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Item 7. Management’s Discussion and Analysis

2025-03-20 compared with 2024-03-28 · 184 added, 160 removed, 166 unchanged (67% of the section changed)

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We are a biotechnology company developing innovative therapeutics targeting serious viral diseases with the potential to improve the lives of patients worldwide.

Our pipeline includes two helicase-primase inhibitors (HPI) targeting recurrent genital herpes, an orally bioavailable hepatitis delta virus (HDV) entry inhibitor, a clinical stage capsid assembly modulator (CAM) designed to disrupt the replication cycle of hepatitis B virus (HBV) at several key points with the aim of achieving finite treatment and functional cures and research programs focused on the discovery of therapeutics to treat devastating viral diseases, including a non-nucleoside polymerase inhibitor (NNPI) targeting transplant-related herpesviruses and a small molecule interferon-α (IFN-α) receptor (IFNAR) agonist targeting HBV and HDV.

We have recruited an accomplished leadership team and research and development organization, with a collective team track record of over 15 approved drugs in viral diseases, including hepatitis.

Our collaboration with Gilead Sciences, Inc.

(Gilead and the Gilead Collaboration) also brings us an industry leading partner with a shared vision of providing differentiated antiviral treatments to patients.

For additional information regarding the Gilead Collaboration, see “Collaboration and License Agreements—Gilead Sciences, Inc.”

Our Clinical Programs and CTA-Enabling Programs

Our pipeline includes multiple clinical-stage investigational therapies, including:

(1) two helicase-primase inhibitors (HPI) targeting recurrent genital herpes;

(2) an orally bioavailable hepatitis delta virus (HDV) entry inhibitor;

and (3) a highly potent next-generation capsid assembly modulator (CAM) designed to disrupt the replication cycle of hepatitis B virus (HBV) at several key points.

Our pipeline also includes a novel, oral broad-spectrum non-nucleoside polymerase inhibitor (NNPI) targeting transplant-related herpesviruses, which is currently undergoing studies to enable a regulatory filing, and we have additional research programs against multiple antiviral targets.

Our Clinical Programs and Regulatory Filing-Enabling Program

Since the beginning of 2024, we have initiated:

(1) both the Phase 1a and Phase 1b portions of a Phase 1a/b study of 5366, long-acting HPI for recurrent genital herpes;

(2) the Phase 1a portion of a Phase 1a/b study of 1179, also a long-acting HPI for recurrent genital herpes;

(3) a Phase 1a study of 6250, an orally bioavailable HDV entry inhibitor;

and (4) a Phase 1b study of 4334, a highly potent, next-generation CAM for chronic HBV infection.

We expect to initiate the Phase 1b portion of the Phase 1a/b study of 1179 in the first half of 2025.

We announced interim results from the Phase 1a portion of the 5366 study in September 2024, interim results from the Phase 1b study of 4334 in December 2024 and interim results from the Phase 1a portion of the 1179 study in February 2025.

In addition, during December 2024, we identified a development candidate, 7423, in our broad-spectrum NNPI program targeting transplant-associated herpesviruses.

Recurrent Genital Herpes/HSV-1 and HSV-2

In August 2022, we introduced our first programs outside of hepatitis.

Among our new viral targets is recurrent genital herpes.

Genital herpes can be caused by either herpes simplex virus type 1 (HSV-1) or herpes simplex virus type 2 (HSV-2).

HSV-1 and HSV-2 are acquired by oral or genital contact either during symptomatic or asymptomatic reactivation of the virus.

Both viruses replicate in neurons, where they can remain latent for the rest of the patient’s life and periodically reactivate, with the virus spreading and replicating in epithelial tissues.

Initial infection can be asymptomatic or can be marked by symptoms, including localized pain and painful lesions.

Genital herpes recurrence is common and can cause painful genital lesions that can lead to increased transmission and debilitate patients, and symptoms may become more serious with additional episodes.

Additional complications include increased risk of HIV infection, as well as associated psychological stress and isolationary thoughts, depression and suicidal ideation.

Both viruses replicate in neurons, where they can remain latent for the rest of the individual’s life and periodically reactivate, with the virus spreading, replicating and causing disease in epithelial tissues.

Initial infection can be asymptomatic or can be marked by serious symptoms, including painful skin lesions, swelling of lymph nodes and urinary problems that can persist for two to three weeks.

While genital herpes can be caused by either HSV-1 or HSV-2, recurrences are more likely to be experienced by individuals infected by HSV-2.

Genital herpes recurrence can cause painful genital lesions that can lead to increased transmission and debilitate patients, and symptoms may become more serious with additional episodes.

Additional complications include increased risk of HIV infection, as 30% of HIV infections acquired through sexual transmission are attributable to HSV-2 infection.

In addition, people with recurrent genital herpes often experience associated psychosocial impacts, including anxiety, concerns about transmission, depression and social stigma.

Immunocompromised patients may experience more severe and prolonged symptoms due to increased recurrence rates.

While genital herpes can be caused by either HSV-1 or HSV-2, recurrences are more likely to be experienced by patients infected by HSV-2.

There are an estimated 800 million people globally with HSV-2, with an estimated 32 million in the United States and 31 million in France, Germany, Italy and Spain (collectively, the EU4) and the United Kingdom (UK).

Only approximately 13% of that population is aware of the infection and have been diagnosed.

Awareness and diagnostic rates are impacted due to asymptomatic infections and low screening rates in adults and adolescents due to high false positive rates with current diagnostic assays.

HPIs are antiviral agents in development for HSV-1 and HSV-2, with a clinically validated mechanism of action.

HPIs are antiviral agents in development for the treatment of recurrent genital herpes, with a clinically-validated mechanism of action.

HPIs inhibit the HSV helicase-primase complex, which is a unique viral enzyme complex without a human homolog, consisting of helicase, primase and cofactor subunits.

Both of these subunits have functions that are essential for viral DNA replication and are conserved across HSV-1 and HSV-2.

These subunits have functions that are essential for viral DNA replication and are conserved across HSV-1 and HSV-2.

Unlike nucleoside analogs, these compounds do not require phosphorylation by the HSV thymidine kinase (TK) and ongoing viral replication to become active drugs.

As a result, HPIs are active immediately upon reactivation of latent HSV-1 and HSV-2.

Furthermore, HPIs are active

against TK-deficient HSV-1 and HSV-2, which is a major mechanism of resistance to nucleoside analogs.

In February 2023, we announced the nomination of our first herpesvirus development candidate, ABI-5366 (5366), a long-acting HPI for treatment of recurrent genital herpes, to progress toward CTA-enabling studies.

In connection with the Gilead Collaboration, in October 2023, we acquired the rights to ABI-1179 (1179), Gilead’s HPI program, which is structurally differentiated from 5366.

HPIs are active against TK-deficient HSV-1 and HSV-2, which is a major mechanism of resistance to nucleoside analogs.

Most people with initial symptomatic genital herpes who are infected with HSV-2 have frequent recurrences, generally between three and 15 per year, including over four million people in the United States and France, Germany, Italy and Spain (collectively, the EU4) and the United Kingdom (UK).

Currently, there are three antiviral drugs (all nucleoside analogs) that have been approved in the United States and the EU4/UK for the treatment of genital herpes.

No new drugs have been approved to treat genital herpes for more than 25 years.

However, no new drugs have been approved in these regions to treat genital herpes for more than 25 years.

In addition to the approved nucleoside analogs, agents such as local anesthetics or analgesics may be used to alleviate local symptoms of minor pain and discomfort.

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However, these agents are only partially effective at controlling the infection or reducing transmission risk.

With current nucleoside analog therapies, only one out of three recurrent genital herpes patients with six or more recurrences per year are able to make it through a year of treatment without a recurrence.

There are still high titer (greater than 10 4 HSV-2 DNA copies/mL) shedding episodes under this current standard of care for HSV-2, which can lead to recurrences and transmission of genital herpes.

Based on the limitations of current therapies, we see a path to advancing the treatment paradigm for patients suffering from recurrent genital herpes.

To reach that goal, we identified an opportunity to develop a potent, long-acting HPI for recurrent genital herpes, 5366, which has demonstrated a strong nonclinical profile, with low nanomolar potency in vitro against both HSV-1 and HSV-2 clinical isolates, exceptionally low plasma clearance rates in multiple nonclinical models and a projected human half-life of more than seven days.

This nonclinical profile has led us to target 5366 for development as a long-acting treatment with the potential to be administered orally or as an injectable.

To date, 5366 has also demonstrated a favorable nonclinical safety profile in Good Laboratory Practice (GLP) toxicology studies, with high safety margins and minimal potential for off-target effects.

We currently anticipate the initiation of clinical studies with 5366 by mid-2024.

In addition, we are also advancing 1179, a second, structurally-differentiated HPI with single digit nM potency against HSV-1 and HSV-2 and a nonclinical pharmacokinetics (PK) profile strongly supporting a potential long-acting treatment by oral and injectable administration.

GLP toxicology studies are underway and clinical studies are expected to begin by the end of 2024.

With current nucleoside analog therapies, only one out of three people with recurrent genital herpes with six or more recurrences per year are able to make it through a year of treatment without a recurrence.

There are still high titer (greater than 10 4 HSV-2 DNA copies/mL) shedding episodes under this current standard of care for recurrent genital herpes, which can lead to recurrent episodes and transmission of genital herpes.

Based on the limitations of current therapies, we see a path to advancing the treatment paradigm for people suffering from recurrent genital herpes.

To reach that goal, we discovered and are developing a novel, potent, long-acting HPI for recurrent genital herpes, 5366, which demonstrated low nanomolar potency in vitro against both HSV-1 and HSV-2 clinical isolates and a favorable nonclinical safety profile in the U.S.

Food and Drug Administration's (FDA) Good Laboratory Practice (GLP) toxicology studies, with high safety margins and minimal potential for off-target effects.

In addition, we are developing a second novel, potent, long-acting HPI for genital herpes, 1179, which was in-licensed to us as part of our collaboration with Gilead.

During the first quarter of 2024, we filed a Clinical Trial Application (CTA) to support initiation of a Phase 1a/b clinical study for 5366, which was approved in April 2024, and we dosed our first participant in the Phase 1a portion of this study during the second quarter of 2024.

In September 2024, we announced positive interim data for the Phase 1a portion of the 5366 study.

Interim results exceeded our objectives for this Phase 1a study and support 5366’s progression into Phase 1b, which we initiated during the third quarter of 2024.

Across the Part A (Phase 1a) cohorts evaluated, 5366 had a mean half-life of approximately 20 days when dosed orally, supporting once-weekly oral dosing, the target profile for 5366, as well as showing the potential for once-monthly oral dosing.

We plan to explore both once-weekly and once-monthly oral dosing regimens in the Part B (Phase 1b) portion of the study.

In the Part A cohorts, 5366 has been well-tolerated with a favorable safety profile observed with exposure of up to 70 days.

Treatment-emergent adverse events (AEs) were all mild to moderate in intensity and all were considered not related to study treatment by the study investigators;

there have been no serious AEs in any dose arm.

There were no treatment-related Grade 3 or 4 laboratory abnormalities and no protocol-defined stopping criteria were met.

There were no clinically significant electrocardiogram (ECG) abnormalities or patterns of AEs or laboratory abnormalities noted.

We expect interim data from the Phase 1b portion of the 5366 study to be available in fall 2025.

In addition to 5366, we are also advancing 1179, a structurally-differentiated HPI with single digit nanomolar potency against HSV-1 and HSV-2 and a nonclinical PK and safety profile to date that is supportive of a potential long-acting treatment by once-weekly oral administration.

We submitted the CTA for a Phase 1a/b study of 1179 in September 2024, which was approved in October 2024.

We dosed our first participant in the Phase 1a portion of this study during the fourth quarter of 2024.

In February 2025, we announced positive interim data for the Phase 1a portion of the 1179 study.

Interim results exceeded our objectives for this Phase 1a study and support 1179’s progression into Phase 1b, and we plan to move directly into the Phase 1b study in participants with recurrent genital herpes.

Across the Part A (Phase 1a) cohorts

evaluated as of the February 13, 2025 data cutoff date, 1179 had a mean half-life of approximately four days when dosed orally, supporting once-weekly oral dosing, the target profile for 1179.

In all cohorts as of the February 13, 2025 data cutoff date, 1179 has been well-tolerated with a favorable safety profile observed.

Treatment-emergent AEs were all mild in intensity and all were considered not related to study treatment by the study investigators;

there have been no serious AEs in any dose cohort.

One self-limited Grade 2 alanine transaminase elevation was observed in a cohort evaluating the highest dose of 300 mg.

There were no treatment-related Grade 3 or 4 laboratory abnormalities and no protocol-defined stopping criteria were met.

There were no clinically significant ECG abnormalities or patterns of AEs or laboratory abnormalities noted.

We expect interim data from the Phase 1b portion of the 5366 study to be available in fall 2025.

The Phase 1b study of 1179 study will be conducted concurrently with the ongoing Phase 1b evaluation of 5366, our other long-acting helicase-primase inhibitor candidate that began dosing in Phase 1b in the fourth quarter of 2024.

The studies are anticipated to be conducted at the same sites using equivalent eligibility criteria and outcome measures for both candidates.

We plan to report interim data for both candidates together in fall 2025.

Our HBV and HDV Programs

The World Health Organization (WHO) estimates that 254 million people worldwide are chronically infected with HBV as of 2022, and 1.2 million new infections occur each year.

HBV is a leading global cause of chronic liver disease and liver transplants, and the WHO estimates that 820,000 people died in 2019 from HBV, mostly due to cirrhosis and hepatocellular carcinoma.

Of the 296 million people living with chronic HBV infection, only approximately 30.4 million, or 10.5%, were aware of their infection, and only approximately 6.6 million, or 22%, of those diagnosed received treatment.

HBV is a highly prevalent disease that infects more than three times the number of people infected with hepatitis C virus and HIV infections combined, according to the WHO.

HDV is a “satellite virus,” because it can only infect people (1) who are already infected with HBV or (2) at the same time as a person is infected with HBV.

HDV affects a subset of approximately 12 million HBV infected patients.

These patients, which comprise an estimated 4.5% of hepatitis B surface antigen (HBsAg) positive patients, experience a substantially increased disease burden, as they account for 18% of cirrhosis and 20% of hepatocellular carcinoma associated with HBV.

HDV is considered the most severe form of hepatitis, as 70% of HDV patients progress to cirrhosis within ten years.

While HDV is less prevalent in the United States, it is a significant and serious health problem with inadequate treatment in many parts of Europe, Africa, the Middle East, East Asia and parts of South America.

HDV may be significantly underdiagnosed, because there were no HDV-targeted therapies approved until very recently, and the first therapy approved is only approved in the European Union.

HDV is known to accelerate disease progression and increase the incidence of liver cirrhosis and liver cancer, which results in higher morbidity and mortality rates than HBV alone.

HBV is a leading global cause of chronic liver disease and liver transplants, and the WHO estimates that 1.1 million people died in 2022 from HBV, mostly due to cirrhosis and hepatocellular carcinoma.

As of 2022, of the 254 million people living with chronic HBV infection, only approximately 33 million, or 13%, were aware of their infection, and only approximately 7 million, or 3%, of those diagnosed received treatment.

HBV is a highly prevalent disease that infects almost three times the number of people infected with hepatitis C virus and HIV infections combined, according to the WHO.

The current standard of care for chronic HBV infection, nucleos(t)ide analog reverse transcriptase inhibitors (NrtIs), are taken life-long and reduce, but do not eliminate, the virus and result in very low cure rates.

No new mechanisms of action (MOA) have been approved for chronic HBV infection in over 25 years.

No new mechanisms of action (MOA) have been approved for the treatment of chronic HBV infection in over 25 years.

The focus of our HBV program is to improve outcomes and increase the number of patients diagnosed and treated through the development of finite and curative therapies targeting an orthogonal MOA.

The current standard of care treatment for HDV is off-label pegylated IFN-α injected weekly or, in some regions, a large, complex molecule that requires daily injections.

There are no approved HDV treatments in the United States, and there is only one approved HDV treatment in Europe.

We believe a safe and effective oral small molecule entry inhibitor would be a significant innovation for patients living with HDV, which face a significant and immediate disease burden.

HDV is a “satellite virus” of HBV because it can only infect people (1) who are already infected with HBV or (2) at the same time as a person is infected with HBV.

HDV affects a subset of approximately 12 to 72 million HBV infected people.

These individuals infected with HDV, which comprise an estimated 4.5% of hepatitis B surface antigen (HBsAg) positive individuals, experience a substantially increased disease burden, as they account for 18% of cirrhosis and 20% of hepatocellular carcinoma associated with HBV.

HDV is considered the most severe form of hepatitis, as 70% of individuals infected with HDV progress to cirrhosis within ten years.

HDV may be significantly underdiagnosed, because there were no HDV-targeted therapies approved until very recently, and the first therapy approved is only approved in Europe.

HDV is known to accelerate disease progression and increase the incidence of liver cirrhosis and liver cancer, which results in higher morbidity and mortality rates than HBV alone.

The current standard of care treatment for HDV is off-label pegylated interferon-α (IFN-α) injected weekly or, in Europe, a large, complex peptide inhibitor that requires daily injections, bulevirtide.

There are no approved HDV treatments in the United States, and the large, complex peptide blocker is the only approved HDV treatment in the Europe.

We believe a safe and effective oral small molecule entry inhibitor would be a significant innovation for people living with HDV, who face a significant and immediate disease burden.

HDV Entry Inhibitor

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Similar to HBV, HDV utilizes HBsAg to enter hepatocytes by binding the cellular transmembrane protein sodium taurocholate co-transporting peptide (NTCP).

NTCP is highly expressed on human hepatocytes, where it serves as one of several proteins involved in the transport of bile acids.

NTCP is highly expressed on human hepatocytes, where it serves as one of several proteins involved in the

transport of bile acids.

The binding of specific small or large molecules to NTCP has been shown to effectively inhibit the interaction of HBsAg with NTCP, which prevents HBV and HDV from infecting hepatocytes.

The inhibition of HBV and HDV infection by molecules that bind NTCP has been demonstrated in vitro, in animal models and clinically.

Notably, Bulevirtide, a peptide blocker of NTCP, is the only approved therapy for HDV (approved in the European Union (the EU).

Notably, bulevirtide, a peptide blocker of NTCP, is the only approved therapy for HDV (approved in Europe).

6250 uses the same clinically-validated MOA as bulevirtide.

The binding of NTCP-targeted HBV/HDV entry inhibitors to NTCP has also been shown to inhibit the transport of certain bile acids into cells, which results in plasma elevations of bile acids;

this effect has been well-tolerated clinically and may serve as a biomarker of pharmacologically active concentrations of drug in the plasma.

We believe a safe and effective oral small molecule entry inhibitor would be a significant innovation for patients living with HDV and could significantly improve treatment uptake and diagnosis rates, especially when compared with currently available injectable products.

In March 2022, we announced our research program focused on a novel, orally bioavailable small molecule approach to inhibit entry of HBV and HDV by targeting NTCP, and in September 2023, we nominated ABI-6250 (6250).

In nonclinical studies, 6250 demonstrated low nanomolar potency against all HBV/HDV genotypes, favorable selectivity for NTCP versus other bile acid transporters, good oral bioavailability and a PK profile in nonclinical species projected to support once-daily oral dosing.

At the European Association for the Study of the Liver's (EASL) International Liver Congress TM in June 2023 and the International HBV Meeting in September 2023, we presented nonclinical characterization of the potencies and properties of our novel class of highly potent, small molecule, orally-bioavailable entry inhibitors.

We expect to initiate Phase 1a clinical studies of 6250 by the end of 2024.

In nonclinical studies in non-human primates, clinically-relevant doses of 6250 elevated bile acids to levels similar to those seen in humans with bulevirtide.

We believe a safe and effective oral small molecule entry inhibitor would be a significant innovation for people living with HDV and could significantly improve treatment uptake and diagnosis rates, especially when compared with currently available injectable products.

In September 2023, we nominated 6250, a novel, orally bioavailable small molecule designed to inhibit entry of HBV and HDV by targeting NTCP.

In nonclinical studies, 6250 demonstrated low nanomolar potency against all tested HBV/HDV genotypes, favorable selectivity for NTCP versus other bile acid transporters, good oral bioavailability and a PK profile in nonclinical species projected to support once-daily oral dosing.

In GLP toxicology studies, 6250 demonstrated a favorable nonclinical safety profile with wide safety margins.

We initiated a Phase 1a clinical study of 6250 during the fourth quarter of 2024, and we expect interim safety, PK and biomarker data from single-ascending and multiple-ascending doses cohorts in healthy participants in the third quarter of 2025.

Capsid Assembly Modulator

HBV is a DNA virus that infects hepatocytes and establishes a reservoir of covalently closed circular DNA (cccDNA), a unique viral DNA moiety that resides in the nucleus of HBV-infected hepatocytes and is associated with viral persistence and chronic infection.

No currently approved oral therapies target cccDNA activity directly, which makes molecules that can modulate cccDNA generation or disrupt its function.

No currently approved oral therapies target cccDNA activity directly.

As a result, we have worked to discover and develop compounds targeting the core protein, a viral protein involved in numerous aspects of the HBV replication cycle, including the generation of HBV cccDNA.

A benchmark for therapeutic agents aiming to decrease cccDNA levels is the use of several key viral antigens as surrogate biomarkers of active cccDNA.

The same biomarkers can be used in both primary human hepatocytes and patients.

On this basis, our next-generation CAM, ABI-4334 (4334), has shown nonclinical proof of principle.

In a variety of cell culture models, 4334 has demonstrated the ability to reduce production of viral HBV DNA levels as

well as the surrogate markers for cccDNA establishment:

HBV e antigen (HBeAg), HBV core-related antigen (HBcrAg) and viral pre-genomic RNA (pgRNA).

As a next-generation CAM, 4334 has been optimized to potently disrupt viral replication (MOA #1) and prevent the establishment and replenishment of new cccDNA (MOA #2).

The same biomarkers can be used in both primary human hepatocytes and infected individuals.

On this basis, our next-generation CAM, 4334, has shown nonclinical proof of principle.

In a variety of cell culture models, 4334 has demonstrated the ability to reduce production of HBV DNA levels as well as the surrogate markers for cccDNA establishment:

HBV e antigen (HBeAg), HBV core-related antigen (HBcrAg) and HBV pre-genomic RNA (pgRNA).

As a next-generation CAM, 4334 was optimized to potently disrupt viral replication (MOA #1) and prevent the establishment and replenishment of new cccDNA (MOA #2).

In contrast, while active against MOA #1, first-generation CAMs have not demonstrated adequate potency to sufficiently block cccDNA formation (MOA #2).

Further, the current standard of care, NrtIs, impacts the viral life cycle after establishment of cccDNA and can only inhibit production of new viral particles, and it does so incompletely.

In mid-2021, we announced the selection of 4334, which was internally discovered, for clinical development.

The chemical scaffold of 4334 is novel and distinct from all our prior CAM candidates.

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Through mechanistic studies presented at multiple conferences, we have demonstrated that 4334 promotes the formation of empty capsids by acceleration of capsid assembly, prevents the formation of cccDNA by disrupting incoming capsids, and prematurely disrupts capsids containing duplex linear DNA, the precursor for integrated HBV DNA.

We expect to initiate Phase 1b clinical studies of 4334 by mid-2024.

Research Programs

A Phase 1a study demonstrated that 4334 was well-tolerated when administered orally as single or multiple doses.

In addition, the PK data support 4334 as a once daily oral therapy and predicts best-in-class activity against both MOA #1 and MOA #2.

During the second quarter of 2024, we dosed our first participant in a Phase 1b clinical study of 4334.

We reported interim clinical results from the initial 150 mg cohort in December 2024, which indicated that 4334

maintained clinical exposures multiple folds above those anticipated to be required for potent viral activity and inhibition of cccDNA formation.

A mean decline in HBV DNA of 2.9 log 10 IU/mL was observed in a population of predominately HBeAg negative participants.

Among the subset of participants with detectable HBV RNA at baseline, a mean decline of 2.5 log 10 U/mL for HBV RNA was observed.

As anticipated, limited changes in viral antigens were observed for the study population over the 28-day treatment period.

These initial antiviral data are consistent with the high potency seen preclinically for 4334.

The interim safety data also demonstrated that 4334 was well-tolerated with a favorable safety profile observed.

Enrollment is ongoing for the second cohort, evaluating an oral once-daily 400 mg dose of 4334.

Based on the strong antiviral activity observed in the first cohort, we expect that the 400 mg cohort will be the final cohort for this Phase 1b study.

We anticipate releasing data from the 400 mg cohort in the first half of 2025.

Transplant-Associated Herpesviruses

In August 2022, in connection with our announcement of our HPI program, we also introduced our NNPI research program, targeting transplant-associated herpesviruses.

In a transplant setting, when patients are experiencing immunosuppression, they are at high risk of uncontrolled viral replication and severe disease brought on by one or more herpesviruses, including cytomegalovirus (CMV), HSV-1, HSV-2 and varicella zoster virus (VZV).

Each of these herpesviruses are highly prevalent, as approximately (1) 60% of transplant patients are CMV-positive;

(2) 60% of transplant patients are HSV-positive;

and (3) 80% of transplant patients are VZV-positive.

These viruses establish lifelong latent infections and frequently reactivate in transplant patients due to the use of immunosuppressive drugs following the transplant.

These uncontrolled viral infections increase the risk of severe disease and serious complications, including organ rejection, graft loss and death, and impacted approximately 60,000 patients in 2018 in the United States and EU4/UK.

While there are approved antivirals that are administered in a transplant setting.

However, currently approved antivirals are not broad spectrum and pose the risk of potentially serious side effects and drug-drug interactions.

As a result of these limitations, we identified an opportunity to develop an oral pan-herpes NNPI for these transplant-associated herpesvirus infections, which could greatly advance treatment.

Our research team has discovered multiple chemical series of potent, broad-spectrum herpesvirus polymerase inhibitors.

In addition, Gilead exclusively licensed us its NNPI program, and we believe the combined effort will speed candidate nomination and enhance our chance of clinical success.

IFNAR Agonist

In July 2022, we introduced our new research program advancing a novel, small molecule IFNAR agonist designed to selectively activate the IFN-α pathway within the liver and offer the convenience of oral dosing.

IFN-α is a subcutaneous injectable immune modulatory therapy approved for HBV that has demonstrated functional cure in some HBV patients, but its poor tolerability profile significantly limits its use.

Substantial side effects include flu-like symptoms, cytopenias, serious depression and psychiatric effects.

In addition, multiple contraindications limit its use, and it requires weekly injections that result in systemic exposure for up to a year.

By focusing exposure on the liver, our investigational IFNAR agonist program aims to engage IFN-α’s validated antiviral and immune modulatory mechanisms, retaining the efficacy of IFN-α while reducing systemic exposure to improve tolerability.

Lead optimization of multiple IFNAR agonists is in progress.

Collaboration and License Agreements

(3) 80% of transplant patients are VZV-positive and (4) 45% of transplant patients are EBV-positive.

These viruses establish lifelong latent infections and frequently reactivate in transplant patients due to the use of immunosuppressive drugs following transplantation.

These uncontrolled viral infections increase the risk of severe disease and serious complications, including organ rejection, graft loss and death, and impacted approximately 95,000 people receiving transplants in 2021 in the United States and Europe.

While there are approved antivirals that are administered in a transplant setting, currently approved antivirals are not active against a broad spectrum of transplant-associated herpesviruses and pose the risk of potentially serious side effects and drug-drug interactions.

As a result of these limitations, we identified an opportunity to develop an oral, broad-spectrum NNPI for transplant-associated herpesvirus infections, which could greatly advance treatment.

In December 2024, we nominated 7423 as our development candidate to undergo CTA-enabling studies, which are ongoing.

Research Programs

In addition to our investigational therapy programs that have nominated development candidates and have advanced into clinical studies or CTA-enabling studies, our research team continues to actively focus on proprietary research to discover and develop novel antivirals to treat serious viral diseases.

Collaboration and License Agreement

Gilead Sciences, Inc.

On October 15, 2023, we entered into an Option, License and Collaboration agreement (the Gilead Collaboration Agreement) with Gilead pursuant to which Gilead (1) exclusively licensed to us its HPI program and its NNPI program, while retaining opt-in rights to these programs and (2) has an option to take an exclusive license, on a program-by-program basis, to all of our other current and future pipeline programs.

In October 2023, we entered into an Option, License and Collaboration agreement (the Gilead Collaboration Agreement) with Gilead pursuant to which Gilead (1) exclusively licensed to us its HPI program and its NNPI program, while retaining opt-in rights to these programs and (2) has an option to take an exclusive license, on a program-by-program basis, to all of our other current and future pipeline programs.

During the 12-year collaboration term (subject to payment of certain extension fees) and for a specified period thereafter, Gilead may exercise its opt-in rights, on a program-by-program basis, at one of two timepoints—completion of a certain Phase 1 study or completion of a certain Phase 2 study for the first product within the program—upon payment of an opt-in fee ranging from $45.0 million to $125.0 million per program depending on the type of program and when the option is exercised.

Pursuant to the Gilead Collaboration Agreement, Gilead made an $84.8 million upfront cash payment to us.

In December 2024, we and Gilead entered into the First Amendment to the Gilead Collaboration Agreement, which restructured the timing of specific options exercisable and the fees payable to us under the terms of the Gilead Collaboration Agreement due to an agreed upon development plan for 6250.

To facilitate this development plan, (1) we received a payment of $10.0 million from Gilead and (2) the opt-in fee payable by Gilead in connection with 6250 was restructured, though it remains in the range of opt-in fees detailed above.

The $10.0 million payment received in connection with the First Amendment to the Gilead Collaboration Agreement is creditable towards future collaboration-related payments payable by Gilead.

If Gilead exercises its opt-in right to any current or future program under the collaboration, we are eligible to receive up to $330.0 million in potential regulatory and commercial milestones on that program, in addition to royalties ranging from the high single-digits to high teens, depending on the clinical stage of the program at the time of the opt-in.

Following Gilead’s exercise of its option for each of our programs, we may opt in to cover 40% of the research and development costs in the United States and share 40% of the profits and operating loss in the United States for products within the program in lieu of receiving milestones and royalties for that program in the United States, unless we later opt out of the cost/profit share for the program.

Prior to Gilead’s potential exercise of its opt-in, we will be primarily responsible for all discovery, research and development on both our programs and the two Gilead-contributed programs.

Following Gilead’s exercise of its option for each program, we may opt in to cover 40% of the research and development costs in the United States and share 40% of the profits and operating loss in the United States for products within the program in lieu of receiving milestones and royalties for that program in the United States, unless we later opt out of the cost/profit share for the program.

Prior to Gilead’s potential exercise of its opt-in, we are primarily responsible for all discovery, research and development on both our programs and the two Gilead-contributed programs.

Following Gilead’s opt-in, Gilead will control the further discovery, research, development, and commercialization on any optioned programs.

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Other customary termination rights are further provided in the Gilead Collaboration Agreement.

We and Gilead also entered into a Common Stock Purchase Agreement and an Investor Rights Agreement (together, the Gilead Equity Agreements), pursuant to which Gilead made an upfront equity investment of $15.2 million by purchasing from us 1,089,472 shares of our common stock at a purchase price of $13.92 per share.

If we complete an equity financing (or series of financings) by July 15, 2024 that results in at least $30 million of proceeds to us, then, subject to approval by our stockholders (which was obtained on January 31, 2024), we may require Gilead to purchase additional shares of common stock from us in an amount that results in Gilead owning 29.9% of our then-outstanding voting capital stock.

If we do not complete the equity financing or do not require Gilead to purchase the additional shares, Gilead may elect to purchase additional shares of common stock from us in an amount that results in Gilead owning 29.9% of our then-outstanding voting capital stock.

The purchase price per share for additional shares purchased by Gilead will be equal to the lesser of (1) a 35% premium to the 30-day volume weighted average price immediately prior to the date of purchase or (2) a 35% premium to the 30-day volume weighted average price immediately prior to delivery by Gilead of notice of the anticipated closing date.

The Gilead Equity Agreements also include a three-year standstill provision and two-year lockup provision, each with customary exceptions, and provide Gilead with certain other stock purchase rights and registration rights, as well as the right to designate two directors (or, alternatively, board observers at Gilead’s election) to our board of directors.

We and Gilead also entered into a Common Stock Purchase Agreement and an Investor Rights Agreement (together, the Gilead Equity Agreements), which were both amended in June 2024 in connection with a financing transaction, in which a new investor purchased shares of common stock and was issued a warrant (the 2024 Financing Transaction).

Pursuant to the Gilead Equity Agreements, Gilead made an upfront equity investment of $15.2 million by purchasing from us 1,089,472 shares of our common stock at a purchase price of $13.92 per share.

The terms of the Gilead Equity Agreements provided Gilead the right to elect to purchase additional shares of common stock from us at a premium in an amount that results in Gilead owning 29.9% of our then-outstanding voting common stock.

This right was exercised in December 2024, at a purchase price of $21.37 per share, which represents a 35% premium to the 30-trading day volume weighted average price immediately prior to the date of purchase.

The Gilead Equity Agreements also include a three-year standstill provision and a two-year lockup provision, each with customary exceptions, and provide Gilead with certain other stock purchase rights and registration rights, as well as the right to designate two directors (or, alternatively, board observers at Gilead’s election) to our board of directors.

In December 2023, Gilead designated Tomas Cihlar, Ph.D.

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Cook II to serve on our board of directors.

BeiGene, Ltd.

In July 2020, we entered into a Collaboration Agreement (the BeiGene Agreement) with BeiGene, Ltd.

(BeiGene), granting BeiGene an exclusive, royalty-bearing license to develop and commercialize products containing vebicorvir

(VBR), ABI-H2158 (2158) and ABI-H3733 (3733) in the People’s Republic of China, Hong Kong, Taiwan and Macau (the Territory).

Under the BeiGene Agreement, we and BeiGene will collaborate on development activities with respect to the licensed products in accordance with a mutually agreed upon development plan.

Pursuant to the terms of the BeiGene Agreement, BeiGene paid us an upfront amount of $40.0 million, and we were eligible to receive up to approximately $500.0 million in milestone payments, comprised of up to $113.8 million in development and regulatory and $385.0 million in net sales milestone payments.

In September 2021, we discontinued development of 2158 following the observation of elevated alanine transaminase (ALT) levels in the Phase 2 clinical study consistent with drug-induced hepatotoxicity, in July 2022, we discontinued VBR because it did not achieve functional cure or finite treatment in our two- and three-drug combination studies and in March 2023, we prioritized 4334 over 3733 based on data from clinical Phase 1 studies of both candidates and chronic toxicology observation for 3733 and announced that we would seek partnering opportunities for the CAMs.

In conjunction with the Gilead Collaboration Agreement, we elected to no longer seek partnering or further development of 3733.

As of our discontinuation of 3733 development, there are no remaining products in development that have been licensed to BeiGene.

The BeiGene Agreement also contains provisions such as representations and warranties of the parties, terms as to governance of the collaboration, commercialization and regulatory responsibilities of the parties, and manufacturing and supply, including potential adjustments in the event supply costs exceed certain levels.

In addition, during the term of the BeiGene Agreement, neither party will commercialize any competing products in the Territory.

BeiGene may terminate the BeiGene Agreement for convenience at any time upon 90 days’ advance written notice to us.

The BeiGene Agreement also contains customary provisions for termination by either party, including in the event of breach of the BeiGene Agreement, subject to cure.

Indiana University Research and Technology Corporation

In September 2013, we entered into an exclusive license agreement (the IURTC License Agreement) with Indiana University Research and Technology Corporation (IURTC) pursuant to which we acquired, with rights to sublicense, the rights to develop and commercialize products associated with multiple patents and patent applications covering aspects of our HBV program held by IURTC.

As part of this agreement, we were obligated to make milestone payments based upon the successful accomplishment of clinical and regulatory milestones.

The aggregate amount of all performance milestone payments under the IURTC License Agreement, should all performance milestones through development be met, was $0.8 million, with a portion related to the first performance milestone having been paid.

Under the IURTC License Agreement, we were also obligated to pay IURTC royalties based on net sales of the licensed technology ranging from 0.5% to 1.75%.

In addition, under the IURTC License Agreement, we paid annual diligence maintenance fees of $0.1 million.

Milestone payments received by IURTC were fully creditable against the annual diligence maintenance fee for the year in which the milestone payments were received.

In January 2024, we notified the Indiana University Innovation and Commercialization Office and IURTC that we had decided to terminate the IURTC License Agreement.

The termination of the License Agreement will be effective on April 11, 2024, 90 days following the delivery of the termination notice.

We currently have corporate and administrative offices and research laboratory space in South San Francisco, California as well as a registrational office, but no employees, in China.

Gilead participated in the 2024 Financing Transaction on the same terms as the new investor pursuant to the anti-dilution provision in the Investor Rights Agreement.

We and Gilead entered into a Securities Purchase Agreement for the issuance and sale, in a private placement, of 179,500 shares of our common stock and a warrant to purchase up to 179,500 shares of our common stock.

The warrant sold to Gilead has an exercise price equal to $17.00 per share, became immediately exercisable on the date of issuance and will expire on June 18, 2029.

Subject to certain exceptions, neither Gilead nor its affiliates may exercise any portion of the warrant to the extent that Gilead would own more than 19.9% of the number of our shares of common stock outstanding immediately after giving effect to such exercise.

Since our inception, we have had no revenue from product sales and have funded our operations principally through debt financings prior to our initial public offering in 2010 and through equity financings and collaborations since then.

Our operations to date have been primarily limited to organizing and staffing our company, licensing our product candidates, discovering and developing our product candidates, maintaining and improving our patent portfolio and raising capital.

Our operations to date have been primarily limited to organizing and staffing our company, discovering and developing our product candidates, licensing our product candidates, maintaining and improving our patent portfolio and raising capital.

We have generated significant losses to date, and we expect to continue to generate losses as we develop our product candidates.

As of December 31, 2023, we had an accumulated deficit of $785.7 million primarily as a result of research

and development expenses and general and administrative expenses.

As of December 31, 2024, we had an accumulated deficit of $825.9 million.

Because we do not generate revenue from any of our product candidates, our losses will continue as we further develop and seek regulatory approval for, and commercialize, our product candidates.

Additionally, we expect our research and development expenses to increase over the coming years as we continue the development of our product candidates.

As a result, our operating losses are likely to be substantial over the next several years and thereafter if none of our product candidates are approved or successfully launched.

As a result, our operating losses are likely to be substantial over the next several years and thereafter if none of our product

candidates are approved or successfully launched.

We are unable to predict the extent of any future losses or when we will become profitable, if at all.

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Note 2 to the Consolidated Financial Statements describes the significant accounting policies and methods used in the preparation of our consolidated financial statements.

We evaluate our estimates and judgments, including those described in greater detail below, on an ongoing basis.

We evaluate our estimates and judgments on an ongoing basis.

We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources.

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We then allocate the total transaction price to each performance obligation based on its SSP and recognize as revenue the amount of the transaction price that is allocated to the respective performance obligation when or as the performance obligation is satisfied.

For recognition of revenue relating to the Gilead Collaboration Agreement, we determined the transaction price and allocated it to a single combined performance obligation, the discovery, research and development services during the collaboration term.

We account for contract modifications, defined as changes in the scope or price (or both) of a contract that are approved by the parties to the contract, such as a contract amendment, when the parties to a contract approve a modification that either creates new, or changes existing, enforceable rights and obligations of the parties to the contract.

We use one of the following methods depending on facts and circumstances:

(i) as a separate contract if the modification adds distinct goods or services and the price reflects the SSP of those additional goods or services;

(ii) as a termination of the existing contract and creation of a new contract if the remaining goods or services are distinct from those transferred before the modification;

or (iii) as a cumulative catch-up adjustment to the original contract if the remaining goods or services are not distinct from those transferred before the modification.

For recognition of revenue relating to the Gilead Collaboration Agreement at commencement of the arrangement, we determined the transaction price and allocated it to a single combined performance obligation, the discovery, research and development services during the collaboration term.

We estimated the SSP of extension fees and opt-in rights pursuant to the Gilead Collaboration Agreement using significant estimates, including forecasted revenues and costs, development timelines, discount rates, and probabilities of technical and regulatory success.

We concluded none of the options in the contract are performance obligations at the outset of the arrangement as they are contingent upon option exercise, are capable of being distinct from the research and development services and are not offered at a discount to their SSP.

We concluded none of the options in the contract are performance obligations at the outset of the arrangement as they are contingent upon

option exercise, are capable of being distinct from the research and development services and are not offered at a discount to their SSP.

We determined the First Amendment to the Gilead Collaboration Agreement represents a contract modification within the scope of the revenue from contracts with customers guidance.

We concluded there continues to be a single combined performance obligation consisting of a series of distinct research and development services, and therefore, the remaining services under the First Amendment to the Gilead Collaboration Agreement are distinct from the research and development services already provided.

Accordingly, we accounted for the First Amendment as a termination of the existing contract and the creation of a new contract and are recognizing the revenue on a prospective basis by reassessing the transaction price and allocating it to the remaining research and development services.

We evaluate each performance obligation to determine if it can be satisfied at a point in time or over time, and we measure the services delivered to the customer, which we periodically review based on the progress of the related program.

We recognize revenue under the Gilead Collaboration Agreement over time using a cost-based input method.

We recognize revenue under the Gilead Collaboration Agreement over time using a cost-based input method, which continues to be appropriate following the First Amendment to the Gilead Collaboration Agreement.

Revenue related to certain performance obligations that are satisfied over time could be materially impacted as a result of changes in the estimated total research effort required to satisfy those obligations.

A 10% change in the total estimated

effort required to satisfy the single combined performance obligation related to the Gilead Collaboration Agreement would have changed the related revenue recognized during the year ended December 31, 2023 by as much as $0.5 million.

A hypothetical 10% change in the total estimated effort required to satisfy the single combined performance obligation related to the Gilead Collaboration Agreement would have changed the related revenue recognized during the year ended December 31, 2024 by as much as $3.5 million.

The effect of any change made to an estimated input component and, therefore revenue recognized, would be recorded as a change in estimate.

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In addition, variable consideration (including regulatory and commercial milestones) must be evaluated to determine if it is constrained and, therefore, excluded from the transaction price.

Research and Development Expense and Accruals

Research and Development Contract Costs and Accruals

As part of the process of preparing our consolidated financial statements, we are required to estimate certain research and development expenses.

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Adjustments to prior period estimates have not been material for the years ended December 31, 2024 and 2023.

We have and may continue to enter into license agreements to access and utilize certain technology.

In each case, we evaluate if the license agreement results in the acquisition of an asset or a business.

To date, none of our license agreements have been considered to be acquisitions of businesses.

For asset acquisitions, the upfront payments to acquire such licenses, as well as any future milestone payments, are immediately recognized as research and development expense when paid, provided there is no alternative future use of the rights in other research and development projects.

These license agreements may also include contingent consideration in the form of cash payments to be made for future milestone events.

We assess whether such contingent consideration meets the definition of a derivative and to date we have determined that such contingent consideration are not derivatives.

Results of Operations

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Collaboration revenue

Collaboration revenue for the year ended December 31, 2023 includes the recognition of $4.4 million for services performed under the Gilead Collaboration Agreement entered into in October 2023.

Additionally, collaboration revenue includes the recognition of $2.7 million of deferred revenue allocated to 3733 under the BeiGene Agreement upon discontinuing development of 3733, following entering into the Gilead Collaboration, as we prioritize 4334.

There was no revenue for the year ended December 31, 2022.

Collaboration revenue was $28.5 million for the year ended December 31, 2024 compared to $7.2 million for the year ended December 31, 2023.

The $21.4 million increase in collaboration revenue was driven by recognizing a full year of revenue in 2024 under the Gilead Collaboration Agreement, which was entered into in October 2023.

Collaboration revenue for 2023 also includes recognizing the remaining $2.7 million of deferred revenue under our Collaboration Agreement with BeiGene, Ltd.

(BeiGene) upon our discontinuing development of ABI-H3733 (3733), which left no products licensed to BeiGene and no remaining performance obligations.

Research and Development Expenses

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Year Ended December 31,

External expenses:

External program expenses:

Research and discovery

Total external expenses

Vebicorvir (VBR)

Total external program expenses

Employee and contractor-related expenses

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Total research and development expenses

(1) Reflects net amounts refundable to us after the final reconciliation of costs of the clinical trial conducted pursuant to the Clinical Trial Collaboration Agreement with Arbutus Biopharma Corporation, which was terminated in February 2023.

Research and development expenses were $55.9 million for the year ended December 31, 2024 compared to $48.9 million for the year ended December 31, 2023.

The $21.1 million decrease in research and development expenses was primarily driven by decreases in external expenses due to pausing further development of our CAMs as we sought partnering opportunities after the completion of the Phase 1b trial for 3733 and Phase 1a trial for 4334 and our discontinuation of the VBR and 2158 programs.

We also experienced decreases in employee and contractor-related expenses of $8.1 million due to the termination of employees as part of the reorganization announced in July 2022.

This was partially offset by increases in external expenses generated from the advancement of 5366 and 6250.

The $7.0 million increase in research and development expenses was primarily driven by increases in external program expenses from the advancement and expansion of our pipeline, most notably from our recurrent genital herpes programs, 1179 and 5366, as well as our HDV entry inhibitor, 6250.

These increases in external expenses were partially offset by savings from our discontinuation of 3733 and VBR.

We also experienced a $0.9 million increase in employee and contractor-related expenses due to higher headcount and increased travel costs as a result of having an expanded pipeline with more candidates entering the clinic in 2024.

overall increase was further offset by a $1.9 million decrease in our facility and other expenses, reflecting cost savings in rent and related expenses from our corporate headquarters sublease, which commenced in November 2023.

General and Administrative Expenses

General and administrative expenses consist primarily of salaries and other related costs for personnel in executive, finance, accounting, business development, information technology, legal and human resources functions.

significant costs include facility costs not otherwise included in research and development expenses, insurance costs, legal fees relating to patents and corporate matters and fees for accounting and consulting services.

Other significant costs include facility costs not otherwise included in research and development expenses, insurance costs, legal fees relating to patents and corporate matters and fees for accounting and consulting services.

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

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General and administrative expenses were $18.0 million for the year ended December 31, 2024, compared to $22.9 million for the year ended December 31, 2023.

The decrease of $1.2 million in general and administrative expenses was primarily due to a $2.2 million decrease in salaries and benefits due to a decrease in headcount, largely attributable to the reorgan ization announced in July 2022.

This was partially offset by an increase in legal expenses incurred with entering into the Gilead Collaboration.

The $4.9 million decrease in general and administrative expenses was primarily due to higher legal expenses incurred in 2023 related to the Gilead Collaboration, as well as higher stock-based compensation expense in 2023, mainly resulting from the vesting of restricted stock awards with performance based-vesting conditions.

Interest and Other Income, Net

Interest income consists of interest earned on our cash and cash equivalents and available-for-sale securities.

Interest income consists of interest earned on our cash and cash equivalents and available-for-sale marketable securities.

The following table summarizes the period-over-period changes in our interest and other income, net (in thousands, except for percentages):

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Interest and other income, net was $5.6 million for the year ended December 31, 2024, compared to $3.5 million for the year ended December 31, 2023.

The increase of $2.4 million was primarily due to more interest income earned on marketable securities caused by multiple interest rate increases in 2023 and a larger portfolio balance after the receipt of $100.0 million upon entering into the Gilead Collaboration in October 2023.

The increase of $2.1 million was primarily due to more interest income earned on marketable securities resulting from having a larger portfolio balance after the receipt of $100.0 million upon entering into the Gilead Collaboration in October 2023 and multiple equity financings entered into in 2024.

Income Tax Expense

The following table summarizes the period-over-period changes in our income tax expense (in thousands, except for percentages):

Year Ended December 31,

Income tax expense

Income tax expense was $0.3 million for the year ended December 31, 2024 due to taxable income incurred from the upfront payments received under the Gilead Collaboration in 2023.

Income tax expense was insignificant during the year ended December 31, 2023.

Liquidity and Capital Resources

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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 December 31, 2023 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.

We have funded our operations through December 31, 2024 principally through equity

financings, raising an aggregate of $648.0 million in net proceeds, and strategic collaborations, raising an aggregate of $200.9 million.

Future Funding Requirements

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We expect to continue to raise capital when and as needed and at the time and in the manner most advantageous to us.

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 expect our existing cash, cash equivalents and marketable securities will enable us to fund our operations into the middle of 2026.

We have based this estimate on assumptions that may prove to be wrong, and we may utilize our available capital resources sooner than we currently expect.

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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 raise capital despite macroeconomic and geopolitical events impacting financial markets, such as rising inflation, potential effects of changes in federal government regulation or policies, including changes in or new tariffs, and market volatility;

• 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;

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Year Ended December 31,

Operating activities

Investing activities

Financing activities

Net (decrease) increase in cash and cash equivalents

Net cash (used in) provided by operating activities

Net cash provided by (used in) investing activities

Net cash provided by financing activities

Net increase (decrease) in cash and cash equivalents

Operating Activities

Net cash provided by operating activities was $22.7 million for the year ended December 31, 2023.

This was primarily due to proceeds of $90.7 million from the upfront payment under the Gilead Collaboration Agreement.

This was partially offset by our net loss of $61.2 million, adjusted for $5.1 million recognized for stock-based compensation expense.

Net cash used in operating activities was $84.5 million for the year ended December 31, 2022.

This was primarily due to our net loss of $93.1 million, adjusted for $6.6 million recognized for stock-based compensation expense.

Net cash used in operating activities for the year ended December 31, 2024 was $51.1 million, compared to net cash provided by operating activities of $22.7 million for the same period in 2023.

The decrease in operating cash flows was primarily due to $90.7 million received under the Gilead Collaboration Agreement in 2023, partially offset by cost savings in rent and related expenses attributable to our corporate headquarters sublease, which commenced in November 2023, and the timing of vendor invoicing and payments.

Investing Activities

Net cash used in investing activities for the year ended December 31, 2023 was $69.1 million primarily due to purchases of marketable securities, net of maturities.

Net cash provided by investing activities for the year ended December 31, 2022 was $90.6 million.

This was due to proceeds of $89.2 million from sales and maturities of marketable securities, net of purchases, and proceeds of $1.5 million received in 2022 from the sale of Microbiome assets in 2021.

Net cash provided by investing activities for the year ended December 31, 2024 was $40.2 million, compared to net cash used in investing activities of $69.1 million for the same period in 2023.

The increase in cash flows from investing was due to higher proceeds from maturities of our marketable securities, which exceeded purchases in 2024.

In contrast, in 2023 our purchases of marketable securities exceeded proceeds because of additional funds available to invest from the upfront payment received from Gilead under the Gilead Collaboration Agreement.

Financing Activities

Net cash provided by financing activities for the year ended December 31, 2023 was $13.8 million resulting from the net proceeds of $9.1 million from the sale of 1,089,472 shares of our common stock in accordance with the Gilead Equity Agreements, $4.5 million from the sale of 261,170 shares of our common stock under our "at-the-market" offering program (the 2020 ATM) and $0.1 million from the issuance of 14,453 shares of common stock under the Assembly Biosciences Amended and Restated 2018 Employee Stock Purchase Plan (2018 ESPP).

Net cash provided by financing activities for the year ended December 31, 2022 was $0.6 million resulting from the net proceeds of $0.3 million from the sale of 25,068 shares of our common stock under the 2020 ATM and $0.3 million from the issuance of 18,819 shares of common stock under the 2018 ESPP.

Net cash provided by financing activities for the year ended December 31, 2024 was $29.4 million, compared to $13.8 million for the same period in 2023.

The increase in financing cash flows was primarily driven by the sale of 0.6 million more shares of our common stock through multiple equity financings in 2024 and at an increased price per share compared to 2023.

Quantitative and Qualitat ive Disclosures about Market Risk

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis