Altimmune, Inc.

Good day, ladies and gentlemen, and welcome to the Altimmune Inc. Q1 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session, and instructions will follow at that time. If anyone should require operator assistance, please press star zero on your touchtone phone. As a reminder, this call is being recorded. I would now like to introduce your host for today's conference call, Rich Eisenstadt. the Financial Officer of Altimmune. Rick, you may begin.

Thank you, Katie, and good morning, everyone. Thank you for participating in Altimmune's first quarter 2022 earnings conference call. Members of the Altimmune team joining me on the call today are Vipin Garg, our Chief Executive Officer, Scott Roberts, our Chief Scientific Officer, and Scott Harris, our Chief Medical Officer. Following the prepared remarks, we will hold a question and answer session A press release with our first quarter 2022 financial results was issued this morning and can be found on the investor relations section 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. Altamine cautions that these forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those indicated, including those related to the ongoing conflict in Ukraine, COVID-19, and the impact on our business operations, clinical trials, and results of operations. For 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 SEC. I would also direct you to read the forward-looking statement disclosure in our earnings press release issued this morning and now available on our website. Any statements made on this conference call speak only as of today's date, Thursday, May 12, 2022, 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 replay on Optamine's website. With that, I will now turn the call over to Dr. Vipengar, Chief Executive Officer of Optamine.

Thank you, Rich, and good morning, everyone. We appreciate you joining us today for a discussion of our first quarter 2022 financial results and business update. We continue to advance multiple clinical trials for our lead product candidate, Pembidutide, a GLP-1 glucagon dual receptor agonist, and are excited about reporting important data from these trials in the second half of 2022. Last month, we announced the initiation of the 48-week Phase II Momentum Trial of Pembidutide in subjects with obesity or who were overweight. That trial is ongoing at multiple sites in the United States with Dr. Lou Aroni and professor of clinical medicine at Weill Cornell Medical College and a leading authority in obesity and obesity clinical trials, serving as the principal investigator. Dosing has commenced and a planned interim analysis to assess changes in body weight after 24 weeks of treatment is expected to read out in the fourth quarter of 2022. Enrollment in the phase 1b non-alcoholic fatty liver disease or NAFLD trial has been completed and data readouts for weight loss and liver fat reduction at 12 weeks of treatment are expected in the third quarter of 2022. In addition, a double-blind placebo-controlled 12-week extension of the NAFLD trial has been initiated with an expected data readout on weight loss at 24 weeks in the fourth quarter of 2022. We believe that the 24-week weight loss readout from the NAFLD Extension Trial will provide a valuable read-through to the Phase II Momentum Obesity Trial. A 12-week trial to characterize effects of pembidutide on glucose control in diabetic subjects with overweight and obesity is also ongoing. This trial will further expand on the findings from our phase one trial in which decreased insulin resistance and maintenance of glucose control were observed in an obese and overweight patient population that included subjects with prediabetes. Given the increasing competitive obesity space, it is important to highlight the potential differentiating features of pembidutide. First, we believe we'll be able to achieve weight loss comparable to the results of pediatric surgery, confirming the benefit of adding glucagon agonism to GLP-1 monotherapy. Based on more than 10% weight loss after only 12 weeks, we expect the level of weight loss to be greater and more rapid than other agents in development, increasing patient satisfaction with treatment. In addition, we believe that the absence of dose titration will represent a major advantage in the minds of prescribers, simplifying patient management in the first months of therapy. And finally, we believe that the robust reduction of serum lipids observed in our phase one study could translate into cardiovascular benefit with long-term use, further increasing the value proposition of pembidutide treatment. I want to emphasize that our focus continues to be on obesity as the lead indication for pembidutide. While we believe that our ongoing NAFLD trial will deliver the best liver fat reduction data in clinical trials to date and add significant value to pembidutide, We are not planning to initiate a 52-week biopsy-driven NASH trial at the current time. We believe this decision will create additional flexibility in the development of obesity indication without forfeiting the value of pembidutide in the NASH indication and puts us in a good position to evaluate various strategic options for the continued development of pembidutide. The findings of our preclinical studies in the Gubra mouse model were published last month, and we are excited about the clinical data that we have generated, which we plan to present at international meetings throughout this year. We are pleased to announce that Pembidutide abstracts have been accepted as oral presentations at the 5th Global NASH Congress, the 82nd Annual Meeting of American Diabetes Association and the 2022 meeting of European Association for the Study of the Liver. We hope to announce the publication of these study results in peer-reviewed journals in the near future. Turning to hep T cell, enrollment in our Phase II clinical trial in chronic hepatitis B subjects is ongoing with an expected study readout in the first half of 2023. We are excited about the progress of Pembidutide and Hepticel and the results of ongoing trials. We expect 2022 to be an important year for Altimmune, with three major readouts representing potential significant value drivers for the company. With that, I'll now turn the call over to our Chief Medical Officer, Dr. Scott Harris, to discuss our data and clinical plans. Scott?

Thank you, Vipin, and good morning, everyone. First, let me talk about the Phase II Momentum Trial of Penvidutide in Obesity. We expect this trial will enroll approximately 320 non-diabetic subjects with either obesity or overweight with at least one obesity-related complication. Subjects will be randomized one-to-one-to-one-to-one to receive either 1.2 milligrams, 1.8 milligrams, 2.4 milligrams penvidutide or placebo administered weekly for 48 weeks. The primary endpoint of the momentum trial is the relative percent change in body weight at 48 weeks compared to baseline, with additional readouts including metabolic and lipid profiles, cardiovascular measures, and glucose homeostasis results. Dr. Lou Aroni from Weill Cornell Medical College, a leading authority in obesity and obesity clinical trials, is serving as the principal investigator. An interim analysis is planned to assess changes in body weight after 24 weeks of treatment with an expected readout in the fourth quarter of 2022 and a 48-week readout in the middle of 2023. As Vivian mentioned, we completed enrollment in our Phase 1B NAFLD clinical trial of pembidutide and expect a data readout in the third quarter of 2022. This trial is designed to assess the effects of pembidutide on liver fat and body weight in subjects with obesity or overweight with NAFLD, defined as a 10% or greater liver fat content as measured by MRI-PDFF. Non-diabetic and diabetic subjects were randomized one-to-one-to-one-to-one to pembidutide 1.2 milligrams, 1.8 milligrams, 2.4 milligrams, or placebo over 12 weeks of treatment. The primary endpoint of this trial is the reduction in liver fat by MRI-PDFF, but a key secondary endpoint is weight loss at the end of 12 weeks of treatment, as we believe that obesity and is the key driver of NAFLD and NASH. Based on the results of our Phase I clinical trial, we expect to achieve a robust reduction in liver fat content and again show a significant weight loss in subjects after 12 weeks of treatment. We have also initiated a 12-week extension for subjects who complete the initial 12 weeks of treatment. This will permit subjects to receive treatment for up to 24 weeks and allow us to compare the weight loss achieved by pembidutide to the weight loss achieved by semaglutide and terzepatide at 24 weeks of treatment. We expect data readout on the 24-week weight loss endpoint in the fourth quarter of 2022. Later this year, we also expect to have the results of two additional Phase I studies to evaluate the effects of pembidutide on glucose control in people with diabetes and its potential for drug-drug interactions. We are rapidly building the pembidutide clinical development program and expect to have accrued safety data in over 200 subjects receiving one or more doses of pembidutide in clinical trials by the fourth quarter of 2022. I want to highlight the robust effects of pembidutide on serum lipids that was demonstrated in our first in-human clinical trial which could have important implications for cardiovascular risk. It's well established that NASH and NAPLD patients come most often to the cardiovascular comorbidities associated with obesity, which include myocardial infarction, stroke, and heart failure. Pemphidutide treatment for 12 weeks resulted in robust reductions of total cholesterol, LDL cholesterol, and triglyceride, elevated levels of which are associated with increased risk for cardiovascular disease. We will be presenting these findings in an oral presentation at the American Diabetes Association meeting this coming June. We are also making continued progress in the enrollment of our Phase II clinical trial in patients with an active chronic hepatitis B and expect to read out the results of this trial in the first half of 2023. Recall that the virologic effects of hep T cell are being evaluated in chronically infected patients to enable the combination of hep T cell with novel direct acting antivirals as part of combination therapy for chronic hepatitis B. I will now hand the call over to Rich Eisenstadt to give us an update on our first quarter financial results. Rich?

Thank you, Scott, and good morning again, everyone. For today's call, I'll be providing a brief update on Altamune's first quarter 2022 financial and operating results. More comprehensive information will be available in our Form 10-Q to be filed with the SEC later today. I also will provide some guidance on our expenses for 2022. Altamune ended the first quarter of 2022 with approximately $180 million of cash and cash equivalents. compared to $190.3 million at the end of 2021. Turning to the income statement, revenue was minimal in the first quarter of 2022 compared to $800,000 in the same period in 2021. Our change in revenue for the quarter is primarily due to discontinuation of development activities for our TCOVID and Nasal Shield programs and will be de minimis going forward. Research and development expenses were $15.1 million in the first quarter of 2022, compared to $11.9 million in the same period in 2021. The expenses for the quarter ended March 31st, 2022 included $10.8 million in direct costs related to the development activities for Pemfodutide and $2.5 million in direct costs related to development activities for Hepticel. As a reminder, we will owe one last development milestone of $3 million payable in common shares of the company within 60 days following dosing of the first patient in the phase two trial of Pembedutide, which occurred in April subsequent to quarter end and will be reflected in the Q2 balance sheet. General and administrative expenses were $4.4 million in the first quarter of 2022 as compared to $3.8 million in the same period in 2021. The year-over-year change was primarily attributable to increased stock compensation expense. Net loss for the three months ended March 31, 2022, was $19.4 million, or $0.44 net loss per share, compared to $14.9 million, or $0.38 net loss per share, for the first quarter of 2021. We currently estimate that our research and development expenses for full year 2022, including the $15.1 million reported in Q1, will be approximately $75 million. G&A expenses for the full year 2022 are anticipated to be approximately $19 million. Approximately $8.5 million of these operating costs are for non-cash expenses, including stock compensation, and depreciation and amortization. With the added financial flexibility afforded through the delay in initiation of a Phase II trial Pemfidutide in NASH, our existing cash not only fully funds us through the NAPLD and 48-week momentum obesity trial data sets, but we currently estimate that our cash is sufficient to allow us to operate well into 2024. I will now turn it back over to Vipin for his closing remarks. Vipin?

Thank you, Rich. Operator, that concludes our formal remarks, and we would like to open the line to take questions. Would you please instruct the audience on the Q&A procedure?

Thank you, sir. If you would like to ask a question, please press star 1 on your touchtone phone. You may remove yourself from the queue at any time by pressing star 2. Again, that is star 1 to ask a question. We will pause for just a moment to allow questions to queue. Thank you. Our first question will come from Seamus Fernandez with Guggenheim.

Thanks, guys. And, you know, congrats on the quarter. Obviously, good management and execution around the expenses. You know, can you help us understand a little bit, you know, obviously, it's great to see the NASH study, you know, really more incorporated into potential strategic options going forward, but Maybe you could just give us a little bit of clarity along those lines. You know, how far into 2024 do you think that the cash would likely take us? You know, and just wanted to get a sense of that payment that you mentioned, Rich. You know, just wanted to get a little bit of clarification on the on the number that you mentioned there that's going to be paid, I think, in the second quarter here. I just kind of missed the absolute number. I couldn't hear if it was 16 or 60, to be honest. And then the second question, you know, is really for Scott Harris. Can you just help us understand what exactly you're looking to understand from these other phase one studies in the context of the diabetic patient population and why the company is conducting those. I think those are some important questions. And then just my final question, you know, Vipin, as you kind of think strategically about the market opportunity here, obviously you've mentioned the competitive landscape, but in the context of the size of this market opportunity, you know, can you just help us better understand what you think the level of strategic interest is likely to be and when that becomes sort of a key discussion point for the company based on the data that you're bringing forward. Thanks.

Thank you, Seamus. Lots of questions there. We'll try to address them one by one. Let me just sort of set the stage in terms of our rationale behind the delay in the NASH study, the 52-week biopsy-proven, biopsy-driven study. As you know, we've got a number of studies going on that will be generating significant amount of data in terms of liver fat reduction. And we think that's going to be sufficient to sort of drive the value proposition for people to sort of draw the line. And we'll also be getting data from other companies, other players in NASH space, during 2022. So if we put all that together, we think we'll have enough information to convince a strategic partner the value proposition that we bring to NASH, which we think will be substantial. So given that, what we want to do is focus on obesity, generate as much data as we can, and maintain financial flexibility. It's really driven by that. that we've decided to essentially postpone at this point initiation of a Phase II NASH study, which, as you know, are very long, so we're not going to see anything out of that study until sometime in 2024, even if we start that study right now. So it was given all of those considerations, we felt we would still be able to retain the upside value of the NASH indication in our discussions And I'm pretty sure that a strategic partner would want to pursue both obesity and NASH indications, just like other large pharma players are doing in the incretin space. So there's no question that incretins will play a role in NASH treatment ultimately in just a matter of timing. So that's the rationale that we are using. With that, let me just turn it over to Rich to talk about your questions about the funding and financing And how long will that last, Rich?

Yeah, sure. Thanks, Vip. And thanks for the question, Seamus. We didn't provide specific guidance on to how deep in the 2024 we'll get. We believe it will be sufficient. We should have, you know, give or take, you know, approximately a year's cash when we have the data or completion of the momentum trial. So, I hope that helps. Of course, you know, a lot changes as time goes on, you know, depending on what the data looks like and additional studies that you may or may not need to do. But it is sufficient to gather all the data, get to the FDA, and have discussions, and then we believe engage in these potential strategic discussions. Regarding the payout for Spitfire, The amount is $3 million. I'm sorry for the confusion on that. It gets paid within 60 days following the achievement of the milestone, and it will be paid in shares, Seamus. There's a preset formula, and the formula indicates that it will likely result in the issuance of approximately 850,000 common shares of the company.

Perfect. That's super helpful. And then just the last question on the diabetes patients, and maybe just an update, if you guys are willing, just to kind of provide a general color on how the obesity study, how the momentum study is recruiting so far, and how you're feeling in terms of that tracking to providing an interim look, whether it be at the full patient population or part of the patient population in the in the fourth quarter. Thanks.

Scott, do you want to take the diabetes first?

Sure. Thank you, Seamus, for the question. I'll take the diabetes part first, and then I'll finish with some comments about the momentum study. So as you know, within the obesity population, 80% of that population does not have diabetes. And you're well aware that What really controls blood sugar chronically in this population is the weight loss that was shown in the STEP trials. The change in hemoglobin A1C at 52 weeks is predominantly driven by the weight loss. So over the long run, we think that this drug will have excellent applications in diabetics. Also, in our phase one study, we saw no perturbations in glucose control measured by fasting blood sugar or hemoglobin A1C. And in fact, as you would have expected with the weight loss that was observed, we actually had a reduction of insulin resistance that bodes quite well for the results of what we're going to see in 52 weeks, either in an undiabetic population or a diabetic population. I think that we felt the obligation at this point to study the effects of pembidutide acutely on aspects of glucose control that are typically studied. in more intense phase one studies, such as continuing glucose monitoring and the like. And we really couldn't do that in our current studies without making them too complicated. So we elected to conduct a committed study in diabetics, and that's what we're trying to get out of the study right now. I'll answer the second question about the momentum study, and I'm happy to go back and backfill on that answer I just gave you on the obesity. So the AMENDM study is going quite well. We're very enthusiastic with enrollment. We think it's going to enroll very, very quickly, like most obesity studies do. And we have 25 extremely enthusiastic investigators. The best guidance I can give you is we'll give you an update when the enrollment in the study completes and tell you what our plan is right now. Right now, we're optimistic that we'll have a very meaningful readout at the end of the year.

And Seamus, to your question. Appreciate it.

And to your question about strategic thinking and the process going forward, I mean, look, the whole obesity space is maturing. I think the latest data from Trisapatide is helping. It's growing awareness. There will be a lot of interest from multiple players in this space. That's how we see it. And what we're trying to do is really generate important data that would put us in the best position to do a robust transaction, partnering transaction around this asset. So a lot of the studies, we've said it many times, we're doing these studies because we think they would add value in our strategic partnering discussions. I think overall, there are multiple players out there that are going to want to play in this space, and we just want to be ready for that.

Excellent. Thanks so much. Appreciate it.

Thank you. Our next question will come from Yasmine Rahimi with Piper Sandler.

Good morning, team, and thank you for taking my questions. I'm going to go one by one. Maybe a good place to start off would be, can you comment on the 1B NAFLD study, what you're seeing in regards to discontinuation rates, how many data safety monitoring committees have you had, and what your expectations are in terms of GI tolerability. So just anything safety-related to the 1B that you've been previewed to during this time could be helpful for us. And then I have a few more.

Well, thanks for the question, Yasmeen. As you know, we continue to be blind in this study, and I can't give you data that we don't have. I will tell you that from the safety point of view, we're extremely pleased, as we've said before, with the safety profile and tolerability of the compound in that study, as well as the other studies that we're conducting right now. There is no official data monitoring committee for this study. You wouldn't expect it with a phase one study. However, we have a safety committee that reviews the data from the study in a blinded fashion on a regular basis, and those meetings have not identified any issues to date, consistent with what I've said before. Regarding the GI tolerability, we think it's only going to improve going forward. Remember that with Phase I studies, the tolerability profile of the compound is less significant less optimistic than it would be in phase two and phase three. And the reason is, number one, there's less known about the compound at that time. There's more heightened, there's more concern about anything that you see. Investigators are heavily attuned to asking patients questions repeatedly. Subjects are admitted to the unit for much of the time, so they're under constant surveillance. And then they come back weekly. That's very different from a phase two environment like the momentum study when patients will be coming back, say, every two to four weeks and not being monitored constantly. And it was well shown in the terzepatide and semaglutide programs that when they went from phase one to phase two, that they had a tremendous decrease in their adverse events. So we were very happy with the tolerability profile that we had with pembidutide in our phase one program. We had no adverse event discontinuations. We think it's only going to get better going forward.

Thanks, Scott. I just want to clarify on the commentary you made. One, do you get notified when a discontinuation occurs in the NAFLD study or the Momentum study, and have you been notified?

Yeah, I mean, we are notified. I'm not free to speak on this on a specific basis other than to say that we're very happy with what we're seeing right now.

Got it. And then when you made the remarks that the GI tolerability could be looking more favorable in a Phase 2 study, are you saying that the Phase 1B NAFLD study's GI profile could be, given the protocol is more similar to the 1B obese data set that we have seen, or the execution of the 1B more like the Phase 2 momentum? Could you clarify, please?

Yeah, I think that clearly as you go from phase one to phase three, the tolerability profile of the compound improves. So one would expect, based on that, that the tolerability in a phase two might even be better than a 1B. But once you get the patients out of the phase one unit and you know more about the compound and you have more confidence in the investigators with what you've seen, it gets better. So We expect that the tolerability in the Phase 1B study will be better than it was in the first in-human study and that it will progressively get better going forward.

Thank you. And then last question. Any more commentary on, like, what exactly we should be expecting out of the interim? Like, what goes into your decision to decide whether you're going to pick, you know, 20 patients per arm or 30 patients per arm? Now it's been, what, about a month and a half, two months into the study. Can you help us narrow down how big the interim analysis will include? And thank you for taking my question.

Yeah, happy to answer that for you, Yasmin. As you know, we're right now in the beginning of May. We still have a long way to go with a very rapid recruitment. We're simply going to have to look at the data at the time that we have to do the cutoff. and make that decision about whether it's a complete set or if it's an incomplete set, how many patients are in it. Based on our current projections, we think that the amount of subjects included in that interim analysis, if not the complete set, will be meaningful, enough to be convincing of the data that's being seen. And that's the best guidance I can give you until we see how enrollment is going.

And when do you make that decision? When is that time period? Is this in July then? Probably in July.

Yeah, probably in that time frame, the middle of the year.

Okay, great. Thank you.

You're welcome.

Thank you. Our next question will come from Lisa Baco with Evercore ISI. Hi there. How are you?

Good morning, Lisa. Good morning. Yes.

I wanted to ask quickly, for the study you're doing that does not include diabetics, the obesity study, are you not at a point where you can include diabetics now? I know you have an earlier study. I was just curious, why not just make it kind of Alzheimer's in a way?

Thanks for the question, Lisa. Well, you know, typically in obesity studies, Lisa, if you look at the STEP program, the SURPASS program, the SURMOUNT program, In these Phase II obesity studies and Phase III, diabetics and non-diabetics are not included. And I believe that the agency would want it that way as well. So consequently, you have to choose one or the other. And we think that the more meaningful readout is going to be in the non-diabetics. Obviously, at some point, we do an obesity chronic study. But that Phase II study right now is in non-diabetics. And we think that taking the lead, given the precedent with step one, and also surmount one, which are non-diabetics, it just makes sense that we match that by doing non-diabetics and momentum.

Yeah, the recent terzapatide data was all non-diabetics. Exactly. So that's pretty standard in the obesity space to not co-mingle them in large studies.

Do you see the terzapatide data as kind of your new benchmark in a way?

Yeah, so... You know, we've been obviously looking at the whole landscape in obesity. And I think, first of all, let me say that it's really validating that the dual agonism approach is becoming more validated now. Clearly, we can see benefit over just pure GLP-1 approach. So sort of the first benchmark was 15% to 20% of that 15% range. We just have crossed the 20% mark. So... Preservatide, as you know, has about 20% to 22% weight loss. And that's great because I think that the interest in multi-agonism is going to grow with this. So we now know what GLP-1 and GIP can do. The question is, what can glucagon combined with GLP-1 do? Obviously, we have some data at this point. And just to put things in perspective, Our trisepatite showed about 22%, 20 to 22% after 72 weeks. We have shown 10% weight loss after just 12 weeks, one-sixth the time of trisepatite data. So we feel very comfortable that we will be able to at least meet, perhaps surpass that number as we go towards 48 weeks. So we are not only, we expect to be greater than trisepatite, but also much faster in terms of getting there. In our 48-week study, we could already be approaching those numbers. So we feel very good about our prospects based on our Phase I data.

Scott, do you want to add something?

Yeah, Lisa. I'll add to Vipin's comments that we're extremely excited by the prospect of delivering these results. Without dose titration, we think this is a very, very important commercial advantage, both for patient satisfaction, patients who want to lose weight faster while they're paying for the drug in the first five months of therapy with terazepatide and dose titrating, and also the ease that it gives physicians for prescribing who really do not want to be involved in managing complex dose titration. As well, one other thing I would point out is that our lipid profile appears to be superior to that of both terzapatide and semaglutide. So you get the weight loss. It's certainly very important, and it's very pleasing to people and doctors. But what you really want to do is decrease the comorbidities, and you achieve that in many ways by reducing the lipids. So the meaningful aspects of weight loss have to be translated into lipids to reduce the cardiovascular risk, and we think we have a superior profile based on the inclusion of glucagon over the monotherapy or the dual therapy that includes GIP but not glucagon.

Okay. You seem to have pretty, I mean, so far it looks like you have pretty rapid weight loss at the beginning. I'm assuming this is not linear, right? So it'll start to, probably level off, is how do you think about the shape of the curve and how predictive do you think this early effect is for more of the long-term weight loss?

Sure. Hey, Lisa, this is Scott Roberts. You know, when we look at the totality of the data out there, and this includes, you know, the STEP studies and the SURPASS study, studies, you know, we see a relationship between, you know, the initial slope of the weight loss and where the final weight loss ends up. And so we're encouraged because of that because right now we have the greatest rate of weight loss, certainly through 12 weeks. Will that slope eventually change over a year? I think that that's likely. But if you look at the data, there's a relationship there, at least we believe strongly, that the bottom is really set by the initial rate.

Interesting. It probably helps and encourages people, too, to stay on drugs and everything, right?

That's right. They're saying, well, that kind of goes to those titration and the fact that they're getting the full dose right out of the gate, and so it happens rapidly. They feel good about that. And then there seems to be this relationship where the nadir is really set by the initial slope.

Okay, interesting. And then just finally, can you kind of maybe qualify, how much are you spending on the hep T cell program and like, is there any sort of interim before the readout next year where you could kind of, you know, make a go, no go, if you want to continue kind of spending on that program, just cause you know, the majority of the value here from, you know, from an investor perspective is an obesity program and hep B has just been such a tough area and, you know, unclear, you know, commercial opportunity and it's just a difficult space. It's been difficult for people. Um, Just wondering kind of if you can make some kind of early read and if it's even worthwhile depending on how much you're spending on it.

Yeah, that's a good question, Lisa. And we track that all the time. So we think towards the end of the year, we'll be able to determine. I think main driver is going to be the rate of enrollment. It's very difficult trials to enroll, particularly in the COVID setting because these are international studies. and COVID keeps flaring up in different parts of the world, so things shut down. So we hear you, and at this point, as you can do the math, most significant spend or most of the majority of the spend is on pembidutide here. So we think there is value to finishing that study because without that study, you really cannot make the argument about combining hep T cell with another antiviral, so we need that data. But we'll evaluate that at the end of the year And if we need additional flexibility, clearly that's a level that we can pull at that point.

Okay. Thank you, guys.

Thank you. Our next question will come from Mayank Mamtami with B. Riley Securities.

Good morning, Dean. Thanks for taking our question. So for conference data presentation this quarter, could you talk to what we should focus on in terms of understanding the differentiating attributes of family, but also maybe specifically at ADA, what might be the data sets that weren't maybe part of Lily's top line press release, just things that you're looking out for at ADA? And then I have a couple of follow-ups.

Scott? Yeah, so Mike, thanks for the question. You know, we'd highlight the differentiating features are, number one, the potential to achieve even higher levels of weight loss with penvidutide than the other compounds that have been studied. But so far, as Scott mentioned in his reply earlier, the rate of weight loss initially lends us to believe that the final weight loss that we will achieve will be higher. We're very optimistic about that. Second, we think the absence of dose titration is extremely important because we think that that's right there where the pen hits the prescription pad. And physicians are going to prefer this much more to regimens that they have to follow over five months with a physician extender or some other kind of help. And in the primary care setting, when the primary care doctor has eight minutes in front of the patient, you know, to manage this is really not feasible and it's only going to get worse. And finally, we think we differentiate strongly on lipids because the effects of GIP and GLP-1 are mediated indirectly through weight loss. And the lipids are mainly a hepatic event. And as you know, we have tremendous reductions in liver fat, but that also represents the mechanism for the serum lipids. And that's why the serum lipids decrease so much. And that's the direct effects of glucagon on the liver and the lipids, which is well described in the literature. So we think that for lipid reduction, which is what physicians are going to focus on, they're going to see penvidutitis having superior attributes. We're seeing effects in lipids that are similar to statins and fibrates in terms of reduction in total cholesterol, LDL cholesterol, and triglycerides. With regards to ADA, obviously there's going to be other compounds that are being presented at that time. I am expecting to see some data from Lilly and their dual and triple agonists. We'll have to wait and see if and what they present. And that will be of extreme interest as well to us. But we'll be on the podium. We'll be presenting the results of our phase one trial. Sam Klein, who is an extremely well-known name, obesity research from WashU will be presenting that and we're really looking for a great session.

Great. Thanks for that, Kalar. And then now that you have some cost savings from the 52-week NASH study and you talk about this broad cardiometabolic benefit, I was just curious, maybe it's still early days, but we are hearing incretin therapies get into CV outcome trials. So is that sort of part of your plan, initial discussions, and is that in any way big then, you know, as you think about the phase three trial design, you know, 2023, 2024 onwards?

Well, thank you for the question, Mayank. As you know, the CV outcome trials are trials that you do predominantly after approval, and maybe even in this space now exclusively after approval. So although our eyes are on it, it's something that's really not on the drawing board right now. At this point in time, we're looking at the surrogate markers, which should be very predictive of the outcomes, and that would be the lipids. I mean, that's your best marker of cardiovascular risk that we have. So at this stage of development, in the absence of an outcomes trial, which is some time away, we'd be focusing on the lipids, and it looks really good.

Yeah, the other thing I would just add, Mayank, is that once we have the Phase II data, our focus will then shift to immediately having an end of Phase II meeting with the FDA. So that would be another important milestone. That's really going to be our first substantive discussion with the FDA on the, you know, Phase III plan for pembidutide for obesity.

And just my final tactical question on... Momentum. So now you're at 25 sites. Any chance you're able to comment how these sites compare to other ingredients studies, you know, in terms of patient enrollment per month, how it ramps up as you know, things progress from screening to dozing. I mean, do you see any issues of competitive enrollment or, you know, if running placebo controlled trials is an issue in the future and, and, and if like not having titration is critical, you know, element of enrollment, not just, you know, real-world prescriptions later on.

Thanks, Mike. There's several parts of that question. Let me try to hit on them, and if I don't backfill fully, please ask your question again. Regarding the sites that we have in the trial, each of those sites are accomplished sites in obesity. Each have a track record not only on enrollment, in rapid enrollment, but also retention, which is very important because we're focusing on that. There is a tremendous, and I want to emphasize this, tremendous amount of investigator enthusiasm. Investigators want to be in this space, and boy, patients really want to be in these studies. There's always a challenge in these studies of keeping people in the studies, particularly the placebos, So the enthusiasm in the investigator and the enthusiasm that's given to the patient to stay in the trial with lots of attention, help with their lifestyle management of the like, is extremely important. And the ability to keep the placebos in the trial are important as well. None of these sites have competitive studies. You know, we don't think that the titration or the absence of it is any issue of anything. It's a plus because patients are looking forward to more rapid weight loss when they come into the program. And that's why they're coming in is the potential for the more rapid weight loss and the greater weight loss.

I understand. Thanks for taking our questions.

Sure.

Thank you. Our next question will come from John Wollenden with JMP. securities.

Hey, thanks for taking the question and congrats on the progress. I guess I had a high-level question on the decision to focus on obesity, which we appreciate, but also understanding the opportunity in NAFLD I think means more in your hands than someone else's. How do you have these discussions with strategics if you are successful in obesity, won't that, pardon the pun, eat into a NAFLD opportunity? Just wondering how someone else would think of how PEMV could be used in NASH if you're out there in obesity as well.

Yeah, that's a good question, Jonathan. Let me just say this, that we've always said that the path to treating NASH is through obesity. So if you look at other players that are working in GLP-1 space or GLP-1 GIP space as well, they're all following both obesity and NASH. We think the data that we have generated so far on FLD speaks for itself and the data that we will generate will be sufficient to connect the dots between obesity and NASH. So just pursuing obesity doesn't exclude you from pursuing NASH. So whoever we partner with, ultimately we think they would value NASH in addition to the obesity indication and really that would be the ideal way for us to proceed with both those indications in parallel. By the way, we will be ready to execute a Phase II NASH study as soon as possible, so we're making all the preparations. We're not sort of putting the pen down. We're just not going to undertake major expense and start the study, but we'll be ready to pull the trigger on that, which we think has value. So we are preparing for all that needs to be done in order to start that study as quickly as possible.

Got it. And I guess to that, and Rich, I kind of missed in the prepared remarks the 2022 guidance. I was hoping you could run through that one more time.

Sure. I just really gave the two operating cost guidance, Jonathan. So R&D expenses for the year are projected to be about $75 million for the full year. So that's increases of the $15 million we spent in Q1. And then G&A is around $19 million in expense. And of all that expense, about $8.5 million of that is non-cash.

Very helpful. Thanks again.

Thank you. Our next question will come from Patrick Truccio with HC Rainlight.

Good morning, team. This is Jason on for Patrick. And so I have a couple questions on the hep T cell program. So the first one is, what do you view as the ideal antiviral to combine with hep T cell? And what is the current status of potential collaboration on hep T cell? And then I have two follow-up questions after that. You want to take that?

Yeah. Scott?

Yeah. Hey, Patrick. You know, I think that, you know, from a combination standpoint, Certainly, agents that knock down surface antigen are the most likely candidates. I think that we look towards the RNAi type of inhibitors. Those are the natural selection. There are others that are out there, whether the other nucleic acid approaches. The capsids may have some use, but I think we're really focused on significant knockdown of surface antigen, creating a a window, a better opportunity then for a hep T cell to go in and activate those T cells.

Okay, great. So just kind of look forward to the data readout for the first half. Are we also basically anticipating for clearance of surface antigen initial data set?

Yes, and I think in terms of your question about partnering status, that kind of goes hand in hand. We've got initial discussion with folks. pending the data, so it's really a question of who do we combine with, and it's for them as well as for us, which is the best combination, and that would only be sort of determined after we have the data.

Okay, great. That's really helpful to know. And then kind of last question, Hep C, so will we have any functional cure rate in the initial data, or will we wait for another six months to fully assess? And what rate of functional cure would you anticipate in this trial? Scott?

Yeah, the trial's really not set up to look at functional cure. This is meant to look at virological endpoint. We think that that's the data we need to take the next important step in the program. So it's really not focused on functional cure. Certainly, we'll be looking for that. Would not go beyond that. Again, the study is focused on the virological endpoints, validating the approach, and setting us up then for a combination study that I think everybody who's in this area understands is really going to be the successful path forward.

Great. Thank you so much.

Thank you. It appears we have no further questions at this time. I would now like to turn the program back over to our presenters for any additional or closing remarks.

Yes, thank you everyone for participating today. We appreciate this opportunity to share our results and outlook with you, and thank you for your continued interest. Have a nice day.

Thank you, ladies and gentlemen. This concludes today's event. You may now disconnect.