Good day and thank you for standing by. Welcome to the Arbutus Biopharma Corporation's Fourth Quarter and Year-End 2021 Financial Results and Corporate Update Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today Lisa Caperelli, Vice President of Investor Relations. Please go ahead.

Thank you, Catherine. Good morning, everyone and thank you for joining Arbutus's fourth quarter and year-end financial and business update call. Joining me today from the Arbutus executive team are, Bill Collier, President and Chief Executive Officer; David Hastings, Chief Financial Officer; Dr. Gaston Picchio, Chief Development Officer; and Dr. Mike Sofia, Chief Scientific Officer. Bill will begin with the review of recent accomplishments and clinical developments followed by David Hastings, who will provide a review of the company's fourth quarter and year-end financial results. After opening remarks, we will open the call up for Q&A. Gaston Picchio and Mike Sofia will be available to address clinical and scientific related questions. Before we begin, we'd like to remind you that some of the statements made during the call today are forward-looking statements, which are subject to a number of risk and uncertainties that may cause our actual results to differ materially, including those described in our Annual Report on 10-K being filed later today. With that, I'll turn the call over to Bill. Bill?

Thank you, Lisa. Good morning everyone. Thank you for joining us. We appreciate your interest and your support of Arbutus Biopharma. This morning, we issued our fourth quarter and year-end financial and business update press release, which provides updates on our clinical and preclinical programs directed at finding a functional cure for patients with hepatitis B and a treatment for coronavirus infections, including SARS-CoV-2. If I had to sum up this past year in one word, it would be transformative. And I'll explain why. In 2021, the Arbutus team did a fantastic job of advancing our proprietary early research compounds into IND-enabling studies, specifically our oral mRNA destabilizer that we now refer to as AB-161 and also our oral PDL1 inhibitor, which we're calling AB-101. The potential addition of the PDL1 inhibitor AB-101 in a proprietary combination with our RNAi therapeutic 729 and our capsid inhibitor 836 would allow us to explore our three-prong strategy to provide a functional cure for chronic HBV infection. As you know, this three-pronged approach consists of suppressing surface antigen, reducing HBV DNA and boosting the immune system. Now the potential role for the RNA destabilizer 161 in our approach is the opportunity to provide a proprietary or oral treatment regimen for HBV. We're excited about this progress and look forward to completing the IND-enabling studies for both these compounds in the second half of this year. Now, in addition, we secured both strategic and clinical partnerships that in line with our strategic initiatives allowed us, first of all, to initiate multiple combination clinical trials to evaluate 729 as a cornerstone therapy with other compounds in patients with HBV. Secondly, we expanded the geographic reach of 729 to China to address the largest HBV patient population. And thirdly, we've been able to broaden our pipeline…

Thanks Bill, and good morning, everybody. As I've mentioned in the past, our key financial metric is cash and financial runway. Our cash, cash equivalents and investments was approximately $191 million as of December 31st, 2021 as compared to approximately $123 million as of December 31st, 2020. The ending cash, cash equivalents and investments balance as of December 31st, 2021 does not include the $40 million upfront payment and a $15 million equity investment received in January, 2022 from Qilu Pharmaceutical as part of the exclusive licensing agreement and strategic partnership to develop and commercialize AB-729 in China. Our cash use from operations for the year-ended December 31st, 2021 was $67.5 million, which was offset by approximately $135 million and net proceeds from the issuance of common shares under Arbutus' ATM program. For 2022, we expect our aggregate cash use to range from $90 million to $95 million. And therefore, we expect our current cash runway to be sufficient of fund operations into the second quarter of 2024. I would like to now discuss a relationship with Genevant, especially as it relates to the Moderna patent infringement lawsuit that was filed on Monday. Now, back in 2018, along with Roivant Sciences, we launched Genevant as a company to focus on mRNA-based therapeutics. We licensed Genevant rights to our LNP technology for mRNA-based applications outside of HBV. And we currently have a 16% equity interest in Genevant. Now under this licensing agreement, if Genevant receives proceeds from an action for infringement by any third parties of Arbutus' intellectual property licensed to Genevant, we would be entitled to receive after deduction of litigation costs, either 20% of the proceeds received by Genevant or if less tiered low single digit royalties on net sales of the infringing product, inclusive of the proceeds from litigation or settlement which in that case would be treated as net sales. So, with that, and in closing, we have established a strong financial foundation to advance the company's mission to develop a functional cure for HBV and a treatment for COVID-19 and potential future coronavirus outbreaks. Bill?

Thanks very much Dave. And operator, why don't we open up the lines now for Q&A.

Thank you. Our first question comes from Roy Buchanan with JMP Securities. Your line is open.

Hey, great. Thanks for taking the questions. Appreciate the details on the litigation stuff. First question on 836, anything you can say about what to expect from the data later this half? You've shown good reductions in viral DNA at 100 milligrams already. Any early thoughts about how the program might take shape in the second half? And then looking slide, just to verify cohorts, INJ have not started, correct?

Yeah. Gaston is on the call this morning. Gaston, do you want to take that question?

Sure. Hi, Roy. So, let me start with the last part of your question. INJ have not started yet. The -- right now, we have -- we're conducting the three first cohorts, the 50, the 100 and the 200 milligram cohorts and the data will be reported in the first half of this year. Once we have the data, then we'll decide on next steps. We have already some plans in mind, but we need to see the final data before make in those final.

Okay. Great. And then, you guys had a case of rash in ALT elevation earlier. Not sure if you can say, but any additional observations of either of those events.

We cannot comment on that. I think the data will be reported the time when it's reported in the first half of the year.

Okay. Great. Just thought I'd try. And then, what's getting for starting the Phase 2a with VTP-300. And then, you mentioned in the slides starting a Phase 2b, assuming positive results. Do you think that would be a larger triple combo trial or do you think you might be able to work in an additional a core inhibitor or some other agent have a quadruple combination?

So, the VTP-300, it's already approved in some of the countries, where we are going to be executing the study. So, it's just a question of activation of clinical sites and so forth. So, it will -- hopefully, we'll be starting very soon. I think we indicated in the first half, but already has been filed in a number of countries and we've just got some approvals. Secondly, in terms of the Phase 2b study, yes. So, we -- obviously from 836, to make those final decisions as to whether 836 will be part of the mix for a larger Phase 2b study. We also want to see some of our preliminary data in combination with interferon as well. And also we want to see other data that's emerging the field. For example, checkpoint inhibition. So, there's a number of pieces of data that, that we are looking forward to see in the course of this year, that will help us shape our final Phase 2b strategy. We cannot really define what that will be at this point in time.

Okay. Great. And one, just check the box for Dave, and then I'll jump back into the queue. The net cash burn $90 million to $95 million this year. Just want to double check. Does that include both components of the Qilu payments in January? Thanks.

Well, yeah. No. So, the cash burn is a net cash burn. The only thing that really reduces that is the -- on Proteros pharmacy royalties, Roy. And in terms of revenue recognition for the Qilu agreement, that $40 million was received in January. So the accounting really starts in Q1. We would expect to defer that revenue recognition over a period of time as we transfer the technology to manufacture AB-729 to Qilu and that might take a couple years.

Okay. Thank you.

Thank you. Our next question comes from Dennis Ding with Jefferies. Your line is open.

Hi, good morning and thanks for taking the question. Two for me, if I may. First question is on your hep B, can you just talk about what you'd like to see from the various triple combo studies reading out in the second half? And what do you want to see to give you confidence that there'll be a higher probability of success for functional care, which I would think is coming 2023, 2024. And then my second question is around your protease inhibitor. I don't really think people are really appreciating that you guys have this asset. So can you just comment on when that will go into to the clinic? And can you just talk about your ideal drug profile there? Specifically, how has preclinical studies panned out in terms of potency and your projected human PK? Thank you very much.

Thank you, Dennis. Gaston, you want to take the first one and then we'll have Mike Sofia talk about the protease.

Yeah. Sure. Can you repeat, because I -- you were breaking up a little bit when you were asking the HBV part of the question, please repeat the question.

Yeah. Yeah. Yeah, sure. Just -- can you just talk about the data that's coming in the second half for your triple combo studies and what you'd like to see that -- to give you more confidence that there will be a higher probability of success for functional cure?

Sure. So, when it comes to the -- specifically, when it comes -- for example, the interferon study, what we would like to see hopefully is a deeper S-antigen decline. And hopefully, some of the participants in the study getting to undetectable levels on-treatment, something that as we were reported, we have not seen with 729 and NUC and pretty much nobody has seen with Antios mRNA and NUC. So the addition of interferon, we believe it's going to contribute to a deeper, maybe faster, S-antigen suppression. Obviously, then that's when it comes to that particular study with additional interferon. And then, we have another interest in piece of data that's coming out, which is what happens after stopping NUC therapy in patients who have been on 729 plus a NUC for 48 weeks. Then they stop 729 for an additional six months, and now they are eventually stopping the NUC. There, I think we would like to see two things. One is whether antigen either is sustainable -- reduced, at the lower levels of -- we are requiring to be able to stop the NUC, which is below a 100 NUC per ML. And secondly, we would like to see what happens to HBV DNA, whether HBV DNA comes back, see a relapse, like pretty much everyone sees after something NUC or is HBV DNA hold back as a result of the addition of 729, which also could lead to a different concept, not necessarily functional cure, which is completed antigen, but could lead to an sustained biological response, which is HBV DNA does not come back after stopping all therapies, which potentially could be beneficial for the patients as well.

Okay.

Question on the protease inhibitor.

Yeah. So, yeah. Hi, Dennis. This is Mike Sofia. So, to answer couple your comments. Look, as far as a profile for the molecule, we are certainly clearly aware of the developments in the field. And so, our molecule -- we're trying -- we're definitely trying to target to have a profile that differentiates it from what else is out there. For example, I could say that we want a molecule that we don't need recital boosting like didn’t requires. We believe that's a disadvantage for general patient population. We clearly want a oral once a day dosing regimen to be competitive in the space and clearly a molecule with very competitive, if not exceptional potency overall. So, I think, those are the general characteristics that we're looking for. Now, as far as the -- where we are, we have -- we're in sort of lead optimization here. We expect -- fully expect to nominate a compound in the second quarter of this year, sort of the latter part of the second quarter of this year, and then obviously rapidly, move into IND-enabling studies and move as quickly as possible to get that molecule into the clinic. So that's sort of the general overall profile and plan that we have realizing that there is a sense of urgency for us in our program, but also for patients and trying to identify ways to accelerate the IND-enabling study aspects of this program.

Thank you. That's helpful.

Thank you. Our next question comes from Ed Arce with H.C. Wainwright. Your line is open.

Hi, everyone. Thanks for taking my questions. Congrats on a very productive year. First question is on AB-836. As I'm looking across the many data readouts that you plan to have this coming – for this year, it would appear, this is the only one in the first half. Part three, I think you mentioned earlier cohorts, INJ have not started yet. So, just wondering, the additional data, could you give us a little more detail on what you expect any more -- either additional data from previously enrolled cohorts, or the initial take from cohorts INJ?

So, hi, Ed. Gaston here. So, I mean, as we said, I mean the data will be reported in the first half. So, really, I can't comment on any additional results from those that will report in December of 2021 on the 100 milligram parameter data, the 100 milligram cohort, which looks very promising the 3.1 log, dropping HBV DNA, I think places 836 as among the most competitive active inhibitors with a point -- with a very good safety profile. So, I think we have to wait until we'll report the totality of the data for the 50, 100 and 200. If -- as I mentioned, we haven't started INJ, but if we have any preliminary data on INJ, by then we are ready to report, we'll report that as well. But that depends on recruitment speed. I think even what we've seen so far, with this 3.1 log BK I think it's fair to say that we are very confident that 836 is going to emerge as a very promising capsid inhibitor. And again, I mean, I just iterate what I before. We need to see that data, analyze it critically to decide whether 836 should move forward in combination with 729 and other agents. Even what we've seen so far, I think I would lean to say yes, but I think we have to see the totality of the data for making the final decision. But even what we've seen so far based on the 3.1 log BK in HBV DNA, it looks like a very strong concern there and contribute significantly to a combination of regimen.

Right. Great. Okay. And then turning to 729, as you mentioned, three readouts, looks like all in the second half with peg-interferon, that Vebicorvir and the ASPIN compound, all combination trials. Maybe you could give was a little more clarity on sort of the order of these, if it's possible? Perhaps, which is first, it would appear perhaps that ASPIN -- the ASPIN trial combo, that's completed perhaps that one's first and then I have follow up.

Yeah. So, let me just comment on that and then I'll hand over to Gaston as well. So, as we mentioned this morning, the study with Antios, that's the one study in our lineup where the majority of the patients were situated in Ukraine. And although, that was a study that I think was close to completion. We're just really not sure right now how we can follow up those patients, in inefficient or typical manner. So, that's why we have tweaked our guidance today. And just indicated that for that study, we may be able to report some limited data on a fewer number of patients, but that's one study where clearly the Ukraine situation has had an impact. Now our other studies, I should point out, we've got a fairly well distributed set of sites in different countries. And that's why we're maintaining our gut on the interferon study and the Assembly applicable study. So, I just wanted to kind of cover that off and then head over to Gaston.

So, I think, as we indicated, the three studies in collaboration I think we will be reporting the second half. When it comes to the 729 data both the first half and the second half, as everyone knows, I mean, obviously there is, an important lever meeting that has shifted, but still is within the first half. So, that's always a good opportunity to present our data in a scientific form. And then the second half, obviously, there's portal meeting, where the data could be presented. We prefer to share that data with the scientific community to get it scrutinized in a more scientific way. So, those are the two options that we have. The 729 data is going to be more distributed along in the year then .

Okay. That's helpful. It was -- your audio was cutting in and out a little bit, but I think I got the gist of what you were saying. A couple more quick follow-ups if I may. Just on, the data readouts, wanted to get your take, if possible, and this is either for Michael or Gaston, on the efficacy readouts from these combo trials, obviously looking at HV -- S-antigen declines and looking at certain things like, the proportion that is below lower limit of quantification or the HBV DNA or mRNA that is not detectable, just wondering as you collect that data and analyze it from these trials later this year, are there, in your minds, any sort of minimum proportion of patients or any sort of specific thresholds that you're looking for, should be helpful?

No. I'll start. And we don't have pre-redefined press goal of portion of patients that need to a certain criteria like -- at least just say this example, 50% of the patient of undetectable HBV. And so, we will just look at the data it comes in and we'll determine what those proposals are, but we don't have any redefine. When it comes to antigen, obviously, aspirationally, we will have to see as many patients as opposable losing S-antigen, either treatment or after treatment continued. But we don't have any proportion of patients.

Okay. Fair enough. And one just -- one quick, last question. Around the use of the ATM, is this something that the company intends to continue as it did? Pretty extensively last year?

Yeah. I mean, I think, we, obviously, as a life science company and have to use all the tools and the toolbox to ensure that the companies are perfectly capitalized and while we don't layout specific plans, that's certainly one element of our ability to fund the company. So, I'll just leave it at that.

Great. Thanks so much for answering my questions.

Thanks Ed.

Thank you. Our next question comes from Brian Skorney with Baird. Your line is open.

Hey, good morning, everyone. Thanks for taking my question. Mike, I was hoping you could give us a little bit of the background on the discovery process of AB-101. I know developing small molecules to disrupt protease interactions has been tough, but when successful has been pretty successful. So, can you kind of walk us through how 101 interacts with PDL1? Is it a PDL1 non-medic and maybe you could give us details on what the molecular weight is and have you shown any data on world bio availability from the preclinical work so far? Thanks.

Yeah. Sure. We did present a little bit of data at hepB 2021. So, look, we -- the molecule are in the slightly larger molecular weight range, okay? I would say around 700 or so. However, we had good oral bio availability for these agents. Now, the process that we have gone through, there have been some historical data published on some small molecules that bind to PDL1 that we sort of jumped off on, and sort of introduced some very novel aspects to it ourselves and then began to investigate how these molecules work. And the way these molecule work is not like a typical antibody, which basically binds and blocks. What they do, they bind into a specific site on PDL1, they cause dimerization of PDL1s on the surface of the cell. This results in an intern of the protease and ultimate degradation of that protease. So this happens actually really quite quickly. And so, you then sort of have a -- the significant depletion of PDL1s on the cell surface. This then translates clearly into a very similar phenotype that you would see in antibody. In fact, we show that these PDL1 small modules do result in immune reactivation and HBV specific t-cells, by looking at interferon -- again, interferon increases. We see, in fact, an in-vivo animal model, given an oral once a day dose of this agent, and this is in a MC 38 tumor model, that we see reductions in tumor size that are comparable to use of antibodies. So that will be using atezolizumab as the comparator. So, molecules do work by different mechanism, but ultimately provide the same biological outcome that one sees were using an antibody. So, the process that we've gone through is clearly to identify molecules that bind to the receptor that have this functional effect of internalization. And then, obviously, doing typical PK assessments to optimize the PK profile that we're interested in, and then evaluate them in in-vivo model to see if we -- that translates to in-vivo efficacy and obviously, move forward from there. So, I hope that answers your question.

Yes. It did. Thank you very much, Mike.

Thank you. And we have a follow-up from Roy Buchanan with JMP Securities.

Hey. Thanks for taking the follow-up. Just really quick on the 729 Phase 1, you mentioned that um, patients coming off of 729 and the NUC. Just wondering if you give us a sense, the day that we'll see how long they'll be off the NUC maybe. Thanks.

Yeah. It's difficult to say. Let me just point out the following. In that study that we've amended to give that option to investigator and participants, they, obviously, stopped 729, then they're being off 729 for six months. And after that point, after being off 729, they had the option to discontinue the look. And again, this is not -- let's say mandated by the protocol. This was an option, that investigators and the patients have based on certain criteria that we have not disclosed. The moment that they choose to do that, they're being follow up obviously very carefully to, for safety reasons and also to monitor whether S-antigen continues to the client or is back up or HBV DNA, and other biomarkers as HBV mRNA and so forth. The duration -- after that -- of that follow is going to be very variable because some patients have chosen to stop a while ago. Others are doing that as we speak. So, it's going to be a wide range of follow-ups. I cannot really pinpoint what the exact follow-up time will be by the time we do the data cut to present the data.

Okay. Thank you.

Thank you. And I'm showing no further questions in the queue. I'd like to turn a call back to management for any closing remarks.

Thank you very much indeed. And thanks everyone for joining us this morning and for your questions. We look forward to keeping you updated as we move forward with many of the clinical milestones we've mentioned today, including the announcement of additional data from our combination trials, evaluating 729, the cornerstone therapy, and also our Phase 1a/1b clinical trials with 729 and 836. So, with that, thank you all again. And operator that concludes our call.

This concludes today's conference call. Thank you for participating. You may now disconnect.