Assembly Biosciences, Inc. — Q1 2023 Form 10-Q
Business context and reporting period. The unaudited quarter ended March 31, 2023. Assembly is a clinical-stage biotechnology company developing antiviral therapies for herpesviruses, HBV and HDV. It has no approved products and has not generated product-sales revenue.
Key financial results
| Metric | Q1 2023 | Q1 2022 |
|---|---|---|
| Research and development expense | $14.5 million | $17.2 million |
| General and administrative expense | $5.0 million | $6.0 million |
| Total operating expenses | $19.6 million | $23.2 million |
| Net loss | $19.0 million | $23.1 million |
| Basic and diluted loss per share | $0.37 | $0.48 |
| Cash used in operating activities | $23.4 million | $27.5 million |
Revenue and operating margins are not meaningful because the company has no product sales. Interest and other income was $0.6 million, versus $0.1 million a year earlier.
- At March 31, cash and cash equivalents were $43.5 million and marketable securities were $29.5 million, totaling $73.0 million, compared with $91.6 million at year-end 2022.
- Total assets were $83.1 million; total liabilities were $12.8 million, including operating lease liabilities and $2.7 million of deferred revenue. The filing reports no borrowings or debt balance.
- Management said existing cash, cash equivalents and marketable securities were expected to fund operations and capital needs for at least 12 months from issuance of the statements.
Material changes and operating developments
- Operating expenses fell 16% year over year. R&D decreased 15%, reflecting the 2022 workforce reduction and lower costs for discontinued programs and 4334 trial start-up; spending increased in discovery research and on 3733. G&A declined 16%, primarily due to lower salaries and benefits.
- Operating cash use improved year over year, though Q1 2023 included payment of 2022 annual bonuses. The company raised $4.5 million net through its at-the-market program by issuing 3.05 million shares; no ATM shares were sold in Q1 2022.
- Stockholders’ equity declined to $70.3 million from $82.7 million at December 31, 2022, primarily reflecting the quarterly net loss, partly offset by ATM proceeds.
Outlook, commentary and risks
- In April 2023, Assembly said it was evaluating potential partners for its HBV core inhibitor portfolio before further clinical development of ABI-4334 and ABI-H3733. A suitable agreement is not assured and could affect whether or how these candidates advance.
- The company nominated HSV-2 candidate ABI-5366 for IND-enabling studies and anticipated starting clinical studies in the first half of 2024. This is a target, not a guarantee.
- ABI-H3733 Phase 1b interim results showed HBV DNA below the lower limit of quantification in the reported 50 mg and 100 mg cohorts; reported treatment-emergent adverse events and laboratory abnormalities were Grade 1 or 2. A 26-week nonclinical toxicology study identified a toxicity in one species not seen in an earlier 28-day study. Further assessment, potentially including another chronic toxicology study, may add development time and cost.
- The Arbutus-partnered Phase 2 combination trial was terminated early in February 2023, at the end of the 48-week on-treatment period, and was being closed.
- Assembly expects continued losses and substantial funding needs. It has no committed external funding source; inability to raise capital or secure favorable collaborations could force spending reductions or delays to research and clinical programs. Other disclosed risks include clinical and regulatory uncertainty, reliance on CROs and manufacturers, and geopolitical and market volatility.
- The 2022 restructuring reduced the workforce by about 30%; the company expected remaining restructuring accruals to be paid by mid-2023. No material legal proceedings were reported. Disclosure controls were assessed as effective.
Important facts for investors to verify
- Whether partnering for the core inhibitor portfolio is secured, and on what terms.
- Whether the ABI-H3733 toxicology finding changes its development path, and whether further assessment supports continued development.
- Whether ABI-5366 enters clinical testing on the stated first-half 2024 target.
- Quarterly cash burn, remaining liquid resources and the assumptions supporting management’s stated 12-month funding outlook.
- Further share issuance and dilution under the ATM program, and the timing and consequences of closing the Arbutus trial.