Assembly Biosciences Inc
Annual Report 2022

Plain-text annual report

2022 Annual Report I am incredibly proud of our exceptional team, their steadfast commitment and the novel antiviral pipeline we have advanced to further our ultimate goal of improving patients’ lives. To our stockholders: 2022 was a year of important progress for Assembly Bio. We took significant steps forward in pursuit of our ambitious mission to change the path of chronic viral diseases and improve the lives of patients around the world. The past year was also not without its challenges. Operating in a difficult biotech environment, we made tough, but necessary, decisions to focus and prioritize our clinical development and research efforts through an organizational restructuring. Amid a period of volatility and change, Assembly Bio responded with agility, resilience and purpose, relying on our unwavering dedication to the science that informs our strategic decision-making and guides our execution. Improving lives through innovative viral therapeutics As a scientific leader in viral therapeutics, Assembly Bio is committed to delivering life- changing therapies for people struggling with chronic hepatitis B virus (HBV), hepatitis delta virus (HDV) and herpesvirus infections. In 2022, we accelerated our discovery research programs and advanced our clinical pipeline of next-generation HBV core inhibitors. As a result, we enter 2023 well-positioned to reach our upcoming milestones and deliver value for patients and stockholders. Advancing research programs with the greatest promise Leveraging our team’s proven expertise in virologic drug development, we made tangible progress in 2022 to expand our discovery pipeline through the introduction of four new research programs, all with clinically validated drug targets. This includes the introduction of two novel small molecule approaches with potential activity against both HBV and HDV. Beyond viral hepatitis, we are also excited about our two new programs targeting herpesviruses, including our first development candidate outside of HBV, ABI-5366 (5366), a long-acting helicase inhibitor aimed at addressing the significant unmet need in high-recurrence genital herpes caused by herpes simplex virus type 2 (HSV-2). We expect to advance 5366 into the clinic in the first half of 2024 and to nominate a second development candidate from an additional new program later this year. Progressing HBV clinical development In 2022, we also made progress in our HBV core inhibitor clinical pipeline. Our drug development efforts for HBV are taking place against the backdrop of a disease in urgent need of a cure. There are an estimated 296 million cases of chronic HBV globally, contributing to an estimated 820,000 deaths each year. Mindful of this critical patient need, we have made a series of data-driven decisions around our core inhibitor pipeline candidates that we believe will help advance the field closer to finite and curative therapies. In the first half of 2022, we completed enrollment in two triple combination studies for our first- generation investigational core inhibitor, vebicorvir (VBR). While interim data from these studies showed that VBR continues to be a strong antiviral with a favorable safety profile, they also showed that VBR is not likely to achieve finite therapy or cure. Based on this evidence, we decided in mid-2022 to discontinue development of VBR to prioritize our discovery research pipeline and next-generation core inhibitors. ABI-H3733 (3733) and ABI-4334 (4334) are Assembly Bio’s highly potent next-generation core inhibitors designed specifically for greater potency than VBR against the formation of cccDNA, the second mechanism of action of core inhibitors. Last year, we initiated a Phase 1b trial for 3733 and a Phase 1a study for 4334, announcing initial data from both studies in December. Subsequently, based on clinical and nonclinical data through mid-March 2023, including results from the ongoing Phase 1 studies of both candidates and a chronic toxicology observation for 3733, we decided to pause 3733 and prioritize 4334 given its greater potency and encouraging clinical profile. Looking ahead, we plan to report clinical data from the final 200 mg multiple-dose Phase 1a cohort for 4334 by the end of April. Fulfilling our commitment to operational excellence With our refocused research and development efforts centered on our most promising compounds, we strongly believe in our ability to build on our progress to-date and position Assembly Bio for long-term growth. As efficient stewards of our financial resources, we have a cash runway that is projected to fund our operations into mid-2024. Undoubtedly, 2022 was a year of progress and change for Assembly Bio — and for me as well. Following the retirement of John G. McHutchison, A.O., M.D., as chief executive officer at the end of the year, I am honored to now lead our team forward as CEO and join our Board of Directors. I am incredibly proud of our exceptional team, their steadfast commitment and the novel antiviral pipeline we have advanced to further our ultimate goal of improving patients’ lives. I believe our future holds much promise for the important work we do. I look forward to reporting our continued pipeline progress to patients, the scientific and medical community and our dedicated stockholders. On behalf of all of us at Assembly Bio, thank you for your continued support. Sincerely, Jason A. Okazaki Chief Executive Officer and President UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2022 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition Period from __________ to __________ Commission File Number: 001-35005 ASSEMBLY BIOSCIENCES, INC. (Exact name of registrant specified in its charter) Delaware (State or Other Jurisdiction of Incorporation or Organization) 20-8729264 (I.R.S. Employer Identification No.) 331 Oyster Point Blvd., Fourth Floor South San Francisco, California 94080 (Address of Principal Executive Offices) Registrant’s telephone number, including area code: (833) 509-4583 Securities Registered Pursuant to Section 12(b) of the Exchange Act: Trading Symbol(s) ASMB Securities Registered Pursuant to Section 12(g) of the Act: None Title of Each Class Common Stock, $0.001 Par Value Name of Exchange on which Registered The Nasdaq Global Select Market Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ☐ No ☒ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐ Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.45 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act: Large accelerated filer Accelerated filer ☐ ☐ Non-accelerated filer ☒ Smaller reporting company Emerging growth company ☒ ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262 (b)) by the registered public accounting firm that prepared or issued its audit report. ☐ If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐ Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒ The aggregate market value of the voting stock held by non-affiliates of the registrant, as of June 30, 2022, was $100.5 million. Such aggregate market value was computed by reference to the closing price of the common stock as reported on the Nasdaq Global Select Market on June 30, 2022. For purposes of making this calculation only, the registrant has defined affiliates as including only (1) directors, (2) executive officers and (3) certain stockholders, if any, that hold greater than 10% of the voting stock of the registrant, in each case, as of June 30, 2022. Shares of common stock held by other persons, including certain other holders of more than 10% of the registrant’s outstanding common stock, if any, have not been excluded from the above calculation in that such persons are not deemed to be affiliates. The determination of affiliate status is not necessarily a conclusive determination for other purposes. As of March 20, 2023, there were 51,946,918 shares of the registrant’s common stock, $0.001 par value per share, outstanding. DOCUMENTS INCORPORATED BY REFERENCE Part III of this Annual Report on Form 10-K incorporates information by reference to portions of the definitive proxy statement for the Company’s Annual Meeting of Stockholders to be held in 2023, to be filed within 120 days of the registrant’s fiscal year ended December 31, 2022. [This page intentionally left blank] ASSEMBLY BIOSCIENCES, INC. TABLE OF CONTENTS Business PART I Item 1. Item 1A. Risk Factors Item 1B. Unresolved Staff Comments Item 2. Item 3. Item 4. PART II Item 5. Properties Legal Proceedings Mine Safety Disclosures Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities [Reserved] Management’s Discussion and Analysis of Financial Condition and Results of Operation Item 6. Item 7. Item 7A. Quantitative and Qualitative Disclosures about Market Risk Financial Statements and Supplementary Data Item 8. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Item 9A. Controls and Procedures Item 9B. Other Information Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections PART III Item 10. Directors, Executive Officers and Corporate Governance Item 11. Item 12. Executive Compensation Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Certain Relationships and Related Transactions, and Director Independence Principal Accountant Fees and Services Exhibits, Financial Statement Schedules Form 10-K Summary Item 13. Item 14. Item 15. Item 16. Financial Statements Page 1 20 32 32 33 33 34 34 35 48 48 48 48 48 48 49 49 49 50 51 52 54 F-1 i References to Assembly Biosciences, Inc. Throughout this Annual Report on Form 10-K, the “Company,” “Assembly Bio,” “Assembly,” “we,” “us,” and “our,” except where the context requires otherwise, refer to Assembly Biosciences, Inc. and its consolidated subsidiaries, and “our board of directors” or “the Board” refers to the board of directors of Assembly Biosciences, Inc. Forward-Looking Statements This Annual Report on Form 10-K contains “forward-looking statements” that are subject to certain risks and uncertainties, including, without limitation, those set forth in Part I, Item 1A under the heading “Risk Factors,” that could cause actual results to materially differ. Such risks and uncertainties include, among other things: • • • • • • our ability to maintain financial resources necessary to continue our research activities, clinical studies and other business operations; our ability to initiate and complete clinical studies involving our therapeutic product candidates, including studies contemplated by clinical collaboration agreements, in the anticipated timeframes; safety and efficacy data from clinical or nonclinical studies may not warrant further development of our product candidates; clinical and nonclinical data presented at conferences may not differentiate our product candidates from other companies’ candidates; results of nonclinical studies may not be representative of disease behavior in a clinical setting and may not be predictive of the outcomes of clinical studies; and continued development and commercialization of ABI-H3733, if successful, in the China territory will be dependent on, and subject to, our collaboration agreement governing our HBV-related activity in the China territory. You are urged to consider statements that include the words may, will, would, could, should, might, believes, hopes, estimates, projects, potential, expects, plans, anticipates, intends, continues, forecast, designed, goal or the negative of those words or other comparable words to be uncertain and forward-looking. In particular, forward-looking statements include, but are not limited to, statements regarding the timing of commencement of future clinical studies involving our therapeutic product candidates; and our ability to successfully complete, and receive favorable results in, clinical trials for our product candidates. We intend such forward-looking statements to be covered by the safe harbor provisions contained in Section 27A of the Securities Act of 1933, as amended (the Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act). Except as required by law, we assume no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. ii PART I Item 1. Business Overview We are a biopharmaceutical company advancing clinical candidates with the potential to improve the lives of millions of people living with chronic hepatitis B virus (HBV) infection around the world, an early-stage development program targeting high-recurrence genital herpes associated with herpes simplex virus type 2 (HSV-2) infection and research programs focused on the discovery of novel antivirals to treat devastating viral diseases, including hepatitis delta virus (HDV) and transplant-related herpesviruses. In July 2022, we implemented a strategic restructuring plan to: (1) discontinue development of our first-generation core inhibitor (CI), vebicorvir (VBR), based on review of interim on-treatment efficacy data from then ongoing triple combination studies that did not support continuation; (2) advance our next-generation CIs, ABI-H3733 (3733) and ABI-4334 (4334), in clinical studies; and (3) prioritize research activities, including our: HBV/HDV entry inhibitor; orally bioavailable, liver-focused interferon-α (IFN-α) receptor (IFNAR) agonist; long-acting HSV-2 helicase inhibitor targeting high-recurrence genital herpes; and programs targeting pan-herpes non-nucleoside polymerase inhibitors (NNPIs) for transplant-associated infections. The strategic plan included a reduction of our workforce by 30 employees, resulting in a total of approximately 70 remaining employees. In connection with the plan, our Chief Medical Officer and Chief Financial Officer stepped down from their roles. Our Strategic Approaches Our current business strategy is focused on three parallel paths: • • • Highly Potent Next-Generation HBV Core Inhibitors – Advancing our novel next-generation CIs in clinical studies, with 4334 (currently prioritized) and 3733 (currently paused) in ongoing Phase 1a and Phase 1b studies, respectively. Novel Small Molecule Approaches for HBV and HDV – Advancing research programs targeting (1) an orally bioavailable HBV/HDV entry inhibitor and (2) an orally bioavailable, liver-focused IFNAR agonist. Novel Antivirals Targeting Herpesviruses – Advancing (1) ABI-5366 (5366), a long-acting HSV-2 helicase inhibitor targeting high-recurrence genital herpes to clinical trials, and (2) a research program for pan-herpes NNPIs to treat transplant-associated infections. HBV Strategy Inspired by the hundreds of millions of people worldwide living with chronic HBV infection, the goal of our HBV program is to discover and develop finite and curative therapies for these patients. While we have learned that combination therapy with our first-generation CI product candidate, VBR, plus the standard of care, nucleos(t)ide analog reverse transcriptase inhibitor (NrtI), did not result in a finite and curative treatment, we have designed and developed our next-generation CIs for significantly increased potency and ability to engage an additional mechanism of action, targeting the viral reservoir, that VBR could not. We believe that a regimen of our next-generation CIs in combination with NrtI therapy will be the antiviral backbone of future finite and curative therapies. To reach a finite and curative therapy, it may also be necessary to include additional mechanisms of action, whether discovered and developed internally or externally through collaborations, licenses, partnerships and other types of business arrangements. 1 Development Pipeline Strategy To complement our CI programs seeking finite and curative chronic HBV therapies, we have leveraged the depth and breadth of our virology expertise to expand our pipeline with a focus on novel mechanisms acting on clinically validated targets in therapeutic areas of high unmet medical need. Since beginning this portfolio expansion in late 2021, we have announced several new programs, both in- and outside of HBV: our HDV/HBV entry inhibitor program, our IFNAR agonist program, our pan-herpes NNPI programs for transplant-associated infections and the long-acting HSV-2 helicase inhibitor for high-recurrence genital herpes. We recently nominated 5366 as a development candidate for our HSV-2 program and look forward to future candidate nominations from our discovery virology pipeline. We believe that these new programs are compelling complements to our CIs, as each program focuses on a clinically validated target in a virologic disease where innovation is critical to improving patients’ lives. In addition, because certain of our new programs are focused on treatments for chronic diseases, rather than curative therapies, the path to proof-of-concept and registrational studies may be significantly shorter than that for our finite and curative HBV therapeutics. Our HBV and HDV Programs The World Health Organization (WHO) estimates that 296 million people worldwide are chronically infected with HBV as of 2019, and 1.5 million new infections occur each year. HBV is a leading global cause of chronic liver disease and liver transplants, and the WHO estimates that 820,000 people died in 2019 from HBV, mostly due to cirrhosis and hepatocellular carcinoma. Of the 296 million people living with chronic HBV infection as of 2019, only approximately 30 million were aware of their infection, and only approximately 6.6 million of those diagnosed received treatment. HBV is a highly prevalent disease that infects more than three times the number of people infected with hepatitis C virus and HIV infections combined, according to the WHO, and has a higher morbidity and mortality rate. The current standard of care for chronic HBV infection, NrtIs, are taken life-long and reduce, but do not eliminate, the virus and result in very low cure rates, leaving an enormous unmet need. No new mechanisms of action (MOA) have been approved for chronic HBV infection in over 25 years. The focus of our HBV program is to improve outcomes and increase the number of patients diagnosed and treated through the development of finite and curative therapies. We are also progressing two programs with potential application against HDV. HDV is a “satellite virus,” because it can only infect people (1) who are already infected with HBV or (2) at the same time as a person is infected with HBV. HDV impacts a subset of approximately 12 million HBV patients. These patients, which only comprise an estimated 4.5% of hepatitis B surface antigen (HBsAg) positive patients, experience a substantially increased disease burden, as they account for 18% of cirrhosis and 20% of hepatocellular carcinoma associated with HBV. In parallel with our efforts to develop finite therapies and functional cures for HBV, we are also advancing programs targeting HDV given the immediate disease burden facing these patients. The current standard of care treatment for HDV is off-label pegylated IFN-α injected weekly or, in some regions, a large, complex molecule that requires daily injections. We believe a safe and effective oral small molecule entry inhibitor would be a significant innovation for patients living with HDV. Core Inhibitors HBV is a DNA virus that infects hepatocytes and establishes a reservoir of covalently closed circular DNA (cccDNA), a unique viral DNA moiety that resides in the cell nucleus of HBV-infected hepatocytes and is associated with viral persistence and chronic infection. No currently approved oral therapies target cccDNA activity directly, which makes molecules that can modulate cccDNA generation or disrupt its function highly sought in the HBV field. As a result, we have worked to discover and develop compounds targeting the core protein, a viral protein involved in numerous aspects of the HBV replication cycle, including the generation of HBV cccDNA. Through our research efforts, we have discovered several chemically distinct series of small molecule CIs that directly target and allosterically inhibit core protein functions. As a result, we believe that our pipeline offers the potential for both first-in-class and best-in- class compounds that target critical steps involved in cccDNA generation and the HBV viral replication cycle. 2 A benchmark for therapeutic agents aiming to decrease cccDNA levels is the use of several key viral antigens as surrogate biomarkers of active cccDNA. The same biomarkers can be used in both primary human hepatocyte cells and patients. On this basis, our CIs have shown preclinical proof of principle. In a variety of cell culture models, CIs have demonstrated the ability to reduce production of viral HBV DNA levels as well as the surrogate markers for cccDNA establishment: HBV e antigen (HBeAg), HBV core-related antigen (HBcrAg) and viral pre-genomic RNA (pgRNA). Our research and development organizations are advancing next-generation CIs through clinical development. These candidates, which exhibit multiple MOAs, have been optimized to potently disrupt both viral replication (MOA #1) and, importantly, prevent the establishment and replenishment of new cccDNA (MOA #2). cccDNA is the viral reservoir that drives HBV’s life-long persistence in patients. First-generation CIs have not demonstrated adequate potency to sufficiently block its formation. Further, the current standard of care, NrtIs, can only inhibit production of new virus—and do so incompletely. We leveraged our prior experience with our first-generation CI, VBR, which did not have sufficient potency against MOA #2, in the development of our next-generation CIs. VBR was evaluated in a Phase 2 program with treatment for up to 1.5 years across patient populations and exhibited a favorable safety profile. VBR was observed to be potent against MOA #1 but not MOA #2, and, while it demonstrated greater viral suppression in combination with standard- of-care NrtIs than NrtIs alone, it did not achieve functional cure or finite treatment in our clinical studies. As a result, we discontinued development of VBR. Our two next-generation CIs, 3733 and 4334, were developed to optimize activity against both MOAs and show significantly enhanced potency against both mechanisms preclinically. 3733 3733 was internally discovered and developed. The chemical scaffold of 3733 is novel and distinct from 4334 and both of our discontinued first-generation CI product candidates, VBR and ABI-H2158 (2158). In preclinical studies, 3733 has demonstrated pan-genotypic activity and an improved resistance profile, as well as significantly increased potency against both MOAs and target coverage as compared to both VBR and 2158. In 2020, we initiated and completed a Phase 1a clinical study of 3733 to evaluate safety, tolerability and pharmacokinetics (PK) following single ascending dose and multiple ascending dose administration in healthy subjects in New Zealand. Data indicated that 3733 was generally well-tolerated and had favorable PK. Results detailing 3733’s safety and PK from this study were presented in a poster presentation at the American Association for the Study of Liver Diseases (AASLD) The Liver Meeting® in November 2021 (AASLD 2021). In 2021, following the completion of the Phase 1a trial, our chemistry, manufacturing and controls (CMC) organization developed a new tablet formulation to support Phase 1b for 3733. At the European Association for the Study of the Liver's (EASL) International Liver CongressTM in June 2022 (EASL 2022), we presented 3733’s improved PK profile resulting from the new formulation activities mentioned above. In addition, at EASL's International Liver CongressTM in June 2021 (EASL 2021), we presented observations on 3733’s enhanced potency and target coverage for both antiviral activity and inhibition of cccDNA generation as compared to VBR and 2158. In June 2022, we initiated a randomized, multi-center, double-blind and placebo-controlled Phase 1b trial of 3733 evaluating the safety, PK and antiviral activity of 3733 in adults with cHBV infection, including changes in HBV DNA and other viral parameters associated with 3733 treatment in adults with chronic HBV infection who are treatment naïve or off treatment. Patients were randomized 8:2 between the new tablet formulation of 3733 and placebo for a period of 28 days. In December 2022, we released interim data from the Phase 1b trial, which consisted primarily of HBeAg negative patients. The dose selected for the first cohort was 50 mg. Given the potent antiviral activity observed at 50 mg, a 25 mg dose was selected for the second cohort to further explore the dose response curve of 3733. A dose of 100 mg was selected for the third cohort. As of mid-December 2022, dosing in the 3733 Phase 1b trial had been completed for all ten patients in the 50 mg first cohort. Nine of ten patients enrolled were HBeAg negative, so efficacy data was provided for these patients. Interim 3 efficacy results from this cohort as of mid-December included HBV DNA, HBV RNA and antigen measurements for all patients for the full 28-day dosing period. In the 50 mg cohort, six of eight patients receiving 3733 achieved HBV DNA less than the lower limit of quantification (

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