Arbutus Biopharma Corporation

Good day, and thank you for standing by. Welcome to the Arbitus Biopharma 2024 Second Quarter Financial Results and Corporate Update. 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 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 Capparelli, 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 McElhall, 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 McElhall 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 10-K, our quarterly report on Form 10-Q, 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 McElhall. 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 IIa clinical trials combining our RNAi therapeutic, Mduciran, with different immunomodulators. Both of these datasets support the continued development of imduceran 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 imduceran 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 a number of KOLs in the HPV field. We are now prioritizing advancing imduceran into Phase IIb 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 Nivolumab arm of the IMPROVE-2 trial evaluating imduceran plus VTP300 in the second half of this year. As a reminder, improved to includes an additional cohort of patients who received imduceran plus nucleoside analog therapy for 24 weeks, followed by VTP300 plus up to two low doses of nivolumab, an approved anti-PD-1 monoclonal antibody. Because we are now focused on advancing imduceran into Phase IIb 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 IIa trial evaluating the addition of dervalumab to imduceran. Our decision to discontinue the IMPROVE III clinical trial is not related to any concerns regarding imduceran 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 imduceran into a Phase IIb clinical trial and the projected availability of IMPROVE III 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 PD-L1 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 trials. 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 L&P intellectual property. In the Moderna case, next steps include expert reports and expert depositions. The court has set April 21, 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 EASL. Karen?

Thanks, Mike, and good morning, everyone. The end-of-treatment data we reported at the EASL Congress in June was from our ongoing Phase IIa combination clinical trials evaluating imbuceran with two immunomodulatory approaches and supports advancing the development of imbuceran 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, IMPROVE-1, evaluated the safety, tolerability, and antiviral activity of a 24-week lead-in of induced NIRAN 60 milligrams given every eight weeks, followed by 12 or 24 weeks of weekly interferon with or without additional doses of induced NIRAN 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 end-of-treatment preliminary data set for all four patient cohorts at EASL, 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. Twelve patients received 24 weeks of inducer and dosing, followed by 24 weeks of weekly interferon with continued inducer and 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 note, there are also two patients that received 24 weeks of induced NIRAN followed by 24 weeks of interferon with no additional doses of induced NIRAN 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 therapies 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, induceram was administered less frequently and at a lower dose. The key opinion leaders in the HPV field have found these data to be impressive. There's been prior skepticism around the use of interferon in HPV 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 HPV 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, IMPROVE-II, is evaluating the safety and immunogenicity of a 24-week lead-in with Induceran, followed by Verinsys Biotherapeutics Immunotherapeutic VTP-300, 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 inducer and lead-in period, we saw a 1.8 log decline in surface antigen from baseline on average. This decline in surface antigen, even with inducer and 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 VTP300 or placebo. And after VTP300 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 induceram, we increased the patient's ability to respond to additional treatment. Recall that we've expanded the IMPROVE-2 clinical trial to evaluate the addition of a low dose of the anti-PD-1 monoclonal antibody nivolumab to the Induceran and the TP300 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 Induceran 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 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 Durant 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 Arbutus' 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 HPV 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 that we announced today, we extended our cash runway into the fourth quarter of 2026 and significantly strengthened our ability to fund an anticipated and deuce around phase 2B clinical trial. In closing, we have a strong financial position to advance our mission

of developing our HPV assets to provide a functional cure for chronic HPV. With that, I'll turn the call back to Mike.

Thanks, Dave. With the reporting of end-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 end-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 the 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 Ding with Jefferies.

Go ahead, your line is open.

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, you know, I'm just curious, would 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 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 CB 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, you know, I think we're evaluating all the options we have at our disposal right now. As you know, we shared very exciting data at ESA with our interferon combination and IMPROVE-1. With BTP-300, we're awaiting that additional nivolumab data from the IMPROVE-2 additional cohort coming later this year. So, at this point, I think, you know, 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 here asking a couple of questions for Ed. Thank you for taking our questions. So first question, for the improved two-expansion cohort data in the 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 that the you know the disposition of abstracts yet, so we hope we hope that's the case. We anticipate that that will be the case, but of course we can. We can't confirm that till we get closer to the to the 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 IMPROV-1 and IMPROV-2 studies, you know, 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 PLAN, IMPROVE III study? And then also, if you can discuss any preclinical programs that are affected by this 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 do certain studies. And then that's, 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 to that until the study design is complete, but with, with the, with the streamlining today that positions the company well to advance and discern it quickly.

Got it. Thank you again for taking our questions. Of course. Thanks, Thomas. Stand by for our next question.

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

Hey, thanks for taking the questions. Just a couple of quick ones.

I guess just to make sure I'm clear, just I'm 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 2B. 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 inducer into later stage clinical development, which is likely a Phase 2B study. We have lots of thinking to do. We are in the process of doing that. And, you know, we'll come back when we have some more details.

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

Still some data to see. That's correct. Yeah.

Yeah. 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 1,000, you know, other companies are looking there. Just how are you potentially thinking about that today? Okay.

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 and 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 going to have to see how that continues to hold as we move forward here. But remember, we're talking about, you know, 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 for our next question. The next question comes from Key with Chardin.

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 know, you're going to have more data, you know, 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. 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, you know, we're diligently working to get this kicked off quickly and, you know, 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. Thank you. you Thank you. Thank you.

Bye. Music Music

Good day, and thank you for standing by. Welcome to the Arbitus Biopharma 2024 Second Quarter Financial Results and Corporate Update. 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 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 Capparelli, 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 McElhall, Interim President and Chief Executive Officer of Dr. Karen Sims, Chief Medical Officer, Dave Hastings, Chief Financial Officer, and Dr. Mike Sophia, Chief Scientific Officer. Mike McElhall 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 10-K, our quarterly report on Form 10-Q, 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 McElhall. 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 IIa clinical trials combining our RNAi therapeutic, Mduciran, with different immunomodulators. Both of these datasets support the continued development of imduceran 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 imduceran 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 Induceram 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 a number of KOLs in the HPV field. We are now prioritizing advancing imduceran into Phase IIb 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 nivolumab arm of the IMPROVE-2 trial evaluating imduceran plus VTP300 in the second half of this year. As a reminder, improved to includes an additional cohort of patients who received imduceran plus nucleoside analog therapy for 24 weeks, followed by VTP300 plus up to two low doses of nivolumab, an approved anti-PD-1 monoclonal antibody. Because we are now focused on advancing imduceran into Phase IIb 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 III trial, also known as AB729203, which was a Phase IIa trial evaluating the addition, of dervalumab to imduceran. Our decision to discontinue the IMPROVE III clinical trial is not related to any concerns regarding imduceran 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 imduceran into a Phase IIb clinical trial and the projected availability of IMPROVE III 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 PD-L1 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 L&P intellectual property. In the Moderna case, next steps include expert reports and expert depositions. The court has set April 21, 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 EASL. Karen?

Thanks, Mike, and good morning, everyone. The end-of-treatment data we reported at the EASL Congress in June was from our ongoing Phase 2A combination clinical trials evaluating imbuceran with two immunomodulatory approaches and supports advancing the development of imbuceran 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, IMPROVE-1, evaluated the safety, tolerability, and antiviral activity of a 24-week lead-in of induced NIRAN 60 milligrams given every eight weeks, followed by 12 or 24 weeks of weekly interferon with or without additional doses of induced NIRAN 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 end-of-treatment preliminary data set for all four patient cohorts at EASL, 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. Twelve patients received 24 weeks of inducer and dosing, followed by 24 weeks of weekly interferon with continued inducer and 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 note, there are also two patients that received 24 weeks of induced NIRAN followed by 24 weeks of interferon with no additional doses of induced NIRAN 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% 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, induceram was administered less frequently and at a lower dose. The key opinion leaders in the HPV field have found these data to be impressive. There's been prior skepticism around the use of interferon in HPV 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 HPV 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, IMPROVE-II, is evaluating the safety and immunogenicity of a 24-week lead-in with induceram followed by Verinsys Biotherapeutics Immunotherapeutic VTP-300, 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 inducer and read-in period, we saw a 1.8 log decline in surface antigen from baseline on average. This decline in surface antigen, even with inducer and 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 VTP300 or placebo. And after VTP300 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 induceram, we increased the patient's ability to respond to additional treatment. Recall that we've expanded the IMPROVE-2 clinical trial to evaluate the addition of a low dose of the anti-PD-1 monoclonal antibody nivolumab to the Induceran and the TP300 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 Induceran 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 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 Induceran 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 Arbutus' 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 HPV 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 and deuce around phase 2B clinical trial. In closing, we have a strong financial position to advance our mission

of developing our HPV assets to provide a functional cure for chronic HPV. With that, I'll turn the call back to Mike.

Thanks, Dave. With the reporting of end-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 end-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 the 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 Ding with Jefferies.

Go ahead, your line is open.

Good morning. Thanks for taking the questions.

I just have 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, you know, I'm just curious, would this include AB101 as part of the regimen? Or I guess maybe it would just include interferon and BTP300, depending on some more data in the second half 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, you know, including compounds in that trial, you know, I think we're evaluating all the options we have at our disposal right now. As you know, we shared very exciting data at ESA with our interferon combination and IMPROVE-1. With BTP-300, we're awaiting that additional nivolumab data from the IMPROVE-2 additional cohort coming later this year. So, at this point, I think, you know, 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 here asking a couple of questions for Ed. Thank you for taking our questions. So first question, for the improved two-expansion cohort data in the 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. 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 IMPROV-1 and IMPROV-2 studies, you know, 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 plan improved three study? And then also if you can discuss any preclinical 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 and do certain studies. And that's the intent and using the existing resources we have to fund the Phase 2B 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 discern it quickly.

Got it. Thank you again for taking our questions. Of course. Thanks, Thomas. Stand by 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, I'm 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 2B.

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 him to later stage clinical development, which is likely a Phase 2B study. We have lots of thinking to do. We are in the process of doing that. And, you know, we'll come back when we have some more details.

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

Still some data to see. That's correct.

Yeah. Yeah. 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 1,000, you know, other companies. or 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 IMPROVE-1 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 going to have to see how that continues to hold as we move forward here. But remember, we're talking about, you know, 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, you know, 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 for our next question. The next question comes from Key with Chardin.

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 going to have more data in the second half of this year, so is this a 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. 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.