Ladies and gentlemen, thank you for standing by and welcome to Arbutus Biopharma Corporation 2020 Third Quarter Financial Results and Corporate Update. [Operators Instruction]. As a reminder, this conference is being recorded. I would now like to hand the conference over to Pam Murphy, you may begin. .

Good morning and thank you for joining Arbutus' Third Quarter 2020 Conference Call. On the call today are William Collier, President and Chief Executive Officer; Dr. Mike Sofia, Chief Scientific Officer; Dr. Gaston Picchio, Chief Development Officer and Dave Hastings, Chief Financial Officer..

Bill will begin with a summary of recent accomplishments and upcoming events and a review of Arbutus' corporate objectives followed by Dave Hastings who will provide a quick recap of Arbutus' key third-quarter financial results. We'll then open the call for Q&A.

Before we begin, we'd like to remind you that some of the statements made during the call today are forward-looking statements, including statements regarding expectations, timelines and clinical results for Arbutus' proprietary HBV pipeline and it's COVID-19 preclinical research efforts, achievement of the company's 2020 objectives and it's expected cash use and cash runway.

These forward-looking statements are subject to a number of risks and uncertainties that may cause actual results to differ materially, including those described in our most recent annual report on 10-K, quarterly report on Form 10-Q and other periodic reports filed with the SEC from time to time.

I would now like to turn the call over to Bill Collier. .

Thank you Pam, and good morning to everybody and thank you very much for joining us today. We appreciate that it's a very busy time for all of you and so, we'll keep our prepared remarks short and allow as much time as needed to address any questions that you have.

To begin, I'm pleased to report that despite the ongoing challenges of the COVID-19 pandemic, our team continues to execute efficiently and effectively and our scientific clinical and corporate operations and timelines, all remain on track..

As described in the press release this morning, we expect to present additional safety and efficacy data from our ongoing Phase 1a/1b clinical trial for our lead clinical candidate, AB-729 at an upcoming scientific conference specifically at AASLD.

We have an oral presentation, which will be supported by a press release on Sunday, November 15th and we will also host a conference call and webcast following the presentation of the data before markets open on Monday, November 16th.

During this November 16th conference call, we'll review the AASLD presentation, which includes results from our first multi-dose 60 milligram cohort in which subjects have been dosed every 4 weeks. We'll also review follow-up data from the 60 and 90 milligram single dose cohort.

Separately, results from the 60 milligram multi-dose cohort with the dosing interval of every 8 weeks and a 90 milligram single dose cohort in HBV DNA positive subjects are expected in the 4th quarter of 2020..

Before moving on, I'll quickly review our recent clinical collaboration with Assembly Biosciences to evaluate AB-729 in combination with Assembly's lead HBV core or capsid inhibitor candidate, vebicorvir, plus a standard-of-care nucleoside or nucleotide reverse transcriptase inhibitors or NUC therapy for the treatment of patients with chronic HBV.

We view this collaboration as a means to expedite our understanding of the therapeutic value of combining AB-729 with an oral capsid inhibitor and potentially informing our own clinical development plan for combining 729 and our lead oral capsid inhibitor, AB-836.

The collaboration with Assembly will include a randomized multi-center open label Phase 2 clinical trial to explore the safety, pharmacokinetics and antiviral activity of the triple combination of 729, vebicorvir and NUC compared to the double combinations of 729 with the NUC and vebicorvir with the NUC..

This clinical trial is on track to initiate in the first half of 2021 and is expected to enroll approximately 60 virologically-suppressed patients with chronic HBV infection. Subjects will be dosed for 48 weeks with a 24-week follow-up period.

As part of the collaboration, the companies may add cohorts in the future to evaluate other patient populations and/or combinations..

Now as most of you know, AB-836, our lead oral capsid inhibitor, is currently in CTA/IND enabling studies and is expected to complete these by the end of this year.

Our COVID-19 preclinical research efforts as well as our collaboration with the COVID-19 R&D consortium whose mission it is to find molecules with the greatest rationale for advancement into clinical trials are in full execution mode.

We've already screened several Arbutus libraries of small molecules as part of the COVID R&D consortium and we are in the process of evaluating the data. In addition, we continue to feed molecules into the screening effort. We've also established a network of testing capabilities that will help us rapidly progress the evaluation of our molecules.

We believe, Arbutus' COVID program is differentiated by our focused expertise and capabilities in antiviral drug discovery and development that puts us in a position to rapidly advance new coronavirus therapies. We are committed long-term to this program with the expectation of delivering novel therapies to patients.

So thank you for your attention this morning. I'll now turn the call over to Dave. .

Thanks, Bill and good morning everybody. Our ending cash, cash equivalents and short-term investments was approximately $118 million as of September 30, 2020, compared to approximately $91 million as of December 31, 2019.

Our cash use from operations for the nine months ended September 30, 2020, was approximately $36 million and we made a $2.5 million equity investment in Genevant in July. These cash outflows were offset by approximately $66 million of net proceeds from the issuance of common share under the Arbutus ATM program.

The company believes its ending third quarter cash, cash equivalents and investments of approximately $118 million are sufficient to fund the company into mid-2022, so with that, Bill, I'll turn the call back to you. .

Thanks very much Dave. Before beginning our Q&A session, I'll just quickly review Arbutus' key objectives for the fourth quarter of 2020. First of all, we'll continue to advance our Phase 1a/1b clinical trial of AB-729, our proprietary GalNAc delivered RNAi compound.

Second, we'll progress our next generation capsid inhibitor 836 through CTA/IND enabling studies. Thirdly, we'll continue to progress our COVID-19 small molecule programs. And fourth, we'll continue to research efforts to advance a lead oral compound that inhibits PD-L1 and a lead oral next generation HBV specific RNA destabilizer.

So with that, operator, could you please help us open up the lines for our Q&A session. .

[Operator Instructions]. Your first question comes from the line of Madhu Kumar from Baird. .

This is Rob on for Madhu.

I have a question, what kind of surface antigen decline from the 60 milligrams 4-week multi-dose cohort, would you consider clinically meaningful?.

Yes, thanks for your question.

Gaston, do you want to take that one?.

Yes, sure. Thanks, Bill. So basically, I think that question is important to put it in the context of at what time one would be measuring that. So really to give you a number without specifying at what time point we would be measuring that decay is a little challenging.

And obviously we're not in a position to disclose at this point what timeframe we're going to be providing the S antigen decline data. .

Okay, thank you. I just have one other follow-up question about the status of your collaboration on 729 with Assembly.

Do you have any sense of timing of that data?.

Good question. We haven't guided to any specific date for availability of data from the study. We have projected the study will initiate in the first half of 2021 though. And it's an open label study. .

Your next question comes from the line of Mayank Mamtani from B Riley. .

Congrats on all the progress over 2020. It seems like a little bit more to go before the end of the year. So for the November 16th presentation beyond the multi-dose data from the 60 mg, what else should we expect to learn? Would you also have some follow-up data from other doses? Would you just clarify? And I'm sorry if I missed that before. .

No, that's fine, Gaston?.

Yes, sure. So I can give a little bit more color about the presentation. So we will show longer-term follow-up of our single dose 60 and 90 milligram cohorts, which I think is interesting. Also, we will obviously update the safety, as well as we will also add some additional biomarkers to the presentation that we haven't shown before. .

Great. And then if I just take a step back and you think about what you have seen from other peers, more advanced peers and that there seems to be -- we see a peak at somewhere in the 1.5 to 2 log reduction.

So is that -- I mean, you are seeing that with your lower dose right, I think it was somewhere, the mean was 1, but you had a hyper-responder, which again with the multi-dose could be higher because that was a single dose data readout we saw.

So just help us to understand what good looks like for 60 mg and also 90 mg and what time point to be competitive and also, what is the element of differentiation that you're targeting?.

So, obviously I cannot give away the data today. Basically, what we've shown is that 60, 90 and 180 result on average, and I think it's important to highlight that's an average result in about 1 level decline at week 12.

So I think it suffices to say that the multi-dosing data will be showing data beyond week 12 and with the single dose will be showing data beyond week 12 as well. So I think the fact that one continuous dosing versus what happens with a single dose will allow people to throw some conclusions. .

Great. And then just moving on to the capsid core inhibitor. Again, I understand that Assembly collaboration and this specific study is still in the works. And you may not have made choices on what dose on 729 would make sense, but I'm just curious.

Could you just layout how does your internally owned 836 program specifically benefit from what you learned in that study. In terms of the studies you may do starting with healthy volunteers, but also as you think about combinations? Because I mean, you can learn a lot from externally what everyone else is doing including the J&J restudy.

But I'm just curious, is it more about how 729 specifically combines with a core capsid? Could you just to help us understand the rationale and how to think about it?.

Yes, well, let me begin and I'll ask Gaston just to kind of follow through. So -- I mean, you may remember that we've always had an ambition at Arbutus to combine 729 with a capsid. And we could have done that with one of our earlier capsids except that that particular molecule didn't progress.

And we're now in a situation where we have to just wait for 836 to complete its IND enabling studies and then Phase 1 studies early next year.

So it seemed to us that doing this collaboration with Assembly was both a great opportunity and an expedient way to move quickly into a proof of concept combination study that looks at both dual therapy and also the triple therapy. And because it's a Phase 2 open label study, we'll be getting some readouts as the study goes through.

And I think all of that plus, as you say, analyzing what the competition is doing in these studies, will help us inform the right structure and elements of a study that we do with 729 and 836. Do you want to add anything else.

Gaston?.

Yes, I will add a couple of things, and I think also it would be nice to hear from Mike on this. But let me start with my additional thoughts on why this is important. You're right, I mean, one could learn from other studies, but you cannot ask other sponsors to do certain things that you would like to explore in a study. .

And I think that's one -- in addition to what Bill mentioned, that's one of the advantages of doing this study. Both Assembly and us have very unique technologies in terms of biomarkers and immune biomarkers and viral biomarkers that we can apply and we will be applying to this study.

And we can go very deeply into the understanding of the effects of the combination of the class being the capsid inhibitor, the class being 729 and the NUC. So yes, to your point, you can learn from others, but you cannot ask others to do the experiment that you would like to do. So I think that gives us a unique opportunity. .

And then -- I mean, as a drug developer, I'll tell you, yes, you can learn from others. 50% say what happens with your drug.

Even if it belongs to the same class, you always have to show that your class, your drug that belongs to a certain class, in this -- specifically the RNAi with the capsid inhibitor being vebicorvir, how does it perform with the NUC.

But then I think there's going to be additional aspects that are going to be unique to our AB-836, perhaps Mike can touch on in terms of potency and second mechanism of action, Mike?.

Yes, sure. Thanks Gaston. So if you look at 836, it is a much more potent agent than vebicorvir is and it's more potent both intrinsically against the first mechanism which is the encapsidation process as well as the uncoating process that results in replenishment of the cccDNA pool. .

And we also have a better profile as far as resistance is concerned, etc.

So I think, the Assembly collaboration will give us, as Gaston said, because we're going to look at a number of unique biomarkers and immune markers that others aren't looking at, will give us a hint on how they will ultimately move forward with a more potent agent that we think will have additive benefit on knocking down a number of immune -- excuse me, of the viral biomarkers going forward..

So I think it will inform us. Also, patient populations we're working, et cetera, will be of interest in value to us as we move forward on 836/729 combination. .

Great. And the final one, maybe staying with you Mike. On the nsp12 viral polymerase and then the other target nsp5 viral protease.

Again, Mike, you have extensive expertise and industry experience including your peers you may have worked with previously, what other groups out there might be looking at a similar approach? I am just curious if anything is near clinic relative to your approach that we should be looking out for. .

Well, I mean, look, there are some agents that people have repurposed, that are currently out there, right. That are in the viral polymerase space. Currently, there are no protease nsp12 viral -- nsp5 viral protease agents that have, at least to my knowledge, would really actively pursue clinically. So that's still an open area.

And even the nsp12 viral polymerase, those are repurposed agents, not necessarily designed specifically for this target or this disease, but has some modest activity that, that was a first entrant into this space could be beneficial to patients. There is an interest in clearly having a therapeutic.

Everything we hear about vaccines right now is that they will have some modest level of efficacy, so having a therapeutic on top of that will be of significant value.

As far as competitors in this space, to my understanding, there are actually very few who have a robust and focus program to look at these 2 targets and ultimately to develop combination therapies around these 2 targets. And so I think we are -- we kind of standout in that arena. .

And I think our decision to get into this space was specifically the fact that, we, as a company are a totally focus antiviral drug discovery company with expertise in these areas and feel that we can make an important impact here for both, maybe the current pandemic, but certainly from any future pandemics that arise. .

[Operators Instruction]. Your next question comes from the line of Roy Buchanan from JMP Securities. .

Great. Apologies if they've been addressed. The first question, it's good to see AB-836 on track for the IND submission this year.

I think on the last call, there was a 28-day tox study ongoing, has that been completed? And do you have any longer term tox studies underway?.

Thanks Roy. Mike, do you want to take that one. .

Sure. Thanks Roy. So as Bill said, we are on track for delivering our regulatory filing by the end of the year. So based on the timing of toxicology studies, you can imagine, we would have had to complete those by this time, so that's moving forward.

And I think we are a company that tries to accelerate our development efforts, so when we look at our programs that we're moving forward into the clinic, we always look at ways to move them more rapidly, whether it's accelerating toxicology programs, to position them more effectively for our efforts in more long-term studies, whether they would be as agents by themselves or in combination with our other development programs.

.

Okay, great, and then a question on the collaborative Phase 2 with Assembly's core inhibitor.

I guess where you guys planning to host sites for that trial? And I'm trying to get a sense of -- your sense of the risk for potential COVID-driven delay considering what we're seeing in the US and Europe in particular?.

Yes, and this is Bill. We've again not disclosed, I think where we're doing this study and I think the risk that you suggest around COVID is a real one and we actually include that in some of our forward-looking statements.

I think the thing to remember here is that some of these early Phase 1 and Phase 2 studies are relatively small cohorts in terms of patient numbers, it's not like a Phase 3 or 4 study where you have hundreds of patients being and -- implementing across multiple clinical trial sites in multiple countries.

So as we've seen with our own Phase 1a studies, we've tried to pick sites carefully in countries where the pandemic has been managed and select sites and hospitals where we have good confidence that subjects can be taken care of.

Gaston, do you want to add anything on that?.

No, I think you've covered great, Bill. But yes, we very carefully select our countries and sites and that's also not -- it's not exclusively considered for the collaboration, but also for our AB-836 study that first [indiscernible]. .

Okay, great that's helpful. And last one from me, I have a follow-up on the COVID candidate question.

I'm just curious, if you guys are, maybe it's too early to say, but are you targeting on oral therapy or something given by IV potentially? Are you looking at addressing the disease earlier or later in the course?.

Good question.

Mike?.

Yes. So we are targeting oral therapies. The course of administration for let's say, IV therapies is not out of the question for us. One of the things that -- we believe that nucleoside will be most effective is in the early stages and so, an oral therapy, we think, is the most appropriate mode of administration for this approach that we're taking. .

Speakers, I'm showing no further questions at this time. I would now like to turn the conference back to Bill Collier. .

Thank you very much and thank you everybody for joining us today and for your questions. We really appreciate your interest and we look forward to sharing updated clinical trial data for AB-729 with all of you on November 15th and 16th, thank you very much. .

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect..