Ladies and gentlemen, thank you for standing by and welcome to the Arbutus Biopharma Corporation 2019 Third Quarter Financial Results and Corporate Update. At this time, all lines are being placed on mute. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions]. Please be advised that today’s conference is being recorded. [Operator Instructions].I would now like to hand the conference over to your speaker today, Pam Murphy with Investor Relations.

Good morning. On the call from the Arbutus executives team are Bill Collier, President and Chief Executive Officer; Dave Hastings, Chief Financial Officer; Dr. Gaston Picchio, Chief Development Officer; and Dr. Mike Sofia, Chief Scientific Officer.Bill will begin with a review of corporate objectives and clinical development, followed by Dave who'll provide a review of the company's third quarter financial results. We'll then open up the call for Q&A. Gaston and Mike will be available to address research, clinical development-related questions.Before we begin, we'd like to remind you that some of the statements made during the call today are forward-looking statements, including statements regarding expectations for Arbutus' proprietary hepatitis B pipeline, including potential clinical results and time lines for AB-729 and AB-452 and future compounds and the potential for drug candidates to improve upon standard of care and contribute to a curative combination regimen for HBV.These forward-looking statements 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, Quarterly Report on Form 10-Q, and other periodic reports filed with the SEC from time to time. Bill?

Okay, thank you very much, Pam. This is Bill Collier and thank you, everyone, for joining us on the call today. Hope you can hear us loud and clear.We appreciate that this is obviously a very busy time for many of you, and so we'll keep our comments this morning succinct and to the point.Now, as many of you know, in early October, we announced our decision to discontinue the clinical development of AB-506, our lead oral capsid inhibitor. That particular project was in Phase 1a/1b clinical trials for the treatment of Chronic Hepatitis B. Now, this decision was based on the fact that we observed two cases of acute hepatitis in a Phase 1a 28-day clinical trial in healthy volunteers. Now importantly, the two subjects concerned have experienced resolution of their acute hepatitis.We wanted to let you know that we will present results from both the healthy volunteer 28-day study as well as the AB-506 Phase Ia/Ib clinical trial in a late break-up poster session at the upcoming AASLD Meeting on November the 11th, and for those of you at the meeting, it will be held at 8 A.M in Hall B and the title of the poster is Safety Tolerability, Pharmacokinetics, and Antiviral activity of the capsid inhibitor AB-506 in healthy subjects and chronic hepatitis B subjects.Now, despite these unexpected results for AB-506, our mission at Arbutus remains unchanged and that is to improve upon the existing standard of care in Hepatitis B by developing a curative combination regimen that includes several different mechanisms of action.So right now we're focused on four areas. We're focused first of all on completing the Phase 1a/1b clinical trial of AB-729, our proprietary GalNAc delivered RNAi compound.Second, we're focused on selecting a next-generation capsid inhibitor for IND enabling studies.Thirdly, we're focused on…

Thanks, Bill and good morning, everybody.I'll start today by discussing the company's cash position and runway. And as a reminder, cash and cash used are most important financial metrics.So at September 30, 2019, we had a cash and investment balance of $90.1 million versus a balance of $124.6 million at December 31, 2018.Our cash used in operating activities during the first nine months of 2019 was $57.7 million. Now this was partially offset by $20 million in non-refundable gross proceeds $18.5 million net, from the sale of a portion of our royalty entitlement on net sales of ONPATTRO in the third quarter of 2019, and $4.7 million in net proceeds from the issuance of shares under our ATM program earlier in the year.Also included in the $57.7 million used in operating activities is a $5.9 million payment. We settled the arbitration proceeding with the University of British Columbia and we paid that in the third quarter of 2019. We now believe that our current cash is sufficient to fund operations into early 2021.I would also like to point out that including our net loss this quarter were non-cash charges of $43.8 million related to the impairment of an in-process research and development and tangible asset and $22.5 million for the impairment of goodwill. Now the impairment of the in-process R&D related to an early stage program and it reflects our focus on development of our later stage programs. And the charge related to goodwill is a result of our market capitalization. Both of these charges reduce the carrying amounts of these assets to zero.And finally, I want to discuss the accounting treatment of the sale of a portion of our royalty entitlement on net sales of ONPATTRO. Now, the counterparty to this transaction has assumed all of the risk of collecting up to $30 million of future royalty payments and under no circumstances is the gross proceeds of $20 million refundable back to the counterparty. Now that said the standard accounting treatment for these transactions calls for us to record an initial liability equal to the $18.5 million of net proceeds received. The difference between the $18.5 million in net proceeds and the $30 million in future royalty payments to be received by the counterparty is accounted for the debt discounts at a debt discount and will amortize as the non-cash interest expense using the effective interest rate method. We will continue to record non-cash revenue for royalties paid to the counterparty with an offset to the liability.So with that, Bill, I'll turn it back to you.

Thank you, Dave. Very good. I think operator if you could help us now open up the lines for questions-and-answers and just to remind everyone, we have myself, Dave but also Mike Sofia and Gaston Picchio on the line to help answer your questions.

Certainly, sir. [Operator Instructions].And we have a question from Mayank Mamtani with B. Riley. Your line is open.

Hi good morning. This is Wayne [ph] on for Mayank. And congrats on the results and I have three questions. The first one is could you review the preclinical observations for AB-729 RNAi program? And perhaps help compare how that data stacks up relative to the similar program for instance, the candidates from Alnylam or like siRNA?

Okay. So I will just each of your questions one at a time, so.

Yes, okay.

Yes. Is that easier, fine.

If that’s a separate question.

So Mike do you want to handle that one, the preclinical results for 729 versus any of the competitors?

Sure. So just to recap the AB-729 which has GalNAc conjugated liver targeted RNAi agent. We have demonstrated and reported that this molecule, demonstrates a multi-dose dependent reduction in HBV S-antigen in animal model of the HBV mouse model, specifically AAV mouse model. This compares very favorably to our competitor reported data. Now, very hard to do a direct head-to-head comparison with competitor compounds but looking at their data and comparing it to ours and the various parameters used, we feel that we're very competitive to the other molecules benefits described out there in the literature.Now this molecule, we believe, is going to provide a once monthly dosing based on the data that we've generated. It also demonstrates the knockdown of HBV DNA and the antigen in the animal model in RNA, HBV RNAs in to that animal model that we put there. We also can see reductions in not only serum levels of those markers, but we also see reductions in the liver levels of those markers in the animal model. So overall, we're pretty bullish on this molecule and expected to perform well clinically.

Great. Thank you.

And do you want to ask your follow-up two questions?

Yes. The second one is what do you believe success looks like in 1Q 2020 readout from HBV patient cohort. Could you remind us the different dose levels you're studying in this Phase 1 trial?

Okay. Gaston, do you want to comment on that. I mean, we've said, then you heard in the presentation today that we expect the preliminary results in Q1 of 2020. But Gaston, I will hand that one over to you.

Yes, sure, thanks. So as we pointed out before, our starting dose in health with 60 milligrams and we've been doing some dose ascending. We haven't really revealed the next doses, but we'll be presenting all of that data within the first quarter of 2020.And in terms of what do we believe success will look like? Well, I think obviously, we're looking very interested in seeing the magnitude of service antigen decay, but importantly, not only the magnitude but the consistency across different patient types, so that is another important aspect for us that we are going to be looking at.

Okay. And my last question is after seeing the J&J Arrow has partnered AI, capsid inhibitor in combination data at upcoming AASLD conference, what is the incremental value you see of having a core capsid inhibitor? And in making portfolio prioritization choices, is that still high on the list relative to say earlier programs such as the one targeted at reawakening the immune systems that attain functional cure?

Okay. So you're making reference, I think to some of the data that's being previewed at AASLD. So, again Mike, Gaston do you want to take that one?

Sure, I will start off. Quick comment.

Go ahead, Mike.

So I will start off there, I think look our strategy still is the belief that you need to do multiple things to affect a functional cure for HBV patients. That one being that you're at the complete surprise [indiscernible] application and replenishment of C2C DNA pools and we believe a capsid inhibitor plus a new combination would be critical to doing that.And, this whole idea of knocking down this antigen is part of the overall strategy of trying to reawaken immune response that you're going to need to address the S-antigen low first. And then hopefully, either spontaneously reawaken immune response. And if that doesn't necessarily happen spontaneously, no, you're going to have to address it directly with some kind of immune activation. And in our case, we're betting on the PDL-1 approach there. So the data that J&J has showed at least reported in abstract which is not the full set of information but in the data that they have does not rule out still the viability of the strategy because the immune piece need to still be additive.

Thank you. And we have a question from the line of Liisa Bayko with JMP Securities. Your line is open.

Hi, guys. Neil on for Liisa. Just two questions. One, what are your thoughts on the Roche-Dicerna deal and then two anything else, could you say little bit more on your next-generation capsids? Thanks.

Okay, two good questions there. I will let Mike Sofia talk about the next-generation capsids in a moment.On the Roche-Dicerna deal, I think, I would say two things. I mean, first of all, you've heard this morning, we do believe strongly that Arbutus, we want to develop a range, a portfolio of different assets with different mechanisms of action that actually contribute to a functional that is still our mission, that’s our goal. But having said that, I think the second thing I'd add is we certainly wouldn't rule out potential partnerships which help us achieve that vision and are beneficial to Arbutus shareholders in fulfilling the ultimate goal that we have. So, before I hand over to Mike, Dave, anything else you'd like to add on that?

No, I think you covered it. We are gratified that the Big Pharma still obviously has a big interest in our field.

Yes. Okay, so Mike, the next-generation capsids?

Sure. I mean, I think Bill alluded to some of this in his earlier comments. Look this molecule is much more potent. So in the sort of single-digit in animal RDC 50 range. So we targeted that in relative to 506 and other competitors out there because we do believe potency has to be critical here, especially when you go into combination therapy. So this molecule is substantially more potent.It also comes from a novel chemical theories distinct from AB-506 and other competitor compounds. So we're hopeful that the issues we saw with 506 will not raise their head in this new molecule series that we're looking at. That's confirmed by the fact that when you look at core crystal structures of our new molecules with core protein, it finds the dimer interface but access is a novel binding site that provides its enhanced potency and distinct characteristic over other molecules.And it has all the other characteristics that we were wanting, meaning QD dosing, potentially QD dosing. Also a critical aspect is this issue with regard to resistance. We believe that in any drug that viral resistance could be an issue going forward. We began to work on this problem, and we believe that we have a potential way to address key resistant variants in the capsid space with these new molecules going forward. So we're pretty bullish on this molecule. We believe it will be very competitive in the space and we're driving it to clinical entry.

Thank you. [Operator Instructions].Our next question is from Keay Nakae with Chardan. Your line is open.

Yes, thanks. I wonder if you can give us your best estimate of when you might commence Phase 1 studies for your next-gen capsid inhibitor in your RNA destabilizer.

Yes, thank you for the question. We've not been specific on an actual start date. I think you've heard this morning on when we intend to make those decisions. I think that that point we may be able to be a little clearer. So again, Mike or Gaston, if you want to add any details, but I think we probably said as much as we can say there in the guidance in the call earlier on today.

I agree. Yes no additional from me.

Yes, no additional from me.

Thank you. And I'm not showing any further questions in the queue. I would like to turn the call back to Bill Collier for his final remarks.

All right. Thank you very much. Thank you for those questions. And we do appreciate you joining us this morning and for your interest in Arbutus. We look forward to seeing some of you at the AASLD meeting in Boston. But we also look forward to keeping you updated in the future as we report results on the 729 Phase 1a/1b study and as we make decisions regarding the nomination of our next-generation capsid inhibitor, and also the go/no-go development decision on AB-452. So thank you very much indeed for your time this morning and that concludes our call.

Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.