Altimmune, Inc.
Q2 2017 Earnings Call Transcript

Published: 10 Aug 2017

[Operator:]

Good day, and welcome to the Altimmune Incorporated Second Quarter 2017 Earnings Conference Call. Today’s conference is being recorded. At this time, I’d like to turn the conference over to Matt Duffy from LifeSci Advisors. Please go ahead.

[Matthew Duffy:]

Thank you, Matt, thank you, everyone, for participating in today’s second quarter 2017 earnings conference call. Leading the call will be Bill Enright, Chief Executive Officer of Altimmune; and Elizabeth Czerepak, Altimmune’s Chief Financial Officer. A press release with the company’s second quarter financial results can be found on the Investor 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 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 discussion of some of the risks and risk factors that could affect the company’s future result, please see the risk factors and other cautionary statements contained in the company’s filings with the Securities and Exchange. I would also direct you to read the forward-looking statements disclaimer in our quarterly earnings release, which is now available on our website. Any forward-looking statements made on this conference call speaks only as of today’s date, Thursday, August 10, 2017, 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, www.altimmune.com. As the operator mentioned, all participants are currently in a listen-only mode, and there will be a brief Q&A session following the company’s prepared remarks. With that, I would like to now turn the call over to Bill Enright, CEO of Altimmune. Bill, go ahead.

[Bill Enright:]

Thank you, Matt, and good morning to everyone joining. I’m really excited to provide you with an update on Altimmune’s progress and our accomplishments. Joining me on the call today is our Chief Financial Officer, Elizabeth Czerepak, who will review our second quarter 2017 financials. Since this is our first public call since the closing of the merger with PharmAthene in May of this year, the merger has really allowed us to create a fully integrated and diversified immunotherapeutics company with four clinical-stage assets and one preclinical asset. These assets are built off of two novel platform technologies that we call RespirVec and Densigen. We expect that our public listing on the NASDAQ global market will provide us with better access to financing to satisfy our future capital needs, which is essential to the continued development of our clinical programs, including NasoVAX, HepTcell, NasoShield and SparVax-L. We are sufficiently capitalized with $8.4 million in cash at the end of the quarter, which together with our committed financing, revenue from ongoing government contracts with BARDA and NIAID and expected a tax refund next year, we believe will be sufficient to fund us through the second quarter of 2018, and importantly, through multiple clinical milestones. A brief comment on the integration. This is going really smoothly. Given the close proximity of the geographies of the two companies, we were able to bring the key technical personnel on Board to continue to manage the SparVax-L program. We consolidated facilities to our Gaithersburg location and have officially closed the Annapolis facility. We’re also able to gain some of efficiencies during the reduction of redundancies in G&A. So now I’d like to take a moment and move on to these promising programs that I mentioned. I’ll start with NasoVAX, which is our intranasally administered recombinant flu vaccine candidate. NasoVAX uses an adenovector to achieve expression of the influenza antigen in the target cell, thereby potentially stimulating a broader and more rapid immune response than traditional flu vaccines. The risks from flu and flu-related complications are well known. Young children, adults over 65, pregnant women and immune-compromised individuals are particularly vulnerable to developing flu-related complications. The World Health Organization reports that worldwide between 250,000 and 500,000 of those infected with the flu each year die as a result of the influenza-related complications. Vaccination against a flu virus can be an effective way to prevent infectious. However the effectiveness of vaccination can vary greatly from year-to-year and the overall level of protection is poor. According to the CVC, the average overall adjusted effectiveness for flu vaccines has been about 40% from 2005 through 2015. So we see there’s a significant room for improvement and an opportunity to develop and market an improved vaccine to prevent flu in these populations with the highest needs. The narrow strain specific responses of current influenza vaccines together with the long lead times needed for vaccine production, result in mismatches between strains used to produce the vaccine and the predominant circulating strains. We have demonstrated and repeated preclinical studies that NasoVAX may provide the type of cross-protection necessary to address a broad variety of strains and has a more rapid production time than the vast majority of currently approved vaccines. NasoVAX has a number of important advantages over traditional vaccines, including the potential for rapid protection in a matter of days rather than weeks, broader protection against changing virus strains, the ability to elicit mucosal immunity at the site of the flu infection, ability to produce the vaccine in less than half the time and at anticipated lower costs with greater worker safety compared to traditional egg-based manufacturing. We completed our Phase 1 clinical trials of NasoVAX in healthy volunteers, demonstrating the overall safety of NasoVAX, as well as its ability to induce influenza-specific antibodies in the majority of subjects in an intranasal arm. We are on track to begin our Phase 2 clinical trial with NasoVAX in the coming weeks. This study will evaluate three dose levels of monovalent version of our vaccine in 60 subjects. And in addition to safety, we’ll measure the antibody response to both matched and divergent influenza strains along with mucosal and cellular immunity responses against influenza. We are on target to begin the trial this quarter and we will have data next spring. Based on the results of this monovalent study, we may do a challenge study later in 2018 to further evaluate protection against divergent strains, as well as the early protection seen in our preclinical studies. In the second-half of 2018, we plan to evaluate a Quadrivalent seasonal formulation of NasoVAX. This dose-ranging study will include approximately 150 subjects stratified to include healthy elderly adults, followed by a dose confirmation study of approximately 500 subjects. Turning to our HepTcell program, we are up and running with our Phase 1 study in chronic hepatitis B in both the UK and South Korea. HepTcell is our immunotherapy for treating patients chronically infected with hepatitis B virus and has the potential to provide patients with a functional cure something that is not achievable in current treatments. HepTcell is a completely synthetic peptide product candidate based on our proprietary Densigen technology, which is designed to stimulate the immune system to clear infected cells from the liver. HepTcell is designed to work as a universal HBV immunotherapy and should be effective in all ethnic groups and against all HBV genotypes, one of the benefits of our Densigen technology platform. Our Phase 1 study is a double-blind, placebo-controlled trial in 60 patients. We are dosing patients at days one, 29 and 57 with either a low or a high-dose of HepTcell, plus or minus an adjutants in patients well-controlled with their current anti-viral therapy. The primary endpoint in this trial is most to Phase 1 studies is safety and tolerability, with T cell response is our secondary endpoint. We remain on track for initial data in the fourth quarter of 2017. We’ll have continued data to include the exploratory endpoints of quantitative HBC – HBV surface antigens in the – in early 2018, and we anticipate a larger Phase 2 study in late 2018 to confirm the dose and evaluate the dosing schedule. Now on to our externally funded programs. Altimmune has two complimentary government-sponsored programs, SparVax-L and NasoShield, in the anthrax vaccine space. This is a market where the only license vaccine averages approximately $300 million in sales annually into the Strategic National Stockpile. As a reminder, we’re not taking any of Altimmune’s dollars to move either of these programs forward, and we rely on government contracts to advance these projects. These contracts in addition to the validation they provide on our technologies provide additional benefits in terms of cash flow, providing overhead and fringe support, as well as a small profit on top. In addition, as NasoShield is built on the same RespirVec platform as NasoVAX, we also gained synergies as it relates to CMC developments, quality infrastructure, assay development, et cetera. In the SparVax-L program, where we have $15 million NIAID contract to move our next-generation lyophilized anthrax vaccine forward, we’re initiating a bridging study in rabbits later this year, with data expected in the first-half of 2018. This asset was acquired through the merger with PharmAthene, where PharmAthene have promising Phase 2 data with a two-dose liquid regimen of the product that unfortunately have some stability issues. We’ve now demonstrated over six years of stability with this new lyophilized version of the product. The current contract runs through August of 2018, and we intend to use data from this study to initiate discussions with BARDA and NIAID for continued support of this program. In our NasoShield program sponsored by a $127 million BARDA contract for the next-generation anthrax vaccine, we’re planning a Phase 1 study to begin in the first quarter of 2018. The study will be a placebo-controlled study and will evaluate escalating dose cohorts with a single intranasal dose, with one cohort to receive a repeated dose at day 21. This contract runs through September of 2021. And if all options are exercised, we’ll provide funding through the end of Phase 2. I’m very proud of the work our team has done in the – in development of these programs and the merger with PharmAthene. We’ve had a lot of activity this year in the first-half, but we’re remaining focused on the key drivers for shareholder value. As we look forward, we have several updates on our ongoing programs. We will have several updates on our ongoing programs and look forward to providing regular updates on our quarterly calls and a key industry conferences. With that, it is my pleasure to turn the call over to Elizabeth for an update on our financials. Elizabeth?

[Elizabeth Czerepak:]

Thank you, Bill, and good morning, everyone. For today’s call, I will provide an update regarding our second quarter 2017 financial results. Altimmune revenues for the second quarter of 2017 were approximately $3 million, consisting primarily of contract revenue from BARDA for our anthrax vaccine product candidate. During July 2016, we signed a new contract with BARDA, resulting in an increase in contract revenue of $1.9 million during the three months ended June 30, 2017, as compared to the same period in 2016. Revenues during the quarter also included $0.4 million in revenues from a contract with NIAID that was acquired from the merger with PharmAthene. Research and development operating expenses were $5.3 million for the second quarter of 2017, compared to $1.4 million in the same period last year. The increase was a result of an additional $0.5 million in research and development expenses for SparVax-L, an increase of $1.5 million in spending on the development of the NasoShield asset on behalf of BARDA, an increase of $1.0 million in HepTcell development and Phase 1 trial cost, in addition to an increase of $1.0 million in manufacturing and other costs in preparation for the NasoVAX Phase 2 trial. General and administrative expenses were $1.8 million for the second quarter of 2017, compared to $1.0 million for the same period last year. The increase was the combined result of the addition of expenses from the mergers with PharmAthene during the three months ended June 30, 2017, an increase in legal and professional costs, primarily as a result of the merger and these were partially offset by a decrease in other costs during those periods. Net loss attributable to common shareholders for the three months ended June 30, 2017 was $3.2 million, compared with $1.7 million in the same period in 2016. As of June 30, 2017, we had approximately $8.4 million in cash and cash equivalent. We believe that this amount together with committed funding and expected revenue and tax refunds is sufficient to support our operations through the second quarter of 2018. We had approximately $15.4 million common shares outstanding at June 30, 2017. For further details on our financials, including the financial results for the three and six month periods ending June 30, 2017 and 2016, please refer to our 10-Q, which is expected to be filed with the SEC shortly. And now, I’d like to turn the call back over to Bill. Bill?

[Bill Enright:]

Thank you, and thank you, everyone, for joining us on our first earnings call as Altimmune. We look forward to providing you with regular updates. I’d like to thank our employees for the tremendous work they put in and our Board and shareholders for their ongoing support. With that, I’d like to open the call now for Q&A. Operator?

[Operator:]

Thank you. [Operator Instructions] And we will take our question from David Sherman with LifeSci Capital.

[David Sherman:]

Hi, guys, thanks for taking my question. You had mentioned earlier in broader protection with the influenza vaccine, I was just wondering, if you could elaborate on the preclinical studies to support that?

[Bill Enright:]

Sure. David, thanks very much for asking the question. So, we’ve got a great deal of preclinical support in mice and parrots and other preclinical models, where we’ve been looking at this our early response. And it’s really the intranasal administration of the adenovector is really key in both the early protection and the broad response that we’re seeing. And what we’ve seen is that, we can get protection with a single intranasally administered dose as quickly as 24 to 48 hours after administering the vaccine. And that protection is pretty long-lasting, which is another key beneficiary of our vaccines. And the other nice thing about this is that, the response is very broad. So when we vaccinate using, for instance, in H1 strain of the vaccine, we’re able to show protection against multiple strains either other H1 strains that are typically non-cross-reactive, or H3, or H5, or H7, we’re getting that kind of broad universal life protection.

[David Sherman:]

Okay. Thanks.

[Operator:]

And with no more questions in the queue, that will conclude our call for today. Thank you for your participation. You may now disconnect.