Arbutus Biopharma Corporation (Nasdaq: ABUS), an industry-leading
Hepatitis B Virus (HBV) therapeutic solutions company, today
reports its second quarter 2019 financial results and provides a
corporate update.
“I am excited to join
Arbutus at this important inflection point as we look to advance
our two lead compounds, AB-506 and AB-729, through Phase1a/1b
clinical trials,” said William Collier, Arbutus’ President and
Chief Executive Officer. “Provided these compounds progress as
expected, we anticipate moving into a combination proof-of-concept
Phase 2 clinical trial in subjects with chronic hepatitis B in the
second half of 2020. We believe a combination regimen that includes
several different mechanisms of action will be required to improve
upon the existing standard-of-care in HBV.”
Recent Clinical Accomplishments and Key
Corporate Accomplishments
New President & Chief Executive
Officer
- William H. Collier was appointed
President and Chief Executive Officer of Arbutus and a member of
the Board of Directors effective June 24th. Mr. Collier’s
appointment filled the vacancy created by the retirement of Mark J.
Murray, Ph.D., as Arbutus’ President and Chief Executive Officer,
which was effective June 23rd. Mr. Collier has over 30 years
of experience as a senior executive in the pharmaceutical industry
and previously served as President and General Manager, North
America at ViiV Healthcare. At ViiV, he oversaw the
industry-leading launches of several new treatments for HIV. Prior
to joining ViiV in 2009, Mr. Collier held multiple senior
leadership roles at GlaxoSmithKline. Earlier in his career he led
the launches of new treatments for herpes and bacterial infections.
Mr. Collier received his BSc in Mathematics and Management Sciences
from the University of Manchester Institute of Science &
Technology, UK, and served on The President’s Advisory Council on
HIV/AIDS from 2014 to 2017.
AB-506
- In July 2019, Arbutus announced
preliminary results from a Phase 1a/1b clinical trial demonstrating
that AB-506 is a potent oral capsid inhibitor. These preliminary
Phase 1a/1b results support the Company’s confidence in its
potential to significantly contribute to the inhibition of HBV
replication in a curative combination regimen.
- Arbutus expects that safety and
efficacy data from this portion of the Phase 1a/1b trial, as well
as results from a planned Phase 1 28-day clinical trial in healthy
subjects, will be submitted to an appropriate scientific meeting
later this year.
- Arbutus is planning on dosing
additional cohorts and final results of this Phase 1a/1b trial,
which are expected in the first half of 2020, will inform next
steps toward the combination proof-of-concept Phase 2 clinical
trial in subjects with chronic hepatitis B.
AB-729
- In July 2019, the Company initiated
the healthy subject portion of a single and multiple dose Phase
1a/1b clinical trial for AB-729, a subcutaneously delivered RNAi
agent which has been shown in preclinical models to span all HBV
transcripts, reduce all viral antigens, including hepatitis B
surface antigen (HBsAg) expression, and inhibit HBV replication. In
this trial, which will investigate the safety, tolerability,
pharmacokinetics, and pharmacodynamics of AB-729 in healthy
subjects and subjects with chronic hepatitis B infection, AB-729
will be dosed monthly.
- Preliminary safety and efficacy
data from both healthy subjects and several single dose cohorts of
subjects with chronic hepatitis B infection are expected in the
first quarter of 2020.
Early R&D Programs
- Arbutus continues a focused
discovery effort on follow-on compounds for its current HBV
pipeline, including its HBV RNA destabilizer, AB-452, as well as
efforts to identify compounds potentially capable of reawakening
HBV patients’ immune response such as PD-L1 blockers and
HBV-specific targets such as HBV cccDNA.
ONPATTRO Royalty
Entitlement
- Arbutus has a royalty entitlement
on global net sales of ONPATTRO™ (Patisiran) for the lipid
nanoparticle delivery (LNP) technology licensed by Arbutus to
Alnylam Pharmaceuticals, Inc. (Alnylam) for this product. ONPATTRO
is an RNAi therapeutic for the treatment of hereditary ATTR (hATTR)
amyloidosis that has been approved by the FDA and the EMA. In July
2019, Arbutus sold this royalty entitlement to OMERS, the defined
benefit pension plan for municipal employees based in the Province
of Ontario, Canada, effective as of January 1, 2019,
for $20 million in gross proceeds before advisory fees.
OMERS will retain this royalty entitlement until it has
received $30 million in royalties, at which point 100% of
this royalty entitlement will revert to Arbutus.
- In addition to the royalty
entitlement from the Alnylam LNP license agreement, Arbutus is also
entitled to a second, lower royalty entitlement on global net sales
of ONPATTRO originating from a settlement agreement and subsequent
license agreement with Acuitas Therapeutics. The royalty
entitlement from Acuitas has been retained by Arbutus and is not
part of the royalty entitlement sale to OMERS.
Financial Results
Cash, Cash Equivalents and
Investments
Arbutus had cash, cash equivalents and
short-term investments totaling $95.3 million as of June 30, 2019,
as compared to $124.6 million as of December 31, 2018. The
decreased cash balance was due primarily to $34.1 million of cash
used in operating activities for the six months ended June 30,
2019, partially offset by $4.7 million of net proceeds from the
issuance of shares under its ATM program. In July 2019, the Company
received $20 million in gross proceeds from the sale of a portion
of its royalty entitlement on net sales of ONPATTRO. The Company
believes its cash and investments balance is sufficient to fund
operations into the second half of 2020.
Operating Expenses
Research and development expenses were $12.8
million in Q2 2019 compared to $16.3 million in Q2 2018. Research
and development expenses in 2019 included costs associated with the
Company’s Phase 1a/1b clinical trial for its lead capsid inhibitor
(AB-506), pre-clinical studies for its RNAi agent (AB-729), and
characterization activities for its HBV RNA Destabilizer (AB-452).
The decrease in research and development expenses was due primarily
to higher costs in 2018 for AB-452, including drug product
manufacturing, and expenses in 2018 associated with the Phase 2
clinical trial for AB-1467, partially offset by increased spending
in 2019 for the Phase 1a/1b clinical trial for AB-506 and
pre-clinical studies for AB-729. General and administrative
expenses were $8.2 million in Q2 2019 compared to $3.8 million in
Q2 2018. The increase in general and administrative expenses was
due primarily to our former President and Chief Executive Officer’s
departure from the Company in June 2019. In accordance with the
terms of his legacy employment agreement, he received $2.3 million
in cash severance and the Company recognized $2.2 million of
non-cash stock-based compensation expense for accelerated vesting
of his stock options.
Equity investment loss
As of June 30, 2019, the Company owned
approximately 40% of the common equity of Genevant Sciences Ltd.
(Genevant), a company launched with Roivant Sciences Ltd. in
April 2018. Arbutus recorded a loss of $3.3 million in Q2
2019 for its proportionate share of Genevant’s net loss. In Q2
2018, Arbutus recognized a non-cash gain of $24.9 million in
connection with the equity interest received by Arbutus upon
Genevant’s formation. Financial results of Genevant are recorded on
a one-quarter lag basis.
Net Income (Loss)
Net income (loss) attributable to common shares
for Q2 2019 was a net loss of $26.1 million ($0.46 basic and
diluted loss per common share) as compared to net income of $0.6
million ($0.01 basic and diluted income per common share) for Q2
2018. Net income (loss) attributable to common shares included $2.8
million of non-cash expense in Q2 2019 and $2.5 million in Q2 2018
for the accrual of coupon on the Company’s convertible preferred
shares. Net income in Q2 2018 included a non-cash gain
of $24.9 million in connection with the equity interest
received by Arbutus upon Genevant’s formation.
Outstanding Shares
The Company had approximately 56.9 million
common shares issued and outstanding as of June 30, 2019. In
addition, the Company had approximately 8.9 million options
outstanding and 1.164 million convertible preferred shares
outstanding, which (including the annual 8.75% coupon) will be
mandatorily convertible into approximately 23 million common shares
on October 18, 2021. Assuming the outstanding options and
convertible preferred shares were fully converted, the Company
would have had approximately 89 million common shares outstanding
as of June 30, 2019.
|
|
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(LOSS) (in millions, except share
and per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six
Months Ended |
|
|
|
June 30, |
|
June
30, |
|
|
2019 |
2018 |
|
|
2019 |
|
|
2018 |
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue |
|
$ |
0.7 |
|
$ |
1.2 |
|
|
$ |
1.3 |
|
$ |
2.7 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
Research and development |
|
12.8 |
|
16.3 |
|
|
|
27.4 |
|
|
30.3 |
|
General and administrative |
|
8.2 |
|
3.8 |
|
|
|
12.6 |
|
|
7.4 |
|
Depreciation and amortization |
|
0.5 |
|
0.6 |
|
|
|
1.0 |
|
|
1.2 |
|
Site consolidation |
|
(0.3 |
) |
2.6 |
|
|
|
(0.1 |
) |
|
4.2 |
|
Loss from operations |
|
(20.5 |
) |
(22.1 |
) |
|
|
(39.6 |
) |
|
(40.4 |
) |
Other income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
Interest income (expense), net |
|
0.5 |
|
0.8 |
|
|
|
1.2 |
|
|
1.4 |
|
Foreign exchange gain (loss) |
|
0.1 |
|
(0.4 |
) |
|
|
0.1 |
|
|
(0.9 |
) |
Gain on investment |
|
— |
|
24.9 |
|
|
|
— |
|
|
24.9 |
|
Equity investment loss |
|
(3.3 |
) |
— |
|
|
|
(8.0 |
) |
|
— |
|
Decrease (increase) in fair value of
contingent consideration |
|
(0.1 |
) |
(0.2 |
) |
|
|
(0.3 |
) |
|
0.7 |
|
Total other income (loss) |
|
(2.8 |
) |
25.1 |
|
|
|
(7.0 |
) |
|
26.1 |
|
Net income (loss) |
|
$ |
(23.3 |
) |
$ |
3.1 |
|
|
$ |
(46.6 |
) |
$ |
(14.3 |
) |
Accrual of coupon on convertible preferred
shares |
|
|
(2.8 |
) |
|
(2.5 |
) |
|
|
(5.5 |
) |
|
(4.9 |
) |
Net loss attributable to common
shares |
|
$ |
(26.1 |
) |
$ |
0.6 |
|
|
$ |
(52.1 |
) |
$ |
(19.2 |
) |
Loss per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.46 |
) |
$ |
0.01 |
|
|
$ |
(0.92 |
) |
$ |
(0.35 |
) |
Diluted |
|
$ |
(0.46 |
) |
$ |
0.01 |
|
|
$ |
(0.92 |
) |
$ |
(0.35 |
) |
Weighted average number of
shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
56,805,583 |
|
|
55,211,294 |
|
|
|
56,275,795 |
|
|
55,149,674 |
|
Diluted |
|
|
56,805,583 |
|
|
56,487,220 |
|
|
|
56,275,795 |
|
|
55,149,674 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UNAUDITED CONDENSED CONSOLIDATED BALANCE
SHEETS(in
millions) |
|
June 30, |
|
December 31, |
|
2019 |
|
2018 |
|
|
|
|
Cash and cash equivalents |
$ |
78.9 |
|
$ |
36.9 |
Short-term
investments |
16.4 |
|
87.7 |
Accounts receivable
and other current assets |
4.3 |
|
4.6 |
Current assets |
99.6 |
|
129.2 |
Investment in
Genevant |
14.4 |
|
22.2 |
Property and
equipment, net |
9.4 |
|
10.2 |
Right of use
asset |
2.9 |
|
— |
Intangible
assets |
43.8 |
|
43.8 |
Goodwill |
22.5 |
|
22.5 |
Total
assets |
$ |
192.6 |
|
$ |
227.9 |
Accounts payable and
accrued liabilities |
7.9 |
|
9.4 |
Site consolidation
accrual |
0.4 |
|
1.3 |
Liability-classified
options |
0.1 |
|
0.5 |
Lease liability,
current |
0.4 |
|
— |
Current liabilities |
8.8 |
|
11.2 |
Deferred rent and
inducements, non-current |
— |
|
0.6 |
Contingent
consideration |
3.4 |
|
3.1 |
Lease liability,
non-current |
3.2 |
|
— |
Deferred tax
liability |
12.7 |
|
12.7 |
Total stockholders’
equity |
164.5 |
|
200.3 |
Total
liabilities and stockholders’ equity |
$ |
192.6 |
|
$ |
227.9 |
|
|
|
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOW (in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
June 30, |
|
|
June 30, |
|
|
2019 |
2018 |
|
|
2019 |
|
|
2018 |
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss) for the period |
|
$ |
(23.3 |
) |
$ |
3.1 |
|
$ |
(46.6 |
) |
$ |
(14.3 |
) |
Net cash used in operating activities |
|
(17.6 |
) |
(17.6 |
) |
|
(34.1 |
) |
|
(37.6 |
) |
Net cash provided by (used in) investing activities |
|
10.0 |
|
15.0 |
|
|
71.0 |
|
|
(60.7 |
) |
Net cash provided by financing activities |
|
2.5 |
|
0.7 |
|
|
5.0 |
|
|
55.1 |
|
Effect of foreign exchange rate changes on cash & cash
equivalents |
|
— |
|
(0.4 |
) |
|
0.1 |
|
|
(0.9 |
) |
Net (decrease) increase in cash, cash equivalents and
restricted investments |
|
$ |
(5.1 |
) |
$ |
(2.3 |
) |
$ |
42.0 |
|
$ |
(44.1 |
) |
Cash, cash equivalents and restricted investments, beginning of
period |
|
84.0 |
|
12.5 |
|
|
36.9 |
|
|
54.3 |
|
Cash, cash equivalents and restricted investments, end
of period |
|
$ |
78.9 |
|
$ |
10.2 |
|
$ |
78.9 |
|
$ |
10.2 |
|
Short-term investments |
|
|
16.4 |
|
|
144.7 |
|
|
16.4 |
|
|
144.7 |
|
Total cash, cash equivalents, restricted cash and
short-term investments, end of period |
|
$ |
95.3 |
|
$ |
154.9 |
|
$ |
95.3 |
|
$ |
154.9 |
|
Conference Call Today
Arbutus will hold a conference call and webcast
today, Monday, August 5, 2019 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.
Alternatively, you can dial (866) 393-1607 or (914) 495-8556 and
reference conference ID 2098024.
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 2098024.
About Arbutus
Arbutus Biopharma Corporation is a publicly
traded (Nasdaq: ABUS) biopharmaceutical company dedicated to
discovering, developing and commercializing a cure for patients
suffering from chronic Hepatitis B infection. Arbutus is developing
multiple drug candidates, each of which have the potential to
improve upon the standard of care and contribute to a curative
combination regimen. 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 our anticipation to move into a combination proof-of-concept
Phase 2 clinical trial in subjects with chronic hepatitis B in the
second half of 2020; our confidence in AB-506’s potential to
contribute to the inhibition of HBV replication in a curative
combination regimen; our expectation that results from this
portion of the Phase 1a/1b trial for AB-506, as well as results
from a planned Phase 1 28-day clinical trial in healthy subjects,
will be submitted and accepted to an appropriate scientific meeting
later this year; our plan to dose additional cohorts in AB-506 and
have data available in the first half of 2020; our expectation that
preliminary safety and efficacy data from the Phase 1a/1b clinical
trial for AB-729 for both healthy subjects and several single dose
cohorts of subjects with chronic hepatitis B infection will be
available in the first quarter of 2020; the benefits from the
royalty monetization transaction; our expectations regarding the
initiation, timing and completion of preclinical studies and
clinical trials; the sufficiency of our cash and cash equivalents
to extend into the second half of 2020; and the potential for our
drug candidates to improve upon the standard of care and contribute
to a curative combination regimen for chronic HBV.
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
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.
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; 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, 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
InvestorsDavid HastingsChief Financial
OfficerPhone: 267-469-0914Email: ir@arbutusbio.com
MediaPam Murphy Investor Relations Consultant
Phone: 604-419-3200 Email: ir@arbutusbio.com
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