Arbutus Reports Third Quarter 2022 Financial Results and Provides Corporate Update

WARMINSTER, Pa., Nov. 09, 2022 (GLOBE NEWSWIRE) -- 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)

AB-101 (Oral PD-L1 Inhibitor)

AB-161 (Oral RNA Destabilizer)

AB-836 (Oral Capsid Inhibitor)

COVID-19 and Pan-Coronavirus Programs

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 2021Revenue Collaborations and licenses$3,607 $1,480 $27,381 $3,819 Non-cash royalty revenue2,345 1,860 5,393 3,963 Total Revenue5,952 3,340 32,774 7,782 Operating expenses Research and development20,055 16,709 61,459 46,290 General and administrative3,493 4,183 13,585 12,539 Change in fair value of contingent consideration215 856 624 1,679 Total operating expenses23,763 21,748 75,668 60,508 Loss from operations(17,811) (18,408) (42,894) (52,726)Other income (loss) Interest income694 27 1,249 97 Interest expense(429) (762) (1,417) (2,297)Foreign exchange loss(21) (15) (18) - Total other income (loss)244 (750) (186) (2,200)Loss before income taxes(17,567) (19,158) (43,080) (54,926)Income tax expense- - (4,444) - Net loss(17,567) (19,158) (47,524) (54,926)Dividend accretion of convertible preferred shares- (5,087) - (11,565)Net loss attributable to common shares$(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 diluted150,995,191 101,286,351 149,385,999 97,174,253 

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands) September 30, 2022 December 31, 2021Cash, cash equivalents and marketable securities, current$134,718 $155,317 Accounts receivable and other current assets6,418 5,344 Total current assets141,136 160,661 Property and equipment, net of accumulated depreciation5,241 5,983 Investments in marketable securities, non-current55,436 35,688 Right of use asset1,821 2,092 Other non-current assets167 61 Total assets$203,801 $204,485 Accounts payable and accrued liabilities$12,268 $10,838 Deferred revenue14,878 - Lease liability, current360 383 Total current liabilities27,506 11,221 Liability related to sale of future royalties12,316 16,296 Deferred revenue, non-current10,585 - Contingent consideration5,922 5,298 Lease liability, non-current1,955 2,231 Total stockholders’ equity145,517 169,439 Total liabilities and stockholders’ equity$203,801 $204,485 

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(in thousands) Nine Months Ended September 30, 2022 2021Net loss$(47,524) $(54,926)Non-cash items3,429 7,080 Change in deferred license revenue25,463 - Other changes in working capital266 (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 Agreement10,973 - Cash provided by other financing activities9,757 78,115 Net cash provided by financing activities20,730 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 period109,282 52,251 Cash and cash equivalents, end of period24,004 77,883 Investments in marketable securities166,150 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. Collier
President and CEO
Phone: 267-469-0914
Email: ir@arbutusbio.com

Lisa M. Caperelli
Vice President, Investor Relations
Phone: 215-206-1822
Email: lcaperelli@arbutusbio.com