What changed in this filing

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Item 1. Financial Statements

2025-05-14 compared with 2024-11-06 · 103 added, 160 removed, 349 unchanged (43% of the section changed)

4 unchanged sentences

Dollars, except share amounts)

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Current assets:

4 unchanged sentences

Total current assets 116,808 127,316

Property and equipment, net of accumulated depreciation of $ 12,663

(December 31, 2023:

Investments in marketable securities, non-current 2,964 6,284

Property and equipment, net of accumulated depreciation and impairment of $ 13,326 (December 31, 2024:

Right of use asset — 1,048

Other non-current assets 34 34

Total assets $ 117,010 $ 131,707

6 unchanged sentences

Liability related to sale of future royalties 4,409 4,829

Deferred license revenue, non-current 2,863 2,863

Contingent consideration 10,524 10,225

19 unchanged sentences

Dollars, except share and per share amounts)

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

Three Months Ended March 31,

Collaborations and licenses $ 1,316 $ 939

29 unchanged sentences

Stock-based compensation expense — — 3,564 — — 3,564

Issuance of common shares pursuant to the Open Market Sale Agreement 8,666,077 21,765 — — — 21,765

Issuance of common shares pursuant to exercise of options 892,857 4,616 ( 1,963 ) — — 2,653

4 unchanged sentences

Balance March 31, 2025 191,481,474 $ 1,416,332 $ 82,089 $ ( 1,371,098 ) $ ( 48,166 ) $ 79,157

Stock-based compensation expense — — 3,180 — — 3,180

Issuance of common shares pursuant to the Open Market Sale Agreement 7,833,922 22,359 — — — 22,359

Issuance of common shares pursuant to exercise of options 712,895 3,660 ( 1,649 ) — — 2,011

Unrealized gain on available-for-sale securities — — — — 63 63

Net loss — — — ( 19,796 ) — ( 19,796 )

Balance June 30, 2024 188,739,044 $ 1,403,334 $ 81,751 $ ( 1,314,323 ) $ ( 48,308 ) $ 122,454

Stock-based compensation expense — — 2,160 — — 2,160

Issuance of common shares pursuant to exercise of options 593,321 3,996 ( 2,406 ) — — 1,590

Issuance of common shares pursuant to ESPP 105,770 265 ( 80 ) — — 185

Unrealized gain on available-for-sale securities — — — — 218 218

Net loss — — — ( 19,717 ) — ( 19,717 )

Balance September 30, 2024 189,438,135 $ 1,407,595 $ 81,425 $ ( 1,334,040 ) $ ( 48,090 ) $ 106,890

See accompanying notes to the condensed consolidated financial statements.

10 unchanged sentences

Issuance of common shares pursuant to ESPP 121,563 271 ( 60 ) — — 211

Issuance of common shares upon vesting of RSUs 410,482 1,190 ( 1,190 ) — — —

Unrealized gain on available-for-sale securities — — — — 50 50

1 unchanged sentence

Balance March 31, 2024 180,192,227 1,377,315 80,220 ( 1,294,527 ) ( 48,371 ) 114,637

Stock-based compensation expense — — 2,964 — — 2,964

Issuance of common shares pursuant to the Open Market Sale Agreement 1,790,546 4,742 — — — 4,742

Unrealized loss on available-for-sale securities — — — — 166 166

Net loss — — — ( 17,094 ) — ( 17,094 )

Balance June 30, 2023 166,922,739 $ 1,344,195 $ 77,202 $ ( 1,237,236 ) $ ( 49,468 ) $ 134,693

Stock-based compensation expense — — 2,483 — — 2,483

Issuance of common shares pursuant to the Open Market Sale Agreement 633,922 1,396 — — — 1,396

Issuance of common shares pursuant to ESPP 138,586 424 ( 139 ) — — 285

Unrealized loss on available-for-sale securities — — — — 584 584

Net loss — — — ( 20,104 ) — ( 20,104 )

Balance September 30, 2023 167,695,247 $ 1,346,015 $ 79,546 $ ( 1,257,340 ) $ ( 48,884 ) $ 119,337

See accompanying notes to the condensed consolidated financial statements.

2 unchanged sentences

(In thousands of U.S.

Nine Months Ended September 30,

Three Months Ended March 31,

OPERATING ACTIVITIES

2 unchanged sentences

Depreciation 330 355

Loss on impairment of lab equipment 167 —

Gain on sale of property and equipment — ( 20 )

Loss on impairment of leasehold improvements and lab equipment 2,811 —

Stock-based compensation expense 3,564 2,014

12 unchanged sentences

Purchase of investments in marketable securities ( 34,716 ) ( 25,397 )

Proceeds from sale of property and equipment — 20

Disposition of investments in marketable securities 46,065 37,186

7 unchanged sentences

Effect of foreign exchange rate changes on cash and cash equivalents 4 ( 13 )

Increase/(decrease) in cash and cash equivalents 5,561 ( 13,245 )

Increase in cash and cash equivalents 746 16,816

Cash and cash equivalents, beginning of period 36,330 26,285

7 unchanged sentences

Description of the Business

Arbutus Biopharma Corporation (“Arbutus” or “the Company”) is a clinical-stage biopharmaceutical company leveraging its extensive virology expertise to develop novel therapeutics with distinct mechanisms of action, which can potentially be combined to provide a functional cure for patients with chronic hepatitis B virus (cHBV) infection.

The Company believes the key to success in developing a functional cure involves suppressing hepatitis B virus deoxyribonucleic acid, reducing hepatitis B surface antigen and boosting HBV-specific immune responses.

The Company’s pipeline of internally developed, proprietary compounds includes an RNAi therapeutic, imdusiran (AB-729), and an oral PD-L1 inhibitor, AB-101.

Imdusiran has generated meaningful clinical data demonstrating an impact on both surface antigen reduction and reawakening of the HBV-specific immune response.

Imdusiran is currently in two Phase 2a combination clinical trials.

AB-101 is currently being evaluated in a Phase 1a/1b clinical trial.

The Company continues to protect and defend its intellectual property, which is the subject of the Company’s ongoing lawsuits against Moderna Therapeutics, Inc.

(Moderna) and Pfizer Inc.

and BioNTech SE (collectively, Pfizer/BioNTech) for their use of the Company’s patented lipid nanoparticle (LNP) technology in their COVID-19 vaccines.

With respect to the Moderna lawsuit, the claim construction hearing occurred on February 8, 2024.

On April 3, 2024, the court provided its claim construction ruling in which it construed the disputed claim terms and agreed with the Company’s position on most of the disputed claim terms.

On August 5, 2024, the Company and Genevant Sciences Ltd.

(Genevant), along with Moderna, filed a Stipulation to Extend Time with the court that requested an amended case schedule to accommodate certain outstanding discovery from Moderna and third parties.

The court approved the amended case schedule and the start of the trial was moved from April 21, 2025 to September 24, 2025, subject to the court’s availability.

The lawsuit against Pfizer/BioNTech is ongoing and a date for a claim construction hearing has been scheduled for December 18, 2024.

At September 30, 2024, the Company had an aggregate of $ 130.8 million in cash, cash equivalents and investments in marketable securities.

The Company had no outstanding debt as of September 30, 2024.

Arbutus Biopharma Corporation (“Arbutus” or the “Company”) is a clinical-stage biopharmaceutical company focused on infectious disease.

The Company is currently developing imdusiran (AB-729), its proprietary, GalNAc-conjugated, subcutaneously-delivered ribonucleic acid interference (RNAi) therapeutic, and AB-101, its proprietary oral PD-L1 inhibitor, for the treatment of chronic hepatitis B (cHBV).

The Company continues to protect and defend its intellectual property, which is the subject of its ongoing lawsuits against Moderna Therapeutics, Inc.

(Moderna) and against Pfizer Inc.

and BioNTech SE (collectively, Pfizer/BioNTech) for their use of the Company’s patented lipid nanoparticle (LNP) delivery technology in their COVID-19 messenger ribonucleic acid interference (mRNA)-LNP vaccines.

With respect to the Moderna lawsuit in the United States, a trial date has been set for September 29, 2025.

With respect to the Pfizer/BioNTech lawsuit, the claim construction hearing occurred in December 2024.

The court is expected to provide its ruling on the Pfizer/BioNTech lawsuit claim construction and issue a further scheduling order, including the date for trial, in 2025.

On March 3, 2025, the Company announced that, along with Genevant Sciences Ltd.

(Genevant), it has filed five international lawsuits against Moderna in connection with the use of the Company’s LNP technology in Moderna’s COVID-19 mRNA-LNP vaccines and, in the Unified Patent Court, also Moderna’s respiratory syncytial virus (RSV) vaccines.

At March 31, 2025, the Company had an aggregate of $ 112.7 million in cash, cash equivalents and investments in marketable securities.

The Company had no outstanding debt as of March 31, 2025.

The Company believes it has sufficient cash resources to fund its operations for at least the next 12 months.

The success of the Company is dependent on obtaining the necessary regulatory approvals to bring its products to market and achieve profitable operations.

The Company’s research and development activities and the commercialization of its products are dependent on its ability to successfully complete these activities and to obtain adequate financing through a combination of financing activities and operations.

It is not possible to predict either the outcome of the Company’s existing or future research and development programs or the Company’s ability to continue to fund these programs in the future.

Significant accounting policies

2 unchanged sentences

These statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto for the year ended December 31, 2024 included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.

These unaudited condensed consolidated financial statements include the accounts of Arbutus Biopharma Corporation and its one wholly-owned subsidiary, Arbutus Biopharma, Inc., and reflect, in the opinion of management, all adjustments and reclassifications necessary to fairly present the Company’s financial position as of September 30, 2024 and December 31, 2023, the Company’s results of operations for the three and nine months ended September 30, 2024 and 2023, and the Company’s cash flows for the nine months ended September 30, 2024 and 2023.

These unaudited condensed consolidated financial statements include the accounts of Arbutus Biopharma Corporation and its one wholly-owned subsidiary, Arbutus Biopharma, Inc., and reflect, in the opinion of management, all adjustments and reclassifications necessary to fairly present the Company’s financial position as of March 31, 2025 and December 31, 2024, the Company’s results of operations for the three months ended March 31, 2025 and 2024, and the Company’s cash flows for the three months ended March 31, 2025 and 2024.

Such adjustments are of a normal recurring nature.

The results of operations for the three and nine months ended September 30, 2024 are not necessarily indicative of the results for the full year.

The results of operations for the three months ended March 31, 2025 are not necessarily indicative of the results for the full year.

These unaudited condensed consolidated financial statements follow the same significant accounting policies as those described in the notes to the audited consolidated financial statements of the Company for the year ended December 31, 2024, except as described below under the section entitled “Recent Accounting Pronouncements.”

2 unchanged sentences

Net loss per share is calculated based on the weighted average number of common shares outstanding.

Diluted net loss per share does not differ from basic net loss per share for the three and nine months ended September 30, 2024 and 2023, since the effect of including potential common shares would be anti-dilutive.

For the nine months ended September 30, 2024, potential common shares of 18.7 million pertaining to outstanding stock options and unvested restricted stock units were excluded from the calculation of net loss per share.

A total of approximately 21.0 million outstanding stock options were excluded from the calculation for the nine months ended September 30, 2023.

Diluted net loss per share does not differ from basic net loss per share for the three months ended March 31, 2025 and 2024, since the effect of including potential common shares would be anti-dilutive.

For the three months ended March 31, 2025, potential common shares of 15.2 million pertaining to outstanding stock options and unvested restricted stock units were excluded from the calculation of net loss per share.

A total of approximately 22.6 million outstanding stock options and unvested restricted stock units were excluded from the calculation for the three months ended March 31, 2024.

Revenue from collaborations and licenses

21 unchanged sentences

In accordance with ASC Topic 210-20, Balance Sheet - Offsetting (ASC 210-20) the Company’s deferred revenue is offset by a contract asset as further discussed in Note 9.

Segment information

The Company operates as a single segment.

Recent accounting pronouncements

In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No.

2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures (ASU 2023-07), which requires disclosure of significant segment expenses and other segment items on an annual and interim basis under ASC 280.

ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and for interim periods beginning after December 15, 2024.

Early adoption is permitted and the amendments in this ASU should be applied on a retrospective basis to all periods presented.

The Company has not yet determined the impact ASU 2023-07 may have on the Company’s financial statement disclosures.

In December 2023, the FASB issued ASU No.

In December 2023, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) No.

2023-09, Income Taxes (Topic 740):

22 unchanged sentences

To determine the fair value of the contingent consideration (Note 8), the Company uses a probability weighted assessment of the likelihood the milestones would be met and the estimated timing of such payments, and then the potential contingent payments are discounted to their present value using a probability adjusted discount rate that reflects the early stage nature of the development program, the time to complete the program development, and overall biotech indices.

The Company determined the fair value of the contingent consideration was $ 8.3 million as of September 30, 2024 and the increase of $ 0.7 million from December 31, 2023 has been recorded as a component of total operating expenses in the statements of operations and comprehensive loss for the nine months ended September 30, 2024.

The Company determined the fair value of the contingent consideration was $ 10.5 million as of March 31, 2025 and the increase of $ 0.3 million from December 31, 2024 has been recorded as a component of total operating expenses in the condensed consolidated statements of operations and comprehensive loss for the three months ended March 31, 2025.

The assumptions used in the discounted cash flow model are level 3 inputs as defined above.

There were no changes in the assumptions as of March 31, 2025 compared to December 31, 2024.

The Company assessed the sensitivity of the fair value measurement to changes in these unobservable inputs, and determined that changes within a reasonable range would not result in a materially different assessment of fair value.

1 unchanged sentence

Level 1 Level 2 Level 3 Total

As of September 30, 2024 (in thousands)

As of March 31, 2025 (in thousands)

Cash and cash equivalents $ 37,076 $ — $ — $ 37,076

Investments in marketable securities, current — 75,631 — 75,631

Investments in marketable securities, non-current — 2,964 — 2,964

Total $ 37,076 $ 75,631 $ — $ 112,707

5 unchanged sentences

Investments in marketable securities, current — 86,293 — 86,293

Investments in marketable securities, non-current — 6,284 — 6,284

Total $ 36,330 $ 86,293 $ — $ 122,623

4 unchanged sentences

(in thousands)

Nine Months Ended September 30, 2024 $ 7,600 $ 735 $ 8,335

Nine Months Ended September 30, 2023 $ 7,531 $ ( 158 ) $ 7,373

Three Months Ended March 31, 2025 $ 10,225 $ 299 $ 10,524

Three Months Ended March 31, 2024 $ 7,600 $ 180 $ 7,780

See Note 4 for additional information regarding the fair value of the Company’s investments in marketable securities.

3 unchanged sentences

Gross Unrealized Loss (1)

As of September 30, 2024 (in thousands)

As of March 31, 2025 (in thousands)

Cash equivalents

Money market $ 23,890 $ — $ — $ 23,890

US treasury bills $ 2,487 $ — $ — $ 2,487

Total $ 26,377 $ — $ — $ 26,377

3 unchanged sentences

Total $ 75,611 $ 25 $ ( 5 ) $ 75,631

Investments in marketable long-term securities

US corporate bonds 2,932 32 — 2,964

Total $ 2,932 $ 32 $ — $ 2,964

(1) Gross unrealized gain (loss) is pre-tax and is reported in accumulated other comprehensive loss.

6 unchanged sentences

Investments in marketable short-term securities

US government agency bonds $ 17,918 $ — $ ( 44 ) $ 17,874

US corporate bonds 30,776 27 ( 6 ) 30,797

Yankee bonds 2,000 — ( 17 ) 1,983

US government bonds $ 9,001 $ — $ ( 26 ) $ 8,975

Total $ 99,964 $ 30 $ ( 276 ) $ 99,718

Investments in marketable long-term securities

US corporate bonds 6,273 18 ( 7 ) 6,284

US treasury bills 55,467 29 — 55,496

Total $ 86,243 $ 56 $ ( 6 ) $ 86,293

(1) Gross unrealized gain (loss) is pre-tax and is reported in accumulated other comprehensive loss.

The contractual term to maturity of the $ 95.9 million of short-term marketable securities held by the Company as of September 30, 2024 is less than one year.

As of September 30, 2024, the Company held $ 3.0 million of long-term marketable securities with contractual maturities of more than one year, but less than five years.

As of December 31, 2023, the Company’s

$ 99.7 million of short-term marketable securities had contractual maturities of less than one year, while the Company’s $ 6.3 million of long-term marketable securities had maturities of more than one year, but less than five years.

At September 30, 2024 and December 31, 2023, the Company had 7 and 27 , respectively, available-for-sale investment debt securities in an unrealized loss position without an allowance for credit losses.

The contractual term to maturity of the $ 75.6 million of short-term marketable securities held by the Company as of March 31, 2025 is less than one year.

As of March 31, 2025, the Company held no long-term marketable securities with contractual maturities of more than one year, but less than five years.

As of December 31, 2024, the Company’s $ 86.3 million of short-term marketable securities had contractual maturities of less than one year, while the Company held no long-term marketable securities with maturities of more than one year, but less than five years.

At March 31, 2025 and December 31, 2024, the Company had 14 and 6 , respectively, available-for-sale investment debt securities in an unrealized loss position without an allowance for credit losses.

Unrealized losses on the Company’s investments in debt securities have not been recognized into income as the issuers’ bonds are of high credit quality and the decline in fair value is largely due to market conditions and/or changes in interest rates.

2 unchanged sentences

The fair value is expected to recover as the bonds approach maturity.

Accrued interest receivable on investments in marketable securities of $ 0.3 million at both September 30, 2024 and December 31, 2023 is included in prepaid expenses and other current assets.

The Company had realized gains of less than $ 0.1 million for the three and nine months ended September 30, 2024 and zero and less than $ 0.1 million realized gains for same periods in 2023, respectively.

Accrued interest receivable on investments in marketable securities of $ 0.2 million at both March 31, 2025 and December 31, 2024 is included in prepaid expenses and other current assets.

The Company had zero realized gain for the three months ended March 31, 2025 and less than $ 0.1 million realized gains for the three months ended March 31, 2024, respectively.

See Note 3 for additional information regarding the fair value of the Company’s investments in marketable securities.

1 unchanged sentence

In April 2018, the Company entered into an agreement with Roivant Sciences Ltd.

(Roivant), its largest shareholder, to launch Genevant, a company focused on a broad range of RNA-based therapeutics enabled by the Company’s LNP and ligand conjugate delivery technologies.

(Roivant), its largest shareholder, to launch Genevant, a company focused on a broad range of ribonucleic acid (RNA)-based therapeutics enabled by the Company’s LNP and ligand conjugate delivery technologies.

The Company licensed rights to its LNP and ligand conjugate delivery platforms to Genevant for RNA-based applications outside of HBV, except to the extent certain rights had already been licensed to other third parties (the Genevant License).

3 unchanged sentences

Additionally, if Genevant receives proceeds from an action for infringement by any third parties of the Company’s intellectual property licensed to Genevant, the Company would be entitled to receive, after deduction of litigation costs, 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 would be treated as net sales).

Notwithstanding the preceding, in March 2025, Genevant and the Company agreed that the Company be entitled to any award of damages in (or any proceeds of settlement of) certain pending patent litigation against Moderna and certain affiliates that specifically accuses Moderna of infringement related to Moderna’s vaccine for RSV known as mRESVIA ™ , and that, in the event there is no such specific allocation to mRESVIA ™ in such award or settlement, the parties will discuss an appropriate allocation in good faith.

The Company accounts for its interest in Genevant as equity securities without readily determinable fair values.

Accordingly, an estimate of the fair value of the securities is based on the original cost less previously recognized equity method losses, less impairments, plus or minus changes resulting from observable price changes in orderly transactions for identical or a similar Genevant securities.

As of September 30, 2024, the carrying value of the Company’s investment in Genevant was zero and the Company owned approximately 16 % of the common equity of Genevant.

As of March 31, 2025, the carrying value of the Company’s investment in Genevant was zero and the Company owned approximately 16 % of the common equity of Genevant.

Accounts payable and accrued liabilities

Accounts payable and accrued liabilities are comprised of the following:

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

(in thousands)

5 unchanged sentences

Total accounts payable and accrued liabilities $ 12,109 $ 7,564

In March 2025, the Company’s Board of Directors (the Board) took action to reduce the Company’s workforce by 57 %, resulting in a total workforce after reductions of 19 employees.

The Board also decided to exit the Company’s corporate headquarters in Warminster, Pennsylvania and to discontinue in-house scientific research.

As a result, the Company recorded a one-time restructuring charge of $ 12.4 million in the first quarter of 2025, of which there was $ 5.6 million in severance and benefit costs and $ 0.4 million of lease-related operation expenses accrued as of March 31, 2025.

Sale of future royalties

4 unchanged sentences

OMERS will retain this entitlement until it has received $ 30 million in royalties, at which point 100 % of such royalty interest on future global net sales of ONPATTRO will revert to the Company.

OMERS has assumed the risk of collecting up to $ 30 million of future royalty payments from Alnylam and the Company is not obligated to reimburse OMERS if they fail to collect any such future royalties.

OMERS has assumed the risk of collecting up to $ 30 million of future royalty payments from Alnylam and the Company is not obligated to reimburse OMERS if it fails to collect any such future royalties.

The $ 30 million in royalties to be paid to OMERS is accounted for as a liability, with the difference between the liability and the gross proceeds received accounted for as a discount.

The discount, as well as $ 1.5 million of transaction costs, will be amortized as interest expense based on the projected balance of the liability as of the beginning of each period.

As of September 30, 2024, the Company estimated an effective annual interest rate of approximately 2.0 %.

As of March 31, 2025, the Company estimated an effective annual interest rate of approximately 2.2 %.

Over the course of the Agreement, the actual interest rate will be affected by the amount and timing of royalty revenue recognized and changes in the timing of forecasted royalty revenue.

2 unchanged sentences

As royalties are remitted to OMERS from Alnylam, the balance of the recognized liability is effectively repaid over the life of the Agreement.

From the inception of the royalty sale through September 30, 2024, the Company has recorded an aggregate of $ 24.4 million of non-cash royalty revenue for royalties earned by OMERS.

From the inception of the royalty sale through March 31, 2025, the Company has recorded an aggregate of $ 25.3 million of non-cash royalty revenue for royalties earned by OMERS.

There are a number of factors that could materially affect the amount and timing of royalty payments from Alnylam, none of which are within the Company’s control.

During the nine months ended September 30, 2024, the Company recognized non-cash royalty revenue of $ 1.7 million and related non-cash interest expense of less than $ 0.1 million.

During the nine months ended September 30, 2023, the Company recognized non-cash royalty revenue of $ 2.7 million and related non-cash interest expense of $ 0.4 million.

The table below shows the activity related to the net liability for the nine months ended September 30, 2024 and 2023:

Nine Months Ended September 30,

During the three months ended March 31, 2025, the Company recognized non-cash royalty revenue of $ 0.4 million and related non-cash interest expense of less than $ 0.1 million.

During the three months ended March 31, 2024, the Company recognized non-cash royalty revenue of $ 0.6 million and related non-cash interest expense of less than $ 0.1 million.

The table below shows the activity related to the net liability for the three months ended March 31, 2025 and 2024:

Three Months Ended March 31,

(in thousands)

11 unchanged sentences

Certain other development milestones related to the acquisition were tied to programs which are no longer under development by the Company, and therefore the contingency related to those development milestones is zero .

The contingent consideration is a financial liability and is measured at its fair value at each reporting period, with any changes in fair value from the previous reporting period recorded in the statements of operations and comprehensive loss (see Note 3).

The fair value of the contingent consideration was $ 8.3 million as of September 30, 2024.

The contingent consideration is a financial liability and is measured at its fair value at each reporting period, with any changes in fair value from the previous reporting period recorded in the condensed consolidated statements of operations and comprehensive loss (see Note 3).

The fair value of the contingent consideration was $ 10.5 million as of March 31, 2025.

Collaborations, contracts and licensing agreements

2 unchanged sentences

In December 2021, the Company entered into a technology transfer and licensing agreement (the License Agreement) with Qilu Pharmaceutical Co., Ltd.

(Qilu), pursuant to which the Company granted Qilu a sublicensable, royalty-bearing license, under certain intellectual property owned by the Company, which is non-exclusive as to development and manufacturing and exclusive with respect to commercialization of imdusiran, including pharmaceutical products that include imdusiran, for the treatment or prevention of hepatitis B in China, Hong Kong, Macau and Taiwan (the Territory).

In partial consideration for the rights granted by the Company, Qilu paid the Company a one-time upfront cash payment of $ 40.0 million, net of withholding taxes, on January 5, 2022, and agreed to pay the Company milestone payments totaling up to $ 245.0 million, net of withholding taxes, upon the achievement of certain technology transfer, development, regulatory and commercialization milestones.

In partial consideration for the rights granted by the Company, Qilu paid the Company a one-time upfront cash payment of $ 40.0 million, net of withholding taxes, on January 5, 2022, and agreed to pay the Company up to $ 245.0 million, net of withholding taxes, upon the achievement of certain technology transfer, development, regulatory and commercialization milestones.

Qilu paid $ 4.4 million of withholding taxes to the Chinese taxing authority on the Company’s behalf, related to the upfront cash payment.

In addition, Qilu agreed to pay the Company double-digit royalties into the low twenties percent based upon annual net sales of imdusiran in the Territory.

In addition, Qilu agreed to pay the Company double-digit royalties into the low twenties percent based upon annual net sales of imdusiran in Greater China and Taiwan.

The royalties are payable on a product-by-product and region-by-region basis, subject to certain limitations.

Qilu is responsible for all costs related to developing, obtaining regulatory approval for, and commercializing imdusiran for the treatment or prevention of hepatitis B in the Territory.

Qilu is required to use commercially reasonable efforts to develop, seek regulatory approval for, and commercialize at least one imdusiran product candidate in the Territory.

A joint development

committee has been established between the Company and Qilu to coordinate and review the development, manufacturing and commercialization plans.

Both parties also have entered into a supply agreement and related quality agreement pursuant to which the Company will manufacture or have manufactured and supply Qilu with all quantities of imdusiran necessary for Qilu to develop and commercialize in the Territory until the Company has completed manufacturing technology transfer to Qilu and Qilu has received all approvals required for it or its designated contract manufacturing organization to manufacture imdusiran in the Territory.

Qilu is responsible for all costs related to developing, obtaining regulatory approval for, and commercializing imdusiran for the treatment or prevention of hepatitis B in Greater China and Taiwan.

Qilu is required to use commercially reasonable efforts to develop, seek regulatory approval for, and commercialize at least one imdusiran product candidate in Greater China and Taiwan.

A joint development committee has been established between the Company and Qilu to coordinate and review the development, manufacturing and commercialization plans.

Both parties also have entered into a supply agreement and related quality agreement pursuant to which the Company will manufacture or have manufactured and supply Qilu with all quantities of imdusiran necessary for Qilu to develop and commercialize in Greater China and Taiwan until the Company has completed manufacturing technology transfer to Qilu and Qilu has received all approvals required for it or its designated contract manufacturing organization to manufacture imdusiran in Greater China and Taiwan.

Concurrent with the execution of the License Agreement, the Company entered into a Share Purchase Agreement (the Share Purchase Agreement) with Anchor Life Limited, a company established pursuant to the applicable laws and regulations of Hong Kong and an affiliate of Qilu (the Investor), pursuant to which the Investor purchased 3,579,952 of the Company’s common shares at a purchase price of USD $ 4.19 per share, which was a 15 % premium on the thirty-day average closing price of the common shares as of the close of trading on December 10, 2021 (the Share Transaction).

17 unchanged sentences

Total deferred license revenue $ 9,622

The Company recognized $ 0.1 million and $ 0.9 million of revenue based on labor hours expended by the Company on its Manufacturing Obligations during the three and nine months ended September 30, 2024, respectively, and $ 3.2 million and $ 10.3 million during the three and nine months ended September 30, 2023, respectively.

As of September 30, 2024, the balance of the deferred license revenue was $ 12.9 million, which, in accordance with ASC 210-20, was partially offset by the contract asset associated with the manufacturing cost reimbursement of $ 2.0 million, resulting in a net deferred license revenue liability of $ 10.9 million.

The Company recognized $ 0.8 million and $ 0.2 million of revenue based on labor hours expended by the Company on its Manufacturing Obligations during the three months ended March 31, 2025 and 2024, respectively.

As of March 31, 2025, the balance of the deferred license revenue was $ 11.6 million, which, in accordance with ASC 210-20, was partially offset by the contract asset associated with the manufacturing cost reimbursement of $ 2.0 million, resulting in a net deferred license revenue liability of $ 9.6 million.

The Company incurred $ 0.6 million of incremental costs in obtaining the Qilu License, which the Company capitalized in other current assets and other assets and amortizes as a component of general and administrative expense commensurate with the recognition of the combined performance obligation.

The Company recognized amortization expense of less than $ 0.1 million for both the three and nine months ended September 30, 2024 and amortization expense of less than $ 0.1 million for the three months ended September 30, 2023 and $ 0.1 million for the nine months ended September 30, 2023.

The Company recognized amortization expense of less than $ 0.1 million for both the three months ended March 31, 2025 and 2024, respectively.

The Company reevaluates the transaction price and the total estimated labor hours expected to be incurred to satisfy the performance obligations and adjusts the deferred revenue at the end of each reporting period.

1 unchanged sentence

Barinthus Biotherapeutics plc

In July 2021, the Company entered into a clinical collaboration agreement with Barinthus Biotherapeutics plc (Barinthus), formerly Vaccitech plc, to evaluate imdusiran followed by Barinthus’ VTP-300, an HBV antigen specific immunotherapy, and ongoing nucleos(t)ide analogue therapy in patients with cHBV.

This clinical trial was amended and is now dosing patients in an additional treatment arm that includes an approved PD-1 monoclonal antibody inhibitor, nivolumab (Opdivo ® ).

In July 2021, the Company entered into a clinical collaboration agreement with Barinthus Biotherapeutics plc (Barinthus), formerly Vaccitech plc, to evaluate imdusiran followed by Barinthus’ VTP-300, an HBV immunotherapy, and ongoing nucleos(t)ide analogue therapy in patients with cHBV.

This clinical trial was amended to include a treatment arm with the addition of an approved PD-1 monoclonal antibody inhibitor, nivolumab (Opdivo ® ).

The Company is responsible for managing this Phase 2a proof-of-concept clinical trial, subject to oversight by a joint development committee comprised of representatives from the Company and Barinthus.

The Company and Barinthus retain full rights to their respective product candidates and will split all costs associated with the clinical trial.

The Company incurred $ 0.5 million and $ 1.7 million of expenses, net of Barinthus’s 50% share, during the three and nine months ended September 30, 2024, respectively, and $ 0.7 million and $ 1.6 million during the three and nine months ended September 30, 2023 respectively, and reflected those costs in research and development in the statements of operations and comprehensive loss.

The Company incurred $ 0.4 million and $ 0.5 million of expenses, net of Barinthus’s 50% share, during the three months ended March 31, 2025 and 2024, respectively, and reflected those costs in research and development in the condensed consolidated statements of operations and comprehensive loss.

Royalty Entitlements

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OMERS will retain this entitlement until it has received $ 30 million in royalties, at which point 100 % of this royalty entitlement on future global net sales of ONPATTRO will revert back to the Company.

If this royalty entitlement reverts to the Company, it has the potential to provide an active royalty stream or to be otherwise monetized again in full or in part.

From the inception of the royalty sale through September 30, 2024, an aggregate of $ 24.4 million of royalties have been earned by OMERS.

From the inception of the royalty sale through March 31, 2025, an aggregate of $ 25.3 million of royalties have been earned by OMERS.

The Company also is receiving a second royalty interest of 0.75 % to 1.125 % on global net sales of ONPATTRO, with 0.75 % applying to sales greater than $ 500 million, originating from a settlement agreement and subsequent license agreement with Acuitas.

1 unchanged sentence

Revenues are summarized in the following table:

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

(in thousands) (in thousands)

Three Months Ended March 31,

(in thousands)

Revenue from collaborations and licenses

Acuitas Therapeutics, Inc.

$ 644 $ 714 $ 1,981 $ 2,980

Qilu Pharmaceutical Co., Ltd.

123 3,221 880 10,349

Non-cash royalty revenue

Alnylam Pharmaceuticals, Inc.

572 723 1,736 2,667

Total revenue $ 1,764 $ 1,532

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Open Market Sale Agreement

The Company has an Open Market Sale Agreement SM with Jefferies LLC (Jefferies) dated December 20, 2018, as amended by Amendment No.

1, dated December 20, 2019, Amendment No.

2, dated August 7, 2020 and Amendment No.

3, dated March 4, 2021 (as amended, the Sale Agreement), under which the Company may issue and sell common shares, from time to time.

On December 23, 2019, the Company filed a shelf registration statement on Form S-3 with the Securities and Exchange Commission (the SEC) (File No.

333-235674) and accompanying base prospectus, which was declared effective by the SEC on January 10, 2020 (the January 2020 Registration Statement), for the offer and sale of up to $ 150.0 million of the Company’s securities.

The January 2020 Registration Statement also contained a prospectus supplement for an offering of up to $ 50.0 million of the Company’s common shares pursuant to the Sale Agreement.

This prospectus supplement was fully utilized during 2020.

On August 7, 2020, the Company filed a prospectus supplement with the SEC (the August 2020 Prospectus Supplement) for an offering of up to an additional $ 75.0 million of its common shares pursuant to the Sale Agreement under the January 2020 Registration Statement.

The August 2020 Prospectus Supplement was fully utilized during 2020.

The January 2020 Registration Statement expired in January 2023.

On August 28, 2020, the Company filed a shelf registration statement on Form S-3 with the SEC (File No.

333-248467) and accompanying base prospectus, which was declared effective by the SEC on October 22, 2020 (the October 2020 Registration Statement), for the offer and sale of up to $ 200.0 million of the Company’s securities.

On March 4, 2021, the Company filed a prospectus supplement with the SEC (the March 2021 Prospectus Supplement) for an offering of up to an additional $ 75.0 million of its common shares pursuant to the Sale Agreement under the October 2020 Registration Statement.

The March 2021 Prospectus Supplement was fully utilized during 2021.

On October 8, 2021, the Company filed a prospectus supplement with the SEC (the October 2021 Prospectus Supplement) for an offering of up to an additional $ 75.0 million of its common shares pursuant to the Sale Agreement under the October 2020 Registration Statement.

The October 2020 Registration Statement expired in October 2023 with $ 29.3 million that was not utilized under the October 2021 Prospectus Supplement.

On November 4, 2021, the Company filed a shelf registration statement on Form S-3 with the SEC (File No.

333-260782) and accompanying base prospectus, which was declared effective by the SEC on November 18, 2021 (the November 2021 Registration Statement), for the offer and sale of up to $ 250.0 million of the Company’s securities.

On March 3, 2022, the Company filed a prospectus supplement with the SEC (the March 2022 Prospectus Supplement) for an offering of up to an additional $ 100.0 million of its common shares pursuant to the Sale Agreement under:

(i) the January 2020 Registration Statement;

(ii) the October 2020 Registration Statement;

and (iii) the November 2021 Registration Statement, of which only the November 2021 Registration Statement remains active.

During the three months ended September 30, 2024, the Company did not issue any common shares pursuant to the Sale Agreement.

During the nine months ended September 30, 2024, the Company issued 16,499,999 common shares pursuant to the Sale Agreement, resulting in net proceeds of approximately $ 44.1 million.

During the three and nine months ended September 30, 2023, the Company issued 633,922 and 9,848,090 common shares pursuant to the Sale Agreement, respectively, resulting in net proceeds of $ 1.4 million and $ 26.0 million, respectively.

As of September 30, 2024, there was approximately $ 25.4 million of common shares remaining available in aggregate under the March 2022 Prospectus Supplement, pursuant to the November 2021 Registration Statement.

Effective March 26, 2025, the Company terminated its Open Market Sale Agreement with Jefferies LLC (Jefferies) dated December 20, 2018, as amended (the Sale Agreement), under which the Company could offer and sell common shares, from time to time.

Prior to the termination of the Sale Agreement, the Company did not issue any common shares pursuant to the Sale Agreement during the three months ended March 31, 2025.

During the three months ended March 31, 2024, the Company issued 8,666,077 common shares pursuant to the Sale Agreement, resulting in net proceeds of $ 21.8 million.

Stock-based compensation

The table below summarizes information about the Company’s stock-based compensation for the three and nine months ended September 30, 2024 and 2023 and the expense recognized in the condensed consolidated statements of operations:

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

The table below summarizes information about the Company’s stock-based compensation for the three months ended March 31, 2025 and 2024 and the expense recognized in the condensed consolidated statements of operations:

Three Months Ended March 31,

(in thousands, except share and per share data)

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Total stock compensation expense $ 1,293 $ 2,014

Segment Reporting

The Company has one reportable segment.

The Company’s chief operating decision maker is the Chief Executive Officer and President.

The accounting policies of the single segment are the same as those described in the summary of significant accounting policies.

The chief operating decision maker assesses performance for the single segment and decides how to allocate resources based on net loss that also is reported on the condensed and consolidated statements of operations and comprehensive loss as consolidated net loss.

The chief operating decision maker uses net loss to monitor budget versus actual results and to evaluate the overall cash burn of the business.

Three months ended March 31,

Revenue $ 1,764 $ 1,532

Research and development employee expense, lab supplies and overhead 4,436 7,100

Imdusiran IM-PROVE I, II & III clinical trials expense 2,384 5,389

AB-101-001 Phase 1a/1b clinical trial expense 1,899 2,810

Other early research and development programs expense 240 104

General and administrative expense 5,832 5,312

Restructuring expense 12,373 —

Other segment expense (1)

Interest income 1,197 1,545

Segment net loss $ ( 24,526 ) $ ( 17,875 )

Adjustments and reconciling items — —

Consolidated net loss $ (24,526) $ (17,875)

(1) Other segment expense includes the change in the fair value of contingent consideration, non-cash interest expenses and foreign currency exchange gains and losses.

Restructuring

On July 29, 2024, the Company’s Board of Directors approved a plan, effective August 1, 2024, to streamline the organization to focus its efforts on advancing the clinical development of imdusiran and AB-101, and therefore ceased all discovery efforts and discontinued its IM-PROVE III clinical trial.

In taking these steps to streamline the organization, the Company implemented a 40 % reduction in its workforce, primarily affecting the discovery and general and administrative functions.

As a result, the Company incurred a one-time restructuring charge in the third quarter of 2024 of $ 3.6 million, which includes approximately $ 2.9 million of cash severance and continued benefits paid, a non-cash impairment charge for laboratory equipment of $ 0.2 million and $ 0.5 million of cash payments to vendors for close-out activities in connection with the cessation of discovery efforts and the discontinuation of the IM-PROVE III clinical trial.

As of September 30, 2024, there were $ 0.6 million of accrued restructuring costs for contract close-out activities and severance payments included in accounts payable and accrued liabilities.

In March 2025, the Board took action to reduce the Company’s workforce by 57 %, resulting in a total workforce after reductions of 19 employees.

The Board also decided to exit the Company’s corporate headquarters in Warminster, Pennsylvania and to discontinue in-house scientific research.

In connection with these actions, the Company incurred a one-time restructuring charge in the first quarter of 2025 of $ 12.4 million, which includes approximately $ 6.0 million of cash severance and continued benefits paid, $ 2.3 million of non-cash expense related to the modification of equity awards, non-cash impairment charges for leasehold improvements and laboratory equipment of $ 1.9 million and $ 0.9 million, respectively, $ 0.9 million related to impairment of the right-of-use asset associated with the lease of the Company’s corporate headquarters and a $ 0.4 million accrual of lease-related operating expenses.

As of March 31, 2025, there was $ 5.6 million of accrued restructuring costs for severance payments and a $ 0.4 million accrual of lease-related operating expenses included in accounts payable and accrued liabilities.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements