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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

 

OR

 

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

1


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

2


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

3


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

 

4


 

 

 

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