Good afternoon, ladies and gentlemen. Welcome to the Atea Pharmaceuticals Q2 2022 financial results conference call. At this time, all participants are in a listen-only mode. Following the formal remarks, we will open the call up for your questions. In order to ask a question, you'll need to press star one one on your telephone, and you'll then hear an automated message advising that your hand is raised. Please note that today's conference is being recorded. I would now like to turn the call over to Jonae Barnes, Senior Vice President of Investor Relations and Corporate Communications at Atea Pharmaceuticals. Please proceed.
Good afternoon, everyone, and welcome to Atea Pharmaceuticals Q2 2022 financial results conference call. Earlier today, we issued a press release that outlines the topics we plan to discuss. You can access the press release as well as the slides that we'll be reviewing today by going to the investor section of our website at ir.ateapharma.com and go to the events and presentation section. With me today from Atea, our Chief Executive Officer and Founder, Dr. Jean-Pierre Sommadossi, Chief Development Officer, Dr. Janet Hammond, Chief Financial Officer and Executive Vice President of Legal, Andrea Corcoran, and our Chief Commercial Officer, John Vavricka. They will all be available for the Q&A portion of today's call. Before we begin the call, as outlined on slide two, I would like to remind you that today's discussion will contain forward-looking statements that involve risks and uncertainties.
These risks and uncertainties are outlined in today's press release and in the company's recent filings with the Securities and Exchange Commission, which we encourage you to read. Our actual results may differ materially from what is discussed on today's call. With that, I'll now turn the call over to Jean-Pierre.
Thank you, Jonae. Good afternoon, everyone, and thank you for joining us today. I would like to start with our bemnifosbuvir review program where there is much to report, as you can see summarized on slide three. It is now evident that, as detailed on slide four, COVID-19 will likely remain a global health concern for a very long time. Indeed, we see new variants and sub-variants emerging in shorter time intervals and the rate of infection is increasing. The changing characteristics have caused the existing antibody treatment to fail and have reduced the efficacy of vaccine-induced immunity, creating the need for frequent and newly engineered booster to combat the emerging variants. Pandemic surges can be life-threatening to those at high risk over 65 years old, particularly those with risk factors causing increased hospitalization and death. Right now, BA.5 accounts for the vast majority of infections.
It's highly infectious, and new variants are expected to fuel a surge this fall. Newer oral antivirals with improved profiles are urgently needed due to the limitations of the current antiviral treatment options. These limitations include the issue of relapse, which was experienced by both President Biden and Tony Fauci, among others, after taking Paxlovid. Relapse can lead to a rebound of symptoms as well as transmission of infection to others. Other limitations include drug-drug interactions with many commonly prescribed life-saving drugs. These drugs are frequently used among those that are the most vulnerable to COVID-19, limiting the ability for Paxlovid to be prescribed and raising treatment dilemma for patients and prescribers. With bemnifosbuvir, we have the potential to address many of these limitations, and we are working diligently to deliver improvements over the current standard of care. Moving to slide five.
We recently had an end-of-phase II meeting with the FDA and met with the European Medicines Agency emerging task force to review the bemnifosbuvir data package to date, including the MORNINGSKY results. Let me remind you that in the MORNINGSKY study, which we reported in May, the risk of hospitalization was 71% lower in the bemnifosbuvir 550 mg BID arm versus placebo with a P value equal to 0.047, unadjusted and exploratory. Obviously, we are very encouraged with this outcome, and the results were consistent in both standard and high-risk patients as well. We are now in the process of finalizing the design of global late-stage clinical trial for the treatment of mild to moderate COVID-19.
The trial will evaluate bemnifosbuvir 750-milligram dose twice daily for five days in high-risk patients, including those who are immunocompromised regardless of vaccination status. The primary endpoint will be hospitalization and death. Operational planning is currently underway for this global trial, and we expect to initiate this study in the fourth quarter of this year. Turning to slide 6. We are confident that bemnifosbuvir will remain fully active against future variants. This is based on the consistent, potent antiviral activity that we continue to generate as new variants of concern emerge and are tested. Our most recent data set confirms antiviral activity against Omicron subvariants similar to the potency demonstrated with Alpha, Beta, Gamma, Epsilon, and Delta. This data reinforce our understanding of bemnifosbuvir potent inhibition of the two functional domains of the highly conserved viral RNA polymerase.
Let me remind you that details related to the molecular mechanism were published in Nature Communications earlier this year. Moving to slide seven. Based on the evolving nature of COVID-19 variants and unmet medical needs, we are pursuing a multi-pronged approach which place us at the forefront of developing a combination regimen to fill the treatment gaps of COVID-19. In the future, we see a role for bemnifosbuvir as monotherapy, as well as in combination regimens. Right now, as previously noted, there are treatment gaps with fourth generation protease inhibitors, including drug-drug interactions and relapse from other SERMs. Also, we can anticipate resistance to emerge with broad use, prolonged treatment, and re-treatment when protease inhibitors are administered as monotherapy. With bemnifosbuvir attractive profile, we believe that it has the potential to become the cornerstone therapeutic for both monotherapy and in combination therapy.
This is our rationale for pursuing in parallel to our late-stage monotherapy trial, a second generation protease inhibitor with an improved profile to be used in combination with bemnifosbuvir in specific patient population. On slide eight, as part of this effort, our target profile for a second generation protease inhibitor is a highly potent drug that has a good safety profile, with limited drug-drug interaction, and does not require ritonavir or any other booster. I'm pleased to report today that we have made significant progress with our internal program. Indeed, in a short time period, we have achieved two essential properties with potency at nanomolar and sub-nanomolar levels and good metabolic stability, leading to highly promising compounds. We are now working to combine this potency and metabolic stability in a clinical candidate, which we hope to select later this year.
Moving to slide nine, the antiviral effect of bemnifosbuvir in combination with the protease inhibitor Paxlovid was examined in vitro in an HK-2 model, and the results indicate an additive antiviral effect. Not only we are encouraged by this data, but also this data support the potential benefit of a combination of bemnifosbuvir with a protease inhibitor for the treatment of COVID-19. I will turn the call over to Janet for a review of our dengue fever and hepatitis C programs. Janet?
Thank you, Jean-Pierre. Turning to slide 11, I'll begin with a review of our program to treat dengue fever. In recent weeks, hundreds of thousands of cases of dengue have been reported across Southeast Asia owing to the flooding and other climate-related issues experienced there. In the United States, in Miami-Dade County, a mosquito-borne illness advisory was issued for dengue in late July after the first case was confirmed this year in a Florida resident. There are no treatments for dengue. Dengue is the most prevalent mosquito-borne viral disease and affects almost 400 million individuals on an annual basis. Dengue is endemic in over 100 countries and more than half of the world's population is at risk for it. There is a significant unmet medical need and the global economic burden is estimated to be between $8 billion-$9 billion annually.
As noted on slide 12, we continue to enroll patients in the DEFEND-2 trial, which is a randomized phase II proof of concept study in patients with dengue fever. The study is designed to assess antiviral efficacy, safety, and the pharmacokinetics of multiple doses of AT-752, with a primary endpoint of change in dengue virus viral load from baseline. AT-752 or placebo will be administered orally for five days in up to 60 patients with dengue infection. We expect to report initial results from this study later in the year. We also initiated a second dengue study, which is a human challenge model in the United States. In this study, healthy volunteers are dosed with AT-752 or placebo, and then administered a live dose of dengue virus.
The subjects are closely monitored within a very controlled setting, allowing for the assessment of viral load and the viral kinetics between the treatment groups. We also expect to report the preliminary results from this study later in the year. Turning now to our hepatitis C program. As shown on slide 14, our HCV combination development plan looks very promising, and we believe that there is still room to improve upon the standard of care for hepatitis C. Our HCV combination profile includes convenient and short treatment duration, with the potential for the first ribavirin-free therapy for decompensated disease. We believe ruzasvir, in combination with bemnifosbuvir, provides the opportunity to create a best-in-class pan-genotypic HCV therapy. We're continuing to make progress with our program and have completed a required combination preclinical toxicology study. We are currently manufacturing ruzasvir clinical trial supply and are finalizing the phase 2 clinical trial design.
We expect the phase 2 combination program to evaluate convenient and short treatment durations in both non-cirrhotic and compensated patients with cirrhosis. We anticipate initiating the study later this year. With that overview, I will now hand the call over to Andrea to review our financial information.
Thank you, Janet. As Jonae mentioned in her introductory remarks, earlier today we issued a press release containing our financial results for the Q2 of 2022. The statement of operations and balance sheet are on slide 16 and 17. For the Q2 of 2022, the decrease in R&D expenses in comparison to the Q2 of 2021 was driven principally by the discontinuation of our cost share arrangement with Roche. This cost share arrangement ceased when the collaboration with Roche ended earlier this year. The decrease was partially offset by an increase in R&D employee payroll and personnel-related expenses. The nominal increase in G&A expenses in the Q2 of 2022 over the Q2 of 2021 was primarily due to an expansion of our organization and reflects an increase in payroll and personnel-related expenses.
We ended the quarter with a strong balance sheet, including cash resources in the amount of $684.5 million to support our clinical development programs. The cash expenditures during the quarter were $21.1 million. We are reiterating our cash guidance with a runway through 2025. I'll now turn the call back over to Jean-Pierre for closing remarks.
Thank you, Andrea. Throughout the H1 of 2022, we made considerable progress advancing our oral antiviral platform with the aim of transforming the treatment of severe viral diseases. As the global demand for COVID-19 treatments continue unabated, we remain confident in the opportunity for Atea to deliver a multipronged approach with best-in-class oral antivirals to treat COVID variants as the virus continues to evolve. On slide 19, as we look to the balance of the year, we expect to build on this momentum by achieving a number of value-creating milestones, including the initiation of our late-stage clinical trial of bemnifosbuvir for COVID-19, reporting preliminary clinical data from our dengue fever program, and the initiation of our phase II combination program in HCV. In addition, our goal is to select the second generation protease inhibitor clinical candidate for COVID-19 combination therapy with bemnifosbuvir.
These programs have the potential to provide global solutions for patients suffering from severe viral diseases, and I look forward to reporting our progress in the months ahead. With that, operator, we will now open the call up to your questions.
Thank you. At this time, we'll conduct the question-and-answer session. As a reminder, to ask a question, you'll need to press star one one on your telephone and wait for your name to be announced. Please stand by while we compile the Q&A roster. Our first question comes from the line of Tim Lugo from William Blair. Your line is now open.
Thank you for taking the question and congrats on the progress in the quarter. I guess from a 10,000-foot level, it seems like there might have been a bit of a regulatory shift at the agency where, you know, maybe they're now more open to the monotherapy trial, whereas, you know, maybe at the beginning of the year, that wasn't the case. Can you talk about, is it just the updated MORNINGSKY data which, you know, impressed them? Or is it just, I guess, the issues with the PI, or is it all of the above?
Janet, would you like to address the question?
Thank you. Yes, JP, and thanks, Tim. No, I think to clarify, we had not had discussions about combination therapy versus monotherapy with any agency. These were our end of phase 2 discussions that We reported now. I don't believe there was any issue one way or the other with that. I think they see a path forward for us, you know, both as monotherapy and then potentially as combination therapy also.
Okay, fair enough. Is there anything, and can you just talk through the thinking about using your own PI versus partnering with one of the other PIs? Obviously there's Paxlovid, but there are other kind of development stage candidates out there. Is there something that just makes those not quite right for combination?
Look, we'll see, you know, in the next six-12 months. As you know, the issues with Paxlovid are going to remain, whether monotherapy or combination, and mostly it's drug-drug interaction. Very likely, we foresee that the combinations are very likely when we are talking about specific population, we are talking about immunocompromised patient transplant, where you can have long-term viral replication. Already you start with a major limitation, which is the drug-drug interaction issues of Paxlovid. As you have seen, we are moving very fast with our second generation. Our goal is to have, like we said, a highly potent drug, which will lead to a low dose. We foresee potential a co-formulation with bemnifosbuvir.
Let's not forget, if we have a low pill burden with bemnifosbuvir, it's two pills twice a day. If you combine with Paxlovid, you're talking about five pills twice a day. That's quite a bit. We keep in mind all this. We believe that we will have a best in class. You see that, to my knowledge, this is the first time we're showing sub-nanomolar or sub-nanomole potency. We start to see even binding at the picomolar level, which this is what we would like to see as we have in HIV and HCV. Not to talk about nanomolar, but picomolar. Let's see where we stand in the next 6-12 months. We believe that our combination, proprietary combination, will lead and help and create major benefits for patients, especially in those very high risk patients, with COVID-19.
All right. Thank you for the color.
Thank you, Tim. As a reminder, if you'd like to ask a question, you'll just need to dial star one one on your telephone. Thank you. Our next question comes from the line of Umer Raffat from Evercore.
Sure. For Umer. I would love to get a little bit more color about your expectations for the continuing market for antivirals. I mean, obviously there's still unmet need in COVID, but by the time your either monotherapy or proposed combination is eligible for launching, what do you think the ongoing COVID market is gonna look like at that stage?
Sure. John, you want to address that question?
Yes, sure, JP. Umer, yes, I understand your question. We believe that the COVID-19 endemic will really continue throughout the world. Right now, recently you've seen the multi-billion-dollar opportunity, and that's just for treatment. There's no mention of even stockpiling there. Even if you look at the current landscape that you have, from which the dominant player, at least in the United States, is Paxlovid, you know, as JP said that due to the drug-drug interactions with many commonly prescribed medicines, that is not going to go away. These drugs are frequently used among those who are the most vulnerable to COVID-19. Unfortunately, it's limiting the ability of Paxlovid to be prescribed and really creating treatment dilemmas for both patient and prescribers.
Just to reiterate, I think we always have seen that the commercial opportunity for COVID will really come from two areas. One will be from the active disease, which is what you see now. Then once NDA approval comes, that the government will stockpile that, and the stockpiling will likely be similar to other type pandemics that we've seen before, which was usually a percentage of the population that would be ongoing. We don't see anything really changing, at least on the current landscape that you see right now. The liabilities of those assets we see are continuing.
Okay, great. That makes sense. I guess maybe one more, and apologies if we already discussed this, but can you talk a little bit about viral rebound and whether the risk of that would be different in combo and mono?
Viral rebound and the risk. Say again, please.
I'd love to talk a little bit about the expectations that other antivirals have had with viral rebound. Obviously it's not just Paxlovid. You've seen similar reports from molnupiravir, although it's not as widely used. I'm wondering what you think about the risks there and whether combo will meaningfully address that.
Well, look, we will have to conduct the study to see if this benefit can be realized, right? We just see, you know, recently, potential for a rebound of molnupiravir, although it's not really being documented, I would say, just in this review paper, recently. Paxlovid is clear. I think that it's really related to the mechanism of action. When we talk about protease inhibitors, we are talking about the likely incomplete suppression, incomplete viral replication. Let's not forget that Paxlovid has a half-life of one hour. That mean that basically when the clearance occurs within one hour, you're back on full viral replication.
That's the major difference with a nucleoside analog, the way you have chain termination, you have an irreversible process. Again, we need first to have a good handle on relapse. You know, there is several reports that talk about 2%, 5%, 10%. It would be very important to know exactly where we are talking. Some even mentioned 20% or 30%. I say very likely it varies among different patient populations, very likely immunosuppressed in patients, for example, immunocompromised, where you have potentially long-term viral replication may occur at the highest rate. Combination you will expect should lead to those benefit. Obviously, the studies will have to be conducted.
All right. Thanks. Makes sense.
Okay, thank you. Our next call comes from the line of Nik Gasic with SVB Securities.
Good afternoon.
Your line is open.
Hey, good afternoon. This is Nik Gasic on for Roanna Ruiz. Thanks for taking our questions. Maybe first off, on bemnifosbuvir, how might lower hospitalization and death event rates impact primary endpoint data for bemnifosbuvir in phase III?
Janet?
I'm sorry, Nik, I didn't completely hear your question. How might hospitalization and death rates impact bemnifosbuvir? Was that your question?
Hey, hey, Janet. Yeah. I'm just curious, how might lower hospitalization and death event rates impact the primary endpoint data in phase III?
I think obviously as an endpoint, it may mean that we will need to explore more patients. I think one can also probably enrich for patient populations where these events are more likely to occur. You know, once we have a final study design and we're on our way, we'll give you some idea of what we're anticipating to do. I think just at a broad level, that would be how we hope to address that.
Got it. That's very helpful. I think you previously mentioned potentially optimizing AT-527, the compound itself, to get better exposures, with a lower cost of goods. Curious if you're moving forward with those plans and with the optimized molecule in phase III.
Yeah, basically, we are moving forward with the new formulation and improved API. The API is just an improved production process to be able to synthesize multi-ton level. The formulation actually is also a much more straightforward formulation process. We are actually just in the process to complete a phase I with this formulation. We will basically include the new CMC in the package for the global trial as well.
Got it. This new compound won't be assessed in the phase III. It'll still be the prior AT-527 compound.
Correct. Exactly the same.
Got it. Lastly, on potency data for bemnifosbuvir against BA.4 and BA.5 variants, when do you expect to share this data, and how do you expect bemnifosbuvir's durability to hold up against future variants of concern?
Look, as you have seen in the slide, the... Regardless of the variant, and we see no major differences in the sequence, especially when we compare the Omicron with the Alpha, the Beta, the Delta, there is no difference at all. Not surprising, as the RNA polymerase is highly conserved. I'd like to remind you that any subvariants have exactly 100% homology in the RNA polymerase sequence. And only in the spike protein. You know, it's going to take a couple months, again, to develop, with especially BA.5, you know. We have activity against BA.1, now against BA.2.
I think that, you know, I can tell you already the data that we are going to get with BA.5. When we see the future again, it's important to know that we have not seen any significant mutation in the RNA polymerase. The only one, as compared to the original Wuhan strain, is the 323 mutation, which is at the interface between the NiRAN and the polymerase. Actually, we have reported that in one of our clinical trials, we have 98% of these patients had that mutation. You know, this is why the nucleoside analog, especially and I like to make a difference with specifically targeting the RNA polymerase with a chain termination mechanism. We don't anticipate that you're going to see any difference regardless of the future variant.
All right. That's helpful. Lastly, on AT-752, in dengue, maybe I'm just curious, what are you hoping to see in the phase II data set in terms of efficacy? Are there any particular safety signals you're watching for closely?
Janet, you'd like to address the question?
We're looking in the treatment trial primarily to see a decline in viral load. This happens naturally fairly quickly, but we believe that, with clinical effect, you should see a more rapid and more deep drop in viral load. That would be the primary endpoint. We'll also be looking at symptoms. We have a fair amount of experience in our phase one trials with the drug, so we are confident in its profile as actually being well-tolerated and safe. We will obviously be monitoring for that and also looking at the pharmacokinetics. The viral kinetics are really the primary endpoint and the main aspect that we're attempting to evaluate. We're going to look potentially at a couple of different doses and dosing regimens, depending on how we go from cohort to cohort. Those will be the things that we'll be looking for.
Got it. Super helpful. Thank you, Janet. I'll hop back in the queue.
Thank you, Nik. If there's anyone else who has a question, please press star, star one one on your telephone. You'll be put in the queue. If there are no further questions at this time, I'd like to hand it back to Jean-Pierre for closing remarks.
Thank you. Thank you again for joining us today, and look forward to report more progress in the fall. Thank you.
Thank you everyone for your participation in today's conference. This concludes the program, and you may now disconnect.