Before opening the call to your questions, I would like to thank our talented and dedicated Attea employees.

Jean-Pierre: Our team relentless pursuit of excellent drives our dedication to advancing all antiviral therapeutics for patients worldwide affected by viral diseases.

Speaker Change: With that, I will turn the call back over to the operator.

Speaker Change: Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 again.

Speaker Change: If you are called upon to ask your question and are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question.

Again, press star one to join the queue.

Speaker Change: And your question, your first question comes from the line of Eric Joseph.

Thank you for having me.

Speaker Change: Hi, this is Val on for Eric. Thank you for taking our questions.

Speaker Change: First, how are you thinking about the Phase 3 HCV trial design, particularly in the context of any remaining adherence obstacles and the use of an active comparator? And additionally, what parameters are you seeking clarity on going into your meeting with the FDA?

Your answer? You want to address those two questions?

Speaker Change: Yes, thank you for the question. So, answer the first one.

Speaker Change: We are planning to do randomized trials and that will, in our opinion, address the issue of adherence because then you'll have a control arm and then you can assess the population against the controls. In terms of the meeting with the FDA, we are really proposing

Speaker Change: development plan, a phase three development plan that is very much aligned with the FDA guidelines. And we're going to be submitting the data and then submitting these designs which are aligned with what they are requiring. So I'm not.

Speaker Change: But the FDA will say, but I think that we are pretty confident that our plan will be generally at least acceptable.

Great, that's all for us. Thank you.

Speaker Change: No, absolutely not. We have, I think we have shown the profile last time and we are very pleased with the PK profile on both drugs and we don't see any difference.

Speaker Change: was on drug exposure and individual parameters such as half-lives of both drugs.

Speaker Change: Okay, thank you. I also want to touch upon the Phase 3 design. Is it going to be the same dose, 550 milligram BAM and 180 milligram Zospir? And I've seen there's only one site in Phase 2, U.S. site.

Speaker Change: will be the same like most of the sites for SES 3.0 and SES XUS.

Speaker Change: Can you hear me? I hear you, Joe. All right sir. Okay.

So the...

Speaker Change: We're going to have U.S. sites, a lot more than one. You know, we only have one in phase two because that was...

what we got time to open in phase two.

Speaker Change: In terms of the dose, yes, it's going to be the same dose, but the beauty of it is that now we're going to have a fixed-dose combination, and we think that that obviously decreases the pill burden, and that's going to help us out with adherence.

Speaker Change: Well, we can we can mention, Lorenzo, I think we have more than a hundred sites just in the U.S., right? Lorenzo, what do we anticipate? Yeah, we're still identifying some of them, but what I can tell you is that we have a lot of interest from the sites.

Speaker Change: we were getting you know very very strong response from investigators and and sites in the United States in and also ex-US but you know especially in the United States

All right. Thank you so much.

Your next question comes from the line of Andy Shea.

Please go ahead.

Oh, great. Thanks for taking our questions.

Speaker Change: Maybe one on the phase three kind of aspiration, just given the active control, I'm curious if you're shooting for perhaps superiority or non-inferiority with a numerical benefit from the SDR-12 perspective, just, you know, try to

Gauge your temperature on that front.

Do you want to address that, Lorenzo?

Lorenzo: Yes, so the trial will be powered for non-inferiority and we always allow a second test for superiority within the primary endpoint. So we are powering for non-inferiority and we may even make a superiority.

And...

Go ahead, I'm sorry.

I'm sorry, I have a second question.

Speaker Change: higher than 90% efficacy, we anticipate that the rule is we anticipate a 5% non-inferiority and and so based on the the number of patients that we need.

Speaker Change: for basically for a safety database, we think that we have.

Speaker Change: power more than 90% with a size of about 800 patients.

Speaker Change: We will see what the FDA feedback at the end of Phase 2 meetings, but we feel reasonably confident that we should be aligned.

Speaker Change: Excellent. Thanks. Thanks for that. And maybe a commercial question just on kind of volume based contracts that we've seen previously.

Speaker Change: potentially be a low-hanging fruit, right, just basically to provide drugs.

Speaker Change: pathway very cost-efficient. I'm just wondering how you think about that segment of the market and how much you'll utilize these types of framework.

John.

John: Yes, thank you for the question. What I can comment on at least is what historically what is going on and there are many pathways for utilization.

John: particularly the traditional pathways as well as with government entities, whether it be Medicare or Medicaid.

and right now the, you know, the government continues to...

be one of the single larger.

John: payers in that regard. So the individual states would likely follow under the Medicaid situation and, you know, it's been pretty relatively stable and we don't see that changing, you know, in the foreseeable future.

Speaker Change: And could you comment on, you know, having sales reps in that kind of framework, would it be less compared to the traditional framework or it will be comparable?

Speaker Change: Well, what I can tell you is that if you look at the market overall,

Speaker Change: In this particular market with the magnitude of these sales, like these are $1.5 billion in net sales in the United States.

Thank you so much.

Thank you.

Speaker Change: That concludes our Q&A session. I will now turn the conference back over to Jean-Pierre for closing remarks. So thank you all for joining our third quarter 2024 earnings conference call and thank you for your continued support.

Speaker Change: Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.