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ALTIMMUNE INC (NASDAQ:ALT)
Q3 2021 Earnings Call
Nov 10, 2021, 8:30 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Operator

Good day, ladies and gentlemen, and welcome to the Altimmune, Inc. Q3 earnings conference call. [Operator instructions] As a reminder, this call may be recorded. I would now like to introduce your host for today's conference call, Will Brown, chief financial officer of Altimmune.

Will, you may begin.

Will Brown -- Chief Financial Officer

Thank you, operator, and good morning, everyone. Thank you for participating in Altimmune's third quarter 2021 earnings conference call. Members of the Altimmune team joining me on the call today are Vipin Garg, our chief executive officer; Scot Roberts, our chief scientific officer; and Scott Harris, our chief medical officer. Following the prepared remarks, we will hold a question-and-answer session.

A press release with our third quarter 2021 financial results was issued last night and can be found on the IR section of the company's website. Before we begin, I would like to remind everyone the remarks about future expectations, plans and prospects constitute forward-looking statements for purposes of safe harbor provisions under the Private Securities Litigation Reform Act of 1995. Altimmune cautions that these forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those indicated, including those related to COVID-19 and its impact on our business operations, clinical trials, and results of operations. For a discussion of some of the risks and factors that could affect the company's future results, please see the risk factors and other cautionary statements contained in the company's filings with the SEC.

I would also direct you to read the forward-looking statement disclaimer in our earnings press release issued yesterday and now available on our website. Any statements made on this conference call speak only as of today's date, Wednesday, November 10, 2021, and the company does not undertake any obligation to update any of these forward-looking statements to reflect events or circumstances that occur on or after today's date. As a reminder, this conference call is being recorded and will be available for audio replay on Altimmune's website. With that, I will now turn the call over to Dr.

Vipin Garg, chief executive officer of Altimmune.

Vipin Garg -- Chief Executive Officer

Thank you, Will, and good morning, everyone. We appreciate you joining us today for a discussion of our third quarter 2021 financial results and business update. The third quarter has been a very productive time for the company as we reached several key milestones in the development of pemvidutide. First, we delivered on the 12-week Phase 1 study results in our trial in overweight and obese subjects.

The data we generated exceeded our expectations as we demonstrated double-digit weight loss in the 1.8 milligram arm with favorable effects observed on blood pressure, serum lipids, and other measures. We believe we achieved a high watermark in weight loss given that dose titration was not used, and there were no modifications to diet or physical activity. Most other programs in this class of drugs must use dose titration that is gradually increased dose to maintain tolerability. Dose titration presents considerable challenges for patient satisfaction and compliance and logistical challenges for time-constrained primary care physicians charged with prescribing these therapies.

So it's highly encouraging that with straight dosing, we saw primarily mild GI side effects with no study discontinuations due to adverse events. The next key milestone we met was the acceptance of our US NASH IND for pemvidutide and the initiation of a 12-week Phase 1b NAFLD clinical trial to explore pemvidutide's effect on liver fat in this -- in the NAFLD population. We are highly encouraged at the prospects of this trial, as we announced this morning the results from an exploratory analysis that all of the patients with hepatic steatosis or fatty liver, in the Phase 1 trial that received 1.8 milligram or 2.4 milligram of pemvidutide experienced reduction in liver fat to undetectable levels after only six weeks of treatment. These findings speak to the potency of pemvidutide, both to induce weight loss and quickly move fat out of the liver.

We look forward with great anticipation to the results of the 12-week Phase 1b NAFLD data, which are expected in the first half of next year. Looking to the future, we are diligently working to submit an IND for pemvidutide in obesity to enable a 48-week Phase 2 trial to study weight loss in obese subjects. This is an important program for the company as patients with obesity are grossly underserved. There is a tremendous market opportunity for effective therapies that safely induce meaningful weight loss, and should future data continue to reflect our recent experience, we believe that pemvidutide could be a highly effective tool to address the obesity endemic.

Finally, we continue to execute on our Phase 2 trial of HepTcell in chronic hepatitis B with clinical trial sites enrolling patients across North America and Europe. We expect top-line data from this study in the second half of next year and look forward to potentially exploring combination therapies of HepTcell with direct-acting antivirals. I am pleased that we have developed a pipeline that seeks to address such high value and significantly underserved indications as obesity, NASH, and chronic hepatitis B. Our company's value has tremendous upside with these assets, and we look forward to advancing our programs through the clinic.

With that, I will now turn the call over to Scott Harris to discuss our data and clinical plans. Scott?

Scott Harris -- Chief Medical Officer

Thank you, Vipin, and good morning, everyone. First, let me quickly recap our 12-week Phase 1 placebo-controlled single and multiple ascending dose study of pemvidutide. The study was conducted in Australia under a clinical trial application and enrolled otherwise healthy overweight and obese volunteers. The SAD portion of the study enrolled 36 subjects and the MAD portion enroll three cohorts at doses of 1.2, 1.8 and 2.4 milligrams, randomized 4:1 to drug or placebo weekly for 12 weeks.

The study did not employ dose titration, subjects receiving the 1.8 milligram weekly dose achieved an absolute mean weight loss of 10.3% at 12 weeks of treatment with pemvidutide with a similar degree of weight loss of 9% at the 2.4 milligram dose and 4.9% at the 1.2 milligram dose, pemvidutide was well tolerated even in the absence of dose titration with no adverse events leading to discontinuations and predominantly mild adverse events. Favorable trends were observed in secondary measures, including a 28% decrease in total in LDL cholesterol and a 38% decrease in triglycerides at the 1.8-milligram dose. Remarkably, these changes occurred in only 12 weeks. Glucose homeostasis as assessed by a plasma glucose and hemoglobin A1c was maintained, and there was an improvement of insulin sensitivity as assessed by the HOMA-IR.

Systolic and diastolic blood pressures also decreased in the absence of significant increases of heart rate. We've also had the opportunity to perform an exploratory analysis of the MRI-PDFF data on liver fat content in the subset of subjects through the initial six weeks of treatment. While the study enrollment criteria did not prespecify a minimum liver fat content and did enroll a number of subjects with hepatic steatosis or fatty liver, defined as a liver fat content of greater than or equal to 5% to enable an early assessment of the effects of pemvidutide on liver fat content. Five subjects had baseline hepatic steatosis and received pemvidutide at 1.8 milligrams or 2.4 milligrams.

And in each of these subjects' liver fat fell to undetectable levels with only six weeks of treatment, declining from levels as high as 19.5%. This represents a greater than 90% reduction in liver fat content. While the subject numbers are small and the data is early, the reductions in liver fat are among the largest seen in clinical trials to date. As Vipin mentioned, these data have increased our excitement for the 12-week Phase 1b study of subjects with nonalcoholic fatty liver disease, or NAFLD, currently enrolling in the United States.

The NAFLD study expands the enrollment criteria used in the first-in-human study in Australia to include diabetic and older subjects. We are optimistic that the reduction in liver fat content in the planned 12-week NAFLD study may parallel the impressive observations that we have already observed to date. In clinical trials performed by other sponsors, we see that high levels of liver fat reduction have been highly predictive of NASH resolution and fibrosis improvement. As previously announced, we plan to file a second IND for pemvidutide in obesity that will create a parallel development path to our ongoing NASH development.

This study will be 48 weeks in duration, and we expect to have top-line data from a 24-week interim analysis in the fourth quarter of 2022 or the first quarter of 2023. We are also considering a 12-week extension to the aforementioned Phase 1b NAFLD study that would provide 24-week data on weight loss lipids and blood pressure control toward the middle of 2022. In summary, double-digit levels of weight loss in 12 weeks, significant reductions in liver fat content. In the absence of the need for dose titration, all build our enthusiasm for the pemvidutide program, and we look forward to sharing data from our ongoing trials in the near future.

I will now hand the call over to Will Brown to give an update on our third quarter financial results.

Will Brown -- Chief Financial Officer

Thank you, Scott. I will now provide a brief update on Altimmune's third quarter 2021 financial results. More comprehensive information can be found in our Form 10-Q filed with the SEC last night. Altimmune ended the third quarter of '21 with approximately $200 million of cash, cash equivalents, and short-term investments, representing a cash burn of approximately $18 million during the quarter.

We continue to have sufficient cash to operate through 2023. Turning to the income statement. Revenue in the third quarter was $158,000 compared to $2.9 million last year. The change in revenue during the period was primarily due to a decrease in revenue attributable to the T-COVID program.

During the comparable period in 2020, we were performing a lot of activities in the Phase 1/2 trial of T-COVID, which was completed earlier this year. We are currently collecting the related accounts receivable as the contract was completed during October. Research and development expenses were $29.2 million in the third quarter compared to $17 million in 2020. The increase in R&D expense was primarily the result of AdCOVID related development costs, including the expensing of payments made to Lonza for the construction of a manufacturing suite.

We continue to evaluate our strategic options with respect to that space. The increases were offset by a decrease in the value of contingent consideration related to changes in the fair value of contingent consideration liability connected with the acquisition and development of pemvidutide. As a reminder, we will owe one last development milestone upon the dosing of the first patient in a Phase 2 trial of pemvidutide. This milestone is payable in shares of our stock, and we estimate about 850,000 shares when we meet that milestone.

General and administrative expenses remained consistent between the periods of $4.2 million in both the third quarter of 2021 and 2020. Net loss for the three months ended September 30, 2021, was $33.5 million or $0.81 of net loss per share, compared to $17.8 million or $0.54 net loss per share during 2020. The difference in the net loss is primarily attributable to the higher research and development expenses and the lower contract revenue. I will now turn it back over to Vipin for his closing remarks.

Vipin?

Vipin Garg -- Chief Executive Officer

Operator, that concludes our formal remarks, and we would like to open the lines to take questions. Could you please instruct the audience on the Q&A procedure?

Questions & Answers:


Operator

[Operator instructions] Your first question comes from the line of Seamus Fernandez with Guggenheim.

Seamus Fernandez -- Guggenheim Partners -- Analyst

Hey. Thanks for the question. So guys, the first question really is what additional color can you provide us on these five patients, the ALTs directional changes there. Anything with regard to the liver fat comparisons as we actually have looked at other drugs in the NASH space, the FGF21 class appears to have rapid liver defatting as well, which I think only the absolute best number matches up to what you guys are showing in these five patients.

How confident are you that this is going to expand to the broader array of patients? And then separately, a lot of investor concerns around ALTs, but you guys only had one patient that had an elevated ALT, efruxifermin had a similar type patient in its own clinical study. Maybe we can talk a little bit about the potential nondrug-related mechanisms that could be at play here like rapid liver defatting, I guess, which is drug-related, but is obviously, may not be a direct effect of the drug, but it may be defatting of the liver itself? And then separately, rapid weight loss, which some of our thought leaders also comment can have associated liver enzyme elevations that result in absolutely no liver damage whatsoever and then those ALTs decline over time. So I'd love to just kind of get a sense of your thoughts as you continue to compile the data and the data evolve?

Vipin Garg -- Chief Executive Officer

Yes. Thanks, Seamus. Thanks for the question. There are lots of questions there.

We'll try to answer them all. Let me just start out by saying that we are very, very encouraged with this data. Both the weight loss data and now the liver fat reduction data. Yes.

These are small numbers, and this is early data, but it's very consistent. Every single subject that had baseline liver fat content of 5% and higher reached below the limit of detection on 1.8 and 2.4-milligram dose. So the two most effective doses. So we'll talk more about it.

But as you know, we're doing a much larger study in NAFLD and really, to us, this is a window into what we might see in that study. So the potential of this drug, both in obesity in weight loss and now in liver fat reduction seems really, really good, and that's what we are excited about. We think we'll have a drug here both for obesity, not only for obesity, but also for NASH. But with that, I'll turn it over to Scott Harris to talk -- to provide you more color on these five subjects as well as talk about the ALT.

Scott Harris -- Chief Medical Officer

Sure. Good morning, Seamus. So regarding the ALT elevations, none of these five subjects had any changes in their ALT. And as we've said in the past, ALT elevations are often sporadic and unexplained in studies, particularly in first-in-human studies.

And in fact, as you've noted, they've frequently been reported with other drugs. We did report on the prior patient with ALT abnormalities. I would finish that conversation to say that we have many patients in the trial with more dramatic changes in MRI-PDFF. And also to your question about weight, changes in weight as well who did not experience ALT abnormalities, including a subject who dropped his liver fat content from 19.5% to below the limit of detection without an ALT elevation.

So we don't think that the data currently supports that hypothesis, but obviously, more information is needed. Regarding the comparison to other drugs, it has to be emphasized that the reduction of the MRI-PDFF to below the limit of detection is unchartered territory. Companies have not reported this in the past. We've achieved a degree of liver fat reduction that has not been realized by other drug development programs where the goal is merely to normalize the liver fat content to 5% or less.

The head of the imaging laboratory that performed the MRI-PDFF analysis, who has very extensive experience in these assessments, advises that the observed reduction in liver fat was among the largest he had seen so far, if not the largest. So I would emphasize that while the study was small and exploratory, the pattern that we've seen is a level of reduction in liver fat that's not been observed with previous compounds.

Seamus Fernandez -- Guggenheim Partners -- Analyst

Great. And also quite rapid as well. And maybe just to provide a little bit more color on the NAFLD study. Can you just help us what is the -- what are the thresholds for enrollment as it relates to liver fat content? And I assume for simplicity reasons, biopsies are likely not going to be included in this Phase 1 study.

But just wanted to get a little bit more color on the enrollment criteria for that study and the pace of enrollment that you anticipate as a result of the more maybe restrictive criteria?

Will Brown -- Chief Financial Officer

Thanks for the question, Seamus. Well, if anything, the enrollment criteria are less restrictive than they were in the Phase 1 study and will include a wide variety of patients. Now the threshold for liver fat in that study is 10%. That's the cutoff that's been used by most sponsors.

And as you mentioned, there will not be a biopsy in this study. This is a noninvasive study based on liver fat content. But I would emphasize that this population will now include older subjects as well as subjects with diabetes, and we actually expect the pace of enrollment to be very rapid.

Seamus Fernandez -- Guggenheim Partners -- Analyst

Congrats on some really intriguing data, looking forward to the next data set from your Phase 1b.

Will Brown -- Chief Financial Officer

Thank you.

Operator

Your next question comes from the line of Yasmeen Rahimi with Piper Sandler.

Yasmeen Rahimi -- Piper Sandler -- Analyst

Hi, team. Thank you so much for taking my question, and congrats on the great new data that you shared with us. I have a number of very short, tailored questions for you. And I'm going to just go one by one.

The first question is directed to you is, what was the average weight loss that was observed in these five patients that really got great liver fat reduction? So let's start there.

Scott Harris -- Chief Medical Officer

Right. The average weight loss that I have for you is at week I would imagine that the numbers that we tell would be approximately double that, although I don't have that number in front of me. And the average weight loss in these subjects was -- well, the range of weight loss was between of 3.1% and 4.7%. So the average weight loss was approximately 4%.

Yasmeen Rahimi -- Piper Sandler -- Analyst

Thank you.

Scott Harris -- Chief Medical Officer

And again, Yasmeen, that was at week six. So a double in 12.

Yasmeen Rahimi -- Piper Sandler -- Analyst

Thank you. Second question directed to you is was there any other MRI-PDFF analysis done at an earlier point? I'm trying to understand, I mean, we're already at the plateau of 90%, but sort of what the curve looks like in terms of the slow? If you could just comment on that. And then I have two more short questions.

Scott Harris -- Chief Medical Officer

Yes. Thanks, Yasmeen. So the way the study was conducted, there was a baseline MRI-PDFF in week six and then week 12. We don't have the week 12 data yet.

So we don't have a slope other than to be able to tell you what happened at baseline and at week six.

Yasmeen Rahimi -- Piper Sandler -- Analyst

The next question, I think, for us and a lot of our clients are asking us to just really understand the translation of weight loss between overweight population versus an NAFL population that you will be enrolling in your 1b. So when we look at the data from other GLP-1 constructs, what we noticed is that the presence of being an NAFL patient does not impact the degree of weight loss. But what does impact it is the presence of diabetes. So I would like you to maybe explain to us, should we be expecting weight loss rates that we saw in obese population to be similar to the NAFL population, specifically the NAFL nondiabetics? And then the second thing is what do we know about GI tolerability based on historical data when we go from an obese population to NAFLD?

Scott Harris -- Chief Medical Officer

Thank you for the question, Yasmeen. So you're correct that studies with drugs and other mechanisms have shown approximately a 30% lower weight loss with diabetics. So our prospective plan in this study is to read out and weight loss in both the nondiabetics and the population and the diabetics and stratify enrollment in that manner, because it is an important covariant in the amount of weight loss that will be achieved, although not in the amount of liver fat reduction. So that's to your first point.

Regarding the adverse events, we do not feel that there will be any difference in the adverse event profile going forward because of the inclusion of other patients. It's been said by experts in the field, the diabetics actually realized lower adverse events than nondiabetics. Also recognize that as we go from Phase 1 to Phase 2, in general, because of the change of the way the studies are conducted, adverse events drop between Phase 1, we have intensive monitoring, often inpatient in Phase 2. So I would say that as we move from the Phase 1 study to the Phase 1b NAFLD study that we'll actually see no worse than the adverse events that we have, if not an improvement.

Yasmeen Rahimi -- Piper Sandler -- Analyst

Thank you, team, for clarity. I'll jump back in the queue.

Operator

Your next question comes from the line of Liisa Bayko with Evercore ISI.

Liisa Bayko -- Evercore ISI -- Analyst

Hi. Thanks. Most of my questions have been answered. But I guess, I'll just kind of riff off the last series of questions.

Can you just comment on the effect of age? I know these patients were slightly younger than perhaps future studies will be. And just wanting to understand, what you know about the effect of age on weight loss and also loss of fat in the liver and if that would have any impact? And if you could just comment a little bit on what the age of these -- these five patients were where you looked at liver fat?

Scott Harris -- Chief Medical Officer

Right. So has been shown in other studies as well as our studies, we did an analysis of that, which we presented, but it's also been discussed in the step programs. There is no effect of age and weight loss. And if there is any effect, there's a higher level of weight loss as you get to older age.

So translating from a younger population in this Phase 1 study to the next study or studies that we'll be doing, if anything, based on that information, we'll be seeing more weight loss. There's also been no effect of age on the degree of fatty liver reduction as reported in other programs. The average age of this cohort was similar. These five patients was similar to the general cohort that we reported on earlier.

Liisa Bayko -- Evercore ISI -- Analyst

Thanks.

Operator

Your next question comes from the line of Jon Wolleben with JMP Securities.

Jon Wolleben -- JMP Securities -- Analyst

Hey. Good morning, and thanks for taking the questions. I was hoping can you just remind us what doses you're studying in the NAFLD study? How many patients are in that one as well as how many patients are in the DDI study?

Scott Harris -- Chief Medical Officer

Thank you, Jon. So we're going to be taking three doses into the NAFLD study 1.2, 1.8 and 2.4 milligrams. There will be 72 subjects in that study. That means 18 for each of the arms, and then also includes the placebo arm.

And the DDI study will be 36 subjects.

Jon Wolleben -- JMP Securities -- Analyst

Got it. And with the liver meeting coming up this weekend, I'm not sure if you had a chance to take a look at this yet, but I saw an interesting analysis for semaglutide, where they found that 69% of the histologic improvement was due to weight loss. So I'm wondering kind of your thoughts on that analysis and then also what you might expect with the direct-acting glucagon effects with pemvidutide?

Scott Harris -- Chief Medical Officer

Right. Well, we would agree with the interpretation, but recognize that with semaglutide, it has no direct effects on the liver. So it didn't relies entirely on weight loss. In a similar analysis on hemoglobin A1c at one year that they performed in their step program.

The majority of the hemoglobin A1c drop that they had was not due to the incretin effect that is the stimulatory effect of GLP-1 and insulin secretion, which did give better acute diabetic control in the first few weeks. In the 52 weeks, the majority of the drop in the hemoglobin A1c was due to the weight loss. So that paralyzed what you've just said about the effects of weight loss on histologic improvement. Now as you often mentioned, there's a direct effect of glucagon here on the liver, which is different from semaglutide, which differentiates pemvidutide from GLP-1 mechanisms semaglutide.

So we believe that there's an opportunity for even greater fat reduction as well as greater weight loss with the additive glucagon agonism. So we agree with your assessment.

Jon Wolleben -- JMP Securities -- Analyst

Interesting color. Thanks again for taking the questions.

Scott Harris -- Chief Medical Officer

You're welcome.

Operator

Your next question comes from the line of Mayank Mamtani with B. Riley Securities.

Mayank Mamtani -- B. Riley Financial -- Analyst

Good morning, team. Congrats on the progress. So maybe if I can just quickly ask a follow-up on the NAFLD study and just comparing the baseline characteristics of the Phase 1 obese study that we talked about. What are the expectations sort of differences that you may have on the baseline ALT levels that the NAFLD study would have? I think you had about somewhere between 20 to 30 in the obese healthy volunteer study.

And just trying to understand, what might be the difference in kinetics that you may observe on ALT given now that we have a good idea on what you have on PDFF and weight loss as we think about the NAFLD study?

Scott Harris -- Chief Medical Officer

Mayank, I'm going to try to answer the question. I'm not sure I fully understand it. So please chime in if I don't answer your question completely. In the Phase 1 study that was recently completed were -- we allowed up to twofold elevation.

And we'll have a very similar -- very similar cutoff in the upcoming study. And I'm not really sure I understand your question about the kinetics. Could you please elaborate on that a bit so I can answer it.

Mayank Mamtani -- B. Riley Financial -- Analyst

Yes. So we -- just based on your ALT data from the Phase 1 study, we are not seeing -- it's kind of like except for that one anomaly. We're not seeing a significant lowering for example. But generally, in NAFLD studies, you would want to see that ALT dropped along with liver fat and weight loss.

So should we be expecting that as you go into the NAFLD diabetic and nondiabetic study, just curious?

Scott Harris -- Chief Medical Officer

I understand that, yes, we should expect -- recognize that in the study that we recruited because these patients, in general, were not an NAFLD population. We're not going to see or have the opportunity to look at ALT dropping that was in the Phase 1 study. But specifically recruiting people where we're going to be having a pharmacologic effect on liver fat, which is driving the ALT. We should see that reduction in the upcoming NAFLD study.

Mayank Mamtani -- B. Riley Financial -- Analyst

Understood. And then on the lower dose 1.2 mg dose level, Scott, did we have any patients there with elevated liver fat. Just curious what were the findings, if any, on the MRI-PDFF for that dose level?

Scott Harris -- Chief Medical Officer

Right. We had two patients at the 1.2 milligram dose who had elevated liver fat, one with 19% and one with 11% approximately. The drops there were 27% and 70% for a mean of about 48%. So the effects were there very comparable to other drugs, but not as robust as the reductions of 1.8 and 2.4.

We're in each of those arms. The reductions were greater than 90% and to below the limit of detection.

Mayank Mamtani -- B. Riley Financial -- Analyst

Wow. That's amazing. And then on the IND package for obesity, just remind us how this is different than the NASH IND, just what goes into it, just curious?

Scott Harris -- Chief Medical Officer

So the heavy lifting Mayank was done by the NASH IND because that's where the major parts of the IND were presented, things like the manufacturing, the toxicology and also some of the early clinical data. Now the emphasis of the obesity IND will mainly be clinical. And we will provide the first study to be conducted under the IND. That's a requirement of the IND, and we'll update with any additional data from the Phase 1 study and from our chronic talk.

So -- which will be completed before that study. So really, it's a smaller IND oriented mainly toward the clinical development program with some additional updates. But the heavy lifting was done with the NASH IND submission in August. And as you know, it cleared in September.

Mayank Mamtani -- B. Riley Financial -- Analyst

Great. And my final question on HepT and HBV. I understand we are a little away from the data second half of next year, I'm just curious how you might be thinking of this being deployed as a combination. I think you commented on this being used with DAA.

But it's becoming clear that at least an RNAi and a nuke is sort of what you need. And the importance of an immunostimulant is becoming increasingly clear. So you might be in a sweet spot there. So have you thought of thinking about this more strategically as you look to be part of a potent combination for developing functional gear for HBV?

Scott Harris -- Chief Medical Officer

Yes. Mayank, I'm going to -- I have Scot Roberts on the line. I'm going to ask Scot to answer that question. Scott?

Scot Roberts -- Chief Scientific Officer

Thanks for that question. I mean you've hit the nail on the head. That's exactly how we see this. The thinking is to create a window with even lower levels of surface antigen than are currently encountered with new treated patients alone, and that would provide a better field for the immunotherapy to stimulate the T cell response.

So as you know, the RNAi approaches mean to do that. It's not really clear if they're doing that well, and they're certainly not doing it for a long term, but they can create that window of opportunity for HepTcell to work better. So that's how we're thinking about that. And we think that there's a lot of potential and approach.

Mayank Mamtani -- B. Riley Financial -- Analyst

Thanks for taking our questions.

Operator

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

Patrick Trucchio -- H.C. Wainwright -- Analyst

Thanks. Good morning. I just have a couple of follow-up questions. The first one is on NASH.

I'm just curious, based on your discussions with regulators in Europe and North America, how likely or unlikely do you think kind of a change in the regulatory endpoints as they currently exist for potential approval of NASH compounds, how likely or unlikely is that to change? Or is it more likely to kind of stay how it is for the foreseeable future?

Scott Harris -- Chief Medical Officer

Thanks for the question, Patrick. It's extremely important. I'm not aware of any public announcements that FDA or EMA will be revising their guidance's for NASH approval. I think that there is a great deal of talk that they should change and perhaps have to change to gear toward noninvasive assessments and steer away from the liver biopsy.

But I can't give you any further guidance myself as to the likelihood of either of those regulatory bodies making a change and when it would occur.

Patrick Trucchio -- H.C. Wainwright -- Analyst

Got it. And then just on the HepTcell on the Phase 2 program. Can you remind us, is this study power to demonstrate a certain reduction in surface antigen or what would you need to see in this data give you confidence that it can act as that co immunostimulatory to combine with another -- with a direct-acting antiviral?

Scott Harris -- Chief Medical Officer

Right. So the study has two key endpoints. The primary endpoint is a one log reduction in surface antigen, and the study is powered to show that. But another key endpoint is the clearance of the surface antigen, we think that, that should be achievable as well, but we don't have our power oriented toward that.

The approval endpoint will be the clearance of the antigen probably, although that discussion with the agency has not taken place. Clearly, to get reductions is extremely meaningful as we move forward, especially in combination therapies with partners.

Patrick Trucchio -- H.C. Wainwright -- Analyst

Got it. And then just one last one. Just in terms of potential collaboration on pemvidutide. How are you thinking about that? Is there kind of a point in development and which you had looked for a collaboration partner, how far along do you bring this program on your own?

Vipin Garg -- Chief Executive Officer

Yes, Patrick, thank you for the question. I mean, as we have said previously, we are well-positioned to take the program through the next phases of trials here. We're well funded to do that. Our goal is to really increase the value of this asset with each study.

So that's why we are planning multiple different studies to really together a very compelling package. Ultimately, we think this is an asset that we will have a partner, at what stage. I can't tell you exactly right now, but we are marching toward that goal and making good progress.

Patrick Trucchio -- H.C. Wainwright -- Analyst

Perfect. Thank you very much.

Operator

[Operator instructions] Your next question is a follow-up question from the line of Liisa Bayko with Evercore ISI.

Liisa Bayko -- Evercore ISI -- Analyst

Hi. This just kind of relates to what we talked about earlier with baseline fat level, but I know future trials are going to be looking at patients with at least 10% liver fat as a cutoff. Can you maybe talk that higher threshold could impact outcomes to patients with higher baseline levels of liver fat, would you expect to see the same more or less? Like, how much more difficult is it to reduce liver fat from a higher baseline?

Scott Harris -- Chief Medical Officer

I would phrase the question as a positive the higher the liver fat, the greater the opportunity for the percent reduction. As we saw in the program, or the data that we presented, Liisa. We had patients -- with patients with up to 19.5% liver fat, who not only dropped their liver fat content by substantial amounts, not only do we normalize liver fat to 5%, we actually dropped that 19% in just six weeks to below the limit of detection. These are -- this is unchartered territory.

Drugs have not done this before. So we think that the opportunity to expand the change and see an even greater change is even higher. So in moving to a 10% population, I think the opportunity to duplicate these changes are grade and see really unprecedented changes in liver fat.

Liisa Bayko -- Evercore ISI -- Analyst

OK. And just -- that's really helpful. And then just may have addressed this already, but were any of those five patients, one of the five patients with elevated ALT?

Scott Harris -- Chief Medical Officer

No. The patient with the elevated ALT, Liisa, had a liver fat content of baseline of 3.7% and that patient dropped below the limit of detection. So that patient was not included in the analysis that we just provided. But I would also emphasize the patients that we've reported on with much greater reductions in liver fat content, as I just mentioned, from 19.5% to below quantitation, another one 17% below quantitation.

I could go through the series here did not repeat did not have ALT drops elevations. So consequently, although that might have been the framework for initial conjecturing hypothesis generating. The data that we have that we're reporting now does not confirm a relationship between the drop in liver fat and the ALT elevation.

Liisa Bayko -- Evercore ISI -- Analyst

Understood. And then just one more question. Moving forward, are you going to include diabetics in your studies and maybe you can describe the impact of diabetes on weight loss for us?

Scott Harris -- Chief Medical Officer

Yes. So as we talked about earlier, traditionally in drug development programs, diabetics have lost less weight over the course of a trial that nondiabetics, typically about 30% less. So based on that, in our NAFLD study, we will be stratifying subjects. That's the 12-week NAFLD study that we've recently launched Liisa.

We're stratifying subjects by the presence or absence of diabetes at baseline and analyzing the weight loss separately. In the Phase 2 study that we'll be conducting and launching next year, we are enrolling nondiabetics. So that will be a pure look at that population and the weight loss in that population. And as I mentioned before, should we conduct the 12-week extension to the NAFLD study? We'll have 24-week data on weight loss in both nondiabetics and diabetics and probably around the middle of next year.

Liisa Bayko -- Evercore ISI -- Analyst

OK. And then just is there a certain proportion of diabetics that you want to have in the studies, I understand you're stratifying them, but do you expect it to be like a third? Or are you cut off at 50%? Is there some number?

Scott Harris -- Chief Medical Officer

I mean, I think that it will be a third to 50% is probably an initial good estimate.

Liisa Bayko -- Evercore ISI -- Analyst

OK. Thank you.

Scott Harris -- Chief Medical Officer

Welcome.

Operator

At this time, there are no further questions.

Vipin Garg -- Chief Executive Officer

Thank you, everyone, for participating today. We appreciate the opportunity to share our results and outlook with you, and thank you for your continued interest. Have a nice day.

Operator

[Operator signoff]

Duration: 49 minutes

Call participants:

Will Brown -- Chief Financial Officer

Vipin Garg -- Chief Executive Officer

Scott Harris -- Chief Medical Officer

Seamus Fernandez -- Guggenheim Partners -- Analyst

Yasmeen Rahimi -- Piper Sandler -- Analyst

Liisa Bayko -- Evercore ISI -- Analyst

Jon Wolleben -- JMP Securities -- Analyst

Mayank Mamtani -- B. Riley Financial -- Analyst

Scot Roberts -- Chief Scientific Officer

Patrick Trucchio -- H.C. Wainwright -- Analyst

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