For Arbutus' Hepatitis B Treatment, 'Liver Safety Risk Overwhelms Promising Efficacy'

Arbutus Biopharma Corp ABUS reported additional data from the Phase II trial of ARB-1467, its RNAi drug for the treatment of chronic hepatitis B virus (HBV). Citing safety concerns related to ARB-1467, Chardan Capital Markets’ Madhu Kumar downgraded the rating on the company from Buy to Neutral, while reducing the price target from $4 to $3.

Arbutus is expected to announce additional Phase II clinical data and initiate an additional bi-weekly dosing cohort of ARB-1467 in the first half of 2017.

Safety Risk

Liver enzyme elevation is a major safety risk in HBV. ARB-1467 is administered as part of a lipid nanoparticle formulation, which triggers inflammation. Thus, patients are administered steroids a day prior to and on the day of the RNAi therapy.

“In chronic hepatitis B, corticosteroids can induce increases in viral replication and serum hepatitis B virus DNA levels while decreasing serum aminotransferase levels. Eventually, however, the increase in viral replication can worsen the underlying liver disease. Exacerbation of hepatitis becomes particularly evident when corticosteroids are withdrawn or lowered to physiological levels,” Kumar wrote.

With the immune system gradually recovering, hepatitis worsens and serum aminotransferase levels can rise to more than 10 times, which is usually accompanied by a decrease in HBV DNA levels. “This flare of disease following withdrawal of corticosteroids can be severe and result in acute liver failure or significant worsening of chronic hepatitis and development of cirrhosis,” Kumar stated.

Comparing With Competition

The main competitor in the HBV RNAi space is Alnylam Pharmaceuticals, Inc ALNY's ALN-HBV (Alnylam is currently rated at Buy). This does not face a similar safety risk, since the GalNAc technology used does not require steroid treatment.

At last check in Tuesday's pre-market session, Arbutus shares were down 1.69 percent at $2.90.