Arbutus Biopharma Corp (ABUS) 2020 Q2 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to the Arbutus Biopharma Corporate 2020 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 like to hand the conference over to one of your speakers today, Ms. Pam Murphy. Ma'am, please go ahead.

Good morning, and thank you for joining Arbutus' Q2 2020 Conference Call. On the call from the Arbutus Executive team are Bill Collier, President and Chief Executive Officer; Dr. Mike Sofia, Chief Scientific Officer; Dr. Gaston Picchio, Chief Development Officer; and Dave Hastings, Chief Financial Officer.

Bill will begin with a summary of recent accomplishments and a review of Arbutus' corporate objective, followed by Gaston and Mike Sofia, who will provide you with updates on the clinical development of AB-729, Arbutus' early-stage HBV program -- pipeline and its COVID-19 research efforts, respectively. Dave Hastings will follow and provide a review of the company's second quarter financial results, and we'll then open the call for Q&A.

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, time lines and clinical results for Arbutus' proprietary HBV pipeline, the patents providing the Arbutus LNP technology that the company licensed to Genevant, achievement of the company's 2020 objectives and its expected cash use and cash runway.

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 our most recent annual report on 10-K, quarterly report on 10-Q and our other periodic reports filed with the SEC. Bill?

Thank you, Pam, and good morning, and thank you, everyone, for joining us today. We hope that all of you are well and obviously continuing to stay safe.

To begin, I'd like to confirm that despite the challenges of COVID-19, our Arbutus team continues to execute efficiently and effectively. And so our scientific, clinical and corporate operations and time lines, all remain on track.

As described in the press release this morning, we expect to report AB-729 safety and efficacy data in the second half of 2020 for the 60-milligram multi-dose cohorts at 4- and 8-week intervals and also the 90-milligram single-dose cohort and an additional cohort of new data from a 90-milligram single-dose cohort in HBV DNA positive subjects.

As most of you know, we provided a clinical update on the positive interim 729 single-dose 60-milligram results in May. And Gaston will review these results and provide more details on the ongoing Phase Ia/Ib clinical trial program in just a few minutes.

Additionally, we've made progress in our own COVID-19 preclinical research effort as well as in our collaboration with the COVID R&D consortium whose mission, as is ours, is to find molecules with the greatest rationale for advancement into clinical trials and put them into studies designed to yield the most meaningful results in the fastest manner possible.

Turning to a different topic. On July 23, 2020, the United States patent and trademark office before the patent trial and appeal board announced their decision in Moderna therapeutic Inc.'s challenge to the validity of the U.S. patent 8058069, what we often call, the 069 patent.

In this decision, they determined that no challenged claims were unpatentable. Now while Arbutus is the patent holder, this patent is licensed to Genevant.

Arbutus is gratified by this decision upholding the validity of one of the patents protecting our LNP technology that, as I said, we've licensed to Genevant. And this decision reinforces our continuing belief in the potential of this technology.

Also, on July 23, 2020, Roivant recapitalized Genevant through an equity investment and conversion of previously issued convertible debt securities held by Roivant. Arbutus participated in the recap of Genevant with an equity investment of $2.5 million. Following the recapitalization, Arbutus now earned approximately 16% of the common equity of Genevant.

Importantly though, Arbutus' entitlement to receive future royalties or sublicensing revenue from Genevant remains unchanged. Before turning over the call to Gaston and Mike, I'd like to just quickly review our key objectives for the next 6 to 12 months. And these are, firstly, to advance our Phase Ia/Ib clinical trial of 729, our RNAi compound, including the initiation of 2 new 90-milligram multi-dose cohorts. Second, to progress our next-generation capsid inhibitor, 836 through IND-enabling studies and initiate a Phase Ia/Ib clinical trial with a goal of moving to proprietary combination studies as rapidly as possible. And thirdly, to continue our research efforts to advance a lead oral compound that inhibits PD-L1 and a lead oral next-generation HBV specific RNA destabilizer.

Let me turn the call over now to Gaston, who will update you on 729.

Thank you, Bill, and good morning, everyone. In May, we provided you with the interim results from the ongoing Phase Ia/Ib clinical trial for AB-729, which included data from the single dose 60-milligram cohort at week 12. This data demonstrates that the 60-milligram single dose at week 12, led to a mean S-antigen decline of approximately 1 log that actually matched what we saw with a 118-milligram cohort at week 12 as well. All the subjects receiving the 60-milligram single dose experienced a significant HBV surface antigen decline and all subjects in this cohort had normal ALTs and ASTs throughout the dosing and follow-up period.

Importantly, we continue to follow these subjects through week 48, and we will be reporting new follow-up data in the second half of the year. We are currently dosing chronic HBV subjects in the following: 2 60-milligram multi-dose cohorts, evaluating dosing intervals of 4 and 8 weeks and a 90-milligram single-dose cohort. We're also dosing HBV DNA positive subjects in a 90-milligram single-dose cohort with results expected in the second half of 2020.

Importantly, this cohort will allow us to evaluate for the first time, the impact of AB-729 on HBV DNA replication.

As mentioned previously, we also intend to initiate 2 90-milligram multi-dose cohorts in the second half of this year. We're also considering several Phase II trial designs in combination with other agents, pending review of our 60-milligram multi-dose data. We will be announcing this in the coming months.

With that, I'll turn the call over to Mike.

Thanks, Gaston, and good morning, everyone. First, I want to update you on AB-836, our next-generation capsid inhibitor. Currently, we expect to complete our IND-enabling studies by December 2020. All looks on track to meet that objective.

In addition, we continue to make progress with our next-generation oral HBV specific RNA destabilizer that primarily targets HBV S-antigen reduction and an oral PD-L1 compound that we believe may be useful in rewaking a patient's own immune response to the HBV virus.

In May of this year, we announced our commitment to help address the coronavirus global pandemic by establishing a long-term effort directed to this problem. We committed to bringing our recognized expertise to the discovery and development of new antiviral therapies that would prove to be safe and effective against not only SARS-CoV-2 but also against future coronavirus outbreaks.

As we laid out our plan, we intended to focus our directed discovery efforts on 2 targets. The nsp5 viral main protease and the nsp12 viral polymerase. These 2 targets are highly conserved across coronaviruses, but crystal structures available for structure-based drug design efforts lend themselves to the deep expertise we have within Arbutus discovery and development functions.

In addition, we joined the COVID R&D consortium to leverage early-stage screening capabilities to screen our own proprietary libraries against SARS-CoV-2 in the hope of identifying novel agents with potentially new mechanisms of action.

As of today, we are in full execution mode. We have chemistry underway to prepare Arbutus designed molecules that target the viral protease and polymerase. We have already screened several Arbutus libraries of small molecules as part of the COVID R&D consortium. We're in the process of evaluating the data.

In addition, we continue to feed molecules to this screening effort. We have also established a network of testing capabilities that will help us rapidly progress the evaluation of our molecules.

We believe Arbutus' COVID program is differentiated by our focused expertise and capabilities in antiviral drug discovery development that puts us in a position to rapidly advance new coronavirus therapies.

We are committed long-term to this program with the expectation of delivering novel therapies to patients.

With that, I'll turn the call over to Dave.

Okay. Thanks, Mike, and good morning. Our ending cash, cash equivalents and short-term investments was approximately $84 million as of June 30, 2020, compared to approximately $91 million as of December 31, 2019.

Our cash used from operations for the first and second quarters of 2020 was approximately $24 million. And in addition, we received approximately $17 million in net proceeds from the issuance of shares under our ATM program in the second quarter of 2020.

Now during July, Arbutus fully utilized the remaining availability under the ATM program, resulting in an additional $36.5 million of net proceeds.

Therefore, based on our ending second quarter cash, cash equivalents and investments of $84 million, plus the additional $36.5 million of proceeds received under the ATM program during July, we now believe our cash position is sufficient to fund the company's operations into mid-2022 versus our prior guidance of mid-2021.

So with that, Bill, I'll turn the call back to you.

Thank you very much, Dave. And with that, operator, Michelle, let's go to open up the lines for the question-and-answer session.

(Operator Instructions) And our first question comes from the line of Mayank Mamtani with B. Riley.

Good to hear progress you're making across the pipeline. Just quick 3 questions and follow-up. Maybe starting with you, Gaston. Any color -- now that we are learning a lot more about RNAi targeted therapies, including S-antigen, an S-antigen targeted. So maybe could you just give us some color on how you think about the 729 positioning in the landscape, including, obviously, the learnings you had on the high dose but also sort of working through the mid-dose and the low dose now, can you just give us an update how you think about the competitive positioning?

Sure. So we believe that 729 remains a very competitive agent in the landscape of RNAi. So I think we're very satisfied with the rate of decline in S-antigen that we saw with the 60-milligram single-dose cohort all the way throughout with trial, and that was with a -- as we pointed out with a single dose, what we would call, a low dose.

So we are awaiting our 90-milligram single-dose data. And obviously, we're awaiting our multi-dose data. Also, the safety profile of the 60-milligram single dose was unremarkable. Achieving those -- the case in the absence of any ALT flares.

Just a reminder, one of those subjects actually achieved a 2.4 log decline. And the way that we are seeing this, and this, I think, will become more clear as the data becomes available later in the year, we will be able to compare the multi dosing versus the single dose. And given the durability of the response that we're seeing with the 60-milligram dose, we believe that we may have some advantages in terms of the dose and the frequency of the dosing.

So as you know, we are studying 4 and 8, which is different from what others have done. They're only studied every 4 weeks, we're going to do for 4 and 8. And we are extending that less frequent dosing schedule to our 90-milligram dose, but we're going to study 8 and 12. So we see those aspects that potentially have some advantages over the other agents in the space.

Great. And then on the PTAB ruling, can you just give us an update on what next steps are specifically in terms of timing and also Moderna filing an appeal? Any update can you provide on next steps there?

Yes, Mayank, this is Bill. So thank you very much for your question. Obviously, appreciate and understand why you're asking it.

As we've disclosed previously, the intellectual property is licensed to Genevant. And as we also explained today, after the recap of Genevant, we now have an equity investment amounting to 16%. But importantly, still, we'll receive the future royalties or sublicensing revenue from Genevant.

So I think it's important to understand that Genevant as the licensee has the first right to pursue full control of any enforcement actions taken in connection with this IP.

So that being said, I wouldn't want to comment or speculate on what those actions may be.

Okay. Great. And my final question for Mike. Mike, can you comment on the 2 targets that you have for the coronavirus efforts. How do you think about proof of biology there? And also maybe be specific on the models and the sort of time lines that you're thinking about?

Yes. So we are looking at 2 highly conserved targets in the coronavirus genome, right? That's the nsp12 viral polymerase and nsp5 viral protease. We chose those because our specific interest is to look at a pan coronavirus agent. And so we were looking for targets that would be conserved across coronaviruses. So that was really important to us. The -- these 2 particular targets have a lot of structural information associated with them. So they help facilitate our drug design and development efforts with regard to this particular virus. The proof of biology here is clearly remdesivir does target the nsp12 viral polymerase. So there's clearly a direct proof-of-concept here. In the viral protease, we're looking clearly towards other viruses that have proteases associated with them, specifically HCV and HIV, where proteus inhibitors have become a part of the regimen for treating those particular diseases. But also even in the SARS-CoV-2, there are early leads that people have identified against the nsp5 viral protease that at least in preclinical models seem to have activity.

So I think when you look at both of these particular targets, I think there's ample evidence and support for the idea of pursuing them as potential therapies for SARS-CoV-2.

And our next question comes from the line of Madhu Kumar with Baird.

This is Rob on for Madhu. And I was just wondering, based on what we've seen for the various HBV RNAi programs, what kind of surface antigen declines in the 60- or 90-milligram cohorts to get excited about 729?

I have to say, Gaston here. So I have to say that we are already excited about 729 with the magnitude of decay that we saw with the 60 in a single dose on the safety profile. So we anticipate that it's going to continue to decline with multi dosing. To give you a number, I think it's -- I think it would be a little premature to try to say 1.5 is important or 2. I think what matters here is throughout the period of dosing, one would like to see S-antigen disappear or become unquantifiable at least and remain as such.

So in some patients that may be 2 logs, in other patients it may be 3 logs. So it's really variable. I wouldn't like to really give you a number. But obviously, we would like to remain competitive. But again, I just want to reiterate that we're very pleased with the decay that we saw with the 60 after a single dose at week 12.

All right. I have another question. And to what extent do you believe you can distinguish an ALT elevation, that's a safety signal from one that's an immune flare?

Well, that's a great question, and it's a question that hasn't been answered over the past 20 years, and we continue to discuss it. As you may recall, we took some efforts in our AB-506 program to try to distinguish them. Because we saw flares, in 1 case, the flares were associated with potential drug toxicity. In another case, we saw S-antigen going down and DNA going down. But even if DNA is going down and S-antigen is going down, there is no guarantee that, that flare is happening -- it's not related to drug toxicity.

I can tell you, there was a recent meeting by the HBV Forum, where many of the sponsors presented with the presence of key opinion leaders as well as regulators. And we continue to discuss this. And I have to -- I think it's fair to say that the matter hasn't been solved. There are no good biomarkers to say, flare, it's potentially related to drug toxicity versus a beneficial flare as we understand it in chronic hepatitis B. So I cannot give you an answer.

Obviously, there are certain things that will allow you to determine if there is a bad flare. Such as meeting duly criteria and so forth, like bilirubin elevations and so forth. But if those things don't happen, like there's no bili elevation, that doesn't guarantee that the flare is a bad flare. So it's still an open question, I think.

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

I had a few on 729 and then one on 836. So for 729, it sounds like you're honing in on the 90-milligram dose based on the selection for these new cohorts in the Phase I. You guys see any signs of greater efficacy in that dose in the ongoing cohorts? Or is there a lack of safety signals that lead you to choose that 90-milligram dose?

We haven't evaluated the data yet. So data that we haven't evaluated. So I can't comment about that at this point. I mean, as I said, we are very pleased with what we saw with the 60-milligram single-dose data.

All right. Great. Then on the 60-milligram single dose, you presented the data earlier this year, the data later this year, what's the duration on that going to be?

So the protocol actually with the multi dosing. So I'm now referring to the multi-dosing cohorts. So we can dose for 6 months, and there is an option for subjects to reconsent and continue dosing for an additional 6 months. So a total of 1 year. The protocol states that the duration of dosing in the multi-dosing cohort is 6 months with the option of reconsenting and enrolling in a protocol extension, if you wish, and continue to dose for an additional 6 months or 1 year of dosing. So we will have long-term dosing data eventually next year.

Long term. Okay. But for the -- so you presented 3 months for the 60-milligram single dose in May, in the second half of this year, can you tell us what the duration for that cohort is going to be?

I'm sorry. I thought you were asking about the duration of the cohorts in general. So while we will present in the second half of the year, we'll be up to week 12 or beyond, depending where the data cut falls, and there may be data beyond with cohorts as well.

Okay. Great. And then for 836, can you just give us any details on what remains to be completed for the IND submission?

This is Mike Sofia. So for 836, we're in the midst of the IND-enabling study. So we're completing the 28-day toxicology assessment and all of the manufacturing requirements. But everything is clearly on track, and as we have guided, as Bill had said, we expect to deliver an IND package by the end of the year for that molecule.

(Operator Instructions) I am showing no further questions, and I would like to turn the conference back over to Mr. Bill Collier for any further remarks. I'm sorry, Mr. Collier. I do see a question that just popped up from the line of [John Chen] with (inaudible) Capital.

I have a slightly different question. I see a cross-ownership or common ownership in intellectual properties between our company and Genevant. Has there been any discussion about maybe combining the 2 companies together to better put the resources as well as to reflect the potential of the combined company and utilize capital market raise capital for additional R&D going forward?

This is Bill. Thanks for the question. I think the best response to that is just to kind of outline again what we've said in the press release this morning about the recent recapitalization of Genevant.

So there's a little bit of history here of when Genevant was formed between Arbutus and Roivant. But the most recent update is on July 31 when Genevant was recapitalized. So it is a stand-alone private company, of which we now have a shareholding of 16%.

And I think what's important to Arbutus in that recap is that it didn't impact in any way the future royalties or sublicensing revenue that we may get from Genevant for any subline.

So at the moment, Arbutus and Genevant are separate companies. And like I said, the most recent corporate update is what we've just disclosed.

I don't know, Dave, do you want to add anything on to that?

No. I think it's well said, Bill. I'll just say, look, Arbutus' core mission is to find a functional cure for hepatitis B. That remains our core mission. And that's where the majority of our resources, along with our COVID effort will be dedicated.

And I'm showing no further questions at this time. And I would like to turn the conference back over to Mr. Bill Collier for any further remarks.

Thank you very much, Michelle. Let me close out then just by thanking each of you for your interest in Arbutus, and we do look forward to updating you on our key objectives, as we progress through the year.

Now those objectives, as we've summarized today, include the following. So we look forward to preliminary results of 729 60-milligram dose cohorts dosed at every 4 and 8 weeks in the second half of the year.

Also in the second half of this year, we expect results at week 12 for the 90-milligram single dose cohort in both HBV positive and negative subjects.

As you've also heard, in the second half of this year, we plan to initiate 2 90-milligram multi-dose cohorts.

And in addition to clinical trial results for AB-729, we expect to progress our next-generation capsid inhibitor, AB-836 through IND-enabling studies and look forward to the initiation of Phase Ia/Ib trials thereafter.

Regarding our earlier stage pipeline, we hope to report continued progress for a lead oral next-generation HBV specific RNA destabilizer and a lead oral compound that inhibits PD-L1 as well as obviously continuing to progress our COVID-19 research program.

So again, thank you very much, everyone, for joining us on the call this morning, and that concludes the meeting. Thank you.

Ladies and gentlemen, this does conclude today's program, and you may all disconnect. Everyone, have a great day.