Okay. All right, I think we're ready to get started. Thanks everyone for joining us again this year for the Guggenheim Healthcare Innovation Conference here on day two. I'm Vamil Divan, one of the biopharma analysts here at Guggenheim. Next to me from the Guggenheim side, we have Evan Wang from the team. Next up from the corporate side in this room, we have the Assembly Biosciences team. Going down the stage here, Bill Delaney, the CSO, Anuj Gaggar, the CMO, and Jason Okazaki, the CEO. Thanks so much for giving us the time and coming to the conference again this year. Obviously, a lot going on with the company over the last several months.
Maybe, Jason, I'll just turn to you first if you want to just share kind of an overview on the progress you've made, and then we'll sort of walk our way through some of the key developments on the programs.
Sure. Thanks, Vamil, and Evan, good to see you again. Thanks for having us to the conference. Look, 2026 has been a pretty big execution year for us. I think 2025, heavy on data, and what you'll see is 2027, specifically starting the second half, is going to be another data-heavy year. As far as recent highlights, we just opted into our 40/60 share of the cost profit split with Gilead on the HSV-2 program, which we think is positive news. Also, you might recall, Gilead also announced as part of that study, they're going to explore potentially a dual HIV/HSV PrEP, which is certainly an interesting angle I'm sure we'll talk about.
Just last week, we initiated the phase II for Hep Delta for ABI-6250, which we're excited about, and that will be probably the first of the datasets that'll come up next year, second half, called Q3, Q4. We also saw that Gilead filed on ClinicalTrials.gov the GS-1179 phase II trial head-to-head against Valtrex. You're looking at the expected timing of that. Of course, they control that program, but hopefully we'll get some data on that in the next year as well. Early in 2027, along the lines of ABI-6250, our small molecule oral entry inhibitor, in addition to the Delta study, we'll be initiating the PBC/PSC study early next year with that dataset expected first half of 2028. So next year is going to be quite a heavy data year, especially starting second half and going into 2028, so pretty excited about that.
Okay, great. Let's start with genital herpes. I think, obviously now Gilead leading, but still very important from an Assembly perspective. Maybe if you can just talk about the broader opportunity, what it means for Assembly, especially with the 40/60 relationship.
Yeah, I mean, we've always had the market analysis for just HSV-2, and this is obviously excluding the dual PrEP because that's a new wrinkle for us. But that, in our minds, is a $2 billion plus market, and we get there from two ways. One is top-down epidemiology. You've got 2 million patients roughly split in the U.S. and then 2 million in EU as well. We've also done a very detailed bottoms-up analysis with the University of Washington at a poster we published at ESMO last year. From that, we looked at ICD-10 codes, we looked at Valtrex scripts that are 90 days or longer, and it kind of created what we think of as the floor of the market.
From that extrapolation, we get to about 1.3, 1.4 million patients in the U.S. with recurrent genital herpes, of which there's probably about 800,000 on chronic therapy through Valtrex. Of course, we expect and hope that ABI-1179 will be superior to Valtrex on efficacy, but also certainly more convenient at a once-weekly dosing. The pricing we've tested with payers in the past, given that profile, is we can expect a premium to brand of Valtrex, which is about $5,500. Just imagine we tested the premium somewhere between $5,500 and the $10,000 range. Doing pretty simple math, even if you got half of that existing 800,000 patient market, that's multi-billion dollars right there. The history of Dr. Divan, particularly our team, knowing and living through HIV, HCV development at Gilead, is that the better the molecule, the more people seek treatment.
We really look at that 1.4 million patients in the U.S. as a floor for the market potential. We know there's a very high unmet medical need, talking to KOLs, talking to patients, so we're excited to see Gilead move this program as fast as possible.
Okay, great. We do get a lot of questions now on the competitive landscape. You mentioned Valtrex. Maybe you could just talk about how you look to differentiate against that older product, but also what else you are seeing emerging in the space.
Yeah, certainly exciting in the space. Pritelivir just got approved on a very niche dual-resistant, acyclovir-resistant population. Again, a very small group within the overall patient group. We are hopeful, based on the current data we have for GS-1179, and again, this is up to Gilead, but we should be able to cover that patient base as well, as well as a broader HSV-2 population. Maybe, Anuj, if you want to talk about what we expect to achieve versus Valtrex.
Yeah, I think when we look at the preclinical profile, we know that our molecules or Gilead's molecules, GS-1179, are significantly more potent than Valtrex. Pritelivir actually is a really nice intermediate medication to look at too from a head-to-head comparison, because pritelivir went head-to-head against Valtrex in a phase II study and beat Valtrex with a 50% or more reduction in lesions and in shedding. With our preclinical profile to be superior to pritelivir, we really expect to have a high probability of success to beat Valtrex in that phase II study, so we are excited for that readout from Gilead.
Okay. The phase II is now posted. We saw this recently, about 300 patients, 4+ recurrences per year, shedding is primary endpoint. Just walk us through the design and what we should think about in terms of enrollment and then timing of the actual data.
Yeah, I think the design as we see it on ClinicalTrials.gov is a lot like what was in our minds previously for this molecule. It looks like three arms, as you said, a high dose of GS-1179 in arm one, a low dose in arm two of GS-1179, and then Valtrex in arm three, using the patient population, like you said, which is similar to what we had tested in phase I-B, which is patients who have between four and nine recurrences per year, either on or not on a nuc at the time. The main endpoint, like you said, is shedding, so a 28-day period within that 12-week dosing period in which they will do viral swabs to look at shedding, and then overall looking at lesions.
There are many ways to look at that data, and I think you will see those secondary endpoints are just showing you the many ways you can look at that data, from numbers of lesion days, number of days being lesion-free, et cetera. But I think in the end, the goal is to really benchmark versus Valtrex and get the right dose and then move those forward into phase III.
Okay. Maybe one more we will do on the- Sorry, please sign and I will turn over to Evan on ABI-6250. But you talked about prevention and sort of the new wrinkles or the story here, just how should people think about the opportunity there? It does seem like a big potential upside driver. Maybe you could just talk about kind of your views there.
Yeah, I mean, obviously from an unmet need, I mean, obviously Gilead is the leader in PrEP, so to have a dual PrEP molecule I think makes a ton of sense from their standpoint, and we think it is a great idea. We have not really quantified the market potential because as you can imagine, GS-1179 would be a portion of that overall PrEP, so the percentage of it, there are some technicalities in the agreement, but think of it as a relative contribution. We have got the 40/60 cost profit share, so we would get 40% of the economics on the GS-1179 portion of that PrEP molecule. So let us just say, like for dumb math, it is 50/50 split. We get 40% of 50%, so it is 20% at the high end, and it is 10%, you get 40% of 10%, 4%.
There is a range of contribution, but as you can imagine, all of that is upside to us, right? Because it is something we did not plan for or expect from a single agent, from an HSV-2 recurrent genital herpes study standpoint. I think the other benefit too is, if you think of analyst consensus expectations for PrEP, I know that is somewhere between $6 billion and $9 billion for Gilead, which is an enormous market. The question obviously outstanding is, would this dual PrEP, again, assuming they are able to go forward with it, is that going to be a subset of that market? Is it going to expand that market? I think it is just too early to really tell what that would be. But I think from a patient standpoint, it would be an incredible advancement.
Okay. Yeah. Evan, you want to?
Great. Switching to ABI-6250, which remains in your control. You are exploring a few different indications here, but starting with Hepatitis D . Can you talk about the mechanism here and how it is validated in Hep Delta already with bulevirtide? I think something that is unique is that you are developing. There is continued development here in the space, and it is pretty active, but you have an oral mechanism here, so.
Yeah, I can start on that one. This is a clinically validated target. The target for the molecule ABI-6250 is the NTCP, which is a host transporter that brings bile acids into the liver. It is expressed on hepatocytes, and it is what hepatitis B and Hepatitis D have evolved to use as an entry receptor. This was validated clinically when bulevirtide, which is a peptide binder of NTCP, was shown to be very active, resulting in multi-log drops in patients, ALT normalization in patients, and has been very well tolerated out through four years now. Certainly a validated target. The real drawback with bulevirtide is it is a daily injection, and the patient has to resuspend it, refrigerate it, and inject it every day, so it is cumbersome for the patient.
The basis for our project was to have an oral version that binds the same receptor and blocks the same interaction. We are quite excited. We have a single-digit nanomolar inhibitor of NTCP, which blocks bile acid entry, and we have seen that data in the phase I study. We can monitor bile acids as a biomarker, so we know that we have on-target activity and that we are binding the target. We are excited. We are now enrolling the study, as Jason said, for hepatitis delta.
Great. Can you talk about, expand a little bit more on the phase I, exactly the PK/PD profile you saw there? I know you have mentioned some comparisons to bulevirtide dosing as well. How well tunable do you think this is?
Yeah, maybe Anuj Gaggar, you want to handle the phase I-A data?
Yeah, I think the phase I-A, just as a reminder, we did a single ascending dose and multiple doses in healthy volunteers, and we looked at a range of doses starting as low as 0.2 mg and then all the way up to 25 mg single dose. We measured PK, and we measured the pharmacodynamic response, as Bill said, which is serum bile acids, which is a really great surrogate to have. It is what has helped us accelerate from phase I-A straight to a phase II study. On the pharmacokinetic side, we had great absorption, and we had a great half-life, so a four-day half-life, which makes it really amenable to daily dosing. That is a key part for this molecule that we think is great. The second is the pharmacodynamics, and what we saw is a dose-dependent increase in bile acids in the periphery.
We could detect it at very low doses, and we could match and exceed the type of bile acid elevations you see with bulevirtide. What that means for us is that we can tune the doses to either match a 2 mg dose, a 10 mg dose, or even try to expand beyond or go higher than a 10 mg bulevirtide equivalent from a bile acid perspective. We are using that data to help inform our phase II dose selection, and I think at the end of this phase II, we will have a really good PK/PD and virology database to be able to deduce dose selection for our subsequent phase IIIs.
Great. Can you walk through some of the phase II design then, and I guess the dose selection there, and I guess what you hope to learn?
Yeah, we haven't disclosed the actual doses yet, but we are basically doing a low dose versus a high dose versus a delayed treatment, which is a common pathway in hepatitis delta development. That period of delayed treatment lasts for 16 weeks, so in that 16-week period, we will be able to look at how a low and a high dose does versus the delayed treatment. The doses we are choosing are meant to kind of match and exceed the bile acid elevations that were seen with bulevirtide, so we are looking to capitalize on their data and try to match that data, but then also see if there is upside with the mechanism that we are doing with a small molecule. In terms of readouts, we are most interested in the virology.
One thing bulevirtide has done a great job with is matching virology changes to changes that matter for the patient, so ALT changes, fibrosis changes, decompensation changes. For us, matching that virology in that 16-week period would give us great confidence moving forward that we should achieve those other outcomes that bulevirtide showed. After 16 weeks, we still follow patients for week 48 to get additional safety data, and then we have an expansion cohort where we generate additional safety data at the dose we think is the right dose for moving forward, and that is just to make a phase III more easy to get to after this trial is done.
Great. So with both doses expected to be efficacious, how are you guys thinking about the dose to bring forward in expansion? What are considerations there?
Yeah, I think in the world of antivirals, you always want to take your maximum tolerated dose forward, as the maximum pressure on the virus for as long a period of time as you can. So I think we're looking at safety throughout that period of time, and the antiviral effect, and at some point, you maximize the antiviral effect. So we want to make sure that we choose the dose that has the highest impact on the virus with the best safety profile. I think with these two doses, we'll be able to choose one.
Great. Then just on the landscape broadly, there's been some competitor updates this weekend at AASLD. I know you guys were all there. Any first impressions?
Oh, yeah, we have lots of first impressions on that data. So yeah, it was great data presented by Mirum and by Vir on their phase III programs. I think the data was really great to see, and it shows a few things. So one is when we look at the composite endpoint, which is the approvable endpoint, which has two components, as you remember. There's a virology endpoint, meaning you have to have a certain impact on the virus, and an ALT endpoint, meaning you're having to improve the actual liver inflammation of the patient. On the combined response for both Mirum and for Vir, they are basically approximate what we see with bulevirtide. So we're running into roughly the 50% ± range for an outcome there, for the combined outcome.
We think that makes sense because we believe all of these are acting as entry inhibitors. They are all acting to prevent a new hepatocyte from being infected, either by blocking the receptor and not letting the virus in, or binding the virus and not letting it enter a new hepatocyte. We are not surprised that these data approximate one another, but it was nice to see confirmation there. We do know that with our mechanism of action, we should also approximate the data that they have seen with those other phase III programs, with the exception being that this will be an oral small molecule, which is differentiated compared to everything else, which is all injectable, whether it is daily injectable with bulevirtide, every one to four weeks with Mirum, or multiple injections with two modalities every month with Vir.
We think an oral small molecule in the setting where patients are already taking an oral small molecule for their hepatitis B makes a lot of sense from the patient perspective.
Got it. One thing I think we learned was some of the kinetics around some of the virologic response and the ALT normalization, where it looked like ALT at least kind of maybe plateaued at 48 weeks compared to 96. Is that kind of within your expectations? Any kind of thoughts on that versus the virologic response?
Yeah, I think that makes a lot of sense for us. I think, as you block new hepatocytes from being infected, you slowly have a decay of the old hepatocytes that are the ones producing the virus. So over time, we would expect those hepatocytes to eventually be lost and their viral load to slowly go down over time. With ALT normalization, it does feel like this is probably the rate that everyone seems to be seeing. There is some incrementally improved ALT normalization from weeks 48 to 96 with bulevirtide, but it is maybe a 10% further increase. It is not a big step on. So this is, I think, what we expected. I just will note that there is a lot made about the actual viral changes in the serum that is being done by the antibodies.
We really feel like that is an important component, but the ALT normalization remains the most important thing from the patient perspective. That's what's dictating their outcomes. While people might be getting to target detected or target not detected at higher rates on the virology side, the composite endpoint is the way we think to look at these data in the end.
Great. Can you remind us why that composite is so important from outcomes versus maybe a virologic response alone or ALT normalization alone?
Yeah, so this is all from historic data looking at long-term evaluation of patients with delta, and the viral load decline has an impact. It's just how you get to a viral load decline that matters. From the patient perspective, what is actually affecting their course is liver inflammation. That liver inflammation leads to cirrhosis, decompensation, HCC. So protecting patients from liver inflammation is the goal, not viral levels. They are often linked to one another in a natural history experiment, but when you start to intervene with an antibody, that link breaks a little bit. So we think that the ALT normalization really is the way to look at these data to know eventually what's going to impact the patient, what's going to track with better outcomes, and then eventually, on the commercial end, what's going to produce value to patients, providers, and to payers as well.
Great. Can you talk about how you guys are thinking about this market opportunity and what it could mean for Assembly? I know we have bulevirtide recently approved in the U.S., and we'll have the submissions for these Mirum and Vir products also. But again, unique is that you guys are bringing forward an oral that could significantly expand the opportunity as well, so.
Yeah, I think in this case, it is actually one of those scenarios where it is good to be last. I think we will have the simplest regimen, no question, probably the lowest cost as well from a COGS perspective, without a doubt. You think about, it is great to have all the competitors out there building a market, but then the day, like Anuj says, if we can match the ALT reduction levels of bulevirtide or Mirum or Vir, any of those, right, with a small molecule oral that could be co-formulated with a nuc, that hep B story on, history will show you that simplicity tends to win the day. Of course, it would not be all the market necessarily, but this is a small patient market, of course, in the U.S., right? The numbers vary somewhere between 40,000 to 150,000.
But if you think about the WAC pricing for bulevirtide at $285,000, even if we took a small portion of that market, which if the efficacy held up as a small molecule, we would expect to take a large portion of that market, that is a pretty sizable, basically, revenue stream just in the U.S., right? We do not want to put estimates on anything right now because until we get the phase II data, we want to know what we are dealing with. But if things pan out like we would, we would expect in the deal, then yeah, we like the positioning from our company standpoint.
Great. One of the newer updates from this summer was the decision to advance ABI-6250 also for primary biliary cholangitis and primary sclerosing cholangitis. Given this is a newer element of the story, can you walk through some of the biologic rationale here and just why you think NTCP in particular is important?
Yeah. I will start here. Remember I said that ABI-6250 binds NTCP and inhibits its transport of bile acids into the hepatocyte, so it does that at a low nanomolar concentration. So it is very effective at doing that. Ever since we first announced this program for Hep Delta, we have been approached by KOLs saying, this is an oral option for HDV. Yes, we want it. But also, have you considered using this molecule as a hepatoprotectant in cholestatic liver diseases? Because all of these cholestatic diseases are diseases of bile acid over-accumulation in hepatocyte and in the bile duct. Really, the goal to protect those cells and prevent the toxicity is to prevent this overload of bile acids. So, the receptor that brings bile acid, conjugated bile acids into the hepatocytes is NTCP.
It is responsible for 75%-95% of bile acids being recirculated and ending up back in the hepatocyte. So, by blocking that, we can keep bile acids out of the hepatocyte, lower intrahepatic bile acid levels, and that should translate into reduction in toxicity and potentially reduction in itching too, because the itching is an intracellular mechanism. At least the main hypothesis is IL-31 is a cytokine produced in hepatocytes when they are overloaded with bile acids, and then it is secreted and causes itching and pruritus in the patients. So, we are very excited to bring this molecule forward. We think it makes complete sense. It is the molecule that governs bile acid entry to hepatocytes.
I guess one of the unique things is that your partner, Gilead, across these programs, or potential partner, markets bulevirtide and seladelpar. Are there any learnings from their data, I guess, both on bile acids and IL-31, they can take?
Yeah. No, I think you are actually pointing it out, that I think it was through their data that the IL-31 discovery happened. This is from their cilofexor program before, but their seladelpar data has also shown a reduction in IL-31. There are some great presentations at AASLD on correlating that with reductions in itch, and there are some good correlations to see there too. So I think there is really a lot to learn from their experience. With bulevirtide, we have taken a lot on just their virologic changes, and I think we are trying to capitalize on that knowledge so that we can compare our data to things that we know work for patients in the end.
Great. Can you walk through how you guys are thinking about the basket study that you guys are planning to start in 1Q? What are some design elements and timelines across the PBC and PSC opportunities?
Yeah. This is a really exciting study. We worked really hard with some KOLs to design the most optimal study to answer the most questions in the shortest period of time, and that's how we decided on the basket study, where we're looking at both PBC and PSC. Within PBC, we're looking at ABI-6250 as a second-line therapy and as a third-line therapy, and then in PSC, we're looking at a first-line therapy. Some important design elements are we have a sentinel dosing period for PBC and PSC, where we take three doses forward into the sentinel dosing and then choose two of those doses to move forward into the main cohorts. That helps us make sure we have a safe and effective dose before we commit to the full cohorts.
In the full cohorts, we are looking at a low dose and a high dose compared to placebo, and it is a 12-week study overall. We're looking at important outcomes like alkaline phosphatase, which is a surrogate endpoint for approval in PBC, and an important disease marker in PSC. We'll also look at non-invasive tests of fibrosis, ELF score, and FibroScan. In addition, looking at PROs, very important for these patients that you know how they're feeling from a fatigue and from an itch perspective, so we have PROs evaluating that, and exploratory cytokines like IL-31, that's mentioned. I think at the end of this, we'll understand how our drug works for PBC, PSC, on all those different domains, and it'll really set the stage for designing the phase III programs afterwards.
All right. We have a few minutes left here. I want to touch on a couple quick last things. ABI-7272, maybe just, Jason, if you want to quickly kind of share your thoughts on that and kind of what we should be looking for.
Sure. Bill, why don't you-
Oh, Bill.
Yes. ABI-7272 is a molecule we are bringing forward. It is an antiviral we are bringing forward for the transplant setting. A common problem in the transplant setting is once you are immunosuppressed, patients can get reactivation of a variety of viruses. This is a compound that is active against the polymerases of cytomegalovirus as well as VZV, EBV, HSV-1, and HSV-2. Because there is a conserved binding site in all of those related herpesviruses, we have one inhibitor, it is active across all of those. We are bringing it forward as a once-daily antiviral. We expect to be dosing it mid-next year, and Gilead will have a chance to take an option to that program when we complete the phase I-A study. Yes, it is an area we are very excited about.
Okay. Then maybe just to wrap things up here, if you can just remind us of your current cash position, your cash runway, and then we started off talking about how 2027, data-rich year, especially in the second half. If you have to highlight, what are the key things we should be focused on?
Yes. Our 10-Q will come out imminently, but I would say as of last quarter, we had about $320 million cash, which did not include the Gilead $75 million extension fees, so you can count that. So we are well into 2029, which is great because we talked about these data readouts all late 2027, early 2028, so we are certainly a year beyond that. Of course, if any one or hopefully multiple of these read out, that is our next logical financing point, of course, to raise for the phase III and our 40% profit share for HSV-2. Of course, if we did the same for the other molecules, we would be the same situation.
Okay. All right. Why don't we leave it there? Thanks again for joining us this year. Another year of a lot of progress. I am looking forward to the next 12 months.
Okay. Thank you.