Overview

Arbutus Biopharma Corporation is a clinical-stage biopharmaceutical company focused on developing treatments for chronic hepatitis B (cHBV) infection. The company’s pipeline includes two main product candidates: imdusiran, an RNAi therapeutic, and AB-101, an oral PD-L1 inhibitor.

In 2024, Arbutus streamlined its organization to focus on advancing the clinical development of imdusiran and AB-101, discontinuing discovery efforts and reducing its workforce by 40%. In the first quarter of 2025, the company announced further restructuring, reducing its workforce by an additional 57% to a total of 19 employees. Arbutus also exited its corporate headquarters and discontinued in-house scientific research, incurring a one-time restructuring charge of $12.4 million.

Strategy and Key Programs

Arbutus’ strategy is focused on maximizing opportunities for its cHBV development programs and its in-house developed lipid nanoparticle (LNP) delivery technology.

LNP Delivery Technology Arbutus and its subsidiary Genevant Sciences have spent years developing and refining LNP delivery technology, which is crucial for enabling the safe and effective delivery of RNA-based medicines. Arbutus has filed patent infringement lawsuits against Moderna and Pfizer/BioNTech, seeking compensation for their use of Arbutus’ patented LNP technology in their COVID-19 mRNA vaccines.

cHBV Programs Arbutus’ current strategy for cHBV is to develop a functional cure by combining compounds that can suppress hepatitis B virus (HBV) DNA replication and antigen expression, as well as boost the patient’s HBV-specific immune response.

Key cHBV product candidates:

• Imdusiran: Arbutus’ proprietary RNAi therapeutic that suppresses HBV antigens, including hepatitis B surface antigen (HBsAg). Clinical data has shown imdusiran can lead to functional cure in some patients when used in combination with other agents.
• AB-101: Arbutus’ proprietary oral PD-L1 inhibitor that has the potential to reawaken patients’ HBV-specific immune response.

Arbutus has completed enrollment in two Phase 2a clinical trials evaluating imdusiran in combination with other agents:

• IM-PROVE I: Imdusiran combined with pegylated interferon alfa-2a (IFN) and nucleoside analogue (NA) therapy. Achieved a 50% functional cure rate in HBeAg-negative patients with baseline HBsAg <1000 IU/mL.
• IM-PROVE II: Imdusiran combined with Barinthus’ HBV immunotherapy VTP-300, NA therapy, and low-dose nivolumab. Achieved a 25% functional cure rate in patients with baseline HBsAg <1000 IU/mL.

Financial Performance

Arbutus’ total revenue increased from $1.5 million in Q1 2024 to $1.8 million in Q1 2025, driven by an increase in license revenue from the Qilu collaboration, partially offset by a decrease in royalty revenue from sales of Alnylam’s ONPATTRO.

Operating expenses increased from $20.9 million in Q1 2024 to $27.5 million in Q1 2025, primarily due to the $12.4 million one-time restructuring charge incurred in Q1 2025. Excluding the restructuring charge, operating expenses decreased year-over-year, reflecting the company’s efforts to streamline its operations.

Research and development expenses decreased from $15.4 million in Q1 2024 to $9.0 million in Q1 2025, due to the cessation of discovery efforts, discontinuation of the IM-PROVE III trial, and workforce reductions. General and administrative expenses increased slightly from $5.3 million to $5.8 million, driven by higher litigation-related legal fees.

Arbutus reported a net loss of $24.5 million in Q1 2025, compared to a net loss of $17.9 million in Q1 2024. The increase in net loss was primarily attributable to the restructuring charge.

Liquidity and Capital Resources

As of March 31, 2025, Arbutus had $112.7 million in cash, cash equivalents, and investments in marketable securities, with no outstanding debt. The company used $13.4 million in cash for operating activities in Q1 2025, a decrease from $19.3 million in Q1 2024, reflecting the impact of the organizational changes.

Arbutus has several sources of potential liquidity, including:

• Royalty entitlements from sales of Alnylam’s ONPATTRO, which generated $0.5 million in Q1 2025.
• Milestone and royalty payments from the Qilu collaboration, which provided $0.8 million in Q1 2025.
• Potential monetization of the ONPATTRO royalty stream, as the portion sold to OMERS is expected to revert to Arbutus once OMERS has received $30 million in royalties (currently at $25.3 million).

However, Arbutus may require substantial additional funding in the future to continue the development of its pipeline and protect its intellectual property. The company’s future funding needs will depend on various factors, including the costs of its patent litigation, the progress of its clinical programs, and its ability to secure additional collaborations and licensing agreements.

Strengths and Weaknesses

Strengths:

• Promising clinical data for imdusiran, showing potential for functional cure in cHBV patients when used in combination therapy.
• Proprietary LNP delivery technology that is crucial for the development of RNA-based medicines, providing a valuable asset for potential monetization.
• Diversified sources of liquidity, including royalties, milestones, and the potential to monetize the ONPATTRO royalty stream.
• Streamlined organization focused on advancing the clinical development of imdusiran and AB-101.

Weaknesses:

• Significant one-time restructuring charge in Q1 2025, reflecting the challenges the company has faced in recent years.
• Reliance on the success of its cHBV pipeline, which is still in early-to-mid stage clinical development.
• Ongoing patent litigation, which could be costly and the outcome is uncertain.
• Potential need for substantial additional funding to continue the development of its pipeline and protect its intellectual property.

Outlook and Future Prospects

Arbutus’ near-term focus will be on advancing the clinical development of imdusiran and AB-101 for the treatment of cHBV, leveraging the promising data generated from the IM-PROVE I and IM-PROVE II trials. The company’s organizational changes and ongoing cost management efforts are expected to significantly reduce its net cash burn in 2025 compared to 2024.

The success of Arbutus’ cHBV programs will be crucial for the company’s future prospects, as it seeks to develop a functional cure for this chronic liver disease. The outcome of the patent infringement lawsuits against Moderna and Pfizer/BioNTech will also be an important factor, as a favorable resolution could provide significant financial resources to support the company’s R&D efforts.

Overall, Arbutus appears to be in a transitional phase, having streamlined its operations to focus on its most promising clinical programs. The company’s ability to continue advancing its cHBV pipeline, while successfully navigating the patent litigation, will be key determinants of its long-term success.