Hepatitis-Focused Assembly Biosciences Stock Trading Over 100% Higher: Here's Why

Gilead Sciences Inc GILD and Assembly Biosciences Inc ASMB have entered into a 12-year partnership.

Their goal is to advance the research and development of novel antiviral therapies, with an initial focus on Assembly Bio's established areas of herpesviruses, hepatitis B virus (HBV) and hepatitis D virus (HDV).

Assembly Bio will receive $100 million, consisting of an $84.8 million upfront payment and a $15.2 million equity investment from Gilead. 

In addition, Gilead has agreed to purchase up to 29.9% of Assembly Bio's outstanding voting stock at a premium.

Gilead may opt-in to obtain exclusive rights for each of Assembly Bio's current and future programs, including two preclinical programs targeting HSV and transplant-associated herpesviruses that Gilead is licensing to Assembly Bio, upon payment of an opt-in fee of at least $45 million per program after clinical proof-of-concept is achieved. 

Suppose Gilead opts in to any current or future program under the collaboration. In that case, Assembly Bio can receive up to $330 million per program in potential regulatory and commercial milestones and royalties ranging from the high single digits to high teens. Assembly Bio will also be eligible to receive three separate $75 million collaboration extension payments.

Following Gilead's exercise of its option for an Assembly Bio program, Assembly Bio will have the right to opt-in to share profits and costs in the U.S. 

For future programs, Assembly Bio will also have the option to co-promote those products in the U.S.

Assembly Bio will oversee research and development efforts on the collaboration programs, including the two contributed Gilead programs (before Gilead's potential opt-in). 

Following Gilead's opt-in, Gilead will control all discovery, research, development, and commercialization.

Gilead has the right to appoint two individuals to Assembly Bio's board.

This transaction with Assembly Bio is expected to reduce Gilead's GAAP and non-GAAP 2023 EPS by seven cents.

Price Action: ASMB shares are up 1.30% at $1.67 during the premarket session on the last check Tuesday.