Assembly Biosciences, Inc. — Q1 2022 Form 10-Q
Reporting period: Three months ended March 31, 2022; filed May 12, 2022. Assembly is a clinical-stage biotechnology company developing therapies for hepatitis B (HBV), hepatitis D (HDV), and other viral diseases. It had no approved products and generated no product-sales revenue.
Financial results and liquidity
| Metric | Q1 2022 | Q1 2021 | Change / context |
|---|---|---|---|
| Revenue | None reported | None reported | No product sales; no BeiGene collaboration revenue recognized in either period. |
| Research and development expense | $17.2 million | $18.6 million | Down 7%; lower VBR and discontinued-program costs partly offset by increased spending on newer programs and research. |
| General and administrative expense | $6.0 million | $8.7 million | Down 32%, including lower stock-based compensation and facility costs. |
| Total operating expenses / operating loss | $23.2 million | $27.3 million | Operating loss narrowed with lower expenses. |
| Net loss | $23.1 million | $27.2 million | Basic and diluted loss per share was $0.48 versus $0.69. |
| Operating cash flow | $(27.5) million | $(33.3) million | Cash use fell year over year. |
| Cash, cash equivalents and marketable securities | $146.5 million | — | At March 31, 2022; includes $51.2 million cash and cash equivalents and $95.3 million marketable securities. |
| Total assets / total liabilities | $162.7 million / $15.9 million | — | Liabilities principally included operating lease obligations and $2.7 million deferred revenue. No borrowings are reported on the balance sheet. |
Margins are not meaningful because the company reported no revenue. Net cash provided by investing activities was $33.0 million, primarily from marketable-security maturities and sales, rather than operating cash generation. Financing cash flow was zero; Q1 2021 included $34.1 million of net ATM offering proceeds. Management stated existing cash, cash equivalents and marketable securities should fund operations and capital requirements for at least 12 months after issuance of the financial statements.
Material changes and business developments
- Research and development expense decreased, reflecting lower VBR costs after termination of Studies 211 and 205, discontinuation of ABI-H2158 and the Microbiome program, and cost sharing on combination studies. Spending increased on ABI-H3733, ABI-4334 and research discovery.
- General and administrative expense fell, in part because of reduced stock-based compensation, lower facility costs following Microbiome-related lease terminations, and lower recruitment and professional fees.
- Weighted-average shares outstanding rose to 48.1 million from 39.7 million year over year, primarily reflecting the 2021 ATM share issuance. The company issued no shares through the ATM in Q1 2022.
- At March 31, 2022, accumulated deficit was $654.5 million. Stockholders’ equity was $146.8 million, down from $168.9 million at year-end 2021.
Outlook, commentary and risks
- Management expects substantial ongoing losses and says additional funding will be needed over time. No external funding source is committed; future financing could dilute shareholders or require less favorable terms. If funding is unavailable, the company may delay, reduce or stop programs.
- Two Phase 2 triple-combination studies completed enrollment in Q1 2022. Interim on-treatment results were expected in the second half of 2022. A third VBR combination study with Antios began in April 2022; removing a planned Ukraine site because of Russia’s invasion is expected to delay its data readout.
- The company expected to begin a Phase 1b study of ABI-H3733 in chronic HBV patients in the first half of 2022, and aimed to start an ABI-4334 Phase 1a study in the second half of 2022. These are forward-looking plans, not reported outcomes.
- COVID-19 disruptions, including China’s zero-COVID lockdowns, affected execution of a combination study, CRO operations, shipping and research activities. Enrollment delays in the two earlier studies had been resolved, but further impacts remained uncertain.
- ABI-H2158 development was discontinued in 2021 after elevated ALT levels consistent with drug-induced liver toxicity. In Study 211, all patients relapsed after stopping VBR-based treatment, and the company concluded the studied double combination did not achieve a cure.
- The company terminated its Door Pharma collaboration in May 2022, effective September 2022, to focus resources on internal HBV programs and other viral targets. The company also identified risks from clinical-trial failure or delay, reliance on CROs and manufacturers, competition, regulatory approval uncertainty and the need for further capital.
- The filing reports no material legal proceedings and no material changes to previously disclosed contractual obligations. Disclosure controls were considered effective; no material change in internal control over financial reporting was reported.
Most important facts for investors to verify
- Whether the planned 2022 clinical milestones and interim data readouts occurred on schedule, and what the final data show about safety and antiviral activity.
- Whether China-related restrictions, CRO or supply-chain issues, and the loss of the Ukraine site further affect trial execution or timelines.
- Whether the stated minimum 12-month liquidity outlook remains adequate as operating cash use continues, and when additional financing may be required.
- Whether new pipeline programs, including ABI-H3733, ABI-4334 and HBV/HDV entry inhibition, advance as planned and support the company’s development strategy.