Good morning and good evening, everyone. Thank you for joining us for Brii Bio's business update investor call. This is Sarah Cho, Associate Director of Investor Relations. We have some exciting news to share with you today regarding our recent corporate updates. Before we start, I would like to remind you that the management may make some forward-looking statements during this call. These statements involve risks and uncertainties, and the company is not obligated to update them based on new information or events.
On today's call from Brii Bio's executive management team, we have Dr. Zhi Hong, Founder and Chief Executive Officer, Dr. Ankang Li, Chief Strategy and Financial Officer, Dr. David Margolis, Chief Medical Officer, Dr. Susannah Cantrell, Chief Business Officer, Dr. Ellie de Groot, Chief Technology Officer. Dr. Ankang Li will highlight the agreements with VBI on BRII-179. Dr. Zhi Hong will discuss the important role of BRII-179 within our HBV functional cure strategy. This will be followed by a Q&A section, and finally, Dr. Hong will close with final remarks. Now, I would like to turn the call over to our Chief Strategy and Financial Officer, Ankang Li. Ankang, please go ahead.
Thank you, Sarah. Thank you for attending this business update call. Last night, we announced our latest transaction with our partner, VBI. Through these strategic transactions, we are able to strengthen our position in HBV functional cure and our operational reach. During the ongoing global weak capital markets for biotech companies, we continue to look for opportunities to create long-term value for our shareholders. We believe this transaction brings such value creation opportunity. I will summarize and highlight the key components of the transaction, and Dr. Hong will tell you more about how this transaction fits our HBV pipeline strategy. The key asset in this transaction is BRII-179, which is a therapeutic vaccine for HBV. You will hear more about this asset in the later part of the presentation. There are a number of components in this transaction. First, we agreed to acquire global IP of BRII-179.
Accordingly, this transaction will eliminate future milestones and royalty payments to VBI, which will significantly increase the upside of BRII if this program becomes successful in the future. In addition, Brii decided to start transferring manufacturing technology to additional sites. This provides Brii with more control over future clinical and commercial supply of BRII-179, and expand our footprint for future supply globally. We also agreed to acquire VBI-1901's Asia Pacific rights. This is a glioblastoma program, which has already received Fast Track and Orphan Drug designations from the U.S. FDA. The phase IIb study is ongoing. As consideration for these transactions, we're first going to issue a promissory note of $2.5 million for eliminating PreHevbri milestones and royalty payments.
Then we will issue another $7.5 million note to acquire BRII-179 IP, and we will pay additional $8 million in promissory note upon completion of the key technology transfer activities. We'll pay $5 million promissory note for the VBI-1901 Asia Pacific rights. On or after June thirtieth, 2024, once key technology transfer activities are completed, we will take control of VBI's manufacturing site as a whole for $10 million in cash. These are the summary of the transaction. Now, I will turn to Dr. Hong to give you more information about our pipeline strategy. Thank you.
Well, thank you, Ankang, and good morning, and good evening if you're calling from China. And we apologize for some of the timing that we have no way of controlling in terms of signing. I know some of you probably are enjoying your Chinese New Year holiday, which we made a presentation last night on U.S. time and also today, trying to provide additional information for additional investors. I really appreciate your joining us for today's call. So what I'm going to do is try to provide additional context for this transaction, as BRII-179 clearly is the key differentiator for us in the search for a cure. Next slide.
As you know, in the last 5 years-6 years, the company has invested enormous amount of resource focusing on and prioritizing on our program to significantly increase the HBV cure rate. We have invested in 3 different complementing assets, BRII-179, which is therapeutic vaccine, and BRII-835 is a HBV-targeting siRNA, and BRII-877 is a broadly neutralizing antibody. So very pleased to inform you, as we have done so in the past conference calls, where we have made steady progress in all three programs. Specifically, for BRII-179, we now have both clinical proof of mechanism as well as a proof of concept. We know that the therapeutic vaccine induced strong antibody response as well as a broader T-cell response in patients.
So far, more than 180 patients have been dosed with this therapeutic vaccine. And we provide the information to China CDE and NMPA, and they have granted us with breakthrough designation. I think, this is something that we like to provide you the knowledge, and then this, this decision was done in November last year, so we're not publicly stating this fact. And for the BRII-835, also, working with our partner, Vir, and we have demonstrated clinical proof of mechanism as well as proof of cure. And, you know, this mechanism of action is through degrading all HBV RNA transcript. So far, as we updated some time ago, about 380 subjects exposed. In fact, this number is much higher now.
BRII-877, which is a most potent broad neutralizing antibody, also working with Vir, we demonstrated the clinical proof of mechanism as well as proof of cure. As you know, aware of this, and following Vir, this is one of the most potent neutralizing antibody, and the very early data, 6 milligram, they were able to induce more than a log of surface antigen reduction. As of last update, we have stated more about 240 subjects exposed, and I can tell you as of today, this number is much higher.
So as you can see, as we continue to mature all three programs, and we're heading towards the late stage as we transition into that, and then, based on the scientific insight and clinical evidence we have got so far, and, and really turn our focus into late-stage clinical trials, where we can power the study with sufficient amount of patients and to address the key outcome more definitively. So as you can see that we have over the last five years, have conducted many combinations. These are smaller studies, and together with our partner, Vir, and then this small phase II study, have already yield results and then continue to produce evidence to really provide insight for us to transition into late stage combination studies. Next slide.
I think at that last AASLD, in November 2023, we have two late breaker presentations. One of them is the one that highlight the combination of BRII-179, the therapeutic vaccine, with BRII-835, which is the siRNA. In two studies, we have demonstrated, that, BRII-179 was able to induce broad T-cell response and, and more specifically, also, robust antibody, induction response in a proportion of patients. And this study is quite interesting. As you can see, we have given the therapeutic vaccine for either 4 doses or 9 doses. And, we see a very safe, well-tolerated safety profile, and we have, mostly primarily, injection site reactions, and we have not seen any serious adverse event that can be attributed to BRII-179.
What's really interesting is that we, we reported before that a, a significant proportion of patients, where 179 failed to induce, any antibody response. We believe these are the patients that have, much impaired, intrinsic antibody response against, the infection, against the viruses. So through this study, we have an insight that, that 179 has the ability to assess patients' intrinsic immunity, as such, that it can provide a very important, patient enrichment strategy, as we further to improve the functional cure rate, and then more on this later. Next slide. The second late breaker that we have presented at AASLD is the combination of 179 on top of PEG interferon alpha.
As you may know, that PEG interferon alpha is the treatment, although not very well tolerated, was able to induce single-digit functional cure. I think in this study we have confirmed that, and obviously this is with the one that has a lower baseline of surface antigen and which is a partial response to PEG interferon. We're able to demonstrate at the end of a treatment, the combination of 179 on top of PEG interferon alpha was able to improve the surface antigen clearance at the end of treatment, and also that benefit was sustained during the 12 weeks of follow-up. And what you see the number here below in the box is the per protocol number.
Obviously, as we continue to follow this patient to longer term, we will report on the ITT numbers, and those information will be provided in a future conference coming up shortly. More importantly, through regression modeling, we were able to identify that the antibody response, i.e., anti-surface antigen seroconversion rate, is closely correlated with the improved loss of surface antigen. So we're very pleased to have this data, and that's consistent with the induction of immune responses. Clearly, this is the first time we demonstrate that BRII-179 was able to induce neutralizing and functional antibody response as well as T cell response. So we're very pleased with this result.
Suggesting that BRII-179, used properly in combination with other curative regimens, was able to improve the functional cure rate. Next slide. As I mentioned early on, we have ongoing phase II study, where we're actually looking at the role of using BRII-179 to differentiate HBsAg-rich patient. This is the ongoing study of siRNA in combination with peg interferon. And the clinical objective of this study is to confirm the data obtained by Vir reported in November 2022, in the AASLD. That in that report, that the siRNA plus peg interferon was able to induce some of the best-in-class functional cure rate. However, it doesn't have the peg interferon control.
So in this study, we're actually gonna have a side, head-to-head comparison with the PEG interferon alone. So that will allow us to definitively address the contribution of siRNA, which we believe contribute to the, the best-in-class functional cure rate. But we're also gonna do so in both 179 naive as well as experienced patients. Those patients, we actually have the phenotyping of those patients in terms of their response to the 179 vaccination. So the schematic is pretty clear here. We believe that 179 can be utilized to assess patients' intrinsic antibody response. And by doing so, we're able to identify those patients who have sufficient intrinsic antibody response that would that will be important for the cure.
Then in those patients, we will test the siRNA plus PEG-IFNα, whether or not they can achieve higher functional cure rate. Then, you know, clearly this is the, this is the belief that we have. We believe this has a very sound scientific rationale, and we're in the middle of trying to obtain the compelling results, hopefully by the end of the year and maybe early next year. Next slide. Also, as I mentioned early on, so far in the last five years, we have conduct multiple smaller combination studies. These are the study that providing us the scientific insight as well as clinical evidence that will allow us to transition our functional cure pipeline into late stage. As you can see, that as we're reporting out the data from the early studies, we are planning for future studies.
There are multiple future studies under consideration. We're hoping to initiate them this year so with the aim to power the study with large sample size and then with definitive, we'll definitively address the functional cure rate and contribution by each component. And our target remains the same, that is, trying to improve the actual functional cure to higher than 30%, perhaps by better selecting patients we will reach even higher functional cure rates. So our ambition remains the same, and that's continued to be the case through the last five years and into the future. So with that, I think I'm gonna stop the presentation, and then we open up for Q&A.
And by the way, we do have our other executive on the call, and they can provide you specific detail with regard to some of the transactions.
Thank you, Zhi. We will now open the line to Q&A. If you have questions, please raise hand in the webinar controls, and we will prompt you to unmute yourself. The first question is coming from Roanna with Leerink. Roanna, please go ahead.
Hi, can you hear me?
Yes.
Yep.
Okay, great. Hi, everyone. This is Rosa Chen on for Roanna Ruiz at Leerink Partners. A couple of questions from us. One maybe for Ankang. We just want to confirm that, the new deal with VBI, you will no longer owe milestone payments and royalties for one seven nine in the future after these promissory notes. But what about the PreHevbri royalties and milestones? Are those also quote-unquote, like, canceled out from the current deal?
Hi, Roanna. Thank you for the question. Yes, so the deal will eliminate milestone payments to both PreHevbri and BRII-179. And on the royalty side, we are also eliminating all the royalty associated with BRII-179 and PreHevbri. But we will still pay the upstream license fee, not to VBI, but the upstream license fee will remain the same.
Understood. Thank you. And then, thinking about future registrational studies, could you guys employ a strategy similar to what you're doing for 179 and 835 with pegylated interferon, where you're enriching for the patients who are responsive, in a future registrational study? And the concern is: would you need a very large number of patients, or would it be a more homogeneous population, so you could actually have fewer patients with the same powering?
Yeah, that's a very good question, and we're actually doing a lot of modelings on this in terms of the—it all depends on the treatment effect and in terms of, compared to the standard of care at this point, which is the pegylated interferon. So that treatment effect size assumption is very important for the size of the, the, the patient, the sample size. But we do believe that it will not, given our current assumption, it, it will not need a very large patient sample size in order to demonstrate the clinical efficacy. And but we must make sure that we have good discussion with CDE and NMPA to define the safety population. You know, and, you know, what will be, the safety population? How many patients we need, you know, to be exposed to the combination in order to get registration?
I think those are very important questions that will be discussed with the regulator to achieve understanding. But clearly, our intent is going forward with the study that's powered enough to address both efficacy and safety, as well as safety.
Got it. Do you have a ballpark number in mind?
It's hard to really advance the thinking from the regulator, and then I think minimally you have to have 300 patients. We believe that's the starting point of a safety population.
Got it.
But we do think you need 300 patients to address the clinical efficacy.
Sorry, the 300 patients is for clinical or for safety?
For safety. For safety.
For safety. Okay, got it.
That's minimum. We don't... You know, we-
Right.
Obviously have to have discussion with regulators to understand the eventual sample size has to be agreed.
Right.
Right.
Right. Okay.
For efficacy, we do believe it needs 300 people.
Okay. And then the phase II study that's ongoing for peg interferon and 835 in the APAC region and China, when can we expect to see data there? I know you just started dosing, like, over the summer.
Yeah. So the one that with the naïve to 179, that those patients have been fully enrolled. And the patient that has 179 experience are near the completion for enrollment. So we do have data coming out towards the end of this year for the naïve patient, and then perhaps early next year for the experienced patient.
Great. Thank you so much, everyone. That's it for us for now.
Thank you.
Thank you, Rosa. Thank you, Zhi and Ankang. Again, if you have any questions, please click Raise Hand in the webinar controls. We also here have a few offline questions I'm going to read. Given the considerable challenges in developing hepatitis B drugs, I'm curious about the timing of your decision to acquire the rights to BRII-179 IP, and what motivates the other party to sell. Is it due to the substantial size of the hep B market and the distinctive features of their product?
Well, thank you for the question. I think some of these questions are philosophic. I understand that many people have been following HBV functional cure journey, and, you know, in the last five years, it hasn't been easy. But I also want to highlight the point that over the last five years, we have learned a lot. As I've mentioned before in the past calls, where we now know how to clear surface antigen. We also know what's important to sustain those surface antigen clearance. Now we have a strategy in rich patients, so those are the learning from the past five years. So we think that's going to be very, very important for the future.
Regarding the motivation to do this, and there's, you know, it's always something that you need to be prepared in terms, you know, from a drug development perspective. You just cannot wait until you finish all the studies and ready to register, and then you try to work on the CMC manufacturing issue. That would be too late. So we believe the timing is actually pretty good in terms of how we start looking at the manufacturing and supply side of the effort, making sure that we have enough security around our footprint. And because this is a very large product, and I think having a reliance on a single manufacturer will be a significant risk going forward.
So having and for all of those people who are, who have experience in dealing with this large product, whether or not you're from big pharma or small biotech company, it's always a very important thing for you to have some level of redundancy in terms of how to make those products. I think the timing is good for us to do that now so that we can avoid extensive bridging study down the road, and then once you approve the product, then you introduce a new manufacturing site, and that will be a significant undertaking at that point. So based on those, and we believe this is a good timing. And also the market condition, frankly, is helpful because it's very challenging in the capital market.
I think, you know, there are, when you have challenges, there's also opportunities. And this is why I think, and this is a perfect example where we're leveraging that, the capital market condition to get a good deal, in, in my mind, to, to acquire the asset, where we have already had so much information that we know about 179 in the, in the past 5 years. So we believe this will allow us to secure our upside in the future, as Ankang have spoken to you before, that's worthwhile investment at this point. And so, you know, this is really some of the consideration we have, something that we've been thinking about it for quite some time. We simply leverage this opportunity to make this thing happen.
Thank you, Zhi. And then a follow-up is, could you provide insights into the rationale behind the decision to issue, the notes as part of the agreements with VBI? And how does this financial arrangement benefit Brii Bio in the long run?
That's a good question. I'm going to ask Ankang to answer that. I think, you know, there's multiple way of doing this, and, you know, obviously, you can use cash, significant amount of cash, to do this as well. But we believe, having this promissory note is the best option. Maybe, Ankang, you can add additional comment to this.
Sure. Certainly. So, I do want to first highlight that since the many components of those transactions are contingent, it depends on completion of certain activities by VBI to achieve certain milestones. So, I think we also look at VBI's relationship with their debt holder. I think we came up with this plan to pay for the rights we are acquiring and the assets we are purchasing by issuing promissory note to VBI. I think this, on the one hand, will give us more flexibility in, you know, looking at the future payment schedule to optimize our cost on interest as well as our cash needs.
And also, this also provides certain way for us to control the contingency part of the payment, and also will satisfy the debt holder's requirement for certain return on their capital. I think this is a really complicated deal that involves different parties to allow us to achieve our goal.
I just want to add one more thing, right? So we've been working with VBI for five years. It has been a very long-term partnership between the two company. I think by this transaction, we're able to reduce significantly their debt, and that's going to provide them a much better and healthy financial situation. So we're happy to do this for our partner when there's a need, but at the same time, we also use this opportunity to secure our future upside. So I hope this addresses your question.
Thank you, Zhi. Thank you, Ankang. The next, we will go next to Timur with Raymond James. Timur, please go ahead.
Yeah, yeah. Hi, thank you. Thank you for the question. First, we have a question on PreHevbri in the Asia Pacific region. Can you just talk about the upside for this therapeutic in the Asia Pacific region? And what is your progress here in terms of marketing, commercialization, et cetera? Thank you.
Yeah, that's a good question. We, we obviously made the decision transaction last July. Over the last six months, we have really looking for a partnership that we can, we can work with, and having a reduced royalty rate and the milestones that will hopefully help us to enable better partnership discussion. We, as a company, do not want to get involved into the prophylactic vaccine. We are a therapeutic company focused on HBV cure. So, I think for us to reach those market, and we simply want to do that through partnership, we do not want to extend our own effort into those market that we have no presence, no experience with.
So those things are ongoing, and that we hope with the reduced rate and reduced eliminate the royalty, that can help us to better ensure those partnership to happen. But more to come, and again, you know, the deal, what we're trying to do is really trying to, you know, focus on the HBV cure, the 179 is the major component of this transaction. But we're also taking this opportunity to improve the economics for the PreHevbri, so that we can better enable our partnership discussion. Thank you.
Yeah, understood. Thank you. And then, a similar question for 1901 and glioblastoma. Are you planning to develop this yourselves?
So yeah, that's a very interesting question. I mean, I think this is one thing that we've been following them for a while. I mean, the scientific rationale is an interesting one, because as you know, for GBM, currently there is no treatment, and it's a very high unmet need . And the survival rate is very, very low, and I think most people think this is a very challenging area for therapeutics. The scientific insight here is that 95% of the GBM actually are CMV positive. So the scientific rationale behind this is that the CMV positivity could potentially label the tumor as a hot tumor for treatment, for immunotherapeutic treatment. I think VBI have conducted the open label study. These are obviously open label study.
They have shown some early results that compared to the historic control and quite exciting data, that has correlation with the immune response they were able to induce with the 1901. And because of that, they have moved forward with the discussion with regulators in getting their, you know, in terms of regulatory pathway going forward. Obviously, this is a very challenging area. So for us, this is a very opportunistic approach where we're trying to help VBI to reduce their debt rate. At the same time, we want to make sure that we can realize the opportunity upside for us as well.
So this is where, should the data turn to be positive in the future, exciting results, and then we're able to either do it ourselves or through partnership in Asia Pacific and Greater China, to make sure that this product is available for all the kinds of patients who, you know, facing these incredible challenges. And there's really currently no therapy for this.
Okay, and just a final question on 179. I see you have some late-stage studies planned in combination with 179. You also talked about selecting patients using 179. Just in terms of kind of your view right now, do you think that 179 will eventually be more useful as a sort of, as a selection tool for you? Or do you think it will actually be used in the final regimen to treat patients for functional cure?
That's a very interesting question. We do believe 179 is very versatile. Not only it can be used as a way to select patient, it can also be used as a therapeutic modality to enhance functional cure rate. So we are obviously planning for future studies but we will prioritize those studies and, you know, potentially with one study that looking at using 179 as a tool to assess, to select patient, and another study will want to evaluate the contribution of 179 on top of a curative regimen. So because we have all the tools available, so we do not need to have additional partnership conversation with others, and I think we can do this ourselves.
Obviously, 179 is also a potential asset that can be used by other, by other companies, for, you know, selecting, their patient, also adding to their, potential curative regimen. So we do believe 179 plays that very versatile role in this competitive landscape. One thing that we did notice, you know, where there's other people begin to realize the important role of siRNA and the neutralizing antibody as therapeutic vaccine. But we is the only company that has all the three tools, and we believe we're going to leverage this capability to rapidly move forward with those, combination regimens. And we absolutely, also want to work with others to further expand the role and the value of, 179. So those are very good questions. Thank you for asking.
Thank you very much.
Thank you, Timur, and thank you, Zhi. We see another question from Rosa with Leerink. Rosa or Roanna, please go ahead.
Hi, Rosa Chen for Roanna Ruiz again, just a follow-up question. For VBI-1901 and glioblastoma, could you just clarify what exactly is ongoing right now that you would be taking over? Are there clinical studies that you would insert into right away, or you are taking over the regulatory discussion from VBI to determine the registrational steps?
We're not taking anything over. We simply taking the right, and then I think VBI will continue to develop them forward. As I mentioned, they have done a number of open label studies. These are small data sets, but so far the data looks interesting from the, in terms of the correlation of the immune response versus the, the the signal on the, on the relapse-free, kind of, or stable diseases. I think those are, you know, obviously compared to the historic controls, and I think those are very interesting. And they will continue to develop this program forward. In this case, we're not, we do not plan to be involved at this moment, with regard conducting additional clinical trial or regulatory discussions, and we are simply relying on our partner, VBI, to continue to move forward.
As I mentioned early on, by doing this transaction, we simply provide them the financial health and stability so for them to continue to progress this program forward.
Got it. Thanks so much for clarifying. That's it for us.
Okay, thank you.
Thank you, Rosa and Zee. Okay. All right, that concludes the Q&A session of today's call. Now, I will turn it back to Dr. Hong for final remarks.
Well, thank you very much, everybody, and for, you know, really paying attention and following us in the past many years. And then thank you for the many excellent questions that you have asked. I think as a company, we continue to put the HBV cure as a top priority for the company as we transition from a regional, you know, drug developer into a global drug developer with the BRII-179 situation, the transaction that we have done so far. I fully appreciate some of the frustration some of you may carry in terms in the past, where, you know, the HBV functional cure seems to be more complicated than anticipated early on.
But I do want to remind you, in the last 5 years, where some of the therapeutic, you know, modalities failed, as you all were aware of that, but there's a significant amount of scientific insight and clinical evidence being obtained. As I mentioned early on, that we continue to believe that it's very important for us to have the tool to clear the surface antigen, which we can do now very effectively. We also need to understand how to sustain those clearances of surface antigen, because you can just simply clear them and then they rebound. It doesn't really, you know, achieve the functional cure. The last piece is about selecting patients. Not selecting patients in terms that we find ourselves in a rare population, rather than selecting patients based on our understanding of their intrinsic immunity.
Then those are very important. I'm sure there are more insights that will be obtained as we continue to progress this program. But our belief to cure HBV in a larger proportion of patients between 30%-40%, that goal remains the same. So I appreciate your patience, your understanding, and your support in the past, and I look forward to continuing working with you closely. So thank you for joining today's call. Have a good day.
Thank you again, and please feel free to reach out to us via ir@briibio.com in the meantime, if you have further questions. Thank you. Goodbye.