Assembly Bio’s hepatitis B program flops as a potential cure in PhII, sending shares spiraling

Looking for a hepatitis B cure, Assembly Biosciences $ASMB has struck out in a Phase II.

The South San Francisco-based company announced Thursday afternoon that its lead experimental drug vebicorvir, in combination with nucleoside therapy, could not keep patients disease-free after stopping treatments. In total, 39 of the 41 individuals in the open-label study relapsed, as the regimen failed to achieve a meaningful sustained virologic response.

Investors did not take too kindly to the news, hammering the biotech’s share prices after the bell. Assembly’s stock dropped as much as 40% on Thursday evening but has since leveled off to down about 35%.

The Hepatitis B patients involved in Assembly’s Phase II generally require treatments for the rest of their lives. Assembly’s theory went that if they could show enough of a prolonged response after taking patients off the program, which is separately being studied as a chronic suppressive therapy, then it could effectively function as a cure.

In order to find that out, Assembly treated their patients with the combination therapy for 12 to 18 months. Following that period, researchers stopped the treatments and evaluated the 41 patients every four weeks to see whether or not the combo was effective enough at preventing a relapse after an extended period of time.

But 33 of the 41 patients saw their hepatitis B return after the first four-week evaluation. By the 16-week mark, another six patients relapsed. Assembly had been looking for an SVR rate of at least 15% after 24 weeks, but Thursday’s results equate to a rate of less than 5%.

Though Thursday’s results are indeed a negative, Assembly’s combo still has potential as a chronic therapy, Baird’s Brian Skorney wrote in a note to investors. Seeing that the near-term cure play is now “off the table,” Skorney says Assembly can effectively pivot toward that path, but notes the upside is much more limited.

“Although the business opportunity for a chronic therapy for Hepatitis B is much less attractive than a curative regimen, we still see it as a reasonable business,” Skorney wrote.

Should Assembly take that route, Skorney predicts the therapy could reach anywhere between $500 million and $1 billion in annual sales.

Assembly has previously taken steps to turn that into a reality, inking a $540 million deal with BeiGene in July to take the vebicorvir and nucleoside combo into a Phase III for chronic suppression of Hepatitis B. The trial is expected to begin sometime in the first half of next year, and will include a group of patients who have seen only partial viral suppression after a year or more of nucleoside monotherapy.

The company is also looking into whether vebicorvir could still cure hepatitis B in a triple therapy concoction. In August, Assembly hooked onto a deal with Arbutus Biopharma and plans to launch the first Phase II next year that combines vebicorvir, nucleoside treatment and Arbutus’ RNAi therapeutic for the disease. Skorney notes the companies are still in the early developmental stages, however.

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