Vir Biotechnology Q2 2023 Earnings Call Transcript

Quartr
Provided by Quartr
August 3, 2023

There are 9 speakers on the call.

Operator

Hello. Welcome to Verit Biotechnology's 2nd Quarter 2023 Financial Results and Business Update Call. As a reminder, this conference call is being recorded. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session.

Operator

I will now turn the call over to Sasha Dimuni Ellis, Executive Vice President, Chief Corporate Affairs Officer. You may begin Ms. Demuney Ellis.

Speaker 1

Thank you and good afternoon. With me today are Mary Anne Debacker, Chief Executive Officer Doctor. Phil Peng, Chief Medical Officer and Sung Lee, Chief Financial Officer. Before we begin, I would like to remind everyone that some of the Statements we are making today are forward looking statements under the securities laws. These forward looking statements involve substantial risks and uncertainties that could cause our clinical development programs, future results, performance or achievements to differ significantly from those expressed or implied by such forward looking statements.

Speaker 1

These risks and uncertainties and risks associated with our business are described in the company's reports filed with the Securities and Exchange Commission, including Forms 10 ks, 10 Q and 8 ks. I will now turn the call over to our CEO, Mary Anne Debacker. Thank you, Sasha. Good afternoon and welcome to Vir Biotechnology's first earnings call. I'm Mary Anne DeBacker, CEO of Veer and I'm pleased to welcome you all here today.

Speaker 1

I joined Veer 4 months ago And every day since, I'm reminded of how well DIR aligns with my commitment over the past 30 plus years to bring new medicines to patients. Vir is one of those unique companies that used its ingenuity in the discovery of neutralizing antibody in the fight against COVID-nineteen and this during the very worst times of the pandemic. This was achieved in just 15 months and brought to nearly 2,000,000 people around the world. Before that, Verastruct Discovery Engine had already yielded an antibody to treat Ebola, now recognized by the World Health Organization for its impact. After 4 months of learning about ZEER's differentiating capabilities, Platforms, pipeline and strong partnerships, I could not be more enthusiastic to lead this team of passionate driven professionals who always have the end goal in mind, serving patients.

Speaker 1

Today and over the next few quarters, I will share more about our focused efforts to drive our pipeline and our science forward. We hope you take away an understanding of our strategy, our development programs and ability to execute. Infectious diseases continue to pose a major threat to global health, economic security and to society as a whole. Just last month in talking to a patient living with chronic hepatitis B, I was reminded of the deep personal impact such a disease has on not just the individual, but also on their families and their communities. We aim here at Veer to address these needs with a broad range of drug candidates and additional data to come this year.

Speaker 1

First, I want to touch on our recently announced Phase 2 Peninsula trial evaluating VER-two thousand four hundred and eighty two for flu prophylaxis, which missed its primary endpoint. Phil will share more details momentarily. It is important to remember that in the world of Drug development and clinical trials unexpected outcomes are not uncommon. That is exactly why we take multiple approaches and have a broad pipeline. Seasonal flu affects about 1,000,000,000 people around the world And claims up to 650,000 lives each year.

Speaker 1

It is a significant unmet need that warrants our attention and we will follow the data in guiding our next steps. We do remain interested in this area and we have BER 2,981 As a preclinical candidate, which has a differentiated mechanism of action to VIIRS-two thousand four hundred and eighty two covering both influenza A and B and maybe a more efficacious alternative to vaccines. 2nd, VERUER is working on a potential functional cure for the more than 300,000,000 people living with chronic hepatitis B worldwide. Current standard of care is lifelong therapy, which decreases but does not eliminate the risk of cirrhosis or liver cancer. As here, we aim to achieve a functional cure, meaning allowing control of the virus without such chronic medical therapy.

Speaker 1

This is akin to remission and further reduces the risk of debilitating disease progression. Pure is focused on regimens such as combining an antibody with an thiolinase designed to We expect a data readout from Part B of our ongoing March Phase II trial in the Q4, which we hope will get us again one step closer to a functional cure for chronic hepatitis B. 3rd, I want to highlight what Vir is working on to address chronic hepatitis delta, which affects more than 12,000,000 people worldwide and imposes a 4 times greater risk of liver cancer compared to chronic hepatitis B alone. We know that around 5% to 15% of patients with chronic hepatitis B are co infected with hepatitis delta virus. And the World Health Organization considers chronic hepatitis delta to be one of the most severe forms of viral hepatitis.

Speaker 1

Our goal is convenience once or twice monthly injections with transformative efficacy. Initial data from our clinical trial Solsys are expected in the Q4. We also expect to report significant progress in the discovery of new drug candidates using our proprietary antibody and T cell platforms, which are yielding a robust pipeline that is optimized through AI and our unique data science capabilities. Currently about 90% of our pipeline leverages data science tools, which enable us to discover, select and develop Drug candidate with the highest chance of success of becoming medicines that could benefit patients in need. Going forward, all our antibodies will be optimized using this approach.

Speaker 1

Phil will touch on the preclinical programs that have the potential for IND filings within the next 24 months. Lastly, we have a strong balance sheet that allows us the financial flexibility to fuel our development programs and grow our antibody platform. We are taking measures to continuously evaluate and judiciously allocate this capital to maximize value for our shareholders. As part of this process and under my leadership, we made the decision to phase out our small molecule platform. This is the first step as we continue to advance our core capabilities and scientific pros.

Speaker 1

The combination of all the strengths we have here at Veer makes this a very exciting time. I am confident in our ability to advance our development programs and potentially impact the lives of many patients. I will now turn the call over to Chief Medical Officer, Phil Tang to provide more details on our pipeline.

Speaker 2

Thank you, Mary Anne. Before speaking to our future research and ongoing development efforts, I want to address the top line data from our INFLUENTHA Phase 2 Peninsula trial. This trial failed to demonstrate a statistically significant difference between those who received VER-two thousand four hundred and eighty two and placebo. Specifically, at 1200 milligrams, which was the highest dose of VER-two thousand four hundred and eighty two Tufted, there was a non statistically significant reduction in influenza illness of approximately 16%. Interestingly, in this same group, an approximate 57% reduction in influenza A illness was observed when illness was defined according to CDC criteria.

Speaker 2

More analysis is going to be needed to address why the study was unsuccessful. We are looking at the data from the perspective of how different symptoms, their duration and severity might influence outcomes and Understanding drug concentrations, time to infection and the sequence of the actual viruses the participants were exposed to will also be important. As far as next steps, any other significant development of VERD-two thousand four hundred and eighty two will be guided by these analyses. To be clear, however, we will not be initiating Phase 3 trial. In the influenza space, as Mary Anne noted, We are continuing our efforts on DIR-two thousand nine hundred and eighty one, an investigational neuraminidase targeting monoclonal antibody that covers not just fluA, but also fluB.

Speaker 2

In some animal models, it has shown markedly greater potency. The characteristics of VER-two thousand nine hundred and eighty one's parent antibody was recently published in Nature. Because VER-two thousand nine hundred and eighty one has a different mechanism of action, Targeting the enzymatic activity of the neuraminidase, not the stem of the hemagglutinin, we believe in its potential to prevent influenza illness. As we learn more from the PDNISLA trial, we will certainly apply relevant findings to the ongoing development of VER 29 EP plan. More broadly, as Mary Anne noted earlier, the antibody platform in Vir has already resulted in a medicine for COVID-nineteen in just 15 months And the only single antibody capable of treating Ebola.

Speaker 2

So while this setback from year 2,482 is unfortunate, It doesn't change our perspective on our platform's ability to identify potentially Guston class antibodies and to then leverage data science and AI to further engineer them. Specifically, we can enhance antibody binding, potency, vector function, half life, developability and stability. Even more broadly, we recognize the importance of a fully integrated data strategy from research all the way through product development and believe that this ability will continue to be differentiated here at Vir. We have 24 publications and numerous patents and awards related to our data science achievements. Now let's turn to chronic hepatitis B.

Speaker 2

Unlike the current standard of care, which requires taking antiviral medicines for the rest of one's life And does not eliminate the risk of cirrhosis or liver cancer, our goal is a functional cure. After completing a functional cure therapy, There should be no need for further treatment and there should also be a further reduction in the risk of liver complications. Our functional cure hypothesis is based on the now more widely accepted belief that chronic hepatitis B is an immunologic disease caused by a virus. As such, we believe that combinations of antivirals alone are not enough. Instead, we believe functional cure requires A combination of antivirus with immunologic agents.

Speaker 2

We call our approach stop and clear. We stopped the virus from replicating and cleared already infected cells by immuno stimulation. This is a fundamentally different hypothesis we seek to prove in our clinical trials. Our clinical development pathway has been as follows. We began with Phase 1 and Phase 2a studies that are exploring different combinations of antivirals and immunomodulators.

Speaker 2

By specifically using small cohorts in these studies, we are able to explore a broad space of possibilities to help identify the right combination, Dose, duration, frequency and population. In the studies, we have made 2 major advances towards a functional cure for chronic hepatitis B that highlight why we believe we can succeed. 1, At EASL in June, we showed that we could achieve a durable off treatment response in 16% of participants who received BIR-two thousand two hundred and eighteen, our siRNA Antegylated interferon alpha for 48 weeks. While the sample size was small and the confidence interval is large, it's worth noting that interferon alpha alone is generally thought to result in an off chain response only 3% to 7% of the time. 2, At the AAFLD conference in 2022, we showed that a short course of year 2,218 with VER3434 resulted in nearly a 3 long knockdown in hepatitis B surface antigen.

Speaker 2

This is a viral protein that is a measure of virus activity. Notably, antiviral activity was additive and no new safety signals were observed. Our next development step has been to build upon these observations. Last summer, we started Part B of our Phase 2 MARCH study, which is exploring the combination of VERU-two thousand two hundred and eighteen and VERU-three thousand four hundred and thirty four with and without pegylated interferon alpha for durations of 24 48 weeks. We expect to present end of treatment data for the 24 week cohorts in the 4th quarter.

Speaker 2

Let me now direct your attention to chronic hepatitis delta. For chronic hepatitis delta, the only treatment approved, which is only available in some parts of the world and not the U. S. Requires lifelong daily subcutaneous injections and has only a 45% chance of benefiting the patient. Our goal is a highly efficacious treatment that only needs to be administered once or twice a month.

Speaker 2

Because hepatitis delta requires the surface antigen protein from hepatitis B, we can target delta using our existing chronic hepatitis B assets, VER-two thousand two hundred and eighteen and VER-three thousand four hundred and thirty four. At EASL, We shared the preclinical data demonstrating their potent antiviral activity against hepatotidase delta. A Phase II clinical trial is now underway evaluating VER-two thousand two hundred and eighteen and VER-three thousand four hundred and thirty four individually or in combination with one another in a small cohort of hepatitis delta patients. We expect to present data from this trial in the Q4. It is worth noting that because hepatitis delta is a potential orphan disease with high unmet medical need, the regulatory path for treatment for Delta may be accelerated.

Speaker 2

Turning now to our early stage pipeline. We've already highlighted BER-two thousand nine hundred and eighty one, our neuraminidase flu antibody. I will now touch on other key assets based on our proprietary monoclonal antibody platform. 1st, Vir-eight thousand one hundred and ninety, which in vitro can neutralize both RSV or respiratory syncytial virus and human metapneumovirus. Both of these viruses pose a serious threat to infants and immunocompromised.

Speaker 2

2nd, VER-seven thousand two hundred and twenty nine, Our next generation COVID-nineteen monoclonal antibody, which in vitro is differentiated by both extreme breadth and potency against a broad spectrum of historical and currently circulating variants. With respect to our T cell platform, which is based on human cytomegalovirus, we are advancing 2 assets. VIR-thirteen eighty eight is our novel next generation HIV vaccine, which will soon be our first patient in Q3 of this year. VIR-nineteen forty nine It's a potentially therapeutic vaccine against HPV associated cervical, anal and head and neck dysplasia and cancer and is the 2nd asset in our T cell platform based on HCMD. We look forward to sharing more about these INDs in the future.

Speaker 2

I will now turn the call over to Chief Financial Officer, Zheng Li.

Speaker 3

Thank you, Phil. We're pleased to share our financial results for the Q2 of 2023, total revenues were $3,800,000 compared to negative $40,600,000 for the same period a year ago. Recall that in 2022, the company recorded a revenue constraint related to sotrovimab in the amount of $397,400,000 which caused the total revenues and collaboration revenue in the Q2 of 2022 to be negative. Specific to sotrovimab in the Q2 of 2023, collaboration revenue was negative $13,800,000 mainly due to sotiromab sales being more than offset by manufacturing costs and expenses to support activities in countries where sotrovimab continues to have a marketing authorization. Going forward and barring a reauthorization of sotrovimab in the U.

Speaker 3

S, We believe collaboration revenues will be at minimal levels and potentially make a negative contribution to our top line due to the ongoing required investments to support the marketing authorization, which our partner GSK leads me upwards in. Turning to operating expenses. R and D expenses in the Q2 of 2023 were $171,900,000 compared to $115,100,000 in the same period in 2022. Included in the 2023 amount is a non cash charge of $10,700,000 related to the impairment of legacy in process R and D and consolidation of our labs. The year over year growth in R and D expenses was primarily driven by investments in the Phase 2 study Peninsula for VERUER-two thousand four hundred and eighty two and manufacturing activities in anticipation of initiating a Phase 3 study.

Speaker 3

While the costs associated with the Peninsula study will ramp down in the next few quarters, we are currently evaluating The impact of the Phase 3 manufacturing capacity and supply for VER-two thousand four hundred and eighty two. We expect to communicate more on this with our Q3 results. SG and A expenses in the Q2 of 2023 were $47,100,000 compared to $41,600,000 for the same period in 2022. The year over year growth was primarily driven by higher personnel costs to support the overall growth of the business. For the Q2 of 2023, we reported a consolidated net loss of $194,800,000 compared to a net loss of $76,500,000 for the same period in 2022.

Speaker 3

Turning to the balance sheet. We ended the Q2 of 2023 with cash and investments of $1,900,000,000 compared to $2,400,000,000 at the end of 2022. As communicated previously, we made a payment of $273,600,000 in the Q2 to our collaborator GSK, which comprised the majority of cash utilization during the quarter. This payment primarily relates to the amount reserved in 2022 for excess sotrovimab supply and manufacturing capacity due to reduced demand expectations for sotrovimab. There remains a balance of $69,700,000 related to this reserve, which we expect a payment of $41,800,000 to GSK in the Q3 of 2023.

Speaker 3

As I conclude, I would like to make a few comments about our financial position and capital allocation. As Mary Anne stated earlier in the call, We are making decisions and taking actions to become more focused, which has resulted in the discontinuation of our small molecule platform. We're well capitalized to see our current Phase 2 programs in hepatitis B and hepatitis delta through the end of Phase 2 and beyond. We also have the balance sheet strength to pursue further innovation by investing in our core antibody platform. And finally, you can expect us to be strong stewards of capital and have a disciplined approach to capital allocation and expense management.

Speaker 3

I'll now turn the call back to Sasha.

Speaker 1

Thank you, Sun. We will now start the Q and A section. Please limit questions to 2 per person, so that we are able to get to all of our covering analysts. Operator, please open up the lines.

Operator

Okay. Our first question comes from Gena Wang from Barclays. Your line is open.

Speaker 1

Thank you. I have two questions regarding the FLU-two thousand four hundred and eighty two program. So first, regarding the PENISLA study. So why the design didn't have a lower bound of 30% Like Pfizer and Moderna studies, if we use 30% lower bound, the study would look like underpowered. Could that be the reason leading to the failure?

Speaker 1

And the second question is with the negative top line, are you terminated And also the work in flu and also any read through to the other via Progamzol Antibody platform.

Speaker 2

Thank you, Gina. Really appreciate that chance to I'll answer your questions. And let me begin with your first question with regards to the design of the Peninsula trial. So the first thing I want to say is that the real the short answer is that it was a well powered study and we need to think of it in the context of the fact that our desire was to show an efficacy beyond that traditional vaccines. So when you think about how to power study, it's not just about demonstrating statistical significance, But it's about demonstrating clinical significance in the context of that.

Speaker 2

And so for example, we could have powered a study to demonstrate that a 10% effect size Was statistically significant. However, of course, as you know, Gina, that wouldn't have been clinically meaningful, given the vaccines that are currently out there. This is in contrast to vaccine flu trials, which do have a desire to that basically power their study for clinical significance and statistical significance to a lower bound confidence interval of 30%. But I would like to remind you that with regard to monoclonal antibodies, Both RSV and COVID, neither of them used such a flu vaccine specific endpoint. So I think that we were definitely well powered To ask the question and answer the question, could we achieve transformative efficacy?

Speaker 2

And unfortunately, we did not. With regard to the other aspects of 2,482, I really want to point to the fact that we are undergoing more analysis right now as to why this study was unsuccessful. And we're looking at it from many different angles, including different symptoms, the PK, time to infection and a number of the other things I talked about earlier on call. And really we need to be guided by those results and that analysis and that data to really decide what next to do. But clearly, as I said earlier also, we're not going to be embarking on a Phase 3.

Speaker 2

And then finally, with regard to your question about read through, I would say that I think that Mary Anne said it best when she said that, we've already had 2 successes with our antibody platform. The Ebola antibody, the only single antibody to treat and cure Ebola as well as sotrovimab, which was brought to market in less than 15 months. So I don't think there's any read through on our ability to really design and identify successful medicines using this antibody platform.

Speaker 1

Thank you, Phil. I would just add Gena. Obviously, we want to be very strategic about how we allocate our Capital and as Phil pointed out, we are not going to rush into any next steps. We really want to do a thorough analysis of the data And then we'll be guided by that outcome as to what we will be doing next. Thank you.

Operator

All right. Our next question is from Paul Choi from Goldman Sachs. Your line is open.

Speaker 4

Hi. Thank you. Good afternoon, everyone. My first question is, if we think about stripping out The one time true up for the excess sotrovimab supply and manufacturing to GSK. And I know there's a couple of moving parts there still.

Speaker 4

If we strip that out, if we look at maybe the year ago OpEx, is that sort of the normalized rate that You would think would be normal here going forward? And what does that imply for your cash runway? If you You can prepare and just say how long your cash balance will go through. And then secondly, on Hep B For the 2,218,134

Speaker 5

plus or

Speaker 4

minus PEG data set that will be coming up in the Later this year. Can you maybe level set expectations on how we should think about potential efficacy there? Is there potential for synergy? Or should we potentially think about it largely as additive? And also what can you say Potential tolerability of the regimen given ag interferon's historical challenges.

Speaker 4

Thank you.

Speaker 1

Okay. Thank you very much, Paul. Maybe the first question on cash runway, Sung, you can Give some more information there.

Speaker 3

Yes, Paul. Thanks for your question. So I think you had a couple of questions there on basically operating expense, Normal levels is less your comparable and the implications for our cash runway going forward. So when you think about our operating expense and specifically R and D expense. For the last several quarters, the last 3 or 4 quarters, it's been heavily driven by the investment in the Flu Phase 2 study, the Peninsula study.

Speaker 3

In addition to that, we also invested in manufacturing activities for an anticipated Phase 3 study in flu. So these have been the primary drivers of our R and D operating expense for the last several quarters. Now going forward, obviously, I go back to The prepared comments I made on the ramping down of the Peninsula study in the next few quarters, There are some variables here where we have an ongoing Phase 2 study in hepatitis B and hepatitis delta and We're going to get to some important data readouts in quarter 4 this year. So pending those the readouts of those data That could be a big swing factor for where our OpEx trajectory will be in the future and certainly Has implications for our cash utilization as well. But I just want to make a clarification here.

Speaker 3

The cash utilization when you go from Q1 to Q2 is not indicative of a run rate. As I mentioned in my prepared comments, there was a $273,600,000 payment to GSK related to a liability booked last year. So I think you have to really cancel Vasnoy's out and then you'll kind of understand what our true cash utilization has been. And it's been averaging somewhere close to $120,000,000 per quarter in each of the quarters this year so far. And then going forward, just coming back to something I said before, the cash utilization will largely depend on the data readouts for hepatitis delta and Hepatitis, Steve, but just to finish answering your question.

Speaker 3

With $1,900,000,000 of cash and investments, We're really in a good position here to fund not only to the end of Phase 2 for those programs, but also through Phase 3.

Speaker 1

Thank you, Sung. And then Paul related to your question on our Chronic hepatitis B functional pure program. As you rightly pointed out in Q4 of this year, we will be reporting Data on combining 2218 or siRNA with 3434 antibody plusminus interferon alpha 24 weeks end of treatment. So and we have actually some really promising data that we have seen and have announced at EASL earlier this year. So I would invite Phil to talk a little bit more about what we have seen as the signals of efficacy and also add to David.

Speaker 2

Thank you, Mary Anne. So Paul, great to talk to you again. And before we get going here, as Mary Anne mentioned, I think it's important to say before we can talk about what's going to be new, I just wanted to reiterate what we've seen most recently in the last two liver congresses. So as Mary Anne noted in at AFLD last year, we saw that a short course of the siRNA-two thousand two hundred and eighteen and 3,444 was additive, But that duration was only 4 13 weeks. And so what we're looking for that's going to be new at ASLD in the Q4 this year is the 24 week data of combining the 2 of these drugs together.

Speaker 2

We're also going to be looking at these 2 drugs together with the addition of interferon alpha. And I think all of that together is what will be new along with of course new data from hepatitis delta.

Speaker 1

Operator, can you go to the next question?

Operator

Okay. Our next question comes from Rowena Ruiz from Leerink Partners.

Speaker 1

Great. Thanks. Hello, everyone. So maybe first question on delta virus. What specific measures Could you disclose in the Phase 2 SOLSTRESS trial and what's the efficacy bar that you're looking for?

Speaker 1

Thank you for that question, Roana. I will ask Phil to give you some more details on that.

Speaker 2

Thank you, Mary Anne and thank you, Roana. So with regard to our adult trial Solstice, remember at EASL this last year this last June actually, sorry, this past June, We just showed that in preclinical models, 3,434, our Fc enhanced monoclonal antibody Was able to knock down the hepatitis delta virus or the RNA from the virus. And we also showed that 2218 or siRNA could do the same And that when combined in an animal, they were additive in their behavior. So now we're looking at Solstice, which also began in the early part of the spring We're asking ourselves the question 10,134,134 alone, 2,218 alone and what's going to happen if you add the 2 of these drugs together in terms of their ability to knock down hepatitis delta RNA virus. So that's what we're looking forward to seeing at in the Q4 of this year.

Speaker 2

As you know, the efficacy bar is rather the bar for getting approval is a 2 log reduction in Hepatitis delta RNA and normalization of ALT, which is only seen 45% of the time with the only currently available drug And that drug requires daily subcutaneous injections. What we're hoping for is transformative efficacy along with maybe having only done an injection once or twice a month. So I think that that can be very differentiating for us. Now in terms of what we're going to actually see in terms of data, as I mentioned, it will be the monotherapy in Combination, but this is early data from a small cohort. So we want to be able to see are they actual antivirals in patients and that's what we look forward to seeing.

Speaker 1

Yes. Quarter of next year. Okay, great. And I have just

Speaker 6

a follow-up.

Speaker 1

Yes, maybe bigger picture, could you give us a sense of what your strategic Priorities for the company will be in 2024. And I guess thinking about flu, hepatitis, Delta virus, HBV and all the programs you have going on, are some of them going to shift to like higher focus next year? And like what should we be following more closely along those lines? Yes. Thank you for that question.

Speaker 1

As mentioned before, as it relates to our flu program, what Next steps are going to be are really going to be determined by further analysis of the data, but our near and intermediate So focus is really on our clinical programs. So chronic hepatitis B and chronic hepatitis delta, those are really our top priorities. We will also bring HIV program into the clinic in the next this quarter. So our focus, Our capital allocation will really be all around, making sure that as fast and as efficiently possible we can progress those programs

Operator

Our next question comes from Eric Joseph from JPMorgan.

Speaker 7

Hi, good afternoon. Thanks for taking the questions. Just one or 2 on HBV. Just trying to get a better sense of the update you might see from March Part B In Q4, whether we should expect well, really the types of patient numbers, I guess, we should anticipate and whether we should expect Readouts across the different the 4 different treatment regimens. And then I'm also curious to get a sense from you guys of what Level of asset engine clearance would support The addition of 3,434 being additive to what you've reported so far from the Yuan Trial of 22.18 plus peg, the doublet, the loan.

Speaker 7

Thanks.

Speaker 2

All right. So Eric, thanks for the question. So I would like to begin by stating, Let's level set to what was shown at EASL. And in EASL, what we showed was that 48 weeks Of 2218, the fRNA with interferon alpha was able to result in an off treatment response in about 16% of patients 6 months after the end of treatment. That was preceded by an on treatment serop clearance as you referred to earlier of around 30%.

Speaker 2

So basically 30% of patients had an on treatment response And then 16% had a continued off treatment response with 48 weeks of 2218 plus Entera on Alpha. What we're going to be seeing at in the Q4 of this year is, of course, the 24 week on treatment data from the triplet and the doublet. And so what we should be looking for is that 2,218 plus 3,434 gets us to patients who have a serial clearance. And remember when you give 2,20083,434 for only 4 or 13 weeks, we did not see any patients with sero clearance. So therefore, the goal will obviously be to see more patients or a number of patients with serop clearance and whether or not we can match or exceed the 30% we saw with 48 weeks of the prior double.

Speaker 2

The other thing that's important to look forward to is of course adding interferon onto that combination of And seeing how much better we can do with that. Now going back to Paul's earlier question about tolerability, Clearly, interferon alpha has some tolerability issues if given for a long period of time, but that's in the context of low efficacy. If we can achieve functional cure rates greater than 30% or 40%, we think that this is something that patients will really be Keen to understand better and appreciate given the fact that living with a chronic disease is as Mary Anne alluded to in the prepared remarks, Something we've heard a lot from patients as something that they want.

Speaker 1

Yes. As it relates to enrollment and timing, I mean, we're right on track as to our expectations.

Speaker 7

Okay. Would it be too would it be premature at in the Q4 to see any Post treatment follow-up or off treatment follow-up for patients that only received the 20 or 24 week regimen?

Speaker 2

So Eric, at this time, all we've guided to is the on treatment data from the 24 week ons. And we are definitely looking forward to that information along with as I alluded to earlier with Ruana the chronic hepatitis D delta. So I think those are going to be the 2 exciting data sets that we hope to be able to share in the 4th quarter.

Speaker 7

Excellent. Thanks very much. Looking forward to it.

Operator

Our next question comes from Eva Privaterra from TD Cowen.

Speaker 1

Hi, good afternoon. Thanks for taking our questions. Just follow-up on the prior question. For the triple combination with data in the second Half, what rate of on treatment sero clearance would get you excited or be indicative of the off treatment clearance?

Speaker 2

Yes. So to answer that question, I think again context is important. For 2218 plus interferon alone for only 24 weeks, we saw only a 5% rate of sero clearance on treatment. So I think anything beyond that is biological proof of principle that 3,434 when added to 2,280 and interferon Is moving the needle. And of course, if you can get there without interferon and 2218 +34, I think that that would also be quite impressive.

Speaker 2

So I think both of those things are Important steps forward. And then of course, the higher the on treatment response rate, the more excited we'll be in terms of whether or not this is going to be able to Make a meaningful difference to patients.

Speaker 1

But what delta between what delta would you anticipate between the on treatment and off treatment. Is there any way to know?

Speaker 2

Well, I think one of the exciting things that we saw at EASL Was one of the first times that there was a predictor of off treatment response. Now granted it was a small cohort of patients, but we demonstrated In that small cohort of patients, the patients who seroconverted, not just sero cleared, but seroconverted to anti antibodies at high levels greater than 100 or 200 that they were the ones most likely to have an off treatment response. So certainly, we're going to be looking at that metric In our studies to see what the off treatment response will be, clearly in our studies it went from 30% down to 16%, But really, I think it's going to be guided by which patients mount an anti S response and what level of anti S response that they mount. And we'll look forward to seeing what that data looks like.

Speaker 1

Great. Thank you very much.

Operator

Our next question comes from Mike Ulz with Morgan Stanley.

Speaker 6

Hey, guys. Thanks for taking the question. Maybe just another follow-up on the March Part B data expected later this year. Just based on what you've seen so far, do you in terms of some of the other studies from Part A etcetera, Do you think 24 weeks will be enough or do you think you may have to go to 48 weeks? And is this a situation where longer term Tends to be better or could there be a reason why longer would not be better for some reason?

Speaker 6

And then maybe your thoughts on the need for PEGG interfering or not? Thanks.

Speaker 2

Great. So that sounded, I think, like a 3 part question, Mike. So let me make sure I get all 3 parts. So the reason for longer being better biologically is, of course, Based on historical precedent that when you give pegyiniferon alpha for 24 versus 48 versus even 72 weeks, You do get a better response even if it's still low single digits. So that's why longer has been historically better.

Speaker 2

Of course, that's balanced by what I think Paul was alluding to earlier when he talked about tolerability, which is the issue is that the longer you give pegylated interferon alpha, The more side effects accumulate for the patient. So you're trying to find a balance between those two things, because in the end, It's really going to come down to efficacy and as once I was once jokingly told efficacy is always along with safety really where the balance gets With a rubber hits the road. So I would say that if we can demonstrate a 24 week cure that is similar to the 48 week We'll of course go with the 24 weeks because I think that that would allow patients to have a shorter course of interferon therapy. But really if it's a delta A meaningful efficacy delta then we'll have to decide as we look forward to talking to patients and talking to providers What exactly would be most desirable in that group? So that's really the balance between longer is better from an efficacy perspective And longer being less ideal from a not a safety, but a tolerability perspective.

Speaker 2

Did that answer your question, Mike?

Speaker 6

Yes. That makes sense. And then Your thoughts on the need for PEG, I guess, shorter with PEG might work, but longer maybe doesn't make sense?

Speaker 2

So I would say that the let me answer that in 2 ways. Let me answer that from a biological perspective and then from a patient perspective. From a patient perspective, I think that it is really going to depend on what the efficacy is. So imagine you're a patient right now And someone says, I'm going to give you a year long course of therapy. It's going to have some side effects, but you only have a 1 in 20 chance of it actually Benefiting you at all.

Speaker 2

Most people say, I'm not willing to roll the die in that circumstance. However, if you were to come back to that same patient and say, I'm going to give you a year in therapy, but if I do it in combination with these other drugs, I could increase your chance of cure to 1 in 3 or I think that's a very different story. So I don't think it's just about absolute duration. I think it's about efficacy in the context of that duration. As far as the biological need for interferon, I think there are things in favor of suggesting why it might be necessary.

Speaker 2

I think the fact that It is the only known way to cure hepatitis B right now that has been approved is one interesting point. But I think it points more broadly to the need for an immunomodulator to really achieve a functional cure, which is really Immunologically induced remission. So one of the aspects about VERD3434 that we're really excited about is the fact that it's not just a neutralizing antibody. It has a modified Fc domain, which allows it to act as a potential therapeutic vaccine. And it's that aspect of VERA-three thousand four hundred and thirty four, which we believe may allow it to act as a substitute or an alternative to interferon alpha.

Speaker 2

So of course the jury is still out on that. We're going to see what 24 weeks looks like on treatment this coming Q4 And then we'll of course have what fully at least of that treatment look like next year.

Speaker 6

That's helpful. Thank you.

Operator

All right. Our next question comes from Joseph Stenger from Needham and Company.

Speaker 8

Thanks for taking our questions. 2 from us. First on the HIV program, You were previously evaluating your 1111 in Phase 1 trials. What's different about 1388? And what gives you confidence that this T cell vaccine is the right approach.

Speaker 8

And what are timelines around initial data? And then secondly, Given current cash balance, what are your thoughts on external BB? What's your appetite for bringing in External assets, whether they be early or late stage? Thanks.

Speaker 1

Thank you, Joe, so maybe I'll start with the last question first. And obviously, we are in a very unique position where we have a strong The balance sheet that will allow us to really fund our critical Phase II and Phase I assets to the next stages of inflection. It also offers us the opportunity to remain opportunistic. And if we see assets or For your first question related to the differentiation of year 11/11 versus year 13/88, maybe Phil, you can take that one.

Speaker 4

Thanks, Mary Anne.

Speaker 2

So Joseph, we are on track to dose our first patients this quarter in Q3 with VER-thirteen eighty eight, Which as you noted is a prophylactic HIV vaccine. In terms of what's different about it compared to VERU-eleven eleven, I think that obviously we need to wait for the results in humans, but at least we can say in tissue culture the biggest difference is that year 11.11 Was deliberately attenuated, which means we made it less able to replicate in tissue culture, because we wanted to Really get some basic understanding of how this vector, which is based on human CMV, behaves in people. We now have the opportunity with 1388 Based on that safety information from VERU-eleven eleven to take what we call a less attenuated virus into the clinic. So this virus at least in tissue culture It's able to replicate a little bit better and therefore we believe can be more immunogenic in humans. So I think that that's really the big difference.

Speaker 2

And there is of course some other minor differences in terms of some of the deletions or insertions we have made, but that's the key difference between VER 11 and 1388.

Speaker 1

Thank you, Phil. And then maybe Sung, if you could comment a little bit more about our cash position.

Speaker 3

Yes. Happy to do that, Joey. This is Sung. So I mentioned earlier, I think there was a question About our cash runway. So with $1,900,000,000 on the balance sheet, it gives us a lot of financial flexibility.

Speaker 3

And as Marion said earlier, Certainly, they fund our current development programs, which are broadly in Phase 2 and HIV obviously is in Phase 1, but We can get to the next inflection points for all of those programs should the data support it. So it's a real fortunate position to be in. And Just to reiterate again, and I really want to make this clarification, because I do think Some information might have been misunderstood. We did have a large payment to GSK during the Q2 and that certainly is We don't consider that to be part of our run rate.

Operator

All right. Our next question comes from Patrick Trucchio from H. C. Wainwright.

Speaker 5

Thanks. Good afternoon. I have a couple of follow-up questions on HBV program. So first, I'm just wondering if you can talk About the bar for regulatory success in HBV, specifically if you need to demonstrate a 30% sustained clearance of HB surface antigen 6 months after treatment is halted to achieve approval or if a rate below this can be sufficient for approval in the setting of HBV. And then can you talk about the potential for demonstrating a partial cure in HBV?

Speaker 5

What's the latest Around how this is being defined and if it could at some point become part of maybe a regulatory bar for approval in the setting of HBV treatments. And then separately with the preclinical pipeline candidates unveiled today, how should we think about the remaining preclinical work That remains a potential timing for filing of IMV's.

Speaker 1

Excellent. Thank you so much, Patrick. So Perhaps that you can start and talk a little bit about our preclinical pipeline?

Speaker 2

Definitely, Mary Anne. So Patrick, in terms of your third question, I think that It really is an exciting time for Veera. I already mentioned to you with the last question 1388, which is the HIV prophylactic vaccine that is going to I did want to actually add a note to that, which is to say that it is based on human cytomegalovirus as I noted earlier. Human cytomegalovirus is one of the most immunogenic vectors that has ever been described. Sometimes up to 20% of your T cells can be I'm not yet against that vector and importantly it generates a type of T cell known as an effective memory mucosal T cell, which is quite important we believe In the prevention of diseases like HIV, but also allows us to use it in other diseases Such as human papillomavirus and that is another thing that is going to be entering the clinic in the next 24 months, basically a therapeutic T cell vaccine called VER-nineteen forty nine, which is for the control of precancerous lesions caused by human papillomavirus.

Speaker 2

So both of those things are quite unique and exciting for VER. In terms of the respiratory franchise and the antibody platform, We've already talked about VER-two thousand nine hundred and eighty one, our neuraminidase targeting monoclonal antibody that has activity not just against influenza A, but influenza B. We also have VER-eight thousand one hundred and ninety, which I touched on earlier, which is uniquely able to neutralize not just RSV, but human metapneumovirus And also VER-seven thousand two hundred and twenty nine, a next generation COVID-nineteen monoclonal antibody that has really shown quite broad Activity and quite potent activity against historical and current strains. So we really have a broad set of things that we believe will That can make a huge patient impact in the future that we'll be entering in the clinic in the next couple of years. Going backwards then to your questions around HBV, In terms of partial cure, I think that this is an area that's what I would say evolving in regulatory science.

Speaker 2

As you know, the guidelines for the EU and the U. S. Are somewhat different. And so right now that is going to be something we need to follow. As you know, whether or not you could achieve patients who do not require treatment because their DNA is Pressed that their HBV service advantage is still present is sort of a middle ground that people are still unclear on.

Speaker 2

So certainly that is a Fallback position one could always take, but I think the important thing as you said is truly to achieve an HBV functional cure, which is as you defined loss of surface antigen 6 months after the end of treatment. With regard to what the bar is, I actually don't think 30% is a regulatory bar. I think 30% is a gross estimate of what was what we would consider clinically meaningful to patients And that obviously always comes with context. What do I mean by that Patrick? So for example, if you were able to achieve a functional cure of let's say 20%, But you were able to do it with a simple set of injections that had very minimal side effects and very well tolerated.

Speaker 2

I think people would be willing and patients more importantly would be certainly willing to give that a try because what you're offering to patients is I'm going to give you a regimen that may have that is extremely well tolerated that has a 1 in 5 chance of being of really benefiting you Versus on the other hand, if it is for example an interferon containing regimen, I think that the functional cure rate would probably have to be higher Because of course then they have to balance the tolerability concerns with the chance of benefit. So I think 30% is more of A ballpark over the thumb estimate many clinicians will give you. I don't think it's a regulatory bar. I think it is a Rule of thumb and context is going to really matter.

Speaker 1

Thank you, Phil. And Patrick, Yes. Just to reiterate what we have focused here today is on discussing those preclinical candidates for which we confidentially expect IND within the next 24 months. Thank you.

Speaker 5

Thank you so much.

Operator

All right. If there are no other questions, I will now turn the call back over to Doctor. Marianne DeBacker.

Speaker 1

Thank you, operator, and thank you all again for your attention today. Pure Biotechnology is a Truly vibrant and dynamic company that I believe is poised for significant growth and most importantly for patient impact. I am thrilled to leap here into what I believe will be the next transformational trajectory as we build on the progress that we have achieved so far. I feel confident that we have the internal scientific expertise and the passion to power our mission forward. So thank you all for joining us here today.

Speaker 1

We really appreciate your time and your interest in Via Biotechnology. Thank you. Operator, you may end the call.

Operator

This concludes the meeting. You may now disconnect.

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Earnings Conference Call
Vir Biotechnology Q2 2023
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