Q2 2023 Arbutus Biopharma Corporation Earnings Call

Okay.

Good day, and thank you for standing by and welcome to the IBD Biopharma Q2 conference call. At this time all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session.

The question that you will need to press star one on your telephone you will then you an automated message advising that your hand to treat the Jay a question. Please press star one again, please be advised that today's conference is being recorded I would now like to hand, the conference over to your speaker today Lisa temporary. Please go ahead, thanks, Jay to good morning.

Everyone and thank you for joining our beautiful second quarter 2023 financial results and corporate update call.

<unk> me today from the argued his executive team are Bill Collier, President and Chief Executive Officer, David H D Chief Financial Officer, Dr. Mike Sofia, Chief Scientific Officer, and Dr. Karen <unk> Chief Medical Officer.

Bill will begin with a corporate update followed by a Doctor Sims, who will review recent data shared at the medical Congress Dave.

Dave Hastings will then provide a review of the company's second quarter 2023 financial results.

After our prepared remarks, we will open the call for Q&A, Dr. Sofia will be joining us at that time to address 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.

May cause our actual results to differ materially including those described in our most recent annual report on Form 10-K, our quarterly report on Form 10-Q, which will 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.

Yeah.

Thank you Lisa and good morning, everyone and thank you for joining us today.

Our goal at Arbutus has always been to develop a combination of therapeutic agents that will lead to a functional cure of chronic hepatitis b.

And today, we are excited to share with you the continued progress.

We've made in advancing this effort.

We believe that AB seven to nine which we will now refer to by its generic name.

Do sit around.

Has the potential to be a cornerstone therapy to functionally cure chronic HBV.

To date, we've generated meaningful in patient data showing that <unk> appears to be the only.

It impacts both surface antigen and reawakening of the HBV specific immune response.

And the effects of inducing around our sustained in some patients even after all therapy is discontinued.

We remain impressed with the compelling safety and efficacy profile of <unk> and look forward to evaluating <unk> in combination not only with other available compounds, but ultimately with our early stage HBV assets that are concurrently progressing.

We expect additional combination data from our ongoing phase Iia clinical trial with our partner Baxter Tech in the second half of this year.

And with this we continue to be well positioned to advance our goal of developing a functional cure for HBV and driving value for our company as we advance our broad pipeline of HBV assets.

Now with respect to our early stage HBV assets. This morning, we announced our Cta has been approved for us to initiate a phase one clinical trial with <unk> 101, oral PDL one inhibitor in New Zealand.

As you May recall, the FDA placed the IND application for <unk> 101 on clinical hold before we had initiated a trial or dosed any patients.

To get a b 101 into a clinical trial as quickly as possible. We made the strategic decision to work with New Zealand to advance a b 101, while in parallel working to address the FDA concerns.

We continue to believe that a b 101 is an oral enough more rapidly titratable checkpoint inhibitor compared to an antibody approach.

Has the potential to be an important component of our combination therapy that could be combined with <unk> to provide a functional cure for HBV.

Now the phase one clinical trials for our RNA Destabilizer AB 161 is ongoing.

161 is our next generation oral HBV specific RNA, destabilizer, which is being developed as part of a potential oral.

Treatment regimen to functionally cure HBV.

We expect to have initial data from the single ascending dose portion of this trial in the second half of the year.

Now beyond our HBV assets, we remain committed to identifying and developing new antiviral small molecules to treat COVID-19, and future coronavirus outbreaks.

Our strategy is to target the two essential enzymes for the Corona virus lifecycle Sars Covid two N S. P. Five main protease also known as <unk>.

And NSP 12 viral preliminaries.

These enzymes are critical for viral replication in a highly conserved across all known Corona viruses.

A b 343 is our lead oral <unk> inhibitor.

Designed to address the urgent need for oral antiviral therapies that are both potent and active against circulating Sars COVID-19 two variants.

And do not require a ton of air booster.

The preclinical profile of a B 343 is impressive and we're currently in IND, enabling studies with plans to complete those studies in the second half of this year.

Ultimately, we believe that the optimal treatment regimen will consist of both on <unk> inhibitor and in NSP 12 inhibitor differentiating this therapy from other strategies.

That and our goal is to identify and nominate in NSP 12 inhibitor, which we can then take into IND, enabling studies in the second half of this year.

And we'll be sharing more updates on these two programs as we progress through the year.

Before turning the call over to our new Chief Medical Officer, Dr. Karen Smith to review the <unk> data I'd.

I'd like first to congratulate Karen on her appointment as CMO at Arbutus.

<unk> has been with the company since 2017 and has played a crucial role in the clinical development of <unk> and I'm very happy that Karen has assumed this role and confident that she and her team will continue to effectively execute our mission so over to you Kevin.

And in this trial, we intend to assess the impact of interferon on safety Tolerability and efficacy as assessed by surface antigen decline when added.

Boeing induced saran nuc therapy.

We enrolled 43 E antigen negative patients that underwent a lead in phase with 24 weeks of induced ran and then were randomized to one of four treatment arms to receive interferon for either 12, or 24 weeks plus ongoing nuc therapy, plus or minus additional doses of induce ran.

At the recent usable medical Congress, we presented preliminary data, including the first 12 patients that had completed the lead in phase and at least 12 weeks of interferon treatment with or without additional doses just ran.

Baseline characteristics were similar across all four interferon treatment cohort.

During the abuse around 24 week lead in phase patients experienced a mean surface antigen decline of $1 $5 nine logs from baseline.

This is comparable to what has been previously seen in other clinical trials with a noose around the.

The mean surface antigen decline from baseline at week 40, which includes 12 weeks of interferon dosing was 188 logs, which is promising albeit from a small sample size.

In addition for patients one from cohort a and one from cohort <unk>, both of which received interferon plus or minus induced ran for 24 weeks and chew from cohort one who received interferon plus induced ran for 12 weeks reached surface antigen levels below the lower limit of quantitation during the interferon treatment period.

These patients had not achieved sustained surface antigen loss and anti <unk> antibody levels were pending as of the date. The data was presented and they continue to be followed in the trial.

Three patients one in cohort two and two and cohort B one have been evaluated to stop nuc treatment and one patient from cohort B one has discontinued new treatment.

Regardless of the duration of interferon treatment 12 weeks or 24 weeks the change in surface antigen from baseline during the interferon treatment period remained below the baseline values, although with considerable variability amongst patients.

These data suggest that the addition of interferon inducer Ens treatment May result in continued surface antigen declines in some patients however, with most patients still in the interferon treatment period, we are cautious in drawing any meaningful conclusions from this preliminary data set we are eager to continue to follow these patients through the duration of interferon treatment period.

And the only follow up period to assess for trends in surface antigen declines and sustained surface antigen loss.

As in our other trial patients that complete the treatment period with induced saran interferon in nuc therapy are evaluated to stop all treatment.

From a safety standpoint, and you surround with or without interferon was generally well tolerated with most treatment emergent adverse events assessed as unrelated to induce around.

There were no serious adverse events study discontinuation or inducer and treatment discontinuation or modification and the interferon dose modifications needed were consistent with the known safety profile of interferon.

These preliminary data from a larger phase II trial continue to reinforce our confidence in <unk> ability to effectively lower surface antigen and we anticipate providing updates when we have additional meaningful data to reports.

Regarding our second phase III combination trial that we're conducting with Oxitec. The original part of the trial designed to evaluate them do Saran nuc therapy, and <unk> HBV antigen specific immunotherapy dudek, ETP 300, or placebo is fully enrolled this trial is designed to reduce surface antigen with induce ramp up.

For the patients are randomized to one of two arms to receive ongoing nuc therapy, plus etp's 300 or placebo.

Recently in collaboration with <unk>, we have expanded the trial to include an additional treatment arm that will enroll approximately 20 patients to receive low dose <unk> a PD one monoclonal antibody inhibitor approved to treat a number of cancers under the brand name Opdivo with the combination regimen.

We will assess if the addition of low dose nibble them out to the booster component of the BCP 300 combination further stimulate immune mediated production of surface antigen. After the initial treatment with <unk> and the first dose of <unk> 300.

We reported in June that the first patient in this additional treatment arm has been dosed.

We are hopeful that if we can lower surface antigen and stimulate the host HBV specific immune system with the combination of <unk> and the first dose of <unk> 300.

Addition of low dose Nikola Mab will further enhance the stimulation and we made therefore enhance the ability of the immune system to fully suppress the virus and in turn achieve functional cure.

As Bill mentioned, we believe that chronic hepatitis b requires a combination of compounds to achieve therapeutic success and we are encouraged by the progress. We have made in these two phase III clinical trial to further support our mission.

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

Thanks.

Thanks, Karen 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 $164 million as of June 32023.

Compared to approximately $184 million as of December 31, 2022.

During the six months ended June 32023, we received approximately 25 million of net proceeds from the issuance of common shares under our <unk> aftermarket offering program.

These cash inflows were offset by approximately $47 million of cash use in operations.

We expect our 2023 net cash burn to range from between 90 to 95 million, excluding any proceeds received from our aftermarket offering program.

And we believe our cash runway will be sufficient to fund our operations into the first quarter of 2025.

So in closing we have a strong financial position to advance our mission.

And develop a functional cure for HBV and a treatment for COVID-19, and potential future coronavirus outbreaks.

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

Dave So just.

To wrap up I'd like to remind everyone of our upcoming key milestones for 2023.

First of all we plan to initiate the phase one clinical trial with <unk> 101 this quarter.

Secondly, we plan to report initial data from the 72 million to two phase III clinical trial, combining and do so in nuc therapy and <unk> 300.

And we expect to report that data in the second half of 2023.

We plan to report initial data from the healthy subjects single ascending dose portion of our phase one clinical trial for <unk> 106, one in the second half of 2023.

And fourthly, we plan to complete IND, enabling studies for <unk> three for three <unk> Coronavirus clinical candidate and also nominated candidates to commence an IND, enabling studies and our NSP 12 program both in the second half of 2023.

I'd like to take this opportunity to recognize and thank all of the arbutus employees for their hard work and dedication.

We've made significant progress in advancing our pipeline and I look forward to sharing more details as we reach our clinical milestones and data Readouts later this year.

I am confident that we have the right team and the right strategy in place to deliver on our mission.

So operator, we are now ready to open the call for Q&A session.

Thank you.

Your first question comes from Dennis <unk> of Jefferies. Please go ahead.

Hi, good morning.

Thanks for taking thanks for taking my question just one for me.

From a big picture perspective around hepatitis B.

How should investors think about the space given that it's been challenging in a lot of these studies take very long and you are hearing some pharma companies actually discontinued developments here.

How and when do you think you could change that narrative significantly. Thank you.

Thank you Dennis This is bill good question and yes, you're right some observations that you've made around.

J&J for example, stoping.

Stopping the development program.

And yes, some of the clinical trials do have some legacy timelines attached to them. However.

There are still several companies that are in this field, both big pharma and.

Small biotech.

And.

As I said in my comments I'm confident.

Strategy that we have.

Which is two.

Reduce HBV DNA suppressed surface antigen and boost the immune system.

Is the correct scientific strategy and we are developing assets in those three arenas.

Testing out different combinations in these trials to find the functional cure.

Ultimately I think there will be some kind of data in this field.

Reaches some kind of.

Level of functional cure.

That will establish a benchmark and then other companies will continue to.

And maybe as a follow up one of the really interesting things about our business.

The platform is DSR in a few years ago Roche did acquired by sirna for around $1 7 billion again for the platform. So I'm just wondering.

How can you leverage that platform.

And given your current cash position is that something you could.

Hi.

Do more work on in the near term or maybe some color there would be helpful. Thank you.

Yes.

As Dave mentioned, we are well capitalized at the moment.

Some cash runway and I think we've shown in the past that we've been able to.

Raise money through different mechanisms. So some of the royalty monetization the China rights deal that we did with <unk>.

Being a couple of examples.

I think we're also quite judicious in the way that we do a combination clinical trials.

We try and keep those relatively simple with 50 50 cost sharing between ourselves and our partners, which reduces some of the cost of the clinical trials.

And.

Dave in the whole exec team, we're pretty cautious on what we spend and where we spend it.

Beyond that Mike.

Mike Mack is here in the room with us and maybe comment on some of the.

Sure I'm happy to do that Dennis as we've mentioned in the past.

Have conversations with all players in the field.

All the time any opportunity we have with tissue advantage of that and there is certainly continued interest in the field.

There are still lots of key players as Bill mentioned.

Working diligently in hepatitis B and we do expect that we're going to be able to drive functional cure rates higher as we continue to iterate.

With our pipeline.

So as things evolve we will continue to have those conversations and we'll see how they progress we obviously can't say much more than that right.

Always we're always open to thinking about potential opportunities for future. So.

We've it's Pat.

Thank you.

Thank you one moment for our next question. Please.

Our next question comes from Ed Arce of H C. Wainwright. Please go ahead.

Hi, Good morning, everyone business promise you are asking a couple questions for Ed. Thank you for taking my questions.

Perhaps first.

Sundar Barry.

Hershey dataset from the tier one phase Iia study.

Okay can you tell us when can we expect the next dataset where would it be later this year and also.

Looking further.

Mitch can investors expect to Uh huh early idea of what the phase II B will look like.

Yes. So good question our goal was to do an update from this study in the first half of the year, which we delivered.

Diesel.

And as Karen said in her comments.

We now have to let this study run.

A little bit further.

I think Kevin and I, both agree that doing too many small updates as may be not helpful. We should probably wait until we have some more meaningful more complete data sets.

So I think what we're going to do is wait until January when we.

Typically.

<unk> expectations and guidance for the 2020 full year.

And I think we'll put something in there about when we expect to further update from this study.

Great.

I assume.

Got that.

That will include.

The profession mixed steps for them.

What's maybe as well.

Yes, I mean as always with the clinical trials you have to wait to read out what the data.

Says and then we'll be guided by that as to how we determine next steps.

I see okay.

And then moving on the other Triple combination study.

There are tier two study our combination with <unk>.

What type of data or can we expect.

In terms of.

Endpoints measurements.

Would that be comparable to their tier one study.

Simon do you want to take that yeah sure. Thanks for the question.

As we've alluded to marine and we plan to report preliminary data from that study before the end of the year.

And typically you know certainly surface antigen is a very important endpoint for us and all of our clinical trials with <unk> as the foundation of many of these combination studies.

Certainly data around surface antigen.

We would expect to present at that time beyond that as in most of our trials, we really just need to see where we are with the number of subjects, reaching certain milestones by the time, we're ready to report that data and the completeness of the datasets. We have at that time will really dictate what we're able to share. So certainly surface antigen beyond that its too early to comment.

<unk>.

Okay understood and then switching gears for one question.

Of our 106 one.

Yes, we expect a single ascending dose data later this year.

So clearly our safety data are very important.

Hi.

Should we expect to see some type of efficacy.

Specifically <unk> data.

And what would be the next step for 161 that these data are positive.

Yes, I can address that as well.

We mentioned we are in a phase one clinical trial with <unk> six one meaning that we are in healthy subjects at this point with that trial.

The early data sharing would certainly be as you alluded to you mostly around safety.

There to get into the Pharmacodynamic responses of 80 161, we need to be in the hepatitis C patient population, which we wouldn't be ready to share any data.

By the end of this year. So for this particular trial just safety data would be what we would be sharing.

Right got it. Thank you so much for taking my questions and looking forward to data Readouts later this year.

Thank you Thomas.

Thank you one moment for our next question. Please.

Our next.

She comes from Roy Buchanan of JMP. Please go ahead.

Hey, great. Thanks for taking the questions I guess the first one on <unk>.

101 pretty quick getting the clinical trial setup ex U S. Sir so nicely done on that I guess just any details.

Details you can give us around the phase one what's gonna look like I assume it's not exotic.

I'll start and then.

What's the path look like with the FDA from here.

What do you do what are the next steps there I guess and what's the conversation looks like with the FDA.

Yes, Thank you Brian .

And as we reveal today.

And previously actually the FDA provided their comments and concerns and the clinical hold letter.

And they predominantly focused on certain aspects of clinical trial design and some preclinical data.

But we were able to switch to New Zealand.

And submit the Cta.

Importantly, we did attached the clinical hold letter from the FDA in our Cta application to New Zealand.

So.

We're encouraged that we'll be able to start that study this quarter and New Zealand.

And as that data emerges we will have the ability to continue conversations with the FDA.

On chart a path forward.

Beyond that count anything you want to say about the design of the study.

No not in particular, Randy alluded to it's nothing surprising at this point in the study in terms of initiating in healthy subjects, and then moving into chronic hepatitis b patients. So yes from that standpoint.

Nothing nothing terribly exotic disease cyclical.

Technical pivotal study, but yes, we are very much looking forward to getting this initiated as soon as possible and we're excited that we have a path forward.

Okay, great, but you would expect to include CHP patients in the same trial.

No. We actually we are so it is an umbrella which is similar to our other small molecule studies that we've worked in the hepatitis B space. So it is a similar trial design initiating in healthy subjects, and then moving onto chronic hepatitis b subjects within the same trial.

Okay great.

And then just a quick one on <unk> just any updates you can give us on the progress there I mean I know it's in their hands, probably can't say much but.

Any sense of what to expect and maybe timing for the next update for that collaboration thanks, Yes.

Yes.

This is Mike. Good question, Yes, we continue to work with our achievement with our partners and to move to move that program forward as quickly as possible. There's not much more we can say beyond that.

It's a bit of a slow process in China is as Im sure Youre aware, but we're moving as diligently as we can.

Sure.

Okay and can you just remind me where it's out at this point like in development or is that not public.

Where is it in development in China.

Yes.

We're still working towards submitting an IND to the Chinese regulatory authorities.

Thank you Robert Thank you one moment for our last question.

Yes.

Yeah.

Our last question comes from Bryan Garnier.

Please go ahead.

Hey, good morning, Thanks for taking our questions. This is Charlie on for Brian just a couple from US. So I was just kind of curious what your interpretation of the combination data with <unk> and peg interferon is given that in the <unk>.

And <unk> cohorts it looks like.

And one or two patients there was a sharp drop in surface antigen and then a bit of a rebound.

Secondly.

We'd be curious.

Any of the kind of investment calculus has changed for you guys with regards to the Corona virus Antivirals given how the disease landscape has evolved over the past year and a half.

And also just kind of could you set the table with expectations for.

When the <unk> 300.

Combination might have an incremental effect from the use of that vaccine and kind of like what youre thinking about in terms of how that combination might be synergistic. Thank you.

Okay, alright, thanks, so, let's let's chunk this up maybe the interferon question first with Karen and then we'll go across to Mike Sofia for his comment on Corona virus, Yes sure. Thanks, Phil So just back to the tier one interferon data that was released so you know as we mentioned earlier I will remind you that this is very preliminary data and that the majority of that.

Subjects had not completed the interferon street in the period when we reported this data so as we alluded to I think it's still too early to draw.

Specific conclusions from the data set that we shared that we were encouraged by the performance of <unk> in the lead in period doing exactly what it's supposed to be doing in terms of lowering surface antigen and then initial data with interferon. So your point is a little variable.

Looking at those plots in the poster or perhaps I can refer you back there. The S. Antigen data was presented in a log scale. So while some of those changes was rather dramatic at the low end. These are subjects that are moving from surface antigen values. For example are less than five to lessen lobe and the quantitation and then back to less than five or less.

And patents so the bottom of that scale there is actually a very.

A very small windows surface antigen changes less in Chennai is prime now.

The tactical where these subjects are moving around and I don't think that surprising given the close follow up with these subjects, we don't necessarily expect someone to hit lower than a quantitative necessarily stay there they may bounce around a little bit before they settle out.

Whichever direction. They may go whether they remain undetectable.

Have a little bit of surface antigen rebalancing and to your point.

I think the big picture here is we need to keep watching these subjects.

And let them complete the full interferon treatment period left them complete the follow up period.

As you know with interferon monotherapy data there are at times be a very interesting outcomes in patients. After they completed their interferon therapy. So I think we just need to be patient.

The data emerges and as alluded to we'll be providing updates on this study when we have additional meaningful data to share.

And then just wanted to talk about the second part the potential impact of <unk> 300, and the other study and then we'll go across to coronavirus.

So in terms of ETP 300, with the <unk> study.

So certainly it as it related to who will be sharing some data from that study towards the end of the year.

We've been following back to tech data very closely with Arab ETP 300 studies or is year on year to study <unk>.

And are encouraged by their results in terms of surface antigen declines, especially in patients who have most surface antigen at the beginning of the study so keeping that in mind, we're very hopeful that <unk> will continue to.

Lower surface antigen and the subjects in that study to appoint where BGP 300 will hopefully have a similar effect of additional surface antigen decline that ideally I'd just note EMEA modulus right activities that will promote functional shorten those patients. Okay. Thanks, so much.

Mike on the coronavirus approach sure.

So I think.

When you look at the code of our space.

Can you talk to.

Sort of Kols are still a significant medical need for effective therapies, which which to a large extent, our washington out there.

As you probably heard.

We are seeing a surge here.

Sure.

So our exposure to.

By nurses and the recent research.

Recent news.

Obviously, you've pointed to the need still for therapeutics.

Our strategy has always been I think differentiated from from others with the idea of a combination of two drug docking or borrowers.

Not only.

No.

Sure.

Infection in the patient but also.

<unk> pre and post exposure prophylaxis.

Finally, this whole issue of long Covid.

Still a concern out there and how do you treat loan covered some of the theories are about or there is some kind of reservoir borrowers out there and if you can hit the bars very hard with effective therapeutic future, possibly address more so.

Still we believe that there is.

A value wins in our Covid program right now there are a number of key important.

Unmet medical needs in this space, but we think we can address.

The two that we've implemented.

Great. Thank you so much for giving them additional color and I appreciate your time today.

Thank you.

Thank you I'll now turn it back over to management for closing remarks, Alright, and I'd just like to take a moment to thank everyone for joining us. This morning. We do appreciate your continued interest and support of our viewers and we look forward to providing you the updates as we progress.

The development of our HPV and coronavirus assets this year.

So thank you everybody operator that concludes our call. Thank you.

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

Okay.

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