8-K: Arbutus Biopharma Prioritizes Imdusiran Development, Extends Cash Runway to Q4 2026

Arbutus Biopharma is focusing on its lead HBV candidate, imdusiran, leading to a workforce reduction and extended cash runway.

Summary

• Arbutus Biopharma reported its second quarter 2024 financial results and provided a corporate update, highlighting progress with its lead drug candidate, imdusiran, for chronic hepatitis B virus (cHBV).
• The company presented positive end-of-treatment data from two Phase 2a clinical trials at the EASL Congress, showing that imdusiran, in combination with other therapies, achieved undetectable HBsAg in a significant portion of patients.
• Specifically, in the IM-PROVE I trial, 33% of patients achieved undetectable HBsAg after 48 weeks of imdusiran and 24 weeks of interferon (IFN), with 67% achieving this in patients with baseline HBsAg less than 1000 IU/mL.
• In the IM-PROVE II trial, imdusiran combined with VTP-300 showed statistically significant reductions in HBsAg levels compared to placebo.
• Arbutus is prioritizing the Phase 2b clinical development of imdusiran and has discontinued its HBV discovery efforts, resulting in a 40% workforce reduction.
• These changes are expected to extend the company's cash runway into the fourth quarter of 2026.
• The company's cash, cash equivalents, and investments totaled $148.5 million as of June 30, 2024, compared to $132.3 million at the end of 2023.
• Arbutus expects its 2024 cash burn to range from $63 million to $67 million.
• Total revenue for the three months ended June 30, 2024, was $1.7 million, down from $4.7 million in the same period of 2023.
• The net loss for the quarter was $19.8 million, or a loss of $0.11 per share, compared to a net loss of $17.1 million, or a loss of $0.10 per share, for the same period in 2023.

Sentiment

Score: 7

Explanation: The document presents positive clinical data and an extended cash runway, but the workforce reduction and increased net loss temper the overall sentiment. The focus on imdusiran is a clear positive, but the restructuring introduces some uncertainty.

Positives

• Imdusiran has shown significant potential in achieving undetectable HBsAg levels, a key step towards a functional cure for HBV.
• The company's focus on imdusiran and AB-101, along with cost-cutting measures, has extended the cash runway into Q4 2026.
• The company has a strong cash position of $148.5 million as of June 30, 2024.
• The company is actively pursuing litigation against Moderna and Pfizer/BioNTech for the use of its LNP technology.
• AB-101, the oral PD-L1 inhibitor, has shown promising early data in its Phase 1 trial.

Negatives

• The company is reducing its workforce by 40%, which may impact morale and productivity.
• The company's revenue decreased by $3.0 million compared to the same period last year.
• The company's net loss increased to $19.8 million for the quarter compared to $17.1 million in the same period last year.
• The company has terminated the IM-PROVE III clinical trial.

Risks

• Clinical trials may not be successful, and regulatory approvals may not be granted.
• The company may face challenges in commercializing its products.
• The company's litigation against Moderna and Pfizer/BioNTech may not be successful.
• The company may need to raise additional capital in the future.
• The company's restructuring may lead to unexpected costs or challenges.

Future Outlook

Arbutus expects its current cash to fund operations into the fourth quarter of 2026 and plans to focus on advancing the clinical development of imdusiran and AB-101.

Management Comments

• Michael J. McElhaugh, Interim President and Chief Executive Officer, stated that the company is optimistic about imdusiran as a potential cornerstone therapeutic in a treatment regimen to functionally cure cHBV.
• Mr. McElhaugh also mentioned the difficult decision to discontinue HBV research efforts and reduce headcount to ensure resources for the Phase 2b clinical trial of imdusiran.

Industry Context

The focus on developing a functional cure for HBV aligns with the broader industry trend of seeking more effective and finite treatments for chronic viral infections. The company's approach of combining antivirals and immunologics is also consistent with current research in the field.

Comparison to Industry Standards

• The 33% HBsAg undetectable rate in the IM-PROVE I trial is a promising result compared to the less than 5% functional cure rate achieved with current standard of care treatments like Peg-IFN.
• The company's approach of combining an RNAi therapeutic (imdusiran) with immunotherapies (VTP-300 and nivolumab) is similar to strategies being explored by other companies in the HBV space, such as Gilead Sciences and Vir Biotechnology.
• The company's cash runway into Q4 2026 is a positive sign of financial stability, which is important for a clinical-stage biotech company. However, the 40% workforce reduction is a significant move that may be viewed negatively by some investors.
• The litigation against Moderna and Pfizer/BioNTech is a unique aspect of Arbutus's situation, as it seeks to monetize its LNP technology, which is a key component of the COVID-19 vaccines. This is a high-stakes legal battle that could have a significant impact on the company's future.

Legal Proceedings

• Arbutus is involved in ongoing patent litigation against Moderna and Pfizer/BioNTech regarding the use of its LNP technology.
• A trial date for the lawsuit against Moderna is set for April 21, 2025, subject to change.
• A date for a claim construction hearing in the lawsuit against Pfizer/BioNTech has not been set.

Stakeholder Impact

• Shareholders may view the positive clinical data and extended cash runway favorably, but the workforce reduction may cause concern.
• Employees will be impacted by the 40% workforce reduction, particularly those in the discovery and general and administrative functions.
• Patients with cHBV may benefit from the development of imdusiran and AB-101.
• The company's suppliers and creditors may be affected by the company's restructuring.

Next Steps

• Arbutus will focus on advancing the Phase 2b clinical trial of imdusiran.
• The company will continue to develop AB-101, with preliminary data from the multiple-ascending dose study expected in the second half of 2024.
• Arbutus will continue to pursue litigation against Moderna and Pfizer/BioNTech.
• The company will report preliminary end-of-treatment data from the additional cohort in the IM-PROVE II trial in the second half of 2024.

Key Dates

Keywords

Imdusiran, Hepatitis B, HBV, RNAi, AB-101, PD-L1 inhibitor, Clinical trials, Functional cure, LNP technology, Biopharmaceutical