Altimmune, Inc.
Q1 2019 Earnings Call Transcript

Published: 15 May 2019

[Operator:]

Greetings, and welcome to the Altimmune First Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note this conference is being recorded. I would now turn the conference over to your host Ms. Monique Kazi [ph]. Please proceed.

[Unidentified Company Representative:]

Thank you, operator, and thank you everyone for participating in today’s first quarter 2019 earnings conference call. Leading the call today will be Vipin Garg, Chief Executive Officer of Altimmune. Also participating on the call today is Will Brown, Acting Chief Financial Officer; and Scot Roberts, Chief Scientific Officer. After their prepared remarks, we will open-up the call for a question-and-answer session. A press release with the first quarter 2019 financial results was issued yesterday after the close of the market 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 purposes 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. For a discussion of some of the risks and 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, Wednesday, May 15, 2019 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.

[Vipin Garg:]

Thank you, Monique, and good morning, everyone. Thank you for joining us today. We are pleased to be here to provide you with the first quarter 2019 financial results and business update. Joining me on the call today is Will Brown, our Acting Chief Financial Officer, who will review our first quarter financial results and Scott Roberts, our Chief Scientific Officer who will provide an important update on our nasal shield program. After our discussion, we will open the call for Q&A. I'm pleased to report that, we are continuing to execute on the strategy we outlined last quarter. We remain focused on building an immunotherapeutics company with multiple product candidates in development. The search and evaluation committee we formed last quarter has been very active in analyzing and evaluating potential acquisition and in-licensing candidates focused on liver diseases, immunoncology and other complementary therapeutic areas. We have been very pleased at the level of interest and activity in this process. Our goal is to build a robust pipeline of product candidates that gives Altimmune multiple shots on goal for success and build shareholder value. Given the level of interest, we believe that we are well on the way to achieving our goals and will update investors as appropriate. Financially, we continue to maintain our strong cash position. Ending the quarter with approximately $45 million. As discussed on our call -- on our last call, the $14 million gross equity raise that occurred near the end of Q1 was extremely important to position ourselves during the acquisition process. We are keenly focused on managing our expenses to preserve our cash for the development of our current programs and to reserve resources for the potential -- for potential future programs. Scientifically, we continue to execute as we prepare HepTcell for a Phase 2 clinical study to be initiated in the U.S. in the near future. We presented the results from our successful Phase 1 clinical study of HepTcell at the International Liver Congress in Vienna, Austria and the full presentation is now available on our website. We continue to be very excited about our immunostimulant product candidate ALT-702, a highly potent and selective dual TLR-7, TLR-8 agonist conjugate that is designed to act locally in the immunosuppressive tumor microenvironment to induce local and systemic antitumor responses. ALT-702 is a first-in-kind product candidate based on our synthetic peptide technology platform and we have recently initiated pre-clinical development of ALT-702. We anticipate announcing more details in the coming months as we complete the pre-clinical data set. We also presented our NasoVAX Phase 2 and related extensions study results at the World Vaccine Congress in April. Data from the extension study demonstrated that the immunogenic responses were quite durable with 100% of the evaluative subjects remaining seroprotected with no decrease in seroconversion rate more than one year after vaccination. Durable responses on the order of one year are not expected from current injected influenza vaccines and suggest that the immune response induced by NasoVAX could be protective for the duration of the long flu season. As discussed on our last earnings call, we have initiated discussions with potential partners to help us further develop and ultimately commercialize this product candidate. We are being patient and deliberate in this process and understand it will take time to find a partner who can best help us move this program forward. I would like to turn now to an important update on NasoShield, our intranasal anthrax vaccine that we are developing in partnership with BARDA. Here to discuss our recent results is Scot Roberts. Scot?

[Scot Roberts:]

Thank you, Vipin and good morning. We reported previously that in a Phase 1 clinical study, NasoShield showed excellent tolerability, but the level of immune response was not consistent with pre-clinical data generated in standardized models of anthrax. As part of the investigation into possible causes for the lower than expected activity of NasoShield in the clinical study, we evaluated both manufacturing related, as well as intranasal dosing related issues that could have contributed to the diminished immune response. We are pleased to report that the results of the investigation are very encouraging and clearly show that while the vaccine product used in the clinical study meets all manufacturing standards, the method of intranasal administration to the study participants had likely interfered with the ability of the vaccine to elicit a robust immune response. We believe that a simple adjustment in the intranasal dosing procedure will allow NasoShield to elicit a full immune response in humans. We also believe that if it approved by the FDA, NasoShield has the potential to be a transformative anthrax vaccine.

[Vipin Garg:]

Thank you, Scott. With that, I would like to turn the call over to Will Brown for an update on our financials. Will?

[Will Brown:]

Thank you, Vipin and good morning everyone. For today's call, I'll be providing an update regarding our first quarter 2019 financial results. As David mentioned, we ended the quarter with approximately $45 million of cash on hand. This is an increase of $10.6 million since year end, primarily the result of net proceeds of $12.7 million received in the Registered Direct Offering that occurred in March. Our quarterly operating cash burn was approximately $2.1 million, which is markedly lower than the same period last year. We are keeping a sharp eye on expenses to minimize cash burn. Revenues for the first quarter were approximately $3 million from our development contracts with BARDA and NIAID. Revenues from BARDA increased by $900,000, due to increased spending on the NasoShield program, related to the investigation that Scott discussed. And NIAID revenues decreased by $600,000 as this program approaches its conclusion. Research and development expenses were $3.2 million for the first quarter compared to $5.7 million in the same period last year. The decrease was primarily the result of a decrease in NasoVAX and HepTcell expenses as the prior year saw heavy cash burn, while those programs were incurring significant clinical trial costs. General and administrative expenses were $2.1 million for the first quarter compared to $2.4 million for the same period last year. The decrease was primarily due to a reduction in legal and professional costs as we seek to manage our overhead cost effectively. Net loss attributed to common stockholders for the first quarter was $2.6 million compared to $5.1 million in the same period last year, but net loss per share equaling $0.27 in Q1 2019 versus $7.49 per share for Q1 2018. Now, I'd like to turn the call back over to Vipin. Vipin?

[Vipin Garg:]

Thank you, Will. We are pleased to be executing our strategic plan and look forward to continuing the dialogue as 2019 unfolds. With that, I would like to open the call now for Q&A. Operator?

[Operator:]

Thank you. At this time, we will conduct a question-and-answer session. [Operator Instructions] Our first questioner is Jerry Isaacson with ROTH Capital. Please proceed with your question.

[Jerry Isaacson:]

Thank you. Good morning. Hi Vipin, Will, Scott. Appreciate you taking my question. So, let's start with talking about the HepTcell data that you presented at the International Liver Conference. First of all, there -- it's nice to see some safety data there and it seemed like the most important signals in the data were pain and tenderness. And I just wondered if you could talk a little bit about how you felt about the safety aspect of the data that was presented.

[Vipin Garg:]

Good morning, Jerry and thank you for the question. Scott, do you want to handle that question.

[Scot Roberts:]

Sure. Good morning Jerry. I think that the overall safety profile of the product was what we expected, certainly very, very low levels of safety issues. These are the sorts of things that we normally expect for an injected a type of therapeutic. So, really everything was in line with expectations and very low grade. So, we really saw no safety issues that were of concern to us.

[Jerry Isaacson:]

Okay. Thanks Scot. And can you as a follow-up to that, maybe you could -- I've made my way through the slides that you published which give a lot of great detail. But I wonder if maybe you could highlight what you think are kind of the most important bits of data that we should be focusing on out of this presentation?

[Vipin Garg:]

Well, I think that the -- for us, the most important part was that we achieved our efficacy endpoint. And that is these patients recall are very immunotolerize, that is their immune cells do not want to recognize the infected cells, with Hepatitis B virus. And so overcoming that hurdle has been the challenge. And the data clearly show, that HepTCell in combination with IC31 led to significant increases in T-cell activation over the baseline values for those subjects. And so we're quite thrilled with the level of immune activation in this very, very difficult population to raise those activation levels.

[Jerry Isaacson:]

Okay. Yes. Thanks. So, the other things that I don't really see addressed here that, Scot maybe you can give me your thoughts on, are of course with Hepatitis B, there's usually a -- or very often a co-infection with hepatitis A or hepatitis B. And so I wonder if you could kind of talk about were there patients that you know that had multiple forms of hepatitis and kind of how this might work in those populations.

[Scot Roberts:]

In this in this trial, there was no co-infection with hepatitis C. Hepatitis A isn't typically associated with co-infection, but hepatitis C is also seen with hepatitis B. But in this study population, there was no co-infection.

[Jerry Isaacson:]

Okay. And of course maybe it's not as big a deal going forward with all the new hepatitis C treatments. So, if you don't mind, I'd like to also talk a little bit about the 702 program. This is still a pretty new program that the company hasn't really -- you haven't really said a lot about this. And so I just wonder, Vipin your study, can you maybe give us a little bit of insight and more into -- how this ties into the current mean immuno-oncology landscape?

[Vipin Garg:]

Absolutely, Scot, do you want to provide an introduction of 702?

[Scot Roberts:]

I'd be happy to. So, we're quite excited about ALT-702, what it does this technology, which really fits into our overall view on how to approach immuno-oncology and that is to enable the immune system to see the tumor antigens that are already present in the tumor and being expressed. And so our approach is to create a localized inflammatory reaction in the tumor. And ALT-702 accomplishes that with these potent TLR-7, TLR-8 dual agonist. Now, typically this agonist can't be used because of the systemic toxicity, they elicit very strong inflammatory responses and if there's systemic exposure to the compound, then there can be untoward side of kind of effects that lead to flu like symptoms and a level of safety that we wouldn't be comfortable with. And so what we've done is to anchor these potent immune-stimulatory molecules to our proprietary peptide technology that allows them to form a depo within the injected tumor site and create inflammation, get the T-cells to recognize tumor antigens both in that tumor and then leave the tumor find other tumors and exert an anti tumor effect by that mechanism.

[Vipin Garg:]

And I would just add Jerry that this synthetic peptide technology platform, this is just the beginning, conjugating it with the TLR-7/8 agonist. We believe it has applications beyond -- just this one immunostimulant could actually work across a whole array of immunostimulants and can make them more effective and safer. So that's really -- what we're excited about is the potential of this technology platform. And that's why as we have said that, we're out there looking for immunostimulants to add to our product portfolio because it fits well, these small molecule immunostimulants they fit very well with our technology platform and we can combine the two to really create significant value for existing immunostimulants.

[Jerry Isaacson:]

Okay, thanks. And that's really interesting. So I wonder if you could also talk little bit about you know you mentioned checkpoints and on clinic viruses is also possible combinations, are you seeking partnerships or collaborations towards that end?

[Vipin Garg:]

Yeah. So we are -- you know we're really broadening our portfolio in the immuno-therapy space and we think oncolytic viruses would be another good add on to our technology platform. Checkpoint inhibitors are not something we are looking to in license, but we think ultimately our technology will work well with the checkpoint inhibitors that others are working on. So it's really -- in cancer, it's going to be all about combination therapies, multiple mode of attack and that's what we're doing, we're providing an additional tool or an additional attack point for the cancer. So we think it will be very complementary to checkpoint inhibitors and other approaches. And oncolytic viruses we -- we're interested in ourselves to bring them in-house and really combine them with this technology platform.

[Jerry Isaacson:]

And I know it might be a little too early to say, but do you have any idea of what types of tumors you might go after. I mean lung and melanoma are obviously the bleeding indications for checkpoints, but there's also lot of space in lot of different thing and lot of other things. So do you have you put any thought into that?

[Vipin Garg:]

Scot….

[Scot Roberts:]

Yeah I think that the -- because this is envisioned as an intertumoral administration, I think that, that the initial indications, we governed largely by the ability to find appropriately injectable tumors that can then be a factory for education of the T-cells and dissemination for systemic effects.

[Jerry Isaacson:]

Yeah, that makes sense. Thanks. Okay. So thanks guys I appreciate that. Let's go and talk about nasal vac a little bit. You mentioned that you saw obviously -- we've seen some nice safety to-date over the course of last year come out here. I wonder if you can maybe -- can talk a little bit about you know kind of what you see as the path to market for this and also kind of what you're looking for in terms of a strategic partner?

[Will Brown:]

Yes. So, as you know we have very good data, very good Phase II data at this point and we think the best course of action moving forward is to find a partner because vaccine development programs can be very, very expensive as you go into late Phase IIs and Phase III. So we have proof of -- very good proof of principle as well as very sort of new data here that, that should excite people. And we think there's an opportunity here to find a partner, either a regional partner who can help us develop it or a global partner. So we've initiated those discussions. We you know obviously, it's going to take time to find the right partner. And as things develop, we will inform everybody as to how that's going. But we're very excited about this program. This could really be a very unique nasal -- intranasal flu vaccine that can be used all over the world particularly in developing countries where it is -- where it’s very difficult to get injections to everybody and people don't get the flu vaccine, because they never get a chance to get to the doctor to get their vaccine. So we think intranasal vaccine can be a major play in those parts of the world as well.

[Jerry Isaacson:]

And now correct me if I'm wrong, Vipin, but I believe that most of the data that's been produced has been using only a single factor, a single strain of the flu virus. And then one of the steps forward would be to move to space where you have multiple different strains represented in the vaccine. Can you talk a little bit about the process that we need to go through to get to that?

[Vipin Garg:]

Yeah. That's absolutely right. So the next step would be to do a larger Phase 2 study with a quadrivalent vaccine or a multivalent vaccine and that's the next step. And that would be followed then by a Phase 3 study, which would be the pivotal study for the approval of the vaccine. So that's where the program is. I mean, technically, there are really no issues in terms of making the multivalent vaccine and doing that trial, the monovalent trial that we did, clearly shows that the quadrivalent vaccines should work it simply needs to be done that that would be the next step to manufacture it and conduct the study. Scot, do you have something to add to that.

[Scot Roberts:]

No. I think that the important point you made and that is there is no technical issues. And the development -- clinical development path is pretty clear on how to do this. It's just a matter of executing and that was a decision that we made that we would look for a partner at this stage to help us conduct those studies.

[Jerry Isaacson:]

Okay, great. Thanks guys. So next turning to NasoShield, I wonder if we could talk a little bit more about, Scot what you said during the call that there’s been some problems with intranasal administration. And that you have a fix for it. And I just -- I wonder if there's any more color that you could potentially give us on those? And also is there any potential spillover of this kind of problems that you face with NasoShield into the NasoVAX since the inward of administration is the same.

[Scot Roberts:]

No. That's -- I'd be happy to Jerry, and I appreciate you raising that the second part of that. So on the first part, unfortunately, we can't say a whole lot more or share a whole lot more with you right now. We are in the process of filing intellectual property related to our observations of the -- from the investigation. I can say that the results that we observed were dramatic. And we do feel that that this has important implications for not only the NasoShield program, but also NasoVAX and other vaccines or therapeutics that would be based on our RespirVec platform. So we're excited about what we've seen here. We're filing some intellectual property and we're looking forward to moving this forward and demonstrating these improved properties.

[Jerry Isaacson:]

Okay, great. Yeah, obviously, we look forward to learning about that as it becomes publicly available. The last thing, I just wanted to bring up, Vipin maybe you could talk about the fact that, obviously, you've built up a nice war chest and have announced an intention to bring in some more assets. As you said more shots on goal for the company and potentially that it ties into your company's expertise, but also potentially into some combination of 702, and I just wonder if you could give us a little bit more detail on what collaboration you're looking at and what technology you're looking to bring in?

[Vipin Garg:]

No, absolutely. And actually that process has gone exceedingly well. We've looked at well over 100 different potential candidates or targets to bring into the company, so there's been lot of interest that people have found out. But we're looking for other acquisition or in-licensing opportunities. We're seeing lot of different new product candidates that we could bring into the company. And because of our focus in hepatitis B, we've also run into a number of liver disease product candidates. We're looking at those as well as immuno therapeutics products that we can combine with our platform technology. So I would say at this point, we are where we would have expected to be. We've narrowed the list of targets down to I would say at this point less than a handful and after a very extensive, very comprehensive diligence process. And we're moving forward. So the process has gone well. We hope to conclude something over the next quarter or a couple of quarters and inform you when that happens. But we're very pleased with where we are in the process.

[Jerry Isaacson:]

Okay, gentlemen, thank you, really thank you for taking my bunch of questions, but I really appreciate the update. And I'm going to go ahead and let you go.

[Vipin Garg:]

Thank you. Thank you very much.

[Operator:]

[Operator Instructions] There are no further questions in queue. I would like to turn the conference back over to Mr. Vipin Garg for closing comments.

[Vipin Garg:]

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

[Operator:]

Thank you. This does conclude today's teleconference. You may disconnect your lines at this time and have a great day.