8-K: Arbutus Biopharma Reports 2023 Financial Results and Provides Clinical Update, Highlighting Progress in Hepatitis B Therapies

Arbutus Biopharma announced its fourth quarter and year-end 2023 financial results, along with updates on its clinical programs, including key data readouts expected in 2024.

Summary

• Arbutus Biopharma reported a net loss of $72.8 million for 2023, compared to a net loss of $69.5 million in 2022.
• The company's total revenue for 2023 was $18.1 million, a decrease from $39.0 million in 2022, primarily due to reduced revenue from a license agreement with Qilu and decreased royalty revenues from Alnylam's sales of ONPATTRO.
• Research and development expenses decreased to $73.7 million in 2023 from $84.4 million in 2022, due to reduced manufacturing and clinical trial costs.
• General and administrative expenses increased to $22.5 million in 2023 from $17.8 million in 2022, mainly due to higher legal fees and employee compensation costs.
• As of December 31, 2023, Arbutus had $132.3 million in cash, cash equivalents, and investments, compared to $184.3 million at the end of 2022.
• The company expects its 2024 net cash burn to be between $63 million and $67 million, excluding any proceeds from its at-the-market offering program.
• Arbutus believes its current cash position is sufficient to fund operations into the first quarter of 2026.
• The company is advancing its hepatitis B virus (HBV) programs, including imdusiran (AB-729) and AB-101, with multiple clinical data readouts expected in 2024.
• Arbutus is also involved in ongoing patent litigation against Moderna and Pfizer/BioNTech regarding its LNP technology, with a trial date set for April 21, 2025, for the Moderna case.

Sentiment

Score: 7

Explanation: The sentiment is moderately positive due to the company's strong cash position, progress in clinical trials, and potential for future growth. However, the decrease in revenue and ongoing losses temper the overall outlook.

Positives

• Arbutus has a strong cash position of $132.3 million, which is expected to fund operations into Q1 2026.
• Imdusiran has demonstrated significant reductions in hepatitis B surface antigen (HBsAg) in clinical trials.
• The company is advancing multiple clinical trials for its HBV therapies, with several data readouts expected in 2024.
• Arbutus is actively pursuing patent litigation against Moderna and Pfizer/BioNTech for the use of its LNP technology.
• The company has a team with virology expertise and a proven track record in drug development.
• The company is focused on developing a functional cure for HBV, which represents a significant unmet medical need.

Negatives

• The company experienced a decrease in revenue from $39.0 million in 2022 to $18.1 million in 2023.
• Arbutus reported a net loss of $72.8 million for 2023, slightly higher than the $69.5 million loss in 2022.
• Operating expenses remain high, with research and development expenses at $73.7 million and general and administrative expenses at $22.5 million for 2023.
• The company's cash balance decreased from $184.3 million at the end of 2022 to $132.3 million at the end of 2023.
• The company is reliant on external funding and may need to raise additional capital in the future.

Risks

• Clinical trials may be more costly or take longer to complete than anticipated, and may not generate positive results.
• Arbutus may not receive the necessary regulatory approvals for its product candidates.
• Economic and market conditions may worsen, impacting the company's financial stability.
• The ongoing patent litigation may be costly and time-consuming, with no guarantee of a favorable outcome.
• The company may face challenges in commercializing its products, even if they are approved.
• There is a risk that the clinical hold on AB-101 by the FDA may not be resolved.

Future Outlook

Arbutus anticipates a productive 2024 with multiple data readouts from ongoing clinical trials and the initiation of a new Phase 2a trial. The company expects its current cash position to fund operations into the first quarter of 2026.

Management Comments

• Michael J. McElhaugh, Interim President and Chief Executive Officer of Arbutus Biopharma, stated that he anticipates that 2024 will be a productive year for Arbutus as they continue to advance the development of their HBV assets.
• Management believes that a combination therapy that reduces surface antigen, suppresses HBV DNA, and boosts the host immune response will be necessary to functionally cure HBV.

Industry Context

Arbutus is operating in the competitive biopharmaceutical industry, specifically targeting chronic hepatitis B virus (cHBV) infection. The company's focus on combination therapies and novel mechanisms of action aligns with the industry's trend towards more effective and finite treatments for chronic viral infections. The ongoing patent litigation highlights the importance of intellectual property in this sector.

Comparison to Industry Standards

• Arbutus's focus on a functional cure for HBV aligns with the industry's shift towards more effective treatments than current standard of care, which often involves lifelong therapy.
• The company's approach of combining an RNAi therapeutic (imdusiran) with an oral PD-L1 inhibitor (AB-101) is similar to other companies exploring combination therapies for HBV, such as Gilead Sciences and Vir Biotechnology.
• The reported cash runway into Q1 2026 is a positive sign for Arbutus, as many biotech companies face funding challenges, however, this is not unusual for a company at this stage of development.
• The decrease in revenue is not unusual for a company at this stage of development, as revenue is often dependent on licensing agreements and milestone payments, which can fluctuate.
• The ongoing patent litigation against Moderna and Pfizer/BioNTech is similar to other cases in the industry where companies are seeking compensation for the use of their patented technologies, such as the litigation between Alnylam and Dicerna.

Legal Proceedings

• Arbutus is involved in ongoing patent litigation against Moderna and Pfizer/BioNTech regarding its LNP technology.
• The claim construction hearing for the Moderna lawsuit occurred on February 8, 2024, and a trial date is set for April 21, 2025.

Stakeholder Impact

• Shareholders may be impacted by the company's financial performance and the progress of its clinical programs.
• Employees are affected by the company's financial stability and the success of its research and development efforts.
• Patients with chronic HBV stand to benefit from the development of new and more effective treatments.
• The company's suppliers and partners are impacted by its financial health and operational activities.

Next Steps

• Arbutus plans to announce end-of-treatment data from the AB-729-201 and AB-729-202 trials in the first half of 2024.
• The company intends to initiate the AB-729-203 Phase 2a clinical trial in the first half of 2024.
• Arbutus expects to report preliminary data from the healthy subject portion of the AB-101 Phase 1a/1b clinical trial in the first half of 2024.
• Preliminary data from the additional cohort of the AB-729-202 trial is expected in the second half of 2024.
• The company will continue to advance its patent litigation against Moderna and Pfizer/BioNTech.

Key Dates

Keywords

Hepatitis B, HBV, Imdusiran, AB-729, AB-101, RNAi, PD-L1 inhibitor, Clinical trials, LNP technology, Patent litigation, Biopharmaceutical, Functional cure