Altimmune (ALT) 12 Nov 242024 Q3 Earnings call transcript

Good day, ladies and gentlemen, and welcome to Altimmune, Inc.'s Third Quarter 2024 Financial Results Conference Call. [Operator Instructions] As a reminder, this call is being recorded. I would now like to introduce your host for today's conference call, Lee Roth of Burns McClellan, Investor Relations Adviser to Altimmune. Lee, you may begin.

Thanks, operator. Good morning, everyone. And once again, thank you for participating in Altimmune's third quarter 2024 financial results and business update conference call. On today's call, you'll hear from Dr. Vipin Garg, our Chief Executive Officer; Dr. Scott Harris, our Chief Medical Officer; and Andrew Shutterly, our acting Chief Financial Officer. Dr. Scot Roberts, our Chief Scientific Officer and Greg Weaver, our newly appointed Chief Financial Officer are on the line as well, and will join us for the Q&A session. A press release covering our third quarter 2024 financial results and corporate update was issued earlier this morning and can be found on the Investor Relations section of the company's website.

Before we begin, I'd like to remind everyone that remarks about future expectations, plans, and prospects constitute forward-looking statements for purposes of the safe harbor provision 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 our actual results to differ materially from those indicated.

For a full review of the risk factors that could affect the company's future results and operations, we refer you to our filings with the SEC. I'll also direct you to read the forward-looking statements disclaimer in our press release issued this morning, which is now available on our website. Any statements made on this call speak only as of today's date, November 12, 2024, 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.

As a reminder, this call is being recorded, and will be available for audio replay on the Altimmune website. With that, it's my pleasure to turn the call over to Dr. Vipin Garg, Chief Executive Officer of Altimmune. Vipin?

Thank you, Lee. Good morning, everyone, and thank you for joining us for our third quarter corporate update. In the 3 months since our last conference call, we have achieved several important milestones. These recent accomplishments, coupled with other upcoming catalysts, give us a high degree of confidence that we are in position for 2025 to be a transformational year for Altimmune.

First, our Phase IIb IMPACT trial of pemvidutide in MASH is now fully enrolled, and top-line efficacy data is expected in Q2 2025. With a successful readout from IMPACT, pemvidutide would be the first MASH therapy to achieve both fibrosis improvement and significant weight loss at 24 weeks of treatment.

Following this readout, we expect to hold an End-of-Phase II meeting for MASH with FDA in Q4 2025.

For our obesity program, as announced last week, we achieved alignment with the FDA at our recent End-of-Phase II meeting on a comprehensive Phase III registrational program designed to leverage the key attributes of pemvidutide.

The important strategic takeaway here is that we now have a differentiated Phase III ready asset that we believe has the potential to benefit obese and overweight patients, and fill gaps in the treatment of the comorbidities of obesity left by existing treatments currently on the market. To realize the full potential of pemvidutide, we have made the strategic decision to expand our R&D investments into development of up to 3 additional indications that leverage the enhanced glucagon activity and other attributes of pemvidutide. We plan to submit an IND for the first of these indications by the end of 2024, and preparations are underway for the initiation of that Phase II clinical trial in H1 2025 -- in the first half of 2025. We believe each of these indications represents a substantial commercial opportunity that will create value for our shareholders.

Importantly, these indications were chosen as we believe we can develop these indications ourselves, and we expect to provide more details in the coming months. To summarize, our overarching development strategy continues to focus on securing a partnership centered around obesity, while moving full speed ahead to advance pemvidutide in MASH and launch development efforts in these additional indications. Upon a positive data readout from Phase IIb IMPACT trial in the second quarter of 2025, we expect to be ready to start a Phase III program in MASH by the end of next year.

We continue to believe that pemvidutide is a highly differentiated agent from others and in strategically important ways, relative to the current metabolic disease landscape. With that, I'll now turn the call over to our Chief Medical Officer, Dr. Scott Harris, to discuss our clinical plans in more details. Scott?

Thank you, Vipin.

As noted, we completed enrollment in the Phase IIb IMPACT trial of pemvidutide in MASH in late September, and are on track to report top-line efficacy data in the second quarter of next year. Recall, the trial is evaluating approximately 190 subjects with and without diabetes, randomized 1:2:2 to receive either 1.2 milligrams, 1.8 milligrams pemvidutide or placebo for 48 weeks. The key efficacy endpoints are MASH resolution or fibrosis improvement at 24 weeks of treatment with subjects followed for an additional 24 weeks to a total of 48 weeks for safety and biomarker responses. Pemvidutide has the potential to be the first incretin agent to achieve statistical significance in MASH resolution and fibrosis improvement rates at only 24 weeks. Combined with the weight loss achieved with pemvidutide therapy, these results could position pemvidutide to become the standard of care in the treatment of MASH at the completion of the Phase III registrational program.

As we continue to analyze the data from our completed clinical trials, it is increasingly clear that pemvidutide not only has a meaningful impact on body weight, but also the comorbidities associated with obesity. We're particularly excited about the results from our Phase II MRI-based body composition substudy reported at the recent European Association for the Study of Diabetes Conference in September of this year. That study demonstrated class-leading preservation of lean mass of only 21.9% in subjects treated with pemvidutide as well as a preferential reduction in visceral adipose tissue. This type of fat has been associated with cardiovascular risk. The preservation of lean mass is a key factor in both the quantity, quality and sustainability of weight loss and will be the focus of 1 of our 4 Phase III studies.

As Vipin discussed, we completed our End-of-Phase II meeting with the FDA last week. This interaction resulted in an alignment with the agency on an innovative registrational program encompassing 4 pivotal Phase III studies, each designed to leverage a specific attribute of pemvidutide in the setting of weight reduction.

Let me recap the planned design of the 4 trials that we outlined in last week's press release. VELOCITY-1. This trial will assess the effects of pemvidutide on body weight in patients with obesity or overweight without diabetes. Other endpoints will include reductions in waist circumference, lipids, and blood pressure. VELOCITY-2. This trial will assess the effects of pemvidutide on body weight and serum lipids in subjects with obesity or overweight and elevated LDL cholesterol levels. The study population will include a subset of subjects with elevated LDL cholesterol despite concomitant statin therapy. A large proportion of patients taking statins failed to achieve target LDL levels. And in a previous Phase II clinical trial in subjects with overweight or obesity, pemvidutide appeared to enhance LDL lowering effects in these subjects. VELOCITY-3. This trial will assess the effects of pemvidutide on body weight in subjects with obesity or overweight and elevated liver fat. Excess liver fat is highly prevalent in patients with obesity and is associated with an increased risk of cardiovascular disease. VELOCITY-4. This trial will assess the effects of pemvidutide on body weight and body composition with emphasis on elderly individuals and individuals with sarcopenia at baseline. Functional measures and activities of daily living will also be assessed in this patient population. The Phase III registrational VELOCITY program will evaluate 3 doses of pemvidutide, 1.2 milligrams, 1.8 milligrams, and 2.4 milligrams administered 1 weekly via subcutaneous injection over a 60-week treatment period. Collectively, the 4 trials are expected to enroll approximately 5,000 subjects, similar to past registrational programs in obesity.

Our intention is to obtain regulatory approval for each of these doses, allowing patients to start on therapy on a pemvidutide dose with demonstrated efficacy for weight loss. The successful completion of the FDA End-of-Phase II meeting for obesity represents an important milestone in the development of pemvidutide, not only de-risking the regulatory path for approval in obesity, but also positively impacting the development of pemvidutide in MASH and the additional indications we are pursuing. We believe that pemvidutide has broad therapeutic potential beyond obesity and MASH.

We are exploring up to 3 additional indications for which pemvidutide's profile as a balanced GLP-1 glucagon dual agonist may be ideally suited.

We expect to submit an IND application for a Phase II clinical trial in the first indication by year-end with the study expected to initiate in the first half of 2025. We'll provide further information about these indications as regulatory discussions are completed. With that, I'll now hand over the call to our acting Chief Financial Officer, Andrew Shutterly, to review our financial results for the third quarter. Andrew?

Thank you, Scott, and good morning.

For today's call, I will be providing a brief overview of Altimmune's third quarter 2024 financial and operating results. More comprehensive information will be available in our Form 10-Q to be filed with the SEC later today. Altimmune ended the third quarter of 2024 with approximately $139.4 million of cash, cash equivalents, and short-term investments compared to $198 million at the end of 2023. We project that our existing cash will fund us well into the first half of 2026, which fully funds our IMPACT trial in MASH, including the expected readout of top-line biopsy data in the second quarter of 2025. Research and development expenses were $19.8 million in the third quarter of 2024 compared to $18.4 million in the same period in 2023.

Our R&D expenses for the third quarter of 2024 included approximately $12.4 million in direct costs related to development activities for pemvidutide and $0.8 million in direct costs related to additional research and discovery projects. General and administrative expenses were $5 million in the third quarter of 2024 versus $4.5 million in the third quarter of 2023. The increase was due primarily to a $0.4 million increase in professional services costs. Included in the R&D and G&A costs for the third quarter of 2024 are approximately $3.1 million of noncash stock-based compensation expense compared to $2.7 million in the same period in 2023. Net loss for the 3 months ended September 30, 2024, was $22.8 million or a $0.32 net loss per share compared to a net loss of $20.7 million or $0.39 net loss per share for the third quarter of 2023. I will now turn it back over to Vipin for his closing remarks. Vipin?

Thank you, Andrew. And thank you for everything you have done serving as our acting CFO over the last several months.

As Lee mentioned at the start of the call, Greg Weaver, who joined our team yesterday as Chief Financial Officer, is with us for the Q&A session. Welcome, Greg. Over a distinguished 25-year career, Greg has led the finance function at a number of public and private life sciences companies.

We are excited to have him on board and look forward to benefiting from his deep expertise.

We are encouraged by the significant strides we have made over the last several months.

While we are in a fast-moving and highly competitive space, we are more confident than ever that pemvidutide has the potential to stand out from the crowd, and we believe that we are well equipped to seize the opportunity that lie ahead. That concludes our formal remarks. We would now like to open the lines to take questions. Operator?

[Operator Instructions] Our first question comes from the line of Yasmeen Rahimi from Piper Sandler.

Congrats on all the updates and congrats, Greg, for joining a wonderful company and look very much forward to working closely with you. Team, really exciting that you got the VELOCITY studies aligned with the agency and kicking it off. I guess the question that we have for you is, now that you have the alignment, how important was the alignment in terms of strategic discussion and partnership? That's sort of question one. Question 2, are you still planning to -- if you're planning to kick off the studies, would they be occurring in a sequential order or at the same time? And then the third question is, if you could shed some light on what are these additional indications you're potentially considering for which you're filing INDs, that would be helpful. And I'll jump back into the queue.

In terms of how important it is, this is really a significant and very important milestone for development of pemvidutide. I mean, this was a comprehensive review of our package so far, all of the studies that we have conducted. Very importantly, pemvidutide got a clean bill of safety, and Scott can talk more about that. And we have clear understanding as to what needs to be done, what are the full registrational trials that would lead to approval of the drug.

So we think this is a very important milestone for pemvidutide for Altimmune and for our potential partners.

Our strategy is to continue to look for a partnership centered around obesity, and we're moving full speed ahead with MASH and other indications.

In terms of studies, the sequencing of them, ideally, they would all be run in parallel, but Scott can comment more about that as well as additional indications.

We haven't really disclosed the details of additional indications at this point, but what I can say is that these are all designed to leverage the advantages of glucagon in pemvidutide has really focused around the properties of glucagon and some of the liver defatting and serum lipid improvement that we have seen from our MOMENTUM trial. We'll talk more about these indications once we have had regulatory alignment.

We are planning to file our first IND later this year. And hopefully, we'll talk more about this 30 days after the IND clears the FDA. Scott, can you provide some more color on the FDA interactions, as well as on the sequencing of the 3 indications -- sorry, the 4 VELOCITY trials?

Sure.

So the meeting was extremely successful. A lot of compliments were passed on the line during the meeting. And we have now exposed over 500 subjects to pemvidutide in completed trials. And based on that, the FDA looked at our safety profile and gave us a thumbs up on that exposure. Obviously, the final consideration is what you have at NDA, but no safety signals were identified from that interaction. They also confirmed our plan for the 4 studies, which did not include a diabetes trial, although we are including diabetics in our program, we'll have an ample number to evaluate, but they felt this was a reasonable approach and really like the idea of targeting the effects most likely to be impacted by glucagon, including the body composition study.

Regarding the launching of the studies, the sequence is still to be determined as we look to operationalize that and hope to have more details for you in the near future.

Our next question comes from the line of Ellie Merle from UBS.

This is Jasmine on for Ellie. Congratulations on all your progress.

So thinking about the recent top-line GLP-1 ESSENCE trial data we saw in MASH and what we saw there on fibrosis, how are you thinking now about what you'd like to see from IMPACT in Q2? And what is really competitive now for incretins in the MASH space?

Scott?

I think I heard you ask a question about the recently completed ESSENCE trial. Is that correct? Am I correct on that?

Yes, yes. And just how you're -- how kind of that's impacted your thinking now about what's competitive for incretins in MASH?

Right. Well, the trial results were as we expected.

You have to recognize that the trial went for 72 weeks. It was longer than other trials, so a longer opportunity to see an effect because of the longer treatment.

As well, the study power was increased by going over [ BARDA ] what was done in another Phase III program, so a large number of subjects in order to show that statistical significance. The treatment effect was modest. This is what we would expect from an agent like semaglutide that exerts its effects on liver fat indirectly through weight loss rather than direct effects on the liver. And as we've seen when glucagon has been in the mix or when there's a liver-targeted effect like FGF21, the liver fat and the endpoints move up considerably with more robust effects.

So moving forward to pemvidutide, the liver fat is what drives the MASH resolution and the fibrosis improvement. That should have been shown repeatedly in trials.

We have class-leading liver fat reduction. The FGF21 showed meaningful and statistically significant effects in MASH resolution and fibrosis improvement at 24 weeks, their liver fat reduction was about 65%. We're at the 76% level.

We have preclinical studies demonstrating a direct effect of pemvidutide on fibrosis that's independent of defatting, and we've done a number of other analyses suggesting success at 24 weeks.

So where do we stand in comparison to ESSENCE? If we are successful, and I believe we will, we will be the first incretin-based agent to show statistical significance, that is success on MASH resolution and fibrosis improvement at only 24 weeks. And combined with the weight loss associated with pemvidutide, the only agent at 24 weeks to offer weight loss because, as you are aware, the current compounds that have shown efficacy at 24 weeks have either been associated with no weight loss or actually even weight gain. And we believe that these combined effects will really put us at the front of the class in terms of the MASH drugs going toward approval.

I just want to add that really combining these 2 effects provides a complete solution for treating MASH. Not only we are going to show direct effect on the liver, but at the same time, it's a good thing in this patient population for patients to lose weight.

So this combination -- there's a lot of discussion already about combination therapy. That's basically what we are doing with pemvidutide is providing a combination of direct liver-acting effect with weight loss.

Our next question comes from the line of Liisa Bayko from Evercore.

Congrats on all the progress.

Sort of 2 line of questions for me.

First of all, I guess, as it relates to cardiac safety, do you think FDA views this as a class effect? And it might be something that sort of comes up as you talk about -- go back to FDA and discuss the fuller Phase III program, including MASH, which I think is what you intend to sort of prioritize yourselves. I'm just curious about that. Or is this something where they've seen something specific in the survodutide data? It just seems to me with the ratio that they have versus the ratio you have and the fact that you do have quite a bit of glucagon, I'm wondering if that's something that kind of gets revisited. And then curious about the timing of the additional indications, really interesting concept. Are you going to wait for data from -- in MASH before initiating those and really taking off or when should we expect to learn more about that?

Liisa, let's take your first question first. Scott, do you want to get started?

Yes. Liisa -- this is not a class effect. Repeatedly, in all of our trials, we've seen no evidence of arrhythmias, no evidence of any effects on coronary disease, cardiovascular disease, no MACE effects. And we've also seen no evidence of any changes on EKG intervals or the like. And we've seen this repeatedly in all of our studies. And we laid out all of the data for the FDA, and the FDA came to the same conclusion.

So our conclusion would be that what's been described in the survodutide program is probably specific to the compound. And we achieved confirmation at the FDA that they agree on that opinion.

Regarding the timing of the studies, we'll launch the study in the first half of next year. We'll have to see whether that actual launch goes before or comes after the MASH readout, and we'll have more information for you as we get into next year.

One quick follow-up.

Just can you remind us for survodutide, were those signals that they saw the increase in heart rate and all those things, were they early events or late events? In other words, do they happen after 6 months or earlier in the study?

Liisa, we don't know. What we know -- when we went to the FDA, we presented our whole program, and they did a comprehensive evaluation of the program. And again, they indicated no safety signals, and like all of the other sponsors that have proceeded in obesity, allowed us to design a program with purely efficacy trials.

As you are aware, you need about 5,000 subjects in total to go to NDA and obesity that is exposed for a year. And we and other sponsors have usually achieved that by filling it up with efficacy trials, and that's what VELOCITY 1, 2, 3 and 4 is.

With the survodutide program, they've elected to conduct 2 smaller efficacy trials in a very large safety trial, which is actually designed to show no harm versus placebo, specifically to cardiac events. One would imagine that, that could be suggestive of a discussion that the company had with FDA. We don't know.

So I really can't comment about the signal. What we can say is that the design of their program is unusual, and is oriented towards showing safety more than it is to show efficacy.

And I think to be very clear, you asked a question about the Phase III program, this was a comprehensive interaction with the FDA, and there is no requirement for pemvidutide to do additional safety studies.

Our next question comes from the line of Xiaotong Jia from Jefferies.

This is Fiona for Roger from Jefferies. My question is -- I have 2 questions regarding the 3 additional indications.

First is, are -- I think I remember that you mentioned in the call that these indications you're going to carry forward independently or is it part of the ongoing conversation regarding partnerships? And I have a follow-up.

Look, these indications have been designed to continue to improve or enhance the value of pemvidutide. The idea -- really, as we have said from the very beginning, pemvidutide has the potential for a pipeline in a product because of its many attributes.

So they're all designed to really look at certain comorbidities of obesity, not obesity directly. And we believe they will not only create value for pemvidutide, these are indications we can pursue on our own, and they will be attractive to potential partners as well.

So it's really designed to continue those discussions. And if a partnership can be built around these indications, we'll be very, very keen to do so, but we can also develop these on our own.

So it really gives us a lot of flexibility, a lot of optionality as to how we move forward with these indications.

And my second question is, does the cash runway to 1 half '26 cover these 3 indications?

Yes. The initial plans -- the initial IND filings as well as the initial Phase II type of trials that we would conduct around them, that the current cash will be sufficient for us to conduct these.

[Operator Instructions] Our next question comes from the line of Karin Johnson from Goldman Sachs.

This is [ Omar ] on for Karin. I also have a couple of questions on the 3 indications. How are you thinking about which indications you'll select to move forward? And what are the size of each trials that you anticipate beginning in the first half of '25?

Scott?

The 3 indications are based on targets which would benefit from glucagon. These are all indications that involve subjects with obesity and overweight. And consequently, it has not only demonstrated an effect on these 3 specific targets, but also the effects of pemvidutide on body weight.

So it has also implications for the obesity program as well. We'll provide further details about the indications once we have complete regulatory discussions. Hope to have that in the very near future.

Regarding the launching of the studies and the size of the studies, we'll provide more information again about that next year. We do expect to file the first IND by the end of this year, and to commence activities to launch that trial in the very near future. But I want to emphasize that these will not be Phase I studies. These will all be Phase II proof-of-concept studies.

So we're really moving ahead into mid-stage development into all of these indications once the IND is clear.

Our next question comes from the line of Mayank Mamtani from B. Riley Securities.

This is William on for Mayank. Congratulations on a great quarter, and congratulations on the recent hiring of Greg.

We have a couple of questions digging a little bit deeper, just kind of curious about the Phase III ESSENCE data that we will be expecting at AASLD coming up. I guess maybe what are you looking for specifically in that data that really could help provide or inform your confidence in your ongoing Phase II IMPACT study? Any extra insight there could be helpful. And then I have a follow-up.

Yes, William. Again, there were a lot of details that were not included in that initial readout, some of the questions about the statistical approaches, completers and the like. I don't think that really changes the way we view the study. We think the effects were predictable. We think the effects were modest, and represented the long duration of treatment and the super sizing of the study power.

So it would be of interest to see the details of that study. We certainly will watch the presentation with everyone else. But we really think the effects of the study are modest and that they speak to our having an even better readout to glucagon effects at a much earlier time point showing enhanced efficacy at a time point that cannot be hit by semaglutide. It would just be too soon to see those effects.

And then an additional question on your strategic partnerships. These have been going on for a little while now, beginning around the end of your Phase II MOMENTUM readout. I'm just kind of curious how your discussions with potential partnerships have evolved over time now that we're getting closer to Phase II impact, obviously, ESSENCE readout and now your 3 additional indications. Any color on the evolving conversation and if they're now starting to expand across multiple -- the broader potential of pemvidutide, any color on that would be helpful.

Yes, absolutely. Ray, do you want to take that question? Our Chief Business Officer, Ray, is here.

So Raymond Jordt.

As you mentioned, the strategic partner discussions we've been engaged with for the -- throughout the period of 2024, what's interesting, I think, is our approach has always been to continue to generate data and advance the programs. And why I say that is because the feedback, I think, we received generally has been from these companies that they're still trying to figure out their own strategic initiatives, how do they leverage their capabilities, what's their strategy to jump into obesity. And I think that feedback is fairly accurate because there have been no other deals that have been executed for now -- about 12 months now.

So I think the feedback we're receiving is genuine.

I think other companies are still trying to figure out how they jump into it.

And so I think what's important for us is to continue to generate the data, advance the programs, keep generating value for everyone. And I think things are starting to resonate.

So again, the preservation of lean mass, I think that's a very unique attribute for pemvidutide, and that's been a hot topic in this space. The MASH indication, I think, is gaining even more traction, I think, with the Rezdiffra launch.

I think more attention is being focused there. And again, Scott and Vipin have talked about how we believe we'll be positioned there with the combination of direct efficacy, 24 weeks and weight loss is going to be differentiating. And I think the additional indications is going to be something that will even create more value, broaden the offering (inaudible).

So at a high level, I think these are the things that benefit our strategic partnering discussions as well as Altimmune in general.

And I would just add that the conclusion of the End-of-Phase II meeting -- successful conclusion of the End-of-Phase II meeting is a very important milestone in moving these discussions forward. The path is clear now. We know how the program looks and what are the trial designs and how much it's going to cost really to take this to the finish line.

So I think all that being in place, we are -- we'll continue to seek a partnership centered around obesity.

At this time, I would now like to turn the conference back over to Vipin Garg for closing remarks.

Thank you, everyone, for joining our call today.

As always, we sincerely appreciate your continued support and interest in Altimmune as we work diligently to advance pemvidutide. Thank you again for your time. We look forward to updating you on our progress in the near future. Have a great rest of your day.

This concludes today's conference call. Thank you for participating.

You may now disconnect.