Okay, I'd like to thank the organizers of the conference for inviting us to speak today. My name is Lawrence Blatt. I'm the CEO and one of the founders of Aligos Therapeutics. I'm going to talk about our pipeline and particularly our HPV drug. We're going to be making some forward-looking statements today. Our pipeline is now moving into phase II pipeline. So we have ALG-000184, which is our capsid assembly modulator for the treatment of chronic hepatitis B. As you'll see in a moment, we're just about ready to start phase II for that study. In addition to the monotherapy study, we're also starting a study in China with our partner Amoytop, which is a combination of 184 plus pegylated interferon. That study's goal is for functional cure. In addition to the 184 franchise, we also have a drug for MASH called ALG-009.
We just completed a phase II study for that drug, and we're currently in discussions for outlicensings. Lastly, we have a coronavirus protease inhibitor that continues to be funded and developed using external sources. We have a phase II study now ongoing that is funded by the MRC and the Wellcome Trust in the U.K. In addition to that, we have an NIAID contract for running some phase I safety pharmacology, and that has not been canceled. That is still running. We're going to talk a lot about chronic HBV, as people are well aware. This is the most prevalent chronic viral infection in the world that causes morbidity and mortality. Almost 300 million people have been infected worldwide. Current therapy consists of two different forms. One is called nucleoside analogs, and these are drugs that block the replication of the virus.
Recent data has demonstrated, though, the blocking of that replication is not complete. In a study recently reported done in Taiwan, where patients were followed for five years who were on nucleoside analogs, 4% of them developed hepatocellular carcinoma, 5% of them had decompensating end-stage liver disease, and 1% of them went on to liver transplant or actually died of their disease. While nucleoside analogs are benefiting patients, they're not sufficiently blocking replication to arrest all of the progression of the disease. There is another class of drugs called pegylated interferons that are approved. They work in a subset of patients, namely those patients with baseline S-antigen at a low level, and they cause what's called a functional cure. That means off therapy patients are controlling the virus with their immune system.
This is some recent data that's very interesting, looking at the suppression of HBV DNA with nucleoside analogs. The researchers in this study divided the patients into two categories. One were complete suppressed. Those are patients that had HBV DNA on therapy that went below 12 international units. Those that were partially suppressed, those that were above 12, were still detectable by this assay. What you can see clearly is the patients that are not complete responders, not below 12, are progressing to liver cancer and end-stage liver disease. This shows dramatically that if you do not completely suppress HBV DNA, you will have issues with progression to poor outcomes. There are other papers in the literature highlighting this similar fact. More profound viral suppression, more rapid viral suppression, are all associated with better outcomes in HBV patients.
Likewise, quantitative reductions in HBV antigens, such as HBV surface antigen, HBV core antigen, and HBV E antigen, are also associated with good outcomes in HBV. The goal of therapy should be to suppress DNA to undetectable limits and suppress antigens. Now, nucleoside analogs cannot do this because the only thing that nucleoside analogs do is block the copying of the viral RNA genome to DNA. HBV is a DNA virus, not a retrovirus like HIV. Nucleoside analogs are chain-terminating nucleoside analogs. They block the elongation of that DNA chain, as transcribed from the RNA. In doing that, they do not block several important parts of the life cycle. They do not block establishment and replenishment of the long-lived form of HBV, which is called the cccDNA. They do not fully block integration.
That's why patients on NUCs can go on to end-stage liver disease and liver cancer. In contrast to that, capsid assembly modulators work in a very different way. Our capsid assembly modulator can block the encapsulation of the pregenomic RNA to complete levels, thereby blocking all of the replication of the virus. In addition to that, it blocks the transport of what's called the rcDNA into the nucleus of the cell and therefore blocks the replenishment and establishment of cccDNA. The net result of that is you see knockdown of all viral markers, including DNA, RNA, and all of the antigens. We'll show you data from our clinical trials. Just to remind you, ALG-000184 started out in the laboratory of Dr. Raymond Schinazi at Emory University. Ray and his group had discovered picomolar capsid assembly modulators.
These are molecules that are 10-100 fold more potent than any of the previous molecules that have been in the clinic, either now or previously. When we received the chemical matter from Ray's group, we noted that those drugs had poor pharmacology. They had about 5% oral bioavailability. They were metabolized poorly. We modified the chemistry of those drugs to the point of now ALG-000184 has 80% oral bioavailability. It's not metabolized. It's not a CYP inhibitor. It doesn't form adducts and behaves very well in PK studies. Now I'm going to show you data from our ongoing, just about finished, phase I- B study where we've treated patients out for just about two years. The study has three arms in it. The first arm is ALG-000184 plus Entecavir. Entecavir is an approved nucleoside analog developed by BMS.
It's one of the standard of care molecules. That was compared to 12 weeks of Entecavir monotherapy. After 12 weeks, those patients crossed over to combination therapy. Now, as we were running the study, we began our discussions with the FDA, and they noted to us that if we wanted to get the drug approved based on chronic suppression, we would have to run a monotherapy arm. We initiated a monotherapy arm. Initially, we were concerned about drug resistance because capsid assembly modulators that had been in the clinic before us that didn't have the potency of our molecule had selected variants that were resistant to their drug. I think I report now that after two years of dosing, we have not seen a single resistant variant. This is the HBV DNA reductions in patients with E antigen positivity.
What you can see is these patients start with extremely high HBV DNA. Even one patient at 10 to the ninth or a billion copies of HBV DNA. By week 48, using our capsid assembly modulator, 60% of those patients are below 10 international units. By week 96, 100% of those patients, even the one patient that was HBV DNA positive to a billion copies, is now negative for HBV DNA. In a similar fashion, patients who are E antigen negative have rapid reductions in HBV DNA, and you can see that they start at a lower level. By week 20, all of the patients are HBV DNA below 10 international units. As we dose the patients longer, the patients are not only going below the 10 international units, they are becoming undetectable, meaning there is no DNA that we can measure in these patients.
Now, how does this compare to standard of care? There are a number of nucleoside analogs on the market. They all behave in a similar fashion. In the phase III study that Gilead ran, comparing its latest drug, TAF, which is a prodrug of tenofovir, to its older prodrug of tenofovir, TDF, what you see is at a threshold of 10 international units, which is the assay that we're using now. In E negative patients, they had about 20% negative, whereas we had 100% in our study. At week 96, or two years, they had 30% below 10, whereas we have 100% of patients. In the E positive patient group, at week 48, they reported no patient below 10. We had 60%. At week 96, they had about 10% of patients below 10, whereas we had 100%.
This is good data that tells us that we can go for a superiority label with our ALG-000184. Now, as I mentioned, nucleoside analogs don't have any effects on HBV antigens, and the quantitative amounts of HBV antigens are associated with different outcomes of HBV patients. With our oral therapy, we're seeing log reductions in HBsAg, greater than log reductions in correlated and HBeAg. There's some interesting things we can glean from these data. The first thing is that we see about week 36 to week 40, HBsAg kind of flattening out on our drug. That's because, I'll remind you, that there's two sources of HBsAg. One is the cccDNA, and the other are viral transcripts that are integrated into the host chromosome. Our capsid assembly modulator has effects on cccDNA, but not on integrated chromosomal DNA.
We see it flattening out because we think we're saturating what we can do with the cccDNA, and we're waiting for hepatocyte turnover to lose the integrins. In contrast to that, E antigen and corelated antigen don't integrate. What you see is a continued reduction of E antigen and corelated antigen, even as S is flattening out. Now, E and core start to level out because we're going to the limit of detection of those. We're reducing those antigens so much that there's no more antigen to lose. That's demonstrated here. These are E antigen positive patients. You see marked reductions in HBV E antigen and the emergence of anti-E antibodies, meaning the patients are seroconverting. That has a positive prognostic value. Patients who are seroconverted from E positive to E negative have better outcomes than those that don't.
In the HBeAg negative patients, of course, we can't measure E because they're not producing that antigen anymore. We see marked reductions in HBV core antigen. We don't see S antigen reductions in these patients because it's well described that the S and E negative patients come from integrated transcripts rather than cccDNA. What about the safety of our drug? Our drug has now been given for two years. Again, we have not seen resistant variants emerge. We've done deep sequencing. Interestingly, at the beginning of the study at baseline, there were a number of patients who had HBV variants that had emerged as resistance to other core or CAM related molecules. Because of our potency and our activity, we're active against those variants, and they did not emerge in our study.
We also had no patient dose reduce and no patient stop due to toxicity of the study. We did see increases in ALT, which was associated with antigen drops. These were transient. They increased as the antigens were dropping, and then they normalized as they remained on therapy. That is distinctively different than other CAMs where you saw a rising and continuous ALT and AST elevation, which also included other liver test elevations or abnormalities in bilirubin or albumin. That is clearly liver tox. We have a very clear regulatory pathway for this compound, and it is on track for regulatory approval. I'll just remind you that there are guidelines that have been previously posted by the FDA around this, and we've actually had discussions with the FDA demonstrating that they're going to adhere to these guidelines.
For monotherapies, and that was the advice that we got from FDA about two years ago, the pathway for approval is based on chronic suppression. You can do your studies at E positive and E negative patients or and or. You have to have an active comparator. We're going to have a nucleoside analog, nucleotide analog, actually. The primary endpoint has to be the percentage of patients that are below the limit of detection or the quantitative limit of detection for the assay that is most sensitive at the time that you're doing the studies. In our case, that's 10 international units. We are doing active comparator to TDF, which is one of the tenofovir drugs. You can do a study designed for superiority or non-inferiority. We're designing our study for superiority given the great differences we see.
Now, in addition to the primary endpoint, we're going to be looking at multiple secondary endpoints, including antigen reduction, RNA reduction, as well as in some patients, paired biopsy that will quantitate cccDNA levels and quantitate the level of integration. We will be able to see at a molecular level the effects that our drug is having. You can see that this is a head-to-head comparator study. Our comparator drug, again, is TDF. Patients are going to be randomized to either receive TDF plus the 184 placebo or 184 plus a TDF placebo. We're going to enroll two different groups, E positives and E negatives. After 48 weeks, the readout on the primary endpoint will be done, but all patients will roll over to 184 monotherapy. This is important for a number of reasons.
One, we want to get for those patients that were on 184 from the beginning, we want to get longer-term safety data and outcomes data for patients on long 184 because this drug will be given for long periods of time. For those patients that are on nucleoside and nucleotide analogs, if they haven't had complete viral suppression, and we know a great number of them won't, we would hope to see 184 cause those patients to have complete viral suppression. For the patients on NUCs that cross over that had complete suppression of DNA, we would hope to see reduction in HBV antigens, as I showed you previously from our phase I data. In the subset of those patients, again, we'll be doing paired biopsies. We'll see the biopsy result for NUCs as well as the biopsy result for 184.
Following that 96-week period, we also plan to do longer-term crossover studies of 184 out to several years, and those are in the planning stage at this point. Now, this study has a number of features. One feature is that we're stratifying based on baseline HBV DNA levels, and that's because if we had an imbalance in the HBV DNA at baseline, we could bias the study in one direction or the other. For example, if the NUC group had more patients with low HBV DNA at baseline, you could end up showing a larger effect size for NUCs that isn't indicative of what happens in the natural population. What we're doing is limiting the number of low baseline or high baseline HBV DNA to balance the groups in each of the cohorts.
In addition to that, there's an interim analysis planned for those patients receiving 184 that are E antigen negative. There'll be an interim analysis when they reach 12 weeks. That's because the baseline HBV DNA in those patients is lower, and the viral reduction is more rapid in those patients. For those patients who are E positive, the interim analysis will occur when they reach week 24. Now, this interim analysis is going to be very important because we can use that to talk to the regulatory agencies about expanding and changing the study so that it can become one of the pivotal studies for approval. Really turning this into a phase II, three strategy. That's something that we have yet to discuss with regulatory authorities. It's aspirational. It's not something that we can say now that we're doing. Where does this lead us?
How does 184 get positioned in the marketplace? I know many of you are thinking about curative or functional curative therapies. I'm going to walk you through that in just a moment. As I've shown you, NUCs inadequately suppress HBV DNA and do not suppress antigens or cccDNA at all. There is a need for better suppressive therapy. We think 184 will replace NUCs as a standard of care for chronic suppression therapies. All of the therapies right now, the antisense oligonucleotides, siRNAs that are being studied for functional cure, are done so on the background of a chronic suppressive therapy. We think 184 is a better choice for that chronic suppression because we have more effects on HBV antigens and DNA and cccDNA and integrins than NUCs do.
We would be the standard of care for chronic suppression, as well as the backbone of therapy for functional cure. That means that our drug would be approved and effective in all HBV patients. That's because we disrupt the entire life cycle of HBV. How does that flow look? I know a lot of you are looking at things like, again, Bepirovirsen, which is the GSK Ionis antisense oligonucleotide, which is aimed at functional cure, or some of the siRNAs that are being combined with interferon or antibodies or vaccines. What we see is that all of those studies require the patients to have a baseline surface antigen at about 3,000 international units. That represents about 30% of all HBV patients. That means 70% of patients do not even qualify for those studies.
Those are patients that would immediately be eligible for chronic suppressive therapy. In that group of 30% of patients that qualify for those studies, they get about a 20% response rate, meaning 70% or 80% of those patients do not respond. That means that 6%, if you do the math, 6% of all HBV patients, given the current functional curative therapies, will have a functional cure. That means that greater than 90% of HBV patients will require a better chronic suppressive therapy. That is where we see 184 coming in. While the drugs that are aimed at functional cure are important drugs, they are not going to impact that many patients. They are probably not going to be utilized very much outside of the United States. They are injectable, they are expensive, they require special handling.
Our drug is a once-a-day oral pill, does not require any special handling, very safe and very effective. Now, we have looked at and done some market analysis, and we have asked the question of payers. Would you pay a premium for this? Because I think many of you are aware that some of the nucleoside analogs are generic. The answer was yes, we would, because we are seeing our patients go on to end-stage liver disease and liver cancer, and the economic burden of that is great. You are looking at just the average cost of just the liver transplant is $1.2 million. That does not account for maintaining that patient with chronic immunosuppressive therapy and other complications that can occur. The yearly cost can exceed $184,000 for patients with decompensated liver disease.
I can tell you, having not the pleasure, but the experience of seeing patients in end-stage liver disease, it's very daunting, very difficult to manage those patients. There are many clinical sequelae which are difficult to manage and very debilitating for those patients. We are looking at a cumulative cost of HBV of $45 billion to the healthcare system, even in the presence of HBV nucleoside analogs. Clearly, something has to be done to bring those costs down. That is why, given the outcomes that we are seeing with our patients and the different parts of the HBV life cycle that we are interrupting, payers are willing to pay a premium for our compound. What that means is that the potential in the United States for our drug exceeds $1 billion.
Just as a benchmark, Gilead is still selling close to $1 billion of TAF, even though there's generic TDF. These are pro drugs of the same molecule, tenofovir, but they're able to differentiate from that generic where there's very little differentiation, some safety differentiation. Our compound, again, has very market differentiation. Rest of the world, I think our drug is ideal. As I mentioned, we were recently at the APASL Asia Pacific liver disease meetings. We met with a lot of KOLs there who told us that there's no way they're going to provide injectables in mainland China. It's not going to happen. They don't have the capability to store the drugs or administer the drugs. They're very excited about 184. Likewise, in Europe, there's a move away from injectables and difficult to store and handle drugs.
This means that there's a bright potential for our drug, well over $1 billion. Again, the lion's share of the HBV market will remain chronic suppressive therapy as we go forward. As we transition more patients to functional curative therapies, we see 184 as a backbone for that therapy. Over the coming year, there are a number of milestones that I want to highlight for investors to look at. The first, of course, is the initiation of the phase II study that I just described, and that is going to happen very soon. We're in the midst now of initiating those sites. We have full regulatory buy-in for this clinical protocol. Incidentally, our experience has been the FDA has been completely responsive. We have not seen changes in their behavior given the cuts that have occurred in the agency.
I think that's consistent with the talk that was at this meeting, and we're experiencing that as well. Another important data point this year is AASLD. We're going to have for the first time the off therapy data from our 96-week phase I-B study. So we're going to see what happens to those patients that have been suppressed with our drug for over two years now. That'll come at AASLD. In 2026, we'll be looking at the interim analysis that I described for the study, the phase II study. That, we believe, is a catalyst for thinking about how to move quickly into phase III and how to turn this phase II study into a pivotal study that would be accepted as a registrational study.
Finally, the bottom line readout or top line readout of the week 48 data will occur in 2027 because it is a year of therapy for our compound. That is the HBV compound. I want to briefly talk about, in the time we have left—I know we want to have a Q&A period—our ALG-009, which is our purpose-built beta thyroid agonist. I think many who are following liver disease have seen the great success of resmetirom, which is a first-generation beta thyroid agonist. What we've been able to do is increase the potency dramatically. Our clinical dose is about a hundred-fold less than the clinical dose of the Madrigal compound. We've eliminated the GI toxicity, so we're not seeing any GI toxicity, even in our phase II studies. We've also eliminated the CYP liability.
There are some drug-drug interactions that have been problematic for resmetirom. The other way that I like to think about this is MASH is not a disease that occurs in a vacuum. MASH is part of cardiovascular metabolic disease. These patients have a number of comorbidities. They have obesity, they have diabetes, they have chronic heart disease. You cannot just treat a MASH patient for MASH. You have to think about everything else you are doing. Having a CYP liability, having GI toxicity, these are things that can limit what you can do with a beta thyroid agonist in the context of greater metabolic cardiovascular disease. The fact that we have eliminated those liabilities, I think, bodes well for the future of our drug. We are currently in the midst of partnering discussions. We have multiple pharmaceutical companies in diligence on this compound.
That's about all I can say. Those discussions are all being held under confidentiality, so I cannot disclose any more than that. We would hope to have a deal done by the end of this year. With that, I thank everybody for their attention to this study and this talk, and happy to answer questions and open it up. Michael?
Hey, so talk about in the hepatitis B landscape, I think that Wall Street has skepticism around some of the prior challenges with capsid. In some cases, people feel like it's a show me story until that happens. How do you get people comfortable with some of the data you're seeing that that's going to begin to drive a clinically meaningful effect? I guess on one side, you'd say, don't worry, HBV DNA is going to be an equivalent point.
Don't worry about trying to work for functional cure, so it's a different story than people's prior investment.
Yeah. Let me address several of those points. The first is, is HBV DNA suppression an acceptable endpoint? We have been in discussions and have written feedback from the FDA, EMEA, and the Chinese Regulatory Authority. All of them have given us a green light that chronic suppression is a pathway we can go forward on. Now, why in the past did other companies fail at that and we've succeeded? That's because of what I said earlier, monotherapy. The early capsid assembly modulators, when given as monotherapy, caused a selection of drug-resistant variants, and they had to be given in combination with nucleoside analogs.
The regulatory guidance throughout the world is if you give combination therapy in HBV, you have to do functional cure as your primary endpoint, not chronic suppression. Okay, so that's a fundamental difference. Our potency and our bioavailability have given us a situation where we don't have drug resistance. Now, what about why are we seeing antigen reductions whereas none of the other previous capsid assembly modulators saw antigen reduction? And that has to do with potency and bioavailability. So the amount of drug required to inhibit the encapsulation of the pregenomic RNA is approximately tenfold less than the amount of drug you need to stabilize the capsid to block the rcDNA from being transported in the nucleus. And simply put, the early capsid assembly modulators never reached concentrations high enough in the liver to evoke that second step. And you know it's very interesting.
A lot of you have followed the HCV space, and you might remember that there were many nucleoside analogs before Sovaldi that were giving a little bit of HCV RNA knockdown, but not the data of Sovaldi. What Sovaldi was, was a nucleoside analog that was a pro drug that delivered high concentrations of the active drug into the cells harboring HCV. Our 184 drug is also a pro drug delivering high concentrations of this drug into hepatocytes. Because we have this pro drug technology that allows us to get extremely high concentrations of an extremely potent capsid assembly modulator, we block drug resistance, we block both the primary and secondary mechanisms, or activate the primary and secondary mechanism, and we're seeing data that no one else has seen. Now, with respect to, is it functional cure, is it chronic suppression, I think it's both.
If there are drugs that in subsets of patients can give you functional cure, the patient should have access and be allowed to use those drugs. As I pointed out, that's not the majority of HBV patients. Because we still see patients who are not completely suppressed going on to liver cancer and end-stage liver disease, they need something else. That is where our drug comes in. The last point is that when you combine a nuke with an sRNA or an ASO, it's not contributing to knocking down antigens. It's only blocking DNA replication. No one has combined our drug with an ASO or nuke or sRNA, and we're knocking down antigen production. How much more functional cure would you get if you combined our drug? I think I addressed all of your questions. Maybe there's some that I didn't.
Totally relevant endpoint.
Yeah.
Much better exposure and coverage of the target.
Right.
And it's a combination.
Yeah, eventually in combination. Yeah. Again, regulatory buy-in. This isn't just waving our hands. We've actually had discussions and feedback from those agencies. Again, if we look at the milestones, we're going to have study initiation coming very soon. Readout on the end of treatment and follow-up on the phase 96 week, the phase I-B study at AASLD this year. Then the first interim readout from the B-Supreme study, which is the name of our phase II study, is in 2026. We'll have more clarity on that as enrollment starts and we can make projections. In the E negative patients, it's when they reach week 12. In the E positive patients, when they reach week 24.
In the middle of therapy, because E negatives have a lower baseline HBV DNA, we see it coming down very fast. We can look at week 12. We want to give the E positives more time. Yeah. Yeah, thank you.