Assembly Biosciences, Inc. — Q2 2022 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2022. Assembly is a clinical-stage biotechnology company developing therapies for hepatitis B and other viral diseases. It had no approved products and no product-sale revenue.
Financial performance and liquidity
| Metric | Q2 2022 | Q2 2021 | Six months 2022 | Six months 2021 |
|---|---|---|---|---|
| Research and development expense | $17.8 million | $16.7 million | $35.0 million | $35.3 million |
| General and administrative expense | $6.8 million | $6.9 million | $12.7 million | $15.6 million |
| Total operating expenses | $24.6 million | $23.7 million | $47.7 million | $50.9 million |
| Net loss | $24.5 million | $23.6 million | $47.6 million | $50.8 million |
| Net loss per share, basic and diluted | $0.51 | $0.55 | $0.99 | $1.23 |
| Net cash used in operating activities | Not provided for quarter | $45.4 million | $55.2 million |
There was no operating margin to report given the absence of product revenue. At June 30, cash and cash equivalents were $43.1 million and marketable securities totaled $85.5 million, for combined cash, equivalents and securities of $128.6 million. Current assets were $124.3 million and current liabilities $15.0 million. Total liabilities were $19.5 million, including operating lease liabilities; the balance sheet reports no borrowings. Management stated existing cash, equivalents and marketable securities were expected to fund operations for at least 12 months from issuance of the statements. The company reported an accumulated deficit of $679.0 million.
Changes versus comparable periods
- Q2 net loss increased by $0.9 million year over year, while six-month net loss declined by $3.2 million.
- Q2 R&D expense rose 6%, reflecting investment in ABI-H3733, ABI-4334 and research programs, partly offset by lower vebicorvir and ABI-H2158 costs. Six-month R&D was roughly flat; lower external and facility costs were offset by higher employee-related expenses.
- Six-month G&A expense fell 18%, mainly due to lower stock-based compensation, facility costs, professional fees and recruitment costs.
- Operating cash use improved by $9.8 million year over year. Financing provided only $0.2 million in the first half of 2022, versus $40.3 million in the prior-year period, when the company raised $40.2 million through its at-the-market offering.
- Combined cash, equivalents and marketable securities fell by $46.2 million from December 31, 2021. Unrealized losses on marketable securities were $0.6 million for the first half.
Outlook, developments and risks
- In July 2022, after quarter-end, the board approved a strategic refocus: discontinue clinical development of first-generation core inhibitor vebicorvir (VBR), advance ABI-H3733 and ABI-4334, and prioritize research on HBV/HDV entry inhibition, an oral IFNAR agonist and two undisclosed viral targets. The plan included an approximately 30% workforce reduction, to about 70 employees.
- The company cited interim data from VBR triple-combination studies that did not support further VBR clinical studies. Study 203 was terminated early; Study 204 was to continue to assess safety and tolerability. Initial ABI-H3733 Phase 1b data were anticipated in the second half of 2022, and a Phase 1a study of ABI-4334 was planned for that period.
- VBR collaboration with Antios ended after Antios’ ATI-2173 was placed on FDA clinical hold following a safety report. ABI-H2158 development had previously been discontinued after elevated liver enzymes consistent with drug-induced hepatotoxicity.
- The July reorganization was expected to cost $1.7 million in severance and related costs; $1.0 million was accrued at June 30 and a further $0.7 million was expected in the second half of 2022. The board also approved $2.5 million in retention bonuses and equity awards for employees, to be recognized in future periods.
- Funding remains a key risk: the company expects substantial future losses, has no committed external funding source, and may need equity, debt or collaboration financing. Additional financing may be unavailable or dilutive; management said spending could be reduced or programs delayed, scaled back or stopped if funds are insufficient.
- Clinical and research timelines face risks from trial outcomes, regulatory review, CRO and manufacturing reliance, and COVID-related disruptions. China shutdowns affected Study 203; a CRO in Ukraine had temporarily shut down following Russia’s invasion, and work was reallocated. The company also depends on its BeiGene agreement for China-region HBV activity.
- Other notable uncertainties include no assurance that clinical candidates will prove safe or effective, obtain approval or generate revenue; potential loss of expertise and execution challenges from the workforce reduction; and the risk that preliminary study data may differ from final results. No material legal proceedings were reported.
Important facts for investors to verify
- Whether the VBR discontinuation and workforce reduction deliver the expected savings while preserving execution capacity.
- Final and detailed results from the VBR combination studies, including the continuing safety assessment in Study 204.
- Timing and findings from ABI-H3733 and ABI-4334 clinical development, and whether the stated milestones remain achievable.
- Cash burn and runway after the strategic refocus, including restructuring, retention and equity-compensation costs, and the timing and terms of any financing.
- Effects of COVID-related, geopolitical and third-party supply or CRO disruptions on clinical and research schedules.