Arbutus Biopharma Corporation (ABUS) Q1 2020 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for standing by, and welcome to the Arbutus Biopharma Corporation First Quarter 2020 Financial Results and Corporate Update Conference Call. At this time, all participants are in a listen-only mode. After the speaker 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 to your speaker today, Pam Murphy. Please go ahead, ma'am.

Thank you, and good morning everyone. On the call from the Arbutus Executive team are Bill Collier, President and Chief Executive Officer; Dr. Mike Sofia, Chief Scientific Officer; Dave Hastings, Chief Financial Officer; and Dr. Gaston Picchio, Chief Development Officer.Bill will begin with a summary of recent accomplishments, any review of Arbutus' corporate objectives followed by Dr. Sofia who will then describe the recently announced Arbutus COVID-19 research effort. Dave Hastings will then provide a review of the Company's first quarter financial results, and I'll then open up the call for Q&A.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, timelines and clinical results for Arbutus's proprietary HBV pipeline, achievement of the Company's 2020 objectives and its expected cash use and cash runway. 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 the most recent Annual Report on 10-K, quarterly report from Form 10-Q and other periodic reports filed with the SEC.With that, Bill?

Thank you, Pam, and good morning everyone. Thank you for joining us today. We hope that all of you are well and staying safe. Also like many of you, I'm sure most of our employees are working virtually and I applaud them for their continued effectiveness in keeping our scientific, clinical and corporate operations and timelines on track. As we previously disclosed, we continue to move forward with our clinical development program for AB-729 at 60 milligram multi-dose and 90 milligram single dose, with data are expected in the second half of 2020.We also intend to share additional data from the 12-week portion of the single dose 60-milligram cohort sometime this quarter. Additionally, under the direction of Mike Sofia, I'm proud to say that we've initiated our own COVID-19 preclinical research effort. And Mike will describe the program in more detail in just a few moments.We've also joined forces with the COVID-19 R&D consortium. The mission of this consortium is to share data, find the molecules with the greatest rationale for advancement into clinical trials and put them into studies designed to yield the most meaningful results in the fastest manner possible. Now given the proven expertise in antiviral drug discovery and development that exists at Arbutus, I'm confident that it's both appropriate and important that we devote resources to address this global crisis. That said, I want to underline that our primary focus and our mission is to find a cure for hepatitis B and that remains unchanged. And this is where substantially all of our resources will continue to be directed, and we're not changing our cash use guidance for 2020 as a result of our COVID-19 initiatives.Now just as a reminder, hepatitis B remains a significant unmet medical need with over 257 million people chronically infected worldwide, including over 2 million right here in the United States. And around 900,000 people in the world die each year despite the availability of vaccines, and nucleoside and interferon therapies. These existing therapies have very low cure rates, less than 5% in fact, and it's our belief that in HBV curative regimen could substantially increase diagnosis and treatment rates and unlock significant market opportunities.So to conclude my opening comments, we remain focused on developing a portfolio of products with different mechanisms of action that when used in combination could result in a functional cure for HBV and our objectives include the following. First, advancing our Phase 1a/1b clinical trial of AB-729; second, progressing our next generation capsid inhibitor AB-836 through IND-enabling studies; and thirdly, continuing our research efforts for a next-generation oral HBV specific RNA destabilizer and a lead oral compound that inhibits PD-L1.So with that being said, I'll now turn the call over to Dr. Mike Sofia.

Thanks, Bill and good morning, everyone. Many of our Arbutus team members have a great deal of expertise in the discovery and development of safe and effective antiviral therapies, and we've been actively following the Coronavirus pandemic developments from the beginning. While there are many companies already well into the race to address this global health challenge, it is still early and much needs to be done. We believe we have a potentially important role to play and have developed a solid plan that is both appropriate for a company of our size and one that may lead to a new small molecule antiviral therapy for coronaviruses.Regarding our internal effort, this is a long-term commitment. We are not working on repurposed drugs, but rather the discovery and development of new molecular entities that address specific viral targets that fit well with our expertise. These targets include the nsp12 viral polymerase and the viral proteases. These targets are essential viral proteins which our team has much experience in targeting. Collectively, our team has been very successful in bringing novel therapies to the clinic against these types of targets for other viruses such as HCV, HBV and HIV.As these targets have been shown to deliver clinical value for patients with other viruses, we believe that this is a proven and potentially fruitful approach to take for coronaviruses as well. You're likely to ask how soon could we have a lead compound or compounds to take into IND-enabling studies, and that's a hard question to answer. The discovery process doesn't happen overnight, and as I said, this is a long-term commitment.In terms of our goals for new [Technical Difficulty] we believe we need a drug that will work effectively against a broad patient population that rapidly reduces viral load, especially in patients who are diagnosed with severe disease, has a high barrier to resistance and works ideally as a pan-Coronavirus agent so that it can be used in future outbreaks.I also believe hitting the virus hard with a combination of agents with different mechanisms of action is likely to provide the best outcome for patients across the broad patient population. It also limits resistance. We will be focused initially on developing single agents, which could be used in resistance -- we will be focused initially on developing single agents, which could be used in combination with other new or existing therapies. Additionally, we are gratified that there has been such a tremendous response to the Corona [ph] arms and finding ways to control this virus. In this unprecedented situation, all scientifically sound ideas are worth investigating in an effort to identify something that can help patients. As we all learn more, the field will be able to make more educated choices on what to work on. This is why we have joined the COVID-19 R&D consortium.It's a highly organized collaboration among top pharmaceutical and several biotech company R&D leaders, has a singular focused goal. First, push forward therapies and vaccines against COVID-19 as quickly and effectively as possible. Through this collaboration, Arbutus will be pooling resources and streamlining early stage discovery processes to identify novel targets and agents, but inhibit SARS COVID-2 and other coronaviruses. We will be contributing our unique chemical library for screening and then further progressing any active molecules that are identified in the screening efforts.Through the consortium, we will be leveraging certain primary screen capabilities and lead optimization capabilities to identify novel clinical development candidates against both known and potentially unknown targets. We believe Arbutus is unique positioned as our focused expertise and capability in antiviral drug discovery and development that puts us in a position to rapidly advance new Coronavirus therapies from discovery through development.I look forward to keeping you all updated in -- on our progress; first, with our own portfolio of HBV compounds including our next-generation capsid inhibitor AB-836, our next generation HBV specific RNA destabilizer and an oral PD-L1 compound that we believe may be useful in reawakening patient's own immune response to the HBV virus and secondly with our work on coronaviruses.With that, I will turn the call over to Dave.

Thanks, Mike, and good morning, everybody. Our ending cash, cash equivalents and short-term investments was approximately $88 million as of March 31, 2020 compared to approximately $91 million as of December 31, 2019. Our cash use from operations for the first quarter of 2020 was approximately $15 million. In addition, we received approximately $12 million in net proceeds from the issuance of shares under our ATM program for the first quarter of 2020.For 2020, we still expect our cash use to range from $54 million to $58 million and therefore, we expect our current cash runway is sufficient to fund operations into mid-2021.So with that, I'll now turn the call back to Bill.

Thank you very much, Dave and to Mike Sofia. And with that, operator Joelle, could you please open up the lines for question and answers.

Thank you. [Operator Instructions] Our first question comes from Mayank Mamtani with B. Riley, FBR. Your line is now open.

Good morning. Thanks team for taking my questions, and I appreciate the efforts on Coronavirus therapeutics. Just first question on the -- I think the update you had on the 180-mg, that went up. Could you maybe just comment on sort of how to think about this longer-term duration, but also obviously you're not having that comment [ph] which you've seen with other peers, so this -- could you maybe talk about how [indiscernible] please?

Yes, Mayank, it's Bill, let me make a comment first and then I'll hand it over to Gaston. So as I'm sure you've already picked up, in this particular press release there is no new news on the 729. Obviously, our last press release was March 26 I think, and what we are still awaiting for and moving forward on is the 60 multiple dose, 90 single dose. But what we have now said is the 12-week data on the 60-milligram single dose available this quarter. So, that's a slight change in the timeline for the 12-week single dose 60-milligram follow-up. But having said that, let me hand over to Gaston.

Yes, hi, good morning. Did that help you answer the question or do you have any further questions and -- I mean because without that additional 12-week follow-up date, I think it's difficult to speculate. But maybe...

I was just curious with the -- I think 180-mg, you saw some deepening of responses, even with the single dose. So I was just curious what -- how to think about the 60-mg, should we expect the same or you think the -- that really comes with the multi-dose that we've seen with other compound experience [ph]?

Yes, well, I think we -- I mean as we said back on March 24th, the 180-milligram data I think beat our expectations in terms of the durability and continuous decline of that dose. So with 60-mg, day 29, we didn't have the same type of decline that we saw day 29 with the 180-mg. But obviously, that's why we're continuing to follow the subjects. And I think we need to see that data to conclude, where do we end and so forth. So as Bill pointed out, that data now, we are announcing that's going to be available in the second quarter 2020. So, I rather wait to see that data before we conclude anything about the 60-mg beyond what we already did at -- with 29, which actually by the way, I would add that one of the other striking pieces of the information we derived from the 60-mg was extremely safe from an ALT/AST level.So as you may recall, the levels were all normal throughout the 29 days of follow-up. So, we'll see very soon what happens with the 12-week follow-up.

Great. I appreciate the clarification on timing and what to expect. Just on the -- any update you could provide on the enrollment front for either the multi-dose 60 mg or 90 mg, just qualitative color would be helpful.

Yes, Mayank it's Bill again. As we settled back in March, given the COVID situation, we're trying to progress carefully and thoughtfully. So where we -- I guess what we can comment is looking at site selection and screening -- patient screening and trying to find locations where we can conduct these trials safely from a patient protection point of view, that work is all underway. We actually haven't disclosed whether we dosed a patient or whatever yet, but we are sticking to our projections that we'll have the data available in the second half of the year.

Okay, great. And Mike, maybe I -- just switching gears on the Coronavirus efforts, I may have missed -- have you -- did you disclose any targets? I know you said antivirals and could you maybe just talk to -- obviously you are learning a ton about how the virus sort of proliferates and enters the cells. Just could you talk to what scientific approaches you're prioritizing and if -- how that is incremental to, say, for example, remdesivir, could you maybe comment on that?

Sure. So as far as COVID too is a positive sense RNA virus and we're specifically interested in direct-acting of virals here, so we chose the nsp12 viral polymerase and the viral protease -- main viral protease because there are key proteins involved in the virus' lifecycle and appear to be highly conserved across coronaviruses. These targets have similarities to virus polymerase and protease seen with other RNA viruses like HCV. So as far as clinical agents that can come from targeting of our polymerase or protease, you only have to look at HCV, HIV or HBV where nucleosides or nucleotides have been used at target of our preliminaries or viral or reverse transferred bases, backbones of HCV or HIV therapy and also where proteases have been shown to be important components in several therapeutic regimens.Remdesivir does target the nsp12 polymerase and appears to provide some benefit. It's not the perfect drug. So there is a lot of room for identifying a much better agent by using a focused approach that we're going to use.

Great. That's very helpful, thanks. Thanks for the clarification.

Thank you. [Operator Instructions] Our next question comes from Madhu Kumar with RW Baird. Your line is now open.

Hi, this is Jennifer [ph] on for Madhu. Thanks for taking our questions. I'm just curious as to if the cash runway that you guys specified include further clinical trials or [indiscernible]? Thanks.

Yes, sorry, you broke up on the last part of your question, could you just repeat that?

Yes, absolutely. So I was wondering if the cash runway that you guys provided includes starting clinical trials for AB-836?

Yes, hi, this is Dave. Yes, it does, because if you think about the cash runway into mid-2021, that would assume that we would start a Phase 1a/1b with our capsid.

Okay, great. And then -- so in terms of 836 as well, do you have any thoughts on the competitor's core inhibitor treatments that have been discontinued and plans to assess the same virological response? And also how do you imagine that you would maybe need quite co-inhibitors to go -- how long you would need them to go before stopping therapy? Thanks.

So maybe I'll hand that one to Mike first for the first part and then maybe, Gaston, you can talk about length of therapy.

So the issue with competitor compounds discontinuation, look, we really have had an issue we 506 we discontinued because of ALT elevations we saw in an extended healthy volunteer study. That particular molecule was shown to be quite clean and safe in preclinical studies and preclinical toxicology studies, L2 6-month and 9-month studies. Unfortunately, we saw a clinical signal with that molecule. Not clear at this point in time what was the basis for that safety signal in patients, but 836 is a completely different chemical series with very differentiating profile -- preclinical profile.So we're very confident that, that molecules is going to provide the profile that we're looking for clinically, including enhanced profile against resistance as well as a much more potent molecule overall.

Thanks, Mike. And Gaston, just on length of therapy, I guess there we need to look at one study start [ph] when we actually can feel confident about stopping capsid therapy?

Yes, so thanks for the question. So maybe a clarification about the duration of therapy with capsid inhibitor, do you mean specifically for our programs or you mean -- this is a general question what is our thinking around what will be the duration of therapy with capsid inhibitors, so if you could clarify that?

Sure. I would say, more of a general question, about phase [ph]. Thanks.

Yes. So that's I think a very relevant and important question, obviously. I think it will depend on many factors. I think the way we like to look at it, it's in two different ways. One is, what's the regimen, so depending on what the regimen is, then I think you can have different expectations about the duration. For example, if you would treat with nuc [ph] and a capsid, maybe you need longer than you -- if treat with a nuc and a capsid and RNAi. And secondly, I think the other area where we look to -- where we look and think about is the area, what's the endpoint. So as you know, there is a lot of discussion around endpoints. For example, if your endpoint where it could be the most probably relevant at this point, which is functional cure defined as undetectable or unquantifiable surface antigen six months after end of therapy with or without MYS [ph]. I think that's kind of the most challenging endpoint to attain. I think -- we -- everyone is thinking around somewhere between a year and two years of therapy.If one thinks of our software endpoint such as undetectable RNA, that's another endpoint that people are looking at. Perhaps shorter therapy would be sufficient. So I think it depends a little bit of what's your regimen and in short, what's the endpoint that you are looking for. Whether undetectable RNA is a relevantly -- clinically relevant endpoint that down the road will translate into functional cure, I think it's early to say. So, we still are sticking to the endpoint of --- defined by the agency functional cure.

Great, thank you so much.

Thank you. [Operator Instructions] I'm not showing any further questions at this time. I would now like to turn the call back over to Bill Collier for closing remarks.

Thank you very much and thank you for your questions. Let me close out just by thanking you all again for your interest in Arbutus. And I'd also like to repeat my gratitude to our employees for their continued effectiveness in keeping our corporate operations and timelines on track. So again, as summarized on this call, for AB-729 we intend to share additional data from the 12-week portion of the single-dose 60-milligram sometime this quarter, that's Q2. And also, we continue to expect data from the 60-milligram multi-dose cohort as well as data for the 90-milligram single dose cohort in the second half of 2020.So, thanks again for dialing in. And that concludes our call for today. Thank you.

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