Good afternoon, ladies and gentlemen, and welcome to the Arbutus Biopharma Second Quarter 2018 Financial Results and Corporate Update Conference Call. [Operator Instructions] As a reminder this conference call is being recorded. I'll now turn the call over to Pam Murphy, who has recently joined the Arbutus team as their IR Consultant. You may begin.

Thank you, operator. And good afternoon everyone and thanks for joining us. With me today are Dr. Mark Murray, Arbutus' CEO; Dr. Mike Sofia, Arbutus' Chief Scientific Officer; Dr. Bill Symonds, Arbutus' Chief Development Officer; Dave. Hastings, Arbutus' Chief Financial Officer; and, Koert VandenEnden, Arbutus' Chief Accounting Officer. Before we begin, let me remind you that some of the statements made during the call today, are forward-looking statements including statements regarding developing accure for chronic HBV, the clinical development plan and potential for AB-506 and AB-452, Genevant development of delivery technologies and the potential of a development partnership, our clinical plan for ARB-1467 along with potential efficacy and timing of reported results, our expected cash runway, timing of regulatory filings and approval and expected revenues from our current and potential licensing agreements. All of these statements involve certain assumptions, risks and uncertainties that are beyond our control and can cause our actual results to differ materially. A description of these risks can be found in our latest disclosure documents and current press releases. In addition, Arbutus does not undertake any obligation to update any forward-looking statements made during this call. I'd now like to pass the call to Mark for his introductory remarks.

Thanks, Pam. And thank you to everyone for joining us on the call today. Our mission is to develop a cure for chronic hepatitis B using a combination of orally active therapeutic agents, which is effective in the defined treatment duration. To that end, we have developed a pipeline of proprietary therapeutic agents that target multiple agents of the HPV lifecycle, the most important of which are HPV data replication and HPV surface antigen expression. Last month, we initiated our Phase 1A/1B clinical trial of AB-506 our second generation capsid inhibitor agent. We will shortly file our regulatory submission to start the Phase 1A/1B clinical study of our RNA destabilizer agent AB-452. We expect patient monotherapy results from both of these studies by mid-2019 and we expect to combine these in the first ever oral combination study by the end of 2019. In addition during the first half of the year we completed a number of strategic initiatives to keep our team, our business activities and our capital resources more closely focused on HPV. We have successfully completed a site consolidation that concentrates our business activities in a single location in Warminster, Pennsylvania. We have successfully launched Genevant Sciences together with Roivant. Genevant is wholly focused on utilizing Arbutus's proprietary LNP and ligand conjugate delivery technologies to develop RNA-based therapies and we've retained a substantial equity interest in Genevant as well as the potential for future royalties on commercialized products. We're encouraged by Genevant's recently announced partnership with BioNTech for the co-development of five mRNA products which we see as being potentially a transformative partnership in the field combining an industry leading mRNA portfolio with the industry leading delivery technologies of Genevant. Importantly we enter the second half of this year with a cash runway extending past 2019 and the potential for additional non-dilutive capital from our royalty entitlement on Alnylam's Patisiran drug for the treatment of hereditary ATTR amyloidosis which could be approved by the FDA later this month. Additionally, and as many of you know, Dave Hastings recently joined the Arbutus team as our Chief Financial Officer. Dave brings extensive financial, operational and strategic experience in the biotech industry and will be a great asset as we further advance toward our goal of delivering a care for chronic HPV and building significant and sustainable shareholders' value. I will now turn the call over to Mike Sofia to describe our capsid inhibitor and our HBV RNA destabilizer. Mike?

Thanks Mark. Our product pipeline is developed in support of our mission to cure chronic HBV by employing a combination of therapeutic agents. AB-506, our clinical stage second generation capsid inhibitor is a highly potent molecule which binds to the core protein and inhibits HBV DNA replication as well as bio-uncoding which in turn inhibits new cccDNA formation. AB-506 is pan-genotypic plus acting against all biogenotypes and is active against [indiscernible]. We have shown that AB-506 can be combined with current standard of care agents and with other proprietary novel mechanism of action agents to deliver an additive or synergistic effects in-vivo and in-vitro thus supporting our combination therapy HPV Cure strategy. In animal studies when given orally, AB-506 demonstrated multi-molecule reductions in HB DNA levels in the serum as well as in liver where it was superior to nucleosides. We have also demonstrated a favorable safety profile both in-vitro and in vivo that has allowed progression into human clinical studies. This molecule is orally available and we expect it to be dosed once a day. Our preclinical characterization of AB-506 indicate that its features could put it among the best-in-class. We have also developed a novel and potent HBV RNA destabilizer, which results in a reduction of s-antigen level in addition to reducing levels of pre-genomic RNA, another Biogen product. This module is pan-genotypic and active against nuc resistant variants. It acts selectively against HBV. It is not active against a large number of other viruses, that includes both DNA and RNA viruses. Indeed our models of HBV infection, AB-452 showed a dose-dependent reduction in serum S antigen level and a reduction of RNA levels in the liver. This molecule is orally available and we expect once daily dosing. We believe we are the first company to advance such a molecule into development and we look forward to demonstrating its activity in patients. We have also studied AB-506 and AB-452 in combination with nucleotide analogs, Entecavir and tenofovir and other siRNA agents in preclinical models. When AB-506 and AB-452 were combined, they demonstrated a distinct and complementary antiviral activity. The combination of AB-506 and 452 range from additive to moderately synergistic of reducing HBV DNA and we believe this complementarity will translate to patients in the clinic. I would now like to turn the call over to Bill, to discuss our ARB-1467 combination study.

Thanks Mike. We have initiated a Phase 2b triple combination study with ARB-1467 tenofovir and pegylated interferon . Reducing hepatitis B surface antigen is believed to be a key prerequisite to allow a patient's immune system to respond with an adequate immune response against the virus and infected cell. In order to evaluate the role of the immune system in patients with reduced hepatitis B surface antigen levels, patients in this study who meet predetermined response criteria after initially ARB-1467 treatment will qualify for the addition of weekly pegylated interferon treatment. Patients who do not reach the predefined response criteria by week six will discontinue all medication. The study will conclude with a 24 week post treatment follow-up period, to evaluate off treatment response. Partial or interim six week treatment results from this study are expected in the second half of 2018, followed by complete results in 2019. We expect the six week treatment data to review how many patients are on a trajectory to reach hepatitis B surface antigen loss by week 30. The pegylated interferon treatment of these patients is expected to contribute to hepatitis B surface antigen loss and durability. Results from this study will help inform the design of future combination studies, with a small molecule agent, Mike described earlier. I would now like to turn the call over to Dave.

Great, awesome. Thanks, Bill and good afternoon everybody. It's great to be part of the Arbutus team. So before turning the call over to Koert to review the financial results for the quarter, I just want to say how confident I am that Arbutus has the resources and assets to succeed and complete its mission of curing HBV. Arbutus is well capitalized, has great science and leadership and has a development pipeline that's differentiated, proprietary and industry leading. And I look forward to working with everyone in the investment community as we move forward. So with best Koert, I'll turn it over to you.

Thanks Dave. We're very excited to have you on board. I'll now review the financial highlights for the second quarter of 2018. During this quarter we completed the spin outs of our LNP and conjugate delivery technologies to Genevant, a newly informed company that is owned jointly by Arbutus together with Roivant. We also substantially completed the site consolidation that we announced in Q1, which resulted in a closure of our Burnaby facility and reduction of our workforce by approximately 35%. The financial implications of these initiatives impacted our Q2 financial results as I'll explain. Starting with our income statement, Arbutus' net income attributable to common shareholders for Q2, 2018, was $0.6 million or $0.01 per common share, as compared to a loss of $18.3 million or $0.33 per common share in Q2 of 2017. The reduction in that loss was primarily due to the gain on investment in Genevant offsets by new expenses related to our site consolidation. In Q2, 2018, we recorded revenues of $1.2 million compared to revenues of $1 million in the second quarter of 2017. Revenues earned were related to the license and service arrangement with Gritstone, as well as royalty revenues from Archibus [ph]. On the expense side, total research developments collaboration and contract expenses of $16.4 million compared to $15.4 million in the second quarter of 2017. The change is due to a decrease of stock-based compensation expense of $3 million which is more than offset by an increase of $4 million in R&D spending. Our increased R&D spend reflects continued advancements of our clinical developments and preclinical pipeline towards our objective of an oral combination therapy as described earlier. G&A expense of $3.8 million was reduced from $4.6 million in Q2 of 2017, as a result of reduced stock based compensation costs,…

Thanks, Koert. Operator I'd like to now open the call for Q&A.

[Operator Instructions] Our first question comes from the line of Liisa Bayko with JMP Securities. Your line is open.

Hi, great. Thanks for taking my question. Can you walk us through kind of the next steps you have from here to looking at, like an all oral combination and I'm curious about what you're thinking specifically for the immune component of that as well? Thank you.

Liisa. This is Mark. Hi. I'll give you the high level answer and then if Bill or Mike would like to add I'll have them do that. So I think we've indicated that the capsid inhibitor AB-506, that's has already started the Phase 1a, 1b study and shortly, we will be initiating the Phase 1a/1b of 452. So our guidance is that we will be through the patient monotherapy portion of those by respectively Q2 and Q3 of next year. And then we will be in a position to initiate a combination of those two, including a nuc by the end of the year, okay.. And so this initial study will not employ an added immune component. We will be looking to see, if we can drive down HBV DNA and s-antigen and in some patients that may restore their immune component. Bill do you have anything to add to that?

No, Mark, I think you summarized it nicely and I would just refer you, Liisa to Slide 10 of the corporate deck that's on the website. That has a nice schematic over time of how these programs will come together into that all-oral combination study.

Great, thank you. That's helpful. And then just a follow-up, how you think when you think about the all-oral. How do you think about addressing that immune component specifically? Thanks and I'll - that's my last question.

Bill, you want to continue?

Sure. Yes. So I think Liisa part of addressing the immune component there comes from reducing surface antigen. So with the RNA, destabilizer, as Mike mentioned earlier, we expect that drug to have an effect upon surface antigen levels. And by reducing that, that alone could be enough to help stimulate the immune system without anything to boost it. So that's going to be our first line of attack, in terms of the all-oral combination, and then we'll see what we what we get in that study. And if we need something more if we do, Mike and his team are working on a number of other programs back in the discovery phase II to address the immune component as well.

Great, thanks. Really excited about your program. Thank you.

Our next question is from Katherine Xu with William Blair. Your line is open

Hi, good afternoon. I'm just wondering whether you could walk us through the design of the Phase I study for both 506 and 452. And what you're looking for each mechanism and all, what kind of, let's say expectations, benchmarks have you set for these molecules to achieve. And also the resistance profile of 506 would love to see whether this one is different or similar to others if you can. And also can we expect the 1467 data at ASOB? Thank you.

Katherine, this is Mark. So there's several questions there. Maybe Bill we will start with you on the comment on the design of the first 506 and 452 trial, and then maybe Mike can address the 506 resistance?

Sure. Yes. So hi, Katherine. So again, I'll refer you to the slides on our website, slide 24 actually has a schematic of the design, which I think Mark showed at the conference, he spoke at in New York a couple of weeks ago. Basically we're employing a very similar study design for both of these drugs 506 and 452. We call it a pharmacist style adaptive design. It's basically multiple trials all coalesced into one single protocol spanning from single ascending doses in healthy volunteers going into multiple doses in healthy volunteers, which then sets us up to go into patient cohorts and patients with chronic hepatitis B with 28 days dosing cohorts at multiple dose levels and a dose escalation type fashion. Also including e-antigen negative, and e-antigen positive patients where possible, and then that's the general construct of those single umbrella protocols for each of the trials. And then each of them too, when you get into the patients, we're going to be looking at different vital markers and endpoints based upon the mechanisms of the drugs. Of course, with capsid we will be looking at DNA reductions, those sorts of things. With 452 we have other markers available to us, such as so s-antigen, e-antigen DNA as well. So we will be able to look at different markers depending on the mechanism of the drug there. And of course, the goal is for both of these programs to finish roughly around the same time. They're staggered a little bit, but then to enable us then to have 28-day data in patients with both drugs to then allow us to go into that combination part of the development program we spoke about with the last question. I'll hand it over to Mike on the resistance.

Sure, thanks. Well Katherine so, I think if you look at AB-506, it is a capsid similar inhibitor that binds to the sort of core protein Dimer:Dimer Interface, just like every other capsid assembly inhibitor does. So from that standpoint they all have a very similar mechanism of action, although this one, just like a number of other capsid assembly inhibitors produce no anti-capsid. So RNA is not encapsulated within that capsid structure. What I can say the core resistance issue is simply that they all bind to the same binding site. All these different capsid inhibitors bind to the same biding site. So we'll be disclosing some of our resistance evaluation shortly. But the other point I want to make is because we are moving forward a combination therapy and AB-452 not only knocks down s-antigen levels, but also knocks down all the other vital proteins. That in fact we obviate many concerns about resistance with the combination therapy approach that we're using.

Katherine, did we answer your questions?

Yes, I guess the other aspect of the question is, do you have like internal kind of benchmarks that, and then based on let's say preclinical data and stuff you know each compound when it reaches this level of DNAs/RNA/ knocksdown then it would have a very good chance of success with or without module [ph]. I mean is there that level of expectations such, internally I am just curious of course the science is quite out there. So.

I think we're not ready to set an expectation. You are well aware that there is other data from capsids out there and we're avid and of course we would hope to be comparable. We're not envisaging to set an expectation for 452 at this point because we haven't put in humans yet. Mike, you want to add to that.

Yes, sure, it is a novel mechanism of actions, so because nothing like it has been in the clinic and it's hard to set expectations. But I think based on everything we know about the molecule, we certainly feel very comfortable that we will see a positive effect in to germ reduction.

Have you disclose where 506 bind and also whether the 1467 data will be aired six week data. Thank you.

Yes, 506 so we - I think we have talked about it that does bind to the dimer, dimer. Essentially similar to many of the other competitors' molecule.

So I mean 452, sorry about that.

Yes, 452, well we have not disclosed although we will be disclosing more data at our upcoming international meeting, on hepatitis B on mechanism by which this molecule works. But suffice it to say that it does interact specifically with HBV RNA. So that gives it a very unique and select - unique mechanism of action and high selectivity, and it does not in all the studies - we have, it does impact result in any effects on other HB - asking DNA or RNA viruses. So it's very selective.

Sorry, I guess the last piece was like was the 1467 data, the six week data at ASLD or is it after?

So we don't specifically plan to have that for ASLD because, it's a question of assembling the data by the abstract deadline. So you'll get it in some other way.

Thank you for indulging me. Thank you very much.

Sure.

Our next question is from Keay Nakae with Chardan. Your line is open.

Hi, thanks. I know it's early, but - and I know the results will be informed by the monotherapy results of 506 and 452 but where you are standing today, what might that or a combo study design look like?

It is very early. But Bill do you want to comment on that?

Yeah, I think it'd be safe to say at this point that the first study design putting the two small molecules together as one that's going to evaluate the pharmecokynetics of the drugs together it's going to evaluate the safety of the drug alone and together, it's going to evaluate the ability of the drug, alone and together to have influences on different vital parameters of hepatitis B. So if you go back again what we did with the nucleo study where we put our two drugs together that concept I think is one that, that is going to be applied here with these drugs as well. And clearly this is something that we're spending a lot of time on thinking about and planning this strategy for how to best optimize the study design where we can fully interrogate the different combinations possible with these drugs together.

Okay. Thanks that's all I have.

[Operator Instructions] Our next question is from the line of Madhu Kumar with B. Riley FBR. Your line is open.

Hey, guys. Thanks for taking my question. So ultimately when we think about the RNA destabilizer, how do you think about the use of that relative RNA interference technology as a way to earn down RNA transcripts from Hepatitis B.

Mike, do you want to take that?

Sure. So I would say that the RNA destabilizer does pretty much everything that a RNA IH in that. the advantage it is it's a small molecule orally bioavailable agent. So it allows us ultimately in the end, in combination with 506 to have a fixed dose combination drug easy to administer agent versus having some other kind of delivery modality for delivering a molecule that can knock that message.

And then thinking about core inhibitor, so I mean there are various phase for core inhibitors there assessing various things like HBV DNA kinetics, other biomarkers. When you start to think about where core inhibitors go into kind of efficacy endpoints. How do you separate the kind of DNA kinetic suppression aspect of core inhibition from the kind of broader biomarkers? Which do you think is kind of more relevant or are both really kind of relevant thinking about kind of deeper efficacy for the core inhibition class?

Well, this is Mike. So it's clear that one of the theories is - or well the data out there shows that nuclear size do not completely shut down vital application. There is leakage through the process. And in fact they don't work as well in the liver as you seem to see bio-DNA reduction in the plasma. What the expectation with the core capital assembly inhibitor is that in combination with the nuc, you're going to now completely shut down that bio replication pathway, and you're going to be able to more effectively reduce the replication in the liver and now we've shown in preclinical animal models that in fact 506 is much better at reducing HBV DNA levels in the liver than is a nucleoside or tenofovir, it's significantly better. So we expect now to have a much better effect on target organ, but in combination with the nucleoside that now really shutdown that process. And then an additive effect that these molecules have is that they also seem to inhibit the uncoding process of bio-DNA, such that you are now inhibiting the replenishment of that core cccDNA that bioreservior that exists in the nucleus, so that parasite. So you have an added benefit there that these core inhibitors provide.

Okay. One last one, can you all co-formulate 506 or 452 with nucs yet?

Well, ultimately that would be the plan, but I can't say we've done that today at this early stage.

Okay, great. Thanks very much.

Thank you. And I'm not showing any further questions. I'll now turn the call back over Mark Murray for closing remarks.

Great, thank you. Again thank you all for joining us today. As you can see, we continue to make significant progress in deepening and advancing our HBV pipeline. In addition to completing several strategic initiatives to further focus Arbutus' resources and activities squarely on this mission. To summarize we have a number of important deliverables in the upcoming months. Our LNP licensee Alnylam, has projected regulatory approval for its Patisiran product in the third quarter of this year, which could result in Arbutus receiving royalty payments as early as this year or being in a position to otherwise monetize all or part of this asset. We've initiated dosing of in the healthy volunteer portion of the Phase 1a/1b study for our next generation capsid inhibitor, AB-506 and anticipate starting healthy volunteer portion of the Phase 1a/1b study of our HBV RNA Destabilizer, AB-452 in the third quarter, pending approval of our regulatory submission. We anticipate initiating a Phase IIa clinical trial for all oral combination of Arbutus' proprietary agents, AB-506 and AB-452 combined with standard of care nucs by the end of 2019. And in the first half of 2019, we plan to complete regulatory filings for our novel GalNAc enabled RNAi agent, AB-729, pending successful enabling studies. We appreciate your participation in the call today, and we look forward to sharing updates on our progress with you in the months ahead. This includes the call today and thank you everyone for joining.

Ladies and gentlemen, this does conclude the program. You may now disconnect. Everyone have a great day.