SEC Filing : Assembly Biosciences, Inc.

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asmb-10q_20200630.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2020

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________to___________.

Commission file number: 001-35005

ASSEMBLY BIOSCIENCES, INC.

(Exact name of Registrant as specified in its charter)

Delaware	20-8729264
(State or other jurisdiction of	(I.R.S. Employer Identification No.)
incorporation or organization)

331 Oyster Point Blvd., Fourth Floor
South San Francisco, California	94080
(Address of principal executive offices)	(zip code)

(833) 509-4583

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.001	ASMB	The Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer	☐	Accelerated Filer	☒
Non-accelerated Filer	☐	Smaller Reporting Company	☒
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of August 3, 2020, there were 32,854,914 shares of the registrant’s common stock outstanding.

Index

		Page Number

PART I:	FINANCIAL INFORMATION	1

Item 1.	Financial Statements	1

	Condensed Consolidated Balance Sheets at June 30, 2020 (unaudited) and December 31, 2019	1

	Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the Three and Six Months Ended June 30, 2020 and 2019 (unaudited)	2

	Condensed Consolidated Statements of Cash Flows for the Three and Six Months Ended June 30, 2020 and 2019 (unaudited)	3

	Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three and Six Months Ended June 30, 2020 and 2019 (unaudited)	4

	Notes to the Condensed Consolidated Financial Statements (unaudited)	6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	31

Item 4.	Controls and Procedures	31

PART II:	OTHER INFORMATION	32

Item 1.	Legal Proceedings	32

Item 1A.	Risk Factors	32

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	63

Item 3.	Defaults Upon Senior Securities	63

Item 4.	Mine Safety Disclosures	63

Item 5.	Other Information	63

Item 6.	Exhibits	64

SIGNATURES		65

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

ASSEMBLY BIOSCIENCES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands except for share amounts and par value)

	June 30,			December 31,
	2020			2019
	(Unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	96,709		$	46,732
Marketable securities		130,005			227,311
Accounts receivable from collaboration		3,315			3,374
Prepaid expenses and other current assets		5,059			5,363
Total current assets		235,088			282,780

Property and equipment, net		2,063			1,830
Operating lease right-of-use (ROU) assets		10,780			11,975
Other assets		5,232			1,684
Indefinite-lived intangible asset		29,000			29,000
Goodwill		12,638			12,638
Total assets	$	294,801		$	339,907

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable	$	3,640		$	1,731
Accrued clinical expenses		4,362			4,826
Other accrued expenses		6,019			8,286
Deferred revenue - short-term		—			6,411
Operating lease liabilities - short-term		3,250			3,186
Total current liabilities		17,271			24,440

Deferred tax liabilities		2,531			2,531
Deferred revenue - long-term		—			30,637
Operating lease liabilities - long-term		7,884			9,082
Total liabilities		27,686			66,690

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, 2020 and December 31, 2019; 32,807,519 and 32,558,307 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively		33			32
Additional paid-in capital		725,784			712,807
Accumulated other comprehensive income (loss)		104			(201	)
Accumulated deficit		(458,806	)		(439,421	)
Total stockholders' equity		267,115			273,217
Total liabilities and stockholders' equity	$	294,801		$	339,907

See Accompanying Notes to Condensed Consolidated Financial Statements

ASSEMBLY BIOSCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(In thousands except for share and per share amounts)

(Unaudited)

	Three Months Ended June 30,					Six Months Ended June 30,
	2020		2019			2020			2019
Collaboration revenue	$	39,376	$	3,080		$	43,457		$	6,966

Operating expenses:
Research and development		23,327		18,700			46,373			41,405
General and administrative		9,470		4,080			18,199			13,597
Total operating expenses		32,797		22,780			64,572			55,002
Income (loss) from operations		6,579		(19,700	)		(21,115	)		(48,036	)

Other income
Interest and other income, net		691		1,186			1,730			2,463
Total other income		691		1,186			1,730			2,463
Income (loss) before income taxes		7,270		(18,514	)		(19,385	)		(45,573	)

Income tax benefit		—		11			—			18
Net income (loss)	$	7,270	$	(18,503	)	$	(19,385	)	$	(45,555	)

Other comprehensive income
Unrealized gain on marketable securities, net of tax		190		52			305			160
Comprehensive income (loss)	$	7,460	$	(18,451	)	$	(19,080	)	$	(45,395	)

Net income (loss) per share, basic	$	0.21	$	(0.72	)	$	(0.55	)	$	(1.77	)
Weighted average common shares outstanding, basic		35,307,669		25,740,500			35,229,570			25,690,617
Net income (loss) per share, diluted	$	0.19	$	(0.72	)	$	(0.55	)	$	(1.77	)
Weighted average common shares outstanding, diluted		37,291,474		25,740,500			35,229,570			25,690,617

See Accompanying Notes to Condensed Consolidated Financial Statements

ASSEMBLY BIOSCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Six Months Ended June 30,
	2020			2019
Cash flows from operating activities
Net loss	$	(19,385	)	$	(45,555	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		237			260
Stock-based compensation		12,058			8,645
Net accretion and amortization of investments in marketable debt securities		(101	)		(1,141	)
Non-cash rent expense		2,308			2,208
Deferred income tax benefit		—			(18	)
Loss on disposal of fixed assets		—			102
Other		—			(5	)
Changes in operating assets and liabilities:
Accounts receivable from collaboration		59			(473	)
Prepaid expenses and other current assets		304			(5,068	)
Other assets		(2,155	)		1,655
Accounts payable		516			(279	)
Accrued clinical expenses		(464	)		248
Other accrued expenses		(2,416	)		(2,428	)
Deferred revenue		(37,048	)		(996	)
Operating lease liabilities		(2,247	)		(2,099	)
Net cash used in operating activities		(48,334	)		(44,944	)

Cash flows from investing activities
Purchases of property and equipment		(470	)		(1,539	)
Purchases of marketable securities		(44,240	)		(93,667	)
Proceeds from maturities of marketable securities		119,252			131,591
Proceeds from sale of marketable securities		22,700			500
Net cash provided by investing activities		97,242			36,885

Cash flows from financing activities
Proceeds from the exercise of stock options		602			331
Proceeds from the issuance of common stock under Employee Stock Purchase Plan (ESPP)		467			515
Net cash provided by financing activities		1,069			846

Net increase (decrease) in cash and cash equivalents		49,977			(7,213	)
Cash and cash equivalents at the beginning of the period		46,732			41,471
Cash and cash equivalents at the end of the period	$	96,709		$	34,258
Supplemental non-cash investing and financing activities
Operating lease liabilities arising from obtaining ROU assets	$	545		$	14,225

See Accompanying Notes to Condensed Consolidated Financial Statements

ASSEMBLY BIOSCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(In thousands except for share amounts)

(Unaudited)

	For the Three Month Period
	Common Stock				Additional		Accumulated Other						Total
	Shares		Amount		Paid-in Capital		Comprehensive Income (Loss)			Accumulated Deficit			Stockholders' Equity
Balance as of March 31, 2020		32,624,725	$	32	$	717,898	$	(86	)	$	(466,076	)	$	251,768
Issuance of common stock upon exercise of stock options		74,879		1		482		—			—			483
Issuance of common stock under ESPP		42,266		—		467		—			—			467
Issuance of shares of common stock for settlement of restricted stock units (RSUs)		65,649		—		—		—			—			—
Unrealized gain on marketable debt securities		—		—		—		190			—			190
Stock-based compensation		—		—		6,937		—			—			6,937
Net income		—		—		—		—			7,270			7,270
Balance as of June 30, 2020		32,807,519	$	33	$	725,784	$	104		$	(458,806	)	$	267,115

	Common Stock				Additional		Accumulated Other						Total
	Shares		Amount		Paid-in Capital		Comprehensive Loss			Accumulated Deficit			Stockholders' Equity
Balance as of March 31, 2019		25,549,757	$	26	$	559,453	$	(239	)	$	(368,839	)	$	190,401
Issuance of common stock upon exercise of stock options		29,875		—		191		—			—			191
Issuance of common stock under ESPP		36,804		—		515		—			—			515
Issuance of shares of common stock for settlement of RSUs		30,347		—		—		—			—			—
Unrealized gain on marketable debt securities, net of tax		—		—		—		52			—			52
Stock-based compensation		—		—		2,051		—			—			2,051
Net loss		—		—		—		—			(18,503	)		(18,503	)
Balance as of June 30, 2019		25,646,783	$	26	$	562,210	$	(187	)	$	(387,342	)	$	174,707

	For the Six Month Period
	Common Stock				Additional		Accumulated Other						Total
	Shares		Amount		Paid-in Capital		Comprehensive Income (Loss)			Accumulated Deficit			Stockholders' Equity
Balance as of December 31, 2019		32,558,307	$	32	$	712,807	$	(201	)	$	(439,421	)	$	273,217
Issuance of common stock upon exercise of stock options		91,713		1		601		—			—			602
Issuance of common stock under ESPP		42,266		—		467		—			—			467
Issuance of shares of common stock for settlement of RSUs		115,233		—		—		—			—			—
Reclassification of stock-based awards from equity to accrued expenses		—		—		—		—			—			—
Unrealized gain on marketable debt securities		—		—		—		305			—			305
Stock-based compensation		—		—		11,909		—			—