Healthcare Stock News Alert: Arbutus Biopharma Corp (NASDAQ:ABUS)
On Tuesday, Shares of Arbutus Biopharma Corp (NASDAQ:ABUS), lost -8.96% to $3.05. The 52-week range of the share price is from $2.35 – $5.48. The beta value for this stock stands at 1.11 points, while its earnings per share (EPS) was $-3.24. The company has total market capitalization of $164.81M and a total of 54.84M outstanding shares.
Arbutus Biopharma Corporation (ABUS), an industry-leading Hepatitis B Virus (HBV) therapeutic solutions company, today declared its 2016 financial results and offered a corporate update.
“Arbutus made noteworthy progress in 2016, counting demonstrating noteworthy HBsAg reduction in the Phase II trial of ARB-1467,” said Dr. Mark J. Murray, Arbutus’ President and CEO. “We are excited to build on this progress in 2017 with three HBV product candidates in clinical development by the end of 1Q17, continued productivity from our research effort, and additional studies to explore the full potential of ARB-1467 and combining RNAi agents with standard of care in HBV patients.”
Financial Results:
Cash, Cash Equivalents and Investments
As at December 31, 2016, Arbutus had cash, cash equivalents and restricted investments of $143.20M, as contrast to cash, cash equivalents and short and long-term investments of $191.40M at December 31, 2015.
On December 27, 2016, the Company secured a $12.0M loan in support of the build out of newly leased laboratory and office space in Warminster, Pennsylvania. This amount is included in the Company’s cash position.
Net loss
For the year ended December 31, 2016, net loss was $384.10M ($7.24 per common share) as contrast to a net loss of $61.10M ($1.34 per common share) for 2015. The increase in net loss was mainly because of a $286.30M impairment of intangible assets and goodwill, net of deferred taxes.
Non-GAAP Net Loss
The non-GAAP net loss for 2016 was $65.80M ($1.24 loss per common share) as contrast to a non-GAAP net loss of $21.60M ($0.48 loss per common share) for 2015. The non-GAAP net loss has been adjusted to exclude:
- a non-cash compensation expense of $32.0M included in expenses in connection to certain share repurchase provisions related to the merger with Arbutus Inc.;
- a non-cash net impairment charge related to intangible assets of $148.20M ($253.20M less deferred taxes of $105.0M); and,
- a non-cash impairment charge related to goodwill of $138.10M.
Revenue
Revenue was $1.50M for 2016 as contrast to $24.90M in 2015.
The revenue generating collaborations with Monsanto and the U.S. Department of Defense were effectively terminated towards the end of 2015. The Dicerna license and partnership was terminated in November 2016.
At the current time Arbutus does not have any noteworthy revenue generating collaborations but does have ongoing license agreements with Alnylam and Spectrum.
Research, Development, Collaborations and Contracts Expenses
Research, development, collaborations and contracts expenses were $61.30M in 2016 as contrast to $51.50M in 2015.
R&D expenses raised during 2016 as contrast to 2015 as Arbutus rose its spending on the Company’s HBV programs to continue to advance them through the clinic in 2016 when the Company initiated Phase 2 clinical trials for ARB-1467 and prepared to advance AB-423 and ARB-1740 into the clinic. Arbutus also continues to incur incremental costs related to a boost in activities for research and preclinical HBV programs, focusing on advancing the development of candidates to support future clinical combination studies.
R&D compensation expense raised in 2016 as contrast to 2015 because of a boost in the number of employees in support of the Company’s expanded portfolio of product candidates. In addition, in the year ended December 31, 2016, the Company incurred a total of $32.0M of non-cash compensation expense related to the expiry of repurchase rights on shares issued as part of the consideration paid for the merger with Arbutus Inc. of which $6.0M has been included as part of research, development, collaborations and contracts expense, and $26.0M included as part of general and administrative expense.
General and Administrative
General and administrative expenses were $39.40M in 2016 as contrast to $26.40M in 2015.
General and administrative expenses raised in 2016 contrast to 2015 due mostly to a non-cash compensation expense of $26.0M incurred in 2016 related to the expiry of repurchase rights on shares issued as part of consideration paid for the merger with Arbutus Inc. contrast to $11.90M in 2015. In Q2 2016, the Company incurred an acceleration of incremental non-cash compensation expense because of the expiration of repurchase rights triggered by the departure of two of the four Arbutus Inc. founders.
Impairment of Intangible Assets and Goodwill
For the year ended December 31, 2016, Arbutus recorded a total intangible asset impairment charge of $148.20M (net of deferred taxes of $105.0M) and a goodwill impairment charge of $138.10M. The impairment charge on goodwill and intangible assets did not impact the Company’s liquidity, operating cash flows, or cash runway.
In 2Q16, Arbutus recorded an impairment charge of $91.50M (net of deferred taxes of $64.80M) on intangible assets for the discontinuance of the ARB-1598 program in the Immune Modulator drug class in addition to a delay of the cccDNA Sterilizer program. In 4Q16, Arbutus accomplished its annual impairment analysis and recorded a further impairment charge of $56.70M (net of deferred taxes of $40.20M) because of a change in administration’s estimate of the cost of capital used in the Company’s valuation models to assess the carrying value of goodwill and intangible assets. The change in cost of capital reflects the sustained discrepancy between the Company’s market capitalization and the estimated fair value of its intangible assets. No other changes in assumptions were introduced in the valuation models and the fundamentals of the underlying development programs remain unchanged.
For the year ended December 31, 2015, Arbutus recorded an impairment charge of $22.80M (net of deferred taxes of $16.20M) based on the Company’s decision to discontinue the cyclophilin inhibitors program, OCB-030.
The goodwill impairment charge also results from the change in cost of capital estimate in the Company’s valuation models. The remaining goodwill balance is because of the application of deferred taxes in the goodwill impairment calculation, following the complex requirements of the accounting standard in this area.
Other Income (Losses):
On January 1, 2016, the Company’s functional currency changed from the Canadian dollar to the U.S. dollar based on an analysis of changes in the primary economic environment in which Arbutus operate. The Company will continue to incur substantial expenses and hold cash and investment balances in Canadian dollars, and as such, will remain subject to risks associated with foreign currency fluctuations. For the year ended December 31, 2016, Arbutus recorded a foreign exchange gain of $1.10M, which is mainly an unrealized gain related to an appreciation in the value of the Company’s Canadian dollar funds from the previous period, when translated to the Company’s functional currency of U.S. dollars. In 2015, Arbutus recorded a foreign exchange gain of $21.80M because of the appreciation in value of U.S. dollar funds from the prior period.
On March 4, 2016, Monsanto exercised its option to acquire 100% of the outstanding shares of the Company’s wholly-owned partner, Protiva Agricultural Development Company. The Company received an exercise fee of $1.0M.
The aggregate decrease in fair value of the Company’s common share purchase warrants was $0.50M in 2016 as contrast to a decrease in the fair value of common share purchase warrants outstanding of $3.30M in 2015. Generally, a decrease in the Company’s share price from the previous reporting date results in a decrease in the fair value of the Company’s warrant liability and vice versa.
For the period ended December 31, 2016, Arbutus performed an evaluation of the fair value of the contingent consideration using the probability weighted assessment of likelihood of milestone payments and determined the fair value of the contingent consideration has risen by $1.60M to $9.10M from $7.50M as at December 31, 2015.
Technical Analysis:
The average true range of the stock is recorded at 0.17 and the relative strength index of the stock stands 64.60. The stock price is going below to its 52-week low with 33.42% and down from its 52-week high with -42.79%.
The stock has shown weekly performance of 21.82% and monthly performance stands at 24.07%. The stock price is trading downbeat from its 200 days moving average with -3.04% and down from 50 days moving average with 15.99%.
Analyst recommendation for this stock stands at 2.00.