Arbutus Biopharma Corporation (NASDAQ:ABUS) Q3 2024 Earnings Call Transcript

Arbutus Biopharma Corporation (NASDAQ:ABUS) Q3 2024 Earnings Call Transcript November 6, 2024

Arbutus Biopharma Corporation reports earnings inline with expectations. Reported EPS is $-0.1 EPS, expectations were $-0.1.

Operator: Good day, and thank you for standing by. Welcome to the Arbutus Biopharma 2024 Third Quarter Financial Results and Corporate Update. [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.

Lisa Caperelli: Thank you, Antoine. Good morning, everyone, and thank you for joining Arbutus’ Third 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; David Hastings, Chief Financial Officer; Dr. Karen Sims, Chief Medical Officer; and Dr. Mike Sofia, Chief Scientific Officer. Mike McElhaugh will provide a corporate update, including an update on our ongoing clinical programs in HBV. Dave will then provide a review of the company’s third 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 10-K, our quarterly report on Form 10-Q, 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?

Mike McElhaugh: Thank you, Lisa, and good morning, everyone. I appreciate you joining us today. A few weeks ago, we issued a press release announcing that multiple abstracts highlighting imdusiran data were accepted for presentation at the Liver Meeting 2024, which is the annual meeting held by the American Association for the Study of Liver Diseases. Included in the acceptance are 2 late-breaker poster presentations with the imdusiran data from our ongoing Phase IIa clinical trials IM-PROVE I and IM-PROVE II. Since that meeting kicks off next Friday, November 15, and the data are under embargo, we’re not able to provide any updates to those trials at this time. I will, however, review at a high level the data that we presented from those clinical trials earlier this year at the EASL conference.

Before doing so, I want to take a minute to discuss why we are focused on a functional cure for patients with chronic hepatitis B. Chronic HBV remains a significant global health challenge, affecting more than 250 million people worldwide despite the availability of preventive vaccines and current treatment options. This underscores our mission to address the urgent need to bring innovative combination treatments with a finite duration such as those that could include our RNAi therapeutic imdusiran to patients as quickly as possible. Currently, the primary treatments for chronic HBV include nucleos(t)ide analogue that suppress HBV DNA and immune modulators like interferon. These agents result in a very low functional cure rate. Therefore, combining new and innovative therapies to reduce surface antigen, suppress HBV DNA and boost the immune system with current standard of care is needed to provide a more optimal functional cure rate for patients with HBV.

If a functional cure rate were available for patients with chronic HBV, it could potentially significantly reduce the patient’s risk of liver cirrhosis and hepatocellular carcinoma, decrease patient stigma and eliminate lifelong treatment and burdensome health care costs. As we focus on developing a functional cure for chronic HBV, we believe it is, first, important to lower viral markers such as hepatitis B surface antigen. Our Phase IIa studies are designed to use imdusiran to reduce surface antigen as low as possible before administering an immune modulator. We are combining our RNA therapeutic imdusiran with 2 different immune modulators in 2 Phase IIa clinical trials, our IM-PROVE I trial, which includes short courses of interferon, and our IM-PROVE II trial, which includes a combination of a therapeutic vaccine and an anti-PD-1 monoclonal antibody.

At the EASL Congress in June, we reported data from our IM-PROVE I clinical trial showing that the combination of imdusiran plus interferon was generally safe and well tolerated. The cohort that performed the best was Cohort A1, where HBV patients received 6 doses of imdusiran and 24 weeks of interferon in addition to ongoing nuke therapy. In cohort A1, 33% of the patients achieved surface antigen loss at the end of imdusiran and interferon treatment that was sustained at 24 weeks post end of treatment. We also looked at a subset of patients who had surface antigen less than 1,000 IU/mL at baseline. In Cohort A1, 67% of the patients who had surface antigen less than 1,000 IU/mL at baseline maintained surface antigen loss 24 weeks after completion of imdusiran and interferon treatment.

This is one of the highest reported rates of surface antigen loss achieved by patients with baseline surface antigen less than 1,000 IU/mL. This is a relevant population to assess because published studies have shown that patients with surface antigen loss have better long-term outcomes. As we think about a Phase IIb clinical trial and based on these data, stratifying the patient population to include those with low surface antigen may best position us for success while still capturing a significant portion of chronic HBV patients. At the time we reported the data, these 4 patients in Cohort A1 with sustained surface antigen loss had discontinued their nucleoside therapy. We’ve been following these patients to assess them for functional cure.

As a reminder, functional cure is defined as sustained hepatitis B surface antigen loss and HBV DNA less than the lower levels of quantification 24 weeks of treatment with or without hepatitis B surface antibodies. We continue to receive positive feedback on these data from key opinion leaders in the HBV field, and we are excited to provide additional follow-up data from this trial at AASLD next week. In June at EASL, we also reported end of treatment data from our IM-PROVE II clinical trial that is evaluating the safety and immunogenicity of a 24-week lead-in with imdusiran followed by Barinthus Biotherapeutics immunotherapeutic VTP-300 or placebo while continuing nuke therapy. In this trial, imdusiran lowered surface antigen to levels less than 100 IU/mL prior to dosing with VTP-300 or placebo in 95% of the patients.

After receiving VTP-300 and through 24 weeks post end of treatment, more patients maintain surface antigen thresholds of less than 100 or less than 10 IU/mL versus placebo. For patients who reach this time point, a statistically significant difference was achieved in mean surface antigen levels between the treatment arm and placebo. Recall that we have expanded this IM-PROVE II clinical trial to evaluate the addition of a low dose of the anti-PD-1 monoclonal antibody, nivolumab, to the imdusiran and VTP-300 combination treatment regimen, which we believe may further boost the host immune response. We are on track to report preliminary data from this portion of the trial next week at AASLD. The totality of these data support our plans to advance imdusiran into a Phase IIb clinical trial as a cornerstone in a potential HBV functional cure treatment regimen.

Now I would like to move on to AB-101, our oral small molecule 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, and the addition of a checkpoint inhibitor in combination with imdusiran could potentially further enhance HBV-specific immune responses. We remain excited about the potential of AB-101 in treating HBV. AB-101 is liver-centric and in preclinical studies had typical small molecule pharmacokinetics, likely providing a much shorter duration of effect than long-acting antibodies. AB-101 was designed with the goal of minimizing systemic exposure and reducing the chance of immune-related adverse events that are often seen with checkpoint antibodies.

AB-101 is currently in a Phase Ia/Ib clinical trial that consists of 3 parts, starting with single and multiple ascending doses in healthy subjects and culminating with multiple doses in patients with chronic HBV. Last quarter, we reported data from the Part 1 single ascending dose portion of the trial, showing that AB-101 was generally well tolerated with evidence of dose-dependent receptor occupancy. In the 25-milligram single-dose cohort, all 5 evaluable subjects showed evidence of PD-L1 receptor occupancy between 50% and 100%, indicating that AB-101 is interacting with its intended target. Today, we recorded data from Phase II of this trial where part — Part 2 of this trial, where we have so far enrolled 2 sequential cohorts of 10 healthy subjects.

Each cohort received 10 or 25 milligrams of AB-101 or placebo daily for 7 days. Multiple ascending doses of AB-101 were generally well tolerated with evidence of dose-dependent receptor occupancy. In the 25-milligram cohort, all subjects showed evidence of receptor occupancy with 7 of the 8 subjects demonstrating receptor occupancy greater than 70% during the 7-day dosing period. With a favorable safety profile to date and evidence of receptor occupancy, we have now moved into Part 3, the global portion of this clinical trial, which evaluates 28 days of repeat dosing in AB-101 in patients with chronic HBV. We expect to report preliminary data from HBV patients dosed with AB-101 in the first half of next year. Finally, I have 2 brief updates on the litigation progress with Moderna and Pfizer/BioNTech around our LNP intellectual property.

In the Moderna case, the trial date is now scheduled for September 24, 2025, which is, of course, subject to the court’s availability. In the Pfizer/BioNTech lawsuit, the date for the claim construction hearing, also known as the Markman hearing, has been set for December 18, 2024. I’ll now turn the call over to Dave Hastings for a brief financial update. Dave?

Dave Hastings: Thanks, Mike, and good morning, everybody. We ended the third quarter of 2024 with approximately $131 million of cash, cash equivalents and investments in marketable securities compared to approximately $132 million as of December 31, 2023. During the first half of 2024, we received approximately $44 million of net proceeds from the issuance of common shares under our at-the-market offering program. These cash inflows were offset by $54.5 million of cash used in operations. We did not issue any common shares under our ATM program in the third quarter of 2024. And we still expect our 2024 cash burn to range from $63 million to $67 million. Importantly, our cash runway is sufficient to fund our operations into the fourth quarter of 2026. In closing, we have a strong financial position to advance our mission of developing our HBV assets to provide a functional cure for people with chronic HBV. And with that, I’ll turn the call back to Mike.

Mike McElhaugh: Thanks, Dave. We look forward to providing an update next week as we intend to report additional data from our IM-PROVE I clinical trial and preliminary end-of-treatment data from the nivolumab arm of the IM-PROVE II trial at AASLD. With these planned data announcements and today’s reporting of the multiple ascending dose data from healthy subjects in the AB-101-001 trial, we will have achieved all of our second half milestones. Operator, we’re now ready to open the call for Q&A.

Q&A Session

Operator: [Operator Instructions] Your first question comes from Dennis Ding from Jefferies.

Anthea Li: This is Anthea on for Dennis. We had a question on functional cure data that’s upcoming. I know that you’ve mentioned the 20% bar but also appreciating that the update will include patients from Cohort A2 without imdusiran. So do you have any thoughts on what functional cure would look like in this arm? Would you be looking for a 20% incremental benefit on top when you add imdusiran. Just imagining if this cohort has 10%, 15% functional cure how you should interpret that data if adding imdusiran gets to 20%.

Mike McElhaugh: This is Mike. So let me try to understand where you’re headed with this question. So first of all, we have not presented any functional cure data related to imdusiran to date. We’ve only presented end of treatment and post-nucleoside consolidation. The 20% functional cure rate that you’ve mentioned is sort of a stick in the mud for us, sort of a baseline of where we think is a meaningful functional cure rate. As you know, the current therapies don’t do very well, less than 10%, somewhere around 5% and less for nucleosides. So we, as a company, have sort of set a goal for our programs that if we can hit a functional cure of 20% as a goal, as an aspirational goal that, that would be meaningful and beneficial to patients going forward. So whether we’re talking about Cohort A1 or A2 or B1 or B2, we should see sort of how that continues at AASLD next week. Karen, if you want to add anything to that, please?

Karen Sims: And I would like to clarify how the study is designed just to avoid any misinterpretation. So all of the subjects in the IM-PROVE I study received at least 4 doses of imdusiran, so 60 milligrams every 8 weeks for a period of 24 weeks. And then they were randomized to the different interferon-containing cohort. The H2 group did, in fact, received 4 doses of imdusiran before they were randomized to receive the 24 weeks of interferon. The difference between the A1 and the A2 cohort is the A1 cohort continued to receive imdusiran during the interferon treatment period whereas the A2 cohort just received the initial 4 doses and then received interferon only. So I just want to clarify that point in case there’s a misunderstanding about the trial design.

Anthea Li: Okay. Got it. And so the bar would be 20% in either cohort.

Karen Sims: Because they’re both interferon – or imdusiran and interferon containing.

Operator: Our next question comes from Roy Buchanan from Citizens JMP.

Roy Buchanan: I guess to follow up on that last question, how — what should we consider as a denominator? So if we just take Cohort A1, for example, is the denominator for functional cure going to be 12 patients? Or are you thinking about the 4 patients who achieved S-antigen loss? And then kind of along the same lines, how are you thinking about the imdusiran lead-in for subsequent studies? You can get a lot of patients below 1,000 with imdusiran itself. So are you maybe thinking to screen after imdusiran lead-in or at the very beginning?

Karen Sims: Yes. So getting back to your first question about the denominator. So each cohort, as you noted, had a denominator of around 12 or 13 subjects for the 24-week cohort. So certainly, we’d be looking at functional cure across the entire population of that cohort, and we’ve already presented some S-antigen loss data, as Mike said, at end of treatment and 24 weeks post end of treatment after the new consolidation period, looking at that denominator of 12 where we get 33%. If we then look at the population a little differently and look at subjects who entered the study with baseline surface antigen less than 1,000, we see that percentage of surface antigen loss go up to 67%, and this is consistent with what a lot of sponsors are seeing across clinical trials recently in the hepatitis B area that subjects with lower surface antigen tend to respond better to these therapies.

But I think in either situation, if our surface antigen loss data transfers the functional cure data, we’re above that 20% bar regardless of whether we look at the entire cohort or whether we look at the subjects with surface antigen less than 1,000. So I think we’ll be looking as the data emerges and looking forward to our updated AASLD about how the functional cure data will appear looking at both of those denominators. In regards to your second question about the imdusiran lead-in period, so obviously, we’re continuing to look at all different possibilities of study designs moving forward. I think what has been a little differentiating about this particular trial with IM-PROVE I, for example, is we’re using this lead-in period to drive surface antigen as low as possible.

And when we do that and then come would the immunomodulator after lowering surface antigen, we’re seeing these very high rates of surface antigen loss. So I think that so far has been, I think, a good study design for us in terms of our goals of lowering surface antigen and then boosting the host immune response and immunomodulators. So certainly, as I mentioned, as we go forward, we’re looking at all different types of study design options, and we’ll see where the data lead us with these Phase III studies.

Roy Buchanan: Okay. Great. That’s helpful. A couple on AB-101. So the results in the first half of next year, is that likely just going to be Cohort A and so 12 subjects from that? And then do you have any plans to present the Part 1 or 2 results?

Mike McElhaugh: Yes. So Roy, we’re still working through that. We will – we can’t – I can’t give you any additional detail on what specifically – what specific data set will be presented in the first half, but there will be HBV patient data in the first half. With regards to the MAD portion of the data, we’ll figure out the right forum to get that out. But of course, we’re pretty open with the data that we have, and we like to get that in the hands of the likes of you as quickly as we typically can. So stay tuned.

Operator: Our next question comes from Keay Nakae from Chardan.

Keay Nakae: Yes. So I’m wondering if you can give us any further clarity on how you’re thinking about timing for Phase IIb?

Mike McElhaugh: Yes. Good to hear from you. At this point, I can’t really give you any additional timing related to the Phase IIb other than to say that we’re working through it as diligently as we can. We are — we’re looking at the data that we have on hand and what’s going to be coming up. Obviously, we need to have internal discussions, talk to regulators and figure out what the right path is for imdusiran to get it to market as quickly as we can. So all I can say at this point is we’re being diligent and we will continue to do so, and we’ll get there just as quickly as we can.

Operator: Our next question comes from Brian Skorney from Baird.

Brian Skorney: Actually, one on AB-101. Just going to Part 3 of the study, just wondering if you had any insight into prior looks of PD-1 or PD-L1 data in HBV, is there any HBV-specific biomarker that would be expected to move here? Not sure if you’re enrolling just a mix of the antigen positives or negatives, but just trying to level set expectations on what a 28-day result could show in HBV patients with an anti-PD-L1.

Mike McElhaugh: Sure. Maybe I’ll ask Karen or Mike to handle that one.

Karen Sims: Yes, I can start. I mean, as you probably know from following our company over the years, we tend to be very biomarker heavy. So we always like to explore biomarkers to the extent we can in any of our trials, including Phase I trial. So we are doing a robust biomarker collection to look, as we’ve already reported, receptor occupancy and other markers. So that continues into the Part 3 of the study, the hepatitis B portion of the study. I will remind everyone that it is just a 28-day treatment period, and AB-101 is not a direct-acting antiviral, right? It’s an immune modulator. So we’re not — we don’t have clear expectations yet on what we might see in terms of actual effects on hepatitis B on the anti-hepatitis B immune response in these subjects with a 28-day treatment period. So we’ll have to see that data as it evolves and as we dose escalate through that portion of the trial. But Mike has any other…

Mike Sofia: I mean, obviously, Karen made it clear what the expectation…

Mike McElhaugh: The goal with 101, obviously, Brian, is to get in combination with imdusiran as quickly as we can. Our strategy has always been to lower surface antigen first then add an immune booster. So unfortunately – or I guess it’s just the reality of drug development. You have to take it as a monotherapy first and see how it performs and then we can get into combo as quick as we can. So…

Operator: Our next question comes from Ed Arce from H.C. Wainwright.

Thomas Yip: This is Thomas asking a couple of questions for Ed. So first question, first, to clarify, the AASLD late-breaking presentation with the IM-PROVE II study. Are we expecting data only from the expansion cohort? Or can we expect updated data from the main study as well?

Karen Sims: Thomas, yes. So the presentation will be focused on Group C of the IM-PROVE II study. So that was the cohort with the addition of low-dose nivolumab. We did present the update on the A and D groups back at EASL in the — in June.

Thomas Yip: Got it. Okay. Yes, that makes sense. And then perhaps moving a little bit on the legal side. So just wonder what can we expect after the claim construction hearing following the — in your lawsuit against Pfizer?

Mike McElhaugh: So Thomas, I just want to make sure I caught that question correctly. Was the question is what can we expect after the claim construction, the Markman hearing for Pfizer? Is that correct?

Thomas Yip: Yes, both the — what kind of results can we expect from that hearing and also what the next step in the process.

Mike McElhaugh: Sure. So as you know, as is always the case, I can say very little about the litigation. So as far as what to expect, we can wait until the hearing happens, and we’ll learn at the same time you do sort of what we can expect coming out of that. The process, as far as feedback is concerned, it’s sort of similar to what we saw in the past. It’s going to take some time after that hearing before we get some kind of report. What we are looking forward to is sort of a court schedule, right, which after the results of the Markman hearing get made available. We will also have a court schedule available to us, which will give us a little more insight into when we may move forward with the trial and when the trial date may come and when all the goodies that happened in between there could take place.

So stay tuned. We’re not that far away from December 18 now, and then it will be likely a couple of months before we have the outcome of that meeting in writing, but we’re anxiously awaiting the results, just like you.

Thomas Yip: Understood. Perhaps one more question from us. This one is regarding cash runway about 24 months from now. So I wonder if that includes any expected proceeds from the ATM program.

Dave Hastings: I’m sorry, you tailed off at the end there.

Mike McElhaugh: Does it include any expected proceeds from the ATM program?

Dave Hastings: No, no, no, it does not. It assumes no financing. Sorry about that. Yes. No financing.

Operator: I’m showing no further questions. I will now turn it back over to management for closing remarks.

Mike McElhaugh: Thank you, everyone, for joining us this morning. We remain committed to transforming the HBV treatment landscape and providing hope to millions of patients worldwide. As always, we appreciate your continued support and confidence in our vision. We look forward to providing updates next week at AASLD on the clinical development of imdusiran. Operator, that concludes our call.

Operator: Thank you for your participation in today’s conference. This does conclude the program. You may now disconnect.