Gilead to invest $100 million in Assembly Bio in return for all current and future programs

In a strategic maneuver aimed at revitalizing Assembly Biosciences, a biotech firm dealing with viral diseases, Gilead Sciences has opted for a substantial investment rather than a complete acquisition. This entails Gilead making an upfront payment of $100 million to secure opt-in rights for all of Assembly Biosciences’ ongoing and future programs. The decision marks a turning point for Assembly Bio, which has encountered a series of clinical challenges in recent years, leading to a shift in its primary goal from hepatitis B cure to disease control.

As Assembly Biosciences grappled with depleting cash reserves, amounting to less than $60 million, and a stock price struggling to reach $1, it was compelled to scale down certain segments of its pipeline to conserve financial resources. However, Gilead’s significant investment, comprising an initial payment of $84.8 million and an equity infusion of $15.2 million, has enabled Gilead to acquire a 19.9% stake in Assembly Bio. Additionally, Gilead has the option to purchase up to an additional 29.9% of Assembly Bio’s stock.

Jason Okazaki, the CEO of Assembly Biosciences, expressed his enthusiasm for this collaboration, stating, “It gives us the ability to actually build a fully-fledged life sciences organization.” Importantly, Okazaki believes that the deal does not compromise Assembly Bio’s independence, as they will maintain control over all programs until the opt-in points are reached.

Under the terms of the agreement, Gilead has secured exclusive rights to opt into Assembly Bio’s programs, typically occurring at the conclusion of phase 1 or, if extended, the end of phase 2. Each program’s opt-in is valued at a minimum of $45 million, with the potential for Assembly Bio to earn up to $330 million in regulatory and commercial milestones for each program.

This strategic partnership is set to span 12 years, with Gilead having the option to acquire Assembly Bio’s assets under pre-established terms. However, Assembly Bio also retains its commercial opt-in options, which Okazaki believes will allow his company to “maintain its independence.”

While it is anticipated that Gilead may not choose to opt into every program, Assembly Bio retains the ability to opt into profit and cost-sharing agreements. Additionally, they have a co-promoter option for new compounds, ensuring their active participation in the success of the joint ventures.

Assembly Bio is not solely reliant on Gilead for the resurgence of its operations. They are committed to advancing their own candidates alongside two programs contributed by Gilead. Their goal is to have four molecules in clinical trials by the end of the next year, including the core inhibitor ABI-4334, which was temporarily halted to conserve funds. Okazaki mentioned that they plan to reinstate this program to reach the phase 1b stage, which signifies an opt-in point.

The revival of the hepatitis B candidate, ABI-4334, will align with efforts to prepare two herpes simplex virus (HSV) therapies for human testing. Gilead’s contribution of a helicase-primase inhibitor will complement Assembly Bio’s own candidate, facilitating the advancement of two HSV programs into clinical trials. Additionally, Assembly Bio’s hepatitis delta virus drug is poised for progress toward clinical development.

The partnership between Gilead Sciences and Assembly Biosciences bears similarities to Gilead’s earlier decision to invest $3.95 billion upfront for exclusive access to all current and future Galapagos compounds. Although the deal with Galapagos turned sour over time, initially it was viewed as a means to expand its research capabilities and innovation while Galapagos perceived it as a pathway to secure its independence and emerge as a midsized biopharma company.

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