Overview

Arbutus Biopharma Corporation (NASDAQ:ABUS) is a publicly traded industry-leading therapeutic solutions company dedicated to discovering, developing, and commercializing a cure for patients suffering from chronic Hepatitis B Virus (HBV) infection. HBV represents a significant, global unmet medical need and is the cause of the most common serious liver infection in the world. The World Health Organization (WHO) estimates that more than 257 million people worldwide are chronically infected (WHO, 2017), and other estimates suggest this could include approximately 2 million people in the United States (Kowdley et al., 2012).

To pursue its strategy of developing a curative combination regimen for chronic HBV, Arbutus Biopharma Corporation has assembled a robust pipeline consisting of multiple drug candidates with differing but complementary mechanisms of action (MOA), each of which have the potential to improve upon the standard of care and contribute to a curative combination treatment regimen. The company's pipeline includes agents that have the potential to form a proprietary, orally administered, combination therapy.

In addition to its drug pipeline focused on HBV, Arbutus Biopharma Corporation has additional assets that have the potential to provide value to Arbutus. The first is its 41% equity ownership interest in Genevant Sciences (Genevant), a newly created company to which Arbutus Biopharma Corporation has licensed Arbutus’ lipid nanoparticle delivery (LNP) platform and conjugate delivery platform (the Delivery Platforms) for all applications except HBV. Secondly, the company retain a royalty entitlement on Patisiran, a drug being developed by Alnylam that incorporates its LNP technology and may be approved in the second half of 2018. This royalty entitlement has the potential to provide an active royalty stream or to be otherwise monetized in full or in part. These assets have the potential to provide significant additional non-dilutive capital to fund development of its pipeline of HBV assets.

HBV Product Pipeline

The company's product pipeline is entirely focused on finding a cure for chronic HBV infection, with the objective of developing a suite of products that intervene at different points in the viral life cycle and reactivate the host immune system. Arbutus Biopharma Corporation is conducting clinical and preclinical combination studies to evaluate combinations of its proprietary pipeline candidates with HBV SOC therapies and with its own proprietary assets. The company expect to use the results from these studies to adaptively design additional clinical studies to test the combination and the duration of therapy in patients. The company plan to continue this process to identify a regimen to conduct Phase III clinical trials intended to ultimately support regulatory filings for marketing approval.

The company's broad pipeline of HBV product candidates includes ARB-1467 (RNAi); AB-506 (capsid inhibitor); AB-452 (HBV RNA destabilizer); AB-729 (GalNAc RNAi), and multiple other preclinical agents in development with novel mechanisms of action (MOA).

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The company will continue to expand its HBV pipeline through internal discovery and development and possibly acquisitions and in-licenses. The company also have a research collaboration agreement with the Baruch S. Blumberg Institute that provides exclusive rights to in-license any intellectual property generated through the collaboration.

Agents for All-oral combination therapy

Capsid Inhibitors (AB-506 & AB-423)

HBV core protein, or capsid, is required for viral replication and core protein may have additional roles in cccDNA function. The current standard of care therapy significantly reduces HBV DNA levels in the serum but HBV replication continues in the liver, thereby enabling HBV infection to persist. Effective therapy for patients requires new agents which will effectively block viral replication. Arbutus Biopharma Corporation is developing core protein inhibitors (also known as capsid assembly inhibitors) as oral therapeutics for the treatment of chronic HBV infection. By inhibiting assembly of the viral capsid, the ability of HBV to replicate is impaired, resulting in reduced cccDNA.

AB-423 was its first-generation capsid inhibitor candidate, which was evaluated in a Phase I SAD and Multiple Ascending Dose (MAD) trial designed to assess the safety, tolerability, and pharmacokinetics (PK) of oral administration of the product in healthy volunteers. AB-423 was well-tolerated with no serious adverse events following single doses up to 800 mg. Multiple doses up to 400 mg twice daily were also well tolerated.

In addition to AB-423, its capsid inhibitor discovery effort generated promising back-up compounds in 2017, which led to the nomination of a next-generation capsid inhibitor AB-506 for Investigational New Drug (IND)/Clinical Trial Authorization (CTA)-enabling studies. Arbutus Biopharma Corporation has received regulatory approval of its submitted CTA in Q2 2018, and have initiated dosing of healthy volunteers, to be followed by dosing in patients in the second half of this year. AB-506 is an orally administered, highly selective capsid inhibitor that has shown striking potency and improved PK in preclinical studies. The company presented these preclinical data at AASLD annual meeting in October 2017 in a presentation titled, "Antiviral Characterization of a Next Generation Chemical Series of HBV Capsid Inhibitors In Vitro and In Vivo," which showed potent inhibition of HBV replication and pgRNA encapsidation, an accelerated rate of capsid assembly, and binding to the HBV core protein at the dimer:dimer interface that indicates improved target engagement compared to first generation capsid inhibitors. AB-506 has the potential to be a 'best-in-class' capsid inhibitor based on its favorable drug-like properties and potent inhibition of HBV replication. This molecule has the potential for once-daily oral dosing, making it an ideal candidate for inclusion in a combination regimen.

The company will continue to focus on rapidly advancing AB-506 through clinical testing before proceeding with additional clinical evaluation of AB-423.

HBV RNA Destabilizer (AB-452)

The company's most advanced preclinical program is an HBV RNA Destabilizer, AB-452 (formerly known as its oral HBsAg inhibitor program), which has novel activity in destabilizing HBV RNA, broad activity against HBV RNAs, and reduces HBsAg. This molecule has the potential for once daily, oral dosing. The company presented preclinical data at AASLD annual meeting in October 2017 in a presentation titled, "Identification and Characterization of AB-452, a Potent Small Molecule HBV RNA Destabilizer In Vitro and In Vivo," which showed that AB-452 has shown synergistic effects when combined with two of its proprietary HBV RNAi agents in vitro. In vivo, twice-a-day oral administration of AB-452 resulted in up to 1.4 log10 reduction of serum HBsAg in a dose dependent manner and correlated well with liver HBV RNA levels. When combined, its capsid inhibitor AB-506 and HBV RNA destabilizer AB-452 show distinct but mechanistically compatible antiviral activities that suggest feasibility of inclusion in a clinical combination regimen. Pending successful completion of IND/CTA-enabling studies, this product candidate could be the subject of an IND/CTA filing in the third quarter of 2018.

RNAi Agents

The company's RNA interference (RNAi) HBV candidates, ARB-1467 and AB-729, are designed to reduce Hepatitis B surface antigen (HBsAg) expression in patients chronically infected with HBV. Reducing HBsAg is thought to be a key prerequisite to enable a patient’s immune system to raise an adequate immune response against the virus. The ability of ARB-1467 to inhibit numerous viral elements in addition to HBsAg increases the likelihood of affecting the viral infection.

RNAi (ARB-1467)

The company's lead RNAi HBV candidate, ARB-1467, is a multi-component RNAi therapeutic that simultaneously targets three sites on the HBV genome, including the HBsAg coding region. Targeting three distinct and highly conserved sites on the HBV genome is intended to facilitate potent knockdown of all viral mRNA transcripts and viral antigens across a broad range of HBV genotypes and lower the risk of developing antiviral resistance ARB 1467 was evaluated in a Phase I Single Ascending Dose (SAD) trial designed to assess the safety, tolerability, and pharmacokinetics of intravenous administration of the product in healthy adult subjects. In the Phase I SAD study, dosing healthy volunteer subjects was well tolerated to a dose of 0.4 mg/kg but a maximum tolerated dose was not reached.

The Phase II trial was a multi-dose study in virally suppressed (NA therapy) patients with chronic HBV. The study enrolled 4 cohorts and explored two doses of ARB-1467 (0.2 and 0.4 mg/kg) at two dose frequencies (monthly and bi-weekly) in two patient populations (HBeAg-negative and positive patients). Cohorts 1, 2, and 4 enrolled HBeAg- patients and Cohort 3 enrolled HBeAg+ patients. The first three cohorts each enrolled eight subjects; six received three monthly doses of ARB-1467, and two received placebo. Cohort 4 enrolled twelve patients, all of whom received five bi-weekly doses of ARB-1467, followed by monthly dosing if pre-defined criteria were met. ARB-1467 was administered at 0.2 mg/kg in Cohort 1 and 0.4 mg/kg in Cohorts 2, 3, and 4. Overall, treatment was well tolerated across all cohorts (Cohorts 1, 2, 3, and 4).

Results from monthly doses in Cohorts 1, 2 and 3 demonstrated a significant reduction in serum HBsAg and a step-wise, additive reduction in serum HBsAg with each subsequent dose. The HBsAg reduction achieved after three monthly doses of 0.4mg/kg in Cohort 2 was greater than that seen at 0.2 mg/kg in Cohort 1, demonstrating a dose-response with repeat dosing. The company observed no significant differences in serum HBsAg reductions between HBeAg-negative and HBeAg-positive patients. In Cohort 4, five doses of ARB-1467 were administered on a bi-weekly dosing schedule. Results after 5 doses of bi-weekly administration demonstrated a deeper reduction in HBsAg levels compared to the results observed during the monthly administration, with a mean reduction of 1.4 log10 and a maximum reduction of 2.7 log10. Seven of the twelve patients met the predefined response criteria (a reduction greater than 1 log10 and HBsAg levels < 1000 IU/ml) at or before day 71. Five of the seven patients who met the response criteria had their serum HBsAg reduced to low absolute levels (below 50 IU/mL).

Arbutus Biopharma Corporation has initiated a triple combination study of its RNAi agent ARB-1467 with tenofovir (TDF) and pegylated interferon (PegIFN) therapy to determine if this regimen will result in patients reaching undetectable HBV DNA and HBsAg levels. The Phase II combination trial is a 30-week multi-dose study in 20 HBV DNA -positive, HBeAg-negative, treatment naïve, patients who will receive bi-weekly doses of ARB-1467 at 0.4 mg/kg and daily oral TDF doses for 30 weeks. Those patients who reach predetermined criteria 6 weeks will qualify for the addition of weekly PegIFN treatment, while continuing to receive bi-weekly doses of ARB-1467 and daily doses of TDF for the remaining 24 weeks. Patients will be followed for 24 weeks after the treatment period concludes. Interim on-treatment results from this trial are expected in the second half of 2018, followed by final results in 2019.

GalNAc RNAi (AB-729)

Early in 2018, the company nominated for development a next-generation RNAi therapeutic, AB-729, targeted to hepatocytes using its novel covalently conjugated N-acetylgalactosamine (GalNAc) delivery technology to enable subcutaneous delivery. This is a promising new agent that acts on multiple HBV viral transcripts, enabling inhibition of viral replication and suppression of all viral antigens. AB-729 showed more durable in vivo preclinical activity than earlier-generation RNAi agents for the treatment of chronic HBV infection. The company observed a significant dose response, and a stepwise reduction in viral proteins when multi-dosing. Arbutus Biopharma Corporation has initiated IND/CTA enabling studies, and pending success of those studies, this product candidate could be the subject of an IND/CTA filing in the first half of 2019.

Additional Research Programs

In addition to its clinical candidates, Arbutus Biopharma Corporation has a number of research programs aimed at discovery and development of proprietary HBV candidates with different and complementary MOAs. Arbutus Biopharma Corporation has ongoing discovery efforts focused on cccDNA targeting and checkpoint inhibition to identify novel drug candidates to complement its pipeline of agents to form an all-oral combination therapy.

Proprietary Delivery Technology

The company's LNP technology represents the most widely adopted delivery technology in RNAi, which has enabled several clinical trials and has been administered to hundreds of human subjects. Arbutus Biopharma Corporation is the leaders in LNP delivery and hold a dominant intellectual property position in this field. Arbutus Biopharma Corporation has applied its extensive technical expertise and clinical experience gained from its LNP-based programs to further advance its platform technology and its broad application to mRNA delivery.

Arbutus Biopharma Corporation has generated value from its LNP platform technology, which is well suited to deliver therapies based on RNAi, mRNA, and gene editing constructs. Arbutus Biopharma Corporation has also developed a proprietary GalNAc conjugate technology to enable subcutaneous delivery of an RNAi therapeutic targeting HBsAg and/or other HBV targets.

In April 2018, the company entered into an agreement with Roivant Sciences to launch Genevant Sciences, a jointly-owned company focused on the discovery, development, and commercialization of a broad range of RNA-based therapeutics enabled by its proprietary LNP and ligand conjugate delivery technologies (collectively, the Delivery Technologies) for all applications except HBV. See further discussion under Recent Developments below.

Development of RNAi therapeutic products is currently limited by the instability of the RNAi trigger molecules in the bloodstream and the inability of these molecules to access target cells or tissues following administration. Delivery technology is necessary to protect these drugs in the bloodstream to allow efficient delivery and cellular uptake by the target cells. Arbutus has developed a proprietary delivery LNP platform. The broad applicability of this platform to RNAi development and clinically proven safety profile has established it as a leader in this new area of innovative medicine.

Partner Programs

Patisiran (ALN-TTR02)

Alnylam Pharmaceuticals, Inc., or Alnylam (Nasdaq: ALNY), has a license to use its intellectual property to develop and commercialize products. Alnylam's patisiran (ALN-TTR02) program represents the most clinically advanced application of its LNP delivery technology, and results demonstrate that its LNP has been well tolerated and efficacy maintained with long-term (>36 months) treatment. Alnylam may only grant access to its LNP technology to its partners if it is part of a product sublicense. Alnylam’s license rights are limited to patents that Arbutus Biopharma Corporation has filed, or that claim priority to a patent that was filed, before April 15, 2010.

Patisiran is Alnylam`s most clinically advanced RNAi therapeutic in development, targeting transthyretin (TTR) for the treatment of TTR-mediated amyloidosis (ATTR). In September 2017, Alnylam successfully completed its APOLLO Phase III clinical trial of LNP-enabled patisiran, which initiated in November 2013. Results showed that patisiran met its primary efficacy endpoint and all secondary endpoints in this trial. As a result, Alnylam completed a New Drug Application (NDA) to the U.S. Food and Drug Administration (FDA) and a Marketing Authorisation Application (MAA) to the European Medicines Agency (EMA) for patisiran. Alnylam has estimated that first regulatory approval may be obtained in the second half of 2018. The company retain full rights to royalties on patisiran global sales and are entitled to low-to-mid single-digit royalty payments escalating based on sales performance as Alnylam’s LNP-enabled products are commercialized. The company could receive its first royalty payments in the second half of 2018, or seek to otherwise monetize all or part of this royalty stream as a source of non-dilutive cash.

Gritstone Oncology

In October 2017, the company entered into a license agreement with Gritstone Oncology (Gritstone) that granted them worldwide access to its portfolio of proprietary and clinically validated LNP products and associated intellectual property to deliver Gritstone’s RNA-based neoantigen immunotherapy products. Gritstone paid it an upfront payment and agreed to future payments for achievement of development, regulatory, and commercial milestones as well as royalties, and reimbursements for conducting technology development, manufacturing and regulatory support for Gritstone’s product candidates. Genevant will be entitled to 50% of any milestones and royalties that may be payable by Gritstone.

Marqibo®

Marqibo, originally developed by Arbutus, is a novel, sphingomyelin/cholesterol liposome-encapsulated formulation of the FDA-approved anticancer drug vincristine. Marqibo’s approved indication is for the treatment of adult patients with Philadelphia chromosome-negative acute lymphoblastic leukemia (Ph-ALL) in second or greater relapse or whose disease has progressed following two or more lines of anti-leukemia therapy. The company's licensee, Spectrum Pharmaceuticals, Inc. (Spectrum), launched Marqibo through its existing hematology sales force in the United States. Spectrum has ongoing trials evaluating Marqibo in three additional indications, which are: first line use in patients with Philadelphia Negative Acute Lymphoblastic Leukemia (Ph-ALL), Pediatric ALL and Non-Hodgkin’s lymphoma. Arbutus Biopharma Corporation is receiving mid-single digit royalty payments on sales of Marqibo.

Recent Developments

Genevant Sciences

In April 2018, the company entered into an agreement with Roivant to launch Genevant, a jointly-owned company focused on the discovery, development, and commercialization of a broad range of RNA-based therapeutics enabled by its proprietary Delivery Technologies. Arbutus Biopharma Corporation has licensed exclusive rights to its LNP and ligand conjugate delivery platforms to Genevant for RNA-based applications outside of HBV. Genevant plans to develop products in-house and pursue industry partnerships to build a diverse pipeline of therapeutics across multiple modalities, including RNAi, mRNA, and gene editing.

Under the terms of the agreement, Roivant contributed $37.5 million in transaction-related seed capital for Genevant, consisting of an initial $22.5 million and a subsequent investment of $15 million at a pre-determined, stepped-up valuation. The company retain all rights to its LNP and conjugate delivery platforms for HBV, and are entitled to a tiered royalty from Genevant on future sales of products enabled by those delivery platforms. The company also retain the entirety of its royalty entitlement on the commercialization of Alnylam’s patisiran. The initial investment and the subsequent investment were completed during the second quarter 2018, therefore at June 30, 2018 Arbutus holds an equity interest in Genevant equal to 41%. The company recorded a $24.9 million non-cash gain in the second quarter of 2018 as a result of this transaction.

Genevant is led by Executive Chairman Paris Panayiotopoulos, former CEO of ARIAD Pharmaceuticals, accompanied by a management team of RNA experts including Dr. Bo Rode Hansen as President, Chief Scientific Officer, and Head of R&D; Dr. Peter Lutwyche as Chief Technology Officer; Dr. Konstantin Linnik as General Counsel; Dr. James Heyes as Senior VP; and a scientific team with decades of RNA development experience.

Acuitas Therapeutics Inc.

In accordance with a settlement agreement signed in November 2012, the company finalized and entered a cross-license agreement with Acuitas Therapeutics Inc. (Acuitas) in December 2013. The terms of the cross-license agreement provided Acuitas with access to certain of its earlier IP generated prior to mid-April 2010 in the fields of gene replacement therapy and antisense. Acuitas was only able to grant access to its LNP technology to its partners if it is part of a product sublicense. At the same time, the terms provided it with certain access to Acuitas’ technology and licenses in the RNAi field, along with a percentage of each milestone and royalty payment with respect to certain products. Acuitas had agreed that it would not compete in the RNAi field for a period of five years, ending in November 2017. Arbutus considered Acuitas to be in material breach of their cross-license agreement and provided notice to Acuitas in August 2016 to terminate the cross license agreement, resulting in litigation between the two parties. In February 2018, Arbutus and Acuitas reached a settlement terminating Acuitas’ right to further use or sublicense Arbutus' LNP technology. Please refer to "Item 1. Legal Proceedings" for additional information.

Site Consolidation

In February 2018, the company announced a site consolidation and organizational restructuring to better align its HBV business in Warminster, PA. These organizational changes are expected to result in increased efficiency, a more flexible variable cost structure, and additional preservation of its cash reserves. To achieve this alignment, during the second quarter of 2018 the company reduced its global workforce by approximately 35% and closed its Burnaby BC facility. These activities were successfully completed during the second quarter without negatively impacting its research and development timelines.

Research, development, collaborations and contracts

Research, development, collaborations and contracts expenses consist primarily of clinical and pre-clinical trial expenses, personnel expenses, consulting and third party expenses, consumables and materials, as well as a portion of stock-based compensation and general overhead costs.

R&D expenses increased in both the three and six months ended June 30, 2018 as compared to the three and six months ended June 30, 2017. Stock based compensation expense in the first six months of 2018 is about $3.0 million less than the first six months of 2017 due to the expiry of certain share repurchase rights in Q3 2017. Program R&D expenses, however, have increased in the first half of 2018 over the first half of 2017 as its pipeline expands and goes further into the clinic. In the first half of 2017, the company initiated a Phase 1 clinical trial for AB-423. In the first half of 2018 the company initiated a Phase I clinical trial for POS AB-506 (capsid inhibitor) and it has shown striking potency and improved PK over AB-423 in preclinical studies. The company will wait for AB-506 results before deciding whether or not to proceed with additional clinical evaluation of AB-423. The company continue to incur costs related to its other programs including IND/CTA-enabling work and CTA regulatory filings completed in mid 2018 for AB-452 (HBV RNA Destabilizer), and pre-IND/CTA work on AB-729 (GalNAc-RNAi).

F- 25

A significant portion of its research, development, collaborations and contracts expenses are not tracked by project as they benefit multiple projects or its technology platform and because its most-advanced programs are not yet in late-stage clinical development. However, its collaboration agreements contain cost-sharing arrangements pursuant to which certain costs incurred under the project are reimbursed. Costs reimbursed under collaborations typically include certain direct external costs and hourly or full-time equivalent labor rates for the actual time worked on the project. As a result, although a significant portion of its research, development, collaborations and contracts expenses are not tracked on a project-by-project basis, the company do, however, track direct external costs attributable to, and the actual time its employees worked on its collaborations.

Tags: US:ABUS
Created by Wilton Risenhoover on 2019/09/01 19:08
     
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