Arbutus Biopharma Corporation (ABUS) on Q2 2021 Results - Earnings Call Transcript
Operator: Good day, and thank you for standing by. Welcome to the Arbutus Biopharma Corporation 2021 Second Quarter Financial Results and Corporate Update Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. Please be advised that today's conference is being recorded. I would now like to hand the conference to your speaker today, Ms. Pam Murphy. Please go ahead.
Pam Murphy: Good morning, everyone. On the call from the Arbutus executive team are, Bill Collier, President and Chief Executive Officer; Dave Hastings, Chief Financial Officer; Dr. Gaston Picchio, Chief Development Officer; and Dr. Mike Sofia, Chief Scientific Officer. Bill will begin with the review of the second quarter and first half accomplishments, clinical development and remaining 2021 corporate objectives; followed by Dave Hastings, who will provide a the review of the company's second quarter financial results. We'll then open up the call for Q&A. And Mike and Gaston will be available to address research and clinical development related questions. Before we begin, we'd like to remind you, that some of the statements made during the call today, are forward-looking statements, including statements regarding expectations for Arbutus' proprietary HBV pipeline and HBV and pan-coronavirus discovery program, including potential clinical results and timelines for AB-729, AB-836 and any future compound; our expected cash runway and the potential for our drug candidates to improve upon the standard of care and contribute to a curative combination regimen for HBV. These forward-looking statements are subject to a number of risks and uncertainties that may cause our actual results to differ materially, including those described in the most recent Annual Report on 10-K, Quarterly Report on Form 10-Q and other specific reports filed with the SEC from time-to-time. Bill?
Bill Collier: Thank you, Pam and good morning everybody. Thank you for joining us today. We appreciate your interest in Arbutus Biopharma. I'm very pleased to report on our significant progress so far this year and to outline our objectives for the rest of 2021. We continue to drive towards our goal of Arbutus which is to focus primarily on developing a portfolio of products with different mechanisms of action that when used in combination, result in a functional cure for patients living with chronic HBV. During the first half of this year, we established a strong foundation towards achieving that goal by accomplishing the following. We continue to report compelling data on AB-729, with four abstracts at the EASL including a late breaker oral presentation that showed substantial declines in hepatitis B surface antigen in subjects with chronic HBV. Importantly, 729 continues to have a favorable safety and tolerability profile. From all four of these abstracts were selected for best of EASL conference. Notably, and addition to reporting significant drops in surface antigen, we saw that in three out of five evaluable subjects are an increased HBV specific immune response, providing support for combination therapy including immunomodulatory agents. This compelling 729 data, derived from up to one year of dosing supports our view with 60 mgs every eight weeks is an appropriate dose in our Phase 2a clinical trials. And I'll discuss these trials in just a moment. Looking forward, we expect to provide additional data in the second half of 2021 including initial data for a 90 mg every 12 week cohort in HBV DNA negative subjects and initial data on a 90 mg every eight week cohort in HBV DNA positive subjects. As we've discussed in the past, we believe that 729 has the potential to be a cornerstone therapeutic in future HBV combination measurements. And therefore, our strategy has been to enter several clinical collaborations to evaluate 729 in combination with other agents with potential complimentary mechanisms of action. And so, I'm pleased to report significant progress towards this goal with our previously announced collaborations with Assembly Biosciences, Antios Therapeutics and Vaccitech. And also the authorization from the FDA to proceed with our IND application for 729 in a clinical trial in combination with a nucleoside analog and short courses of peg-interferon. Now the Antios collaboration will evaluate a triple combination of 729, the Antios proprietary active site polymerase inhibitor nucleotide which is called ATI-2173, and Viread for the treatment of subjects with chronic HBV. The Vaccitech collaboration will evaluate a triple combination of 729 with Vaccitech's proprietary immunotherapeutic, VTP-300, and standard-of-care nucleoside analog therapy for the treatment of subjects with chronic HBV. A clinical trial evaluating 729 with interferon and Antios' ATI-20173 are expected to initiate in the second half of 2021. We expect to file the CTA for the clinical trial with Vaccitech's VTP-300 in the second half of 2021 and expect to initiate the clinical trial in early 2022. In addition to the substantial progress that we've made with AB-729, I'm also gratified with the initiation of a Phase 1a/1b clinical trial with AB-836 on next generation oral capsid inhibitor. This is an important program as it will allow us to potentially have our own proprietary combination therapy to treat patients with chronic HBV. And the recent EASL conference, Arbutus presented pre-clinical 836 data suggesting the potential for increased efficacy on an enhanced resistance profile relative to previous generation capsid inhibitors. Initial data from healthy volunteers and HBV subjects is expected in the second half of this year. We continue to make progress in all of our discovery programs, we're focused on generating lead nomination candidates for our oral PD-L1 inhibitor and RNA-destabilizer programs. In addition, our internal research program to identify new small molecule antiviral medicines to treat COVID-19 and future coronavirus outbreaks continues to progress. And so, with that summary, I'll now turn the call over to Dave Hastings for a brief financial update. Dave?
Dave Hastings: Thanks Bill, and good morning everybody. As I have mentioned in the past, our key financial metric is cash and financial runway. Our cash, cash equivalence in investments was a $121.3 million as of June 30th, 2021, as compared to a $123.3 million as of December 31st, 2020. Our cash use from operations for the first half of 2021 was $31.9 million which was offset by $30.7 million at net proceeds from an issuance of common shares under Arbutus' ATM program. For all of 2021, we expect our cash use to range from $70 million to $75 million and therefore we expect our current cash runway is sufficient to fund operations through the third quarter of 2022. So with that, Bill, I'll turn the call back to you.
Bill Collier: Thanks very much, Dave. So operator, let's now turn up the lines for Q&A, please.
Operator: Your first question comes from the line of Ed Arce with H.C. Wainwright.
Unidentified Analyst: Hi, good morning everyone. This is Thomas Yip asking a couple of questions for Ed. First, about the new Phase 2a study with 729. Specifically regarding to those in choice. In the press release you indicated that you really selected a 60 mg every eight week as the dose to go forward. I'm just wondering will this study include only one dose or is there a possibility to improve additional doses with the 90 mg dose stay there or they are expected in the second half this year.
Bill Collier: Yes, good question. Thank you very much, good morning. Gaston, would you like to take that one?
Gaston Picchio: Sure. Hi, good morning from us. For now, the decision has been made to include the a single dose but since we are in the early stages of preparation of the trial and our 90 mg data will come later this year, there is always an opportunity to reconsider that decision and includes the doses. But right now we're now we're going with one dose.
Unidentified Analyst: Okay, sounds good. And then, perhaps for 836 for -- or also the Phase 1a/b study that's ongoing, you mentioned that data from both healthy volunteers and HBV patients will be included in they'll increase second half this year. Just wondering what does the single data readout and what should we expect from this readout be on safety data?
Bill Collier: Yes. Gaston, you want to add to?
Gaston Picchio: Sure. So, we expect obviously safety data and the availability as well as some HBV DNA data coming from the currently related to the cohorts. We may be able to also deliver some HBA RNA data as well. Sorry, let me just add one thing. What we will as usual measure as antigen, pending whether as you know 836 potentially it's much more effective but targeting the second mechanism. So, we will be measuring that antigen as well and see what happens in that front.
Unidentified Analyst: Alright. So, perhaps some are comparable to 729 area, daily releases?
Gaston Picchio: Yes, correct.
Unidentified Analyst: Yes, that's right, okay. And then, one final question from us, just wondering you mentioned the progress for 729 combination studies. I wonder if you have -- have you report involvement progress for the 729 combo study with Assembly, recall the year. And if not, what should we expect from this study next?
Bill Collier: Yes Gaston, want to again?
Gaston Picchio: So, it's a limit for maturity, yet the study's recruiting and pending the progress in terms of on rolling this study, we will make a later announcement regarding what data can we share before at the end of the year. But there is the study been rolling as planned as we speak.
Unidentified Analyst: Okay. So, we should expect a new update by the end of the year?
Bill Collier: I guess, I think it's going to be dependent on how successful the enrolment process moves forward. There is -- challenges around the world right now in terms of COVID. So, so far so good, the study's enrolling, the studies are opening but it's very difficult to predict these days the pace of enrollment in any way around the line.
Dave Hastings: Yes. So just, on that we haven’t guided to having results by the end of the year. And that Assembly collaboration, what we have said in conjunction with our partners at Assembly, it's that the study has initiated as is recruiting.
Unidentified Analyst: Okay, understood and completely understandable given what's going on around the world. Thank you so much for taking the questions and we look forward to the multiple data releases in second half this year.
Bill Collier: Thank you, very much.
Operator: Your next question comes from the line of Brian Skorney with Baird.
Unidentified Analyst: Hi, this is Luke on for Brian. So, regarding peg-interferon outlook combo study, beyond safe, you could you maybe talk about what you're hoping to see, you're going biomarkers and also kind of early here. But also when do you think we could see initial data?
Bill Collier: Well, on that study, we said that we will initiate in the second half of this year. As to the study design, I'll let Gaston answer that.
Gaston Picchio: Yes, thanks for the question. So, basically us as you know we present the data at EASL showing that there is reawakening of HBV specific immunity after around 20 weeks of dosing with seven to nine. So, we think this provides a great opportunities to add on another agents such as immunomodulatory agents such as interferon. So, we expect basically to see this time will be the addition of interferon, we expect to see a probably faster and the product line in S-antigen. We also plan to measure T cell responses and we obviously potentially expect to see the T cell responses in the presence of interferon, are stronger and potentially broader. Then obviously we have other biomarker. Biomarkers such as the HBV RNA but that will depend on whether the initial baseline, it should be on a level it's -- the better one, not as you know in on in patients it'd be better one. So, really it's been to be around that and hopefully we may feel so and increasing anti-S-antibodies, that's another possibility in the presence of interferon, on which we haven’t seen so far in the ongoing studies.
Unidentified Analyst: Great, thanks.
Bill Collier: Thank you, Luke.
Operator: Your next question comes from the line of Roy Buchanan with JMP Securities.
Roy Buchanan: Hi great, thanks for taking the questions. The first one I want to ask about is Vaccitech approach and just what made that approach therapeuting -- for ease of the therapeutic vaccine. But again why not use that approved potent vaccine like Heplisav-B or something as a possible option?
Bill Collier: Yes, thanks for the question. Look, we've always had a strategy that a combination of drugs like you to be the -- like the -- there's a specialist slide that we've had in our corporate deck for seems like many years now which has got all the different potential combinations and kind of up arrows and down arrows. So, I think we've also always to recognize that vaccines are apart in that. And so, we were intrigued and interested in the Vaccitech collaboration. I'll let Gaston expand further.
Gaston Picchio: Yes, thanks for the question. So, it's I think it's along the lines of what we've just discussing in the previous question. So, now we have evidence I think for the first time I will believe we're being the first ones and showing that as we've done siRNA you're able to reawaken HBV-specific immune responses. So, I think this provides an excellent opportunity to act the question of enhancing the HBV-specific immune response in different ways. One to be with the broad immunomodulatory such as interferon, the other would be with HBV-specific vaccines. Now specifically, so I think we the data we have gathered in the AB-729 program especially the immunology data really provides a very good foundation and justification to build this study with Vaccitech. So, Vaccitech's platform we believe provides a much stronger HBV-specific immune response that existing prophylactic HBV vaccines. So, I mean I think you should discuss with them directly their data but based on what we've learnt, we believe this their therapeutic vaccine with the adeno platform as well as MVA provides a much better opportunity at enhancing HBV-specific responses compared to prophylactic HBV vaccines that maybe in the market.
Roy Buchanan: Okay, great. And I had a question on Antios' ATI-2173. How does that so clinically how does that differ in targeting versus the background is which is tenofovir in this case. And is the goal to replace the background new with a more potent new or what's the goal of the combination?
Bill Collier: Yes, good question. It's set up in the study as with nucleoside. Maybe Mike Sofia, do you want to chime in on that?
Mike Sofia: Sure. So, I mean if you look at clonidine as a nucleoside, it should, very interesting profile in In Vivo studies. Even in some of the earlier historic clinical trials which you saw was this longer duration of effect well compared to a typical nucleoside whether tenofovir or entecavir. It also has a slightly different mechanism of action although it does target the polymerase, it does bind to the active site. It's not what they call a chain terminator. So, it doesn't function as a tenofovir or entecavir does that differentiates in some way. So, that combination of interesting observations made it an interesting experiment to do to combine it with an agent like 729 which reduces S-antigen, can't you then bring in something like the Antios molecule with another nucleoside and see very deep suppression of viral replication that is more sustained over time than with a single nucleoside. So, that was sort of the rationale for an interesting level in bringing in the Antios molecule into the mix.
Roy Buchanan: Okay great, that's helpful, thanks. And then last couple questions on the interferon program. They have presented some preliminary results for their combo with the RNAi plus interferon. With anything that you learnt from that program that can be applied to 729, anything that you're doing differently with 729 that might differentiate it from the other candidates or maybe you don't needed differentiate. And then, what do you guys expect to be the baseline functional cure rate for the interferon plus the new guide. I don’t see you have the number for interferon and looking at slide decks I'm not -- not clear if interferon number is there, combo or just interferon itself. Thanks.
Bill Collier: Gaston, do you want to take that one?
Gaston Picchio: Sure. S, let me start from the last question. So, the expectation in terms of functional cure I don't think we are in a position to provide a number of I mean what's our expectation of functional cure. So, we just let the data speak for itself. When it comes to what did we learn, well the approach that we undertook actually was and this part of the study that they showed data on EASL was adding interferon at the beginning. So, from the get-go, they would after RNAi plus interferon. So, that resulted I believe if I remember correctly, it was 12 in an increase in the decay of S-antigen. So, we have a little bit of a different approach again in line with the findings that we have as a result of the immunology studies that we presented at EASL. We believe that it's better to first drop S-antigen and allow that immune response to come back and then add the interferon. So, I believe again I mean don't take my word for it but I believe that based on the data I believe I've seen that they will be testing that as well. They will be adding interferon later but we are only exploring adding the interferon later. So, after as you may see in you can see the design of the study in clinical trials are coped right now, we're going to be adding interferon after 24 weeks of 729 treatment. So, we believe that S-antigen already would have gone down by probably somewhere around 1.8 to 2 logs on average across the entire population. So, what we expect as I said before is that after adding interferon, obviously the S-antigen will continue to decay. We may see some sort of conversion, we may see also because we're going to measure that a better HBV specific immune reawakening compared to subjects that did not receive interferon.
Roy Buchanan: Okay, great. Thank you.
Operator: Your next question comes from the line of Keay Nakae with Chardan.
Keay Nakae: Hi, Keay Nakae from Chardan. Just back on that same topic with the time adding interferon in your study, is there a threshold drop in S-antigen before you'll advance the patient to the interferon or is it just simply the 24 week duration standpoint?
Bill Collier: There is no threshold. We're very confident that by week 24 all subjects have achieved at least a log and for the vast majority more than a log and a half of S-antigen drop. So, in response to your question, there is no minimum threshold that they need to meet but very confident everyone is going to be in excess of one log decay of in S-antigen.
Keay Nakae: Okay. And then, how long is the course of interferon?
Bill Collier: Yes, great question. We're testing two courses, 24 weeks as well as 12 weeks.
Keay Nakae: Okay.
Bill Collier: Again, we remind everyone yes the details are in clinical trials, I'll go for it right now.
Keay Nakae: Okay, alright great. That's all I have.
Bill Collier: Thank you, yes.
Operator: There are no additional questions at this time. I'll like to turn it back over to management -- I'm sorry, there is a question. And it's from Kelechi Chikere with Jefferies.
Bill Collier: Kelechi.
Kelechi Chikere: Yes hey, how is it going? Thanks for fitting me in here. Just a couple of questions on my end. I guess, on a high level, are there any competitor datasets over the coming quarters, the actuals specifically be looking at for read through or transform the design or to provide with any information for your online clinical studies?
Bill Collier: Alright, good question. I mean, we just had obviously the EASL conference and as always we had our eyes peeled for interesting data from I mean actually any source.
Kelechi Chikere: Uh-huh.
Bill Collier: And then, as we think about the second half of the year, the typical event is AASLD, which is in November. And I don’t know that I would single out any particular dataset, I'm just wracking my brains here. Gaston or Mike, can you think of anything that -- other than obviously staying like you got the best of what all the major companies are doing in the area. So, Gaston?
Kelechi Chikere: Got it.
Gaston Picchio: I think the one --. So, it's interesting because we -- these are we pretty much showed one year of dosing with AB-729. We were expecting to see one year of dosing coming in from -- just and that some percentage on their week study. So, I would say it will be interesting to see if that data gets presented at ASLD later this year as well as in that study that is they also have a triple combinations, so that will be also interesting to see.
Kelechi Chikere: Yes right, great. Great, thank you. That's great color there. And I guess lastly, I guess and with respect to your earlier Phase programs, is there any additional color you can provide around when you might be able to enter the clinic with those. So, your destabilizer as well as the PD-L1?
Bill Collier: Yes, Mike you want to take that one?
Mike Sofia: Yes. So, we're very close, now we're kind of in the latter stages of our candidate selection process. So, I think we'll be able to update and we expect to be in the clinic.
Bill Collier: Perfect, and thank you.
Operator: There are no additional questions at this time.
Bill Collier: Alright. Well, thank you very much everyone for joining us this morning. We appreciate your interest and your questions, actually. So, we look forward to your productive remainder 2021 and we continue to be confident with further data from the 729 Phase 1a/1b trial. Our progression of 729 into two additional Phase 2a proof-of-concept studies and data from our 836 clinical trial as well as continued progress in our HBV discovery programs. Yes. We'll be building on a strong foundation to achieve a functional cure for people with chronic HBV and of course we're also looking forward to leveraging our antiviral discovery and research efforts in progressing our pan-coronavirus discovery program. So, with that being said, thank you again for your time and operator that concludes our call this morning.
Operator: Ladies and gentlemen, this does conclude today's conference call, you may now disconnect.
