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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 September 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 November 2, 2020, there were 33,022,336 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 September 30, 2020 (unaudited) and December 31, 2019

1

 

 

 

 

Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three and Nine Months Ended September 30, 2020 and 2019 (unaudited)

2

 

 

 

 

Condensed Consolidated Statements of Cash Flows for the Three and Nine Months Ended September 30, 2020 and 2019 (unaudited)

3

 

 

 

 

Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three and Nine Months Ended September 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

23

 

 

 

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

33

 

 

 

Item 4.

Controls and Procedures

33

 

 

 

PART II:

OTHER INFORMATION

34

 

 

 

Item 1.

Legal Proceedings

34

 

 

 

Item 1A.

Risk Factors

34

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

65

 

 

 

Item 3.

Defaults Upon Senior Securities

65

 

 

 

Item 4.

Mine Safety Disclosures

65

 

 

 

Item 5.

Other Information

65

 

 

 

Item 6.

Exhibits

66

 

 

SIGNATURES

67

 

 

 


PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

ASSEMBLY BIOSCIENCES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands except for share amounts and par value)

 

 

 

September 30,

 

 

December 31,

 

 

 

2020

 

 

2019

 

 

 

(Unaudited)

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

58,311

 

 

$

46,732

 

Marketable securities

 

 

179,630

 

 

 

227,311

 

Accounts receivable from collaboration

 

 

3,590

 

 

 

3,374

 

Prepaid expenses and other current assets

 

 

4,856

 

 

 

5,363

 

Total current assets

 

 

246,387

 

 

 

282,780

 

 

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

1,904

 

 

 

1,830

 

Operating lease right-of-use (ROU) assets

 

 

10,397

 

 

 

11,975

 

Other assets

 

 

5,980

 

 

 

1,684

 

Indefinite-lived intangible asset

 

 

29,000

 

 

 

29,000

 

Goodwill

 

 

12,638

 

 

 

12,638

 

Total assets

 

$

306,306

 

 

$

339,907

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Accounts payable

 

$

1,611

 

 

$

1,731

 

Accrued clinical expenses

 

 

4,451

 

 

 

4,826

 

Other accrued expenses

 

 

7,404

 

 

 

8,286

 

Deferred revenue - short-term

 

 

 

 

 

6,411

 

Operating lease liabilities - short-term

 

 

3,338

 

 

 

3,186

 

Total current liabilities

 

 

16,804

 

 

 

24,440

 

 

 

 

 

 

 

 

 

 

Deferred tax liabilities

 

 

2,531

 

 

 

2,531

 

Deferred revenue - long-term

 

 

8,987

 

 

 

30,637

 

Operating lease liabilities - long-term

 

 

7,435

 

 

 

9,082

 

Total liabilities

 

 

35,757

 

 

 

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 September 30, 2020 and December 31, 2019; 32,924,536 and 32,558,307 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively

 

 

33

 

 

 

32

 

Additional paid-in capital

 

 

732,829

 

 

 

712,807

 

Accumulated other comprehensive loss

 

 

(158

)

 

 

(201

)

Accumulated deficit

 

 

(462,155

)

 

 

(439,421

)

Total stockholders' equity

 

 

270,549

 

 

 

273,217

 

Total liabilities and stockholders' equity

 

$

306,306

 

 

$

339,907

 

 

See Accompanying Notes to Condensed Consolidated Financial Statements

1


ASSEMBLY BIOSCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(In thousands except for share and per share amounts)

(Unaudited)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Collaboration revenue

 

$

34,611

 

 

$

4,231

 

 

$

78,068

 

 

$

11,197

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

26,941

 

 

 

21,736

 

 

 

73,314

 

 

 

63,141

 

General and administrative

 

 

11,689

 

 

 

8,488

 

 

 

29,888

 

 

 

22,085

 

Total operating expenses

 

 

38,630

 

 

 

30,224

 

 

 

103,202

 

 

 

85,226

 

Loss from operations

 

 

(4,019

)

 

 

(25,993

)

 

 

(25,134

)

 

 

(74,029

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and other income, net

 

 

670

 

 

 

983

 

 

 

2,400

 

 

 

3,446

 

Total other income

 

 

670

 

 

 

983

 

 

 

2,400

 

 

 

3,446

 

Loss before income taxes

 

 

(3,349

)

 

 

(25,010

)

 

 

(22,734

)

 

 

(70,583

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax benefit

 

 

 

 

 

15

 

 

 

 

 

 

33

 

Net loss

 

$

(3,349

)

 

$

(24,995

)

 

$

(22,734

)

 

$

(70,550

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive (loss) income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized (loss) gain on marketable securities, net of tax

 

 

(262

)

 

 

(18

)

 

 

43

 

 

 

142

 

Comprehensive loss

 

$

(3,611

)

 

$

(25,013

)

 

$

(22,691

)

 

$

(70,408

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share, basic and diluted

 

$

(0.09

)

 

$

(0.96

)

 

$

(0.64

)

 

$

(2.74

)

Weighted average common shares outstanding, basic and diluted

 

 

35,506,042

 

 

 

25,912,568

 

 

 

35,321,393

 

 

 

25,765,414

 

 

See Accompanying Notes to Condensed Consolidated Financial Statements

2


ASSEMBLY BIOSCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

 

Nine Months Ended September 30,

 

 

 

2020

 

 

2019

 

Cash flows from operating activities

 

 

 

 

 

 

 

 

Net loss

 

$

(22,734

)

 

$

(70,550

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

377

 

 

 

377

 

Stock-based compensation

 

 

18,106

 

 

 

14,049

 

Net accretion and amortization of investments in marketable debt securities

 

 

(80

)

 

 

(1,503

)

Non-cash rent expense

 

 

3,463

 

 

 

3,344

 

Deferred income tax benefit

 

 

 

 

 

(33

)

Loss on disposal of fixed assets

 

 

 

 

 

102

 

Other

 

 

 

 

 

18

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable from collaboration

 

 

(216

)

 

 

(514

)

Prepaid expenses and other current assets

 

 

507

 

 

 

(3,763

)

Other assets

 

 

(4,296

)

 

 

1,677

 

Accounts payable

 

 

(120

)

 

 

(984

)

Accrued clinical expenses

 

 

(375

)

 

 

670

 

Other accrued expenses

 

 

(877

)

 

 

(1,000

)

Deferred revenue

 

 

(28,061

)

 

 

(2,241

)

Operating lease liabilities

 

 

(3,382

)

 

 

(3,188

)

Net cash used in operating activities

 

 

(37,688

)

 

 

(63,539

)

 

 

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

(470

)

 

 

(1,539

)

Purchases of marketable securities

 

 

(153,022

)

 

 

(149,327

)

Proceeds from maturities of marketable securities

 

 

165,252

 

 

 

166,911

 

Proceeds from sale of marketable securities

 

 

35,595

 

 

 

28,659

 

Net cash provided by investing activities

 

 

47,355

 

 

 

44,704

 

 

 

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

 

 

Proceeds from the exercise of stock options

 

 

1,445

 

 

 

1,716

 

Proceeds from the issuance of common stock under Employee Stock Purchase Plan (ESPP)

 

 

467

 

 

 

515

 

Net cash provided by financing activities

 

 

1,912

 

 

 

2,231

 

 

 

 

 

 

 

 

 

 

Net increase (decrease) in cash and cash equivalents

 

 

11,579

 

 

 

(16,604

)

Cash and cash equivalents at the beginning of the period

 

 

46,732

 

 

 

41,471

 

Cash and cash equivalents at the end of the period

 

$

58,311

 

 

$

24,867

 

Supplemental non-cash investing and financing activities

 

 

 

 

 

 

 

 

Operating lease liabilities arising from obtaining ROU assets

 

$

1,063

 

 

$

15,261

 

 

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 June 30, 2020

 

 

32,807,519

 

 

$

33

 

 

$

725,784

 

 

$

104

 

 

$

(458,806

)

 

$

267,115

 

Issuance of common stock upon exercise of stock options

 

 

81,066

 

 

 

 

 

 

843

 

 

 

 

 

 

 

 

 

843

 

Issuance of shares of common stock for settlement of restricted stock units (RSUs)

 

 

35,951

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized loss on marketable debt securities

 

 

 

 

 

 

 

 

 

 

 

(262

)

 

 

 

 

 

(262

)

Stock-based compensation

 

 

 

 

 

 

 

 

6,202

 

 

 

 

 

 

 

 

 

6,202

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,349

)

 

 

(3,349

)

Balance as of September 30, 2020

 

 

32,924,536

 

 

$

33

 

 

$

732,829

 

 

$

(158

)

 

$

(462,155

)

 

$

270,549

 

 

 

 

Common Stock

 

 

Additional

 

 

Accumulated

Other

 

 

 

 

 

 

Total

 

 

 

Shares

 

 

Amount

 

 

Paid-in

Capital

 

 

Comprehensive

Loss

 

 

Accumulated

Deficit

 

 

Stockholders'

Equity

 

Balance as of June 30, 2019

 

 

25,646,783

 

 

$

26

 

 

$

562,210

 

 

$

(187

)

 

$

(387,342

)

 

$

174,707

 

Issuance of common stock upon exercise of stock options

 

 

192,606

 

 

 

 

 

 

1,385

 

 

 

 

 

 

 

 

 

1,385

 

Issuance of shares of common stock for settlement of RSUs

 

 

33,334

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized loss on marketable debt securities, net of tax

 

 

 

 

 

 

 

 

 

 

 

(18

)

 

 

 

 

 

(18

)

Stock-based compensation

 

 

 

 

 

 

 

 

5,410

 

 

 

 

 

 

 

 

 

5,410

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(24,995

)

 

 

(24,995

)

Balance as of September 30, 2019

 

 

25,872,723

 

 

$

26

 

 

$

569,005

 

 

$

(205

)

 

$

(412,337

)

 

$

156,489

 

4


 

 

 

For the Nine 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

 

 

172,779

 

 

 

1

 

 

 

1,444

 

 

 

 

 

 

 

 

 

1,445

 

Issuance of common stock under ESPP

 

 

42,266

 

 

 

 

 

 

467

 

 

 

 

 

 

 

 

 

467

 

Issuance of shares of common stock for settlement of RSUs

 

 

151,184

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gain on marketable debt securities

 

 

 

 

 

 

 

 

 

 

 

43

 

 

 

 

 

 

43

 

Stock-based compensation

 

 

 

 

 

 

 

 

18,111

 

 

 

 

 

 

 

 

 

18,111

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(22,734

)

 

 

(22,734

)

Balance as of September 30, 2020

 

 

32,924,536

 

 

$

33

 

 

$

732,829

 

 

$

(158

)

 

$

(462,155

)

 

$

270,549

 

 

 

 

Common Stock

 

 

Additional

 

 

Accumulated

Other

 

 

 

 

 

 

Total

 

 

 

Shares

 

 

Amount

 

 

Paid-in

Capital

 

 

Comprehensive

Loss

 

 

Accumulated

Deficit

 

 

Stockholders'

Equity

 

Balance as of December 31, 2018

 

 

25,495,425

 

 

$

25

 

 

$

552,762

 

 

$

(347

)

 

$

(341,787

)

 

$

210,653

 

Issuance of common stock upon exercise of stock options

 

 

243,481