Assembly Biosciences, Inc. — Q3 2022 Form 10-Q
Reporting period: Quarter and nine months ended September 30, 2022. Assembly is a clinical-stage biotechnology company developing therapies for HBV and other viral diseases; it reported no product sales and has no approved products.
Financial results and liquidity
- Revenue: No collaboration revenue in Q3 or the first nine months of 2022, versus $6.254 million in each 2021 comparison period. The prior-year revenue was a one-time recognition of BeiGene deferred revenue after discontinuing ABI-H2158 development.
- Expenses and losses: Q3 R&D expense was $18.130 million (down 2% year over year) and G&A was $5.271 million (down 21%). Q3 net loss was $23.145 million, or $0.48 per diluted share, versus $18.803 million, or $0.41, in Q3 2021. For nine months, operating expenses were $71.136 million and net loss was $70.697 million, or $1.46 per diluted share, versus $76.053 million and $69.598 million, or $1.63, respectively.
- Cash flow: Operating cash use was $65.209 million for the first nine months, compared with $74.034 million in 2021. Investing activities provided $74.078 million, primarily from maturities and sales of marketable securities; financing provided $0.177 million. Cash and cash equivalents increased to $54.673 million from $45.627 million at year-end.
- Liquidity and debt: Cash, cash equivalents and marketable securities totaled $108.651 million at September 30, 2022, versus $174.599 million at December 31, 2021. Current assets were $115.078 million and current liabilities $15.461 million. The filing reports no debt balance. Management said available funds were expected to cover operating expenses and capital needs for at least 12 months after issuance of the statements, while also stating substantial additional funding will be needed.
- Margins: Not meaningful given the absence of product sales and collaboration revenue in 2022. No operating margin was reported.
Material changes and business developments
- In July, Assembly discontinued further development of first-generation HBV core inhibitor vebicorvir (VBR), following interim results from two triple-combination studies that did not show benefit on key viral measures versus combinations without VBR. Development of ABI-H2158 had already been discontinued in 2021 after elevated liver enzymes consistent with drug-induced liver toxicity.
- The company refocused resources on next-generation core inhibitors ABI-H3733 and ABI-4334 and expanded research into HBV/HDV entry inhibition, an oral liver-focused interferon-α receptor agonist, an HSV-2 helicase inhibitor and a pan-herpes polymerase inhibitor.
- ABI-H3733’s Phase 1b trial began in June 2022; initial data were expected by year-end 2022. ABI-4334’s Phase 1a study began in October 2022. These were management expectations, not reported results.
- The July reorganization reduced the workforce by approximately 30%. The company recorded $1.766 million of restructuring charges through September, had $1.390 million accrued, and expected total charges of approximately $1.8 million through mid-2023.
- In October 2022, Assembly announced that CEO John McHutchison would retire effective December 31, 2022, with President and COO Jason Okazaki elected to become CEO effective January 1, 2023.
Outlook, risks and contingencies
- Assembly expects continuing substantial losses and relies on additional financing, collaborations or other funding; it has no committed external funding source. Equity financing may dilute shareholders, and funding may not be available on acceptable terms.
- Clinical and research timelines and outcomes remain uncertain. Key risks include clinical safety or efficacy setbacks, regulatory delays, reliance on CROs and manufacturers, and COVID-19-related disruption. The filing also describes delays affecting certain studies and compound shipments, including disruption in China; a CRO in Ukraine had resumed operations, but work was reallocated as a precaution.
- The Antios collaboration and related VBR triple-combination study were terminated after Antios’s ATI-2173 was placed on FDA clinical hold in May 2022 following a safety report. The study was being closed.
- There were no material legal proceedings reported. Management concluded disclosure controls were effective; no material change in internal control over financial reporting was reported.
Most important facts for investors to verify
- Whether ABI-H3733 and ABI-4334 clinical data support continued development, and whether expected milestones were achieved.
- Current cash runway, actual cash burn, and any proceeds or share issuance from the October 2022 ATM activity; the filing gives no amount for that post-quarter activity.
- Whether the workforce reduction and pipeline reprioritization deliver expected cost savings without materially impairing execution.
- Leadership transition completion and any resulting operational or strategic changes.
- Updates on clinical holds, study close-outs, CRO and supply-chain disruptions, and the company’s ability to secure future funding.