What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2025-03-20 compared with 2024-03-28 · 338 added, 366 removed, 716 unchanged (50% of the section changed)

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Other Information

Not applicable.

No t applicable.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

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Equity compensation plans not approved by security holders

(1) The weighted average exercise price is calculated solely based on the exercise prices of the outstanding stock options and does not reflect the shares that will be issued upon the vesting of outstanding awards of restricted stock units (RSUs), which have no exercise price.

(1) The weighted average exercise price is calculated solely based on the exercise prices of the outstanding stock options and warrants and does not reflect the shares that will be issued upon the vesting of outstanding awards of restricted stock units (RSUs), which have no exercise price.

(2) This number includes the following:

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to outstanding stock options and 1,159 were subject to outstanding RSUs;

520,707 shares subject to outstanding awards granted under the Assembly Biosciences, Inc.

2018 Stock Incentive Plan, as amended (2018 Plan), of which 429,157 were subject to outstanding stock options and 91,550 were subject to outstanding RSUs;

and 38,853 options assumed by us in connection with our merger with Assembly Pharmaceuticals.

and 700,538 shares subject to outstanding awards granted under the Assembly Biosciences, Inc.

Amended and Restated 2018 Stock Incentive Plan, as amended (2018 Plan), of which 633,643 were subject to outstanding stock options and 66,895 were subject to outstanding RSUs.

This number excludes purchase rights currently accruing under the Assembly Biosciences, Inc.

Amended and Restated 2018 Employee Stock Purchase Plan (2018 ESPP).

Second Amended and Restated 2018 Employee Stock Purchase Plan (2018 ESPP).

(3) This number includes:

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and 156,815 shares reserved for issuance under the 2018 ESPP.

As of March 22, 2024, assuming each participant purchases the maximum number of shares in the current offering period, no more than 12,896 shares are subject to purchase in the current offering, which ends on May 14, 2024.

Eligible employees may participate in the 2018 ESPP at a minimum of 1% and up to a maximum of 15% of such employee’s compensation for each pay period, subject to annual IRS limitations of $25,000.

(4) This number includes 51,285 shares subject to stock options granted under the 2017 Inducement Award Plan (2017 Inducement Plan);

41,666 shares subject to stock options granted under the 2019 Inducement Award Plan (2019 Inducement Plan);

and 60,725 shares subject to outstanding awards granted under the 2020 Inducement Award Plan (2020 Inducement Plan), of which 58,746 were subject to outstanding stock options and 1,979 were subject to outstanding RSUs.

58,746 shares subject to stock options granted under the 2020 Inducement Award Plan (2020 Inducement Plan);

and 814,000 warrants granted in a registered direct offering and a private placement in June 2024.

(5) This number includes:

13,756 shares available for issuance under the 2017 Inducement Plan, no shares under the 2019 Inducement Plan and 5 shares available for issuance under the 2020 Inducement Plan.

Our stockholder-approved equity compensation plans consist of the 2018 Plan, 2014 Plan, the 2010 Plan, stock options assumed in our merger with Assembly Pharmaceuticals and the 2018 ESPP.

Our stockholder-approved equity compensation plans consist of the 2018 Plan, the 2014 Plan, the 2010 Plan and the 2018 ESPP.

Effective on June 2, 2016, the 2010 Plan was frozen, and no further grants will be made under the 2010 Plan.

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An “Award” under the 2018 Plan, 2014 Plan or 2010 Plan is any right to receive our common stock consisting of non-statutory stock options, incentive stock options, stock appreciation rights, RSUs, or any other stock award.

In May 2018, our stockholders approved the 2018 ESPP and it was amended and restated in May 2021.

In May 2018, our stockholders approved the 2018 ESPP and it was amended and restated in May 2021 and May 2024.

The 2018 ESPP provides for the purchase by employees of up to an aggregate of 226,398 shares of the Company’s common stock.

Eligible employees can purchase shares of our common stock at the end of a predetermined offering period at 85% of the lower of the fair market value at the beginning or end of the offering period.

Our outstanding equity compensation arrangements that have not been approved by our stockholders consist of the 2017 Inducement Plan, the 2019 Inducement Plan and the 2020 Inducement Plan.

Our outstanding equity compensation arrangements that have not been approved by our stockholders consist of the 2017 Inducement Plan, the 2019 Inducement Plan, the 2020 Inducement Plan and warrants granted in a registered direct offering and a private placement in June 2024.

In April 2017, our board of directors adopted the 2017 Inducement Plan and reserved 66,666 shares of our common stock for issuance under the 2017 Inducement Plan.

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Description of Securities.

Registered Warrant.

Private Placement Warrant.

Sublease, dated July 26, 2023, by and between Arsenal Biosciences, Inc., as Sublandlord, and Assembly Biosciences, Inc., as Subtenant.

First Amendment to Sublease, dated December 30, 2024, by and between Arsenal Biosciences, Inc.

and Assembly Biosciences, Inc.

Option, License and Collaboration Agreement, dated October 15, 2023, by and between Assembly Biosciences, Inc.

and Gilead Sciences, Inc.

First Amendment to Option, License and Collaboration Agreement, dated December 19, 2024, by and between Assembly Biosciences, Inc.

and Gilead Sciences, Inc.

Common Stock Purchase Agreement, dated October 15, 2023, by and between Assembly Biosciences, Inc.

and Gilead Sciences, Inc.

Amendment No.

1 to Common Stock Purchase Agreement, dated June 17, 2024, by and between Assembly Biosciences, Inc.

and Gilead Sciences, Inc.

Investor Rights Agreement, dated October 15, 2023, by and between Assembly Biosciences, Inc.

and Gilead Sciences, Inc.

Exclusive License Agreement dated September 3, 2013 by and between The Indiana University Research and Technology Corporation and Assembly Pharmaceuticals, Inc.

Amendment No.

1 to Exclusive License Agreement, by and between Assembly Biosciences, Inc.

and the Indiana University Research and Technology Corporation.

Amendment No.

2 to Exclusive License Agreement, by and between Assembly Biosciences, Inc.

and the Indiana University Research and Technology Corporation.

Collaboration Agreement, dated as of July 17, 2020, by and between Assembly Biosciences, Inc.

and BeiGene, Ltd.

1 to Investor Rights Agreement, dated June 17, 2024, by and between Assembly Biosciences, Inc.

and Gilead Sciences, Inc.

Amended and Restated Employment Agreement, dated December 12, 2022, between Assembly Biosciences, Inc.

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2010 Equity Incentive Plan.

Description of Document

Assembly Biosciences, Inc.

Amended and Restated 2014 Stock Incentive Plan.

Description of Document

Omnibus Amendment to Assembly Biosciences, Inc.

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Assembly Biosciences, Inc.

2018 Stock Incentive Plan.

Amendment No.

1 to Assembly Biosciences, Inc.

2018 Stock Incentive Plan.

Amendment No.

3 to Assembly Biosciences, Inc.

2018 Stock Incentive Plan.

Amendment No.

4 to Assembly Biosciences, Inc.

2018 Stock Incentive Plan.

Amendment No.

5 to Assembly Biosciences, Inc.

2018 Stock Incentive Plan.

Amendment No.

6 to Assembly Biosciences, Inc.

2018 Stock Incentive Plan.

Amended and Restated 2018 Stock Incentive Plan.

Form of Notice of Stock Option Grant and Stock Option Agreement under the 2018 Stock Incentive Plan.

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2018 Stock Incentive Plan.

Amended and Restated Assembly Biosciences, Inc.

2018 Employee Stock Purchase Plan.

Assembly Biosciences, Inc.

Second Amended and Restated 2018 Employee Stock Purchase Plan.

Assembly Biosciences, Inc.

2019 Inducement Award Plan.

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Form of Restricted Stock Unit Award Notice and Restricted Stock Unit Award Agreement under the 2020 Inducement Award Plan.

Securities Purchase Agreement, dated June 16, 2024, by and between Assembly Biosciences, Inc.

and the Purchaser.

Securities Purchase Agreement, dated June 17, 2024, by and between Assembly Biosciences, Inc.

and Gilead Sciences, Inc.

Open Market Sale Agreement by and between Assembly Biosciences, Inc.

and Jefferies LLC.

Description of Document

Assembly Biosciences, Inc.

2024 Corporate Bonus Plan.

Assembly Biosciences, Inc.

Insider Trading Policy

List of Subsidiaries of Assembly Biosciences, Inc.

Consent of Independent Registered Public Accounting Firm.

Description of Document

Power of Attorney (included on signature page).

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Cover Page Interactive Data File (embedded within the Inline XBRL document).

* Certain information in this exhibit has been omitted and filed separately with the Securities and Exchange Commission pursuant to a confidential treatment request.

The schedules to this exhibit have been omitted pursuant to Item 601(a)(5) of Regulation S-K.

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Description of the Matter

As described in Note 10 to the consolidated financial statements, the Company entered into an Option, License and Collaboration Agreement (the Gilead Collaboration Agreement) and Common Stock Purchase Agreement and an Investor Rights Agreement (the Gilead Equity Agreements) with Gilead Sciences, Inc.

during the year ended December 31, 2023.

The Company concluded Gilead is a customer and accordingly, the Gilead Collaboration Agreement is within the scope of the revenue from contracts with customers guidance.

In determining the appropriate accounting treatment, the Company identified a single combined performance obligation for the discovery, research and development services during the collaboration term, and will recognize revenue over time using a cost-based input method.

The Company determined that the total transaction price under the Gilead Collaboration Agreement was $90.7 million, which consisted of an upfront payment of $84.8 million and a $5.9 million premium on the purchase of the Company’s common stock that was allocated to the single combined performance obligation under the Gilead Collaboration Agreement.

Auditing the Company’s revenue recognition for the Gilead Collaboration Agreement is complex and required the Company to apply significant judgment to determine whether any promises or services described in the Gilead Collaboration Agreement meet the criteria of being distinct and capable of being distinct within the context of the contract or represent a material right.

As described in Note 8 to the consolidated financial statements, in December 2024, the Company entered into the First Amendment to its 2023 Gilead Collaboration Agreement, which restructured the timing of specific options exercisable in the agreement and the fees payable to the Company.

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

The Company concluded there is a single combined performance obligation for the discovery, research and development services during the remaining collaboration term, and will recognize revenue over time using a cost-based input method consisting of a series of distinct R&D Services.

As of December 31, 2024, the total transaction price was determined to be $74.2 million, consisting of the unrecognized portion of the transaction price under the original contract, a premium of $5.2 million on Gilead's purchase of the Company's common stock in December 2024, and $10.0 million received from Gilead pursuant to the First Amendment to the Gilead Collaboration Agreement.

Auditing the Company’s accounting for the First Amendment to the Gilead Collaboration Agreement required increased audit effort due to the complex and judgmental nature of evaluating the terms and assumptions of the related amendment and the appropriate accounting for the modification under the guidance.

How We Addressed the Matter in Our Audit

To test the conclusion that the various promises under the contract collectively constituted a single combined performance obligation, our audit procedures included, among others, reviewing the Gilead Collaboration Agreement, discussing the potential performance obligations with management, and evaluating whether management's accounting position considered all relevant facts and terms included in the agreement.

We further evaluated management's technical analysis and assessed management's conclusions to determine whether they had appropriately considered and applied the guidance and interpretations associated with performance obligations within the scope of the revenue from contracts with customers guidance.

To test the conclusion that the modification was accounted for appropriately, our audit procedures included, among others, reviewing the First Amendment to the Gilead Collaboration Agreement and evaluating whether management's accounting position considered all relevant facts and terms included in the agreement.

/s/ Ernst & Young LLP

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(In thousands except for share amounts and par value)

As of December 31,

Current assets

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Other accrued expenses

Deferred revenue - short-term ($ 30,915 and $− to a related party)

Deferred revenue from a related party - short-term

Operating lease liabilities - short-term

Total current liabilities

Deferred revenue - long-term ($ 55,379 and $− to a related party)

Deferred revenue from a related party - long-term

Operating lease liabilities - long-term

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Other comprehensive loss

Unrealized gain (loss) on marketable securities

Unrealized (loss) gain on marketable securities

Comprehensive loss

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Issuance of common stock under at-the-market (ATM) equity offering program, net of issuance costs

Issuance of common stock in a private placement to a related party, net of issuance costs

Issuance of common stock under Employee Stock Purchase Plan (ESPP)

Issuance of common stock for settlement of restricted stock units (RSUs)

Unrealized loss on marketable debt securities

Unrealized gain on marketable debt securities

Stock-based compensation

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Issuance of common stock under ATM equity offering program, net of issuance costs

Issuance of common stock and warrants in a registered direct offering, net of issuance costs

Issuance of common stock and warrants in private placements to a related party, net of issuance costs

Issuance of common stock upon exercise of stock options

Issuance of common stock under ESPP

Issuance of common stock for settlement of RSUs

Issuance of common stock to a related party, net of issuance costs

Unrealized gain on marketable debt securities

Unrealized loss on marketable debt securities

Stock-based compensation

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Cash flows from operating activities

Adjustments to reconcile net loss to net cash used in operating activities:

Adjustments to reconcile net loss to net cash (used in) provided by operating activities:

Depreciation and amortization

Stock-based compensation

Net (accretion) amortization of investments in marketable debt securities

Net accretion of investments in marketable debt securities

Non-cash rent expense

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Other accrued expenses

Deferred revenue

Deferred revenue (-$ 13,294 and $ 86,294 from a related party)

Operating lease liabilities

Net cash provided by (used in) operating activities

Net cash (used in) provided by operating activities

Cash flows from investing activities

Proceeds from maturities of marketable securities

Purchases of marketable securities

Proceeds from sale of property and equipment

Purchases of property and equipment

Purchases of marketable securities

Proceeds from sale of marketable securities

Proceeds from the sale of Microbiome assets

Net cash (used in) provided by investing activities

Net cash provided by (used in) investing activities

Cash flows from financing activities

Proceeds from the issuance of common stock to a related party, net of issuance costs

Proceeds from the issuance of common stock under ATM equity offering program, net of issuance costs

Proceeds from the issuance of common stock and warrants in private placements to a related party, net of issuance costs

Proceeds from the issuance of common stock and warrants in a registered direct offering, net of issuance costs

Proceeds from the issuance of common stock under ATM equity offering programs, net of issuance costs

Proceeds from the issuance of common stock under ESPP

Proceeds from the exercise of stock options

Net cash provided by financing activities

Net (decrease) increase in cash and cash equivalents

Cash and cash equivalents at the beginning of the period

Cash and cash equivalents at the end of the period

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents at the beginning of the year

Cash and cash equivalents at the end of the year

Supplemental non-cash investing and financing activities

Operating lease liabilities arising from obtaining ROU assets

Supplemental disclosure of cash flow information

Income taxes paid

See Accompanying Notes to the Consolidated Financial Statements

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Assembly Biosciences, Inc.

(together with its subsidiaries, Assembly or the Company), incorporated in Delaware in October 2005, is a biotechnology company developing innovative therapeutics.

The Company's 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 inhibitor (CAM) candidate 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.

The Company operates in one segment and is headquartered in South San Francisco, California.

(together with its subsidiaries, Assembly or the Company), incorporated in Delaware in October 2005, is a biotechnology company developing innovative therapeutics targeting serious viral diseases with the potential to improve the lives of patients worldwide.

The Company's 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.

The Company's 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 it has additional research programs against multiple antiviral targets.

The Company operates in one segment and is headquartered in South San Francisco, California (s ee Note 13 - Segment Reporting).

The Company has not derived any revenue from product sales to date and currently has no approved products.

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Food and Drug Administration (FDA) or an applicable foreign regulatory agency.

Since inception, the Company’s operations have been financed through the sale of equity securities, the proceeds from the exercise of warrants and stock options, the issuance of debt, and upfront payments related to collaboration agreements.

Since inception, the Company’s operations have been financed through the sale of equity securities, payments related to collaboration agreements, the proceeds from the exercise of warrants and stock options and the issuance of debt.

The Company has incurred losses from operations since inception and expects to continue to incur substantial losses for the next several years as it continues its product development efforts.

In October 2023, the Company received $ 100.0 million upon entering into the Option, License and Collaboration Agreement (the Gilead Collaboration Agreement) and the Common Stock Purchase Agreement and an Investor Rights Agreement (collectively, the Gilead Equity Agreements) with Gilead Sciences, Inc.

Management believes the Company currently has sufficient funds to meet its operating requirements for at least the next twelve months following the date these consolidated financial statements are issued.

The Company intends to obtain any additional funding it requires through strategic relationships, public or private equity or debt financings, grants or other arrangements.

The Company cannot assure such funding will be available on reasonable terms, if at all.

Market volatility, inflation or other factors could also adversely impact the Company's ability to access capital when and as needed.

If the Company is unable to secure additional sources of funding or generate enough revenue from its collaborations, it may be necessary to significantly reduce the current rate of spending through reductions in staff and delaying, scaling back, or discontinuing certain research and development programs, including more costly clinical trials.

Note 2 - Summary of Significant Accounting Policies and Recent Accounting Pronouncements

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All intercompany balances and transactions have been eliminated in consolidation.

On January 31, 2024, following approval by the Company's stockholders, the Company's board of directors approved the implementation of a reverse stock split at a ratio of 1-for-12 shares of the Company's common stock (the Reverse Stock Split).

The Reverse Stock Split was effective as of February 9, 2024 (see Note 15).

All share and per share amounts of the Company's common stock presented have been retroactively adjusted to r eflect the 1-for-12 R everse Stock Split, including reclassifying an amount equal to the reduction in par value of common stock to additional paid-in capital.

Use of Estimates

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Other Risks and Uncertainties

The Company relies on contract research organizations (CROs), including one located in Ukraine that temporarily shut down operations due to Russia’s invasion.

Though this CRO has resumed operations and the Company continues to utilize this CRO, the Company has reallocated certain work to other global CROs in case the CRO shuts down operations again.

and global financial markets have experienced volatility and disruption due to other macroeconomic and geopolitical events such as rising inflation, rising interest rates to combat inflation, the risk of a recession, the war between Russia and Ukraine and the Israel-Hamas war.

The Company cannot predict at this time to what extent, if at all, it and its employees, CROs, vendors and/or collaborators could potentially be negatively impacted by these events.

and global financial markets have experienced volatility and disruption due to macroeconomic and geopolitical events such as rising inflation, changes in interest rates to combat inflation, the war between Russia and Ukraine, the conflicts in the Middle East, the rising tensions between China and Taiwan, as well as tariffs.

The Company cannot predict at this time to what extent, if at all, it and its employees, contract research organizations (CROs), vendors and/or collaborators could potentially be negatively impacted by these events.

Cash and Cash Equivalents

All highly liquid investments, including money market funds, with original maturities of three months or less at the time of purchase are considered to be cash equivalents.

All highly liquid investments with original maturities of three months or less at the time of purchase are considered to be cash equivalents.

All of the Company’s cash equivalents have liquid markets and high credit ratings.

The Company maintains its cash in bank deposits and other accounts, the balances of which, at times as of and during the years ended December 31, 2023 and 2022 , exceeded federally insured limits.

Investments in Marketable Securities

The Company invests its excess cash in debt securities with high credit ratings, including, but not limited to, money market funds classified as cash equivalents, securities issued by the U.S.

government and its agencies, corporate debt securities and commercial paper.

The Company has designated its investments in marketable securities as available-for-sale and measures these securities at their respective fair values.

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The Company recognizes a lease asset for its right to use the underlying asset and a lease liability for the corresponding lease obligation.

The Company determines whether an arrangement is or contains a lease at contract inception.

The Company determines if an arrangement is or contains a lease at inception or modification of the arrangement.

Operating leases with a duration greater than one year are included in operating lease ROU assets, operating lease liabilities - short-term, and operating lease liabilities - long-term in the Company’s consolidated balance sheets.

The Company elected

the short-term lease exception policy, permitting it to not apply the recognition requirements to leases with terms of less than one year (short-term leases) for all classes of assets.

The Company elected the short-term lease exception policy, permitting it to not apply the recognition requirements to leases with terms of less than one year (short-term leases) for all classes of assets.

Operating lease ROU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term.

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The incremental borrowing rate represents the interest rate the Company would incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis over the term of a lease.

The Company considers a lease term to be the noncancelable period that it has the right to use the underlying asset, including any periods where it is reasonably assured the Company will exercise the option to extend the contract.

the contract.

Periods covered by an option to extend are included in the lease term if the lessor controls the exercise of that option.

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There was no impairment of long-lived assets during the years ended December 31, 2024 and 2023 .

Property and Equipment, Net

Property and equipment are stated at cost and consist of lab and office equipment and leasehold improvements.

The Company records depreciation under the straight-line method over the estimated useful lives of its property and equipment ranging from two to seven years .

Leasehold improvements are amortized over the remaining terms of the respective leases or the estimated useful life of the leasehold improvements, whichever is less.

Maintenance and repair costs are expensed as incurred.

Fair Value Measurements

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Certain of the Company’s financial instruments are not measured at fair value on a recurring basis but are recorded at amounts which approximate their fair value due to their liquid or short-term nature, such as cash, accounts receivable, accounts payable and accrued expenses.

The following tables present the fair value of the Company’s financial assets measured at fair value on a recurring basis using the above input categories (in thousands):

December 31, 2023

Cash equivalents

Money market fund

Total cash equivalents

Short-term marketable securities

and foreign corporate debt securities

treasury securities

and foreign commercial paper

Total short-term marketable securities

Total assets measured at fair value

December 31, 2022

Cash equivalents

Money market fund

Total cash equivalents

Short-term marketable securities

and foreign corporate debt securities

treasury securities

and foreign commercial paper

Total short-term marketable securities

Total assets measured at fair value

Money market funds are highly liquid and actively traded marketable securities that generally transact at a stable $1.00 net asset value representing its estimated fair value.

The Company estimates the fair value of its U.S.

and foreign corporate debt securities, U.S.

treasury securities and U.S.

and foreign commercial paper by taking into consideration valuations obtained from third-party pricing services.

The pricing services utilize industry standard valuation models, including both income and market-based approaches, for which all significant inputs are observable, either directly or indirectly, to estimate fair value.

These inputs include reported trades of and broker/dealer quotes on the same or similar securities, issuer credit spreads;

benchmark securities;

prepayment/default projections based on historical data;

and other observable inputs.

There have been no transfers between Level 1, Level 2 or Level 3 for any of the periods presented.

See Note 4 for further information regarding the carrying value of the Company’s investments in marketable securities.

Revenue Recognition and Accounts Receivable from Collaboration

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For elements of collaboration arrangements that are not accounted for pursuant to the revenue from contracts with customers accounting standard, an appropriate recognition method is determined and applied consistently, generally by analogy to the revenue from contracts with customers accounting standard.

Amounts related to transactions with a

counterparty in a collaborative arrangement that is not a customer are presented on a separate line item from revenue recognized from contracts with customers, if any, in the Company’s consolidated statements of operations and comprehensive loss.

Amounts related to transactions with a counterparty in a collaborative arrangement that is not a customer are presented on a separate line item from revenue recognized from contracts with customers, if any, in the Company’s consolidated statements of operations and comprehensive loss.

Under certain collaborative arrangements, the Company has been reimbursed for a portion of its research and development expenses or participates in the cost-sharing of such research and development expenses.

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The Company recognizes the amount of the transaction price that is allocated to the respective performance obligation when the performance obligation is satisfied or as it is satisfied as revenue.

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, exist 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.

The Company accounts for contract modifications using 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.

If a license to the Company’s intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, the Company recognizes revenues from nonrefundable, upfront license fees based on the relative value prescribed to the license compared to the total value of the arrangement.

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The promises under the Company’s agreements may include research and development services to be performed by the Company on behalf of the counterparty.

If these services are determined to be distinct from the other promises or performance obligations identified in the arrangement, the Company recognizes the transaction price allocated to these services as revenue over time based on an appropriate measure of progress when the performance by the Company does not create an asset with an alternative use and the Company either has received or has an enforceable right to payment for the performance completed to date.

If these services are determined to be distinct from the other promises or performance obligations identified in the arrangement, the Company recognizes the transaction price allocated to these

services as revenue over time based on an appropriate measure of progress when the performance by the Company does not create an asset with an alternative use and the Company either has received or has an enforceable right to payment for the performance completed to date.

If these services are determined not to be distinct from the other promises or performance obligations identified in the arrangement, the Company recognizes the transaction price allocated to the combined performance obligation as the related performance obligations are satisfied.

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If the customer options are determined to represent a material right, the material right is recognized as a separate performance obligation at the outset of the arrangement.

discount rates, post-option development timeline, the probability of technical and regulatory success and the probability the customer will exercise the option.

The identification of a material right, and if identified as a material right, the allocation of the transaction price to it, is based on the SSP, which is determined using assumptions regarding estimated costs, discount rates, post-option development timeline, the probability of technical and regulatory success and the probability the customer will exercise the option.

Amounts allocated to a material right are not recognized as revenue until, at the earliest, the option is exercised or expires.

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The Company does not assess whether a contract has a significant financing component if the expectation at contract inception is such that the period between payment by the customer and the transfer of the promised goods or services to the customer will be one year or less.

At December 31, 2023 and 2022, all accounts receivable from collaboration are deemed collectible.

Contract Liabilities

The following tables present changes in the Company’s contract liabilities (in thousands):

Year Ended December 31, 2023

Contract liabilities:

Deferred revenue

Year Ended December 31, 2022

Contract liabilities:

Deferred revenue

Year Ended December 31,

Collaboration revenue recognized in the period from

Amounts included in deferred revenue at the beginning of the period

Performance obligations satisfied in previous period

There were no accounts receivable from collaboration as of December 31, 2024.

At December 31, 2023 , all accounts receivable from collaboration are deemed collectible.

Stock-Based Compensation

The Company measures stock-based compensation to employees, consultants, board members, and non-employees at fair value on the grant date of the award.

The Company measures stock-based compensation to employees and board members at fair value on the grant date of the award.

The fair value of RSUs is determined based on the number of shares granted and the quoted market price of the Company’s common stock on the date of grant.

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Compensation cost is recognized as expense on a straight-line basis over the requisite service period of the award.

Stock-based awards with graded vesting schedules are recognized using the accelerated attribution method on a straight-line basis over the requisite service period for each separately vesting portion of the award.

Stock-based awards with graded vesting schedules are recognized using the

accelerated attribution method on a straight-line basis over the requisite service period for each separately vesting portion of the award.

For awards that have a performance condition, compensation cost is measured based on the fair value of the award on the grant date, the date performance targets are established, and is expensed over the requisite service period for each separately vesting tranche when achievement of the performance condition becomes probable.

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The assumptions used in estimating the fair value of these awards, such as expected term, expected dividend yield, volatility and risk-free interest rate, represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment.

The Company uses the Monte-Carlo model to calculate the fair value on the date of grant of awards which contain market-based vesting conditions.

This pricing model uses multiple simulations to evaluate the probability of achieving the market condition to calculate the fair value of the awards, which includes the recent market price and volatility of the Company's shares.

The Company calculates the weighted average expected term of options using the simplified method where permitted by accounting guidance for stock-based compensation when there is limited history of relevant stock option exercise activity.

The Company uses an expected dividend yield of zero as the Company currently does not intend to pay dividends in the foreseeable future.

The Company calculates the expected volatility based on the Company’s historical stock prices.

The risk-free interest rate assumption is based on the rates for U.S.

Treasury zero-coupon bonds with maturities similar to those of the expected term of the stock option being valued.

The Company is also required to make estimates as to the probability of achieving the specific performance conditions.

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The Company assesses whether such contingent consideration meets the definition of a derivative and to date the Company has determined that such contingent consideration are not derivatives.

Restructuring Charges

The Company recognizes restructuring charges related to reorganization plans that have been committed to by management and when liabilities have been incurred.

In connection with these activities, the Company records restructuring charges at fair value for (1) contractual employee termination benefits when obligations are associated to services already rendered, rights to such benefits have vested, and payment of benefits is probable and can be reasonably estimated, (2) one-time employee termination benefits when management has committed to a plan of termination, the plan identifies the employees and their expected termination dates, the details of termination benefits are complete, it is unlikely changes to the plan will be made or the plan will be withdrawn and communication to such employees has occurred, and (3) contract termination costs when a contract is terminated before the end of its term.

One-time employee termination benefits are recognized in their entirety when communication has occurred, and future services are not required.

If future services are required, the costs are recorded ratably over the remaining period of service.

Contract termination costs to be incurred over the remaining contract term without economic benefit are recorded in their entirety when the contract is canceled.

The recognition of restructuring charges requires the Company to make certain judgments and estimates regarding the nature, timing and amount of costs associated with the reorganization plan.

To the extent the Company’s actual results differ from its estimates and assumptions, the Company may be required to revise the estimates of future accrued restructuring liabilities, requiring the recognition of additional restructuring charges or the reduction of accrued restructuring liabilities already recognized.

Such changes to previously estimated amounts may be material to the consolidated financial statements.

Changes in the estimates of the restructuring charges are recorded in the period the change is determined.

There were no restructuring charges incurred during the year ended December 31, 2023.

Changes to previous estimates for restructuring charges were not material during the year ended December 31, 2022.

At the end of each reporting period, the Company evaluates the remaining accrued restructuring balances to ensure that no excess accruals are retained, and the utilization of t he provisions are for their intended purpose in accordance with developed restructuring plans.

Variable Interest Entities

The Company reviews agreements it enters into with third party entities, pursuant to which it may have a variable interest in the entity, in order to determine if the entity is a variable interest entity (VIE).

If the entity is a VIE, the Company assesses whether or not it is the primary beneficiary of that entity.

In determining whether the Company is the primary beneficiary of an entity, the Company applies a qualitative approach that determines whether it has both (1) the power to direct the economically significant activities of the entity and (2) the obligation to absorb losses of, or the right to receive benefits from, the entity that could potentially be significant to that entity.

If the Company were to determine it is the primary beneficiary of a VIE, the Company would consolidate the statements of operations and financial condition of the VIE into its consolidated financial statements.

The Company’s determination about whether it should consolidate such VIEs is made continuously as changes to existing relationships or future transactions may result in a consolidation event.

The Company records income taxes using the asset and liability method.

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The Company establishes a valuation allowance if it is more likely than not the deferred tax assets will not be realized based on an evaluation of objective verifiable evidence.

For tax positions that are more likely than not of being sustained upon audit, the Company recognizes the largest amount of the benefit that is greater than 50% likely of being realized.

For tax positions that are not more likely than not of being sustained upon audit, the Company does not recognize any portion of the benefit.

The Company recognizes and measures uncertain tax positions using a two-step approach set forth in authoritative guidance.

The first step is to evaluate the tax position taken or expected to be taken by determining whether the weight of available evidence indicates it is more likely than not the tax position will be sustained in an audit, including resolution of any related appeals or litigation processes.

The second step is to measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement.

The Company recognizes and measures tax benefits from uncertain tax positions only if it is more likely than not the tax position will be sustained in an audit, including resolution of any related appeals or litigation processes.

The tax benefit recognized for a particular tax position is based on the largest amount that is more than 50% likely to be realized upon ultimate settlement.

Significant judgment is required to evaluate uncertain tax positions.

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It is the Company’s policy to recognize interest and penalties related to income tax matters in income tax expense.

No interest or penalties related to uncertain tax positions has been incurred or accrued for any periods presented.

Pursuant to Section 174 of the Internal Revenue Code (Sec.

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Diluted net loss per common share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity unless inclusion of such shares would be anti-dilutive.

Diluted net loss per share is the same as basic net loss per share, since the effects of potentially dilutive securities are antidilutive given the net loss for each period presented.

Diluted net loss per share is the same as basic net loss per share in the years reported, since the effects of potentially dilutive securities are antidilutive given the net loss for each year presented.

A reconciliation of the numerators and the denominators of the basic and diluted net loss per common share computations is as follows (in thousands, except for share and per share amounts):

Year Ended December 31,

Weighted average common shares and

pre-funded warrants outstanding - basic and diluted

Weighted average common shares outstanding - basic and diluted

Net loss per share - basic and diluted

Securities excluded from the computation of diluted net loss per share because including them would have been antidilutive are as follows:

Warrants to purchase common stock

Options to purchase common stock

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The Company holds these investments in highly rated financial institutions, and, by policy, limits the amounts of credit exposure to any one financial institution.

These amounts at times may exceed federally insured limits.

These amounts as of and at times during the year ended December 31, 2024 exceeded federally insured limits.

The Company has not experienced any credit losses in such accounts and does not believe it is exposed to any significant credit risk on these funds.

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Customer Risk

During the year ended December 31, 2023, 62 % of the Company's collaboration revenue was recognized from a related party, Gilead, under the Gilead Collaboration Agreement (see Note 10 ).

During the year ended December 31, 2024, 100 % of the Company's collaboration revenue was recognized from a related party, Gilead, under the Gilead Collaboration Agreement (see Note 8 - Collaboration Agreements).

If the collaboration with Gilead does not result in the successful development and commercialization of products or if Gilead terminates the Gilead Collaboration Agreement, the Company may not receive any future payments under the collaboration.

Recently Adopted Accounting Standards

In June 2016, the Financial Accounting Standards Board (the FASB) issued Accounting Standards Update (ASU) No.

2016-13, Instruments – Credit Losses:

Measurement of Credit Losses on Financial Instruments (ASU 2016-13), which requires expected credit losses relating to financial assets measured on an amortized cost basis and available-for-sale debt securities be recorded through an allowance for credit losses.

ASU 2016-13 limits the amount of credit losses to be recognized for available-for-sale debt securities to the amount by which carrying value exceeds fair value and requires the reversal of previously recognized credit losses if fair value increases.

The FASB issued additional amendments to the new guidance related to transition and clarification and deferred the effective date of this standard for all entities except SEC filers that are not smaller reporting companies to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.

The Company adopted ASU 2016-13 effective January 1, 2023 on a modified retrospective basis.

The adoption of ASU 2016-13 did not have a material impact on the Company’s consolidated financial statements.

In November 2023, the Financial Accounting Standards Board (the FASB) issued Accounting Standards Update (ASU) 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures (ASU 2023-07), which requires public entities to disclose information about their reportable segments’ significant expenses and other segment items on an interim and annual basis.

Public entities with a single reportable segment are required to apply the disclosure requirements in ASU 2023-07, as well as all existing segment disclosures and reconciliation requirements in ASC 280 on an interim and annual basis.

The Compa ny adopted ASU 2023-07 during the year ended December 31, 2024 .

See Note 13 - Segment Reporting for further details.

Accounting Pronouncements to Be Adopted

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures , which is intended to provide enhanced segment disclosures.

The standard will require disclosures about significant segment expenses and other segment items and identifying the Chief Operating Decision Maker and how they use the reported segment profitability measures to assess segment performance and allocate resources.

These enhanced disclosures are required for all entities on an interim and annual basis, even if they have only a single reportable segment.

The standard is effective for years beginning after December 15, 2023, and interim periods within annual periods beginning after December 15, 2024, with early adoption permitted.

The Company is evaluating this standard to determine the impact on the Company’s consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures .

The update requires a public business entity to disclose, on an annual basis, a tabular rate reconciliation

using both percentages and currency amounts, broken out into specified categories with certain reconciling items further broken out by nature and jurisdiction to the extent those items exceed a specified threshold.

Improvements to Income Tax Disclosures (ASU 2023-09).

The update requires a public business entity to disclose, on an annual basis, a tabular rate reconciliation using both percentages and currency amounts, broken out into specified categories with certain reconciling items further broken out by nature and jurisdiction to the extent those items exceed a specified threshold.

In addition, all entities are required to disclose income taxes paid, net of refunds received disaggregated by federal, state/local, and foreign and by jurisdiction if the amount is at least 5% of total income tax payments, net of refunds received.

Adoption of the ASU allows for either the prospective or retrospective application of the amendment and is effective for annual periods beginning after December 15, 2024, with early adoption permitted.

Adoption of ASU 2023-09 allows for either the prospective or retrospective application of the amendment and is effective for annual periods beginning after December 15, 2024, with early adoption permitted.

The Company does not expect ASU 2023-09 to have a material impact on the Company’s consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses (ASU 2024-03), which requires the disaggregation of certain expense captions into specified categories in disclosures within the notes to the

financial statements to provide enhanced transparency into the expense captions presented on the face of the income statement.

ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026 and interim periods beginning after December 15, 2027, with early adoption permitted, and may be applied either prospectively or retrospectively to financial statements issued for reporting periods after the effective date of ASU 2024-03 or retrospectively to any or all prior periods presented in the financial statements.

The Company does not expect ASU 2024-03 to ha ve a material impact on the Company’s consolidated financial statements.

Note 3 - Related Party

In October 2023, Gilead purchased 1,089,472 shares of the Company’s common stock at a purchase price of $ 13.92 per share for total proceeds of $ 15.2 million under the Gilead Equity Agreements (see Note 8).

As of December 31, 2023 , Gilead held 19.9 % of the Company's outstanding voting common stock.

In addition to the Gilead Equity Agreements, the Company entered into the Gilead Collaboration Agreement pursuant to which the Company received total proceeds of $ 84.8 million as an upfront payment (see Note 10).

The Company recognized revenue of $ 4.4 million under the Gilead Collaboration Agreement during the year ended December 31, 2023.

Additionally, Gilead may, at the Company’s or Gilead's option, subject to certain conditions, purchase additional shares to increase its holdings up to a maximum of 29.9 % of the Company's then-outstanding voting common stock.

Under the Investor Rights Agreement, Gilead has the right to designate two directors to the Company's board of directors.

The Company appointed each of Gilead's designees to its board of directors in December 2023 and February 2024.

In October 2023, the Company entered into an Option, License and Collaboration Agreement (the Gilead Collaboration Agreement), and a Common Stock Purchase Agreement and an Investor Rights Agreement (collectively, the Gilead Equity Agreements) with Gilead Sciences, Inc.

(Gilead) under which it received aggregate gross proceeds of $ 100.0 million .

The Company recognized $ 28.5 million and $ 4.4 million of collaboration revenue under the Gilead Collaboration Agreement during the years ended December 31, 2024 and 2023, respectively.

Pursuant to the Investor Rights Agreement, Gilead designated two directors to the Company’s board of directors, who were appointed in December 2023 and February 2024.

In June 2024, the Company entered into a Securities Purchase Agreement pursuant to which it issued and sold 179,500 shares of common stock and a warrant to purchase up to 179,500 shares of common stock in a private placement to Gilead (the June 2024 Private Placement).

This transaction was executed concurrently with a Securities Purchase Agreement the Company entered into with an investor for a registered direct offering (the June 2024 Registered Direct Offering) pursuant to anti-dilution provisions in the Investor Rights Agreement.

The common stock and warrant in the June 2024 Private Placement were sold at the same combined offering price as the June 2024 Registered Direct Offering of $ 15.46 per share, for aggregate gross proceeds to the Company of approximately $ 2.8 million.

Also in June 2024, the Gilead Equity Agreements were amended to extend deadlines relating to the Company’s efforts to complete an equity financing and its right to require Gilead to purchase additional shares of the Company’s common stock by three months.

This right expired in October 2024.

The amendments also explicitly included the shares of the Company's common stock and warrant sold under the June 2024 Private Placement in the definition of registrable securities.

The amendments to the Gilead Equity Agreements did not have an impact to the Company's consolidated financial statements.

In December 2024, the Company and Gilead entered into the First Amendment to the Gilead Collaboration Agreement, which restructured the timing of specific options exercisable in the agreement and the fees payable to the Company to support an accelerated development plan for ABI-6250 (6250), under which it received a non-refundable payment of $ 10.0 million.

Also in December 2024, Gilead exercised its right under the Gilead Equity Agreements to purchase additional shares of common stock from the Company at a purchase price of $ 21.37 per share, for aggregate proceeds of $ 20.1 million, resulting in Gilead owning 29.9 % of the Company's then-outstanding voting common stock.

Based on Gilead's ownership as of December 31, 2024, Gilead is considered a related party.

See Note 6 - Stockholders' Equity and Note 8 - Collaboration Agreements for additional details.

Note 4 - Investments in Marketable Securities

3 unchanged sentences

Money market fund

treasury securities

Total cash equivalents

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There were no realized gains and losses for the years ended December 31, 2024 and 2023.

As of December 31, 2023 and 2022, investments which were in an unrealized loss position were not material and generally due to interest rate fluctuations, as opposed to declines in credit quality.

As of December 31, 2024, investments which were in an unrealized loss position were not material and generally due to interest rate fluctuations, as opposed to declines in credit quality.

The Company determined it has the intent and ability to hold all marketable securities that have been in a continuous loss position until recovery of their amortized cost basis, which may be until maturity.

As a result, the Company did not recognize any credit losses related to its investments and all unrealized gains and losses on available-for-sale securities are recorded in accumulated other comprehensive loss on the consolidated balance sheets during the years ended December 31, 2024 and 2023.

Accrued interest receivable was $ 0.3 million as of December 31, 2023 and 2022 and was recorded in prepaid expenses and other current assets on the consolidated balance sheets.

Accrued interest receivable was $ 0.4 million and $ 0.3 million as of December 31, 2024 and 2023, respectively, and was recorded in prepaid expenses and other current assets on the consolidated balance sheets.

The Company did not write off any accrued interest receivable during the years ended December 31, 2024 and 2023.

See Note 2 for further information regarding the fair value of the Company's investments in marketable securities.

Note 5 - Property and Equipment, Net

Property and equipment, net consists of the following (in thousands):

Lab equipment

Office equipment

Leasehold improvement

Total property and equipment

Accumulated depreciation

Property and equipment, net

Depreciation expense for both the years ended December 31, 2023 and 2022 was $ 0.5 million and was recorded in both research and development expense and general and administrative expense in the consolidated statements of operations and comprehensive loss.

Fair Value Measurement

The following tables presents the Company’s financial assets measured at fair value on a recurring basis by level within the fair value hierarchy (in thousands):

December 31, 2024

Cash equivalents

Money market fund

treasury securities

Total cash equivalents

Short-term marketable securities

and foreign corporate debt securities

treasury securities

and foreign commercial paper

Total short-term marketable securities

Total assets measured at fair value

December 31, 2023

Cash equivalents

Money market fund

Total cash equivalents

Short-term marketable securities

and foreign corporate debt securities

treasury securities

and foreign commercial paper

Total short-term marketable securities

Total assets measured at fair value

Money market funds are highly liquid and actively traded marketable securities that generally transact at a stable $1.00 net asset value representing its estimated fair value.

The Company estimates the fair value of its U.S.

and foreign corporate debt securities, U.S.

treasury securities and U.S.

and foreign commercial paper by taking into consideration valuations obtained from third-party pricing services.

These inputs include reported trades of and broker/dealer quotes on the same or similar securities, issuer credit spreads;

benchmark securities;

prepayment/default projections based on historical data;

and other observable inputs.

There were no transfers between Level 1, Level 2 or Level 3 for any of the years presented.

Note 5 – Other Accrued Expenses

2 unchanged sentences

Accrued compensation

Accrued restructuring charges

Accrued professional fees and other

Total accrued expenses

Note 7 – Restructurings

In July 2022, the Company and its board of directors approved a strategic plan to align with its refocused pipeline on its next generation capsid assembly modulators (CAMs) and research programs and reduced its workforce by approximately 30 %.

The Company incurred cumulative restructuring charges of $ 1.1 million representing all costs to be incurred.

These restructuring charges consisted solely of employee severance and related benefits, including $ 1.0 million in severance payments to executive officers impacted by the restructuring, $ 0.8 million in one-time termination severance payments and other employee-related costs associated with the restructuring and a reversal of $ 0.7 million for previously recognized stock-based compensation expense related to forfeited awards based on the Company's policy of recognizing stock-based awards with graded vesting schedules using an accelerated attribution method on a straight-line basis over the requisite service period for each separately vesting portion of the award and to recognize forfeitures when they occur.

There were no restructuring charges incurred during the year ended December 31, 2023 .

The Company incurred $ 1.1 million in restructuring charges during the year ended December 31, 2022 , $ 0.9 million of which were included in research and development expenses and $ 0.2 million in general and administrative expenses.

The following table presents the activity in accrued restructuring charges, included as a component of other accrued expenses on the Company's consolidated balance sheet, during the period (in thousands):

Accrued balance as of December 31, 2021

Costs incurred

Reductions for cash payments

Accrued balance as of December 31, 2022

Reductions for cash payments

Accrued balance as of December 31, 2023

Note 6 - Stockholders’ Equity

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As of December 31, 2024 and 2023 , no shares of preferred stock were issued and outstanding.

In May 2022, the Company's stockholders approved the Sixth Amended and Restated Certificate of Incorporation, which increased the authorized number of shares of common stock to 150,000,000 .

The Company is authorized to issue 150,000,000 shares of common stock as of December 31, 2024 and 2023.

Reverse Stock Split

In February 2024, the Reverse Stock Split became effective.

All share and per share amounts of the Company's common stock presented have been retroactively adjusted to reflect the 1-for-12 Reverse Stock Split, including reclassifying an amount equal to the reduction in par value of common stock to additional paid-in capital (see Note 15 ).

In September 2023, the Company received a letter from the Listing Qualifications Department of the Nasdaq Stock Market notifying the Company, as the bid price for its common stock had closed below $ 1.00 per share for the last 30 consecutive business days, it was not in compliance with Nasdaq Listing Rule 5450(a)(1), which is the minimum bid price requirement for continued listing on the Nasdaq Global Select Market.

In accordance with Nasdaq Listing Rule 5810(c)(3)(A), the Company was provided a 180-calendar day period, or until March 25, 2024, to regain compliance with the minimum bid price requirement.

The continued listing standard would be met once the closing bid price of the Company’s common stock was at least $ 1.00 per share for a minimum of ten consecutive business days during the 180-calendar day period.

In January 2024, the Company's stockholders approved a reverse stock split of its common stock at a range of ratios between 1-for-7 to 1-for-17 , and the Company's board of directors approved the implementation of the reverse stock split at a ratio of 1-for-12 (the Reverse Stock Split).

The Reverse Stock Split was effective as of February 9, 2024 and the Company regained compliance with the minimum bid price requirement in February 2024.

As of the effective time of the Reverse Stock Split, every 12 issued and outstanding shares of the Company’s common stock was automatically reclassified into one issued and outstanding share of the Company’s common stock.

This reduced the number of shares outstanding from 65.8 million shares to 5.5 million shares.

The Reverse Stock Split did not affect the number of authorized shares of common stock or the par value of the common stock.

No fractional shares of common stock were issued in connection with the Reverse Stock Split and all fractional shares were rounded down to the nearest whole share with respect to outstanding shares of common stock.

Any holders of common stock who would have otherwise received a fractional share of common stock pursuant to the Reverse Stock Split, received cash in lieu of the fractional share.

All share and per share amounts of the Company's common stock presented in this Annual Report on Form 10-K have been adjusted to reflect the 1-for-12 Reverse Stock Split.

The Company's authorized shares of common stock remain at 150,000,000 and its authorized shares of preferred stock remain at 5,000,000 .

Sale of Common Stock

In August 2020, the Company entered into a sales agreement under which the Company may offer and sell shares of its common stock having an aggregate offering price of up to $ 100.0 million through “at-the-market” offerings (2020 ATM), pursuant to its shelf registration statement on Form S-3 on file with the SEC.

During the year ended December 31, 2023, the Company issued and sold 261,170 shares of common stock under the 2020 ATM, for which the Company received net proceeds of $ 4.5 million , after deducting commissions, fees and expenses.

During the year ended December 31, 2022, the Company issued and sold 25,068 shares of common stock under the 2020 ATM, for which the Company received net proceeds of $ 0.3 million , after deducting commissions, fees and expenses.

In October 2023, the Company entered into the Gilead Equity Agreements pursuant to which Gilead purchased 1,089,472 shares of the Company’s common stock at a purchase price of $ 13.92 per share for total proceeds of $ 15.2 million.

Of the $ 15.2 million in proceeds received under the Gilead Equity Agreements, $ 5.9 million was determined to be a premium on the purchase of the Company’s common stock and allocated to the single combined performance obligation under the Gilead Collaboration Agreement (see Note 10).

The fair value of Gilead's common stock purchase was $ 9.3 million and total proceeds from the issuance of common stock under the Gilead Equity Agreements was $ 9.1 million , net of $ 0.2 million in issuance costs.

Pursuant to the terms of the Gilead Equity Agreements, if the Company completes equity financing by July 15, 2024 , which results in at least $ 30.0 million of proceeds to the Company, then, subject to approval by the Company’s stockholders (which was obtained on January 31, 2024), the Company may require Gilead to purchase additional shares of common stock from the Company in an amount that results in Gilead owning 29.9 % of the Company’s then-outstanding voting capital stock.

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

The purchase price per share for additional shares purchased by Gilead will be equal to the lesser of a 35 % premium to the 30 -day volume weighted average price immediately prior to the date of purchase or 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, with customary exceptions, and provide Gilead with certain other stock purchase rights and

registration rights, as well as the right to designate two directors to the Company’s board of directors.

The Company appointed each of Gilead's designees to its board of directors in December 2023 and February 2024.

Sale of Common Stock and Warrants

At-The-Market Offering

333-248469), which became effective in September 2020.

The Company did not sell any shares of its common stock under the 2020 ATM during the year ended December 31, 2024.

During the year ended December 31, 2023, the Company issued and sold 261,170 shares of its common stock under the 2020 ATM, for which the Company received net proceeds of $ 4.5 million , after deducting commissions, fees and expenses.

In November 2024, the Company terminated the 2020 ATM and entered into a new sales agreement under which the Company may offer and sell shares of its common stock having an aggregate offering price of up to $ 75.0 million through "at-the-market" offerings (2024 ATM), pursuant to its shelf registration statement on Form S-3 (File No.

333-270760), which became effective in April 2023.

During the year ended December 31, 2024, the Company issued and sold 152,666 shares of its common stock under the 2024 ATM, for which the Company received net proceeds of $ 2.0 million , after deducting commissions, fees and expenses.

Registered Direct Offering

In June 2024, under the June 2024 Registered Direct Offering and pursuant to its shelf registration statement on Form S-3 on file with the SEC, the Company issued and sold 634,500 shares of common stock and a warrant to purchase up to 634,500 shares of common stock.

The common stock and warrant were sold at a combined offering price of $ 15.46 per share for aggregate gross proceeds to the Company of $ 9.8 million.

Private Placements

In October 2023, the Company entered into the Gilead Equity Agreements, which were amended in June 2024.

Pursuant to the Gilead Equity Agreements, Gilead purchased 1,089,472 shares of the Company’s common stock in a private placement at a purchase price of $ 13.92 per share for total proceeds of $ 15.2 million.

Of these proceeds, $ 5.9 million was determined to be a premium on the purchase of the Company’s common stock and allocated to the single

combined performance obligation under the Gilead Collaboration Agreement (see Note 8 - Collaboration Agreements).

The fair value of Gilead's common stock purchase was $ 9.3 million and total proceeds from the issuance of the Company's common stock under the Gilead Equity Agreements was $ 9.1 million, net of $ 0.2 million in issuance costs.

Pursuant to the terms of the amended Gilead Equity Agreements, if the Company completed an equity financing by October 2024 , which would have resulted in at least $ 30.0 million of proceeds to the Company, then, subject to approval by the Company’s stockholders (which was obtained on January 31, 2024), the Company would have had the right to require Gilead to purchase additional shares of its common stock from the Company in an amount that resulted in Gilead owning 29.9 % of the Company’s common stock.

This right expired in October 2024.

The terms of the Gilead Equity Agreements also provided Gilead with the right to elect to purchase additional shares of common stock from the Company at a premium in an amount that would result in Gilead owning 29.9 % of the Company's common stock.

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 to the Company’s board of directors.

In June 2024, the Company issued and sold 179,500 shares of common stock and a warrant to purchase up to 179,500 shares of common stock under the June 2024 Private Placement with Gilead.

This transaction was executed concurrently with the June 2024 Registered Direct Offering pursuant to anti-dilution provisions in the Investor Rights Agreement, with the common stock and warrant sold at the same combined offering price of $ 15.46 per share for aggregate gross proceeds to the Company of $ 2.8 million.

In December 2024, Gilead exercised its right under the Gilead Equity Agreements to purchase an additional 940,499 shares of common stock from the Company 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 Company received aggregate proceeds of $ 20.1 million, of which $ 5.2 million was determined to be a premium on the purchase of the Company’s common stock and allocated to the single combined performance obligation under the Gilead Collaboration Agreement (see Note 8 - Collaboration Agreements).

The fair value of Gilead's common stock purchase was $ 14.9 million.

The warrants sold in the June 2024 Registered Direct Offering and June 2024 Private Placement have an exercise price of $ 17.00 per share, were immediately exercisable upon issuance, and expire on June 18, 2029 .

Neither party may exercise any portion of the warrants to the extent it would beneficially own more than the limits defined in the warrant agreements.

The exercise price and number of shares of the Company's common stock issuable upon the exercise of the warrants are subject to adjustment in the event of any stock dividends and distributions, stock splits, stock combinations or stock reclassifications, as described in the respective warrant agreements.

Under certain circumstances, the warrants may be exercised on a “cashless” basis.

The warrants were classified as a component of permanent stockholders’ equity within additional paid-in-capital and were recorded at the issuance date.

The warrants are equity classified because they are freestanding financial instruments that are legally detachable and separately exercisable from the equity instruments, are immediately exercisable, do not embody an obligation for the Company to repurchase its shares, permit the holders to receive a fixed number of common shares upon exercise, are indexed to the Company’s common stock and meet the equity classification criteria.

In addition, such warrants do not provide any guarantee of value or return.

As of December 31, 2024 , there were 814,000 outstanding and no warrants exercised during the year then ended.

Note 7 - Stock-Based Compensation

Equity Incentive Plans

In May 2022, the Company’s stockholders approved an amendment to the 2018 Stock Incentive Plan (the 2018 Plan), which increased the aggregate number of shares of common stock reserved under the 2018 Plan to 716,666 .

In May 2023, the Company's stockholders approved an amendment to the Assembly Biosciences, Inc.

Amended and Restated 2018 Stock Incentive Plan (the 2018 Plan), which increased the aggregate number of shares of common stock reserved under the 2018 Plan to 883,333 .

In May 2024, the Company's stockholders approved an amendment to the 2018 Plan, which increased the aggregate number of shares of common stock reserved under the 2018 Plan to 1,103,333 .

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2010 Equity Incentive Plan (the 2010 Plan), which has been frozen;

the Amended and Restated 2014 Stock Incentive Plan (the 2014 Plan);

the Assembly Biosciences, Inc.

Amended and Restated 2014 Stock Incentive Plan (the 2014 Plan);

and the 2018 Plan.

1 unchanged sentence

As of December 31, 2024, the Company also had awards outstanding under the Assembly Biosciences, Inc.

2017 Inducement Award Plan, the 2019 Inducement Award Plan, and the Assembly Biosciences, Inc.

2017 Inducement Award Plan, the Assembly Biosciences, Inc.

2019 Inducement Award Plan, and the Assembly Biosciences, Inc.

2020 Inducement Award Plan.

As of December 31, 2023, the Company also had outstanding options it assumed in connection with its merger with Assembly Pharmaceuticals.

The Company issues new shares of common stock to settle options exercised or vested RSUs.

The Company also issues new shares of common stock in connection with purchases of shares of common stock by eligible employees under the Assembly Biosciences, Inc.

Employee Stock Purchase Plan (the 2018 ESPP).

Second Amended and Restated Employee Stock Purchase Plan (the 2018 ESPP).

In February 2024, the Reverse Stock Split became effective.

All outstanding stock options and restricted stock units, as well as the Company's equity incentive plans presented have been retroactively adjusted to reflect the 1-for-12 Reverse Stock Split (see Note 15).

All outstanding stock options and restricted stock units presented have been adjusted to reflect the 1-for-12 Reverse Stock Split.

Stock Plan Activity

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Options vested and exercisable as of December 31, 2024

Options expected to vest as of December 31, 2024

The weighted-average grant-date fair value of options granted was $ 10.04 and $ 7.68 during the years ended December 31, 2024 and 2023, respectively.

There were no options exercised in 2023 or 2022.

The intrinsic value of options exercised was not material during the year ended December 31, 2024 .

There were no options exercised in 2023.

The following table summarizes RSU activity and related information for 2024:

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The total fair value of RSUs vested and settled during 2024 and 2023 was $ 2.2 million and $ 2.8 million , respectively.

The total intrinsic value of RSUs vested and settled during both 2023 and 2022 was $ 0.5 million .

The total intrinsic value of RSUs vested and settled during 2024 and 2023 was $ 0.7 million and $ 0.5 million , respectively.

In July 2021, the Company granted 26,981 RSUs with performance-based vesting conditions upon the achievement of clinical milestones to the majority of employees, including executive officers.

The awards had a grant date fair value of $ 1.2 million and vest upon performance conditions which were deemed probable of being met as of D ecember 31, 2022.

The Company recognized stock-based compensation expense of $ 0.3 million and $ 0.7 million for these RSUs during the years ended December 31, 2023 and 2022, respectively.

The awards had a grant date fair value of $ 1.2 million and vested upon achievement of performance conditions fully met by December 31, 2023 .

The Company did no t recognize any stock-based compensation expense for these RSUs during the year ended December 31, 2024 , compared to $ 0.3 million during the year ended December 31, 2023 .

All awards were fully vested with no remaining unrecognized compensation cost as of December 31, 2023.

In March 2022, the Company granted 21,248 RSUs with market-based vesting conditions to members of management, including its executive officers.

The awards had a grant date fair value of $ 0.4 million and are being recognized over the derived service period of 1.5 years and vest upon the achievement of certain market-based conditions which have not been achieved as of December 31, 2023.

The Company recognized stock-based compensation expense of $ 0.1 million and $ 0.2 million for these RSUs during the years ended December 31, 2023 and 2022, respectively.

The awards had a grant date fair value of $ 0.4 million and were recognized over the derived service period of 1.5 years and vest upon the achievement of certain market-based conditions which have not been achieved as of December 31, 2024.

The Company did no t recognize any stock-based compensation expense for these RSUs during the year ended December 31, 2024 , compared to $ 0.1 million for these RSUs during the year ended December 31, 2023.

In August 2022, the Company granted 43,748 RSUs with performance-based vesting conditions upon the achievement of clinical milestones to its executive officers.

The awards had a grant date fair value of $ 1.1 million.

Some of the performance conditions were deemed probable of being met as of December 31, 2022, with the remaining performance conditions deemed probable of being met as of December 31, 2023.

The awards had a grant date fair value of $ 1.1 million and vested upon achievement of performance conditions fully met by December 31, 2024.

The Company recognized stock-based compensation expense of $ 0.1 million and $ 0.6 million for these RSUs during the years ended December 31, 2024 and 2023, respectively.

All awards were fully vested with no unrecognized compensation cost as of December 31, 2024.

Employee Stock Purchase Plan

The 2018 ESPP provides for the purchase by employees of up to an aggregate of 108,333 shares of the Company’s common stock at a discount to the market price.

Eligible employees may participate through payroll deductions of up to 15 % of such employee’s compensation for each pay period subject to annual statutory limits and the 2018 ESPP’s limit of 208 shares of common stock per offering.

In May 2024, the Company's stockholders approved an amendment to the 2018 ESPP, which increased the aggregate number of shares of common stock available for purchase by employees up to an aggregate of 226,398 shares at a discount to the market price.

Eligible employees may participate through payroll deductions of up to 15 % of such employee’s compensation for each pay period subject to annual statutory limits.

Eligible employees can purchase the Company’s common stock at the end of a predetermined offering period at 85 % of the lower of the fair market value at the beginning or end of the offering period.

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Valuation Assumptions

The Company used the Black-Scholes option-pricing model for determining the estimated fair value and stock-based compensation related to stock options and ESPP purchase rights.

A summary of the assumptions used to estimate the fair values of stock options grants for the years presented is as follows:

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Expected dividend yield

The risk-free interest rate assumption was based on the rates for U.S.

Treasury zero-coupon bonds with maturities similar to those of the expected term of the stock option being valued.

The expected dividend yield was zero as the Company currently does not intend to pay dividends in the foreseeable future.

The weighted average expected term of options was calculated using the simplified method as prescribed by accounting guidance for stock-based compensation due to the Company’s limited history of relevant stock option exercise activity.

The expected volatility was calculated based on the Company’s historical stock prices.

The fair value of ESPP purchase rights and stock appreciation rights were not material for any period presented.

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Year Ended December 31,

Gilead (a related party)

BeiGene, Ltd.

Total collaboration revenue

The following tables present changes in the Company’s contract liabilities (in thousands):

Year Ended December 31, 2024

Contract liabilities:

Deferred revenue

Year Ended December 31, 2023

Contract liabilities:

Deferred revenue

Year Ended December 31,

Collaboration revenue recognized in the period from

Amounts included in deferred revenue at the beginning of the period

Performance obligations satisfied in previous period

Gilead Agreement

In October 2023, the Company entered into the Gilead Collaboration Agreement pursuant to which Gilead will exclusively license to the Company its HPI program and NNPI program, while retaining opt-in rights to these programs and have an option to take an exclusive license, on a program-by-program basis, to all of the Company’s other current and future pipeline programs for a 12-year collaboration term.

In addition to the Gilead Collaboration Agreement, the Company and Gilead entered into the Gilead Equity Agreements, pursuant to which Gilead purchased 1,089,472 shares of the Company’s common stock at a purchase price of $ 13.92 per share (see Note 8).

received total proceeds of $ 100.0 million , consisting of $ 84.8 million as an upfront payment under the Gilead Collaboration Agreement and $ 15.2 million under the Gilead Equity Agreements.

Pursuant to the terms of the Gilead Collaboration Agreement, during the term 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 – and 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.

In October 2023, the Company entered into the Gilead Collaboration Agreement and the Gilead Equity Agreements under which it received total proceeds of $ 100.0 million .

Under the Gilead Collaboration Agreement, Gilead exclusively licensed to the Company its HPI program and NNPI program, while retaining opt-in rights to these programs and has an option to take an exclusive license, on a program-by-program basis, to all of the Company’s 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.

To facilitate this development plan, the Company received a non-refundable payment of $ 10.0 million from Gilead and 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, the Company is 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 Company program, the Company 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 the Company later opts out of the cost/profit share for the program.

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

Gilead may conduct certain development activities related to the Gilead Collaboration Agreement which will be reimbursed by the Company.

Following Gilead’s exercise of its option for each program, the Company 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 the Company later opts out of the cost/profit share for the program.

Prior to Gilead’s potential exercise of its opt-in, the Company will be primarily responsible for all discovery, research and development on its 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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Gilead also has a right to terminate the collaborative activities under the Gilead Collaboration Agreement at certain specified points during the collaboration term.

The Company concluded Gilead is a customer and accordingly, the Gilead Collaboration Agreement is within the scope of the revenue from contracts with customers guidance.

The Company identified a single combined performance obligation for the discovery, research and development services during the collaboration term (the R&D Services).

The Company concluded the R&D Services are distinct from Gilead's right to obtain an exclusive license to any of the Company's programs as Gilead benefits from the knowledge and expertise gained from the R&D Services and the Company's know-how is not highly specialized in nature.

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

At the commencement of the arrangement, the Company concluded Gilead was a customer and accordingly, the Gilead Collaboration Agreement was within the scope of the revenue from contracts with customers guidance.

The Company initially identified a single combined performance obligation for the discovery, research and development services (the R&D Services) consisting of a series of distinct services that are substantially the same and have the same pattern of transfer.

The Company concluded the R&D Services were distinct from Gilead's right to obtain an exclusive license to any of the Company's programs as Gilead benefits from the knowledge and expertise gained from the R&D Services and the Company's know-how is not highly specialized in nature.

Gilead could perform the R&D Services themselves, particularly considering Gilead contributed its HPI and NNPI programs and Gilead may continue to conduct development activities on programs being developed under the Gilead Collaboration Agreement.

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The Company accounted for the agreements based on the fair values of the assets and services exchanged.

As of the effective date of the Gilead Collaboration Agreement, the total transaction price was determined to be $ 90.7 million .

The value the Company received from the licenses Gilead contributed are not material within the context of the contract and accordingly, the Company made no adjustments to the transaction price for them.

Of the $ 15.2 million in proceeds received under the Gilead Equity Agreements in October 2023, $ 5.9 million was determined to be a premium on the purchase of the Company’s common stock and allocated to the single combined performance obligation under the Gilead Collaboration Agreement.

The value the Company received from the licenses Gilead contributed were not material within the context of the contract and accordingly, the Company made no adjustments to the transaction price for them at the commencement of the arrangement.

In December 2024, Gilead exercised its right under the Gilead Equity Agreements to purchase additional shares of the Company's common stock for aggregate proceeds of $ 20.1 million, of which $ 5.2 million was determined to be a premium on the purchase of the Company’s common stock and allocated to the single combined performance obligation under the Gilead Collaboration Agreement.

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

The Company concluded there continues to be a single combined performance obligation consisting of a series of distinct R&D Services, and therefore, the remaining services under the First Amendment to the Gilead Collaboration Agreement are distinct from the R&D Services already provided.

Accordingly, the Company accounted for the First Amendment to the Gilead Collaboration Agreement as a termination of the existing contract and the creation of a new contract and is recognizing the revenue prospectively by reassessing the transaction price and allocating it to the remaining R&D Services.

The amended transaction price as a result of the modification was determined to be $ 74.2 million , consisting of the unrecognized portion of the transaction price under the original contract, the premium of $ 5.2 million on Gilead's purchase of the Company's common stock in December 2024 and $ 10.0 million received from Gilead pursuant to the First Amendment to the Gilead Collaboration Agreement.

The variable consideration related to the regulatory and commercial milestones has not been included in the transaction price as of December 31, 2024, since Gilead has not opted in to take a license to any of the Company's programs.

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The Company will reevaluate the transaction price in each reporting period as uncertain events are resolved or other changes in circumstances occur.

The transaction price, including the upfront payment from Gilead, is reflected as collaboration revenue when realized in the Company’s consolidated statements of operations.

The Company will recognize revenue over time using a cost-based input method, based on internal and external labor cost effort to perform the services, over the initial non-cancellable term of three years since this method best reflects the transfer of services to Gilead.

The transaction price is reflected as collaboration revenue when realized in the Company’s consolidated statements of operations.

The Company recognizes revenue over time using a cost-based input method, based on internal and external labor cost effort to perform the services, over the initial non-cancellable term of three years since this method best reflects the transfer of services to Gilead.

In applying a cost-based input method of revenue recognition, the Company uses actual costs incurred relative to estimated total costs to fulfill each performance obligation.

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A significant change in these assumptions and estimates could have a material impact on the timing and amount of revenue recognized in future periods.

The Company recognized collaboration revenue of $ 4.4 million during the year ended December 31, 2023.

The Company recognized $ 28.5 million and $ 4.4 million of collaboration revenue under the Gilead Collaboration Agreement during the years ended December 31, 2024 and 2023, respectively.

The transaction price for future collaborative activities was recorded as deferred revenue on the consolidated balance sheet as of December 31, 2024, of which $ 37.6 million was included in deferred revenue - short-term and $ 35.4 million was included in deferred revenue - long-term.

During the year ended December 31, 2023, the Company did not make any payments to Gilead.

Antios Agreement

In July 2021, the Company and Antios Therapeutics, Inc.

(Antios) entered into a Clinical Trial Collaboration Agreement (the Antios Agreement) to collaborate on a triple combination therapy using VBR and Antios’s active site polymerase inhibitor nucleotide ATI-2173 for the treatment of HBV.

Assembly and Antios were individually responsible for the study’s manufacturing costs but equally shared the remaining costs of the study.

Antios was responsible for conducting the clinical trial with Assembly reimbursing Antios its share of expenses.

In May 2022, the Company was notified by Antios that ATI-2173 had been placed on clinical hold by the FDA following submission of a safety report involving a patient who received a triple combination of VBR, ATI-2173 and a nucleos(t)ide analog reverse transcriptase inhibitor (NrtI).

Due to the clinical hold, the Company terminated the Antios Agreement effective May 2022.

There were no costs incurred during the year ended December 31, 2023.

During the year ended December 31, 2022 , the Company incurred $ 0.4 million in research and development expenses under the Antios Agreement.

During the year ended December 31, 2024, the Company incurred $ 0.3 million in reimbursable expenses due to Gilead.

During the year ended December 31, 2023 , the Company did no t incur any reimbursable expenses due to Gilead.

Arbutus Biopharma Agreement

In August 2020, the Company and Arbutus Biopharma Corporation (Arbutus Biopharma) entered into a Clinical Trial Collaboration Agreement (Arbutus Biopharma Agreement) to conduct a randomized, multi-center, open-label Phase 2 clinical trial to explore the safety, pharmacokinetics and antiviral activity of the triple combination of VBR, AB-729 and an NrtI compared to the double combinations of VBR with a NrtI and AB-729 with a NrtI.

Under the Arbutus Biopharma Agreement, Assembly and Arbutus Biopharma share responsibility for the costs of the trial equally, excluding manufacturing supply which are the burden of each company to supply their respective drugs, VBR and AB-729.

Assembly is responsible for conducting this clinical trial with Arbutus Biopharma reimbursing Assembly its share of expenses.

In February 2023, Assembly and Arbutus Biopharma decided to terminate the Phase 2 clinical trial early, at the end of the 48-week on-treatment period, and are in the process of closing the study.

The Arbutus Biopharma Agreement is within the scope of the collaborative arrangements guidance as both parties are active participants and are exposed to significant risks and rewards dependent on the success of the collaborative activity.

Reimbursements and cost-sharing portions from Arbutus Biopharma are reflected as a reduction of research and development expense when realized in the Company’s consolidated statements of operations.

The Company recognized a reduction of research and development expense of $ 1.6 million and $ 2.7 million under the Arbutus Biopharma Agreement during the years ended December 31, 2023 and 2022, respectively.

In August 2020, the Company and Arbutus Biopharma Corporation (Arbutus Biopharma) entered into a Clinical Trial Collaboration Agreement (the Arbutus Biopharma Agreement) to conduct a randomized, multi-center, open-label Phase 2 clinical trial to explore the safety, pharmacokinetics and antiviral activity of the triple combination of vebicorvir (VBR), AB-729 and a nucleos(t)ide analog reverse transcriptase inhibitor (NrtI) compared to the double combinations of VBR with a NrtI and AB-729 with a NrtI.

Under the Arbutus Biopharma Agreement, Assembly and Arbutus Biopharma shared responsibility for the costs of the trial equally, excluding manufacturing supply which were the burden of each company to supply their respective drugs, VBR and AB-729.

Assembly was responsible for conducting this clinical trial with Arbutus Biopharma reimbursing Assembly its share of expenses.

In February 2023, Assembly and Arbutus Biopharma terminated the Phase 2 clinical trial early, at the end of the 48-week on-treatment period.

The Arbutus Biopharma Agreement was within the scope of the collaborative arrangements guidance as both parties were active participants and were exposed to significant risks and rewards dependent on the success of the collaborative activity.

Reimbursements and cost-sharing portions from Arbutus Biopharma were reflected as a reduction of research and development expense when realized in the Company’s consolidated statements of operations.

During the year ended December 31, 2024, the Company recognized research and development expenses of $ 0.3 million for net amounts refundable to Arbutus Biopharma after the final reconciliation of clinical trial costs.

Amounts refundable to Arbutus Biopharma are recorded as accrued research and development expenses on the consolidated balance sheet as of December 31, 2024.

During the year ended December 31, 2023, the Company recognized a reduction of research and development expense of $ 1.6 million under the Arbutus Biopharma Agreement.

BeiGene Agreement

In July 2020, the Company and BeiGene entered into a Collaboration Agreement (the BeiGene Agreement) to develop and commercialize the Company’s novel core inhibitor product candidates vebicorvir (VBR), ABI-H2158 (2158) and ABI-H3733 (3733) for chronic HBV infection (the Licensed Product Candidates) in the People’s Republic of China, Hong Kong, Taiwan and Macau (the Territory).

Under the agreement, the Company and BeiGene are collaborating on certain global clinical studies and both the Company and BeiGene will independently conduct other clinical studies in their own respective territories.

Under the agreement, the Company and BeiGene collaborated on certain global clinical studies and both the Company and BeiGene would independently conduct other clinical studies in their own respective territories.

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

In September 2021, the Company discontinued development of 2158 following the observation of elevated alanine transaminase levels in the Phase 2 clinical study consistent with drug-induced hepatotoxicity, and in July 2022, the Company discontinued clinical development of VBR because it did not achieve functional cure or finite treatment in its two- and three-drug combination studies.

In conjunction with the Company entering into the Gilead Collaboration Agreement with Gilead in October 2023, the Company discontinued further development and will no longer seek partnering of 3733.

As of the Company's discontinuation of 3733 development, there are no remaining products in development which have been licensed to BeiGene.

Pursuant to the terms of the BeiGene Agreement, the Company received an upfront cash payment of $ 40.0 million from BeiGene for the delivery of exclusive, royalty-bearing licenses to develop and commercialize the Licensed Product Candidates in the Territory, and the Company was eligible to receive up to approximately $ 500.0 million in cash milestone payments, comprised of up to $ 113.8 million for development and regulatory milestones and up to $ 385.0 million in net sales milestones.

In addition, the Company was eligible to receive tiered royalties at percentages ranging from the mid-teens to the low thirties of net sales.

Due to the discontinuation of development of VBR, 2158 and 3733, the Company is not eligible to receive any development and regulatory milestones or net sales milestones.

The BeiGene Agreement is within the scope of the collaborative arrangements guidance as both parties are active participants and are exposed to significant risks and rewards dependent on the success of commercializing the Licensed Product Candidates in the Territory but that the unit of account related to the delivery of Licensed Product Candidates is within the scope of the contract with customers guidance.

The Company identified the following material promises related to the contract with customers unit of account under the BeiGene Agreement:

1) the transfer of the VBR License, 2) the transfer of the 2158 License, and 3) the transfer of the 3733 License.

The Company concluded each of these licenses to be functional as they have significant standalone functionality and grant BeiGene the right to use the Company’s intellectual property as it exists on the effective date of the license.

The Company estimated the SSP of the licenses using an income-based valuation approach for the estimated value a licensor of the compounds would receive considering the stage of the compound’s development.

The transaction price at the inception of the agreement was limited to the $ 40.0 million upfront payment.

The variable consideration related to the remaining development and commercialization milestone payments has not been included in the transaction price as these were fully constrained as of December 31, 2023 and 2022 .

Following the discontinuation of development and decision to no longer seek partnering of 3733, the obligation related to the technology transfer associated with the license of 3733 was considered to be complete.

Accordingly, the Company recognized $ 2.7 million as collaboration revenue for the amount allocated to 3733 during the year ended December 31, 2023 .

No revenue was recognized during the year ended December 31, 2022.

As of December 31, 2023 and 2022 , there were no remaining performance obligations under the BeiGene Agreement.

The transaction price allocated to 3733 of $ 2.7 million was recorded as a long-term deferred revenue contract liability on the consolidated balance sheet as of December 31, 2022.

During the years ended December 31, 2023 and 2022 , the Company did no t recognize any increase or reduction of research and development expense under the BeiGene Agreement.

The Company incurred $ 3.5 million in incremental costs of obtaining the BeiGene Agreement.

These contract costs have been capitalized and are being recognized consistent with the pattern of recognition of revenue associated with the Licensed Product Candidates.

As of December 31, 2023 , no unamortized contract costs remained.

As of December 31, 2022 , the remaining unamortized contract costs were $ 0.2 million and were included in other assets on the consolidated balance sheet.

In conjunction with the Company entering into the Gilead Collaboration Agreement with Gilead in October 2023, the Company discontinued further development of 3733 leaving no remaining products in development which have been licensed to BeiGene.

Due to the discontinuation of development of all Licensed Product Candidates, the Company is not eligible to receive any development and regulatory milestones or net sales milestones.

The Company had no further performance obligations under the BeiGene Agreement following the discontinuation of development of 3733.

Accordingly, the Company recognized the remaining contract liability of $ 2.7 million as collaboration revenue during the year ended December 31, 2023.

The Company also recognized the remaining $ 0.2 million unamortized incremental costs of obtaining the BeiGene Agreement as general and administrative expenses during the year ended December 31, 2023 .

No revenue or amortization was recognized during the year ended December 31, 2024 .

Note 9 – Strategic License Agreements

HBV Research Agreement with Indiana University

Since September 2013, the Company has been party to an exclusive License Agreement dated September 3, 2013 with Indiana University Research and Technology Corporation (IURTC) from whom it has licensed aspects of the Company’s HBV program held by IURTC.

The license agreement requires the Company 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 milestones through development be met, is $ 0.8 million, with a portion related to the first performance milestone having been paid.

The Company is obligated to pay IURTC royalty payments based on net sales of the licensed technology as well as a portion of any sublicensing revenue Assembly receives.

The Company is also required to pay diligence maintenance fees each year to the extent that the royalty, sublicensing, and milestone payments to IURTC are less than such fees for that year.

In February 2024, following its decision to discontinue further development or partnering for 3733, the Company terminated the IURTC license agreement, which will become effective April 2024.

Since September 2013, the Company was party to an exclusive License Agreement dated September 3, 2013 with Indiana University Research and Technology Corporation (IURTC) from whom it licensed aspects of the Company’s HBV program held by IURTC.

The license agreement required the Company 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, if all milestones through development were met, was $ 0.8 million, with a portion having been paid.

The Company was obligated to pay IURTC royalty payments based on net sales of the licensed technology as well as a portion of any sublicensing revenue Assembly received.

The Company was also required to pay diligence maintenance fees each year to the extent that the royalty, sublicensing, and milestone payments to IURTC were less than such fees for that year.

Following its decision to discontinue further development of 3733, the Company terminated the IURTC license agreement effective April 2024.

The Company paid IURTC $ 0.1 million in diligence maintenance fees during both the years ended December 31, 2024 and 2023, which are included in research and development expenses in the consolidated statements of operations and comprehensive loss.

Door Pharma Agreement

In November 2020, the Company and Door Pharmaceuticals, LLC (Door Pharma) entered into an exclusive, two-year Collaboration Agreement and Sublicense Agreement (collectively, the Door Pharma Agreement) focused on the development of a novel class of HBV inhibitors.

The Company terminated the Door Pharma Agreement in May 2022, which became effective September 2022, to focus its resources on its other internal HBV programs and its programs targeting other viruses.

Under the terms of the Door Pharma Agreement, the Company was obligated to continue to reimburse Door Pharma for certain research and development costs through September 2022 following which such reimbursements ceased.

Under the consolidation accounting standard, the Company determined Door Pharma was a VIE.

The Company did not have the power to direct the activities that most significantly affected the economic performance of Door Pharma and as such the Company was not the primary beneficiary and consolidation was not required prior to the termination of the agreement in May 2022.

The Company did no t incur any research and development funding during the year ended December 31, 2023.

The Company incurred research and development funding of $ 1.6 million during the year ended December 31, 2022.

Microbiome Purchase Agreement

In December 2021, the Company entered into an asset purchase agreement (the Microbiome Purchase Agreement) with a third party pursuant to which the Company sold know-how, patents, materials and regulatory filings for the Company’s Microbiome program.

The sale included ABI-M201 (M201), which had been the Company’s lead candidate in its Microbiome program.

As consideration for the sale, the Company was entitled to receive $ 3.0 million, of which $ 1.5 million was received in 2021 and the remaining $ 1.5 million was received in 2022.

The Company is also entitled to receive a $ 10.0 million milestone payment upon the achievement of a regulatory approval milestone as defined in the purchase agreement.

The Company is entitled to receive a $ 10.0 million milestone payment upon the achievement of a regulatory approval milestone as defined in the purchase agreement.

The variable consideration relating to the $ 10.0 million milestone has not been included in the transaction price as it was fully constrained as of December 31, 2024 and 2023 .

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Note 10 - Income Taxes

Income tax benefit is as follows (in thousands):

Income tax expense is as follows (in thousands):

Income tax expense

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Capitalized research expense

Deferred revenue

Operating lease liabilities

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The Company maintains a valuation allowance on deferred tax assets due to the uncertainty regarding the ability to utilize these deferred tax assets in the future.

The valuation allowance increased by $ 18.4 million and $ 26.9 million

for the years ended December 31, 2023 and 2022, respectively, primarily due to an increase in the Company’s federal and state-operating loss carryforwards.

The valuation allowance increased by $ 9.2 million and $ 18.4 million for the years ended December 31, 2024 and 2023, respectively, primarily due to an increase in the Company’s federal and state-operating loss carryforwards.

Net operating loss and tax credit carryforwards as of December 31, 2024 are as follows (in thousands):

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The Company has adjusted its net operating loss carryovers to appropriately reflect any attributes which will expire due to the limitation.

The Company has not completed any additional analysis for IRC Sections 382 and 383 and there is a risk additional changes in ownership could have occurred since December 31, 2022.

If a change in ownership were to have occurred, additional net operating loss and tax credit carryforwards could be eliminated or restricted.

If further changes in ownership occur, additional net operating loss and tax credit carryforwards could be eliminated or restricted.

If eliminated, the related asset would be removed from the deferred tax asset schedule with a corresponding reduction in the valuation allowance.

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Operating Leases

In August 2023, the Company entered into a sublease agreement for office and laboratory space in South San Francisco, California to serve as the Company's new corporate headquarters.

The sublease contains scheduled annual rent increases over the lease term and expires in October 2025 .

The Company has the option to extend the sublease through September 30, 2029 .

The option to extend the Company's corporate headquarters sublease through 2029 is not included in the Company's ROU assets or lease liabilities.

In August 2023, the Company entered into a sublease agreement for office and laboratory space in South San Francisco, California to serve as the Company's corporate headquarters.

The sublease originally expired in October 2025 , with an option to extend through September 2029 .

In December 2024, the Company amended the sublease to extend the term through September 2029 and modify the base rent payments beginning in January 2025, with scheduled annual rent increases over the remaining lease term.

The Company's previous corporate headquarters sub-sublease in South San Francisco, California expired in December 2023.

The Company also leased office space in Carmel, Indiana under a lease agreement, which expired in August 2023.

In February 2021, the Company subleased substantially all of the office space under lease in Carmel, Indiana for the remainder of its term.

The Company’s China subsidiary leases a registrational office in Shanghai, which expires in March 2024.

The Company's registrational office in Beijing, which was month-to-month, ended in 2023.

The Company also leased office space in Carmel, Indiana under a lease agreement that expired in August 2023, which had been substantially subleased since February 2021.

The Company dissolved its China subsidiary in 2024, allowing the lease for its registrational office in Shanghai to expire in March 2024.

The lease for the Company's registrational office in Beijing, which was month-to-month, ended in 2023.

The Company also leases certain laboratory equipment accounted for as operating leases expiring at various dates, with the final lease expiring in 2025.

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The Plan also permits the Company to make discretionary matching contributions.

During the years ended December 31, 2023 and 2022, the Company made discretionary matching contributions of $ 0.7 million and $ 0.8 million , respectively.

Note 15 - Subsequent Event

Reverse Stock Split

In accordance with Nasdaq Listing Rule 5810(c)(3)(A), the Company was provided a 180-calendar day period, or until March 25, 2024, to regain compliance with the minimum bid price requirement.

The Reverse Stock Split was effective as of February 9, 2024 and the Company regained compliance with the minimum bid price requirement in February 2024.

This reduced the number of shares outstanding from 65.8 million shares to 5.5 million shares.

The Reverse Stock Split does not affect the number of authorized shares of common stock or the par value of the common stock.

Any holders of common stock who would have otherwise received a fractional share of common stock pursuant to the Reverse Stock Split, received cash in lieu of the fractional share.

All share and per share amounts of the Company's common stock presented have been retroactively adjusted to reflect the 1-for-12 Reverse Stock Split, including reclassifying an amount equal to the reduction in par value of common stock to additional paid-in capital.

During both the years ended December 31, 2024 and 2023, the Company made discretionary matching contributions of $ 0.7 million .

Note 13 - Segment Reporting

The Company operates as a single operating s egment focusing on developing innovative therapeutics targeting serious viral diseases.

The Company's chief oper ating decision maker (CODM) is its Chief Executive Officer and President, who reviews financial information presented on a consolidated basis for purposes of making operating decisions, assessing financial performance, and allocating resources.

The measure of segment profit or loss used by the CODM to evaluate performance and allocate resources is consolidated net loss as reported in the Company's consolidated statements of operations.

This measure is used by the CODM to assess its cash runway and make strategic decisions about resource allocation.

The CODM does not use asset measures to evaluate segment performance or make resource allocation decisions.

Operating expenses include all costs necessary to operate the Company's business, primarily consisting of research and development and general and administrative expenses directly related to advancing the Company's programs.

These expenses are reviewed by the CODM on a consolidated basis as part of evaluating the Company's overall financial performance.

During the years ended December 31, 2024 and 2023, the Company generated all of its collaboration revenue from two customers, one of which is a related party (see Notes 3 - Related Party and 8 - Collaboration Agreements).

For the years ended December 31, 2024 and 2023, all of the Company's revenue and long-lived assets were in the United States.

The following table presents the significant segment expenses and other segment items regularly reviewed by the Company's CODM:

Years Ended December 31,

Collaboration revenue ($ 28,520 and $ 4,430 from a related party)

External program expenses:

Research and discovery

Total external program expenses

Employee and contractor-related expenses (2)

Facility and other expenses

Total research and development

General and administrative (2)

Other segment items (3)

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

(2) Includes stock-based compensation expense, see Note 7 - Stock-Based Compensation for further details.

(3) Other segment items include interest and other income, net, and income tax expense as reported in the Company's consolidated statements of operations and comprehensive loss.

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 9A. Controls and Procedures