Atea Pharmaceuticals, Inc. (NASDAQ:AVIR) Q3 2023 Earnings Call Transcript
Atea Pharmaceuticals, Inc. (NASDAQ:AVIR) Q3 2023 Earnings Call Transcript November 8, 2023
Atea Pharmaceuticals, Inc. beats earnings expectations. Reported EPS is $-0.4, expectations were $-0.46.
Operator: Good afternoon, ladies and gentlemen. Welcome to the Atea Pharmaceuticals Third Quarter 2023 Financial Results and Business Update Conference Call. [Operator Instructions]. 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 Pharmaceuticals third quarter 2023 financial results and business update conference call. Earlier today, we issued a press release, which outlines the topics we plan to discuss. You can access the press release as well as the slides that we'll be reviewing today by going to the Investors section of our website at ir.ateapharma.com. . With me today from Atea are our Chief Executive Officer and Founder, Dr. Jean-Pierre Sommadossi; Chief Development Officer, Dr. Janet Hammond; Dr. Arantxa Horga, Chief Medical Officer; Andrea Corcoran, Chief Financial Officer and Executive Vice President of Legal; and our Chief Commercial Officer, John Vavricka. They will all be available for the Q&A portion of today's call.
Before we begin the call, and as outlined on Slide 2, I would like to remind you that today's discussion will contain forward-looking statements that involve risks and uncertainties. These risks and uncertainties are outlined in today's press release and in the company's recent filings with the Securities and Exchange Commission, which we encourage you to read. Our actual results may differ materially from what is discussed on today's call. With that, I'll now turn the call over to Jean-Pierre.
Jean-Pierre Sommadossi: Thank you, Jonae. Good afternoon, everyone, and thank you for joining us. Since the beginning of the year, we made great progress across our COVID-19 and HCV program. So as you can see on Slide 3, for our COVID-19 program, enrollment in SUNRISE, our global Phase III, reflect the inflection rates occurring globally and the study global footprint, supported by clinical data, including favorable efficacy, safety and lack of drug interaction profile of bemnifosbuvir, we are pleased with the progression of SUNRISE-3 study, and we look forward to several important milestones in 2024. Our goal for this program is to deliver an effective treatment to the millions of patients for whom the current standard of care is not adequate.
COVID is here to stay. And the area where there was great vulnerability is the urgent need for additional oral antivirals. We believe that bemnifosbuvir has the potential to address the key limitations of current COVID-19 therapies, including safety and drug-drug interactions. New, safe and well tolerated, oral therapies are also needed to keep up with the evolution of the virus. The SARS-CoV-2 virus indeed is accumulating mutations with amino acid substitutions faster than any other endemic RNA virus. To prevent the emergence of cross-resistance, we need a broader and more diversified arsenal of oral antivirals with various distinct mechanism of action. As part of a multipronged approach against COVID-19, we continue to also make progress with our discovery program focused on the second-generation protease inhibitor that is highly differentiated and has a well-suited clinical profile, and we expect to share an update sometime early next year.
For our HCV program, we are very pleased with the substantial progress made in our Phase II combination study of bemnifosbuvir and ruzasvir. We have quickly completed enrollment of the 60-patient leading cohort, and initial results are expected in early 2024. Our goal for this program is to substantially enhance the current standard of care by offering an 8-week pan-genotypic protease-3 treatment options for HCV patients. Despite treatment options, indeed, there remain a large underserved HCV patient population that continues to grow dramatically, even in the United States, due to the opioid crisis, injection drug use and HCV reinfection. For both our COVID-19 and HCV program, which each multibillion-dollar commercial opportunities, we are well capitalized to achieve key inflection points with a cash runway well into 2026.
As of September 30, we had $595.1 million of cash and cash equivalents, and Andrea will go over the details with you. I will now turn the call over to Janet for an update on our COVID-19 program.
Janet Hammond: Good afternoon, everyone. As Jean-Pierre just stated, COVID-19 variants are continuing to evolve at a very rapid pace. On Slide 5, you can see how, as quickly as every 2 weeks, the variant proportions in the United States are changing based on genomic sequencing results. These rates are faster than reported for any other RNA virus. And you can see why it isn't surprising that there are so many new variants circulating, and it isn't possible to predict how these variants might further evolve in terms of which mutations come next and the associated rates of infectivity and ability to cause severe disease. The CDC is currently monitoring 35 variants, of which HV.1 is the latest to be the dominant string. But there are hundreds more that haven't yet reached the level of community spread to appear on their radar.
Not showing up on this slide yet is the variant of Omnicon BA.2.86 and its new mutation, which is called JN.1, which contains a further 41 additional unique mutations compared to XBB.1.5. As you can see, as a result of this, we're caught in a perpetual game of catch-up with continued attempts at updated vaccines that are often outdated before they become available. Each new variant introduces mutations that can impact vaccine efficacy and durability. On top of this, first-generation monoclonal antibodies have quickly become obsolete with authorizations revoked due to waning efficacy. Alarmingly, it is apparent that some recently circulating variants seem to have resulted from the use of monoclonal antibodies. All of this underscores the important role for direct-acting oral antivirals, which are effective independent of new mutations.
Importantly, bemnifosbuvir has a high barrier to resistance due to its unique mechanism of action maintaining potency against all variants tested to date. And we anticipate that this will be the case as new variants continue to emerge. Turning to Slide 6. Supported by our extensive global footprint, we're seeing promising enrollment trends in our SUNRISE-3 trial. We have strong patient enrollment in the U.S. where clinical sites have been responsible for approximately 50% of the patients to date. The majority of patients globally continue to be enrolled in the monotherapy arm despite their awareness and availability of current oral antiviral options. This clearly highlights the ongoing important unmet medical need, which continues due to safety concerns, tolerability and potential drug-drug interactions, which limit the use of the currently available agents.
Heading into this winter, forecast from the U.S. CDC suggests that this respiratory season should be similarly high to last year, where our hospitals were more full than at any other time point in the pandemic and worse than pre-pandemic years. It's predicted that COVID-19 will likely account for approximately half of those hospitalizations with flu and RSV combined accounting for the other half. There's a very low COVID-19 booster uptake with the latest vaccine at approximately only 7% of U.S. adults, which leaves many susceptible to the virus without a suitable treatment option. The most vulnerable to severe COVID infections are the elderly, the immunocompromised, and those with underlying risk factors for severe infection. Turning to Slide 7.
As a reminder, SUNRISE-3 is focusing on high-risk patients, and its primary endpoint is all-cause hospitalization or death through day 29, in approximately 2,200 patients in the supportive care monotherapy arm. There are 2 planned interim analysis for DSMB review at approximately 650 patients and again at 1,350 patients in the supportive care monotherapy arm with initial top line data also anticipated next year. Please note, the DSMB's review we do not expect to report efficacy results as these analysis are primary geared towards safety and futility. In April, we were granted fast track designation for bemnifosbuvir, which reflects the recognized unmet medical need that remains for COVID-19 patients. We believe that the compelling profile of bemnifosbuvir has differentiated both clinically and preclinically with its lower risk for drug interactions and its good tolerability profile, as well as the absence of mutagenicity and embryo-fetal toxicity in the preclinical study.
Our goal for COVID-19 is to deliver a safe, tolerable and effective treatment to the millions of patients for whom this current standard of care is not a suitable option. I'm now going to hand the call over to John to review the COVID-19 commercial opportunity.
John Vavricka: Good afternoon, everyone. On Slide 9, let's discuss the COVID-19 landscape of active oral antiviral programs in clinical development in the U.S. under FDA review. As you can see, SUNRISE-3 is the only Phase III program in the U.S. that is evaluating a new oral antiviral exclusively for the treatment of high-risk patients. Turning to Slide 12 -- I'm sorry, so turning to Slide 10. The prescription demand for oral antivirals to treat COVID correlates with the infection rates. The demand for oral antivirals in 2023 has been considerable and shows that the U.S. is averaging approximately 580,000 scripts per month, January through September. Turning to Slide 11. As of November 1, the market for COVID-19 oral antivirals began transitioning to the traditional payer markets, such as Medicare, Medicaid and private commercial insurance.
Oral antiviral therapeutics for COVID-19 are expected to remain a multibillion-dollar opportunity for years to come. Projected annual COVID-19 oral antiviral U.S. demand, using IQVIA retail prescriptions, suggest an estimated annual global market opportunity of approximately $10 billion. And to our knowledge, this is one of the -- become one of the largest antiviral markets, concentrated with only 2 products that have key limitations. We believe there is still an unmet need with critical gaps, and there is an opportunity to expand this market to patients where Paxlovid tolerability and drug-drug interactions is a concern, in addition to the safety concerns with Lagevrio. I'll now turn the call over to Arantxa to review our Phase II HCV program.
Arantxa Horga: Thank you, John. Moving now to Slide 13, let's discuss our Phase II hepatitis C program, a novel combination of bemnifosbuvir and ruzasvir. We recently achieved an important milestone and we completed enrollment of the 60-patient leading cohort. In this cohort, we are evaluating the combination of bemnifosbuvir and ruzasvir for safety, tolerability and sustained biological response or SBR at week 4. The primary endpoint of the study remains at SBR week 12. But as you may know, there is an accepted correlation between SBR at weeks 4 and 12. And utilizing this correlation allows us to accelerate the study. Patients will complete treatment this quarter. And factoring in the time line for data analysis, we expect to announce initial results early 2024.
We are expanding the study geographical footprint to approximately 50 clinical sites in 15 countries, and we plan to reinitiate enrollment after we review the results from the leading cohort. We are receiving global regulatory approvals for the remainder of the trial and our broad investigation network will help to lay the groundwork for the anticipated initiation of a global Phase III trial, which is expected in the fourth quarter of 2024. Slide 14 outlines our Phase II open-label study of bemnifosbuvir and ruzasvir in hepatitis C patients. This study is expected to enroll a total of approximately 280 antiviral naive patients across all genotypes, including the leading cohort of 16 patients. Patients are administered 550 milligrams of bemnifosbuvir in combination with 180 of ruzasvir once daily for 8 weeks.
The primary endpoints of the study are safety and sustained biological response or SBR at week 12 post-treatment. Other biological endpoints include biological failure and viral resistance. We believe that the combination of bemnifosbuvir and ruzasvir has the potential to substantially improve upon the current standard of care by offering a protease inhibitor-free 8-week duration option for hepatitis C patients with and without cirrhosis. I would like to note, before I hand over the call to Andrea, that we will be presenting 2 posters at the 2023 Annual Meeting of the American Association for the Study of Liver Diseases later this week. They include supportive data for bemnifosbuvir and ruzasvir highlighting the potential to use these 2 drug candidates together as a novel treatment for hepatitis C.
And with that, I will now turn the call over to Andrea to summarize Atea's financial position.
Andrea Corcoran: Thank you, Arantxa. As Jonae mentioned in her introductory remarks, earlier today, we issued a press release containing our financial results for the third quarter of 2023. The statement of operations and balance sheet are on Slides 16 and 17. For the third quarter 2023, G&A expenses remained relatively consistent with the third quarter of 2022. There was an increase in R&D year-over-year third quarter related to the advancement of our COVID-19 and HCV clinical programs. We do anticipate that R&D expenses will continue to increase in a measured way as these programs continue to advance. We are exercising focused financial discipline to manage spend as we invest in both of these programs. At the end of the third quarter of 2023, our cash, cash equivalent and marketable securities balance was $595.1 million.
Based on our current plans, we are reiterating our cash guidance with a runway well into 2026. I'll now turn the call back over to Jean-Pierre for closing remarks.
Jean-Pierre Sommadossi: So in closing, we have made great clinical and operational progress across our COVID-19 and HCV program so far this year. We have also published and presented a significant scientific and clinical evidence in support of the potential of our clinical programs among an audience of leading virologists and infectious disease specialists at several scientific conferences this year. We will continue to highlight the potential of our programs at upcoming scientific conferences, including AASLD later this week, and through the publication of our data. We know the clinical data are very important and the number of interim analysis and data readouts starting in early 2024, we believe that next year will be transformational for Atea.
As always, we thank you for your continued interest and support of Atea as together, we strive to address the unmet medical needs of patients with serious bowel diseases. With that, operator, we will now open the call up to your questions.
Operator: [Operator Instructions]. Our first question comes from the line of Eric Joseph with JPMorgan.
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