Altimmune, Inc.
Q3 2019 Earnings Call Transcript

Published: 15 Nov 2019

[Operator:]

Thank you for standing by. This is the conference operator. Welcome to the Altimmune, Inc. Third Quarter 2019 Earnings Conference Call. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. [Operator Instructions]I would now like to turn the conference over to Ms. Monique Kosse, LifeSci Advisors. Please go ahead.

[Monique Kosse:]

Thank you, operator, and thank you, everyone, for participating in today's third 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, Chief Financial Officer; and Scott Harris, Chief Medical Officer. After the prepared remarks, we will open up the call for a question-and-answer session during which time Scot Roberts, Chief Scientific Officer, will also be available.A press release with the third quarter 2019 financial results was issued yesterday after the close of 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 the purposes of the 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, Thursday, November 14, 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 would like to now turn the call over to Vipin Garg, Chief Executive Officer of Altimmune. Vipin, please go ahead.

[Vipin Garg:]

Thank you, Monique. Good morning everyone and thanks for joining – taking the time to join us as we discuss our 2019 third quarter financial results and business update. Joining me on the call today will be Will Brown, our Chief Financial Officer, who will review our third quarter financial results; as well as Scott Harris, our Chief Medical Officer; and Scott Roberts, our Chief Scientific Officer. After our discussions we will open the call for Q&A.I'm proud of our company's performance so far in 2019. Our team has worked very hard to build a robust and diversified product pipeline with multiple shots on goal for investor value creation. The table is now set with four candidates at varying stages of development in our pipeline and the coming year would be exciting as we expect to initiate new clinical trials on NasoShield, HepTcell and ALT-801. The company is no longer primarily dependent on this tough commoditized vaccine market. And we are taking every opportunity to introduce analysts and investors to the new Altimmune.As you may have seen from our press releases, we have had several opportunities to speak at important conferences and have also participated in a number of private investor forums. We are encouraged by the excitement that's building around our pipeline. As we announced in our press release last time, we are hosting a conference call on December 5 with renowned NASH expert, Dr. Stephen Harrison. During this call, Dr. Harrison will provide an update on the NASH therapeutic landscape followed by a presentation by Altimmune management on ALT-801. I would differentiate it in highly potent GLP-1/glucagon dual receptor agonist. A question-and-answer session will follow the presentation and we hope to have your participation.Since our acquisition of ALT-801 in July of this year, we have been busy preparing for an IND filing in 2020, initiating toxicology studies as well as GLP manufacturing of the drug substance required for the trial. We remain excited about the potential of this dual agonist as the NASH community appears to be coalescing around the idea that treating the disease early in its progression will be the cornerstone of NASH therapy in the future. We believe we are very well positioned with ALT-801 to address this need, with impressive weight loss and liver fat reduction observed in well established preclinical models.Please join us on December 5 as we discuss this program fully with Dr. Harrison.At this time I'm pleased to introduce you to Dr. Scott Harris, our new Chief Medical Officer, appointed in September of this year. Scott is a fantastic addition to our team, bringing with him significant experience as Chief Medical Officer at a number of companies where he was responsible for leading global clinical trials including Phase 3 studies and several therapeutic indications.Scott has jumped right into the role and he will provide us with an update on Phase 1b trial of NasoShield, our single dose anthrax vaccine candidate. Scott?

[Scott Harris:]

Thank you, Vipin for that kind introduction. And good morning to everyone. I'm excited to be here at Altimmune and I've got a full plate in front of me as we head into the clinic with three programs.Our first of three programs to initiate a new clinical study in 2020 will be NasoShield following our $3.7 million BARDA award that was announced in August of this year. We will be translating compelling, preclinical data demonstrating the effects of dosing position on the immunogenicity of the vaccine in the clinic. Top line data from the 72 subject, double-blind, placebo-controlled, Phase 1b trial is expected to report in the second half of 2020. Our HepTcell program for chronic hepatitis B and ALT-801 for the treatment of NASH will also enter clinical testing in 2020.With that I will turn it back over to Vipin. Vipin?

[Vipin Garg:]

Thank you, Scott. As Will is going to discuss later, we also had a legacy anthrax vaccine program, SparVax-L, whose contract with NIAID ended this quarter. We chose to abandon this program as the government clarified its priority for an improved anthrax vaccine and has decided to move any development funding solely to single dose anthrax vaccine. While we did take an impairment of the SparVax-L, the silver lining is that our NasoShield program is currently the only BARDA-funded anthrax program which fits their desired product profile of a single dose anthrax vaccine.Success in our upcoming Phase 1b trial could lead Altimmune to disrupt a multi dose market that saw nearly $300 million in net revenue last year. As a reminder, we are currently in the base period of this contract with the Phase 1b trial being the final anticipated activity. At the conclusion of the trial, BARDA has the opportunity to exercise $105 million in option over a three-year period to take the program through Phase 2 to develop.As you may have seen, our competitor recently received a contract to deliver 10 million dosage of its two dose intramuscular anthrax vaccine candidate at the conclusion of its Phase 2 activities. This greatly accelerates our potential timeline for commercial sales and based on this we eagerly anticipate the results of our upcoming Phase 1b trial.We continue to press ahead with HepTcell, our chronic hepatitis B immunotherapy candidate. We have recently participated at AASLD and held a scientific advisory board meeting to discuss the design of our upcoming trial. We'll keep you apprised of our progress as we prepare for our IND filing in the second quarter of next year, with plans to begin the trial as soon as possible thereafter.Preclinical experiments are continuing on ALT-702, our TLR7/8 agonist immunostimulant program. This candidate utilizes Altimmune’s synthetic peptide technology. To anchor immune stimulants to inject the solid tumors via a depot and is designed to reverse immunosuppression to allow the body's immune system to fight cancer.What makes this program exciting is the potential to conjugate a number of different immune stimulants to our depot-forming peptide, including STING, TLR4, NKT agonist and others. We are currently performing experiments with TLR7/8 agonists and will update investors on our progress in the coming months.I also want to take a few minutes to discuss NasoVAX, our intranasal influenza vaccine candidate, despite impressive results and strong efficacy data from our recent Phase 2 trial and extension study. For strategic reasons, we made the decision to proceed with the further development of the seasonal influenza vaccine only upon updating and manufacturing our commercialization partner.What we have learned is that interest in seasonal influenza vaccines is being eclipsed by governmental interest in pandemic vaccine and commercial interest in so-called universal influenza vaccine. NasoVAX is specially well suited for pandemic use and while we continue to seek commercialization partners, we will also assess the value to shareholders for NasoVAX as a pandemic vaccine.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 will be providing an update regarding our third quarter 2019 financial results. We ended the quarter with $39.2 million in cash and short-term investments. During Q3, we invested a portion of our cash into highly-rated government and corporate debt securities to maximize the yield on our resources. The principles underlying our investment philosophy are to preserve principal and maintain liquidity while maximizing yield.Revenues for the third quarter were $644,000 which is a reduction of $2 million compared to the third quarter of 2018. We experienced lower revenue in the third quarter, primarily due to a lag between the end of the NasoShield investigation in Q2 and the awarding of the Phase 1b study late in the third quarter. We expect to recognize the majority of the $3.7 million award into revenue beginning in Q4 of this year and throughout 2020.Research and development expenses were $8.7 million for the third quarter, compared to $4.7 million in the same period last year. The increase year-over-year is primarily attributable to the $7.3 million of acquired research and development related to the acquisition of our NASH candidate, ALT-801.The value is driven by the fair value of the common stock transferred as upfront consideration, plus the fair value of the contingent consideration attributable to the regulatory milestones. The increase is offset by a decrease of R&D costs and our other programs as the spin during Q3 is attributable to planning activities for our various trials. I expect costs to increase in 2020 as we entered the clinic on three of our programs.G&A expenses of $2.2 million is slightly higher than Q3 2018 due to increase in costs related to insurance and stock compensation. As Vipin mentioned, we recognized $1 million impairment related to our SparVax-L anthrax vaccine program. This represents the entire book balance of the IPR&D asset related to this product candidate, which is a legacy program acquired to the merger with PharmAthene, Inc. The contract ended in Q3 without further funding. And considering the government's focused on developing a single dose anthrax vaccine, future development of this program is not expected.Net loss attributed to common stockholders for the third quarter was $10.9 million compared to $2.3 million in the same period last year, with net loss per share equaling $0.74 in Q3 versus $1.73 per share for Q3 2018. The higher net loss quarter-over-quarter is primarily attributable to ALT-801 acquisition expense plus the SparVax impairment.With that, I would now like to open the call for Q&A. Operator?Certainly, sir. We will now begin the question-and-answer session. [Operator Instructions] The first question comes from Mayank Mamtani of B. Riley FBR. Please go ahead.

[Suowei Wu:]

Hi, good morning. This is Suowei Wu on for Mayank. Thank you for taking the question. So I'm just wondering if the ALT-801 can be developed for other indications such as like obesity or diabetes. Thank you.

[Vipin Garg:]

Yes. Good morning, Suowei Wu, and thank you for your question. Maybe Scott Harris can take this question. Scott?

[Scott Harris:]

Yes. We're clearly considering those options. We have those options on the table right now and we're considering it – considering them. But we don't have immediate plans to announce it this time. It's clearly on our radar screen, however.

[Suowei Wu:]

Okay, thank you.

[Vipin Garg:]

Yes. I would just add to that, that clearly our focus initially is on NASH and the product fits that profile quite nicely. But we'll let the data dictate once we have the Phase 1b data available. We’d be looking at the additional endpoints that would direct us towards the future development of this molecule for indications beyond NASH.

[Suowei Wu:]

Okay. Got it. Thanks for taking the question.

[Operator:]

[Operator Instructions] There are no more questions at this time. I would now like to turn the conference back over to management for closing remarks.

[Vipin Garg:]

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

[Operator:]

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