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), today
reports its third quarter 2020 financial results and provides a
corporate update.
William Collier, President and Chief Executive
Officer of Arbutus, stated, “Arbutus is focused on discovering and
developing a functional cure with a finite treatment duration for
chronic HBV by developing a combination of agents, with different
mechanisms of action, that target distinct parts of the virus
lifecycle. To this end, we continue to make steady progress in our
ongoing Phase 1a/1b clinical trial of our lead clinical candidate,
AB-729, a subcutaneously delivered RNAi agent. AB-729 is currently
being dosed in chronic HBV subjects in four multi-dose cohorts
using both the 60 mg dose every 4- and 8-weeks and the 90 mg dose
every 8- and 12-weeks.”
“Based upon the clinical data generated thus
far, AB-729 has demonstrated meaningful reductions in HBsAg with a
favorable safety and tolerability profile. We look forward to
presenting additional results from the ongoing Phase 1a/1b clinical
trial as part of an oral presentation at the upcoming AASLD
conference in November.”
Pipeline Update
AB-729
- 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.
- Arbutus is currently dosing two 60
mg multi-dose cohorts of subjects with chronic HBV infection with
dosing intervals of every four and eight weeks, respectively.
Results from the 60 mg multi-dose cohort with a dosing interval of
every four weeks and additional follow-up data on the 60 mg and 90
mg single-dose cohorts are expected to be disclosed as part of an
oral presentation at the upcoming AASLD conference in
November.
- Separately, results from the 60 mg
multi-dose cohort with a dosing interval of every eight weeks and a
90 mg single-dose cohort in HBV DNA positive subjects are expected
in the fourth quarter of 2020.
- In September 2020, Arbutus reported additional data from its
ongoing Phase 1a/1b clinical trial for AB-729. The clinical data
generated thus far demonstrate the robust activity of AB-729 and,
at week 12, the 60 mg and 90 mg single-doses achieved meaningful
reductions in HBsAg while remaining generally safe and well
tolerated.Mean HBsAg changes from baseline:
|
60 mg Single-DoseCohort (B) (N=6) |
90 mg Single-Dose Cohort (C) (N=6) |
Week 12 (day 84) mean log10 IU/mL (Standard Error of the Mean) |
-0.99 (0.24) |
-1.23 (0.18) |
- Arbutus is also currently dosing
two 90 mg multi-dose cohorts of subjects with dosing intervals of
every eight and twelve weeks, respectively.
AB-836: Oral Capsid
Inhibitor
- In January 2020, Arbutus selected
AB-836 as its next-generation oral capsid inhibitor. AB-836 is from
a novel chemical series differentiated from competitor compounds
with the potential for increased efficacy and an enhanced
resistance profile. Arbutus continues to expect completion of
CTA/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 through lead optimization next-generation oral
RNA-destabilizers with chemical scaffolds distinct from Arbutus’
prior generation HBV RNA destabilizer candidate. 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.
Clinical Collaboration with Assembly
Biosciences, Inc.
- In August 2020, the Company entered into a clinical
collaboration agreement with Assembly Biosciences, Inc. (Assembly)
to evaluate Arbutus’ AB-729 clinical candidate in combination with
Assembly’s lead hepatitis B virus (HBV) core/capsid inhibitor
candidate vebicorvir (VBR) and standard-of-care nucleos(t)ide
reverse transcriptase inhibitor (NrtI) therapy for the treatment of
patients with chronic HBV infection. This collaboration will
include a randomized, multi-center, open-label Phase 2 clinical
trial that will explore the safety, pharmacokinetics, and antiviral
activity of the triple combination of AB-729, VBR, and an NrtI
compared to the double combinations of VBR with an NrtI and AB-729
with an NrtI. This trial is expected to initiate in the first half
of 2021 and enroll approximately 60 virologically-suppressed
patients with chronic HBV infection.
Dr. Gaston Picchio, Chief Development Officer of
Arbutus, stated, “This clinical collaboration in which both
companies share expertise and costs has the potential to provide
proof of concept data regarding the safety and efficacy of
combining two promising drug candidates and to expedite efforts to
advance a much needed HBV treatment regimen.”
Research Efforts to Combat COVID-19 and
Future Coronavirus Outbreaks
- Based on its extensive antiviral drug discovery experience,
Arbutus has established an internal research program to identify
new small molecule antiviral medicines to treat COVID-19 and future
coronavirus outbreaks. This effort, led by Dr. Michael Sofia,
Arbutus’ Chief Scientific Officer, is focused on the discovery and
development of new molecular entities that address specific viral
targets including the nsp12 viral polymerase and the nsp5 viral
protease. These targets are essential viral proteins which Arbutus
has experience in targeting. Arbutus has also joined forces with
the COVID R&D consortium to further support and expedite
efforts to address the COVID-19 pandemic.
Genevant Sciences Ltd.
Update
- On July 31, 2020, Genevant Sciences
Ltd. (Genevant) was recapitalized through an equity investment and
conversion of previously issued convertible debt securities held by
Roivant Sciences Ltd. (Roivant), Arbutus’ largest shareholder.
Arbutus participated in the recapitalization of Genevant with an
equity investment of $2.5 million. Following the recapitalization,
Arbutus owns approximately 16% of the common equity of Genevant.
Arbutus’ entitlement to receive future royalties or sublicensing
revenue from Genevant remains unchanged.
- As previously disclosed, in April
2018 Arbutus entered into an agreement with Roivant to launch
Genevant, a company focused on the discovery, development, and
commercialization of a broad range of RNA-based therapeutics
enabled by Arbutus' lipid nanoparticle ("LNP") and ligand conjugate
delivery technologies. Arbutus licensed exclusive rights to its LNP
and ligand conjugate delivery platforms to Genevant for RNA-based
applications outside of HBV, except to the extent certain rights
had already been licensed to other third parties
COVID-19 Impact
In December 2019 an outbreak of a novel strain
of coronavirus (COVID-19) was identified in Wuhan, China. This
virus continues to spread globally, has been declared a pandemic by
the World Health Organization and has spread to nearly every
country in the world. The impact of this pandemic has been, and
will likely continue to be, extensive in many aspects of society.
The pandemic has resulted in and will also likely continue to
result in significant disruptions to businesses. A number of
countries and other jurisdictions around the world have implemented
extreme measures to try and slow the spread of the virus. These
measures include the closing of businesses and requiring people to
stay in their homes, the latter of which raises uncertainty
regarding the ability to travel to hospitals in order to
participate in clinical trials. Additional measures that have had,
and will likely continue to have, a major impact on clinical
development, at least in the near-term, include shortages and
delays in the supply chain, and prohibitions in certain countries
on enrolling subjects in new clinical trials. While we have been
able to progress with our clinical and pre-clinical activities to
date, it is not possible to predict if the COVID-19 pandemic will
negatively impact our plans and timelines in the future.
Financial Results
Cash, Cash Equivalents and
Investments
Arbutus had cash, cash equivalents and
investments totaling $118.3 million as of September 30, 2020,
as compared to $90.8 million as of December 31, 2019. During
the nine months ended September 30, 2020, Arbutus used $36.4
million in operating activities and made a $2.5 million equity
investment in Genevant. These cash outflows were offset by $66.1
million of net proceeds from the issuance of common shares under
Arbutus’s ATM program. The Company believes its ending third
quarter cash, cash equivalents and investments of $118.3 million
are sufficient to fund the Company’s operations into mid-2022.
Net Loss
Net loss attributable to common shares for the
three months ended September 30, 2020 was $21.8 million ($0.27
basic and diluted loss per common share) as compared to $85.3
million ($1.50 basic and diluted loss per common share) for the
three months ended September 30, 2019. Net loss attributable to
common shares for the three months ended September 30, 2019
included: i) non-cash impairment charges of $43.8 million for an
in-process research and development ("IPR&D") intangible asset
and $22.5 million for goodwill to reduce their carrying values to
zero, as well as a corresponding income tax benefit of $12.7
million related to the decrease in the deferred tax liability
associated with the IPR&D intangible assets; and ii) a $6.5
million expense related to an arbitration award from the Company's
arbitration with the University of British Columbia.
Net loss attributable to common shares for the
three months ended September 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,
and non-cash expense for a proportionate share of Genevant’s net
losses of $2.5 million in the third quarter of 2020 and $3.5
million in the third quarter of 2019.
Operating Expenses
Research and development expenses were $12.1
million for the three months ended September 30, 2020 compared to
$17.7 million in 2019. The decrease in research and development
expenses for the three months ended September 30, 2020 versus the
same period in 2019 was due primarily to lower clinical expenses in
2020. General and administrative expenses were $4.1 million for the
three months ended September 30, 2020 compared to $3.2 million for
the same period in 2019. This increase was due primarily to
increased compensation-related expenses and an increase in
insurance premiums.
Outstanding Shares
The Company had approximately 84.6 million
common shares issued and outstanding as of September 30, 2020.
In addition, the Company had approximately 10.9 million stock
options outstanding and 1.164 million convertible preferred shares
outstanding, which (including the 8.75% annual interest in the form
of additional preferred shares) will be mandatorily convertible
into approximately 23.0 million common shares on October 18,
2021.
UNAUDITED CONDENSED CONSOLIDATED
STATEMENTS OF LOSS (in thousands, except share and
per share data)
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Revenue |
|
|
|
|
|
|
|
Collaborations and licenses |
$ |
827 |
|
|
$ |
2,600 |
|
|
$ |
2,487 |
|
|
$ |
3,414 |
|
Non-cash royalty revenue |
696 |
|
|
461 |
|
|
2,041 |
|
|
979 |
|
Total Revenue |
1,523 |
|
|
3,061 |
|
|
4,528 |
|
|
4,393 |
|
Operating expenses |
|
|
|
|
|
|
|
Research and development |
12,065 |
|
|
17,731 |
|
|
32,946 |
|
|
45,183 |
|
General and administrative |
4,065 |
|
|
3,249 |
|
|
11,184 |
|
|
15,850 |
|
Depreciation and amortization |
490 |
|
|
507 |
|
|
1,491 |
|
|
1,521 |
|
Change in fair value of contingent consideration |
120 |
|
|
(376) |
|
|
348 |
|
|
(121) |
|
Site consolidation |
— |
|
|
182 |
|
|
64 |
|
|
33 |
|
Impairment of intangible assets |
— |
|
|
43,836 |
|
|
— |
|
|
43,836 |
|
Impairment of goodwill |
— |
|
|
22,471 |
|
|
— |
|
|
22,471 |
|
Arbitration |
— |
|
|
6,486 |
|
|
— |
|
|
6,486 |
|
Loss from operations |
(15,217) |
|
|
(91,025) |
|
|
(41,505) |
|
|
(130,866) |
|
Other income (loss) |
|
|
|
|
|
|
|
Interest income |
100 |
|
|
503 |
|
|
645 |
|
|
1,709 |
|
Interest expense |
(1,074) |
|
|
(1,100) |
|
|
(3,214) |
|
|
(1,114) |
|
Foreign exchange gain (loss) |
(19) |
|
|
(25) |
|
|
(84) |
|
|
43 |
|
Equity investment loss |
(2,545) |
|
|
(3,512) |
|
|
(2,545) |
|
|
(11,497) |
|
Total other loss |
(3,538) |
|
|
(4,134) |
|
|
(5,198) |
|
|
(10,859) |
|
Loss before income taxes |
$ |
(18,755) |
|
|
$ |
(95,159) |
|
|
$ |
(46,703) |
|
|
$ |
(141,725) |
|
Income tax benefit |
— |
|
|
12,656 |
|
|
— |
|
|
12,656 |
|
Net loss |
$ |
(18,755) |
|
|
$ |
(82,503) |
|
|
$ |
(46,703) |
|
|
$ |
(129,069) |
|
Dividend accretion of convertible preferred shares |
(3,027) |
|
|
(2,792) |
|
|
(9,000) |
|
|
(8,269) |
|
Net loss attributable to common shares |
$ |
(21,782) |
|
|
$ |
(85,295) |
|
|
$ |
(55,703) |
|
|
$ |
(137,338) |
|
Loss per share |
|
|
|
|
|
|
|
Basic and diluted |
$ |
(0.27) |
|
|
$ |
(1.50) |
|
|
$ |
(0.77) |
|
|
$ |
(2.43) |
|
Weighted average number of common shares |
|
|
|
|
|
|
|
Basic and diluted |
79,487,444 |
|
|
56,850,172 |
|
|
72,342,070 |
|
|
56,469,358 |
|
UNAUDITED CONDENSED CONSOLIDATED BALANCE
SHEETS (in thousands)
|
September 30, 2020 |
|
December 31, 2019 |
Cash and cash equivalents |
$ |
96,918 |
|
|
$ |
31,799 |
|
Investments
in marketable securities, current |
21,378 |
|
|
59,035 |
|
Accounts
receivable and other current assets |
$ |
2,946 |
|
|
2,994 |
|
Total current assets |
121,242 |
|
|
93,828 |
|
Property and
equipment, net of accumulated depreciation |
7,262 |
|
|
8,676 |
|
Right of use
asset |
2,491 |
|
|
2,738 |
|
Other
non-current assets |
109 |
|
|
293 |
|
Total assets |
$ |
131,104 |
|
|
$ |
105,535 |
|
Accounts
payable and accrued liabilities |
$ |
6,913 |
|
|
$ |
7,235 |
|
Liability-classified options |
317 |
|
|
253 |
|
Lease
liability, current |
378 |
|
|
340 |
|
Total current liabilities |
7,608 |
|
|
7,828 |
|
Liability
related to sale of future royalties |
20,117 |
|
|
18,992 |
|
Contingent
consideration |
3,301 |
|
|
2,953 |
|
Lease
liability, non-current |
2,733 |
|
|
3,018 |
|
Total
stockholders’ equity |
97,345 |
|
|
72,744 |
|
Total liabilities and stockholders’ equity |
$ |
131,104 |
|
|
$ |
105,535 |
|
UNAUDITED CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOW (in
thousands)
|
Nine Months Ended September 30, |
|
2020 |
|
2019 |
Net loss |
$ |
(46,703 |
) |
|
$ |
(129,069 |
) |
Impairment
of intangible assets and goodwill |
— |
|
|
66,307 |
|
Deferred
income tax benefit |
— |
|
|
(12,661 |
) |
Other
non-cash items |
10,365 |
|
|
19,764 |
|
Changes in
working capital |
(90 |
) |
|
(1,996 |
) |
Net cash used in operating activities |
(36,428 |
) |
|
(57,655 |
) |
Net cash provided by investing activities |
35,067 |
|
|
87,160 |
|
Net cash provided by financing activities |
66,536 |
|
|
23,564 |
|
Effect of
foreign exchange rate changes on cash and cash equivalents |
(56 |
) |
|
71 |
|
Increase in cash and cash equivalents |
$ |
65,119 |
|
|
$ |
53,140 |
|
Cash and
cash equivalents, beginning of period |
31,799 |
|
|
36,942 |
|
Cash and cash equivalents, end of period |
$ |
96,918 |
|
|
$ |
90,082 |
|
Investments
in marketable securities |
21,378 |
|
|
— |
|
Cash, cash equivalents and investments, end of
period |
$ |
118,296 |
|
|
$ |
90,082 |
|
Conference Call and Webcast
Today
Arbutus will hold a conference call and webcast
today, Thursday, November 5, 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 7161816.
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 7161816.
About AB-729
AB-729 is an RNA interference (RNAi) therapeutic
targeted to hepatocytes using Arbutus’ novel covalently conjugated
N-acetylgalactosamine (GalNAc) delivery technology that enables
subcutaneous delivery. AB-729 inhibits viral replication and
reduces all HBV antigens, including hepatitis B surface antigen in
preclinical models. Reducing hepatitis B surface antigen is thought
to be a key prerequisite to enable reawakening of a patient’s
immune system to respond to the virus. Based upon clinical data
generated thus far in an ongoing single- and multi-dose Phase 1a/1b
clinical trial, AB-729 has demonstrated positive safety and
tolerability data and meaningful reductions in hepatitis B surface
antigen.
About AB-836
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.
About HBV
Chronic hepatitis B virus (HBV) infection is a
debilitating disease of the liver that afflicts over 250 million
people worldwide with up to 90 million people in China, as
estimated by the World Health Organization. HBV is a global
epidemic that affects more people than hepatitis C virus (HCV) and
HIV infection combined—with a higher morbidity and mortality rate.
HBV is a leading cause of chronic liver disease and need for liver
transplantation, and up to one million people worldwide die every
year from HBV-related causes. The current standard of care for
patients with chronic HBV infection is life-long suppressive
treatment with medications that reduce, but do not eliminate, the
virus, resulting in very low cure rates. There is a significant
unmet need for new therapies to treat HBV.
About Arbutus
Arbutus Biopharma Corporation is a publicly
traded (Nasdaq: ABUS) biopharmaceutical company primarily dedicated
to discovering, developing and commercializing a cure for people
with chronic hepatitis B virus (HBV) infection. The Company is
advancing multiple drug product candidates that may be combined
into a potentially curative regimen for chronic HBV infection.
Arbutus has also initiated a drug discovery and development effort
for treating coronaviruses (including COVID-19). 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 Arbutus’ expectations regarding the timing and clinical
development of its product candidates, including Arbutus’
expectations that results from the multi-dose 60 mg cohorts and
single-dose 90 mg cohorts in HBV DNA positive subjects will be
disclosed as part of an oral presentation at the upcoming ASSLD
conference in November, that results from the 60 mg multi-dose
cohort with a dosing interval of every eight weeks and a 90 mg
single-dose cohort in HBV DNA positive subjects are expected in the
fourth quarter of 2020, and that CTA/IND-enabling studies for
AB-836 will be complete by the end of 2020; Arbutus’ expectation to
initiate a Phase 2 clinical trial for AB-729, VBR and an NrtI in
the first half of 2021 and enroll approximately 60
virologically-suppressed patients with chronic HBV infection;
Arbutus’ planned 2020 cash burn guidance; the potential safety and
efficacy of Arbutus’ product candidates; Arbutus’ expectations
regarding its internal and external research efforts to combat
COVID-19 and future coronavirus outbreaks; the expected sufficiency
of Arbutus’ ending third quarter cash, cash equivalents and
investments are sufficient to fund operations into mid-2022;
Arbutus’ expectations regarding its technology licensed to Genevant
and Arbutus’ expectations regarding the effect of the COVID-19
pandemic on its business.
With respect to the forward-looking statements
contained in this press release, Arbutus has made numerous
assumptions regarding, among other things: the timely receipt of
expected payments; the effectiveness and timeliness of preclinical
studies and clinical trials, and the usefulness of the data; the
timeliness of regulatory approvals; 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, including uncertainties and contingencies
related to the ongoing COVID-19 pandemic.
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 studies 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; changes in Arbutus’ strategy regarding its product
candidates and clinical development activities; 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; and the ongoing COVID-19 pandemic could significantly
disrupt our clinical development programs.
A more complete discussion of the risks and
uncertainties facing Arbutus appears in Arbutus’ Annual Report on
Form 10-K, Arbutus’ Quarterly Reports on Form 10-Q and Arbutus’
continuous and periodic 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 and Media
William H. Collier President and CEO Phone:
267-469-0914 Email: ir@arbutusbio.com
Pam Murphy Investor Relations Consultant Phone:
267-469-0914 Email: ir@arbutusbio.com
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