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Document And Entity Information - shares	6 Months Ended
Document And Entity Information - shares	Jun. 30, 2019	Jul. 31, 2019
Document And Entity Information [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Jun. 30, 2019
Entity File Number	001-35005
Entity Registrant Name	ASSEMBLY BIOSCIENCES, INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	20-8729264
Entity Address, Address Line One	11711 N. Meridian St., Suite 310
Entity Address, City or Town	Carmel
Entity Address, State or Province	IN
Entity Address, Postal Zip Code	46032
City Area Code	833
Local Phone Number	509-4583
Amendment Flag	false
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q2
Entity Central Index Key	0001426800
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Trading Symbol	ASMB
Security Exchange Name	NASDAQ
Title of 12(b) Security	Common Stock
Entity Common Stock, Shares Outstanding		25,711,781
Entity Shell Company	false
Entity Emerging Growth Company	false
Entity Small Business	false

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Current assets
Cash and cash equivalents	$ 34,258	$ 41,471
Marketable securities	139,553	176,609
Accounts receivable from collaboration	2,903	2,430
Prepaid expenses and other current assets	6,746	1,992
Total current assets	183,460	222,502
Property, plant and equipment, net	2,048	557
Operating lease right-of-use assets	12,672	0
Other assets	1,693	3,348
Indefinite-lived intangible asset	29,000	29,000
Goodwill	12,638	12,638
Total assets	241,511	268,045
Current liabilities
Accounts payable	3,414	3,693
Accrued expenses	7,585	9,679
Deferred revenue - short-term	6,082	5,100
Operating lease liabilities - short-term	2,854	0
Total current liabilities	19,935	18,472
Long-term liabilities
Deferred rent	0	108
Deferred tax liabilities	3,252	3,252
Deferred revenue - long-term	33,582	35,560
Operating lease liabilities - long- term	10,035	0
Total liabilities	66,804	57,392
Commitments and contingencies
Stockholders' equity
Preferred stock, $0.001 par value; 5,000,000 shares authorized; no shares issued or outstanding
Common stock, $0.001 par value; 100,000,000 shares authorized as of June 30, 2019 and December 31, 2018; 25,646,783 and 25,495,425 shares issued and outstanding as of June 30, 2019 and December 31, 2018, respectively	26	25
Additional paid-in capital	562,210	552,762
Accumulated other comprehensive loss	(187)	(347)
Accumulated deficit	(387,342)	(341,787)
Total stockholders' equity	174,707	210,653
Total liabilities and stockholders' equity	$ 241,511	$ 268,045

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
Collaboration revenue	$ 3,080	$ 3,218	$ 6,966	$ 6,783
Operating expenses:
Research and development	18,700	17,840	41,405	32,381
General and administrative	4,080	12,544	13,597	18,240
Total operating expenses	22,780	30,384	55,002	50,621
Loss from operations	(19,700)	(27,166)	(48,036)	(43,838)
Other income (expenses)
Interest and other income	1,182	453	2,458	899
Other income (expense), net	4	(127)	5	(150)
Total other income	1,186	326	2,463	749
Loss before income taxes	(18,514)	(26,840)	(45,573)	(43,089)
Income tax benefit	11	34	18	34
Net loss	(18,503)	(26,806)	(45,555)	(43,055)
Other comprehensive (loss) income
Unrealized gain on marketable securities, net of tax	52	87	160	20
Comprehensive loss	$ (18,451)	$ (26,719)	$ (45,395)	$ (43,035)
Net loss per share, basic and diluted	$ (0.72)	$ (1.30)	$ (1.77)	$ (2.11)
Weighted average common shares outstanding, basic and diluted	25,740,500	20,541,549	25,690,617	20,387,532

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
Cash flows from operating activities
Net loss	$ (45,555)	$ (43,055)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	260	312
Stock-based compensation	8,645	15,672
Net accretion and amortization of investments in marketable securities	(1,141)	0
Non-cash rent expense	2,208	0
Deferred income tax benefit	(18)	(34)
Loss on disposal of fixed assets	102	0
Other	(5)	150
Changes in operating assets and liabilities:
Accounts receivable from collaboration	(473)	148
Prepaid expenses and other current assets	(5,068)	(1,834)
Other assets	1,655	0
Accounts payable	(279)	415
Accrued expenses	(2,180)	(1,059)
Deferred revenue	(996)	(2,195)
Deferred rent	0	(67)
Operating lease liabilities	(2,099)	0
Net cash used in operating activities	(44,944)	(31,547)
Cash flows from investing activities
Purchases of property and equipment	(1,539)	(92)
Purchases of marketable securities	(93,667)	(32,167)
Proceeds from maturities of marketable securities	131,591	32,621
Proceeds from sale of marketable securities	500	0
Net cash provided by investing activities	36,885	362
Cash flows from financing activities
Net proceeds from issuance of common stock through equity plans	846	3,344
Net cash provided by financing activities	846	3,344
Net decrease in cash and cash equivalents	(7,213)	(27,841)
Cash and cash equivalents at the beginning of the period	41,471	82,033
Cash and cash equivalents at the end of the period	$ 34,258	$ 54,192

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($)	Common Stock	Additional Paid-in Capital	Accumulated Other Comprehensive Loss	Accumulated Deficit [Member]	Total
Balance at Dec. 31, 2017	$ 20,000	$ 364,528,000	$ (392,000)	$ (251,036,000)	$ 113,120,000
Balance (in shares) at Dec. 31, 2017	20,137,974
Issuance of common stock upon exercise of stock options	$ 1,000	3,343,000	0	0	3,344,000
Issuance of common stock upon exercise of stock options ( in shares )	476,524
Unrealized gain (loss) on marketable securities, net of tax	$ 0	0	20,000	0	20,000
Stock-based compensation	0	15,672,000	0	0	15,672,000
Net loss	0	0	0	(43,055,000)	(43,055,000)
Balance at Jun. 30, 2018	$ 21,000	383,543,000	(372,000)	(294,091,000)	89,101,000
Balance (in shares) at Jun. 30, 2018	20,614,498
Balance at Mar. 31, 2018	$ 20,000	370,105,000	(459,000)	(267,285,000)	102,381,000
Balance (in shares) at Mar. 31, 2018	20,386,736
Issuance of common stock upon exercise of stock options	$ 1,000	1,849,000	0	0	1,850,000
Issuance of common stock upon exercise of stock options ( in shares )	227,762
Unrealized gain (loss) on marketable securities, net of tax	$ 0	0	87,000	0	87,000
Stock-based compensation	0	11,589,000	0	0	11,589,000
Net loss	0	0	0	(26,806,000)	(26,806,000)
Balance at Jun. 30, 2018	$ 21,000	383,543,000	(372,000)	(294,091,000)	89,101,000
Balance (in shares) at Jun. 30, 2018	20,614,498
Balance at Dec. 31, 2018	$ 25,000	552,762,000	(347,000)	(341,787,000)	210,653,000
Balance (in shares) at Dec. 31, 2018	25,495,425
Issuance of common stock upon exercise of stock options	$ 0	331,000	0	0	331,000
Issuance of common stock upon exercise of stock options ( in shares )	50,875
Issuance of common stock under Employee Stock Purchase Plan (ESPP)	$ 0	515,000	0	0	515,000
Issuance of common stock under Employee Stock Purchase Plan (ESPP) ( in shares )	36,804
Issuance of shares of common stock for settlement of restricted stock units (RSUs)	$ 1,000	(1,000)	0	0	0
Issuance of shares of common stock for settlement of restricted stock units (RSUs)(in shares)	63,679
Reclassification of stock-based awards from equity to accrued expenses	$ 0	(4,000)	0	0	(4,000)
Unrealized gain (loss) on marketable securities, net of tax	0	0	160,000	0	160,000
Stock-based compensation	0	8,607,000	0	0	8,607,000
Net loss	0	0	0	(45,555,000)	(45,555,000)
Balance at Jun. 30, 2019	$ 26,000	562,210,000	(187,000)	(387,342,000)	174,707,000
Balance (in shares) at Jun. 30, 2019	25,646,783
Balance at Mar. 31, 2019	$ 26,000	559,453,000	(239,000)	(368,839,000)	190,401,000
Balance (in shares) at Mar. 31, 2019	25,549,757
Issuance of common stock upon exercise of stock options	$ 0	191,000	0	0	191,000
Issuance of common stock upon exercise of stock options ( in shares )	29,875
Issuance of common stock under Employee Stock Purchase Plan (ESPP)	$ 0	515,000	0	0	515,000
Issuance of common stock under Employee Stock Purchase Plan (ESPP) ( in shares )	36,804
Issuance of shares of common stock for settlement of restricted stock units (RSUs)	$ 0	0	0	0	0
Issuance of shares of common stock for settlement of restricted stock units (RSUs)(in shares)	30,347
Unrealized gain (loss) on marketable securities, net of tax	$ 0	0	52,000	0	52,000
Stock-based compensation	0	2,051,000	0	0	2,051,000
Net loss	0	0	0	(18,503,000)	(18,503,000)
Balance at Jun. 30, 2019	$ 26,000	$ 562,210,000	$ (187,000)	$ (387,342,000)	$ 174,707,000
Balance (in shares) at Jun. 30, 2019	25,646,783

Summary of Significant Accounting Policies and Recent Accounting Pronouncements

6 Months Ended

Jun. 30, 2019

Summary of Significant Accounting Policies and Recent Accounting Pronouncements

Summary of Significant Accounting Policies and Recent Accounting Pronouncements

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

Basis of Presentation

The accompanying unaudited interim condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with the accounting principles generally accepted in the United States of America (U.S. GAAP) for interim financial information and pursuant to the instructions to Form 10-Q and Rule 10-01 of Regulation S-X of the U.S. Securities and Exchange Commission (SEC). In management’s opinion, the unaudited interim condensed consolidated financial statements have been prepared on the same basis as the annual audited consolidated financial statements and include normal recurring adjustments necessary for the fair presentation of the Company’s financial position and its results of operations and comprehensive loss and its cash flows for the periods presented. These statements do not include all disclosures required by GAAP and should be read in conjunction with the Company’s audited consolidated financial statements and accompanying notes for the fiscal year ended December 31, 2018, which is contained in the Company’s Annual Report on Form 10-K as filed with the SEC on February 28, 2019. The results for the three and six months ended June 30, 2019 are not necessarily indicative of results to be expected for the entire year ending December 31, 2019 or future operating periods.

Use of Estimates

The preparation of the unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that may affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of expenses during the reporting period. Actual results could differ from those estimates.

Significant estimates inherent in the preparation of the accompanying unaudited condensed consolidated financial statements include revenue recognition, clinical trial accruals, recoverability and useful lives (indefinite or finite) of intangible assets, assessment of impairment of goodwill, provisions for income taxes, amounts receivable and recognized as revenue under the Collaboration Agreement, measurement of operating lease liabilities, and the fair value of stock options, stock appreciation rights, and restricted stock units (RSUs) granted to employees, directors and consultants.

The Company’s estimates could be affected by external conditions, including those unique to the Company and general economic conditions. It is reasonably possible that these external factors could have an effect on the Company’s estimates and could cause actual results to differ from those estimates and assumptions.

Significant Accounting Policies

There have been no material changes to the Company’s significant accounting policies from those described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, other than as set forth below.

Stock-Based Compensation

The Company expenses stock-based compensation to employees and Board members over the requisite service period based on the estimated grant-date fair value of the awards. Stock-based awards with graded-vesting schedules are recognized using the accelerated attribution method over the requisite service period for each separately vesting portion of the award.

Prior to the adoption of Accounting Standards Update (ASU) 2018-07 (ASU 2018-07) on January 1, 2019, the Company remeasured the fair value of the non-employee awards at each reporting period prior to vesting and finally at the vesting date of the award. Changes in the estimated fair value of these non-employee awards were recognized as compensation expense in the period of change. Subsequent to the adoption of ASU 2018-07, the Company recognizes non-employee compensation costs over the requisite service period based on a measurement of fair value for each stock award.

The Company estimates the fair value of stock option grants using the Black-Scholes option pricing model and the assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment. Forfeitures are recognized when incurred.

The fair value of restricted stock units 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. The fair value of restricted stock units with performance conditions deemed probable of being achieved and vesting are amortized to expense over the requisite service period using the accelerated attribution method of expense recognition.

Leases

All of the Company’s leases are operating leases for facilities and equipment. Prior to January 1, 2019, the Company recognized related rent expense on a straight-line basis over the term of the lease. Incentives granted under the Company’s facilities lease, including allowances for leasehold improvements and rent holidays, were recognized as reductions to rental expense on a straight-line basis over the term of the lease. Deferred rent consisted of the difference between cash payments and the rent expense recognized.

Subsequent to the adoption of the new leasing standard on January 1, 2019, 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. Operating leases are included in operating lease right-of-use assets, operating lease liabilities - short-term, and operating lease liabilities - long-term in our condensed consolidated balance sheet at June 30, 2019. Operating lease right-of-use assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. In determining the net present value of lease payments, the Company uses its incremental borrowing rate based on the information available at the lease commencement date. 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. Periods covered by an option to extend are included in the lease term if the lessor controls the exercise of that option.

The operating lease right-of-use assets also include any lease payments made and exclude lease incentives. Lease expense is recognized on a straight-line basis over the expected lease term. Variable lease expenses are recorded when incurred. The Company has elected to not separate lease and non-lease components for its leased assets and account for all lease and non-lease components of its agreements as a single lease component.

Net Loss per Share

Basic net loss per common share excludes dilution and is computed by dividing net loss by the weighted average number of common shares outstanding during the period. 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. Since the Company has only incurred losses, basic and diluted net loss per share is the same. Securities that could potentially dilute loss per share in the future that were not included in the computation of diluted loss per share are as follows:


	Six Months Ended June 30,
	2019	2018
Warrants to purchase common stock	15,296	15,296
Options to purchase common stock	5,203,935	4,740,674
Common stock subject to purchase under ESPP	5,976	—
Unvested RSUs	489,857	350,059
Total	5,715,064	5,106,029

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 per share amounts):


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Numerator:
Net loss (in thousands)	$	(18,503)	$	(26,806)	$	(45,555)	$	(43,055)
Denominator:
Weighted average common shares outstanding for diluted net loss per share		25,740,500		20,541,549		25,690,617		20,387,532
Net loss per share:
Basic	$	(0.72)	$	(1.30)	$	(1.77)	$	(2.11)
Diluted	$	(0.72)	$	(1.30)	$	(1.77)	$	(2.11)

Adoption of Recent Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board (FASB) issued ASU 2016-02, Leases (ASU 2016-02). Under this standard, which applies to both lessors and lessees, lessees will be required to recognize all leases (except for short-term leases) as a lease liability, which is a lessee’s obligation to make lease payments arising from a lease measured on a discounted basis, and as a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Leases will be classified as either financing or operating, with classification affecting the pattern of expense recognition in the income statement. In January, July and December 2018 and March 2019, the FASB issued additional amendments to the new lease guidance related to transition and clarification.

The Company adopted ASU 2016-02 on January 1, 2019 using the modified retrospective approach and elected the package of practical expedients permitted under transition guidance, which allowed the Company to carry forward its historical assessments of: (1) whether contracts are or contain leases, (2) lease classification and (3) initial direct costs. The Company did not elect the use-of-hindsight practical expedient, which would require the Company to reassess the lease term of its leases based on all facts and circumstances through the effective date, and the Company did not elect the practical expedient pertaining to land easements as this is not applicable to the Company’s current contract portfolio. The Company elected the post-transition practical expedient to not separate lease components from nonlease components for all existing lease classes. The Company also elected a policy of not recording leases on its condensed consolidated balance sheets when the leases have a term of 12 months or less and the Company is not reasonably certain to elect an option to purchase the leased asset.

The adoption of this standard resulted in the recognition of right of use (ROU) assets and lease liabilities of $13.8 million and $14.0 million, respectively, and the derecognition of the deferred rent balance of $0.1 million as of January 1, 2019. The adoption of the standard had no impact on the Company’s condensed consolidated statements of operations and comprehensive loss or to its cash flows from or used in operating, financing, or investing activities on its condensed consolidated statements of cash flows. No cumulative-effect adjustment within accumulated deficit was required to be recorded as a result of adopting this standard.

On January 1, 2019, the Company adopted ASU 2018-02, Income Statement - Reporting Comprehensive Income, (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the federal corporate income tax rate enacted under the Tax Cuts and Jobs Act (the Tax Act). The amount of the reclassification would be the difference between the historical corporate income tax rate and the Tax Act’s 21% corporate income tax rate. The Company’s adoption of this standard did not have a material impact on its condensed consolidated financial statements.

On January 1, 2019, the Company adopted ASU 2018-15, Intangibles (Topic 350): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. This new standard also requires customers to expense the capitalized implementation costs of a hosting arrangement that is a service contract over the term of the hosting arrangement. This new standard can be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. The Company is currently evaluating the effect that the updated standard will have on its condensed consolidated financial statements and related disclosures.

On January 1, 2019, the Company adopted ASU 2018-07, Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting (ASU 2018-07), which simplifies several aspects of the accounting for nonemployee share-based payment transactions resulting from expanding the scope of Topic 718, Compensation – Stock Compensation to include share-based payment transactions for acquiring goods and services from nonemployees. The Company’s adoption of this standard did not have a material impact on its condensed consolidated financial statements.

In August 2018, the SEC adopted amendments to certain disclosure requirements in Securities Act Release No. 33-10532, Disclosure Update and Simplification. The amendments became effective on November 5, 2018 and impact the Company’s condensed consolidated financial statements through, among other things, the addition of a requirement to present a statement of stockholders’ equity for interim periods. As a result of adopting this guidance, the Company is presenting comparative interim statements of stockholders’ equity in this Form 10-Q for the quarters ended June 30, 2019 and 2018. Additionally, the guidance also simplified certain non-material disclosures in its SEC filings.

Recent Accounting Pronouncements

In November 2018, the FASB issued ASU 2018-18, Collaborative Arrangements (Topic 808): Clarifying the Interaction between Topic 808 and Topic 606, which clarifies that certain transactions between collaborative arrangement participants should be accounted for as revenue under Topic 606 when the collaborative arrangement participant is a customer in the context of a unit of account. In those situations, all the guidance in Topic 606 should be applied, including recognition, measurement, presentation, and disclosure requirements. The standard adds unit-of-account guidance in Topic 808 to align with the guidance in Topic 606 (that is, a distinct good or service) when an entity is assessing whether the collaborative arrangement or a part of the arrangement is within the scope of Topic 606 and requires that in a transaction with a collaborative arrangement participant that is not directly related to sales to third parties, presenting the transaction together with revenue recognized under Topic 606 is precluded if the collaborative arrangement participant is not a customer. The standard is effective for interim and annual periods beginning after December 15, 2019, with early adoption permitted, including adoption in any interim period for public business entities for periods in which financial statements have not been issued. Amendments in the standard should be applied retrospectively to the date of initial application of Topic 606, but entities may elect to apply the amendments in Topic 808 retrospectively either to all contracts or only to contracts that are not completed at the date of initial application of Topic 606, and should disclose the election. An entity may also elect to apply the practical expedient for contract modifications that is permitted for entities using the modified retrospective transition method in Topic 606. The Company is currently assessing the impact of this standard on its condensed consolidated financial statements and related disclosures.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement, which makes a number of changes meant to add, modify or remove certain disclosure requirements associated with the movement amongst or hierarchy associated with Level 1, Level 2 and Level 3 fair value measurements. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted upon issuance of the update. The Company does not expect the adoption of this guidance to have a material impact on its condensed consolidated financial statements and related disclosures.

In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (ASU 2017-04), which simplifies how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit's goodwill with the carrying amount of that goodwill. Under the amendments in ASU 2017-04, an entity should recognize an impairment charge for the amount by which the carrying amount of a reporting unit exceeds its fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The updated guidance requires a prospective adoption. ASU 2017-04 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted for goodwill impairment tests performed on testing dates after January 1, 2017. The Company is currently evaluating the timing and impact of adopting this new accounting standard on its condensed consolidated financial statements and related disclosures.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments, which requires that 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 also requires the reversal of previously recognized credit losses if fair value increases. In April 2019, the FASB issued ASU 2014-04, Codification Improvements to Topic 326 Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, which clarifies certain aspects of the accounting for credit losses, hedging activities and financial instruments. In May 2019, the FASB issued ASU 2019-05, Financial Instruments - Credit Losses (Topic 326): Targeted Transition Relief, which provides transition relief for entities adopting the Board’s credit losses standard. Specifically, ASU 2019-05 amends ASU 2016-13 to allow companies to irrevocably elect, upon adoption of ASU 2016-13, the fair value option for financial instruments that (1) were previously recorded at amortized cost and (2) are within the scope of the credit losses guidance in Accounting Standards Codification (ASC) 326-20, (3) are eligible for the fair value option under ASC 825-10, and (4) are not held-to-maturity debt securities. The new standard will be effective on January 1, 2020. Early adoption is available. The Company is currently evaluating the effect that the updated standard will have on its condensed consolidated financial statements and related disclosures.

Investments in Marketable Securities

6 Months Ended

Jun. 30, 2019

Investments in Marketable Securities

Investments in Marketable Securities

Note 3 – Investments in Marketable Securities

The carrying amounts of cash equivalents and marketable securities approximate their fair value based upon quoted market prices. Certain of the Company’s financial instruments are not measured at fair value on a recurring basis, but are recorded at amounts that approximate their fair value due to their liquid or short-term nature, such as cash, accounts receivable, accounts payable, accrued expenses, lease liability-short term and deferred revenue-short term.

The Company uses the following three-level hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs to value its financial instruments:

Level 1: Observable inputs such as unadjusted quoted prices in active markets for identical instruments.

Level 2: Quoted prices for similar instruments that are directly or indirectly observable in the marketplace.

Level 3: Significant unobservable inputs which are supported by little or no market activity and that are financial instruments whose values are determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant judgment or estimation.

Investments in marketable securities consisted of the following:


	June 30, 2019
			Gross Unrealized		Gross Unrealized
($ in thousands)	Amortized Cost		Gain ⁽¹⁾		Loss ⁽¹⁾		Fair Value
Short-term available-for-sale debt securities
U.S. and foreign corporate debt securities	$	43,279	$	52	$	—	$	43,331
Asset-backed securities		38,082		27		—		38,109
U.S. treasury securities		20,948		18		—		20,966
U.S. and foreign commercial paper		37,147		—		—		37,147
Total	$	139,456	$	97	$	—	$	139,553

(1)	Gross unrealized gain (loss) is pre-tax.


	December 31, 2018
			Gross Unrealized		Gross Unrealized
($ in thousands)	Amortized Cost		Gain ⁽¹⁾		Loss ⁽¹⁾		Fair Value
Short-term available-for-sale debt securities
U.S. and foreign corporate debt securities	$	73,251	$	—	$	(92)	$	73,159
Asset-backed securities		28,450		—		(31)		28,419
U.S. treasury securities		19,898		—		(3)		19,895
U.S. and foreign commercial paper		55,136		—		—		55,136
Total	$	176,735	$	—	$	(126)	$	176,609

⁽¹⁾	Gross unrealized gain (loss) is pre-tax.

The contractual term to maturity of short-term marketable securities held by the Company as of June 30, 2019 is less than one year. There were no long-term marketable securities held by the Company as of June 30, 2019.

Realized gains and losses for the three and six months ended June 30, 2019 and 2018 were not significant.

The following tables present the fair value of the Company’s financial assets measured at fair value on a recurring basis:


	June 30, 2019
($ in thousands)	Level 1		Level 2		Level 3		Fair Value
Cash equivalents
Money market fund	$	30,082	$	—	$	—	$	30,082
Total cash equivalents		30,082		—		—		30,082

Short-term investments
U.S. and foreign corporate debt securities		—		43,331		—		43,331
Asset-backed securities		—		38,109		—		38,109
U.S. treasury securities		—		20,966		—		20,966
U.S. and foreign commercial paper		—		37,147		—		37,147
Total short-term investments		—		139,553		—		139,553
Total assets measured at fair value	$	30,082	$	139,553	$	—	$	169,635


	December 31, 2018
($ in thousands)	Level 1		Level 2		Level 3		Fair Value
Cash equivalents:
Money market funds	$	39,345	$	—	$	—	$	39,345
Total cash equivalents		39,345		—		—		39,345
Short-term investments:
U.S. and foreign corporate debt securities		—		73,159		—		73,159
Asset-backed securities		—		28,419		—		28,419
U.S. treasury securities		—		19,895		—		19,895
U.S. and foreign commercial paper		—		55,136		—		55,136
Total short-term investments		—		176,609		—		176,609
Total assets measured at fair value	$	39,345	$	176,609	$	—	$	215,954

The Company estimates the fair value of its U.S. and foreign corporate debt securities, asset-backed 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 were no transfers between Level 1, Level 2 or Level 3 during the periods presented.

Stock Plans and Stock-Based Compensation

6 Months Ended

Jun. 30, 2019

Stock-Plans and Stock-Based Compensation

Stock Plans and Stock-Based Compensation

Note 6 – Stock Plans and Stock-Based Compensation

Equity Incentive Plans

In May 2018, the Company’s stockholders approved the Assembly Biosciences, Inc. 2018 Stock Incentive Plan (the 2018 Plan) pursuant to which the Company reserved 1,900,000 shares of its common stock for issuance in connection with equity incentive awards, and in May 2019, the Company’s stockholders approved Amendment No. 1 (the Amendment) to the 2018 Plan to increase the number of shares reserved for issuance thereunder from 1,900,000 shares of common stock to 3,000,000. In May 2018, the Company’s stockholders also approved the Assembly Biosciences, Inc. Employee Stock Purchase Plan (the 2018 ESPP), pursuant to which eligible employees can purchase an aggregate of up to 400,000 shares of the Company’s common stock at the end of predetermined offering periods at 85% of the lower of the fair market value at the beginning or end of the offering period.

As of June 30, 2019, the Company had awards outstanding under the following shareholder approved plans:

●

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

●

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

●

the 2018 Plan.

Shares of common stock underlying awards that are forfeited under the 2010 Plan on or after June 2, 2016 will become available for issuance under the 2014 Plan. As of June 30, 2019, the Company also had awards outstanding under the Assembly Biosciences, Inc. 2017 Inducement Award Plan (the 2017 Plan).

The Company issues new shares of common stock to settle options exercised and upon settlement of 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 Company’s 2018 ESPP.

Stock Plan Activity

Stock Options

A summary of the Company’s option activity and related information for the six-month period ended June 30, 2019 is as follows:


		Weighted Average		Total Intrinsic
		Exercise Price		Value (in
	Number of Shares	Per Share		thousands)
Outstanding as of December 31, 2018	4,637,145	$	17.21	$	48,179
Granted	826,350		18.40		—
Exercised	(50,875)		6.51		655
Forfeited	(208,685)		45.81		117
Outstanding as of June 30, 2019	5,203,935	$	16.36	$	19,511
Options vested and exercisable	3,482,129	$	12.58	$	18,398

Restricted Stock Units (RSU)

A summary of the Company’s RSUs and related information for the six-month period ended June 30, 2019 is as follows:


			Weighted
			average
	Number of RSUs		grant price
Outstanding as of December 31, 2018	568,005		$	37.18
Granted	235,928			19.34
Vested and settled	(63,920)			46.03
Forfeited	(121,822)			24.14
Outstanding as of June 30, 2019	618,191	⁽¹⁾	$	32.03

⁽¹⁾	Includes 128,334 RSUs that have vested but are subject to deferred settlement.

As of June 30, 2019, RSUs outstanding include 45,000 RSUs granted in December 2017 with performance-based conditions to an executive of the Company. The 45,000 RSUs with a grant date fair value of $1.9 million vest upon the performance conditions not yet deemed probable and accordingly, no compensation expense has been recognized as of June 30, 2019 for these awards. In the second quarter of 2019, 100,000 RSU’s granted to a former officer were forfeited due to his departure. The RSU’s had a grant date fair value of $2.4 million and were vesting over time but would have accelerated upon the achievement of certain performance conditions. The Company reversed the previously recognized expense of $0.4 million related to these forfeited awards upon the departure of the former officer.

As of June 30, 2019, the Company had unrecognized stock-based compensation expense related to all unvested RSUs of $9.7 million, which is expected to be recognized over the remaining weighted average amortization period of 1.8 years.

In May 2019 employees purchased 36,804 shares of common stock under the 2018 ESPP.

Valuation Assumptions

The fair value of the stock options granted or modified during the periods indicated was estimated using the Black-Scholes option pricing model, based on the following assumptions:


	Three Months Ended June 30,		Six Months Ended June 30,
	2019	2018	2019	2018
Exercise price	$15.22 - $57.33	$41.36 - $46.75	$15.22 - $57.33	$41.36 - $57.53
Expected volatility	66.2% - 83.0%	75.7% - 85.5%	66.2% - 83.2%	76.7% - 86.1%
Risk-free rate	2.17% - 2.47%	2.56% - 2.93%	2.17% - 2.65%	2.56% - 2.93%
Expected term (years)	5.0 - 9.0	5.5 - 7.0	5.0 - 9.0	5.5 - 7.0
Dividend yield	0%	0%	0%	0%

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

Stock-Based Compensation Expense

The following table summarizes the components of total stock-based compensation expense included in the condensed consolidated statements of operations and comprehensive loss:


	Three Months Ended June 30,					Six Months Ended June 30,
($ in thousands)	2019			2018		2019		2018
Research and development	$	3,116		$	3,689	$	5,845	$	6,214
General and administrative		(1,048)	⁽¹⁾		7,900		2,800		9,458
Total stock-based compensation expense	$	2,068		$	11,589	$	8,645	$	15,672

⁽¹⁾	Includes the reversal of previously recognized expense of $3.6 million related to forfeited awards resulting from the departure of one of our former officers during the period.

Collaboration Agreement

6 Months Ended

Jun. 30, 2019

Collaboration Agreement

Collaboration Agreement

Note 7 - Collaboration Agreement

Allergan

In January 2017, the Company entered into the Collaboration Agreement with Allergan to develop and commercialize select microbiome gastrointestinal disease therapies. Pursuant to the Collaboration Agreement, the Company granted Allergan an exclusive worldwide license to certain of its intellectual property, including its intellectual property arising under the Collaboration Agreement, to develop and commercialize licensed compounds for UC, Crohn’s disease, and two compounds for IBS. Allergan and the Company also agreed to collaborate on research and development activities with respect to the licensed compounds in accordance with a mutually agreed upon research and development plan. Per the terms of the Collaboration Agreement, Allergan can select backups and additional target indications to add to the licenses granted for additional consideration and also has the ability to enter into a contract manufacturing agreement with the Company for compound supply at cost plus an agreed upon margin. In addition, the Company will participate on a Joint Development Committee (JDC) and Joint Patent Committee (JPC). The Company provided to Allergan standard indemnification and protection of licensed intellectual property, which is part of assurance that the license meets the contract’s specifications and is not an obligation to provide goods or services.

Allergan paid the Company an upfront non-refundable payment of $50.0 million, which was received in 2017. Additionally, the Company is eligible to receive variable consideration in the form of research and development cost reimbursements, up to approximately $631.0 million related to seven development milestones and up to approximately $2.14 billion related to 12 commercial development and sales milestones in connection with the successful development and commercialization of licensed compounds. In addition, the Company is eligible to receive tiered royalties at rates ranging from the mid-single digits to the mid-teens based on net sales.

Allergan and the Company have agreed to share research and development costs up to an aggregate of $75.0 million through proof-of-concept (POC) studies on a ⅔, ⅓ basis, respectively, and Allergan has agreed to assume all post-POC development costs. In the event any pre-POC development costs exceed $75.0 million in the aggregate, the Company may elect either (a) to fund ⅓ of such costs in excess of $75.0 million or (b) to allow Allergan to deduct from future development milestone payments ⅓ of the development costs funded by Allergan in excess of $75.0 million plus a premium of 25%. The Company has an option to co-promote the licensed programs in the U.S. and China, subject to certain conditions set forth in the Collaboration Agreement.

Allergan may terminate the Collaboration Agreement at any time upon 120 days’ advance written notice to the Company. Unless terminated early, the Collaboration Agreement has a term that ends on the earlier of the (i) the period when POC studies have been completed and no further licensed compounds or licensed products are in development, and (ii) expiration of the last to exist valid claim covering the manufacture, use and sale of the licensed products. The Collaboration Agreement also contains customary provisions for termination by either party, including in the event of breach of the Collaboration Agreement, subject to cure. Upon termination for convenience, the licenses granted by the Company and its know-how all revert to the Company.

The Company concluded that Allergan is a customer and that the Collaboration Agreement is not subject to accounting literature on collaborative arrangements. This is because the Company granted to Allergan licenses to its intellectual property, and research and development services, all of which are outputs of the Company’s ongoing activities, in exchange for consideration. The Company identified the following material promises under the Collaboration Agreement: (1) transfer of a licenses to intellectual property for the four initial indications, inclusive of the related technology know-how (Licenses) and (2) the obligation to perform research development services through POC (Development Services). The Company’s participation on the JDC and JPC were considered to be immaterial in the context of the contract. The Company’s co-promotion option was not considered to be a performance obligation. Allergan’s selection of backups or additional target indications to add to the licenses granted for additional consideration and ability to enter into a contract manufacturing agreement with the Company for compound supply at cost plus an agreed upon margin were not considered to be performance obligations as the Company concluded the options were not offered at a discount that exceeds discounts available to other customers, and therefore were not material rights. The grant of additional licensing rights upon option exercises and contract manufacturing agreements will be accounted for as separate contracts when they occur.

The Company concluded the Licenses each were considered to be functional as they have significant standalone functionality and were capable of being distinct. However, the Company determined that each of the Licenses individually were not distinct from the Development Services within the context of the agreement. This is because Allergan is dependent on the Company to execute the Development Services, that it is only uniquely able to perform, in order for Allergan to benefit from the Licenses. As such, the Company determined that it has four performance obligations under the Collaboration Agreement associated with the transfer of the four compound Licenses combined with the performance of the Development Services for each of the four compound indications. The Company determined that the four performance obligations will be performed over the duration of the contract, which began in February 2017 and ends upon completion of the Development Services. We originally estimated the completion of the Development Services to be in 2024. During the second quarter of 2019, the completion of the Development Services was extended to 2025 based on updated estimates of effort associated with our and Allergan’s development plans. This change in estimate did not have a material impact on our revenue recognition. The Company is using a cost-based input method to measure proportional performance and to calculate the corresponding amount of revenue to recognize. The Company believes this is the best measure of progress because other measures do not reflect how the Company transfers its performance obligation to Allergan. In applying the cost-based input method of revenue recognition, the Company measures costs incurred relative to budgeted costs to fulfill the four performance obligations. These costs consist primarily of third-party contract costs and internal labor costs. Revenue will be recognized based on actual costs incurred as a percentage of total budgeted costs as the Company completes its performance obligations.

To allocate transaction price among the four performance obligations, the Company estimated their standalone selling price (SSP) using income-based valuation approach for the estimated value a licensor of the compounds would receive

considering the stage of the compounds’ development. The Company believes that a change in the assumptions used to determine its best estimate of selling price for the four performance obligations would not have a significant effect on the allocation of consideration received to the four performance obligations.

The transaction price at the inception of the agreement and upon adoption of ASC 606 was limited to $50.0 million upfront payment. Of this amount, the Company allocated $12.5 million to each of the four performance obligations. Research and development cost reimbursement payments are included in the transaction price in the reporting period that the Company concludes that it is probable that recording revenue in the period will not result in a significant reversal in amounts recognized in future periods. 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 at June 30, 2019. As part of the Company’s evaluation of the development and commercialization milestones constraint, the Company determined that the achievement of such milestones is contingent upon success in future clinical trials and regulatory approvals which are not within its control and uncertain at this stage. Any variable consideration related to sales-based milestones (including royalties) will be recognized when the related sales occur as they were determined to relate predominantly to the license granted to Allergan. The Company will re-evaluate the transaction price in each reporting period and as uncertain events are resolved or other changes in circumstances occur.

The Company did not incur any significant incremental costs of obtaining the Allergan contract.

For the six months ended June 30, 2019 and 2018, the Company recognized approximately $7.0 million and $6.8 million, respectively, in revenue associated with the Collaboration Agreement. Short-term and long-term deferred revenue contract liabilities related to the Collaboration Agreement were approximately $6.1 million and approximately $33.6 million at June 30, 2019 and approximately $5.1 million and approximately $35.6 million at December 31, 2018.

On the unaudited condensed consolidated balance sheets, contract asset balances of approximately $2.9 million and approximately $2.4 million were recorded as accounts receivable from collaboration as of June 30, 2019 and December 31, 2018, respectively.

The following table presents changes in the Company’s contract liabilities ($ in thousands):


	Balance at
	Beginning						Balance at
	of Period		Additions		Deductions		End of Period
Six Months Ended June 30, 2019
Contract liabilities:
Deferred revenue	$	40,660	$	—	$	(996)	$	39,664


	Balance at
	Beginning						Balance at
	of Period		Additions		Deductions		End of Period
Six Months Ended June 30, 2018
Contract liabilities:
Deferred revenue	$	45,785	$	—	$	(2,195)	$	43,590


	Three Months Ended June 30,				Six Months Ended June 30,
($ in thousands)	2019		2018		2019		2018
Collaboration revenue recognized in the period from:
Amounts included in deferred revenue at the beginning of the period	$	137	$	893	$	996	$	2,195
Performance obligations satisfied in previous period	$	—	$	—	$	—	$	—

Leases

6 Months Ended

Jun. 30, 2019

Leases

Leases

Note 9 - Leases

Operating Leases

The Company leases office space for corporate and administrative functions in Carmel, Indiana under a lease agreement that expires in August 2023. The Company leases office and laboratory space in South San Francisco, California under a sub-sublease that expires in December 2023. Prior to moving into the South San Francisco office and laboratory space in February 2019, the Company leased office and laboratory space in San Francisco, California, under a sublease that expired on February 28, 2019. The Company also leases office and laboratory space in Groton, Connecticut under a lease that expires in March 2020. The Company’s China subsidiary leases office space in Shanghai that expires in May 2020 and rents lab space in Shanghai under a lease agreement that expires in December 2019. Additionally, the Company’s China subsidiary leases office space in Beijing under a lease agreement that expires in December 2019. Certain lease contracts contain renewal clauses that the Company assesses on a case by case basis. The Company also leases certain laboratory equipment accounted for as operating leases. These equipment leases began to expire in 2017, with the final lease expiring in 2021.

When the Company cannot determine the implicit rate in its leasing arrangements the Company uses its incremental borrowing rate as the discount rate when measuring operating lease liabilities. The incremental borrowing rate represents an estimate of 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 within a particular currency environment.

At June 30, 2019, the Company had operating lease liabilities of $12.9 million and right-of-use assets of $12.7 million, which were included in the condensed consolidated balance sheet.

The following summarizes quantitative information about the Company’s operating leases:


	Three Months Ended		Six Months Ended
($ in thousands)	June 30, 2019		June 30, 2019
Lease cost
Operating lease cost	$	1,117	$	2,208
Short-term lease cost		112		433
Variable lease cost		300		599
Total lease cost	$	1,529	$	3,240


	Three Months Ended		Six Months Ended
($ in thousands)	June 30, 2019		June 30, 2019
Cash paid for amounts included in the measurement of lease liabilities	$	1,062	$	2,099
Right-of-use assets exchanged for new operating lease liabilities		400		400

As of June 30, 2019, the weighted-average remaining lease term for operating leases was approximately 4.2 years and the weighted-average discount rate for operating leases was approximately 9.6%.

As of June 30, 2019, the maturities of the Company’s operating lease liabilities were as follows (in thousands):


2019 (from July to December)	$	1,999
2020		3,881
2021		3,396
2022		3,267
2023		3,303
Total undiscounted future minimum lease payments		15,846
Less: present value adjustment		(2,957)
Operating lease liabilities	$	12,889

Operating lease costs were approximately $1.1 million and $2.2 million, for the three and six months ended June 30, 2019, respectively and $0.7 million and $1.5 million for the three and six months ended June 30, 2018, respectively.

Summary of Significant Accounting Policies and Recent Accounting Pronouncements (Policies)

6 Months Ended

Jun. 30, 2019

Summary of Significant Accounting Policies and Recent Accounting Pronouncements

Basis of Presentation

Use of Estimates

Significant Accounting Policies

Stock-Based Compensation

Leases

Net Loss per Share


	Six Months Ended June 30,
	2019	2018
Warrants to purchase common stock	15,296	15,296
Options to purchase common stock	5,203,935	4,740,674
Common stock subject to purchase under ESPP	5,976	—
Unvested RSUs	489,857	350,059
Total	5,715,064	5,106,029

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 per share amounts):


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Numerator:
Net loss (in thousands)	$	(18,503)	$	(26,806)	$	(45,555)	$	(43,055)
Denominator:
Weighted average common shares outstanding for diluted net loss per share		25,740,500		20,541,549		25,690,617		20,387,532
Net loss per share:
Basic	$	(0.72)	$	(1.30)	$	(1.77)	$	(2.11)
Diluted	$	(0.72)	$	(1.30)	$	(1.77)	$	(2.11)

Recent Accounting Pronouncements

Adoption of Recent Accounting Pronouncements

Recent Accounting Pronouncements

Summary of Significant Accounting Policies and Recent Accounting Pronouncements (Tables)

6 Months Ended

Jun. 30, 2019

Summary of Significant Accounting Policies and Recent Accounting Pronouncements

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share


	Six Months Ended June 30,
	2019	2018
Warrants to purchase common stock	15,296	15,296
Options to purchase common stock	5,203,935	4,740,674
Common stock subject to purchase under ESPP	5,976	—
Unvested RSUs	489,857	350,059
Total	5,715,064	5,106,029

Schedule of Earnings Per Share, Basic and Diluted


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Numerator:
Net loss (in thousands)	$	(18,503)	$	(26,806)	$	(45,555)	$	(43,055)
Denominator:
Weighted average common shares outstanding for diluted net loss per share		25,740,500		20,541,549		25,690,617		20,387,532
Net loss per share:
Basic	$	(0.72)	$	(1.30)	$	(1.77)	$	(2.11)
Diluted	$	(0.72)	$	(1.30)	$	(1.77)	$	(2.11)

Investments in Marketable Securities (Tables)

6 Months Ended

Jun. 30, 2019

Investments in Marketable Securities

Schedule of Available-for-sale Securities Reconciliation

Investments in marketable securities consisted of the following:


	June 30, 2019
			Gross Unrealized		Gross Unrealized
($ in thousands)	Amortized Cost		Gain ⁽¹⁾		Loss ⁽¹⁾		Fair Value
Short-term available-for-sale debt securities
U.S. and foreign corporate debt securities	$	43,279	$	52	$	—	$	43,331
Asset-backed securities		38,082		27		—		38,109
U.S. treasury securities		20,948		18		—		20,966
U.S. and foreign commercial paper		37,147		—		—		37,147
Total	$	139,456	$	97	$	—	$	139,553

(1)	Gross unrealized gain (loss) is pre-tax.


	December 31, 2018
			Gross Unrealized		Gross Unrealized
($ in thousands)	Amortized Cost		Gain ⁽¹⁾		Loss ⁽¹⁾		Fair Value
Short-term available-for-sale debt securities
U.S. and foreign corporate debt securities	$	73,251	$	—	$	(92)	$	73,159
Asset-backed securities		28,450		—		(31)		28,419
U.S. treasury securities		19,898		—		(3)		19,895
U.S. and foreign commercial paper		55,136		—		—		55,136
Total	$	176,735	$	—	$	(126)	$	176,609

⁽¹⁾	Gross unrealized gain (loss) is pre-tax.

Schedule of fair value of financial assets

The following tables present the fair value of the Company’s financial assets measured at fair value on a recurring basis:


	June 30, 2019
($ in thousands)	Level 1		Level 2		Level 3		Fair Value
Cash equivalents
Money market fund	$	30,082	$	—	$	—	$	30,082
Total cash equivalents		30,082		—		—		30,082

Short-term investments
U.S. and foreign corporate debt securities		—		43,331		—		43,331
Asset-backed securities		—		38,109		—		38,109
U.S. treasury securities		—		20,966		—		20,966
U.S. and foreign commercial paper		—		37,147		—		37,147
Total short-term investments		—		139,553		—		139,553
Total assets measured at fair value	$	30,082	$	139,553	$	—	$	169,635


	December 31, 2018
($ in thousands)	Level 1		Level 2		Level 3		Fair Value
Cash equivalents:
Money market funds	$	39,345	$	—	$	—	$	39,345
Total cash equivalents		39,345		—		—		39,345
Short-term investments:
U.S. and foreign corporate debt securities		—		73,159		—		73,159
Asset-backed securities		—		28,419		—		28,419
U.S. treasury securities		—		19,895		—		19,895
U.S. and foreign commercial paper		—		55,136		—		55,136
Total short-term investments		—		176,609		—		176,609
Total assets measured at fair value	$	39,345	$	176,609	$	—	$	215,954

- Definition

Tabular disclosure of financial instruments measured at fair value, including those classified in shareholders' equity measured on a recurring or nonrecurring basis. Disclosures include, but are not limited to, fair value measurements recorded and the reasons for the measurements, level within the fair value hierarchy in which the fair value measurements are categorized and transfers between levels 1 and 2. Nonrecurring fair value measurements are those that are required or permitted in the statement of financial position in particular circumstances.

+ References + Details

Stock-Based Compensation (Tables)

6 Months Ended

Jun. 30, 2019

Stock-Plans and Stock-Based Compensation

Schedule of Stock Options Activity

A summary of the Company’s option activity and related information for the six-month period ended June 30, 2019 is as follows:


		Weighted Average		Total Intrinsic
		Exercise Price		Value (in
	Number of Shares	Per Share		thousands)
Outstanding as of December 31, 2018	4,637,145	$	17.21	$	48,179
Granted	826,350		18.40		—
Exercised	(50,875)		6.51		655
Forfeited	(208,685)		45.81		117
Outstanding as of June 30, 2019	5,203,935	$	16.36	$	19,511
Options vested and exercisable	3,482,129	$	12.58	$	18,398

Schedule of RSU's

A summary of the Company’s RSUs and related information for the six-month period ended June 30, 2019 is as follows:


			Weighted
			average
	Number of RSUs		grant price
Outstanding as of December 31, 2018	568,005		$	37.18
Granted	235,928			19.34
Vested and settled	(63,920)			46.03
Forfeited	(121,822)			24.14
Outstanding as of June 30, 2019	618,191	⁽¹⁾	$	32.03

Assumptions for Weighted Average Fair Value of Options Granted

The fair value of the stock options granted or modified during the periods indicated was estimated using the Black-Scholes option pricing model, based on the following assumptions:


	Three Months Ended June 30,		Six Months Ended June 30,
	2019	2018	2019	2018
Exercise price	$15.22 - $57.33	$41.36 - $46.75	$15.22 - $57.33	$41.36 - $57.53
Expected volatility	66.2% - 83.0%	75.7% - 85.5%	66.2% - 83.2%	76.7% - 86.1%
Risk-free rate	2.17% - 2.47%	2.56% - 2.93%	2.17% - 2.65%	2.56% - 2.93%
Expected term (years)	5.0 - 9.0	5.5 - 7.0	5.0 - 9.0	5.5 - 7.0
Dividend yield	0%	0%	0%	0%

Schedule of Stock-Based Compensation Expense

The following table summarizes the components of total stock-based compensation expense included in the condensed consolidated statements of operations and comprehensive loss:


	Three Months Ended June 30,					Six Months Ended June 30,
($ in thousands)	2019			2018		2019		2018
Research and development	$	3,116		$	3,689	$	5,845	$	6,214
General and administrative		(1,048)	⁽¹⁾		7,900		2,800		9,458
Total stock-based compensation expense	$	2,068		$	11,589	$	8,645	$	15,672

Collaboration Agreement (Tables)

6 Months Ended

Jun. 30, 2019

Collaboration Agreement

Schedule of changes in contract liabilities

The following table presents changes in the Company’s contract liabilities ($ in thousands):


	Balance at
	Beginning						Balance at
	of Period		Additions		Deductions		End of Period
Six Months Ended June 30, 2019
Contract liabilities:
Deferred revenue	$	40,660	$	—	$	(996)	$	39,664


	Balance at
	Beginning						Balance at
	of Period		Additions		Deductions		End of Period
Six Months Ended June 30, 2018
Contract liabilities:
Deferred revenue	$	45,785	$	—	$	(2,195)	$	43,590

Schedule of Collaboration revenue recognized with the period


	Three Months Ended June 30,				Six Months Ended June 30,
($ in thousands)	2019		2018		2019		2018
Collaboration revenue recognized in the period from:
Amounts included in deferred revenue at the beginning of the period	$	137	$	893	$	996	$	2,195
Performance obligations satisfied in previous period	$	—	$	—	$	—	$	—

Leases (Tables)

6 Months Ended

Jun. 30, 2019

Leases

Schedule of quantitative information- operating leases

The following summarizes quantitative information about the Company’s operating leases:


	Three Months Ended		Six Months Ended
($ in thousands)	June 30, 2019		June 30, 2019
Lease cost
Operating lease cost	$	1,117	$	2,208
Short-term lease cost		112		433
Variable lease cost		300		599
Total lease cost	$	1,529	$	3,240


	Three Months Ended		Six Months Ended
($ in thousands)	June 30, 2019		June 30, 2019
Cash paid for amounts included in the measurement of lease liabilities	$	1,062	$	2,099
Right-of-use assets exchanged for new operating lease liabilities		400		400

Schedule of operating lease maturities

As of June 30, 2019, the maturities of the Company’s operating lease liabilities were as follows (in thousands):


2019 (from July to December)	$	1,999
2020		3,881
2021		3,396
2022		3,267
2023		3,303
Total undiscounted future minimum lease payments		15,846
Less: present value adjustment		(2,957)
Operating lease liabilities	$	12,889

Summary of Significant Accounting Policies and Recent Accounting Pronouncements - Earnings per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Numerator:
Net loss	$ (18,503)	$ (26,806)	$ (45,555)	$ (43,055)
Denominator:
Weighted average common shares outstanding for diluted net loss per share	25,740,500	20,541,549	25,690,617	20,387,532
Net loss per share:
Basic	$ (0.72)	$ (1.30)	$ (1.77)	$ (2.11)
Diluted	$ (0.72)	$ (1.30)	$ (1.77)	$ (2.11)

- Definition

The amount of net income (loss) for the period per each share of common stock or unit outstanding during the reporting period.

+ References

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+ Details

- Definition

The amount of net income (loss) for the period available to each share of common stock or common unit outstanding during the reporting period and to each share or unit that would have been outstanding assuming the issuance of common shares or units for all dilutive potential common shares or units outstanding during the reporting period.

+ References

Reference 1: http://www.xbrl.org/2003/role/exampleRef
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+ Details

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References + Details

Investments in Marketable Securities - Fair Value (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Recurring
Cash equivalents:
Money market funds	$ 30,082	$ 39,345
Total cash equivalents	30,082	39,345
Short term investments:
Short-term investments	139,553	176,609
Total assets measured at fair value	169,635	215,954
U.S and foreign corporate debt securities \| Recurring
Short term investments:
Short-term investments	43,331	73,159
Asset-backed securities \| Recurring
Short term investments:
Short-term investments	38,109	28,419
U.S. treasury securities \| Recurring
Short term investments:
Short-term investments	20,966	19,895
U.S. and foreign commercial paper \| Recurring
Short term investments:
Short-term investments	37,147	55,136
Level 1
Short term investments:
Short-term investments	0
Level 1 \| Recurring
Cash equivalents:
Money market funds	30,082	39,345
Total cash equivalents	30,082	39,345
Short term investments:
Short-term investments		0
Total assets measured at fair value	30,082	39,345
Level 1 \| U.S and foreign corporate debt securities \| Recurring
Short term investments:
Short-term investments		0
Level 1 \| Asset-backed securities \| Recurring
Short term investments:
Short-term investments	0	0
Level 1 \| U.S. treasury securities \| Recurring
Short term investments:
Short-term investments	0	0
Level 1 \| U.S. and foreign commercial paper \| Recurring
Short term investments:
Short-term investments	0	0
Level 2 \| Recurring
Cash equivalents:
Money market funds	0	0
Total cash equivalents	0	0
Short term investments:
Short-term investments	139,553	176,609
Total assets measured at fair value	139,553	176,609
Level 2 \| U.S and foreign corporate debt securities \| Recurring
Short term investments:
Short-term investments	43,331	73,159
Level 2 \| Asset-backed securities \| Recurring
Short term investments:
Short-term investments	38,109	28,419
Level 2 \| U.S. treasury securities \| Recurring
Short term investments:
Short-term investments	20,966	19,895
Level 2 \| U.S. and foreign commercial paper \| Recurring
Short term investments:
Short-term investments	37,147	55,136
Level 3 \| Recurring
Cash equivalents:
Money market funds	0	0
Total cash equivalents	0	0
Short term investments:
Short-term investments	0	0
Total assets measured at fair value	0	0
Level 3 \| U.S and foreign corporate debt securities \| Recurring
Short term investments:
Short-term investments	0	0
Level 3 \| Asset-backed securities \| Recurring
Short term investments:
Short-term investments	0	0
Level 3 \| U.S. treasury securities \| Recurring
Short term investments:
Short-term investments	0	0
Level 3 \| U.S. and foreign commercial paper \| Recurring
Short term investments:
Short-term investments	$ 0	$ 0

Stock Plans and Stock-Based Compensation - Stock Options (Details) - Options - USD ($) $ / shares in Units, $ in Thousands	6 Months Ended
	Jun. 30, 2019
Number of Shares
Option, Outstanding at beginning of period	4,637,145
Option, Granted	826,350
Option, Exercised	(50,875)
Option, Forfeited	(208,685)
Option, Outstanding at end of period	5,203,935
Options vested and exercisable	3,482,129
Weighted Average Exercise Price
Option, Outstanding at beginning of period	$ 17.21
Option, Granted	18.40
Option, Exercised	6.51
Option, Forfeited	45.81
Option, Outstanding at end of period	16.36
Options vested and exercisable	$ 12.58
Total Intrinsic Value
Option, Outstanding at beginning of period	$ 48,179
Option, Granted	0
Option, Exercised	655
Option, Forfeited	117
Option, Outstanding at end of period	19,511
Options vested and exercisable	$ 18,398

Stock Plans and Stock-Based Compensation - RSU (Details) - USD ($)	1 Months Ended	3 Months Ended		6 Months Ended
	May 31, 2019	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Weighted average grant price
Stock-based compensation expense		$ 2,068,000	$ 11,589,000	$ 8,645,000	$ 15,672,000
RSUs
Number of Shares
Beginning of period				568,005
Granted				235,928
Vested and settled				(63,920)
Forfeited				(121,822)
Ending of period		618,191		618,191
Weighted average grant price
Beginning of period				$ 37.18
Granted				19.34
Vested and settled				46.03
Forfeited				24.14
Ending of period		$ 32.03		$ 32.03
Vested and subject to deferred settlement				128,334
Stock-based compensation expense				$ 9,700,000
Contractual term (in years)				1 year 9 months 18 days
RSUs \| Executive
Number of Shares
Granted				45,000
Weighted average grant price
Grant date fair value				$ 1,900,000
Stock-based compensation expense				$ 0
RSUs \| Former Officer
Number of Shares
Forfeited		(100,000)
Weighted average grant price
Grant date fair value		$ 2,400,000
Stock-based compensation expense		$ (400,000)
Options
Weighted average grant price
Issuance of common stock under employee stock purchase plan ( in shares )	36,804

Collaboration Agreement (Details) $ in Thousands		3 Months Ended		6 Months Ended
Collaboration Agreement (Details) $ in Thousands	Feb. 10, 2017 USD ($)	Jun. 30, 2019 USD ($)	Jun. 30, 2018 USD ($)	Jun. 30, 2019 USD ($) Milestone	Jun. 30, 2018 USD ($)	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)
Collaboration Agreements:
Collaboration revenue		$ 3,080	$ 3,218	$ 6,966	$ 6,783
Contract with customer, liability, current		39,664	$ 43,590	39,664	43,590	$ 40,660	$ 45,785
Accounts receivable from collaboration		2,903		2,903		2,430
Allergan
Collaboration Agreements:
Agreed to share maximum amount development cost	$ 75,000
Collaborative Arrangement
Collaboration Agreements:
Collaboration revenue	$ 50,000			12,500
Cost of reimbursable expenses				7,000	$ 6,800
Contract with customer, liability, current		6,100		6,100		5,100
Contract with customer, liability, noncurrent		$ 33,600		33,600		$ 35,600
Collaborative Arrangement \| Milestone Scenario One
Collaboration Agreements:
Potential milestone payments				$ 631,000
Number of milestones \| Milestone				7
Collaborative Arrangement \| Milestone Scenario Two
Collaboration Agreements:
Potential milestone payments				$ 2,140,000
Number of milestones \| Milestone				12

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Jun. 30, 2019	Dec. 31, 2018
CONDENSED CONSOLIDATED BALANCE SHEETS
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares issued	25,646,783	25,495,425
Common stock, shares outstanding	25,646,783	25,495,425

Nature of Business (Details)	6 Months Ended
Nature of Business (Details)	Jun. 30, 2019 product segment
Nature of Business
Operating segments (in segments) \| segment	1
FDA approved products (in products) \| product	0

Summary of Significant Accounting Policies and Recent Accounting Pronouncements - Adoption of Recent Accounting Pronouncements (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Jun. 30, 2019	Jan. 01, 2019
Summary of Significant Accounting Policies and Recent Accounting Pronouncements
Lessee, operating lease, term of contract			12 months
Operating lease, right-of-use asset	$ 0	$ 12,672	$ 13,800
Operating lease, liability		$ 12,889	14,000
Deferred rent credit			$ 100
Statutory federal tax rate (as percent)	21.00%

Property and Equipment, net (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Property, Plant and Equipment
Total property, plant and equipment	$ 3,011	$ 1,461
Less: Accumulated depreciation and amortization	(963)	(1,057)
Property, plant and equipment, net	2,048	557
Computer hardware and software
Property, Plant and Equipment
Total property, plant and equipment	0	194
Lab equipment
Property, Plant and Equipment
Total property, plant and equipment	215	407
Office equipment
Property, Plant and Equipment
Total property, plant and equipment	705	70
Leasehold improvement
Property, Plant and Equipment
Total property, plant and equipment	2,091	790
Construction in progress
Property, Plant and Equipment
Total property, plant and equipment	$ 0	$ 153

Property and Equipment, net - Useful life (Details)	6 Months Ended
Property and Equipment, net - Useful life (Details)	Jun. 30, 2019
Computer hardware and software
Property, Plant and Equipment
Useful Life (in years)	3 years
Lab equipment \| Minimum
Property, Plant and Equipment
Useful Life (in years)	3 years
Lab equipment \| Maximum
Property, Plant and Equipment
Useful Life (in years)	5 years
Office equipment
Property, Plant and Equipment
Useful Life (in years)	7 years
Leasehold improvement \| Minimum
Property, Plant and Equipment
Useful Life (in years)	1 year
Leasehold improvement \| Maximum
Property, Plant and Equipment
Useful Life (in years)	5 years

Summary of Significant Accounting Policies and Recent Accounting Pronouncements (Details) - shares	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
Antidilutive Securities Excluded from Computation of Earnings Per Share
Antidilutive securities excluded from computation of earnings (loss)	5,715,064	5,106,029
Warrants
Antidilutive Securities Excluded from Computation of Earnings Per Share
Antidilutive securities excluded from computation of earnings (loss)	15,296	15,296
Options
Antidilutive Securities Excluded from Computation of Earnings Per Share
Antidilutive securities excluded from computation of earnings (loss)	5,203,935	4,740,674
Common stock subject to purchase under ESPP
Antidilutive Securities Excluded from Computation of Earnings Per Share
Antidilutive securities excluded from computation of earnings (loss)	5,976
RSUs
Antidilutive Securities Excluded from Computation of Earnings Per Share
Antidilutive securities excluded from computation of earnings (loss)	489,857	350,059

Investments in Marketable Securities (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Investments in marketable securities:
Amortized Cost	$ 139,456	$ 176,735
Gross Unrealized Gain	97	0
Gross Unrealized Loss	0	(126)
Fair Value	139,553	176,609
Short-term available-for-sale debt securities \| U.S and foreign corporate debt securities
Investments in marketable securities:
Amortized Cost	43,279	73,251
Gross Unrealized Gain	52	0
Gross Unrealized Loss	0	(92)
Fair Value	43,331	73,159
Short-term available-for-sale debt securities \| Asset-backed securities
Investments in marketable securities:
Amortized Cost	38,082	28,450
Gross Unrealized Gain	27	0
Gross Unrealized Loss	0	(31)
Fair Value	38,109	28,419
Short-term available-for-sale debt securities \| U.S. treasury securities
Investments in marketable securities:
Amortized Cost	20,948	19,898
Gross Unrealized Gain	18	0
Gross Unrealized Loss	0	(3)
Fair Value	20,966	19,895
Short-term available-for-sale debt securities \| U.S. and foreign commercial paper
Investments in marketable securities:
Amortized Cost	37,147	55,136
Gross Unrealized Gain	0	0
Gross Unrealized Loss	0	0
Fair Value	$ 37,147	$ 55,136

Accrued Expenses (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Accrued expenses:
Accrued compensation	$ 2,786	$ 5,011
Accrued clinical trial expenses	3,809	3,561
Accrued professional fees and other	990	1,107
Total accrued expenses	$ 7,585	$ 9,679

Stock Plans and Stock-Based Compensation (Details) - shares	May 31, 2018	May 31, 2019
Stock-Plans and Stock-Based Compensation
Shares reserved for issuance (in shares)	1,900,000	3,000,000
Maximum shares available by employee (in shares)	400,000
Purchase price after discount (in percent)	85.00%

Milestones and Research Agreements (Details) $ in Thousands	6 Months Ended
Milestones and Research Agreements (Details) $ in Thousands	Jun. 30, 2019 USD ($) Milestone	Dec. 31, 2018 USD ($)	Jun. 30, 2018 USD ($)
Milestone and Research Agreements:
Potential milestone payment	$ 800
Accrued expenses	$ 7,585	$ 9,679
Microbiome Targeted Colonic Delivery Program
Milestone and Research Agreements:
Number of milestones \| Milestone	2
Accrued expenses	$ 300		$ 0

Leases - Cost (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
Leases - Cost (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Leases
Operating lease cost	$ 1,117	$ 700	$ 2,208	$ 1,500
Short-term lease cost	112		433
Variable lease cost	300		599
Total lease cost	$ 1,529		$ 3,240