10-Q
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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, 2022

 

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 3, 2022, there were 48,779,985 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, 2022 (unaudited) and December 31, 2021

2

 

 

 

 

Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three and Nine Months Ended September 30, 2022 and 2021 (unaudited)

3

 

 

 

 

Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three and Nine Months Ended September 30, 2022 and 2021 (unaudited)

4

 

 

 

 

Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2022 and 2021 (unaudited)

6

 

 

 

 

Notes to the Condensed Consolidated Financial Statements (unaudited)

7

 

 

 

Item 2.

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

17

 

 

 

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

42

 

 

 

Item 3.

Defaults Upon Senior Securities

42

 

 

 

Item 4.

Mine Safety Disclosures

42

 

 

 

Item 5.

Other Information

42

 

 

 

Item 6.

Exhibits

43

 

 

SIGNATURES

44

 

 

 

 


 

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 March 11, 2022 (2021 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. Such risks and uncertainties include, among other things:

our ability to successfully execute our strategic plan announced on July 20, 2022 to (1) discontinue further development of our first-generation core inhibitor, vebicorvir; (2) advance our next generation core inhibitors, ABI-H3733 and ABI-4334, in clinical studies; (3) prioritize additional research activities targeting a small molecule hepatitis B virus/hepatitis delta virus entry inhibitor, a small molecule interferon-α receptor agonist, a herpes simplex virus type 2 long-acting helicase inhibitor for the treatment of recurrent genital herpes and a pan-herpes polymerase inhibitor to treat multiple transplant-associated herpesviruses infections; and (4) reduce the size of our organization to align with the foregoing;
our ability to successfully execute the Chief Executive Officer transition announced on October 5, 2022;
our ability to initiate and complete clinical trials involving our therapeutic product candidates, including studies contemplated by our clinical collaboration agreements, 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;
results of nonclinical studies may not be representative of disease behavior in a clinical setting and may not be predictive of the outcomes of clinical studies;
our ability to maintain financial resources necessary to continue our clinical studies and fund business operations;
continued development and commercialization of our hepatitis B virus (HBV) core inhibitor product candidates, if successful, in the China territory will be dependent on, and subject to, our collaboration agreement governing our HBV core inhibitor-related activity in the China territory; and
any impact that the COVID-19 pandemic may have on our business and operations, including initiation, enrollment 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. In particular, forward-looking statements include, but are not limited to, statements regarding the timing of commencement of future clinical studies involving our therapeutic product candidates; our ability to successfully complete, and receive favorable results in, clinical trials for our product candidates; and the expected impact of the COVID-19 pandemic on our business and operations. 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,

 

 

 

2022

 

 

2021

 

 

 

(Unaudited)

 

 

 

 

ASSETS

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

54,673

 

 

$

45,627

 

Marketable securities - short-term

 

 

53,978

 

 

 

101,000

 

Accounts receivable from collaborations

 

 

1,246

 

 

 

336

 

Prepaid expenses and other current assets

 

 

5,181

 

 

 

7,241

 

Total current assets

 

 

115,078

 

 

 

154,204

 

 

 

 

 

 

 

 

Marketable securities - long-term

 

 

 

 

 

27,972

 

Property and equipment, net

 

 

867

 

 

 

1,139

 

Operating lease right-of-use (ROU) assets

 

 

3,958

 

 

 

6,042

 

Other assets

 

 

1,613

 

 

 

1,703

 

Total assets

 

$

121,516

 

 

$

191,060

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Accounts payable

 

$

1,942

 

 

$

2,659

 

Accrued research and development expenses

 

 

4,462

 

 

 

3,400

 

Other accrued expenses

 

 

5,686

 

 

 

6,863

 

Operating lease liabilities - short-term

 

 

3,371

 

 

 

3,151

 

Total current liabilities

 

 

15,461

 

 

 

16,073

 

 

 

 

 

 

 

 

Deferred revenue

 

 

2,733

 

 

 

2,733

 

Operating lease liabilities - long-term

 

 

918

 

 

 

3,325

 

Total liabilities

 

 

19,112

 

 

 

22,131

 

 

 

 

 

 

 

 

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; 150,000,000 and 100,000,000 shares authorized as of September 30, 2022 and December 31, 2021, respectively; 48,481,194 and 48,120,437 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively

 

 

48

 

 

 

48

 

Additional paid-in capital

 

 

805,480

 

 

 

800,728

 

Accumulated other comprehensive loss

 

 

(999

)

 

 

(419

)

Accumulated deficit

 

 

(702,125

)

 

 

(631,428

)

Total stockholders' equity

 

 

102,404

 

 

 

168,929

 

Total liabilities and stockholders' equity

 

$

121,516

 

 

$

191,060

 

 

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,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Collaboration revenue

 

$

 

 

$

6,254

 

 

$

 

 

$

6,254

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

18,130

 

 

 

18,474

 

 

 

53,127

 

 

 

53,777

 

General and administrative

 

 

5,271

 

 

 

6,655

 

 

 

18,009

 

 

 

22,276

 

Total operating expenses

 

 

23,401

 

 

 

25,129

 

 

 

71,136

 

 

 

76,053

 

Loss from operations

 

 

(23,401

)

 

 

(18,875

)

 

 

(71,136

)

 

 

(69,799

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income

 

 

 

 

 

 

 

 

 

 

 

 

Interest and other income, net

 

 

256

 

 

 

72

 

 

 

439

 

 

 

201

 

Total other income

 

 

256

 

 

 

72

 

 

 

439

 

 

 

201

 

Net loss

 

$

(23,145

)

 

$

(18,803

)

 

$

(70,697

)

 

$

(69,598

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized loss on marketable securities

 

 

(1

)

 

 

(15

)

 

 

(580

)

 

 

(18

)

Comprehensive loss

 

$

(23,146

)

 

$

(18,818

)

 

$

(71,277

)

 

$

(69,616

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share, basic and diluted

 

$

(0.48

)

 

$

(0.41

)

 

$

(1.46

)

 

$

(1.63

)

Weighted average common shares outstanding, basic and diluted

 

 

48,448,399

 

 

 

45,569,276

 

 

 

48,289,501

 

 

 

42,725,109

 

 

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
Loss

 

 

Accumulated
Deficit

 

 

Stockholders'
Equity

 

Balance as of June 30, 2022

 

 

48,362,736

 

 

$

48

 

 

$

803,910

 

 

$

(998

)

 

$

(678,980

)

 

$

123,980

 

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

 

 

118,458

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized loss on marketable debt securities

 

 

 

 

 

 

 

 

 

 

 

(1

)

 

 

 

 

 

(1

)

Stock-based compensation

 

 

 

 

 

 

 

 

1,570

 

 

 

 

 

 

 

 

 

1,570

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(23,145

)

 

 

(23,145

)

Balance as of September 30, 2022

 

 

48,481,194

 

 

$

48

 

 

$

805,480

 

 

$

(999

)

 

$

(702,125

)

 

$

102,404

 

 

 

 

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 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

 

 

4


 

 

 

 

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, 2021

 

 

48,120,437

 

 

$

48

 

 

$

800,728

 

 

$

(419

)

 

$

(631,428

)

 

$

168,929

 

Issuance of common stock under Employee Stock Purchase Plan (ESPP)

 

 

134,888

 

 

 

 

 

 

177

 

 

 

 

 

 

 

 

 

177

 

Issuance of common stock for settlement of RSUs

 

 

225,869

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized loss on marketable debt securities

 

 

 

 

 

 

 

 

 

 

 

(580

)

 

 

 

 

 

(580

)

Stock-based compensation

 

 

 

 

 

 

 

 

4,575

 

 

 

 

 

 

 

 

 

4,575

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(70,697

)

 

 

(70,697

)

Balance as of September 30, 2022

 

 

48,481,194

 

 

$

48

 

 

$

805,480

 

 

$

(999

)

 

$

(702,125

)

 

$

102,404

 

 

 

 

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

 

 

See Accompanying Notes to Condensed Consolidated Financial Statements

5


 

ASSEMBLY BIOSCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

 

Nine Months Ended September 30,

 

 

 

2022

 

 

2021