NEW YORK, May 17 (Reuters) - Whitefort Capital Management is urging Arbutus Biopharma to stop issuing shares and launch a strategic review this year to find a potential partner for its hepatitis B virus treatment portfolio, according to a letter seen by Reuters.

The New York-based investment firm owns 6.8% of the Warminster, Pennsylvania headquartered clinical-stage biopharmaceutical company and criticized the company for using share sales to fund its hepatitis research in the letter.

This practice hurts investors through dilution, the investment firm argued, adding Arbutus' hepatitis treatment program could have more success by partnering with a larger biopharmaceutical company that has relevant clinical expertise and commercial infrastructure.

"We firmly believe that the Board must act with urgency to end new share issuances, limit dilution from its 2016 Plan, explore strategic options for its HBV (hepatitis) portfolio by yearend and judiciously allocate capital until then," Joseph Kaplan, Whitefort's co-managing partner wrote in the letter sent on Friday.

An Arbutus representative did not immediately respond to a request for comment.

The investment firm argues that continued share sales would hurt Arbutus shareholders as they wait for the conclusion of patent infringement claims against Moderna and Pfizer related to their COVID-19 vaccines.

"Arbutus' share of patent infringement claims against Moderna and Pfizer/BioNTech is potentially worth billions of dollars, or multiples of the current Arbutus market capitalization," Kaplan wrote.

Whitefort said it would vote against a proposal that would increase the amount of shares issued under its incentive program at the annual meeting next week.

The investment firm is also pushing for a different future for Arbutus' portfolio of hepatitis therapies.

"We believe that the Company should hire a financial advisor by the end of 2024 to explore strategic alternatives for its HBV portfolio, including potential license and collaboration agreements and other strategic partnerships," the letter said. (Reporting by Svea Herbst-Bayliss; Editing by Jamie Freed)