Arbutus Biopharma Corp (ABUS) 2021 Q2 法說會逐字稿

Good day, and thank you for standing by. Welcome to the Arbutus Biopharma Corporation 2021 Second Quarter Financial Results and Corporate Update Conference Call. (Operator Instructions) Please be advised that today's conference is being recorded. (Operator Instructions) I would now like to hand the conference over to your speaker today, Ms. Pam Murphy. Please go ahead.

Good morning, everyone. On the call from the Arbutus executive team are Bill Collier, President and Chief Executive Officer; Dave Hastings, Chief Financial Officer; Dr. Gaston Picchio, Chief Development Officer; and Dr. Mike Sofia, Chief Scientific Officer. Bill will begin with a review of the second quarter and first half accomplishments, clinical development and remaining 2021 corporate objectives, followed by Dave Hastings who will provide a review of the company's second quarter financial results.

We'll then open up the call for Q&A, and Mike and Gaston will be available to address research and clinical development-related questions.

Before we begin, we'd like to remind you that some of the statements made during the call today are forward-looking statements, including statements regarding expectations for Arbutus' proprietary HBV pipeline, and HBV and pan-coronavirus discovery programs, including potential clinical results and time lines for AB-729, AB-836 and future compounds. Our expected cash runway and the potential for our drug candidates to improve upon the standard of care and contribute to a curative combination regimen for HBV. These forward-looking statements are subject to a number of risks and uncertainties that may cause our actual results to differ materially, including those described in the most recent annual report on 10-K, quarterly report on Form 10-Q and other specific reports filed with the SEC from time to time. Bill?

Thank you, Pam, and good morning, everybody. Thank you for joining us today. We appreciate your interest in Arbutus Biopharma. I'm very pleased to report on our significant progress so far this year and to outline our objectives for the rest of 2021. We continue to drive towards our goal at Arbutus, which is to focus primarily on developing a portfolio of products with different mechanisms of action, that when used in combination results in a functional cure for patients living with chronic HBV.

During the first half of this year, we established a strong foundation towards achieving that goal by accomplishing the following: We continue to report compelling data on AB-729, with 4 abstracts at EASL, including a late-breaker oral presentation that showed substantial declines in hepatitis B surface antigen in subjects with chronic HBV. Importantly, 729 continues to have a favorable safety and tolerability profile, and all 4 of these abstracts were selected for best of EASL conference.

Notably, in addition to reporting significant drops in surface antigen, we saw that in 3 out of 5 evaluable subjects and increased HBV-specific immune response, providing support for combination therapy, including immunomodulatory agents. This compelling 729 data derived from up to 1 year of dosing supports our view that 60 milligrams every 8 weeks is an appropriate dose in our Phase IIa clinical trials. And I'll discuss these trials in just a moment.

Looking forward, we expect to provide additional data in the second half of 2021, including initial data for a 90-milligram every 12-week cohort in HBV DNA negative subjects and initial data on a 90-milligram every 8-week cohort in HBV DNA positive subjects. As we've discussed in the past, we believe that 729 has the potential to be a cornerstone therapeutic in future HBV combination regimens. Therefore, our strategy has been to enter several clinical collaborations to evaluate 729 in combination with other agents with potential complementary mechanisms of action.

And so I'm pleased to report significant progress towards this goal with our previously announced collaborations with Assembly Biosciences, Antios Therapeutics and Vaccitech, and also the authorization from the FDA to proceed with our IND application for 729 in a clinical trial in combination with a nucleoside analog and short courses of peginterferon. Now the Antios collaboration will evaluate a triple combination of 729, the Antios proprietary active site polymerase inhibitor nucleoside, which is called ATI-2173, and VIREAD, for the treatment of subjects with chronic HBV. The Vaccitech collaboration will evaluate a triple combination of 729 with Vaccitech's proprietary immunotherapeutic VTP-300 and standard-of-care nucleoside analog therapy for the treatment of subjects with chronic HBV.

The clinical trials evaluating 729 with interferon and Antios' ATI-2173 are expected to initiate in the second half of 2021. We expect to file the CTA for the clinical trial with Vaccitech's VTP-300 in the second half of 2021 and expect to initiate the clinical trial in early 2022.

In addition to the substantial progress that we've made with AB-729, I'm also gratified with the initiation of a Phase Ia/Ib clinical trial with AB-836, our next-generation oral capsid inhibitor. This is an important program as it will allow us to potentially have our own proprietary combination therapy to treat patients with chronic HBV. At the recent EASL conference, Arbutus presented preclinical 836 data suggesting the potential for increased efficacy and an enhanced resistance profile, relative to previous generation capsid inhibitors. Initial data from healthy volunteers and HBV subjects is expected in the second half of this year.

We continue to make progress in all of our discovery programs. We're focused on generating lead nomination candidates for our oral PD-L1 inhibitor and RNA destabilizer programs. In addition, our internal research program to identify new small-molecule antiviral medicines to treat COVID-19 and future coronavirus outbreaks continues to progress. And so with that summary, I'll now turn the call over to Dave Hastings for a brief financial update.

Thanks, Bill, and good morning, everybody. As I've mentioned in the past, our key financial metric is cash and financial runway. Our cash, cash equivalents and investments was $121.3 million as of June 30, 2021, as compared to $123.3 million as of December 31, 2020. Our cash use from operations for the first half of 2021 was $31.9 million, which was offset by $30.7 million of net proceeds on an issuance of common shares under Arbutus' ATM program.

For all of 2021, we expect our cash use to range from $70 million to $75 million, and therefore we expect our current cash runway is sufficient to fund operations through the third quarter of 2022. So with that, Bill, I'll turn the call back to you.

Thanks very much, Dave. So operator, let's now open up the lines for Q&A, please.

(Operator Instructions) Your first question comes from the line of Ed Arce with H.C. Wainwright.

This is Thomas Yip asking a couple of questions for Ed. First, about the new Phase IIa study with 729, specifically regarding the dosing choice. In the press release, you indicated that you've already selected 60-milligram every 8 week as the dose to go forward. Just wondering, will the study include only 1 dose? Or is there -- possible to include additional doses with the 90-milligram dose data that are expected in the second half this year?

Yes. Good question. Thank you very much. Good morning. Gaston, would you like to take that one?

Sure. Good morning, Thomas. For now, the decision has been made to include a season dose. But since we are in the early stages of preparation of the file. And our 90-milligram data will come later this year, there's always an opportunity to reconsider that decision; that includes the doses. But right now, we're going with 1 dose.

Okay. Sounds good. And then, perhaps for 836, for also the Phase Iab study that's ongoing. You mentioned that data from both have the volunteers and HBV patients will be included in at least second half of this year. Just wondering, will this be a single data readout? And what should we expect from this readout beyond safety data?

Yes, Gaston, you want that, too?

Sure. So we expect, obviously, safety data and tolerability, as well as some HBV DNA data coming from the current hepatitis B cohorts. We may be able to also deliver some HBV RNA data as well.

Sorry, let me just add 1 thing. We will, as usual, measure as antigen, pending whether, as you know, 836, potentially it's much more effective, but targeting the second mechanism. So we will be measuring as antigen as well and see what happens in that front.

So perhaps somewhat comparable to 729 earlier data releases?

Yes. correct.

Great. Okay. And then 1 final question from us. Just wondering, you mentioned the progress for 729 combination studies. I wonder if -- have you report enrollment progress for the 729 combo study with Assembly, I recall here? And if not, what should we expect from the study mix.

Gaston, if you have?

So is -- I mean, it's a little bit premature yet, the study is recruiting, and pending the progress in terms of enrolling this study, we will make a later announcement regarding what data can we share before the end of the year. But the study is enrolling as planned, as we speak.

Okay. So we should expect a new update by the end of the year?

Again, I think it's going to be dependent on how successful the enrollment process moves forward. There's challenges around the world right now in terms of COVID. So, so far, so good. The study is enrolling. The sites are opening, but it's very difficult to predict the pace of enrollment anywhere around the world.

Yes. So just -- we haven't guided to having results by the end of the year in that assembly collaboration. What we have said, in conjunction with our partners at Assembly, is that the study has initiated and is recruiting.

Okay. Understood. And completely understandable given what's going on around the world. We look forward to the multiple payer releases in the second half this year.

Thank you very much.

Your next question comes from the line of Brian Skorney with Baird.

This is Luke on for Brian. So regarding the peginterferon alpha combo study, beyond safety, could you maybe talk about what you're hoping to see regarding biomarkers? I know it's still kind of early here, but also, when do you think we could see initial data?

Well, on that study, we said that we will initiate in the second half of this year as to the study design. I'll let Gaston answer that.

Yes. Thanks for the question. So basically, as you know, we presented data at EASL, showing that there is reawakening of HBV-specific immunity after around 20 weeks of dosing with the 729. So we think this provides a great opportunity to add on another agent such as the minimal (inaudible) agents such as interferon. So we expect basically to see at the time of the addition of interferon, we expect to see a probably a faster and deeper decline in S-antigen. We also plan to measure T cell responses. And we obviously potentially expect to see that decent responses in the presence of interferon are stronger and potentially broader. Then obviously, we have other biomarker, biomarkers such as HBV RNA, but that will depend on whether the initial baseline HBV RNA level is susceptible, as you know, not in all patients is susceptible. So really, it's going to be around that. And hopefully, we may see also an increase in antibodies. That's another possibility in the presence of interferon, which we haven't seen so far in the ongoing studies.

Your next question comes from the line of Roy Buchanan with JMP Securities.

The first 1, I want to ask about the Vaccitech approach? And just what made that approach still appealing for use as a therapeutic vaccine? For example, why not use that approved potent vaccine like (inaudible) or something, as a possible option?

Yes. Thanks for the question. We've always had a strategy that a combination of drugs is likely to be the (inaudible). There's actually a slide that we've had in our corporate deck for, it seems like many, many years now, which has got all the different potential combinations in kind of up arrows and down arrows. So I think we've also always recognized that vaccines play a part in that. And so we were intrigued and interested in the Vaccitech collaboration. I'll let Gaston expand further.

Yes. Thanks for the question. So it's a little bit along the lines of what we just discussed on the previous questions. So now we have evidence, I think for the first time, I would believe we've been the first ones in showing that, that with an siRNA, you're able to, reawaken HBV specific immune responses. So I think this provides an excellent opportunity to ask the question of enhancing the HBV specific immune response in different ways.

One could be with a broad immunomodulator such as interferon, the other would be with HBV-specific lectins. Now specifically, so I think we -- the data that we have gathered in the 729 programs, especially the immunology data, it really provides a very good foundation and justification to do this study with Vaccitech. So Vaccitech's platform, we believe, provides a much stronger HBV specific immune response than existing prophylactic HBV backings.

So I mean, I think you should discuss with them directly this -- their data. But based on what we learned, we believe their therapeutic vaccine with the adeno platform as well as NDA provides a much better opportunity at enhancing HBV-specific responses compared to prophylactic HBV vaccines that may be in the market.

Okay, great. And I had a question on Antios' ATI-2173. How does that, so clinically aside, how does that differ in targeting versus the background with, which is tenofovir in this case? And is the goal to replace the background news with a more potent nuke? Or what's the goal of the combination?

Yes. Good question. It's set up in the study with a nuclear sign. Maybe Mike Sofia, do you want to chime in on that?

Sure. So I mean, if you look at (inaudible) as a nucleotide, nucleoside, it shows very interesting profile in, in vivo studies, even if some of the earlier historic clinical trials, which you saw was this longer duration of effect compared to a typical nucleoside, whether tenofovir or entecavir. It also has a slightly different mechanism of action, although it does target the polymerase, it does bind to the active site, it's not what they call a chain terminator. So it doesn't function as a tenofovir or entecavir does. So that differentiates it in some way. So that combination of interesting observations made it an interesting experiment to do, to combine it with an agent like 729, which reduces S-antigen, can we then bring in something like the Antios molecule with another nucleoside and see very deep suppression of viral replication that is more sustained over time than with a single nucleoside. So that was sort of the rationale for an interest level in bringing in the Antios molecule into the mix.

Okay. Great. That's helpful. And then last couple of questions on the interferon program. Vir has presented some preliminary results for their combo with the RNAi plus interferon, just anything that you've learned from that program that can be applied to 729, anything that you're doing differently with 729 that might differentiate it from the other candidates or maybe you don't need to differentiate?

And then, what do you guys expect to be the baseline, functional cure rate for the interferon, plus a move? If have the number for interferon, can look in the slide deck. But I'm not clear if interferon numbers, the combos, just interferon itself.

Gaston, do you want to take that one?

Sure. So let me start from the last question. So the expectation in terms of functional cure, I don't think we are in a position to provide a number of, what's our expectation of functional cure. So we just let the data speak for itself. When it comes to what did we learn? Well, the approach that Vir took actually was -- in this -- in the part of the study that they showed data on, at EASL was having interferon at the beginning.

So from the get-go, they would add their RNAi plus interferon. So that resulted, I believe, if I remember correctly, with 12 in an increase in the decay of S-antigen. So we have a little -- a different approach. Again, in line with the finance that we have. There were some immunology studies that we presented at EASL. We believe that it's better to first drop S-antigen and allow that immune response to come back and then add the interferon.

So I believe -- again, I mean, don't take my word for it, but I believe that based on the data, I believe I have seen that Vir will be testing that as well. They will be adding interferon later. But we are only exploring adding the interferon later.

So after -- as you may see, you can see the design of the starting clinical trials are comped right now. We're going to be adding interferon after 24 weeks of 729 treatment. So we're -- we believe that S-antigen already would have gone down by probably somewhere around 1.8 to 2 locks, on average, across the entire population. So what we expect, as I said before, is that after having interferon, obviously the S-antigen will continue to decay. We may see some sort of conversion. We may see also, because we're going to measure that, better HBV specific immune reawakening compared to subjects that did not receive interferon.

Your next question comes from the line of Keay Nakae with Chardan.

Keay Nakae from Chardan. Just back on that same topic with the time to the interferon in your study. Is there a threshold drop in S-antigen before you'll advance the patient to the interferon? Or is it just simply the 24-week duration time point?

There is no threshold. We are very confident that by week 24, all subjects have achieved at least a lot. And for the vast majority more than a log and a half of S-antigen drug. So in response to your question, there's no minimum threshold that they need to meet, but very confident that everyone is going to be in excess of one log decay of -- in S-antigen.

Okay, and then how long is the course of interferon?

Yes. Great question. We're testing 2 courses, 24 weeks, as well as 12 weeks. Again, may I remind everyone, yes, the details are in (inaudible).

There are no additional questions at this time. I'd like to turn it back over to management -- I'm sorry, there is a question. There is from Kelechi Chikere with Jefferies.

Just a couple of questions on my end. I guess, on a high level, are there any competitor data sets over the coming quarters that you'll specifically be looking at for a read through or to inform the design or to provide with any information for your own clinical studies?

Hey, good question. I mean, we've just had, obviously, the EASL conference. And as always, we had our highest field for interesting data from, actually any source. And then as you think about the second half of the year, the typical event is AASLD, which is in November. I don't know that I would single out any particular data set. I'm just racking my brain here, Gaston or Mike, can you think of anything that, other than obviously staying, like you guys, the rest of what all the major companies are doing in the area. So, Gaston?

I think the one -- so it's interesting because we -- at EASL, we pretty much showed 1 year of dosing with AB-729. And we were expecting to see 1 year of dosing coming in from Janssen that was presented from their (inaudible) studies. So I would say it will be interesting to see if that data gets presented at ASMD later this year, as well as in that study, I believe they also have a triple combination. So that would be also interesting to see.

Great. Great. That's great color there. And I guess, lastly, I guess, in respect to your earlier stage programs, is there any additional color you can provide around when you might be able to enter the clinic with those, so your destabilizer as well as the PD-L1?

Yes. Mike, you want to take that one?

Yes. So we're very close. We're kind of in the latter stages of our candidate selection process. So I think we'll be able to update, and when we expect to be in the clinic.

There are no additional questions at this time.

All right. Well, thank you very much, everyone, for joining us this morning. We appreciate your interest and your questions, actually. So we look forward to a productive remainder of 2021, and we continue to be confident with further data from the 729 Phase Ia/Ib trial. Our progression of 729 into 2 additional Phase IIa proof-of-concept studies, and data from our 836 clinical trial, as well as continued progress in our HBV discovery programs, that we'll be building on a strong foundation to achieve a functional cure for people with chronic HBV.

And of course, we're also looking forward to leveraging our antiviral discovery and research efforts in progressing our pan-coronavirus discovery program. So with that being said, thank you again for your time. And operator, that concludes our call this morning.

Ladies and gentlemen, this does conclude today's conference call. You may now disconnect.