Assembly Biosciences, Inc. — Q2 2023 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2023. Financial amounts are in U.S. dollars; figures below are in millions unless otherwise noted. Assembly is a clinical-stage antiviral biotechnology company with no approved products and no product-sales revenue.
Financial results and liquidity
| Metric | Q2 2023 | Q2 2022 | Six months 2023 | Six months 2022 |
|---|---|---|---|---|
| Revenue | No product revenue reported | No product revenue reported | No product revenue reported | No product revenue reported |
| Research and development expense | $12.5 | $17.8 | $27.1 | $35.0 |
| General and administrative expense | $5.0 | $6.8 | $10.0 | $12.7 |
| Net loss | $(16.9) | $(24.5) | $(35.8) | $(47.6) |
| Net loss per share | $(0.32) | $(0.51) | $(0.69) | $(0.99) |
| Cash used in operating activities | Not separately presented | Not separately presented | $(37.1) | $(45.4) |
At June 30, 2023, cash and cash equivalents were $21.6 and marketable securities were $38.2, compared with $52.4 and $39.2, respectively, at December 31, 2022. Total current assets were $64.1 and current liabilities $8.8; total assets were $66.6 and total liabilities $11.6. The balance sheet reports no borrowings; liabilities primarily include lease obligations, accrued expenses and $2.7 of deferred revenue. Operating margins are not meaningful given the absence of product revenue.
Cash and cash equivalents declined by $30.8 in the first half. Investing activities provided $1.6, mainly from net maturities of marketable securities; financing activities provided $4.6, including net ATM proceeds of $4.5 from issuing 3.13 million shares. Management stated existing cash, cash equivalents and marketable securities were expected to fund operations for at least 12 months after issuance of the financial statements. The company nevertheless expects to need substantial additional funding.
Changes versus prior comparable periods
- Q2 net loss narrowed by $7.6 year over year; first-half net loss narrowed by $11.7. Lower R&D and G&A expenses drove the improvement, partly offset by higher interest and other income.
- R&D expense fell 30% in Q2 and 23% in the first half. Management attributed the reductions mainly to lower spending on discontinued VBR and 2158 programs, lower prior-year clinical start-up costs, and workforce reductions; spending on 5366 and discovery research partly offset the decline.
- G&A expense declined 27% in Q2 and 22% in the first half, primarily due to lower salary, benefit, legal and overhead costs.
- Operating cash use decreased to $37.1 from $45.4 in the first half, while cash and cash equivalents fell more sharply in 2023 partly because the prior-year period included substantially higher net investment-security proceeds.
Business, outlook and material developments
- The pipeline includes next-generation HBV core inhibitors ABI-H3733 and ABI-4334; the herpes candidate ABI-5366; and discovery programs for HBV/HDV entry inhibition, liver-focused interferon signaling and transplant-associated herpesviruses. Assembly is evaluating partners for its core-inhibitor portfolio before further clinical development.
- ABI-5366 was nominated for IND-enabling studies. GLP toxicology studies began in early Q3 2023, and management anticipated initiating clinical studies in the first half of 2024. This is a forward-looking target, not a guarantee.
- Phase 1 data for ABI-4334 and Phase 1b data for ABI-H3733 showed encouraging pharmacokinetic and antiviral findings as described by the company. However, a 26-week chronic toxicology study of ABI-H3733 identified a toxicity in one species not seen in the earlier 28-day study. Management said further assessment, and likely additional chronic toxicology work, would be needed before longer-term Phase 2 dosing.
- The Arbutus collaboration Phase 2 trial was terminated early in February 2023, at the end of the 48-week on-treatment period, and was being closed. Cost reimbursements reduced R&D expense by $0.5 in Q2 and $1.1 in the first half; these are not reported as revenue.
- The 2022 restructuring reduced the workforce by approximately 30% and refocused the pipeline. No restructuring charges were incurred in the first half of 2023; $0.1 of accrued charges remained and was expected to be paid in Q3.
- After quarter-end, Assembly entered an office and laboratory sublease expected to begin in November 2023 for 24 months, with monthly base rent of $0.1 and an option to extend.
Risks, contingencies and investor verification points
- Funding access is a key risk: no committed external funding source exists, and additional capital may be unavailable or dilutive. The company says it may need to reduce staff, delay, scale back or stop programs if funding or collaboration support is insufficient.
- Development remains subject to clinical and nonclinical safety and efficacy results, regulatory requirements, manufacturing and CRO execution, and timing uncertainty. A CRO in Ukraine had resumed operations, but some work was reallocated as a contingency.
- Verify the company’s cash runway assumptions, subsequent cash use and financing plans; management’s stated runway is not assurance that capital will be available thereafter.
- Track partnering progress for the core-inhibitor portfolio and the implications of the ABI-H3733 toxicology finding for further development.
- Monitor ABI-5366 toxicology and the stated first-half 2024 clinical-start target, and confirm whether any additional clinical or safety disclosures change the outlook.
- Assess dilution from equity financing: 52.45 million shares were outstanding at June 30, 2023, and 52.61 million at August 4, 2023. The filing reports no material legal proceedings; it identifies no formal revenue or earnings guidance.