Arbutus Biopharma Corporation

Good day, and thank you for standing by. Welcome to the Arbutus Borough Pharma Corporation's fourth quarter and year-end 2021 financial results and corporate update 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. To ask a question during the session, you'll need to press star 1 on your telephone. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Lisa Capparelli, Vice President of Investor Relations. Please go ahead.

Thank you, Catherine. Good morning, everyone, and thank you for joining Arbutus' fourth quarter and year-end financial and business update call. Joining me today from the Arbutus executive team are Bill Collier, President and Chief Executive Officer, David Hastings, Chief Financial Officer, Dr. Gaston Piccio, Chief Development Officer, and Dr. Mike Sophia, Chief Scientific Officer. Bill will begin with a review of recent accomplishments and clinical developments, followed by Dave Hastings, who will provide a review of the company's fourth quarter and year-end financial results. After opening remarks, we will open the call up for Q&A. Distan Pichio and Mike Sophia will be available to address clinical and scientific-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, 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 10-K being filed later today. With that, I'll turn the call over to Bill. Bill?

Thank you, Lisa. Good morning, everyone. Thank you for joining us. We appreciate your interest and your support of Arbutus Biopharma. This morning, we issued our fourth quarter and year-end financial and business update press release, which provides updates on our clinical and preclinical programs directed at finding a functional cure for patients with hepatitis B and a treatment for coronavirus infections, including SARS-CoV-2. If I had to sum up this past year in one word, it would be transformative. And I'll explain why. In 2021, the Arbutus team did a fantastic job of advancing our proprietary early research compounds into IND enabling studies. Specifically, our oral RNA destabilizer that we now refer to as AB161, and also our oral PD-L1 inhibitor, which we're calling AB101. The potential addition of the PD-L1 inhibitor, AB101, in a proprietary combination with our RNAi therapeutic, 729, and our capsid inhibitor, 836, would allow us to explore our three-pronged strategy to provide a functional cure for chronic HPV infection. As you know, this three-pronged approach consists of suppressing surface antigen, reducing HPV DNA, and boosting the immune system. Now, the potential role for the RNA destabilizer 161 in our approach is the opportunity to provide a proprietary oral treatment regimen for HPV. We're excited about this progress and look forward to completing the IND enabling studies for both these compounds in the second half of this year. Now, in addition, we secured both strategic and clinical partnerships that, in line with our strategic initiatives, allowed us, first of all, to initiate multiple combination clinical trials to evaluate 729 as a cornerstone therapy with other compounds in patients with HPV. Secondly, we expanded the geographic reach of 729 to China to address the largest HPV patient population. And thirdly, we've been able to broaden our pipeline to include development programs against coronavirus infections. And I'd like to elaborate on these strategic accomplishments starting with our combination trials with our lead HPV compound, 729. With the compelling safety and efficacy data from our Phase 1A, 1B clinical trial, in 2021, we moved 729 into three Phase 2A clinical trials to evaluate 729 as a cornerstone therapy in combination with one or more approved investigational compounds. As enrollment continues or is near completion in these trials, data is expected in the second half of this year from our clinical trial evaluating 729, a nucleotide analog, and interferon, as well as data from our partnered trial evaluating 729 with assembly's core inhibitor. Now, with respect to our partnered program with ANTIOS's liver-targeted NUKE, As we mentioned in our press release today, enrollment is complete in this cohort. However, the majority of patients were enrolled in Ukraine, which obviously is currently in a state of war. And these patients may be lost to follow-up before completing the study. Therefore, Arbutus and Antios may report limited data on a reduced number of patients from this clinical trial. Also, as a reminder, we do have a fourth phase 2A combination trial that we expect to initiate in the first half of this year to evaluate 729 combined with VTP300, that's the Vaxitec therapeutic vaccine, and a nuke. And our goal is to utilize the learnings from all of these trials to provide insights with the potential to de-risk the use of our proprietary compounds in combination with 729 to develop a functional cure for HPV, as well as to support our go-forward clinical and regulatory strategy for Phase IIb development. Now, let's move on to expanding the geographic reach of AB729. At the end of last year, we executed an important strategic partnership with Qilu Pharmaceutical, one of the leading pharmaceutical companies in China. For us to reach the largest HPV patient population in need of a functional cure for chronic HPV infection, it was essential to find a strategic partner with significant experience in developing, manufacturing, and commercializing products in mainland China, Hong Kong, Macau, and Taiwan. As part of our discussions, Qilu conducted extensive diligence before completion of the agreement. Based on their belief in the potential of 729 to be a safe and effective treatment option for HPV, Qilu paid us $40 million upfront and made a $15 million equity investment in Arbutus. along with potential additional payments of up to $245 million consisting of certain development, regulatory, and sales milestones. Finally, as part of this transaction, we're also entitled to receive double-digit tiered royalties up to the low 20% on annual net sales of 729 in their territories. This is one of the largest early clinical deals conducted with a Chinese company. As important, this partnership also allows us and Qilu to maximize the potential clinical value that 729 can bring to the millions of underserved patients in China. As we collaborate with Qilu on a clinical development strategy for 729 in China, we plan to provide updates on our progress. Now, finding a functional cure for patients with HPV remains a key initiative for Arbutus. But we also recognize the urgent need to identify new antiviral small molecules to treat COVID-19 and future coronavirus outbreaks. We've expanded our pipeline to include preclinical programs targeting coronaviruses. We're focusing our research efforts on two essential targets critical for replication across all coronaviruses, those being the NSP5 protease, and the NSP12 polymerase. In December, through our partnership with Exchem and Proteris Biostructures, we identified unique and differentiated pan-coronavirus assets that inhibit the SARS-CoV-2 NSP5 main protease, or MPRO, which is a validated target for the treatment of COVID-19 and potential future coronavirus outbreaks. We recognize the importance of rapidly developing oral small molecules in addition to vaccines to address this pandemic as it transitions to an endemic phase. To that end, we intend to advance an MPRO clinical candidate into IND-enabling studies this year. We are also continuing lead optimization activities for an NSP12 viral polymerase candidate. Now, aside from our progress in our research efforts and partnerships to achieve our strategic initiatives, in 2021, we continue to build convincing safety and efficacy data with AB729 and AB836. Both of these compounds are undergoing rigorous evaluation at various dose levels and dosing intervals in cohorts of patients with various baseline characteristics. This comprehensive body of evidence that we're building gives us the confidence that the dose and dosing interval we intend to advance into later stage clinical trials will be best suited to be safe and effective. This year, we anticipate reporting key data for AB729 that will include new on-treatment data on multiple cohorts of patients included in the Phase 1A, 1B clinical trials. as well as long-term follow-up data for patients who completed treatment and have discontinued AB729 and nuke therapy. We also expect to report additional AB836 data from Part 3 of the Phase 1A, 1B clinical trial that will inform potential future clinical trial development. I'm proud of the enormous progress the Arbutus team has made this last year to position the company for multiple key clinical milestones and significant growth in 2022. And I look forward to keeping all of our shareholders informed of our progress and planned continued success. Now, lastly, as you saw in our press release on Monday, Along with Genovant Sciences, we filed a lawsuit in the United States District Court for the District of Delaware against Moderna and an affiliate of Moderna seeking damages for infringement of certain U.S. patents in the manufacture and sale of mRNA-1273. That's Moderna's vaccine for COVID-19. The patents relate to nucleic acid lipid particles and lipid vesicles as well as compositions and methods for their use. As you may recall, in December 2021, the United States Court of Appeals for the Federal Circuit rejected Moderna's appeal of a prior decision of the U.S. Patent Trial and Appeals Board holding all claims of the asserted 069 patent to be patentable and dismissed Moderna's appeal challenging a similar finding of patentability with respect to certain claims of the asserted 435 patent. Moderna had initiated inter-parties review IPR challenges against these patents in 2018 and 2019. Now Arbutus and our licensee Genevent do not seek an injunction or otherwise seek to impede the sale, manufacture or distribution of mRNA-1273. However, we do seek fair compensation for Moderna's use of our patented technology that was developed with great effort and at great expense without which Moderna's COVID-19 vaccine would not have been successful. Now I do recognize that this litigation is of great interest to our shareholders and that many of you will have questions. We believe that the lawsuit we have filed is the appropriate way to resolve our claims. I ask that you be patient with us as we will not be able to provide any additional commentary on our allegations or our litigation strategy aside from what is in the publicly filed complaint other than to say we intend to pursue all appropriate avenues to defend our intellectual property rights. With that, I'll now turn the call over to Dave Hastings for a brief financial update.