Assembly Biosciences, Inc. ($ASMB)

Well, welcome to the Assembly fireside chat here at the 47th Annual Goldman Sachs Healthcare Conference. Very pleased to be joined by Jason and Katie from the company. First, welcome.

Thank you.

Maybe for those less familiar with Assembly's company, maybe Jason, if you could give a brief overview of Assembly and what you think differentiates the company today.

Yes. So basically, Assembly Bioscience is a small biotech company locating in [indiscernible]. Our focuses today are primarily HSV2 recurrent herpes as well as hepatitis delta. And then most recently, we announced an expansion into PVC PSC, so cholestatic liver diseases. So historically, been virology-focused expanded into liver disease. A lot of us came from Gilead, in particular, so a lot of work on liver programs. So our expansion in the liver diseases very -- based on our expertise in the past. So our focus is from molecules wise, our lead molecules for HSV-2, we have 2 compounds, 5366 and 1179 in both case, primes inhibitors focused on high recurring general herpes, the TPP for both those molecules is a once-weekly oral, and we're targeting superior efficacy to Valtrex, and we could talk more about the data we announced last year, but that was incredibly positive, led to Gilead opt-in on the program. We do have a partnership, a long-term part of Gilead Sciences. And under that collaboration, they have opt-in rights to our program. The HSV-2 program is the first off in the exercise. And then, this year coming up in May, we'll have a decision as to where not we decide -- or sorry, midyear, as May. We'll have a decision as to whether to opt into our 40-60 cost profit share. So we're awaiting the clinical development plan. And excited to see what Gilead's going to do with the molecule, which molecule they choose or both molecules potentially going forward. So that's the HSV-2 program, and then, Delta 6250 is really -- what we're looking at is our pipeline in the pill, right? So it's focused on originally. It has potential mechanistic impact on PVC/PSC, which we're very excited about. So those are the other studies we're focused on enrolling initiating end of this year and early next year. So a lot of data points coming ahead in 2027 and 2028. So I like what we're really set up as far as a small molecule use this company.

That's great. Maybe pulling on that a little bit, a number of data readouts over the past year. Before looking forward, what do you see as the most important validation points in -- across the pipeline?

Yes, absolutely. Last year was a very data-heavy year, so 4 Phase I clinical trials with an HBV compound an IB that we decided to partner because our focus on HBV is cure, but it's a great molecule. It's a TAM that showed great antiviral activity. So we're starting the partnering process for that and hopefully placing that with an organization that can combine with a third asset for immunomodulator, really advanced the cure field. HepDelta-6250 with Phase I study that obviously, it's a safety study, but we were able to get clear signs of target engagement there. So there, and we'll talk more about this. It's a small molecule oral NTCP inhibitors. So the idea is to prevent file assets from entering the parasites. So in the Phase Ia, we saw file asset elevation of serum. So it was doing exactly what we wanted to do. So that's very encouraging as we move on to Phase II for that. And then, last but not least, the HSV-2. We have 2 molecules, so 5266 and 1779 both that phenomenal proof-of-concept data in patients with recurrent here. So statistically, basically for viral shedding, we had 95-plus percent reduction of viral shedding, which is really what the 1b. We also were not powered for this, we had 90-plus percent lesion reduction, which will be the eventual of the approval end point. And then, we also incredibly importantly, showed 98% plus reduction in high viral load shedding. And that's what we think is a surge transmission. So based on the back of that data, Gilead opted in fact, opted in before the Phase Ibs were actually complete. So I think, obviously, they were happy -- as happy that as we were. So I think that's a true proof of concept on those compounds. And the next step will really be head-to-head against Valtrex, but based on that 1D given our expertise of Ray, nothing certainly guaranteed, but we tend to track more to the 1 we did at Phase II, Phase III, so we're looking forward to those.

Maybe continue in the Anima lines. You mentioned a little bit about the Phase Ib data. Can you help contextualize what you saw there versus current standard of care?

Yes. Yes. So maybe I'll start on kind of the Xenetic molecule. It's actually a very nice molecule, also a helicase primes inhibitor. It's only in studies for a very small niche population, aclicovir-resistant immunocompromised population. But the same target for ponies dose once daily, but they set up a very nice broad chrome path for us to fall -- so and they want to be similar to our design, right, they showed an 80% roughly reduction in shedding. As I mentioned earlier, we were high 90% reduction, which is obviously favorable. That same molecule 1 on the Phase II head-to-head, with the standard of care and nation of superior already. So radical next step or Gilead. Next step, presumably would be a Phase I head to head and mature you show that's absolute proof of concept against stance, but hopefully, we would track along the lines of the competitor molecule and then set us up well for the Phase III, which really has been an expansion of the safety database more so than kind of proof of concept because I think the Phase II data, we're applying it internally would have been roughly 200 subject studies, you get a good from your head-to-head Valtrex. And maybe you can just talk a little bit about, but it certainly leaves a lot of unmet medical need in the population.

Yes. So I think just kind of stepping back and thinking about the patient population, that's a pretty underserved population overall. There have not been any new advancements for recurrent general herpes and over 30 years. And as Jason said, Valtrex is the standard of care. What Phase III studies with Valtrex is recurrence free over the course of the year. And furthermore, there's only less than a 50% reduction in transmission from infected individuals to their partners, which is obviously a big concern for individuals living with this disease. So I think on the back of the initial heel case promise inhibitor that Jason talked about, which has shown superiority versus Valtrex, but we know both 5366 and 1179 have improved potency relative to that. We really feel that both these molecules have big opportunity to make a significant advance for patients, both in terms of efficacy, but also in terms of convenience because we're looking at once weekly minimum for both drugs and then 5366 also having the potential for monthly oral dosing as well.

That's great. Jason, you mentioned it earlier, the Gilead opt and updated in before they needed to. I guess, how do you see that as changing the trajectory of HSV, is it accelerating it? Is it kind of broadening the opportunity? And, I guess, kind of implications to the overall company as well.

Yes, I think it's probably a great example of the collaboration working exactly the share work, right? So you think about these kind of collaborations holistically and certainly a common like you'll have a proven track record of development, commercialization. But obviously, the bar for them revenue-wise is probably pretty high. So HSV-2 is a big market. And I think kind of collaboration like this, you would expect your partner in Gilead to really take the ball and really run with, like you said, acceleration in development time lines, really building out the commercial profile and the presence to maximize this market, which something we couldn't do real estate light as a small company, it'd be very hard to still particularly for HSV2, I think there are disease areas of virology and liver disease we're working on that would be smaller niche markets that you could have a very small specialty sales force and potentially on your own. But this 1 no question, like it's a win-win for Gilead take us over. And of course, they are very advanced quick development organization. So that's why we're very much going forward to the development plan. So -- we're going to the cost structure, the timing launch planning. And I think going back to that market, right, this is an enormous market. So from how it affects the company, we have either milestone royalties, right? Or we have a 40-60 commercial opt-in for profit share, cost share. So we'll have to carefully analyze that. But the market, as we see it, the -- just from an epidemiology standpoint, there's 2 million patients in the U.S. alone. And even from a bottoms-up study, we did a study with the University of Washington. It's 1 of, if not the leading research center treatment center for HSV-2, and looking at Valtrex scripts, particularly for 90-day scripts and more ICT-10 medical records, as much public of rich read gathered basically, you're looking at about 1.3 million patients on the low end in the U.S., of which about 800,000 on chronic suppressive therapy. So just going in, you've got a very established market. And of course, like we said, Valtrex has efficiencies as well as kind of prevention of recurrences. So we can increase that bar significantly as we've all experienced across falls in other diseases, the better the drug, but the bigger patient population, more people actually take therapy that may not be pursuing therapy right now because it's inadequate. So all now, I think the opt-in is a great indication of the high potential for HSV2 and recurrent general herpes, and that's nothing to mention these molecules are active against HSV-1 as well. So the theoretically should work in some facial herpes. So there's a lot of expansion potential there that, again, having a company like Gilead take this over, I think it opens a lot of those opportunities. And for us, it's just analyzing, do we want to share those costs going forward or just participate just up through our milestones and royalties.

That's great. You mentioned a little bit about this, but can you help investors understand some of the more specifically key catalyst, key milestones, key decisions on your point on the program?

Yes. So for 2, the next clear catalyst, if you will, is really our decision on opting into the 40:60 cost proper split. So nothing really first shot in there. I think we'll look at the development plan, obviously, the extended on plan. We'll certainly run an NPV analysis to figure out how that lies versus the uphill royalty formulation. But of course, it's a trade-off, right? You're going to incur significant costs for Phase II, Phase III commercial ramp up, that you would expect that given the market that we just discussed that it would be worth it on the back end. So that's the big next catalyst. And of course, coming out of development plan, most importantly is which molecule, if not both is going forward. We would expect them -- for us, we would have data against Valtrex head-to-head, probably second half of next year. So hopefully, they're on that same time line, if not faster, again, because they can speed things up potentially over a small company. So that's the first thing for HSV-2. And then coming off the heels of our recent announcements, for 6250, again, now that has this kind of pipeline of potential. The next thing we want to make sure as we get the Phase II for Delta initiated by end of this year and would expect data and have at least interim data by end of 2027. And then for PBC, PSC, which are, again, high met medical needs and also large commercial markets, we're going to try and initiate those studies by first quarter 2027 with data expected in first half 2028. So as we talked about last year, 2025, was a very large kind of data-rich year, whereas this year is kind of reload and re-execute. And I think with the addition of the PBC, PSC expansion, that's going to really set us up well for a very significant catalyst flow from mid-'27 to, call it, mid-2028 across all these programs. And that's Frank and I have included we've got a lot of programs under discovery that we expect to nominate. So 1 thing, I think, going back to differentiation, unlike a lot of companies, we still have a very strong research pipeline, right? And part of that is because the Gilead collaboration, like it's incentivized the collaboration in the long term for us to discover evolve things. And also, Gilead not going to opt into everything, nobody's going to do that, right? So it will give us some potential down the road to also have niche indications or in these disease states where we can build an end-to-end organization. So a lot of excitement for the next few years ahead?

You mentioned 6250 just a minute ago. Maybe taking a step back, can you give overview of the program? What gives you confidence in the program and potential for differentiation versus other approaches?

Yes. So we initiated this program kind of on the backs of bulevirtide, which is a large peptide inhibitor of NTCP. NTCP is a receptor on the surface of hepatocytes. Its primary mechanism is bile acid transport, but it also is the receptor that hepatitis delta and hepatitis B used to enter into hepatocytes. And bulevirtide has been used for over 4 years now. great safety and efficacy has shown multiple log reductions in viral RNA as well as ALT normalization. The downside of bulevirtide is that it's a daily subcu injectable, and it also requires cold chain storage. So we were looking to identify small molecule inhibitors of NTCP that either met or exceeded the efficacy of bulevirtide while improving on the convenience. So from the program, we identified 6250. It has low nanomolar potency at inhibiting hepatitis delta from entering cells. It also has low nanomolar potency on inhibiting bile acid transport, which will be important when we talk about cholestatic liver disease. We just presented our Phase Ia data at EASL a couple of weeks ago, and we showed excellent PK 3- to 4-day half-life, which absolutely supports being a daily oral. In addition, we had a pharmacodynamic marker. Jason alluded to this a little bit ago, and we're able to show elevations in serum bile acids, and those elevations met or exceeded that which has been seen with the approved doses of bulevirtide. And finally, we had good safety over 10 days of dosing, no AEs of pruritus. And I will also mention that we've completed our chronic tox studies, and those have given us excellent safety margins with the doses we're looking to take forward into Phase II. And as Jason said, we're looking to initiate those studies by the end of this year.

Yes. On the cholestatic expansion that you mentioned and you announced recently. I guess maybe taking a step back, rationale for moving into both PBC and PSC, both biologically, commercially and why you think 6250 could be differentiated there?

Yes. I guess so to take a step back, as we talked about, the primary focus for this program was Hep delta, but the mechanism over the past year, 1.5 years, we've been talking to KOLs, both from a mechanical side and a clinical development side as to the intriguing aspect of a hepatoprotective molecule, right, and its effect in cholestatic liver diseases. So I would say that work has been ongoing and really culminated 3 weeks ago, 2 weeks ago when we announced the program. And that was the reason we got to that point is we had a full clinical development plan. We had talked to KOLs and got resoundingly positive feedback that, yes, this is definitely something that should work and would be additive, if not supplant existing 6 second-line therapies for PBC, certainly. And then beyond that, obviously, commercial potential. And then finally, we had a pre-IND meeting with FDA, which was -- ended up being a very nice check the box kind of conversation. So off the back of that, we made the announcement going into EASL was able to raise to actually fund this program into the proof-of-concept data. So we've kind of been triangulating across that, and that's what -- why we think the molecule is really going to be very productive for cool cat liver disease as a general. Of course, we have to show that in the data, but I think it gives us the optionality to do that, and we talk more about it later for commercial market. But as we're thinking about the clinical plan, right, we've laid it out very nicely to kind of lay out the potential, right? So you've got an arm in second line as a stand-alone, you have a third-line arm on top of PPARs. And then, of course, you can win on either of those or if it's additive, which we think it very much could be on top of PPARs, that could supplant second-line therapy as well. So I think from a patient need and a commercial standpoint, because it's a different mechanism, right? It's not another IBA, it's not another PPAR, I think that gives us a very unique positioning and also gives us the ability to potentially have a much more significant effect on disease. And maybe, Katie, do you want to talk about the biology on the side?

Yes. So as I mentioned before, we have really nice low nanomolar potency against NTCP. And I think there's kind of multiple intervention points when you think about bile acid flow throughout the body. And Jason mentioned some of the other targets, PPAR agonist, IBAT inhibitors. I think all of those are potentially complementary interventions. We know that at the crux of cholestatic liver disease, it's about the accumulation of bile acids in the hepatocytes, which are driving the progression of disease. How much each of these intervention points contribute to that accumulation and what mechanisms or combination of mechanisms are going to result in the best patient outcomes, I think, is unclear right now. So for NTCP inhibition, I think we're very excited about this because, for one, 250 directly prevents bile acids from getting from the serum into the hepatocyte. In addition, we know that the majority of bile acids anywhere from 75% to 90% are recycled throughout the body as opposed to the de novo production of bile acids on a daily basis. So with that, I think 6250 has the potential, we'll have to prove this in the studies to have greater reductions in alkaline phosphatase normalization relative to a PPAR agonist, which is preventing the de novo production. I think additionally, we have a really nice safety profile with 6250 through 10 days of dosing. We've got great safety margins from our chronic toxicology studies. Some of the -- we know for IBAT inhibitors, they do have some limitations in terms of their dosing due to GI tolerability issues. So I think those are the reasons we're really excited about bringing 6250 forward for cholestatic liver disease.

Makes sense. One investor question or potential investor question could be bile acid versus kind of risk of pruritus. How do you think about that?

Absolutely. It's an important question. So in our Phase Ia study, we did not see any AEs of pruritus. It's not anything that we've seen in our chronic toxicology studies. And if you look over the 4-plus years of dosing with olebertide, only a minority of patients have had very mild pruritus and none of that has resulted in discontinuations. I think taking a step back and thinking about the mechanism of pruritus, as I mentioned, it's the intrahepatic bile acids that are really driving progression of disease and contributing to that itch that's observed in these patients. And what's been demonstrated recently is that levels of IL-31, which is a cytokine associated with itch, really seem to be very strongly correlated with pruritus. And so what happens is as those bile acids accumulate in the hepatocyte, it triggers the FXR pathway, which is essentially trying to shut down de novo production of bile acids. And in doing that, that triggers elevations in IL-31. So what you see with something like a PPAR agonist where it reduces intrahepatic bile acids, it also reduces levels of IL-31, and they say improvements in itch score. So for 6250, where we expect it to prevent bile acids from getting into the hepatocyte, we also anticipate that it will reduce levels of IL-31. And so we expect to see, if not no change, greater improvements in itch for those patients.

Very interesting. Very interesting in IL-31. Maybe maybe a little premature, but Jason, how are you thinking about positioning in PBC and PSC, combination, stand-alone line of therapy, et cetera?

Yes. I think it could be all of the above, right? So obviously, the market is really second line, right? So everyone goes through UDCA first. So the question and then we're going to answer on the clinical side is we do have an arm that is a stand-alone basically of 6250 against UDCA. So we'll see basically how it's comparing second-line therapy to other molecules, so PPARs, et cetera. And then third line would be on top of a PPAR, so we've already taken PFAR, seladelpar or whatever it is that it will be on top of it. So that will actually show if we're right to that it could have additive in addition to stand-alone. So the way we look at it is it's got a unique optionality and like there's multiple ways to win, right? So you could win as a stand-alone. You could also win as additive therapy on top of PFARs. And of course, given our partner, Gilead, has a PAR they're an expert at fixed-dose combinations. This is a very small dose molecule, right? This is going to be 1 milligram or less dosing. So I think we have that potential, like you said, biologically, you should be -- you should have that additive property because of where the bile acids are entering from. So we like the way that the clinical design set up, and it's going to answer that question exactly. So in our scenario, the best case scenario would be your stand-alone second line, which approaches more of a $2 billion market. On the worst case, going for a worst case, or third line on top of PPAR, which is probably closer to $1 billion market. And then the in between is if you're on top of the PPAR and that really becomes second-line therapy. So I think that's where we're excited that in a relatively small clinical study, Phase II study, we should be able to get the answer to all those questions and have a very clear kind of outcome as that where we think we could stand going out of that. And of course, that will inform Gilead's opt-in decision on that program as well.

Makes sense. Maybe finally, taking a step back, how should investors think about the overall growth trajectory of the company, key catalysts over the next couple of years, execution this year, but over the next couple of years, how should investors be thinking about assembly?

Yes, I think it's pretty broad-based, right? So obviously, like I noted earlier, starting, call it, mid-2027, second half '27, it's going to be back on to true catalyst proof-of-concept data, right? So that's going to be Hep delta data that we really looking at ALT reduction, really looking at the results against BulirT, right? So BOT just got approved in the U.S. The WACC is $280,000 an ounce. So small patient population, but very large price kind of orphan indication. We're the only small molecule oral compound in the space, right? So there's a lot of competitors out there, but they're all antibodies, siRNA or Bulvirt is a peptide, right? So I think that alone, once we get that data will give us a good kind of wind in our sales going forward. We're certainly going to be later to market, right? But I think that small molecule oral give us a big advantage if we can show that proof of concept in relation to bulevirt as far as matching, if not matching or exceeding the levels that they hit in their Phase I -- sorry, their clinical data and their actually treatment data, right? So that sets up again, for combinations potentially, right? So a small molecule oral, you figure everyone on delta is basically on TAF or TDF as well for hep B. So we could have a small molecule oral that could try to treat all diseases. So that's for delta, right? And the first step on that is that proof-of-concept data for the Phase II that we expect interim data, call it, end of 2027. And then if you go back to HSV-2, again, pending the clinical development plan from Gilead, you're going to have true head-to-head data against Valtrex, right? So I think depending on, hopefully, the extent you're exceeding Valtrex, that will help kind of set up the commercial profile, obviously, where you could stand and then obviously, where you stand for launch potential. And the interesting thing will be, are there other kind of indications going to look at early on given the size of the company and what they can do with kind of speed and volume. So I think that's going to be a really interesting thing. Even though we have proof of concept, certainly in the Ib trials last year, I think that Phase II undoubtedly is going to be what people are concerned about as far as actually head-to-head against Valtrex. And then last but not least, first half of 2028 is the PBC PSC. So PBC, very clear markers for kind of proof of concept, the alkaphos reduction and how we're comparing and really kind of getting to alkaphos normalization is where the field is going. We had a lot of discussions at EASL and all the other companies working on this have a similar approach of alkophos normalization. So PBC, I think the endpoint is pretty clear, and we should be able to show that or show that it is working or not working certainly on that marker in particular, in the Phase II, we'll certainly check all the other markers, pruritus, AL, et cetera. And that's going to be important for PSC, right? Because there is no alkaphos reduction endpoint for approval of PSC, and we've had sort of pre-IND discussion with FDA. And I think it still remains as of right now, an outcomes model. But with a number of companies working on PSC, I think our hope and expectation is that would evolve in the next couple of years to maybe have some other kind of biomarkers or kind of surrogate markers that can make a clear pathway to PSC. And the interesting thing, too, is we're one of the few companies working on disease-modifying therapy for PSC, like this mechanism could have a disease-modifying rather than just treating kind of symptoms of pruritus, which obviously is very important for the ultimate goal of be disease modifying. So that's going to be the big data point for first half of 2028. The good thing is with the financing we did in August of 2025, -- and when we just did a few weeks ago, at least the HSV-2 programs are funded to get to that Phase II proof of concept against Valtrex head-to-head. And then the PBC PS are likewise financed so we get to that mid -- past that mid-2028 point to get that proof-of-concept data. So I know the catalyst setup is pretty enormous for the next 2 years, not to mention, we'll still announce some new programs and hopefully some interesting areas that to follow the next 2 years as well.

Wonderful. Well, very exciting next little bit for you guys. Appreciate you joining us.

Thank you so much, Rob.

Great. Thank you.