Altimmune - Earnings Call - Q1 2020

Transcript

Speaker 0

Thank you for standing by. This is the conference operator. Welcome to the Altimmune Incorporated First Quarter twenty twenty Earnings Conference Call. As a reminder, all participants are in listen only mode and the I would now like to turn the conference over to Monique Kosas of LiFi Sai Advisors. Please go ahead.

Speaker 1

Thank you, operator, and thank you, everyone, for participating in today's first quarter twenty twenty earnings conference call. Leading the way today will be Kevin Gard, Chief Executive Officer of Altimmune. Also participating on the call today is Will Brown, Chief Financial Officer Scott Roberts, Chief Scientific Officer and Scott Harris, Chief Medical Officer. After the prepared remarks, we will open up the call for a question and answer session. A press release with the first quarter twenty twenty financial results was issued last night and can be found on the Investors page of the company's website.

Before we begin, I would like to remind everyone that remarks about future expectations, plans and prospects constitute forward looking statements for the purpose of Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. Altimmune cautions that these forward looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those indicated, including those related to COVID -nineteen and its impact on our business operations, clinical trials and results of operations. For a discussion of some of the risk factors that could affect the company's future results, please see the risk factors and other cautionary statements contained in the company's filings with the Securities and Exchange Commission. I would also direct you to read the forward looking statement disclaimer in our earnings release issued last night and now available on our website. Any statements made on this conference call speak only as of today's date, Thursday, 05/14/2020, and the company does not undertake any obligation to update any of these forward looking statements to reflect events or circumstances that occur on or after today's date.

As a reminder, this conference call is being recorded and will be available for audio rebroadcast on Altimmune's website at www.altimmune.com. With that, I will now turn the call over to Vipin Garg, Chief Executive Officer of Altimmune. Vipin, please go ahead.

Speaker 2

Thank you, Monique. Good morning, everyone, and thank you for joining us as we discuss our Q1 twenty twenty financial results and corporate update. Joining me on the call today is Will Brown, our Chief Financial Officer, who will review our Q1 financial results as well as Scott Harris, our Chief Medical Officer and Scott Roberts, our Chief Scientific Officer. After our discussion, we will open the call for Q and A. We have all watched in recent months the historic impact of COVID-nineteen on both our businesses and our personal lives.

Our thoughts and prayers go out to all of those fighting this disease, including both our healthcare workers and those infected. Most of our employees continue to work remotely with the exception of our lab personnel who continue their important COVID-nineteen vaccine development work. Despite operating under these conditions, we have made significant strides this year to advance our development programs. And today, we will be providing you an update on our progress both on our vaccines and our liver disease product candidates. We advanced our COVID-nineteen vaccine candidate, AdCOVID, into preclinical testing at the University of Alabama at Birmingham.

This is an important milestone for this program as we continue to be hopeful that our COVID-nineteen vaccine candidate will have a significant impact on the disease. We believe the attributes of our platform technology are ideally suited for pandemic. And as a confirmation, the World Health Organization published a target product profile for an ideal COVID-nineteen vaccine candidate that closely aligns with the clinically proven profile of our vaccine technology, namely a single dose non injectable vaccine that can be shipped without refrigeration and provides a rapid and long lasting immunity. Regarding Naso NasoShield, our anthrax vaccine program, we anticipate starting our Phase Ib trial next month. NasoShield, all of our vaccine candidates, is designed as a single dose intranasal vaccine and is secured by a $133,700,000 contract grant with BARDA, most of which should be available if BARDA exercises its option at the conclusion of the Phase 1b trial.

These options take the program to the end of Phase II development, at which time it may be possible to begin stockpiling the vaccine under an emergency authorization continue to advance ALT-eight zero one, our GLP-oneglucagon dual agonist, towards the clinic with our IND enabling studies and product manufacturing. We're very excited about the potential of this program. In a head to head comparison of our compound in the preeminent mouse model, we saw more than double the weight loss compared to semaglutide and greater improvement in histological measures of fatty liver, liver inflammation and fibrosis. This is important as Novo Nordisk recently announced their successful Phase II trial where they met their primary endpoint endpoint of resolution of NASH and no worsening of fibrosis. However, we believe that ALT-eight zero one can do better and has the potential to achieve best in class profile, not only for GLP-one derived therapeutics, but NASH drugs as a whole.

Finally, we have completed the manufacturing activities of HepTcell and are finalizing the IND, which we expect to file next week. The planned trial is a six month course of treatment in chronically infected hepatitis B patients with clinical sites in The U. S, Canada and Europe. As disclosed in the press release, we will wait to initiate this study until the impact of COVID-nineteen on the trial can be better understood. I would now like to turn the call over to Scott Roberts, our Chief Scientific Officer, who will fully update you on progress we have made with AdCOVID and Scott Harris, who will discuss our clinical plans for ALT-eight zero one and NasoShield.

Scott?

Speaker 3

Thank you, Vipin, and good morning. As we previously shared with you, we have created several vaccine candidates against COVID-nineteen and have now progressed them to preclinical testing with our collaborators at the University of Alabama where the vaccine candidates will be thoroughly characterized for immunogenicity against the SARS CoV-two virus. One of the features that differentiates AdCOVID from other COVID-nineteen vaccines in development is the broad immunity that can be induced following a single intranasal dose. Based on preclinical and clinical data obtained with our other platform vaccines, activation of multiple arms of the immune system that does not only include neutralizing antibody, but also cellular immunity and importantly mucosal immunity that can block the virus at the site of infection. UAB is a world class institution for studying the immunology of vaccines, especially vaccines directed against viral pathogens, and we are excited about our collaboration on this project.

While the work to understand at COVID will continue and become increasingly more sophisticated, the core group of experiments to be included in our IND submission will be completed by the end of Q2 and selection of the vaccine candidate to progress forward into clinical testing in Q4 of this year will be made at that time. In addition to the differentiated immunogenicity profile of AdCOVID, our other attributes of the platform may be equally important. As Ripon mentioned, the WHO published a target product profile that in many ways perfectly describes our vaccine platform technology. As you may know, a target product profile or TPP identifies the minimally acceptable attributes of a drug product as well as the preferred attributes. If one compares a number preferred attributes that WHO would like to see in a COVID-nineteen vaccine, AdCOVID is expected to meet or exceed almost all of the preferred characteristics, including single dose protection, a rapid and durable immune response, an avoidance of injections and an enhanced product stability, including the ability to store the vaccine without refrigeration for months.

We believe that the product characteristics and immunogenicity of AdCOVID will be significantly better than many of the vaccines being developed and will be an important contribution to the pandemic response. With that, I will turn the call over to Scott Harris, who will provide a clinical update on our programs. Scott?

Speaker 4

Thank you, Scott, and good morning, everyone. As Vipin mentioned, we are on track with IND enabling studies and manufacturing to commence dosing in our first in man clinical trial for ALT-eight zero one, our GLP-oneglucagon dual agonist for NASH. We are currently looking to commence this trial in Australia in the fourth quarter of this year. The initial trial will include six weeks of dosing in overweight and obese volunteers with fatty liver, defined as an MRI PDFF of greater than 10%. We expect to have a readout on body weight loss and reduction in liver fat towards the end of the first quarter of twenty twenty one.

This will be a value driving event for investors as it will place ALT-eight zero one squarely in the forefront of NASH development. At this point, we may elect to initiate a separate program in the treatment of obesity. We expect ALT-eight zero one to be well tolerated and achieve weight loss and improvement of liver fat in the Phase I trial without the need to dose titrate for GI intolerability, which has impacted the GLP-one development program space. At the conclusion of this first in human trial, we plan to initiate a twelve week trial in patients with NASH as defined by noninvasive markers. We expect a data readout on this trial toward the 2021 and rapidly transition to a full Phase IIb biopsy driven trial based on NASH endpoints at that time.

We have not had a great deal of interest in the recently announced preliminary trial results from the seventy two week semaglutide Phase II trial, which demonstrated remarkable improvements in NASH, but only modest changes in liver fibrosis. We need to see the full readout from that trial, but we suspect the tolerability of semaglutide administered in high doses up to three to seven times higher than the prescribing dose resulted in sufficient intolerability to limit drug's effectiveness. We feel confident that the improved efficacy and pharmacokinetic profile of ALT-eight zero one compared to semaglutide in our preclinical studies will translate to improved weight loss and tolerability and that weekly dosing with ALT-eight zero one will demonstrate superior results and more convenience than semaglutide when our trials are conducted. I wanted to comment briefly on our NasoShield vaccine for anthrax. We anticipate our NasoShield program will start Phase Ib trial in June and that we will have a data readout in November on both immunogenicity and safety.

If NasoShield is shown to be safe and effective, we expect it to release the remainder of the $133,700,000 contract with BARDA and to move forward to a Phase II trial and stockpiling in the strategic reserve. And with that, I'll turn back over to Vipin Garg. Vipin?

Speaker 2

Thank you, Scott. It's truly remarkable the progress we have made in recent months, especially considering the extraordinary circumstances in which we are working. It is a testament to our dedication and commitment to our mission and to our shareholders. With that, I will turn the call over to Will Brown, our Chief Financial Officer, who will provide an update on our financials. Will?

Speaker 5

Thank you, Vipin, and good morning, everyone. For today's call, I'll be providing an update regarding our first quarter twenty twenty financial results. Our cash and short term investments balance is $33,000,000 at 03/31/2020, representing a $4,300,000 cash burn for the quarter. Since quarter end, we have received net proceeds of approximately $600,000 under our ATM. Additionally, with a March 27 CARES Act provision that allows the carryback of net operating losses, we plan to carry back our 2019 and 2018 tax losses to claim a $2,900,000 cash refund.

Following this refund, we will have the opportunity to carry back our 2020 losses during 2021 to claim an additional $1,800,000 refund. Finally, the CARES Act established the Paycheck Protection Program and the company received a $632,000 forgivable loan, which we will use to retain employees, maintain payroll and for rent and utilities, all in accordance with the terms of the CARES Act. Turning to the income statement. Revenues for Q1 were $2,200,000 which is a reduction of $740,000 compared to Q1 twenty nineteen. Our revenue was lower year over year considering clinical trial and preclinical work performed in 2019 compared to clinical trial startup activities performed in 2020.

Research and development expenses were $7,200,000 for 2020 compared to $3,200,000 in the same period last year. The increase year over year is attributable to development expenses incurred with ALT-eight zero one as we perform IND enabling preclinical studies and begin manufacturing. As a reminder, this program was acquired in July 2019 and contains stock based milestone payments. We carry a liability on our balance sheet for the fair market value of these non cash payments. And during the quarter, we recognized $1,750,000 in expense for an increase in the fair market value of the liability due to an increase in our stock price and an increase in the probability of success.

Also contributing to the R and D increases are higher spend due to increased employee compensation costs and the development of AdCOVID. We saw a decrease in spend for NasoShield due to the cycle of product development. Q1 twenty twenty gs and A expenses of $2,300,000 is approximately 300,000 higher than Q1 twenty nineteen due to an increase in compensation and legal costs offset by an increase in insurance premiums. Our income tax benefit for the quarter was $3,200,000 which represents the $2,900,000 refund discussed above in the Q1 portion of our 2020 net loss, which we expect to file a refund claim for next year. Net loss attributed to common stockholders for the first quarter was $3,900,000 compared to $2,600,000 in the same period last year, with net loss per share equaling $0.26 in Q1 twenty twenty versus $0.27 per share in Q1 nineteen.

Now I would like to open the call for questions and answers. Operator?

Speaker 0

Thank you. We'll now begin the question and answer session. Our first question comes from Yasmeen Rahimi with ROTH Capital Partners. Please go ahead.

Speaker 6

Hi, team. Thank you so much for taking our questions. We have a number for them for you. So the first question is, team, can you share with us what type of preclinical studies are currently underway for AdCOVID? Specifically, have you begun already your challenge studies?

And when should we be expecting the results from those studies? And then I have a number of follow ups.

Speaker 2

Scott Roberts?

Speaker 3

Sure. Good morning, Yasmin, and thank you for your questions. Our preclinical studies have begun with the University of Alabama at Birmingham. And consistent with the immune profile that is has been demonstrated with our platform vaccines, we'll be looking at multiple arms of the immune system in those preclinical studies. So we'll be looking for antibody responses, which is what most people think about, and certainly will likely be an important part of the immune response.

Both total antibody and the antibody that is able to neutralize virus. And so that'll be important. We'll also be looking at the induction of cellular immunity. This is activation of T cells that can kill infected cells and stop the spread of infection in the host that way. And so those folks at the University of Alabama are expert at that type of assay, and we'll be looking specifically where that's directed and how efficient that response is.

And then also, and really what separates us from a lot of the other all of the other vaccines that are being developed for COVID-nineteen is the mucosal immunity aspect. And so while we'll be looking at the induction of this special type of immunity that can block infection at the site of where the virus trains to gain access to host and the nose and the respiratory tract. And we'll be looking at the special type of antibody that's developed there called IgA. So because we know our vaccines can induce all of these aspects of the immune system, we'll be looking at all of those aspects in our preclinical studies.

Speaker 6

Thank you, Scott. And then can you maybe share with us what are the rate limiting steps for scaling up manufacturing at this point? And then the last question is, can you tell us where you are in terms of your timeline on completing your tax package for ALT-eight zero one?

Speaker 3

Sure. Well, let's start at the end there. With respect to the tox package, one of the benefits we have, given our clinical experience with our vaccine platform and the very nature of the vaccine platform is we will not have to do or certainly are not anticipating doing toxicology studies prior to Phase study. This has already been borne out in our previous studies and the FDA is comfortable with the vector system. And therefore, we won't have to repeat those studies before entry into Phase one.

So that's a clear advantage and will help. As far as the manufacturing, one of the things that we're doing is making sure that we derisk and give ourselves the best possible chance to see positive data quickly in our clinical study. So to that end, we obtained a license for the PERCI6 cell line from Johnson and Johnson, actually, Janssen subsidiary. And we'll be using that cell line for our manufacturing. Now that's the same cell line that we've used for other products, and we're able to broaden our license with Janssen so that we could include that for AdCOVID.

And this will certainly help because we're very used to using that cell line. It's an excellent cell line. The FDA is very comfortable with that cell line. So by taking steps like that, we've built in the success into our vaccine.

Speaker 6

Thank you, Scott. I just wanted to clarify, sorry, I was referring to the tox package for ALT-eight zero one for the NASH program where it is in regards to timeline on finishing that.

Speaker 3

That's fine. Sorry about that. Sure. So that program is going program is on track and proceeding well. We expect to have the tox package complete for our IND in the fall, and that will allow us to enter the clinical trials later at the end of the year there.

So everything is on track with that. We're seeing the sort of information we'd like to see and no problems. So we're very much on track with that and looking forward to getting that IND in.

Speaker 6

Thank you so much for taking our questions and the best of luck.

Speaker 3

Thank you.

Speaker 0

Our next question comes from Jim Molloy with Alliance Global Partners. Please go ahead.

Speaker 7

Hey, guys. Thanks for taking my questions. And I guess my questions are some of them are around a lot of companies are seeing some pretty good delays on their non COVID work and really just COVID stuff going forward. Can you talk a little bit to your thoughts on what sort of potential there is for delays on your trials for ALT-eight zero one or Hep2 cell going forward and sort of or are they mitigated by how you have set up the trial site design?

Speaker 2

Yeah, good morning. Good morning, Jim. Thanks for the question. As you can imagine, we are actively monitoring the situation. The good news is that many of our studies are Phase one type studies that are a single center Phase one unit studies.

But as far as HepTcell is concerned, that's a multinational, multicenter study that's going to last six to nine months. So clearly, that's where it's most critical for us to sort out the COVID-nineteen situation and that's exactly what we are doing. We're monitoring the situation. We want to make sure if we start the study, we are able to complete it. So therefore, we are delaying the start of that study, even though we are filing the IND next week.

So we should be ready to start enrollment as early as in June, July timeframe. But depending upon the COVID-nineteen situation, we will decide the exact start date of that study. With that, let me ask Scott Harris to sort of fill in more details.

Speaker 4

Thanks, Pippin. I think you characterized it quite well. I don't know that we're going to be seeing any practical delays at this point. We're just monitoring the situation sensitive to the ability of sites to recruit patients and enroll in the safety and the welfare of patients and staff. So we're moving ahead with all of the regulatory activities that will be necessary for conducting the trial full speed.

When we actually pull the trigger on letting patients come in will depend on a live analysis of the condition in each of the sites in each of the countries and we're looking at that very carefully right now.

Speaker 2

Scott, you may want to add ALT-eight zero one and HepTcell sorry, and Naso Shield.

Speaker 4

Right. And as you mentioned, Vipin, the NasoShield study is a Phase one study and we anticipate that starting in June, and moving ahead. And we've critically looked at that and feel that that June date will happen. At this point, we don't anticipate any delays for ALT-eight zero one. It will be a Phase I study.

And I think the same considerations that apply to the NasaShield will also apply to the ALT-eight zero one program. But obviously, we're going to carefully monitor the situation in Australia, and we've created contingency plans in case other sites or other locations of the study are needed.

Speaker 7

Then following up on ALTOPE-one, is there any read through, I know it's a different mechanism of action, but any read through on Ginafet alfibranor Phase three failure basically they just reported out that informs how you guys will look at ALT-eight zero one trial design and any mistakes made that you guys won't make? And then on the obesity, what sort of change in obesity do you need to see to trigger that, all right, we'll try an obesity trial on this out of the Phase one trial in ALT-eight zero one?

Speaker 4

So Jim, as you know, elafibranor is an entirely different mechanism. It depends on a mechanism called PPAR and there are different subtypes. There's alpha, there's delta and there's gamma. And probably the gamma is the most effective mechanism, but it has the most side effects. And there's still debate about whether delta can be effective and elafibranor was predominantly a delta.

As you know, they did a Phase II study, which failed to meet its primary endpoint. They rejiggered the program based on a post hoc analysis. Those of us experienced in drug development would not have moved into Phase III. So I think it's simply a failure of the drug in the mechanism. And I think it has reflects in no way upon not only the efficacy of ALT-eight zero one, but other drugs and other drug classes.

And could you rephrase your second question? I'm sorry, didn't quite Quite entertain

Speaker 7

right. Thank you for the update on the other one. Just a question on what sort of magnitude of weight loss would you need to

Speaker 4

see or want to see or what are

Speaker 7

the triggers that you want to see in the eight zero one Phase I trial that will say, all right, let's run an obesity trial? I know you mentioned in your prepared remarks, you wait to see the Phase I data before potentially starting an obesity trial in 2021.

Speaker 4

Right. Well, I feel confident that we're going to beat other drugs. And as you know, the GLP-1s are achieving five percent to six percent, but you have side effects. So I would start by saying just to beat those numbers without side effects would be a real positive. And we showed in our animal data that we got 2.5x the weight loss in semaglutide, and we think our PK profile is far superior to semaglutide.

So we feel very confident that we're going to get good levels of weight loss. I would say that the first trial will only be six weeks. So it will only be a partial readout of the kind of weight loss we could get at, say, twelve weeks or twenty four weeks. But we will follow-up with that six week trial with an immediate twelve week trial that will be in a NASH population that I think will give us better metrics for the amount of weight loss we're going to obtain.

Speaker 7

And then last question on the AdCOVID trial. Will you be looking to get nondilutive funding to run the AdCOVID? Know there's quite a bit being on offer out there for the pandemic. Then can you talk a little bit about any risks of ADE with the AdCOVID antibodies? I think you mentioned the neutralizing antibodies rather than binding antibodies, so perhaps not an issue.

Speaker 2

Let me take the first part of your question, Jim. So of course, we are in discussions with a number of potential non dilutive funding sources and those discussions are progressing well, but these things take time. At the moment, our focus is to get that preclinical data and get ready for the Phase one studies. We think once we have the information that's going to sort of drive the program forward, there will be plenty of sources of non dilutive funding. So we are engaged with all of them and we'll keep you posted as we make progress on that front.

With regards to ADE, Scott Roberts, do you want to take that question?

Speaker 3

Sure. I'm happy to. Hello, Jim. So the issue with the ADE or more broadly immune enhanced disease seems to really relate to an ineffective immune response, an immune response that's there, but not quite strong enough. And that's where the immune complexes can accumulate and form in the lungs and create some problems, at least that's what's been seen in the past.

So until we get into the clinic, obviously, you've got to do the work. But there's certainly no expectation that we'll see anything like that. All of the data from our previous vaccines show very strong immune responses against the antigens. And in addition, there's been a preclinical work looking at this with a similar sort of approach out Oxford. And they're showing that where they specifically look for it and did not see it.

And so I think that there's a growing consensus that that may not be as much of an issue with the SARS CoV-two as it has been with some few viruses in the past such as dengue. But that's something we'll have to keep an eye on and certainly do the studies to look at that carefully, but we're not anticipating a problem.

Speaker 7

Thank you very much for taking the questions.

Speaker 0

Our next question comes from Lisa Baejko with JMP Securities. Please go ahead.

Speaker 8

Guys. Neil on for Lisa. Just a question on the read through for semaglutide. It seems like the data was kind of a good scenario for you guys in the sense that it validated GLP-one with pretty good results on NASH resolution, but there's still kind of room for improvement on the fibrosis front. Do you think it was a matter of just not enough weight loss?

Or was it a matter of the lack of glucagon effect directly to deliver or kind of a combination of both?

Speaker 2

Scott Harris?

Speaker 4

Hi, thanks for the question. The information that was provided in the conference call was incomplete and there really wasn't a lot of information provided on things such as weight loss. I would agree with you that more than likely the intolerability of semaglutide at the dose they gave, which just to remind you was three to seven times the prescribing dose, because they literally gave up to zero point four milligrams per day, which is a daily dose excuse me, a weekly dose, they gave it daily, so up to seven times higher. And we think that intolerability translated into discontinuations and dropouts, and that affected the weight loss. And I think that probably read through to the fibrosis, but we're going to have to wait for the full data readout to actually see that.

We think that we can achieve better levels of weight loss with better levels of tolerability even without looking at the glucagon effects on the liver. But clearly, the addition of the glucagon, coupled with the superior weight loss we're going to achieve could have really very remarkable effects on liver fat. And that we think would translate into NASH resolution as well as fibrosis. And this is all seen in our animal models, as Vipin mentioned. So I think we're very bullish on our ability to achieve the changes across the spectrum of histology of NASH, not only the reduction of liver fat and the resolution of NASH inflammation, but also fibrosis, we think we can achieve that based on our mechanism.

Speaker 8

Great. Thanks, Scott.

Speaker 2

You're welcome.

Speaker 0

This concludes the question and answer session. I would like to turn the conference back over to Zid Bin Garg for any closing remarks.

Speaker 2

Thank you everyone for listening in today. We look forward to speaking to you again on our next earnings call. Thank you.

Speaker 0

This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant