Q3 2023 Arbutus Biopharma Corp Earnings Call
Participants
David C. Hastings; CFO & CAO; Arbutus Biopharma Corporation
Karen Sims; Chief Medical Officer; Arbutus Biopharma Corporation
Lisa M. Caperelli; VP of IR; Arbutus Biopharma Corporation
Michael J. McElhaugh; Co-Founder and COO; Arbutus Biopharma Inc.
William H. Collier; President, CEO & Director; Arbutus Biopharma Corporation
Douglas Royal Buchanan; Director & Equity Research Analyst; JMP Securities LLC, Research Division
Unidentified Analyst
Wing Cheung Yip; Research Analyst; H.C. Wainwright & Co, LLC, Research Division
Presentation
Operator
Good day, and thank you for standing by. Welcome to the Arbutus Third Quarter Corporate and Financial Update Conference Call. (Operator Instructions) Please be advised that today's conference is being recorded.
I would now like to hand the conference over to Lisa Caperelli, please go ahead.
Lisa M. Caperelli
Thank you, Briana. Good morning, everyone, and thank you for joining Arbutus' Third Quarter 2023 Financial Results and Corporate Update Call. Joining me today from the Arbutus executive team are Bill Collier, President and Chief Executive Officer; David Hastings, Chief Financial Officer; Michael McElhaugh, Chief Operating Officer; Dr. Mike Sofia, Chief Scientific Officer; and Dr. Karen Sims, Chief Medical Officer.
Bill will begin with a corporate update, followed by Dave Hastings who will provide a review of the company's third quarter 2023 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 most recent annual report on 10-K, our quarterly report on Form 10-Q, which will be filed later today and from time to time in our other documents filed with the SEC.
With that, I'll turn the call over to Bill Collier. Bill?
William H. Collier
Good morning, everyone, and thank you very much for joining us today. As you likely saw, in addition to reporting our third quarter results earlier this morning, we also announced that I will be retiring at the end of the year. I'll speak more about that shortly, but first, let's discuss our results.
At Arbutus, we remain committed to our goal of developing a functional cure for patients with chronic hepatitis B virus by advancing the development of our clinical assets that can be combined to create a curative treatment regimen. Over the last few months, we've optimized our pipeline including the discontinuation of our coronavirus research programs and our oral RNA destabilizer. This allows us to sharpen our focus and resources on our most promising clinical programs, imdusiran and AB-101, both of which are expected to have data readouts next year.
As a result of this pipeline prioritization, we are also announcing today the difficult decision to streamline our organization by reducing our workforce by 24%. We want to underscore how grateful we are to all of our employees, especially those departing the organization for their dedication and passion in developing novel therapeutics for viral diseases at Arbutus. And while these changes primarily impact our research function, we have maintained a group of research scientists as we remain committed to continuing discovery research in chronic HBV.
Now we know that changes that impact our people are not easy, and we're committed to providing those employees with support as they transition to their next role. At the same time, we're confident that Arbutus remains positively positioned for the future.
Now I'd like to provide some updates on the continued progress that we're making across our pipeline. With more than 290 million people worldwide chronically infected with HBV and with current lifelong treatment options resulting in less than a 5% cure rate, there remains a large unmet medical need for a functional cure for chronic HBV. We believe we're well suited to address this need with our team's extensive expertise in virology and with imdusiran, which is one of the most advanced RNAi therapeutics in development. Based on data generated to date, imdusiran has shown to impact all three components needed for a functional cure for patients with chronic HBV.
Those are reducing HBV DNA, suppressing surface antigen and reawakening the HBV-specific immune response. Our strategy to develop a functional cure for HBV involves exploring imdusiran in combination with other investigational and approved products that can further stimulate the immune system to induce functional cure in chronic HBV patients.
Imdusiran is our lead asset and later this week at a prestigious liver-focused medical conference, AASLD, the Liver Meeting, we will be presenting a late-breaking poster with preliminary data from our Phase IIa clinical trial that we're conducting with Barinthus Biotherapeutics, formerly known as Vaccitech. Through this clinical trial, we're testing whether the combination of imdusiran, NUC therapy and Barinthus' HBV antigen-specific immunotherapeutic VTP-300 can lower surface antigen and stimulate the host immune system to fully suppress the virus.
As I've mentioned previously, this is an early look at data as not all patients have received the full VTP-300 or placebo dosing regimen. In addition to safety data, from an efficacy standpoint, we're hoping to see a reduction in surface antigen within 24 weeks -- sorry, we're hoping to see a reduction in surface antigen with 24 weeks of imdusiran treatment that is similar to what we've seen in our other clinical trials to date and further impact on HBsAg and HBV-specific immune activation with the addition of VTP-300. We look forward to reporting these data at AASLD.
Now you may recall that we've expanded this trial to explore the addition of a low dose of the anti-PD-1 monoclonal antibody inhibitor nivolumab, to the combination treatment regimen. We believe Nivo may further boost the host immune response. The data that we're reporting at AASLD will not include any data from this expanded arm, as we're in the early stages of this trial. We will have more to report on this portion of the clinical trial next year. We also have a second Phase IIa clinical trial that is evaluating imdusiran in combination with ongoing NUC therapy and interferon in patients with chronic HBV.
Earlier this year, we reported preliminary data that continues to reinforce our confidence in imdusiran's ability to effectively lower surface antigen. We're continuing to follow these patients and expect to provide updates from this clinical trial in 2024. Our second HBV asset is AB-101, our oral PD-L1 inhibitor that is currently in a Phase Ia/Ib clinical trial. Immune checkpoints have been shown to play an important role in HBV-specific immune tolerance and in T cell activation. This double-blind, randomized, placebo-controlled clinical trial is designed to investigate the safety, tolerability, pharmacokinetics and pharmacodynamics of AB-101. The trial will be conducted in 3 parts, starting with single and multiple ascending doses in healthy subjects and culminating with multiple doses in patients with chronic HBV.
In September, we announced that we dosed the first patient in the single ascending dose group of the trial and expect initial data from that group in the first half of 2024.
Finally, let me spend a moment talking about my decision to retire as CEO at the end of this year. As many of you know, I've had the privilege to lead Arbutus since June 2019, and since then, we've accomplished so much. This was a particularly challenging decision for me to make personally and one that is completely unrelated to recent activities at Arbutus.
I remain confident in imdusiran and AB-101, and the ability of this team to develop these compounds to possibly provide a functional cure for patients with chronic HBV. My 4-year plus tenure at Arbutus is one of the most rewarding positions I've had in my career. The opportunity to lead a group of talented and passionate researchers, clinicians and professionals with the drive to serve the HBV patient community has been a true privilege. We've achieved many successes and key milestones. And as I look to my future retirement, I'm confident in the future of Arbutus.
Now Mike McElhaugh will succeed me as Interim CEO effective January 1. As many of you know, Mike is a co-founder of Arbutus and serves as our Chief Operating Officer. He has more than 20 years of scientific strategic, transactional and commercial experience spanning various operating roles within Bristol-Myers Squibb, Pharmasset, Merck and Viropharma.
The board and I have the utmost confidence in Mike's ability to be successful in leading Arbutus and to continue to create value for our shareholders. Mike has worked very closely with me over the last 4-plus years, and I'm confident that there will be a smooth transition. And I will also continue to be a resource for Mike as he becomes acclimated to his new role.
In closing, I'm confident in Mike's leadership as he leads Arbutus into its next chapter. Imdusiran and AB-101 are well positioned to deliver on our goal of developing a functional cure for HBV, and driving value for our company as we advance these HBV assets.
With that, I'll hand the call over to Dave Hastings for a brief financial update.
David C. Hastings
Thanks, Bill, and good morning, everybody. We ended the third quarter of 2023 with approximately $145 million of cash, cash equivalents and investments compared to approximately $184 million as of December 31, 2022. During the 9 months ended September 30, 2023, we received approximately $26 million of net proceeds from the issuance of common shares under our betas at-the-market offering program. These cash inflows were offset by approximately $69 million of cash used in operations.
As Bill mentioned, today, we announced that we reduced our workforce by 24%. Importantly, we have maintained a discovery research capability in HBV, and continue to believe we have the people necessary to advance our clinical stage HBV pipeline. With this reduction in workforce, we will incur a onetime restructuring charge of approximately $1.1 million that will be recorded in the fourth quarter of 2023. We expect our 2023 net cash burn to range between $90 million to $95 million, excluding any proceeds received from our at-the-market offering program. Importantly, we believe our cash runway will be sufficient to now fund our operations into the first quarter of 2026.
In closing, we have a strong financial position to advance our mission and we remain committed to developing our HBV assets to provide a functional cure for chronic HBV.
With that, I will now turn the call back to Bill.
William H. Collier
Thanks, Dave. As I mentioned earlier, we're looking forward to reporting preliminary data from the AB-729-202 Phase IIa study combining imdusiran, NUC therapy and VTP-300 at the AASLD, Liver Meeting in the coming weeks. Immediately following that medical congress will be attending the Jefferies Healthcare Conference in London. So please reach out to Lisa if you want to schedule time to meet with the team to review that data.
In closing, I wish the best to our departing employees and again, thank them for their dedication and many contributions to the company. As we continue to pursue our goal of developing a functional cure for patients with chronic HBV.
Operator, we're now ready to open the call for any Q&A.
Question and Answer Session
Operator
(Operator Instructions) Our first question comes from Roy Buchanan for JMP.
Douglas Royal Buchanan
All right. Great. So congrats to Bill for the retirement just as things are getting exciting over there, and congrats to Mike for the promotion. I guess maybe if you will start with AB-101, just the results in the first half of next year. Are you going to have, sounds like maybe not, but the complete SAD results? And maybe just give us some patient number details if you can. And then are you going to share the data regularly with the FDA or you going to wait to complete the whole Phase I? And then just remind us what other activities like preclinical studies are underway with 101.
William H. Collier
Okay, Roy. Thank you for your well wishes. I'll turn it over to Karen in a moment. Maybe the best thing we could do to answer your question is just to describe the structure of the 101 Phase Ia study. I think I misspoke earlier on when I said it was a double-blind randomized study. So Karen, perhaps you could clarify that? And I know it's a Roy's question.
Karen Sims
Absolutely. So actually, Bill, you're correct. It is a double-blind [randomized] clinical trial. So it is a, what we call umbrella trials. So there are healthy subject portion of the trial in chronic hepatitis B patient portion of the trial. So we begin in single ascending dosing in healthy subjects and then there's a multiple dosing healthy subjects in the chronic hepatitis B patients. So the way these trials run, you obviously need data from each part of the trial to advance to the next part of the trial.
So right now, as Bill said, we're in the single ascending dose portion of the trial. We do expect to have data next year. It really depends on the cadence of the trial. If things continue to move smoothly we'll recruit our subjects in a timely manner. So we should have some safety data -- some PKs data on preliminary pharmacodynamic data in the first half of the year for the single-dose portion of the trial in healthy subjects. Beyond that, it really just depends again on the cadence of the trial, the recruitment and we will disclose data once we have a meaningful data package to report.
Douglas Royal Buchanan
Okay. Great. And then just maybe what other activities are you doing some preclinical studies or anything that's underway with 101?
William H. Collier
Mike, do you want to take that one?
Michael J. McElhaugh
Well, the standard nonclinical safety studies continue to move forward with 101. I think we've established a pretty solid package of data, preclinical data that supports the mechanism, which is novel, which supports efficacy in animal models. So -- and obviously, peak ideal PK profile, which was liver targeting for this agent. But really, right now, the only activities is all the nonclinical toxicology assessments that are required to support further progression of the drug.
Douglas Royal Buchanan
Okay. Great. And one more detailed question. Just in the imdusiran study, how frequently do you check for seroconversion of S-antigen. And then on the really crystal ball or speculative question, you guys never considered hepatitis delta. Some of your competitors are using the same agents for hepatitis B and potential hepatitis delta. Have you considered that indication? Just what are your thoughts around that?
William H. Collier
So Karen, do you want to take the first part? And then, Mike, the second.
Karen Sims
Absolutely. So we are checking frequently in all of our clinical trials for surface antigen loss in seroconversion. The timing really depends on how these clinic visits were set up for subjects. So typically, whenever there's a clinic visit for a subject, we do collect those parameters just for monitoring. So it can vary anywhere from every month to every 8 weeks, depending on where the subject is in the clinical trial, whether they're in the dosing phase, in the follow-up phase. So we do collect those parameters at pretty much every study visit and I would say, ballpark every month, if not more frequent.
Michael J. McElhaugh
Yes, Roy. On the deltas question. Yes, look, we've looked at a lot of targets and delta was clearly one of them. The idea initially was that potentially one could use AB-729 as an siRNA to knock down antigen load or -- and that's required for delta to exist. Recent clinical data certainly has the generated data that's not supportive of that. There seems to be some liver safety issues associated with potentially the accumulation of delta-related antigens in the cell, and therefore, somebody else significant ALT elevation.
So our assessment is that siRNA developed for hepatitis B is probably not an option for delta. So also, as Bill had mentioned that the focus, our efforts with our reduced head count on hepatitis B, we still think that's a significant challenge to that needs to be overcome, and we believe in our strategy. So that's where we're focusing our efforts.
Operator
Our next question comes from Dennis Ding of Jefferies.
Unidentified Analyst
This is Anthea on for Dennis. Two questions from us. What are your thoughts on GSK in licensing the J&J siRNA and what does that mean for the hep B space? Was Arbutus also in discussions with GSK. And then second, could you comment on the LNP litigation and what we should expect heading into the joint construction brief in December?
William H. Collier
Yes. So let me take the second part first, and then maybe Mike Mc can talk about our business development efforts. So on the litigation front, as I think we put in the press release, there's no new news to announce. We continue to remain passionate about defending our patents. In the Moderna case, there is a claims construction meeting scheduled for February 7, right? So that's the next kind of data point in the Moderna trial, in the Pfizer case, there is not yet a date set for claims construction. I think that's about all we can say at this stage. So Mike, do you want to take the GSK news.
Michael J. McElhaugh
The development question -- so I think the way we look at the GSK news is that any consolidation in the field, any licenses that happen in the hepatitis B space are good for the field generally. And of course, we want to see success in the hepatitis B space with people getting to functional cure. That's opportunity for everybody. So as you know, it's a very, very large market and can certainly support multiple competitors. With regards to conversations with any particular company, we can't comment on that, obviously. But I think it's fair to say that we stay closely in touch with everyone in the field, and we continue those conversations whenever appropriate.
Operator
Our next question comes from Brian Skorney of Baird.
Unidentified Analyst
This is Charlie on for Brian. So one is you mentioned that with the reduction in force, the cash runway extended through 2026. And I was just hoping you could contextualize this for us with your kind of ideal clinical development time line and possibly other scenarios just to kind of get a better grasp on what this cash runway means for you and your development efforts as well as could you do, based on your research, just a little bit of comparing and contrasting, following up on the recent question about the GSK deal with the asset that they just in-licensed compared to imdusiran?
William H. Collier
Okay. So I mean I think we're pleased that we've now extended the runway into 2026. It allows us a good, clear 2 years' worth of funding. And as we continue to progress the Phase IIa studies, we'll get further readouts, further data readouts, and then that will inform the next phase of either Phase IIb or Phase III work. It's also going to allow us to continue to progress AB-101 through its Phase I activity. So all of that, I think, is quite encouraging.
On the GSK question, a couple of comments. I think, one, it's another recognition of the fact that combination therapy is the way to go in hepatitis B. As far as comparing imdusiran with the asset that they've licensed in. I think there are a couple of key differences. As I mentioned in my comments earlier on, 729 has shown activity on all 3 of the components we believe are necessary for functional cure, reducing HBV DNA, reducing surface antigen and reawakening the immune system. And 729 is the only RNAi that's generated data showing dosage intervals of either monthly, every 8 weeks, every 12 weeks. So we have built in some dosage flexibility moving forward.
And then Mike, you might want to just comment upon the single trigger aspect and any of the preclinical differences.
Michael J. McElhaugh
Yes. So preclinically, if you look at imdusiran, right, it's a single trigger agent, which can not got all viral transcripts with one siRNA, including integrated transcript that comes off of integrated as androgen transcript that comes off the host genome. One of the challenges with the J&J asset is that it requires two siRNAs to be able to accomplish what we're able to accomplish with one. So I think there's a big difference in when you look at cost of goods and feasibility of commercialization of those two different assets. We're a lower dose than they are as well. So there is, I think, a differentiating profile for imdusiran versus the J&J siRNA.
Operator
Our next question comes from Thomas Yip of H.C. Wainwright.
Wing Cheung Yip
Asking a couple of questions for as -- just first of all, I just want to say, Bill, Ed and I both, FDA are looking at you and best of luck in your (inaudible). And yes, just to kind of call us by the price. But first, perhaps the first question, from the expanded cohort from the Q2 study, the one with low dose nivolumab. Perhaps can you provide more specific time frame for this preliminary readout? Should we expect something in the first half of the year? And then also how many weeks of treatment data can we expect from this preliminary data set?
William H. Collier
All right. Thomas, thank you very much for your well wishes. I appreciate that. Yes, so this additional arm that we've included in the 202 study that includes Nivo. Obviously, we announced that a good time after we started the original study design. So it is running on a later time track. As we've announced, we have started dosing in that arm. So that arm is underway. We've not yet disclosed when we're likely to get data from that specific arm. I mean, I would point to the fact that most years, we normally do a press release with our kind of expectations early in January, and that might be another time to ask you a question.
Wing Cheung Yip
Okay. Got it. And then perhaps pertaining to this preliminary readout. Can you discuss what would be your say -- a point that you will consider to be a successful trend.
William H. Collier
Yes, Karen?
Karen Sims
Sure absolutely. So as we've discussed, our goal certainly is to look for functional cure in hepatitis B, certainly, there'll be interim steps readouts that will have to be taken before we get subjects to functional cures. So for this particular data set, certainly we'll be looking at surface antigen decline based on the imdusiran leading period, which is 24 weeks of imdusiran treatment prior to randomization shortly to either the VTP-300 immunotherapeutic or placebo. So certainly looking for imdusiran contribution to lower surface antigen during this lead-in period and then certainly, any impact to that VTP-300 has in terms of maintaining that surface antigen decline, increasing that surface antigen decline and certainly anything related to additional immunomodulatory impacts in addition to what we have served previously with imdusiran on its own. So I think those are what we'll be looking for in this data readout that's coming up at AASLD unfortunately, it's still under embargo, so I can't share any specific details of that. But to be disclosed in the next few days as the conference begins.
Wing Cheung Yip
Okay. I understood that. Perhaps just one more question from us for AB-101. Can you talk about how far and long the enrollment for each of the 3 parts? And if -- especially data for the third part in the HBV patients beta positive, any possibility to those 101 combination with imdusiran as we have seen in the expansion cohort?
William H. Collier
Yes. I think what we said so far in that study is that we'll have some initial data in the first half of next year. I think Karen also mentioned earlier on it's still somewhat dependent upon recruitment rates into each of those arms. You're right that our ultimate aim would be to combine 729 and 101 with the nucleoside. But we've not yet provided any time lines for that.
Operator
And this concludes the question-and-answer session. I would now like to turn it back to management for closing remarks.
William H. Collier
Okay. Well, look, thank you very much, everyone, for joining us this morning. We appreciate your continued interest in and support of Arbutus and your questions. We very much look forward to providing you updates as we progress the development of our HBV clinical stage assets over coming months. So operator, that concludes our call for this morning.
Operator
Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.
