Arbutus Biopharma Corporation (Nasdaq:ABUS), an industry-leading
therapeutic solutions company focused on developing a cure for
chronic hepatitis B virus infection (HBV), today announced its
third quarter 2015 unaudited financial results and provided a
corporate update.
"We are excited to advance the development of our lead HBV
candidate, TKM-HBV, to a Phase II, multi-dosing, clinical trial
that will measure hepatitis B surface antigen (HBsAg) reduction in
HBV infected patients," said Dr. Mark J. Murray, Arbutus' President
and CEO. "We are also accelerating the development of our other
promising HBV candidates, in particular, those that target cccDNA
formation and core protein/capsid assembly."
Recent Company Highlights
- Arbutus announced progression of TKM-HBV to Phase II studies in
HBV infected patients based on results from a Phase I single
ascending dose study. The TKM-HBV product candidate that will be
studied in Phase II will be referred to as ARB-1467.
- Arbutus presented preclinical HBV data at the 2015
International Meeting on Molecular Biology of Hepatitis B Viruses,
held on October 4-8, 2015. The presentations were titled: 1)
"Profiling the Effects of TKM-HBV on cccDNA in Humanized Chimeric
Mouse Model of HBV"; 2) "TKM-HBV, a Novel RNA Interference
Treatment for Chronic Hepatitis B, Mediates Global Viral Antigen
Reductions through a Well-Defined Mechanism of Action"; and 3)
"Novel Inhibitors of HBV cccDNA Formation Exhibit Synergistic
Effects with Nucleoside and Nucleotide Analog."
- Arbutus announced plans to present at the 2015 American
Association for the Study of Liver Diseases (AASLD) Liver Meeting
held on November 13-17, 2015. The titles of Arbutus' accepted
abstracts are: 1) "TKM-HBV, a Novel RNA Interference Treatment for
Chronic Hepatitis B, Rapidly Reduces Surface Antigen and other
Viral Proteins in Both Intrahepatic and Peripheral Compartments";
2) "TKM-HBV, a Novel RNA Interference Treatment for Chronic
Hepatitis B, has a Complementary Mode of Action to Current Standard
of Care Nucleos(t)ide Analogs"; and 3) "Development of a Direct RNA
Interference Therapy for Hepatitis Delta Virus Infection."
Upcoming Pipeline Milestones
- 4Q15: Initiate phase II, multi-dose efficacy study of TKM-HBV
in chronically infected patients
- 2016: HBsAg reduction data from TKM-HBV Phase II trial (final
data in 2H16)
- 2016: Initiate clinical immune biomarker study for CYT-003 in
HBV chronically infected patients
- 2H16: File IND (or equivalent) for cccDNA formation
inhibitor
- 2H16: File IND (or equivalent) for core protein/capsid assembly
inhibitor
- 2017: Initiate combination studies including two or more
Arbutus HBV product candidates
Financial Results
Cash, Cash Equivalents and Investments
As at September 30, 2015, Arbutus had an aggregate balance in
cash and investments of $206.1 million, as compared to $112.2
million at December 31, 2014. On March 25, 2015, Arbutus completed
an underwritten public offering of 7,500,000 common shares, at a
price of $20.25 per share, resulting in net proceeds of $142.2
million. The Company plans to use these proceeds to develop and
advance its product candidates through clinical trials, as well as
for working capital and general corporate purposes.
Cash used in operating activities
Arbutus is revising its guidance for 2015 cash used in operating
activities to $50 million. Results to-date reflect $38.2 million of
cash used in operating activities.
Non-GAAP Net Loss
The non-GAAP net loss for the three months and nine months ended
September 30, 2015 was $15.7 million ($0.31 loss per common share)
and $37.3 million ($0.86 loss per common share), respectively. The
non-GAAP net loss has been adjusted to exclude:
- non-cash compensation expense of $5.7 million for the three
month period and $11.0 million for the nine month period included
in research, development, collaborations and contracts expenses and
general and administrative expenses in connection to certain share
repurchase provisions related to the merger with Arbutus Inc.,
described below.
- in both the three and nine month periods ended September 30,
2015, a non-cash estimated impairment charge of $38.0 million on
intangible assets related to the discontinuance of the cyclophilins
program OCB-030, net of deferred income taxes of $15.2
million.
Net loss
The net loss for Q3 2015 was $29.0 million ($0.57 per common
share) as compared to a net loss of $8.6 million ($0.39 per common
share) for Q3 2014. The net loss for the nine-months ended
September 30, 2015 was $55.9 million ($1.28 per common share) as
compared to a net loss of $32.7 million ($1.53 per common share)
for the nine-months ended September 30, 2014.
Revenue
Revenue was $4.1 million for Q3 2015 as compared to $4.4 million
for Q3 2014.
Under the DoD contract to develop TKM-Ebola, Arbutus is being
reimbursed for costs incurred, including an allocation of
overheads, and is being paid an incentive fee. In October, the
Company received formal notification from the DoD that, due to an
unclear development path for TKM-Ebola and TKM-Ebola-Guinea, the
Ebola Manufacturing and Ebola-Guinea IND submission statements of
work had been terminated, subject to the completion of certain
post-termination obligations. For this contract, Arbutus recorded
$2.0 million in revenue in Q3 2015 as compared to $1.5 million in
Q3 2014. The increase is largely related to the release of deferred
revenue as the Company is near completion of the TKM-Ebola portion
of the contract, which is expected to complete by the end of 2015,
at which point the contract close out procedures will commence.
Under the Monsanto contract, Arbutus earns 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. In 2015, Monsanto made a
total of $1.8 million in payments for research services under the
arrangement. Arbutus recorded $1.0 million in aggregate Monsanto
revenue in Q3 2015.
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 $1.0 million in revenue in respect of the Dicerna
collaboration in Q3 2015.
Research, Development, Collaborations and Contracts
Expenses
Research, development, collaborations and contracts expenses
were $16.4 million in Q3 2015 as compared to $9.3 million in Q3
2014.
Arbutus increased research activities related to HBV assets in
Q3 2015, following the merger with Arbutus Inc. (formerly OnCore
BioPharma, Inc.).
General and Administrative
General and administrative expenses were $7.7 million in Q3 2015
as compared to $1.8 million in Q3 2014.
The increase in general and administrative expenses was largely
due to an increase in compensation expense with the growth in
employee base to support the expanded portfolio of product
candidates, and, in particular, a non-cash compensation expense
related to share repurchase rights. As a result of the expiry of
share repurchase rights included in the consideration paid for
Arbutus Inc. (formerly OnCore), in Q3 2015, the Company recorded
$5.7 million of incremental non-cash compensation expense. Of this
amount, $4.3 million has been included in general and
administration expense, and $1.4 million has been included in
research and development, collaborations and contracts
expenses.
Acquisition Costs
During 2015, Arbutus incurred $9.7 million in costs related to
the merger with Arbutus Inc., which was completed on March 4,
2015.
Impairment of intangible assets
In Q3 2015, Arbutus recorded an estimated impairment charge of
$38.0 million based on the Company's decision to discontinue the
cyclophilin program, OCB-030, after extensive preclinical
evaluations which concluded that cyclophilins do not play a
meaningful role in HBV biology.
Other Income (Losses)
In Q3 2015, Arbutus recorded a foreign exchange gain of $11.8
million with the appreciation in value of U.S. dollar funds from
the prior period, as compared to a foreign exchange gain of $3.1
million in Q3 2014.
The aggregate decrease in fair value of the Company's common
share purchase warrants was $2.0 million in Q3 2015 as compared to
an increase in the fair value of common share purchase warrants
outstanding of $5.1 million in Q3 2014. The decrease is a result of
a decrease in the Company's share price from the previous reporting
date, and vice versa for Q3 2014.
About Arbutus
Arbutus Biopharma Corporation is a biopharmaceutical company
dedicated to discovering, developing and commercializing a cure for
patients suffering from chronic HBV infection. Our strategy is to
target the three pillars necessary to develop a curative regimen
for HBV: suppressing HBV replication within liver cells,
stimulating and reactivating the body's immune system so that it
can mount an effective defense against the virus and, eliminating
the reservoir of viral genomic material known as covalently closed
circular DNA, or cccDNA that is the source of HBV persistence. Our
portfolio of assets includes a broad pipeline of drug candidates
for use in combination to develop a cure for HBV. To support
continuous discovery of potential novel drug candidates and
technologies, Arbutus has a research collaboration agreement with
the Baruch S. Blumberg Institute that provides exclusive rights to
in-license any intellectual property generated through the
relationship. The Baruch S. Blumberg Institute was established in
2003 by the Hepatitis B Foundation.
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
developing a cure for HBV; advancing the development of TKM-HBV
(ARB-1467) to a Phase II clinical trial in the fourth quarter of
2015; HBsAg reduction data from the TKM-HBV trial in 2016 (and
final data in the second half of 2016); the initiation of a
clinical immune biomarker study for CYT-003 in 2016; fling an IND
(or equivalent) for cccDNA formation inhibitor in the second half
of 2016; filing an IND (or equivalent) for core protein/capsid
assembly inhibitor in the second half of 2016; initiating
combination studies including two or more Arbutus HBV product
candidates in 2017; and planned use of proceeds from our March 2015
underwritten public offering.
With respect to the forward-looking statements contained in this
press release, Arbutus has made numerous assumptions regarding,
among other things: the effectiveness 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.
|
|
UNAUDITED CONDENSED
CONSOLIDATED BALANCE SHEETS (in millions) |
|
|
|
|
|
|
|
September 30,
2015 |
December
31, 2014 |
|
|
|
|
|
Cash and cash equivalents |
$ 181.1 |
$ 72.2 |
|
Short -term investments |
15.0 |
40.0 |
|
Accounts receivable |
2.2 |
1.9 |
|
Other current assets |
1.8 |
2.3 |
|
Long-term investments |
10.0 |
-- |
|
Property and equipment, net |
2.3 |
1.8 |
|
Intangible assets |
353.6 |
-- |
|
Goodwill |
156.6 |
-- |
|
Total assets |
$ 722.6 |
$ 118.2 |
|
Accounts payable and accrued liabilities |
7.5 |
9.3 |
|
Total deferred revenue |
11.7 |
15.8 |
|
Warrant liability |
1.5 |
5.1 |
|
Contingent consideration |
6.7 |
-- |
|
Deferred tax liability |
141.4 |
-- |
|
Total stockholders' equity |
553.8 |
88.0 |
|
Total liabilities and
stockholders' equity |
$ 722.6 |
$ 118.2 |
|
|
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (in
millions) |
|
Three Months
Ended September 30, |
Nine Months
Ended September 30, |
|
2015 |
2014 |
2015 |
2014 |
|
|
|
|
|
Total revenue |
$ 4.1 |
$ 4.4 |
$ 12.2 |
$ 10.6 |
Operating expenses |
|
|
|
|
Research, development,
collaborations and contracts |
16.4 |
9.3 |
20.2 |
26.8 |
General and administrative |
7.7 |
1.8 |
10.4 |
5.6 |
Depreciation of property and
equipment |
0.2 |
0.1 |
0.3 |
0.4 |
Acquisition costs |
-- |
-- |
9.6 |
-- |
Impairment of intangible
assets |
38.0 |
-- |
38.0 |
-- |
Loss from
operations |
(58.1) |
(6.8) |
(90.6) |
(22.2) |
Other income (losses) |
14.0 |
(1.8) |
19.5 |
(10.4) |
Income tax benefit |
15.2 |
-- |
15.2 |
-- |
Net loss |
$ (29.0) |
$ (8.6) |
$ (55.9) |
$ (32.7) |
Cumulative translation adjustment |
(10.1) |
(4.8) |
19.3 |
(3.2) |
Comprehensive
loss |
$ (39.1) |
$ (13.4) |
$ (75.1) |
$ (35.9) |
|
UNAUDITED GAAP TO
NON-GAAP RECONCILIATION: NET LOSS AND NET LOSS PER SHARE
(in millions, except per share amounts) |
|
Three Months
Ended September 30 |
Nine
Months Ended
September 30 |
|
2015 |
2014 |
2015 |
2014 |
GAAP net loss |
$ (29.0) |
(8.6) |
(55.9) |
(32.7) |
Adjustment: |
|
|
|
|
Compensation expense of
expiring repurchase provision rights |
5.7 |
-- |
11.0 |
-- |
Impairment on intangible
assets (net of tax benefit) |
22.8 |
-- |
22.8 |
-- |
Non-GAAP net loss |
$ (15.7) |
$ (8.6) |
$ (37.3) |
$ (32.7) |
|
|
|
|
|
GAAP net loss per common share |
$ (0.57) |
$ (0.39) |
$ (1.28) |
$ (1.53) |
Non-GAAP net loss per common
share |
$ (0.31) |
$ (0.39) |
$ (0.86) |
$ (1.53) |
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 and nine months
period ended September 30, 2015, 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. (formerly OnCore
BioPharma, Inc.) and impairment on intangible assets (net of tax
benefit). 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.
CONTACT: 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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