Altimmune, Inc.
Q4 2018 Earnings Call Transcript

Published: 2 Apr 2019

[Operator:]

Greetings and welcome to the Altimmune, Inc. Fourth Quarter and Fiscal Year 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions]. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Paul Arndt of LifeSci Advisors. Thank you. You may begin.

[Paul Arndt:]

Thank you, operator, and thank you everyone for participating in today’s year-end 2018 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 the call for a question-and-answer session. A press release with today's year-end 2018 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, Tuesday, April 02, 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’d now turn the call over to Vipin Garg, CEO of Altimmune. Vipin, please go ahead.

[Vipin Garg:]

Thank you, Paul, and good morning, everyone. We are pleased to be here today to provide you with the year end 2018 financial and corporate update. Joining me on the call today is our Acting Chief Financial Officer, Will Brown, who will review our 2018 financials; and Scot Roberts, our Chief Scientific Officer, who will provide us some details on our programs under development. After our discussion, we will open the call for Q&A. As I joined Altimmune in the fourth quarter of 2018 and this is my first earnings call with the company, I want to take this opportunity to introduce myself. I have worked in the biotechnology industry for over three decades in a variety of executive positions. My most recent roles have been as CEO, taking two different early stage companies public, obtaining FDA approvals for a number of products and eventually building commercial stage entities. What excites me about Altimmune is the opportunity to grow and develop the company's portfolio of product candidates and to build long-term value for our shareholders. The company has a fantastic management team, exciting products under development and the resources to make meaningful progress very quickly. I believe my experiences intersect well with Altimmune’s potential and I look forward to this challenge. 2018 was a great year of progress for the company. First, we completed a Phase 2 clinical trial for our NasoVAX intranasal flu vaccine program and follow on extension studies which showed excellent immunogenicity with greater durability than expected with the current injected flu vaccines. We also completed a Phase 1 clinical trial for our HepTcell program, which is a potential cure for hepatitis B. As we analyze the data generated from this study, we and our KOLs have grown increasingly excited about the program’s potential. Additionally, we have raised nearly $56 million, including our most recent financing last month. These financings put Altimmune in a very strong position to support our initiatives. As we look to the year ahead, we are focusing our strategy on being a development stage immunotherapuetics company. Our next steps in 2019 are being guided by that philosophy and we expect that our investors will see this play out in how we spend our attention and resources. Specifically, we have formed a committee composed of executives and Board members who are evaluating acquisition and in-licensing candidates focusing on immunoncology, liver diseases and other complementary therapeutic areas. It is important for us to build a robust pipeline of products that give the company multiple shots on goal for success. We believe that the therapeutic indications outlined above are well matched to our current know how and represents significant unmet need in the marketplace. We are preparing HepTcell for a Phase 2 clinical study to be initiative in the U.S. in 2020. Our Phase 1 results for HepTcell will be presented next week at the International Liver Congress in Vienna, Austria. And we invite conference attendees to participate in that presentation on April 12th. We will make the full presentation available on our website soon thereafter. We are also advancing an immunostimulant that was already in development by Altimmune called ALT-702. Here to provide more details on this program is our Chief Scientific officer, Scot Roberts. Scot?

[Scot Roberts:]

Thank you, Vipin. ALT-702 is a immuno-oncology product candidate that has the potential to alter the tumor of microenvironment in a power of the immune system to mount an effective antitumor response. It is a conjugated TLR-7, TLR-8 dual agonist that is based on our synthetic peptide technology platform and is designed to turn so called cold tumors to half, without the systemic side effects that have hampered other injected TLR-7 and 7/8 agonists. We anticipate that ALT-702 will be active in many solid tumor types and that it will synergic with the new checkpoint inhibitors and other immuno-oncology products. We are currently developing a full pre-clinical data set in murine tumor models with the intention of advancing the program into the clinic and we have recently bolstered our intellectual property position for this platform technology with the filing of an additional patent application.

[Vipin Garg:]

Thank you, Scot. Additionally, we announced earlier this year, the results of our NasoVAX Phase 2 extension study, which showed excellent durability over one year after dosing. We believe this program has the potential to capture a significant share of the market, should it continue to have such excellent results in more advanced clinical trials. However, we recognize that to advance a flu vaccine into later stage Phase 2 and Phase 3 clinical trials and ultimately achieve commercial success would require resources outside of our core competencies and beyond our financial means. Accordingly, we see the greatest opportunity for this program -- for this program's long-term success is to find a partner to assist us in further development and commercialization of NasoVAX. With that strategy update, it is my pleasure 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 full year 2018 financial results and also discuss our financing strategy. Revenues for 2018 were $10.3 million consisting of research grants and contracts from BARDA and NIAID for our anthrax vaccine product candidate. Revenue decreased by $400,000 when compared to 2017, due primarily to a decrease in research and development costs related to our BARDA program. The decrease was driven by lower manufacturing costs related solely to the timing of the program development activities. Research and development expenses were $18.5 million for 2018, compared to $18.4 million in 2017. The increase was due to the aforementioned reduction in BARDA expenditures, offset by an increase in non-program specific R&D related to the compensation and facility costs. General and administrative expenses were $9.8 million for 2018, compared to $8.5 million for 2017. The increase was primarily the result of an increase in severance, professional services, insurance, legal fees and labor costs. Impairment charges were $24.9 million for the year ended December 31, 2018, compared to $35.9 million for the prior year. Impairment charges in 2018 are related primarily to a write-down of IPR&D assets related to SparVax-L and Oncosyn. Charges in 2017 were due to fully impairing the carrying value of goodwill. Other expense was $2.5 million for the year ended December 31, compared to $18,500 in the prior year. The increased expense was primarily due to changes in the fair value of the company’s warrant liability. Net loss attributed to common stockholders for 2018 was $42.5 million, compared to $51.4 million in 2017. We embarked on the plan last year to recapitalize the company, which included retiring legacy warrants and stock, increasing our authorized shares and effectuating a reverse split. This set the stage for the equity offering that followed in Q3 and Q4 of '18, and most recently in Q1 of '19. We have raised nearly $56 million during that time. And as of the end of Q1, we have approximately $45 million of cash, cash equivalents and restricted cash on hand. These equity offerings have fully consumed our shelf capacity under our existing S-3. While we do not have any imminent plans for additional equity raises, as a matter of good housekeeping, we intend to file a new S-3 registration statement in the near future. For further details on our financial statements, please refer to our Form 10-K filed with the SEC yesterday. And now, I would like to turn the call back over to Vipin. Vipin?

[Vipin Garg:]

Thank you, Will. We have an ambitious plan for the coming year, and we 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. We will now be conducting a question-and-answer session. [Operator Instructions]. Our first question comes from the line of [Frances Kahn] with [Sterling Equity]. Please proceed with your question.

[Unidentified Analyst:]

My question is about the amount of shares that are outstanding and issued in a public float, in other words, with insider holding. I read it’s about 9 million plus 600,000, is that correct?

[Will Brown:]

Yes, so if you take into account the latest equity financing, we have about 13.4 million shares outstanding. And most of those are in the public float.

[Unidentified Analyst:]

So it’s 13 million shares, okay. And if you did a back out of your liability, your outstanding debt with your net cash, what would your share -- what would your cash per share be?

[Will Brown:]

The cash per share, like I said, we have $45 million cash on hand. And so we have very limited debt. I mean we only have $600,000, related to France note. And so, just doing the cash $45 million ...

[Unidentified Analyst:]

Yes, you're going to come up with it. Pardon me sir.

[Will Brown:]

Around $3 a share.

[Unidentified Analyst:]

Alright, okay, so $3 a share. I am new to your stock and have taken up a good position and it is my first conference call. The previous reverse split, what was that amount?

[Will Brown:]

The previous reverse split was a 1 to 30.

[Unidentified Analyst:]

1 to 30, okay, alright. And lastly, I mean I know you can't just -- but moving forward with partnerships, I think Novartis is one of your big shareholders, correct? Novartis or somebody like that?

[Will Brown:]

Yes, so Novartis historically has been a shareholder of ours. Back in 2015, there was a merger between Altimmune and a company that they helped to start and they had retained an ownership interest in the company.

[Unidentified Analyst:]

The new CEO -- I'm an Indian also but the new CEO -- I welcome you on. In moving forward, do -- I know you have a lot of experience in this business, can you give any kind of color as to what you might be doing in terms of developing this nasal thing that you're very excited about though. When we’ll have results, save people results?

[Vipin Garg:]

No I mean -- thank you. Thank you for that question. We're very excited about the all of our technology platforms. Our synthetic peptide technology that we believe has very significant opportunity in the immunotherapeutic space. And that's why we are talking about that, because that we see as the future of the company. As far as the vaccine programs are concerned, we just announced excellent data on NasoVAX. NasoVAX has unique properties, ease of administration, a broad immune response that we are seeing, as well as durability with the new data. So we think everybody is going to focus on durability, because that wasn't available with the injectable vaccines in the past. And so, yes, we're looking for a partner, we think that that program has a lot of potential. And with a commercial partner who can help us take it forward and get us to the large trials that we still need to do to get the approval and ultimately make this product a commercial success is well positioned for partnership. So that's our strategy going forward is to focus on early to mid-stage assets, which is what we are good at as a development company. We have a good track record of that. And that's how we believe we can create significant value for our shareholders.

[Operator:]

Thank you. Our next question comes from the line of Jerry Isaacson with ROTH Capital Partners. Please proceed with your question.

[Jerry Isaacson:]

Good morning, gentlemen. Thanks for taking my call. I appreciate it. Congratulations on finishing up these financings recently. My first question is, as you were marketing these financing deals to the investors, what's your kind of specific use of funds that you were kind of marketing in that case?

[Vipin Garg:]

Good morning Jerry, and thank you, thank you for joining the call. Yes, as I just outlined, I mean, our strategy, we laid it out as we were going out talking to investors, it was really to focus our technology platform on these mid to early stage assets, and also move our vaccine programs forward. So I think we're well positioned from that perspective and the financings will really help us because we've also gone out and told people that part of our strategy is to either in-license or acquire complementary assets. So we're looking for immuno-oncology assets that we think some of them will fit very well with our technology platform. We're looking for immunostimulants. We’re looking for oncolytic viruses. So all of these -- sort of they will fit together very well with our technology platform. And so, this financing, having this cash is critical, because anything we acquire, we will need to invest in that to move it forward. And that's really the value proposition, our expertise, the experience that the team has with these types of programs as well as the financial resources to move these programs from, let's call it, early clinical development, from pre-clinical to Phase 1 and then into Phase 2, that's where we will fit in going forward.

[Jerry Isaacson:]

Okay, yes, I appreciate that. So, you’ve mentioned a number of different programs that you’re looking at, and kind of the idea -- a lot of the -- specific details here. But I wonder if you can just give us kind of a little bit higher level view of kind of your vision of where you see the company going and obviously this is part of the reason that you joined Altimmune as you see the potential here, but maybe you can give us a little bit more thoughts on your vision for the company?

[Vipin Garg:]

Thank you. Absolutely, when I looked at Altimmune, I saw a tremendous opportunity, really very compelling story, particularly if we start focusing the -- focusing on our technology platform. So one of the key value driver here is our synthetic peptide technology platform. And the reason we like it -- I like it a lot and as we have discussed internally, it really makes a lot of sense. One of the challenges in immuno-oncology is we have potent molecule chemotherapies, immunostimulant, they are very potent, but the challenge is how do you deliver these immunostimulants in such a way that you can retain them where you need the activity and not have the toxic side effects throughout the body. And our synthetic peptide technology lends itself really well to help with that. For instance what we are able to do, we’re able to take these very potent immunostimulants, which are mainly small molecules and conjugate them with these synthetic peptides and what that allows us to do -- these peptides really act like anchors. So what this allows us to do is deliver the peptide to where we want the activity to be delivered, the immunostimulantconjugated with our peptide, to where we want the activity to be and concentrated there and prevented from dispersing and diffusing throughout the body. Because that has two problems

[Jerry Isaacson:]

Okay, thanks, I appreciate that. So, I also want to dig in a little bit on your recent announcement that you are going to be presenting at EASL in Vienna next week for the HepTcell program. What more can you kind of tell us some in terms of what you are expecting in this presentation?

[Vipin Garg:]

Yes, So, HepTcell is another immunotherapy focused program that we are very excited about as we have looked at the data, as we have shared that data with our KOLs, it's become clear that HepTcell meets a critical need in the marketplace in hepatitis B. As you know, there’s really no cure for hepatitis B today as most of the treatments and antivirals we use today, they control the disease -- they control the progression of the disease but really don’t eliminate the virus. So, what everybody is looking for is a cure -- is a functional cure, so you can actually eliminate the virus and not have to be on therapy for rest of your life. And we believe HepTcell offers that potential either as a monotherapy but perhaps more likely in combination with these anti-virals or other approaches that are being developed in the marketplace. So, we will be presenting that data for the first time, our Phase 1 data that shows very strong immune response in these patients and this was a Phase 1 study, so now we are preparing to enter Phase 2 which will be a larger study and would really pave the pathway for us to take this program forward. We will be -- we are also preparing to meet with FDA here and open a US IND and start these Phase 2 studies in 2020. So, we are very excited about that program and this is our opportunity to really meet not only the academic community but also potential partners, with whom we might ultimately do combination therapy trials in conjunction with their existent products that are in development.

[Jerry Isaacson:]

Okay, thank you, I appreciate that. So, I wonder maybe see if we can just start a discussion here a little bit -- and talk a little more about 702, obviously we are interested in finding out what happens in terms of what you might [indiscernible]. But this seems to be much pretty interesting asset in some right. So, maybe can you tell us a little bit more about the potential combinations, indications and mechanism of actions, I think there was a nice introduction that you gave earlier in the call, maybe we can dig into that a little bit more?

[Scot Roberts:]

Sure, happy to say that for you. So, what was learned, the scientific community as a whole over the last few years is that, that the immune system inside the tumor within the tumor microenvironment contains a number of cell types that are working against the immune system to kind of dampen it and make the tumor essentially invisible. So ALT-702 is designed to inhibit those inhibitory cells. And by doing so, we changed the balance of the immune system within the tumor, allows immune system to now see the tumor and use the antigens that are being produced by the tumor to mount an effective immune response. And so instead of working as specific antigen like some people are doing, we're allowing the tumor to provide all that and we're just enabling the immune system to do what it does best. We expect that we will be able to combine ALT-702 with a number of modalities. Certainly the tremendous success that has been realized with immune checkpoint inhibitors. It can be expanded to solid tumors by combination with immune stimulants. And so we dis-inhibit the immune system and -- through the action of 702 and also through the immune checkpoint inhibitors and conceivably, and we expect it to be combined well with other immune modulatory approaches such as oncolytic viruses which are reborn again, with their ability to replicate and kill tumor cells. And again catalyze a strong immune response to the tumor antigens that wasn't able to [grow] before.

[Jerry Isaacson:]

So the other thing, Vipin I just want to touch base on this -- obviously NasoVAX, you did have some very nice data that you presented in the fall. I wonder if you can just be a little bit more specific on kind of what we would you might expect in terms of like the next upcoming milestones on that front?

[Vipin Garg:]

Yes, so this data -- we were waiting for this data, this data was really critical from our perspective in terms of the value proposition for this product. And now we’ve become the process of outreach. We have begun discussions -- initial discussions with a number of parties. We're talking to both global players, who can develop this product and launch it worldwide. But we will also talk to regional players, who might be interested in a particular region, and helping us develop this product forward. So we're very open-minded. We think there's a lot of potential for this product. It could be the best vaccine in the flu space with this ease of administration, patient-friendly administration and very broad immune response and durability; I mean nobody was thinking about this type of durability, this type of persistence of the opinion responsive. We're very, very pleased with that. And we are seeing the results of that in terms of our discussions that we are talking to people, so we are optimistic. But it takes time to do these types of deals. So we -- stay tuned, we'll keep you posted but we're really excited about the prospects of this program.

[Jerry Isaacson:]

One thing, it would be helpful, if you spend a little more time on -- and you mentioned the durability of the response and I think that's possibly and you can maybe correct me if I'm wrong, that seems to be related to potentially the route of administration. And this is, of course, different thing, anything that's on the market. And I just wondered to what extent that you think that your partners have interest in those differences, both in terms of just as both commercial implications in terms of usability and also potentially as you're talking about durability. So I was just wondering, maybe you can spend a little more time giving us more detail about that?

[Vipin Garg:]

Scot, do you want to provide some color on that.

[Scot Roberts:]

I think that what you touched on about the intranasal delivery, it’s certainly a clear advantage of nasal vaccine. I mean there's a tremendous segment of the population that is afraid of using needles and to greater uptake through intranasal administration, which is painless, is certainly advantage. I think the durability that we see which is unprecedented for commercial -- the vast majority of commercial vaccines really stems from our unique platform approach and that is RespirVec where we deliver the flu antigen inside the cell, instead of just presenting it in a muscle injection, the antigen is produced inside the cell. And that allows a whole sequela of immune effects to take shape. That includes antibody response and T-cell immunity and mucosal immunity. And all of these types of immunity can work together to make a more effective vaccine. And also, it is -- because of the intercellular administration that the durability is able to manifest itself here out a year, which is really at least twice as long as what's expected from the majority of commercial vaccines.

[Operator:]

As there are no further questions at this time, I would like turn the call back over to Mr. Vipin Garg for any closing remarks.

[Vipin Garg:]

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

[Operator:]

Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.