ASSEMBLY BIOSCIENCES INC

Comparison of the Three Months Ended March 31, 2024 and 2023

Collaboration Revenue

The following table summarizes the period-over-period changes in our collaboration revenue (in thousands, except for percentages):

Collaboration revenue for the three months ended March 31, 2024 includes the recognition of $5.8 million for services performed under the Gilead Collaboration Agreement entered into in October 2023. There was no revenue for the three months ended March 31, 2023.

Research and Development Expenses

Research and development expenses consist primarily of employee-related expenses, fees paid to contract research organizations and contract manufacturing organizations, lab supplies and other third-party expenses that support our research and discovery, nonclinical and clinical activities. External costs represent a significant portion of our research and development expenses, which we track on a program-by-program basis following the nomination of a development candidate. We use our employee and infrastructure resources, as well as certain third-party costs, across multiple research and development programs, and we do not specifically allocate these costs to our programs.

The following table summarizes the period-over-period changes in our research and development expenses (in thousands, except for percentages):

Research and development expenses were $11.9 million for the three months ended March 31, 2024 compared to $14.5 million for the same period in 2023. The $2.7 million decrease in research and development expenses was driven by decreasesin external expenses during the three months ended March 31, 2024 compared to the same period in 2023 due to our discontinuation of the 3733 and VBR programs. The overall decrease in external expenses was partially offset by increases in expenses related to 1179, which was licensed from Gilead pursuant to the Gilead Collaboration Agreement in October 2023, and the nomination of 6250. We also experienced a decrease of $1.2 million in employee and contractor-related expenses primarily due to a decrease in stock-based compensation expense because of lower grant date fair value of our awards vesting, as well as reductions in the number of third-party contractors used. Facility and other expenses decreased by $0.5 million due to cost savings in rent and related expenses attributable to our new corporate headquarters sublease, which commenced in November 2023.

General and Administrative Expenses

General and administrative expenses consist primarily of salaries, consulting fees and other related costs, professional fees for legal services, accounting and tax services, insurance and travel expenses, as well as stock-based compensation expense associated with equity awards to our employees and directors.

The following table summarizes the period-over-period changes in our general and administrative expenses (in thousands, except for percentages):

General and administrative expenses were $4.6 million for the three months ended March 31, 2024 compared to $5.0 million for the same period in 2023. The decrease of $0.4 million in general and administrative expenses was primarily due to a decrease in stock-based compensation expense because of lower grant date fair value of our awards vesting and a decrease in the number of employees.

Interest and Other Income, Net

Interest income consists of interest earned on our cash and cash equivalents and available-for-sale securities. The following table summarizes the period-over-period changes in our interest and other income, net (in thousands, except for percentages):

Interest and other income, net was $1.7 million for three months ended March 31, 2024, compared to $0.6 million for the same period in 2023. The increase of $1.0 million was primarily due to more interest income earned on marketable securities caused by a larger portfolio balance after the receipt of $100.0 million upon entering into the Gilead Collaboration in October 2023.

Liquidity and Capital Resources

Sources of Liquidity

As a result of our significant research and development expenditures and the lack of any FDA-approved products to generate product sales revenue, we have not been profitable and have generated operating losses since we were incorporated in October 2005. We have funded our operations through March 31, 2024 principally through equity financings, raising an aggregate of $618.8 million in net proceeds, and strategic collaborations, raising an aggregate of $185.7 million through upfront payments.

Cash Flows for the Three Months Ended March 31, 2024 and 2023

The following table summarizes our cash flow activities (in thousands):

Operating Activities

Net cash used in operating activities was $18.4 million for the three months ended March 31, 2024. This was primarily due to our $9.1 million net loss, including the recognition of $5.8 million deferred revenue under the Gilead Collaboration Agreement. We also experienced a decrease in other accrued expenses of $3.7 million due to payment of our 2023 annual bonuses in 2024.

Net cash used in operating activities was $23.4 million for the three months ended March 31, 2023. This was primarily due to our $19.0 million net loss and a decrease in other accrued expenses of $4.2 million due to payment of our 2022 annual bonuses in 2023.

Investing Activities

Net cash provided by investing activities for the three months ended March 31, 2024 was $17.3 million due to proceeds from maturities of our marketable securities, partially offset by purchases of marketable securities.

Net cash provided by investing activities for the three months ended March 31, 2023 was $10.0 million due to proceeds from maturities of our marketable securities.

Financing Activities

We did not generate any cash flows from financing activities for the three months ended March 31, 2024.

Net cash provided by financing activities for the three months ended March 31, 2023 was $4.5 million due to proceeds from the sale of 254,203 shares of our common stock under the 2020 ATM.

Funding Requirements

We expect our future operating expenses to increase substantially over the coming years as we continue to advance our candidates into the clinic. We expect our existing cash, cash equivalents and marketable securities will enable us to fund our operating expenses and capital expenditure requirements into the second half of 2025.

We monitor our cash needs and the status of the capital markets on a continuous basis. From time to time, we opportunistically raise capital and have done so numerous times since our initial public offering by issuing equity securities. We expect to continue to raise capital when and as needed and at the time and in the manner most advantageous to us.

Our future capital requirements will depend on many factors, including:

•

the scope, progress, results and costs of our ongoing drug discovery, nonclinical development, laboratory testing and clinical studies of our product candidates and any additional clinical studies we may conduct in the future;

•

our ability to raise capital despite macroeconomic and geopolitical events impacting financial markets, such as rising inflation, market volatility and risk of recession;

•

our ability to realize future potential benefits pursuant to the Gilead Collaboration and maintain the collaboration;

•

our ability to manufacture, and to contract with third parties to manufacture, adequate supplies of our product candidates for our clinical studies and any eventual commercialization;

•

the costs, timing and outcome of regulatory review of our product candidates; and

•

the costs of preparing, filing and prosecuting patent applications in the United States and abroad, maintaining and enforcing our intellectual property rights and defending intellectual property-related claims.

Identifying potential product candidates and conducting nonclinical testing and clinical studies is a time-consuming, expensive and uncertain process that takes years to complete, and we may never generate the necessary data or results required to obtain marketing approval and achieve product sales. In addition, our product candidates, if approved, may not achieve commercial success. Our commercial revenues, if any, will likely be derived from sales of medicines that we do not expect to be commercially available for years, if at all. Accordingly, we will need to continue to rely on additional financings to achieve our business objectives. Adequate additional financings may not be available to us on acceptable terms, or at all. To the extent that we raise additional capital through the sale of equity, the ownership interest of our stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we are unable to raise additional funds when needed, we may be required to reduce staff, delay, scale back or discontinue our product development and clinical studies or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.