Good morning, everyone. Welcome to the first session of the 2024 Baird Healthcare Conference. I'm Brian Skorney, for those of you who do not know me. I am one of the Senior Biotech Analysts here at Baird, and I'm very happy to host, as my first fireside chat this morning, Arbutus Biopharma. To my left, I have some of the management team here. I've been following the name for a while. It's got a great story here to tell. So maybe to just kind of kick things off, I'll start with the first question and just say, can you give us a broad overview of Arbutus, who each of you are, and, you know, what the company's focused on? Sure. Sure. Thanks, Brian. Good morning, everybody. Thank you for joining us this morning. I'm Mike McElhaugh. I'm the Interim President and CEO, also Co-Founder of Arbutus. With me today is Dr. Karen Sims, our Chief Medical Officer, and David Hastings, our Chief Financial Officer. I do have a couple of intro slides that we'll just kinda kick through here quickly. Of course, we're gonna make some forward-looking statements as we talk through today. I do have an investment highlight slide. For those of you who aren't aware, Arbutus Biopharma is a company that is exclusively focused on developing a functional cure for hepatitis B. Hepatitis B is a virus that affects the liver. This is a very large market opportunity, and we believe we have the team with the project expertise to deliver on that mission. We have a portfolio of internally developed assets. We have an RNAi therapeutic called Imdusiran, previously known as AB-729. And we also have a small molecule, liver-targeted PD-L1 inhibitor called AB-101. We have a strong financial position, which David will cover. I'm sure Brian will ask a question at some point about the financial strength of the company. And we also have a patented LNP technology estate, and we receive some licensing revenues from Alnylam for their sales of ONPATTRO. And we also have two litigations ongoing, one with Moderna and one with Pfizer, with regards to the COVID-19 vaccines. Our approach to delivering a functional cure for hepatitis B involves three steps. One, we need to suppress HBV DNA. Two, we need to reduce hepatitis B surface antigen, all antigens really, but hepatitis B surface antigen, which leads to immune exhaustion in hepatitis B. And third, we need to boost the host immune system, and we have a couple of approaches there, mainly focused on our PD-L1 inhibitor long term. But Karen will talk about two phase II studies we have ongoing with Imdusiran and two other potential immune modulators, which we presented some data at the last EASL conference. We'll also present some data potentially at the upcoming AASLD conference sometime this fall, assuming we get abstracts accepted, of course. But we're excited about that data and excited to have Karen talk through that. This is our pipeline, as I mentioned. We have Imdusiran, our RNAi therapeutic, in two phase II-A studies, one in combination with pegylated interferon, one in combination with a product called VTP-300, which is a product of our collaborator, Barinthus Biotherapeutics. We also have added an arm to that study that includes Nivolumab, so that's an interesting addition as well, and Karen can talk to that. And then AB-101 is in phase I studies. It's in a phase I-A/1-B study. First in single-ascending dose, moving to multiple-ascending dose in healthy volunteers, and then moving into hepatitis B patients. This is our milestone slide. I'm just gonna leave this up while we talk. We're gonna hit most of this- Yep ... as we make our way through it. So with that, maybe I'll pause and let you ask some more questions. Great! So Mike, you and I go way back to a company that effectively revolutionized functional cure for another viral hepatitis, hepatitis C. Hepatitis B is, you know, I think perceived as sort of like that next frontier. Large market opportunity for a chronic viral hepatitis. Maybe you can walk us through sort of the pathophysiology of HBV and maybe even contrast it a little bit with hep C as well as sort of the prevalence, incidence, and what the current standard of care is. Sure. So, there's a lot to unpack there, right? Mm-hmm. So, Brian's referring to hepatitis C in our time, my time at Pharmasset, a long time ago now. Hepatitis C was an RNA virus, different than hepatitis B. Hepatitis B actually has a reservoir of viral replication called cccDNA, so definitely much different. Hepatitis B leads to immune exhaustion, as I said. That's how you get to chronic disease. That's mainly through the surface antigen that it spits off in almost teaspoon quantities that can be available in the body. And And obviously, we need to get rid of that as we move forward. As far as market size is concerned, hepatitis B is actually about twice the size of the hepatitis C market. There's about 250 million patients chronically infected globally with hepatitis B. A large market in the U.S. as well. There's about two million patients chronically infected. Globally, the diagnosis rate and the treatment rate are pretty low, similar to what we saw in hepatitis C. But with new therapies coming to market, that's going to. We have the opportunity to increase that, obviously. A real, a tremendous opportunity, lots of patients to treat, lots of patients that need functional cure, and new therapies. Got it. So in terms of the current standard of care, you know, how is it used, and does it lead to any functional cures? And maybe even, like, what is a functional cure? Yeah, sure. I know there's a lot of different endpoints that are considered in HBV: DNA, S antigen, e antigen. How do they all come into play in terms of what- Good question ... you're trying to achieve? So, let's start with the definition of functional cure. Definition of functional cure is undetectable HBV DNA, undetectable HBV surface antigen, with or without development of antibodies against surface antigen, for 24 weeks off of all therapy. Okay? So it's a very defined approach. We know exactly what the definition is and what we're shooting for. As far as what the current standard of care therapies are, there are actually two of them that are approved for hepatitis B. Neither of them are great. There's nucleoside analogues, which are small molecule oral drugs. Those do a really nice job of lowering HBV DNA. They don't generally touch surface antigen in any way... and unfortunately, those need to be taken lifelong, okay? So you see some patients spontaneously move to functional cure, but it's very low, about 3%. The other option that's available is pegylated interferon for 48 weeks in duration, okay, for naive patients. Pegylated interferon for 48 weeks is tough to tolerate. We know that from the HCV days. Different virus, different tolerability profile for HBV patients, but 48 weeks is tough to tolerate regardless. That leads to functional cure in about 5% of patients. You'll remember that I mentioned we have a study ongoing with pegylated interferon, but what we're looking at is shorter courses of pegylated interferon. So when Karen gets a chance to talk, and she can talk you through the data from that study. Very well tolerated for 12 or 24 weeks, so that's a good thing. Okay. So the lead program that you have in development is in phase II, and multiple phase IIs at this point, Imdusiran. If you just walk us through the mechanism of Imdusiran and how you think its mechanism sort of can relate to ultimately achieving functional cure. Sure. Do you wanna handle that, Karen? So, someone can talk other than me. Sure. Absolutely. So Imdusiran, as Mike mentioned, is our lead therapeutic. It's a siRNA molecule, so it is a galNAc conjugated siRNA, meaning that it's specifically targeted to the liver. So very quick, as a subcutaneous injection targeted to the liver, and there it targets all hepatitis B transcripts. So it's a single trigger mechanism, meaning one nucleotide sequence that targets all the different antigens across the hepatitis B genome. So it, in our initial phase I trials, reduces HBV DNA, reduces surface antigen, reduces e antigen, so across the board reduction. So it's, for our drug, administered once every eight weeks, and it's a 60 milligram dose right now in phase II, so low dose, relatively infrequent administration, and very well tolerated to date in our patients. Okay, so I mean, you kind of gave us a little- Mm-hmm ... preview of some of the clinical data, but maybe you can kind of walk us through the development history here and what your most recent phase II results have sort of reflected. Sure, absolutely. Very well. Yeah, so as Mike said, we just presented some data recently at EASL Congress, excuse me, back in June, for our two ongoing phase 2-A clinical trials, and these are proof of concept trials, so both of these trials really were designed in a similar way, so we used Imdusiran to lower surface antigen, HBV surface antigen, as much as possible because we believe that contributes to host immune exhaustion, so by lowering surface antigen initially, we believe by adding then an immunomodulator to boost the host immune response, we'll get better activity from that immunomodulator, so our first trial is called IM-PROVE I, and it's Imdusiran in combination with short courses of interferon in patients who are already suppressed on ongoing nuke therapy. In that trial, we took these patients, administered Imdusiran for 24 weeks to lower surface antigen and then randomized them to one of four arms. Two arms received 24 weeks of interferon, the other two, 12 weeks of interferon, and within those groups, some patients continued to receive Imdusiran during the interferon treatment period, and others did not receive additional Imdusiran. At EASL, we presented data for the end of treatment, so meaning the end of the interferon treatment period, and then also for 24 weeks after completion of interferon treatment period, and those patients remained on their nuke therapy for that period as a consolidation period, if you will. What we saw basically is the 24-week interferon arms did very well. In the A one group in particular, which was 24 weeks of interferon and continued Imdusiran, we saw 33% of those patients achieve surface antigen loss at the end of the treatment period, and all of those subjects maintained that surface antigen loss through the 24 week follow-up period. If we dove a little deeper into that data set, what we found is subjects who entered the trial with lower surface antigen levels, so less than 1,000, had a 67% chance of reaching S antigen loss and maintaining that S antigen loss. The other 24 week arm also did quite well. We had, I think, 23 patients achieve surface antigen loss at the end of treatment, about 15% at the end of the 24 week nuke consolidation period. Those patients are all now off of nuke therapy and being followed for evidence of functional cure, which Mike defined for you earlier. Great, and then, so at what point do we start seeing kind of the numbers that we'll achieve in functional cure? And I guess going back to one of the questions we kind of talked about in terms of the different markers, given the mechanism, do you think seropositivity has any role to play here? Does it indicate any... I would assume if you're seropositive, it means that you're gonna remain probably S antigen negative, but with this sort of mechanism, does that really play a role? It's a good question. I don't know that we know that it's mechanism dependent yet. I mean, as Mike said, the FDA definition is with or without- Yeah ... that seroconversion component. I will say in the trial I just described, all of the patients in that arm that achieved surface antigen loss also seroconverted, so they did have presence of significant amounts of surface antibody. I think we don't know yet. Mm-hmm. I think the jury's still out on that. It seems to make sense that if you also seroconvert, you'd have a better likelihood of maintaining that, but I think we just don't know yet. Right. And then I guess, so what is sort of the target, you think, in, post-removal of all treatment to see functional cure? I mean, what would be sort of a regulatory bar? And, you know, what do you think you can achieve ultimately? I can tell you what we've sort of set our sights on is about 20%, right? As I mentioned earlier, the rates currently are abysmal, 3% or 5%, depending on what you're looking at. And you'll remember, we mentioned hepatitis C earlier. Remember, that was a bit of an iterative process, right? So once we found something that worked, you can build on that, to build from there. So we've set our initial target at 20%. We think that's a reasonable target. If you talk to your opinion leaders in the field, they'll mention 15%, 20%, 25%, depending on who you speak to, but generally, 20% is a win, right? So we're excited to potentially deliver that. Yeah. How many patients will we ultimately see from IM-PROVE I in terms of the denominator to analyze for functional cure? And do we have any numerator yet? It's a good question. So based on the data we presented at EASL, it was the total population was 43 subjects across all four of those arms. We have criteria in the protocol that allow them to discontinue nuke therapy if they meet certain thresholds. The most notable is probably the surface antigen threshold. So if they complete the 24-week nuke consolidation period, and their surface antigen is less than 100, they're allowed to discontinue their nuke therapy. So that denominator is 21 subjects out of the 43. So that kind of starts the clock for the six months off therapy for functional cure. Right. And that's across all four arms. Have you said anything in terms of any relapsers after stopping nuke therapy? I believe at the time of the EASL presentation, we had two subjects that required restart at that point, and that was just for increases in DNA levels, not for ALT elevations, flares, anything like that. Okay. Yeah. Well, so in addition to your IM-PROVE I study, you're also running a study with- Mm-hmm. VTP-300 and Imdusiran. Maybe you can kind of walk us through the mechanism of 300, and how you think that sort of complements Imdusiran and what we've seen so far from that study. Absolutely. So that's a different immunomodulatory approach from interferon, and as Mike said, we're exploring, you know, many different ways to boost the host immune system. So VTP-300 is a therapeutic vaccine from our colleagues at Barinthus. It's a heterologous prime-boost system, so meaning it's a chimpanzee adenovirus prime with an HBV vector, and then the boost is an MVA. So two different viral vectors, for lack of a better word. And the goal really is to try to boost HBV-specific T cell immunity. Mm-hmm. through that vaccine. And so Barinthus has its own program, bringing that compound forward in patients who are suppressed on nuke therapy. They've also done a little work with the PD-1 inhibitor Nivolumab as well, which we'll get into, I'm sure, shortly. So our study was meant to try to optimize the effects of VTP-300, because one thing they've noticed is it tends to achieve better decreases in surface antigen, again, in patients that have a lower baseline surface antigen at the start of treatment. So for our phase II-A study, IM-PROVE II, we took a similar approach as the interferon study, where we administered Imdusiran first to subjects for 24 weeks to lower surface antigen as much as possible, with the idea of potentiating potential responses to VTP-300. After that 24-week lead-in, they were randomized to receive either VTP-300 or placebo, and then were followed for a completion of 48 weeks treatment period. Again, in that study, were given the opportunity to discontinue nuke therapy if protocol criteria were met at week 48. At EASL, we presented data for, I think, the majority of subjects at that week 48 time point, and then some subjects who had completed 24 weeks post the end of treatment week 72. Essentially what we saw is at that week 72 time point, we saw a statistically significant difference in surface antigen levels between the active arm- Mm-hmm. versus the placebo arm. So the active arm had lower surface antigen levels at that week 72 time point, including one subject who had lost surface antigen at that point. Okay, and do you have stopping criteria in place in that study, too? And how, For discontinuation? Yeah, yeah. Yeah, absolutely. Yeah, so very similar stopping criteria. Okay. The key being a surface antigen value less than 100. Okay - out of this per mL. And how I guess maybe to contrast it with the interferon study. Mm-hmm. What are you seeing with VTP-300 in combination? Is it similar? Is it better? I mean, how do you think about ultimately moving forward with VTP-300 versus interferon, or is it a both scenario? Right. So right now, I think it's both because they're very different mechanisms of action. Mm-hmm. - in terms of that immunomodulatory response. Interferon has not only antiviral activity, but, you know, immediate activity in terms of interferon as a cytokine. In terms of VTP-300, I think we're still understanding the timing of optimal T cell responses- Mm-hmm - to that. And Barinthus has shown in their studies that it does take a bit of time to develop that immune response from the vaccine and then have that T cell immune response translate into actual surface antigen reduction. Mm-hmm. So the timeline for response, we think, is probably a little bit longer for VTP-300 than what we see with interferon. So I think we're still working through that, and there's a lot of immunologic work being done in both trials, honestly, to understand exactly the impact of both interferon and of VTP-300 on the patients. Mm-hmm - and their responses. And then the third modality you're- Mm-hmm sort of actively evaluating is PD-1/PD-L1. Mm-hmm. There's a study with Imdusiran, VTP-300 and Nivolumab that we're expecting end-of-treatment data. Mm-hmm. I mean, I guess we can't go anywhere without hearing about PD-1 these days in an oncology setting. I guess, what's the role of PD-1/L1 in viral diseases, and how do you think about adding that to your combinations? Mm-hmm. You want me to handle that one? Sure. Sure. Yeah. I can talk. I can I can talk and give you a rest. So, good question, Brian. So as Karen mentioned, our goal is to really to boost the immune system, right? To boost this T cell response, and you see that happen with the PD-L1, PD-1, PD-L1 axis. You also see specific to HBV, there's a downregulation of PD-L1- Mm-hmm ... in hepatocytes with regards to HBV infection. So we think that's a reasonable path forward for our immunologic component of our potential functional cure, right? We decided to choose a very different approach than the antibody. So as I mentioned at the beginning, it's a small-molecule, liver-targeted approach, and there's good rationale for that. So you mentioned oncology patients who have a much different risk-benefit profile than an HBV patient might have, right? Sure. So some of the issues with the antibodies are once you give it, it's on board. It's difficult to sort of manage. There are issues with immune-related adverse events with the antibodies that might be tolerated in an oncology patient but likely wouldn't be tolerated in an HBV patient. So the approach we've taken is a small-molecule, liver-targeted approach, which gives us much more control over that activity, right? Yeah. As Karen has said, it sort of gives us a scalpel approach versus a sledgehammer, you know, right? It allows us to closely monitor for issues, and if the issues exist, we could potentially, you know, remove the drug or dose reduce to help, you know, tailor the effect. We're excited about that program. It's currently in phase I-A/I-B, and it's moving along quickly. Yeah. And then, I guess, looking back at the Nivolumab study that you have end of treatment data on, what do you, what should we expect to kind of see from that data set? What, you know, what sort of indications of PD-1 being effective here, are you seeing at this point? And what can you translate from that study to ultimately what your Yeah ... oral PD-L1 will be? That's a good question. So we don't know because we don't have the data yet, but we'll know come potentially the fall when we release some preliminary data with that study. But what we do know is that our colleagues at Barinthus have looked at VTP-300 in combination with Nivolumab, sort of a similar dosing schedule. Mm-hmm. And they do see increased reduction in surface antigen over VTP-300 alone. So I would expect that we'd hope to see something similar- Mm-hmm ... in our study. Mm-hmm. A contribution above and beyond what we see with VTP-300, with the addition of Nivo. And look, having Nivo have some effect on surface antigen would be good and allow us to sort of think about what that might mean in the small molecule program as well, right? Okay. And what can you share so far from what you've seen or what we should expect to see from sort of the ascending-dose healthy subject cohorts? Are you looking for sort of T cell responses? What are the important metrics to take away from here? Yeah, absolutely. I'll take that one. So that trial, as Mike said, is an ongoing phase I trial. It is an umbrella study, which means it starts in healthy subjects and then transitions within the same protocol to chronic hepatitis B subjects. So as you said, we do have some single-dose data available in healthy subjects. Right now, we're well into the repeat dosing in healthy subjects to prepare us for moving that drug into chronic hepatitis B patients. So what's interesting about this particular mechanism, since it's not specifically an antiviral, we can actually look for PD responses in healthy subjects, meaning we can look at receptor occupancy data in healthy subjects with the small molecule program. So we have shared so far data from the single ascending dose through four dosing panels. The highest dose we've tested at the time we shared data was 25 mg, single dose, and amongst those healthy subjects we were able to analyze, we saw receptor occupancy levels between 50% and 100% just after a single dose of AB-101, with no safety findings of concern to report, so far, you know, data we're really happy with, even just after a single dose. All right. Great. Mm-hmm. So I think, you know, putting all of this together, how do you sort of see the next steps to developing your programs in a functional cure? Is there a phase II-B study that's gonna start, where you're sort of formally evaluating that? And what do we kind of think of, in terms of what a clinical trial design- Yeah ... would ultimately look like? So the answer to that question is yes. That's kind of how we're thinking about it. We have a lot of data that we need to incorporate into the ultimate design, but we're working through that. We're gonna... As the data continue to evolve this fall, we'll sort of prioritize what makes the most sense for a phase II-B study. Mm-hmm. But yeah, you're right. That's exactly kind of the path that we're on, phase II-B, larger sample sizes so that we can validate the data and then move as quickly as we can into pivotal studies. Mm-hmm. Great. Yeah. Now, probably as much as I get questions about HBV for Arbutus, the other side of the story is the LNP side. Obviously, there's a number of patent disputes that are ongoing here that you probably can't- There are ... go into too much detail on. But maybe, for the people here, you can just kind of review, you know, the history of the LNP technology, where it sits, sort of vis-a-vis the royalty obligations that other companies have to you already. You mentioned ONPATTRO, but also maybe touch on sort of the Moderna, Pfizer disputes as well. Sure. Dave, would you like to, Sure ... would you like to talk through that? I'm happy to contribute as well. Yeah. No, so we filed suit against both Moderna and Pfizer around the LNP technology. A couple of things we can say, the Moderna trial has been scheduled for September of 2025, subject to court availability. The wheels of justice grind slowly, so hopefully we'll stick to that date. Also importantly, in the Pfizer litigation, we have scheduled the claims construction hearing, which is an important marker in patent suits, and that's scheduled for December 18th of this year, and post that, the scheduling will run from there. In terms of ONPATTRO, we do have a royalty entitlement, low single digits. As you know, there's a 2nd-generation product. We don't really expect that royalty flow to be a material contributor to Arbutus going forward. But we did a very constructive deal with that, several years ago, where we received $18 million of net proceeds from OMERS. And maybe, I mean, since you mentioned sort of the scheduling of a Markman hearing for Pfizer, maybe you could kind of talk a little bit about you know what happened in the Markman hearing with you guys and Moderna, just in terms of the claims you had versus the claims Moderna had, and who ultimately- Yeah, we were very gratified with the judge's view of our claims. I think three out of four were really upheld, and we're quite confident, but you know, obviously, time will tell. Mm-hmm. Got it. And then, I guess, to follow up with the question you mentioned from the beginning, maybe just to walk through the company's current cash position and, you know, what sort of data points that can get you guys through. Sure. So as Mike mentioned, we're well capitalized, $149 million. I always round up. It's $148.5 million, but I round up to $149. It's basically two years of cash. So we have cash runway into the fourth quarter of 2026. You know, the company's strategy around that really has been to ensure that. Well, not totally funded. A significant amount of our phase II-B study that we would initiate next year at some point is funded with that cash, that cash flow. You know, we also have important data points coming this fall, which also will support the market cap of the company. We're confident about that as well. Got it. And then maybe just to kind of finalize things, when you think about sort of development as a company and where you ultimately want to go with commercialization, obviously, this is a huge market opportunity, but also seems like it would be potentially a very big lift from a commercial standpoint. Certainly, Asia is probably the largest territory- Mm-hmm. From a prevalence perspective for hepatitis B. How do you think about sort of development in partnership with pharmaceutical companies? Is there a stage where you think that it's critical to sort of do those deals? Obviously, I think there's you know, one or two companies in the large pharma side that are sort of in development parallel with you guys. So maybe just how do you think about BD- Yeah. -going forward? It's a good, it's a good question. So we have historically shown our ability to do BD deals, right? Not only in the collaboration deals that we've done with regards to development, but also in out-licensing Imdusiran rights in China to Qilu, our development partner in China. Because you're right, a small company in Warminster, Pennsylvania, doesn't have the power, at least at this point, to develop drugs in China, right? As far as other business development is concerned, look, I think the way I answer that question is pretty consistent. We have conversations with everyone, both in and outside the space, as we should, regular touch points. You know, depending on how those conversations evolve, we'll make a decision whether it makes strategic sense for the company, and we'll execute if appropriate. As far as timing is concerned, I don't... you know, there's not any specific time that we're looking at. It's just ongoing. Okay. Great. I'll. That's all I really have. I'll see if there's any questions in the audience. Feel free to jump in these last few seconds here. Mm-hmm. All right. If not, is there anything else that I didn't ask that you think investors should should really be focused on for Arbutus? Hopefully, I got most of them. I don't think so. I think you covered it all. Yeah. Thank you. Thanks, Brian. All right. Well, thanks for the time today. Thank you. We really appreciate it. Thank you. Thanks, everyone, for coming. Thank you.