Yahoo Finance Arbutus Biopharma Corporation (NASDAQ:ABUS) Q1 2024 Earnings Call Transcript
Arbutus Biopharma Corporation (NASDAQ:ABUS) Q1 2024 Earnings Call Transcript May 2, 2024
Arbutus Biopharma Corporation misses on earnings expectations. Reported EPS is $-0.10178 EPS, expectations were $-0.1. Arbutus Biopharma Corporation isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Good day, and thank you for standing by. Welcome to the Arbutus Biopharma 2024 First Quarter Financial Results and Corporate Update Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] 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 Caperelli, VP of Investor Relations. Please go ahead.
Lisa Caperelli: Thank you, Andrea. Good morning, everyone and thank you for joining Arbutus' first quarter 2024 financial results and corporate update call. Joining me today from the Arbutus executive team are Mike McElhaugh, Interim President and Chief Executive Officer; Dr. Karen Sims, Chief Medical Officer; David Hastings, Chief Financial Officer; and Dr. Mike Sofia, Chief Scientific Officer. Mike McElhaugh will begin with a corporate update, followed by Karen, who will review our ongoing clinical programs. Dave will then provide a review of the company's first quarter 2024 financial results. After our prepared remarks, we will open the call for Q&A. Before we begin, I'd like to remind you that some of the statements made during the call today are forward-looking statements, which are subject to a number of risks and uncertainties that may cause our actual results to differ materially including those described in our annual report on Form 10-K, our quarterly report on Form 10-Q which will be filed today and from time-to-time in our other documents filed with the SEC.
With that, I'll now turn the call over to Michael McElhaugh. Mike?
Mike McElhaugh : Thanks, Lisa. Good morning, everyone, and thank you for joining us today. This morning, we issued two press releases, one announcing the end-of-year retirement of our Co-Founder and Chief Scientific Officer, Dr. Mike Sophia, and one with our first quarter of 2024 financials and a corporate update. I want to pass the call to Mike Sophia to address his retirement. Mike?
Mike Sofia: Thanks Mike and good morning, everyone. Today we announced my decision to retire as Chief Scientific Officer at Arbutus effective the end of this year. I will continue in my full capacity as CSO until that time. Since co-founding Arbutus more than 10 years ago, the company has made incredible strides in its research and clinical efforts. We have built an organization of dedicated individuals who are passionate about our mission to cure HBV. I continue to believe that Arbutus is on the correct path to developing a functional cure to the millions of patients living with HBV. My lifelong goal has been to discover medicines that improve patients' lives. Over my 38-year career in pharma and biotech, one of my great successes with the discovery and development of sofosbuvir, the backbone of curative therapies for hepatitis C, which has already cured millions of patients globally.
Learnings from the HBV story spurred me towards finding a cure for the more challenging problem, HBV. This led to the founding of Arbutus, where we have been able to build a world-class team uniquely positioned to potentially transform the HBV treatment landscape with drug candidates like imdusiran and AB-101. Throughout my more than 10 years at Arbutus, I have enjoyed tackling the many challenges that drug discovery and development brings, collaborating with my colleagues, and mentoring many of the scientists here. I am confident this passionate and dedicated team will continue to do great things. I have great pride in what we have been able to accomplish at Arbutus. Look forward to following the future successes as the company advances its mission and finding a cure for HBV.
Thank you, and back to Mike.
Mike McElhaugh : Thanks, Mike, and thanks for everything you have done for Arbutus and our shareholders. I'm sure I speak for all employees when I say it's been an honor to work with you. We all wish you the best in your retirement. Now on to our Q1 financial and corporate update press release that we issued today, announcing significant achievements made in advancing our pipeline in pursuit of developing a functional cure for patients with HBV and driving value for our company. We believe our two proprietary clinical assets in HBV, imdusiran, our RNAi therapeutic, and AB-101, our oral small molecule PD-L1 checkpoint inhibitor, have the potential to deliver on our three-pronged approach to functionally cure chronic HBV, which involves reducing surface antigen, suppressing HBV DNA, and boosting the immune system.
While imdusiran has shown activity in all three of these components and clinical trials conducted to date, we know a combination of agents are necessary to cure this challenging disease. I'll turn the call over to Karen shortly to walk through preliminary data from our Phase 1a/1b clinical trial with AB-101 and to provide an overview of our third Phase 2a clinical trial that is evaluating the combination of imdusiran and durvalumab, a PD -L1 monoclonal antibody, which has begun screening patients. Currently, we have two Phase 2a combination clinical trials, the AB-729-201 trial, which includes the addition of interferon, and the AB-729-202 trial, which includes the addition of Barinthus Biotherapeutics Immunotherapeutic VTP-300. These trials are intended to provide data on the safety and efficacy of imdusiran as a cornerstone of therapy and to help us identify an optimal combination treatment that we can advance into a later stage clinical trial.
This quarter, we will report end of treatment data from these two Phase 2a trials. with imdusiran, which could potentially include patients who achieve undetectable surface antigen. As we've previously stated, achieving undetectable surface antigen in either of these two Phase 2a clinical trials would be an important validation of imdusiran’s role as a cornerstone in potentially achieving a functional cure for patients with chronic HBV. We are happy to report that two abstracts, including data from these Phase 2a clinical trials, were accepted for presentation at the EASL Congress, which takes place in early June in Milan, Italy. We will provide more details on those abstracts at a later date. With that, I'll turn the call over to Karen to provide an overview of the AB-729-203 clinical trial and to discuss the AB-101 Phase 1 preliminary data.
I'll come back at the end of the team's fair remarks to provide an update on our LNP litigation before we move into Q&A. Karen?
Karen Sims : Thanks, Mike, and good morning, everyone. As Mike mentioned, our approach to developing a functional cure for patients with chronic hepatitis B involves reducing surface antigen, suppressing HBV DNA, and boosting the immune system. In our clinical trials conducted to date, imdusiran has been shown to reduce HBV DNA in untreated patients and reduce surface antigen when given both with and without ongoing standard of care nuke therapy. In addition, evidence of HBV specific T-cell reawakening has been observed in some patients undergoing treatment with imdusiran. To further boost the immune system, we designed our Phase 2a trials to evaluate imdusiran in combination with one of three immunomodulatory approaches. Interferon, a therapeutic vaccine, or checkpoint inhibitor targeting the PD-1, PD-L1 axis.
Our two ongoing Phase 2a clinical trials, AB-729-201 and AB 729-202, are evaluating imdusiran in combination with interferon and in combination with a therapeutic vaccine, respectively. As Mike said, both of these Phase 2a trials are on track to report end-of-treatment data the EASL Congress in June. Note that we also amended the AB-729-202 trial to evaluate the addition of the PD-1 checkpoint inhibitor antibody nivolumab to the imdusiran and VTP-300 combination. We expect preliminary end of treatment data from that cohort in the second half of this year. Today, we announced that we have initiated patient screening in our third Phase 2a clinical trial, AB-729-203, which is evaluating imdusiran in combination with durvalumab, an anti-PD-L1 monoclonal antibody.
While all of these Phase 3 trials are geared towards finding the right immune modulator to combine with imdusiran, the AB-729-203 trial with durvalumab is specifically intended to evaluate how we can use checkpoint inhibition in combination with imdusiran to boost HBV-specific immune responses. This trial will inform upcoming combinations with our proprietary oral small molecule PD-1 checkpoint inhibitor, AB-101. With that backdrop, I'd like to provide more information regarding the AB-729-203 trial design. AB-729--203 is an open-label, multi-sensor, Phase 2a clinical trial evaluating the safety, tolerability, antiviral, and HBV-specific immunologic activity of imdusiran and ongoing nuke therapy in combination with durvalumab, an approved anti-PD-L1 monoclonal antibody in patients with chronic hepatitis B.
We intend to enroll 30 biologically suppressed patients into three separate cohorts. All patients will receive 60 milligrams of imdusiran every eight weeks with their ongoing nuke therapy for 48 weeks and will receive two doses of durvalumab at pre-specified times during the imdusiran treatment period that will differ by cohort. After completion of treatment, all patients will be assessed for eligibility to discontinue nuke therapy and will be followed for an additional 24 to 48 weeks. The endpoints for this clinical trial include basic and changes in surface antigen from baseline during the treatment and follow-up period. This trial allows us to explore the optimal timing of checkpoint inhibitor dosing in the context of surface antigen reduction during ongoing imdusiran treatment.
Now moving on to our proprietary oral small molecule checkpoint inhibitor AB-101 that is differentiated from monoclonal antibodies such as durvalumab and nivolumab in the following ways based on our preclinical testing. First, AB-101 is liver-centric, meaning it preferentially traffics to the liver and has a high liver-to-plasma ratio, thus minimizing systemic exposure and reducing the chance of immune-related adverse events seen with monoclonal antibodies. Second, AB-101 has typical small molecule pharmacokinetics and therefore a much shorter duration of effect than long-acting antibodies, thus allowing for the potential to modify the dose or dosing interval to maximize effect or to stop dosing to quickly mitigate any safety concerns. Third, AB-101 acts through a novel mechanism of action differentiated from antibodies.
It binds to PD-L1 on the surface of cells, causing dimerization and internalization of the PD-L1 protein, followed by degradation within hours. The flushing out of the drug results in full reconstitution of PD-L1 on the cell surface and restoration of PD-L1 function within days, unlike antibody therapies where the duration of receptor occupancy and PD effect is maintained for weeks with no ways to reverse it. It is for these reasons that we are excited about the potential of AB-101 and HBV, and are advancing our AB-101 clinical program, which is currently evaluating AB-101 in a double-blind, randomized, placebo-controlled Phase 1a/1b clinical trial, known as AB-101 and 001. This trial is designed to investigate the safety, tolerability, pharmacokinetics, and pharmacodynamics of AB-101.
The trial consists of three parts, starting with single and multiple ascending doses in healthy subjects, and culminating with multiple doses in patients with chronic HBV. In part one, which is the single ascending dose portion of the trial, we have enrolled four sequential cohorts of eight healthy subjects each to date. Within a cohort, six subjects received AB-101 and two subjects received placebo. And after review of safety, PK and PD data, AB-101 dose levels were increased in each subsequent cohort up to 25 milligrams. The data from part one showed that AB-101 is generally well tolerated with evidence of dose -dependent receptor occupancy. In the 25 milligram cohort, five of the six subjects had test samples that were evaluable for receptor occupancy, and all five of these subjects showed evidence of PD-L1 receptor occupancy between 50% and 100%, indicating that AB-101 is interacting with its intended target.
One subject in this cohort was excluded from the PD evaluation as their samples could not be analyzed. We are now in part two of this trial, where cohorts of healthy subjects are receiving multiple ascending doses of AB-101. Our goal is to move as quickly as possible into part three, which will enroll patients with chronic hepatitis B. We anticipate announcing preliminary data from part two, the multiple ascending dose portion of this trial on healthy subjects in the second half of this year. We believe that the immune checkpoint pathway plays an important role in HBV-specific immune tolerance and in T-cell activation, and the addition of a checkpoint inhibitor in combination with imdusiran 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?
David Hastings: Thanks, Karen, and good morning, everybody. We ended the first quarter of 2024 with approximately $138 million of cash, cash equivalents, and investments, compared to approximately $132 million as of December 31, 2023. During the quarter ended March 31, 2024, we received $21.8 million of net proceeds from the issuance of common shares under Arbutus at the market offering program. These cash inflows were offset by $19.3 million of cash used in operations. We still expect our 2024 net cash burn to range from between $63 million to $67 million, excluding any proceeds from our ATM program. In April 2024, we received an additional $22.4 million of net proceeds from sales under our ATM. And now importantly, we believe our cash runway is sufficient to fund our operations through the second quarter of 2026.
So in closing, we have a strong financial position to advance our mission of developing our HBV assets to provide a functional cure for chronic HBV. With that, I'll turn the call back to Mike.
Mike McElhaugh: Thanks, Dave. With today's update, we have achieved most of our first half of 2024 key milestones, including reporting preliminary data from the AB-101, 001, Phase 1a/1b clinical trial, and initiating the Phase 2a clinical trial with imdusiran and durvalumab. We look forward to reporting the data from the AB-729-201 and 202 Phase 2a clinical trials at EASL in June. In the second half of this year, we anticipate preliminary end-of-treatment data from the nivolumab arm of the 202 trial and preliminary multiple ascending dose data from the healthy subjects in the AB-101, 001 trial. 2024 is off to a strong start, and it wouldn't be possible without the dedication of my Arbutus colleagues. I would like to take this opportunity to thank all of them for their hard work to advance our pipeline.
Before turning the call over to Q&A, I'd like to provide a brief update on the ongoing patent infringement lawsuit, specifically the lawsuit against Moderna. As you may recall, on February 8th of this year, there was a claim construction hearing, also commonly referred to as the Markman hearing, where the court heard each party's interpretation of the construction of claims in the disputed patents. The court issued its order on April 3rd, in which it agreed with our position on most of the disputed claim terms. This is another important step in the ongoing litigation process and provides clarity on the interpretation of key terms and the scope of the claims. I refer you to the press release that we issued on April 4th, which is available on our website, and summarizes the claims related to the three patents that were presented at the Markman hearing and the court's position on each claim.
While this is important for us, we cannot further comment or elaborate on what is in the press release, but we suggest you review the judge's opinion, which is also available on our website. In his opinion, the judge provides an overview of the disputed aspects of each claim and each party's position, as well as the evidence that was used to inform his decision-making process. The litigation process continues to move forward. Fact discovery is ongoing, and next steps include expert reports and debt positions. The court has set April 21, 2025, at the trial date for this case. That date is subject to change. The Pfizer/BioNTech lawsuit is ongoing, and a date for the claim construction hearing for that case has not yet been set. We will continue to protect and defend our intellectual property, including our LNP delivery technology.
All of our scientists take great pride in the intellectual property they develop, which takes great effort, time, resources, and expense. Operator, we're now ready to open the call for Q&A.
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