Arbutus Biopharma Corp (ABUS) 2020 Q1 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to the Arbutus Biopharma Corporation First Quarter 2020 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 to your speaker today, Pam Murphy. Please go ahead, ma'am.

Thank you, and good morning, everyone. On the call from the Arbutus executive team are Bill Collier, President and Chief Executive Officer; Dr. Michael Sofia, Chief Scientific Officer; Dave Hastings, Chief Financial Officer; and Dr. Gaston Picchio, Chief Development Officer. Bill will begin with a summary of recent accomplishments and a review of Arbutus' corporate objectives, followed by Dr. Sofia, who will then describe the recently announced Arbutus COVID-19 research effort. Dave Hastings will then provide a review of the company's first quarter financial results, and we'll then open up 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's proprietary HBV pipeline, 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 the most recent annual report on 10-K, quarterly report from Form 10-Q and other periodic reports filed with the SEC.

With that, Bill?

Thank you, Pam, and good morning, everyone. Thank you for joining us today. We hope that all of you are well and staying safe. Also, like many of you, I'm sure, most of our employees are working virtually, and I applaud them for their continued effectiveness in keeping our scientific, clinical and corporate operations and time lines on track.

As we previously disclosed, we continue to move forward with our clinical development program for AB-729 at 60-milligram multidose and 90-milligram single dose with data expected in the second half of 2020. We also intend to share additional data from the 12-week portion of the single-dose, 60-milligram cohort sometime this quarter. Additionally, under the direction of Mike Sofia, I'm proud to say that we've initiated our own COVID-19 preclinical research effort. And Mike will describe the program in more detail in just a few moments.

We've also joined forces with the COVID-19 R&D consortium. The mission of this consortium is to share data, find the 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. Now given the proven expertise in antiviral drug discovery and development that exists at Arbutus, I'm confident that it's both appropriate and important that we devote resources to address this global crisis.

That said, I want to underline that our primary focus and our mission is to find a cure for hepatitis B, and that remains unchanged. And this is where substantially all of our resources will continue to be directed, and we're not changing our cash use guidance for 2020 as a result of our COVID-19 initiatives.

Now just as a reminder, hepatitis B remains a significant unmet medical need with over 257 million people chronically infected worldwide, including over 2 million right here in the United States. And around 900,000 people in the world die each year despite the availability of vaccines and nucleoside and interferon therapies. These existing therapies have very low cure rates, less than 5%, in fact, and it's our belief that an HBV curative regimen could substantially increase diagnosis and treatment rates and unlock significant market opportunities.

So to conclude my opening comments, we remain focused on developing a portfolio of products with different mechanisms of action that, when used in combination, could result in a functional cure for HBV. And our objectives include the following: first, advancing our Phase Ia/Ib clinical trial of AB-729; second, progressing our next-generation capsid inhibitor, AB-836 through IND-enabling studies; and thirdly, continuing our research efforts for a next-generation oral HBV-specific RNA destabilizer and a lead oral compound that inhibits PD-L1.

So with that being said, I'll now turn the call over to Dr. Mike Sofia.

Thanks, Bill, and good morning, everyone. Many of our Arbutus team members have a great deal of expertise in the discovery and development of safe and effective antiviral therapies, and we've been actively following the coronavirus pandemic developments from the beginning. While there are many companies already well into the race to address this global health challenge, it is still early, and much needs to be done. We believe we have a potentially important role to play and have developed a solid plan that is both appropriate for a company of our size and one that may lead to a new small molecule antiviral therapy for coronaviruses.

Regarding our internal efforts, this is a long-term commitment. We are not working on repurposed drugs, but rather the discovery and development of new molecular entities that address specific viral targets that fit well with our expertise. These targets include the nsp12 viral polymerase and the viral proteases. These targets are essential viral proteins, which our team has much experience in targeting. Collectively, our team has been very successful in bringing novel therapies to the clinic against these types of targets for other viruses such as HCV, HBV and HIV.

As these targets have been shown to deliver clinical value for patients with other viruses, we believe that this is a proven and potentially fruitful approach to take for coronaviruses as well. You're likely to ask how soon could we have a lead compound or compounds to take into IND-enabling studies, and that's a hard question to answer. The discovery process doesn't happen overnight. And as I said, this is a long-term commitment.

In terms of our goals for a new

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We believe we need a drug that will work effectively against a broad patient population that rapidly reduces viral load, especially in patients that are diagnosed with severe disease, has a high barrier to resistance and works ideally as a pan-coronavirus agent so that it can be used in future outbreaks.

While I also believe hitting the virus hard with a combination of agents with different mechanisms of action is likely to provide the best outcome for patients across a broad patient population and also limit resistance, we will be focused initially on developing single agents, which could be used in combination with other new or existing therapies.

Additionally, we are gratified that there has been such a tremendous response to the call to arms and finding ways to control this virus. In this unprecedented situation, all scientifically sound ideas are worth investigating in an effort to identify something that can help patients. As we all learn more, the field will be able to make more educated choices on what to work on. This is why we have joined the COVID-19 R&D consortium.

This highly organized collaboration among top pharmaceutical and several biotech company R&D leaders has a singular-focus goal: First, push for therapies and vaccines against COVID-19 as quickly and effectively as possible. Through this collaboration, Arbutus will be pooling resources and streamlining early stage discovery processes to identify novel targets and agents that inhibit SARS-CoV-2 and other coronaviruses. We will be contributing our unique chemical library for screening and then further progressing any active molecules that are identified in the screening efforts. Through the consortium, we will be leveraging certain primary screening capabilities and lead optimization capabilities to identify novel clinical development candidates against both known and potentially unknown targets.

We believe Arbutus' unique position is our focused expertise and capability in antiviral drug discovery and development that puts us in a position to rapidly advance new coronavirus therapies from discovery through development. I look forward to keeping you all updated on our progress: first, with our own portfolio of HBV compounds, including our next-generation capsid inhibitor, AB-836; our next-generation HBV-specific RNA destabilizer; and an oral PD-L1 compound that we believe may be useful on rewaking a patient's own immune response to the HBV virus; and secondly, with our work on coronaviruses.

With that, I will turn the call over to Dave.

Thanks, Mike, and good morning, everybody. Our ending cash, cash equivalents and short-term investments was approximately $88 million as of March 31, 2020, compared to approximately $91 million as of December 31, 2019. Our cash use from operations for the first quarter of 2020 was approximately $15 million. In addition, we received approximately $12 million in net proceeds from the issuance of shares under our ATM program for the first quarter of 2020. For 2020, we still expect our cash use to range from $54 million to $58 million and, therefore, we expect our current cash runway is sufficient to fund operations into mid-2021.

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

Thank you very much, Dave, and to Mike Sofia. And with that, operator Joelle, could you please open up the lines for question and answers?

(Operator Instructions) Our first question comes from Mayank Mamtani with B. Riley FBR.

I appreciate the efforts on coronavirus therapeutics. Just first question on the

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I think the update you had on the 180 mg that went up, could you maybe just comment on sort of how to think about this longer-term duration, but also, obviously, you're not having that comment which we have seen with other peers. So just could you maybe talk what -- how to think about that [12-week] data, please?

Yes, Mike, it's Bill. Let me make a comment first, and then I'll hand it over to Gaston. So as I'm sure you've already picked up in this particular press release, there's no new news on 729. Obviously, our last press release was March 26, I think. And what we are still waiting for moving forward on is the 60 multiple dose, 90 single dose. But what we have now said is that the 12-week data on the 60-milligram single dose

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available this quarter. So that's a slight change in the time line for the 12-week, single-dose 60-milligram follow-up. But having said that, let me hand over to Gaston.

Did that help you answer the question? Or do you have any further questions? I mean because without that additional 12-week follow-up data, I think it's difficult to speculate. But maybe...

I was just curious with the, I think 180 mg, you saw some deepening of responses, even with the single dose. So I was just curious what -- how to think about the 60 mg? Should we expect the same? Or do you think the -- that really comes with the multidose that we've seen with other compounds? Just curious.

Yes, but I think we -- I mean, as we said back on March 24, the 180-milligram data, I think, beat our expectations in terms of the durability and continuous decline of that dose. So with the 60, day 29, we didn't have the same type of decline that we saw at day 29 with the 180. But obviously, that's why we're continuing to follow the subjects. And I think we need to see that data to conclude where do we end and so forth.

So as Bill pointed out, that data now we are announcing, that's going to be available in the second quarter 2020. So I'd rather wait to see that data before we conclude anything about the 60 milligram beyond what we already did at week 29 (sic) [day 29], which, actually, by the way, I would add that one of the other striking pieces of information that we derived from the 60 was it's extremely safe from an ALT, AST level. So as you may recall, the levels were all normal throughout the 29 days of follow-up. So we'll see very soon what happens with the 12-week follow-up.

Great. I appreciate the clarification on timing and what to expect. Just on the -- any update you could provide on the enrollment front for either the multidose 60 mg or 90 mg? Just qualitative color would be helpful.

Yes, Mayank, it's Bill again. As we said back in March, given the COVID situation, we're trying to progress carefully and thoughtfully. So we're -- we -- I guess what we can comment is looking at site selection and screening, patient screening and trying to find locations where we can conduct these trials safely, from a patient protection point of view, that work is all underway. We actually haven't disclosed whether we dosed a patient or whatever yet, but we are sticking to our projections that we'll have the data available in the second half of the year.

Okay. Great. And Mike, maybe just switching gears on the coronavirus efforts. I may have missed -- did you disclose any targets? I know you said antivirals. And could you maybe just start to -- obviously, we're learning a ton about how the virus sort of proliferates and enter the cell. Just could you talk to what scientific approaches you're prioritizing? And if -- how that is incremental to, say, for example, remdesivir, could you maybe comment on that?

Sure, surely. So SARS-CoV-2 is a positive-sense RNA virus. And we're specifically interested in direct-acting antivirals here. So we chose the nsp12 viral polymerase and the viral protease, main viral protease because they are key proteins involved in the virus life cycle and appear to be highly conserved across coronaviruses. These targets have similarities to viral polymerases and proteases seen with other RNA viruses like HCV. So as far as clinical agents that can come from targeting a viral polymerase or protease, you only have to look at HCV, HIV or HBV, where nucleosides or nucleotides have been used to target the viral polymerase or viral -- or reverse transcriptases, backbones of HCV or HIV therapy and also where proteases have been shown to be important components in several therapeutic regimens.

Remdesivir does target the nsp12 polymerase and appears to provide some benefit. It's not the perfect drug. So there's a lot of room for identifying a much better agent by using a focused approach that we're going to use.

(Operator Instructions) Our next question comes from Madhu Kumar with R.W. Baird.

This is Jennifer on for Madhu. I'm just curious as to the cash runway that you guys specified include further clinical trials or starting clinical trials rather for AB-836.

Yes. Sorry, you broke up on the last part of your question. Could you just repeat that?

Yes, absolutely. So I was wondering if the cash runway that you guys provided include starting clinical trials for AB-836.

Yes. This is Dave. Yes, it does. Because if you think about the cash runway into mid-2021, that would assume that we would start a Phase Ia/Ib with our capsid.

Okay. Great. And then -- so in terms of 836 as well, do you have any thoughts on the competitor's core inhibitor treatments that have been discontinued? And plans to assess the same virological response? And also, how do you imagine that you would maybe need core inhibitors to go -- how long you would need them to go before stopping therapy?

So maybe hand that one to Mike first for the first part. And then maybe, Gaston, you can talk about length of therapy.

So the issue with competitor compound's discontinuation, look, we really have had an issue with 506. We discontinued because of ALT elevations we saw in a extended healthy volunteer study. That particular molecule was shown to be quite clean and safe in preclinical studies, in preclinical toxicology studies out to 6- and 9-month studies. Unfortunately, we saw a clinical signal with that molecule. Not clear at this point in time what was the basis for that safety signal in patients, but 836 is a completely different chemical series with very differentiating profile, preclinical profile. So we're very confident that, that molecule is going to provide the profile that we're looking for clinically, including an enhanced profile against resistance as well as a much more potent molecule overall.

Thanks, Mike. And Gaston, just on length of therapy. Yes, I guess, there, we need to look at once studies start, when we actually can feel confident about stopping capsid therapy.

Yes. So thanks for the question. So maybe a clarification about the duration of therapy with capsid inhibitors. Do you mean specifically for our programs? Or you -- this is a general question of what is our thinking around what will be the duration of therapy with capsid inhibitors? So if you could please clarify that.

Sure. I would say more of a general question about the space in general.

Yes. So that's, I think, a very relevant and important question, obviously. I think it will depend on many factors. I think the way we like to look at it, it's in 2 different ways: One is what's the regimen. So depending on what the regimen is, then I think you can have different expectations about the duration. For example, if you would treat with a new kind of capsid, maybe you need longer than -- if you treat with a new kind of capsid than RNAi. And secondly, I think the other area where we look to -- where we look and think about is the area, what's the end point? So as you know, there is a lot discussion around end points. For example, if your end point were to be the most probably relevant at this point, which is a functional cure, defined as undetectable or unquantifiable surface antigen 6 months after end of therapy with or without anti-S, I think that's kind of the most challenging end point to attain. I think we -- everyone is thinking around somewhere between a year and 2 years of therapy.

If one thinks about softer end points such as undetectable RNA, that's another end point that people are looking at. Perhaps a shorter therapy would be sufficient. So I think it depends a little bit on what's your regimen and, in short, what's the end point that you're looking for. Whether undetectable RNA is a relevant -- clinically relevant end point down the road will translate into functional cure, I think it's a little bit early to say. So we still are sticking to the end point of a -- defined by the agency functional cure.

(Operator Instructions) I'm not showing any further questions at this time. I would now like to turn the call back over to Bill Collier for closing remarks.

Thank you very much, and thank you for your questions. Let me close out just by thanking you all again for your interest in Arbutus. And I'd also like to repeat my gratitude to our employees for their continued effectiveness in keeping our corporate operations and time lines on track.

So again, as summarized on this call, for AB-729, we intend to share additional data from the 12-week portion of the single-dose 60 milligram sometime this quarter. That's Q2. And also, we continue to expect data from the 60-milligram multidose cohort as well as data for the 90-milligram single-dose cohort in the second half of 2020.

So thanks again for dialing in, and that concludes our call for today. Thank you.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.