Altimmune, Inc.
Q4 2020 Earnings Call Transcript

Published: 25 Feb 2021

[Operator:]

Greetings and welcome to the Altimmune Year End 2020 Earnings Conference Call. Currently all participants are in a listen-only mode. A brief question-and-answer session will follow the prepared remarks. As a remainder this conference is being recorded. It is now my pleasure to introduce your host for todays call Ms. Stacey Jurchison, Senior Director of Investor Relations and Corporate Communications at Altimmune. Stacey you may begin.

[Stacey Jurchison:]

Thank you, operator, and good morning everyone. Thank you for participating in Altimmune's year end 2020 earnings conference call. Leading the call today will be Vipin Garg, our Chief Executive Officer. Additional members of the Altimmune executive team participating on the call today are Will Brown, our Chief Financial Officer; Scot Roberts, our Chief Scientific Officer; and Scott Harris, our Chief Medical Officer.

[Vipin Garg:]

Thank you, Stacey, and good morning everyone. We appreciate you joining us today for a discussion about 2020 financial and operating results, and a 2021 business outlook. Without hesitation I can proudly say that 2020 was the transformative year for Altimmune and our shareholders. Our historical development efforts lays the groundwork to enable us to unlock the value of our portfolio as we advance our five novel product candidates in clinical development. I'm pleased to say that each of our candidates has the opportunity to reach value inflection points in 2021 and beyond. Never in our history have we had such an impressive portfolio with so many opportunities to build value. As you will hear about in more detail shortly from Scot Roberts and Scott Harris we believe the intranasal vaccines and peptide therapeutics are developing may provide novel solutions to unmet medical needs and potentially have highly favorable attributes that are differentiated from existing therapies or treatment approaches.

[Scot Roberts:]

Thank you, Vipin, and good morning everyone. It's been an especially rewarding year at Altimmune from a scientific perspective, as we deploy our expertise to initiate clinical development programs for AdCOVID and T-COVID to do our part to help fight this devastating pandemic. As Vipin mentioned, we believe AdCOVID has unique attributes that distinguish it from other currently authorized vaccines, most notably the simple intranasal dosing has potential for single-dose protection and potential to provide both systemic neutralizing antibody and local mucosal immunity in the respiratory track. Additionally, we've seen excellent tolerability in our NasoVax and NasoShield clinical studies, which are based on the same platform technology is AdCOVID, with its anticipated ability to be distributed at room temperature and stored in refrigerator for years, we believe AdCOVID could be a key COVID-19 vaccine for both vaccination and revaccination, and can play an important role in helping facilitate and then to the global health crisis. During the past year, we completed and provided outline the results of preclinical studies of AdCOVID demonstrating compelling results. Briefly these data showed strong activation of all three arms of the adaptive immune system by that, I mean high systemic serum neutralizing antibody titers, robust T-cell responses to the viral spike protein primarily of the killer CD8 T-cell type and importantly T-cells of the resident memory type were also observed in the lung poised there to combat viral infection. And finally, and most importantly, the preclinical data showed a pronounced induction of mucosal IgA specific to the spike protein in the respiratory track following the single intranasal dose of AdCOVID. We were very encouraged by these data and believed that the robust IgA response combined with the lung associated with tissue resident memory T-cell response may yield an enhanced level of immune protection against COVID-19 disease and importantly transmission. Also during the year we expanded our collaboration with the University of Alabama at Birmingham, and established a new collaboration with Saint Louis University to build on the accumulating preclinical data for AdCOVID. Specifically, these studies were conducted – we are conducting with these collaborators are designed to evaluate the efficacy of AdCOVID and challenge models demonstrate its ability to reduce viral transmission and evaluate heterologous prime boost vaccine regimens. Data from these studies are expected later this quarter.

[Scott Harris:]

Thank you, Scot, and good morning everyone. As Vipin said at the outset of the call, this is a very important year for Altimmune from a clinical perspective, with five of our pipeline candidates now advancing into clinical development and meaningful data readouts anticipated throughout the year. That said we are pleased to announce the initiation of our AdCOVID Phase 1 clinical trial today, given the known and potential advantages of an intranasal vaccine approach. There is considerable interest in our AdCOVID program. To briefly recap the Phase 1 trial will evaluate the safety and immunogenicity of AdCOVID in up to 180 healthy adult volunteers between the ages of 18 and 55. Volunteers will receive AdCOVID at one of three dose levels administered as a nasal spray. While the experience from our influenza vaccine platform in preclinical experiments from the University of Alabama at Birmingham indicates that AdCOVID should be effective after a single dose. We plan to study the effects of both prime and prime boost in this study. In addition to the primary study endpoint of safety and tolerability, the immunogenicity of AdCOVID will be evaluated by serum IgG binding and neutralizing antibody titers, mucosal IgA antibody from nasal samples, and T cell responses. We anticipate a full data read out from this Phase 1 trial in the second quarter of 2021. We continue to explore additional development opportunities for AdCOVID, including as Scott mentioned, designing studies to address the efficacy of AdCOVID against variant straints use in a heterologous prime boost regimen and use in a pediatric setting. As the understanding of the pandemic constantly shifts we remain nimble and will continue to adopt our development path to address these evolving needs and opportunities, most importantly visibility into the Phase 1 clinical data, which we expect to have in the second quarter, will guide these opportunities.

[Will Brown:]

Thank you, Scot, and good morning, everyone. For today's call I'll be providing a brief update on Altimmune's year-end 2020 financial and operating results. More comprehensive information can be found in our Form 10-K filed with the SEC today. Altimmune ended 2020 with cash and short-term investments totaling $216 million. The increase in our net cash year-over-year is the result of the receipt of approximately $124 million and net proceeds from a public offering $48 million in net proceeds from the issuance to common stock from our ATM Program and $41 million in proceeds from the exercise of warrants. Today, we entered into an equity distribution agreement with Piper Sandler, Evercore, and B.Riley under which we may offer and sell up to $125 million of our common stock for working capital in general corporate purposes. We feel this is a good corporate housekeeping measure, which gives us optionality into the future. We are solidly capitalized to advance our pipeline candidates through at least the next 12 months of operations sending results from our ongoing clinical programs. A significant element of our anticipated cash utilization in 2021 will be directed towards manufacturing scale-up and advanced clinical trials as we progress AdCOVID through development. Turning to the income statement; revenues in 2020 was $8.2 million compared to $5.8 million in 2019. The change in revenues year-over-year reflects an increase in revenue from our U.S. government contracts due to the timing of manufacturing and clinical trial activities for both our NasoShield and T-COVID programs. Research and development expenses were $49.8 million in 2020, compared to $17.8 million in the prior year. The increase was primarily attributable to increased costs related to the development of AdCOVID,-T COVID and ALT-801 and includes an increase in the contingent liability for stock-based milestone payments associated with the acquisition of ALT-801. General and administrative expenses were $13.2 million in 2020, compared to $8.5 million in 2019. The increase year-over-year is attributable to additional employee compensation as Altimmune's workforce expanded during the year, as well as increased professional costs. Income tax benefit in 2020 was $5.4 million compared to $60,000 in the prior year. The increase is attributable to the CARES Act passed on March 27, 2020, which may temporary changes regarding the utilization and carry-back of net operating losses. We are in the process of filing refund claims with federal and state authorities to collect this cash benefits. Net loss attributed to common stock holders for the year ended December 31, 2020 was $49 million or $1.91 net loss per share compared to $20.9 million in the prior year or $1.60 net loss per year. The difference in net loss is primarily attributable to higher research and development expenses and G&A expenses offset the higher revenue and an increase in the income tax benefit. I will now turn it back over to Vipin for his closing remarks. Vipin?

[Vipin Garg:]

Thank you, Will and Scot Roberts, Scott Harris for your remarks. The tremendous effort and dedication the entire Altimmune team has tirelessly demonstrated over the past year has brought us to this important juncture. With each of our portfolio candidates now in clinical development and poised to make important advances this year. As you heard on this call, we have a data and catalyst-rich period ahead of us. As we anticipate multiple data readouts from four of these programs in 2021. AdCOVID, T-COVID, ALT-801 and NasoShield with HepTcell data anticipated in 2022. If successful, we believe that each one of these programs has the potential to advance science and medicine and address important outstanding unmet best patient needs. We're extremely proud of where we have come as a company in a short time and where we are positioned today. And we look forward with much anticipation to the future. We will continue to work tirelessly for patients and for our shareholders to realize the full potential and value of the opportunities in our portfolio. We look forward to keeping in touch and keeping you appraised of our progress as the year unfolds. Once again, I thank you for your continued support of Altimmune and for your participation on our call today. Operator, that concludes my formal remarks. Could you please instruct the audience on the Q&A procedure?

[Operator:]

Thank you. Our first question comes from the line of Yasmeen Rahimi with Piper Sandler. Please proceed with your question.

[Unidentified Analyst:]

Hi. This is Rachel on for Yasmeen. Thanks very much for taking our questions. Can you provide us with some color on what type of activities are going on to additional AdCOVID metric? Are you targeting the emerging size COVID 2 variant? And how long will it take to develop new investors to combat ? Thank you.

[Vipin Garg:]

Yes. Good morning, Scot Roberts, do you want to take that question please?

[Scot Roberts:]

Sure and good morning. So the preparations that are currently underway include making a variant of vaccines against the primary variants that are circulating the South African, the UK, the one in California. We see there's a new one here in New York that shares a lot of commonality with the South African. And so it's easy for us to make these – to make these changes within the vaccine and our goal is to create a number of bioseed stocks, and have those prepared and released so they can be used for GMP manufacturing in preparation for trial conducted in a region where the variant is circulating. So this is really all about getting ahead of the curve, doing our best with the information that's available to us, to make these variants and have them ready-to-go so that we can then execute. So the whole process is fairly quick for vector like ours and to have these then available to us and dropped into the manufacturing process, which is the same as we've discussed earlier for all of our vaccines, which is a tremendous advantage then that puts us in the best position to respond quickly to whatever the current environment is.

[Unidentified Analyst:]

Thank you. That's incredibly helpful. And can you also provide some color on how discussions are going with regulators in regard to design and considerations for pediatric trial? And when can we expect details on timelines for pediatric trial? Thank you.

[Vipin Garg:]

Scott Harris do you want to take that question please?

[Scott Harris:]

Sure. Good morning, Rachel. Yes, we're having active discussions right now with the agency. There's nothing that we can really disclose at this point because those discussions are not final, but we're looking to implement a pediatric trial in the middle of the current year.

[Unidentified Analyst:]

Thank you so much, and congratulations on your progress.

[Operator:]

Thank you. Our next question comes from line of Seamus Fernandez with Guggenheim. Please proceed with your question.

[Seamus Fernandez:]

Great. Thanks for the question. So, yes, congratulations on all the advancement. Just wanted to ask a couple of questions here. First off could you guys update us; I know you did – you've kind of got these single ascending dose that's proceeded with 801, obviously, I love the decision to move forward and have the Australian trial expand to the 12 weeks. So can you just update us a little bit on – or do you have some visibility from that trial in terms of the tolerability profile, from the single ascending dose program. Incremental to that on the prime boost plans, could you guys just give us a general sense of what type of a product you think would be the ideal partner on for your assets and are you in discussions with some of the potential players that are already in mark or poised to be in market as a partner vaccine or positive prime boost. To us it seems like a really unique opportunity to collaborate especially given the need to potentially reduce transmission with the antibiotic program? And I have a couple of other follow-up questions, but let's start with those two.

[Vipin Garg:]

Yes. So maybe – good morning Seamus. Maybe we can take these questions in reverse order and go to the – your question about the prime boost first. Scot Roberts, do you want to take that and just describe the features of the ideal candidate for prime boost?

[Scot Roberts:]

Sure. Vipin, happy to and good morning, Seamus. So we think about what's the best way to move forward as a community to respond to the pandemic. Obviously you wanted well-tolerated vaccine and you want a vaccine that can block transmission because it's through transmission and through the growth of the virus and other individuals that these variants that, that we're wrestling with pop-up and so. Cutting that off at the start is clearly advantageous. And so without mucosal immunity, which is clearly best suited to block infection and block transmission and our anticipated exceptional tolerability profile we think that as a boost to whatever regimen, AdCOVID offers a significant advantages. So that, that said obviously a boosting a strong prior immune response is going to be more beneficial than boosting a weak response. And I say that the – having a T-cell response will also be helpful because then with mucosal administration, you can pull those T-cells into the respiratory tract, further improving the immunity. So, I think that there are probably some better and some with our second tier of nations, but in the general sense that's how we're thinking about things.

[Vipin Garg:]

And I would just add that it's important to realize that if COVID-19 out of this disease becomes an endemic, we're going to need yearly boost. So it really doesn't matter what vaccine people received at the beginning. You're going to need after-after-year; you're going to need a boost. So as long as you have a safe and well-tolerated vaccine, that's blocking transmission and developing this new course and immunity, we think we can really be used as a boost with any of the existing vaccines. So along those lines, obviously the data will dictate that, but we'll see how the whole field develops.

[Seamus Fernandez:]

And maybe if I can; can you guys update us how you're thinking about the updated FDA guidance. Obviously there's a lot in there, but in terms of the guidance on variants in particular how are you thinking about the development of an advancing your own vaccine, targeting your own AdCOVID targeting those variants? Are we talking about variance intranasal administration, original plus a variant prime boost, multi-family constructs, I'm just trying to get a sense of what's possible and how you're thinking about the updated FDA guidance. I think that's probably the big question that the investors are wrestling with right now?

[Vipin Garg:]

Yes. Scott Harris, do you want to address the regulatory perspective the FDA guidance?

[Scott Harris:]

Yes. And good morning again, Seamus. So the guidance that was written – was oriented predominantly to vaccines that are under EUA. So there's a bit of guesswork as to how to apply to vaccines that have not currently done clinical trials. Clearly there's going to be a need to establish the effectiveness of a vaccine oriented around a strain. We would hope that that could be done by a correlative protection, in other words based on immunogenicity, but that will rather than a full clinical trial. So there's a potential there of not conducting a full Phase 3 trial, but we don't know what that current potential is. And there's clearly a great interest in the use of boosters against the variants in order to get protection against those new strains. And again, the concept would be that this would base to be based on an immunogenicity rather than a clinical readout, but we're going to have to see how the agency treats the vaccines that do not currently have us.

[Seamus Fernandez:]

Got it. Perfect.

[Vipin Garg:]

And Scott Harris, do you want to address the question about 801?

[Scott Harris:]

Yes. Sure. So Seamus, we are very happy with the way the trial is proceeding right now. We've made a decision not to make any announcements about we'll look at the data so far, because that would constitute enormous analyses, which are not provided for in the protocol and would be disruptive to the commitments made to regulators. So what I can say in general is that the trial is progressing well. It's moving ahead the way we taught and we're going to have the readouts which we believe will be very positive for six weeks in the second quarter; and for 12 weeks in the third quarter.

[Seamus Fernandez:]

Okay. Maybe just one final question. Can you just update us on sort of the structure of the U.S. IND going forward? And that's my final question, just in terms of the advancement into sort of the full NASH program, just wanted to get a sense of what the needs are from the IND perspective, and then with the data that you have from Australia, do you believe that you can initiate the full Phase 2 NASH study using those data? Thanks.

[Vipin Garg:]

Yes, absolutely. So very often, in fact most cases the IND is filed before clinical trials, but many sponsors, Seamus have chosen to go outside of the U.S. and their Phase 1 particularly Australia and the FDA is very comfortable with that. So we'll actually coming to the IND process with clinical data rather than just preclinical data, which puts us at a great advantage in terms of the discussions. And in fact specifically how the program was designed to have a much later discussion of the clinical program at the time of IND, because we were coming in with clinical data. That IND is to set-up the Phase 2 trial that we talked about earlier in the presentation. And we anticipate it will be filed approximately in the middle of this year. We obviously will have clinical data from the Phase 1 trial to support that. So we're very happy with the timing and we feel very confident about the ability to initiate that Phase 2 trial in the first part of 2022.

[Seamus Fernandez:]

That is super helpful. Thanks so much, guys.

[Vipin Garg:]

You're welcome.

[Operator:]

Thank you. Our next question comes from the line of Kelechi Chikere with Jefferies. Please proceed with your question.

[Kelechi Chikere:]

Hi, good morning. Thanks for taking my questions. I was hoping to get some clarification on the timing for data for AdCOVID; I know there was a belief that you could potentially have data on a subset of patients by the end of this quarter and full dating in Q2, but it looks like at least in the PR you're mentioning full data in Q2 with no mention of any substantive data in Q1. Can you clarify that for us? And my second question is related to, what do you think the is for moving at COVID into a Phase 2? Do you need to see neutralizing antibodies in the nasal cavity as well as in the serum before you say; okay this is something that could be moving into a Phase 2. And the reason why I'm asking that is because as you think about running a Phase 2 or Phase 3, based on potential in trying to get potential approval based on surrogate protection. How important are those markers for that eventual approval et cetera?

[Vipin Garg:]

Scott Harris, do you want to talk and maybe Scot Roberts can jump in.

[Scott Harris:]

Sure. Again, good morning, Kelechi. So we've not made any changes in our position. What we're emphasized here is the availability of what we consider to be meaningful data. So while we will have data in the first quarter, we wanted to emphasize that the meaningful readout would occur in the second quarter. And we're emphasizing that in the call today in the press release. And that's when we really feel that the full communication, on the trial results can occur. I'll defer to the second question to Scot to answer.

[Scot Roberts:]

Yes. Good morning. So on the point; what do we need to see to confident advancing? I think that neutralizing antibodies are clearly part of the picture, a, that's how it's really the only measure because our strong T-cell induction and our unique ability to generate mucosal immunity, because those are those unique attributes and so difficult to compare across platforms until the neutralizing antibodies is going to give everybody the confidence that this thing is working the way we expect it to, and then also will be necessary for use of a surrogate potential is going to move before. We think that thing is moving along very quickly and that there's a real opportunity there. And by the time we're in advanced clinical studies to take advantage of that surrogate, next is going to be based on neutralizing antibody. So that’s clearly a key. As far as the neutralizing the nasal cavity, that's something that we'll be looking at and that's fine. I think for the Phase 1, clear demonstration that we have the induction of IgA, like we've seen in all of our other intra-nasal clinical studies is expected. And I think that being to check that box. Neutralizing whether or not those – whether or not what those assays get executed. And with that, depending on a number of other factors, we don't see that is necessarily critical at this stage. There is a number of other opportunities to validate the role of the mucosal immunity. It's already been established with influenza and RSV. And we're looking at those, and so in the Phase 1, I think the presence of IgA and clearly the neutralizing antibodies, and of course we'll have the T-cell data also.

[Kelechi Chikere:]

Perfect. Thank you very much. That's really helpful.

[Operator:]

Thank you. Our next question comes from the line of Mayank Mamtani with B.Riley FBR. Please proceed with your question.

[Mayank Mamtani:]

A good morning team. Thanks for taking my question and congrats on the progress. I mean, first focusing on the first quarter catalyst. Can you talk a little bit about the design of the heterologous study that it seems like you added Saint Louis University to the collaboration recently? Can you just talk about what is the design? What animal model you're looking at and insight of what helps you understand better about the transmission blockade of AdCOVID from that study?

[Vipin Garg:]

Yes. Good morning, Mayank. So we're in that study where the model is the transgenic mouse model. That's the model after Saint Louis is been using for a while and it's a very, very expert at. And what we're doing is comparing the vaccine activities and efficacies of a RNA vaccine that closely mimics the RNA vaccines that are currently authorized and AdCOVID. So these will be used as single agents and then combined in a heterologous prime boost, looking at order of addition, which vaccine comes first to understand the overall immune responses, which order provides the best immune response? How best to control and close the replication of the virus in the respiratory tract. And so really just understanding the system of how the interaction of two different vaccines proceeds. Obviously, if we can reduce the amount of viral shedding or replication, and ideally even remove it completely, that has a direct knockdown effects for transmission. So that's kind of like the 30,000 foot overview for the studies that are going on there at Saint Louis University.

[Mayank Mamtani:]

Great. And maybe – and the second question, if I can follow-up on your comments made previously on the FDA guidance and also on the experience with flu. Now, if you think about that NASH factors, the FDA guidance was not very clear in quantifying, which does to be a positive for the field that the ball is not that high. But I'm just curious what do you think relative to natural infection, your NASH should be, when you think about progression for the next step. Any quantities color you can provide?

[Vipin Garg:]

I'm reluctant to do that because currently I think we're getting close to having a harmonized assay's performed with harmonized reagents. And so you can really do the comparisons and understand what's going on. This is what they got. This is what we got in a meaningful way. We're not there yet. The temperature has released at the end of last year. The critical reagents that are necessary is qualified as – that I have assigned values for neutralization then IgG binding, and so that's going to be critical. I mean, I think we all have a sense of what, like a neutralizing titer like 20 or something like that is not going to be too exciting, but I think we get up into the 100s, when compared that to a convalescent serum that's available and we can put these things in perspective. And I think to be a quantitative at this stage right now is – be less informative. I think that we're getting close though to having those types of conversations that everybody wants to have. How will these things really do relate to each other, but we're not quite there yet.

[Mayank Mamtani:]

Got it. And obviously in the context of the emerging variants, that could become even more interesting, because – I mean I kind of listen to the numbers could also change, but maybe just a final question was under modularity of the platform. As you saw from the testimony given by the prime vaccines on Tuesday, it does seems like adenovirus platform in general may not have the same timelines in which they can come up with the new vaccine for the variant. I'm just curious like, with your platform again, I’m clear on timing, but still can you provide the differences between adenovector versus the Ad26 that is part of the NDA vaccine?

[Vipin Garg:]

Sure. So, you're right. There are vectors unchanged as quickly the RNA, and that's why the RNA vaccines are really got the attention and the initial funding to get where they are now in that that's fantastic. The important question is how quickly can we make the variance in relation to the evolving landscape of circulation of that variant. And so we can make these things in a very short amount of time in order of a month and have these ready. And so the bio-dynamics and the population are not changing that quickly. There is plenty of time to understand what's going on? Where you doing your work? And have the right vaccine. So yes, not as fast but fast enough, yes, also to that.

[Mayank Mamtani:]

Great. Thanks for taking my question.

[Operator:]

Thank you. Our next question comes from the line of Jonathan Wolleben with JMP Securities. Please proceed with your question.

[Jonathan Wolleben:]

Hey, good morning, and congrats on all the progress. Just two questions for me. Talk a lot about AdCOVID, I was hoping if you can extract the way that things go as planned, what the next NASH look like in terms of next study, if that could be registrational and when that could kick-off? And then second question on 801. You discussed that you're expecting robust reductions in liver fat and body weight. I was hoping you could help us quantify kind of expectations. Given this first readout will be six weeks in duration?

[Vipin Garg:]

Scott Harris, I think you can handle both of these.

[Scott Harris:]

Yes. Good morning, Jonathan. So we are – we've just initiated the Phase 1 trial of AdCOVID with a readout that will occur – a full readout, which will occur now in the second quarter. And we are planning right on the heels of that to initiate a Phase 2 trial, which would probably start toward the end of the second quarter. And that trial was looking like a traditional Phase 2 trial with studying all age groups, as well as a larger number of patients on the immunogenicity and safety read-outs. Regarding the second question, I'm going to defer to comments that were made by recent conference call, and also look at the semaglutide data that was recently published in New England Journal on a weight loss trial. That was not a NASH trial, but the results of that trial are very similar to the NASH trial that was published at the end of last year. And with that at six weeks, they had a reduction of 3%. Now it should be pointed out that all subjects in that trial were placed on a restricted diet with a net negative of 500 kilocalories per day, as well as exercise and with that even the placebo subjects in the six weeks lost 1%. So if one were to take the 3% growth and subtract the baseline at 1% due to dive-in exercise which cannot implement in a Phase 1 study, because it's a safety and tolerability study, not an efficacy trial, and that we couldn't do in a Phase 1 first in human trial. If you look at the net, its six weeks, it would be 2%. Now we think that's the floor, but we think that's a minimum the show that we're at least on par with semaglutide, and we think we can do better.

[Jonathan Wolleben:]

That's very helpful. Thanks again and congrats on all the progress.

[Vipin Garg:]

You're welcome.

[Operator:]

Thank you. Ladies and gentlemen that concludes our question-and-answer session. I'll turn the floor back to Mr. Garg for any final comments.

[Vipin Garg:]

Yes. Thank you everyone for listening in today. We hope you'll join us on our next quarterly earnings call and have a nice day.

[Operator:]

Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.