Altimmune, Inc.
Q4 2017 Earnings Call Transcript

Published: 29 Mar 2018

[Operator:]

Good day and welcome to the Altimmune Year End 2017 Earnings Call. Today’s conference is being recorded. At this time, I would like to turn things over to Paul Arndt [ph]. Please go ahead.

[Paul Arndt:]

Thank you, Kayla and thank you everyone for participating in today’s 2017 year end earnings conference call. Leading the call today will be Bill Enright, Chief Executive Officer of Altimmune. Also participating on the call today are Elizabeth Czerepak, Altimmune’s Chief Financial Officer and Executive Vice President of Corporate Development; Dr. Sybil Tasker, Altimmune’s Chief Medical Officer; and Scot Roberts, Altimmune’s Chief Scientific Officer. A press release with the company’s 2017 financial results was issued yesterday after the market closed 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 quarterly earnings release, which was issued last night and is now available on our website. Any forward-looking statements made on this conference call speak only as of today’s date, Thursday, March 29, 2018 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 will now turn the call over to Bill Enright, Chief Executive Officer of Altimmune. Bill, please go ahead.

[Bill Enright:]

Thank you, Paul and good morning everyone. We are pleased to be here today to provide you with an update on our recent accomplishments. Joining me on the call today is our Chief Financial Officer, Elizabeth Czerepak, who will review our 2017 financials; Dr. Sybil Tasker, our Chief Medical Officer who will talk about the very promising results from our Phase 2 NasoVAX influenza vaccine program and provide updates on our Phase 1 HepTcell program and our ongoing Phase 1 study with our NasoShield program; and Scot Roberts, our Chief Scientific Officer, who will talk about the great preclinical results from our SparVax-L program. 2017 was an amazing year for Altimmune. To recap some of the highlights, we successfully completed and integrated our second merger within a 26-month period. We successfully transitioned from a privately held to a publicly traded company through the reverse merger with PharmAthene, including all of the operational stocks and all related requirements culminating and ringing of the bell on NASDAQ. We raised approximately $30 million through a pre-merger private placement with existing investors, the reverse merger with PharmAthene and a series B preferred offering providing sufficient cash into 2019. We submitted two investigative new drug applications or INDs within 4 months at each other, both of which received very few comments from the FDA and we are clear to proceed. And we completed enrollment in two clinical studies, NasoVAX Phase 2 and HepTcell Phase 1. These events positioned us very well heading into 2018 and the exciting times that Altimmune continue as we build on the progress and momentum we made last year. Over the last few weeks, we have announced positive data in two Phase 2 programs, NasoVAX, our intranasal flu vaccine and SparVax-L, our government funded two-dose anthrax vaccine. We anticipate more news to come with additional data readouts expected mid-2018 for our BARDA funded NasoShield Phase 1 study and follow-up data from both NasoVAX and HepTcell in the second half of this year. We are very excited by the potential market opportunity for an intranasal flu vaccine. As we are seeing this season, flu is not just a cold and the risk from flu and flu leaded complications are potentially deadly even in the young healthy adults. The flu vaccine can help prevent or lessen the effects of the flu, but its effectiveness can vary greatly from year-to-year and the overall level of protection is typically poor. NasoVAX is potentially more effective vaccine than traditional flu vaccines as NasoVAX potentially can stimulate broader and more rapid immune response. Additionally, NasoVAX can potentially protect in a matter of days rather than weeks as with traditional flu vaccines. It may have broader protection against changing virus strains and it can be produced in less than half the time as traditional vaccines because it’s manufactured in cell culture. Vaccines manufactured in cell culture were reported by the CDC to be 20% more effective this year than traditional vaccines that are produced in chicken eggs. We will begin with the review of the data we have already and provided update on the expected timing for additional milestones and data. I am going to turn the presentation over to Sybil to provide an update on the recent clinical results. Sybil?

[Sybil Tasker:]

Thank you, Bill. Let me begin with the review of NasoVAX, our intranasally administered recombinant flu vaccine candidate. Earlier this week, we announced positive Phase 2a data in our dose ranging study of NasoVAX. We were very pleased to see such excellent tolerability and robust immune responses achieving 100% zero protection with two of the three doses tested. Our study randomized 60 healthy adults to one of three different dose levels or intranasal placebo. Side effects from vaccination were not statistically different than placebo and did not increase with dose. We also compared immune responses to 20 similar subjects who received Fluzone, Sanofi’s licensed injectable flu vaccine. Results of the highest dose of intranasal NasoVAX produced similar antibody responses compared with the injectable Fluzone. FluMist, the licensed intranasal flu vaccine typically produces less antibodies than injected flu vaccines. So we were very pleased with this result. More importantly, median T-cell response after vaccination was nearly six-fold higher with NasoVAX. Cellular immunity is important in limiting disease severity and transmission of influenza. And we believe this result with the cellular immune responses indicates that NasoVAX will be more effective keeping people well during flu season. We are looking forward to sharing additional results about NasoVAX later this summer. We are measuring mucosal antibody levels. These are antibody levels present right at the site of infection in the nose and we will also test immune response at later time points up to 6 months after vaccination. We are very excited about NasoVAX’s potential as a safe, effective, easy to use intranasal vaccine and we look forward to evaluating the quadrivalent formulation in a wider age range to include healthy elderly adults early next year. We also announced data earlier this week about HepTcell immunotherapy for chronic hepatitis C. The primary endpoint of safety and tolerability was met, but the T-cell responses are secondary endpoint were inconclusive. Previous review of the blinded data by cohort indicated evidence of increased cellular immune responses in cohort two compared with cohort one. Both of these cohorts included control patients. However, in the un-blinded analysis the T-cell responses in the treated subjects were not appreciably different than placebo controls. Subjects in this study will continue to be followed for six months after their last dose as per study protocol. Later this year, we will have data on quantitative hepatitis B surface antigen, a virologic marker in addition to other markers of immune response. This will help us better understand how HepTcell is performing. We will evaluate the status of this program when these additional data are available. In addition to the two programs I just discussed Altimmune has two complementary government sponsored anthrax vaccine programs SparVax-L and NasoShield. NasoShield is based on the same platform technology as the NasoVAX influenza vaccine I just discussed. And it is actively enrolling the Phase 1 safety study after a successful IND submission last December. The study is evaluating the safety and immunogenicity of a single intranasal dose of NasoShield in four escalating dose cohorts. And we will also test a two dose schedule at the highest dose. This study includes a blinded placebo and an open-label comparator the license injectable anthrax vaccine BioThrax. Enrollment is proceeding as planned and we plan to share data about the single dose cohorts this summer. As a reminder NasoShield development is funded through a contract with the Biomedical Advance Research and Development Authority or BARDA which will provide funding through the end of Phase 2 time point if contract options are exercised. So, now I will turn the presentation over to our Chief Scientific Officer, Scott Roberts. Scott?

[Scot Roberts:]

Thank you, Sybil. Recently Altimmune received additional IP protection with the notice of allowance from the United States Patent Office extending the IP coverage for NasoShield administered by the intranasal route. That patent has an expiry no sooner than July of 2024. This adds IP protection to our already granted in Europe and Japan. Earlier this month we announced positive preclinical data comparing SparVax-L and BioThrax against anthrax infection. BioThrax is the only licensed anthrax vaccine in the United States. In this study our single dose of SparVax-L protected 67% of animals from lethal anthrax disease following challenge. And when two doses were given 100% of animals were protected and the protective antibody response was much higher than that following two doses of BioTrax. SparVax-L is a reformulated version of the SparVax vaccine that had undergone extensive Phase 2 clinical testing in nearly 700 subjects and was shown to be well tolerated and immunogenic. The improved formulation is expected to have an extended shelf life without cold chain requirements and ongoing studies have demonstrated excellent stability at room temperature for at least 2 years. This program like the NasoShield program is fully funded by government contracts and we do not use Altimmune’s dollars to move either program forward. This program is currently being developed through funding from the National Institute of Allergy and Infectious Diseases or NIAID. And Altimmune is seeking additional government funding to further advance this program. With that, it’s my pleasure to turn the call over to Elizabeth for an update on our financials. Elizabeth?

[Elizabeth Czerepak:]

Thank you, Scott and good morning everyone. For today’s call, I will provide an update regarding our 2017 year end financial results. Altimmune revenues for the year ended 2017 were approximately $10.7 million consisting primarily of revenue from BARDA and NIAID for our anthrax vaccine product candidates. Our BARDA contract resulted in an increase in revenue of $5.7 million for the year as compared to 2016. Revenues during the year also included $1.8 million in revenue from a contract with NIAID that was acquired from our merger with PharmAthene in May of 2017. Research and development expenses were $18.3 million for 2017 compared to $7.2 million in 2016. The increase was primarily a result of increases in NasoShield, NasoVAX, SparVax-L and HepTCell clinical and preclinical costs partially offset by approximately $500 in reduced spending on the Oncosyn program. In addition, research and development spending in 2016 did not include PharmAthene R&D or other costs associated with the research and development program supported with the NIAID contract. General and administrative expenses were $8.5 million for 2017 compared to $7.1 million for last year. The increase was a combined result of increased professional fees related to the merger with PharmAthene and costs incurred by us as a public company. Offset by $2.4 million of costs related to preparations for initial public offering that were incurred in 2016 and did not recur in 2017. We have determined that our goodwill was impaired and recorded a non-cash goodwill impairment charge of $35.9 million in 2017. This non-cash charge has no effect on our current cash balance or operating cash flows. In 2017 we recorded an income tax benefit of $5.6 million, which reflected estimated tax refunds we expect to receive from carrying back our 2017 net operating losses to offset the 2016 federal and state income taxes paid by PharmAthene as well as other tax credits. Net loss attributable to common stockholders for the year ended December 31, 2017 was $51.4 million compared with $11.5 million in 2016. When the non-cash goodwill impairment charges are excluded, net loss attributable to common shareholders for 2017 was $15.4 million compared to the $11.5 million for 2016. As of December 31, 2017, we had approximately $12.3 million in cash, cash equivalents and restricted cash. We believe that this amount together with committed funding and expected revenue and tax refunds is sufficient to support our operations into the first quarter of 2019. For further details on our 2017 financial results, please refer to our annual report on Form 10-K expected to be filed with the SEC shortly. And now, I would like to turn it back over to Bill. Bill?

[Bill Enright:]

Thank you. As you can see, we have had a very productive 2017 with solid momentum moving into this quarter and significant progress made on all fronts, including on the corporate side where we appointed Mitch Sayare as Chairman of our board. Mitch brings tremendous insight and experience from his years as Chairman and CEO of ImmunoGen and we welcome his astute input. It is exciting time at Altimmune. Looking forward, we have several important near-term milestones, including NasoShield data from our ongoing Phase 1 study later this summer, additional immunogenicity data from our Phase 2 NasoVAX study in the third quarter, additional data from our Phase 1 HepTcell study in the third quarter and initiation of manufacturing for our NasoVAX quadrivalent Phase 2 study. Thank you everyone for joining us today. I would like to thank our employees for the tremendous work they put in over the last year 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] We will go first to Charles Duncan, Piper Jaffray.

[Sarah Weber:]

Hi, good morning. This is Sarah on for Charles. Congratulations on the NasoVAX data. I had a couple of questions on that. So, first, it sounds like both the middle and high doses you look at generator-sufficient immune responses. So, can you understand what you learned about the dosing from this study?

[Bill Enright:]

Sarah thanks for joining the call. I am going to go ahead and let Sybil answer that.

[Sybil Tasker:]

Hi, Sarah. We saw dose response with the highest dose had higher levels than the middle dose and so we feel that probably both the middle and high dose are viable going forward and we are going to continue to evaluate the data, especially when we look at durability of antibody response which when you look at the NIH strategic plan durability than the response, it’s really important. So, we are going to wait for the final data to be sure of what the best doses going forward.

[Sarah Weber:]

Okay, great. And then based on its first data update from the Phase 2a, how are you continuing to think about the advantage of the NasoVAX versus traditional vaccines, is this the formulation player, do you feel like you have more evidence for potential to generate more robust immune responses?

[Bill Enright:]

Yes. So, I think there is a lot of advantage this year, not just the formulation. Clearly, the intranasal route of administration is more convenient and I don’t think anybody likes getting a shot, but in reality it looks like the intranasal route of administration is actually important to protection as well and we believe that we will see that when we look at the mucosal antibody response and we get those data later this year, but in addition that the large increase in T-cell response that we see over the injected vaccine also is important as Sybil pointed out, the T-cell response is becoming increasingly or people are becoming increasingly aware that, that’s really necessary to limit disease. Right, so the antibody response is more important for preventing the disease, but the T-cell response is more important for actually limiting the disease impact and effect. So I think we have really got a different kind of flu vaccine that really gives us a unique opportunity in the marketplace.

[Sarah Weber:]

Great, thanks. And just one last question on the anthrax program, can you help us understand the next step for that program and the news that investor should expect later this year?

[Bill Enright:]

Sure. So, the anthrax program really consists of two different vaccines and the SparVax-L program, we talked about the great data that we saw earlier this year in the comparison study with BioThrax and we are looking for additional funding both from BARDA and/or NYAD or DoD for that program to move that forward with additional clinical studies. On the NasoShield side with the data that we are expecting later this summer, we will have the safety and immunogenicity data from the single dose cohorts and then we are following that up at the same time with the one cohort that we are looking at two intranasal administrations, but we will have those data available from both of those studies and positive data from that study then will be in discussions with BARDA about triggering the option part of our contract. And that’s the main financial piece of that contract.

[Sarah Weber:]

Thanks and congrats on the progress.

[Bill Enright:]

Thanks very much, Sarah.

[Operator:]

[Operator Instructions] We will go next to David Sherman of LifeSci Capital.

[Unidentified Analyst:]

Hi, this is [indiscernible] speaking on behalf of David Sherman. Congrats again on all the good data and a good 2017. I have a question regarding the next Phase 2 trial for NasoVAX, if you could please elaborate on its design that would be great please?

[Bill Enright:]

Yes, thank you very much for joining the call and again I am going to let Sybil talk about the design of that Phase 2 study.

[Sybil Tasker:]

Yes. So, we are planning to – we are going forward with the assumption that we may want to reevaluate two dose levels with the quad, so that design would be to check two dose levels versus placebo. FDA has requested that we continue in the past that we look at placebo comparator for safety, but we also will probably have an active comparator. The plan would be to stratify enrollment in that study to make sure we could get the same high level of immunity in elderly patients and so that we have two dose levels versus placebo versus an active comparator and all 4 of those would be stratified between healthy underdogs and healthy elderly. The endpoints would be similar immunogenecity endpoints. We also would in the later part of the dose confirmation we would be looking as exploratory endpoint of protective efficacy against actual influenza infection.

[Unidentified Analyst:]

That’s great. Thank you very much. Appreciate it.

[Sybil Tasker:]

You are welcome.

[Operator:]

And with no further questions, I would like to turn it back to the speakers for closing remarks.

[Bill Enright:]

Thank you very much, Kayla and thanks again everyone for participating. We are excited about the positive data from our two Phase 2 programs, the progress we are making our NasoShield and the potential of the company moving forward. Good morning.

[Operator:]

That concludes today’s conference. We thank you for your participation. You may now disconnect.