Vir Biotechnology Q4 2023 Earnings Call Transcript

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Provided by Quartr
February 22, 2024

There are 13 speakers on the call.

Operator

Hello. Welcome to Vir Biotechnologies 4th Quarter and Full Year 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. DeMooney Ellis.

Speaker 1

Thank you and good afternoon. With me today are Doctor. Mary Anne DeBacker, Chief Executive Officer Doctor. Phil Tang, Chief Medical Officer and Sun 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.

Speaker 1

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. 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.

Speaker 2

Thank you, Sasha. Good afternoon to everyone on the webcast and thank you all for joining us today. Before we discuss the tremendous progress we made in 2023 and what's ahead in 2024, I want to touch on the announcement we made earlier this week that Phil Pang, our Chief Medical Officer, has decided to step down at the end of March to spend more time with his family. We have initiated a search for a successor. I want to sincerely thank Phil for his leadership.

Speaker 2

He leads a strong clinical development team in place, positioning us well for continued success, and I wish him the very best. Stepping in as Interim Chief Medical Officer is Doctor. Carrie Wang, currently Severe's Senior Vice President, Clinical Research. As I reflect on 2023, I'm proud of the clinical progress we have made towards developing a potential treatment for patients with chronic hepatitis delta, a potential functional cure for the millions living with chronic hepatitis B as well as a differentiated approach to preventing HIV. Our priority is to deliver on our mid stage clinical pipeline, while also refocusing our research and early pipeline to programs beyond infectious disease.

Speaker 2

We anticipate significant data readouts this year, which build off last year's progress across all our clinical programs. Specifically, already in the Q1, we anticipate completing the enrollment of approximately 60 participants across 2 cohorts in SOLFIST, our Phase 2 hepatitis delta trial. We attribute this rapid rate of enrollment to the positive clinician and patient interest following the initial data we reported at AASLD last year. In the Q2, we entirely share early biologic and safety data on a subset of these participants. It is important to appreciate that there is a significant underserved patient population in need of a safe, highly efficacious and convenient therapy for treating hepatitis delta.

Speaker 2

We estimate that there are at least 12,000,000 people diagnosed with this disease and an estimated 60,000,000 or more undiagnosed globally. We aim to develop a best in class treatment, which we believe will drive increased diagnosis rates and position PHEER to become the leader in hepatitis delta. To position us for success, we are collaborating with patient advocacy groups and policymakers to improve surveillance and screening. In addition, crucial work is ongoing to understand who and where delta patients are. These efforts will support a targeted rapid and successful commercial launch in the future.

Speaker 2

Switching gears, I will now discuss our functional cure program for chronic hepatitis B, another area of high unmet medical need. Based on the data reported in our ongoing Phase 2 trials thus far, we believe our 2 therapeutic candidates dibegivart and elastiran has the potential to play a critical role in delivering high functional purees for chronic hepatitis B patients. We look forward to reporting end of treatment data from the March Part B trial at a major medical Congress in the 4th quarter. Finally, in the second half of the year, we are looking forward to sharing initial immunologic proof of concept data for year 1388, an HIV T cell vaccine candidate currently being evaluated in a Phase 1 trial. If the data supports the validity of the platform, it could be a springboard for other indications, including our preclinical therapeutic vaccine for control of precancerous lesions and HPV cancers.

Speaker 2

Switching to research. We continue to advance antibody therapeutics optimized for increased likelihood of development success, thanks to our proprietary platform powered by AI and machine learning. Our focus is on prophylactic antibodies for influenza A and B, RSV, NPV and COVID-nineteen. In addition, we are developing a cocktail of broadly neutralizing antibodies for an HIV cure. We look forward to sharing more about these programs and the timing of potential IND submissions during the year.

Speaker 2

On February 21, Vir and GSK terminated our collaboration to research, develop and commercialize our monoclonal antibodies targeting the influenza virus under our definitive collaboration agreement that we established in May of 2021. Spiro retains so right to continue advancing our investigational therapies for influenza. With that in mind, we are actively pursuing external partnership opportunities for our next generation influenza A and B antibodies and ADCs. Meanwhile, our respiratory collaboration with GSK continues. Turning to our cash and investments, our financial strength allows us to fund our clinical programs through major inflection points, while enabling the flexibility to invest in external innovation opportunities.

Speaker 2

In evaluating external innovation, we are thoughtful, selective and strategic with a focus on opportunities capable of augmenting our pipeline and platforms. To recap, we are preparing for a transformational year at Vir, anticipating critical value inflection points in our program focused on chronic hepatitis delta, hepatitis B and HIV. With that, I'll now turn the call over to Phil.

Speaker 3

Thank you, Mary Anne. I want to begin by thanking you, the Board and all of my Veer colleagues for what has been an honor and privilege to serve as Vir's Chief Medical Officer. Vir has been a family to me as well as an all consuming passion for the last 7 plus years. I have full confidence in Veer's future and the ability of our promising clinical programs to impact the lives of millions of patients. Moving on to that pipeline, I'll begin by summarizing the initial results from our Phase 2 SOLTIS trial, which is on hepatitis delta that was shared in a late breaker presentation at ASLD last year and discussed earlier this year.

Speaker 3

The Solsys trial is evaluating tobevavart alone and in combination with elepseron as a potential chronic treatment for patients living with chronic hepatitis delta. Tilbevivart is our investigational neutralizing monoclonal antibody, which has been engineered for enhanced immune engagement. Alepsiran is an investigational HBV targeted siRNA that reduces hepatitis B surface antigen, which is the protein that the delta virus needs for its lifecycle. In our initial data, we observed extraordinarily rapid declines in HDV RNA. 5 out of 6 participants had undetectable HDV RNA and 6 out of 6 were below the lower limit of quantification within 12 weeks of starting combination therapy.

Speaker 3

Of note, 2 out of 6 also achieved ALT normalization. While participant numbers are small, these data were recognized by several hepatologists as one of the most exciting advancements shared at the ASLD Conference in 2023. That excitement has meaningfully translated into our ability to rapidly enroll patients both with and without cirrhosis ahead of schedule in our SOLSA study. As a reminder, our stated goal is to enroll approximately 60 participants in SOLSTIS by the end of the Q1. These participants are being enrolled into 2 groups.

Speaker 3

The first group is receiving tobevibar monotherapy every 2 weeks and a second group is receiving tobevivar plus elepseron combination therapy every 4 weeks. As of early February, greater than 90% of participants have been dosed. Notably, of the 55 participants who have already been dosed, 24 of them or 44 percent have compensated cirrhosis. We plan to share initial data on a subset of these participants in the Q2. Specifically, 15 participants per regimen at 12 weeks and 10 participants per regimen at 24 weeks.

Speaker 3

Should these data be supported, we intend to discuss with regulators on a potential path to registration in the Q3. Switching to our Phase 2 program for chronic hepatitis B, our preliminary data suggests that when elixirone was given with coagulated interferon alpha for up to 48 weeks, approximately 26% of participants achieved hepatitis B surface antigen loss at the end of treatment and 16% maintained hepatitis B surface antigen loss 24 weeks after the end of therapy. Again, although the number of participants treated was small, this was the first sign that our siRNA may have a potential impact on functional cure rates beyond what is possible with PEG interferon alone. In a subsequent trial, when adding tobevivar to a regimen of elepseron alone or elepseron plus peginterferon, we observed an almost threefold increase in end of treatment response rates after only 24 weeks of treatment. These data were the first indication of the potentially important role of an HBV directed antibody in hepatitis B functional cure.

Speaker 3

These data are encouraging and we look forward to sharing end of treatment data from the MARCH PART B trial, which is evaluating 48 weeks of the doublet and triplet regimens in the Q4. This will be followed by post treatment data in the first half of twenty twenty five, which will allow us to assess functional curates. Turning to what we anticipate will enter the clinic next, VIIRS-seven thousand two hundred and twenty nine is a next generation COVID antibody with increased potency, breadth and resistance to viral escape, thanks to AI engineering and optimization. We expect to file a health authority application to support a Phase 1 trial later this year. The development of VERDAR-seven thousand two hundred and twenty nine through the end of Phase 1 is supported by BARDA.

Speaker 3

We look forward to continuing to share our progress over the coming quarters and during an R and D day planned for the end of this year. I will now turn the call over to Saum.

Speaker 4

Thank you, Phil. We're pleased to share our financial results for the Q4 of 2023 and the full year. Total revenues in the Q4 of 2023 were $16,800,000 compared to $49,400,000 for the same period in 2022. Total revenues for the full year of 2023 were $86,200,000 compared to $1,620,000,000 in 2022. The primary driver for the year over year decline is lower collaboration revenues from sotrovimab.

Speaker 4

We do not anticipate any meaningful collaboration revenue from sotrovimab in the future. And this line item could make a negative contribution to our top line due to the ongoing required investments to support the marketing authorization of sotrovimab, which our partner GSK leads the efforts in. Turning to operating expenses, cost of revenue for the full year of 2023 was $2,800,000 compared to $146,300,000 in 2022. The year over year decline was driven by lower third party royalties owed on sotrovimab sales. R and D expenses in the Q4 of 2023 were $111,900,000 compared to $155,200,000 in the same period in 2022.

Speaker 4

The decrease was primarily driven by the wind down of the Phase 2 flu study of VER 2,482 in the Q4 of 2023. Included in the R and D expense for the Q4 of 2023 is a severance charge of $2,600,000 related to the workforce reduction announced in December 2023. R and D expenses for the full year of 2023 were $589,700,000 compared to 400 stop. R and D expenses for the full year of 2023 were $589,700,000 compared to $474,600,000 in 2022. The year over year increase was primarily driven by the Phase 2 FLU trial evaluating VER-two thousand four hundred and eighty two and related manufacturing costs and to a lesser extent the advancement of our hepatitis delta and hepatitis B programs.

Speaker 4

SG and A expenses in the Q4 of 2023 were $43,100,000 compared to $38,700,000 for the same period in 2022. The increase was primarily driven by higher personnel costs and a severance charge of $1,900,000 related to the workforce reduction announced in December of 2023. SG and A expenses for the full year of 2023 were $178,000,000 compared to $161,800,000 in 2022. The year over year increase was primarily driven by higher personnel costs. For the Q4 of 2023, we reported a consolidated net loss of $116,000,000 compared to a net loss of 101 $600,000 for the same period in 2022.

Speaker 4

For the full year of 2023, we reported a consolidated net loss of $615,100,000 compared to a net income of $515,800,000 in 2022. Moving to the balance sheet. Cash, cash equivalents and investments declined by $108,000,000 quarter over quarter. And we finished the Q4 of 2023 with $1,630,000,000 Turning to the financial guidance for 2024. We anticipate that the GAAP combined R and D and SG and A expense will be in the range of $650,000,000 to $680,000,000 Included in this range are non cash stock based compensation expense in the range of $105,000,000 dollars to $115,000,000 and restructuring charges for the closing of 2 R and D sites previously announced in December 2023 in the range of $25,000,000 to $35,000,000 The restructuring expenses are primarily non cash.

Speaker 4

When excluding the non cash stock based compensation and restructuring expenses from the GAAP combined R and D and SG and A expense range, The resulting range is $500,000,000 to $550,000,000 which represents an 18% year over year decline at the midpoint. The expected year over year decline is driven primarily by first, the absence of expenses from the Phase 2 flu trial evaluating VER 2,482 and related manufacturing costs in 2024, partially offset by the ramp up of our hepatitis delta and hepatitis B programs in 2024 and second, the cost optimization measures taken in 2023. Approximately 3% to 4% of the GAAP combined R and D and SG and A expense will be funded by brands. It's important to remember that these grants are recognized as revenue in our income statement. The combined GAAP R and D and SG and A expense guidance does not include the effect of GAAP adjustments caused by events that may occur subsequent to the publication of this guidance, including but not limited to business development activities, litigations, in process R and D impairments and changes in the fair value of contingent considerations.

Speaker 4

Our financial strength allows us to advance the Phase 2 Hepatitis Delta and hepatitis B programs through multiple milestones, invest in our core antibody platform and provide flexibility to evaluate external innovation. We will continue to have a disciplined approach to capital allocation and expense management. I will now turn the call back to Sasha.

Speaker 1

Thank you, Sung. 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 line for questions.

Operator

Your first question comes from the line of Paul Choi with Goldman Sachs. Your line is open.

Speaker 4

Hi, everyone. Can you hear me? Hello?

Speaker 2

Yes.

Speaker 5

Hi. This is Khalil calling in for Paul. Thank you so much for taking our question. I guess we'd like to ask about, the tobilirbarkolibziran combination cohort without PEG interferon alpha in March Part B at 24 weeks. Is that slightly higher efficacy observed in the cohort without interferon something you expect to see repeated in the 48 week data?

Speaker 5

And what would that mean for interferon to place in future pivotal study?

Speaker 2

Thank you for that question, Paul. I will ask our CMO Phil Tang to give you deeper insights into that.

Speaker 3

Thank you. Yes. So I think that, remember the numbers from the 24 week end of treatment data that we showed with the doublet and the triplet are still small numbers. So I would not look much into the fact that the doublet was slightly different from the triplet at 24 weeks. I think that really what we're looking forward to seeing is what happens as you know after 48 weeks of the doublet and triplet.

Speaker 3

So I would say the jury is still out as to what those results are going to be, which we will share with you in the Q4. And I think that that leaves open whether or not interferon will be required. And if it is, I think it will require a slightly higher And I think that if we can show a transformational increase in functional cure rates such as 30% or more, this is something that will be very important tool for clinicians.

Speaker 5

Got it. Thank you so much. And I guess a quick follow-up kind of relating to the pipeline in general. Could you guys give like a potential timeline as to when the company will select any front runner antibody candidates to enter the clinic? And any color on what would drive that decision of choosing 1?

Speaker 3

Yes. So just to provide a little clarity, we have a number of candidates entering the clinic in the near term and that's sort of regardless of platform, whether it's an antibody or a T cell vaccine. And really what we're always looking for is obviously something that is differentiated and something that we believe can make an impact on patients' lives. So those three candidates are VER-seven thousand two hundred and twenty nine, the next generation COVID antibody I spoke about earlier with its increased breadth and potency, thanks to our AI engineering platform. That also includes FEAR-two thousand nine hundred and eighty one, our neuraminidase targeting monoclonal antibody, which is differentiated on 3 levels.

Speaker 3

1, it targets both FLU A and B. It's more potent than 2,482 and has a derisk mechanism of action by targeting the neuraminidase enzyme. And third, we're very excited about BR-nineteen forty nine, which is a potential therapeutic T cell vaccine that builds on our human cytomegalovirus vaccine vector platform and targets precancerous HPV lesions. But I do want to say and stress that of course the first two candidates 7,229 and 2,981 we are planning to execute with a partner given the scale of development necessary.

Speaker 5

Right, right. All right. Thank you so much.

Speaker 2

Thank you, Paul.

Operator

Your next question comes from the line of Gena Wang with Barclays. Your line is open.

Speaker 6

Hello. This is Yi on Gena. Thank you so much for taking our questions. So first of all, for Phil, best wishes for your next journey. And for Mary Anne, with Phil's departure and now you have focused on infectious disease, oncology and immunology, What do you think will be the ideal candidate for your next CMO?

Speaker 6

And for your HDV, could you share your data expectation that you're going to share in the Q2? And also did you hear some initial regulatory feedback on the approval path? And lastly, for your earlier stage pipeline, how do you select the lead antibody candidates and what will drive those decisions? Thank you.

Speaker 2

Okay. Thank you very much, Gina. I will start with your first question related to a successor to Phil and what we are looking for in the next TMO. First of all, what is going to be really critical is for someone to have a proven track record in advancing therapies really through Phase 3 and having experience bringing therapeutics all the way to market. Needless to say, we have already initiated a search for a successor.

Speaker 2

And I must say also, since the news has gone out this week, we have received a flood of inquiries. But obviously, we will be very selective in what the profile of that candidate needs to be. We're also looking for someone who has a really in-depth understanding of the involving regulatory landscape, deep insights in how to use data and big data for insights into clinical development. So there's a number of things here that need to come together. And as Phil pointed out, we have a very talented leadership team here in our clinical group.

Speaker 2

So we are also looking for someone who can lead such a team of very talented developers for success, especially focused on our hepatitis B and hepatitis delta programs. Now switching to your second question, Gina, I understood that was related to hepatitis delta and what data we are expecting in the Q2. So I will ask Phil to give you more color on that.

Speaker 3

Yes. Thank you, Mary Anne. So with regard to the data in Q2 around hepatitis delta, to step back first, as we shared both at the conference earlier this year as well as at AFLD, what we showed was data on 6 patients and that data we think is quite transformative, but it is only 6 patients. So what we're looking for in Q2 is really to answer 3 questions. The first is what happens when we dose more patients with our combination therapy?

Speaker 3

Will we be able to repeat that type of data? Number 2, what will happen when we dose patients who have compensated cirrhosis? And 3, what will happen with the long term durability of those initial 6 patients. So I think we're excited and looking forward to that data. I think you also asked a question about regulatory feedback.

Speaker 3

And I just wanted to reiterate what we had said earlier this year, which is that the next step will be to take that data if positive and put it in front of regulators in the Q3 in an attempt to discuss a path to registration. So that's sort of the path as we see it coming from here on out.

Speaker 2

Yes. And Rana, related to your third question, which was related to our early stage pipeline, I think that's still in answering question of Paul already laid out. We really have 3 candidates that can enter the clinic or in the next 12 to 24 months. It's PR 7,229, PR 29, PR 29, And so each of those are really progressing very well and we will be providing more data and information on timing during the course of this year.

Operator

Your next question comes from the line of Ruana Ruiz with Leerink Partners. Your line is open.

Speaker 7

Hi, good afternoon. This is Nick Gassik on for Rojana. Thanks for taking our questions. Just first on HDV, could you provide a little more color around how large the market opportunity is in HDV currently? And also could you discuss what a possible accelerated approval pathway could look like for tibetabart and elobseran in HDV?

Speaker 7

And then I have a quick follow-up.

Speaker 2

Okay. Thank you, Josh. Let me maybe begin with reminding everyone that delta is the most severe form of hepatitis. And as you know, I mean, people that are co infected with delta progressed to liver cancer 4 times faster and 2 times faster to death. So there's a tremendous unmet need here.

Speaker 2

I think it's the first point that I would like to make. And then looking at the prevalence, we estimate that there are about 100,000 patients in the United States and over 200,000 patients in the EU5 alone. And we do believe that this is likely a growth underestimate given that diagnosis is really not optimal at this moment in time. So you can assume that even if you were to access only a modest portion of this population and if you think about pricing that would reflect really the clinical benefit of a potential transformative therapy, taking that together, we are confident that you would already be looking at a very large and significant market opportunity. And obviously, we believe that the combination regimen that we have of the Bevybark and elapsiran represents the potential of such a transformative therapy based on the data that we have shown thus far.

Speaker 2

And of course, in a limited set of patients, but still very impressive, very impressive data.

Speaker 3

And with regard to an accelerated approval, if I'll take that one, Mary Anne?

Speaker 2

Yes, please go ahead, Phil.

Speaker 3

I think that as we often like to say in the development space, data changes everything and more data is always better. So I think that when we think about accelerated approval or a rapid path to approval, what's in our favor is the fact that the unmet need as Mary Anne has described is undoubtable, right. There are hundreds of thousands of patients worldwide who would benefit from a chronic expressive therapy for Delta. And the fact that there is a lack of good options for many of them is also clear. So I think that that all favors a rapid path in the setting of the right data.

Speaker 3

On the other hand, of course, our program is still early and we're really waiting for our chance to get in front of regulators and our anticipated goal is goalpost is Q3. And by then, we'll have a subset of data, which we've talked about previously, which we will share in Q2, which is 30 participants through week 12 and 20 participants through week 24 in our 2 regimens that we are exploring. And to remind you of that, that is the combination of tobevavart and elixirone every 4 weeks versus just tobevavart every 2 weeks.

Speaker 2

Thank you, Phil. Joe, did you have an additional question?

Speaker 7

Yes. Sai, this is Nick. Just wanted to follow-up on HDV. Curious, what signals you're hoping to see in the upcoming additional data from Solstice? And maybe what are some of the gating factors for moving this program into the Phase 3?

Speaker 7

I guess like what would regulators really want to see in this data to support moving into Phase 2?

Speaker 2

Sorry, Josh, are you referring to hepatitis B or down sample?

Speaker 3

No. I can take that one, Mary Anne. So I think it's thank you, Nick. So as I said earlier, I think it's really a question of getting in front of them with the so to answer your first question, there are 3 things we're looking for in the data. The first thing we're looking for in the data is, does it repeat what we've seen with the original 6 patients?

Speaker 3

2nd, what will happen when we dose patients who have compensated cirrhosis? And 3rd, how durable it will be? I think that all of that data in terms of numbers will matter to the regulators and be able to reassure them that the 6 patients we the data on the 6 patients is not sort of a one off, but actually something that really is as transformative as we believe it to be. So in terms of gating factors, I can only speak more generally. But once we have the opportunity to sit down with regulators in the Q3, which is our anticipated goal, we'll be able to discuss with them, 1, what the comparator arm would be 2, what the size of the safety database needs to be and 3, what kind of particular endpoints they would be most interested in that they believe would be demonstrative of transformative efficacy.

Speaker 3

So that's what we're going to be talking about. And then of course, it's a matter of execution. I will say that of course we are planning for success in terms of both trial planning and regulatory interactions. And so we'll continue to do so because this is our most important clinical program, and it's first out the gate.

Speaker 2

Yes. And just to maybe add and repeat that already in the Q2, we will be seeing 12 week data on 30 participants across the 2 regimens and then 20 participants for the 24 weeks. So that will give us already a lot of insights into the data.

Speaker 8

Helpful. Thank you.

Operator

Your next question comes from the line of Eva Privatera with TD Cowen. Your line is open.

Speaker 9

Hi, good afternoon. Thank you for taking our questions. Just a couple from us. On the HDV Solstice trial, there was some ALT elevation seen with 2218 monotherapy, which came down with the combo. What's the mechanism for that?

Speaker 9

And what are the kinetics for achieving ALT normalization with suppressing viral RNA?

Speaker 3

I'll take that one, Eva. So thank you for the question. I think that it's important to remember that the number of patients dosed with 2,218 or elepseron monotherapy is small, but we did see a couple of patients who did show an ALT signal. This replicates what was seen with other siRNA therapy in hepatitis delta patients. In a larger study known as ReefD, almost 70% of patients did see an ALT signal in patients receiving siRNA who had delta.

Speaker 3

But it's important to remember that when they gave an siRNA and when we've given our siRNA to hepatitis B patients, we have not seen this. So it does not appear to be something intrinsic to the drug, but some interaction between the drug and the hepatitis delta virus itself. So with that in mind, when you look at the data closely, it seems to suggest that on treatment with an siRNA, there is a paradoxical increase in HDV RNA after some duration of therapy. If that is the driving force behind the ALT signal, then it would make sense that driving that HDV RNA down further and preventing the infection of new hepatocytes would be key. And that's exactly what we're intending to do with our monoclonal antibody tobevibart or VR-three thousand four hundred and thirty four.

Speaker 3

So the idea there is that any kind of fluctuation you would see in hdvRNA that might be driving an ALT signal would be prevented by having a neutralizing antibody like tubevapart. And so far, of course, the numbers are very small. Of the 6 patients, we did not see any ALT elevations, unlike the 70% of ALT elevation seen with siRNA monotherapy by another company. And so that's the thing we'll be looking forward to seeing as to what will happen when we dose these next 30 patients in the combination arm. So to summarize, the mechanism is still not clear, but there are early signals that it is due to changes in hdbrRNA and there are early signals that 3,434 or cabevivart can solve for that.

Speaker 9

Perfect. Thank you. And another question on the HBV MARCH trial. You've previously shown that high antibody titers were predictive of sustained surface antigen loss. Do you expect to present antibody titer data at the 48 weeks end of treatment data in Q4?

Speaker 3

So we have not yet guided to whether or not we will be sharing anti HBS data along with the actual surface antigen loss, but we will be doing everything we can to provide as much clarity on our results at that time. So stay tuned.

Speaker 2

Perfect. Thank you.

Operator

Your next question comes from the line of Patrick Trucchio with H. C. Wainwright. Your line is open.

Speaker 8

Congrats on all the progress. I have a couple of follow-up questions on Solstice program. So just first a clarification around the next data readouts. I'm wondering first, should we expect the next update or when should we expect the next update on the patient cohort data reported at ASLD 2023, specifically the proportion who achieve ALT normalization, which I understand can take longer than achieving hdvRNA below lower limit of quantification, as well as assessment of the durability of the virologic response. I'm wondering if that update may be part of this data that's coming in the Q2 or if maybe we would see the next cut there later this year in Q4.

Speaker 8

And then secondly, I'm wondering how we should think about the 44% of patients having compensated cirrhosis. Is this a proportion of patients with compensated cirrhosis consistent with what would be expected in real world setting for patients with chronic HCV or how did you decide on that proportion? And then how should we think about these key endpoints like HBV RNA and normalization of ALT and as well the safety profile of the combination regimen in these patients with or without compensated cirrhosis?

Speaker 3

All right. Well, Patrick, you're going

Speaker 7

to challenge my memory to

Speaker 3

make sure I remember all those questions. But let me start with the compensated cirrhotic question, move on to the endpoint question and then finish with the durability question. So with regard to the compensated cirrhosis, it is the epidemiology on hepatitis delta patients and how many of them have compensated cirrhosis is not entirely clear, but it is certainly a large proportion, probably somewhere between 30% to 50%. That was not the reason why we ended up at 44%. As you can imagine, when you're enrolling this trial, we actually targeted around 50%, but you want to move also the trial enrollment as fast as possible.

Speaker 3

So right now, as I said in my prepared remarks, there's about 90% of the trial has been enrolled. That's why it's at 44%. I expect that number to go up because the only patients left in screening are all cirrhotic are all patients with cirrhosis. So we'll probably get 44% or maybe even 48% or somewhere around there. But what we really wanted to do was to get at least 10 to 15 patients with cirrhosis per cohort to be able to understand what the kinetics of viral decline is and ensure that there's no obvious safety signal.

Speaker 3

So that's how the 44% is just sort of the result of where we are in enrollment. With regard to the endpoints, I think it is important to remember that how we think about the endpoints is both historical as well as forward looking. So there are a few possibilities for the primary endpoint that I want to share with you. The first of course is the endpoint that was used by viviratide, which was a combined biologic and biochemical endpoint. Specifically, that virologic endpoint allowed either a too long decline or getting to the limit of detection virologically and then also requiring ALT normalization.

Speaker 3

But I think when you speak to physicians, providers and virologists, what they'll say is they're not sure what a 2 log decline actually means. For example, if you go from 7 logs to 5 logs, you still have 100,000 copies of the virus in your blood per milliliter and that obviously does not sound good. So we think as well as clinicians that getting to undetectable or below the limit of quantification would be strongly preferred. So then you can imagine a forward looking endpoint and I think this is the likely possibility of requiring patients to get to the lower limit of detection or the lower limit of quantification and ALT normalization without allowing patients to achieve just a 2 log decline in viral load. That would set a goal standard that I think we could definitely show a meaningful benefit on because it would require everyone to at the first instance get to the lower limit of quantification where we would have a possible advantage over the standard of care.

Speaker 3

So I think those are some of the color I can provide for you around the primary endpoint. And then as far as your third question around durability, I would say that we have actually not guided to the follow-up on those 6 patients. But as we're going to have nearly 20 participants at 24 weeks, we'll be able to share their kinetics of both viral load decline and ALT changes, which I think will be informative. And we will look into sharing the 6 patient follow-up data as well a future guidance call.

Speaker 8

Great. That's very helpful. Thanks so much.

Operator

Your next question comes from the line of Eric Joseph with JPMorgan. Your line is open.

Speaker 10

The program, what you expect to be the ultimate treatment duration or kind of paradigm here with the Tobeyelli combination, do you expect it to be finite therapy or chronic treatment? And if it is the former finite interval, I guess how much sort of off treatment observation do you think you would sort of hope to have going into discussion with regulators?

Speaker 2

So Eric, sorry, the beginning of your question was a little bit difficult to understand.

Speaker 10

Is the in hepatitis delta, is the expected treatment algorithm going to be finite therapy or chronic therapy? If it's finite therapy, how much treatment follow-up do you think you would have going into initial discussions with regulators?

Speaker 2

Thank you, Eric. Yes, so what we are aiming to achieve here is a chronic treatment regimen for hepatitis delta patients. You want to comment further, Phil?

Speaker 3

Yes. So with that, in that framework of chronic viral suppressive therapy, as we currently know it, for example, for other viruses like HIV and or hepatitis B, there is no need for a follow-up therapy as there is not a finite duration therapy. I think one of the questions that can come up is, are we going to be following these patients for 24 or 48 weeks? And of course, we'll follow for both. But the question will be with regulators, is there any precedent for earlier data?

Speaker 3

And there is with givatide, and that's another discussion we will be having with regulators.

Speaker 10

Okay. Anything you can share about the tolerability profile in among patients receiving the upfront combo regimens in the 2C4?

Speaker 3

Yes. So I think that certainly we're looking forward to the Q2 data from our Solstice trial and the patients who have started what we call de novo or immediately on combination therapy without a lead in. And what we've said is that we'll have about 30 participants between the two arms actually between mono and combo at week 12 and 20 participants at week 24. So you divide that into 15 of the patients will be through week 12 10 participants through week 24 in the combination arm and we're looking forward to being able to share that data in Q2.

Speaker 10

Okay, great. Thanks for taking the questions.

Speaker 2

Thanks, Eric.

Operator

Your next question comes from the line of Alex Stranahan with Bank of America. Your line is open.

Speaker 4

Hey guys, thanks for taking our questions. Just a couple from us. You've mentioned in the past about expanding beyond infectious disease into say immunology, etcetera. Are there any areas of immunology or targets, CDN20 that you see as particularly interesting? And would you stay within your core competencies regarding antibodies and siRNA or would you be more maybe technology agnostic?

Speaker 4

And one question on how you plan to allocate your $1,600,000,000 roughly in cash. Maybe if you could break down percent spend on pipeline development, discovery, clinical trials and investments in your AI machine learning capabilities versus say dry powder for investing in external innovation that would be great? Thanks.

Speaker 2

Thank you, Alex. Yes, I mean since its inception, Veer has really been a leader in immunology and of course initially focused only on really targeting infectious diseases. But what we are really doing now is broadening that vision to we call empowering the immune system, which is really giving patients the ability to empower their immune system to either fight infection, fight cancer. And we do it in 2 fundamental ways through our powerful antibody therapeutics, which we generate through AI engineering. And then secondly, through generating unique T cell response in vivo with our T cell based viral vector platform.

Speaker 2

So the type of expansion that we're looking at Alec is really rooted in our strength as a company and where we have deep expertise and that is in immunology, virology and oncology. So we are looking at expanding into viral associated diseases and then indeed immune targeting such as in cancer. And we will be sharing more information on our early programs in that area towards the end of the year when we will be holding an R and D day. So with that, I'll maybe ask Sung to comment on our cash position and breakdown.

Speaker 4

Yes. So, Alex, thanks for that question. So with regard to our $1,600,000,000 in cash and cash equivalents, the majority of this will be dedicated to the ongoing clinical stage programs of hepatitis delta and hepatitis B. Of course, we have to sort of take this 1 year at a time as we have important data readouts in both of those programs this year. So obviously, we're rooting for success and that would dictate the capital allocation for subsequent years.

Speaker 4

But when you look at the immediate year 2024, we've provided guidance. R and D and SG and A expense combined. It's fair to think that more than half of that is dedicated to the development programs, primarily hepatitis delta and hepatitis B. There's amounts that will be invested to in our antibody platform. And as Mary Anne said in her prepared comments, we'll be very opportunistic about tapping into external innovation where it makes sense.

Speaker 4

So we'll be very prudent about that.

Speaker 10

Great. Appreciate the color. Thank you.

Speaker 2

Thank you, Alan.

Operator

Your next question comes from the line of Joseph Springer with Needham and Company. Your line is open.

Speaker 11

Hi, thanks for taking our questions. Just a follow-up question on the delta readout in the second quarter. I wanted to focus on the cirrhotic patients. Clearly, safety will be key, but do

Speaker 7

you anticipate that it would

Speaker 11

be more challenging to show a treatment effect in these patients relative to the non cirrhotic patients? And how important from a commercial perspective would it be to show a clinical effect in these patients?

Speaker 3

Thank you, Joey. I'll take that one if that's all right, Mary Anne. So in terms of cirrhosis, first off, I want to just provide a little clarity. We need to distinguish between patients who we have who have what we call compensated cirrhosis and patients who have decompensated cirrhosis. Decompensated patients are obviously much more fragile and have a high 1 year mortality.

Speaker 3

So I think really we need to we are focused on getting our drugs to patients as fast as possible or our drug candidates to patients as fast as possible. And that will include both compensated cirrhosis patients with compensated cirrhosis as well as those who are non cirrhotic. We think that the as I said earlier, I think the compensated cirrhosis patients are approximately 30% to 50% of patients currently living with hepatitis delta. That number is obviously a little bit biased, simply because those with compensated services are more likely to present to a clinician. In terms of whether or not we expect the efficacy to be any different, I don't see any biological reason why we would expect a different result in cirrhotic patients compared to non cirrhotic patients from a viral efficacy perspective.

Speaker 3

From a safety perspective, there's also not any reason to believe that they would be a significant safety signal. I do want to point out that we did do a hepatic impairment study in decompensated child pewtericott B patients or CPT B patients. And there was no evidence to date of a clinically significant change in PK or safety in that small study. So I think that there's again no reason to believe there's a concern, but that's why we do the clinical trials and that's why we're looking forward to seeing what that data looks like in Q2.

Speaker 11

Great. Very helpful. Thanks for taking our questions.

Speaker 3

Thank you, Joy. Yes.

Speaker 2

Thank you, Joy.

Operator

Your next question comes from the line of Mike Ulz with Morgan Stanley. Your line is open.

Speaker 12

Hey, guys. Thanks for taking the question. Maybe just a follow-up for Sung. Thanks for giving clarity on how to think about OpEx spend this year, but maybe if I could push you a little bit as we think about moving beyond 2024, maybe give us a sense of how to think about it trend wise? Should we be thinking more flattish spend or should we be thinking sort of an upward trend?

Speaker 12

Know a lot will depend on kind of what happens with some of these readouts here, but any comments there would be helpful. Thanks.

Speaker 4

Yes. Thanks for the question, Mike. So kind of going back to what I said before, the bulk of the capital allocation, if we continue to demonstrate successful data with hepatitis delta and hepatitis B programs as we have over the last 18 months, that would garner the lion's share of capital allocation. So moving beyond 2024, we would expect hepatitis delta and hepatitis B studies to continue to ramp up. They're still in Phase II.

Speaker 4

As we get into Phase III, both of these studies would peak, but that peak would not be reached in 2025. The peak would most likely be reached somewhere in the second half of 2026 to 2027 timeframe as things progress. But again, we have to really take this 1 year at a time because it's dependent on data. I might just add though, when you look at the guidance for 2024 and we put a lot of information out there to help you think about not only GAAP operating expenses excluding cost of sales, but also how to think about cash utilization from our guidance range because we've provided you with important non cash items. So both on an OpEx basis and cash utilization basis, we would be significantly lower than 2023, which we would consider a peak year driven by the flu study and related manufacturing.

Speaker 4

And I'll just round out my statement by saying, on an operating expense basis, when you exclude the non cash significant items, we would expect to be down 18% year over year, which is significant. And again, from all the cost optimization efforts undertaken last year and coming off the peak of the flu investment last year as well.

Speaker 12

Got it. That's helpful. Thank you.

Operator

There are no further questions at this time. I will now turn the call over to Marianne DeBacher for closing remarks.

Speaker 2

Okay. Thank you, operator. So to close, we are eagerly anticipating our multiple data catalysts that really in our mind holds a great promise for patient impact and for value creation. And we are well on our way, as we said, to powering the immune system to transform lives. Thank you all for joining us today.

Speaker 2

And operator, you may end the call. Thank you.

Operator

This concludes today's call. You may now disconnect.

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Key Takeaways

  • Vir’s Chief Medical Officer Phil Pang will step down at end of March, with Dr. Carrie Wang named Interim CMO as the company searches for an experienced leader to advance late‐stage programs.
  • The Phase 2 SOLSTIS hepatitis delta trial is on track to finish enrollment of ~60 participants in Q1, with Q2 data readouts expected on viral suppression and safety, and plans to discuss a potential registration path in Q3.
  • In chronic hepatitis B, the dibegivart plus elapseran regimens continue to show promise in ongoing Phase 2 trials, with end‐of‐treatment data from the March Part B study set for presentation at a major congress in Q4.
  • Beyond hepatitis, Vir anticipates H2 immunologic proof‐of‐concept data for the HIV T-cell vaccine candidate VIR-1388 and advances AI‐optimized antibody programs against influenza A/B, RSV, NPV and COVID-19, while seeking new partnerships after ending its GSK influenza mAb deal.
  • Financially, 2023 revenue fell to $86.2 M (versus $1.62 B in 2022) due to lower sotrovimab collaboration income; full-year net loss was $615.1 M, ending Q4 with cash of $1.63 B and 2024 R&D+SG&A guidance of $650–680 M.
AI Generated. May Contain Errors.
Earnings Conference Call
Vir Biotechnology Q4 2023
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