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

Good day, everyone. I'm John McHutchison, CEO of Assembly Bio, and I'd like to welcome you to the third and final in our series of planned webcasts for 2022, introducing our expanded research pipeline beyond core inhibitors and hepatitis B. Bill Delaney, our Chief Scientific Officer, will be talking to you shortly about our 2 newest programs focused on HSV-2 and transplant-associated herpesviruses. And then he and I are honored to have Dr. Michael Houghton join us for the discussion. While I will introduce Dr. Houghton more formally before the Q&A session, Sir Michael needs no introduction. He is a visionary and renowned leader in virology and hepatitis, a Nobel laureate, and we're incredibly fortunate to have him on Assembly Bio's Board of Directors. As a reminder, we'll be making forward-looking statements, so please refer to our SEC filings for a full list of disclosures. In 2 short years, Assembly Bio has evolved from being a solely hepatitis B core inhibitor company to a virology company discovering and developing innovative therapeutics for hepatitis B and other viral diseases. Since Bill Delaney joined us as CSO in 2020, he and his talented team of scientists are focused on innovating by designing novel small molecules that broaden our portfolio and have the potential to bring new and better treatment options to patients where there is a clear unmet need and an opportunity to improve their outcomes and their experiences. We have now introduced 5 new programs that have become part of our preclinical pipeline under Bill's tenure with additional research initiatives that are in earlier stages as well. The most advanced of these 5 programs is 4334, our most potent oral core inhibitor candidate to date. 4334's optimized profile has shown strong preclinical activity against both cccDNA formation and PG or pregenomic RNA encapsidation, and a regulatory submission is planned shortly with the aim of beginning the first clinical trial before the year-end. And the next slide will highlight the focus of our 4 new research programs shown in the boxes here, which take us beyond core inhibitors and hepatitis B. As you will recall from our earlier research webcast this year, we are expanding our work in hepatitis B to include distinct and complementary mechanisms and novel candidates. These are our oral small molecule viral entry inhibitor for hepatitis B and delta and our liver-focused oral interferon alpha agonist, aimed at engaging interferons validated antiviral and immunomodulatory mechanisms for improving tolerability with reduced systemic exposure. Finally, as we are highlighting today, we are building on our team's collective 150 years of experience in virologic drug development and 15 approved drugs under our belts to expand Assembly Bio's portfolio to viral diseases beyond hepatitis. We're excited to unveil our first look at our research efforts focused on herpesviruses, specifically recurrent genital herpes caused by herpes simplex virus Type 2 or HSV-2 and serious transplant associated herpesvirus infections. Secondly, we have designed approaches that we believe will be differentiated from the current and anticipated treatment landscape. Our HSV-2 program is designed to be long-acting, extended from the current standard dosing interval from 3x per day to once every 2 to 3 months with the aim of enhancing patient convenience, compliance and also importantly, outcomes. And for transplant patients who are at considerable risk for significant and often serious post-transplant activation of multiple herpesviruses, including CMV, HSV-1 and -2 and VSV (sic) [ VZV ] of Varicella zoster virus, we're advancing a pan-herpes antiviral approach, where as historical efforts have typically only focused on single viruses. Before Bill presents his overview of these 2 programs, I'd like to quickly touch base on a few housekeeping items. Today's event will be available for a replay on the Assembly Bio website shortly after the live webcast has concluded. The slide presentation will also be available there for download. Following the prepared remarks, we'll be hosting a Q&A session. You may submit your questions at any time during the event by entering the text in the Q&A box, which you'll find below the video player on the screen. 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. So with all of that taken care of now, I'll turn things over to you, please, Bill.

All right. Thank you, John. So I'd like to start by talking about the process that we use to arrive at these 2 new programs. And as you mentioned, this is something we embarked upon about 2 years ago when I joined the company and sought to broaden our portfolio in hepatitis B beyond core inhibitors and also look beyond the liver viruses. So we've done that with the programs we've announced earlier this year for HBV and Delta. But we had this process ongoing to evaluate a much broader panel of viruses. So those include other liver-related viruses, chronic human viruses, viruses imported in the transplant population and a large number of acute and respiratory viruses. So this was a very systematic process that we used. We looked at unmet medical need. We looked at clinical validation of various targets. We looked at the ability of -- to intervene in the infection to have a positive outcome on patients. And we also looked at the technical feasibility of having an antiviral program in these areas as well as those that matched the skills that we had here and the talent that we have at Assembly. So at the end of this process, we identified 4 high met unmedical (sic) [ unmet medical ] needs that were very well aligned with our strengths in both virology and medicinal chemistry. We then embarked upon a period of exploratory research where we did some chemistry and biology to further explore these viruses, and it was clear that 2 quickly rose to the surface as ideal matches for what we do here at Assembly, and those are the programs that you've just mentioned. So I'm going to talk -- give a little bit more detail on both of these, and then I'll go through each program and give you an overview of our efforts. So the first on the left is the high-recurrence genital herpes, as John said, that's caused by HSV-2 and affects up to 13 million patients in the U.S. and Europe. This disease causes painful re-occurrent (sic) [ recurrent ] lesions and greater than 6x per year in what we're calling high reoccurrence. This also is associated with the transmission risk of HSV-2 to partners or to neonates, increases the risk of HIV infection and causes significant psychological stress to patients. There are approved antivirals in this area, but they are high dose and typically are given multiple times a day and most importantly, are only partially efficacious. The opportunity that we see before us, as John indicated, for a highly potent long-acting injectable to move the paradigm from daily oral pills or multiple pills to a monthly long-acting that will improve efficacy, adherence and convenience for patients. For the transplant associated herpesviruses outlined on the right, we identified 4 related viruses that are important in solid transplant and stem cell transplant. These are cytomegalovirus, HSV-1, HSV-2 and Varicella zoster virus. There's 60,000 patients in the EU in Europe that these viruses can affect. And in the setting of immunosuppression after a transplant, there can be uncontrolled viral replication, which can have severe consequences such as loss of the graft or death. There are approved antivirals to treat these viruses, but they're narrow spectrum. And there are several side effects, tolerability issues, black box warnings and some significant drug-drug interactions with various individual drugs. So the opportunity in this area is for us to have an oral agent that's active against all 4 of these viruses and wouldn't have these side effects or tolerability issues, and this gives the treating physician an opportunity to greatly simplify treatment of these viruses during transplant. So I wanted to zoom out since all of these programs today relate to herpesviruses and talk a little bit about human herpesviruses. So there are 3 large families of human herpesviruses. This include alpha herpesviruses, beta herpesviruses and gamma herpesviruses. Three of the viruses we're discussing today are in the alpha herpesviruses family. So that's herpes simplex 1, herpes simplex 2, Varicella zoster. And then cytomegalovirus belongs to the beta herpes virus family. In terms of the disease that these viruses cause, HSV-1 causes oral herpes, can also cause genital herpes less frequently and can cause keratitis and encephalitis. HSV-2 causes primary genital herpes and recurrent genital herpes, which is the subject of the program that we're talking about today. And it can also cause oral herpes in some circumstances. VZV is responsible for chicken box and reactivation later in life to shingles. And cytomegalovirus is responsible for mononucleosis, also has severe congenital effects and can be associated with retinitis and disseminated CMV. I'll now go into some detail on the program focusing on high recurrence genital herpes. So a little bit more about the epidemiology and disease HSV-2. There's about 500 million patients worldwide infected with HSV-2. 33 Million of these are resided in the U.S. and the EU. And of those, about 13 million of them have high recurrent HSV-2. Both HSV-1 and -2 are lifelong diseases that cause painful lesions. Again, HSV-1 mostly associated with oral lesions and HSV-2 associated with genital lesions. And again, there are many patients that suffer frequently recurrent HSV-2 and these lesions are painful, can be quite severe and are quite distressing to patients. As we mentioned, HSV infection can increase the risk of HIV infection. It can also be transmitted perinatally and can cause severe birth defects. And there are therapies that are partly efficacious, but they do require high doses or daily pill burden. And the current diagnosis rates are low. A little bit about the virology of herpes simplex viruses. These are a family of large enveloped DNA viruses that have an envelope studded with viral glycoproteins. They house a nucleocapsid with a large 150 kilobase double-stranded genome. And their life cycle or replication cycle is depicted on the right-hand panel. These cells -- these virus infect the epithelium and then gains access to nerve cells and travel down the axon in the nerve to the cell body of the nerve, where they can replicate and they can also remain latent. A variety of stresses or triggers such as UV light, emotional stress, exhaustion, hormonal changes can cause reactivation and viral replication. And at this point, the virus continues to replicate. It can travel back down the axon into the epithelium, have replication in the epithelium and cause lesions. And as I said earlier, these are lifelong infections. This slide summarizes the current standard of care for high recurrence HSV-2. There are 3 approved drugs. They're all nucleoside analogs, acyclovir, which is given twice daily, valacyclovir, which can be given once daily at a high 1 gram dose and then famciclovir, which is given twice daily. These are older drugs with the most recently approved drug being valacyclovir approved 27 years ago. Their efficacy is summarized on the right-hand panel. And this graph shows the -- over a period of 1 year, they are reoccurrence-free number of patients, percentage of patients. You can see in placebo, 96% of the patients have reoccurrence throughout the year. And you can see that both acyclovir and valacyclovir have an improvement here, up to 34% of patients are reoccurrence free. But this also makes it obvious that there's a large number of patients, 66% of the patients that are having reoccurrences despite daily antiviral therapy with these regimens. So clearly a lot of room for improvement. One of the interesting pieces of data from the valacyclovir studies is that as the dose is increased, the percentage of patients that are reoccurrence-free increases, and this also correlates well with the exposure of the drug in the plasma. You can -- so you can see on this graph across the x-axis, the acyclovir exposure increases as the dose increases and this raises the efficacy of the drug from preventing reoccurrence in about 20% of patients to over 40% of patients. So clearly, optimizing the plasma exposure of the drug can drive improvements in the efficacy of the regimen. So to summarize what I've said so far, HSV-2 causes genital herpes and up to 13 million patients have high reoccurrence disease. We know that lowering viral load reduces the recurrence frequency, also reduces viral shedding and transmission rates. And the current chronic treatment options require high daily doses and often multiple pills a day and are only partially effective at preventing recurrence in transmission. So there's clearly a need for more efficacious and simple treatments for HSV patients. And the paradigm that we're pursuing here at Assembly is to convert daily oral regimens into a long-acting injectable, and that's depicted here on this slide. So the standard of care using Valtrex, as an example, is on the left-hand slide, where you can see that over a 3-month period, a patient needs multiple bottles of pills and a daily pill, and you can see that the concentration of the drug in the plasma increases after every daily pill but then starts to decrease. This gives the opportunity if the patient doesn't take their pills every day for the concentration to drop below the efficacious dose and to have reactivation of the virus. So our plan is to convert this to a long-acting injectable therapy, where a patient would get 1 injection subcutaneously. They would rapidly achieve a highly efficacious dose, and this would be maintained, this plasma concentration would be maintained over a multiple month period. So instead of requiring the multiple pills per day over this period, they would need only the 1 injection and maintain an optimal efficacious dose. So I wanted to take a minute and talk about some of the potential benefits of long-acting therapies, which is a relatively new concept in antivirals, and also talk about some of the recent advances that have been made in the HIV field. In terms of benefits in the top left panel, we have the ability to optimize the dose and also the plasma concentrations of the drugs by having a compound with the right properties and significantly improve adherence since the patient doesn't have the opportunity to miss a dose and doesn't need to remember to take their pills every day to keep the effective plasma concentration. So these factors could combine to generate greater efficacy against the virus. It also relieves the mental burden on the patient to remember to take their pills every day. If they're traveling or a prescription runs out, there's the potential to miss pills for a few days. And not insignificant is also the daily reminder every day that the patient has a viral infection. It also provides the opportunity for greater privacy for patients. They don't have to take their pills every day or multiple times a day, can reduce stigma, provides greater convenience and may also make some patients good candidates for treatment who wouldn't be ideal candidates for daily oral medications. So there's been great strides in long-acting therapies for HIV recently. There's 2 approved drugs from ViiV, cabotegravir and rilpivirine. And just last week, Gilead had a third long-acting agent in the field approved, which is lenacapavir, an HIV capsid inhibitor and there's additional long-acting agents under development for HIV. And a couple of the seminal studies with cabotegravir and rilpivirine are summarized in the bottom left. This is 48-week -- 2 large 48-week studies, over 500 patients each, where they compare the dual agent long-acting therapy. This is given as a once-monthly IM injection to daily oral therapy with a combination of 3 drugs. And you can see from the graph, which depicts the number of patients that are undetectable for HIV RNA by the conventional test that the activity is equivalent between the 2 regimens, so non-inferiority. So these are highly effective oral regimens and are matched by the 2 drug, once-monthly long-acting therapy. And I think what's remarkable from these studies is when patients were polled following the studies, whether they would prefer a daily oral therapy or to move to long-acting injectable drugs once monthly, 98% of patients responded they preferred the long-acting regimen over taking daily pills. So moving on and refocusing again on our HSV-2 program. We're going to take a long-acting approach. The next question is what is the target for the antiviral activity? And we've selected the HSV helicase-primase as the target. This is an essential viral enzyme, the helicase-primase is responsible for opening the viral DNA during DNA replication of HSV and allows the DNA polymerase to then come in and replicate the individual DNA strands. So we like this target because there are small molecule inhibitors that have been discovered and it's a clinically validated target. Pritelivir, our Phase III helicase inhibitor from AiCuris, has demonstrated significantly improved clinical efficacy versus the acyclovir in a clinical study, and this includes greater reductions in HIV shedding, fewer lesions and fewer days with pain. So it's a clinically validated target. Another key point is that helicase inhibitors are active immediately upon entering cells and before HSV reactivates. And this is in contrast to the current standard of care, which I mentioned were all nucleosides. These nucleosides rely on a viral enzyme being expressed to modify them and phosphorylate them. So they're not actually active until the viral [ DNA ] kinase phosphorylates, and so this is, I think, an important difference when we think about the timing and how quickly an agent can act. It does not require active replication by the virus to become an active drug. And finally, helicase inhibitors are active against nucleoside analog resistant HSV as well. So the target product profile for our long-acting helicase inhibitors as follows: it needs to have potent antiviral activity against HSV-2 and HSV-1, less than 5 nanomolar. In terms of PK profile, it has to support subcutaneous injection 4 to 6 times per year and has to be able to achieve a high fold above the efficacious minimum plasma concentration. Safety profile includes having no clinically significant side effects, so it's suitable for chronic dosing and low potential for drug-drug interactions. Now designing a drug for long-acting is inherently different than designing a drug for a typical oral administration. And I wanted to take a minute to discuss some of the parameters that are particularly important for long-acting. This is a figure taken from a great review by Andrew Owens at University of Liverpool. And it summarizes that the 2 key parameters are to have very high potency, which minimizes the overall amount of drug that needs to be administered by the injection and importantly, to have very low clearance that is, the drug needs to be very stable to metabolic clearance. This helps to have a long half-life and maximizes the plasma exposure. So the combination of these 2 parameters are highly important. And in contrast, some of the other parameters that we would normally spend a lot of time optimizing drugs for oral exposure such as solubility and bioavailability are things that we can be a little bit more flexible on with the long-acting approach. So we are designing our drug from initiation of the program to incorporate those properties that are ideal for long-acting. So we can measure these parameters in vitro as we synthesize new compounds that can go into standard assays for antiviral evaluation. So that's shown on the left. It's a fairly simple assay where we can infect cells with HSV-1 or -2, have the compound incubate for a number of days, and then we can measure the ability of the drug to protect cells from being killed by the virus to cell viability as the endpoint. And then to evaluate clearance. This is a conventional microsome stability assay where we use liver microsomes, incubate the compound with those enzymes in the liver microsomes and look to see how much compound survives that incubation as an indicator of how stable it is. This slide summarizes some of our lead compounds at this point. I'm showing 3 different chemical series, representative compounds on this slide. The left-hand side summarizes antiviral activity against HSV-2. And you can see that all 3 of these compounds are showing low nanomolar activity, around 10 nanomolar. And for comparison, acyclovir is also shown on the slide, which as we expect has a micromolar EC50. All 3 of these compounds show equal activity against both HSV-1 and HSV-2 and also have very promising stability. You can see particularly Series I and Series III are very stable. And this slide summarizes some exciting results from long-acting -- evaluating the long-acting PK of our compounds. So this is a representative of Series I, given a single 10-milligram per kilogram subcu injection, and then we monitored the plasma concentration of the drug over several weeks, actually out to 2 months, 60 days. And what you can see is that very quickly in both nonhuman primates and in dogs, we reach high plasma concentrations ranging from hundreds of nanomolar up to micromolar levels. And then these high plasma concentrations are maintained very steadily out through 60 days. So this is exactly the type of profile we want to see when we inject the compound subcutaneously. So a very promising and a very exciting result for us. So to summarize where the program is right now, the project is rapidly progressing towards the identification of a development candidate. We've got multiple chemically differentiated leads, as I showed you, with less than 20 nanomolar potency. And we have scaffolds, as I showed you, that show a PK profile that strongly suggests the long-acting profile after subcutaneous injection. We're anticipating moving a compound into preclinical safety profiling by the end of this year. And this is 1 of 3 preclinical programs that have the potential to nominate a development candidate next year. So to summarize this program overall. Again, high recurrence HSV-2, it affects 13 million patients in the EU and Europe. As these patients have high disease burden. The current therapies are only partially effective, and they're associated with high and daily pill burdens. A long-acting therapy has the potential to drive greater efficacy and also improve adherence in patients and convenience, and we've discovered multiple novel series of helicase inhibitors with high potential as long-acting agents, and we look forward to progressing this program into preclinical safety testing later this year. I'll now switch and give an overview of our transplant-associated herpesvirus program. Wanted to talk briefly about the epidemiology and disease burden of these 4 herpesviruses in transplant patients. So as we mentioned earlier, herpesviruses are highly prevalent. CMD is positive in about 60% of the population. HSV positivity is about 60% of the population and VZV is positive in about 80% of the population. So these are highly prevalent viruses. And as we said, once you're infected with them, they establish latent -- lifelong latent infections. And then once a patient is immunosuppressed, following a transplant, they're at high risk for one of these viruses to reactivate and cause disease. And as we said, the reactivation can have severe consequences, including organ rejection and death. We've captured on the right-hand panel, the incidence of these various viruses in the solid organ transplant population and the homologous stem cell transplant population. And you can see that CMD is very prevalent, particularly in solid organ transplant, up to 50% of patients. HSV has similar prevalence and VZV is present in a significant number of patients as well. Slightly different statistics in the homologous stem cell transplant population. CMV is still about 25% of patients, herpesvirus is about 75% of the population and up to 50% with VZV infection. So it's common, very common infections in the patients that are undergoing transplant. I won't go over the virology in too much detail because I gave a good overview in the introduction to the HSV program. But again, these viruses are all related, with HSV-1, -2 and VZV, all belonging to the alpha herpesvirus family and CMV belonging to the beta. They all have a similar structure and a similar type of life cycle. They're all large enveloped DNA viruses. They all depend on a viral polymerase, which is an essential enzyme for replication. And overall, there's a very obvious homology between the herpesviruses. A typical life cycle of virus is just shown on the left, where the virus gains access to the cell. The DNA is delivered to the nucleus of the cell. The DNA replicates, can be packaged into new nucleocapsids and those nucleocapsids can then acquire an envelope and be secreted from the cells. Also shown on this slide is the large panel of drugs that's available to transplant physicians to manage reactivation of these various viruses. Many of these are polymerase inhibitors, which would act at the nuclear step of DNA replication. You can also see some of the newer drugs target different targets. So for instance, maribavir targeting viral kinase and letermovir targeting viral terminase. As you can see from this table that there is no drug that's approved for use of all of the viruses that we're discussing today. So there's no drug that's active universally against CMV, HSV-1, HSV-2 and VZV. And many of these drugs have individual toxicities, black box warnings or drug-drug interactions that make them complex to use, especially when the patient may have more than one viral infection as well. So to summarize the rationale for this program, there are multiple herpesviruses that frequently reactivate during immunosuppression after transplant, and they can cause severe disease. The existing therapies are narrow spectrum over these 4 viruses. And they have some further drawbacks, including some tolerability issues, drug interactions and other features that complicate the use in immunosuppressed patients. And therefore, there's a need for an oral agent that's active against all 4 of these viruses and wouldn't have some of the other drawbacks that the existing therapies have to greatly simplify therapy for the treating physician and for the patient. So the target that we've selected for this program is the herpesvirus polymerase. As I indicated before, there is strong homology between these different herpesviruses and in particular, in the polymerase, there's 87% identity in the active site across all 4 of these herpesviruses. As I said, the DNA polymerase is absolutely essential for viral replication. It's also a clinically validated target. I showed you the table that many of the existing therapies target the polymerase so that we know inhibiting polymerase has a clinical benefit. And furthermore, structure -- there are structures available for these polymerases enabling structure-guided drug design. Target product profile for this program is as follows: compounds have to have potent antiviral activity. We're targeting less than 10 nanomolar and that goes for all 4 of the viruses we discussed, CMV, HSV-1 and -2 and VZV. They also have to be active against mutations that confer resistance to standard of care agents. In terms of the PK profile, we're striving for oral dosing at a reasonable dose. We need to be able to achieve plasma concentrations significantly above the efficacious Cmin, and we want to have a conventional formulation. Safety profile, no clinically significant side effects, suitable for long-term dosing. And importantly, in this patient population, which receive many medications following transplantation and for immunosuppressions, we want to have the low potential for drug-drug interactions. And that's a drawback with some of the existing therapies currently. So I'll share a little bit of data from the early chemistry effort in our discovery program. But first, let me describe the assay. So we've developed assays for all 4 of these viruses. They're on the surface, very similar assays. We use a cell line that we can plate. We can then infect with the various viruses, treat with the compounds and then we incubate with the compounds for a period of 3 to 7 days, depending on the virus. CMV, HSV-1 and HSV-2, we can monitor the activity of the drug by cell viability. So we look at the number of cells that survive as an indicator of the potency of the drug. And for VZV, we use a quantitative PCR assay to measure viral DNA level at the end of the period. This slide summarizes data that we've -- for 3 different chemical, distinct chemical series where we're measuring activity against the various viruses I've described today. So Series I and Series II, we have CMV, HSV and HSV-1 and HSV-2 activities summarized on these graphs. And you can see we have similar activity in the range of about 100 nanomolar to below 100 nanomolar against all 3 of those viruses. Series III is actually the first seriously, we've had the opportunity to test the VZV activity now that we've recently developed that assay. And you can see the Series III compounds have activity across all 4 of those viruses. And as a control, we've run [ pritelivir ] in the assays. Remember, this is the terminase inhibitor that's active against CMV and in our in vitro assays, that's what it shows, but no activity against the herpes simplex viruses 1 or 2. So this project is an early lead optimization. We've got multiple novel chemically-differentiated hits that have activity across different herpesviruses. We're in the process of optimizing potencies and we've developed assays for each of those different viruses. And then we also have to optimize the DMPK properties to get an oral medication, and we anticipate advancing compounds into preclinical safety profiling in the second half of next year. So this is in an early stage than the first program that I discussed today, but moving along well. So to summarize, the pan-herpes polymerase inhibitor project, there are multiple herpesviruses that cause significant morbidity and mortality in immunocompromised patients. And again, we're looking at patients following transplant. The current antivirals are not broad spectrum and there are numerous issues among the various drugs in terms of tolerability or drug-drug interactions. An oral pan-herpesvirus inhibitor that had a profile that we've described would be a significant advance over the current therapies. So we have the potential to simplify therapy, to use 1 drug to treat 4 viruses and the potential to remove some of those tolerability and drug-drug interactions that make managing patients more complex. So I shared data on a series -- 3 series of potent broad-spectrum herbed virus inhibitors and we're enthusiastic to continue to move this program forward and look forward to moving it into safety testing in the second half of next year. So at this point, that concludes my presentation, and I'll hand it back to you, John.

Thanks, Bill. That was great. So as you know, and I know from our work in the virology field over the last decades, the paradigm for these oral disease -- and then treatment continues to evolve. Efficacy in suppressing the virus is obviously a key concern. But beyond that are the compliance considerations that you've touched on, particularly that the lifelong chronic therapy is currently the case for HSV-2. And if we look at the experience with HIV, it was not so long ago I felt that patients were adequately taken care of if they had an effective once-daily, single-tablet regimen. And now there's clearly a shift away from that, particularly for pre-exposure prophylaxis, et cetera. And there's a market and a patient need and a request for these long-acting antivirals. So I think this is very relevant to the patients with HSV-2. With HSV-2 moving the dosing interval from hours to month should position us to reduce viral shedding and also improve patient compliance. In doing so, such a long-acting antiviral has the potential to also enhance efficacy by decreasing the likelihood and frequency of outbreaks and relapses as well. So I've invited Nicole White, Assembly Bio Chief Manufacturing Officer to join us for the Q&A portion of today's event since she and her team have been instrumental in our strategy to create an effective long-acting subcutaneous injectable formulation strategy for the program. As for our transplant herpesviruses, it's early days yet, as Bill said, but I believe that our pan-herpes antiviral approach offers really significant clinical advantages over what we've been using now for decades, for both transplant patients and their care teams as they try and optimize successful post-transplant outcomes. We'll do a little bit about -- more about that as well. As we turn now to discussion and Q&A, which Dr. Houghton will be joining us for, I'd like to introduce him more formally. In 1989, his laboratory and collaborators identified the hepatitis C virus. That was really groundbreaking work, for which he and 2 others were later awarded the Nobel Prize in Physiology or Medicine. Beyond hepatitis C, he's worked on a number of viruses during his career, including B, Delta, herpes and other transplant-related viruses. He has over 40 years of experience in major pharmaceutical companies including 24 years in virology research at Chiron Corporation. He currently serves its Canada Excellence Chair in virology at the University of Alberta, in Edmonton and is Director of the Li Ka Shing Applied Virology Institute and is a Li Ka Shing Professor in the Department of Medical Microbiology & Immunology. Over the course of his career, Dr. Houghton has also more than 300 research publications and over 70 patents. He's been the recipient of 17 prestigious awards for his scientific contributions, including the Nobel Prize and the Lasker Award. And he was knighted in the 2021 Queen's Birthday Honours for his services to medicine. So I'd like to note that because the University of Alberta has an active research program in CMV, we won't ask Sir Michael to comment directly on our chemistry and our structures, but he can speak obviously very eloquently and with experience about transplant-associated herpes and the unmet needs, et cetera. So Sir Michael, thank you again. And as we kick off the discussion today, I'd love to just get your general thoughts on what we've presented here today, what Bill's presented really, and where you think we're going with our research programs.

Thank you very much, John. Thank you, Bill. And I have been on the Board of Assembly for over 1 year now, and I've really enjoyed reviewing and digesting the science being done at this wonderful company. It's very clear to me and I'm sure to the audience that Assembly Biosciences has an absolutely outstanding research engine. And many of the team at Assembly were previously at Gilead, who really revolutionized how we treat HBV, HIV and, of course, hepatitis C. This is an outstanding research team, and it really has been a tremendous pleasure for me to be on the board of this company. While historically, as you heard from John and Bill, Assembly have been focused on developing hep B virion assembly inhibitors, which they are testing in the clinic in combination with standard polymerase inhibitors as well as type I interferon. It's very clear to me that -- and as you heard today, this exceptional research group can readily innovate against other serious viral infections. I often use the analogy with John and Bill, that this is like having a gleaming Ferrari in the garage. And as they're doing, you need to get it out and drive it. And this is what you heard today and earlier this year. So I am very impressed with their progress in producing a long-acting antiviral against genital herpesvirus. As you heard, this is a very common infection, persists for life and causes frequent outbreaks, both symptomatic and asymptomatic. So often the person is not aware that they have an outbreak. And of course, during that time, there's obviously a high probability of transmitting to their partners. So I believe the work you've heard today, the long-acting antiviral approach is a very smart approach. I think based on the PK and the antiviral activity that Bill showed you, it definitely has a chance to be best-in-class for this major disease and at the very least, an additional valuable antiviral to improve patients' lives. Likewise, Assembly's progress in developing a new pan-herpesvirus antiviral, including cytomegalovirus for use in immunosuppressed transplant patients is very promising and has been very well thought out and is close to obtaining the potency required which is in the low nanomolar range in drug activity. And having a drug that's not just active against 1 herpesvirus, but against several has been the holy grail of herpes antiviral therapy for decades. And I think as you saw today, there are advanced hit drugs, which are currently under lead optimization are active against -- very active against the polymerases of cytomegalovirus, herpes simplex 1, herpes simplex 2 and Varicella zoster virus, the chickenpox virus that also causes shingles. It's very important to understand that these viruses are very dangerous in the transplant setting because of the immunosuppression required before and following transplantation, these can reactivate and there are often very dramatic and serious consequences, including fatalities. So I think the 2 promising programs you heard today add to the previous product lines that were revealed earlier this year with Assembly's small molecule inhibitors of hepatitis B and hepatitis Delta cell entry, small molecules that once again are a wonderful example of the research expertise of Assembly that prevent binding of these viruses to the receptors on the liver cell surface and prevent entry into the cell. So -- and also, as you heard, today and earlier in the year, Assembly have come up with small molecule agonists of the type I interferon receptor. So not only do these programs offer real promise in treating hep B and hep Delta, hepatitis D virus. What I think is very smart about what Assembly is doing is that these approaches complement their existing potent HBV assembly inhibitor program. And importantly, what they allow are additional options for clinical development aimed at curing hep B and hep D patients. For example, one can easily see how using currently available nucleoside inhibitors to downregulate polymerase activity with entry inhibitors is a great strategy potentially for curing hep B patients or NUCs with interferon agonists because we know that when interferon type I interferon is added to NUCs, you increase suppression of the virus and inhibit the disease better. So I'm very excited about Assembly's elite drug discovery engine. It's been a delight for me to be associated with them for the last 1.5 years or so. And I'm delighted that they are clearly focusing on other viruses besides hepatitis B simply because I know they can be so effective potentially against many other viruses. And as a medical researcher for 50 years now, I feel that their work is very likely to benefit many patients suffering from various herpesviruses as well as hepatitis B and hepatitis D virus, 2 viruses that I've worked on quite a bit in my career. And also, I will end by saying with this kind of elite drug discovery engine that Assembly has, it's very easy to see other antiviral opportunities being brought in against other viruses. And it seems to me, in my experience, there's no better company to be doing this kind of work than Assembly Biosciences. So thank you for the opportunity to speak to you. And I will be involved in the Q&A session as well.

Thanks for all those comments and putting it into context so clearly, Sir Michael. So I just want to ask you both, Sir Michael, first. 27 years, the last drug for herpes was approved, I think valacyclovir, so -- therapy wise. So why have people not being focused on this? And why hasn't -- it's a bit similar to hepatitis B, no new drugs approved for 25 years. So why do you think that is, Sir Michael?

Well, I think as you know and as Bill went through, there are several antivirals against herpesviruses. The basic problem is the life cycle of these viruses. They readily enter neuronal cells, become latent and then as we age or as we are stressed and our immune function is downregulated, they can pop out. So I think it's just the nature of the disease caused by these viruses has been a huge problem. And I think there was a -- what's the word, I think, a casualness that the -- the acyclovir discovery was a huge one. But as you said, John, it was made 30 years ago at least. So I think there was maybe overconfidence that these were the be all and end all. They clearly are not. People that suffer from genital herpes, it's a real problem in their lives and for their partners. And yes, when outbreaks occur, they can be treated with acyclovir derivatives, and it will go away after several days treatment, but it's always there ready to pop out. So I think as we're progressing as a community, we want better drugs, and we certainly need better drugs against the herpesviruses. And of course, in the transplant setting, cytomegalovirus is a real problem. It kills people when it gets reactivated. So -- and I have a personal experience of that with a colleague who died following transplantation from CMV. So we need better drugs for sure.

Well, thanks. Look, I agree. I think Bill said it nicely. 1/3 of patients, 33%, 34% adequately taken care of, they don't have significant recurrences. But that means that 2/3 of the patients who are at risk for frequent multiple recurrences are not getting the benefit they should get. And that's the opportunity here that we can address with something. If we can get that adequate exposure and the compliance benefit, et cetera. I wanted to bring in Nicole White as well, Bill, if we could. And just for a minute, focus on how as a team and in manufacturing, we're going to achieve this sort of long-acting profile. And are we confident that we can get where we're really aiming. So Nicole, would you like to chime in?

Sure. Thanks, John. Hopefully, you can hear me. I think really, it touches on what Bill said in the presentation earlier, which is we're actually designing compounds at inception with this long-acting potential in mind. So we're selecting compounds that have a long half-life as well as high potency. And this kind of leads into why has nobody done this before, right? And I think, as we just touched on with valacyclovir, that's a relatively high dose compound or about 1 gram per day in certain situations. And if you think about that, if you were to deliver that on a quarterly basis, that would be about 90 grams of compound you would have to deliver. And when formulated, that's close to 1 pound of material. So really high dose compounds are just not very amenable to long-acting formulations. I will say there are some interesting case studies out there that have been reported by [ Ingleton ] in JAMA in a paper published in 1990, in which they showed some interesting data about high-dose continuous acyclovir IV infusions. And these were done in patients with very severe HSV, HIV co-infection over a period of 6 weeks. And what they saw was really interesting was actually an improvement over standard of care. So these patients were actually able to be treated in this situation, although not by means that would be long-term viable for the broader population because if you could imagine you're on IV for an extended period of time. But this is very encouraging data. I think more generally too, and if you look at the long-acting space that's out there, as Bill noted in the presentation as well, there's been a lot of progress in the HIV therapeutic area, most notably by ViiV and Gilead, in which they've been able to really make some great advancements. And similar to HSV patients, these are patients with lifelong disease and on chronic treatment. And I think really, what we're hearing from the team is that HSV long-acting treatments are really the wave of the future. And we can look to projections made in the HIV space as to where these companies see the market going for these types of products, even with a pretty effective oral treatment available.

Thanks, Nicole. Bill, anything to add at all there, or?

I think Nicole summed it up. I mean this -- I think this is going to be the future of many antiviral therapies that -- there's been great strides in getting by [ viral ] single-pill regimens. But particularly for these chronic disease where patients have to be treated for years that the ability to take a long-acting dose just relieves the burden from the patient and makes a situation where you're not going to miss a dose, you're going to have viral reactivation or you're going to get viral resistance from having a suboptimal therapeutic dose. So I think -- and as Nicole indicated, the projections in the HIV field are that are substantial, maybe up to half of patients will eventually move to long-acting regimens and go away from taking single pill. So I see it as a wave of the future. And I'm very excited that we can be launching into that with the first HSV program for a long-acting.

We always thought that actually they would have to see a 12-week duration curative therapy, a long-acting approach would have great relevance to certain parts of the world where you could really if you like, mass vaccinate a population that were impacted at a low cost, but we never got to do that. I would like to spend a little bit of time on the transplant associated herpesviruses. I didn't know, Sir Michael, that you had a friend or a colleague that suffered that. So I had similar experiences in the transplant units as well, where you had this constant battle about minimizing immunosuppression, so you didn't get CMV or another viral reactivation. And then you're putting the graft at risk by minimizing immunosuppression and then the virus would reactivate it. And you have to use these medicines that were quite toxic. There were drug interactions. You had to modify the immunosuppression. There was [ skinny ] toxicity, et cetera, et cetera. You didn't know which virus was happening, either. You didn't know whether it was CMV or one of the other ones. So it was really an unsatisfying, difficult part of transplant medicine. And I think a simple oral effective drug that could be used prophylactically in an at-risk setting such as a CMV-positive donor going into a CMV negative recipient and other paradigms in the transplant population would be very, very well received. In fact, our market research says that it would be very well received as well. But again, so Michael, I just have to ask you, so CMV -- people have been working on CMV and thinking about it for a long time, but nothing new for many, many years, right?

Yes, that's right, John. For decades, people have wanted pan-hepatic antivirals, and it's been very elusive. But I think with modern drug discovery and a great team like Assembly, it becomes feasible. As you saw from the -- as we all saw from the broad antiviral activity against many herpes viruses. So I think it's really important. I totally agree with you. It's a huge problem in transplantation medicine. We really do need molecules that inhibit all the herpes viruses and we've got great hopes that Assembly can really change the paradigm of transplant medicine. It's been very difficult to make vaccines against the herpes viruses. People have been trying for decades without success. There's been a therapeutic vaccine against Varicella zoster that has been developed by GlaxoSmithKline, that is effective in preventing serious shingles disease, and it's very helpful to the elderly who are at increased risk of getting shingles as they age. But apart from that, the herpes vaccine field has been really disappointing. There have been activities to try and make therapeutic vaccines against simplex 1, simplex 2. But all, they haven't got very far. And companies like Genocea in Cambridge in Massachusetts, they've got some encouraging data in Phase II against simplex 2 with their therapeutic vaccine, but then they dropped it and converted to cancer vaccines. So yes, it's very clear that the work described today offers a lot of promise for transplant patients.

Good. Well, thank you, Sir Michael. So we've got some questions from the audience. We always go over, but that's good, everybody is interested. So I'll bring some of these questions up. So the first one I can sort of answer fairly quickly. And that's one about whether this HSV long-acting would be administered in the office or at home? I think our goal overall -- and Nicole and Bill piped in briefly, but our goal would be that this would be self-administered. Correct?

Correct.

Yes.

Yes. Even though 3 monthly visits to the doctor doesn't really matter and it's not a big imposition, but we'd like to remove that as well. And there is a great technology now, right Nicole to get these things into self-administration [ hands ], et cetera.

Right. We're working towards an SC injection, which is quite fast, all to do at home. So that would be a main part of the TPP.

Right. Another question for you, Bill, about the herpes program, long-acting program. What gives you confidence in the likely safety profile of the HSB 2 agent given the high concentration and slow dissipation necessary to remain effective for 3 or more months.

Yes. Good question. And it's definitely something when you consider developing the long-acting agent, is the safety profile is critical. I mean I would like to say the dose administered and the plasma concentrations achieved would -- actually, the overall dose would be much lower than the same amount of medication you would need to give orally to achieve the same plasma concentrations. And ideally with an agent like this that has a very long half-life, you can have a very flat PK profile that avoids high swings and low dips. So I think there's actually a strong advantage to this type of administration and keeping a consistent drug exposure exactly where you need it. But we'll have to go through preclinical safety evaluations. Just like any other drug that we're going to bring forward orally, and we'll have to test it in the clinic and establish the safety profile in a very careful manner through Phase I and Phase II studies, just like any other program. So I don't think that this presents a challenge. We'll have to develop the exposure data according to the FDA guidelines and it's clear to us how to do that.

Here's another one, Bill. I can answer or you can have a crack at it first, if you like. For transplant-associated herpesviruses, how efficacious is current prophylactic treatment? And roughly how many patients are not eligible for antivirals due to DDIs, et cetera, et cetera?

Do you want to start and I'll come in?

Sure. Sure. So everybody has to be treated. If you've got an immunosuppressed patient who has reactivation of these -- one of these viruses, you don't have the privilege or the liberty of not treating them because they can die, or they can lose their graft or they can get serious viral reactivation. So in that situation, you have to start them and you either stop the drugs that they can't take or you stop their immunosuppression as well or you do both. So that's the way you get by with this. But it's very clunky. So that's why an oral agent that works against all the viruses that didn't have all these drug-drug interactions would really be a panacea of change the way these teams treat these patients. Now in terms of reactivations, let's take CMV I think if you treat a high-risk patient with CMV prophylaxis, which is between 3 and 12 months depending on the organ that's been transplanted, you'll get 20% to 30% of people who will still have reactivation. That's the figure I generally remember, Bill. Is that right?

Yes.

Yes. So that's the answer to that one.

I mean the other thing to consider is there's some special populations. So due to the nephrotoxicity to some of the drugs that some patients might not be eligible to take certain drugs, especially with some of the nucleosides.

Sure. But if you're going to -- you can put people on dialysis if they have a kidney problem. It's better than re-transplanting them, and it's better than having them die from an overwhelming viral infection. And you can't use a lot of these agents together. They're sort of contraindicated as well in the various different settings. So that's a problem. Bill, one thing I just wanted you to touch on while we're getting the next question queued up is this concept -- and I said this to you the other day, but you have built this team, and you've been working on all of these programs now for 2 or more years. So this isn't just something that's sort of -- that's happened over the last few months. So it's a culmination of a crack team being brought together as Sir Michael said, with some careful thought and deliberation about what the programs are, given the likelihood that they're going to be successful with our expertise. So I just want at least to make sure that, that comes through to everybody here today.

Yes. I mean this was a very careful process. We thought deeply about it. And included not only in the thought process, but actually conducting experiments, evaluating chemical matter, setting up assays. But as I said, the real driver is the unmet need. There's an unmet need there. There's an opportunity with a validated target to make a big difference in patients' lives. So that's always the driver for us. But this is an experienced team, a great medicinal chemistry team here, and we've got a number of urologists that have worked on herpesviruses previously. So it's just really fit the expertise that we had in the group extremely well and overlaid that with the unmet medical need. And that's why these 2 really rose to the surface. And everybody is really excited about this. And again, taking a technology like long-acting is going to be a really important future technology and being in the vanguard there is really -- the team is very engaged in that, and not just in research but across research, manufacturing and development. It's a fantastic collaboration within the company.

I'm going to get a couple of rapid fire ones here for you now, Bill, as we're getting towards the end of the hour. So helicase for a target, right?

I think helicase is a great target. As I said, essential enzyme. We know that there are small molecules that inhibit it. So it's amenable to the type of chemistry that we want to do. And the AQRS clinical data shows the improvement over the nucleoside standards of care. And I love the fact that this is a drug that we could have on board in the cells even before the virus reactivates and be present from the onset to shut the infection down before it reactivates, whereas I think that's a bit of a problem for the nucleoside. They have to wait for the infection to reactivate to get the kinase expressed to activate the drug and then inhibit the virus. So I'm quite excited, and I think it's a fantastic target.

Anybody else working on a long-acting injectable, Bill or Nicole? Do you know anybody who is working on long-acting for HSV, too?

I'm not aware of anybody else that's working on it for HSV-1 or -2. Most of the antiviral efforts is in the HIV field right now, which is again, quite exciting and revolutionary in some of those new treatments.

So you've mentioned pritelivir Phase III a couple of times. So how -- if they're in Phase III, and they've got a drug that a helicase, right, and working through the same mechanism, and that looks good in Phase II. How is our program differentiated? So again, I'll ask Bill and Nicole to address that either way, and whoever would like to go first.

I think we can start with the fact that we're studying this in a population of nucleoside-resistant patients and immunosuppressed patients, so they are not developing this drug in -- for high reoccurrence HSV-2, which is our target. So it's a very different patient population. So that's the first distinction I'd like to make. Nicole, do you want to comment?

Yes, I can add in. So I think, obviously, pritelivir to date has shown some great data. But I think one of the things to point out is that a weekly oral tablet was evaluated in Phase I and that wasn't taken into Phase III. So far, that product hasn't shown itself to be amenable to long-acting formulation development.

Okay. Resistance, Bill. We can't talk about new viruses without resistance. Yes or no? Problem, is it a hep C all over again? Or are we going to be okay?

The existing data in HSV patients, immunocompetent HSV patients is resistance has not been a major issue. In fact, less than 1% of patients develop resistance. So it looks very different than many of the other viruses we've had experience with, where HCV being the extreme case where it's preexisting and you have it within hours of treatment. So there's a little bit more in the immunosuppressed population, which is not the population we're going after for the long-acting. But I think in general, these large DNA viruses to have a reservoir of late and the neuron resistance hasn't been a big problem in immunocompetent patients. And we certainly won't be arrogant about that. It's something as virologists, it is always on our mind. But we think -- again, that's one of the reasons we like this opportunity because that risk is relatively low compared to many other viruses.

Well, thank you. With that, I think we'll wrap things up. We've gone over 10 minutes. So at the end of the day on the East Coast, for sure. So Sir Michael, we are grateful again that you have been so generous with your time and for sharing your insights and your vast expertise to those that had the opportunity to listen to you today. So thank you very much for your many outstanding contributions to the field over the years and for supporting us as well here at Assembly.

Thank you, John. My pleasure. Great pleasure.

Okay. The Assembly Bio team and I are excited about the virology pipeline we are building and advancing from our next-generation of core inhibitors that we haven't talked about today, to the innovative and differentiated research programs we've introduced to you during the last 3 webcasts were posted this year. We are driving these new research programs forward quickly with the goal of nominating development candidates for 2 of these programs during 2023 to proceed toward IND filings. And our cash runway includes the planned nomination of these 2 candidates next year and so forth, just so you understand that as well. In the meantime -- sorry, my cough is continuous. In the meantime, we remain focused on achieving important near-term milestones, including reporting interim data this half year from our ongoing Phase Ib study of our next-generation core inhibitor 3733. During the same time frame, we also expect to complete a regulatory filing and initiate a first in human study for 4334, our most core inhibitor candidate designed with a profile that's potentially best in class. The first data from this study could be available by the year-end, might be early next year, and we are looking -- also we encourage you to stay tuned to the full conferences, and we're looking forward to presenting more information about our hepatitis B, delta entry inhibitor program at the Liver Meeting hosted by AASLD in November. So I look forward to updating you for - with further on our progress on all fronts during the remainder of the year. This concludes today's webcast. Thank you for joining us. And as always, thank you for supporting the company, Assembly Biosciences.