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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, 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 the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes       No   

 

As of November 1, 2021, there were 47,861,677 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 September 30, 2021 (unaudited) and December 31, 2020

2

 

 

 

 

Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three and Nine Months Ended September 30, 2021 and 2020 (unaudited)

3

 

 

 

 

Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2021 and 2020 (unaudited)

4

 

 

 

 

Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three and Nine Months Ended September 30, 2021 and 2020 (unaudited)

5

 

 

 

 

Notes to the Condensed Consolidated Financial Statements (unaudited)

7

 

 

 

Item 2.

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

22

 

 

 

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

30

 

 

 

Item 4.

Controls and Procedures

30

 

 

 

PART II:

OTHER INFORMATION

31

 

 

 

Item 1.

Legal Proceedings

31

 

 

 

Item 1A.

Risk Factors

31

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

44

 

 

 

Item 3.

Defaults Upon Senior Securities

44

 

 

 

Item 4.

Mine Safety Disclosures

44

 

 

 

Item 5.

Other Information

44

 

 

 

Item 6.

Exhibits

45

 

 

SIGNATURES

46

 

 

 


 

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)

 

 

 

September 30,

 

 

December 31,

 

 

 

2021

 

 

2020

 

 

 

(Unaudited)

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

70,760

 

 

$

59,444

 

Marketable securities - short-term

 

 

110,142

 

 

 

156,969

 

Accounts receivable from collaborations

 

 

769

 

 

 

1,230

 

Prepaid expenses and other current assets

 

 

6,548

 

 

 

6,850

 

Total current assets

 

 

188,219

 

 

 

224,493

 

 

 

 

 

 

 

 

 

 

Marketable securities - long-term

 

 

9,180

 

 

 

 

Property and equipment, net

 

 

1,241

 

 

 

1,600

 

Operating lease right-of-use (ROU) assets

 

 

6,773

 

 

 

9,131

 

Other assets

 

 

1,922

 

 

 

6,392

 

Indefinite-lived intangible asset

 

 

29,000

 

 

 

29,000

 

Goodwill

 

 

12,638

 

 

 

12,638

 

Total assets

 

$

248,973

 

 

$

283,254

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Accounts payable

 

$

2,628

 

 

$

4,598

 

Accrued clinical expenses

 

 

3,744

 

 

 

4,444

 

Other accrued expenses

 

 

5,457

 

 

 

11,987

 

Operating lease liabilities - short-term

 

 

3,099

 

 

 

3,404

 

Total current liabilities

 

 

14,928

 

 

 

24,433

 

 

 

 

 

 

 

 

 

 

Deferred tax liabilities

 

 

2,531

 

 

 

2,531

 

Deferred revenue

 

 

2,733

 

 

 

8,987

 

Operating lease liabilities - long-term

 

 

4,136

 

 

 

6,725

 

Total liabilities

 

 

24,328

 

 

 

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 September 30, 2021 and December 31, 2020; 47,077,052 and 34,026,680 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively

 

 

47

 

 

 

34

 

Additional paid-in capital

 

 

796,057

 

 

 

742,387

 

Accumulated other comprehensive loss

 

 

(288

)

 

 

(270

)

Accumulated deficit

 

 

(571,171

)

 

 

(501,573

)

Total stockholders' equity

 

 

224,645

 

 

 

240,578

 

Total liabilities and stockholders' equity

 

$

248,973

 

 

$

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 September 30,

 

 

Nine Months Ended September 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Collaboration revenue

 

$

6,254

 

 

$

34,611

 

 

$

6,254

 

 

$

78,068

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

18,474

 

 

 

26,941

 

 

 

53,777

 

 

 

73,314

 

General and administrative

 

 

6,655

 

 

 

11,689

 

 

 

22,276

 

 

 

29,888

 

Total operating expenses

 

 

25,129

 

 

 

38,630

 

 

 

76,053

 

 

 

103,202

 

Loss from operations

 

 

(18,875

)

 

 

(4,019

)

 

 

(69,799

)

 

 

(25,134

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and other income, net

 

 

72

 

 

 

670

 

 

 

201

 

 

 

2,400

 

Total other income

 

 

72

 

 

 

670

 

 

 

201

 

 

 

2,400

 

Net loss

 

$

(18,803

)

 

$

(3,349

)

 

$

(69,598

)

 

$

(22,734

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive (loss) income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized (loss) gain on marketable securities

 

 

(15

)

 

 

(262

)

 

 

(18

)

 

 

43

 

Comprehensive loss

 

$

(18,818

)

 

$

(3,611

)

 

$

(69,616

)

 

$

(22,691

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share, basic and diluted

 

$

(0.41

)

 

$

(0.09

)

 

$

(1.63

)

 

$

(0.64

)

Weighted average common shares outstanding, basic and diluted

 

 

45,569,276

 

 

 

35,506,042

 

 

 

42,725,109

 

 

 

35,321,393

 

 

See Accompanying Notes to Condensed Consolidated Financial Statements

3


ASSEMBLY BIOSCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

 

Nine Months Ended September 30,

 

 

 

2021

 

 

2020

 

Cash flows from operating activities

 

 

 

 

 

 

 

 

Net loss

 

$

(69,598

)

 

$

(22,734

)

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

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

346

 

 

 

377

 

Stock-based compensation

 

 

3,292

 

 

 

18,106

 

Net accretion and amortization of investments in marketable debt securities

 

 

398

 

 

 

(80

)

Non-cash rent expense

 

 

2,940

 

 

 

3,463

 

Loss on disposal of fixed assets

 

 

1,625

 

 

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable from collaboration

 

 

461

 

 

 

(216

)

Prepaid expenses and other current assets

 

 

302

 

 

 

507

 

Other assets

 

 

4,470

 

 

 

(4,296

)

Accounts payable

 

 

(1,970

)

 

 

(120

)

Accrued clinical expenses

 

 

(700

)

 

 

(375

)

Other accrued expenses

 

 

(6,490

)

 

 

(877

)

Deferred revenue

 

 

(6,254

)

 

 

(28,061

)

Operating lease liabilities

 

 

(2,856

)

 

 

(3,382

)

Net cash used in operating activities

 

 

(74,034

)

 

 

(37,688

)

 

 

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

(3,078

)

 

 

(470

)

Proceeds from sale of property and equipment

 

 

857

 

 

 

 

Purchases of marketable securities

 

 

(107,480

)

 

 

(153,022

)

Proceeds from maturities of marketable securities

 

 

132,200

 

 

 

165,252

 

Proceeds from sale of marketable securities

 

 

12,500

 

 

 

35,595

 

Net cash provided by investing activities

 

 

34,999

 

 

 

47,355

 

 

 

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

 

 

Proceeds from the exercise of stock options

 

 

 

 

 

1,445

 

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

 

 

144

 

 

 

467

 

Proceeds from sale of common stock, net of issuance costs

 

 

50,207

 

 

 

 

Net cash provided by financing activities

 

 

50,351

 

 

 

1,912

 

 

 

 

 

 

 

 

 

 

Net increase in cash and cash equivalents

 

 

11,316

 

 

 

11,579

 

Cash and cash equivalents at the beginning of the period

 

 

59,444

 

 

 

46,732

 

Cash and cash equivalents at the end of the period

 

$

70,760

 

 

$

58,311

 

Supplemental non-cash investing and financing activities

 

 

 

 

 

 

 

 

Operating lease liabilities arising from obtaining ROU assets

 

$

126

 

 

$

1,063

 

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)

 

 

 

 

For the Three Month Period

 

 

 

Common Stock

 

 

Additional

 

 

Accumulated

Other

 

 

 

 

 

 

Total

 

 

 

Shares

 

 

Amount

 

 

Paid-in

Capital

 

 

Comprehensive

Loss

 

 

Accumulated

Deficit

 

 

Stockholders'

Equity

 

Balance as of June 30, 2021

 

 

43,779,059

 

 

$

44

 

 

$

784,391

 

 

$

(273

)

 

$

(552,368

)

 

$

231,794

 

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

 

 

2,949,647

 

 

 

3

 

 

 

10,052

 

 

 

 

 

 

 

 

 

10,055

 

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

 

 

33,333

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock upon cashless exercise of pre-funded warrants

 

 

315,013

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized loss on marketable debt securities

 

 

 

 

 

 

 

 

 

 

 

(15

)

 

 

 

 

 

(15

)

Stock-based compensation

 

 

 

 

 

 

 

 

1,614

 

 

 

 

 

 

 

 

 

1,614

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(18,803

)

 

 

(18,803

)

Balance as of September 30, 2021

 

 

47,077,052

 

 

$

47

 

 

$

796,057

 

 

$

(288

)

 

$

(571,171

)

 

$

224,645

 

 

 

 

 

 

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 common stock for settlement of 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

 

 


5


 

 

 

 

 

For the Nine Month Period

 

 

 

Common Stock

 

 

Additional

 

 

Accumulated

Other

 

 

 

 

 

 

Total

 

 

 

Shares

 

 

Amount

 

 

Paid-in

Capital

 

 

Comprehensive

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 ATM equity offering program, net of issuance costs

 

 

10,399,548

 

 

 

11

 

 

 

50,196

 

 

 

 

 

 

 

 

 

50,207

 

Issuance of common stock under ESPP

 

 

42,803

 

 

 

 

 

 

144

 

 

 

 

 

 

 

 

 

144

 

Issuance of common stock for settlement of RSUs

 

 

184,387

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock upon cashless exercise of pre-funded warrants

 

 

2,423,634

 

 

 

2

 

 

 

(2

)

 

 

 

 

 

 

 

 

 

Unrealized loss on marketable debt securities

 

 

 

 

 

 

 

 

 

 

 

(18

)

 

 

 

 

 

(18

)

Stock-based compensation

 

 

 

 

 

 

 

 

3,332

 

 

 

 

 

 

 

 

 

3,332

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(69,598

)

 

 

(69,598

)

Balance as of September 30, 2021

 

 

47,077,052

 

 

$

47

 

 

$

796,057

 

 

$

(288

)

 

$

(571,171

)

 

$

224,645

 

 

 

 

Common Stock

 

 

Additional

 

 

Accumulated

Other

 

 

 

 

 

 

Total

 

 

 

Shares

 

 

Amount

 

 

Paid-in

Capital

 

 

Comprehensive

Income (Loss)

 

 

Accumulated

Deficit