On August 7, 2020 Arbutus Biopharma Corporation (Nasdaq: ABUS), a clinical-stage biopharmaceutical company primarily focused on developing a cure for people with chronic hepatitis B virus (HBV) infection, as well as therapies to treat coronaviruses (including COVID-19), reported its second quarter 2020 financial results and provides a corporate update (Press release, Arbutus Biopharma, AUG 7, 2020, View Source [SID1234563161]).
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William Collier, President and Chief Executive Officer of Arbutus, stated, "Despite the challenging conditions resulting from the COVID-19 pandemic, we continue to make steady progress in our Phase 1a/1b clinical trial of AB-729, a subcutaneously delivered RNAi agent, and have recently initiated an additional AB-729 90 mg single-dose cohort in HBV DNA positive subjects. We also intend to initiate two 90 mg multi-dose cohorts in the second half of this year."
Mr. Collier added, "Importantly, in March and May of this year we announced positive preliminary results from this trial, and we look forward to providing additional clinical updates in the second half of 2020. We anticipate these updates will include data from 60 mg multi-dose cohorts with dosing intervals every four and eight weeks and 90 mg single-dose week 12 data in HBV DNA negative and positive subjects. We continue to believe AB-729 is a potent RNAi agent capable of reducing HBsAg plasma levels."
Pipeline Update
AB-729
•AB-729 is an RNA interference (RNAi) therapeutic targeted to hepatocytes using Arbutus’ novel covalently conjugated N-acetylgalactosamine (GalNAc) delivery technology that
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enables subcutaneous delivery. AB-729 inhibits viral replication and reduces all HBV antigens, including hepatitis B surface antigen (HBsAg), in preclinical models. Reducing HBsAg is thought to be essential to enable the reawakening of a patient’s immune system so that it can respond to the virus.
•Arbutus is currently conducting a single- and multi-dose Phase 1a/1b clinical trial to determine the safety, tolerability, pharmacokinetics, and pharmacodynamics of AB-729 in healthy subjects and in subjects with chronic HBV infection.
•Preliminary positive safety data in single-dose cohorts of healthy subjects and safety and efficacy data in the 60 mg and 180 mg single-dose cohorts in subjects with chronic HBV infection were reported in March 2020. Additional follow-on week 12 data for the 60 mg single-dose cohort were reported in May 2020. The data demonstrate the robust activity of AB-729 and, at week 12, the 60 mg single-dose achieved equivalent reductions in HBsAg as the 180 mg single-dose and did so while remaining generally safe and well tolerated with no abnormal transaminase values in any of the six subjects.
•Arbutus is dosing two 60 mg multi-dose cohorts of subjects with chronic HBV infection with dosing intervals of every four and eight weeks, respectively. Arbutus is also dosing subjects in a 90 mg single-dose cohort. Results from these cohorts are expected in the second half of 2020. We also intend to initiate two 90 mg multi-dose cohorts in the second half of this year.
•Arbutus has also initiated an additional AB-729 90 mg single-dose cohort in HBV DNA positive subjects with results expected in the second half of 2020.
AB-836: Oral Capsid Inhibitor
•AB-836 is an oral HBV capsid inhibitor. HBV core protein assembles into a capsid structure, which is required for viral replication. The current standard-of-care therapy for HBV, primarily nucleos(t)ide analogues that work by inhibiting the viral polymerase, significantly reduce virus replication, but not completely. Capsid inhibitors inhibit replication by preventing the assembly of functional viral capsids. They also have been shown to inhibit the
uncoating step of the viral life cycle thus reducing the formation of new covalently closed circular DNA (cccDNA), the genetic reservoir which the virus uses to replicate itself.
•In January 2020, Arbutus selected AB-836 as its next-generation oral capsid inhibitor. AB-836 is from a novel chemical series differentiated from Arbutus’ second generation capsid inhibitor candidate, AB-506, as well as competitor compounds. AB-836 has the potential for increased potency and an enhanced resistance profile as compared to AB-506. Arbutus continues to expect completion of IND-enabling studies by the end of 2020.
Early HBV R&D Programs
•Arbutus’ drug discovery efforts are focused on follow-on compounds for its current HBV pipeline, including the development of oral RNA-destabilizers that have shown compelling antiviral effects in multiple HBV preclinical models. Arbutus is now focused on advancing next-generation oral RNA-destabilizers with chemical scaffolds distinct from Arbutus’ prior generation HBV RNA destabilizer candidate, AB-452, through lead optimization. Arbutus also has several oral anti-PD-L1 inhibitors in lead optimization that are potentially capable of reawakening the immune response to HBV in infected patients.
Research Efforts to Combat COVID-19 and Future Coronavirus Outbreaks
•Earlier this year, the Company initiated an internal research program to identify new small molecule antiviral medicines to treat COVID-19 and future coronavirus outbreaks. Dr. Michael Sofia, Arbutus’ Chief Scientific Officer, who was awarded the Lasker-DeBakey Award for his discovery of sofosbuvir, brings extensive antiviral drug discovery experience to this new program. Arbutus has also joined forces with the COVID R&D consortium to further support and expedite efforts to address the COVID-19 pandemic. At this time, Arbutus’ COVID-19 research program will focus on the discovery and development of new molecular entities that address specific viral targets including the nsp12 viral polymerase and the viral protease. These targets are essential viral proteins which Arbutus has experience in targeting. The Company is actively screening multiple new oral molecular entities. The establishment of the COVID-19 effort does not impact Arbutus’ current cash burn guidance for 2020 of $54 to $58 million.
Genevant Sciences Ltd. Update
On July 23, 2020, the United States Patent and Trademark Office before the Patent Trial and Appeal Board (PTAB) announced their decision in Moderna Therapeutics, Inc.’s challenge of the validity of U.S. Patent 8,058,069 ("the ‘069 Patent"). In this decision, the PTAB determined no challenged claims were unpatentable. While Arbutus is the patent holder, this patent has been licensed to Genevant. The ‘069 Patent was included in this license agreement between Genevant and Arbutus.
quarter cash, cash equivalents and investments of $84.0 million plus the additional $36.5 million of proceeds received under the ATM program during July 2020 are sufficient to fund the Company’s operations into mid-2022 versus prior guidance of mid-2021.
Net Loss
Net loss attributable to common shares for the three months ended June 30, 2020 was $17.1 million ($0.25 basic and diluted loss per common share) as compared to $26.1 million ($0.46 basic and diluted loss per common share) in 2019. Net loss attributable to common shares for the three months ended June 30, 2020 and 2019 included non-cash expense for the accrual of coupon on the Company’s convertible preferred shares of $3.0 million and $2.8 million, respectively. Additionally, net loss attributable to common shares for the three months ended June 30, 2019 included $3.3 million of non-cash equity losses associated with our investment in Genevant Sciences Ltd. ("Genevant"), a company launched with Roivant Sciences Ltd., Arbutus’s largest shareholder, in April 2018.
Operating Expenses
Research and development expenses were $10.5 million for the three months ended June 30, 2020 compared to $12.7 million in 2019. The decrease in research and development expenses for the three months ended June 30, 2020 versus the same period in 2019 was due primarily to lower clinical expenses. General and administrative expenses were $3.6 million for the three months ended June 30, 2020 compared to $8.2 million in 2019. The decrease in general and administrative expenses was due primarily to the departure of the Company’s former President and Chief Executive Officer in June 2019 and a decrease in legal fees. In accordance with the terms of his legacy employment agreement, the Company’s former President and Chief Executive Officer received $2.3 million in cash severance and the Company recognized $1.1 million of non-cash stock-based compensation expense for accelerated vesting of his stock options in 2019.
Outstanding Shares
The Company had approximately 71.3 million common shares issued and outstanding as of June 30, 2020. During July 2020, Arbutus issued an additional 9.5 million common shares under the ATM program. In addition, the Company had approximately 11.0 million stock options outstanding and 1.164 million convertible preferred shares outstanding, which (including the annual 8.75% coupon) will be mandatorily convertible into approximately 23.0 million common shares on October 18, 2021.
Conference Call and Webcast Today
Arbutus will hold a conference call and webcast today, Friday, August 7, 2020 at 8:45 AM Eastern Time to provide a corporate update. You can access a live webcast of the call through the Investors section of Arbutus’ website at www.arbutusbio.com or directly at Live Webcast. Alternatively, you can dial (866) 393-1607 or (914) 495-8556 and reference conference ID 4974547.
An archived webcast will be available on the Arbutus website after the event. Alternatively, you may access a replay of the conference call by calling (855) 859-2056 or (404) 537-3406, and reference conference ID 4974547.