Arbutus Biopharma Corporation

Good day and thank you for standing by. Welcome to the Arbitus BioFarma 2024 second quarter financial results and corporate updates. 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 1-1 on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star 1-1 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, Jill. Good morning everyone and thank you for joining Arbitus' second quarter 2024 financial results and corporate update call. Joining me today from the Arbitus executive team are Mike McAuliffe, interim president and chief executive officer, Dr. Karen Sims, chief medical officer, Dave Hastings, chief financial officer, and Dr. Mike Sophia, chief scientific officer. Mike McAuliffe 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 second 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 10K, our quarterly report on Form 10Q, which we filed today, and from time to time in other documents filed with the SEC. With that, I'll turn the call over to Mike McAuliffe. Mike?

Good morning, everyone, and thank you for joining us today. In the second quarter of 2024, we made significant advancements in our pursuit of developing a functional cure for patients with hepatitis B and driving value for our company and shareholders. Most importantly, we presented positive data from two phase 2A clinical trials combining our RNNI therapeutic, Induceran, with different amino modulators. Both of these data sets support the continued development of Induceran as a cornerstone in an HPV functional cure treatment regimen. Of note, the Improve 1 clinical trial demonstrated undetectable hepatitis B surface antigen in 33% of patients from cohort A1 who were treated with 48 weeks of Induceran and 24 weeks of interferon. More importantly, 67% of those patients with baseline surface antigen less than 1,000 international units per mil had undetectable hepatitis B surface antigen. In addition, six patients, four from cohort A1 and two from cohort A2, who achieved undetectable surface antigen after receiving Induceran plus 24 weeks of interferon, stopped all therapy and maintained undetectable surface antigen and HPV DNA in early follow-up, a precursor to a functional cure. To put this in context, if these six patients continue to maintain undetectable levels of HPV DNA and surface antigen for 24 weeks while off all therapy, they would be considered functionally cured. We look forward to following the trajectory of these patients and potentially achieving our goal of reaching a functional cure rate that is equal to or greater than 20%, a goal that aligns with the number of KOLs in the HPV field. We are now prioritizing advancing Induceran into phase 2b clinical development and preparations are ongoing. In addition to the follow-up data from the patients from IMPROVE-1 that are trending towards a functional cure, we expect to report preliminary data from the Nvolumab arm of the IMPROVE-2 trial evaluating Induceran plus VTP300 in the second half of this year. As a reminder, IMPROVE-2 includes an additional cohort of patients who received Induceran plus nucleoside analog therapy for 24 weeks followed by VTP300 plus up to two low doses of Nvolumab and approved -PD-1 monoclonal antibody. Because we are now focused on advancing Induceran into phase 2b clinical development and ensuring we have the resources to do so, we have made the difficult decision to further streamline the company by eliminating our HPV discovery efforts. These actions will result in a reduction in workforce of 40% affecting our discovery research and GNA functions. We know changes that impact our people are not easy and we are committed to providing our departing employees with support as they transition to their next roles. At the same time, we are confident that our beauties remains well positioned for the future. I want to emphasize how grateful we are to all our employees, especially those departing, for their dedication and passion in developing novel therapeutics that may lead to a functional cure in hepatitis B. In addition to eliminating our research discovery efforts, we have also decided prior to dosing any patients to discontinue our recently initiated Improve3 trial, also known as AB729203, which was a phase 2a trial evaluating the addition of their ValuMab to Induceran. Our decision to discontinue the Improve3 clinical trial is not related to any concerns regarding Induceran or our belief that the addition of controlled checkpoint inhibition may be a key component of a functional cure regimen. The decision was based solely on prioritization of resources for the advancement of Induceran into a phase 2b clinical trial and the projected availability of Improve3 clinical data given the advancement of AB101 through phase one clinical development. I want to emphasize that our decision to discontinue this clinical trial has no impact on our oral small molecule PDL1 checkpoint inhibitor, AB101, that is differentiated from checkpoint antibodies and is currently in a phase 1a, 1b clinical trial. Recall AB101 is liver-centric and in preclinical studies had typical small molecule pharmacokinetics and therefore likely a much shorter duration of effect than long-acting antibodies. These features were designed with the goal of minimizing systemic exposures and reducing the chance of immune-related adverse events that are often seen with checkpoint antibodies. It is for these reasons that we continue to remain excited about the potential of AB101 in hepatitis B and are continuing to evaluate multiple ascending doses of AB101 in healthy subjects in our phase 1a, 1b clinical trial. Importantly, the actions today have allowed us to extend our projected cash runway into the fourth quarter of 2026. Before I turn the call over to Karen, I would like to provide a brief update on the litigation with Moderna and Pfizer-Biontech around our LNP intellectual property. In the Moderna case, next steps include expert reports and expert depositions. The court has set April 21st, 2025 as a trial date for this case, which is of course subject to change. The Pfizer-Biontech lawsuit is ongoing with no updates at this time. With that, I'll now turn the call over to Karen to review the data we presented at EASIL. Karen?

Thanks, Mike, and good morning, everyone. The -of-treatment data we reported at the EASIL Congress in June was from our ongoing phase 2a combination clinical trials evaluating InduSteran with two immunomodulatory approaches and supports advancing the development of InduSteran as the cornerstone therapeutic of an HBV functional cure regimen that reduces surface antigen, suppresses HBV DNA, and boosts the immune system. The first trial, IMPRUBE-1, evaluated the safety, tolerability, and antiviral activity of a 24-week lead-in of InduSteran, 60 milligrams, given every eight weeks, followed by 12 or 24 weeks of weekly interferon, with or without additional doses of InduSteran in nuke-suppressed chronic hepatitis B patients. At the end of interferon treatment, patients remain on their nuke therapy for an additional 24 weeks, and at that point, if protocol criteria were met, they could stop their nuke therapy and remain off all therapy for 48 weeks of follow-up. While we presented the full -of-treatment preliminary data set for all four patient cohorts at EASIL, I will focus on the two cohorts of patients in the trial that received 24 weeks of interferon, as more patients in these cohorts reached and maintained undetectable surface antigen levels than in the 12-week interferon cohort. 12 patients received 24 weeks of InduSteran dosing, followed by 24 weeks of weekly interferon with continued InduSteran dosing every eight weeks, and four of those 12 patients, or 33%, had undetectable surface antigen at the end of treatment. All four patients maintained undetectable surface antigen after stopping interferon treatment and continuing just their nuke therapy for 24 weeks. These same four patients discontinued their nuke therapy and are in follow-up, and if they continue to maintain undetectable surface antigen and HBV DNA levels for another 24 weeks, they will be considered functionally cured. Of notes, there are also two patients that received 24 weeks of InduSteran, followed by 24 weeks of interferon with no additional doses of InduSteran, that also reached and maintained undetectable surface antigen and have discontinued nuke therapy. So in total, there are six patients from the 24-week interferon cohorts that achieved sustained surface antigen loss, have seroconverted with high surface antibody levels, and are now being followed off all therapy to assess for a functional cure. The 33% response rate seen with 24 weeks of interferon is one of the highest response rates seen in the field, including from studies testing interferon treatment durations of 48 weeks. In addition, unlike other RNAi candidates in development that have been evaluated in combination with interferon, InduSteran was administered less frequently and at a lower dose. The key opinion leaders in the HBV field have found these data to be impressive. There's been prior skepticism around the use of interferon in HBV functional cure regimens, especially since 48 weeks of interferon treatment is not always well tolerated. This clinical trial evaluated 24 weeks of interferon treatment, which is one of the shortest courses leading to sustained surface antigen loss in patients with HBV to date. Additionally, in this clinical trial, interferon was generally safe and well tolerated, giving us and others in the field the belief that this may be a viable treatment regimen to advance into a phase IIb clinical trial. Our second trial, improved two, is evaluating the safety and immunogenicity of a 24-week leading with InduSteran, followed by Borinsis Biotherapeutics Immunotherapeutic BTP300, while continuing new therapy. At the end of treatment, week 48, if patients met protocol criteria, they could stop their new therapy and continue to be followed for 48 weeks off all treatments. During the 24-week InduSteran lead-in period, we saw a 1.8 log decline in surface antigen from baseline on average. This decline in surface antigen, seen with InduSteran treatment alone, is in line with data we have seen to date from our other clinical trials. In addition, 95% of patients had surface antigen levels less than 100 IUs per ml at the time of dosing with BTP300 or placebo. And after BTP300 administration, more patients maintained surface antigen thresholds of less than 100 or less than 10 IUs per ml versus placebo through 24 weeks post end of treatment. Statistical significance was achieved in mean surface antigen levels between the treatment arm of five patients and placebo with six patients reaching the 24-week post end of treatment time point. The data from this trial supports our thesis that by first lowering surface antigen with InduSteran, we increase the patient's ability to respond to additional treatment. Recall that we've expanded the improved FUSE clinical trial to evaluate the addition of a low dose of the -PD-1 monoclonal antibody nivolumab to the InduSteran and BTP300 combination treatment regimen. We believe nivolumab may further boost the host immune response. We are on track to report preliminary data from this portion of the trial later this year. Now let's briefly review the phase 1a, 1b clinical trial with AB101. As Mike mentioned, AB101, our liver centric oral small molecule PDL1 checkpoint inhibitor is differentiated from checkpoint inhibitor antibodies and is developed for potential use in combination with InduSteran as a potential treatment regimen to functionally cure chronic hepatitis B. The phase 1a, 1b clinical trial consists of three parts, starting with single and then multiple ascending doses in healthy subjects and culminating with multiple doses in patients with chronic hepatitis B. Last quarter, we reported data from part one showing that AB101 is generally well tolerated with evidence of dose dependent receptor occupancy. In the 25 milligram cohort, all five evaluable subjects showed evidence of PDL1 receptor occupancy between 50 and 100%, indicating that AB101 is interacting with its intended targets. We are now in part two of this trial where cohorts of healthy subjects are receiving multiple ascending doses of AB101. We anticipate announcing preliminary data from part two later this year. Our goal is to move as quickly as possible into part three, which will enroll patients with chronic hepatitis B. 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 induced RANS could potentially further enhance HBV specific immune responses. 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 the second quarter of 2024 with approximately 148.5 million of cash, cash billings and investments in marketable securities compared to approximately 132 million as of December 31st, 2023. During the first half of 2024, we received 44.1 million of net proceeds from the issuance of common shares under our Budis's At the Market offering program. These cash inflows were offset by 33.8 million of cash used in operations. As we announced today, we are reducing our workforce by 40%. Importantly, we continue to believe we have the financial and human resources necessary to advance our clinical stage HBV pipeline. Now, with this reduction in workforce, we will incur a one-time restructuring charge of approximately three to $4 million that will be recorded in the third quarter of 2024. We still expect our 2024 cash burn to range from 63 to $67 million. We are also expecting to see a three-year increase in our cash flow to $7.5 million. Importantly, with the actions we announced today, we extended our cash runway into the fourth quarter of 2026 and significantly strengthened our ability to fund and anticipate and induce her on phase 2B clinical trial. 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 the reporting of -of-treatment data from improved one and improved two, we have now achieved all of our first half of 2024 key milestones. All second half milestones are on track, including reporting preliminary -of-treatment data from the new volume of arm of the improved two trial and reporting preliminary multiple ascending dose data from healthy subjects in the -101-001 trial. In closing, I wish the best to our departing employees and again thank them for their dedication and contributions to the company as we continue to pursue our goal of developing a functional cure for patients with chronic hepatitis B. Operator, we're now ready to open the call for Q&A.

Thank you. At this time, we will conduct a 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. The first call comes from Dennis Jing with Jeffreys. Go ahead,

your line is open.

Hi, good morning. Thanks for taking the questions. I just had one on the phase

two B that you guys were mentioning. Can you just talk a little bit about what this trial would look like in terms of size and design and approximately how much it would cost to run? And as a follow-up, I'm just curious would this include AB 101 as part of the regimen or I guess maybe it would just include Inifero and BTP 300 pending some more data and effects have this year. Maybe just comment on that as well, please. Thank you.

Sure, good morning, Dennis. Karen, would you like to handle that question?

Sure, that's fine, hi Dennis. So there's really not much I can share at this point in terms of the phase two B study design. Obviously we're in the planning stages of that study so it would be premature to describe any specific study design features or the timing of the study. So that will need to be the subject of a future discussion. In terms of including compounds in that trial, I think we're evaluating all the options we have at our disposal right now. As you know, we shared very exciting data at ESO with our Interferon combination and improved one with BTP 300, we're awaiting that additional novolumab data from the improved two additional cohort coming later this year. So at this point, I think all options are open and on the table and we're evaluating all those as we speak.

Okay,

thank

you.

Thank you, stand by for our next question. Next question comes from Ed Arcee with HC Wainwright. Please go ahead, your

line is open.

Hello, good morning everyone. This is Thomas Yip asking a couple of questions for Ed. Thank you for picking our questions. So first question for the improved two expansion cohort data and expected second half this year. Is the data announcement expected to be in conjunction with any major medical conference in the second half this year?

Good morning, Thomas. Thanks for the question. I will tell you what we tell you every time we talk about the release of data. We hope that that's the case, but of course, we can't commit to that because we don't know, we won't know the disposition of abstracts yet. So we hope that's the case. We anticipate that that will be the case, but of course we can't confirm that till we get closer to the end of the year.

Understood, and then perhaps to add on questions to that, are there any plans to report new interim data from improved one and improved two studies before year end?

Yeah, I think the answer to that question Thomas is yes.

Timing TBD. Got it, and then perhaps one question from us on the operation streamlined plans. Any other impacts on your clinical programs other than the plan improved three study, and then also if you can discuss any free clinical programs that are affected by the streamlining.

Yeah, no, look,

we don't anticipate any other impact in the clinical programs. In fact, the focus really is to focus on the later stage in two certain studies, and that's the intent, and using the existing resources we have to fund the phase two B study, which we believe we can substantially fund with the current cash on hand. Obviously, we can't give exact guidance as to that until the study design is complete, but with the streamlining today that positions the company well to advance and disarray

quickly. Got it, thank you again for taking on the questions. Of course, thanks Thomas.

Standby for our next question.

The

next question

comes from Roy Buchanan with Citizens. Go ahead, your line is open.

Okay, thanks for taking the questions. Just a couple of quick ones. I guess, just to make

sure I'm clear, I'm sure you're gonna need to talk to the FDA, but it sounds like the next and possibly only trial that you're

going to start is gonna be this phase two B. Is that correct? Yeah, Roy, I don't know how to answer that.

I mean, what we said today was we're planning to move in to serenity later stage clinical development, which is likely a phase two B study. We have lots of thinking to do. We are in the process of doing that. And we'll come back when we have some more details.

Okay, and still some data to see.

Still some data to see, that's correct.

Okay, and then just one, I guess you're thinking, and I think you mentioned it in the prepared remarks about focusing on patients with baseline HBS, less than 1,000 other companies are looking there. Just how are you potentially thinking about that today?

Yeah, that's a good question, Roy. I mean, yes, you're right. You did hear that comment in the prepared remarks. One of the things that we found very intriguing about the data that we generated in improved one is that if you looked at the response rate in patients with surface antigen less than 1,000 at baseline, the number increased dramatically from 33% to 67%. Now, of course, we're gonna have to see how that continues to hold as we move forward here. But remember, we're talking about 350 million patients globally with hepatitis B. So even if you start to cut that down into some patient populations, and you think about how you could potentially segment that market, we're still talking about substantial numbers of patients. We're working on specifically what that looks like. But there is a very large base number of patients to work from.

So yeah, we're excited about that.

Okay, thank you. One moment, there I am. Thank you.

The

next question comes from Key with Chardonnay.

Go ahead, your line is open.

Yeah, thanks. Yeah, just again, not to beat a dead horse here, but just trying to understand the path forward for the next clinical trial. It sounds like you're trying to position your resources to be able to at least start this on your own if needed. But can you just firm up when you think you might start it? I know you can't give us any details on design, but you're gonna have more data in the second half of this year. So is this the first half, 25 study or later?

Yeah, okay, good question. Good to have you on the line. Thanks for the question. I can't give you any more specifics about design or timing at this point. All I can say is that we'll get it started just as quickly as we possibly can. There are still some discussions to be had. We are, as you mentioned, we're still waiting for some data, which is obviously gonna help drive that decision. But the goal here is to start this as quickly as we can. And yes, we do have the legs to kick this off on our own. And as Dave said, to fund substantially all of it at this point with the cash we have on hand. So we're diligently working to get this kicked off quickly and stay tuned for more information.

Okay, thanks.

Thank you. I'm showing no further questions at this time. I would now like to turn it back to the company for closing remarks.

Thank you everyone for joining us this morning. We appreciate your

continued interest and support of Arbutus. And of course we look forward to providing updates as we progress the development of our HPV assets. Operator, that concludes our call.

Thank you. And thank you for your participation

in today's conference. This does conclude the program. You may now disconnect.

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Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Good day and thank you for standing by. Welcome to the Arbutus BioPharma 2024 second quarter financial results and corporate updates. 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. You will then hear an automated message advising that 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, Jill. Good morning everyone and thank you for joining Arbutus' second quarter 2024 financial results and corporate update call. Joining me today from the Arbutus executive team are Mike McAulhall, interim president and chief executive officer, Dr. Karen Sims, chief medical officer, Dave Hastings, chief financial officer, and Dr. Mike Sofia, chief scientific officer. Mike McAulhall 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 second 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 10K, our quarterly report on form 10Q, which we filed today, and from time to time in other documents filed with the SEC. With that, I'll turn the call over to Mike McAulhall. Mike?

Good morning, everyone, and thank you for joining us today. In the second quarter of 2024, we made significant advancements in our pursuit of developing a functional cure for patients with hepatitis B and driving value for our company and shareholders. Most importantly, we presented positive data from two phase 2a clinical trials combining our RNN-I therapeutic, Induceran, with different amino modulators. Both of these data sets support the continued development of Induceran as a cornerstone in an HPV functional cure treatment regimen. Of note, the improved one clinical trial demonstrated undetectable hepatitis B surface antigen in 33% of patients from cohort A1 who were treated with 48 weeks of Induceran and 24 weeks of interferon. More importantly, 67% of those patients with baseline surface antigen less than 1,000 international units per mil had undetectable hepatitis B surface antigen. In addition, six patients, four from cohort A1 and two from cohort A2, who achieved undetectable surface antigen after receiving Induceran plus 24 weeks of interferon, stopped all therapy and maintained undetectable surface antigen and HPV DNA in early follow-up, a precursor to a functional cure. To put this in context, if these six patients continue to maintain undetectable levels of HPV DNA and surface antigen for 24 weeks while off all therapy, they would be considered functionally cured. We look forward to following the trajectory of these patients and potentially achieving our goal of reaching a functional cure rate that is equal to or greater than 20%, a goal that aligns with the number of KOLs in the HPV field. We are now prioritizing advancing Induceran into phase 2B clinical development and preparations are ongoing. In addition to the follow-up data from the patients from IMPROVE-1 that are trending towards a functional cure, we expect to report preliminary data from the Nvolumab arm of the IMPROVE-2 trial evaluating Induceran plus VTP300 in the second half of this year. As a reminder, IMPROVE-2 includes an additional cohort of patients who received Induceran plus Nucleoside analog therapy for 24 weeks, followed by VTP300 plus up to two low doses of Nvolumab and approved -PD-1 monoclonal antibody. Because we are now focused on advancing Induceran into phase 2B clinical development and ensuring we have the resources to do so, we have made the difficult decision to further streamline the company by eliminating our HPV discovery efforts. These actions will result in a reduction in workforce of 40% affecting our discovery research and GNA functions. We know changes that impact our people are not easy and we are committed to providing our departing employees with support as they transition to their next roles. At the same time, we are confident that Arbutus remains well positioned for the future. I want to emphasize how grateful we are to all our employees, especially those departing, for their dedication and passion in developing novel therapeutics that may lead to a functional cure in hepatitis B. In addition to eliminating our research discovery efforts, we have also decided prior to dosing any patients to discontinue our recently initiated IMPROVE-3 trial, also known as AB729203, which was a phase 2A trial evaluating the addition of their value map to Induceran. Our decision to discontinue the IMPROVE-3 clinical trial is not related to any concerns regarding Induceran or our belief that the addition of controlled checkpoint inhibition may be a key component of a functional cure regimen. The decision was based solely on prioritization of resources for the advancement of Induceran into a phase 2B clinical trial, and the projected availability of IMPROVE-3 clinical data given the advancement of AB101 through phase 1 clinical development. I want to emphasize that our decision to discontinue this clinical trial has no impact on our oral small molecule PDL1 checkpoint inhibitor, AB101, that is differentiated from checkpoint antibodies and is currently in a phase 1A1B clinical trial. Recall AB101 is liver-centric, and in preclinical studies had typical small molecule pharmacokinetics, and therefore likely a much shorter duration of effect than long-acting antibodies. These features were designed with the goal of minimizing systemic exposures and reducing the chance of immune-related adverse events that are often seen with checkpoint antibodies. It is for these reasons that we continue to remain excited about the potential of AB101 in hepatitis B and are continuing to evaluate multiple ascending doses of AB101 in healthy subjects in our phase 1A1B clinical trial. Importantly, the actions today have allowed us to extend our projected cash runway into the fourth quarter of 2026. Before I turn the call over to Karen, I would like to provide a brief update on the litigation with Moderna and Pfizer-BioNTech around our LNP intellectual property. In the Moderna case, next steps include expert reports and expert depositions. The court has set April 21st, 2025 as a trial date for this case, which is of course subject to change. The Pfizer-BioNTech lawsuit is ongoing, with no updates at this time.

With

that, I'll now turn the call over to Karen to review the data we presented at EASIL. Karen?

Thanks, Mike, and good morning, everyone. The -of-treatment data we reported at the EASIL Congress in June was from our ongoing phase 2A combination clinical trials, evaluating InduSteran with two immunomodulatory approaches and supports advancing the development of InduSteran as the cornerstone therapeutic of an HBV functional cure regimen that reduces surface antigen, depresses HBV DNA, and boosts the immune system. The first trial, improved one, evaluated the safety, tolerability, and antiviral activity of a 24-week lead-in of InduSteran, 60 milligrams, given every eight weeks, followed by 12 or 24 weeks of weekly interferon, with or without additional doses of InduSteran in nuke-suppressed chronic hepatitis B patients. At the end of interferon treatment, patients remained on their nuke therapy for an additional 24 weeks, and at that point, if protocol criteria were met, they could stop their nuke therapy and remain off all therapy for 48 weeks of follow-up. While we presented the full -of-treatment preliminary data set for all four patient cohorts at EASIL, I will focus on the two cohorts of patients in the trial that received 24 weeks of interferon, as more patients in these cohorts reached and maintained undetectable surface antigen levels than in the 12-week interferon cohort. 12 patients received 24 weeks of InduSteran dosing, followed by 24 weeks of weekly interferon with continued InduSteran dosing every eight weeks, and four of those 12 patients, or 33 percent, had undetectable surface antigen at the end of treatment. All four patients maintained undetectable surface antigen after stopping interferon treatment and continuing just their nuke therapy for 24 weeks. These same four patients discontinued their nuke therapy and are in follow-up, and if they continue to maintain undetectable surface antigen and HBV DNA levels for another 24 weeks, they will be considered functionally cured. Of note, there are also two patients that received 24 weeks of InduSteran, followed by 24 weeks of interferon with no additional doses of InduSteran, that also reached and maintained undetectable surface antigen and have discontinued nuke therapy. So in total, there are six patients from the 24-week interferon cohort that achieved sustained surface antigen loss, have seroconverted with high surface antibody levels, and are now being followed off all therapy to assess for a functional cure. The 33 percent response rate seen with 24 weeks of interferon is one of the highest response rates seen in the field, including from studies testing interferon treatment durations of 48 weeks. In addition, unlike other RNAi candidates in development that have been evaluated in combination with interferon, InduSteran was administered less frequently and at a lower dose. The key opinion leaders in the HBV field have found these data to be impressive. There's been prior skepticism around the use of interferon in HBV functional cure regimens, especially since 48 weeks of interferon treatment is not always well tolerated. This clinical trial evaluated 24 weeks of interferon treatment, which is one of the shortest courses leading to sustained surface antigen loss in patients with HBV to date. Additionally, in this clinical trial, interferon was generally safe and well tolerated, giving us and others in the field the belief that this may be a viable treatment regimen to advance into a phase IIb clinical trial. Our second trial, improved two, is evaluating the safety and immunogenicity of a 24-week leading with InduSteran, followed by Berenstis Biotherapeutics Immunotherapeutic BTP300, while continuing NUKE therapy. At the end of treatment, week 48, if patients met protocol criteria, they could stop their NUKE therapy and continue to be followed for 48 weeks off all treatment. During the 24-week InduSteran lead-in period, we saw a 1.8 log decline in surface antigen from baseline on average. This decline in surface antigen, seen with InduSteran treatment alone, is in line with data we have seen to date from our other clinical trials. In addition, 95% of patients had surface antigen levels less than 100 IUs per ml at the time of dosing with BTP300 or placebo. And after BTP300 administration, more patients maintained surface antigen thresholds of less than 100 or less than 10 IUs per ml versus placebo through 24 weeks post-end of treatment. Statistical significance was achieved in mean surface antigen levels between the treatment arm of five patients and placebo with six patients reaching the 24-week post-end of treatment time point. The data from this trial supports our thesis that by first lowering surface antigen with InduSteran, we increased the patient's ability to respond to additional treatment. Recall that we've expanded the improved huge clinical trial to evaluate the addition of a low dose of the -PD-1 monoclonal antibody nivolumab to the InduSteran and BTP300 combination treatment regimen. We believe nivolumab may further boost the host immune response. We are on track to report preliminary data from this portion of the trial later this year. Now let's briefly review the Phase 1a, 1b clinical trial with AB101. As Mike mentioned, AB101, our liver-centric oral small molecule PD-L1 checkpoint inhibitor, is differentiated from checkpoint inhibitor antibodies and is developed for potential use in combination with InduSteran as a potential treatment regimen to functionally cure chronic hepatitis B. The Phase 1a, 1b clinical trial consists of three parts, starting with single and then multiple ascending doses in healthy subjects and culminating with multiple doses in patients with chronic hepatitis B. Last quarter, we reported data from Part 1, showing that AB101 is generally well tolerated with evidence of dose-dependent receptor occupancy. In the 25-milligram cohort, all five evaluable subjects showed evidence of PD-L1 receptor occupancy between 50 and 100%, indicating that AB101 is interacting with its intended target. We are now in Part 2 of this trial, where cohorts of healthy subjects are receiving multiple ascending doses of AB101. We anticipate announcing preliminary data from Part 2 later this year. Our goal is to move as quickly as possible into Part 3, which will enroll patients with chronic hepatitis B. 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 InduSteran could potentially further enhance HBV-specific immune responses. 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 the second quarter of 2024 with approximately $148.5 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 $44.1 million of net proceeds from the issuance of common shares under our Butis's -the-Market Offering Program. These cash inflows were offset by $33.8 million of cash used in operations. As we announced today, we are reducing our workforce by 40%. Importantly, we continue to believe we have the financial and human resources necessary to advance our clinical-stage HBV pipeline. Now, with this reduction in workforce, we will incur a one-time restructuring charge of approximately $3 to $4 million that will be recorded in the third quarter of 2024. We still expect our 2024 cash burn to range from $63 to $67 million. Importantly, with the actions we announced today, we extended our cash runway into the fourth quarter of 2026 and significantly strengthened our ability to fund an anticipated inducer on Phase 2B clinical trial. 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 the reporting of -of-treatment data from Improve 1 and Improve 2, we have now achieved all of our first half of 2024 key milestones. All second half milestones are on track, including reporting preliminary -of-treatment data from the Novolumab arm of the Improve 2 trial and reporting preliminary multiple ascending dose data from healthy subjects in the AB101-001 trial. In closing, I wish the best to our departing employees and again thank them for their dedication and contributions to the company as we continue to pursue our goal of developing a functional cure for patients with chronic hepatitis B. Operator, we're now ready to open the call for Q&A.

Thank you. At this time, we will conduct a question and answer session. As a reminder, to ask a question, you will need to press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again.

Please stand by while we compile the Q&A roster. The first call comes from Dennis Jing with Jeffries. Go ahead, your line

is open.

Hi, good morning. Thanks for taking the questions. I just had one on the phase 2b

that you guys were mentioning. Can you just talk a little bit about what this trial would look like in terms of size and design and approximately how much it would cost to run? And as a follow-up, I'm just curious will this include AB101 as part of the regimen or I guess maybe it would just include Interferon and BTP300 pending some more data in the second half of this year. Maybe just comment on that as well, please. Thank you.

Sure, good morning, Dennis. Karen, would you like to handle that question?

Sure, that's fine. Hi, Dennis. So there's really not much I can share at this point in terms of the phase 2b study design. Obviously, we're in the planning stages of that study so it would be premature to describe any specific study design features or the timing of the study. So that will need to be the subject of a future discussion. In terms of including compounds in that trial, I think we're evaluating all the options we have at our disposal right now. As you know, we shared very exciting data at EASEL with our Interferon combination and improved one with BTP300. We're awaiting that additional Novolumab data from the improved two additional cohort coming later this year. So at this point, I think all options are open and on the table and we're evaluating all those as we speak.

Okay, thank you.

Thank you. Stand by for our next question. The next question comes from Ed Arcee with HC Wainwright. Please go ahead. Your line

is open.

Hello. Good morning, everyone. This is Thomas Yip asking a couple of questions for Ed. Thank you for taking our questions. So first question for the improved two expansion cohort data and expecting the second half this year. Is the data announcement expected to be in conjunction with the major medical conference in the second half this year?

Good

morning, Thomas. Thanks for the question. I will tell you what we tell you every time we talk about the release of data. We hope that that's the case, but of course we can't commit to that because we don't know, we won't know the disposition of abstracts yet. So we hope that's the case. We anticipate that that will be the case, but of course we can't confirm that until we get closer to the end of the year.

Understood. And then perhaps as an add-on question to that, are there any plans to report new interim data from improved one and improved two studies before year end?

Yeah,

I think the answer to that question, Thomas, is yes.

Timing TBD. Got it. And then perhaps one question from us on the operation streamline plans. Are there any other impacts on your clinical programs other than the planned improved three study? And then also if you can discuss any free clinical programs that are affected

by the streamlining? Yeah, no, look,

we don't anticipate any other impact on the clinical programs. In fact, the focus really is to focus on the later stage in two certain studies. And that's the intent and using the existing resources we have to fund the phase two B study, which we believe we can substantially fund with the current cash on hand. Obviously, we can't give exact guidance as to that until the study design is complete. But with the streamlining today that positions the company well to advance and disarray

quickly. Got it. Thank you again for taking on the questions. Of course. Thanks, Thomas.

Standby for our next question. The next question

comes from Roy Buchanan with Citizens. Go ahead. Your line is open.

Thanks for taking the questions. Just a couple of quick ones. I guess just to make sure

I'm clear, just I'm not sure you're going to need to talk to the FDA, but it sounds like the next and possibly only trial that you're going to

start is going to be this phase two B. Is that correct? Yeah, Roy, I don't know how to answer that.

I mean, what we said today was we're planning to move in deuteronomy later stage clinical development, which is likely a phase two B study. We have lots of thinking to do. We are in the process of doing that. And we'll come back when we have some more details.

Okay. And still some data to see. I got some

data to see. That's correct.

Okay. And then just one, just I guess you're thinking and I think you mentioned it in the prepared remarks about focusing on patients with baseline HBS less than a thousand, other companies are looking there. Just how are you potentially thinking about that today?

Yeah, that's a good question, Roy. I mean, yes, you're right. You did hear that comment in the prepared remarks. One of the things that we found very intriguing about the data that we generated in improved one is that if you looked at the response rate in patients with surface antigen less than a thousand in baseline, the number increased dramatically from 33% to 67%. Now, of course, we're going to have to see how that continues to hold as we move forward here. But remember, we're talking about 350 million patients globally with hepatitis B. So even if you start to cut that down into some patient populations and you think about how you could potentially segment that market, we're still talking about substantial numbers of patients. We're working on specifically what that looks like. But there is a very large base number of patients to work

from. So yeah, we're excited about that.

Okay. Thank you. One moment. Thank you.

The next question comes from Key with Chardon. Go ahead.

Your line is open.

Yeah, thanks. Yeah, just again, not to beat a dead horse here, just trying to understand the path forward for the next clinical trial. It sounds like you're trying to position your resources to be able to at least start this on your own if needed. But can you just firm up when you think you might start it? I know you can't give us any details on design, but you're going to have more data in the second half of this year. So is this the first half, 25 study or later?

Yeah. Okay, good question. Good to have you on the line. Thanks for the question. I can't give you any more specifics about design or timing at this point. All I can say is that we'll get it started just as quickly as we possibly can. There are still some discussions to be had. We are, as you mentioned, we're still waiting for some data, which is obviously going to help drive that decision. But the goal here is to start this as quickly as we can. Yes, we do have the legs to kick this off on our own. And as Dave said, to fund substantially all of it at this point with the cash we have on hand. So we're diligently working to get this kicked off quickly. And stay tuned for more information.

Okay, thanks.

Thank you. I'm showing no further questions at this time. I would now like to turn it back to the company for closing remarks.

Thank you, everyone, for joining us this morning. We appreciate your continued

interest and support of Arbutus. And of course, we look forward to providing updates as we progress the development of our HPV assets. Operator, that concludes our call.

Thank you. And thank you for your participation in today's conference. This does conclude the program. You may now disconnect.