Arrowhead Pharmaceuticals, Inc. (ARWR)

Investor Day 2015

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Sep 24, 2015

Hi, everybody. I think we're going to get started today. Thanks for coming out. I know it's busy in Midtown today and tomorrow, so we appreciate everybody making the trip. So we're talking about our ARC-five 20 product today. And just I want to remind everybody that we will be making forward looking statements within the meaning of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are based on our current expectations and speak only as of the date hereof. Our actual results may differ materially and adversely from those expressed in any forward looking statements as a result of various factors and uncertainties, including our ability to finance our operations, the future success of our scientific studies, our ability to successfully develop drug candidates, the timing for starting and completing clinical trials, rapid technological change in our markets and the enforcement of our intellectual property rights. Arrowhead Research Corporation's most recent annual report on Form 10 ks and subsequent quarterly reports on Form 10 Q discuss some of the important risk factors that may affect our business, results of operations and financial condition. We assume no obligation to update or revise forward looking statements to reflect new events or circumstance. So with that out of the way, just want to introduce the panelists for today's talk. We have Robert Gisch, who is a consultant professor at Stanford Hospital and Medical Center. We have Robert Lanford, who is the Director of the Southwest National Primate Research Center. We have Steven Lachernini, who's the Head of Research and Molecular Development at the Victorian Infectious Diseases Reference Laboratory. And thanks to all of you for joining us today. It's a great panel, so we could have a good discussion. And then for management, we have Chris Anzalone, our President and CEO Dave Lewis, our Chief Scientific Officer and Bruce Given, our Chief Operating Officer. So we'll have a short introduction from Chris today to go over the data that we've presented in the press release and what we'll be talking about today. Doctor. Gish will talk about the current consensus on HBV, what the field has generally believed about the disease. Doctor. Lanford will then introduce the study in chimpanzees that we've been conducting for the last little over a year. Dave Lewis will then give some of the key findings from that study. Bruce Given will then talk about our clinical program, the HEPARC-two thousand and one study and some of the data that we've had along the way. And Doctor. Lakarnini will then talk about what this means to the field. So how does some of these data that we've generated in our clinical program and in our chimpanzee study, how does that challenge what the field has believed for some time about HBV? We'll have some closing remarks, and then we'll open the floor up to questions from the floor. So with that, I will turn it over to Chris. Thanks, Vincent. Thank you all for coming today. And thank you, Doctor. Lanford, for coming from Texas Doctor. Gish coming from California, Arizona, Nevada and various other airports and of course, Doctor. Lakernini for coming all the way from Australia. Think he got in at 01:30 last night or this morning. So we are really excited to be here and to talk to you about some of the work we've been doing. We have generated a ton of data. And so necessarily, what we will be doing today is talking about top line summary of some of those results. But stay tuned. We expect to provide additional data at scientific conferences and publications. In fact, we have Chimp data that will be presented at ASLD in two presentations, one poster, one oral, and we expect the clinical data to be presented at various conferences as well as published in various journals. So let's start with a quick reminder of the proposed mode of action of ARK-five twenty. So in an untreated situation, naturally, the hepatitis B virus will get into an hepatocyte and do what any virus does. It will hijack the machinery of that cell and enable or cause that cell to produce new virus. But interestingly, what it also does is produce high quantities of free antigens or free proteins, notably S antigen or surface antigen. It's thought that that surface antigen, free surface antigen, immunosuppresses the host and therefore is a strategy for the virus to keep from being cleared or controlled by the immune system. So ARK-five 20 is designed to interfere with all of that. It's designed to silence the entire HBV genome that's expressed by the cccDNA. And so what that means for us potentially is two things, I think. One is, if we can turn down the level of circulating free S antigen, the theory goes that we could enable the immune system to come up and reconstitute itself and control the virus. And second, and maybe a bit more subtly, potentially equally important is that we are designed to silence all of the gene products produced by cccDNA. And so to the extent that we can do that, we think that we can disrupt the virus over time and also potentially contribute to a functional cure. So that's what we're trying to do with ARK-five twenty. The treatment groups we'll be talking about today are as follows. First, we have a chimp study that consisted of nine chimps that were first suppressed on NUCs and then given monthly doses of ARK-five twenty, six to eleven doses of ARK-five twenty. These animals all had biweekly blood samples, and we had several biopsies. And so a ton of data came in through this study over time. We also have seven cohorts of patients in our clinical study. Four of these you know about. We've talked about these a lot in the past. These are all patients that are suppressed on NUCs. They are all E negative patients, and we were looking at single doses of ARK-five twenty at one to four mgs per kg. The new cohorts that we have not yet talked about until today are as follows. Cohort five is on a background of NUC therapy. It is E positive patients, and it's four milligrams per kilogram, again, one dose. We have six patients and two patients on drug and two placebos. Cohort six is also on NUC therapy, and these are E positive patients that receive two doses of ARK-five twenty at two mg per kg each, and those doses are separated by two weeks. And then Cohort seven, which is really two subgroups, one is E positive patients and one is E negative patients, and these are not on a background nukes. These are nuke naive patients. So if I were sitting in your seat, I think that I would have five questions for Arrowhead. One is, is ARK-five twenty well tolerated? Is it safe? Second, what do you learn from the CHIMB study? Third, what does the DPC platform work? Fourth, did ARK-five twenty work? And fifth, what are going to do with ARK-five twenty? What's the outlook for 05/20? So let me I'll go through all those briefly. First is, well, is ARC520 well tolerated? Well, we've now been in 84 humans, and we've seen no AEs rated as serious or severe. We've seen no discontinuations due to AEs and no laboratory signs of end organ tox. We also have data now from nine chimps with between six and eleven monthly doses of ARK520, and we have seen no safety signals in any of the chimps. So we think that ARK520 has been well tolerated, very well tolerated, in fact, to date. So what have we learned from the chimp study? First, ARK520 leads to deep S antigen knockdown. We have four E positive chimps. What we saw with them is a mean peak knockdown of 99% or two logs. We've got four E negative chimps where we saw a mean peak knockdown of 81% or 0.7 log. We got one chimp that was a transitional chimp, was transitioning from E positive to E negative, and that chimp had an 87.4% peak knockdown of S antigen or about 0.9 logs. We've seen evidence of immune reactivation in one of our four E positive GIMPs. So we look at the differences in E response I'm sorry, in S response of these GIMPs, and we have concluded that the different responses are due to a decrease in cccDNA during the life cycle of the virus as well as a decrease in cccDNA during nuc therapy. That leaves significant F antigen production from integrated DNA. This is a new concept for the field, and we think is important. So we see deep knockdown with ARK520 in chimps, and we see a new paradigm for the life cycle of the virus. So does the platform work? So as I mentioned, our data suggests that integrated DNA becomes an increasingly important source of circulating S antigen as cccDNA is reduced. Therefore, to assess the platform activity, I think you really need to look at e antigen production or e antigen in circulation. E antigen is produced only by cccDNA, not by integrated DNA, and our five twenty is designed to silence expression of cccDNA. So what do we find in humans? In a cohort of E positive patients receiving four mgkg of ARK520, we saw good knockdown of 92% mean max knockdown or 1.2 logs and a maximum knockdown of 98% or 1.7 of e antigen in these patients. Now interestingly, we did not only knockdown e antigen, we also knocked down correlated antigen, not only in positive patients, but also in e negative patients. So we've got good data to suggest the platform is working well and consistently. We think that derisks ARK-five twenty and also derisks future candidates using the same DPC. So does ARK-five twenty work? Well, we reached 99% max knockdown or 1.9 logs of S antigen after a single dose in a patient in Cohort seven. We think that's the highest knockdown ever reported in a human using RNAi. So here's what we saw in Cohort seven. Remember, is are E positive patients who are NUC naive, and we saw a mean max knockdown of about a log and a maximum knockdown at 99% or just under two logs. Now keep in mind that this is just through day 15 of this cohort. We think that it's quite possible that this will continue to decrease. And so we saw really good results in this cohort of patients. And also keep in mind that we're not just knocking down S antigen. Remember, the E antigen data and the core data, we should be disrupting this virus substantially. So ARK-five twenty, we think, is quite expression. So what's outlook for ARK520? Well, as we expected, I think that we will see a number of subpopulations within HBV that will respond differently to different treatments. We identified cccDNA and integrated DNA or the ratio of those as an important determinant of a subgroup. ARK520 has been shown to be well tolerated and deeply silenced to cccDNA, and we see NUC naive E positive patients as potentially the richest population of CCCDNA. So we think that's a very important target population for ARK-five twenty. But the question is, is that a small slice of a very large market? We think the answer is no. It's actually a very large market unto itself. For instance, in The U. S, roughly ninety five percent of those thought to be infected, chronically infected with hepatitis B are untreated. And so ninety five percent are nuke naive. And of those, it's thought that about half of them are E positive. And we're seeing just that the seeing that populations. We think it could be a good antiviral for both high and low cccDNA level patients for a few reasons. First, ARK520 appears to deeply silence all cccDNA expression. As we talked about, we see good knockdown in E antigen, core antigen, and so we think that will disrupt the virus, whether or not we are completely suppressing S antigen. Second, the clinical data that we're talking about here is after a single dose. What we've seen in the chimps is an increase in knockdown over time. And we also believe that long term disruption of the virus will have positive effects towards a functional cure. And third, it's unclear how much S antigen needs to be knocked down to achieve that functional cure, particularly when you're disrupting the virus. Even so, we have also expanded our HBV portfolio. We've nominated an additional candidate called ARC-five twenty one, and that now gives us two shots on goal. ARC-five twenty one uses the same DPC as ARC-five twenty, so we expect the same safety profile as we see in ARC-five twenty. It's now been optimized to include integrant knockdown. It has been validated in chimps. You'll see later that we have seen multi log knockdown with the integrated siRNAs. We think it's a good complement for ARK-five twenty, and we expect an IND or equivalent by the middle of twenty sixteen. So we think that what we will be showing today will derisk our entire program because of the tolerability we have seen in ARK-five 20 and because of the activity we've seen in ARK-five 20, not only for S antigen, but for the other engines produced by cccDNA. And we have just increased our ammunition to attack this difficult virus. So with that, I will step aside and turn the mic over to Doctor. Gish. Good morning, everybody. I'm here really wearing probably three hats. One of those is as a clinician. I practice, as you heard from Chris, in California. I have a number of clinics in Northern California, also in San Diego. I work with a group in San Jose that's got a large Vietnamese and Chinese practice. I also work in Arizona and Nevada. So I have a very, very broad picture about liver disease in general and seeing hepatitis B in a variety of different communities. Another really important point is how do I think about hepatitis B today. And one of the things I think about every day is that the number two cause of cancer death in the world is liver cancer, and the number one cause of liver cancer is hepatitis B. Come back to The United States, the number one cause of cancer death in Vietnamese men is liver cancer. In my practice in San Jose, I'm seeing that every day. We're also thinking about hepatitis B in The U. S. Differently now. We just had a paper published that estimates there's about two million infected individuals in The U. S. That was published in hepatology just a few weeks ago. So we really know this is a very important disease in our hepatology community. I also wear a hat of advocacy. I was in Glasgow about one weeks point ago for the World Hepatitis Summit. This is a collection of advocates, physicians, policymakers, government, WHO. And at that meeting, they are focused on eliminating viral hepatitis from the world by 02/1930. Now eliminate is slightly different than eradicate. Eliminate means we're going to take this down to a rare disease. And there's really two focuses. One is vaccine for hepatitis B, obviously, treating and curing hepatitis C, but hepatitis B is testing and linkage to care. And in my practice today or in practice globally, what we really discuss with patients is taking a pill every day indefinitely. Not quite forever because I'm an optimist. I'm from Kansas. Thinking that we're going to have new treatments. We have a whole library of new drugs that are in development today. I know of at least 20 companies with about 30 new products that are in development that I think will lead to this next step, functional cure, which is S clearance. And I guess because I'm an optimist, I'm even thinking that the word real cure is probably down the road, maybe a decade away, but we may actually get there. What you're seeing on this slide is how we think in the clinic today. And this first phase that you see on the left used to be called immune exhaustion, but we've changed the word slightly to immune trained. We think that the T and B cells that are key to clearing and controlling hepatitis B aren't tired. They're just distracted. They're trained to go in a different direction. They're trained not to attack those cells. We think that this patient population is now becoming quite small because of vaccine and aging population. And the majority of our patients are in this immune active or immune clearance stage or this reactivation stage, which is really an E negative disease. It's a small subset that sit in that inactive carrier state. And the reasoning is pretty simple. What we thought was a normal liver enzyme normal ALT has changed dramatically. For a woman, an ALT over 20 is abnormal. And for a man, an ALT over 30 is abnormal. And if you find elevated enzymes in a DNA level in the virus of over 2,000, we're talking about treating those individuals. That instead of forty percent or maybe fifty percent of our practice is now probably eighty percent of our practice. So small subset are in this immune train stage with high DNA and normal ALT, not yet thinking about that. And then the rest of these individuals are immune active or reactivation or E negative disease. We're also thinking E negative is very different than E positive because at least in E positive, we can get to S antigen clearance at least in maybe ten percent of patients with NUCs and maybe slightly higher with interferon therapy. Interferon is not being used much. In The U. S, it's a few percent of patients or providers that are using interferon for a couple of reasons, side effects, and we're missing a key test in The U. S. Called quantitative surface antigen. In Europe, they have access to this test, quantitative surface antigen, which helps guide therapy, either as a positive or negative predictor. But even in Europe, probably less than one in seven patients are getting interferon today, probably again because of side effects, and really only helping maybe one out of seven or one out of six patients with interferon long term. What do we need? S clearance and DNA control. But at least with a NUC, entecavir or tenofovir, you can take a pill every day, rare side effects, and you get DNA suppression, and we're changing outcomes. We're seeing much less liver failure. We think we're seeing less liver cancer, but those people are going to be taking those oral medications indefinitely. You're going to hear some very important information, which Chris has already hinted that our paradigm is changing. What you're going to hear today, we think, is going to have a huge impact on patient care and drug development. We think this data is quite interesting and provocative. So that's today. And actually, I'll even say yesterday because today is now the future with all this information. And drug development is going to go beyond nucs and interferon. We think, as with hepatitis C, you can attack this, control this virus, and there's a huge shift towards hepatitis B now. WHO has made this a top priority finally. They have people focused on hepatitis B in policy. They have new guidelines that are focused heavily on hepatitis B. And we think that hepatitis B is going to yield to an attack of combination therapy. Just like hepatitis C, one drug wasn't going to make it, right? One drug, it's suppression, you get resistance, you get treatment failure. Hepatitis B, we think, is even more complex than hepatitis C, and combination therapy is really going to be our key. So this chronicity is a failure of the immune system to exert control so we can either go after the immune system directly or indirectly by suppressing these viral infections. Resolve acute infection, it's clearing S antigen, and those patients have a very active immune response. Near term, S clearance, DNA negativity, surface antibody positivity, it'd be our ideal world. And sterilizing cure, which means no DNA, I still think is a realistic possibility. And there are some very special cases out there with hepatitis B where we actually think patients have cured themselves through some type, we think, of a dominant immune response. These antigens play a dominant role in immune suppression or immune control, this immune training that takes place. So yes, you can come in through the immune system, through the side door or you suppress viral proteins and allow that immune system to be detrained or retrained to attack those viral infected cells. CccDNA is central but may not be the ultimate target. We think that we've been a little distracted recently thinking that, that is the Holy Grail. And we think that hepatitis B replication cycle and locations is multifactorial on how it trains. And you're going to hear some very interesting information. Just to wrap things up. We're targeting hepatitis B through this immune system directed by, one, reducing antigenemia directly through a number of new technologies and methodologies. Or you can say, I'm going go after the immune system with TLR7s, like with one drug that's in development or checkpoint inhibitors, super hot topic in cancer, including liver cancer, but also hot topic in hepatitis B. But there are some risks of even side effects like autoimmune disease with these. So we have to be very, very cautious. And then we may be able to change how we're killing cells or controlling cells or decreasing virus. The cccDNA directed agents are logical. We're also thinking about entry inhibitors blocking uptake virus, stopping capsid formation. Capsid masks the messenger RNA inside the liver cells and probably modulates the immune system in the hepatocyte itself. And then there may be some epigenetic control we can do with ccc DNA as well. So with those comments, where we are today, and I'm going to say where we were yesterday because today is really we're looking at a new future. And I'm going introduce Doctor. Robert Lanford, who's the Director of the SNPRC, and he'll be talking about the Chimp facilities. Thank you very much. Thank you, Bob, and good morning. I'm going to provide a fairly brief introduction to the research facility that conducted the chimpanzee trials that we're discussing today. Texas Biomedical Research Institute is a private nonprofit research institute. I've been there for over thirty years performing basic research on hepatitis B and hepatitis C as well as preclinical studies. The Southwest National Primate Research Center is part of TBRI. I'm the Director of SNPRC. SNPRC is one of the seven NIH funded national primate research centers. We work on a large diversity of human diseases and nonhuman primate models. To give you a brief background of the Texas Biomedical Research Institute, I mentioned that we're an independent nonprofit research institute. We were founded in 1941. We began primate studies in 1957. Currently, have about three fifty employees, 70 of them are doctoral level investigators, PhDs, MDs and DVMs. And we average about 200 research projects ongoing at any time. We're on a three thirty acre campus that has over 600,000 square feet of lab, animal and support space. We operate under a $50,000,000 a year budget that is primarily from federal grants and contracts as well as support from pharmaceutical companies. And we have about $120,000,000 in our endowment, although recently the market is probably pushing that down a little bit. So the major focus today would be on one of our four large primate colonies. We have baboon colonies, macaque colonies, marmoset colonies. But today, I want to focus on our chimpanzee colony. There are several photographs here. The one on the left shows you an area that the chimpanzees are housed in called the Playgrounds. And the photograph from the center is just a close-up of a few animals in the playground area. There are three adjacent playgrounds and they have 20 fourseven indooroutdoor access. The next on the right is what's called a prima dome. The size of this is misleading. If you look at that small dark spot at the bottom, that's a large chimpanzee. So this is actually a very large geodesic dome. There are 12 of them in the complex. Each pair of two is interconnected so the chimpanzees can run from one dome to the next and interact between social groups. Our chimpanzee colony was initiated in 1967 and we immediately began translational research with pharmaceutical companies. Most notably in the beginning, it was with Merck Laboratories developing the hepatitis B vaccine. The first vaccine was actually from contaminated human plasma that had been inactivated. That was FDA approved, but surely there were some concerns about the safety of this product. So the next vaccine that followed shortly after that was a recombinant product, and it was one of the first recombinant products used in man. The first transmission of HIV to an animal model occurred in our chimpanzee colony when blood from an AIDS patient was transmitted to a chimpanzee. For many years, the chimpanzee was the only model for us to help understand what was going on with HIV and AIDS. But soon SIV was discovered and the macaque model became the new model of the future. We only use chimpanzees when there is no other animal model available for that research. The first transmission of non A, non B hepatitis to an animal model occurred in our chimpanzee colony as well as one other at about the same time, and this was from a transfusion patient we now call non A, non B hepatitis, hepatitis C. About ten years after that first transmission, it was cloned from chimpanzee serum by Chiron Laboratories, bringing about the era of HCV. We were the home for two of the NIH cooperative hepatitis C centers for over fifteen years, conducting basic research on the mechanism of chronicity, why do some patients resolve the illness whereas others become persistent for life, what is a protective immune response, how does the virus interact with the host. During that same period of time, I was developing a program to look at preclinical trials for therapeutics. We had over 20 sponsors over a ten year period, multiple of our candidates entered into Phase one and Phase two clinical trials and at least components of one of those became one of the FDA approved cocktails for HCV cures. I want to mention our veterinary care program. We have a very high quality animal care program to maintain healthy colonies. Healthy colonies are essential for good research. We have a high quality veterinary and technical support program for research. There's eight veterinarians, two are board certified in experimental medicine, two are board certified in pathology. We have outstanding clinical and anatomical pathology program. We have a behavioral staff of nine individuals whose only job is to provide the enrichment and training for these animals. Three of them are dedicated to the chimpanzee area, and they're also involved in the assessment and intervention if there's any signs of abnormal behavior. AAALAC accreditation was renewed in 2015. That's the highest standard for any animal care program and it is a voluntary program that we submit to. So I want to briefly show the design of this study. Nine chimps were used as mentioned. Five of them are e antigen positive, four were e antigen negative. These animals have been chronically infected for many years with HBV, some for decades. Deep sequencing of the viral sequences and phylogenetic analysis points to variants in the virus. It is a human HBV with some variations that are typical of isolates that come from chimpanzees. We don't suspect that this has a clinical significance. We know that human HBV causes the same infection in chimpanzees. The reverse has never been tested whether the chimpanzee virus does that in humans. Tissue and blood samples were assayed in my laboratory at Texas Biomedical Research, or some samples were sent out to specialized laboratories. The efficacy readouts were the serum viral DNA levels by quantitative PCR assay, quantitative assays for the surface antigen and the E antigen by immunoassay or ELISA. Total liver HBV DNA was compared to cccDNA levels, again, by quantitative PCR assays. HBV RNA and host transcripts were quantified by RT PCR assays and there were additional readouts. Safety labs included clinical safety parameters that are standard, complete blood chemistries, complete blood counts and blood chemistry standardized. We have a hospital that has the same equipment running in human hospitals for these analyses. And most importantly, there are daily observations by the veterinary and technical and behavioral staff to make sure that animals on study are exhibiting normal behavior patterns, and they're closely observed several times a day. So with that, I want to turn the stage over to Doctor. David Lewis, who will give some details of these studies. Thank you, Robert, and good morning, everybody. So as we said, I'm going to be presenting some of the results we had from the CHIPANTCE studies. I'm only going to be presenting some of the key data because we're going to be presenting more details at the Liver Meeting in November with a poster as well as an oral presentation, as Chris previously mentioned. So this is a slide showing the study design and the dosing and sampling schedule that we used in this study. We really based the design of this study on that, which we used in the HEPARC2001 clinical trial in humans in which patients enrolled had been on long term NUC therapy. In this study, we had a lead in period with NUCs that was only eight to twenty four weeks to suppress viral replication. And then we gave monthly doses of ARK520 to these CHEMs either at two, three or four mgs per kg. So at the pre study time points, health check and regularly throughout the study, we took blood samples to monitor safety and efficacy, outlined by Doctor. Lanford. And then we also took periodic liver biopsies. We took one at the pre study time point again. And then also periodically throughout the study in order to monitor different virological, immunological and histological parameters. So let me tell you about the safety of ARK-five twenty in multiple dose in this multiple dose studies in chimps. We found that we saw no sign of end organ toxicity. We saw no adverse changes in behavior, body weight or food consumption in these animals, saying that ARK-five twenty was indeed very well tolerated on monthly dosing. Interestingly, we did see some animals at the pre study health check that had higher moderately high levels of transaminases at the baseline. These generally normalized under treatment, suggesting that the treatment actually moderated antiviral induced liver damage. Another thing that we saw in one chip was ALT increase, which coincided with E antigen seroconversions as well as signs of immune reaction. This is very interesting. E antigen seroconversion is considered a medical milestone in treating humans. We were able to capture a lot of data around this event in our CHEMs, which I think will shed light on how that process occurs be see that data in the next slide. In in next the and the S antigen levels in the serum and the graph on the right. Now we've divided both of these data sets according to the E antigen status of the chimps because as Chris mentioned, we saw differential response to ARK520 in these two populations. So at the beginning of the study, we saw very high DNA levels in the E positive chimps about 10 to the eighth or 10 to the ninth copies per ml, much lower amount in the E antigen negative Chimps where the levels were around the lower limit of quantification of the LLOQ as shown there. After eight to twenty four weeks of new therapy, we saw a dramatic multi log decrease in the viral DNA levels in the E antigen positive chimps, and also a drop to almost undetectable levels in the E antigen negative chimps. So this data shows what happens during the NUC only lead in period is similar to what's seen in humans taking this type of new therapy. On the right, we have our S antigen levels. Again, at pre study, we saw increased S antigen compared in E positive chimps compared to that in the E negative chimps, although the difference wasn't quite as large as we saw in the DNA titers. And then similar to the experience in humans, under NUC therapy, these S antigen levels didn't really change. You can see that in ARK520 day one. So NUCs don't really although they have a very large effect on lowering DNA levels in the serum, they really don't affect S antigen levels at all. This data shows you what happens to S antigen levels over the course of the study. So this lead in period that I've just been talking about with the nucleotide only therapy, day minus fifty seven here on this graph to day one, which represents the first injection of ARKHIV twenty, you can see there's not much difference in S antigen levels. So NUCs, again, don't affect S antigen levels in the blood. What you can see, even after the first dose of ARKHIV twenty, there's dramatic drop in S antigen levels in these two groups of chimps. And that knockdown is sustained with multiple with subsequent monthly doses of ARK-five twenty and even gradually reduced even further. So at nadir, the knockdown that we saw in the E antigen positive CHIMS is about 99% or about 2.1 logs and in E antigen negative CHIMS about 81% or 0.7 logs. So we were very excited about this data because it showed that ARK-five twenty could indeed dramatically lower the levels of S antigen in these animals. What we also saw though is, again, kind of differential response between E antigen positive, which were highly responsive to ARK-five 20 and E antigen negative chimps, which were still responses but less so than in the E antigen positive animals. So we think we know the reasons for that now, and it has to do with the source DNA of the S antigen. And I'll show you exactly what I mean by that and the evidence we have for that in the next few slides. So first let me kind of go over again the HBV lifecycle and mainly how this genome is replicated because it's important to understand these different sources of DNA. So once HBV infects hepatocyte here, it deposits its genome in the form of this relaxed circular or rcDNA into the nucleus shown here. This rcDNA is converted into cccDNA and the cccDNA as we've heard is really the template for all the viral mRNA production. It also makes the pre genomic RNA, which is used in viral DNA replication. So this pre genomic RNA not only includes some viral proteins, it can be translated, but it's also packaged in this viral capsid. And it's in within this viral capsid that RNA is reverse transcribed to DNA and eventually forming this rcDNA in the capsid. Now there's a separate replication product that's called double stranded linear DNA or DSL DNA that's also produced. This DSL DNA is less than full genome length. It's replication defective because of that. But it actually makes up about 10% of the replication products of HBV DNA replication. That's also packaged in this capsid, it's produced in this capsid. It can also be enveloped by S protein and exported from the hepatocyte into the bloodstream to make new viral particles. But these capsid can also go directly back into the nucleus where they again, they deposit this rcDNA and this other separate replication product called dslDNA. This dslDNA has been shown, there's a fairly large body of literature out there that shows that this dslDNA is actually the HBV DNA that integrates into the host genome. So the DSL itself doesn't contribute to HBV replication, it's dead for HBV replication, but it can actually be carried into daughter cells of hepatocytes when they divide, which they do quite often in chronic HBV. So it's propagated that way. So we are interested in looking at these different forms of HBV DNA in the chance and perhaps they would shed light on some of this differential response that we're seeing between these two groups, this E positive and this E negative CHIMs. So we did biopsies after this new bleed in period prior to them receiving ARK520. What we saw was pretty interesting. So most of the HBV DNA in the liver of E positive chimps was actually this normal cccDNA that we think of as being controlling for viral antigen production and making the pre genomic RNA and replication. What we saw in the E antigen negative chimp though was dramatically less of the cccDNA, about 500 fold times less than in the E positive chimp. I think what's even more interesting is that the cccDNA in the E negative chimp population is just 5% of the HBV DNA. So 95% of the HBV DNA in this chimp liver is not CCC DNA. So what is it? Well, we knew that our NUC therapy, the level of total HBV DNA in the liver didn't change. So whatever this form was, it wasn't dependent on viral replication. This immediately made us think that perhaps the greatest burden of HBV DNA in these E negative chimps is actually the integrated DNA. So here's a slide that kind of illustrates what we think a liver lobule might look in these two different population groups in these chimps. So we have E antigen negative chimp hepatocytes on the left and E antigen negative on the right. So you see the hepatocytes here in yellow. I've drawn the nucleus here. You can see the cccDNA pointed out and then integrated HBV DNA. So in the E positive GIMPs, we have a lot of cccDNA and that is borne out by our data. Probably ninety five percent or more of liver hepatocytes in these chimps are infected. We have very high viral titers. So the cccDNA is always being replenished by this HBV replication. Not that there isn't integrated DNA in these genes, it's just that it's a very small proportion in this particular population. On the other hand, in E negative genes, we have the sort of the reverse. We have very low amounts of cccDNA. And that makes sense because there's not much viral replication on there. Viral DNA titers are very low and cccDNA is required for viral replication. But we also have a large amount of total HBV DNA somewhere in there. And we think that's the integrated DNA. And so in the e antigen negative, this shows that most of the DNA burden for HBV in E negative chimps is actually integrated DNA. So why is that important and how does that relate to our differential response to ARK-five 20? What we think is that this integrated DNA actually produces S antigen. And moreover, these transcripts that make S antigen from integrated DNA seem to be blind to ARK-five twenty. And here's why. So once we get integration of this DSL DNA into the host chromosome and that's shown here, you actually get deletions on the ends of the DSL DNA. And those are shown by these dotted lines here at the end of this integrated HBV DNA. So what that means is that some of the promoters for other antigens shown here at the end on the right end can be missing in the DSL DNA. They're actually dislocated to the open reading frames that they control except for S. So S is in the middle of this integrated DNA. So the reading frame is intact for S protein and also the cis regulatory elements that control transcription of the SM RNA are intact. So theoretically, can make these transcripts and you can make full length S antigen protein. Now this goes against what was currently thought in the field that this integrated DNA is here, maybe it plays a role in cancer, liver cancer, but not really thought of as a source of viral antigens. But I think what we see is that, yes, it's theoretically possible. We have a high burden of integrated DNA in the antigen negative chance. So it's entirely possible that maybe this is actually a source of S antigen. And so why when we give ARK520 can't we knock down source of S antigen? The answer is because where the ARK520 lies. So ARK520 was designed against transcripts that are expressed in cccDNA. But in the integrated DNA, those target sites are missing in the transcript because of the way that the integration occurs. And so this is why we see this lower level response to ARK520 e antigen negative chimps. It's still E antigen negative chimps still have CCC DNA, and we're able to knock that down just fine with ARK520. We get deep knockdown in E antigen positive chimps, which have a high level of CCC DNA. But in the E negatives, a greater proportion is actually produced from this integrated DNA, and we to be missing that with R520. So another thing that we did to prove that we're actually getting expression from integrated DNA is to make another siRNA that targeted specifically these integrated transcripts and then inject E negative chimps with that and the results are shown in this slide. So here we treated two E antigen negative chimps. Both of them had been on ARK520 treatment for seven doses kind of at the end of that treatment, were about 77% reduced in their S antigen production. After ARK520, we gave them this siRNA that targeted targeted integrated S protein. And what we saw was all of a sudden another further dramatic decrease in S antigen levels down to 99.8% of baseline. And this actually represents going from 77% to 98% about another two logs of knockdown by using this integrated targeted DNA. So this I think is really good evidence along with some of the other things that we have that yes, S antigen is produced from integrated DNA, is previously thought never have thought to occur or if it did in some very, very minor level. So this really, I think, changed the way we interpreted a lot of things about our study, about our drug and also about some of the clinical results. So in conclusion, I want to reiterate that we did see robust sustained direct antiviral effect on S antigen product in all the CHEMs, E positive or E negative. E positives were the highest responders. And in our best CHEMP, we saw about 2.7 logs of knockdown after monthly dosing of ARK-five twenty. E antigen negative chimp, we also saw a good response, but not quite as big as we saw with the E positive chimp, so up to about 0.9 logs. Importantly, all these chimp's very were very tolerant of ARK520 injections. We saw no safety issues. And then I think from a biological, virological standpoint, I think what we really learned about HBV from this Chimp study is that HBV integrated DNA is actually important. It can be important for the HBV lifecycle. It may be important in maintaining chronicity. So with that, I think I'll end and introduce Doctor. Bruce Given, who's our Chief Operating Officer, and who will talk to you about some of the human clinical trial results that we've been giving. Wants to talk to me for some reason here. Good morning, everybody. I am Bruce Gibbon. I'm the Chief Operating Officer. I also head research and development and act as the Chief Medical Officer for the company as well, which sort of explains why I'm here speaking to you today. This is one of those rare opportunities in drug development where you get to get out on a frontier. The advantage of that is it's a lot of fun. You discover a lot of new things. The disadvantage is there's no road map and there's just a wilderness. We've had a very interesting year as we've had the opportunity to combine information we had coming in from our clinical work with information coming from the Chimp data. And it's been a bit of a travelogue. So we thought really the best way to present this today was to take you on that journey as we had experienced it. So Chris has already said the main conclusions from the presentation, but there are a few things worth reiterating. Again, the trial design, the first four cohorts were in the E negative NUC experienced patients. The fifth cohort was also NUC experienced, but now E positive. And we went ahead in these last three cohorts essentially using four mgkg. The dose was well tolerated. We thought we didn't want to miss anything by maybe taking a dose that was too low. So we've just lost our projection here. For those of you at home, we're just plugging the projector back in. Just make sure you put those dispense back in right way. Well, I will go ahead and keep speaking while we wait for this to reboot. So Cohort five was also a blinded cohort of six active and two placebo patients in E positives treated with four mgs per kg, NUC experience, as I said. Many of you may remember that our chimpan zee that we presented at AASLD two years ago had two divided doses, a two mg per kg dose and then two weeks later, a three mg per kg dose. So we thought it might be worthwhile to go ahead and emulate that in patients as well. And in this particular case, we felt that we had had enough placebo controlled data, we had seen enough safety and tolerability that we were comfortable going open label for Cohort six. And then Cohort seven was our first foray into naive patients who had never been on NUCs or interferon. And here, we wanted to look at both E positives and E negatives, and we had six of each. So if you go back where we were a year plus ago, DPCs had never before been in the clinic. It's easy to forget that this was a new technology. So we really did not know how to correlate what we all of our animal work with what we would expect in humans. We did have the experience with the one chimpanzee, which made us feel fairly comfortable that it was likely that one and two mgs per kg were going to be active doses, but we didn't know that. So it was actually it's easy to forget how we were out on that frontier. But we had good safety and tolerability in healthy volunteers through two mgs per kg. But recognizing that we might want to go higher, we did keep the normal volunteer study open and active so that we could go higher if we thought that was worthwhile. And you'll recognize this data on the slide from AASLD last year. It's a little bit different. Some of you will recall we had that strange data point in the placebo group at day 57, which now you no longer see. One of the things we learned in the two the first two cohorts was that in measuring surface antigen on a visit by visit basis, there was enough inter assay between assay variability that it really at times created some issues for us in interpretation. So what we now do is we routinely after we finish a complete cohort, we analyze all the samples in a single assay for all the patients. And that really smooths the data by taking away this inter assay variability and gives us cleaner data like this. But we had this data. And the our interpretation of that data, looking at it, there was a dose response between one and two mgkg. Our experience in all of our animal data across multiple genes and actually dating back to before we acquired the technology from Roche indicated to us that we thought we were at the bottom of the dose response curve. Because we have endosomal escape as a key feature of our platform, we expect a steep dose response curve. So we thought three or four mgkg were probably going to be at the top. And so we went ahead and dosed in normal volunteers up to four mgkg, and we're happy to see that it didn't really look like the safety profile changed at all to our eye. And because of that, we added the three and four mgkg cohorts that the Street was well aware of, but we're still in E negative patients that had been chronically nuke exposed. And to our surprise, the three and four mgkg cohorts didn't look all that different from the two mgkg cohort. The peak knockdown tended to be around percent, which was not what we had expected. And the other thing that we saw that surprised us a bit was we actually saw two patterns of response in surface antigen. So the one pattern and this patient is actually from cohort five, but it's particularly clean figure that shows you what I want to say here. The first pattern is what we call primary responders. So we know from animal studies, for instance, that if we give our product to an animal, within one to two hours, we have hit the liver, we've gotten into the endosome, we've escaped the endosome, we are in the cytoplasm and started to knock down the mRNAs of interest. So it's very fast. So not surprising when you look at this by day three, we already have very substantial knockdown. This profile is I think emblematic of something else in the primary responders. You see that the peak effect is down around day twenty one, day twenty nine, day twenty two, day twenty nine. So three to four weeks with S antigen. And S antigen has fairly complex kinetics that we think we understand a bit. We could talk about it if anybody cares, but that's usually where we peak. And then we start to have a nice gradual increase back up. And as we noted back at ASOD last year, one of the big surprises to us was how long the knockdown was and again you see that in this particular example. But we also saw this late response and these late responders can look a little different. Not all of them have dropped this much, but you see that for the first several weeks the S antigen is bouncing up around basically baseline. It could be higher, it could be lower, but it's basically bouncing around baseline. And then after three to four weeks we see this decline. And we've actually now seen this pattern in twenty five percent to thirty percent of the patients and we've seen it in all of the cohorts. So it seems to be a real phenomenon And that was one of the things that had surprised us. But meanwhile, we started to get the data from the Chimp study. The Chimp study took a while to get going. There's a lot of care taken in the planning of these and the reviews, the institutional reviews are very strict and careful. So the Chimp studies took a while to get going and we had the nuke lead in period, but we started to see data right around the time that we were also looking at this clinical data from the first cohorts. And we saw this difference between the E positive and the E negative chimps. So that really pointed us toward wanting to test ARK-five twenty in E positive patients. And that's where we went with the four mgkg either in a single dose or the divided dose cohorts five and six. But we're again on a background of chronic entecavir. But this was very important for us because it allowed us to not only look at S antigen, but now we could look at E antigen. And this was really before we quite understood the cccDNA part of this story, but it did give us a very different antigen to look at. And this was really a very exciting data when it came in because all of the patients that responded all had primary responses. They all peaked at day eight. E antigen has a different kinetic profile than S, but each of the patients looked the same and it was quite a deep response. The worst responder was eighty three percent, which is 0.8 logs. The best responder was point seven logs or ninety eight percent. And this was after a single dose. So this was really powerful data to us because we confirmed all at once. We delivering to the hepatocyte. We were getting into the endosome. We were getting out of the endosome and into the cytoplasm. And those were all questions for us since this was our first time that we had been in humans, and we weren't seeing what we had expected to see with respect to surface antigen up until this time. So it validated the technology for us, which was very important. Now subsequently, actually just in the last month, we had the opportunity to test a different antigen assay. And this is the core related antigen assay. It's not very commonly used. The site that the antibody sees is in core, but it also is an E antigen and it also is in some E antigen metabolites. So it's an assay that's not as specific as E antigen or S antigen. But what's interesting about it is that it's something you can actually look at in E negative patients as well as E positive patients. We just got those results within the last thirty days or so, and core looks like e antigen. So everybody has the immediate response, and the reductions are around a mean, nadirb around a log, etcetera. So it really confirmed that even in the e antigen patients, we were getting, again, that deep knockdown, we were getting good delivery to the cytoplasm. So it's very important to us. And we actually feel it generalizes in all likelihood to ARK AAT and ARK Factor XII as well and any other RNAi programs that use the same delivery mechanism. But interestingly enough, the S antigen reductions in the E positive NUC experienced patients were somewhat better than we had seen in the E negatives, but they weren't the dramatic difference that we had seen in the chimps. And we saw a best knockdown in Cohort five of about eighty percent. And the mean knockdown in the primary responders was the mean nadir was around sixty percent. And again, we had a couple of these late responders, which are you see the average of these couple of late responders here in green. So we were faced with a conundrum here. We had the surface antigen results that I mean, I'm sorry, the e antigen results that clearly validated the drug. So from the e antigen results, we knew that ARK-five twenty was doing what it was designed to do. But the surface antigen was not behaving the way we thought it would. And we also had this issue of these two distinct patterns, which was really novel. And once again, the Chimp data comes and gives us insights. The biopsy data was sort of the latest data that started to come out of the Chimp program, and that's what started to really teach us about this question of cccDNA versus integrated DNA. And in addition, right about the same time, we started to see some things in the academic space from human biopsy data in the entecavir world that was actually corroborating for us what we were seeing in the chimps in our human studies. And what was found, as Dave just pointed out, is that e antigen loss itself is associated with sharp cccDNA reductions, but so too is nuc treatment. So in fact, this the notion that had been out there that cccDNA is dominating throughout the viral life cycle is starting to come under question. And integrated DNA really emerged as an unexpected source of surface antigen production for us. As Dave mentioned, ARK-five 20 was optimized to silence expression from ccc DNA. We had used the mouse plasmid model, which used a full length DNA. So essentially, it was a model for ccc DNA. And as we started to think about integrated DNA, we knew that it was unlikely that we would silence most of those transcripts. So what did this mean for us as we looked back on Cohorts one and six? Well, we knew how long our patients had been on entecavir. The shortest had been on for a couple of years, the longest for eight years and the average was five years. And CLI had actually put out a poster at last year's AASLD, where they had biopsied entecavir patients at baseline after something like five or six years of entecavir than at twelve years, I think. And based on his poster, the prediction would be that if we had biopsied our patients, the cccDNA would either be undetectable or very, very low level. So in fact, this data of CLs that maybe have violated conventional wisdom that NUCs don't really affect cccDNA, we were finding data that sort of supported the notion that, that conventional wisdom was wrong. So we developed a new hypothesis. And our hypothesis was that integrated DNA was placing a floor under surface antigen. And in these chronically nuke treated patients, especially in the E negative patients, it was really quite a substantial part of the total surface antigen in these patients. And as we thought about the chimps and we tried to understand why the chimps had a much larger differential in their surface antigen, some of these chimps had occasionally seen a short term exposure to another experimental agent. But for the most part, they were more like naive patients than they would be like chronically treated patients. So we actually viewed them as analogous to naive patients. And this is what led us to do the naive Cohort seven. And we wanted to do both E negative and E positive because we really thought there was a good chance that they were going to look like the chimps. So we had further theorized that was the E positives that would give us the best result. As Chris said, this data is very fresh. The last patient in this cohort was treated last week. And most of these patients, we only have maybe fifteen days of therapy of data. Some patients, we don't even have any data yet. But they received a single dose of four mg per kg. And you could see here in the E positive, we have quite a good reduction. We have a mean reduction at day fifteen of one log. If these patients behave like we saw in the rest of the patients, the nadir is probably going to occur somewhere around day twenty two to day twenty nine. So we don't even think we're all the way at the nadir. One of our earliest patients has already achieved a maximum knock down of 1.9 logs or ninety nine percent. So we find this data very exciting. The E negative data is not up here yet because it's more complex. It looks like we have a couple of these late responders in the E negative group. We have one responder that is better than any of the E negative NUC experienced patients. So as we would expect, they're less impacted. But that data, hopefully, we'll be able to see that at ASLD and people will be able to look at it. But the E positive data was very much confirmatory of what we expected. So what all this has told us, first of all, it's easy to forget, but we now have experience in 84 humans. That's forty eight patients and thirty six normal volunteers who have received ARK-five twenty. So that's actually a pretty nice database. That's a single dose database. We have these nine chimps that who that have received chronic ARK-five twenty. And as Chris said, we've been really gratified to see that we really haven't encountered anything untoward yet that was concerning to us from a safety perspective. We now know that ARC-five twenty can produce very deep and sustained knockdown of cccDNA derived mRNAs and proteins. So e antigen falls very nicely, core antigen falls very nicely. And surface antigen is also deeply reduced in those patients that are cccDNA driven. So the technology works. And as Chris said, that 1.9 log reduction that we've seen in this C positive patient, to our knowledge, is the highest reported single dose knockdown ever seen with RNAi across any platform in any disease state. We're So not just talking HBV. We don't think anybody has ever achieved that before. So it says a lot about what this platform is capable of. Now a brief update on where that leaves us with our clinical program. So we've been talking about the Monarch study over the last few months. This is our study that is designed after the pharmaset work that gave us HCV cures with SOBODY. So it's an open architecture, combination approach trying to find the best recipe or recipes to start giving us real functional cures in hepatitis B. So not surprisingly with all this, that study is now designed in its first few cohorts to enroll patients. And of course, we expect a deep knockdown of all the gene products, and we're really looking forward to that. We ought to be able to enroll this study because at this point in the major developed markets, only about fifteen percent of diagnosed HBV, so we're not even talking about prevalent. We're just talking about patients who are diagnosed, only about fifteen percent are being treated. So we think we have a pretty population to go after to do this study. We've been talking for over a year about the two thousand and two and two thousand and three programs. 2,002 are E negative on background NUC, 2,003 E positives on chronic NUCs. So these are more akin to the cohorts one through five. It's an interesting question of what's going to happen here because if the S hypothesis was all that mattered and if all that matters is S reduction, one might anticipate that we won't see functional cures here or we won't see many. We just don't know if we can count on that because of all these effects we're having on the other viral proteins, pre genomic RNA and everything else. So we think it's important to do this and to carry out this test. And I don't want to predict one way or the other what may happen. We have made one change though, and that is at the extension, we're going to enrich the extension. We're only going to take the patients into the extension that have at least a 70% reduction in surface antigen at the end of the four doses in 02/2002, 2003 in the belief that we're certainly not hurting ourselves by doing that. And we do want to understand whether functional cures are going to be seen in this population. But we also added additional product to the program, as Chris said. So we took our very best trigger from ARK-five twenty, and we combined it with our very best trigger against these integrated DNA sites to produce a product that we're calling ARK-five twenty one. And this product is currently in GMP manufacturing. We expect to go into GLP tox this fall. Assuming everything goes well, we expect to be filing to commence clinical studies around the middle of next year, so in about nine months or so. And we do expect ARK-five twenty one, if all of these theories are correct about what we've seen our program to date, including the chimps, we expect ARK-five twenty one to be more active against surface antigen that's derived from these integrated DNAs. So it's a nice complementary program to ARK-five twenty, and it's going to really be fascinating to see what happens over these next couple of years with 05/20 and '5 twenty '1 in the clinic. So with that, I'll turn things over to Steven Lachernini. Thanks, Bruce. Good morning. Well, thanks, Bruce, and thanks, colleagues. It's a great pleasure to come up and share and discuss some of this exciting data that we're hearing this morning. And my job is to is, I guess, compare and contrast what we used to think about hepatitis B virus and what we now think about hepatitis B virus in the context of its replication and therefore, in the context of its treatment. So I'm actually from Melbourne from the Victorian Infectious Diseases Reference Laboratory. I'm a medical virologist, and, like Bob, also an advocate in hepatitis B. And I now work and I wish to thank America because if it wasn't for your world financial crisis some years ago, then my government would not have invested in the Doughty Institute. But to create infrastructure and a growing economy, the Doughty Institute, which was named after Peter Doughty, Doughty, who won the Nobel Prize for Immunology, is named and is actually a living patron in our center, would not have been possible. So I'm personally grateful. The Doty Institute for Infection and Immunity is a partnership between the University of Melbourne, the premier university in Australia, and the Royal Melbourne Hospital, the premier clinical teaching hospital in Australia. It's located in the Parkville Healthcare Centre, where the Walter and Eliza Hall Institute is also located and as is the pharmacy and the centre. And it really is integrating infectious diseases research, teaching and diagnostic and public health capability. Now we don't have a CDC. And so the DOE's role is also to sort of provide resources and activities for outbreak investigation. So my lab is the Victorian infectious diseases reference lab. We have a clinical service, the bids. We have an infection control system with VICNUS, the DMI, the University Department and the Microbiological diagnostic unit. And we've been operational for just over eighteen months. So it's a very exciting time for us, and that's by way of background. Now as I said, and I think the feeling that you're getting from the presentations this morning is that really it's an exciting time in hepatitis B. The hepatitis B science has improved dramatically in the last twelve to eighteen months. And a significant reason for that is the impact of these studies that we're hearing this morning are having on how key opinion leaders are thinking in the field. So I'll just see if this works. I won't touch that just in case something goes off. So this life cycle or replication that's shown for you here, let's see if the button works. No, it doesn't. Is typically what we would always see in the textbooks, what I would write reviews on about the hepatitis B virus. Well, it's e antigen positive. This is how it replicates. It infects the hepatocyte, comes in. Its genomic DNA that you see on the left is converted into the so called cccDNA, key replicative intermediate in the nucleus. From that, host cell enzymes make transcripts that are reverse transcribed. And then you see the RC on the lower right corner. And then the critical pathway that was really planned for was that these mini chromosomes or the cccDNA, which doesn't self replicate, is replenished from this pool of replicating genomic DNA through the intracellular conversion pathway. Now that was what we thought was the typical replication process of hepatitis B. Therefore, if we inhibited reverse transcription, we would dry up the intracellular conversion pathway, turn the newly replenish pool off, and eventually, the mini chromosomes might just disappear. Well, that was what we hoped anyway. And so really, that was a pretty naive view in the '80s and '90s and heralded in the, what I call, the nucleoside nucleotide analog era. But this is how we were thinking just a few years ago. The other key part of hepatitis B pathogenesis is service antigen. And really, one of the things that took my interest with the ARC-five twenty approach was that they were prepared to address the issue of surface antigen. Now just to give you an idea about what this thing is, and I've got a little picture at the top there of what we see in the blood of a chronically infected individual, huge amounts of surface antigen. The surface antigen is a subviral protein, as shown by that yellow circle, that really is produced in enormous excess of the virus itself, thousand fold, sometimes 10,000 fold more. And it circulates in the blood at concentrations that are just unbelievable, almost 400 to 500 micrograms per ml. Now if you do your sums, that's actually 1% of total serum protein. Now because of that, Bloomberg, who got the Nobel Prize for discovering hepatitis B surface antigen, used that as the first generation vaccine, purified it out. And that was actually exploited by us or by biotechnology to make the first generation vaccine. But as you heard from Bob and others this morning, because of risks of AIDS and CJD and other factors, we moved over to recombinant very quickly. But let me just sort of linger a little bit on the surface protein. It's a unique protein in the database. There is nothing like this protein that I have ever seen or any other biochemist has seen. It's got this unique conformational epitope, eight cysteines and eight prolines in the space of about 60 amino acids, four transmembrane domains. This guy is really different. And it's associated with an increased risk of liver cancer. Now it obviously plays a key role of what we've learned in hepatitis B persistence. It suppresses both innate and adaptive responses. But really, existing antiviral therapy, except for a small subset of patients treated within the pheron, the service antigen is basically not really affected. And so that's why I think the ARC-five twenty was really important in terms of trying to grapple with the surface antigen question. Now the other question that we're going to think a little bit about this morning is the so called cccDNA question. The question of ccc, what is cccDNA? Yes, it's a very catchy little term. Some people call it 3cDNA, C3DNA or cccDNA. But what in the hell is this thing? I spent a bit of my life on it some years ago and found out it's a bit like a beads on a string. It's a transcriptional template of the virus. But it's not just a single entity. And this is what this slide is trying to tell you. It's not just a single target in a concept of actually what if we tried to eliminate or surgically strike, remove this molecule, it's not one but 21 different topoisomers. And in the lower left hand corner, I've got for you what we have been able to work out what the structure of the mini chromosome is. And you can see there from zero to 20, it's like a boomerang. And the boomerang is actually we call these boomerang gels, and it exists as a population of an intense population or at the edge of the boomerang of 10 and then at the lower right hand version of that, another 20. And it's clustered into these sort of beads on a string structure, the closed compacted form, low replication phenotype and doesn't replicate much. But the open form, B1, B2, these are half chromatinized. These are transcriptionally active and result in high viremia. So I think that I know that there's a lot of discussion about getting a cccDNA magic bullet. The cccDNA magic bullet is going to not just address one particular topoisomer, but the other 20 as well. So and that's what we'll try and sort of as we become more sophisticated in our understanding of hepatitis B science, what we need to get to. So as I think Bob has discussed this morning and also Dave, we've realized that viral products are critical as well as host products in maintaining the integrity and the transcription ability of this cccDNA. And on the left, I've got what we call a high replication phenotype, where we know the X protein of hepatitis B is a key component, drives transcription, blocks the methylation complex. We know that in both structures, low and high replication phenotype, the core protein is a key component in terms of sort of maintaining the integrity of the mini chromosome. So sort of corollary would be that if we knocked out X and knocked down core, this would result in a reduction in the transcriptional activity of the cccDNA or mini chromosome. And indeed, that's been what we think is the case. So here we are in sort of like September 2015. We had a pretty good understanding of what hepatitis B virus was like and how it replicated. We had clinical good clinical practice guidelines about how to treat hepatitis B and control it, but we had really no way in terms of actually moving beyond that, what I call, a roadblock that we'd come into hepatitis B. So we'd known about integrated DNA for quite a while, but we had really dismissed it. So in my initial sort of replication life cycle that I presented to you, I did not talk about integrated DNA. If you look at the textbooks, we don't talk about it. We sort of don't, well, we know it's associated with liver cancer. But we've now realized that it plays a key role not only in liver cancer but also in terms of another source of surface antigen. And there's been minimal attention paid to it as a source of messenger RNA transcription or a critical component of the chronic persistence. So even at baseline, as you heard from this morning from Dave on the e antigen negative chimps, that were below the lower limit of detection for cccDNA and hepatocytes. And we've tried to sort of use the detection of surface antigen as a surrogate measure of the amount of cccDNA in the liver. We can't go around biopsying humans every sort of six to twelve months just to get a feel for what's happening in their liver. And we've tried to use surrogate markers in the peripheral compartment like quantitative S to give us a measure for that. And as we also heard this morning, we had the dogma was that the nucleoside nucleotide analogs do not really affect the cccDNA levels. But as we've gone out into year five and year seven and twelve, of these long term monotherapy treatment programs, we're now starting to see from certainly our Asian experience that there are indeed some reductions in cccDNA with the conventional therapy. So this, as I said, really allows us to rethink the role of all of these various intermediates that we've known sort of hung around and are important in our understanding, what does it really mean in terms of chronic hepatitis B. So Bruce talked about what the Asian experience now in terms of what happens with long term nucleoside nucleotide analog therapy. And so here's my two d boomerang gel showing the mini chromosomes, the 21 chromosomes of HBV. On the upper left is that life cycle that I introduced to you early. So what we've realized is that when we introduce entecavir or tenofovir in our patients, they don't get resistance and they take all their pills every day, that over time, the cccDNA pool drops. It drops by about 50%, and it drops, we believe, in that sort of group of mini chromosomes shown for you in that little elbow, those fully transcriptionally active molecules that are making indeed hepatitis B products. But that's it. It still leaves for you on the if you look at the 2018, 2019 and 2020, they're still there. They are the guys that hang around. They are the guys that when we stop antiviral therapy, bang, back hepatitis B. But if we measure the total amount of mini chromosomes or cccDNA on long term new treated patients, yes, we do see a fifty percent drop. So what have we sort of now learned and now started to appreciate about integrated HBV DNA? So if I had to sort of sit down and say, update the textbook on hepatitis B virology in 2015, this is what we would do, is that there's been a big shift in our clinics. We see a much more significant number of e antigen negative patients. So e antigen negative patients are shown for you by that black arrow in the middle of the diagram. This is the E protein. The virus mutates and drops off the E protein. It's an accessory protein. It's not essential for replication. So the phenotype of the disease that causes that's caused by E antigen negative viruses, obviously, is e antigen negativity. Now what's different about this replication diagram compared to the previous one is that the just below the intracellular conversion pathway, we're now sort of seeing a failure to translocate replicative intermediates, and we see this DSL DNA. So the DSL DNA is in your lower left hand corner. This double stranded linear DNA is a key replicative intermediate precursor for integration. So as Dave pointed out, 10%, 15% of the intrahepatic DNA is thought to be this particular replicative intermediate, not all of the relaxed circular DNA that we've traditionally regarded. But this floats around. And as the cell divides, it's promotably integrated into the host itself. So viral integration is now a key part of the whole process of HBV replication. And now in the top left hand part of that figure, you see that we've now got not one but two sources of surface antigen. We've got surface antigen coming from the epizome, from the cccDNA molecule, the traditional life cycle of the virus. We've now got hepatitis B service antigen coming from viral integrins as a consequence of the DSL. So I think that as we shift from e antigen positive to e antigen negative over the natural history of chronic hepatitis B that Bob Gish talked about earlier, we're seeing much more frequent this big shift in replication strategy from a productive to a more restrictive replication cycle. So now we have two sources of surface antigen to address. And this is really critical in terms of interfering in a positive way and blocking the adverse effects of the natural history of chronic hepatitis B. So how does all that sort of fit into RNAi? So in addition to service antigen, we know that ARK520 is expected to have other important antiviral effects, both on the E antigen, the core antigen and the X antigen. Now I showed in an earlier slide of the mini chromosome how critical the core antigen and, in particular, the X antigen are on the sort of epigenetic regulation of the viral mini chromosome or the cccDNA. So I regard ARK520 as a selective and yet broadly active, broadly based antiviral agent. And that is, I think, really a plus of the technology and mechanism of action of RNAi. I think the fact that the E antigen is going down so dramatically as well as what Bruce showed for you in the clinical studies is really breathtaking. To me as a virologist, I was staggered by some of those sort of dose response effects with the ARK-five twenty. And I think that what the data is now sort of teasing us to understand is these late responders for surface antigen. And so I think that it may very well be that a reasonable hypothesis that the ARK520 is affecting the core protein and the X antigen, which are the epigenetic regulators of the viral mini chromosome. So the sorry, I'm going the wrong way. So the way that the mini chromosome transcribes is directly knocked out by the ARK-five 20. So this all raises some very interesting questions in terms of how we go forward in terms of our drug development in hepatitis B. Will the capsid inhibitors have an impact in the context of nuke effects on cccDNA? Well, if already the long term anticovirtenofovir treatment patients have got their maximum reduction of 50% of cccDNA, what role is left for the capsid inhibitors that would be required to or as well as packaging would affect transcriptional activity of the mini chromosome as well. As I said, we're trying to develop surrogate assays to measure the effect of cccDNA drops in the liver in relationship to e antigen negative patients especially, looking at the peripheral compartment for those biomarkers. And now we're asking the question, do we need as a basis as a consequence of the ARK-five twenty data, do we also need to get rid of integrated DNA? And if the answer is yes, how will we actually achieve that? And of course, like in the HIV space at the moment, the epigenetic manipulation is important. Are we able to do likewise with HBV? But I think for me, what I've learned from these studies is that the we really do need to address the question about integrated DNA and how we will address that in terms of going forward in our clinical trial. So my own personal thinking in terms of hepatitis B has shifted. And I'm now thinking in terms of e antigen positive and e antigen negative diseases as different diseases, which has been something that the clinical practice guidelines have not really addressed. And not only are they different diseases, but they are different diseases that require different treatment approaches. So what do I mean by that? So again, using our general HBV replication cartoons that we've been looking at this morning. Here is the e antigen positive initial model that I had. What has the RNAi data taught us? It's taught us that probably in a combination of NUC, shown for you in the far right hand Red Cross, the blocking by reverse the process of reverse transcription by the nucleoside nucleotide analog therapy and in combination with the RNAi ARK520, the existing compound that you've heard this morning at the transcriptional level, I think that would be a very effective way of inhibiting HBV replication. But we've also heard this morning that in the setting of e antigen negative chronic hepatitis B, that ARK-five twenty and the NUC are not enough And that what we need is a different approach. And I think one of the exciting parts of this program has been the fact that they've been able to prove that the next generation RNAi inhibitor, ARK-five twenty one, which was targeted really to specifically the surface antigen transcript, as Dave elegantly showed you this morning, that in combination with a new, so you've now got three sites of action with two drugs. You've got the RNAi ARK-five twenty inhibiting the integration phase, ARK-five twenty one RNAi inhibiting the transcriptional phase in combination with the nuc would give you a significant effect on the surface antigen. And so I think you can now see that by putting together five twenty and ANUC, it accounts for the, I believe, the antiviral effects that Arrowhead have been able to show in the e antigen positive patients of greater than one to two logs. And now with the ARK-five twenty one, I believe that they will be successful, enabling to achieve a greater than one log and two log reductions in the e antigen negative patients because of their ARK521 inhibitor. So are we there yet? Almost, I think. So the question that the immunologists will ask is how can we achieve surface antigen seroclearance? How can we reduce this 1% of the total serum burden of protein circulating in our blood? How can we eliminate that and reduce the risk of cirrhosis and liver cancer? And the immunologists have proposed, well, there's two ways that we can get rid of surface antigen or cccDNA out of the liver. There's a cytolytic mechanism, which means that probably you need to promote active T cell killings through CD8 activation pathways to promote and selectively kill the hepatocytes and that these hepatocytes will be replaced by preferably by uninfected hepatocytes diluting the CCC DNA content. The other mechanism that the immunologists have proposed is a noncytolytic mechanism where antiviral cytokines like interferon gamma and TNF alpha on the right of that slide will actually noncytolytically cure the hepatocytes themselves. So I think that when you think about what we've learned from the nucleoside nucleotide analogues, what we've now learned from the ARC-five twenty and the five twenty one data, that and we combine that, I think, with the interferon approaches proposed in the monarch studies, I think that we've now got the best of the best of the best treatment possible for hepatitis B. We're really heading in the right direction. So as a virologist, what do I think is very exciting about these five twenty the ARC-five twenty data? This is the first drug that really has had a direct antiviral effect on serum service antigen. Bang. If for nothing else, that's a fantastic achievement. Also, by the way, e antigen and the C related antigen levels have also been reduced. Now we've learned positive and e antigen negative disease have very different viral patho ideologies and therefore very different approaches clinically to managing these heavy burden of chronic liver disease. And I think this has significant important therapeutic and prognostic significance. So with that, thank you. All right. We have gobbled up one hours point of your life, and I don't want to gobble up too much more. I have two slides to close it up, and then we can take some questions. So what have we done today? What have we shown you today? I think we've demonstrated that the DPC platform works in humans. We've seen deep and consistent knockdown in that which we are targeting, and it's been very well tolerated. We think that has dramatic de risking effects on ARK-five twenty, ARK-five twenty one, ARK AAT and ARK F12. These all use the same TPC. Second, I think that we have demonstrated ARK-five twenty works in humans. Think of that in two ways. First, I think in all patient classes, we should see deep knockdown of non S antigens, non S proteins. So this is core like a core antigen, E antigen, X antigen. And I think more importantly, I think our experts believe that long term disruption of the virus in this way could have dramatic effects towards functional cure. And then second, we've shown a good, very deep knockdown of S antigen in nucinide E positive patients, and we've also shown good knockdown of E antigen in NUC treated patients. Third, ARK-five twenty is well tolerated. We've seen a very attractive safety profile thus far. Fourth, I think we have established a new paradigm or at least proposed a new paradigm for the HPV lifecycle. I think that is that has moved the field forward and certainly informed us as we develop ARK-five twenty and ARK-five 21. And then finally, have expanded our HBV pipeline to include ARK-five twenty one. We think we have an extremely powerful and complete approach to this very difficult virus. And then finally, stay tuned. We have an awful lot of data that will be coming toward you through scientific presentations at conferences and through publications, in journals. For instance, we will present the chimp data in two presentations at ASLD, one poster, one oral, and we expect clinical data to come through publications and presentations as well. We are conducting right now, as we speak, multiple dose Phase 2b studies of ARK-five twenty. We'll be starting monarch combination studies shortly, and we expect ARK-five twenty one to be at IND or equivalent by the middle of next year. So we are excited about where we are. We are very excited about what we've just proven and shown you today. And I think we're in a good place going forward for the rest of this year and of course, 2016 as well. So with that, I'll open the floor up to questions. Ted, on. Can we get a mic on that? Great. Thank you very much for a thorough presentation and certainly some provocative findings. So firstly, when should we get data from Cohort seven? And will it be upon initiation of Monarch that you will disclose those cohorts? So for Cohort seven, and actually for the entire 2,001 study, we'll see if we can get a late breaker at possible, you'll see some stuff there. If we don't, we'll find our earliest possibility for presentation. But it's open label. So we don't have the constraints that we had for Cohorts three, four and five, which we just broke the blind about ten days ago. With Cohorts six and seven, we get to follow them as they go, which gives us the ability to try to find good forms for presenting. Your second question was about Monarch. Well, I think that those initial cohorts at the point that goes into clintrials.gov, it probably will explain what those cohorts are. Okay. And then, I think, Chris, maybe you just answered my next question, which is why still conduct HEPARC-two thousand and three in the E antigen negative patients? Few so in years, for of we're We think ARK-five twenty has great promise, not just for NUC naive E positive patients, but also for other classes of patients because it is clear that we're getting good deep knockdown of, we believe, all non S antigens. So And when you think about that, if you are disrupting the virus to that extent, showing log plus reductions of all the other components associated with this virus, we want to see what that does to normal viral function over time. And by the way, we are knocking down S antigen in those low cccDNA patients. We see good knockdown with those. We just happen to see phenomenal knockdown of S antigen for those NUC naive positive patients. So we are as excited as ever on about ARK-five twenty, and we think it is sort of a combination product unto itself because we're knocking out all these gene products. But then, of course, five twenty one is just more specialized for also knocking down the integrated DNA. Do we need that to get to a functional cure? I don't know. But it makes us more comfortable to have that extra shot on goal, that extra bullet in our gun, if you will. And I'm sorry to monopolize the microphone, but with the second gen DPCs, do they offer the potential to get to a subcu dose? And will you ultimately explore ARK-five twenty DPC2, ARK-five twenty one DPC2? Yes. So both ARK-five twenty and ARK-five twenty one are IV administered. Could we someday have a subcu candidate for HBV? Sure, but it's not something that we're focused on right now. We think that a finite treatment window for either ARK-five twenty and or ARK-five twenty one is a perfectly acceptable drug if we can get to functional cures. I'm just wondering for the Chimp two years ago, was that E positive or E negative? Oh, the Michelle, two years ago, she was E positive. Okay. And then for five twenty one, is that five twenty does five twenty one equal five twenty plus anti dsiRNA? Or is it just going to be more targeted towards dsiRNA? And eventually, you want to do five twenty plus five twenty one or five twenty one is enough? So ARK520 has two siRNAs, both of which target in a similar region toward the three prime end of the viral DNA. And what we did for five twenty one was we took the best of those two, and we combined it with the best RNA targeting integrated. So it's a two component it's also just two. It's not three. It's two RNAs. Got it. Okay. And then lastly, is LTFLAIR necessary for immune reactivation? So there's some controversy there. So you had one E that is converted E plus that is converted, one of the chimps. Did that chimp have a flare? So what is the general consensus now? Do you Maybe we should send that down to either Bob Gish or Steven Lachernini. Let me say one thing on the ChIM. So as we mentioned, we did see signs of immune reactivation in one of the four E positive ChIMs. We hope to have to present more of those data at a later scientific meeting. So we want to not go too much more into that, but relating to the to whether or not we need a flare. Go to Doctor. Gish. So from a hepatology perspective and we were treating hepatitis C, we thought we were going to need to see these flares of ALT for hep C to be cleared. But what we really learned that those immunologic events are going on intracellular really weren't showing up in the blood as a rising ALT level. But probably intracellular, there's a flare or an immune event taking place. So I think ALT flares will be seen in a minority of these, either chimps or humans as we move forward with our data analysis and won't be required. So if we don't see an ALT flare, it's not a negative signal. I think what's going on in the cell, what we're seeing with viral products is key. Steve? Yes. I mean I think the what will be exciting in the next year will be the impact of the lowering the surface antigen will have on the endogenous immune response. I don't think we can predict which way it's going to go. We're just going to see and learn what will happen in the treated patients. But I think the reduction of that antigen burden will have an enormous effect on the endogenous immune response. We're already beginning to see early signs of immune recovery in some of the treated patients. And I think we're watching very closely that space to see what will be the final outcome. Actually, want to make an announcement really quick. So once the presentation is over, a copy of all the slides will be available on our website within thirty minutes after the conclusion. And I also had a question from Michael Yee at RBC that was emailed that I want to present to the panel. So he asks, cccDNA is pretty much nonexistent in e antigen negative patients and integrated DNA for the most part only produces S antigen, yet measurable virus is still being produced. We don't get viral declines in these patients. So millions of infectious particles are still being made. If integrated DNA can't make virus, where is virus in these patients coming from? Doctor. Lakhanini and Doctor. Ghisch, do want to? Yes. I think the our ability is to measure the level of the cccDNA in the liver is it's only the copy number is between one and five per cell across the whole liver lobule. And it's a reflection of technology. So in e antigen positive disease, we see a lot, like 10 copies per cell. In e antigen negative, we see two to three. So that's the sort of level that we're talking about. And the PCR assays that we use, we're right on the level of sensitivity of those particular assays. Obviously, an e antigen negative disease, it's making virus that are infectious. But it's our ability to measure them in terms of a reputable intermediate or a biomarker is the fact that they're just so low. Bob, do you have any comments? I don't want to expand too much on that, but I agree with Stephen's comments. It is a technical aspect of how we measure these molecules. We are pushing the technology pretty close to what our limits are. We are able to see cccDNA in the liver. More importantly, we can see replicative intermediate. So it is just at the threshold of detection in contrast to E positive patients where it's very abundant and easily detected. I think there is the possibility through multiple recombination events that you could reconstruct a full length genome through integrated copies. But I think that would be much more rare and we'd have it would be impossible for us to actually detect that event. Thank you. So on the COR2-seven non nuke e antigen positive patients, the data we were seeing is all six patients? Yes. The six patient, I don't have any post treatment data yet. So the day 15 data four patients. The day eight was five patients. So basically, it's still young data. Okay. If you were presented, I might have missed it. So do we have a data for cohorts of five and six, the e antigen positive patients, but they are on nuke? Yes. I did I showed the Cohort five data. I did show the Cohort six data just because it doesn't differ in any material way. If we wind up getting the opportunity to present this at AASLD, we'll be able to show everything. But here, we really had to stick to just top line data. But six is not materially different than five. Okay. Does this change now your definition of a functional cure, the new information about integrated DNA and so on? Do you want to address that, Doctor. Gish? So we're looking at this in multiple steps. And I would say that functional cure remains S loss DNA undetectable. There's still some controversy about surface antibody positivity, whether that's required or not. And then this sterilizing cure, I'm going to go one step further that we are going to need to eliminate cells that are producing S antigen or potentially other viral proteins from integrated sources because those S antigen proteins are going to modulate the immune system and allow persistent of other hepatocytes that may have replicative intermediates. And so from our perspective also, our definition of functional care has not changed until the experts tell us we should change it. And keep in mind that this goal of S loss is not intended to be directly the result of five twenty, right? We're not we are not trying to take S down to zero with the drug itself. What we're trying to do is disrupt the virus enough to decrease S to a point that the immune system can then take over and then and do the rest of the job for us. Okay. Well, thank you all for coming. It was a pleasure to speak with you today.

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