Arbutus Biopharma Corporation (Nasdaq: ABUS), a clinical-stage
biopharmaceutical company leveraging its extensive virology
expertise to develop novel therapeutics that target specific viral
diseases, today reports its third quarter 2022 financial results
and provides corporate updates.
“This quarter we continued to advance our
pipeline of clinical and preclinical programs in support of our
mission to develop a functional cure for patients with chronic
hepatitis B virus (cHBV) and to treat COVID-19 and future
coronavirus outbreaks,” said William Collier, Arbutus’ President
and Chief Executive Officer. “We reported at AASLD off-treatment
data which showed that AB-729 treatment results in long-lasting
control of HBV biomarker levels. We continue to believe that AB-729
can be a cornerstone agent in a potential curative combination
treatment for cHBV based on the body of data supporting its impact
on HBV markers and immune activation properties, safety profile and
convenient dosing schedule.”
Mr. Collier continued, “Looking ahead, we are
on-track to achieve our remaining 2022 milestones including
reporting data from our Phase 2 clinical trial evaluating AB-729
with interferon, completing IND-enabling studies with AB-161, our
RNAi destabilizer, and AB-101, our PD-L1 inhibitor, and nominating
a compound that inhibits the SARS-CoV-2 nsp5 main protease and has
pan-coronavirus inhibitor properties.”
Pipeline Updates:AB-729
(RNAi Therapeutic)
- Presented additional off-treatment
data from AB-729-001 at the AASLD Liver Meeting, showing that HBsAg
levels remained well below pre-trial levels in nine of nine
patients who were eligible and elected to stop therapy, suggestive
of immunological control, with no patient meeting protocol-defined
criteria to restart NA therapy.
- The Phase 2a clinical trial
evaluating AB-729 in combination with NA therapy and short courses
of Peg-IFNα-2a (AB-729-201) in cHBV patients is continuing. The
Company is on-track to report initial data this quarter.
- Enrollment is on-going in the
AB-729-202 Phase 2a clinical trial evaluating AB-729, in
combination with VTP-300, Vaccitech plc’s (Vaccitech) therapeutic
vaccine, and NA, in cHBV patients.
- Presented preliminary data from the
Phase 2a clinical trial evaluating AB-729 and NA in combination
with vebicorvir (VBR), Assembly Biosciences, Inc.’s first
generation HBV core inhibitor (capsid inhibitor), at AASLD showing
that the combination of VBR+AB-729+NA does not result in greater
on-treatment improvements in markers of active HBV infection as
compared to AB-729+NA alone. The addition of VBR did not negatively
impact the reduction of HBsAg, in the triple combination arm.
AB-101 (Oral PD-L1
Inhibitor)
- At AASLD, presented preclinical
data in mice infected with HBV showing that combination treatment
with AB-101 and an HBV targeting GalNAc-siRNA agent resulted in
activation and increased frequency of HBV-specific T-cells and
greater anti-HBsAg antibody production. The Company is on-track to
complete IND-enabling studies for AB-101 this year.
AB-161 (Oral RNA
Destabilizer)
- At the Discovery on Target
Conference, presented preclinical data showing that AB-161 reduced
HBV RNA and HBsAg in multiple preclinical models, with favorable
liver centricity and lack of observed peripheral neuropathy. The
Company is conducting the remaining IND-enabling studies which are
expected to be complete by the end of the year.
AB-836 (Oral Capsid
Inhibitor)
- Discontinued development of AB-836
based on additional ALT elevations seen in the new healthy
volunteer arm of the AB-836-001 clinical trial.
COVID-19 and Pan-Coronavirus
Programs
- The Company is on-track to nominate
a lead candidate that inhibits the SARS-CoV-2 nsp5 main protease
(Mpro) this year and then advance that compound into IND-enabling
studies.
- The Company is continuing lead
optimization activities for an nsp12 viral polymerase
candidate.
Financial Results
Cash, Cash Equivalents and
Investments
As of September 30, 2022, the Company had cash,
cash equivalents and investments in marketable securities of $190.2
million, as compared to $191.0 million as of December 31, 2021.
During the nine months ended September 30, 2022,
the Company received a $40.0 million (net of withholding taxes)
upfront payment from Qilu Pharmaceutical Co., Ltd. (“Qilu”) related
to a technology transfer and license agreement for AB-729 in
greater China, $15.0 million of gross proceeds from Qilu’s equity
investment in the Company and $9.2 million of net proceeds from the
issuance of common shares under Arbutus’s “at-the-market” offering
program. These cash inflows were partially offset by $62.4 million
of cash used in operations. The Company expects a net cash burn
between $90 to $95 million in 2022, not including the $55 million
of proceeds received from Qilu, and believes its cash runway will
be sufficient to fund operations into the second quarter of
2024.
Revenue
Total revenue was $6.0 million for the three
months ended September 30, 2022 compared to $3.3 million for the
same period in 2021. The increase of $2.7 million was due primarily
to $2.3 million of revenue recognition from the Company’s license
agreement with Qilu based on employee labor hours expended by the
Company during the three months ended September 30, 2022 to perform
its manufacturing obligations under the license agreement.
Operating Expenses
Research and development expenses were $20.1
million for the three months ended September 30, 2022, compared to
$16.7 million for the same period in 2021. The increase of $3.4
million was due primarily to an increase in expenses related to the
Company’s multiple, ongoing AB-729 Phase 2a clinical trials,
including its collaborations with Assembly and Vaccitech, and an
increase in expenses for its early-stage development programs,
including AB-101 and AB-161. General and administrative expenses
were $3.5 million for the three months ended September 30, 2022,
compared to $4.2 million for the same period in 2021. This decrease
was due primarily to an arbitrator’s award of $0.5 million during
the three months ended September 30, 2022 for recovery of costs and
attorneys’ fees related to an arbitration matter with the
University of British Columbia.
Net Loss
For the three months ended September 30, 2022,
the Company’s net loss attributable to common shares was $17.6
million, or a loss of $0.12 per basic and diluted common share, as
compared to a net loss attributable to common shares of $24.2
million, or a loss of $0.24 per basic and diluted common share, for
the three months ended September 30, 2021. Net loss attributable to
common shares for the three months ended September 30, 2021
included $5.1 million of non-cash expense for the accrual coupon on
the Company’s convertible preferred shares, which converted into
22.8 million common shares in October 2021.
Outstanding Shares
As of September 30, 2022, the Company had
approximately 152.7 million common shares issued and outstanding,
as well as approximately 15.9 million stock options outstanding.
Roivant Sciences Ltd. owned approximately 25% of the Company’s
outstanding common shares as of September 30, 2022.
COVID-19 Impact
The COVID-19 pandemic has resulted in and will
likely continue to result in significant disruptions to businesses.
Measures implemented around the world in attempts to slow the
spread of COVID-19 have had, and will likely continue to have, a
major impact on clinical development, at least in the near-term,
including shortages and delays in the supply chain and prohibitions
in certain countries on enrolling subjects and patients in new
clinical trials. While the Company has been able to progress with
its clinical and pre-clinical activities to date, it is not
possible to predict if the COVID-19 pandemic will materially impact
the Company’s plans and timelines in the future.
UNAUDITED CONDENSED CONSOLIDATED
STATEMENTS OF LOSS(in thousands, except share and
per share data)
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
2022 |
|
2021 |
|
|
2022 |
|
|
2021 |
Revenue |
|
|
|
|
|
|
|
Collaborations and licenses |
$ |
3,607 |
|
|
$ |
1,480 |
|
|
$ |
27,381 |
|
|
$ |
3,819 |
|
Non-cash royalty revenue |
2,345 |
|
|
1,860 |
|
|
|
5,393 |
|
|
|
3,963 |
|
Total
Revenue |
5,952 |
|
|
3,340 |
|
|
|
32,774 |
|
|
|
7,782 |
|
Operating
expenses |
|
|
|
|
|
|
|
Research and development |
20,055 |
|
|
16,709 |
|
|
|
61,459 |
|
|
|
46,290 |
|
General and
administrative |
3,493 |
|
|
4,183 |
|
|
|
13,585 |
|
|
|
12,539 |
|
Change in fair value of
contingent consideration |
215 |
|
|
856 |
|
|
|
624 |
|
|
|
1,679 |
|
Total operating
expenses |
23,763 |
|
|
21,748 |
|
|
|
75,668 |
|
|
|
60,508 |
|
Loss from
operations |
(17,811 |
) |
|
(18,408 |
) |
|
|
(42,894 |
) |
|
|
(52,726 |
) |
Other income
(loss) |
|
|
|
|
|
|
|
Interest income |
694 |
|
|
27 |
|
|
|
1,249 |
|
|
|
97 |
|
Interest expense |
(429 |
) |
|
(762 |
) |
|
|
(1,417 |
) |
|
|
(2,297 |
) |
Foreign exchange loss |
(21 |
) |
|
(15 |
) |
|
|
(18 |
) |
|
|
- |
|
Total other income
(loss) |
244 |
|
|
(750 |
) |
|
|
(186 |
) |
|
|
(2,200 |
) |
Loss before income
taxes |
(17,567 |
) |
|
(19,158 |
) |
|
|
(43,080 |
) |
|
|
(54,926 |
) |
Income tax expense |
- |
|
|
- |
|
|
|
(4,444 |
) |
|
|
- |
|
Net loss |
(17,567 |
) |
|
(19,158 |
) |
|
|
(47,524 |
) |
|
|
(54,926 |
) |
Dividend accretion of
convertible preferred shares |
- |
|
|
(5,087 |
) |
|
|
- |
|
|
|
(11,565 |
) |
Net loss attributable
to common shares |
$ |
(17,567 |
) |
|
$ |
(24,245 |
) |
|
$ |
(47,524 |
) |
|
$ |
(66,491 |
) |
Loss per share |
|
|
|
|
|
|
|
Basic and diluted |
$ |
(0.12 |
) |
|
$ |
(0.24 |
) |
|
$ |
(0.32 |
) |
|
$ |
(0.68 |
) |
Weighted average number of
common shares |
|
|
|
|
|
|
|
Basic and diluted |
150,995,191 |
|
|
101,286,351 |
|
|
|
149,385,999 |
|
|
|
97,174,253 |
|
UNAUDITED CONDENSED CONSOLIDATED BALANCE
SHEETS(in thousands)
|
September 30, 2022 |
|
|
December 31, 2021 |
Cash, cash equivalents and marketable securities, current |
$ |
134,718 |
|
|
$ |
155,317 |
|
Accounts receivable and other
current assets |
6,418 |
|
|
5,344 |
|
Total current assets |
141,136 |
|
|
160,661 |
|
Property and equipment, net of
accumulated depreciation |
5,241 |
|
|
5,983 |
|
Investments in marketable
securities, non-current |
55,436 |
|
|
35,688 |
|
Right of use asset |
1,821 |
|
|
2,092 |
|
Other non-current assets |
167 |
|
|
61 |
|
Total assets |
$ |
203,801 |
|
|
$ |
204,485 |
|
Accounts payable and accrued
liabilities |
$ |
12,268 |
|
|
$ |
10,838 |
|
Deferred revenue |
14,878 |
|
|
- |
|
Lease liability, current |
360 |
|
|
383 |
|
Total current liabilities |
27,506 |
|
|
11,221 |
|
Liability related to sale of
future royalties |
12,316 |
|
|
16,296 |
|
Deferred revenue,
non-current |
10,585 |
|
|
- |
|
Contingent consideration |
5,922 |
|
|
5,298 |
|
Lease liability,
non-current |
1,955 |
|
|
2,231 |
|
Total stockholders’
equity |
145,517 |
|
|
169,439 |
|
Total liabilities and stockholders’ equity |
$ |
203,801 |
|
|
$ |
204,485 |
|
UNAUDITED CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOW(in thousands)
|
Nine Months Ended September 30, |
|
2022 |
|
2021 |
Net loss |
$ |
(47,524 |
) |
|
$ |
(54,926 |
) |
Non-cash items |
3,429 |
|
|
7,080 |
|
Change in deferred license
revenue |
25,463 |
|
|
- |
|
Other changes in working
capital |
266 |
|
|
(80 |
) |
Net cash used in operating activities |
(18,366 |
) |
|
(47,926 |
) |
Net cash used in investing activities |
(87,624 |
) |
|
(4,557 |
) |
Issuance of common shares
pursuant to Share Purchase Agreement |
10,973 |
|
|
- |
|
Cash provided by other
financing activities |
9,757 |
|
|
78,115 |
|
Net cash provided by financing activities |
20,730 |
|
|
78,115 |
|
Effect of foreign exchange
rate changes on cash and cash equivalents |
(18 |
) |
|
- |
|
(Decrease) increase in cash and cash
equivalents |
(85,278 |
) |
|
25,632 |
|
Cash and cash equivalents,
beginning of period |
109,282 |
|
|
52,251 |
|
Cash and cash equivalents, end of period |
24,004 |
|
|
77,883 |
|
Investments in marketable
securities |
166,150 |
|
|
74,054 |
|
Cash, cash equivalents and marketable securities, end of
period |
$ |
190,154 |
|
|
$ |
151,937 |
|
Conference Call and Webcast Today
Arbutus will hold a conference call and webcast
today, Wednesday, November 9, 2022, at 8:45 AM Eastern Time to
provide a corporate update. To dial-in for the conference call by
phone, please register using the following link: Registration Link.
A live webcast of the conference call can be accessed through the
Investors section of Arbutus' website at www.arbutusbio.com.
An archived webcast will be available on the
Arbutus website after the event.
About AB-729
AB-729 is an RNA interference (RNAi) therapeutic
specifically designed to reduce all HBV viral proteins and antigens
including hepatitis B surface antigen which is thought to be a key
prerequisite to enable reawakening of a patient’s immune system to
respond to the virus. AB-729 targets hepatocytes using Arbutus’
novel covalently conjugated N-Acetylgalactosamine (GalNAc) delivery
technology enabling subcutaneous delivery. Clinical data generated
thus far has shown single- and multi-doses of AB-729 to be
generally safe and well-tolerated, while also providing meaningful
reductions in hepatitis B surface antigen and hepatitis B DNA.
AB-729 is currently in multiple Phase 2a clinical trials.
About AB-101
Immune checkpoints such as PD-1/PD-L1 play an
important role in the induction and maintenance of immune tolerance
and in T-cell activation. We have identified a class of small
molecule oral PD-L1 inhibitors that we believe will allow for
controlled checkpoint blockade, enable oral dosing, and mitigate
systemic safety issues typically seen with checkpoint antibody
therapies. Our lead oral PD-L1 inhibitor candidate, AB-101, is
currently in IND-enabling studies. We believe AB-101, when used in
combination with other approved and investigational agents, could
potentially allow us to realize our mission of achieving a
functional cure for HBV chronically infected patients. We are also
exploring oncology applications for our internal PD-L1
portfolio.
About HBV
Hepatitis B is a potentially life-threatening
liver infection caused by the hepatitis B virus (HBV). HBV can
cause chronic infection which leads to a higher risk of death from
cirrhosis and liver cancer. Chronic HBV infection represents a
significant unmet medical need. The World Health Organization
estimates that over 290 million people worldwide suffer from
chronic HBV infection, while other estimates indicate that
approximately 2.4 million people in the United States suffer from
chronic HBV infection. Approximately 820,000 people die every year
from complications related to chronic HBV infection despite the
availability of effective vaccines and current treatment
options.
About Arbutus
Arbutus Biopharma Corporation (Nasdaq: ABUS) is
a clinical-stage biopharmaceutical company leveraging its extensive
virology expertise to develop novel therapeutics that target
specific viral diseases. Our current focus areas include Hepatitis
B virus (HBV), SARS-CoV-2, and other coronaviruses. To address HBV,
we are developing a RNAi therapeutic, an oral PD-L1 inhibitor, and
an oral RNA destabilizer to potentially identify a combination
regimen with the aim of providing a functional cure for patients
with chronic HBV by suppressing viral replication, reducing surface
antigen and reawakening the immune system. We believe our lead
compound, AB-729, is the only RNAi therapeutic with evidence of
immune re-awakening. It is currently being evaluated in multiple
phase 2 clinical trials. We also have an ongoing drug discovery and
development program directed to identifying novel, orally active
agents for treating coronavirus (including SARS-CoV-2). In
addition, we are exploring oncology applications for our internal
PD-L1 portfolio. 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 future development plans for our product candidates; the
expected cost, timing and results of our clinical development plans
and clinical trials with respect to our product candidates; our
expectations with respect to the release of data from our clinical
trials and the expected timing thereof; our expectations and goals
for our collaborations with third parties and any potential
benefits related thereto; the potential for our product candidates
to achieve success in clinical trials; and our expected financial
condition, including the anticipated duration of cash runways and
timing regarding needs for additional capital.
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 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 and patent
litigation matters.
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
product candidate; Arbutus may elect to change its 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; uncertainties associated
with litigation generally and patent litigation specifically;
Arbutus and its collaborators may never realize the expected
benefits of the collaborations; market shifts may require a change
in strategic focus; and the ongoing COVID-19 pandemic could
significantly disrupt Arbutus’ 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. CollierPresident and CEO Phone: 267-469-0914Email:
ir@arbutusbio.com
Lisa M. CaperelliVice President, Investor RelationsPhone:
215-206-1822Email: lcaperelli@arbutusbio.com
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