Assembly Biosciences, Inc. — Form 10-Q Summary
Reporting period: Quarter ended September 30, 2023; filed November 8, 2023. Assembly is a clinical-stage antiviral biotechnology company with no approved products and no product-sales revenue.
Financial performance and position
| Metric | Q3 2023 | Q3 2022 | Nine months 2023 | Nine months 2022 |
|---|---|---|---|---|
| Revenue | No product-sales revenue | No product-sales revenue | No product-sales revenue | No product-sales revenue |
| Research and development expense | $10.8 million | $18.1 million | $37.9 million | $53.1 million |
| General and administrative expense | $4.2 million | $5.3 million | $14.2 million | $18.0 million |
| Net loss | $14.4 million | $23.1 million | $50.3 million | $70.7 million |
| Net loss per share, basic and diluted | $0.27 | $0.48 | $0.97 | $1.46 |
At September 30, 2023, cash and cash equivalents were $26.7 million and marketable securities were $19.6 million, totaling $46.2 million. Total assets were $51.6 million; current liabilities were $7.1 million; total liabilities were $9.9 million. The filing reports no borrowings or other financial debt; lease liabilities were $0.9 million current and $0.1 million long term. Accumulated deficit was $774.8 million. Operating margins are not meaningful because the company has no product revenue.
For the first nine months of 2023, operating cash use was $50.9 million, investing cash provided was $20.5 million, and financing cash provided was $4.6 million, including $4.5 million net proceeds from ATM share sales. Cash and cash equivalents fell by $25.8 million from year-end 2022. The company also held $19.6 million of marketable securities at quarter-end.
Changes versus the comparable period
- Q3 net loss narrowed by $8.7 million year over year; nine-month net loss narrowed by $20.4 million.
- Q3 R&D expense fell 40% and nine-month R&D expense fell 29%, primarily reflecting discontinued VBR and ABI-H2158 work, completion of specified trials, and the 2022 workforce restructuring. Spending on candidate ABI-5366 increased.
- G&A expense declined 20% in Q3 and 21% for the nine-month period, mainly due to reduced personnel-related and professional costs.
- Nine-month weighted-average shares increased to 52.0 million from 48.3 million, including ATM issuance; 52.6 million shares were outstanding at September 30.
Outlook, developments and risks
- Gilead transaction after quarter-end: On October 15, 2023, Assembly entered a 12-year collaboration and equity agreements with Gilead. It received $100 million: $84.8 million upfront under the collaboration and $15.2 million for 13,073,668 shares at $1.16 per share. This cash was not included in September 30 balances. Management said available funds, including the transaction proceeds, were expected to fund operations into the second half of 2025; the notes also state management believed funds were sufficient for at least 12 months after issuance of the statements.
- Gilead licensed Assembly two antiviral programs and retained opt-in rights to those and other current and future programs. Opt-in fees range from $45 million to $125 million per program; potential regulatory and commercial milestones may reach $330 million per program, plus royalties. These are contingent, not assured proceeds. Gilead also committed extension fees of $75 million in years three, five and seven, subject to the agreement. Assembly expects expenses to increase as programs advance.
- Gilead may acquire additional shares, subject to conditions and stockholder approval, potentially reaching 29.9% ownership under specified arrangements; it also has certain rights to purchase shares and designate two directors. The filing notes Gilead owned approximately 19.9% after the initial equity investment.
- Pipeline timing disclosed: Assembly anticipated clinical studies of ABI-5366 by mid-2024; a Phase 1b study of HBV candidate ABI-4334 by mid-2024; and clinical studies of HDV/HBV entry inhibitor ABI-6250 by the end of 2024. These are forward-looking targets, not guarantees.
- The company has no approved products, continues to incur substantial losses, and expects to need additional financing. Clinical outcomes, regulatory review, manufacturing, collaborator decisions and market access may delay or prevent development; future equity financing could dilute shareholders.
- Other stated risks include dependence on Gilead and CROs, geopolitical disruption affecting vendors (including a CRO in Ukraine), inflation and capital-market conditions, and the possibility that preclinical or early clinical results may not predict later outcomes.
- Assembly received a Nasdaq notice because its share price had been below $1 for 30 consecutive business days. It had until March 25, 2024 to regain compliance, with a possible additional 180-day period if eligible. Failure could lead to delisting.
- The company entered a 24-month sublease for new South San Francisco office and laboratory space, with $2.6 million of aggregate future lease payments; it had not commenced at quarter-end. No material legal proceedings were reported. Disclosure controls were concluded effective.
Important facts for investors to verify
- Whether Gilead collaboration programs progress, whether Gilead exercises any opt-in rights, and the terms and timing of any contingent fees or milestones.
- Actual cash burn and runway after the $100 million October receipt, including increased R&D spending and lease commitments.
- Progress and safety data for ABI-4334, ABI-5366 and ABI-6250 against the company’s stated clinical-start targets.
- Nasdaq bid-price compliance status and any resulting effects on listing, liquidity or financing capacity.
- Potential dilution from Gilead’s equity rights, future capital raises and outstanding equity awards.