VIR - Arbutus: Two Data Readouts Of AB-729 Could Shift Momentum In 2023

2023-05-17 15:17:32 ET

Summary

• Preliminary results from phase 2a study, using AB-729 + Nucleoside analogue + PEG-IFN-2a for the treatment of patients with Hepatitis B, are expected in Q2 of 2023.
• Results from phase 2a study, using AB-729 + Nucleoside analogue + VTP-300, for the treatment of patients with Hepatitis B, are expected in the 2nd half of 2023.
• Results from phase 1 study using oral RNA destabilizer AB-161 in patients with Hepatitis B are expected in the 2nd half of 2023.
• Clinical update showed that 7 patients with cHBV remained off treatment and still continue to do so with low levels of HBV DNA and HBsAg for at least 1 and half years after their last dose of AB-729.

Arbutus Biopharma ( ABUS ) is a good speculative biotech play to look into. That's because it has a major catalyst, which is approaching in Q2 of 2023. It expects to release results from its ongoing phase 2a study using its RNAi [RNA interference] drug AB-729 for the treatment of patients with Hepatitis B. This data is going to be crucial, because it will show if using AB-729 together with the combination of ongoing nucleoside analogue [NA] therapy along with short courses of PEG-IFNa-2a, produces an improved reduction of Hepatitis B Surface Antigen [HBsAg]. This isn't the only shot on goal for AB-729 as a cornerstone combination agent either for the treatment of patients with Hepatitis B. Arbutus has sought out Vaccitech ( VACC ) so that it could explore another triple combination for this patient population. This would be the use of AB-729 together with Vaccitech's HBV immunotherapeutic known as VTP-300 in a phase 2a study. Preliminary data from this combination study is expected in the 2nd half of 2023. What's even more promising is that both companies were able to expand upon this triple combination study and add a fourth component. That is, to include Opdivo [Nivolumab] + AB-729 + NA + VTP-300. The first patient to be dosed for this multi-combination study is expected to take place in the 1st half of 2023. It remains to be seen if combining all four of these treatments together produce an even more profound effect at reducing HBsAg, but it is encouraging that it received clearance from the FDA to tackle 4 therapies in one study. In addition, it is expecting to release results from a phase 1 study using AB-161 for the treatment of patients with Hepatitis B in the 2nd half of 2023. With two major data readouts expected from phase 2a proof of concept studies using AB-729 for Hepatitis B, plus improved off-treatment effect of HBV patients after the last dose of AB-729, these are the reasons why I believe that Arbutus Biopharma is a good speculative biotech play to look into.

AB-729 Shows Highly Promising Off-Treatment Activity

As I noted above, there is a major catalyst readout coming up. This would be the release of results evaluating AB-729 in combination with ongoing NA therapy and short-courses of PEG-IFNa-2a in 43 patients with chronic Hepatitis B Virus [chronic Hepatitis B Virus], in the ongoing phase 2a AB-729-201 trial. Results from this phase 2a proof of concept study are slated to be released any day now in Q2 of 2023. There are two positive aspects to consider as it relates to this triple-combination AB-729 therapy. The first positive aspect to consider is that AB-729 continues to work even after patients had their last dose a year and a half ago. What do I mean by this? Well, Arbutus presented an update on the advancement of AB-729 as an oral presentation at the Global Hepatitis Summit 2023. The update presented at this medical conference showed that 7 patients with cHBV remained off treatment and still continue to do so with low levels of HBV DNA and HBsAg for at least 1 and half years post AB-729 treatment. What's remarkable is that this RNAi drug has not only achieved this function, but has also been shown to reawaken the immune system. The reawakening of the immune system is what is highly ideal, especially if you want it to clear the HBV from the body.

The second positive aspect to consider is that Vir Biotechnology ( VIR ) already established initial proof of concept that combining an RNAi drug together with PEG-IFN-a already produced an even more profound reduction of HBsAg. It ran a phase 2a study proving that when its drug VIR-2218 was combined with PEG-IFN-a there was a greater reduction in HBsAg compared to only those who took VIR-2218 alone . This was shown in Cohort 3 where the mean HBsAg decline from baseline was 2.0 log10 IU/mL at week 12 and 06 log10 IU/mL, which was greater than the two cohorts evaluating VIR-2218 alone. VIR Biotechnology is also advancing additional combinations of its own. For instance, it is advancing the phase 2 STRIVE sub-protocol clinical trial evaluating safety and efficacy of VIR-3434, VIR-2218 pegylated interferon alpha [PEG-IFN-a] and a nucleoside reverse transcriptase inhibitor [NRTI], to treat patients with Hepatitis B. However, its approach is to target two different HBV populations. That is, its program is targeting HBV patients with active viral replication and inflammation and then those who are inactive carriers. The premise here is that Vir showed that its RNAi drug VIR-2218 with PEG-IFN-a was able to achieve greater HBsAg reduction. What remains to be seen now is if Arbutus can do better by combining its RNAi drug AB-729 together with a NA + short courses of PEG-IFN-2a.

Financials

According to the 10-Q SEC Filing , Arbutus Biopharma had cash, cash equivalents and investments in marketable securities of $178.5 million as of March 31, 2023. It burned through $27.3 million in cash during the 3 months ending March 31, 2023, but it was offset by generating $19.9 million of net proceeds through the issuance of common shares under the "At-The-Market" offering program. The biotech is guiding that it will burn through between $90 to $95 million in cash in 2023. It believes that it has enough cash on hand to fund its operations into Q1 of 2025. Being that this biotech has been funding itself through the issuance of shares through the ATM, it will likely continue to raise cash this way in the coming months.

Risks To Business

There are several risks that traders/investors should be aware of before investing in this biotech. The first risk to consider would be with respect to the upcoming data readout of the phase 2a proof of concept study using AB-729 + NA + short courses of PEG-IFN-2a, for the treatment of patients with Hepatitis B. Results from this phase 2a study are expected to be released any day now in Q2 of 2023. While AB-729 has been shown to work well with NA in many cohorts in the past, there is no guarantee that adding in PEG-IFN-2a will produce an even more pronounced effect in reducing HBsAg in patients with Hepatitis B. What gives some confidence is that VIR was able to establish a greater reduction in HBsAg in this patient population when it deployed its RNAi drug VIR-2218 together with PEG-IFN-a compared to VIR-2218 alone. A second risk to consider would be with respect to the ongoing collaboration study with Vaccitech which is deploying AB-729 together with VTP-300 and NA for cHBV patients. It remains to be seen if adding an immunotherapeutic agent like VTP-300 to AB-729 + NA results in a greater HBsAg reduction compared to AB-729 and NA instead. The final risk to consider would be with respect to the financial position. Even though Arbutus states it has enough cash to fund its operations into Q1 of 2025, it will likely still sell ATM shares on the open market in the coming months, as it has been doing so the last few years.

Conclusion

The final conclusion is that Arbutus Biopharma is a good speculative biotech play to look into. What traders/investors should look forward to for this company is the two major data readouts it has in 2023. One data readout relates to the phase 2a study using AB-729 + NA + PEG-IFN-2a for the treatment of patients with Hepatitis B. Results from this study are expected any day now in Q2 of 2023. The other data readout to look forward to would be with respect to the ongoing phase 2a proof of concept study using AB-729 + NA + VTP-300 for the treatment of patients with Hepatitis B. Results from this phase 2a proof of concept study are expected to be released in the 2nd half of 2023. Another catalyst in the 2nd half of 2023 would be the release of results from the phase 1 study, which is exploring the use of the oral RNA destabilizer AB-161 in patients with Hepatitis B. With two major data readouts expected from phase 2a proof of concept studies using AB-729 for Hepatitis B, plus improved off-treatment effect of HBV patients after the last dose of AB-729, these are the reasons why I believe that Arbutus Biopharma is a good speculative biotech play to look into.

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