Altimmune, Inc.

Good day, ladies and gentlemen, and welcome to Altamune Inc. Second Quarter 2024 Financial Results Conference Call. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. As a reminder, this call is being recorded. I would now like to introduce your host for today's conference call, Lee Roth of Burns McClellan Investor Relations Advisors to Altimmune. Lee, you may begin.

Thanks, Gigi. Good morning, everyone. Thank you for participating on the Altimmune Second Quarter 2024 Financial Results and Business Update Conference Call. Members of the Altimmune team joining me today are Vipin Garg, our Chief Executive Officer, Scott Harris, our Chief Medical Officer, Ray Jort, our Chief Business Officer, Andrew Shutterly, our Acting Chief Financial Officer, and Scott Roberts, our Chief Scientific Officer. Following prepared remarks from Vipin, Scott, Harris, and Andrew, we'll hold a Q&A session. As a reminder, a press release with our Q2 2024 financial results was issued this morning and can be found on the IR 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 the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. Altamune cautions that these forward-looking statements are subject to risks and uncertainties that could cause our actual results to differ materially from those indicated. For discussion of some of the risks and the factors that could impact the company's future results and operations, please refer to the risk factors and other cautionary statements contained in our filings with the SEC. I'll also direct you to read the forward-looking statement disclaimer in our press release issued earlier today and now available on our website. Any statements made during this call speak only as of today's date, Thursday, August 8, 2024, 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. As a reminder, this call is being recorded and will be available for audio replay on the Altimmune website. With that, it's now my pleasure to turn the call over to Dr. Vipin Garg, Chief Executive Officer of Altimmune. Vipin?

Thanks, Lee. Good morning, everyone. And once again, thank you for joining us for our second quarter corporate update. In the second quarter and throughout the first half of the year, we continue to strengthen the rationale for pembidutide as a highly differentiated therapeutic with significant potential in a variety of metabolic diseases. We are continuing to advance our key strategic, clinical, and operational priorities that are excited for the milestones that are approaching in both our obesity and MASH programs. The quarter was highlighted by important data presentations at two of the most prominent medical meetings in our space, the American Diabetes Association or ADA's 84th Scientific Sessions, and the European Association for the Study of the Liver or EASL Congress. At the ADA meeting in June, we presented updated data on the effects of pembidutide on body composition from our phase two momentum obesity trial that demonstrated a class leading preservation of lean mass among increasing agents. Preservation of lean mass and the quality of weight loss is becoming increasingly important for the treatment of obesity and for the safety and long-term maintenance of weight loss. In addition, we presented data during the EASL Congress that highlighted the disease-modifying potential of pembidutide in MASH and reinforces our confidence in achieving both the MASH resolution and fibrosis endpoint in our Phase IIb impact trial. We remain engaged in discussions regarding a global strategic transaction for pembidutide involving a variety of possible structures. We are intently focused on identifying and securing a partner with the right vision, resources, and commitment to help us realize the full potential of pembidutide in obesity, MASH, and other metabolic conditions. In parallel, We intend to create additional value by completing the impact study and pursuing additional indications for which pembidutide is specially well suited. Finally, we continue to prepare for the end of phase two meeting with the FDA to review our registrational program for obesity. The outcome of this meeting will confirm the patient population we believe will benefit most from the differentiated profile of pembidutide. With that, I'll now turn the call over to our chief medical officer, Dr. Scott Harris, to provide additional updates and discuss our plans. Scott. Thank you, Vipin.

To provide a bit more information on some of the points he's discussed, I'd like to turn to the data presented at recent scientific meetings. At the ADA meeting, Dr. Lou Aroni, one of the foremost experts in obesity and metabolic disease, and principal investigator in our Momentum Obesity Trial, presented data showing that pembidutide led to nearly 16% weight loss at 48 weeks, with a direct trajectory suggesting additional weight loss with continued treatment. Dr. Aroni also presented updated body composition analyses that showed class-leading preservation of lean mass among Inkerton agents, with only 21.9% of weight loss attributed to lean mass, while 78.1% of weight loss was associated with fat loss. Available data on other Inkerton-based weight loss agents have shown that lean mass loss can account for as much as 40% of the total weight loss. The preservation of lean mass is becoming an increasingly important consideration in the management of obesity, as loss of lean mass has been associated with higher rates of bone fractures, reduced physical function, and mortality. The data presented at ADA also demonstrated that pembidutide has pronounced effects in serum lipids associated with cardiovascular risk. In a subset of subjects, With dyslipidemia, pemphidutide treatment led to a 55.8% reduction in triglycerides, 20% reduction in total cholesterol, and 17.4% reduction in LDL cholesterol at the 2.4 milligram dose. Since dyslipidemia affects as many as 70% of obesity patients, we believe that pemphidutide could benefit a significant segment of the obesity population. While significant cardiovascular benefits of weight loss were observed with JLP monotherapy in the recent SELECT trial, the effects on lipids were not clinically meaningful. We believe that with the robust reductions of serum lipids and liver fat observed with pembidutide, we can achieve even greater degrees of cardiovascular benefit in this population. The narrative in the obesity space is evolving towards higher quality weight loss, safe and effective maintenance of weight loss, and the ability to directly address the comorbidities associated with obesity. We believe that pembidutide, with its excellent preservation of liver mass and its robust reductions in serum lipids and liver fat, is well positioned compared with other agents. We will share a comprehensive package of these data with the FDA as part of our upcoming end of Phase II meeting. We look forward to feedback from the FDA on our unique and differentiation-driven approach to a Phase III program designed for obesity. We will provide an update on the outcome of this meeting when the dialogue with the FDA is complete. Turning to MASH, we presented data at the EASL Congress from a quantitative model that would predict a high likelihood of success in the upcoming IMPACT trial. In addition, an analysis of data in our Phase I trial of metabolic-associated steatotic liver disease, also known as MASLD, demonstrated that higher proportions of subjects receiving pembidutide achieved improvements in Fibroscan Aspartate Immunotransferase, or FAST, score. MRI-PDFF, and amylin immunotransferase compared with subjects receiving placebo. This suggests that significant rates of MASH resolution and fibrosis improvement may be achieved in the IMPACT Phase IIb MASH trial. We also presented data on the ability of pembazutide to lower serum lipid species associated with dyslipidemia in MASH. which reminds us that cardiovascular benefits are the primary cause of mortality in MASH patients. In addition, we recently published our results from the 12-week trial of pembidutide in Masl-D metabolic-associated liver disease in the Journal of Hepatology, establishing the differentiated effects of pembidutide in the treatment of Masl-D in MASH. The safety and tolerability profile of pembidutide was highlighted by the low 2.9% rate of adverse event discontinuations in this trial. With respect to impact, our enrollment is progressing well. If the 24-week efficacy endpoints are achieved, we believe the results could be transformative for the MASH therapeutic space, as we would demonstrate, for the first time, both rapid improvement in MASH resolution and fibrosis improvement with an incretin agent in a 24-week timeframe. Finally, as we have discussed before, we are continuing to evaluate additional indications for pembidutide that leverage the benefits of glucagon and that we believe will create additional value that will be attractive to strategic partners or allow us to develop on our own. We envision pursuing up to three additional indications for pembidutide in our areas of great unmet areas of greatest unmet medical need, and we expect to provide more details later this year. With that, I'll now turn the call over to our Acting Chief Financial Officer, Andrew Shutterly, to review our financial results for the second quarter. Andrew?

Thank you, Scott, and good morning again, everyone. For today's call, I'll be providing a brief update on Altamune's second quarter 2024 financial and operating results. More comprehensive information will be available in our Form 10-Q to be filed at the SEC later today. Altamune ended the second quarter of 2024 with approximately $164.9 million of cash, cash equivalents, and short-term investments, compared to $198 million at the end of 2023. We project that our existing balance will fund us into the first half of 2026, which fully funds our impact trial and match including the expected Q1 2025 readout of top-line biopsy data. Turning to the income statement, revenue was negligible in the second quarter of 2024 and 2023. Any revenue reported during such period was for indirect rate adjustments on a government contract that we're closing out. Research and development expenses were $21.2 million in the second quarter of 2024, compared to $13.3 million in the same period in 2023. Approximately $14.8 million of this total for the second quarter of 2024 were direct expenses for the conduct of our clinical programs, including $13.8 million in direct costs related to development activities for Pemvidutide and $1 million in direct costs related to the wind-down and closing of HeptoCell, as announced on March 27, 2024. R&D expenses in the second quarter of 2023 included $5.6 million in direct expenses associated with the development of penvidutide and $1.8 million in direct expenses related to hep to cell development activities. General and administrative expenses were $5.6 million in the second quarter of 2024 versus $4.8 million in the second quarter of 2023. The increase was due primarily to a $1 million increase in stock compensation expense caused by the modification of stock awards, partially offset by a $0.3 million reduction in insurance expenses. Our quarterly non-cash operating expenses for the second quarter of 2024 was $4.4 million, all of which were recurring expenses. Net loss for the three months ended, June 30, 2024, was $24.6 million, or a 35-cent net loss per share, compared to a net loss of $16.1 million, or a $0.32 net loss per share for the second quarter of 2023. The increase in net loss in the quarter is primarily attributable to the $7.9 million increase in research and development expenses as we continue to execute the IMPACT Phase 2B trial in MASH. I'll now turn it back over to Vipin for his closing remarks. Vipin?

Thank you, Andrew. We are optimistic about the next steps for pemidutide and are looking forward to the opportunities that lie ahead. With multiple upcoming milestones, we believe that we are well positioned for an exciting second half of the year and early 2025. Operator, that concludes our formal remarks, and we would like to open the lines to take questions.

Thank you. As a reminder, to ask a question, please press star 11 on your telephone. and wait for your name to be announced. To withdraw your question, please press star 1-1 again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Yasmin Rahimi from Piper Sandler.

Hi, this is Liam Heaster on for Yaz. Just a few quick questions. So, the first one, if you could kindly talk about the response rate in fibrosis and mass resolution that you believe to be competitive in the mass space. Secondly, what are your expectations for the dose response across the 1.2 milligram to 1.8 milligram dosing for biopsy endpoints? And then third, going into the end of phase two meeting with the FDA, what are some key questions you plan to discuss with them? And if you could provide any color on which patient population you are considering for phase three would be great.

Scott Hennis. Well, thanks for the questions, Leon. So regarding the response rates for fibrosis and MASH resolution, it really depends on the placebo response that you see. So if you have a 30% placebo response, you're going to expect a much higher rate of, say, MASH resolution or fibrosis improvement. And consequently, with a low placebo response rate, you'd expect a lower. So to actually talk about response rates is difficult in that setting. Even looking at the delta over placebo really depends on where you start. as I just mentioned. The most important thing is that statistical significance is achieved. And I believe that we'll see not only statistical significance, but meaningful response rates in both endpoints. Regarding your second question on the dose response in MASH, in the IMPACT trial, we believe that the 1.8 milligram dose will be the superior dose, same as we saw the dose response in the MOMENTUM trial, and to remind you that the endpoints in MASH are driven predominantly by reduction in liver fat. And the reduction in liver fat at the 1.8 milligram dose was substantially higher than the reduction at the 1.2 milligram dose, and we think that the endpoints in the MASH trial will follow that same pattern as well. Lastly, regarding the end of phase two meeting, the key questions that we're asking the FDA are about our study design, which we intend to bring out the differentiated profile of pembidutide on lipids, liver fat, and body composition, because we believe that this will differentiate pembidutide in the marketplace, so we are constructing our end of Phase II program and Phase II interaction with the FDA and the Phase III program to basically bring out a target product profile that will be commercially attractive and very differentiating from the other compounds in the space.

Thank you. One moment for our next question. Our next question comes from the line of Roger Song from Jefferies.

Morning, team. This is Combizon for Roger. Thanks for the questions. Maybe following up on endpoints for your potential phase three program, you discussed body fat, lipids, and liver. How are some ways you could differentiate or measure those endpoints in a way that are more nuanced or detailed than other companies can. And then secondly, perhaps on potential partnerships, what are some attractive collaboration structures you're exploring? And at this point, do your MASH results at all factor into those partnership discussions?

Thank you. Thanks, Kambi. I'll take the first question about the endpoints of the Phase III trial, and I'll ask Vik to answer the second question about the collaborations. So, you know, we think that the endpoints are fairly clear because they represent meaningful clinical changes. You know, for example, serum lipids are a clear surrogate for cardiovascular risk, and there's been a very strong association of liver fat with not only cardiovascular outcomes, but outcomes in a variety of other organs such as the kidney. So, we believe that simply demonstrating improvement of those endpoints will be very meaningful. As we mentioned, we also have class-leading preservation of lean mass among the incretin agents, either approved or in development. And we think that's extremely important as a standalone because the loss of lean mass has been associated with loss of physical function fractures, and also, in some cases, mortality. Many of these endpoints would take far larger trials to demonstrate, but we believe that they stand on their own as surrogates and are clinically meaningful. Bipin?

Yeah, so with regards to the structure, I can't really get into the specific details of the structures, but we are open to multiple different structures. The focus is to get full value for the asset. As you know, family duty is basically pipeline in a product. We have got two major indications that we are pursuing, so we want to make sure we are able to capture the upside on both of those indications. There are so many different ways to capture that value and structure the deal so we are able to get full value for the asset.

Thank you. One moment for our next question. Our next question comes from the line of Seema Shoran from Evercore. Hi, this is Seema. I'm for Lisa.

Thank you for taking my questions. As you're expecting phase two NASH data in first quarter, can you expand on like how the enrollment is going and when you expect it to be complete? And my second question is on orals and vegetites. You have mentioned that you plan to announce a candidate by year end. Is that still the case? And what are some of the characteristics of this candidate that you are looking for? Thank you.

Thanks, Ema. I'll answer the first question. I'll ask Scott Roberts to address the oral candidates. So enrollment is going extremely well. We've been told that we're enrolling this trial faster than any other mass trial, and that represents the fact that the trial is attractive to patients because of the weight loss that it offers. So screening has not been a problem. We do intend to complete screening in the near future, and then we can provide you an update on the estimated date of the announcement of the trial results, which we still believe will be in the first quarter of 2025. Scott, did you want to address the question about the oral formulation?

Sure. Good morning, Seema, and thanks for the question. Our efforts on the oral formulation are continuing. We've actually expanded the number of types of formulations that we're looking at, prototype formulations. We're still hopeful that we can nominate one of these formulations for formal development by the end of the year. I think that on the oral formulations, there's an important point that I do want to make, and it's that success with penvidutide, the peptide, as an oral formulation is really quite that we're seeing with the small molecule oral formulations, which are obviously working. But the amount of weight loss and the overall potency, the adverse event profile of the dutide is well-established. And an oral formulation that delivers the peptide into the blood at equivalent concentrations to the same profile. So we're really very differentiated with respect to small molecules. which are clearly active but not really pushing the levels of weight loss that you see with subcutaneous peptides and also have higher rates of adverse events, as you know. So we still think this project is extremely valuable. The goal is to achieve a Pembidutide-like clinical profile with the oral formulation. So we'll update you as we know further advances there.

Thank you. One moment for our next question. Our next question comes from the line of Corrin Johnson from Goldman Sachs.

Good morning. This is Omari on for Corrin. So we have a couple questions. In the past, you wanted to establish a partnership prior to seeking regulatory approval. Does that remain an aim? And how would you think about executing against the next steps as provided by the agency after the partner? And then second, what is your wish list as you approach the agency for alignment on the end of phase two meeting and prepare for future studies?

I'm sorry, can you repeat your first question?

Sure. So in the past, you had wanted to establish a partnership prior to seeking regulatory approval. Does that remain an aim? And how would you want to think about executing against next steps provided by the agency without a partner?

Okay, I got it. So sorry. So in terms of partnership prior to approval, I mean, look, our goal has always been to have a partner lined up before we start the phase three development in obesity. In MASH, it's a different story. We think we can take it forward on our own in MASH. And part of the reason we are looking at these additional indications that gives us additional flexibility, even in obesity-related indications. So we'll see what... feedback we get from the FDA at the end of phase two meeting, as well as we have other interactions planned with the FDA to discuss the additional indications that we are evaluating. And once we have that information, we'll be able to make a better decision as to how to move forward.

Amre, this is Scott. I'm going to ask you to repeat the second question because I didn't hear it. The audio quality wasn't good enough. Could you please repeat the question?

Sure. What is your wish list as you approach the agency for alignment on an end of phase two meeting and prepare for future studies?

Well, I think this was partially addressed previously. So, we believe that we have a highly differentiated compound. We believe that the obesity marketplace is going to segment with different patient needs. we stress repeatedly that 70% of the marketplace is dyslipidemic or high liver fat. So consequently, rather than saying, you know, this is a program for the treatment of obesity, we're going to highlight that this is a program for the treatment of subjects with obesity with high serum lipids, high liver fat, and also people who might be subject to the effects of excessive lean muscle loss. So what differentiates our EndoPhase 2 discussion from others that may have preceded it is that we're not going in and saying this is an approval for obesity. We're saying this is an approval for obesity focusing on the key attributes of pembidutide that create our target product profile, which we will use to commercialize the compound. And we think that differentiation will not only be attractive in the marketplace, but for potential partners as well.

Thank you. One moment for our next question. Our next question comes from the line of Mayank Mamthani from B. Reilly Securities.

Hi, thanks so much. This is actually William Owen from IONC. Congratulations on the nice quarter. Just a couple questions from us. The first is I'm just kind of curious about the discontinuation rate variance that you've seen from prior phase two trials, whether it be in momentum and diabetes, maybe even in your NAFLA earlier trial. Where are you expecting to land in your phase two impact trial and maybe what you've been seeing so far?

Right. Well, thank you, William. So, we believe that penvidutide, at the completion of studies, will prove itself to be the best tolerated incretin agent, either approved or in development. We believe that based on the pharmacokinetics of the compound with the slow entry of drug into the bloodstream. And remember that any discontinuation rates we're seeing are essentially without any dose titration, which is really in stark contrast to other agents with titrating now up to 32 weeks. Our longest titration period was four weeks. And also, those adverse event discontinuation rates that were observed were observed without allowing for dose reduction, which was employed in as many as 30% of patients in the semaglutide and gerizepatide trials. So we have tremendous optionality in improving the tolerability of the compound going into phase three, and we'll have those discussions with the agency and get their feedback about the best approach. Previously, we had zero adverse event discontinuations in our diabetes trial, And as we announced on the call today and in the publication of Journal of Hepatology, the adverse event discontinuation rate in subjects who received pembidutide in that trial was only 2.9%. And again, with the odds stacked against the compound because of the relative absence of dose titration and also not allowing for dose reduction. Now, going forward, we have lots of options. One is to extend the titration period. We can get the feedback from the agency on that proposal, although we believe that that 1.2 milligram dose, which produces 10 percent weight loss in clinical trials, doesn't need to be dose titrated and can be administered straight off without dose titration, achieving as much as 10 percent weight loss in that population. So for primary care, that's a very, very attractive dose to give. But we're also going to look for approval of the 1.8 and 2.4 milligrams, as we've discussed in other discussions with the community. But in addition, we are now allowing for dose reduction, which is something that had been employed in other trials and that we're going to employ going forward. And it also mimics real life use of these drugs. So consequently, we believe that we have a great adverse event discontinuation rate shown mainly in the diabetes and the NAFLD population. We have lots of tools in our tool chest for improving it further. We saw in development of semaglutide and trisepatide, 25% to 30% adverse discontinuation rates in their Phase II trials, which became single desserts in Phase III. We believe that, likewise, by employing the tools that are commonly used between Phase II and Phase III to adjust the dose, we're going to have really nice adverse event discontinuation rates in our Phase III program when it's finally read out. Got it.

Very helpful. I appreciate that. And then just one extra, you've got a couple presentations coming up at EASD. You know, specifically on the muscle data, you've got, you'll be presenting data on the VAT, SAT, and TAT. I'm just kind of curious what exactly we may be expecting, you know, all doses, you know, maybe just give us a little color on where or what we should be expecting as far as the muscle data. And then also, if you could just remind me, have you or do you have any plans to look into functional benefit given that you're showing the least amount of lean muscle mass loss in your patients? Thank you.

Yeah, thanks for the question, William. So, the details on the muscle, the VAT, the side and the TAD will all come out in the presentation. that we plan to make it easel. So, you know, stay tuned. There's some preliminary information out there, but we'll give a much more detailed presentation at that meeting in Madrid in September. But, you know, again, at this point in time, we're leading in lean mass preservation among the incretin agents, and we think that's extremely important. Functional benefit is extremely important, and that's a discussion that we're having with the agency right now on the design of a Phase III trial. So stay tuned. We hope to announce on that in the near future.

Appreciate it. Thank you. I'll hop back in the queue. Congratulations again.

Thank you. Our next question comes from the line of John Wollobin from Citizens JMP.

Hey, good morning. Two questions for me. One piggybacking on the last. Do we have any data, literature, or thoughts on know the body composition changes and you know how those translate to anything clinically and you know any thoughts on how the differences you're seeing you know if it's a 30 versus 40 um fat loss you know what what could that mean you know do you think that's a meaningful enough difference to translate to some kind of clinical or functional change yeah thanks jonathan so um there's limited data

on the effects of changes in body composition to these functional measures that William just asked about. We know that in population studies that low lean body mass is associated with poor outcomes, higher morbidity and mortality, and there's a wealth of data talking about that. Getting to not the actual amount of lean mass that you have, but the change The best data that we have is from two studies. One is the look-ahead trial of weight loss where lean mass loss was associated with bone fractures, and this was also seen in the semaglutide select trial where they had a 40 percent loss of lean mass, and in that trial, a higher rate of pelvic and hip fractures that actually made it into the semaglutide label. So this is the data that we have. I think that we're going to be really developing and presenting a lot of new important data that we hope will substantiate those benefits, but we do believe that preservation of lean mass is extremely important. And I think we also have to look at the functional measures, as was asked by William, and that's a discussion that we'll have with the agency in the near future. In terms of the meaningful differences, we know that visceral fat and liver fat are associated with cardiovascular risk, and we're seeing very prominent reductions of both here with penvidutide. So that, combined with the reduction of serum lipids, not only the typical lipoproteins but all the cardioinflammatory lipids that we presented at the easel and the ADA meeting is going to result in an improved cardiovascular profile. We know that in the recent SELECT trial, there was a 20% reduction in MACE events associated with weight loss alone. But as I mentioned, the reduction of serum lipids with that agent is minimal. With semaglutide, generally around 3% reduction in total cholesterol or LDL cholesterol, maybe as high as 5% in some studies. That compares to the approximate 20% effects that we're getting with pembidutide. So on top of the benefit that was seen with semaglutide in the select trial, we think we can do even better when a cardiovascular outcomes trial is conducted.

That makes sense. And my second question is, you know, if a partnership doesn't take shape, how are you thinking strategically about potentially moving pembi forward yourself? It seems like an obesity phase three program might be, you know, too large, but you mentioned three additional indications that could make sense. Can you talk a little bit about if a partnership doesn't take place, the potential path forward for PEM to do type?

Yeah, first of all, let me say, Jonathan, that we continue to be optimistic that we will have a partner lined up, particularly after we have the end of Phase 2 meeting. We have the outcome from the end of Phase 2 meeting because we're looking at some very interesting trial designs that we think will be very attractive to a partner. The name of the game here is to try to differentiate the idea of being fourth or fifth in Creighton-based agent for obesity. How are you going to differentiate yourself? So I think that's what we are focused on in our partnership discussions. It's encouraging to see that our partners are also focused on that, and they're getting the message. We're hearing it from a number of potential players that they're looking for a differentiated asset in the obesity space. So that's exactly what we are working on. So stay tuned. We're very bullish about our plans for a unique phase three trial designed for pembidutide for obesity. In addition, as we have mentioned multiple times, we're looking at additional indications that we can execute on our own. So we're approaching it from multiple angles. But first and foremost, we believe that we have a very differentiated asset and it will be attractive to a partner. Got it. Thanks again for taking the questions.

Thank you. At this time, I would now like to turn the conference back over to Vipin Garg for closing remarks.

Thank you, everyone, for joining us all today. As always, we greatly appreciate this opportunity to share our meaningful developments and results with you and would like to thank you your ongoing support. Have a wonderful rest of your day.

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