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

Good day. I'm John McHutchison, CEO and President of Assembly Bio, and I'd like to welcome you all to our event today. We're excited to introduce another new research program that our Chief Scientific Officer, Bill Delaney and his team have underway focused on inhibiting the entry of both hepatitis B and hepatitis delta viruses. And also, we have with us Professor Michael Manns, who I will introduce in a moment. While hepatitis delta virus may be less well-known in the U.S. health care landscape than hepatitis B or C, hepatitis delta infection also remains a significant and serious health problem without adequate treatment in many parts of Europe and Africa, the Middle East, East Asia and parts of South America. Hepatitis delta is referred to as a satellite virus because it can only infect those already infected with hepatitis B or infect individuals at the same time as they acquire hepatitis B infection. Most recent estimates conservatively suggest that approximately 5% of the nearly 300 million individuals chronically infected with hepatitis B globally are infected with hepatitis delta. In those 12 million people, the added burden of delta infection is known to accelerate disease progression, increase the incidence of liver cirrhosis and liver cancer and it is thus ultimately associated with higher morbidity and mortality. This, of course, also creates a greater burden on our health care systems. In our mission at Assembly to deliver finite and curative treatments for patients with hepatitis B, we also have with this program an important opportunity to address the urgent need of those individuals concurrently infected with hepatitis delta and B with the aim of improving their quality of life and outcomes. The 3 of us on this call today and many others on the Assembly Bio team were involved in the efforts to turn hepatitis C into a curable disease where it was imperative that we think broadly and creatively about how to suppress and eradicate the virus. The same is true with hepatitis B where we are exploring multiple ways to effectively and completely shut down viral replication as we are doing with our core inhibitor candidates or to blocking new virus from entering uninfected cells. This latter approach is the focus of the new research program that you'll hear more about today. In fact, we plan to also introduce several additional new programs during 2022 that build upon the strength of our existing pipeline of potent core inhibitor candidates and expand our portfolio with novel approaches for treating viral diseases more broadly, leveraging the exceptional experience our team has in this area. We're also very fortunate to have with us today Professor Michael Manns, an international expert in liver diseases and viral hepatitis, including hepatitis B and delta. For more than 35 years, Professor Manns has served in clinical and research roles at leading medical and academic institutions. And he is currently President and Board member for Research and Education at Hannover Medical School in Hannover, Germany. He's also a Founder and Chairman of HepNet, an important national network on viral hepatitis and the German Liver Foundation. Over the years, Professor Manns has received numerous awards, including the international Hans Popper Award and EASL Recognition Award and he has published more than 1,000 articles in international peered-review journals. We are grateful that he has made the time to join us and share his expertise and overview of delta infection and his views on new potential treatments. After Professor Manns' overview, Bill Delaney will tell you more about our hepatitis B hepatitis delta viral entry inhibitor program. He'll cover things, including what we are aiming to achieve, where we are with our research activities and what we have seen to date, why we are excited and confident about the program and what to look from us as this body of work progresses. Since I joined Assembly in mid-2019, I've made it a priority to assemble what I believe is the dream team of virology R&D. We've worked to move more and more potent core inhibitors into the clinic but at the same time catalyzed novel programs to combat hepatitis B and other viral diseases. Bill has headed those efforts with the outstanding group of scientists he has now assembled in his group here, and I'm pleased that you'll be hearing about this work today and more throughout the year also. Before I turn this over to Professor Manns, I'll quickly touch on a few housekeeping items regarding today's event. I'd like to remind you that we will be making forward-looking statements. Please refer to our SEC filings for a full list of disclosures. This webcast will also be available for replay on the Assembly Bio website shortly after the event has concluded. The slide presentation will also be available there for download. Following the prepared remarks today, we'll be hosting a Q&A session. You may submit your questions at any time during the event by entering the text into the Q&A box at the bottom of the video player. If you experience any technical issues during the broadcast, please first refresh your browser. And then if the issue persists, please message the technical support team using the chat box at the bottom right corner of your screen. With that, I'd like to turn the event over to Professor Manns for his remarks, to Michael.

Hello, John, ladies and gentlemen, welcome and greetings from Hannover, Germany. Hepatitis delta also called hepatitis D virus infection is the biggest unmet need in hepatology, I would say, at least in viral hepatitis. And I would like to introduce to this very specific virus and explain to you why we need so urgently treatments. Next slide. I want to discuss with you the epidemiology and natural history of the disease, the standard of care we are providing today and the new treatment concepts for future therapies. Next, epidemiology and natural history, this is very interesting. Next slide, you can see that this is a virus which is an RNA virus. It's the smallest of all animal viruses. There are no enzymes but ribosomes and the genetic information only encodes for the small hepatitis delta antigen. And there is also the small and the large hepatitis delta antigen. The small one increases replication and what is also very important that this virus needs a co-infection with the hepatitis B virus infection since the hepatitis B virus provides the code for the hepatitis B virus. Without this code, there is no uptake of the virus into the liver cell. Next slide. This is a global prevalence figure, showing the hepatitis delta virus infection all over the globe. You see there are some hotspots. You see Mongolia in red. There are also hotspots in the Amazonian basin and tribe villages. And then you have high prevalences in areas of the Middle East, of eastern countries and others, as you can see here. Limited information is available for many parts of the world, including Africa. Since it's a co-infect of hepatitis B and D, we have to look which of the hepatitis B carriers is infected with hepatitis B virus. And we estimate from the studies still available so far that at least 12 million chronic hepatitis delta virus carriers are there around the world. Next slide. As I mentioned before, this is a very rapidly progressing disease. It's the biggest unmet need because we are lacking therapies. And what is shown here, it's a very early study by Dr. Fattovich from Italy that when we look at the progression to liver cirrhosis, that patients with hepatitis delta, HDV/HBV co-infection have a more rapid course compared to mono infects with hepatitis B alone. Next slide. This is more recent data from Dr. Manesis, and it shows the cumulative incidents of liver events, meaning signs of decompensation of cirrhosis, including cancer. And again, the hepatitis D/B co-infection has a higher rate over time of cumulative incidence of liver events compared to hepatitis B infection mono infection, as you can see here. Next slide. When we look at cancer, it's known that liver cirrhosis is a pre-cancerous state, and then the risk to develop liver cancer on the basis of an underlying cirrhosis between 2% and 8%. But what you can see here that if you have a co-infection of hepatitis B and D, there is an increased risk of hepatitis B mono infection, which is very important to underline that a hepatitis D co-infection of B means a more progressive disease. Next slide. Now I want to discuss treatment. Since this is a co-infection, we need to tackle hepatitis B but we have learned over years that suppressing hepatitis B is not suppressing the progression of liver disease due to hepatitis delta. Next slide. First of all, before discussing the results of treatment, we have to look at screening procedures. And everybody with hepatitis B according to the European guidelines, EASL, should be tested for hepatitis D. And first, we test for antibodies. And if the patient has an hepatitis D antibody, then we test for hepatitis D RNA to look whether the replication is evident. EASL is very strict, recommending every HBsAg-positive individuals should be screened for delta, which I also agree and support. In America, the recommendation is that hepatitis B carrier patients should be tested for Delta if they have a risk. Next slide. This is data from a study that Dr. Wedemeyer from our center and myself published the so-called HIDIT-1 study. For a long time, we know, in particular, based on the studies from Italy that interferon is improving ALT, transaminases, liver enzymes, and also hepatitis delta RNA. However, this was the largest study of its kind, testing pegylated interferon giving once a week either alone or together with adefovir, at that time, a nucleotide analog used to treat hepatitis B. What you can see that the hepatitis B treatment by adefovir alone had no impact on hepatitis delta RNA, but interferon had a significant decrease in hepatitis delta RNA. However, the addition of the B drug, adefovir had no beneficial effect. Next slide. When we look at the surface antigen, you see that the combination, you see a decline in hepatitis B surface antigen, not so if you give a interferon mono or adefovir alone. Next slide. We've done some years later, did a study with the German HepNet that Dr. McHutchison introduced to you, it is an international study, German centers, centers from Romania, Greece and Turkey. And we compared pegylated interferon alpha 2A alone or the combination with tenofovir at that time the widely used hepatitis B drug also nucleotide. And you see between 23% and 30% was after 96 weeks the outcome result. What it means HDV RNA negativity. However, these 96 weeks results were not superior to 48 weeks. And tenofovir had no beneficial -- no significant beneficial effects. So over the years, we learned that interferon is beneficial. However, only in 1 out of 4 sessions. Next slide. When we look on long-term results, this is Dr. Wranke, also from our center, you can see that interferon is associated with an improved clinical outcome in hepatitis delta. So here, you see the cumulative event-free survival. These data confirmed previous study out of Italy, the country where the hepatitis delta d virus was discovered by Dr. Rizzetto. Next slide. Now we discuss a new treatment and new treatment concepts, none of them is approved yet apart from one, which I will discuss. Next, slide. Regulatory and guideline recommendations on efficacy endpoints are as follows. When we discuss treatment, we also have to discuss the endpoints. And there are some consensus between the FDA, AASLD and EASL that the treatment goal should be to achieve at least 2-log reduction of hepatitis delta RNA and also normalization of ALT; FDA asked for normalization of ALT; while EASL and AASLD mainly asked for log reduction of delta RNA. Next slide. Here is the life cycle of the hepatitis D delta virus. You see, number one, the uptake of the virus via the receptor. The receptor has been identified some years ago by a Chinese group. It's the bile acid receptor NTCP, then after uptake in the liver, you see the processing of the virus including various steps, including a prenylation. There are several therapeutic targets. You have bulevirtide, which is inhibiting the uptake at the receptor at 1, then you can have interferon and then you can have high RNA, no approved targets then you can have lonafarnib as a prenylation inhibitor, and then you have nuclear acid polymers, which are inhibiting the secretion of the virus out of liver cell. Next slide. There is bulevirtide, which has conditional approval in the European Union by EMA. The summary of the results with bulevirtide monotherapy are as follows: in 50% to 60% we see in HDV RNA decline of at least 2 logs at the same time ALT normalization of 43% to 73%. However, this drug does not lead to a decline of hepatitis B surface antigen in the serum, which means this drug will not lead to cure of hepatitis B but significant improvement in hepatitis delta. There are side effects, asymptomatic dose-dependent elevation of bile salts, injection site reactions and discontinuation of bulevirtide may lead to reactivation of both hepatitis D and hepatitis B and also exacerbation of hepatitis. Next slide. There is a Phase III study ongoing. These are preliminary data presented at the last year's EASL meeting; the International Liver Congress, ILC; and we will see the final results at EASL in June this year. And you see here, you have a placebo arm and you have 2 doses of bulevirtide. And as you can see on the right side that bulevirtide giving subcutaneously significantly has advantage over placebo, meaning both RNA reduction and ALT normalization. Next slide. There is also a Phase II study available looking at the combination of bulevirtide with pegylated interferon. And you see that the combination is superior to the monotherapy. So this is also a view to the future that a combination of bulevirtide and interferon will be beneficial. Next slide. This is a summary now of the drugs that are under clinical development. Bulevirtide has conditional approval in the European Union based on Phase II and Phase III results. We can combine it with interferon, and we could demonstrate both HDV RNA decline and ALT decline in normalization, safety issues, mainly local reaction and increase in bile acids. The prenylation inhibitor is also in Phase III, and it has demonstrated also on Phase II HDV RNA ALT combined with pegylated interferon alpha. Interesting is pegylated interferon lambda. Since the receptor for interferon lambda is only expressed in the liver cell, it has efficacy like interferon alpha, but less side effects. Here, we have data available on HDV RNA, more data will come soon, less side effects than pegylated interferon alpha. The nucleic acid polymers, so far only Phase II results, efficacy on HDV RNA. And finally, JNJ-3989 is an iRNA approach Phase II, but however, no published data. Next slide. So ladies and gentlemen, I hope I could demonstrate that hepatitis D delta is the worst form of viral hepatitis. 12 million chronic HDV carriers, may be an underestimation due to incomplete global epidemiology. There's a high prevalence of delta in risk groups like IV drug abusers, dialysis patients and migrant population. In Germany, 20, 30 years ago, patients came from the South of Europe, Greece or Turkey. Now they come from Eastern countries of the Former Soviet Union. Unfortunately, globally, we have no universal hepatitis delta screening of surface antigen carriers. And I support the guidelines of the European Association for the Study of the Liver that every surface antigen positive hepatitis B carrier should be tested first for hepatitis D antibody and in the case of positivity of hepatitis delta RNA. We need efficacious, tolerable and affordable HDV-targeted therapies. Hopefully, I could demonstrate this by the presentation that I did. Next slide. The opportunities we have in delta is that it's the greatest unmet need in viral hepatitis and we need therapies for hepatitis D. There are several molecular targets that have been identified. There are several molecules at various stages of clinical development. Interferon is a candidate for combination therapy and curing HBV would also cure HDV. But so far, although there are many drugs in development, in clinical development for the treatment of hepatitis B in order to cure hepatitis B, the development of cure for [ B ] is still early. This is another argument that we need urgently specific drugs to interfere with the life cycle of the hepatitis D virus to prevent progress. Next slide. Thanks to Markus Cornberg working with me in the field and helping me to prepare this. And finally, I want to thank you for your attention. Next slide. This is the cartoon of the virus again. Please remember, it's the smallest of all animal viruses we know. It's based on an RNA encoding for the delta antigen, but you need co-infection with B, providing the surface otherwise the virus would not be taken up to the liver. Thank you very much again.

Thank you, Professor Manns. Your comments, Michael, and summary of the disease due to delta, the current therapies and what's new that's going on in the area and what the unmet needs are fantastically and importantly and extremely relevant. So you've summarized it beautifully for us. As you've said today, you said to me in the past as well, it really is one of the most important liver diseases that the field and the liver practitioners and academics are working on. So we feel it's very important as well. Next, I'd like to hand things over to Bill to provide an overview of Assembly Bio's viral entry inhibitor program. Bill has been with us approximately 2 years. When we first sat down and talked about Bill coming to the company and what he would like to work on, delta virus is one of the first things he actually said to me. So I'm glad we're now at that stage now where Bill can start to talk about the fantastic progress he and the research group have made here. So Bill, over to you.

Yes. Thank you, John. So I'll start just by summarizing some of the key points highlighted by Professor Manns during his presentation, then talk a little bit more detail about hepatitis B and molecular virology of B and delta, and then I will share some of the exciting progress on our internal entry program. So as Professor Manns said, HDV infection represents the most severe form of viral hepatitis, and there are very few current treatment options. However, I would say that some of the data that Professor Manns shared of bulevirtide and some of the other emerging therapies is very encouraging, indicating that lowering viral load does improve patient outcomes. However, the current treatment options have drawbacks and convenience, both interferon and bulevirtide are injectable with bulevirtide being daily injectable. And the side effects of interferon have been well documented and challenges in managing patients through on treatment course of interferon. So therefore, hepatitis delta patients would definitely benefit from a safe, simple and effective oral therapy in the same way that many other chronic viral diseases have been managed by single pill regimens. So this slide depicts a diagram of hepatitis B on the left and hepatitis delta on the right. I'll talk briefly about some of the similarities and important differences between these viruses. Both are small envelope viruses that replicate in the liver in hepatocytes; however, they have very different genomes and along with different viral families. So in case of hepatitis B, it has a partially double-stranded DNA genome. It's a small virus of 3.2 kilobases. In the case of hepatitis delta, as Michael Manns says, it's the smallest known animal virus with only a 1.7 kilobase circular RNA genome. So hepatitis B being a DNA virus versus HDV being RNA virus. Despite its small size, hepatitis B encodes a number of proteins, including the core antigen, which we've talked about a lot at Assembly, which forms the shell around the viral genome and nucleocapsid. HBV also secretes and produces E antigen. It encodes its own viral polymerase, which is able to replicate by reverse transcription with this polymerase. Three forms of surface antigen that are in the envelope of the virus. And then finally, HBx, a small protein that ensures the transcriptional activation of cccDNA in the infected cells. And in contrast, hepatitis delta encodes only the delta antigen, 2 forms of the delta antigen, small and large delta antigen. And then finally, as Professor Manns pointed out, importantly, HDV is a satellite virus of HBV. It requires the expression of the envelope proteins in HBV in order to be enveloped and in order to secrete infectious particles that can complete the replication cycle and infect new cells. So stepping quickly through the viral life cycle for hepatitis delta. It enters the cell through a receptor-mediated process, using the NTCP bile acid transporter. Once inside the cell, it can encode. It comes in as a negative-stranded RNA. This can be replicated by host RNA polymerases into a positive strand of the genome. That positive strand can then be reamplified back into more negative strands. It can also be translated into the small and large delta antigens. And those newly synthesized antigens, along with the newly replicated negative-stranded genomes can form new ribonucleoproteins or nucleocapsids. Those can be developed by the surface antigen hepatitis B and secreted. So I want to highlight that there are relatively few specific targets for this virus. You'll notice it uses mostly host machinery in terms of host polymerases for replication, host transcription and translation machinery. So there are a few points to enter a few classical targets such as a polymerase-helicase or protease like many other viruses have. But one target that's been validated is the entry procedure and blocking the interaction between the virus and its receptor. So that will be the highlight for the remainder of the presentation. We can move on to the next slide. A little bit more about NTCP. It stands for sodium taurocholate cotransporting polypeptide. And as we said, it's a bile acid transporter. It has multiple transmembrane domains. It's expressed selectively on hepatocytes, and it's important for regulating the uptake of bile acids into the liver. And it was in seminal work from [indiscernible] (00:27:53) lab and they -- identified NTCP as a receptor for both hepatitis B and hepatitis delta virus. And a lot of elegant virology coming from Stephan Urban's Lab has really characterized the interaction between the pre-S1 protein or the large surface antigen of hepatitis B and this receptor to mediate entry. So thinking about NTCP as a target for drug discovery. This has been well validated by data generated with bulevirtide, spanning the laboratory through human clinical studies. So I'm sharing some data on the left. These are data from Stephan Urban's lab looking at the ability of bulevirtide to block entry of delta virus into tissue culture cells expressing the receptor. In this particular experiment, they've used delta that has been enveloped by the large surface antigen and surface protein of HBV from all the different genotypes A through H. So all 8 known HBV genotypes, and you can see the bulevirtide effectively blocks entry regardless of which genotype of HBV is enveloping delta virus. These in vitro results have also been reproduced in a humanized mouse model. So in this model, mice that are transplanted with primary human hepatocytes can be infected with both hepatitis B and hepatitis delta. In untreated mice, both viruses spread throughout the liver. And you can see that they achieved quite substantial viral loads. However, in a 4-week treatment course with bulevirtide in this model you can see [indiscernible] spread of both hepatitis B and hepatitis delta to below detectable levels. And then finally, as Professor Manns shared, the efficacy of bulevirtide in clinical studies has been established. Here again, summarizing some of the 24-week treatment data, and you can see approximately 2-log drop in patients' viral load for delta antigen with the treatment. So bulevirtide has shown safety and efficacy, but challenges with bulevirtide include that it's a very large, complex molecule. And again, it requires daily injections. So there's an opportunity here to develop a small molecule approach and have a safe and effective once-daily medication. This would improve greatly convenience for patients and has the potential to enhance treatment uptake, and easier to take treatment and also to improve diagnosis rates, which is another important factor for the field. So the target profile for our entry inhibitor program is as follows. Starting with the virology. It will be a potent single-digit nanomolar inhibitor of both hepatitis B entry and delta entry. It will be pan-genotypic for both hepatitis B and hepatitis delta. In terms of PK profile, it will be a once-daily oral medication at a reasonable dose. It will achieve plasma trough concentrations at least tenfold in excess of the protein adjusted EC50. And finally, it will be suitable for a conventional formulation, and this will also allow co-formulation for use for hepatitis B or hepatitis delta thinking forward. In terms of safety profile, no clinically significant side effects, so it will be suitable for chronic dosing in patients and low potential for drug-drug interactions. So I'm going to share some activity data for some of our inhibitors that we've discovered here at Assembly Biosciences. But first, I want to quickly walk through the assays that we use to profile our compounds. The top depicts an entry assay, looking at blocking the entry of hepatitis B virus, and the bottom represents a similar assay we're developing for hepatitis D virus. And let me just walk quickly through how the experiments are done. So we see HepG2 cells that express the HBV receptor NTCP. We can then infect the cells with hepatitis B virus and also treat with compound. We give the virus a day to attach and infect the cells. And after which, we wash off the viral inoculum along with the compounds. We give the cells 4 days to incubate so that they can form cccDNA and begin to have transcription and then produce proteins. And then at the end of the assay, we can monitor the presence of e antigen that's been secreted into the media of the cells and e antigen would be then a marker for a successful infection formation of cccDNA and antigen formation. So if we can block the formation of the e antigen, it shows that we block the entry process for the virus. And we're developing a very similar assay for hepatitis delta, with the main difference being that we infect with the delta virus instead hepatitis B, we give the cells slightly longer to replicate delta virus and express delta antigen, and then we will have an immune assay to measure the delta antigen in those cells. So blocking the formation of delta antigen will indicate that we've blocked the entry procedure and infection of the cells. So on the next slide, I'll share some of the activity data with some of our new compounds using the hepatitis B entry assay. So I'm showing a summary of a series of 5 chemically differentiated small molecules. The EC50 curves are shown on the left and the EC50s for blocking e antigen production as a result of blocking the entry procedure are shared on the table on the right. You can see that these are all low single-digit nanomolar inhibitors, ranging between 1 and 3 nanomolar. We've also included bulevirtide in these experiments as a control. And as you can see, it's a very potent inhibitor of about 200 picomolar. This number agrees very well with what's been published in the literature. I do want to point out that bulevirtide is a very large 47 amino acid peptide and as such, it has a high molecular weight and biologics such as antibodies or polypeptides like this are typically able to drive high potency through the large number of interactions they can have as a virtue of being large molecules. And again, just to reinforce that our molecules are small molecules with a molecular rate of 500. In fact, if we adjust for the weight difference and express the EC50s in a nanogram per ml format, you can see that on this weight adjusted basis that these compounds are all coming in around 1 nanogram per ml, very similar to bulevirtide. So we're extremely excited about the potency that we would have been able to achieve with these small molecules. So the status of the program. It's currently in lead optimization. It's highly resourced here at Assembly, and our goal is to push for a development candidate as quickly as possible. As I indicated, we have multiple chemically differentiated leads of single-digit nanomolar potency. We have entry in assay in place for hepatitis B, and we'll have one in place shortly for delta virus. We look forward to sharing some of that data at a meeting later this year. And we're currently optimizing the DMPK properties of the molecule and pushing for that PK profile in humans that would support a once-daily dose of the inhibitor. So we anticipate advancing compounds into preclinical safety profiling throughout the second half of the year. And our goal is to nominate a development candidate in the first half of 2023. So just to summarize what I've shared today, again, hepatitis delta is the most severe form of our hepatitis and it remains an important subgroup of HBV patients that have a high unmet medical need. Very encouraging data from recent HDV therapeutics, but there's significant room for improvement, particularly in convenience to overcome the injection and the side effects associated with interferon. And an oral once-daily HDV entry inhibitor that meets our target profile would be a significant advance to currently used therapies and has the potential to increase both diagnosis and treatment rates. And as I've said, we've discovered novel, single-digit nanomolar HDV entry inhibitors, and we aim to nominate a candidate within about a year's time. So with that, John, I'll conclude and hand back to you.

Okay. Thanks, Bill. That's great progress. As I always say, keep going. We're excited to talk about it now. There's been an enormous amount of projects and the potency is there. So we have to file in all the other drug like favorable characteristics, of course, as Bill has described to you today. So you've been working on hepatitis B for many years and participated in the approval of 3 NUCs for hep B. So as I've said, I'm excited, and we are excited about the prospects of addressing the need here, which is very acute really for the subset of patients who are coinfected with delta and hepatitis B. So thank you, both.

I think it's a great time to transition into some questions and answers. [Operator Instructions] But to start Professor Manns, perhaps I can ask you to share some of your expertise and ask you a question or 2. In Hannover, the hospital there in Europe, where are you seeing these patients? And how do they present exactly with delta?

Yes. I mean they are liver cirrhotic patients normally. And we have more or less 2 approaches. Number one is the transplant population. We have a transplant program, around 100 transplants per year. And over the years, the hepatitis B patient population has changed. In the '90s, these were decompensated cirrhosis with ascites and variceal bleedings and increased jaundice. Then with the control of hepatitis B, we saw more and more compensated cirrhosis developing cancer. And now we see the proportion of B with co-infection of D is increasing. So this indicates that we treat widely the hepatitis B population successfully, but we cannot prevent progression of hepatitis delta. So over the years, the proportion of B patients co-infected with delta increased in the transplant population. Number two are our liver outpatient clinics. And here, we see patients, IV drug abusers, and we also see patients, migrants in -- from either Southern Eastern Europe and also countries from the former Soviet Union. There's -- also Romania has a high prevalence of hepatitis D in the hepatitis B population.

Okay. Thanks, Michael. Can I also ask you, and then I'm going to ask Bill a question or 2. An effective oral therapy that Bill has described today that is potent and leads to a proportion of the patients becoming RNA negative. What would that -- how would that be perceived? How would that be thought? And would that be an advantage -- is it a good thing to do? That's what we're really asking you really.

Of course, I mean we learned from hepatitis B, but also from HIV. If we can suppress viral replication, we can prevent progression of the disease. I mean the hepatitis B story is a very successful story, but also HIV. And I think if on top of hepatitis B, we can suppress by an oral medication, we even could think of a coformulation of the 2 drugs. And I'm very much convinced and the goal of treatment is less -- more than 2-log reduction, but normalization and undetectability of HDV RNA, and at the same time, normalization of ALT are very convincing, the progression of disease will be stopped or at least significantly ameliorated.

Okay. Thank you very much, Michael. Bill, I have to ask you, you've been working in hepatitis B therapeutics for probably 20 years as well as other things as well. So why haven't folks and groups going after delta previously? Why now? Why are we not focused on -- if this virus is so important and so forth, why are we just focusing on now?

Yes. Thanks, John. I think there's a couple of factors here that play into this. The first is, as Professor Manns highlighted, that we have the thought that if you could cure hepatitis B, you would be able to take care of patients' delta infection along with the cure for hepatitis B. So I think right now, there's an appreciation that while curing hepatitis B is still a primary goal that's incredibly important that we're -- it's still going to take some time to achieve that cure. And these delta patients really can't wait. They should be treated as soon as possible given the aggressive course of the disease, so I think bringing the attention to treating what we can treat now versus waiting to be dependent on hepatitis B. I think the second thing is also similar to hepatitis B in that it's a very challenging virus to study. It was very hard to study, particularly before the discovery of the entry receptor. And now is really a time when the molecular virology and the proof of concept from the clinical development of bulevirtide have really paved the path to bring more to bear to attack this virus. So I think it's a combination of things.

I think Michael also said it well, and we would agree with this because we're trying to create curative treatments for hepatitis B. Once we get a curative treatment or cocktail for hepatitis B, then that will address delta because it's codependent on hepatitis B, but that's taking longer, and we're working hard on that, and this is something we should be doing in the interim, and it's very important. So Bill, just -- I mean I don't want to rehash this too much. But if you keep going at this pace, you achieve your goal, we get there, we have a single-digit nanomolar potent oral drug once a day. I mean why and what are the advantages of bulevirtide and interferon, et cetera?

Yes. Really, the advantage, I think, will come primarily down to convenience for the patients. So we've highlighted that bulevirtide is effective, but it is a complex molecule It does require preparation of a lyophilized drug and daily injection refrigeration. So I think greatly simplifying this for patients is a strong advantage. We saw this in many other viral diseases, particularly in HIV and HCV, where simplifying the regimen into a single oral pill really transformed the treatment of the disease. So that's the same type of thing we'll be trying to achieve for delta.

I think both of you have said that today as well. Michael, you mentioned in your slides, Professor Manns, I should say, in your slides today, and mentioned a couple of times, underdiagnosis.

Yes.

So it's screening -- obviously, in Europe, you're screening everybody with hepatitis B. How underdiagnosed is it really? I know this is a bit of a conundrum, and we don't know exactly how many folks are. But what are the factors here, do you think?

Okay. First of all, for a long time, it certainly was underdiagnosed in the United States. And also the diagnostics reagents have not been available not in the United States. But there are other countries, for example, in the Sub-Saharan Africa, we have no idea in some areas, whether there is delta co-infection or not. And the other thing is if patients with hepatitis B come to a practitioner, to a GP, they don't know delta. So if a patient comes to test at referral center with a hepatitis cirrhosis, I mean if it is B positive he will be tested for delta. But normally, we also have this in Germany that a general practitioner, he doesn't think of delta.

Yes. No, I agree. Whenever I ordered a delta test in my past life, I knew I was going to get a call from the lab to explain and be asked what it was. So there was an inherent road block to getting easy access to testing and thinking about GPs they just didn't think about delta.

Yes.

I agree with you there as well. Look, we have had a number of questions come in through the chat room. So perhaps it's a good time to start and address them. And perhaps Professor Manns, I'll start with you. And we've had quite a few questions around. Could you please comment on which setting you could use such a drug as described an oral entry inhibitor specifically. Could it be used in a combination with interferon or with other agents or would it be used alone, et cetera?

No, no. I think the bulevirtide is approved -- conditional approval as a monotherapy. But I think in the future, in particular, when we think of curing hepatitis D, I mean, at the moment, we have as an endpoint, both by FDA and the recommendations by AASLD more than 2-log reduction. However, we know that clearing delta is what we would like to see. There is one issue we need to discuss. And this is -- we have -- since the treatment hepatitis B with interferon and also in hepatitis C, we have x weeks after the end of treatment as an endpoint. For example, if hepatitis C RNA is negative 12 weeks after the end of the treatment, this is cured. If the hepatitis B, if e-antigen positive. If 24 weeks after the end of treatment, there is e-antigen negativity, normal ALT, we know that interferon has been efficacious. In delta, the story is a little bit different. And I have [indiscernible] group together with Dr. [indiscernible], they have found out that if you look at our HIDIT-1 study long term, that there may be relapses beyond 24 weeks. This is an argument that there will be, in the future, presumably a long-term treatment, and they're an oral drug given daily together with interferon, I could think of. I could think of also giving the combination for a certain time period, let's say, 24 or 48 weeks and then continuing with the oral drug in order to prevent relapse. We don't know how the final schedule will look like. But I think the combination, this is the treatment for combination.

Yes. Thank you, Michael. I agree. You could give it with interferon and try and have a more of a sustained response. So give it with monotherapy. And if Bill's group can design a drug that has favorable characteristics without accumulation, we could use it in people with cirrhosis and potentially more advanced liver disease. We can't use interferon in that setting and so forth right now. But that all has to be determined and so forth. There's something else I want to get back to if we have time, but we'll see if we have time...

For people more specialized, also, these oral drugs could be useful to prevent reinfection after transplantation. There's such a little bit transplantation. We know that hepatitis B can be prevented by giving oral drugs. We can prevent reinfection but we cannot prevent reinfection of D delta. Therefore, it's so important to treat delta before transplantation. Also the data from [indiscernible] Italy have shown that there may be a reinfection of the graft without co-infection of B. So I think there is also an indication for such an oral drug, which would be very welcome in the field.

Very good idea. Thank you. Bill, the next question is for you, and it's about bandwidth and understanding that delta is a new area for Assembly. Just can you briefly elaborate on the priority of this versus what we're doing with hepatitis B and our existing hepatitis B pipeline.

Yes. Thanks for the question, John. So it is a new area for us, but one that's overlaps very nicely with HBV in terms of both the research and the development aspects. So something that allows us to make progress on both viruses simultaneously. So in terms of resourcing, this is an important program for us, and we are resourcing it to move ahead aggressively, as I said, with the goal of having a development candidate in the first half of next year. But it's still important for us to move other mechanisms forward for hepatitis B, and we're looking for ways to leverage the expertise we have in the research and the development group in terms of treating other viral diseases as well. So this is part of our overall building out of and broadening the pipeline at Assembly. And we're excited about all the new programs we have. We do expect that this particular program will be the next development candidate that we deliver. But we'll be excited to tell you more about our second target for hepatitis B in the coming months as well as expand a little bit about what we're doing on other viruses.

It was -- the process here. Thanks, Bill. Process here over the last 2 years is to build a world-class best virology -- molecular virology drug development research team, and that's what Bill has done. And that cadre and group of highly focused, qualified people, has allowed us to do things such as what we're talking to you about today over the last 6-plus months and not distract from our primary mission of trying to cure hepatitis B. So this is not a program at the expense of our other hepatitis B program. So I hope I've made that clear as well in a different way, Bill. Now this is a question, I knew we're going to have a few professor Manns. I think we should discuss it a bit. But could you describe the increased bile salts that's observed with bulevirtide? Is it a problem clinically? How is it managed? And would you expect us to see this with a small molecule, which I think Bill can answer as well.

First of all, I think the virus is taken up by this NTCP receptor. So I think if you don't see an increase in bile salts, then the drug is not efficacious via that mechanism. So I think this is inevitable that there's an increase in bile salts. From bulevirtide, we know that it may be transient. But on the other hand, this may be a side effect we have to take into consideration. The treatment could be, for example, cholestyramine trying to bind the bile salts in the enterohepatic circulation. For those not familiar with it, the bile salts are circulated -- secreted via the bile coming into the gut and then an uptake in the ileum to 90%. And if you bind them with drugs like cholestyramine, which itself are uptaking up in the gut then they're excreted through the normal enteral route. Other applications would be to give antihistaminics. And I think these 2 should be fair enough to cope with this side effect. But nevertheless, it also tells us that the drug is efficacious.

There are many people have itch, Michael, with the drug -- when they receive a drug. It's not in the -- when you look at the documents for regulatory approval, it's very rare, right?

It's rare, it's transient, and it normally is at subclinical levels. And I mean this is also an interesting phenomena. I think it's not a problem for the drug. It was not a problem for the approval. And certainly, it's not life-threatening. And also, the itching, for example, there is also the idea that it's not only due to bile salts. There are very interesting data coming out of Dr. [indiscernible] Laboratory in Amsterdam. There are other mechanisms involved leading to pruritus in cholestatic liver disease. It's not just based on bile acid increase.

Thanks, Michael. And Bill, are we going to see this with a small molecule approach?

Yes. I think as Michael said, we could expect to see this as well. It would be a marker of the pathway of inhibition. But as Michael and you've highlighted, it's generally not an issue, tolerable.

The other thing I would just add to the discussion and to answer the question here is that there have been a number of rare individuals described that have a autosomal recessive absence of these receptors, and they have high levels of bile acids and some of them are actually normal and the normal levels of bile acids. Some of them are transient in the pediatric population, then they return to normal. But they're certainly not -- it's not an issue and those people who have complete deficiency of -- no receptors, which is the same as the drug. So I think it's not a serious problem as Professor Manns has described as well today.

Yes, I think once we discuss in such detail, I think, first of all, the [indiscernible] BRIC diseases, they are pediatric diseases. And I think they should not develop delta. And the other thing is there may be an issue, for example, we know that in the heterogeneous genetic background that sometimes these deficiencies are associated with cholestasis of pregnancy. And so maybe in the future, patients with cholestasis in pregnancy in their history should be cautious taking these drugs. But this is a very small population of patients. And still, I think, for example, using cholestyramine or other drugs this should be manageable but a minority of cases.

Thank you. Now there's 2 questions here that are the same. And Bill, you and I have talked about this. So I'm going to let you start and then I'll chime in as well. But the 2 questions are really about this blocks entry of hepatitis B as well. So it has -- could it be used in hepatitis B, what would we do with it as well as the delta population we have to talk about today, could it be complementary to standard of care for hepatitis B. Could it be complementary to core inhibitors. And actually, I'll tell you that Bill and I have discussed doing a triple combination trial with bulevirtide previously as well. So thoughts and comments on that. There's a couple of questions around this because of the shared similarities in entry.

Yes. Thanks, John. I mean this is one of the things that attracted us to this program and why we decided to move forward with this program because it does give us another potential to intensify the antiviral pressure on hepatitis B beyond nucleosides and core inhibitors. So it certainly works at a distinct step. It blocks the virus before it enters the cell. Whereas core inhibitors work at several points inside the cell, they can prevent the assembly of new virus. They can also destroy any virus making it into the cell by affecting the nucleocapsid and resulting in the degradation of each DNA. So works on 2 separate steps. I think people often say, well, if it works on 2 steps that are next to each other in the viral life cycle, is that going to be effective. But I think you only need to look at the results we've established here with core inhibitors and nucleosides, which work at adjacent steps in the viral replication cycle with assembly being immediately preceding the reverse transcription step that NUCs work on, yet we see clearly additional antiviral benefit in patients that are treated with that combination. So certainly, adding a third mechanism is very rational in terms of intensifying in oral pressure.

So we will explore this. And there's another very important piece of information that the clinics did a study in hepatitis -- not with nucleotides, bulevirtide, I apologize. There was a study done in hepatitis B mono infected patients. And at the 10-milligram dose, which is the higher dose, it wasn't approved, but it's also a more effective dose. Some of Professor Manns slides showed that today as well. Given as monotherapy for 12 weeks, it reduced HBV DNA to the same level that entecavir did. And the same proportion of patients had a reduction and HBV DNA of greater than 1 log at 12 weeks, it was about the same proportion of patients, small study. But that shows you that just blocking entry of hepatitis B had a significant reduction by preventing cell-to-cell new cell infection or cell-to-cell spread in reducing HBV DNA and viral replication. So there is an effect there, and whether that effect has additional benefit in trying to shut down all elements of our replication of multiple steps, et cetera, for hepatitis B. We'd be fortunate enough to be able to study that, I think, in a particular population. So we will do that. There's another question for you for Professor Manns. We're getting to the end of the time soon here, I think, but this is a good one. So do we know for certain that complete viral suppression of hepatitis B alone, a cure of hepatitis B I presume, is enough or not enough to eliminate Delta infection. And if not, why not, I suppose?

Okay. First of all, we don't know. If I would have to guess, I think complete suppression means undetectable HBV DNA in serum. This does not mean undetectable HBV DNA in the liver cell. And I think we cannot predict. But for the time being, I think all the means we have available to suppress hepatitis B will not be sufficient to eliminate or cure hepatitis delta. .

Yes, I think we would agree with you. If you can shut down all viral replication, and those cells are getting infected, then over time, surface antigens should decline because the residual infected cells should diminish. And you'll need loss of surface antigen to get rid of old delta infected cells, I agree.

John, I could also modify your question. So I think suppressing HBV DNA is not enough. You need to have a clearance of surface antigen and best with the seroconversion. Then I would say the treatment is enough. But we have learned that in particular with the NUCs, this is a rare event.

Hopefully, we'll get there one step at a time and we will work on it. But I think -- look sorry, Michael, I interrupted you.

So I would say we have to go both ways because we don't know what will be successful. And those patients who have delta associated cirrhosis now, they cannot wait and bet for this approach on B. And for example, if you look at hepatitis C, the virus was discovered by Michael Houghton and his group. The patent was developed mainly aiming at a hepatitis C vaccine, not as therapeutics. So far, we don't have a vaccine for C, but we have efficacious treatment. If we look at SARS pandemic, we had a vaccine within 10 months, but we don't have efficacious treatment. No, therefore, we cannot predict, and we have to go both ways because there are so many patients that cannot wait.

Thank you very much. So with that, I think we'll wrap things up for the day. It's getting late in Germany, I know, and we are incredibly grateful to you, Michael, for being so generous with your time and your thoughtful insights into viral entry inhibition for hepatitis delta. So thank you once again.

Pleasure.

Bill and I and the research team are excited about our activities in this area, and our path towards the clinic as we've talked to you today. We look forward to sharing our progress with you on this program at an upcoming scientific meeting later this year also. Also, we plan to introduce, as shown, additional research programs by midyear. So stay tuned, please. We are thrilled to be broadening the scope of our pipeline to complement our portfolio of potent core inhibitors, including clinical candidates, which have demonstrated favorable safety and antiviral activity to date. To that point, during 2022 this year, we expect to initiate a Phase Ib study of 3733, our next-generation core inhibitor and have interim data to report by year-end. And we also plan to advance 4334 into the clinic. This is our most potent core inhibitor designed with a profile that's potentially best-in-class as well. We expect also the initiation of a Phase II triple combination study under our collaboration with Antios evaluating vebicorvir plus NUC and Antios' active site polymerase inhibitor or ASPIN. And lastly, we anticipate interim data, on-treatment data from our Phase II triple combination studies evaluating vebicorvir plus NUC with RNAi and interferon, respectively. The RNA study is part of our collaboration with Arbutus and recently completed enrollment. We are leveraging the strength of our team and their track record in virologic discovery and drug development to further strengthen our portfolio. In doing so, we are building important momentum and progress during 2022, and I look forward to updating you further as the year progresses. This concludes our event. Thank you for joining us today. I hope you found it helpful and for your support of our company, Assembly Biosciences.