Arbutus Biopharma (ABUS): Progress vs Chronic Hepatitis B Virus

In its Global Hepatitis Report 2017, the World Health Organization (WHO) estimates that 325 million people worldwide are living with chronic hepatitis. The vast majority of the affected population – 257 million – have hepatitis B virus (HBV). According to the Hepatitis B Foundation, 2 billion people have been infected with HBV, and nearly 1 million people die from HBV each year.

HBV is an insidiously silent epidemic, as most people do not have symptoms when they are newly or even chronically infected and can therefore unknowingly spread the virus to others. For people who are chronically infected but don’t have any symptoms, their liver is still being silently damaged which can develop into serious liver disease such as cirrhosis or liver cancer.

We’ve been following Arbutus Biopharma (Nasdaq: ABUS), which is developing RNAi treatments for HBV. RNA (ribonucleic acid) is critical to the body’s processes of protein synthesis, gene expression and cellular communication, and RNAi – or RNA interference – is the body’s natural mechanism to silence or regulate gene expression.

Source: Nature.com

Lipid Nanoparticle (LNP) Delivery Technology

In order for RNAi drugs to be effective, they must be delivered and released effectively to the appropriate target cells in the body. Arbutus has developed a proprietary Lipid Nanoparticle (LNP) delivery platform, which enables RNAi drugs to be encapsulated in tiny lipid (fats or oils) particles and delivered to the target cells via the bloodstream. The company has successfully licensed its LNP delivery technology and partnered with other biopharmaceutical companies, including Alnylam Pharmaceuticals (Nasdaq: ALNY).

Alnylam’s patisiran program is the most clinically advanced application of Arbutus’ LNP technology. Results from Alnylam’s Phase III study of patisiran to treat hereditary transthyretin amyloidosis (buildup of abnormal deposits of a protein called amyloid in the body’s organs and tissues) are expected this quarter, and Arbutus is entitled to “low to mid-single-digit” royalty payments escalating based on the sales performance of patisiran.

Arbutus is developing synthetic RNAi trigger molecules designed using the gene sequence coding for specific target proteins involved in viral transcription (the first step in gene expression). The LNPs are designed to stay in circulation long enough to accumulate at disease sites, where they’re taken up by the cells and deliver the RNAi triggers without being unnecessarily toxic to surrounding tissue.

Lead clinical candidate progressing well. Discontinuing secondary candidate.

The company provided a detailed clinical update as part of its Q2 conference call last Thursday, led by Mark Murray, PhD, who has been CEO since the 2008 merger of Arbutus (then known as Tekmira Pharmaceuticals) and Protiva. He was the President, CEO and founder of Protiva since its inception in 2000 and held senior management positions at ZymoGenetics and Xcyte before that. Dr. Murray has worked extensively on three programs that resulted in FDA approved drugs, including the first growth factor protein approved for human use.

Arbutus’ lead candidate is ARB-1467, an RNAi trigger molecule that targets all four of the viral proteins involved in HBV transcription. At the EASL (European Association for the Study of the Liver) International Conference in April, the company presented results from the first three cohorts of the Phase II study of ARB-1467, which showed significant reduction in the hepatitis B surface antigen (HBsAg) – the key marker for HBV infection – with three monthly doses of ARB-1467 in combination with new treatment. The results suggested that even greater reductions in HBsAg could be seen if there was a more frequent or longer dosage, and the fourth cohort of the Phase II trial is testing this premise with three months of bi-weekly dosing. Top line results from this cohort will be available in September.

The positive results of ARB-1467 were a double-edged sword, however, as Arbutus announced in its Q2 press release and elaborated on the call that it was discontinuing its secondary clinical candidate, ARB-1740, as it hasn’t shown “a sufficient clinical potency advantage over ARB-1467.” While it may be disappointing to see this trial end early, we view this decision to redirect resources toward the development of the more promising candidate as a positive one.

Next in the pipeline is a capsid inhibitor, AB-423, which is undergoing a Phase I trial. A capsid is a protein shell that encloses a virus, and AB-423 is designed to inhibit the assembly of the capsid for HBV and impair its ability to replicate.

Source: Arbutus Biopharma website

Combination Therapy is the Answer for Long Term Treatment of HBV

Long term treatment of HBV – as with many viral infections – will likely involve some type of combination therapy that reduces or suppresses viral DNA and antigens while boosting the immune response. At the 30th International Conference on Antiviral Research (ICAR) held in May 2017, Arbutus presented preclinical data in three presentations that demonstrated additive and, in some cases, synergistic activity when several of its developmental drug candidates were used in combination with entecavir or pegylated interferon. Entecavir [ Baraclude by Bristol-Myers Squibb (NYSE: BMY) ] is an antiviral medication that is approved to treat HBV infection but only shows about a 1% to 2% reduction in HBsAg. Pegylated interferon is an immunosuppressive and antiviral medication [ Pegasys by Genentech/Roche (OTCQX: RHHBY) ] that has demonstrated a 3% to 4% reduction in HBsAg.

Source: Arbutus Biopharma Corporate Overview, July 2017

Upcoming Milestones

Arbutus expects to hit several clinical milestones in the second half of this year.

• As mentioned above, top line results from Cohort 4 of ARB-1467 are expected in September
• Presentation of detailed results from the study at “The Liver Meeting” – the AASLD (American Association for the Study of Liver Diseases) conference in Washington DC in October.
• Presentation of clinical and preclinical data from multiple pipeline programs will also occur at The Liver Meeting, where Arbutus has had six abstracts accepted for presentation.
• Arbutus expects to complete the Phase I study of Ab-423 and advance into a multi-dosing study by year-end
• A new study will be initiated in Q4 to evaluate the dosing of ARB-1467 in combination with tenofovir and pegylated interferon. Tenofovir [ Viread by Gilead (Nasdaq: GILD) ] is an approved HBV treatment that shows only a 1% to 3% reduction in HBsAg.

Outlook

We like where Arbutus sits on the risk-reward spectrum. Chronic HBV is a global epidemic for which currently available treatments lead to less than a 5% cure rate. The company has shown promise thus far in the clinic and there is sufficient cash on the balance sheet to carry the company through late 2018. Additionally, there are opportunities for extending the runway beyond 2018 without dilution, through potential further LNP licensing and the royalty entitlement from the potential commercialization of Alnylam’s patisiran.

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