Arbutus Biopharma Q4 2023 Earnings Call Transcript

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Provided by Quartr
February 29, 2024

There are 9 speakers on the call.

Operator

Good day

Speaker 1

and thank you for standing by. Welcome to the Arbitis Biopharma 4th Quarter and Year End 2023 Financial Results and Corporate 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 your first speaker today, Lisa Capparelli, VP of Investor Relations.

Speaker 1

Please go ahead.

Speaker 2

Thank you, Stephen. Good morning, everyone, and thank you for joining Arbutus' Q4 year end 2023 financial results and corporate update call. Joining me today from the Arbutus executive team are Mike McElholl, Interim President and Chief Executive Officer Doctor. Karen Sims, Chief Medical Officer David Hastings, Chief Financial Officer and Doctor. Mike Sofia, Chief Scientific Officer.

Speaker 2

Mike McLuhall will begin with a corporate update, followed by Karen, who will review our ongoing clinical programs. Dave will then provide a review of the company's 4th quarter and year end 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 annual report on Form 10 ks and from time to time in our other documents filed with the SEC. With that, I'll now turn the call over to Mike McElholl.

Speaker 2

Mike?

Speaker 3

Thank you, Lisa. Good morning, everyone, and thank you for joining us today. In 2023, we made several important strategic choices to best position Arbutus for long term success. In addition to streamlining our focus and resources on HBV, which extended our cash runway into the Q1 of January 2026, we also announced my appointment as Interim President and CEO. As a co founder of Arbutus, I am honored to have this opportunity to lead my colleagues in our mission to develop a functional cure for the millions of people chronically infected with hepatitis B virus.

Speaker 3

I'm excited for my new role and plan to leverage my extensive scientific, strategic, transactional and commercial experience with antiviral and infectious disease companies to continue to move Arbutus forward. In 2024, our focus is to position Arbutus for continued success and create value for all our stakeholders. We remain committed to advancing the development of our proprietary clinical assets in HBV, including imduceran, our RNAi therapeutic and AV101, our oral PD L1 checkpoint inhibitor. There remains a need for finite and more efficacious HBV treatments that further improve long term outcomes and increase functional cure rates as fewer than 5% of patients currently achieve functional cure with currently approved nukes or interferon. Our goal is to develop a treatment for chronic hepatitis B virus patients that results in at least a 20% functional cure rate to address this large unmet medical need.

Speaker 3

HBV is a complex virus that will most likely require a combination of compounds that inhibit viral replication, lower the viral antigen burden and boost the immune response. We are executing on our 3 pronged approach to functionally cure HBV with a combination therapy that includes imduceran as a cornerstone. A combination that includes imduceran, AB101 and ANUCC is our ultimate goal. That said, our current strategy is evaluating imduceran in combination with other agents in multiple Phase 2a clinical trials with the goal of gaining valuable insights on efficacy, safety and optimal dosing to help inform the design of a Phase 2b clinical trial with indusiran as the cornerstone therapy. Throughout 2024, we anticipate reporting data from our 2 ongoing Phase 2a clinical trials with Indusiran, including the potential to see patients with undetectable surface antigen.

Speaker 3

Achieving undetectable surface antigen levels in either of our current Phase 2a clinical trials would certainly be an important validation of embusiran's role in potentially achieving a functional cure for hepatitis B patients. This year, we also anticipate data from our healthy subject portion of our Phase IaIb clinical trial with AB101, our immune modulator. We expect to report preliminary safety and importantly preliminary receptor occupancy and target engagement data in this population. With the potential of AV-one hundred and one to boost the host immune response, our goal is to move AV-one hundred and one through the clinic as quickly as possible to prepare it for a possible combination with imduceran. I'd like to say a few brief words about our ongoing intellectual property litigation efforts before closing out this section of the call.

Speaker 3

All of our scientists take great pride in the intellectual property they develop, which takes great effort, time, resources and expense. It is for these reasons that we continue to protect and defend our intellectual property, including our LNP delivery technology, which is a subject of ongoing lawsuits against Moderna and Pfizer BioNTech. An important step in the litigation for Moderna took place on February 8 this year. This was the date of the Markman hearing, also known as a claim construction hearing, where the court heard each party's interpretation of the construction of claims in the disputed patents. We anticipate the judge to issue his order from the hearing within 60 days of February 8.

Speaker 3

The next steps will include expert testimony and depositions. In addition, the court has set April 21, 2025 as the trial date for this case. That date is subject to the court's availability. With respect to the Pfizer BioNTech lawsuit, the only update I can provide is that the lawsuit is ongoing, but is behind the Moderna lawsuit as it was filed later. A date for the claim construction hearing for that case has not yet been set.

Speaker 3

When able, we will provide updates on both the Pfizer and Moderna lawsuits, but please keep in mind that given the legal sensitivities, we're limited in what we can say. I'll now turn the call over to Karen Sims to provide an update on the continued progress we are making across our pipeline. Karen?

Speaker 4

Thanks, Mike, and good morning, everyone. We are currently conducting 3 clinical trials with our hepatitis B assets, 2 Phase 2a clinical trials with Indusiran and 1 Phase 1a1b clinical trial with AD101 and we expect to report data from all three of these trials throughout this year. We also plan to initiate a 3rd Phase 2a clinical trial with imdusiran and durvalumab, an approved anti PD L1 monoclonal antibody in the first half of this year. We will share more details on that trial upon initiation. As Mike stated, the purpose of these multiple Phase 2a combination clinical trials are to glean information on the safety and efficacy of imbusiran as a cornerstone therapy and to identify a combination treatment regimen that reduces viral burden and boosts the host immune response to advance into a later stage clinical trial.

Speaker 4

AB-seven twenty nine-two zero one is our Phase IIa clinical trial evaluating educiran in combination with ongoing unique therapy and interferon in patients with chronic hepatitis B. Last June at EASL, we reported preliminary data that continues to reinforce our confidence in Inducerin's ability to effectively lower surface antigen. At that time, we recorded data on a small number of patients that had received Indusiran plus at least 12 weeks of interferon and show that interferon may contribute to additional declines in surface antigen. In the first half of this year, we plan to announce end of interferon treatment data for all 43 study patients, which will include safety and changes in surface antigen from baseline. While we report these data, we could potentially have some subjects that achieved undetectable surface antigen.

Speaker 4

As a reminder, undetectable surface antigen is a key component of functional cure. AB729-two zero two is a Phase 2a clinical trial that we are conducting in collaboration with Brincess Biotherapeutics, formerly known as Vaxatec. Through this clinical trial, we are testing whether the combination of induceran, nuke therapy and Brintas' HPV antigen specific immunotherapeutic VTP-three hundred can lower surface antigen and stimulate the host immune system to fully suppress the virus. Late last year at ASLD, we reported preliminary data that included all patients that received indusiran treatment and several patients who had received BTP-three hundred or placebo. In these early data, we reported that surface antigen levels were reduced and sustained with the combination treatment of imbusiran and BTP-three hundred.

Speaker 4

In the first half of this year, we expect to report end of treatment data, which would include safety and change in surface antigen from baseline for all 40 patients that received indusiran, BTP-three hundred or placebo and Nuc therapy. We are continuing to dose patients in the amendment to the AB72-nine thousand two hundred and two trial that explores the addition of a low dose of the anti PD-one monoclonal antibody nivolumab to the combination treatment regimen. We believe nivolumab may further boost the host immune response. Preliminary data from this portion of the trial is expected in the second half of this year. As noted for the AB729-two zero one trial, we may also have undetectable surface antigen in some patients, which is a prerequisite to achieving functional cure.

Speaker 4

While our Phase 2a clinical trials are evaluating indusiran in combination with immune modulators, we intend to develop a proprietary combination therapy with imbusiran and AB101, our oral PD L1 checkpoint inhibitor. We believe that the immune checkpoint pathway plays an important role in HBV specific immune tolerance and in T cell activation. Our 3rd ongoing clinical trial is our Phase 1a1b clinical trial AB101001. This double line randomized placebo controlled trial is designed to investigate the safety, tolerability, pharmacokinetics and pharmacodynamics of AB101. This trial consists of 3 parts, starting with single and multiple ascending doses in healthy subjects and culminating with multiple doses in patients with chronic hepatitis B.

Speaker 4

We are now moving AB101 into the 2nd part of this trial, which includes evaluating multiple ascending doses of AB101 in healthy subjects. In the first half of this year, we anticipate reporting preliminary data from the healthy subject portion of this trial, which will include safety data in addition to preliminary target engagement and receptor occupancy data. As we continue to advance the clinical development of imbusiran in AB101, we believe both compounds are well positioned to deliver on our goal of developing a functional cure for hepatitis B and driving value for our company. With that, I'll turn the call over to Dave Hastings for a brief financial update. Dave?

Operator

Thanks, Karen, and good morning, everybody. We ended 2023 with approximately $132,000,000 of cash, cash equivalents and investments, compared to approximately $184,000,000 as of December 31, 2022. During the year ended December 31, 2023, we received $29,900,000 of net proceeds from the issuance of common shares under our at the market offering program. These cash inflows were offset by $85,900,000 of cash used in operations. We anticipate a significant reduction to our cash burn in 2024 from 2023 as we focus our pipeline and research efforts on HBV.

Operator

Therefore, we expect our 2024 net cash burn to range between $63,000,000 to $67,000,000 excluding any proceeds received from our at the market offering program. Importantly, we believe our cash runway is sufficient to fund our operations into the first quarter 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'll turn the call back to Mike. Mike?

Speaker 3

Thanks, Dave. As I mentioned earlier, we have a data rich year with end of treatment data expected from our 2 Phase 2a clinical trials with imiduceran and preliminary data from our Phase 1a1b clinical trial with AV-one hundred and one. We also anticipate initiating a third Phase 2a clinical trial with imdusiran and durvalumab. Operator, we're now ready to open the call for Q and A.

Speaker 1

All right. Thank you. At this time, we will conduct a question and answer session. First question comes from the line of Dennis Ding with Jefferies. Your line is now open.

Speaker 5

Hi, good morning. If I can ask a question around the patent litigation. Can you just help frame for us what to expect at the upcoming claims construction order? And what is perhaps a good outcome? And do you need the judge to roll in favor of you for all 3 or could just one disputed claim be bigger than that?

Speaker 5

Thank you.

Speaker 3

Good morning, guys. Dave, do you want to handle that question?

Operator

Yes, sure. I mean, look, Dennis, as you know, we're a little bit we have to be very careful about what we say publicly about this case. We look forward to the judge's ruling. I really don't think we want to comment sort of on the play by play of that until it actually happens. We appreciate everyone's interest.

Operator

We take this obviously very seriously. But we were pleased with the actual hearing itself and we look forward to Justice Goldberg's ruling, which we expect as you know within 60 days of February 8.

Speaker 5

And maybe as a follow-up to that, like as you look for 6 to 12 months, is there an opportunity for a summary judgment or anything that could happen potentially in your favor before actually going to trial? Thank you.

Operator

Yes. I believe that the schedule is that there will be that opportunity at some point. I believe we're expecting that in the late summer. All these timelines are subject to change, obviously. I think that's the best estimate of the company at this point in time.

Speaker 5

Thank you.

Speaker 3

Thanks Dennis.

Speaker 1

All right. Thank you. One moment for our next question. Next question comes from the line of Brian Skorney of Baird. Your line is now open.

Speaker 6

Hey, good morning. Thank you for taking my question. I just wanted to get a little bit more of a handle on the PD-one L1 antibody study designs and rationale. I guess first, how do you think about PD-one versus PD L1 targeting? It's been a while, but I think some of the initial metrics literature showed that maybe pre clinically PD L1 was more desirable of a target for infectious disease.

Speaker 6

Any thoughts on that differential? And then how did you kind of go about thinking about selecting nivo for 2 0 2 and dervo for Study 203? Yes. Thanks.

Speaker 3

Good morning, Brian. Thanks for the questions. So a couple of questions there. So maybe what I'll do is I'll turn it over to Mike Sofia to answer the PD-one versus PD L1 question. And then we can go to Karen for some considerations on design, if that works.

Speaker 3

So Mike, do you want to handle the PD-onePD L1 question?

Speaker 7

Sure. Hi, Brian. So we do know that PD L1 is certainly upregulated on hepatocytes in chronic hepatitis B patients, right? The decision for PD-one versus PD L1 really come from a strategy standpoint in the sense that we were able to identify small molecule agents that target that block PD L1 essentially. And obviously, as we reported in the literature, this is a novel mechanism of action by which it internalizes the PD L1 causes degradation, etcetera.

Speaker 7

And you can then reconstitute PD

Speaker 5

L1 on

Speaker 7

the surface of hepatocytes completely by just washing out drugs. So that all fit within our strategy for small molecule, liver centric agents that circumvents the concerns with, let's say, general systemic activation of the immune system. So it was a partly the decision around the fact that PD L1 is highly upregulated in hepatocytes. Therefore, we can target the hepatocytes with a PD L1 agent and the ability to design and develop a small molecule that fits within our overall concept of how to address this from a liver disease standpoint.

Speaker 4

Yes. Thanks, Micah. And I can jump in about the questions regarding the nivo versus durvalumab in our clinical trials. So for the two zero two trial, that's the trial we're doing in collaboration with Brintis Biotherapeutics and their VTP-three hundred asset. So as you probably know, they have performed some studies already using BTP-three hundred in combination with low dose nivolumab in their HBV-two and ongoing HBV-three studies.

Speaker 4

And in those studies, they have suggested that there is potentiation of response in subjects that receive VTP-three hundred plus a dose of low dose nivolumab given at the time of the MBA boost. So for that reason, we incorporated that strategy into the two zero two study as an amendment based on their prior and ongoing experience with using nivolumab in this context. For the 203 study, we did decide to utilize the anti PD L1 antibody durvalumab, basically for the reasons Mike just suggested and to be able to inform our upcoming combination study with AV-one hundred and one and induceran in terms of starting to explore the optimal timing and administration of a PD L1 inhibitor in the context of inducediran therapy. So that's kind of the rationale for the difference between the two studies. And certainly as the 203 study moves forward, we'll be able to share more details about the study design.

Speaker 6

Great. Thanks. That's really helpful.

Speaker 3

Great. Thanks, Brian.

Speaker 1

Right. One moment for our next question. Next question comes from the line of Roy Buchanan of Citizens JMP. Your line is now open.

Speaker 6

Hey, thanks for taking the questions. A couple, I guess for 101, just when do you think you might be in a position to reengage the FDA on 101? And I guess more broadly, what are your plans following the Phase 1a, 1b? Can you just elaborate on those a little bit?

Speaker 3

Sure. Karen, do you want to handle that one?

Speaker 4

Sure. Absolutely. So as we said throughout this process, we certainly do intend to reengage the FDA for this program. And really the criteria for that is for when we feel that we have sufficient data to return to them with a robust package to be able to move forward in the U. S.

Speaker 4

So that line of communication is certainly always open and we're looking forward to the AV-one hundred and one trial continuing to proceed as it is and accumulating that data to be able to share back with the FDA. And this development strategy is something we've done before. We've frequently taken assets initially outside of the United States for a Phase 1 study and then brought them back to FDA to initiate Phase 2 trials along with other global jurisdictions as we need to increase study populations and study size. And then in regards to how the study is progressing in output, as we said, just now we have progressed the study into multiple dosing in healthy subjects. We do intend to share preliminary data from healthy subjects in the first half of this year.

Speaker 4

The study is designed as an umbrella study. So into chronic hepatitis B patients once we have sufficient data to move forward into that population. And certainly, we'll be sharing updates as they become available with the study in an ongoing fashion.

Speaker 6

Okay, great. And then if I could ask one about ZTP-three hundred. What do you need to see from the results this half to kind of move that approach forward? And potentially, I guess, make it a cornerstone, but you mentioned combos with indusiran and 101. Yes, what do you need to see to add VTT-three hundred or another vaccine to that approach?

Speaker 6

Or do you really need to see the nivo data? Thanks.

Speaker 3

Yes. Good question, Roy. So honestly, I think we just need to see what the data look like and we'll continue to evaluate as it comes forward. As you rightfully mentioned, we added the nivo arm to that study as well. I think we probably want to see that nivo data before moving that combo forward unless of course we see something spectacular out of the VTP-three hundred plus inducerin arm and I have no insight into that.

Speaker 3

Currently, I just it will depend on what the data look like. Obviously, with VTP-three hundred not being a proprietary asset, we're considering thinking about indusiran plus 101 and moving that forward as quickly as we can. That's always been sort of the goal. But the data will guide us, I think is probably the best way to think about it.

Speaker 6

Okay. Thanks.

Speaker 1

Sure. One moment for our next question. Next question comes from the line of Ed Arce of H. C. Wainwright.

Speaker 1

Your line is now open.

Speaker 8

Hi, good morning, everyone. This is Thomas Yip asking a couple of questions for Ed. Thank you for the kind of questions. First question for the new Q3 Phase 2a study with divalumab. Can you discuss the design in broad strokes, how big would the study be and any specific elements that we can expect in the study that is running from the ongoing 2 or 2 study?

Speaker 3

Karen, do you want to handle that one, please?

Speaker 4

Yes, sure. So again, we typically don't dive into the details of our study designs until we're able to announce the 1st subject, 1st dose in the study. So I can't elaborate much beyond what we've already said. Again, the goal of the study is to try to help inform upcoming studies with imbusiran in combination with AV-one hundred and one. So looking at different options in terms of the timing of adding a PD L1 inhibitor to imbusiran therapy is really the high level goal.

Speaker 4

In terms of the size of the study, it is a typical 2A size study. This is again an exploratory study to try to basically learn about again that optimal timing, optimal duration of that combination approach. So the study is listed on clinicaltrials.gov and you're certainly welcome to peruse that for any additional details there. But again, we will share more specific details about the trial once we have subjects enrolled.

Speaker 8

Got it. Understood. And then same thing similar along that line, just thinking ahead of the combination study with imbuciran and then with 101. Will the first study be a similar proof of concept study Phase IIa that we've seen with other combinations as well?

Speaker 4

Yes, I can jump into that one as well. Typically, it is. I mean, the rationale really for starting with the Phase IIa study is certainly for AV-one hundred and one, we will still be increasing the safety database for that molecule. We'll be still learning additional information about PK and pharmacodynamics in a larger population of subjects. So moving to a Phase 2a study is fairly routine with an early development asset just to make sure we're fully understanding the different aspects of the molecule before taking it into a larger Phase 2b type study.

Speaker 4

And that really is just all about derisking the compound and making sure that we're completely comfortable taking it into these larger studies, which as you know are very technically difficult, very expensive. So it's most likely it'll start with a smaller 2A study. But again, as Mike mentioned throughout the call, we need to see the data and see how the data guides us. More to come on that as the AV-one hundred and one program moves through Phase 1.

Speaker 8

Got it. Understood. And then one final question from us. Just trying to narrow down the timing of the first half readouts, most notably the Tier 1 end of premium data readout and then also the AD101 heavy on tier data. Are these separate events or should we expect kind of like a big splash at EASL?

Speaker 3

Yes, good question, Thomas. It's kind of a tough question to answer. I think and the reason I say that is because, of course, we'd love to present our data at EASL. We always love to present our data at EASL, but of course, we have no idea whether any abstracts that we may or may not submit will be accepted. So it's hard to guide specifically to a particular conference.

Speaker 3

But I think that I think you're kind of thinking about the timing correctly, that that's probably around the time when either through a conference or through some other mechanism, the data will likely be available.

Speaker 8

Got it. Thank you again everyone for taking the questions and we're looking forward to the data readout in the next few months.

Speaker 3

Great. Thank you, Thomas.

Speaker 1

Thank you. One moment for our next question. Next question comes from the line of Keay Nakae of Chardan. Your line is now open. Your question has been answered.

Speaker 1

Thanks.

Speaker 3

Thanks, Gabe.

Speaker 1

Okay. I'm showing no further questions at this time. I would now like to turn it back to management for closing remarks.

Speaker 3

Great. Thank you. And thanks everyone for joining us this morning. We certainly appreciate your continued interest in and support of Arbutus and we look forward to providing updates we progress the development of our HBV clinical stage assets. Operator, that concludes our call.

Speaker 1

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

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