Arbutus Biopharma Corporation

Good day and thank you for standing by. Welcome to the Arbutus BioPharma 2024 first quarter financial results and corporate update 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. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. 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 Caparelli, Vice President of Investor Relations. Please go ahead. Thank you,

Andrea. Good morning, everyone. And thank you for joining Arbutus's first quarter 2024 financial results and corporate update call. Joining me today from the Arbutus executive team are Mike McAul, Interim President and Chief Executive Officer, Dr. Karen Sims, Chief Medical Officer, David Hastings, Chief Financial Officer, and Dr. Mike Sophia, Chief Scientific Officer. Mike McAul 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 first 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 McAul. Mike.

Thanks, Lisa. Good morning, everyone, and thank you for joining us today. This morning, we issued two press releases, one announcing the -of-year retirement of our co-founder and chief scientific officer, Dr. Mike Sofia, and one with our first quarter of 2024 financials and a corporate update. I want to pass the call to Mike Sofia to address his retirement. Mike.

Thanks, Mike, and good morning, everyone. Today, we announce my decision to retire as chief scientific officer at Arbutus, effective the end of this year. I will continue in my full capacity as CSO until that time. Since co-founding Arbutus more than 10 years ago, the company has made incredible strides in its research and clinical efforts. We have built an organization of dedicated individuals who are passionate about our mission to cure HPV. I continue to believe that Arbutus is on the correct path to developing a functional cure for the millions of patients living with HPV. My lifelong goal has been to discover medicines that improve patients' lives. Over my 38-year career of pharma and biotech, one of my great successes was the discovery and development of Cephaspivir, the backbone of curative therapies for hepatitis C, which has already cured millions of patients globally. Learnings from the HCV story spurred me towards finding a cure for the more challenging problem, HPV. This led to the founding of Arbutus, where we have been able to build a world-class team, uniquely positioned to potentially transform the HPV treatment landscape with drug candidates like Imduceran and AB101. Throughout my more than 10 years at Arbutus, I have enjoyed tackling the many challenges that drug discovery and development brings, collaborating with my colleagues, and mentoring many of the scientists here. I am confident this passionate and dedicated team will continue to do great things. I have great pride in what we have been able to accomplish at Arbutus. Look forward to following the future successes as the company advances its mission in finding a cure for HPV. Thank you, and back to Mike.

Thanks, Mike, and thanks for everything you've done for Arbutus and our shareholders. I'm sure I speak for all employees when I say it's been an honor to work with you. We all wish you the best in your retirement. Now on to our Q1 financial and corporate update press release that we issued today, announcing significant achievements made in advancing our pipeline in pursuit of developing a functional cure for patients with HPV and driving value for our company. We believe our two proprietary clinical assets in HPV, Induceran, our RNAi therapeutic, and AB101, our oral small molecule PDL1 checkpoint inhibitor, have the potential to deliver on our three-pronged approach to functionally cure chronic HPV, which involves reducing surface antigen, suppressing HPV DNA, and boosting the immune system. While Induceran has shown activity in all three of these components in clinical trials conducted to date, we know a combination of agents are necessary to cure this challenging disease. I'll turn the call over to Karen shortly to walk through preliminary data from our phase 1A1B clinical trial with AB101, and to provide an overview of our third phase 2A clinical trial that is evaluating the combination of Induceran and Dervalumab, a PDL1 monoclonal antibody, which has begun screening patients. Currently, we have two phase 2A combination clinical trials, the AB729201 trial, which includes the addition of interferon, and the AB729202 trial, which includes the addition of Borynthus biotherapeutics immunotherapeutic VTP300. These trials are intended to provide data on the safety and efficacy of Induceran as a cornerstone therapy, and to help us identify an optimal combination treatment that we can advance into a later stage clinical trial. This quarter, we will report end of treatment data from these two phase 2A trials with Induceran, which could potentially include patients who achieve undetectable surface antigen. As we've previously stated, achieving undetectable surface antigen in either of these two phase 2A clinical trials would be an important validation of Induceran's role as a cornerstone in potentially achieving a functional cure for patients with chronic HPV. We are happy to report that two abstracts, including data from these phase 2A clinical trials, were accepted for presentation at the ESL Congress, which takes place in early June in Milan, Italy. We will provide more details on those abstracts at a later date. With that, I'll turn the call over to Karen to provide an overview of the AB729203 clinical trial, and to discuss the AB101 phase one preliminary data. I'll come back at the end of the team's prepared remarks to provide an update on our LNP litigation before we move into Q&A. Karen?

Thanks, Mike, and good morning, everyone. As Mike mentioned, our approach to developing a functional cure for patients with chronic hepatitis B involves reducing surface antigen, suppressing HPV DNA, and boosting the immune system. In our clinical trials conducted to date, Induceran has been shown to reduce HPV DNA in untreated patients, and reduce surface antigen when given both with and without ongoing standard of care NUKE therapy. In addition, evidence of HPV specific T cell reawakening has been observed in some patients undergoing treatment with Induceran. To further boost the immune system, we designed our phase two A trials to evaluate Induceran in combination with one of three immunomodulatory approaches, interferon, a therapeutic vaccine, or a checkpoint inhibitor targeting the PD1 PDL1 axis. Our two ongoing phase two A clinical trials, AB729201 and AB729202, are evaluating Induceran in combination with interferon, and in combination with a therapeutic vaccine, respectively. As Mike said, both of these phase two A trials are on track to report end of treatment data at the ESL Congress in June. Note that we also amended the AB729202 trial to evaluate the addition of the PD1 checkpoint inhibitor antibody nivolumab to the Induceran and BTP300 combination. We expect preliminary end of treatment data from that cohort in the second half of this year. Today, we announced that we have initiated patient screening in our third phase two A clinical trial, AB729203, which is evaluating Induceran in combination with dervalumab, an anti-PDL1 monoclonal antibody. While all of these phase two A trials are geared towards finding the right immune modulator to combine with Induceran, the AB729203 trial, with dervalumab, is specifically intended to evaluate how we can use checkpoint inhibition in combination with Induceran to boost HVV specific immune responses. This trial will inform upcoming combinations with our proprietary oral small molecule PDL1 checkpoint inhibitor, AB101. With that backdrop, I'd like to provide more information regarding the AB729203 trial design. AB729203 is an open-label, multi-center, phase two A clinical trial evaluating the safety, tolerability, antiviral, and HVV specific immunologic activity of Induceran and ongoing Duke therapy in combination with dervalumab, an approved anti-PDL1 monoclonal antibody in patients with chronic hepatitis B. We intend to enroll 30 virologically suppressed patients into three separate cohorts. All patients will receive 60 milligrams of Induceran every eight weeks with their ongoing Duke therapy for 48 weeks, and will receive two doses of dervalumab at pre-specified times during the Induceran treatment period that will differ by cohort. After completion of treatment, all patients will be assessed for eligibility to discontinue Duke therapy and will be followed for an additional 24 to 48 weeks. The endpoints for this clinical trial include safety and changes in surface antigen from baseline during the treatment and follow-up period. This trial allows us to explore the optimal timing of checkpoint inhibitor dosing in the context of surface antigen reduction during ongoing Induceran treatment. Now moving on to our proprietary oral small molecule checkpoint inhibitor AB101 that is differentiated from monoclonal antibodies such as dervalumab and nivolumab in the following ways based on our pre-clinical testing. First, AB101 is liver-centric, meaning it preferentially traffics to the liver and has a high liver to plasma ratio, thus minimizing systemic exposure and reducing the chance of immune-related adverse events seen with monoclonal antibodies. Second, AB101 has typical small molecule pharmacokinetics and therefore a much shorter duration of effect than long-acting antibodies, thus allowing for the potential to modify the dose or dosing interval to maximize effect or to stop dosing to quickly mitigate any safety concerns. Third, AB101 acts through a novel mechanism of action differentiated from antibodies. It binds to PD-L1 on the surface of cells, causing dimerization and internalization of the PD-L1 protein followed by degradation within hours. Washing out of the drug results in full reconstitution of PD-L1 on the cell surface and restoration of PD-L1 function within days, unlike antibody therapy where the duration of receptor occupancy and PD effect is maintained for weeks with no ways to reverse it. It is for these reasons that we are excited about the potential of AB101 in HPV and are advancing our AB101 clinical program, which is currently evaluating AB101 in a double-blind, randomized placebo-controlled phase 1A1B clinical trial known as AB101-001. This trial is designed to investigate the safety, tolerability, pharmacokinetics, and pharmacodynamics of AB101. The trial consists of three parts, starting with single and multiple ascending doses in healthy subjects and culminating with multiple doses in patients with chronic HPV. In part one, which is the single ascending dose portion of the trial, we have enrolled four sequential cohorts of eight healthy subjects each to date. Within a cohort, six subjects received AB101 and two subjects received placebo, and after review of safety, PK and PD data, AB101 dose levels were increased in each subsequent cohort up to 25 milligrams. The data from part one showed that AB101 is generally well tolerated with evidence of dose-dependent receptor occupancy. In the 25 milligram cohort, five of the six subjects had test samples that were available for receptor occupancy, and all five of these subjects showed evidence of PD-L1 receptor occupancy between 50 and 100%, indicating that AB101 is interacting with its intended target. One subject in this cohort was excluded from the PD evaluation as their samples could not be analyzed. We are now in part two of this trial, where cohorts of healthy subjects are receiving multiple ascending doses of AB101. Our goal is to move as quickly as possible into part three, which will enroll patients with chronic hepatitis B. We anticipate announcing preliminary data from part two, the multiple ascending dose portion of this trial on healthy subjects in the second half of this year. We believe that the immune checkpoint pathway plays an important role in HPV-specific immune tolerance and in T-cell activation, and the addition of a checkpoint inhibitor in combination with InduSteran could potentially further enhance HPV-specific immune responses. With that, I'll turn the call over to Dave Hastings for brief financial updates. Dave?

Thanks, Karen, and good morning, everybody. We ended the first quarter of 2024 with approximately $138 million of cash, cash equivalents and investments, compared to approximately $132 million as of December 31, 2023. During the quarter ended March 31, 2024, we received $21.8 million of net proceeds from the issuance of common shares under Arbutus' -the-Market Offering Program. These cash inflows were offset by $19.5 million of cash used in operations. We still expect our 2024 net cash burn to range from between $63 to $67 million, excluding any proceeds from our ATM program. In April 2024, we received an additional $22.4 million of net proceeds from sales under our ATM. And now importantly, we believe our cash runway is sufficient to fund our operations through the second quarter of 2026. So in closing, we have a strong financial position to advance our mission of developing our HBV assets to provide a functional cure for chronic HBV. With that, I'll turn the call back to Mike.

Thanks, Dave. With today's update, we have achieved most of our first half of 2024 key milestones, including reporting preliminary data from the AB 101-001 Phase 1A-1B clinical trial and initiating the Phase 2A clinical trial with Imduceran and Dervalumab. We look forward to reporting the data from the AB 729-201 and 202 Phase 2A clinical trials at ESL in June. In the second half of this year, we anticipate preliminary -of-treatment data from the Nivolumab arm of the 202 trial and preliminary multiple ascending dose data from the healthy subjects in the AB 101-001 trial. 2024 is off to a strong start, and it wouldn't be possible without the dedication of my Arbutus colleagues. I would like to take this opportunity to thank all of them for their hard work to advance our pipeline. Before turning the call over to Q&A, I'd like to provide a brief update on the ongoing patent infringement lawsuit, specifically the lawsuit against Moderna. As you may recall, on February 8th of this year, there was a claim construction hearing, also commonly referred to as the Markman hearing, where the court heard each party's interpretation of the construction of claims in the disputed patents. The court issued its order on April 3rd, in which it agreed with our position on most of the disputed claim terms. This is another important step in the ongoing litigation process and provides clarity on the interpretation of key terms and the scope of the claims. I refer you to the press release that we issued on April 4th, which is available on our website, and summarizes the claims related to the three patents that were presented at the Markman hearing and the court's position on each claim. While this is important for us, we cannot further comment or elaborate on what is in the press release, but we suggest you review the judge's opinion, which is also available on our website. In his opinion, the judge provides an overview of the disputed aspects of each claim and each party's position, as well as the evidence that was used to inform his decision-making process. The litigation process continues to move forward. Fact discovery is ongoing, and next steps include expert reports and depositions. The court has set April 21st, 2025 as the trial date for this case. That date is subject to change. The Pfizer BioNTech lawsuit is ongoing, and a date for the claim construction hearing for that case has not yet been set. We will continue to protect and defend our intellectual property, including our L&P delivery technology. All of our scientists take great pride in the intellectual property they develop, which takes great effort, time, resources, and expense. Operator, we're now ready to open the call for Q&A.

Thank you. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Our first question comes from Dennis Ding with Jeffreese. Please go ahead.

Hi, good morning. Thanks for taking our questions. Two, if I may, on the pipeline. You guys have a few phase two trials with a lot of different combinations going on, but talk about when you think we can get any functional cure signals, and is that a 2025 type of event, or can we get some data later this year? And then number two, I appreciate you starting a new phase two with DERVA, but I'm just curious, how much more data do you think you'll need from your hepatitis B trials before you can start a phase three? I'm just wondering what is the key factor here? Is it waiting for AB101 to show some combo data, or is it data from the new DERVA study, which is essentially one year treatment and one year follow-up? So just wondering what the gating factor is there. Thank

you. Good morning, Dennis. Thanks for the question. So Karen, do you wanna handle Dennis's first question on functional cure, excuse me, yes, functional cure?

Yeah, sure, absolutely. So Dennis, as you know, as you just stated, these trials do take some time, including the treatment period and the extended follow-up period, and as you know, functional cure signals can't be assessed until subjects are at least six months off of all treatment. So that is ongoing in both of our phase two studies at the moment, both the 201 interferon study and the 202 study in combination with, for instance, this is VTP 300. So as the data comes in and as we are able to compile that data into a meaningful data release with sufficient number of subjects, we'll certainly share that data when we can. So I can't give any additional guidance just to say that the trials are ongoing, and we'll present the data as it becomes available.

Okay. Thank you. And then on to the second question was in regards to the value map and when we might be able to start a follow-on trial. I think the answer to that question, Dennis, is it's gonna depend on what we see from our existing ongoing studies, right? So yes, we're starting a new trial, and yes, we think that will be valuable in helping to inform how we think about the addition of AB101 to induceran, but as Karen just mentioned, we have some trials ongoing, which could of course produce interesting data, which could then lead to follow-on studies. So I don't think that it's a situation where we need to wait until we have the full picture from all of these trials ongoing before we decide what we're going to do to move forward. As you know, the goal here is functional cure. If we can deliver some functional cures in any of the ongoing studies, we will obviously be moving that as quickly as possible into follow-on studies.

Got it, thank you.

Thanks, Dennis. One moment for our next question. Our next question comes from Ed Arce with H.C. Wainwright. Please go ahead.

Hi, good morning, everyone. This is Thomas Yip asking a couple of questions for Ed. Thank you for taking on the questions. So first, perhaps following up with the previous question, just looking forward to induce a run. With the next phase, phase two B or phase three study, would that be expected to evaluate, induce a run, that amount of therapy, or in a combination,

or perhaps both? So Thomas, good morning. Thank

you, this is Mike. I think we've always said that we're gonna have to think about combination therapy when it comes to curing HPV. We have to hit those three pillars that we talk about frequently. So I think as we think about what a next study might look like, it's definitely gonna be a combination study.

Understood. Perhaps one question for Dr. Simms for the new phase two A study with the value map. Can you discuss the rationale behind different dosing interval for the value map, and what is the significance to analyze these different dosing intervals?

Yeah, thanks for the question, Thomas. So the idea here is evaluating the extent of checkpoint inhibition that's necessary to try to induce that HPV specific immunity. So as I'm sure you're aware, the use of checkpoint inhibitor therapy in oncology is a much different dosing regimen and much different dosing level. So it's very high doses over repeated cycles for weeks to months, and with that comes a safety profile that may not be optimal in patients with chronic hepatitis B. So what we're looking to do is strike the appropriate balance between having a regimen that's safe and well tolerated for these patients with chronic hepatitis B, as well as trying to understand exactly when we need to intervene on the checkpoint inhibitor access in the context of the surface antigen reduction that we see with induced sarans. So that's the idea behind the trial. Is it best to inhibit the checkpoint access during the acute decline of surface antigen? Is it best to inhibit after surface antigen has reached a nadir, somewhere in between, and doing that at multiple time points? So that's the idea behind the trial, is really to strike that balance between optimal immunomodulatory effects but maintaining a very good safety profile for this patient population.

Understood, thank you. And perhaps one last question for AP101. After completing the multi-ascending dose based off the ongoing phase 130, what's the next step for the program? Would that be looking at a combination study in HPV or are there other therapeutic areas that AP101 can have potential in?

Sure, yes, thanks for the question. Again, just to clarify, so the current study is a three-part study, so single doses in healthy subjects, then multiple doses in healthy subjects, and then we move seamlessly into multiple doses in patients with chronic hepatitis B in combination with NUCC therapy. So we need to complete those different portions of the trial to understand the safety profile, the pharmacokinetic profile, the PD profile of AB101 to be able to enter that next phase of studies. But certainly you can imagine after completion of the phase one study, the next goal would be to put it in combination with induced saran in a phase two study as quickly as possible.

Understood, thank you again for taking all questions and looking forward to the ESA data readouts.

You're welcome, Thomas, thank you.

Thank you, one moment for our next question. Our next question comes from Brian Scorney with Baird. Please go ahead.

Hey guys, thanks for taking our question and congratulations and best wishes to Mike. This is Charlie on for Brian. So just a couple from us, just wondering when you're thinking about dosing with AB101, it sounds like so far you've seen good safety data but just would be curious if you're kind of thinking of 25 mgs as a cap in the MAD as well. And then, are you, when you're thinking about this, the Dervallumab trial, have you seen anything from the NIVO combination so far that might be playing into your thinking on different timings? And then just one more on an early stage asset in the space, what are your thoughts on ALPK1 agonism if you have any at this point? Thank you so much.

All right, so Charlie, good morning. Thanks for the questions. So Karen, why don't you handle the question with regards to AB101 and the NIVO lead to Dervallumab question?

Yeah, sure, absolutely. So the data we're sharing thus far is just the extent of dosing we've completed with AB101. So it's too early to comment on the dosing that we'll be using in the next portions of the trial. We do have flexibility in the trial in all the different arms to either increase dose, decrease dose, make changes to dosing regimen. So 25 as reported today is the highest dose we tested with an excellent safety profile and good pharmacodynamic profile. So we'll be evaluating different dosing levels as we move on through the trial. So 25 isn't necessarily a cap, it's just the data we have available to share with you today. So, and in terms of the NIVO-Lumab data coming out of the 202 study, I can't comment on that. We provided guidance that we'll be sharing the preliminary end of treatment data at the end of the year, the second half of this year. So that data I can't comment on, but certainly we look at all of our trials holistically and certainly would, as Mike said earlier, move forward or adapt as we see the data emerging with our trials. But yeah, to date I can't comment on anything regarding the NIVO-Lumab arm in the 202 study.

And then Mike, do you wanna handle the last question? Yeah, on the ALPK one question. Yeah, we're aware an abstract just came out, EASL on that. Frankly, it just came out, so we'd be interested in looking at the abstract more clearly, more fully, and obviously seeing the presentation at EASL to get a full understanding of the target.

Gotcha, great, thanks so much for the questions, guys.

Thanks, Charlie.

Charlie. One moment for our next question. Our next question comes from Roy Buchanan with CitizensJMP.

Please go ahead.

Thanks for taking the questions. Obviously congrats to Mike, Sophie, on the planned retirement, and it definitely misses. Deep insights and observations on the calls. You have eight months to get to a functional cure now. Yeah, just a few questions. So I guess on the 203 trial, I think there's a typo in the slide there, which says Q48 weeks, and I think Karen said every eight weeks, which makes a lot more sense. So just wanted to confirm that. And then I guess is the only variable that the timing of dervalumab dosing, the arms all look identical. So is that the only variable? There's no difference in actual dose levels or anything else? I guess that's my first.

Yeah, no, thanks for the question. So you're absolutely right. The inducer and dosing is 16 milligrams every eight weeks as we have been studying throughout our phase two program. So we'll go in and make sure that that's correct in the deck. But yeah, 60 milligrams every eight weeks of induceran for a 48 week treatment period, as we've also done in some of our other studies. And at the moment, yes, the only difference between the arms is the timing of the induceran dose. And as I mentioned before, we obviously keep track of the data with these trials, especially safety data, but we have no intention of changing any of the other parameters of the trial at the moment. Just as mentioned between the three arms, it's just the timing of the two dervalumab doses.

Okay, great. And then follow up on the 101 dosing question. So it's 25 mgs per day, the dose you started part two with. And then for the, I guess the target engagement, I assume that was derived from, did you take circulating blood cells or where did you look for the target engagement in the patients?

Right, so in regards to the dosing of AB101 in part two of the study, again, I can't comment on that, it's ongoing as we speak. And as Mike said earlier in the call, we'll be providing data for the part two portion of the study in the second half of this year. And in regards to the pharmacodynamic assay, yes, it is based on peripheral blood mononuclear cells that are isolated from the subject.

Okay, great. And then the last one, maybe count the number of people who can answer this either, but it's on the NEVO combo with Berenksis vaccine. Can you give us a sense, it looks like the enrollment target went up by a couple of patients, 22 versus 20. Can you just tell us where enrollment stands currently in that cohort and about how many patients you can expect for the data in the second half? Thank you.

Sure, absolutely. So the target enrollment was 20 subjects for that arm to be consistent with the other two arms of the study as often happens in these studies, we have screening open to many sites in many countries across the globe and we can't necessarily control the number of subjects in screening at any one time. So it just happened here that we had a couple of additional subjects that were eligible for the trial and had completed screening. So we did allow them to enter the trial, but that's the only reason for the 22 subjects as opposed to the 20 subjects. And as said previously, we'll be sharing the preliminary endotreatment data for that trial in the second half of this year.

Okay, thank you. Thank you.

One moment for our next question. The next question comes from Kaye Nickay with Chardon.

Please go ahead.

Yeah, just some follow ups on 101 study. In terms of the receptor occupancy, is the assay you're using, is that a standardized or do you have to customize it?

Hi, this is Mike Kaye. It's an assay we actually developed internally. So it's a proprietary assay that we use for getting that target occupancy readout.

Okay, and is the dose response you're seeing, is that consistent with what

you'd hope to see?

Well, I would say preclinical models, we see 80 to 100% receptor occupancy. So that gave full efficacy for us. So I think what we're seeing in the clinical study is very encouraging to

us. Okay, and then in the multi-sending dose part of the study, just remind me again, what's the dose frequency is, how often is it?

So it's a total dose duration of seven days, and we do have flexibility within that arm to dose every day or anything different than that, depending on how the data reads out. So it could be a daily dose, it could be every other day, every third day, that part will be determined as we evaluate the safety PK and PD data that comes in from the different arms of the trial. But it's a seven day maximum duration.

Okay, and when do you expect to be able to advance into part three of the study?

Right, so it really depends on how these multiple sending dose arms proceed in the healthy subjects. So really we just need sufficient, again, safety PK and PD data to feel confident to move into that third portion of the trial and to choose a dose to initiate that part of the trial that we think will have impact in these chronic hepatitis B subjects. So again, it just depends on the progression of part two of the study. But it is, as we've said earlier, an integrated protocol. So the part three of the study is already approved, and we would be able to move on as soon as we are ready with the data.

Okay, thanks.

Thank you. I'm showing no further questions at this time. I'd

now like to turn it back to management for closing remarks.

Great, thank you. Thanks everyone for joining us this morning. We appreciate your continued interest in and support of Arbutus, and we look forward to providing updates to progress the development of our HPV assets. Operator, that concludes our call.

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