Arbutus Biopharma Corporation

Good day and thank you for standing by. Welcome to the Arbutus Biopharma 2024 third quarter financial results and corporate update. At this time, all participants are in listen only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you need to press star one one on your telephone. You would then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 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, Antoine. Good morning, everyone, and thank you for joining Arbutus' third 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, David Hastings, Chief Financial Officer, Dr. Karen Sims, Chief Medical Officer, and Dr. Mike Sophia, Chief Scientific Officer. Mike McElhall will provide a corporate update, including an update on our ongoing clinical programs in HBV. Dave will then provide a review of the company's third quarter 2024 financial results. After our prepared remarks, we will open the call for Q&A. Before we begin, I'd like to remind you that some of the statements made during the call today are forward-looking statements, which are subject to a number of risks and uncertainties that may cause our actual results to differ materially, including those described in our annual report on Form 10-K, our quarterly report on Form 10-Q, which will be filed today, and from time to time in our other documents filed with the SEC. With that, I'll turn the call over to Mike McElhall. Mike?

Thank you, Lisa, and good morning, everyone. I appreciate you joining us today. A few weeks ago, we issued a press release announcing that multiple abstracts highlighting inducer and data were accepted for presentation at the Liver Meeting 2024, which is the annual meeting held by the American Association for the Study of Liver Diseases. Included in the acceptance are two late-breaker poster presentations with their inducer and data from our ongoing Phase IIa clinical trials, IMPROVE-1 and IMPROVE-2. Since that meeting kicks off next Friday, November 15th, and the data are under embargo, we're not able to provide any updates to those trials at this time. I will, however, review at a high level the data that we presented from those clinical trials earlier this year at the EASL conference. Before doing so, I want to take a minute to discuss why we are focused on a functional cure for patients with chronic hepatitis B. Chronic HPV remains a significant global health challenge affecting more than 250 million people worldwide, despite the availability of preventive vaccines and current treatment options. This underscores our mission to address the urgent need to bring innovative combination treatments with a finite duration, such as those that could include our RNAi therapeutic Indusiran to patients as quickly as possible. Currently, the primary treatments for chronic HPV include nucleoside analogs that suppress HPV DNA and immune modulators like interferon. These agents result in a very low functional cure rate. Therefore, combining new and innovative therapies to reduce surface antigen, suppress HPV DNA, and boost the immune system with current standard of care is needed to provide a more optimal functional cure rate for patients with HPV. If a functional cure rate were available for patients with chronic HPV, it could potentially significantly reduce the patient's risk of liver cirrhosis and hepatocellular carcinoma, decrease patient stigma, and eliminate lifelong treatment and burdensome healthcare costs. As we focus on developing a functional cure for chronic HPV, we believe it is first important to lower viral markers such as hepatitis B surface antigen. Our Phase IIa studies are designed to use imduceran to reduce surface antigen as low as possible before administering an immune modulator. We are combining our RNA therapeutic imducerin with two different immune modulators in two Phase IIa clinical trials, our IMPROVE-1 trial, which includes short courses of interferon, and our IMPROVE-2 trial, which includes a combination of a therapeutic vaccine and an anti-PD-1 monoclonal antibody. At the EASL Congress in June, we reported data from our IMPROVE-1 clinical trial showing that the combination of imduceran plus interferon was generally safe and well tolerated. The cohort that performed the best was cohort A1, where HPV patients received six doses of imduceran and 24 weeks of interferon, in addition to ongoing nuke therapy. In cohort A1, 33% of the patients achieved surface antigen loss at the end of imduceran and interferon treatment that was sustained at 24 weeks post end of treatment. We also looked at a subset of patients who had surface antigen less than 1,000 international units per mil at baseline. In cohort A1, 67% of the patients who had surface antigen less than 1,000 international units per mil at baseline maintained surface antigen loss 24 weeks after completion of imducerin and interferon treatment. This is one of the highest reported rates of surface antigen loss achieved by patients with baseline surface antigen less than 1,000 international units per mil. This is a relevant population to assess because published studies have shown that patients with surface antigen loss have better long-term outcomes. As we think about a Phase IIb clinical trial and based on these data, stratifying the patient population to include those with low surface antigen may best position us for success while still capturing a significant portion of chronic HPV patients. At the time we reported the data, these four patients in cohort A1 with sustained surface antigen loss had discontinued their nucleoside therapy. We've been following these patients to assess them for functional cure. As a reminder, functional cure is defined as sustained hepatitis B surface antigen loss and HPV DNA less than the lower levels of quantification, 24 weeks off treatment with or without hepatitis B surface antibodies. We continue to receive positive feedback on these data from key opinion leaders in the HPV field, and we are excited to provide additional follow-up data from this trial at AASLD next week. In June at EASL, We also reported end-of-treatment data from our IMPROVE-II clinical trial that is evaluating the safety and immunogenicity of a 24-week lead-in with Imdusiran, followed by Barenthis Biotherapeutics Immunotherapeutic VTP300 or placebo while continuing nuke therapy. In this trial, Imdusiran lowered surface antigen to levels less than 100 international units per mil prior to dosing with VTP300 or placebo in 95% of the patients. After receiving VTP300 and through 24 weeks post-end of treatment, more patients maintained surface antigen thresholds of less than 100 or less than 10 international units per mil versus placebo. For patients who reached this time point, a statistically significant difference was achieved in mean surface antigen levels between the treatment arm and placebo. Recall that we have expanded this IMPROVE-2 clinical trial to evaluate the addition of a low dose of the anti-PD-1 monoclonal antibody, nivolumab, to the Mduceran and VTP300 combination treatment regimen, which we believe may further boost the host immune response. We are on track to report preliminary data from this portion of the trial next week at ASLD. The totality of these data support our plans to advance Mduceran into a Phase IIb clinical trial as a cornerstone in a potential HPV functional cure treatment regimen. Now we'd like to move on to AB101, oral small molecule PD-L1 checkpoint inhibitor. We believe that the immune checkpoint pathway plays an important role in HPV-specific immune tolerance and in T cell activation, and the addition of a checkpoint inhibitor in combination with imduceran could potentially further enhance HPV-specific immune responses. We remain excited about the potential of AB101 in treating HPV. AB101 is liver-centric and in preclinical studies had typical small molecule pharmacokinetics. likely providing a much shorter duration of effect than long-acting antibodies. AB101 was designed with the goal of minimizing systemic exposure and reducing the chance of immune-related adverse events that are often seen with checkpoint antibodies. AB101 is currently in a phase 1A, 1B clinical trial that consists of three parts, starting with single and multiple ascending doses in healthy subjects and culminating with multiple doses in patients with chronic HPV. Last quarter, we reported data from the part one single ascending dose portion of the trial showing that AB101 was generally well tolerated with evidence of dose-dependent receptor occupancy. In the 25 milligram single dose 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. Today, we reported data from phase two of this trial where part, excuse me, part two of this trial where we have so far enrolled two sequential cohorts of 10 healthy subjects. Each cohort received 10 or 25 milligrams of AB101 or placebo daily for seven days. Multiple ascending doses of AB101 were generally well tolerated with evidence of dose-dependent receptor occupancy. In the 25 milligram cohort, all subjects showed evidence of receptor occupancy with seven of the eight subjects demonstrating receptor occupancy greater than 70% during the seven-day dosing period. With a favorable safety profile to date and evidence of receptor occupancy, we have now moved into part three, the global portion of this clinical trial, which evaluates 28 days of repeat dosing in AB101 in patients with chronic HPV. We expect to report preliminary data from HPV patients dosed with AB101 in the first half of next year. Finally, I have two brief updates on the litigation progress with Moderna and Pfizer-BioNTech around our LNP intellectual property. In the Moderna case, the trial date is now scheduled for September 24th, 2025, which is of course subject to the court's availability. In the Pfizer-BioNTech lawsuit, the date for the claim construction hearing, also known as the Markman hearing, has been set for December 18th, 2024. I'll now turn the call over to Dave Hastings for a brief financial update.

Dave? Thanks, Mike, and good morning, everybody. We ended the third quarter of 2024 with approximately $131 million of cash, cash equivalents in investments and marketable securities, compared to approximately $132 million as of December 31, 2023. During the first half of 2024, we received approximately 44 million of net proceeds from the issuance of common shares under our at the market offering program. These cash inflows were offset by 54.5 million of cash used in operations. We did not issue any common shares under our ATM program in the third quarter of 2024. And we still expect our 2024 cash burn to range from 63 to $67 million. Importantly, our cash runway is sufficient to fund our operations into the fourth quarter of 2026. In closing, we have a strong financial position to advance our mission of developing our HPV assets to provide a functional cure for people with chronic HPV. With that, I'll turn the call back to Mike.

Thanks, Dave. We look forward to providing an update next week as we intend to report additional data from our IMPROVE-1 clinical trial and preliminary end-of-treatment data from the Novolumab arm of the IMPROVE-2 trial at ASLD. With these planned data announcements and today's reporting of the multiple ascending dose data from healthy subjects in the AB 101-001 trial, we will have achieved all of our second half milestones. 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 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 I compile the Q&A roster. Your first question comes from Dennis Ding from Jefferies. Please go ahead.

Good morning. This is Anthea on for Dennis. Thanks for taking our questions. We had a question on functional cure data that's upcoming. I know that you've mentioned the 20% bar, but also appreciating that the update will include patients from cohort A2 without imducerin. So do you have any thoughts on what functional cure would look like in this arm? Would you be looking for a 20% incremental benefit on top when you add imducerin? Just imagining if this cohort has 10, 15% functional cure, how we should interpret that data if adding imducerin gets to 20%. Thank you.

Good morning, Althea. This is Mike. So let me try to understand where you're headed with this question. So first of all, we have not presented any functional cure data related to inducer and to date. We've only presented end of treatment and post-nucleoside consolidation. The 20% functional cure rate that you've mentioned is sort of a stick in the mud for us, sort of a baseline of what we think is a meaningful functional cure rate. As you know, the current therapy's don't do very well, less than 10%, somewhere around 5%, and less for nucleosides. So we as a company have sort of set a goal for our programs that if we can hit a functional cure of 20% as a goal, as an aspirational goal, that that would be meaningful and beneficial to patients going forward. So, you know, whether we're talking about cohort A1 or A2 or B1 or B2, you know, You know, we should see sort of how that continues at ASLD next week. And Karen, if you want to add anything to that, please.

Yeah, and I would like to clarify how the study is designed just to avoid any misinterpretation. So all of the subjects in the IMPROVE-1 study received at least four doses of imdustoran, so 60 milligrams every eight weeks for a period of 24 weeks. And then they were randomized to the different interferon-containing cohorts. The A2 group did, in fact, receive four doses of Induceran before they were randomized to receive the 24 weeks of interferon. The difference between the A1 and the A2 cohort is the A1 cohort continued to receive Induceran during the interferon treatment period, whereas the A2 cohort just received the initial four doses and then received interferon only. So I just want to clarify that point in case there's a misunderstanding about the trial design.

Okay, got it. And so the bar would be 20% in either cohort.

Because they're both in Deuce Durant and Interferon containing. Got it. Thank you.

Thank you. One moment for our next question. Our next question comes from Roy Buchanan from Citizens JMP. Please go ahead.

Hey, great. Thanks for taking the questions. I guess to follow up on that last question, what should we consider as a denominator for So if we just take cohort A1, for example, is the denominator for functional cure going to be 12 patients? Or are you thinking about the four patients who achieved S antigen loss? And then kind of along the same lines, how are you thinking about the imduceran lead-in for subsequent studies? You can get a lot of patients below 1,000 with imduceran itself. So you may be thinking to screen after imduceran lead-in or at the very beginning. Thanks.

Yeah, so getting back to your first question about the denominator. So, you know, each cohort, as you noted, had a denominator of around 12 or 13 subjects for the 24-week cohort. So certainly we'd be looking, you know, at functional care across the entire population of that cohort, and we've already presented some S antigen loss data, as Mike said, at end of treatment and 24 weeks post end of treatment after the new consolidation period, looking at that denominator of 12, where we get 33%. If we then look at the population a little differently and look at subjects who entered the study with baseline surface antigen less than a thousand, we see that percentage of surface antigen loss go up to 67%. And this is consistent with what a lot of sponsors have seen across clinical trials recently in the hepatitis B area, that subjects with lower surface antigen tend to respond better to these therapies. But I think in either situation, you know, if if our surface antigen loss data transfers to functional cure data, we're above that 20% bar, regardless of whether we look at the entire cohort or whether we look at the subjects with surface antigen less than 1,000. So, you know, I think we'll be looking, you know, as the data emerges and looking forward to updated ASLG about how the functional cure data will appear, looking at both of those denominators. In regards to your second question about the MD-SARAN lead-in period, so, you know, obviously we're continuing to look at all different possibilities of study designs moving forward. I think what has been a little differentiating about this particular trial with IMPROVE-1, for example, is we're using this lead-in period to drive surface antigen as low as possible. And when we do that and then come with the immunomodulator after lowering surface antigen, we're seeing these very high rates of surface antigen loss. So I think that so far has been, I think, a good study design for us in terms of our goals of lowering surface antigen and then boosting the host immune response with an immunomodulator. So, certainly, as I mentioned, as we go forward, we're looking at all different types of study design options, and, you know, we'll see where the data lead us with these phase 2A studies.

Okay, great. That's helpful. Thank you. A couple on AB101. So, the results in the first half of next year, is that likely just going to be cohort A, so 12 subjects from that And then do you have any plans to present the part one or two results? Thanks.

Yeah, so Roy, we're still working through that. I can't give you any additional detail on what specific data set will be presented in the first half, but there will be HPV patient data in the first half. With regards to the MAD portion of the data, we will figure out the right forum to get that out. But of course, you know, we're pretty open with the data that we have, and we like to get that in the hands of, you know, in the hands of the likes of you, you know, as quickly as we typically can.

So stay tuned.

All right. Thank you.

Thank you. One moment for our next question. Our next question comes from Kay Mackey from Chardon. Please go ahead.

Yes, thank you. So I'm wondering if you can give us any further clarity on how you're thinking about timing for Phase 2B.

Yeah, so good morning, Kay. Good to hear from you. At this point, I can't really give you any additional details timing related to the Phase IIb, other than to say that we're working through it as diligently as we can. We are, you know, we're looking at the data that we have on hand and what's going to be coming up. Obviously, we need to have internal discussions, talk to regulators, and figure out what the right path is for Inducerand to get it to market as quickly as we can. So, you know, all I can say at this point is we're being diligent, and we will continue to do so, and we'll get there just as quickly as we can.

Okay, thanks.

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

Hey, good morning, everyone. Thanks for taking the question. Actually, I have one on AB101. Just going into part three of this study, just wondering if you had any insight into prior looks at PD-1 or PD-L1 data in HPV. Is there any HPV-specific biomarker that would be expected to move here? Not sure if you're enrolling just a mix of the antigen positives or negatives, but just trying to level set expectations on what a 28-day result could show in HPV patients with an anti-PD-L1. Thanks.

Sure. Good morning, Brian. Thanks for the call. Maybe I'll ask Karen or Mike to handle that one.

Yeah, I can start. I mean, you know, as you probably know from following our company over the years, we tend to be very biomarker heavy, so we always like to explore, you know, biomarker to the extent we can in any of our trials, including phase one trials. So we are doing a robust biomarker collection to look, as we've already reported, receptor occupancy and other markers. So that continues into the part three of the study, the hepatitis B portion of the study. You know, I will remind everyone that it is just a 28-day treatment period, and AB101 is not a direct acting antiviral, right? It's an immune modulator. So we're not We don't have clear expectations yet on what we might see in terms of actual effects on hepatitis B, on the anti-hepatitis B immune response in these subjects with a 28-day treatment period. So, we'll have to, you know, see that data as it evolves and as we dose escalate through that portion of the trial. But if Mike has any other.

Yeah, I mean, you know, obviously, Karen made it clear what the expectations were.

The goal with 101, obviously, Brian, is to get it in combination with a booster and as quickly as we can. Our strategy has always been to lower surface energy first, then add an immune booster. So, you know, unfortunately, I guess it's just the reality of drug development. You have to take it as monotherapy first and see how it performs, and then we can get it into combo as quick as we can.

Great. Thanks.

Thank you. One moment for our next question. Our next question comes from Ed Arst from HC Wainwright. Please go ahead.

Hi, good morning, everyone. This is Thomas asking a couple of questions for Ed. Thank you for taking our questions. So first question, for us to clarify, the ASLD a late-breaking presentation with the IMPROVE-II study. Are we expecting data only from the extension cohort, or can we expect updated data from the main study as well?

Hi, Thomas. Yes, so the presentation will be focused on Group C of the IMPROVE-II study, so that was the cohort with the addition of low-dose nivolumab. We did present the update on the A and B groups back at EASL in June.

Got it. Okay, yeah, that makes sense. And then perhaps moving a little bit on the legal side, just wonder what can we expect after the claim construction hearing following the loss against Pfizer?

So, Thomas, I just want to make sure I caught that question correctly. The question is what can we expect after the claim construction, the Markman hearing for Pfizer? Is that correct?

Yes, both the, you know, what kind of results can we expect from that hearing and also what's the next step in the process?

Sure. So as you know, as is always the case, I can say very little about the litigation. So as far as what to expect, we can, you know, wait until the hearing happens and we'll learn at the same time you do sort of what we can expect coming out of that. The process, as far as feedback is concerned, is sort of similar to what we saw in the past. It's going to take some time after that hearing before we get some kind of report. What we are looking forward to is sort of a court schedule, which after the results of the Markman hearing get made available, we will also have a court schedule available to us, which will give us a little more insight into when we may move forward with the trial and when the trial date may come and when all the goodies that happen in between there could take place. So, you know, stay tuned. We're not that far away from December 18th now, and then it'll be likely a couple of months before we have the outcome of that meeting in writing, but we're anxiously awaiting the results just like you.

Understood. Perhaps one more question from us. This one's regarding cash runway. About 24 months from now, so I wonder if that includes any expected proceeds from the ATM program.

I'm sorry, you tailed off at the end there.

Does it include any expected proceeds from the ATM program?

No, no, no, no, it does not. It assumes no financing. Sorry about that, Thomas. Yeah.

Okay. Thank you. Okay.

Got it. Thank you, Thomas.

Talk to you soon. Thank you. Bye-bye.

Thanks, Thomas.

Thank you. I'm showing no further questions. I will now turn it back over to management for closing remarks.

Thank you, everyone, for joining us this morning. We remain committed to transforming the HPV treatment landscape and providing hope to millions of patients worldwide. As always, we appreciate your continued support and confidence in our vision. We look forward to providing updates next week at AASLD on the clinical development of Imdusiran. Operator, that concludes our call.

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