SEC Filing : Assembly Biosciences, Inc.

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10-Q

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


☐	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.

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

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

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


	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

ASSEMBLY BIOSCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Nine Months Ended September 30,
	2022		2021
Cash flows from operating activities
Net loss	$	(70,697