Atea Pharmaceuticals, Inc.

Good afternoon, everybody, and welcome to ATEA Pharmaceuticals' fourth quarter 2024 Financial Results and Business Update conference call. At this time, all participants are in a listen-only mode. Following the formal remarks, we will open the call up for your questions. I would now like to hand the call over to Janaya Barnes, Senior Vice President, Investor Relations and Corporate Communications at ATEA Pharmaceuticals. Ms. Barnes, please proceed.

Thank you, Operator. Good afternoon, everyone, and welcome to Atea Pharmaceutical's fourth quarter and full year 2024 financial results and business update conference call. Earlier today, we issued a press release which outlines the topics we plan to discuss. You can access the press release as well as the slides that we'll be reviewing today by going to the investor section of our website at ir.ateafarma.com. With me today from Atea are our Chief Executive Officer and Founder, Dr. John Pierce Amadosi, Chief Development Officer, Dr. Janet Hammond, John Bavrica, our Chief Commercial Officer, Dr. Arantxa Horga, our Chief Medical Officer, and Chief Financial Officer and Executive Vice President of Legal, Andrea Corcoran. They will all be available for the Q&A portion of today's call. Before we begin the call, and as outlined on slide two, I would like to remind you that today's discussion will contain forward-looking statements that involve risk and uncertainties. These risks and uncertainties are outlined in today's press release and in the company's recent filings with the Securities and Exchange Commission, which we encourage you to read. Our actual results may differ materially from what is discussed on today's call. With that, I'll now turn the call over to Jean-Pierre.

Thank you, Joné. Good afternoon, everyone, and thank you for joining us. I will begin on slide three. We made significant progress last year advancing our HCV program who is a regimen of Benifazovir and Rizazvir. In December, we reported positive results from our global phase two trial, which demonstrated a 98% cure rate in the primary efficacy analysis with a short eight-week treatment. The very high SVR rate demonstrated robust potency across HCV genotypes. We believe our regimen, if approved, has the opportunity to become a best-in-class hepatitis C treatment and disrupt the global HCV market of approximately $3 billion in annual net sales. The very positive Phase II results help to support a successful end of Phase II meeting with the FDA, which occurred this past January. In addition to the substantial clinical progress, business updates include recent steps we have taken to further enhance shareholder value. This includes the retention of Evercore, a global investment bank, to assist us in the exploration of strategic partnership related to our Phase III HCV program. We also took cost-cutting actions to enhance efficiency in the management of infrastructure expenditures, which Andrea will discuss in further details. In February, we announced the appointment of a new independent director, Arthur Kirsch, who brings decades of financial and strategic advisory experience to our board of directors. Moving to slide four, based upon the encouraging results today, together with the successful outcome of the FDA meeting, we are initiating the global phase three program, evaluating the regimen of Benifazovir and Rizosvir, and expect enrollment to begin next month. We believe that our phase three program is the risk with a compelling value proposition. Furthermore, robust Phase II results for antiviral therapies have historically led to a high probability of success in Phase III studies. In addition, we will be showing today results from a multi-scale modeling approach that confirm the high likelihood of success of our Phase III programs. With $454.7 million of cash, cash equivalent and marketable securities for December 31st, 2024, we are in a strong financial position to execute and complete our Phase III HCV program as we anticipate our cash runway will extend into 2028. Moving to slide five. HCVs continue to be a significant global healthcare issue despite the availability of direct acting antiviral for the past decade. The unrelenting high rate of HCV infections, which is outpacing the stagnant number of patients being treated, underscore the need for a new, differentiated, and optimized therapy. I would like to point out but we still have a very large number of untreated HCV patients of between 2.4 to 4 million in the United States. And let's not forget that in the United States, 70% of liver cancer is a consequence of HCV disease progression. Therefore, the lack of treatment of these HCV patients has a profound impact not only on patients' life, but also with the associated healthcare hospitalization costs. On slide six, the large burden of untreated HCV disease translate into a large and tab commercial opportunity. Currently in the United States, out of the 160,000 new infections every year, only approximately 100,000 patients are treated. Last year, for example, these U.S. treated patients resulted in approximately $1.5 billion net sales, and globally the market continued to approximate $3 billion. We believe that the best-in-class profile of our regiment, together with the anticipated removal of access barrier and future government initiatives, can dramatically expand the number of patients cured in the United States from this severe viral disease. With that, I will now turn the call over to Janet to review the profile of our regimen and the global phase three program. Janet?

Thanks, Jean-Pierre. On slide seven, our potential best-in-class regimen is the only one that combines the required attributes to treat today's ACV patients. Our regimen combines benifostavir, which is the most potent nucleotide for HCV yet to have been developed, and drusavir, which is a highly potent HCV NH5A inhibitor. This regimen is differentiated from the approved treatment. It offers a highly potent pan-genotypic therapy with a short treatment duration, along with a low potential for drug-drug interaction, and can be taken with or without food. All these attributes address the needs of the prescriber and the patient. Slide 8 illustrates that only our regimen has a preferred drug-drug interaction profile. Since approximately 80% of HCV patients are taking concomitant medications, the drug-drug interaction profile of HCV therapies is of particular importance to both patients and prescribers for ease of use. As detailed on this slide, The regimen of Benifosavir and Ruvozir has the cleanest drug-drug interaction profile with commonly prescribed medications, such as oral contraceptives, statins, and proton pump inhibitors. On slide 10, I'm excited to share an update for our Phase III program. In January, we had a successful end-of-Phase II meeting with the FDA. Following the meeting and at the request of the FDA, we submitted the final phase three protocol, which also will be submitted to other regulatory agencies. We're currently in the process of opening up clinical sites and we're targeting over 250 sites worldwide. As JP stated earlier in the presentation, we're initiating the phase three program and expect enrollment to begin in April. On slide 11. Our global HCV phase 3 program consists of two randomized open-label phase 3 trials comparing the regimen of benifosbuvir and rusosvir to the regimen of sofosbuvir and valpasivir in patients with chronic HCV infection. Each trial will enroll approximately 800 treatment-naive patients, both with and without compensated cirrhosis. Patients will be stratified by genotype and cirrhosis status. And patients with HIV co-infection will be allowed. For non-cirrhotic patients, which represent more than 90% of patients in the U.S., eight weeks of benifostavir and rudazir will be compared with 12 weeks of sofostavir and zelpatazir. For cirrhotic patients, 12 weeks of benifostavir and rudazir will be compared with 12 weeks of cefosbuvir and valpatacir. The primary endpoint for both trials encompasses sustained virologic response 12 weeks after treatment, or SVR12, in each arm, and is HCV RNA less than the lower limit of quantitation 24 weeks from the start of treatment. Measurement at 24 weeks from the start of treatment is selected to ensure the primary endpoints occurs at the same relative time point from the start of treatment in all patients. With that, I'll now turn the call over to Arantra for a review of the global phase 2 HCV study results. Thank you, Janice.

Thank you, Janice. On slide 12, I would like to remind you that our global phase two study was a single arm of 550 milligrams of demycosovir with 180 milligrams of rusosvir once daily for eight weeks. This phase two trial enrolled 275 treatment-nice patients chronically infected with HCV, including patients with compensated cirrhosis. In this study, we had two efficacy populations. The primary efficacy endpoint was in the treatment adherent population. A secondary efficacy analysis assessed SBR12 in the same population, but also included non-adherent patients. Of note, we had 17% of patients who did not take the study medication or were non-adherent in our Phase II study, and this non-adherent rate is similar to what was reported in our third-party market research. Moving to slide 13, the primary efficacy endpoint demonstrates a 98% FVR12 rate in all adherent patients after 8 weeks of treatment. and a 95% SBR12 rate was achieved in patients regardless of treatment adherence. This patient population also included cirrhotic patients where the SBR12 was 88%. In these cirrhotic patients, on treatment viral kinetics was lower, but it is important to note that 100% viral clearance was achieved at the end of treatment. Therefore, we can expect that 12 weeks of treatment in serotic patients should lead to very high SBR rates. Slide 14 shows that the overall non-serotic treatment adherent population, SBR12, was almost 100%, with only one failure in 179 patients. In genotype 3, it was 100%, which is a genotype historically hard to treat. The robust potency and drug forgiveness was demonstrated in non-serotic patients, regardless of drug adherence, with the regimen achieving 97% as they are 12 in the overall population and 98% in genotype 3, even with 20% of these patients being non-adherent. On slide 15, The regimen of benifosfavir and rusosvir was generally safe and well-tolerated with no drug-related severe adverse events or premature treatment discontinuation. Similarly, there were no trends observed in adverse events or safety laboratory parameters. Let's now review new modeling data on slide 16. The Phase II data was further evaluated in a multi-scale model of HCV infection and treatment to confirm the effectiveness of benifosfavir and rusavir. A similar approach has been previously validated and published to evaluate other DAA regimens against HCV. In this model, the population estimate for the time to achieve HCV RNA less than the lower limit of quantification in the plasma was approximately 12 to 16 days, while the corresponding time to achieve cure was approximately seven to eight weeks. Therefore, this model provides further support for a high likelihood of success for the regimen being evaluated in Phase III with durations of eight weeks in non-cirrhotic patients and 12 weeks in cirrhotic patients. I will now turn the call over to Andrea to discuss ATEA's financials.

Thank you, Arentha. As Joneigh mentioned, earlier today we issued a press release containing our financial results for the fourth quarter and full year 2024. The statement of operations and balance sheet can be found on slides 18 and 19. In 2024, R&D expenses declined quarter over quarter but increased year over year in 2024. The full year increase was primarily driven by higher 2024 external spend related to our COVID-19 Phase III Sunrise III trial, as well as our Phase II HCV trial. For G&A, expenses in 2024 and 2023 were similar quarter over quarter and year over year. Interest income quarter over quarter and year over year decreased due to lower investment balances. In 2025, Substantially, all our external R&D spend will be related to the advancement of our Phase III program. As Jean-Pierre mentioned, at year-end 2024, our cash, cash equivalent, and marketable securities balance was $454.7 million. Continuing our strong financial discipline, we protect cash guidance runway into 2028. Moving to slide 20. As noted in our press release today, we announced a reduction of our workforce by approximately 20-25% in early January. This action is intended to enhance efficiency in the management of infrastructure expenditures and is expected to result in a cost savings of approximately $15 million through 2027. Additionally, we also announced that Arthur Kirsch has joined our Board of Directors. His extensive financial and strategic advisory experience will further strengthen the ATEA Board as we advance our strategic priorities. We believe that Arthur's proven track record of executing and overseeing transactions will be invaluable as we pursue opportunities to enhance shareholder value. I'll now turn the call back over to Jean-Pierre for closing remarks.

Thank you, Andrea. In closing, We believe that our global Phase III HCV program is de-risk with a high compelling value proposition. This is based on substantial preclinical and mostly clinical data, a well-characterized regulatory pathway, optimized manufacturing processes, a durable multi-billion dollar market, and a long pattern runway. We believe that the regimen of Benifazvin and Resesvir with its potential best-in-class profile for the treatment of hepatitis C, if approved, provide an opportunity to become the most prescribed treatment and disrupt the global hepatitis C market of approximately $3 billion in annual net sales. Before opening the call to your questions, I would like to thank our talented and dedicated Atea employees. Our team's relentless pursuit of excellence drives our dedication to advancing all antiviral therapeutics for patients worldwide affected by severe viral diseases. With that, I will turn the call back over to the operator.

Thank you. To ask a question at this time, please press star 11 on your telephone and wait for your name to be announced. to withdraw your question, please press star 11 again. One moment while we compile our Q&A roster. And our first question comes from the line of Bella Kamont with JP Morgan. Your line is open. Please go ahead.

Hi, this is Bella on for Eric. Just two questions from us here. First, following your meeting with the FDA, are there any specific call-outs that they've guided for in the phase three trial design? And then second, what can we expect in terms of the scope of your phase two readout later this half?

Janet, do you want to address the first one, and then I'll answer with the second questions? Janet?

Thank you, JP. Yes. So with regards to our meeting with the FDA, no. I don't think really any specific call-outs. are fully aligned with our approach of going forward with two open-label phase three trials. I think it's somewhat unconventional to run open-label trials, but I think given the circumstances of the different properties of the drugs in the population that we are studying, this is completely in agreement with them, and they didn't really have any substantive comments around the conduct of the trial.

Yes, I think the question from Bella was about the Phase II results. So we're expecting to present data this summer at ESOLIS in May. And so you'll have additional data there in terms of the needs of home safety and all the other details of the protocol of the study.

Great. Thank you. Thank you. And one moment for our next question. Our next question comes from the line of Annie Shea with William Blair. Your line is open. Please go ahead.

Oh, great. Three questions from us, if you don't mind. One is on the trial design for the Phase III program. I'm curious, you have an estimated number of cirrhotic patients across those two trials. Are they going to be, you know, strictly controlled, or this is kind of an estimation based on global and U.S. epidemiology? So that's question number one.

That's two by one question at a time, if you don't mind. So Janet, you can address the first question, please.

So yes, so there are estimates. We have target numbers of cirrhotic patients that we'd like to see enroll in the trial. But the number of cirrhotic patients, I think, generally worldwide has declined with the advent of direct-acting antiviral therapies. I think particularly, sir, in the U.S., they're harder to find than I think they were when the earlier direct acting antiviral trials were conducted. But we do anticipate seeing somewhere in the order of just north of 10%, probably, in our trial, and that's what we're aiming for.

I see. Is there an ability for you to adjust that number if you're seeing maybe a little bit lower or a little bit higher as the trial is enrolling?

Yes, I think so. As I said, we're setting targets, not absolute numbers. So we do have some flexibility in there. And obviously, if we can achieve more and get greater experience, I think that will be important. But I don't think there are absolute requirements around that. We want to have sufficient patients enrolled as diverses to be able to justify having that population in our label. But I think we're certainly going to do the best we can to have enough. But there is flexibility there.

That's helpful. Second question has to do with the modeling, which is very unique on slide 16. So I'm curious, if you were to plot this with EPCLUSA, you know, would you expect that, you know, those two lines to be right shifted for EPCLUSA across the non-neurotic and neurotic populations?

This model has been developed by Dr. Alan Perlson from Los Alamos. And please check there is publications with other antiviral Okay. Okay.

Okay. That's helpful. Okay. That's actually, sorry for the confusion. There's just two questions from us, but thanks for your input. Okay.

You're very welcome. Thank you for the questions.

Thank you and again, ladies and gentlemen, if you would like to ask a question, please press star 11 on your telephone. I'm showing no further questions and I would like to hand the conference back over to John Pierre for closing remarks.

Thank you for all of you for joining our fourth quarter 2024 earning conference call and thank you for your continued support.

This concludes today's conference call. Thank you for participating, and you may all disconnect. Everyone, have a great day.