aibioAssembly Biosciences sets up $75,000,000 at-the-market program with Jefferies
Tickers ASMB
Jefferies will earn up to 3.0% of gross proceeds. The stock last sold at $16.65 before the agreement.
Key facts
- Company
- Assembly Biosciences, Inc. (NASDAQ: ASMB)
- News type
- Financings
- Primary source
- Assembly Biosciences, Inc. 8-K (2024-11-07)
The agreement
Assembly Biosciences, Inc. (Nasdaq: ASMB) entered into an Open Market Sale Agreement with Jefferies LLC on November 7, 2024. Under the agreement, the company may sell shares of its common stock with an aggregate offering price of up to $75,000,000 from time to time, with Jefferies acting as sales agent. The company filed a prospectus supplement the same day describing the program as an at-the-market offering.
Jefferies will act as sales agent on a best efforts basis and use commercially reasonable efforts to sell the shares the company asks it to sell. Sales may be made on The Nasdaq Global Select Market or another market venue, over the counter, in privately negotiated transactions, or through a combination of those methods. The company may instruct Jefferies on the number of shares to sell, the time period, a daily limit and a minimum price below which no sales may be made.
The prospectus supplement says there is no arrangement for funds to be received in an escrow, trust or similar arrangement. It also says there can be no assurance that the company will sell any shares under the agreement or fully use it.
Fees and counsel
Jefferies is entitled to a fixed commission rate of up to 3.0% of the gross sales price of each share sold under the agreement. The company has also agreed to reimburse Jefferies for the fees and disbursements of its counsel, payable when the agreement was signed, in an amount not to exceed $75,000, plus certain ongoing legal disbursements unless the two sides agree otherwise. Because the offering has no minimum amount, the prospectus says the total commissions and net proceeds cannot be determined at this time.
Skadden, Arps, Slate, Meagher & Flom LLP, of Los Angeles, will pass on the validity of the securities for the company. Latham & Watkins LLP, of Chicago, will pass on legal matters for the sales agent. Ernst & Young LLP is the independent registered public accounting firm whose audit reports are incorporated by reference.
The shelf and the price
The shares will be issued under the company's Form S-3 shelf registration statement, filed March 22, 2023 and declared effective April 14, 2023, as supplemented by the November 2024 prospectus supplement. The last reported sale price of Assembly's common stock was $16.65 per share on November 6, 2024.
The company says it plans to use the net proceeds for general corporate purposes. Its risk factors say management will have broad discretion over the proceeds and its existing cash, and that investors will not be able to assess whether that money is used well. The prospectus says that proceeds held pending use may go into short-term investments that do not produce significant income. The prospectus gives a dilution example. If the full $75,000,000 sold at $16.65 a share, historical net tangible book value of $4.09 per share at September 30, 2024 would become an as adjusted $9.13 per share, an immediate dilution of $7.52 per share to buyers.
The business behind the money
Assembly describes itself as a biopharmaceutical company advancing clinical candidates against chronic hepatitis B virus infection, along with an early-stage development program for high-recurrence genital herpes linked to herpes simplex virus type 2. Its strategy runs on three paths.
The lead hepatitis B program is a set of next-generation core inhibitors. ABI-4334 is in an ongoing Phase 1a study and is currently prioritized. The prospectus says 3733 is in a Phase 1b study and is currently paused. The company says its first-generation core inhibitor, vebicorvir, did not produce a finite and curative treatment when combined with standard nucleos(t)ide analog therapy. It says the next-generation compounds were designed to hit the viral reservoir, which vebicorvir could not.
On herpes, the company is advancing ABI-5366, a long-acting HSV-2 helicase inhibitor. Its research work includes an entry inhibitor for hepatitis B and delta viruses.
What the filings leave open
The 8-K and the prospectus supplement give no cash balance and no runway figure, so these filings do not show how much the $75,000,000 program would add against the company's spending.