Hello, and welcome to Vir Biotechnology's Third Quarter 2023 Financial Results and Business Update Call. As a reminder, this conference call is being recorded. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. I will now turn the call over to Sasha Damouni Ellis, Executive Vice President, Chief Corporate Affairs Officer. You may begin Ms. Damouni Ellis.

Thank you, and good afternoon. With me today are Marianne De Backer, Chief Executive Officer; Dr. Phil Pang, Chief Medical Officer; and Sung Lee, Chief Financial Officer. Before we begin, I would like to remind everyone that some of the statements we are making today are forward-looking statements under the securities laws. These forward-looking statements involve substantial risks and uncertainties that could cause our clinical development programs, future results, performance or achievements to differ significantly from those expressed or implied by such forward-looking statements. 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 Form 10-K, 10-Q and 8-K. I will now turn the call over to our CEO, Marianne De Backer.

Thank you, Sasha. Good afternoon, and welcome. I'm Marianne De Backer, CEO of Vir, and I am pleased to welcome you all here today. Since the last time we spoke, Vir has made some impressive progress on driving our scientific platforms, our pipeline and our clinical trials forward. All this positive momsentum is encouraging as we seek to serve all the patients who are waiting, especially those with unmet medical needs in multiple infectious disease areas and beyond. Let me first call your attention to the updates we are most looking forward to at AASLD The Liver Meeting in Boston later this month. Our Phase 2 data readouts from two of our most advanced programs chronic hepatitis B and chronic hepatitis delta. As a reminder, this includes initial data from Part B of the MARCH trial where we are looking at combinations of our monoclonal antibody, VIR-3434 and our siRNA VIR-2218 for 24 and 48 weeks with and without peg interferon alfa. We also look forward to sharing initial data from our ongoing SOLSTICE trial, which is evaluating whether our antibody VIR-3434 alone, our siRNA VIR-2218 alone, or the combination of these can be a viable chronic therapy for patients who are co-infected with hepatitis delta virus. Thanks to the approximately $50 million in new BARDA funding, we have had positive momentum on the development of VIR-7229, our investigational next generation COVID-19 monoclonal antibody with a distinct combination of potency, breadth, and viral ines capability. This funding includes $40 million in Project NextGen non-diluted funding, which will support the development of VIR-7229 through Phase 1. We expect the Phase 1 trial to initiate in 2024, and we'll be exploring a partnership for the development of this antibody post Phase 1. The BARDA funding also supports alternative monoclonal antibody delivery technologies,…

Thank you, Marianne. As Marianne mentioned, we are looking forward to sharing at ASLD data from our Phase 2 MARCH chronic hepatitis B trial and our Phase 2 SOLSTICE chronic hepatitis delta trial. First, I want to talk about chronic hepatitis B and our goal, which is to achieve a functional cure defined as lifelong control of the virus after a finite duration of treatment, a goal that would be welcomed by the 300 million people living with chronic hepatitis B. The only treatment available to achieve a functional cure is arduous and results in a functional cure only 3% to 7% of the [time]. We are aiming to set the bond much higher with a goal of achieving a 30% or better functional cure rate. Our hypothesis is that you cannot achieve a functional cure with only an antiviral or only with an immunomodulator, but you really need both mechanisms fraction, which is exactly what we are evaluating in our multiple ongoing clinical trials. Our vaccine antibody VIR-3434, and our siRNA VIR-2218 can potentially act as both immunomodulators and antivirals. VIR-3434 has three mechanisms of action. First, it is a neutralizing antibody preventing viral entry of HBV and HDV virions. Second, via enhanced optimization, it removes viral particles and subviral particles from the bloodstream. Third, it has a modified Fc domain, which allows it to act as a potential direct immune activator, capable in-vitro of stimulating dendritic cells to mature and create T-cells against HBV or HDV. This is otherwise known as a vaccinal effect. VIR-2218 can act as an antiviral by knocking down HBV RNA transcripts. VIR-2218 can also act as a potential immunomodulator because we believe the HBV protein hepatitis B surface antigen is an immune to allergen and by knocking it down we can unleash the…

Thank you, Phil. We're pleased to share our financial results for the third quarter of 2023. Total revenues were $2.6 million compared to $374.6 million for the same period a year ago. The primary reason for the decline is lower collaboration revenues from Sotrovimab compared to a year ago. We continue to expect collaboration revenues to be at minimal levels and potentially making negative contribution to our top line due to the ongoing required investments to support the marketing authorization of Sotrovimab, which our partner GSK lease the efforts in. Turning to operating expenses. R&D expenses in the third quarter of 2023 were $148.3 million compared to $114.2 million in the same period in 2022. In the third quarter of 2023, we have recorded an expense of $21.9 million for the cancellation of Phase 3 manufacturing activities for VIR-2482, our investigational flu monoclonal antibody. With this expense recorded, cost related to VIR-2482 are now largely behind us. Other drivers of year-over-year growth were the investments in our ongoing Phase 2 studies in hepatitis B and hepatitis delta. SG&A expenses in the third quarter of 2023 were $41.1 million compared to $43.2 million for the same period in 2022. The decline was primarily driven by lower consulting expenses and stock based compensation. For the third quarter of 2023, we reported a consolidated net loss of $163.4 million compared to a net income of $175.3 million for the same period in 2022. Turning to the balance sheet. We ended the third quarter of 2023 with cash and investments of $1.74 billion compared to $1.9 billion at the end of the second quarter of 2023. During the third quarter, we made a payment of $67 million to our collaborator GSK for excess Sotrovimab supply and manufacturing capacity, which were originally recorded as a liability in 2022. With this recent payment, the liabilities of GSK is effectively paid off. Excluding the payment to GSK, our cash utilization during the third quarter was approximately $94 million. In closing, I would like to add that we are taking measures to optimize our cost structure and capital allocation. You can expect us to continue to be strong stewards of capital and have a disciplined approach to capital allocation and expense management. I will now turn the call back to Sasha.

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

Our first question will come from the line of Gena Wang with Barclays.

I have two questions. One is a big picture question for Marianne. So you mentioned that you wanted to expand strategic focus on autoimmune diseases and immuno-oncology. Could you share with us your key rationale for selecting the lead indications? And my second question is more for Phil regarding the AASLD update. And if I hear you correctly, you mentioned that you're looking for in general for HBV over 30% functional cure. So for this particular MARCH part B data, given we know that this is still on treatment completed treatment. So what will be the initial bar you'll be looking for so that we can maintain say after six months of treatment that could be above 30%?

Maybe first on the big picture one you mentioned. So as you know, our ambition here at Vir is to become an integrated commercial company. And of course, with products that address significant unmet patient need and ever since Vir was founded, we have first seen ourselves as immunology company. So what we have been doing at Vir is always aiming to bolster the immune system stability to fight disease. And in the first seven years, clearly, that was focused entirely on addressing unmet need in infectious disease. However, as you well know, we have bode a very powerful B-cell antibody platform and we have a T-cell platform, and we really want to build on those tools to make an impact in a much broader area. We can use exactly the same type of technologies and platforms to also, for example, help fix the balance of the immune system to fight cancer or to address diseases for the immune system really has gone or arise such as in auto immune disease. And we are not starting here from scratch. We already had a small team, focused on immune targeting and oncology, under the leadership of Alan Korman, who as mentioned in my introductory comments, is a person who discovered three blockbuster really in immuno-oncology, some of those being YERVOY and OPDIVO while he was at BMS. And as also mentioned in my prepared comments, we also have here the world renowned immunologist, Antonio Lanzavecchia, who is really working again on a novel agnostic way to identify T-cell receptor specific to very specific tumor antigen. So we have a lot here to build on and mostly we want to make sure that all that great knowledge and platform technology that we have, also using AI and machine learning, for example, to…

Thank you, Marianne. And thank you, Gena for the question. So maybe I'll put a couple of statements in context first, which is that predicting off-treatment rates from on-treatment response rates is still very in it, much in its infancy. As you know from our previous presentation at EASL, we were the first to demonstrate that if you had a endogenous anti-HBS response, you were more likely to have an off-treatment response. And that was one of the first times there was any hint of a predictor of off-treatment response from on treatment response. So I can just say generally that of course, in answers to your question, if one is looking for a greater than 30% off-treatment response, then the on treatment response should be at their or higher, and that would be the clinical bar to progress a regimen forward, and that's true for all the regimens that we're looking at. But to be specific at AASLD, I think what's really important to think about is that with Marianne's statement, we've proven that 2218 can have a role in a functional cure. The next question is, can 3434 have a role in a functional cure? And that's why in my prepared remarks, I've talked about the fact that when you have 2218 plus interferon for 24 weeks, you see only 6% of patients having an end of treatment response. And the first question we need to answer is if we add 3434 or replace peg interferon, will we move beyond that? And therefore, really honing in on the role of 3434 that it can have either in achieving an end of treatment response and then hopefully later on an off-treatment response. So the answer to your question is, is that predicting an off-treatment response from an on-treatment response is still in its infancy. You would need at least a 30% rate. And what we're focused on for AASLD is will 3434 get us closer to that answer?

Our next question will come from the line of Paul Choi with Goldman Sachs.

I want to maybe follow up on Gena's question regarding the expansion into autoimmune and immuno-oncology. Marianne, could you maybe sketch for us how you are thinking about the metrics that you're going to share with the street in terms of how to further allocate capital, and just sort of again, how the street might be able to keep score on your progress and expansion into these two areas? And then second regarding RSV, I was wondering -- I realize it's still relatively early stage, but given the commercial success at Pfizer and Sanofi are seeing with their products, can you maybe again, sketch out how you envision clinical development of 8190 over the next couple years? Thank you.

Maybe we'll start with the RSV question. Phil, do you want to give a bit more color on where we stand with the program?

So with our 8190 antibody, which is both covering both RSV and human metapneumovirus, the answer is that we believe we can bring in IND forward in the next 12 to 24 months. And the path is relatively straightforward and has really been blazed by others where in the infant population, what you're trying to demonstrate is prevention of lower MALRI -- or lower respiratory tract infection medically attended respiratory tract infection or lower respiratory tract infection. And we believe that there's a relatively straightforward path to do so after you obtain Phase 1 PK data. Beyond that, as you know, this is a partnered program with GSK and we are working closely with our collaborator to determine the fastest and most robust path forward. So that's what I can say about the 8190 at this time.

And then, Paul, on your first question, I first want to clarify that the efforts we are doing in these new areas are at discovery stage and maybe also ask Sung to provide a bit more background on how we are allocating capital here at here at Vir.

So, Paul, in terms of the metrics, as Marianne said, the efforts in autoimmune and oncology would be discovery and that's not an expensive part or doesn't require a large investment at Vir. The capital allocation here will still largely be directed to our mid stage programs in hepatitis B and hepatitis delta. Those will be ongoing for the foreseeable future and the majority of our capital allocation will be directed there. Now, I just want to add something here. We have in the past year-to-date, our capital allocation has been heavily directed towards a couple of items. Obviously the Phase 2 flu study and the related Phase 3 manufacturing activities. Also, the liability we have to GSK related to Sotrovimab supply and manufacturing. As you probably saw from the press release, we did take a write down for those manufacturing activities. So those costs, the flu costs are behind us now and the liabilities of GSK is effectively paid down. So again, the capital going forward will largely be directed to the clinical stage programs.

So I would just add in addition to capital allocation to predominantly our clinical stage programs, of course, we continue to explore if there are external innovation opportunities that could help us accelerate our programs or complement what we are doing here at Vir.

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

It's Billy on for Eric. Couple ones from us. First, just following up from that last question. So with the external opportunity, do you see this as something maybe for more the new immuno-oncology side or the historical virology side of the business? And then I'll pull up my one after.

Eric, we could not understand you very well…

Can you hear me now?

Could you try again?

So the question was just following on from the previous question about you stated some complementary external opportunities you were looking at potentially and whether these would be more in the immuno-oncology space or in the historical space of virology?

So as mentioned, we are looking at external innovation really from the perspective of how can we accelerate what we are already doing. I really do believe that we have world class expertise in our platforms and we want to, of course, stay at the forefront in our field. And so we are looking at anything that could help us stay there, potentially [reproc]. So that’s been both be in infectious diseases or beyond.

And just one quick one about the HBV program. Looking forward to the off-treatment follow up that you have now guided to in 2Q '24. Would you expect patients to be off the NUC by that point or still on NUCs? Thanks.

So 24 weeks post treatment, they will -- it's actually somewhat of a mixed bag, but they will -- you can continue to expect that they will still be on NUCs. And usually what happens is this, once they have demonstrated that they have lost surface antigen for at least six months off-treatment, their NUC had stopped and then you follow them for another period of time to make sure that they don't relapse further. I will say though that as you know the NUCs usually only suppress HBV DNA. And therefore, surface antigen loss, which is a protein, would be unexpected to be impacted by the nucleoside reverse transcriptase inhibitor. So although of course, it's not a perfect match, I think that what we are looking forward to and what we are guiding to is the post treatment data of our drugs but still on the nucleoside reverse transcriptase inhibitor.

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

First, I am wondering if you can discuss the bar for regulatory approval in HDV or hepatitis delta. And what you would need to see in SOLSTICE to give confidence that this program is on-track? And then secondly, what would be the next steps for the delta program, specifically would you possibly be able to move directly into a Phase 3 program after SOLSTICE readout based on all of the data that’s been generated across HBV and HDV?

So I mean, as you know, the goal of therapy in delta is chronic trial suppression progression as well as reduction of liver inflammation that's also how the bar is set on the regulatory side. Phil, do you want to add any more color to what we want to see in SOLSTICE?

So exactly as Marianne said, the regulatory bar is too long decline in HDV RNA and the normalization of ALT, that was one of the bars that was set early on to allow for an incentivized drug development. And I think that that's one of the bars one to look at. But I think another part to look at is undetectability and HDV RNA, that is another marker that is totally associated with clinical benefit. So we are looking at both of those bars. I do want to remind you that for AASLD we are going to be having a small cohort of patients treated for a relatively short period of time. And I think that we will have to just wait to see what that data looks like to be able to know what the next steps are going to be. But as I have mentioned in my prepared remarks, the regulatory pathway can be accelerated if warranted given the unmet need in this space.

Your next question comes from the line Roanna Ruiz with Leerink Partners.

This is Nik Gasic on for Roanna. Thanks for taking our questions. Maybe first, could you remind us, I guess, what the status is of the next generation 2981 antibody against flu A and B? I guess, could you talk a little bit about how this antibody is differentiated from 2482 aside from the flu B targeting aspect as well? And then secondly, could you discuss some of the learnings which you might apply from your experience developing 2482 in flu A to the development of 2981 in flu A and B? Thanks.

So I'll start and then ask Phil to provide a bit more depth. So first of all, as you rightly pointed out, one of the major differences between 2482 and 2981 are next generation flu antibody is the fact that it covers both flu A and flu B. It's also a different mechanism of action. It's a neuraminidase inhibitor and that is a mechanism of action that has been proven to work before. We have also seen in vitro that the antibody is more potent than 2482. So there's a lot of differentiating components here for our next generation antibody that we feel are very relevant and interesting. And as it relates to our learnings from 2482, as Phil pointed out in his prepared remarks, there's some learnings that we already have based on initial data analysis. I mean, obviously we have seen that for the clinical trials, it does make a difference whether you include fever in your primary endpoint. It also is really important how much time elapses between someone being dosed and someone being infected. So these are of course very important learnings for us. And we are of course continuing to analyze the data and grasp as much learnings as we can for our next steps. And maybe, Phil, you can talk a little bit more about all the data analysis that is ongoing and that we are planning to learn more about by beginning of next year?

So Nick, one of the critical questions that always exists regardless of the space and especially it's true for infectious disease is how does your in vitro or in vivo results translate into the clinic. And so one of the critical questions in addition to all the lessons that Marianne pointed out is how do we calibrate dose between in vivo findings and clinical efficacy. So one of the advantages of having really been the first company to ever run a prophylactic outpatient flu trial is we now will and soon will have the data that really calibrates PK to PD, as I mentioned in my -- as I may have mentioned previously, which allows us to really understand the dose and concentration that is necessary and translate in vitro and in vivo findings to people. And so that will be very useful part of our 2981 development in addition to what Marianne mentioned about clinical endpoints and timing is really trying to calibrate that bridge that gap and using 2482 to help inform 2981. And we're already planning a series of studies to make sure that that gap is as small as possible.

So thinking about this future trial design. Would you consider using the WHO and CDC endpoint -- WHO and/or CDC endpoints as your primary, I guess, future trials in flu? How should we think about that since they both feature fever?

So I think we maybe even a little bit more advanced beyond that. We are basically certainly recognizing that fever is an important -- or temperature, if you would. Now they do have a slightly different temperature between the CDC and the WHO, 37.8 versus 38.0 degrees Celsius. So we are looking into that as well as any other symptoms that are well covered by 2482 in post-hoc analysis. So we're going to put all that together to decide. But certainly, fever will be a part of what we consider moving forward.

Your next question will come from the line of Eva Privitera with TD Cowen.

We have one on the SOLSTICE trial with data at AASLD. Approximately how many patients worth of data should we expect, and are each treatment groups pretty balanced? And what efficacy measures do you expect to report in addition to the primary endpoint?

I will just say that obviously this will be the very first time that we show really very initial data also from our SOLSTICE this trial. So as Phil mentioned in this prepared remarks, this is still with a small number of participants in each of the arms. But we will see some initial data on, of course, 2218 alone, 3434 alone, and then the combination. Anything to add there, Phil?

No, I don't think. And maybe I'll just clarify a couple of things that essentially we are going to be looking at, as Maryanne pointed out, the monotherapy and the combination therapy. And the way in which the study is designed is we enrolled a very small number of patients in those monotherapy arms. And then if they -- it showed signs of antiviral activity or didn't show signs of anti antiviral activity, they would or would not roll into a combination treatment arm to be able to really understand how the two drugs work together or don't work together. So that's going to be the design of the trial and we look forward to sharing data at AASLD.

How important is getting HDV to undetectable levels granted that the regulatory bar is the two log decline?

So I think that the answer to your question is certainly getting to undetectable is a higher bar than a two log decline. I think that there is good clinical data suggesting that undetectable correlates well with clinical outcomes. And I think that as I mentioned before with the current therapy it's about 12%. So I would say that that 12% of course happens after a full 40 weeks of therapy. And the question is, can we meet or do better than that given the fact that we have been following our patients for a much shorter period of time. So I think we'll just have to wait and see what AASLD has to say and let the science speak.

Your next question comes from the line of Joseph Stringer with Needham & Company.

Just a quick one on the HIV program, Phase 1 readout. What type of day did you plan to announce from that the second half of next year? And what will give you confidence or what would you need to see to proceed the next steps in that program?

Phil, do you want to take that one?

So as you noted, Joey, it is a Phase 1 study. It is an immunogenicity study in healthy volunteer here. So the primary endpoint is obviously safety plus immunogenicity. And so the answer is, as we expect to have an understanding of, one, is the insert, which is obviously an HIV insert immunogenic, the amount of CD4 and CD8 T-cell responses -- rather CD8 T-cell responses against the cassette. Then the next question is, if we do what type of T-cells are we creating? Are we creating what we are calling effector memory T-cells, which are really T-cells that are very special that reside in the mucosa, they are ready to fight, they don't need to multiply before they can have impact. And then third, if possible, to understand what type of HLA restriction they have and whether or not, for example, they will be restricted by MHC-E, which is something that would be a very unique immune response which might be harder for the virus to overcome. So all those are things we are looking for in our immunologic readouts. We are planning initial data from those immunologic readouts next year.

And then maybe just to add that, you know, the HCMV based vaccine or what we call the T-cell platform, I mean, learning those initial data for HIV will also really be helpful in guiding us for our next investigational T-cell vaccine that is focused on the HBV.

I will now turn the conference back over to Dr. Marianne De Backer for closing remarks.

Thank you, operator. And thank you all again for your time and attention today. To close, I just want to leave you with these couple of takeaways. First, we continue to make progress on our clinical programs, and you can expect new data from our ongoing Phase 2 chronic hepatitis B and chronic hepatitis delta clinical trials, to be presented on November 13th. Second, we are expanding our strategic focus beyond infectious disease first to offer immune diseases and immuno-oncology. We are also pioneering the discovery of RNA delivered monoclonal antibodies, thanks to the help and new funding from BARDA. And lastly, the $1.7 billion in cash and investments that we have available to support the advancement of our hepatitis B and delta clinical trials and our core antibody platform, yet, additionally, it enables us to evaluate complementary external opportunities that strengthen our existing platforms and pipeline. So thank you again, all of you for joining us today. We really appreciate your time and your interest in Vir. Operator, you may end the call.

Thank you all for joining. This does conclude today's meeting. You may now disconnect.