Arbutus Biopharma Corporation (Nasdaq:ABUS), an industry-leading
Hepatitis B Virus (HBV) therapeutic solutions company, today
announced its first quarter 2016 unaudited financial results and
provided a corporate update.
“We are focused on advancing the development of
our candidates to support clinical combination studies in 2017. In
addition, we continue to grow our HBV pipeline through new product
innovation and partnerships,” said Dr. Mark J. Murray, Arbutus’
President and CEO. “HBV remains a significant global unmet medical
need and market opportunity, and we believe our combination
approach is the key to a cure. We are funded into late 2018,
allowing us to execute our development plans with the aim of
generating meaningful data.”
Recent Highlights
- Ongoing Phase II study of ARB-1467 evaluating at least two
doses of ARB-1467 (0.2 mg/kg and 0.4 mg/kg) in HBV infected
patients.
- Progress in developing a proprietary GalNAc conjugate
technology to enable subcutaneous delivery of an RNAi therapeutic
targeting hepatitis B surface antigen and/or other HBV
targets.
- Licensing and research collaboration agreement with the Saint
Louis University Liver Center to develop Ribonuclease H (RNaseH)
inhibitors and further expand Arbutus’ HBV pipeline.
- Preclinical combination data presented at EASL 2016 showing
additive to synergistic activity when combining AB-423 (core
protein/capsid assembly inhibitor) with entecavir.
- Preclinical combination data presented at other scientific
conferences in April 2016 showing:
- ARB-1467 (RNAi), AB-423 (core protein/capsid assembly
inhibitor), and ARB-199 (cccDNA formation inhibitor) are potent and
selective inhibitors of their respective targets;
- Additive or synergistic activity (and no antagonism) when
combining these candidates with “nuc” standard of care; and
- Additive activity when combining ARB-1467 with AB-423.
Upcoming Milestones
- 2016: Preclinical data release on multiple pipeline programs,
including results from preclinical combination studies of
proprietary pipeline candidates
- 3Q16: Single dose HBsAg reduction data from the ARB-1467 (RNAi)
Phase II trial in HBV-infected patients
- 4Q16: HBsAg reduction data from the multiple dose portion of
the Phase II trial testing ARB-1467 in HBV-infected patients
- 2H16: Initiate clinical immune biomarker study for TLR9 agonist
ARB-1598 in chronically infected HBV patients
- 2H16: File IND (or equivalent) for cccDNA formation
inhibitor
- 2H16: File IND (or equivalent) for core protein/capsid assembly
inhibitor
- 2H16: File IND (or equivalent) for ARB-1740 (RNAi)
- 2H16: Phase II results for TKM-PLK1 in HCC
- 2017: Initiate clinical combination studies with two or more
proprietary product candidates
Financial Results
On January 1, 2016, Arbutus’ functional currency
changed from the Canadian dollar to the U.S. dollar based on the
analysis of changes in the primary economic environment in which
the Company operates. The change in functional currency is
accounted for prospectively from January 1, 2016 and financial
statements prior to and including the year-ended December 31, 2015
will not be restated for the change in functional currency.
Cash, Cash Equivalents and
Investments
As at March 31, 2016, Arbutus had cash and cash
equivalents of $144.8 million and short-term and long-term
investments of $37.9 million for an aggregate of $182.7 million, as
compared to cash, cash equivalents and short-term investments of
$191.4 million at December 31, 2015.
Non-GAAP Net Loss
The non-GAAP net loss for Q1 2016 was $9.9
million ($0.19 loss per common share). The non-GAAP net loss for
the three-months ended March 31, 2016 excludes the aggregate of
$6.0 million non-cash compensation expense included in research,
development, collaborations and contracts expenses, and general and
administrative expenses in connection to certain share repurchase
provisions and arising from the merger with Arbutus Inc. (see
below).
Net loss
For Q1 2016, net loss was $15.9 million ($0.31
basic and diluted loss per common share) as compared to a net loss
of $12.0 million ($0.40 basic and diluted loss per common share)
for Q1 2015.
Revenue
Revenue was $0.6 million for Q1 2016 as compared
to $4.7 million for Q1 2015.
Under the Monsanto contract, Arbutus earned
revenue from research and collaboration activities, as well as
license fees related to Monsanto’s use of the Company’s delivery
technology and related intellectual property in agriculture.
Research activities under the arrangement ended in Q4 2015, and in
March 2016, Monsanto exercised its option to acquire 100% of the
outstanding shares of the Company’s wholly-owned subsidiary,
Protiva Agricultural Development Company (“PADCo”). The Company
received an exercise fee of $1.0 million, which has been recorded
as other income in Q1 2016.
Under the DoD contract to develop TKM-Ebola,
Arbutus was being reimbursed for costs incurred, including an
allocation of overheads, and was being paid an incentive fee. In Q4
2015, Arbutus received formal notification from the DoD terminating
the contract, subject to the completion of certain post-termination
obligations. Arbutus has not recorded any revenue from the DoD in
Q1 2016.
In November 2014, Arbutus entered into a
collaboration with Dicerna for the use of its technology to
develop, manufacture, and commercialize products related to the
treatment of PH1. Arbutus recorded $0.2 million in licensing
revenue in Q1 2016, which relates to the earned portion of the
upfront payment of $2.5 million for the use of its technology.
Arbutus also recorded $0.1 million in collaboration revenue in Q1
2016, which relates services provided to, Dicerna.
Under a licensing and collaboration arrangements
with Alnylam and Acuitas, the Company earns licensing fee revenue
from Acuitas as well as further potential development and
commercial milestones from Alnylam for the use of its LNP
technology. Arbutus recorded $0.3 million in licensing revenue in
Q1 2016.
Research, Development, Collaborations
and Contracts Expenses
Research, development, collaborations and
contracts expenses were $13.1 million in Q1 2016 as compared to
$10.6 million in Q1 2015.
R&D expenses increased during Q1 2016 as
compared to Q1 2015 as Arbutus increased spending on ARB-1467, for
which Phase I clinical trials were initiated in 2015. Arbutus also
incurred incremental costs related to an increase in activities for
preclinical HBV programs acquired from the merger with Arbutus
Inc.
R&D compensation expense increased in Q1
2016 as compared to Q1 2015 due to an increase in the number of
employees in support of the Company’s expanded portfolio of product
candidates and from the merger with Arbutus Inc. As a result of the
expiry of share repurchase rights included in the consideration
paid for Arbutus Inc., as compared to Q1 2015, the Company recorded
$4.8 million of incremental non-cash compensation expense, of which
$1.2 million has been included as part of research, development,
collaborations and contracts expense, and $3.6 million included as
part of general and administrative expense.
General and Administrative
General and administrative expenses were $7.2
million in Q1 2016 as compared to $2.7 million in Q1 2015.
The increase in general and administrative
expenses was largely due to an increase in compensation expense
linked to an increase in employee base and incremental corporate
expenses to support the growth of the Company following the
completion of the merger with Arbutus Inc. This includes
incremental non-cash compensation expense of $3.6 million related
to the expiry of repurchase rights on shares issued as part of
consideration paid for the merger with Arbutus Inc. (see
above).
Acquisition Costs
In Q1 2015, the Company incurred $9.3 million in
costs related to the merger with Arbutus Inc., which was completed
on March 4, 2015.
Other Income (Losses)
On January 1, 2016, the Company’s functional
currency changed from the Canadian dollar to the U.S. dollar based
on an analysis of changes in the primary economic environment in
which Arbutus operates. The Company expects to incur substantial
expenses and hold cash and investment balances in Canadian dollars,
and as such, will remain subject to risks associated with foreign
currency fluctuations. During Q1 2016, Arbutus recorded a foreign
exchange gain of $2.9 million which is primarily an unrealized gain
related to an appreciation in the value of Canadian dollar funds
from the previous period, when converted to the Company’s
functional currency of U.S. dollars.
On March 4, 2016, Monsanto exercised its option
to acquire 100% of the outstanding shares of Arbutus’s wholly-owned
subsidiary, PADCo, as described above and paid an exercise fee of
$1.0 million.
The aggregate decrease in fair value of the
Company’s common share purchase warrants was $0.2 million in Q1
2016 as compared to an increase in the fair value of common share
purchase warrants outstanding of $1.2 million in Q1 2015. The
decrease is a result of a decrease in the Company’s share price
from the previous reporting date, and vice versa.
UNAUDITED CONDENSED CONSOLIDATED BALANCE
SHEETS |
|
(in millions) |
|
|
|
|
March 31, |
|
|
|
December 31, |
|
2016 |
|
|
2015 |
|
|
|
|
|
Cash
and cash equivalents |
$ |
144.8 |
|
|
$ |
166.8 |
|
Short-term investments |
|
27.8 |
|
|
|
14.5 |
|
Accounts receivable |
|
0.4 |
|
|
|
1 |
|
Other
current assets |
|
1.9 |
|
|
|
1.6 |
|
Long-term investments |
|
10.1 |
|
|
|
10.1 |
|
Property and equipment, net |
|
3.2 |
|
|
|
3.2 |
|
Intangible assets |
|
352.6 |
|
|
|
352.6 |
|
Goodwill |
|
162.5 |
|
|
|
162.5 |
|
Total assets |
$ |
703.3 |
|
|
$ |
712.3 |
|
Accounts payable and accrued liabilities |
|
7.7 |
|
|
|
8.8 |
|
Total
deferred revenue |
|
1 |
|
|
|
1.1 |
|
Warrant liability |
|
0.7 |
|
|
|
0.9 |
|
Liability-classified options |
|
1.8 |
|
|
|
- |
|
Contingent consideration |
|
7.7 |
|
|
|
7.5 |
|
Deferred tax liability |
|
146.3 |
|
|
|
146.3 |
|
Total stockholders’ equity |
|
538.1 |
|
|
|
547.7 |
|
Total liabilities and stockholders’ equity |
$ |
703.3 |
|
|
$ |
712.3 |
|
|
|
|
|
|
|
|
|
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF
COMPREHENSIVE LOSS(in millions) |
|
|
|
|
Three-months ended March 31, |
|
|
2016 |
|
2015 |
|
|
|
|
Total revenue |
$ |
|
0.6 |
|
|
$ |
|
4.7 |
|
|
Operating expenses |
|
|
|
|
|
|
Research, development,
collaborations and contracts |
|
|
13.2 |
|
|
|
|
10.6 |
|
|
General and administrative |
|
|
7.2 |
|
|
|
|
2.7 |
|
|
Depreciation of property and
equipment |
|
|
0.2 |
|
|
|
|
0.1 |
|
|
Acquisition costs |
|
|
- |
|
|
|
|
9.3 |
|
|
Loss from operations |
|
|
(20.0 |
) |
|
|
|
(18.0 |
) |
|
Other
income |
|
|
4.1 |
|
|
|
|
6.0 |
|
|
Net loss |
|
|
(15.9 |
) |
|
|
|
(12.0 |
) |
|
Cumulative translation adjustment |
|
|
- |
|
|
|
|
(9.2 |
) |
|
Comprehensive loss |
$ |
|
(15.9 |
) |
|
$ |
|
(21.2 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UNAUDITED GAAP TO NON-GAAP
RECONCILIATION:NET LOSS AND NET LOSS PER
SHARE (in millions, except per share amounts) |
|
Three-months ended March 31, |
|
|
2016 |
|
2015 |
|
|
|
|
GAAP net loss |
$ |
|
(15.9 |
) |
|
$ |
|
(12.0 |
) |
|
Adjustment: |
|
|
|
|
|
|
Compensation expense of expired
repurchase provision rights |
|
|
6.0 |
|
|
|
|
1.2 |
|
|
Non-GAAP net loss |
|
|
(9.9 |
) |
|
|
|
(10.8 |
) |
|
|
|
|
|
|
|
|
GAAP net loss per common share |
|
|
(0.31 |
) |
|
|
|
(0.40 |
) |
|
Non-GAAP net loss per common share |
|
|
(0.19 |
) |
|
|
|
(0.36 |
) |
|
|
|
|
|
|
|
|
|
Use of Non-GAAP Financial
Measures
The Company’s consolidated financial statements
are prepared in accordance with generally accepted accounting
principles in the United States (U.S. GAAP) on a basis consistent
for all periods presented. In addition to the results reported in
accordance with U.S. GAAP, the Company provides additional measures
that are considered “non-GAAP” financial measures under applicable
SEC rules. These non-GAAP financial measures should not be viewed
in isolation or as a substitute for GAAP net loss and basic and
diluted net loss per common share.
The company evaluates items on an individual
basis, and considers both the quantitative and qualitative aspects
of the item, including (i) its size and nature, (ii) whether or not
it relates to the Company’s ongoing business operations, and (iii)
whether or not the company expects it to occur as part of its
normal business on a regular basis. In the three months ended March
31, 2016, the Company’s non-GAAP net loss and non-GAAP net loss per
common share excludes the compensation expense related to the
expiration of repurchase provision rights connected with certain
common shares issued as part of total consideration for the
acquisition of Arbutus Inc. The Company believes that the exclusion
of these items provides management and investors with supplemental
measures of performance that better reflect the underlying
economics of the Company’s business. In addition, the Company
believes the exclusion of these items is important in comparing
current results with prior period results and understanding
projected operating performance.
Conference Call Today
Arbutus will hold a conference call and webcast
today Wednesday, May 4, 2016, at 1:30 p.m. Pacific Time (4:30 p.m.
Eastern Time) to provide a corporate update and report its first
quarter 2016 financial results. A live webcast of the call can be
accessed through the Investor section of Arbutus’ website
at www.arbutusbio.com. Or, alternatively, to access the
conference call, please dial 1-914-495-8556 or 1-866-393-1607.
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 1-404-537-3406 or
1-855-859-2056 and referencing conference ID 2861586.
About Arbutus
Arbutus Biopharma Corporation is a
biopharmaceutical company dedicated to discovering, developing and
commercializing a cure for patients suffering from chronic HBV
infection. Arbutus is headquartered in Vancouver, BC, Canada with
offices in Doylestown, PA, USA. For more information, visit
www.arbutusbio.com.
Forward-Looking Statements and
Information
This press release contains forward-looking
statements within the meaning of the Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934,
and forward looking information within the meaning of Canadian
securities laws (collectively, “forward-looking statements”).
Forward-looking statements in this press release include statements
about advancing the development of our candidates to support
clinical combination studies in 2017; continuing to grow our HBV
pipeline through new product innovation and partnerships; HBV
remaining a significant global unmet medical need and market
opportunity; curing HBV through a combination approach; a
cash runway extending into late 2018; using a proprietary GalNAc
conjugate technology to deliver an RNAi agent targeting hepatitis B
surface antigen and/or other RNAi products through partnerships;
expand Arbutus’ HBV pipeline through a collaboration with the Saint
Louis University Liver Center; releasing preclinical data on
multiple pipeline programs, including results from preclinical
combination studies of proprietary pipeline candidates, in 2016;
obtaining single dose HBsAg reduction data from the ARB-1467 (RNAi)
Phase II trial in HBV-infected patients in 3Q16; obtaining HBsAg
reduction data from the multiple dose portion of the Phase II trial
testing ARB-1467 in HBV-infected patients in 4Q16; initiating
clinical immune biomarker study for TLR9 agonist ARB-1598 in
chronically infected HBV patients in 2H16; filing an IND (or
equivalent) for core protein/capsid assembly inhibitor in 2H16;
filing an IND (or equivalent) for ARB-1740 (RNAi) in 2H16; filing
an IND (or equivalent) for cccDNA formation inhibitor in 2H16; and
initiating clinical combination studies with two or more
proprietary product candidates in 2017.
With respect to the forward-looking statements
contained in this press release, Arbutus has made numerous
assumptions regarding, among other things: the effectiveness and
timeliness of preclinical and clinical trials, and the usefulness
of the data; the continued demand for Arbutus’ assets; and the
stability of economic and market conditions. While Arbutus
considers these assumptions to be reasonable, these assumptions are
inherently subject to significant business, economic, competitive,
market and social uncertainties and contingencies.
Additionally, there are known and unknown risk
factors which could cause Arbutus' actual results, performance or
achievements to be materially different from any future results,
performance or achievements expressed or implied by the
forward-looking statements contained herein. Known risk factors
include, among others: anticipated pre-clinical and clinical trials
may be more costly or take longer to complete than anticipated, and
may never be initiated or completed, or may not generate results
that warrant future development of the tested drug candidate;
Arbutus may not receive the necessary regulatory approvals for the
clinical development of Arbutus' products; economic and market
conditions may worsen; and market shifts may require a change in
strategic focus.
A more complete discussion of the risks and
uncertainties facing Arbutus appears in Arbutus' Annual Report on
Form 10-K and Arbutus' continuous disclosure filings, which are
available at www.sedar.com and at www.sec.gov. All forward-looking
statements herein are qualified in their entirety by this
cautionary statement, and Arbutus disclaims any obligation to
revise or update any such forward-looking statements or to publicly
announce the result of any revisions to any of the forward-looking
statements contained herein to reflect future results, events or
developments, except as required by law.
Contact Information
Investors
Adam Cutler
Senior Vice President, Corporate Affairs
Phone: 604.419.3200
Email: acutler@arbutusbio.com
Helia Baradarani
Manager, Investor Relations
Phone: 604.419.3200
Email: hbaradarani@arbutusbio.com
Media
Please direct all media inquiries to: media@arbutusbio.com
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