Arbutus Biopharma Corporation (Nasdaq: ABUS), a clinical-stage
biopharmaceutical company focused on developing a cure for people
with chronic hepatitis B virus (HBV) infection, today reports its
first quarter 2020 financial results, provides a pipeline update
and announces the establishment of a new research initiative
focused on the identification of novel therapies to combat
COVID-19.
William Collier, President and Chief Executive
Officer of Arbutus, stated, “As we announced in March, preliminary
results from an ongoing Phase 1a/1b clinical trial for our lead
compound, AB-729, demonstrate that it is a potent RNAi agent
capable of reducing HBsAg plasma levels. We are on track to have
additional results from the week 12 portion of the 60 mg
single-dose cohort in the second quarter of 2020.”
Mr. Collier added, “Despite the challenges of
COVID-19, we have not had to alter our objectives for 2020.
However, future disruptions related to the COVID-19 pandemic could
negatively impact our plans and timelines, including enrolling and
monitoring subjects in the trial. We remain focused on developing a
portfolio of products, with different mechanisms of action, that
when used in combination could result in a functional cure for
HBV.”
The Arbutus 2020 objectives include:
- advancing the Phase 1a/1b clinical trial of AB-729, a
proprietary GalNAc delivered RNAi compound;
- progressing our next-generation capsid inhibitor AB-836 through
IND-enabling studies; and,
- continuing our preclinical research to develop an oral HBV
RNA-destabilizer and an oral anti-PD-L1 inhibitor.
Also, during the first quarter, and under the
direction of Arbutus’ Chief Scientific Officer, Dr. Michael Sofia,
the Company has initiated an internal research program to identify
new small molecule antiviral medicines to treat COVID-19 and future
coronavirus outbreaks. Dr. Sofia, 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.
The establishment of the COVID-19 effort does
not impact Arbutus’ current cash burn guidance for 2020 of $54 to
$58 million.
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 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.° Additional week 12 results for the 60 mg single-dose
cohort are expected in the second quarter of 2020.° Results
from the multi-dose 60 mg and single-dose 90 mg cohorts are
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 compared to
AB-506. Arbutus continues to expect completion of
IND-enabling studies by the end of 2020.
Early R&D Programs
- Arbutus continues a focused
discovery effort 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.
New Research Efforts Initiated to Combat
COVID-19
Dr. Michael Sofia, Chief Scientific Officer of
Arbutus stated, “While our core mission at Arbutus is to find a
cure for hepatitis B, the magnitude of the coronavirus pandemic is
undeniable. Given our proven expertise in the discovery of new
antiviral therapies, we feel compelled to work towards the
discovery of a new treatment. To that end, we have assembled an
internal team of expert scientists, with proven track records in
bringing new antiviral medicines to market, to identify novel small
molecule therapies to treat COVID-19. We have also recently joined
forces with the COVID R&D consortium to further support and
expedite efforts to address the SARS-CoV-2 pandemic and any future
coronavirus outbreaks.”
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.
COVID-19
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 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 $88.1 million as of March 31, 2020, as
compared to $90.8 million as of December 31, 2019. We
believe our ending first quarter cash, cash equivalents and
investments of $88.1 million is sufficient to fund operations into
mid-2021. Arbutus used $15.5 million in operating activities during
the three months ended March 31, 2020. In addition, we received
$12.3 million of net proceeds during the three months ended March
31, 2020 from the issuance of common shares under Arbutus’s ATM
program.
Net Loss
Net loss attributable to common shares for the
three months ended March 31, 2020 was $16.8 million ($0.25 basic
and diluted loss per common share) as compared to $26.0 million
($0.47 basic and diluted loss per common share) in 2019. Net
loss attributable to common shares for the three months ended March
31, 2020 and 2019 included non-cash expense for the accrual of
coupon on the Company’s convertible preferred shares of $3.0
million and $2.7 million, respectively. Additionally, net
loss attributable to common shares for the three months ended March
31, 2019 included $4.7 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 $10.4
million for the three months ended March 31, 2020 compared to $14.7
million in 2019. The decrease in research and development
expenses for the three months ended March 31, 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 March 31, 2020 compared to $4.4 million in 2019.
The decrease in general and administrative expenses was due
primarily to a decrease in legal fees and non-cash stock based
compensation expense.
Outstanding Shares
The Company had 68,961,395 common shares issued
and outstanding as of March 31, 2020. In addition, the Company
had approximately 10.6 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 million common shares on October 18, 2021.
UNAUDITED CONDENSED CONSOLIDATED
STATEMENTS OF LOSS(in thousands, except share and
per share data)
|
Three Months Ended March 31, |
|
2020 |
|
2019 |
Revenue |
|
|
|
Revenue from collaborations and licenses |
$ |
835 |
|
|
$ |
508 |
|
Non-cash royalty revenue |
656 |
|
|
171 |
|
Total
Revenue |
1,491 |
|
|
679 |
|
Operating
expenses |
|
|
|
Research and development |
10,416 |
|
|
14,712 |
|
General and
administrative |
3,553 |
|
|
4,412 |
|
Depreciation |
500 |
|
|
509 |
|
Change in fair value of
contingent consideration |
112 |
|
|
125 |
|
Site consolidation |
57 |
|
|
117 |
|
Loss from
operations |
(13,147 |
) |
|
(19,196 |
) |
Other income
(loss) |
|
|
|
Interest income |
345 |
|
|
600 |
|
Interest expense |
(1,041 |
) |
|
(12 |
) |
Foreign exchange (losses) /
gains |
(18 |
) |
|
8 |
|
Net equity investment
loss |
— |
|
|
(4,651 |
) |
Total other
loss |
(714 |
) |
|
(4,055 |
) |
Net loss |
$ |
(13,861 |
) |
|
$ |
(23,251 |
) |
Dividend accretion of
convertible preferred shares |
(2,978 |
) |
|
(2,715 |
) |
Net loss attributable
to common shares |
$ |
(16,839 |
) |
|
$ |
(25,966 |
) |
Net loss per common share |
|
|
|
Basic and diluted |
$ |
(0.25 |
) |
|
$ |
(0.47 |
) |
Weighted average number of
common shares |
|
|
|
Basic and diluted |
67,683,586 |
|
|
55,740,121 |
|
|
|
|
|
|
|
UNAUDITED CONDENSED CONSOLIDATED BALANCE
SHEETS(in thousands)
|
March 31, 2020 |
|
December 31, 2019 |
Cash and cash equivalents |
$ |
26,416 |
|
|
$ |
31,799 |
|
Investments in marketable
securities, current |
58,475 |
|
|
59,035 |
|
Accounts receivable and other
current assets |
3,442 |
|
|
2,994 |
|
Total current assets |
88,333 |
|
|
93,828 |
|
Property and equipment, net of
accumulated depreciation |
8,176 |
|
|
8,676 |
|
Investments in marketable
securities, non-current |
3,215 |
|
|
— |
|
Right of use asset |
2,657 |
|
|
2,738 |
|
Other non-current assets |
233 |
|
|
293 |
|
Total assets |
$ |
102,614 |
|
|
$ |
105,535 |
|
Accounts payable and accrued
liabilities |
$ |
3,565 |
|
|
$ |
7,235 |
|
Liability-classified options |
58 |
|
|
253 |
|
Lease liability, current |
408 |
|
|
340 |
|
Total current liabilities |
4,031 |
|
|
7,828 |
|
Liability related to sale of
future royalties |
19,375 |
|
|
18,992 |
|
Contingent consideration |
3,065 |
|
|
2,953 |
|
Lease liability, non-current |
2,887 |
|
|
3,018 |
|
Total
stockholders’ equity |
73,256 |
|
|
72,744 |
|
Total liabilities and stockholders’ equity |
$ |
102,614 |
|
|
$ |
105,535 |
|
|
UNAUDITED CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOW(in thousands)
|
Three Months
Ended March 31, |
|
2020 |
|
2019 |
Net loss |
$ |
(13,861 |
) |
|
$ |
(23,251 |
) |
Non-cash items |
2,448 |
|
|
6,589 |
|
Changes in working capital |
(4,040 |
) |
|
82 |
|
Net cash used in operating activities |
(15,453 |
) |
|
(16,580 |
) |
Net cash provided by / (used in) investing
activities |
(2,401 |
) |
|
61,033 |
|
Net cash provided by financing activities |
12,481 |
|
|
2,536 |
|
Effect of foreign exchange
rate changes on cash and cash equivalents |
(10 |
) |
|
38 |
|
Increase / (decrease) in cash and cash
equivalents |
$ |
(5,383 |
) |
|
$ |
47,027 |
|
Cash and cash equivalents,
beginning of period |
31,799 |
|
|
36,942 |
|
Cash and cash equivalents, end of period |
$ |
26,416 |
|
|
$ |
83,969 |
|
Investments in marketable
securities |
61,690 |
|
|
26,621 |
|
Cash, cash equivalents and investments, end of
period |
$ |
88,106 |
|
|
$ |
110,590 |
|
|
|
|
|
|
|
|
|
Conference Call and Webcast
Today
Arbutus will hold a conference call and webcast
today, Monday, May 11, 2020 at 8:00 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 2993486.
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 2993486.
About Arbutus
Arbutus Biopharma Corporation is a publicly
traded (Nasdaq: ABUS) biopharmaceutical company 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. 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 expectations regarding the timing and clinical
development of our product candidates, including our expectations
that certain data from the 60 mg single-dose cohort will be
available in the second quarter of 2020, that results from the
multi-dose 60 mg and single-dose 90 mg cohorts will be available in
the second half of 2020 and that IND-enabling studies for AB-836
will be complete by the end of 2020; our planned 2020 objectives
and cash burn guidance; the potential safety and efficacy of our
product candidates, including the potential for AB-836 to have
increase potency and an enhanced resistance profile compared to
AB-506; our expectations regarding our new internal and external
research efforts to combat COVID-19; the expected sufficiency of
our ending first quarter cash, cash equivalents and investments to
fund operations into mid-2021; and our expectations regarding the
effect of the COVID-19 pandemic on our 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 MediaWilliam H.
CollierPresident and CEOPhone: 604-419-3200Email:
ir@arbutusbio.com
Pam MurphyInvestor Relations ConsultantPhone:
604-419-3200Email: ir@arbutusbio.com
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