Assembly Biosciences, Inc. (ASMB) Earnings Call Transcript & Summary

Good afternoon, and welcome to the Assembly Biosciences conference call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the call over to Lauren Glaser, Senior Vice President of Investor Relations and Corporate Affairs for Assembly.

Good afternoon, and thank you for joining us as we discuss the hepatitis B program update that we announced today. This press release is available in the News & Events section of our corporate website at www.assemblybio.com. Our corporate presentation is also available in the same section of our website as a reference, though we will not be referring to it specifically on this call. Please note that a replay of today's call and audio webcast also will be available from our website. In a moment, I will turn the call over to our Chief Executive Officer and President, Dr. John McHutchison, to provide opening remarks, and then we will host a Q&A session. Joining John for the Q&A portion of the call will be our Chief Medical Officer, Dr. Luisa Stamm; our Chief Scientific Officer, Dr. Bill Delaney; our Chief Financial Officer, Tom Russo; and our Chief Legal and Business Officer, Jason Okazaki. Before we begin, I want to remind you that we'll be making forward-looking statements, including statements regarding our future research and development plans, evaluation of interim data, the timing of clinical trials, trial results and therapeutic potential of our research and development program. These statements are subject to the safe harbor protections provided under the Private Securities Litigation Reform Act of 1995. They involve certain assumptions, risks and uncertainties that are beyond our control, and actual results may differ materially from those forward-looking statements. A description of these risks can be found in our latest SEC disclosure documents and press releases. Assembly does not undertake any obligation to update any forward-looking statements made during this call. I will now hand the call over to our CEO, Dr. John McHutchison.

Thanks, Lauren, and thank you to everyone for joining us today. As I have shared with you since I joined the company in 2019, our vision and ultimate goal has been and continues to be curing patients with hepatitis B and freeing them from the burden of a lifetime chronic treatment. In order to advance and accelerate our progress towards that goal, we have decided going forward to focus our efforts with vebicorvir solely in finite and curative combination for hepatitis B rather than continuing to pursue a chronic suppressive therapy indication in parallel. This afternoon, we would like to provide more background on that decision as well as an update on our overall hepatitis B strategy and our expanding research pipeline, which includes work on our fourth-generation core inhibitor, our work on cccDNA disruptors and the preclinical programs focused on novel hepatitis B virus target. And of course, we're happy to answer any questions you may have, as Lauren said. The greatest unmet medical need for hepatitis B patients is a finite and curative therapy, and solving for that has always been the ambition of this company and the team with you on the call today. I remember saying to you when I joined Assembly about 18 months ago that I believe, and I still do, that we will cure this disease as we did hepatitis C. Of the approximately 270 million hepatitis B patients worldwide, only 5 million or so are currently being treated. While those treatments are safe for most patients, they are also lifelong. In order to truly change outcomes for patients with hepatitis B infection and treat the far greater proportion of these patients, it's clear that we need to -- more than just a chronic viral suppressive type approach to therapy. We need finite and curative combination therapies. And based upon our work so far, we are confident, and I am confident, that core inhibitors will be a central part of this. As you know, our pipeline includes the most advanced and potentially best-in-class core inhibitor candidates in development. In Phase II trials, vebicorvir plus Nuc therapy demonstrates deeper viral suppression with a favorable safety profile, which was an important step for the hepatitis B field, a step that we plan to build upon through continued development of vebicorvir as well as our next-generation or potent core inhibitor candidates. We believe the combination of these potent direct antiviral mechanisms that is called plus Nuc that suppresses viral replications to the levels that could not be previously achieved will form the backbone for combination therapies that remain central to our finite and curative strategies. We know that finite and curative therapies are still a way off, particularly in light of the Study 211 results we shared with you in the fall. However, we've always viewed the pursuit of cure as a longer-term endeavor, and it was that insight that drove us to evaluate in parallel near-term opportunities to bring a more effective chronic suppressive therapy to patients who do not currently achieve adequate or complete viral suppression with the standard of care therapy. As you recall last year, we completed our interactions and received regulatory go-ahead in China to commence 2 Phase III registrational studies to evaluate vebicorvir as a chronic suppressive therapy in different populations. China, obviously, has a large hepatitis B prevalence, and its regulatory agencies are therefore eager to consider new treatment options. As we plan for those studies with our partner, BeiGene, we met with experts around the world and then also initiated discussions with the FDA with the intention of pursuing a global chronic suppressive therapy program. FDA feedback, however, has been different from that of the Chinese NMPA, and we do not see a clear path forward in the U.S. for this approach given FDA's view that the vast majority of these patients are in large part served by the current standard of care. Our discussions with hepatitis experts have also indicated that this type of approach of an add-on to suppressive therapy is less of a need and less valued in terms of what treating physicians need or want for their patients. So after significant internal and external discussions and analyses, including discussions in agreement with our partner, BeiGene, for the China territory, we have concluded that rather than proceeding with the Phase III suppressive therapy studies, we should go all-in and focus our efforts on finite and curative therapies. We believe this represents the greatest unmet medical need for the hepatitis B patients that we serve and has the potential to create the greatest value for our organizations as well. With the decision to not pursue chronic suppressive therapy, we can now concentrate our resources on finite and curative therapies, including initiation of the planned triple combinations with vebicorvir as well as additional potential combination studies and study arm, advancement of more potent next-generation core inhibitors and expansion of the breadth and depth of our research and discovery program. Redirecting the resources previously reserved for those registrational studies and other related activities will allow us to advance all of these initiatives faster while simultaneously extending our cash runway into 2023. I know I've already provided a lot of information and updates to you. So in light of all this, let me review for you the 3 key components of our hepatitis B strategy and how our current and future pipeline will drive our progress. The first component centers on advancing our portfolio of leading core inhibitors to select the best molecule to bring forward as part of finite and curative combination strategy. We have 3 potent core inhibitors in the clinic, but we are planning on selecting a fourth-generation compound in the first half of this year, which I'll speak more about shortly in discussing our new research discovery program. All 4 core inhibitors have different scaffolds and present a unique opportunity to more deeply suppress viral replication and hence, be an integral component of the drive towards finite and curative combination regimens. However, we do not plan on bringing all 4 core inhibitors forward in sequential and similar fashions. But rather, we will execute on our concise data-driven development plans to select the optimal core inhibitor that we'll be then able to use in latter stage finite and curative combination studies. This leads me to the second component of our strategy, advancing proof-of-concept triple and potentially quad combination studies with Nuc and our core inhibitors . The initial step in this approach includes vebicorvir combined with the Nuc, serving as the antiviral backbone of these planned triple combination studies, 2 of which we expect to initiate in the first half of this year. As previously noted, the combination of vebicorvir and Nuc has already demonstrated potent antiviral activity and a favorable safety profile in Phase II studies so it's ideally situated now for those proof-of-concept studies. As the other core inhibitors progress, and if they show a differentiated efficacy and safety profile, we will be able to bring them forward into this part of the strategy. Earlier today, we announced the initiation of a Phase II trial evaluating vebicorvir plus Nuc in combination with interferon in treatment-naive hepatitis B antigen-positive subjects. In addition to its antiviral effect, interferon has many pleiotropic immunological effects that are beneficial in augmenting both specific and nonspecific hepatitis B-related immunity. Notably, it is a drug that has shown the highest rates of Ag loss in combination with a Nuc in previous controlled studies. The other combination trial with vebicorvir we anticipate initiating shortly is being conducted in collaboration with Arbutus, combining their RNAi therapeutic candidate, AB-729, with vebicorvir and Nuc in a Phase II trial enrolling virologically suppressed E antigen-negative subjects. RNAi has been shown to inhibit viral antigen production, and its effects on surface antigen also offer the potential to restore the immune response to hepatitis B. In both triple combination studies, we will be evaluating the safety and on-treatment response of the 3 drug combinations versus each of the 2 drugs in combination with Nuc. If the data suggests in each of these trials enhanced on-treatment efficacy parameters, we then have the option to incorporate modified stopping criteria to assess our treatment response. We also continue to explore additional combination studies to evaluate the core inhibitor vebicorvir for now and Nuc backbone together with 1 or potentially 2 other mechanisms so please stay tuned here also. In parallel with the vebicorvir combination studies I've just described, we are actively advancing our pipeline of more potent next-generation core inhibitors. The most advanced, 2158, has been shown to be tenfold more potent than vebicorvir against the formation of new cccDNA in in-vitro lab studies. In Phase Ib, 2158 demonstrated potent antiviral activity and a favorable safety profile when dosed once-daily for 14 days. Our Phase II trial of 2158 combined with the Nuc is ongoing in treatment-naive E antigen-positive subjects, and we hope to report interim data later this year. Initially, we will be evaluating the changes in DNA, pregenomic RNA and other HBV-related viral antigens and comparing that to our prior data in the same population that were treated with vebicorvir. If these data suggest that the increased potency observed with 2158 in the lab has translated to improved clinical efficacy on treatment, we'll also be able to incorporate modified stopping criteria for the purpose of evaluating off-treatment response. Additionally, we also had 3733, which recently completed initial Phase Ia evaluation in healthy subjects. And as I mentioned earlier, we are very excited with our progress towards nominating the fourth core inhibitor candidate during the first half of this year. In our fourth-generation core inhibitor, we are aiming for a compound with a potential best-in-class profile. This will include greater potency that is single-digit nanomolar potency against cccDNA formation and also antiviral potency. Of course, it will have pangenotypic hepatitis B activity, a clean preclinical safety profile, high solubility, once-daily single-pill dosing and the potential to be co-formulated with other therapeutics in a fixed-dose combination regimen. Once we nominate our fourth-generation core inhibitor, we will proceed as quickly as possible to develop all 4 of these compounds, as I've described them today, with a data-driven approach to ultimately advance only our most promising candidates into latter stages, as I've outlined. So again, stay tuned there, please. The fourth-generation core inhibitor actually leads me into the third and final component of our strategy, which is expanding the breadth and depth of our research engine beyond the core inhibitor mechanism. In 2020, we made significant strides in expanding our pipeline of research programs, both internally and externally. As we announced also back in November, we obtained option rights to core protein cccDNA disruptors arising through a research collaboration with Door Pharmaceuticals. Door's discovery platform targets different phases of the hep B virus replication cycle distinct from viral assembly and that have the potential to interfere with viral nucleic assets, including cccDNA transcription within the nucleus of the cell where the minichromosome reside. This could prove a strong complementary mechanism of action to our core inhibitor pipeline. For over a decade, the holy grail of the hepatitis B cure field has been to develop therapy to target cccDNA to either degrade, disrupt, prevent transcription or silence this reservoir. So we're very excited about this novel small molecule approach. At the same time, our internal research team has worked very hard on unique hepatitis B targets that we believe are also differentiated in the space and have the potential to accelerate our progress towards those finite and curative therapies for hepatitis B. These research programs have coalesced from the decades of experience that our CSO, Bill Delaney, had dedicated to pioneering hepatitis B virus biology and virology as well as the contributions of this group, of course. While it would be premature to disclose those 2 specific targets, we can tell you that we have 2 novel differentiated projects underway, and we will keep you apprised of this work as it progresses. The emergence of our early-stage pipeline is further evidenced to me that we now have precisely the right people in place to pursue our vision. Many of us have spent a large part of our careers in virology, and hepatitis B remains a critical and exciting field of research focusing on a very pervasive difficult-to-cure viral disease. Our world-class team has extensive hepatitis B experience, a very strong record -- a strong track record executing in viral hepatitis and is committed to advancing the field of HBV research towards this goal of finite and curative therapies for the patients with the disease. We are all excited to develop our leading core inhibitor portfolio and accelerate our novel discovery programs to drive us closer to that finite and curative therapy approach for these patients. With that, we are now happy to take your questions. As a reminder, Luisa, Bill, Tom and Jason are all here with me. So operator, would you open the question-and-answer session line, please?

[Operator Instructions] And our first question comes from Salim Syed from Mizuho. Our next question comes from Brian Skorney from Baird.

I guess maybe you could just dig a little bit deeper into kind of the thoughts on not pursuing the chronic indication for vebicorvir and really going full bore into targeting sort of acute curative therapy. I mean is there any new data that's been generated sort of in the space that kind of gives you confidence in a pathway to achieve here, particularly with core inhibitors? And then maybe the second question. On the Nuc, the core of your pegylated interferon Phase II triple combo study, just thoughts on -- is this primarily just kind of a safety of a triple combination study? Or do you think there'll be a durability of treatment here that would eventually lead to maybe some sort of stopping criteria as well?

Brian, it's John. Thanks for the question. I'll start with the first part, and then I'll hand it over to Bill in terms of that as well. And then I'll ask Luisa to comment on the triple combination therapy initiation with interferon in terms of is it safety or efficacy and what the plan is. So to answer your question, it's a new data that give us greater confidence that a core inhibitor-based program is going to provide us curative regimens. It's clear to all of us that you must inhibit all evidence of viral replication to -- even before you can cure anybody. So I think that's the premise. And we've seen levels of viral suppression with a core inhibitor Nuc that haven't been seen with Nucs alone before with our first-generation compound. And then we'll be looking at the more potent compounds, which are being designed to be more potent against cccDNA. So we don't have new data in the clinic today, but the premise is there from a virologic perspective. Bill, do you want to add anything to that in terms of what Brian's asked here? He's asking, really, is there any new data that we have, or the field has, that sways us to think that a stronger antiviral backbone will get us towards a cure?

Yes, John. So yes, just to respond to that, and thanks, Brian. So I mean, I think greater potency, particularly against the second mechanism of core inhibitors, is really what we're driving after, the ability to inhibit the formation of new cccDNA. So while we don't have new data, just looking at the data that we have in terms of the potency of the molecules that we have and the exposure that they achieve in the clinic, we're confident we'll reach a much higher level of inhibition with that second mechanism with our second-generation compounds.

We have a slide, Brian, in our new corporate slide deck that's on our website that looks at the potency of the compounds and what we're hoping to achieve with the fourth-generation compound as well that we've talked about that we're hoping we'll be able to advance and nominate that candidate soon. But that has a very attractive profile. So Luisa, the second part of Brian's question, is this just a safety study with interferon? Or what is it?

Yes. So we are happy to start our first triple combination study with NrtI core inhibitor, vebicorvir and interferon just last week. And the primary objectives are safety and efficacy. Initially, we'll be looking at on-treatment efficacy, looking at the different viral parameters, DNA, pgRNA and antigen with the dual combination compared to the triple combination. Based on what we see there, we anticipate that we'll incorporate modified stopping criteria and be able to evaluate off-treatment efficacy. What those modified stopping criteria are at this time is undetermined. We continue to analyze the data from Study 211, the results of which we shared at a high level last fall. And think about this question, we haven't reached a criteria there, but we're going to be looking at the on-treatment response and anticipate incorporating a lot of live stopping criteria. And we'll share more details about that when we have more information.

And our next question comes from Raju Prasad from William Blair.

I wanted to kind of discuss a little bit about how we should be looking at the potential interim data readout from the 2158 study in the context of the triple combo data as well as some of the stoping criteria comments you've made. Are there any specific data points that you're looking at internally there that gives you -- will give you more confidence on a potential maybe 12-week regimen with the second-gen core inhibitor?

Thanks, Raj. I'll ask Luisa to answer the question first, and I might chime in a bit afterwards.

Thank you. So as John mentioned, our current Phase II study with 2158 will be evaluating 2158 and entecavir in treatment-naive E antigen-positive individuals. We chose this population because of the dynamic range afforded and the ability to assess the impacts of the second-generation core inhibitor on cccDNA and compare it to the prior results with VBR Phase II Study 202 in a similar population. We are going to be doing cross-study on-treatment comparisons with viral parameters, including pgRNA, E antigen and correlated antigen. And to your point, we've started internal discussions about what statistically and clinically would be meaningful and give us confidence that 2158 is better than VBR. And as mentioned, we hope to have some interim data by the end of this year, and that would be the earliest point at which we could be making this assessment. When we have more information about this, we'll share it when we can.

So thanks, Luisa. Raj, look, we look -- we could look at 12 weeks. We can look at 24 weeks since the half-life of -- lifespan of cccDNA is, we believe, somewhere in that range. So if this is more potent against the prevention of formation of new cccDNA, we'll be hoping to look for those differences. And we have the study conducted for now in the same population as we did with vebicorvir. So that will be the approach. So again, it's going to be driven by the data. We have to see the safety. There's 80 patients in that study. It gives us a fairly good feeling we know where we're going. And then in terms of the triple, you touched -- you talked a little bit about in terms of the triple. We've initiated and we've said we're going to initiate both of these 2 of our first triple combination studies now. So we wouldn't be getting data to compare them with -- to compare this experiment with 2 drugs with 2158 until the following year. So that would be another component here as well. So look, we'll see how deep we can drive it down. We'll see about modified stopping rules. We'll see how it compares with vebicorvir. We'll take a scientific approach, and we'll work it out. If -- and then we have 3733 and hopefully, we'll be able to accelerate our fourth-generation compound as well. So that's the approach on the core inhibitors. But I do believe, and I think this gets back to Brian Skorney's question as well, you must inhibit all evidence of viral replication and shut the spigot off. And that's what we're trying to do as well as prevent the formation of new cccDNA. So thank you, Raj.

And our next question comes from Michael Yee from Jefferies.

Two questions. One is in relation to the chronic suppressive treatment strategy. I'm not sure if I caught it, but was there any incremental information from FDA or even China FDA that kind of -- that this is going to take too long or maybe there's just a market opportunity? Maybe just shed some more light on what happened there and what BeiGene says. And then the second question is in regards to combination studies. Can you comment how long the RNAi combo would be? And what kind of information you get out of that, that would be good data? And what other types of combos could be possible, PD-1 to PD-L1, et cetera, TLR? Maybe just tease us a bit.

Thanks, Mike. Congratulations on the birth of your son. I will ask Luisa to talk first about the combinations, what we're doing with the siRNA and RNA and duration. In terms of other triples, let me just say that checkpoint inhibitors would be one. There are some other possibilities out there that we're considering and discussing as well. We could also look at quota arms as well in future studies and then other studies we could add in a fourth mechanism of action. But duration of siRNA and the Arbutus collaboration, Luisa?

Yes. So as John mentioned, we're going to be again looking at the triple combinations compared to the 2 double combination, and we are targeting initially evaluation of safety and efficacy in virologically-suppressed patients. As was mentioned, we're going to be starting the study in the first half of this year, and we'll share more details about the dosing and the duration at that time.

Thanks, Luisa. Mike, the first question, a bit delving into the chronic suppressive therapy, why the change in the strategy? What transpired? Look, the interactions with the Chinese regulatory body was a go-ahead. Two populations, safety database, et cetera. So that was tied down. The FDA doesn't see it the same way. And they feel that most of these patients are currently served appropriately and adequately by standard of care new therapy with a very, very small niche population that are only partially virologically suppressed. So therefore, our global trial and our global plans wouldn't have been a global plan -- global trial or plan at all. It would have been a China-only territory plan. So we have these extensive discussions with BeiGene. And we came to the conclusions that we've made to you today, that we're not going to move forward with the chronic suppressive therapy, even one that's based alone in China. We should put those valuable resources into trying to cure patients, which is going to be more of a balanced approach, and it's going to take longer. We understand that. So it did become a discussion about, well, it's a much smaller population. It's a niche population. It's going to take longer. Is that really what we should be doing? So I think to summarize for you, we listened to -- over a period of many, many, many months, we listened to many constituents here. And I think we made the right decision and -- that we're doing what we should be doing, what's best for the patients. It's certainly best for us, our company, our shareholders and our collaborators that we focus on cure, which is, actually, as I said, why I came to the company anyway. So that's what transpired, Mike, without getting into all the details. I hope that helps.

That makes sense. That makes sense. And my son says he looks forward to your data.