Arbutus Biopharma Corp (ABUS) 2024 Q1 法說會逐字稿

Good day, and thank you for standing by, and welcome to the Arbutus Biopharma 2024 First Quarter Financial Results and Corporate Update Conference Call. (Operator Instructions) 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 Caperelli, Vice President of Investor Relations. Please go ahead.

Thank you, Andrea. Good morning, everyone. And thank you for joining Arbutus' First Quarter 2024 Financial Results and Corporate Update Call. Joining me today from the Arbutus executive team are Mike McElhaugh, Interim President and Chief Executive Officer; Dr. Karen Sims, Chief Medical Officer; David Hastings, Chief Financial Officer; and Dr. Mike Sofia, Chief Scientific Officer. Mike McElhaugh 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 first quarter 2024 financial results. After our prepared remarks, we will open the call for Q&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 10K, our quarterly report on Form 10Q, which will be filed today and from time to time in our other documents filed with the SEC.

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

Thanks, Lisa. Good morning, everyone. And thank you for joining us today. This morning, we issued two press releases, one announcing the end-of-year retirement of our Co-Founder and Chief Scientific Officer, Dr. Mike Sofia, and one with our first quarter of 2024 financials and a corporate update, I want to pass the call to Mike Sofia to address his retirement.

Thanks, Mike, and good morning, everyone. today we announced my decision to retire as Chief Scientific Officer at Arbutus effective the end of this year. I will continue in my full capacity as CSO until that time since cofounding Arbutus more than 10 years ago, the company has made incredible strides in its research and clinical efforts. We have built an organization of dedicated individuals who are passionate about our mission to cure HBV.

I continue to believe that Arbutus is on the correct path to developing a functional cure for the millions of patients living with HBV. My lifelong goal has been to discover medicines that improve patients' lives over my 38 year career in pharma and biotech, one of my great successes with the discovery and development of sofosbuvir here, backbone of curative therapies for hepatitis C, which is already cured millions of patients globally, have learnings from the HBV stores spurred me towards finding a cure for the more challenging problem HBV.

This led to the founding of Arbutus, where we have been able to build a world-class team uniquely positioned to potentially transform the HBV treatment landscape with drug candidates like induced around and maybe one to one throughout more my more than 10 years at Arbutus, I have enjoyed tackling the many challenges that drug discovery and development brings collaborating with my colleagues and mentoring.

Many of the scientists here. I am confident this passionate and dedicated team will continue to do great things. I have great pride in what we've been able to accomplish at Arbutus look forward to following the future successes as the company advances its mission in finding a cure for HBV. Thank you, and back to Mike.

Thanks, Mike, and thanks for everything you've done for Arbutus and our shareholders. I'm sure I speak for all employees when I say it's been an honor to work with you. We all wish you the best in your retirement.

Now onto our Q1 financial and corporate update press release that we issued today announcing significant achievements made in advancing our pipeline in pursuit of developing a functional cure for patients with HBV and driving value for our company. We believe our two proprietary clinical assets in HBV inducer and RNAi therapeutics, and AB-101, our oral small molecule, PD-L1 checkpoint inhibitor have the potential to deliver on our three pronged approach to functionally cure chronic HBV, which involves reducing surface antigen, suppressing HBV DNA and boosting the immune system.

While inducer and has shown activity in all three of these components in clinical trials conducted to date, we know a combination of agents are necessary to cure this challenging disease I'll turn the call over to Karen shortly to walk through preliminary data from our Phase 1a/1b clinical trial with AB-101 and to provide an overview of our third Phase 2a clinical trial that is evaluating the combination of imdusiran and durvalumab, a PD-L1 monoclonal antibody, which has begun screening patients.

Currently, we have two Phase 2a combination clinical trials, the AB-729-201 trial, which includes the addition of interferon and the AB-729-202 trial, which includes the addition of Brent, this biotherapeutics immunotherapeutic VTP-300. These trials are intended to provide data on the safety and efficacy of inducer. And as a cornerstone therapy and to help us identify an optimal combination treatment that we can advance into a later-stage clinical trial.

This quarter, we will report end of treatment data from these two Phase 2a trials with imdusiran and which could potentially include patients who achieve undetectable surface antigen. As we previously stated, achieving undetectable surface antigen in either of these two Phase 2a clinical trials would be an important validation of imdusiran's role as a cornerstone in potentially achieving a functional cure for patients with chronic HBV.

We are happy to report that two abstracts, including data from these Phase 2a clinical trials were accepted for presentation at the EASL Congress, which takes place in early June in Milan, Italy. We will provide more details on those abstracts at a later date.

With that, I'll turn the call over to Karen to provide an overview of AB-729-203 clinical trial and to discuss the AB-101 Phase 1 preliminary data. I'll come back at the end of the team's prepared remarks to provide an update on our LNP litigation before we move into Q&A.

Karen?

Thanks, Mike, and good morning, everyone. As Mike mentioned, our approach to developing a functional cure for patients with chronic hepatitis B involves reducing surface antigen, suppressing HBV DNA and boosting the immune system in our clinical trials conducted to date imdusiran and has been shown to reduce HBV DNA in untreated patients and reduce surface antigen when given both with and without ongoing standard-of-care Nuc therapy.

In addition, evidence of HBV specific T-cell reawakening has been observed in some patients undergoing treatment with induced ran to further boost the immune system. We designed our Phase 2a trials to evaluate and do strand in combination with one of three immunomodulatory approaches interferon therapeutic vaccine for checkpoint inhibitor targeting the PD-1, PD-L1 axis, our two ongoing Phase 2a clinical trial, AB-729-201 and AB-729-202 are evaluating inducer and in combination with interferon and in combination with the therapeutic vaccine respectively.

As Mike said, both of these Phase IIa trials are on track to report end of treatment data at the EASL Congress in June. Note that we also amended the AB-729, [2] trial to evaluate the addition of the PD-1 checkpoint inhibitor antibody nivolumab to the inducer and [ECP]-300 combination. We expect preliminary end of treatment data from that cohort in the second half of this year.

Today, we announced that we have initiated patient screening in our third Phase 2a clinical trial, AB-729-203, which is evaluating inducer and in combination with durvalumab and anti-PD-L1 monoclonal antibody. While all of these Phase 3 trials are geared towards finding the right immune modulator to combined with imdusiran the AB-729-203 trial with durvalumab is specifically intended to evaluate how we can use checkpoint inhibition in combination with Ingersoll-Rand to boost HBV specific immune responses. This trial will inform upcoming combinations with our proprietary oral small molecule PD-L1 checkpoint inhibitor AB-101.

With that backdrop, I'd like to provide more information regarding the AB-729-203 trial, AB-729-203 is an open-label multicenter Phase 2a clinical trial evaluating the safety, tolerability antiviral and HBV's specific immunologic activity of induced ran an ongoing gene therapy in combination with durvalumab and approved anti-PD-L1 monoclonal antibody in patients with chronic hepatitis B, we intend to enroll 30 virologically suppressed patients into three separate cohorts.

All patients will receive 60 milligrams of Ingersoll-Rand every eight weeks with their ongoing NUC therapy for 48 weeks, and we will receive two doses of durvalumab at prespecified time during the inducer and treatment period that will differ by cohorts after completion of treatment. All patients will be assessed for eligibility to discontinue new therapy and will be followed for an additional 24 to 48 weeks. The endpoints for this clinical trial include safety and changes of surface antigen from baseline during the treatment and follow-up period in this trial allows us to explore the optimal timing of checkpoint inhibitor dosing in the context of surface antigen reduction during ongoing inducer and treatment.

Now moving on to our proprietary oral small molecule checkpoint inhibitor, AB-101 that is differentiated from monoclonal antibodies such as durvalumab and nivolumab in the following ways, based on our preclinical testing first, AB-101 is liver centric, meaning it preferentially traffics to the liver and has a high liver to plasma ratio, thus minimizing systemic exposure and reducing the chance of immune-related adverse events seen with monoclonal antibodies. Second, AB-101 has typical small molecule pharmacokinetics and therefore a much shorter duration of effect than long acting antibodies, thus allowing for the potential to modify the dose or dosing interval to maximize effects or to stop dosing to quickly mitigate any safety concern.

Third, AB-101 acts through a novel mechanism of action, differentiated from antibodies binds to PD-L1 on the surface of cells causing dimerization and internalization of the PD-L1 protein, followed by degradation within hours washing out of the drug resulting for reconstitution of PD-L1 on the cell surface and restoration of PD-L1 function within days, unlike antibody therapy, where the duration of receptor occupancy and PD effect is maintained through leaks with no ways to reverse it.

It is for these reasons that we are excited about the potential AB-101 and HBV. and are advancing our AB-101 clinical program which is currently evaluating AB-101 in a double-blind, randomized, placebo-controlled Phase 1a/1b clinical trial known as AB-101-001. This trial is designed to investigate the safety, tolerability, pharmacokinetics and pharmacodynamics of AB-101.

The trial consists of three parts starting with single and multiple ascending doses in healthy subjects and culminating with multiple doses in patients with chronic HBV in Part one, which is the single ascending dose portion of the trial. We have enrolled four sequential cohorts of eight healthy subjects each to date within a cohort six subjects received AB-101 and two subjects received placebo.

And after a review of safety, PK and PD data, AB-101 dose levels were increased in each subsequent cohort up to 25 milligrams, the data from Part one. So that AB-101 is generally well tolerated with evidence of dose-dependent receptor occupancy in the 25 milligram cohort, five of the six subjects has had test samples that were evaluable for receptor occupancy. And all five of these subjects showed evidence of PD-L1 receptor occupancy between 50% and 100%, indicating that AB-101 is interacting with its intended targets.

One subject in this cohort was excluded from the PD evaluation as their samples cannot be analyzed. We are now in part two of this trial where cohorts of healthy subjects are receiving multiple ascending doses of AB-101. Our goal is to move as quickly as possible into Part three, which will enroll patients with chronic hepatitis B, we anticipate announcing preliminary data from Part two, the multiple ascending dose portion of this trial in healthy subjects in the second half of this year.

We believe that the immune checkpoint pathway plays an important role in HBV specific immune tolerance and T-cell activation and the addition of a checkpoint inhibitor in combination with inducer and could potentially further enhance HBV specific immune responses.

With that, I'll turn the call over to Dave Hastings for a brief financial update.

Dave.

Thanks, Karen, and good morning to everybody. We ended the first quarter of 2024 with approximately $138 million of cash, cash equivalents and investments compared to approximately $132 million as of December 31, 2023. During the quarter ended March 31, 2024, we received $21.8 million of net proceeds from the issuance of common shares under Arbutus' at-the-market offering program.

These cash inflows were offset by $19.3 million of cash used in operations we still expect our 2024 net cash burn to range from between $63 million to $67 million, excluding any proceeds from our ATM program in April 2024, we received an additional $22.4 million of net proceeds from sales under our ATM. And Now importantly, we believe our cash runway is sufficient to fund our operations through the second quarter of 2026.

So in closing, we have a strong financial position to advance our mission of developing our HBV assets to provide a functional cure for chronic HBV.

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

Thanks, Dave. With today's update, we have achieved most of our first half of 2024 key milestones, including reporting preliminary data from the AB-101-001 Phase 1a/1b clinical trial and initiating the Phase 2a clinical trial with inducer and durvalumab. We look forward to reporting the data from the AB-729-201 and AB-729-202 Phase 2a clinical trials at EASL in June.

In the second half of this year, we anticipate preliminary end of treatment data from a volume add arm of 202 trial and preliminary multiple ascending dose data from the healthy subjects in the AB-101-001 trial, 2024 is off to a true strong start, and it wouldn't be possible without the dedication of my Arbutus colleagues. I would like to take this opportunity to thank all of them for their hard work to advance our pipeline.

Before turning the call over to Q&A, I'd like to provide a brief update on the ongoing patent infringement lawsuit, specifically the lawsuit against Madonna. As you may recall, on February 8, of this year, there was a claim construction hearing also commonly referred to as the Markman hearing where the court heard each party's interpretation of the construction of claims in the disputed patents. The Court issued its order on April 3, in which it agreed with our position on most of the disputed claim terms. This is another important step in the ongoing litigation process and provides clarity on the interpretation of key terms and the scope of the claims.

I refer you to the press release that we issued on April 4, which is available on our website and summarizes the claims related to the three patents that were presented at the Markman hearing an important position on such claims.

While this is important for us, we cannot further comment or elaborate on what is in the press release, but we suggest for your group, you review the judge's opinion, which is also available on our website. In his opinion, the judge provides an overview of the disputed aspects of each claim in each party's position as well as the evidence that was used to inform his decision making process.

The litigation process continues to move forward. In fact, Discovery is ongoing and next steps include expert reports and depositions. The court has set April 21, 2025 as the trial date. For this case, that date is subject to change.

The Pfizer/BioNTech lawsuit is ongoing and a date for the claim construction hearing for that case has not yet been set. We will continue to protect and defend our intellectual property, including our LNP delivery technology all of our scientists take great pride in the intellectual property they develop, which takes great effort, time, resources and expense.

Operator, we're now ready to open the call for Q&A.

Thank you. (Operator Instructions) Dennis Ding, Jefferies.

Good morning. Thanks for taking my questions. Two, if I may, on the pipeline, you guys have a a few Phase 2 trials with a lot of different combinations going on. But other, what do you think we can get any functional cure signal-to-noise? Is that a 2025 event or can we get some data later this year? And then number two, I appreciate you starting a new Phase 2 with durva, but I'm just curious how much more data do you think you'll need from your hepatitis B trials before you can start a Phase 3.

I'm just wondering what is the gating factor here? Is there waiting for maybe one I want to show some combo data or the data from the new service study, which is essentially one year treatment and one-year follow-up. So just wondering what the gating factors there. Thank you.

Good morning, guys. Thanks for the question. So Karen, do you want to handle Dennis's first question on functional cure?

Yeah, sure. Absolutely. So Dennis, as you noted as you just stated, these trials do take some time, including the treatment period and the extended follow-up period. And as you know, functional store signal can't be assess until subjects or at least six months off all treatment. So that is ongoing in both of our Phase 2 studies at the moment or the Tier one interferon study immature to study in combination with Princess is VTP 300.

So as the data comes in and as we are able to compile that data into a meaningful data release with sufficient number of subjects we'll certainly share that data when we can. So I can't give any additional guidance just to say that the trials are ongoing and we'll present the data as it becomes available Okay.

Okay. And then on to the second question was in regards to the value add and when we might be able to start a follow-on trial, I think the answer to that question, Dennis, is it's going to depend on what we see from our existing ongoing studies, right. So yes, we're starting a new trial and yes, we think that will be valuable in helping to inform how we think about the addition of AB-101, 2 inducerin.

But as Karen just mentioned, we have some trials ongoing, which could of course, produce interesting data, which could then lead to follow-on studies. So I don't think that it's a it's a situation where we need to wait until we have the full picture from all of these trials ongoing before we decide what we're going to do to move forward. As you know, the goal here is functional cure. If we can deliver some functional cures in any of the ongoing studies. We will obviously be moving as quickly as possible into follow-on studies.

Got it. Thank you.

Thank you. Ed Arce, H.C. Wainwright.

Good morning, everyone. This is Thomas Yip asking a couple of questions were asked. Thank you for taking the questions. So first off perhaps, but following up with the workforce. But the previous question, I was just hoping for 40 and do surround on what the next phase in our Phase 2b or Phase 3 study that's expected to evaluate Xyrem as a monotherapy or in combination with (Inaudible)?

So Thomas, good morning. Thank you. This is Mike. I think we've always said that that we're going to have to think about combination therapy when it comes to curing HBV have hit those three pillars that we talk about frequently. And so I think if we think about what a next study might look like it's definitely going to be a combination study.

Yes, understood. And perhaps one more question of what that assumes for the for the new Phase IIa study with the roadmap? And can you discuss the rationale behind the difference those in the Eagle Ford development map and what is significant to analyze it is different from dosing interval?

Yeah. Thanks for the question, Thomas. So the idea here is evaluating the extent of checkpoint inhibition that's necessary to drive to induce that HBV specific immunity. So as I'm sure you're aware, the use of checkpoint inhibitor therapy, oncology and oncology is a much different dosing regimen and have much different dosing levels. So it's very high doses over repeated cycles for weeks and months.

And with that comes a safety profile that may not be optimal in patients with chronic hepatitis B. So what we're looking to do is strike the appropriate balance between having a regimen that's safe and well-tolerated for these patients with chronic hepatitis B as well as trying to understand exactly when we need to intervene on the checkpoint inhibitor axis in the context of the surface antigen reduction that we see with induced around.

So that's the idea behind the trial. Is it best to inhibit the checkpoint Axis during the acute decline of surface antigen is the best to inhibit after surface antigens reached a nadir somewhere in between and, you know, doing that at multiple time points so that's the idea behind the trial is really to strike that balance between optimal immunomodulatory effects, but maintaining a very good safety profile for this patient population.

Yes. And this does Thank you. And perhaps one last question for AB-101. After completing the multi-ascending dose phase of the ongoing Phase 1 study, what's the next step of the program would that be a looking at a combination study in HBV? Or are there other areas that AB-101 can potential?

Sure, thanks for the question again. Just to clarify, so the current study is a three-part study. So single doses in healthy subjects, then multiple doses in healthy subjects. And then we move seamlessly into multiple doses in patients with chronic hepatitis B in combination with Nuc therapy. So we need to complete those different portions of the trial to understand the safety profile, the pharmacokinetic profile, the PD profile of maybe AB-101 to be able to enter that next phase of studies. But certainly you can imagine after completion of the Phase 1 study, the next goal would be to put it in combination with inducer and in a Phase 2 study as quickly as possible.

Understood. I thank you again for taking our questions and looking forward to the initial data readouts.

You're welcome, Thomas. Thank you.

Brian Skorney, Baird.

Hey, guys, thanks for taking our question. And congratulations and best wishes to Mike. This is Charlie on for Brian. So just a couple from us. Just wondering when you're thinking about dosing with AB-101, it sounds like so far, you've seen good safety data. But just would be curious if you're kind of thinking of 25 makes as a cap in the mad as well.

And then you know, are you when you're thinking about this on the durvalumab trial, have you seen anything from the nivo combination so far that might be playing into your thinking on different timings. And then just one more on an early-stage asset in this space. What are your thoughts on ALPK1 agonism, if you have any at this point? Thank you so much.

All right. So Charlie, good morning. Thanks for the questions. So Karen, why don't you handle the question with regards to AB-101 and the Nevo lead (Inaudible) my question.

Sure, absolutely. So either the data we're sharing thus far is just the extent of dosing we've completed with AB-101. So it's too early to comment on the dosing that we'll be using in the next portions of the trial. We do have flexibility in the trial in all the different arms to either increase does decrease does make changes to the dosing regimen. So 25, as reported today is the highest dose we tested with an excellent safety profile and good pharmacodynamic profile.

So we will be evaluating different dosing levels as we move out through the trial. So 25 isn't necessarily a cap. It's just the data we have available to share with you today. So and in terms of the nivolumab arm data coming out of the GAO to study, obviously I can't comment on that. You know, we provided guidance that we'll be sharing the preliminary end of treatment data at the edge of the year, the second half of this year.

So that date I can't comment on, but certainly we look at all of our trials holistically and certainly would, as Mike said earlier, move forward or adapt as we see the data emerging with our trials. But yet to date, I can't comment on anything regarding the development of our miniature two studies.

And then, Mike, you want to handle the last question.

Yeah. On the ALPK1 on question on. Yes, we're aware of the abstract just came out on EASL on on that arm. You know, we frankly just came out. So we are interested in looking at the abstract more clear, more fully and now, obviously seeing the presentation at EASL you get a full understanding of the targets.

Got it. Great. Thanks so much for the questions, guys.

Thanks, Charlie.

Roy Buchanan, Citizens' GMP.

Obviously, congrats to Mike, Sophie on the planned retirement, and I definitely Mrs. I'm deep insights and observations on the call. Some you have eight months to get to a functional cure now better yet. Just a few questions. Just so I guess on the 2, 3 trial?

I think there's a typo on the slide just says Q-48 weeks. I mean, I think Karen said every two weeks which makes a lot more sense. And so just wanted to confirm that and I'll come back because the only variable that the timing of their value, not dosing, there's no other the arms are identical side? Is that the only variable there is no difference in actual dose levels or anything else? And I guess that's my first.

Yeah, thanks for the question. So you're absolutely right. The inducer and dosing is 60 milligrams every eight weeks as we have been studying throughout our Phase 2 program. So we'll go in and make sure that that's correct in the in the deck, but at 60 milligrams every eight weeks have been used around for a 48 week treatment period as we've also done in some of our other studies and at the moment.

Yes, the only difference between the arms is the timing of the induced around dose than a as I mentioned before, we obviously keep track of the data with these trials, especially safety data, but we have no intention of changing any of the the other premise of the trials. The moment just as mentioned, between the three arms. It's just the timing of the huge volume of doses.

Okay. Great. And then Tom, follow up on 101 dosing question is, so it's 25 migs per day the dose you started part Part two with. And then for the I guess, the target engagement, I assume that was derived from did you take circulating blood cells or what does the look for the target engagement?

Right. So in regards to the dosing of AB-101 and part two of the study, again, I can't comment on that as it's ongoing as we speak. And as Mike said earlier in the call, we'll be providing data for the part two portion of the study in the second half of this year. And in regards to the pharmacodynamic assay, yes, it is based on peripheral blood mononuclear cells that are isolated from the subjects.

Okay, great. And then the last one, maybe you can answer this either, but it's on the nivo and combo. It brings this vaccine. Can you give us a sense? It looks like the enrollment target went up by publications, 22 versus versus 20. Can you just tell us where enrollment stands currently in that cohort and about how many patients you can expect from the data in the second half?

Thank you.

Sure. Absolutely said that the target enrollment was 20 subjects for that arm to be consistent with the other two arms in the study. As often happens in these studies, we have screening open to many sites in many countries across the globe. And we can't necessarily control the number of subjects in screening at any one time.

So it just happened here that we had a couple of additional subjects that were eligible for the trial and had completed screening. So we did allow them to enter the trial, but that's the only reason for the 22 subjects as opposed to the 20 subjects. And as said previously, we'll be sharing the preliminary and retreatment data from that trial in the second half of this year.

Yes. Thank you.

Keay Nakae, Chardan.

Yeah, just some follow-ups on 101 study. On in terms of the receptor occupancy at the asset you're using? Is that a standardized or do you have to customize?

Yes, hi. This might come. It's an EASL. We actually developed internally. So it's a proprietary EASL that we use for getting that target occupancy I'll read out.

Okay. And is the dose response you're seeing is that I think consistent with what you'd hoped to see?

Well, you know, I would say in preclinical models, we see 80% to 100% receptor occupancy on. So that gave full efficacy for us. So I think what we're seeing in the clinical study is very encouraging to us.

Okay. And then in the multi-ascending dose part of the study, just remind me again, what's the dose frequency. How often is it?

There is a total dose duration of 7 days, and we do have flexibility within that arm to dose every day or anything different than that, depending on how the data reads out. So it could be a daily dose that could be every other day every third day. That part will be determined as we evaluate each of the safety, PK and PD data that comes in from the different arms of the trial. But it's a 7 days maximum duration.

Okay. And when do you expect to be able to advance and in part three in the strudy?

Right. So it really depends on how these multiple-ascending dose arms are proceed. And the healthy subjects are really we just need sufficient again, safety PK and PD data to feel confident to move into that third portion of the trial and to choose a dose to initiate that part of the trial that we think will have had impacts in these chronic hepatitis B subjects. So again, it just depends on the progression of part two of the study. But it is, as we've said earlier, an integrated protocol. So the part three of the study is already approved and we would be able to move on it is we are ready with the data.

Okay, thanks.

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

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

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