Assembly Biosciences, Inc. — FY2023 Form 10-K
Reporting period: Fiscal year ended December 31, 2023. Amounts are in U.S. dollars; financial figures below are in millions unless otherwise noted. The company is a clinical-stage biotechnology company with no approved products and no product-sales revenue.
Business context and pipeline
Assembly is developing antiviral therapies for recurrent genital herpes (HSV), hepatitis delta (HDV), hepatitis B (HBV), and transplant-associated herpesviruses. Its programs include ABI-5366 and ABI-1179 (HPIs for HSV), ABI-6250 (an oral HDV/HBV entry inhibitor), ABI-4334 (a next-generation HBV capsid assembly modulator), and earlier-stage NNPI and IFNAR agonist research programs.
Financial performance and liquidity
| Metric | FY2023 | FY2022 |
|---|---|---|
| Collaboration revenue | $7.2 | $0 |
| Research and development expense | $48.9 | $70.0 |
| General and administrative expense | $22.9 | $24.1 |
| Operating loss | $(64.6) | $(94.1) |
| Interest and other income, net | $3.5 | $1.0 |
| Net loss | $(61.2) | $(93.1) |
| Net loss per share, basic and diluted | $(13.38) | $(23.08) |
| Net cash provided by (used in) operating activities | $22.7 | $(84.5) |
The revenue recognized in 2023 comprised $4.4 million under the Gilead collaboration and $2.7 million of deferred BeiGene revenue following discontinuation of the ABI-H3733 program; it was not product-sales revenue. The positive operating cash flow principally reflected Gilead-related upfront proceeds and deferred revenue, rather than profitable operations.
At year-end, cash and cash equivalents were $19.8 million and marketable securities were $110.4 million, totaling $130.2 million. Current assets were $133.8 million and current liabilities were $39.2 million. Total liabilities were $95.7 million, including $86.3 million of deferred revenue and $2.3 million of operating lease liabilities; the balance sheet reports no borrowings. Accumulated deficit was $785.7 million. Management estimated available cash, cash equivalents and marketable securities would fund operations into the second half of 2025, while cautioning that assumptions could prove incorrect. The filing does not provide a meaningful product gross margin; the company had no product sales.
Material changes versus FY2022
- Net loss narrowed by $31.9 million, primarily as R&D expense fell $21.1 million (30%) and interest income increased $2.4 million. R&D reductions reflected discontinued or paused programs and lower staffing costs; spending on ABI-5366 and ABI-6250 increased.
- Cash and marketable securities rose from $91.6 million to $130.2 million, largely following the $100.0 million received from Gilead in October 2023. Cash and cash equivalents alone declined from $52.4 million to $19.8 million as funds were shifted into marketable securities and used in operations.
- Gilead became a strategic partner and a 19.9% shareholder. The company issued Gilead 1,089,472 shares for a stated $15.2 million investment and received an $84.8 million collaboration upfront payment. The company recognized $4.4 million of Gilead collaboration revenue in 2023.
- Assembly discontinued or deprioritized legacy HBV candidates, including VBR, ABI-H2158 and ABI-H3733, and focused development on ABI-4334 and newer programs.
Outlook, risks and unusual items
- As stated in the filing, management expected to begin ABI-4334 Phase 1b studies and ABI-5366 clinical studies by mid-2024; ABI-1179 and ABI-6250 Phase 1 studies were expected by year-end 2024. These are forward-looking expectations, not guarantees.
- Under the 12-year Gilead agreement, Gilead has program-by-program opt-in rights, with fees of $45 million to $125 million per program, and Assembly may be eligible for up to $330 million in milestones per opted-in program plus royalties. Potential extension fees are $75 million in each of years three, five and seven. These are contingent and not assured revenue.
- Assembly may require, or Gilead may elect, an additional share purchase that could bring Gilead’s ownership to 29.9%, subject to agreement conditions, including a qualifying equity financing by July 15, 2024 for Assembly’s requirement to apply. This could affect ownership and governance.
- Key risks include clinical and regulatory failure or delay, continued losses and future financing needs, dependence on Gilead and third-party research and manufacturing providers, competition, and intellectual-property and supply risks. Management said cash resources could be used sooner than estimated; additional financing may dilute shareholders.
- A 1-for-12 reverse stock split became effective February 9, 2024 after Nasdaq minimum-bid-price noncompliance; the company reported regaining compliance on February 27, 2024. The filing reports no material legal proceedings or cybersecurity incidents that materially affected or were reasonably likely to materially affect the company.
Important facts for investors to verify
- Whether actual cash, marketable securities, spending and financing activity support the stated runway into the second half of 2025.
- Whether the anticipated clinical starts occurred, and what trial results, safety findings and regulatory feedback show.
- Progress and terms of any Gilead opt-ins, future payments, collaboration extensions, or additional equity purchases; distinguish contingent opportunities from cash already received.
- Whether spending reductions are sustainable as clinical programs advance, and how any future equity financing could dilute shareholders.
- How the discontinued HBV programs, termination of the Indiana University license effective April 2024, and reverse split affect the company’s pipeline, rights and share count.