Q2 2022 Arbutus Biopharma Corp Earnings Call

August 4, 2022

Yeah.

Good morning, My name is Avi and I will be your conference operator today.

This time I would like to welcome everyone to the RPX Biopharma 2022 second quarter financial results incorporate update.

All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.

You would like to ask a question. During this time simply press star followed by the number one on your telephone keypad.

If you would like to withdraw your question again press the star and the number one on your telephone keypad.

Thank you.

Miss Lisa kept perrelli, Vice President of Investor Relations you May begin your conference.

Thank you Abby good morning, everyone and thank you for joining our second quarter 2022 financial results and corporate update call.

Joining me today from the our beautiful executive team are Bill Collier, President and Chief Executive Officer, David Hastings, Chief Financial Officer, Dr. <unk>, <unk>, Chief Development Officer, and Dr. Mike Sofia, Chief Scientific Officer.

Bill will begin with a corporate update followed by Dave Hastings, who will provide a review of the company's second quarter 2022 financial results.

After opening remarks, we will open the call up for Q&A.

P T O and Mike Sofia will be available to address clinical development related questions.

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 most recent annual report on 10-K quarterly reports on Form 10-Q.

To be filed later today and from time to time in our other documents filed with the SEC.

With that I'll turn the call over to Bill Collier Bill.

Thank you Lisa and good morning, everyone. Thank you for joining US today. We appreciate your continued interest and support.

Talk for Arbutus Biopharma.

Now with the first half of this year behind US we've made significant progress in advancing our preclinical and clinical programs in support of our mission to develop a functional cure for hepatitis B virus.

And to treat COVID-19, and future coronavirus outbreaks.

Furthermore, we're on track to deliver on multiple key milestones across these programs in the remainder of this year.

And equally important in this volatile capital markets environment, we're well positioned financially to fund our current programs and provide runway into the second quarter of 2024.

Dave will discuss the financial aspects during the.

Financial position summary, shortly.

Now, we all making excellent progress with our two key HBV preclinical programs, that's a b one O one oral PDL one inhibitor.

A b 161 oral RNA destabilizer.

Now rather than elaborate on these programs yeah I'll refer you to today's press release for those updates.

And use the time on this call to briefly highlight the rather impressive data on our lead HBV clinical asset a b seven to nine that's all RNA therapeutic. This data was reported last month of the easel International liver Congress.

Now as you know patients with chronic HBV infection received nuc therapy standard of care.

And while that therapy is generally safe and effective at reducing viral load less than 5% of patients are functionally cured and usually only after many many years of therapy.

And all clinical trial, a b 17, nine double O. One we wanted to see how treatment with various doses and dosing schedules of our RNA therapeutic. In addition to nuc therapy was handled by patients with chronic HBV you had different baseline characteristics.

If patients met certain predefined criteria and consented, we discontinued first that treatment with a b seven to nine and later that lifelong standard of care in nuc therapy.

To see if there undetectable HBV DNA status was maintained.

The S antigen reduction was sustained which could be assigned a biologic control and potential subsequent financial a functional cure.

Now three major findings were disclosed from this clinical trial the easel conference.

First of all we saw a robust reduction in surface antigen between 182.1 log reduction.

And that was with 48 weeks of treatment and the reduction occurred regardless of dose.

Sing schedule or baseline characteristics.

Second in addition to the meaningful and consistent surface antigen decline.

We saw an increase in HBV specific T cells.

And a decrease in exhausted T cells in patients treated with seven to nine.

A third of what we believe to be a significant importance when we stopped treatment with a b seven tuna and stopped nuc therapy and the first five eligible patients that consented.

The surface antigen.

That HBV DNA responses were sustained at low levels, while they were off treatment for at least eight to 24 weeks.

Now in addition, none of these patients showed evidence of viral logic no clinical relapse.

So they did not need to restart the nuc therapy.

We believe this data is most impressive is it shows that we were able to take patients off of the lifelong treatment of standard of care of Nuc therapy and.

Still maintain reduce surface antigen and reduced HBV DNA a potential early indicator of a functional cure.

We are continuing to follow these patients as well as other patients that have consented to stop all therapy, and we anticipate reporting more data in the second half of this year.

729 is one of the most advanced RNA therapeutics for HBV and based on the availability of public data.

Differentiates it from other RNA is based on it's more convenient dosing schedule and immune activation capacity.

We're also encouraged by the safety that we see in this and other ongoing trials.

And it's for these reasons that we continue to view a b seven to nine as a cornerstone agents and a potential curative combination treatment for chronic HBV.

With our own proprietary compounds.

Or would those in development by other companies.

All with therapies that are already approved for the treatment of HBV.

Now also an easel, we along with many of our peer companies reported data on the use of capsid inhibitors alone or in combination in the HBV treatment regimen.

And while much of this data is early and inconclusive. Our strategy is as follows first of all.

Based on data from our ongoing phase one I won't be trial, some of which was presented at easel, we're planning to conduct a longer duration fabled phase one study in healthy volunteers with our oral capsid inhibitor AB 836.

As you will recall, we reported the 836 showed robust antiviral activity.

With greater than 3.5 log reduction in HBV DNA.

Along with this impressive efficacy. However, we saw an increase in a L T and some patients on the last day of treatment.

And so the goal of the longer duration healthy volunteer study to further characterize the safety of 836.

By determining whether the a L. T flairs, we saw were beneficial or not before resuming doses dosing in HBV patients.

Second part of our strategy is that we are continuing income collaboration with assembly the phase II a proof of concept clinical trials.

They're waiting the triple combination of seven to nine and assembly is core inhibitor very cold here and Nuc therapy, even do assembly has announced its plans to discontinue the development of that'd be called in.

At Arbutus, we believe it's important to continue the conduct of this trial in order to fully and accurately assess the results.

By continuing this phase II Triple combination combination trial and also evaluating a b 836 in healthy volunteers in a phase one study.

We believe we will obtain data that will inform our use of caps heads in a go forward combination strategy and the development of chronic HBV treatments as.

As well as help to address open questions in the field.

Now finally, we were gratified to see positive topline results announced by our long island for the Phase III study of them penetrate in patients with H T T <unk> amyloidosis with cardiomyopathy.

As you May recall, we're entitled to tiered royalty payments on global net sales of one petro ranging from 1% to $2 three 3% after offsets with the highest tier applicable to annual net sales above $500 million.

Now this royalty interest was sold to other members effective as of January the first 2019 for $20 million in gross proceeds before advisory fees and.

Omar will retain the summer months until they have received $13 million in royalties at which point, 100% of the royalty interest on future global net sales of one type trial.

Which could include additional sales for the expanded indication if it's approved will revert back to arbutus.

Not to date <unk> has received approximately $14 million.

In addition, we retained a second lower royalty interests, ranging from seven 5% to $1, 125% on global net sales of them right.

With the seven 5% applying to sales greater than $500 million.

That royalty stream was not part of the amas.

Transaction.

So as I wrap up my opening remarks. This morning, I'd like to remind you of the key milestones we anticipate in the second half of this year.

There are four.

First a seven to nine follow up data, which could include long term on and off treatment data from our phase one a one b clinical trial.

Second initial data from both the phase two a combination trial of seven to nine interferon and nuc therapy, and the Triple combination trial with assembly's badly called in.

Third we expect to complete the IND, enabling studies, but with a b one O one oral PDL one inhibitor.

A b 161, our oral RNA destabilizer.

Unfortunately, we expect to advance into R&D, enabling studies, a clinical candidate that inhibit the Sars Covid two NSP five main protease.

I'll now turn the call over to Dave Hastings for a brief financial update every two days.

Thanks, Bill and good morning, everybody.

As I've mentioned in the past, our key financial metrics, our cash and financial runway.

Our cash cash equivalents and investments were approximately $201 million as of June 32022.

As compared to approximately $191 million as of December 31, 2021.

Now during the six months ended June 30 of 2022.

Company received a $40 million upfront payment from <unk> pharmaceutical company.

Related to a technology transfer and license agreement for 72 nine in greater China.

$15 million of gross proceeds from cheetos equity investment in the company.

And $300000 of net proceeds from the issuance of common shares.

There are viewed us as at the market offering program.

These cash inflows were partially offset by approximately $44 million of cash use in operations.

We still expect.

Net cash burn of between $90 million to $95 million in 2022.

Not included in the $55 million of proceeds received from Chile.

And we believe our cash runway will be sufficient to fund operations into the second quarter of 2024.

So in closing we are well positioned financially to advance our mission to develop a functional cure for HBV.

And the treatment for Covid, 19, and potential future Corona virus outbreaks.

With that I will turn the call back to Bill.

Thanks, very much Dave and operate Abbey, perhaps you could help US now open up the lines for a question and answer session.

Thank you at this time I would like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad.

Your first question comes from the line of Roy Buchanan from JMP Securities. Your line is open.

Okay.

Good morning Roy.

Yeah.

So the phase one in healthy volunteers that you're planning to study do you need to or will you talk to the FDA in advance of starting that trial did you inform the agency of the the recent results from the CHP patience and did they have any feedback.

Good questions. Thank you Roy I guess, Don is on the line with US. This morning, so guests, sometimes you'd like to answer that question.

Sure Hi, Roy Good morning, No we haven't talked to the FDA about this study I remind everyone.

Everyone that $8 six does not have an AMD with the FDA.

It was not necessary actually this is going to be done through an amendment to the existing.

<unk> phase <unk> study that we're conducting work conducted.

Okay, great that makes sense and then that for 79 that the triple combo phase twos.

Fair on in February Corvair later this year can you just help us understand the key data points, we should be looking for and which results from those trials are you going to view as a success.

Yep. Thanks Roy.

I mean, what we've said is it's going to be initial data from those two studies.

So I think that's important just to kind of set expectations. I guess is there anything else you'd like to add.

No I think that's really summarizes it.

Yeah.

Okay I'll jump back in queue. Thanks.

Thanks Roy.

Yeah.

Your next question comes from the line of Dennis <unk> from Jefferies. Your line is open.

Hi, good morning, Thanks, so much for.

Alright.

Hi.

Thanks, so much for taking the questions. Two from me can you. Please remind us again your licensing agreement without an island around participation I think consensus is modeling about $1 billion in peak sales for for for Alan Islands on Petro and based.

On some of your commentary it seems like you'll be getting a 2% to 3% net royalty. So so this could potentially be a $20 million to $30 million annual royalty.

At peak so can you confirm if that math is roughly in line with with how you guys are thinking about it and then my second question is around the hepatitis B.

Assembly discontinued the Corvair, because there wasn't really meaningful efficacy delta versus the doublet. So can you go into a little bit more detail there and your decision to keep the trial going.

And perhaps how should this read through to your pack interferon study. Thank you.

Yeah, Thank you Dennis and.

Great questions.

I'll, let Dave comment in a moment on the mechanics of the license agreement.

What we are trying to do is make clear the specific percentages.

Licensing agreements and also as I summarized this morning, the details of the sale of that royalty stream. The first what royalty stream to omer as and when it reverts back to us.

We're not making any projections about what our long island sales might be or could be.

So I think that is something that we would refer you back to our nylon for in terms of what those sales expectations, though.

But we are being very clear this morning, and what percentage.

Percentages are and how those royalty streams work so Dave anything else you want to add before I turn to the other big question.

I don't know Dennis is math is correct once the.

Royalty reverts back to us after <unk> received $30 million.

Okay.

Thank you.

Just remember there are the two royalty streams that the one that we sold to <unk> and then the second one which is slightly lower right.

And your question around the Phase Iia studies.

I'm not going to comment on anything that assembly has or hasn't said.

About Bebee Colgate.

All view at Arbutus is it's important once you've started a clinical trial to.

To finish the clinical trial.

You know when you get to the.

At the end of the study that's the best opportunity to make an assessment of the actual results.

So.

That's what we included in our press release, but then the study continues with the collaboration.

Yeah.

And exactly the same way in which it was originally set up.

We look forward to presenting those results when it comes through.

So I don't know that we can project anything either.

Either or.

About the study or what it means for our own interferon study.

But I'll hand, it over to guests don't say, if there's any additional comments you want to make gaslog.

Yeah. Thank you I'll, just make one comment which is.

I think there is.

Basically three types of data in clinical studies related to <unk>. One is contribute responds. The other one is end of therapy and the other one is a follow up so.

As Bill was explaining we think it's important that we get to the end of the southern moves at the end of the study were referred to even the forward period and I think we can make a good case for that based on our own seven to 9001 Phase <unk> study, where I think we are starting to appreciate really the value of seven to nine after lease continue.

<unk>.

And you know.

If you look at the on treatment data.

Got it.

Many people have pointed out.

This antigen declines.

Aren't very comparable across the other molecules in the field. However, when it comes to the discontinuation rate that we're seeing really 70, <unk> performing very well you know I'll buy the data is still limited and the follow up hasn't been extensive but I'll just remind everyone that we.

We don't stop patients as they have been stopping other studies such as in the Johnson, one where they stopped the two drugs at the same time, we stopped first seven to nine then were waiting six months.

Then we stop the new so when we say for example in our follow up 24 weeks. After this continuing the new it's really 48 weeks almost a year after discontinuing seven to nine and still to do.

DNA and S antigen is holding so going back to your question what I am trying to say here is that I think.

There is ways of evaluating the efficacy in the study one aspect is on treatment. The other one is what happens at the very end of therapy. The week 48, and the other one is the follow up.

So I think we need to wait for the end of the study.

Got it thank you guys.

Your next question comes from Brian <unk> from Baird.

Your line is open.

Hey, good morning, guys. Thanks for taking my questions.

I guess to start I have a question on sort of conceptually the oral PD Lone program I know there are a range of commercial PD, one and PDL one inhibitors.

Available therapy.

<unk> therapeutic antibody. So just wondering your thoughts on exploring sort of proof of concept studies with any of those to evaluate seven to nine plus PD one as a mechanism.

Before progression or an oral PDL, one inhibitor to get a feel of what.

The combination could yield and then also on the on Patriot questions. I was just wondering if you could review with us what the duration of the IP around the <unk> and the deal with online one is does.

The royalties last as long as on Petro is exclusive or is there a specific hockey exploration date on that royalty payment stops. Thanks.

Alright, Thanks, Brian .

So I'll get Mike Sofia, and Gaston I'll, just to come in on PDL ones, and whether or not we can do it for like a <unk> study with a commercially available PD L. One, but I think the point I'd make before.

Before we get into that is what we're aiming for here.

PD L P.

PDL, one which is HBV specific which is oral.

Therefore, which.

Might potentially be efficacious without some of the systemic.

Side effects that you get from some of the others. So would that maybe Mike Sofia first and then Gastar.

Okay.

Hey, Mike.

I think he might be on mute.

Can you hear me.

Yes Hello.

Okay Alright.

Alright.

So for the PD, one PD L. One axis I think theres clearly mounting evidence supporting the role of checkpoint.

You know axis in HBV right I think you had that early Gilead study that that.

And it was tantalizing about the rollout.

Checkpoint axis PD, one PDL, one and showing one functional cure in a number of S antigen.

Reductions in patients and then a more.

More recently, you see sort of the <unk> study, where they took a checkpoint blockade Adrian and again showed some very interesting tantalizing data there. So I think theres clearly mounting evidence.

To support that.

This access is going to be important reason.

Or is it important immune control for hepatitis B.

As far as.

Why we're doing small molecules clearly as bill mentioned is several.

Several fault right we have the belief that we are.

Gonna be able to target the liver and therefore reduce.

Potential systemic activation.

That checkpoint access because of.

The concerns of the sort of on target safety issues that one always seized with.

In the oncology space.

And.

And and so we believe that we're going to be able to circumvent those those concerns and there's issues with with the approach that we're taking a small molecule.

And pre clinically we have also.

Reported on and have more studies.

We will report on in the future clearly support the combination of an RNA or close to checkpoint blockade at immune activation and reduction.

And antigen load. So so there is there is substantial evidence to support.

I think the approach that we're taking.

As far as a proof of concept study.

We've been we've been discussing that put potential internally.

Haven't really decided on weather.

Our strategy.

Uh huh.

That would include an existing.

Checkpoint blockade agent with a seven to nine.

Would provide.

And the timing of it would provide substantial data to help us further develop.

Our current isn't going forward.

Yeah.

Thank you Mike I got on anything you want to add.

No no nothing from my end. Thank you. Okay. Thank you now on your second question around the duration of the pattern.

Hum.

Whether or not the royalties extend beyond the expiry date.

I don't immediately have an answer to that question less Dave does I think we might have to get back to you on that one Brian Dave.

No I don't want my clarification, but it is a typical agreement that would run through the patent life.

We'll confirm that right Brian .

Okay. Thanks.

Okay.

Your next question comes from Kane Mckay from Chardan. Your line is open.

Yes. Thank you a question about <unk>.

Seven to nine.

When you provide us the next.

Data update.

Can you tell us how many patients.

That you're following who've stopped.

<unk> 729, now stopped nukes that you might report on in the next data.

Update.

Okay.

Right. So we have five so far which is what we've spoken about.

There are more that have confronted I don't know that we have revealed the exact number.

Guests on anything you can add.

Yes, I can I can not only with more color there.

If you look at the poster from ESL.

Information posted this year.

May see and we actually purposely included those subjects. There. So we've reported on the five for which we have a follow up.

After discontinuing the newco, but minimum eight weeks as much as 24, but we also included four additional subjects, who had discontinued but we didn't have meaningful follow up would be considered a minimum minimum sort of meaningful follow up it will be more than eight weeks. So for sure. Those additional four subjects will be included.

In the in the next update so at a minimum there will be a follow up on nine subjects.

Okay, and Theres, some others beyond that who haven't.

Aren't that far along.

Yeah, I can't comment about others at this point in time, but for sure we will have nine.

Okay and then.

Just back to the combo study with interferon.

Hum.

Are you seeing initial data but.

What might that consist of.

So that will consist on.

On treatment data basically that that's all we can say it will be on treatment data preliminary on treatment data.

Okay. That's all I had thanks.

Thank you Kay.

Yes.

Your next question.

At acre from H C. Wainwright your line is open.

Hi, Good morning, everyone is Thomas Yip, asking a couple questions for Ed.

Thank you.

<unk>.

So first.

That's correct.

Two nine here.

We're seeing some special amount.

So.

Good morning.

Sure.

Combination study data in the second half.

Yes.

Rich clients should we expect.

Q2 2022 Arbutus Biopharma Corp Earnings Call

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