Arbutus Biopharma Corp
NASDAQ:ABUS
Earnings Call Analysis
Q4-2023 Analysis
Arbutus Biopharma Corp
Arbutus has honed its strategic focus on developing treatments for hepatitis B (HBV), a decision that seems promising given the extended cash runway into the first quarter of 2026. With $132 million in cash reserves at year-end, contrasting with $184 million at the close of the previous year, the company is targeting a significant reduction in cash burn to between $63 and $67 million in 2024. These steps appear to align the company's resources to support long-term success, positioning it to manage operations for multiple upcoming years.
Arbutus has reiterated its commitment to advance proprietary clinical assets in HBV, which includes identifying a treatment aiming for at least a 20% functional cure rate—a striking goal given the current less-than-5% cure rate with existing treatments. The centerpiece of the strategy is to evaluate imdusiran across multiple trials for efficacy, safety, and optimal dosing. The anticipated reporting of Phase IIa trial data for imdusiran and preliminary safety data for AB-101 this year will be crucial milestones.
Arbutus is running three clinical trials focused on HBV, expecting to share data across all of them during the year. One of these trials includes a Phase IIa evaluating the combination treatment with imdusiran in chronic hepatitis B patients. Additionally, intellectual property claims, notably involving their LNP delivery technology, suggest a proactive approach to protecting the commercial potential of their developments, with an important case against Moderna progressing through legal channels with a trial date set for April 21, 2025.
In an interesting clinical collaboration, Arbutus and Barinthus Biotherapeutics are examining the combined efficacy of imdusiran with Barinthus' HBV-specific immunotherapeutic and nivolumab to lower surface antigen and stimulate the immune system. Initial results have been promising, and further data is anticipated in the first half of this year, with potential updates planned for major scientific conferences. Expanding on the synergy of combination therapies, another study with durvalumab is expected to offer insights into optimizing treatment regimens.
As Arbutus progresses with its clinical studies, there is a plan to re-engage with the FDA to move forward with the AB-101 trial in the U.S.. The company intends to share data from ongoing Phase I trials with healthy subjects soon and will communicate updates for the future phase trials as they become available. The importance of data to guide the company's future direction with the FDA and overall strategy is underscored, suggesting a versatile approach in their development path.
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Good day, and thank you for standing by. Welcome to the Arbutus Biopharma Fourth Quarter and Year-end 2023 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, VP of Investor Relations. Please go ahead.
Thank you, Stephen. Good morning, everyone, and thank you for joining Arbutus' Fourth Quarter and Year-End 2023 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 fourth quarter and year-end 2023 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 10-K and from time to time in our other documents filed with the SEC. With that, I'll now turn the call over to Mike McElhaugh. Mike?
Thank you, Lisa. Good morning, everyone, and thank you for joining us today. In 2023, we made several important strategic choices to best position Arbutus for long-term success. In addition to streamlining our focus and resources on HBV, which extended our cash runway into the first quarter of January 2026, we also announced my appointment as Interim President and CEO.
As a co-founder of Arbutus, I am honored to have this opportunity to lead my colleagues in our mission to develop a functional cure for the millions of people chronically infected with hepatitis B virus. I'm excited for my new role and plan to leverage my extensive scientific, strategic, transactional and commercial experience with antiviral and infectious disease companies to continue to move Arbutus forward.
In 2024, our focus is to position Arbutus for continued success and create value for all our stakeholders. We remain committed to advancing the development of our proprietary clinical assets in HBV, including imdusiran, our RNAi therapeutic, and AB-101, our oral PD-L1 checkpoint inhibitor. There remains a need for finite and more efficacious HBV treatments that further improve long-term outcomes and increase functional cure rates as fewer than 5% of patients currently achieve functional cure with currently approved nucs or interferon. Our goal is to develop a treatment for chronic hepatitis B virus patients that results in at least a 20% functional cure rate to address this large unmet medical need.
HBV is a complex virus that will most likely require a combination of compounds that inhibit viral replication, lower the viral antigen burden and boost the immune response. We are executing on our three-pronged approach to functionally cure HBV with a combination therapy that includes imdusiran as a cornerstone. A combination that includes imdusiran, AB-101 and a nuc is our ultimate goal. That said, our current strategy is evaluating imdusiran in combination with other agents in multiple Phase IIa clinical trials with the goal of gaining valuable insights on efficacy, safety and optimal dosing to help inform the design of a Phase IIb clinical trial with imdusiran as the cornerstone therapy.
Throughout 2024, we anticipate reporting data from our 2 ongoing Phase IIa clinical trials with imdusiran, including the potential to see patients with undetectable surface antigen. Achieving undetectable surface antigen levels in either of our current Phase IIa clinical trials would certainly be an important validation of imdusiran's role in potentially achieving the functional cure for hepatitis B patients.
This year, we also anticipate data from our healthy subject portion of our Phase Ia/Ib clinical trial with AB-101, our immunomodulator. We expect to report preliminary safety and importantly, preliminary receptor occupancy and target engagement data in this population. With the potential of AB-101 to boost the host immune response, our goal is to move AB-101 through the clinic as quickly as possible to prepare it for a possible combination with imdusiran. I'd like to say a few brief words about our ongoing intellectual property litigation efforts before closing out this section of the call. All of our scientists take great pride in the intellectual property they develop which takes great effort, time, resources and expense. It is for these reasons that we continue to protect and defend our intellectual property, including our LNP delivery technology which is the subject of ongoing lawsuits against Moderna and Pfizer/BioNTech. An important step in the litigation for Moderna took place on February 8 of this year. This was the date of the Markman hearing, also known as a claim construction hearing, where the court heard each party's interpretation of the construction of claims in the disputed patents. We anticipate the judge to issue his order from the hearing within 60 days of February 8. The next steps will include expert testimony and depositions. In addition, the court has set April 21, 2025, as the trial date for this case. That date is subject to the court's availability.
With respect to the Pfizer/BioNTech lawsuit, the only update I can provide is that the lawsuit is ongoing but is behind the Moderna lawsuit as it was filed later. A date for the claim construction hearing for that case has not yet been set. When able, we will provide updates on both the Pfizer and Moderna lawsuits, but please keep in mind that given the legal sensitivities, we're limited in what we can say.
I'll now turn the call over to Karen Sims to provide an update on the continued progress we are making across our pipeline. Karen?
Thanks, Mike, and good morning, everyone. We are currently conducting 3 clinical trials with our hepatitis B assets, 2 Phase IIa clinical trials with imdusiran and 1 Phase Ia/Ib clinical trial with AB-101, and we expect to report data from all 3 of these trials throughout this year. We also plan to initiate a third Phase IIa clinical trial with imdusiran and durvalumab, an approved anti-PD-L1 monoclonal antibody, in the first half of this year. We will share more details on that trial upon initiation.
As Mike stated, the purpose of these multiple Phase IIa combination clinical trials are to gain information on the safety and efficacy of imdusiran as a cornerstone therapy and to identify a combination treatment regimen that reduces viral burden and boosts the host immune response to advance into a later-stage clinical trial.
AB-729-201 is our Phase IIa clinical trial evaluating imdusiran in combination with ongoing nuc therapy and interferon in patients with chronic hepatitis B. Last June at EASL, we reported preliminary data that continues to reinforce our confidence in imdusiran's ability to effectively lower surface antigen. At that time, we reported data on a small number of patients that had received imdusiran plus at least 12 weeks of interferon and show that interferon may contribute to additional declines in surface antigen.
In the first half of this year, we plan to announce end of interferon treatment data for all 43 study patients, which will include safety and changes in surface antigens from baseline. When we report these data, we could potentially have some subjects that achieved undetectable surface antigen. As a reminder, undetectable surface antigen is a key component of functional cure.
AB-729-202 is a Phase IIa clinical trial that we are conducting in collaboration with Barinthus Biotherapeutics, formerly known as Vaccitech. Through this clinical trial, we are testing whether the combination of imdusiran, nuc therapy and Barinthus' HBV antigen-specific immunotherapeutic, VTP-300, can lower surface antigen and stimulate the host immune system to fully suppress the virus.
Late last year at AASLD, we reported preliminary data that included all patients that received imdusiran treatment and several patients who had received VTP-300 as placebo. In these early data, we reported that surface antigen levels were reduced and sustained with the combination treatment of imdusiran and VTP-300.
In the first half of this year, we expect to report end-of-treatment data, which would include safety and change in surface antigen from baseline for all 40 patients that received imdusiran, VTP-300 or placebo and nuc therapy. We are continuing to dose patients in the amendment to the AB-729-202 trial that explores the addition of a low dose of the anti-PD-1 monoclonal antibody nivolumab to the combination treatment regimen. We believe nivolumab may further boost the host immune response. Preliminary data from this portion of the trial is expected in the second half of this year.
As noted for the AB-729-201 trial, we may also have the potential to see undetectable surface antigen in some patients, which is a prerequisite to achieving functional cure. While our Phase IIa clinical trials are evaluating imdusiran in combination with immunomodulators, we intend to develop a proprietary combination therapy with imdusiran and AB-101, our oral PD-L1 checkpoint inhibitor. We believe that the immune checkpoint pathway plays an important role in HBV-specific immune tolerance and in T-cell activation.
Our third ongoing clinical trial is our Phase Ia/Ib clinical trial, AB-101-001. This double-blind, randomized, placebo-controlled trial is designed to investigate the safety, tolerability, pharmacokinetics and pharmacodynamics of AB-101. This trial consists of 3 parts, starting with single and multiple ascending doses in healthy subjects and culminating with multiple doses in patients with chronic hepatitis B. We are now moving AB-101 into the second part of this trial, which includes evaluating multiple ascending doses of AB-101 in healthy subjects.
In the first half of this year, we anticipate reporting preliminary data from the healthy subject portion of this trial which will include safety data in addition to preliminary target engagement and receptor occupancy data. As we continue to advance the clinical development of imdusiran and AB-101, we believe both compounds are well positioned to deliver on our goal of developing a functional cure for hepatitis B and driving value for our company. With that, I'll turn the call over to Dave Hastings for a brief financial update. Dave?
Thanks, Karen, and good morning, everybody. We ended 2023 with approximately $132 million of cash, cash equivalents and investments compared to approximately $184 million as of December 31, 2022. During the year ended December 31, 2023, we received $29.9 million of net proceeds from the issuance of common shares under our at-the-market offering program. These cash inflows were offset by $85.9 million of cash used in operations. We anticipate a significant reduction to our cash burn in 2024 from 2023 as we focus our pipeline and research efforts on HBV. Therefore, we expect our 2024 net cash burn to range between $63 million to $67 million, excluding any proceeds received from our at-the-market offering program. Importantly, we believe our cash runway is sufficient to fund our operations into the first quarter of 2026.
In closing, we have a strong financial position to advance our mission, and we remain committed to developing our HBV assets to provide a functional cure for chronic HBV. With that, I'll turn the call back to Mike. Mike?
Thanks, Dave. As I mentioned earlier, we have a data-rich year with end-of-treatment data expected from our 2 Phase IIa clinical trials with imdusiran and preliminary data from our Phase Ia/Ib clinical trial with AB-101. We also anticipate initiating a third Phase IIa clinical trial with imdusiran and durvalumab. Operator, we're now ready to open the call for Q&A.
[Operator Instructions] First question comes from the line of Dennis Ding, Jefferies.
If I can ask a question around the patent litigation. Can you just help frame for us what to expect at the upcoming claim construction order and what is perhaps a good outcome? And do you need the judge to rule in favor of you for all 3 or to just 1 disputed claim be good enough.
Dave, do you want to handle that question?
Yes, sure. I mean look, Dennis, as you know, we're a little bit -- we have to be very careful about what we say publicly about this case. We look forward to the judge's ruling. I really don't think we want to comment sort of on the play-by-play of that until it actually happens. We appreciate everyone's interest. We take this, obviously, very seriously. We were pleased with the actual hearing itself, and we look forward to Justice Goldberg's ruling which we expect, as you know, within 60 days of February 8.
And maybe as a follow-up to that, like, as you look forward 6 to 12 months, is there an opportunity for a summary judgment or anything that could happen potentially in your favor before actually going to trial?
Yes. I believe that the schedule is that there will be that opportunity at some point. I believe we're expecting that in the late summer. All these timelines are subject to change, obviously. I think that's the best estimate of the company at this point in time.
Next question comes from the line of Brian Skorney of Baird.
I just wanted to get a little bit more of a handle on the PD-L1 antibody study designs and rationale. I guess, first, how do you think about PD-1 versus PD-L1 targeting? It's been a while, but I think some of the initial Medarex literature showed that maybe preclinically, PD-L1 was the more desirable of a target for infectious disease. Any thoughts on that design trial? And then how do you kind of go about thinking about selecting nivo for 202 and durva for study 203.
Brian, thanks for the questions. So a couple of questions there. So maybe what I'll do is I'll turn it over to Mike Sofia to answer the PD-1 versus PD-L1 question and then we can go to Karen for some considerations on design, if that works. So Mike, do you want to handle the PD-1, PD-L1 question?
Sure. Sure, Brian. So we do know that PD-L1 is certainly upregulated on hepatocytes in chronic hepatitis B patients, right? The decision for PD-1 versus PD-L1 really come from a strategy standpoint in the sense that we were able to identify small molecule agents that target -- that block PD-L1 essentially. And obviously, as we reported in the literature that this is a novel mechanism of action by which it internalizes the PD-L1, causes degradation, et cetera, and you can then reconstitute PD-L1 on the surface of hepatocytes completely by just washing out drug. So that all fit within our strategy for small molecule liver-centric agents that circumvents the concerns with, let's say, general systemic activation of the immune system. So it was, a, partly the decision around the fact that PD-L1 is highly upregulated in hepatocytes. Therefore, we can target the hepatocytes with a PD-L1 agent and the ability to design and develop a small molecule that fits within our overall concept of how to address this from a liver disease standpoint.
Yes. Thanks, Mike. And I can jump in about the questions regarding the nivo versus durvalumab in our clinical trials. So for the 202 trial, that's the trial we're doing in collaboration with Barinthus Biotherapeutics and their VTP-300 asset. So as you probably know, they have performed some studies already using VTP-300 in combination with low-dose nivolumab and their HBV002 and ongoing HBV003 studies. And in those studies, they have suggested that there is potentiation of response in subjects that receive VTP-300 plus a dose of low-dose nivolumab given at the time of the MVA boost. So for that reason, we incorporated that strategy into the 202 study as an amendment based on their prior and ongoing experience with using nivolumab in this context.
For the 203 study, we did decide to utilize the anti-PD-L1 antibody, durvalumab, basically for the reasons Mike just suggested, and to be able to inform our upcoming combination study with AB-101 and imdusiran in terms of starting to explore the optimal timing and administration of a PD-L1 inhibitor in the context of imdusiran therapy. So that's kind of the rationale for the difference between the 2 studies. And certainly, as the 203 study moves forward, we'll be able to share more details about the study design.
Next question comes from the line of Roy Buchanan of Citizens JMP.
A couple, I guess, for 101, just when do you think you might be in a position to re-engage with the FDA on 101? And I guess, more broadly, what are your plans following the Phase Ia/Ib, too? Can you just elaborate on those a little bit?
Sure. Karen, do you want to handle that one?
Sure, absolutely. So as we said throughout this process, we certainly do intend to re-engage the FDA for this program. And really, the criteria for that is -- are when we feel that we have sufficient data, to return to them with a robust package to be able to move forward in the U.S. So that line of communication is certainly always open, and we're looking forward to the AB-101 trial continuing to proceed as it is and accumulating that data to be able to share back with the FDA.
And this development strategy is something we've done before. We've frequently taken assets initially outside of the United States for a Phase I study and then brought them back to FDA to initiate Phase II trials along with other global jurisdictions as we need to increase study populations and study size.
And then in regard to how the study is progressing and output, as we said just now, we have progressed the study into multiple dosing in healthy subjects. We do intend to share preliminary data from healthy subjects in the first half of this year. The study is designed as an umbrella study, so a seamless transition into chronic hepatitis B patients once we have sufficient data to move forward into that population and certainly, we'll be sharing updates as they become available with the study in an ongoing fashion.
Okay. Great. And then if I could ask 1 about VTP-300. What do you need to see from the results this half to kind of move that approach forward and potentially, I guess, make it a cornerstone. But you mentioned combos with imdusiran and 101. Yes, what do you need to see to add VTP-300 or another vaccine to that approach? Or do you really need to see the nivo data?
Yes. It's a good question, Roy. So honestly, I think we just need to see what the data look like and we'll continue to evaluate as it comes forward. As you rightfully mentioned, we added the nivo arm to that study as well. I think we'd probably want to see that nivo data before moving that combo forward, unless, of course, we see something spectacular out of the VTP-300 plus imdusiran arm and I have no insight into that. Currently, I just -- it will depend on what the data look like.
Obviously, with VTP-300 not being a proprietary asset, we're considering thinking about imdusiran plus 101 and moving that forward as quickly as we can. That's always been sort of the goal. But the data will guide us, I think is probably the best way to think about it.
Next question comes from the line of Ed Arce of H.C. Wainwright.
This is Thomas Yip asking a couple of questions for Ed. First question for the new 203 Phase IIa study with durvalumab, can you discuss the design in broad strokes how big will the study be? And any specific [ elements ] that we can expect the study that is [ learning ] from the ongoing 202 study?
Yes. Karen, do you want to handle that one, please?
Yes, sure. So again, we typically don't dive into the details of our study designs until we're able to announce the first subject, first dose in the study. So I can't elaborate much beyond what we've already said. Again, the goal of the study is to try to help inform upcoming studies with imdusiran in combination with AB-101, so looking at different options in terms of the timing of adding a PD-L1 inhibitor to imdusiran therapy is really the high-level goal.
In terms of the size of the study, it is a typical IIa size study. This is again an exploratory study to try to basically learn about, again, that optimal timing, optimal duration of that combination approach. So the study is listed on clinicaltrials.gov, and you're certainly welcome to peruse that for any additional details there. But again, we will share more specific details about the trial once we add and have subjects enrolled.
Got it. Understood. And then, same thing, similar along with that line, just thinking ahead of the combination study with imdusiran and then with 101. Will the first study be a similar proof-of-concept study, Phase IIa that we've seen with other combinations as well?
Yes, I can jump into that one as well. Typically, it is. I mean the rationale really for starting with a Phase IIa study is, certainly for AB-101, we will still be increasing the safety database for that. The molecule will be -- still learning additional information about PK and pharmacodynamics and a larger population of subjects. So moving to a Phase IIa study is fairly routine with an early development asset just to make sure we're fully understanding the different aspects of the molecule before taking it into a larger Phase IIb type study.
And that really is just all about derisking the compounds and making sure that we're completely comfortable taking it into these larger studies, which, as you know, are very technically difficult, very expensive. So it's -- most likely, it will start with a smaller IIa study. But again, as Mike mentioned throughout the call, we need to see the data and see how the data guides us. So more to come on that as the AB-101 program moves through Phase I.
Got it. Understood. And then one final question from us. Just trying to narrow down the timing of the first half readouts, most notably the 201 end-of-treatment data readout and then also the AB-101 [indiscernible] data. Are these separate events? Or should we expect kind of like a big splash at EASL?
Yes. Good question, Thomas. That's kind of a tough question to answer. I think -- and the reason I say that is because, of course, we'd love to present our data at EASL. We always love to present our data at EASL. But of course, we have no idea whether any abstracts that we may or may not submit will be accepted. So it's hard to guide specifically to a particular conference. But I think you're kind of thinking about the timing correctly, that that's probably around the time when either through a conference or through some other mechanism, the data will likely be available.
Next question comes from the line of Keay Nakae of Chardan.
My questions have been answered.
Okay. I'm showing no further questions at this time. I would now like to turn it back to management for closing remarks.
Great. Thank you. And thanks, everyone, for joining us this morning. We certainly appreciate your continued interest in and support of Arbutus, and we look forward to providing updates as we progress the development of our HBV clinical stage assets. Operator, that concludes our call.
All right. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.