Arbutus Biopharma Q3 2023 Earnings Call Transcript

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Provided by Quartr
November 7, 2023

There are 11 speakers on the call.

Operator

Good day and thank you for standing by. Welcome to the Arbutus Third Quarter Corporate and Financial Update Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer Please be advised that today's conference is being recorded. I would now like to hand the conference over to Lisa Capparelli.

Operator

Please go ahead.

Speaker 1

Thank you, Brianna. Good morning, everyone, And thank you for joining Arbutus' Q3 2023 financial results and corporate update call. Joining me today from the Arbutus executive team are Bill Collier, President and Chief Executive Officer David Hastings, Chief Financial Officer Michael McElholl, Chief Operating Officer Doctor. Mike Sofia, Chief Scientific Officer and Doctor. Karen Sims, Chief Medical Officer.

Speaker 1

Bill will begin with a corporate update followed by Dave Steve Deans, who will provide a review of the company's Q3 2023 financial results. After our prepared remarks, we will open the call for Q and A. Before we begin, I'd like to remind you that some of the statements made during the call today are forward looking statements, which are subject to a number of risks and uncertainties that may cause our actual results to differ materially, including those described in our most recent annual report on 10 ks, Our quarterly report on Form 10 Q, which will be filed later today and from time to time in our other documents filed with the SEC. With that, I'll turn the call over to Bill Collier. Bill?

Speaker 2

Good morning, everyone, and thank you very much for joining us today. As you likely saw, in addition to reporting our Q3 results earlier this morning, we also announced that I will be retiring at the end of the year. I'll speak more about that shortly, but first, let's discuss our results. At Arbutus, we remain committed to our goal of developing a Functional cure for patients with chronic hepatitis B virus by advancing the development of our clinical assets that can be combined to create a curative Over the last few months, we've optimized our pipeline, including the discontinuation of our coronavirus research programs and our oral RNA destabilizer. This allows us to sharpen our focus and resources on our most promising clinical programs, imduciran and AB101, both of which are expected to have data readouts next year.

Speaker 2

As a result of this pipeline prioritization, we are also announcing today the difficult decision to streamline our organization by reducing our workforce by 24%. We want to underscore how grateful we are to all of our employees, Especially those departing the organization for their dedication and passion in developing novel therapeutics for viral diseases at Arbutus. And while these changes primarily impact our research function, we have maintained a group of research scientists Now we know that changes that impact our people are not easy and we're committed to providing those employees with support as they transition to their next roles. At the same time, we're confident that Arbutus remains positively positioned for the future. Now I'd like to provide some updates on the continued progress that we're making across our pipeline.

Speaker 2

With more than 290,000,000 Worldwide chronically infected with HBV and with current lifelong treatment options resulting in less than a 5% cure rate, There remains a large unmet medical need for a functional cure for chronic HBV. We believe we're well suited to address this need With our team's extensive expertise in virology and with imbusiran, which is one of the most advanced RNAi therapeutics in development. Based on data generated to date, Indusiran has shown to impact all three components needed for a functional cure for patients with chronic Those are reducing HBV DNA, suppressing surface antigen and reawakening the HBV specific immune response. Our strategy to develop a functional cure for HBV involves exploring indusiran in combination with other investigational and approved products that can further stimulate the immune system to induce functional cure in chronic HBV patients. Imduceran is our lead asset and later this week at a prestigious liver focused medical conference AASLD's the liver meeting, We will be presenting a late breaking poster with preliminary data from our Phase 2a clinical trial that we're conducting with Varintas Biotherapeutics, formerly known as Vaxatek.

Speaker 2

Through this clinical trial, we're testing whether the combination of imduciran, Nuc therapy and Berenthus' HBV antigen specific immunotherapeutic VTP-three hundred Can lower surface antigen and stimulate the host immune system to fully suppress the virus. As I've mentioned previously, This is an early look at data as not all patients have received the full VTP-three hundred or placebo dosing regimen. In addition to safety data from an efficacy standpoint, we're hoping to see a reduction in surface antigen within 24 weeks of sorry, We're hoping to see a reduction in surface antigen with 24 weeks of imduceran treatment that is similar to what we've seen in our other clinical trials to date and further impact on HPSNG and HBV specific immune activation with the addition of VTP-three hundred. We look forward to reporting these data at AASLD. Now you may recall that we've expanded this trial to The addition of a low dose of the anti PD-one monoclonal antibody inhibitor nivolumab to the combination treatment regimen.

Speaker 2

We believe nivo may further boost the host immune response. The data that we're reporting at ASLD will not include any data from this expanded arm as we're in the early stages of this trial. We will have more to report on this portion of the clinical trial next year. We also have a second Phase 2a clinical trial that is evaluating imducerin in combination with ongoing Nuc therapy And interferon in patients with chronic HBV. Earlier this year, we reported preliminary data that continues to reinforce our confidence in imduceran's ability to effectively lower surface antigen.

Speaker 2

We're continuing to follow these patients and expect provide updates from this clinical trial in 2024. Our second HBV asset is AB101, Our oral PD L1 inhibitor that is currently in a Phase 1a1b clinical trial. Immune checkpoints have been shown to This double blind randomized placebo controlled clinical trial is designed to investigate the safety, tolerability, pharmacokinetics and pharmacodynamics of AB101. The trial will be conducted in 3 parts, starting with single and multiple ascending doses in healthy subjects and culminating with multiple doses in patients with chronic HBV. In September, we announced that we dosed the 1st patient in the Finally, let me spend a moment talking about my decision to retire as CEO at the end of this year.

Speaker 2

As many of you know, I've had the privilege to lead Arbutus since June 2019 and since then we've accomplished so much. This was a particularly challenging decision for me to make personally and one that is completely unrelated to recent activities at Arbutus. I remain confident in imduciran and AB101 and the ability of this team to develop these compounds To possibly provide a functional cure for patients with chronic HBV. My 4 year plus tenure at Arbutus is one of the most Rewarding positions I've had in my career. The opportunity to lead a group of talented and passionate researchers, clinicians and professionals With the drive to serve the HBV patient community has been a true privilege.

Speaker 2

We've achieved many successes and key milestones. And as I look to my future retirement, I'm confident in the future of Arbutus. Now Mike McElhore will succeed me as Interim CEO, effective As many of you know, Mike is a Co Founder of Arbutus and serves as our Chief Operating Officer. She has more than 20 years of scientific, strategic, transactional and commercial experience spanning various operating roles within Bristol Myers Squibb, Pharmacet, Merck and Biro Pharma. The Board and I have the utmost confidence in Mike's ability to be successful In leading Arbutus and to continue to create value for our shareholders.

Speaker 2

Mike has worked very closely with me over the last 4 plus years And I'm confident that there will be a smooth transition. And I will also continue to be a resource for Mike as he becomes acclimated to his new role. In closing, I'm confident in Mike's leadership as he leads Arbutus into its next chapter. Indusiran and AB101 are well positioned to deliver on our goal of developing a functional cure for HBV and driving value for our company as we advance these HBV assets. With that, I'll hand the call over to Dave Hastings for a brief financial update.

Speaker 3

Thanks, Bill, and good morning, everybody. We ended the Q3 of 2023 with approximately $145,000,000 of cash, cash During the 9 months ended September 30, 2023, we received approximately $26,000,000 of net proceeds from the issuance of common shares Under Arbutus' at the market offering program, these cash inflows were offset by approximately $69,000,000 of cash used in operations. As Bill mentioned, today we announced that we reduced our workforce by 24%. Importantly, we have maintained a discovery research capability in HBV And continue to believe we have the people necessary to advance our clinical stage HBV pipeline. With this reduction in workforce, We will incur a one time restructuring charge of approximately $1,100,000 that will be recorded in the Q4 of 2023.

Speaker 3

We expect our 2023 net cash burn to range between $90,000,000 to $95,000,000 excluding any proceeds received from our at the market offering program. Importantly, we believe our cash runway will be sufficient to now fund our operations into the Q1 of 2026. In closing, we have a strong financial position to advance our mission and we remain committed to developing our HBV assets to provide a functional cure for chronic HBV. With that, I will now turn the call back to Bill.

Speaker 2

Thanks, Dave. As I mentioned earlier, we're looking forward to reporting preliminary data from the AB729-two zero two Phase 2a study combining indusiran, nuke therapy and VTP-three hundred at the AASLD Liver Meeting in the coming weeks. Immediately following that Medical Congress, we'll be attending the Jefferies Healthcare Conference in London. So please reach out to Lisa if you want to schedule time to meet with the team to review that data. In closing, I wish the best to our departing employees And again, thank them for their dedication and many contributions to the company as we continue to pursue our goal of developing a functional cure for patients with chronic Operator, we're now ready to open the call for any Q and A's.

Operator

Thank you. At this time, we will conduct a question and answer session. And wait for your name to be announced. Our first question comes from Roy Buchanan for JMP. Your line is now open.

Speaker 4

Hi, great. So congrats to Bill for the retirement just as things are getting exciting over there and congrats to Mike for the Promotion, I guess, maybe if you let's start with AB101, just the results in the first half of next year. Are you going to have, sounds like maybe not, but the complete, SAD results? And maybe just give us Some patient number details, if you can. And then, are you going to share the data regularly with the FDA?

Speaker 4

Are you going to wait to complete the whole Phase And then just remind us what other activities like preclinical studies are underway with 101?

Speaker 2

Okay, Roy. Thank you. Thank you for your well wishes. I'll turn it over to Karen in a moment. Maybe the best thing we could do to answer your question is just to describe the structure Of the 101 Phase 1a study.

Speaker 2

I think I misspoke earlier on when I said it was a double blind randomized study. So, Karen, perhaps you could clarify that and answer Roy's question.

Speaker 5

Absolutely. So, actually, Bill, you were correct. It is a double line of the trial.

Speaker 1

So it is a what

Speaker 5

we call umbrella trial. So there are healthy subject portions of the trial and chronic hepatitis B Patient portions of the trial, so we begin in single ascending dose from healthy subjects and then move to multiple dose from healthy subjects and then on to chronic hepatitis B patients. So the way these trials run, you obviously need data from each part of the trial to advance to the next part of the trial. So right now, as Bill said, we're in the single ascending dose portion of We do expect to have data next year. It really depends on the cadence of the trial.

Speaker 5

If things continue to move smoothly, we recruit our subjects in a So we should have some safety data, some PK data, some preliminary pharmacodynamic data in the first half of the year for the single dose portion of the trial in healthy subjects. Beyond that, it really just depends again on the cadence of the trial, the recruitment and we will disclose data once we have a meaningful

Speaker 4

Okay, great. And then just maybe What other activities are you doing, some preclinical studies or anything that's underway with 101?

Speaker 2

Mike, do you want to take that one?

Speaker 6

Well, the standard non clinical safety studies continue forward with 101. I think we've established a pretty solid package of data, preclinical data that supports the mechanism, which is novel, which supports Efficacy in animal models. So and obviously, the peak ideal PK profile, which was liver targeting For this agent, but really right now the only activities is all the non clinical toxicology Assessments that are required to support further progression of the drug.

Speaker 4

Okay, great. And one more detailed question. Just in the imbusiran study, how frequently do you check for seroconversion of S antigen? And then on the really crystal ball or speculative question, do you guys ever considered hepatitis delta, Some of your competitors are using the same agents for hepatitis B and potentially hepatitis delta. Have you considered that indication?

Speaker 4

Just what are your thoughts around that? Thanks.

Speaker 2

So Karen, do you want to take the first part and then Mike the second?

Speaker 5

Absolutely. So we are checking frequently in all of our clinical trials for The timing really depends on how these clinic visits were set up for subjects. So Typically, whenever there's a clinic visit for subjects, we do collect those parameters just for monitoring. So it can vary anywhere from Every month to every 8 weeks depending on where the subject is in the clinical trial, whether they're in the dosing phase and the follow-up phase. So we do collect those parameters At pretty much every study visit and I would say ballpark every month, if not more frequent.

Speaker 6

Yes, Roy. On the Delta's question, yes, look, we've looked at a lot of targets And Delta was clearly one of them. The idea initially was that potentially one could use AD-seven twenty nine As an siRNA to knock down antigen lobe or it's required for delta to exist. Recent clinical data certainly has the generated data that's not supportive of that. There seems to be some liver safety issues associated with potentially the accumulation of delta related Antigens in the cell and therefore some ALT significant ALT elevation.

Speaker 6

So our assessment is that a siRNA developed for hepatitis B is probably not an option for delta. So also Bill has mentioned that the focus our efforts with our reduced headcount On hepatitis B, we still think that's a significant challenge to that needs to be overcome and we believe in our strategy. So that's where we're focusing our

Speaker 4

Got it. Thank you.

Speaker 3

Thank you, Roy.

Operator

Thank you. And one moment for our next question. Our next question comes from Dennis Ding of Jefferies. Your line is now open.

Speaker 7

Hi, good morning. This is Anthea on for Dennis. Two questions from us. What are your thoughts on GSK Okay. In licensing, the J and J sRNA and what does that mean for the hep B space?

Speaker 7

Was Arbutus also in discussions with GSK? And then second, could you comment on the LNP litigation and what we should expect heading into the joint construction brief in December? Thank you.

Speaker 2

Yes. So let me take the second part first and then maybe Mike Mac can talk about our business development efforts. So on the litigation front, as I think we put in the press release, there's no new news to announce. We continue to remain passionate about defending our patents. In the Moderna case, there is a claims construction Meeting scheduled for February 7, right?

Speaker 2

So that's the next kind of Data point in the Moderna trial in the Pfizer case, there is not yet a date set for claims construction. I think that's about all we can say at this stage. So Mike, do you want to take

Speaker 8

the GSK news?

Speaker 2

Sure. GSK news.

Speaker 8

So I think the way we look at the GSK news is that any consolidation in the field, any licenses that happen in the hepatitis B space are good for the And of course, we want to see success in the hepatitis B space with people getting to functional cure. That's As you know, it's a very, very large market and can certainly support multiple competitors. With regards to conversations with any particular Company, we can't comment on that obviously, but I think it's fair to say that we stay closely in touch with everyone in the field and We continue those conversations whenever appropriate.

Speaker 7

Great. Thank you so much.

Operator

Thank you. And one moment for our next question. Our next question comes from Brian Gorney of Baird, your line is now open.

Speaker 9

Hey, guys. This is Charlie on for Brian. Thanks for taking our questions. So One is, you mentioned that with the reduction in force, the cash runway is extended through 2026. And I was just hoping you could contextualize this for us with your kind of ideal clinical development timeline and possibly Other scenarios just to kind of get a better grasp on what this cash runway means for you and your development efforts As well as could you do, based on your research, just a little bit of comparing and contrasting, following up on the recent Question about the GSK deal with the asset that they just in license compared to Inducerin.

Speaker 9

Thanks.

Speaker 2

Yes. Okay. So I mean, I think we're Pleased that we've now extended the runway into 2026. It allows us a good clear 2 years' worth of Funding and as we continue to progress the Phase 2a studies, we'll get further readouts, Further data readouts and then that will inform the next phase of either Phase 2b or Phase 3 work. It's also going to allow us to continue to progress AB101 through its Phase 1 activity.

Speaker 2

So All of that I think is quite encouraging. On the GSK question, A couple of comments. I think one, it's another recognition of the fact that combination therapy This is the way to go in hepatitis B. As far as comparing Indusiran with the asset that they've licensed in, I think there are a couple of key differences. As I mentioned in my comments earlier on, 729 has shown activity on all three of the components we believe are necessary for functional cure, reducing HBV DNA, reducing surface antigen And reawakening the immune system.

Speaker 2

And 729 is the only RNAi that's Generated data showing dosage intervals of either monthly, Every 8 weeks, every 12 weeks. So we have built in some dosage flexibility moving forward. And then Mike, you might want to just comment upon the single trigger aspect and any of the preclinical differences.

Speaker 6

Yes. So preclinically, if you look at emduceran, right, it's a single trigger agent, which can knock on all viral transcripts with 1 siRNA, Including integrated transcripts that comes off of the integrated s Anderson transcript that comes off of the host genome. One of the challenges with the J and J asset is that it requires 2 siRNAs To be able to accomplish what we're able to accomplish with 1. So I think there's a big difference And when you look at cost of goods and feasibility of commercialization of those two different assets. We're a lower dose than they are as well.

Speaker 6

So there is a, I think, a Differentiating profile for Indusiran versus the J and J SIR.

Speaker 9

Great. Thank you. That's very helpful.

Speaker 10

Okay.

Operator

Thank you. And one moment for our next question. Our next question comes from Thomas Yip of H. C. Wainwright.

Operator

Your line is now open.

Speaker 10

Hi, good afternoon, everyone. Good morning. Sorry about that. Thank you for taking my questions. Just asking a couple of questions for Ed.

Speaker 10

First of all, I just want to say, Bill, Ed and I both have the honor of working with you and best of luck And Patricia, that was and yes, just kind of call us by surprise. But first perhaps the first question from the expanded cohort From the Tier 2 study, the one with low dose nazolumab, perhaps can you provide more Specific time frame for this preliminary readout, should we expect something in the first half of the year? And then also how many weeks of treatment data can we expect from this preliminary data set?

Speaker 2

All right. Thomas, thank you very much for your well wishes. I appreciate that. Yes, so this additional arm that we've included in the 202 Study that includes nivo. Obviously, we announced that a good time after we started the original So it is running on a later time track.

Speaker 2

As we've announced, we have Started dosing in that arm, so that arm is underway. We've not yet disclosed when we're likely to get Data from that specific arm, I mean, I would point to the fact that most years, we normally do a press release with our kind of Expectations early in January, and that might be another time to ask you a question.

Speaker 10

Okay. Got it. And then perhaps pertaining to this preliminary readout, Can you discuss what would be your stake of coins that you will consider to be a successful Karen?

Speaker 5

Sure. No, absolutely. So as we've discussed, our goal certainly is to look for And hepatitis B, certainly there will be interim steps, readouts that will have to be taken before we get subjects to functional cure. So For this particular data set, certainly we'll be looking at surface antigen decline based on the induced urine lead in period, which is 24 weeks of endosiran treatment prior to randomization to receive either the VTP-three 100 immunotherapeutic or placebo. Certainly looking for induced brands contribution to lowering surface antigen during the bleeding period and then certainly any impact that VCP-three hundred has in terms of Maintaining that surface antigen decline, increasing that surface antigen decline, and certainly anything related to additional immunomodulatory impacts In addition to what we have served previously written Duke Saran on its own, so I think those are what we'll be looking for in this data readout that's Unfortunately, it's still under embargo, so I can't share any of the details of that, but to be disclosed in the next few days as the conference begins.

Speaker 10

Okay. I understood that. Perhaps just one more question from us for AB101. Can you talk about how far and long the enrollment for each of the 3 parts and Theta for the 3rd part in the expectations, is theta positive? Any possibility To those 101 in combination with emzuciran as we have seen in the expansion cohort?

Speaker 2

Yes. I think what we said so far on that study is that we'll have some initial data in the first half of next year. I think Karen also mentioned earlier on, it's still somewhat dependent upon recruitment rates into each of those arms. You're right that our ultimate aim would be to combine 729 and 101 with the nucleoside, But we've not yet provided any timelines for that.

Speaker 10

Okay, understood. Thank you again for taking my questions and we're looking forward to the ASAE presentation.

Speaker 2

Thank you. Thanks, Thomas.

Operator

Thank you. And this concludes the question and answer session. I would now like to turn it back to management for closing remarks.

Speaker 2

Okay. Well, look, thank you very much everyone for joining us this morning. We appreciate your continued interest in and support of Arbutus and your questions. We very much look forward to providing you updates as we progress the development of our HBV clinical stage assets over coming months. So operator, that concludes our call for this morning.

Operator

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

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Key Takeaways

  • Arbutus announced that CEO Bill Collier will retire at year-end and COO Michael McElholl will step in as Interim CEO, ensuring continuity in leadership.
  • The company has streamlined its pipeline by discontinuing non-core assets (coronavirus programs and an oral RNA destabilizer) to focus on its lead HBV candidates, imdiciran and AB101.
  • To concentrate resources on its HBV strategy, Arbutus is implementing a 24% workforce reduction primarily in research, while maintaining a core team to advance its clinical programs.
  • Imdiciran (RNAi therapeutic) is in two Phase 2a trials—one with Berna Biotherapeutics’ VTP-300 and nivolumab and another with interferon—and preliminary data will be presented at AASLD, with full readouts expected in 2024.
  • AB101, an oral PD-L1 inhibitor, has dosed its first patient in a Phase 1a/1b trial in healthy volunteers and chronic HBV patients, with initial safety and pharmacodynamic data due in H1 2024.
  • Following these cost and headcount actions, Arbutus projects a cash runway into Q1 2026, supporting ongoing development of its HBV clinical assets.
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Earnings Conference Call
Arbutus Biopharma Q3 2023
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