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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 March 31, 2021

 

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 the definitions 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 May 3, 2021, there were 40,158,197 shares of the registrant’s common stock outstanding.

 

 


 

Index

 

 

 

Page

Number

 

 

 

PART I:

FINANCIAL INFORMATION

2

 

 

 

Item 1.

Financial Statements

2

 

 

 

 

Condensed Consolidated Balance Sheets at March 31, 2021 (unaudited) and December 31, 2020

2

 

 

 

 

Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three Months Ended March 31, 2021 and 2020 (unaudited)

3

 

 

 

 

Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2021 and 2020 (unaudited)

4

 

 

 

 

Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three Months Ended March 31, 2021 and 2020 (unaudited)

5

 

 

 

 

Notes to the Condensed Consolidated Financial Statements (unaudited)

6

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

21

 

 

 

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

27

 

 

 

Item 4.

Controls and Procedures

27

 

 

 

PART II:

OTHER INFORMATION

28

 

 

 

Item 1.

Legal Proceedings

28

 

 

 

Item 1A.

Risk Factors

28

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

41

 

 

 

Item 3.

Defaults Upon Senior Securities

41

 

 

 

Item 4.

Mine Safety Disclosures

41

 

 

 

Item 5.

Other Information

41

 

 

 

Item 6.

Exhibits

42

 

 

SIGNATURES

43

 

 

 


 

References to Assembly Biosciences, Inc.

Throughout this Quarterly Report on Form 10-Q, the “Company,” “Assembly,” “we,” “us,” and “our,” except where the context requires otherwise, refer to Assembly Biosciences, Inc. and its consolidated subsidiaries, and “our board of directors” or “the Board” refers to the board of directors of Assembly Biosciences, Inc.

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains “forward-looking statements” that are subject to certain risks and uncertainties, including, without limitation, those set forth in Part I, Item 1A of our Annual Report on Form 10-K filed with the U.S. Securities and Exchanges Commission (SEC) on February 25, 2021 (2020 Annual Report) and Part II, Item 1A of this Quarterly Report on Form 10-Q under the heading “Risk Factors,” that could cause actual results to materially differ. In addition, factors that could cause actual results to differ from those stated in the forward-looking statements in this Quarterly Report on Form 10-Q include, among other things:

 

changes in our ability to initiate and complete clinical trials involving our chronic hepatitis B virus (HBV) therapeutic product candidates in the currently anticipated timeframes;

 

safety and efficacy data from clinical studies may not warrant further development of our product candidates;

 

clinical and nonclinical data presented at conferences may not differentiate our product candidates from other companies’ candidates;

 

continued development and commercialization of our HBV product candidates is dependent on, and subject to, our collaboration agreement governing our activity in the China territory;

 

changes in our ability to maintain financial resources necessary to continue our clinical studies and fund business operations; and

 

any impact that the COVID-19 pandemic may have on our business and operations, including initiation and continuation of our clinical studies or timing of discussions with regulatory authorities.

You are urged to consider statements that include the words may, will, would, could, should, might, believes, hopes, estimates, projects, potential, expects, plans, anticipates, intends, continues, forecast, designed, goal or the negative of those words or other comparable words to be uncertain and forward-looking. We intend such forward-looking statements to be covered by the safe harbor provisions contained in Section 27A of the Securities Act of 1933, as amended (the Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act). Except as required by law, we assume no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

1


PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

ASSEMBLY BIOSCIENCES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands except for share amounts and par value)

 

 

 

March 31,

 

 

December 31,

 

 

 

2021

 

 

2020

 

 

 

(Unaudited)

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

78,253

 

 

$

59,444

 

Marketable securities

 

 

136,631

 

 

 

156,969

 

Accounts receivable from collaborations

 

 

203

 

 

 

1,230

 

Prepaid expenses and other current assets

 

 

6,547

 

 

 

6,850

 

Total current assets

 

 

221,634

 

 

 

224,493

 

 

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

1,493

 

 

 

1,600

 

Operating lease right-of-use (ROU) assets

 

 

8,104

 

 

 

9,131

 

Other assets

 

 

6,034

 

 

 

6,392

 

Indefinite-lived intangible asset

 

 

29,000

 

 

 

29,000

 

Goodwill

 

 

12,638

 

 

 

12,638

 

Total assets

 

$

278,903

 

 

$

283,254

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Accounts payable

 

$

3,562

 

 

$

4,598

 

Accrued clinical expenses

 

 

4,342

 

 

 

4,444

 

Other accrued expenses

 

 

3,659

 

 

 

11,987

 

Operating lease liabilities - short-term

 

 

2,934

 

 

 

3,404

 

Total current liabilities

 

 

14,497

 

 

 

24,433

 

 

 

 

 

 

 

 

 

 

Deferred tax liabilities

 

 

2,531

 

 

 

2,531

 

Deferred revenue

 

 

8,987

 

 

 

8,987

 

Operating lease liabilities - long-term

 

 

5,644

 

 

 

6,725

 

Total liabilities

 

 

31,659

 

 

 

42,676

 

 

 

 

 

 

 

 

 

 

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 March 31, 2021 and December 31, 2020; 40,104,684 and 34,026,680 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively

 

 

40

 

 

 

34

 

Additional paid-in capital

 

 

776,248

 

 

 

742,387

 

Accumulated other comprehensive loss

 

 

(271

)

 

 

(270

)

Accumulated deficit

 

 

(528,773

)

 

 

(501,573

)

Total stockholders' equity

 

 

247,244

 

 

 

240,578

 

Total liabilities and stockholders' equity

 

$

278,903

 

 

$

283,254

 

 

See Accompanying Notes to Condensed Consolidated Financial Statements

2


ASSEMBLY BIOSCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(In thousands except for share and per share amounts)

(Unaudited)

 

 

 

Three Months Ended March 31,

 

 

 

2021

 

 

2020

 

Collaboration revenue

 

$

 

 

$

4,081

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

Research and development

 

 

18,554

 

 

 

23,046

 

General and administrative

 

 

8,704

 

 

 

8,729

 

Total operating expenses

 

 

27,258

 

 

 

31,775

 

Loss from operations

 

 

(27,258

)

 

 

(27,694

)

 

 

 

 

 

 

 

 

 

Other income:

 

 

 

 

 

 

 

 

Interest and other income, net

 

 

58

 

 

 

1,039

 

Total other income

 

 

58

 

 

 

1,039

 

Net loss

 

$

(27,200

)

 

$

(26,655

)

 

 

 

 

 

 

 

 

 

Other comprehensive (loss) income

 

 

 

 

 

 

 

 

Unrealized (loss) gain on marketable securities

 

 

(1

)

 

 

115

 

Comprehensive loss

 

$

(27,201

)

 

$

(26,540

)

 

 

 

 

 

 

 

 

 

Net loss per share, basic and diluted

 

$

(0.69

)

 

$

(0.76

)

Weighted average common shares outstanding, basic and diluted

 

 

39,679,734

 

 

 

35,079,756

 

 

See Accompanying Notes to Condensed Consolidated Financial Statements

3


ASSEMBLY BIOSCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

 

Three Months Ended March 31,

 

 

 

2021

 

 

2020

 

Cash flows from operating activities

 

 

 

 

 

 

 

 

Net loss

 

$

(27,200

)

 

$

(26,655

)

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

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

107

 

 

 

115

 

Stock-based compensation

 

 

(286

)

 

 

4,924

 

Net accretion and amortization of investments in marketable debt securities

 

 

92

 

 

 

(135

)

Non-cash rent expense

 

 

1,135

 

 

 

1,151

 

Loss on disposal of fixed assets

 

 

1,611

 

 

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable from collaboration

 

 

1,027

 

 

 

319

 

Prepaid expenses and other current assets

 

 

303

 

 

 

795

 

Other assets

 

 

358

 

 

 

23

 

Accounts payable

 

 

(1,036

)

 

 

373

 

Accrued clinical expenses

 

 

(102

)

 

 

(193

)

Other accrued expenses

 

 

(8,312

)

 

 

(3,808

)

Deferred revenue

 

 

 

 

 

(1,007

)

Operating lease liabilities

 

 

(1,041

)

 

 

(1,120

)

Net cash used in operating activities

 

 

(33,344

)

 

 

(25,218

)

 

 

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

(3,078

)

 

 

(65

)

Proceeds from sale of property and equipment

 

 

857

 

 

 

 

Purchases of marketable securities

 

 

(49,213

)

 

 

(44,242

)

Proceeds from maturities of marketable securities

 

 

66,450

 

 

 

55,000

 

Proceeds from sale of marketable securities

 

 

3,000

 

 

 

10,000

 

Net cash provided by investing activities

 

 

18,016

 

 

 

20,693

 

 

 

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

 

 

Proceeds from the exercise of stock options

 

 

 

 

 

119

 

Proceeds from sale of common stock, net of issuance costs

 

 

34,137

 

 

 

 

Net cash provided by financing activities

 

 

34,137

 

 

 

119

 

 

 

 

 

 

 

 

 

 

Net increase (decrease) in cash and cash equivalents

 

 

18,809

 

 

 

(4,406

)

Cash and cash equivalents at the beginning of the period

 

 

59,444

 

 

 

46,732

 

Cash and cash equivalents at the end of the period

 

$

78,253

 

 

$

42,326

 

Supplemental non-cash investing and financing activities

 

 

 

 

 

 

 

 

Operating lease liabilities arising from obtaining ROU assets

 

$

42

 

 

$

362

 

Remeasurement of lease liabilities arising from modification of ROU assets

 

$

(788

)

 

$

 

 

See Accompanying Notes to Condensed Consolidated Financial Statements

4


ASSEMBLY BIOSCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(In thousands except for share amounts)

(Unaudited)

 

 

 

Common Stock

 

 

Additional

 

 

Accumulated

Other

 

 

 

 

 

 

Total

 

 

 

Shares

 

 

Amount

 

 

Paid-in

Capital

 

 

Comprehensive

Income (Loss)

 

 

Accumulated

Deficit

 

 

Stockholders'

Equity

 

Balance as of December 31, 2020

 

 

34,026,680

 

 

$

34

 

 

$

742,387

 

 

$

(270

)

 

$

(501,573

)

 

$

240,578

 

Issuance of common stock under at-the-market (ATM) equity offering program, net of issuance costs

 

 

5,991,858

 

 

 

6

 

 

 

34,131

 

 

 

 

 

 

 

 

 

34,137

 

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

 

 

86,146

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized loss on marketable debt securities

 

 

 

 

 

 

 

 

 

 

 

(1

)

 

 

 

 

 

(1

)

Stock-based compensation

 

 

 

 

 

 

 

 

(270

)

 

 

 

 

 

 

 

 

(270

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(27,200

)

 

 

(27,200

)

Balance as of March 31, 2021

 

 

40,104,684

 

 

$

40

 

 

$

776,248

 

 

$

(271

)

 

$

(528,773

)

 

$

247,244

 

 

 

 

Common Stock

 

 

Additional

 

 

Accumulated

Other

 

 

 

 

 

 

Total

 

 

 

Shares

 

 

Amount

 

 

Paid-in

Capital

 

 

Comprehensive

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

 

 

16,834

 

 

 

 

 

 

119

 

 

 

 

 

 

 

 

 

119

 

Issuance of shares of common stock for settlement of RSUs

 

 

49,584

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gain on marketable securities

 

 

 

 

 

 

 

 

 

 

 

115

 

 

 

 

 

 

115

 

Stock-based compensation

 

 

 

 

 

 

 

 

4,972

 

 

 

 

 

 

 

 

 

4,972

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(26,655

)

 

 

(26,655

)

Balance as of March 31, 2020

 

 

32,624,725

 

 

$

32

 

 

$

717,898

 

 

$

(86

)

 

$

(466,076

)

 

$

251,768

 

 

See Accompanying Notes to Condensed Consolidated Financial Statements

5


ASSEMBLY BIOSCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Note 1 - Nature of Business

Overview

Assembly Biosciences, Inc. (together with its subsidiaries, Assembly or the Company), incorporated in Delaware in October 2005, is a clinical-stage biotechnology company advancing a novel class of oral therapeutic candidates for the treatment of chronic hepatitis B virus (HBV) infection. The Company operates in one segment and is headquartered in South San Francisco, California, with operations in California and China. Prior to the Company’s wind-down of its Microbiome program on January 31, 2021, the Company also had operations in Connecticut.

The Company’s research and development programs are pursuing multiple drug candidates that inhibit the HBV replication cycle and block the generation of covalently closed circular DNA (cccDNA), with the aim of discovering and developing finite and curative therapies for patients with HBV. Assembly has discovered several novel core inhibitors, which are small molecules that directly target and allosterically modify the HBV core (HBc) protein in a way that affects assembly and stability of HBV nucleocapsids.

Liquidity

The Company has not derived any revenue from product sales to date and currently has no approved products. Once a product has been developed, it will need to be approved for sale by the U.S. Food and Drug Administration (FDA) or an applicable foreign regulatory agency. Since inception, the Company’s operations have been financed primarily through the sale of equity securities, proceeds from the exercise of warrants and stock options, issuance of debt, and upfront payments related to collaboration agreements. The Company has incurred losses from operations since inception and expects to continue to incur substantial losses for the next several years as it continues its product development efforts. Management believes the Company currently has sufficient funds to meet its operating requirements for at least the next twelve months following the date these unaudited condensed consolidated interim financial statements are issued. If the Company cannot generate significant cash from its operations, it intends to obtain any additional funding it requires through strategic relationships, public or private equity or debt financings, grants or other arrangements (see Note 6 for recent sales of common stock). The Company cannot assure such funding will be available on reasonable terms, if at all. Market volatility resulting from the global novel coronavirus disease (COVID-19) pandemic or other factors could also adversely impact the Company’s ability to access capital when and as needed.

If the Company is unable to generate enough revenue from its collaborations, secure additional sources of funding or receive full and timely collections of amounts due, it may be necessary to significantly reduce the current rate of spending through reductions in staff and delaying, scaling back, or stopping certain research and development programs, including more costly clinical trials.

 

 

6


ASSEMBLY BIOSCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

 

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 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 U.S. 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, 2020, which are contained in the 2020 Annual Report. The results for the three months ended March 31, 2021 are not necessarily indicative of results to be expected for the entire year ending December 31, 2021 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.

Estimates inherent in the preparation of the accompanying unaudited condensed consolidated financial statements include estimates for the cost-based input of revenue recognition and standalone selling price estimates for allocation of transaction price to performance obligations, revenue recognition, estimates of costs incurred but not yet invoiced for clinical trial accruals, recoverability and useful lives of our long-lived assets, the estimated fair value of our indefinite-lived intangible assets, the estimated fair value of our reporting unit for purposes of evaluating goodwill impairment, provisions for income taxes, amounts receivable under collaboration agreements, 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 these external factors could have an effect on the Company’s estimates and could cause actual results to differ materially from those estimates and assumptions.

Other Risks and Uncertainties

In March 2020, the World Health Organization declared the COVID-19 outbreak a pandemic. To date, the Company’s operations have not been significantly impacted by the COVID-19 pandemic. However, the Company cannot at this time predict the specific extent, duration, or full impact the COVID-19 pandemic will have on its business, operations, strategy, prospects and financial condition and results. The impact of the COVID-19 pandemic on the Company’s financial performance will depend on future developments, including the duration and spread of the outbreak and related governmental advisories and restrictions. These developments and the impact of the COVID-19 pandemic on the financial markets and the overall economy are highly uncertain. If the financial markets and/or the overall economy are impacted for an extended period, the Company’s results may be adversely affected.

Income Taxes

In March 2021, the American Rescue Plan (H.R. 1319) was signed into law. This legislation extends and enhances a number of current-law tax incentives for businesses, but also expands the definition of a “covered employee” as defined by Section 162(m)(1) of the Internal Revenue Code. The corporate tax provisions included within the bill are not expected to have a material impact on the Company.

7


ASSEMBLY BIOSCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

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.

In December 2019, the Company sold 6,287,878 shares of common stock as well as pre-funded warrants to purchase up to 2,424,242 shares of common stock. The pre-funded warrants are exercisable for shares of common stock at an exercise price of $0.001 per share. The shares of common stock into which the pre-funded warrants may be exercised are considered outstanding for the purposes of computing earnings per share because the shares may be issued for little or no consideration, they are fully vested, and are exercisable after the original issuance date.

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 March 31,

 

 

 

2021

 

 

2020

 

Numerator:

 

 

 

 

 

 

 

 

Net loss

 

$

(27,200

)

 

$

(26,655

)

Denominator:

 

 

 

 

 

 

 

 

Weighted average common shares and

   pre-funded warrants outstanding -

   basic and diluted

 

 

39,679,734

 

 

 

35,079,756

 

Net loss per share - basic and diluted

 

$

(0.69

)

 

$

(0.76

)

 

 

Securities excluded from the computation of diluted loss per share because including them would have been antidilutive are as follows:

 

 

 

March 31,

 

 

 

2021

 

 

2020

 

Warrants to purchase common stock

 

 

 

 

 

15,296

 

Options to purchase common stock

 

 

7,382,515

 

 

 

6,370,396

 

Common stock subject to purchase under our ESPP

 

 

44,870

 

 

 

32,940

 

Unvested RSUs

 

 

666,574

 

 

 

999,926

 

Total

 

 

8,093,959

 

 

 

7,418,558

 

 

 

Adoption of Recent Accounting Pronouncements

On January 1, 2021, the Company adopted ASU 2020-10, Codification Improvements – Disclosures. This ASU improves consistency by amending the codification to include all disclosure guidance in the appropriate disclosure sections and clarifies application of various provisions in the Codification by amending and adding new headings, cross referencing to other accounting standards and refining or correcting termination. The adoption of this standard had no material impact on the Company’s condensed consolidated financial statements and related disclosures.

Recent Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (the FASB) issued ASU 2016-13, Financial Instruments Credit Losses: Measurement of Credit Losses on Financial Instruments (ASU 2016-13), 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, May and November 2019, the FASB issued additional amendments to the new guidance related to transition and clarification. In November 2019, the FASB issued ASU 2019-10, Financial Instruments – Credit Losses (Topic 326), Derivatives

8


ASSEMBLY BIOSCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

and Hedging (Topic 815), and Leases (Topic 842): Effective Dates, which deferred the effective date of this standard for all entities except SEC filers that are not smaller reporting companies to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted. 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 August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (ASU 2020-06), which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. Specifically, ASU 2020-06 simplifies accounting for convertible instruments by removing major separation models in ASC 470-20 that require separate accounting for embedded conversion features. The ASU also removes certain settlement conditions in ASC 815-40 that are required for equity contracts to qualify for the derivative scope exception, which will permit more equity contracts to qualify for the scope exception and simplifies the diluted earnings per share (EPS) calculation in certain areas. The ASU is effective for interim and annual periods beginning after December 15, 2021, with early adoption permitted. Adoption of the ASU can either be on a modified retrospective or full retrospective basis. The Company is currently evaluating the impacts of ASU 2020-06 on its condensed consolidated financial statements and related disclosures.

Note 3 – Fair Value Measurements and 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 that 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 (in thousands):

 

 

 

March 31, 2021

 

 

 

Amortized

Cost

 

 

Gross

Unrealized

Gain

 

 

Gross

Unrealized

Loss

 

 

Fair Value

 

Cash equivalents

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

$

66,494

 

 

$

 

 

$

 

 

$

66,494

 

Total cash equivalents

 

 

66,494

 

 

 

 

 

 

 

 

 

66,494

 

Short-term investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. and foreign corporate debt securities

 

 

22,954

 

 

 

 

 

 

(6

)

 

 

22,948

 

Asset-backed securities

 

 

16,762

 

 

 

2

 

 

 

(2

)

 

 

16,762

 

U.S. and foreign commercial paper

 

 

96,921

 

 

 

 

 

 

 

 

 

96,921

 

Total short-term investments

 

 

136,637

 

 

 

2

 

 

 

(8

)

 

 

136,631

 

Total cash equivalents and investments

 

$

203,131

 

 

$

2

 

 

$

(8

)

 

$

203,125

 

 

9


ASSEMBLY BIOSCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

 

 

 

 

December 31, 2020

 

 

 

Amortized

Cost

 

 

Gross

Unrealized

Gain (1)

 

 

Gross

Unrealized

Loss (1)

 

 

Fair Value

 

Cash equivalents

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

$

47,553

 

 

$

 

 

$

 

 

$

47,553

 

U.S. and foreign commercial paper

 

 

6,498

 

 

 

 

 

 

 

 

 

6,498

 

Total cash equivalents

 

 

54,051

 

 

 

 

 

 

 

 

 

54,051

 

Short-term investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. and foreign corporate debt securities

 

 

16,939

 

 

 

3

 

 

 

(3

)

 

 

16,939

 

Asset-backed securities

 

 

12,674

 

 

 

2

 

 

 

(1

)

 

 

12,675

 

U.S. treasury securities

 

 

23,997

 

 

 

2

 

 

 

 

 

 

23,999

 

U.S. and foreign commercial paper

 

 

103,356

 

 

 

 

 

 

 

 

 

103,356

 

Total short-term investments

 

 

156,966

 

 

 

7

 

 

 

(4

)

 

 

156,969

 

Total cash equivalents and investments