Altimmune, Inc.

Good day, ladies and gentlemen, and welcome to the Altimmune Inc. Q2 Financial Results Conference Call. At this time, all participants are in the listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. To ask a question during the session, you will need to press star 1-1 on your telephone. As a reminder, this call is being recorded. I would now like to introduce your host for today's conference call, Rich Eisenstad, Chief Financial Officer of Altimmune. Rich, you may begin.

Thank you, Carlo, and good morning, everyone. Thank you for participating in Altamune's second quarter 2022 financial results conference call. Members of the Altamune 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 second 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'd 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. Altamene 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 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 SEC. I would also direct you to read the foreign looking statements disclaimer in our 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, August 11, 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 Altamune's website. With that, I will now turn the call over to Dr. Wippengard, Chief Executive Officer of Altamune.

Thank you, Rich, and good morning, everyone. We appreciate you joining us today for a discussion of our second quarter 2022 financial results and business update. We continue to advance multiple clinical trials for our lead obesity product candidate, Pembidutide, a GLP-1 glucagon dual receptor agonist, and are excited about reporting important data from these trials in the coming months. One thing that has become abundantly clear over the last 12 months is that we now have two truly effective drugs to combat the obesity epidemic, and with promising additional drugs on the horizon. Given the increasingly competitive obesity space, it's important to highlight the potential differentiating features of PEMVDU diet. First, we believe that we have the potential to achieve weight loss equal to or exceeding 20% after only 48 weeks of treatment, confirming the benefit of adding glucagon agonism to GLP-1 monotherapy. We also believe the robust reduction of serum lipids observed in our Phase I trial could translate into important cardiovascular benefits with long-term use, further increasing the value proposition of our drug candidate. Finally, we believe that the absence of dose titration will be viewed as a major advantage in the minds of prescribers and patients, simplifying management by avoiding the cumbersome use of dose titration over the first four to five months of therapy. We are planning to announce the top-line data readout on our Phase 1b multi-center trial in subjects with obesity or overweight and non-alcoholic fatty liver disease, or FLD, in mid-September. The key readouts will include assessment of liver fat, weight loss, serum lipids, and safety at 12 weeks of treatment. Scott Harris will join us shortly to discuss our expectations for that readout. In addition, we are currently executing a 12-week double-blind, placebo-controlled extension to this trial and expect data readout after 24 weeks of treatment in Q4 2022. We believe that the 24-week readout will provide valuable information about the weight loss that could be achieved with Pembidutide at one year of treatment. Our 48-week Phase II Momentum Trial of Pembidutide in subject with obesity and overweight is enrolling rapidly. Approximately 25 obesity study centers are now enrolling in the trial across the United States. As of yesterday, August 10, we had randomized 167 subjects, and we expect to fully enroll the 320 subject trial population by the end of this third quarter. A 24-week interim analysis, which was initially planned at year-end 2022, is now planned for Q1 2023, when we expect that approximately 50% of the subjects have been treated for 24 weeks. We believe the interim readout on 50% of the subjects in our trial would provide a more meaningful and robust data set in our evaluation of pembidutide. Scott Harris will talk more about the MOMENTUM trial shortly. A 12-week phase 1b multicenter trial in type 2 diabetics is also ongoing, and we expect this trial to provide important information on parameters of glucose control such as hemoglobin A1C in subjects with obesity and overweight who have type 2 diabetes. Finally, we are continuing to enroll in our phase 2 multicenter trial of hep T cell in subjects with inactive chronic hepatitis B and expect to have a data readout in the second half of 2023. We are excited about the progress of PAMV DUTYTE and hep T cell and the upcoming results of these ongoing trials. 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 our upcoming readout in our 12-week Phase 1b multicenter trial of subjects with obesity or overweight and NAFLD in mid-September. NAFLD in this trial was defined as a 10% or greater liver fat content as measured by MRI, PDFF. At the conclusion of enrollment, the trial randomized and dosed 94 subjects who were randomized one-to-one-to-one-to-one to 1.2 milligrams, 1.8 milligrams, 2.4 milligrams Pemfidutide or placebo over 12 weeks of treatment. Approximately 29% of the subjects participating in the trial have preexisting type 2 diabetes. The primary endpoint of this trial is the reduction in liver fat by MRI-PDFF, and a key secondary endpoint is weight loss at the end of 12 weeks of treatment. We will report consolidated and stratified data in these and other parameters for subjects with and without diabetes. The readout in September will also include the effects of Pemvidutide on serum lipids, laboratory parameters, including liver function tests and fasting glucose, adverse events, including adverse events leading to treatment discontinuation, hemoglobin A1c, heart rate and blood pressure. Based on an analysis of the pooled unblinded data, the average BMI of participants is approximately 36 with median weight approximately of 101 kilograms, and the median age is approximately 49 years, with approximately 53% of subjects being female. As you are aware, we are conducting a 12-week extension trial for participants who complete the initial 12 weeks of treatment, resulting in a total of 24 weeks of treatment. The extension trial is now fully enrolled, And we expect to read out on these results in Q4 2022. The principal readouts will be weight loss and the continued safety of Pemfidutide administration. The 24-week data may allow us to project the amount of weight loss that could be achieved by Pemfidutide at one year of treatment. Now, let me talk about the Phase II Momentum Trial of Pemfidutide in obesity. The trial is enrolling approximately 320 non-diabetic subjects with either obesity or overweight with at least one obesity-related complication across approximately 25 obesity study centers in the United States. Subjects are being randomized one-to-one-to-one-to-one to receive either 1.2 milligrams, 1.8 milligrams, 2.4 milligrams pembidutide or placebo, administered weekly for 48 weeks as an adjunct to diet and exercise. 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. Dr. Lou Arani from Weill Cornell Medical School a leading authority in obesity and clinical trials, is serving as the principal investigator. As Vipin mentioned, enrollment and randomization are progressing rapidly. We now plan to perform an inner analysis to assess changes in body weight after 24 weeks of treatment on approximately 50% of expected study participants in Q1 of 2023. We are currently randomizing 25 subjects per week and expect to complete randomization of the full 320 study participants next month. We are also completing enrollment in our 12-week phase 1 multicenter trial, evaluating the effects of pembidutide on glucose control in subjects with type 2 diabetes. Approximately 48 subjects are planned, with readout expected in Q1 2023. Across the trials that I have described, we are rapidly building the safety profile of pemfidutide with unblinded safety data accrued in over 200 subjects, receiving one or more doses of pemfidutide in clinical trials expected by year-end 2022 and approximately 500 subjects by year-end 2023. We are all aware of the recent interim readout on the Wegovy Select Cardiovascular Outcomes Trial And like most of us who are following this study, we believe that a positive effect in cardiovascular outcomes will be demonstrated at the final readout. Following on this thought, however, I'd like to highlight the robust reductions in serum lipids demonstrated in our first in human clinical trial of Pemfidutide, where we achieved 20 to 30 percent reductions in total in LDL cholesterol within 12 weeks of Pemfidutide treatment. These lipid effects are expected to have important implications for cardiovascular disease, such as myocardial infarction, stroke, and heart failure, and they compare quite favorably to the limited 3% reduction in total cholesterol and LDL levels observed in the Wegovy Step 1 trial at 68 weeks. We believe the market effect on lipids that we demonstrated in our first in-human trial speak directly to the superior effects of glucagon on hepatic concern lipids and support our belief that we will achieve more rapid and pronounced outcomes when cardiovascular outcomes trials with penvidutide are conducted. We are also making continued progress in the enrollment of our Phase II multicenter clinical trial of hep T-cell in subjects with inactive chronic hepatitis B and expect the results of this trial in the second 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 an update on our first quarter financial results. Rich?

Thank you, Scott, and good morning again, everybody. For today's call, I'll be providing a brief update on Altamine's second quarter 2022 financial results. More comprehensive information will be available in our Form 10-Q to be filed with the SEC later today. Altamine ended the second quarter of 2022 with approximately 184.8 million of cash, cash equivalents, and short-term investments, compared to $190.3 million at the end of 2021. We drew down approximately $21.3 million in net proceeds off of our ATM during the three months end of June 30, 2022, and had approximately $32.9 million in availability remaining under the ATM at June 30. Turning to the income statement, Revenue was minimal in the second quarter of 2022 compared to $100,000 in the same period in 2021. Our change in revenue for the quarter was primarily due to the discontinuation of development activities for our T-COVID and nasal shield programs. Research and development expenses were $16 million in the second quarter of 2022 compared to $13.3 million in the same period in 2021. Approximately $10.1 million of this total for the second quarter of 2022 was direct expenses for the conduct of our clinical programs, including $8.7 million in direct costs related to development activities for Pemvidutide and $1.4 million in direct costs related to development activities for Hep T-cell. Approximately $1.9 million of expense in the second quarter of 2022 was a non-cash expense associated with the achievement of the Phase II development milestone for Pemba-Dutai. General and administrative expenses were $4.4 million in the second quarter of 2022, as compared to $3.7 million in the same period in 2021. The increase year-over-year was primarily attributable to increased labor and labor-related expenses, including stock compensation expense. Net loss for the three months entered June 30th, 2022 was $20.1 million or 42 cents net loss per share compared to $24.8 million or 60 cents net loss per share for the second quarter of 2021. Our existing cash not only fully funds us through all of our ongoing clinical trials, but we currently estimate that our cash is sufficient to allow us to operate into the second half of 2024. I will now turn 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 lines to take questions. Could you please instruct the audience on the Q&A procedure?

Thank you. As a reminder, to ask a question, you will need to press star 1-1 on your telephone keypad. Our first question is from the line of James Fernandez of Guggenheim. Your question, please.

Oh, great, guys. Can you hear me okay? Yes. Okay, excellent. So just a couple of things, you know, on timelines and expectations heading into the event. Obviously, you guys are making some very strong statements around what you believe Pemba Dutide has the capability to do, and incorporating that 20% target into the press release, I'm sure, has people paying attention. I wanted to just get a little bit of incremental color on your conviction around that 20% threshold. It would strike us that even if you were to achieve a high team's number at 48 weeks, that would still be approaching, if not still a best-in-class result relative to the current two assets. Just wanted to get a better sense of what you guys, what raised your conviction to kind of put that and, you know, really make such a strong statement. And again, you know, we can certainly see that, but I have to imagine, you know, that perhaps you're seeing something in the phase one data to imply that things are going quite well. Separately, as we just kind of look at the updates on the timing dynamics, you know, where we saw some push out, I guess, can you talk to us and help us understand what the workup of the patients actually is? You know, we actually think it's good that there's a healthy pace, but perhaps not too fast of a pace of patient enrollment. And while folks may be a little bit disappointed by the timing of the 24-week results, I was just hoping you could give us an update on the participation rate from patients going from the 12-week into the 24-week extension in the NAFLD study. And then just the last question, you know, the diabetes, you know, study, can you just remind us what you're hoping to understand in the phase one, you know, basically safety portion study in the diabetic patient population. Is that, you know, purely drug-drug interaction work, or is it possible that we could see, you know, treatment-related effects in that patient population just to kind of replicate the 29% of patients that are in NAFLD? Apologize for the series of questions, but Just wanted to get those three things out there. Thanks.

Yeah, absolutely. Good morning, Seamus. All great questions. There's a lot to unpack there. So let me just start with in terms of the magnitude of weight loss. As we have said all along, and we agree with you that it's not about just achieving a number. It's really looking at the entire package. that you're bringing to the table, and we've been emphasizing that it's not just the weight loss, it's lack of dose titration, it's our serum lipid profile that we are seeing, so all of that will go into finally distinguishing or differentiating pembidutide from the rest of the field. Based on what we have seen from our phase one study in Australia, as you know, we were able to achieve approaching eight to 10% weight loss in about 12 weeks. When you compare that to other agents, it makes sense that we should be able to reach a number approaching 20% in 48 weeks because we got all of this runway left for the drug to work. So that's really where that conviction is coming from. We are totally unblinded to the national D phase one study, so none of this is coming from that. But we continue to believe that Pembidutide has the potential to be a highly differentiated product in this space. Your second question relates to – Scott, do you want to take that?

Yeah. Hey, Seamus. Good morning. So you had several parts of your question, and let me make sure I touch on all of them, and please interrupt me if I haven't. We're very confident about the rate of enrollment. We have a really great clinical operations group. We also have, even more important than that, some very, very experienced obesity study centers. They have conducted many trials through the years. More recently, some of them participated in the STEP or their SUMMONT or their SURPASS trials. We have a lot of confidence in them. And based on that, we are... we are really confident about the quality of the data that we're generating in that trial at a very nice rate. We haven't commented yet on the rollovers from the NAFLD 12-week study to the 12-week extension. We'll make that announcement in the fourth quarter, but we're very happy at this point at the rate of rollover. And finally, regarding your question of the diabetes study, recognize that there are only a limited number of subjects who are diabetic who are participating in the 12-week NAFLD study. Doing a committed diabetes study allows us to increase those numbers, get more robust readouts, and also put some measures into that study that are considered to be more of an industry standard in assessing diabetic patients, such as continuous glucose monitoring, that would be too difficult to incorporate into a NAFLD trial. I wanted to also just clarify on a statement that Vipin made that Vipin may have used the word that we are unblinded. I want to make it clear that we are still blinded to the 12-week NAFLD data. So let me just make sure that clarification is heard. Thanks.

Great. Thanks, guys. Really appreciate that. And just on the diabetes study, can you guys clarify, did you increase the number of patients that are going to be participating in that diabetes study? And that's the reason that we're going to see those data in the first quarter of next year. And the reason is to ensure that you have more robust data, or just has enrollment been a little bit more challenging in that study? And maybe you could just help us understand why that might be. And then I'll drop back into the queue.

Yeah, I don't want to talk about our final enrollments. Seamus, let me just say it's a combination of factors where we felt that we were much more comfortable announcing the first quarter rather than the fourth quarter. Okay, got it.

Thank you. Our next question is from the line of Yasmin Rahimi from Piper Sandler. Go ahead, your question, please.

Good morning, team, and thank you so much for taking my questions, and thank you for the quite additional color presented in your press release this morning and your remarks. A few questions. I'm going to go one by one. The first question I would like to understand is, I know in the past you guys have said that in the NAFLD study, the target diabetic population was 50%. And now we're at about 29%. So obviously with less number of insulin-resistant patients in the study, it's going to influence the mean weight loss. So just kind of provide us some commentary on what your expectations are in the diabetic and non-diabetic population in this NAFLD study at a 12-week endpoint. So we could address that first, and I have a couple little follow-ups as well.

Sure, very happy to address that, Yasmin. If you look at the NAFLD population in general, and there are some studies out there that capture this, the rate of diabetics in the NAFLD population is approximately 25%. It gets higher in the actual NASH population, but remember this was a NAFLD population with some NASH patients and not a committed NASH trial. When we saw our initial enrollment, it did look like 50% of subjects who were coming into the trial were diabetics, and that's what we had informed investors about. But actually, we came down to the expected number around 25%, and in fact, we're 29%. So we think that we're right in line with where we should be. Although the initial estimates were higher, we are where we should have landed. Regarding the mean weight loss, I would... direct you to focus on the fact that we are reporting out the weight losses in the diabetics and non-diabetics separately, as well as the consolidated figure. I think that's the best way to understand the data because they're separate populations. So, as I mentioned in my remarks, we'll report the weight loss and other data in three subsets of patients, or sets of patients. First will be those who don't have diabetes, which would be a standard readout. The second would be those in diabetes. And then finally, we'll consolidate, but we'll allow everyone to see exactly what the separate effects are of pembidutide in non-diabetics and diabetics despite the ratios.

Thank you, Scott. And then just, you know, with various analysts maybe having different views on what's the expected bar in this upcoming, you know, 12-week time point for NAFLD, Just, you know, can you help us understand what is an acceptable range in weight loss in your view that you think, you know, you hope to achieve if you could? And I'm sorry that I keep asking this, but we get this question quite a bit from our investors as we head into middle of September data. So just invest some color on what you're expecting in terms of an acceptable weight loss range.

Yeah, I think that a nice starting point is to look at the terzepatide or the semaglutide data at 12 weeks, Yasmin, and realize that those were obesity trials conducted over a baseline of diet and exercise intervention. So that automatically gives you about 2% to work with even without drug effects. So when you look at the placebo-adjusted semaglutide rate, it's 4%. If you look at the terazepatite rate, the placebo adjusted to 6%. You know, clearly, to be interesting, I think we should be in that range, although we think that we have properties, as Vipin emphasized, with glucagon, that even if we're kind of somewhere in that range and not exceeding it, I guess that's not our expectation. But, you know, even if we're just in that ballpark, given the other superior properties of pembidutide, the amazing lipid effects that we're seeing, and also the absence of dose titration, you know, we think that we're extremely competitive. We really are looking towards the safety of the compound in this readout. We think that that's as important as anything else to move forward. And then as you know, investors are looking at 12% because they're interested in what's going to happen at 48 weeks. And I think that that's really We're trying to really understand what's going to happen at that point. Certainly the 24-week data that we're going to generate in the fourth quarter with the extension of this trial is going to be extremely informative and certainly as interesting, if not more interesting than the 12-week readout.

Thank you, Scott. And then the last question. Can you maybe help us understand what type of safety data you are previewed to on a blinded basis? As you know, the safety data set is going to be critically important as we head into the September readout. Just in broad strokes, what are the type of things that you see on a blinded basis? And if you could provide some commentary, how satisfied you are with the things you're seeing would be great. And thank you, and I'll jump back into the queue.

Yeah, thanks, Yasmin. It's well known that as a sponsor, being responsible for the safety of study subjects, we're always alerted to panic values. That would be ALT elevations, glucose elevations, safety, severe adverse events, serious adverse events, and the like. We don't see the aggregate data, by treatment group at least, until the end of the study, the same time you do. But, you know, based on what we're getting, the information that we're getting in the trial on those metrics, we've just been very, very happy so far. So I would say that, you know, based on that blinded understanding of the data, we're just extremely encouraged.

Excellent. Thank you. Thank you. Our next question is from the line of Roger Song of Jefferies. Go ahead, please.

Great. Thank you for taking the question. A couple of questions on us. So the first one, maybe just be a little bit more specific. Given you will have your Phase 2 obesity study readout after the Phase 1 NAFLD, even the 24-week data. So maybe just that you can just contextualize this for us and the investors. How should we make research from one to the other from napoli study to obesity given it's a slightly different population baseline characteristics etc thank you yeah so you know clearly as you get to 24 weeks with an apple d you get an obesity readout we're going to have to look

at that population at 12 and 24 weeks to see if there's any impact on pre-existing liver fat, on the weight loss. It's not something that's been well characterized in the literature. Our initial impression is that there shouldn't be an effect, but we're just going to have to look at the data.

And there are differences in trial design. Obviously, you've already emphasized that point, but I want to reemphasize that the lack of diet and exercise from one study to the other, that that also has to be taken into account. But we'll be able to sort through all of that once we have the data. I mean, there's no question that there will be some read-through from one study to the other because these patients are also obese patients, so we're expecting to see significant weight loss in them, both at 12 weeks and 24 weeks.

Great. Okay, great. And then, so for the understanding the primary endpoint, efficacy endpoint is the liver cell reduction. Can you just provide some color around the expectation for the liver fat reduction, given your phase 1a have like a 90% plus liver fat reduction, even at the six-week time point? Thank you.

Yeah. So we were really impressed, even though the numbers were small, Roger, in that phase 1 first in human trial. The effects were so consistent, it gave us a great deal of confidence in the readouts. I think, once again, the more liver fat reduction that you get, the greater the effects that we're going to see on NASH resolution and fibrosis improvement, especially the speed with which we're seeing it because, as you recall, with the semaglutide trial, which did not have a significant effect on fibrosis improvement in their 72-week trial, The amount of liver fat they moved was very small, only about 34% at 24 weeks. And although they hit 50% at the end of the year, the speed was not enough to see within that same time period of one year movement in fibrosis. We're seeing very robust effects in only six weeks. If you place it against other drugs in the class, we saw the FXRs coming in in that 40% range. We saw Magigol, the resmiteron thyroid agonist, coming in at about 50%. We're seeing the FGF21s coming in about 60% to 70%. We like to believe that we're going to be as good, if not better, than those drugs.

Action. Thank you. Yeah, that's it on us. Thank you.

Thank you. Our next question is from the line of Mayank Mamsani of B. Reilly. Go ahead, please.

Good morning, team. Thanks for taking our questions. So first, just a quick follow-up on the NAFAS study. The total enrollment looks higher than I think what you had originally planned. Can you just maybe comment why is that? And then the baseline, I think you commented on BMI, age, you know, proportion of female, male. But if you are able to, you know, give any color on baseline liver enzyme levels, like, you know, should we see, with these NAFTA studies, we've seen anything ranging from mid-30s to mid-50s to mid-70s IU per liter. So anything you could comment on that would be great. And then I have a follow-up.

Yeah. So, Mayank, we obviously see the 94 subjects as being a real plus. You know, the patients who go into the 12-week trial are the same patients who go into the 24-week trial. In other words, who go into the extension. And you have to understand that when patients came into that, first 12-week trial, they came with the understanding that they were going to come in for 12 weeks. They were offered another 24 weeks, but a lot of people didn't have the time or set aside the commitment to go into for a full 24 weeks. So that has to be understood. Nonetheless, we're happy with the rollover rate, but the 94 patients really allowed us to move a robust number of patients from the 12-week study to 24 weeks. So we see that as being a real positive. on the readout that we're going to have at 24 weeks in the extension trial. So with regards to the liver enzymes, we will have that data. This is not a NASH trial, so the level of liver enzyme elevations are not going to be great, but we are allowing for some liver function elevations at baseline, and we should be able to see a meaningful change in ALT, for example, over the course of treatment of 12 weeks.

Thank you. And then having that less proportion of diabetics in the NAFLD study, just curious, what does that mean to, you know, the weight loss contribution? Because I think it would be helpful to put in context what, you know, weight loss we saw in the sematis hepatitis studies you know type 2d diabetes versus non-diabetes patients and maybe you know from your earlier phase one study if you had any diabetes versus non-diabetes patients there yeah so i'll take the second part of the question first our first study was conducted entirely with non-diabetics so we can't really you know use any information from that study to predict

what we would see in type two diabetics in the upcoming trial readout. I would emphasize, however, that 40% of the subjects who participated in the phase one study were prediabetics, and we saw a reduction in insulin resistance in that population. We saw the majority of those patients who were prediabetics becoming non-prediabetic. Regarding the lower percentage of patients who have type 2 diabetes in this trial, I would emphasize again the fact that we're gonna read out separately in the three populations. The first being the non-diabetics, so that'll compare directly to step one, which is the semaglutide first pivotal. The second would be in diabetics, that would compare to step two, and then a combination, although I don't think that the combination is meaningful, and that's why the change in the percentage of diabetics is really not meaningful as well, because what we're interested in is the separate effects of non-diabetics and diabetics, with your correct understanding that typically in clinical trials, diabetics lose less weight than non-diabetics.

Got it. And my final question on the 48 week full readout timeline, just trying to understand that gap between when you have the 24 week interim analysis in first quarter and that 48 week full analysis, which I'm assuming is going to be at the total sample size of 320 subjects. Could you just provide what that gap could look like in terms of timelines? And just maybe some color on what's the screen failure rate? You know, I think you gave a screening number of, you know, per week of about 25 subjects. Just curious if you could comment on, you know, how that rate is increasing, you know, month over month, and what's the failure rate look like?

Yeah, so to be clear, Mayank, that 25 subjects per week is not a screening rate. That's an actual randomization and dosing rate. Those are subjects who are actually being dosed and put into the final data set. So based on that, we will have dosed our final patient by the end of September. The screening rate is obviously higher than that. We haven't gone public in what the screen failure rate is, but we're very, very happy with that. But it's obviously a lot higher or somewhat higher than that 25 subjects because of the screen failures. You know, we are, you know, confident, obviously, about the WIDAT at 24 weeks in the first quarter. And with the completion of the first patients receiving their first dose by the end of September, you can estimate where the 48 WIDAT would approximately occur in 2023. Got it.

I'll hop back in the queue. Thanks for the email question.

Thank you. Next question is from the line of John Wollobin of . Go ahead, please.

Hey, good morning, and thanks for taking the questions. A couple on the NAFLD study. I was hoping you could clarify. I might have missed this. If diet and exercise instruction is part of this phase one study that wasn't part of your prior phase one, And then you mentioned the average baseline weight is about 101 kilograms, which is substantially higher than you saw in phase one. Wondering how you're thinking about how that might affect the weight loss you see here versus the prior study. And Scott, you said the study was fully enrolled, but just looking for clarity on what percentage of patients rolled over into that 12-week extension. Thanks.

Thanks, Jonathan. So you're absolutely correct. We did not use diet and exercise in our initial first-in-human study, and we are not using diet and exercise in the current 12-week NAFLD study. So consequently, when we look at this, we're not going to see the 2% benefit of placebo because, remember, that the step in the surmount and even the surpassed trials were conducted over a baseline of diet and exercise and the reason is because when a drug is approved for the treatment of obesity in the US it's approved as an adjunct to diet and exercise so it actually has to be in the study the NAFLD study was designed without diet and exercise the same as the initial phase one study however The Momentum Phase 2 trial, which is a committed obesity study, follows FDA guidances. This is designed exactly like Step 1 and Surmount 1. And with that, we do have an intensive diet and exercise program. With regards to the higher weight, the mean weights, or median weights, I should say, that we saw in the Phase 1 study were approximately 90 to 95 kilograms, depending on the cohort. So this is somewhat higher, but it's not a lot higher. Our initial evaluations from our phase one study suggested that we did not see an effect of body weight on either our serum concentrations or the amount of weight that people lost, but I'd also caution that that was a small number of subjects, and we'll have to see if that holds true as we go into this readout with a larger number of subjects. The extension study is fully enrolled. We're happy with the rollover rate. We're happy with the additional patients who have gone into the study following the increase of the size of the base study to 94. We haven't gone public on the percentage of rollover. We'll obviously have that data when we announce it 24 weeks but it will be a very nice data set. Got it. Thanks again for taking the questions. ...into this readout with a larger number of subjects. The extension study is fully enrolled. We're happy with the rollover rate. We're happy with the additional patients who have gone into the study. Following the increase of the size of the base study to 94, We haven't gone public on the percentage of rollover. We'll obviously have... Go ahead, please.

Thanks. Good morning. I'm wondering, you know, in discussing the potential points of differentiation of pembidutide, if you can talk about the expected advantages specifically in type 2 diabetic patients, particularly in areas of glucose control and lipid counts relative to other mechanisms in the field. And if you could also remind us the proportion of patients with obesity that would also be expected to present with type 2 in the real-world setting.

Thanks, Patrick. So regarding your first question in type 2 diabetes, the immediate, and I want to stress the word immediate, target product profile for Pemfidutide is not to have at least like a GLP-1 monotherapy acute glucose-lowering effects. We have balance in the compound between GLP-1 and glucagon, and we believe that that, at the base case, is going to be maintaining glucose. And we saw that in our Phase I study where glucose and hemoglobin A1C were maintained. So, but over the course of time, recognize these patients lose weight. And it was stressed at the recent ADA meeting that the focus in the treatment of patients with type 2 diabetes should focus not so much or the focus should change from the treatment or the control of blood sugar to the loss of body weight because the loss of body weight has a much more meaningful effect on their hemoglobin A1C over the course of time than the anti-diabetic effects. So consequently, we're very confident given the amount of weight loss that we're seeing that we're going to achieve drops in hemoglobin A1C over the course of more extended treatment. We're fairly confident we'll see that at 48 weeks. We're hoping we're going to see it at 24 weeks, but it's a shorter period of time with less weight loss. We may see it at 12 weeks. That would certainly be only a plus that we saw a drop. But at the same time, our base case is that we won't necessarily see a drop. Now, recognize that one of the principal factors in blood sugar elevations in type 2 diabetics is insulin resistance. And the great portion of that comes from the liver, and it's related directly to liver fat. And when you see liver fat being decreased as dramatically as we are with pembidutide, and that's due to the glucagon effects, we think we're going to see a drop in insulin resistance that's also going to contribute to the blood sugar decreases over time. So just to reiterate, we do feel confident that this is an anti-diabetic drug over, say, 48 weeks, perhaps 24. Our base case at week 12 is that we won't see it, because the hemoglobin A1C averages out the blood sugar over 12 weeks, even when you don't initially have weight loss. But An upside would be that we saw a drop in hemoglobin 1C or fasting blood sugar in the diabetic population. Regarding the lipids in diabetics, it should be clear that diabetics do suffer from the effects of blood sugar, and those elevations result in microangiopathies, such as diabetic eye disease, diabetic kidney disease. But the predominant reason for death in type 2 diabetics is serum lipids. And consequently, drugs that more effectively move serum lipids are going to have better cardiovascular outcomes than those that don't. And I want to, again, contrast the reductions in serum lipids that we saw, particularly total LDL cholesterol in our phase one study at 20-30%, and contrast that to the only 3% reductions in total in LDL cholesterol in the step one clinical trial. And we think that ultimately that's going to have major benefits on cardiovascular outcomes when we conduct those clinical trials. Regarding your question, Patrick, about the percentage of obese patients who have type 2 diabetes, it's about 20%. Got it.

That's really helpful. And then just another follow-up question. We looked at the first quarter of next year. You're going to have the interim data for momentum. You'll also have the Phase 1B NAFLD study, 12-week and 24-week data, and as well the Phase 1 study data in diabetic subjects, so additional safety data. I'm just wondering, do you think at that point you would have sufficient data to have a meeting with the FDA, depending on the outcome of all of these studies, to move directly into a Phase 3 program in obesity? Or would you anticipate needing the full data set for momentum before you can move ahead to Phase 3?

Yeah, great question, Patrick. The initial advice that we got from FDA, and I want to stress initial, was that they would like to see the full 48-week data before moving ahead to phase three, but we could certainly look at what we have in the first quarter and see if that discussion should be held again. Again, when we approached them, which was at the filing of the IND for obesity, and we filed that at the end of 2021, We only had phase one data in a limited subset of patients, and data prevails at those meetings. So when you propose, you know, meetings, they want to have as much possible. So their initial impression, and I'm not surprised, is let's see 48-week data, but it's possible with the abundance of data that we're going to be generating in the first quarter that we could have that discussion earlier.

Yep. Great. Thank you very much.

Yep.

Thank you. And we have a follow-up question from the line of Seamus Fernandez. Go ahead, please.

Great. Thanks, guys. So, just two quick follow-ups. You know, the first question, there was a publication from Novo Nordisk highlighting a relatively robust study of their own glucagon agonist, you know, in combination with I believe they're GLP-1 semaglutide. Just wondering if you guys could comment, whether it be on that study or at least on the safety of pembidutide as it relates to heart rate elevations. I think the triple G agonist that Eli Lilly in their early phase one data saw substantial heart rate elevations that, you know, clearly would require some factors there, but it's also our understanding that that's also tends to be associated with GLP-1. So, Are you guys seeing anything related to heart rate elevations outside of what we would see normally with the GLP-1 in your data sets at all? Just wanted to start there just because that has been a critique from Novo Nordisk, but we're not sure if it applies here or perhaps it's even just purely molecule specific. And then the second question was just, you know, as we think about the possibility of entering larger phase three. It would seem to us the size of the overall obesity efforts likely would have you guys with strong interest from potential partner, especially if you can achieve the profile that you're talking about. How are you guys thinking about the timing of when you think it's best to engage with potential partners from a strategic discussion perspective? Thanks.

Hey, thanks, Seamus. I'll answer the first question, and then I'll turn to Vipin to answer the second question. So as you know, in that GGG study, the effects on heart rate were striking. They announced that with their multiple dosing, they saw increases of about 10 beats per minute. But actually, in their single ACE any dose study earlier than that, they actually got 30 beats per minute. So why is that? Is that because you simply added glucagon to the molecule? Well, we'd say a couple of things about that. The first is the amount of glucagon in that triple G, as we understand it, and I want to emphasize that, is small. That molecule appears to be terzepatide, slightly lower ratio of GIP to GLP-1. I think in terzepatide it's 15 to 1. It looked like, based on the data they presented, that's 8 to 1. But I want to emphasize that the ratio of GLP-1 To glucagon, that molecule is 10 to 1. There's only one-tenth the relative amount of activity in that molecule compared to the GLP-1. So if there's any effect of that molecule, it's the GLP-1, and we've seen those heart rate increases before. How do we explain it, and why aren't we seeing it with our compound? We believe it's probably the pharmacokinetic effect. If you look at the time to maximal concentration, about compound, as we understand it, as presented in graphs at the meeting, it looks like it's very short, about 12 hours. And again, I want to say it's about because I'm estimating it from slides that they presented without actually seeing the raw data. What that means is that when that drug is given, there's a surge of drugs into the bloodstream with higher peak concentrations and immediate effect. Contrast that with penzodutide, where we see a maximal concentration that's actually several times greater than that, not 12 hours, but 70 hours with a lower Cmax, we've estimated that our Cmax compared to comparative doses of semaglutide is about one-third. So what we have is an onset that is slower and perhaps more gentle, using a non-biological term, but we think that that accounts for the lack of heart rate increases. Now, we presented that data at the ADA meeting that we're not seeing the heart rate increases of semaglutide. You know, it's probable that as we go further in development, because this is a GLP-1-based compound that we'll see some increase, that the initial data suggests that it's not going to be significant any more than a GLP-1, but again, I want to emphasize that we have a small number of patients, and we'll just observe that as we go. But we think that the heart rate increase that we're seeing with the glucagon-containing compound were not due to glucagon. We think it was the nature of the pharmacokinetics. So for the second question, I'm going to turn that over to Vipin.

Yeah, Seamus, I mean, we agree with you that with this, kind of data package that we are putting together. And if we are able to maintain the profile that we've been highlighting that we expect PEMBIDU type to have, we expect to have significant interest, strategic interest in this program. So we'll explore that. Right now we're focused on generating this data. We think that's what's going to drive the value proposition here. Thanks. Thanks so much, guys.

And we have another follow-up question from . Go ahead, please.

Oh, thanks for taking my follow-up. And maybe just another kind of follow-up, a forward-looking kind of question. Like, in terms of doing the CV outcome trial, do you expect that to be in parallel to your phase three or more sequentially? post-phase three. And as you know, the reason I asked you this question is with the recent NOVO update, you know, with the select study, but also, I mean, you're trying to get to, you know, weight loss levels comparable to terzapotide, you know, in two-thirds of the time. So, I'm just curious, as you look forward, like, would doing an outcome study in parallel to doing your phase three? Because longer term, these are important to reimbursement and payer dynamics for the market.

Yeah, Mike, it's a great question. I want to emphasize that, first, that the conduct of cardiovascular outcome trials will not be gating to approval that we do it in parallel with phase three or afterwards. These drugs are approved without having these trials up front. So we saw that recently with Monjaro, Terzepatide. I think it's intriguing to think that we could do it in parallel. It's not something that we've carefully looked at. We think it's a very nice suggestion and we'll certainly take a better look at it.

Thank you.

Thank you. And now I would like to turn the conference back to Vipin for closing remarks.

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

This concludes today's conference call. Thank you for participating. You may now disconnect.