- Clinical trial results expected for AB-506, a
potent capsid inhibitor, and AB-729, a subcutaneously administered
RNAi agent targeting HBsAg
Arbutus Biopharma Corporation (Nasdaq: ABUS), an industry-leading
Hepatitis B Virus (HBV) therapeutic solutions company, today
reports its fourth quarter and year-end 2018 financial results and
provides a description of recent clinical accomplishments and key
2019 corporate objectives.
“Arbutus is committed to developing a cure for
chronic Hepatitis B which we maintain can be best achieved by
employing a combination of therapeutic agents with distinct, yet
complementary mechanisms of action,” said Dr. Mark J. Murray,
President and Chief Executive Officer of Arbutus. “With multiple
clinical trial initiations and data readouts expected throughout
the year, 2019 promises to be an eventful and important year for
Arbutus as we make progress toward our first novel combination
regimen.”
Recent Clinical Accomplishments and Key
2019 Objectives
AB-506
- In a Phase 1a/1b clinical trial, AB-506, Arbutus’ oral capsid
inhibitor, successfully progressed through the healthy volunteer
portion and is now being evaluated in HBV patients in the 28-day
multiple dose Phase 1b portion of the trial. Top-line results of
this Phase 1a/1b clinical trial are expected late in the second
quarter of 2019.
- A Phase 2 dose-finding and long-term safety trial of AB-506 in
combination with an approved nucleoside analogue (NA) is expected
to be initiated late in the second half of the year to support
AB-506 use in future combination trials.
- AB-506 inhibits HBV capsid assembly which inhibits HBV
replication, a mode of action complementary to NAs; its use in
patients is expected to reduce the levels of HBV DNA in the
blood.
AB-729
- AB-729 is currently completing IND-enabling studies and is
expected to begin a Phase 1a/1b clinical trial in the second
quarter of 2019 and progress into HBV patients in the second half
of the year. AB-729 is an RNAi agent which blocks HBsAg
expression and can be administered subcutaneously and we anticipate
will be dosed monthly.
- A Phase 2 clinical trial combining AB-729, AB-506 and an
approved NA is expected to initiate in the first half of 2020.
AB-452 and RNA Destabilizer
Program
- Arbutus is developing oral RNA-destabilizers that have shown
compelling anti-viral effects in multiple preclinical models. As a
result of a nonclinical safety finding with our lead
RNA-destabilizer, AB-452, we are conducting a series of in vitro
and in vivo studies to further characterize the compound, its
mechanism of action and pharmacokinetic profile before deciding to
initiate clinical trials. A go/no go decision is expected in the
second half of the 2019.
- In parallel, the Company is also advancing a number of follow
on compounds with distinct chemical scaffolds into the lead
optimization stage.
Dr. Michael J. Sofia, Arbutus’ Chief Scientific
Officer, stated, “We believe our RNA destabilizer program is
amongst the most advanced programs of its kind in the HBV space and
we remain confident that this mechanism represents a very relevant
and important therapeutic target; success here could be very
meaningful for patients and for Arbutus.”
ARB-1467
- The Company has discontinued development of ARB-1467. Results
from the ARB-1467 clinical trials confirmed the potential
therapeutic value of an RNAi agent and informed the development of
our next-generation RNAi agent, AB-729.
Early R&D Programs
- The Company continues a robust discovery effort focused on
back-up compounds for its current pipeline as well as discovery
efforts focused on reawakening HBV patient’s immune response and on
novel HBV-specific targets. These programs include orally
available compounds targeting PD-L1 and HBV cccDNA.
Cash Position and 2019 Cash
Guidance
- The Company ended the year with approximately $125 million in
cash, cash equivalents and short-term investments which we believe
is sufficient to fund operations into 2020. The Company
expects to use approximately $70 to $75 million in cash in
2019.
ONPATTRO Royalty
Entitlement
ONPATTRO is an RNAi therapeutic that has been
developed for the treatment of hereditary ATTR (hATTR) amyloidosis,
and has been approved by the FDA and the EMA. Arbutus has a royalty
entitlement on global sales of ONPATTRO for the LNP technology
licensed by Arbutus to Alnylam for this product. The Company began
recognizing royalty income in 2018. The royalty rate is
tiered, based on product sales, and in the low to mid-single
digits.
Financial Results
Cash, Cash Equivalents and
Investments
As of December 31, 2018, Arbutus had cash, cash
equivalents and short-term investments totaling $124.6 million, as
compared to $139.0 million in cash and cash equivalents, short-term
investments, and restricted investments at December 31,
2017.
Net Loss
For the year ended December 31, 2018, net loss
attributable to common shares was $67.2 million ($1.21 basic and
diluted loss per common share) as compared to $85.3 million ($1.56
basic and diluted loss per common share) for 2017.
Revenue
Revenue was $5.9 million in 2018 compared to
$10.7 million in 2017. The decrease was related primarily to
a $7.5 million non-recurring, upfront payment in 2017 from Alexion
Pharmaceuticals, Inc. Revenue in 2018 includes $4.3 million
pursuant to our license agreement with Gritstone Oncology, Inc.
Research and Development
Research and development expenses were $57.9
million, including $2.7 million of non-cash stock based
compensation in 2018 compared to $62.7 million in 2017, including
$9.2 million of non-cash stock based compensation. Excluding
the decrease in non-cash stock based compensation expense, which
was due to the expiry of certain share repurchase rights in 2017,
R&D expenses in 2018 have increased as Arbutus’ pipeline
expands and advances into the clinic.
General and Administrative
General and administrative expenses were $16.0
million in 2018, including $3.3 million of non-cash stock based
compensation compared to $16.1 million in 2017, including $5.9
million of non-cash stock based compensation.
Site Consolidation
Site consolidation expenses were $4.8 million in 2018.
In the first half of 2018, Arbutus substantially
completed a site consolidation and organizational restructuring to
better align its HBV business in Warminster, PA, by reducing the
Company’s global workforce and closing its facility in Burnaby,
Canada. We expect related total cash expenditures will be
approximately $5.6 million upon completion, of which approximately
$4.8 million has been incurred to date.
Impairment of intangible
assets
In 2018, the Company recorded a $14.8 million
($10.5 million net of tax benefit) non-cash expense for the
impairment of intangible assets related to the indefinite deferral
of further development of its AB-423 capsid inhibitor program, due
to the successful progression of its AB-506 capsid inhibitor
program.
Decrease in fair value of contingent
consideration
In 2018 the Company recorded a non-cash decrease
in contingent consideration of $7.3 million compared to a $1.4
million increase in 2017.
The decrease in 2018 was due primarily to the
Company’s decision to indefinitely defer clinical development of
AB-423 thereby reducing the probability of achieving future
development milestones, as well as a recalibration in the expected
timing of future sales milestones, resulting in a reduction in the
estimated fair value of the liability.
Equity investment loss
The Company recorded a gain of $24.9 million on
its initial investment in Genevant, a jointly owned company with
Roivant Sciences Ltd., and equity losses of $5.6 million for its
proportionate share of the Genevant’s net loss. Financial results
of Genevant are recorded on a one-quarter lag basis. The
Company currently owns approximately 40% of the common equity of
Genevant as of December 31, 2018.
Outstanding Shares
The Company had 55.5 million common shares
issued and outstanding at December 31, 2018. In addition, the
Company had 6.8 million options outstanding and 1.164 million
Preferred Shares outstanding, which (including the annual 8.75%
coupon) will be mandatorily convertible into 22.6 million common
shares on October 18, 2021. Assuming the outstanding options and
convertible preferred shares were fully converted, the Company
would have had 84.9 million common shares outstanding at December
31, 2018.
UNAUDITED CONDENSED CONSOLIDATED
STATEMENTS OF LOSS (in millions,
except share and per share data) |
|
|
|
|
|
|
Year Ended |
|
|
|
December 31, |
|
|
|
2018 |
2017 |
|
|
|
|
|
|
Total
revenue |
|
$ |
5.9 |
|
$ |
10.7 |
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
Research and
development |
|
57.9 |
|
62.7 |
|
|
General and
administrative |
|
16.0 |
|
16.1 |
|
|
Depreciation
of property and equipment |
|
2.2 |
|
2.0 |
|
|
Site
consolidation |
|
4.8 |
|
— |
|
|
Impairment of intangible assets |
|
14.8 |
|
40.8 |
|
|
Loss from operations |
|
(89.8 |
) |
(110.9 |
) |
|
Other income (loss) |
|
|
|
|
|
|
Interest
income |
|
3.0 |
|
1.5 |
|
|
Interest
expense |
|
(0.2 |
) |
(0.3 |
) |
|
Foreign exchange
(loss) gain |
|
(1.0 |
) |
2.3 |
|
|
Gain on
investment |
|
24.9 |
|
— |
|
|
Equity investment
loss |
|
(5.6 |
) |
— |
|
|
Decrease (increase) in fair value of contingent
consideration |
|
7.3 |
|
(1.4 |
) |
|
Total other income |
|
28.4 |
|
2.2 |
|
|
Income tax benefit |
|
4.3 |
|
24.3 |
|
|
Net loss |
|
$ |
(57.1 |
) |
$ |
(84.4 |
) |
|
Accrual of coupon on convertible preferred shares |
|
|
(10.1 |
) |
|
(0.9 |
) |
|
Net loss attributable to common shares |
|
$ |
(67.2 |
) |
$ |
(85.3 |
) |
|
|
|
|
|
|
|
|
|
|
Loss per
share |
|
|
|
|
|
|
|
|
Basic and diluted |
|
$ |
(1.21 |
) |
$ |
(1.56 |
) |
|
|
|
|
|
|
|
|
|
|
Weighted average
number of shares |
|
|
|
|
|
|
|
|
Basic and diluted |
|
|
55,304,083 |
|
|
54,723,272 |
|
|
UNAUDITED CONDENSED CONSOLIDATED
BALANCE SHEETS(in millions) |
|
|
December 31, |
|
December 31, |
|
|
2018 |
|
2017 |
|
|
|
|
|
|
Cash and cash
equivalents |
$ |
36.9 |
|
$ |
54.3 |
|
Short-term
investments |
87.7 |
|
72.1 |
|
Accounts receivable |
1.4 |
|
0.4 |
|
Other current assets |
3.2 |
|
2.6 |
|
Restricted
investments |
— |
|
12.6 |
|
Investment in
Genevant |
22.2 |
|
— |
|
Property and equipment,
net |
10.2 |
|
12.2 |
|
Intangible assets |
43.8 |
|
58.6 |
|
Goodwill |
22.5 |
|
24.4 |
|
Total assets |
$ |
227.9 |
|
$ |
237.2 |
|
Accounts payable and
accrued liabilities |
9.5 |
|
10.7 |
|
Total deferred
revenue |
— |
|
2.7 |
|
Liability-classified
options |
0.5 |
|
1.2 |
|
Loan payable |
— |
|
12.0 |
|
Site consolidation
accrual |
1.3 |
|
— |
|
Deferred lease
inducements, net of current portion |
0.6 |
|
0.7 |
|
Contingent
consideration |
3.1 |
|
10.5 |
|
Deferred tax
liability |
12.7 |
|
16.9 |
|
Total stockholders’ equity |
200.2 |
|
182.5 |
|
Total liabilities and stockholders’ equity |
$ |
227.9 |
|
$ |
237.2 |
|
UNAUDITED CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOW(in millions) |
|
|
|
|
|
|
|
|
|
|
|
Year Ended |
|
|
|
December 31, 2018, |
|
|
|
2018 |
2017 |
|
|
|
|
|
|
|
Net loss for the
period |
|
$ |
(57.1 |
) |
$ |
(84.4 |
) |
|
Net cash
used in operating activities |
|
(67.9 |
) |
(48.6 |
) |
|
Net cash
provided by (used in) investing activities |
|
(4.1 |
) |
15.2 |
|
|
Net cash
provided by financing activities |
|
55.6 |
|
49.3 |
|
|
Effect of
foreign exchange rate changes on cash & cash equivalents |
|
(1.0 |
) |
2.4 |
|
|
Net (decrease) increase in cash, cash equivalents and
restricted investments |
|
$ |
(17.4 |
) |
$ |
18.3 |
|
|
Cash,
cash equivalents and restricted investments, beginning of
period |
|
54.3 |
|
36.0 |
|
|
Cash, cash
equivalents and restricted investments, end of period |
|
$ |
36.9 |
|
$ |
54.3 |
|
|
Conference Call Today
Arbutus will hold a conference call and webcast
today, Thursday, March 7, 2019 at 4:30 PM Eastern Time (1:30 PM
Pacific 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
1-866-393-1607 or 1-914- 495-8556 and reference conference ID
1942769.
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 1-855-859-2056 or
1-404-537-3406, and reference conference ID1942769.
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 expectation for top-line data from the Phase 1a/1b
clinical study of AB-506 in the second quarter of 2019; our
expectation to initiate a Phase 1a/1b clinical study of AB-729 in
the second quarter of 2019; our expectation to make a decision
regarding AB-452 clinical development in the second half of 2019;
our expectation to initiate HBV patient dosing on AB-729 in the
second half of 2019; our expectation to initiate a Phase 2 clinical
study of AB-506 in the second half of 2019; the trajectory for
inclusion of AB-506 in a multi-drug combination regimen with AB-729
in the first half of 2020 with data expected in the second half of
2020; 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 2020;
our expected amount of cash to be used in 2019; 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 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.
Contact Information
InvestorsMark J. MurrayPresident and CEOPhone:
604-419-3200Email: ir@arbutusbio.com
MediaPam Murphy Investor Relations Consultant
Phone: 604-419-3200 Email: ir@arbutusbio.com
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