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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
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☒ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2024
OR
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☐ |
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)
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Delaware |
20-8729264 |
(State or other jurisdiction of |
(I.R.S. Employer Identification No.) |
incorporation or organization) |
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Two Tower Place, 7th Floor |
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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:
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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.
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Large accelerated filer |
☐ |
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Accelerated filer |
☐ |
Non-accelerated filer |
☒ |
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Smaller reporting company |
☒ |
Emerging growth company |
☐ |
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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 August 2, 2024, there were 6,345,561 shares of the registrant’s common stock outstanding.
Index
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 “board of directors” 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 Exchange Commission (SEC) on March 28, 2024 (2023 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 realize the potential benefits of our collaboration with Gilead Sciences, Inc. (Gilead), including all financial aspects of the collaboration and equity investments;
•our ability to initiate and complete clinical studies involving our therapeutic product candidates, including studies contemplated by our collaboration with Gilead, in the currently anticipated timeframes or at all;
•safety and efficacy data from clinical or nonclinical 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; and
•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.
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; and our ability to successfully complete, and receive favorable results in, clinical studies for our product candidates. 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)
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June 30, |
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December 31, |
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2024 |
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2023 |
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(Unaudited) |
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ASSETS |
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Current assets |
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Cash and cash equivalents |
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$ |
19,208 |
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$ |
19,841 |
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Marketable securities |
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90,011 |
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110,406 |
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Accounts receivable from collaboration |
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— |
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43 |
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Prepaid expenses and other current assets |
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3,712 |
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3,497 |
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Total current assets |
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112,931 |
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133,787 |
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Property and equipment, net |
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349 |
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385 |
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Operating lease right-of-use (ROU) assets |
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1,731 |
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2,339 |
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Other assets |
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312 |
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312 |
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Total assets |
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$ |
115,323 |
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$ |
136,823 |
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LIABILITIES AND STOCKHOLDERS' EQUITY |
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Current liabilities |
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Accounts payable |
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$ |
801 |
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$ |
461 |
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Accrued research and development expenses |
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2,531 |
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885 |
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Other accrued expenses |
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3,587 |
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5,744 |
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Deferred revenue from a related party - short-term |
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33,060 |
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30,915 |
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Operating lease liabilities - short-term |
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1,295 |
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1,220 |
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Total current liabilities |
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41,274 |
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39,225 |
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Deferred revenue from a related party - long-term |
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38,916 |
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55,379 |
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Operating lease liabilities - long-term |
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451 |
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1,122 |
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Total liabilities |
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80,641 |
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95,726 |
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Commitments and contingencies |
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Stockholders' equity |
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Preferred stock, $0.001 par value; 5,000,000 shares authorized; no shares issued or outstanding |
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— |
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— |
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Common stock, $0.001 par value; 150,000,000 shares authorized as of June 30, 2024 and December 31, 2023; 6,345,561 and 5,482,752 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively |
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6 |
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5 |
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Additional paid-in capital |
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840,946 |
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826,921 |
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Accumulated other comprehensive loss |
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(293 |
) |
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(81 |
) |
Accumulated deficit |
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(805,977 |
) |
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(785,748 |
) |
Total stockholders' equity |
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34,682 |
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41,097 |
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Total liabilities and stockholders' equity |
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$ |
115,323 |
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$ |
136,823 |
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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)
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Three Months Ended June 30, |
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Six Months Ended June 30, |
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2024 |
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2023 |
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2024 |
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2023 |
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Collaboration revenue from a related party |
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$ |
8,533 |
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$ |
— |
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$ |
14,318 |
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$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
Research and development |
|
|
16,259 |
|
|
|
12,523 |
|
|
|
28,138 |
|
|
|
27,070 |
|
General and administrative |
|
|
4,477 |
|
|
|
4,965 |
|
|
|
9,112 |
|
|
|
9,977 |
|
Total operating expenses |
|
|
20,736 |
|
|
|
17,488 |
|
|
|
37,250 |
|
|
|
37,047 |
|
Loss from operations |
|
|
(12,203 |
) |
|
|
(17,488 |
) |
|
|
(22,932 |
) |
|
|
(37,047 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income |
|
|
|
|
|
|
|
|
|
|
|
|
Interest and other income, net |
|
|
1,457 |
|
|
|
592 |
|
|
|
3,109 |
|
|
|
1,201 |
|
Total other income |
|
|
1,457 |
|
|
|
592 |
|
|
|
3,109 |
|
|
|
1,201 |
|
Loss before income taxes |
|
|
(10,746 |
) |
|
|
(16,896 |
) |
|
|
(19,823 |
) |
|
|
(35,846 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense |
|
|
406 |
|
|
|
— |
|
|
|
406 |
|
|
|
— |
|
Net loss |
|
$ |
(11,152 |
) |
|
$ |
(16,896 |
) |
|
$ |
(20,229 |
) |
|
$ |
(35,846 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive loss |
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized (loss) gain on marketable securities |
|
|
(54 |
) |
|
|
188 |
|
|
|
(212 |
) |
|
|
478 |
|
Comprehensive loss |
|
$ |
(11,206 |
) |
|
$ |
(16,708 |
) |
|
$ |
(20,441 |
) |
|
$ |
(35,368 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share, basic and diluted |
|
$ |
(1.98 |
) |
|
$ |
(3.88 |
) |
|
$ |
(3.64 |
) |
|
$ |
(8.33 |
) |
Weighted average common shares outstanding, basic and diluted |
|
|
5,642,752 |
|
|
|
4,355,007 |
|
|
|
5,563,033 |
|
|
|
4,303,244 |
|
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 March 31, 2024 |
|
|
5,482,752 |
|
|
$ |
5 |
|
|
$ |
827,660 |
|
|
$ |
(239 |
) |
|
$ |
(794,825 |
) |
|
$ |
32,601 |
|
Issuance of common stock and warrants in a registered direct offering and a private placement, net of issuance costs |
|
|
814,000 |
|
|
|
1 |
|
|
|
12,394 |
|
|
|
— |
|
|
|
— |
|
|
|
12,395 |
|
Issuance of common stock under Employee Stock Purchase Plan (ESPP) |
|
|
7,252 |
|
|
|
— |
|
|
|
55 |
|
|
|
— |
|
|
|
— |
|
|
|
55 |
|
Issuance of common stock for settlement of restricted stock units (RSUs) |
|
|
41,143 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Issuance of common stock upon exercise of stock options |
|
|
414 |
|
|
|
— |
|
|
|
4 |
|
|
|
— |
|
|
|
— |
|
|
|
4 |
|
Unrealized loss on marketable debt securities |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(54 |
) |
|
|
— |
|
|
|
(54 |
) |
Stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
833 |
|
|
|
— |
|
|
|
— |
|
|
|
833 |
|
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(11,152 |
) |
|
|
(11,152 |
) |
Balance as of June 30, 2024 |
|
|
6,345,561 |
|
|
$ |
6 |
|
|
$ |
840,946 |
|
|
$ |
(293 |
) |
|
$ |
(805,977 |
) |
|
$ |
34,682 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock |
|
|
Additional |
|
|
Accumulated
Other |
|
|
|
|
|
Total |
|
|
|
Shares |
|
|
Amount |
|
|
Paid-in
Capital |
|
|
Comprehensive
Loss |
|
|
Accumulated
Deficit |
|
|
Stockholders'
Equity |
|
Balance as of March 31, 2023 |
|
|
4,334,575 |
|
|
$ |
4 |
|
|
$ |
814,312 |
|
|
$ |
(513 |
) |
|
$ |
(743,470 |
) |
|
$ |
70,333 |
|
Issuance of common stock under at-the-market (ATM) equity offering program, net of issuance costs |
|
|
6,966 |
|
|
|
— |
|
|
|
54 |
|
|
|
— |
|
|
|
— |
|
|
|
54 |
|
Issuance of common stock under ESPP |
|
|
7,533 |
|
|
|
— |
|
|
|
80 |
|
|
|
— |
|
|
|
— |
|
|
|
80 |
|
Issuance of common stock for settlement of RSUs |
|
|
21,789 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Unrealized gain on marketable debt securities |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
188 |
|
|
|
— |
|
|
|
188 |
|
Stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
1,190 |
|
|
|
— |
|
|
|
— |
|
|
|
1,190 |
|
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(16,896 |
) |
|
|
(16,896 |
) |
Balance as of June 30, 2023 |
|
|
4,370,863 |
|
|
$ |
4 |
|
|
$ |
815,636 |
|
|
$ |
(325 |
) |
|
$ |
(760,366 |
) |
|
$ |
54,949 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Month Period |
|
|
|
Common Stock |
|
|
Additional |
|
|
Accumulated
Other |
|
|
|
|
|
Total |
|
|
|
Shares |
|
|
Amount |
|
|
Paid-in
Capital |
|
|
Comprehensive
Loss |
|
|
Accumulated
Deficit |
|
|
Stockholders'
Equity |
|
Balance as of December 31, 2023 |
|
|
5,482,752 |
|
|
$ |
5 |
|
|
$ |
826,921 |
|
|
$ |
(81 |
) |
|
$ |
(785,748 |
) |
|
$ |
41,097 |
|
Issuance of common stock and warrants in a registered direct offering and a private placement, net of issuance costs |
|
|
814,000 |
|
|
|
1 |
|
|
|
12,394 |
|
|
|
— |
|
|
|
— |
|
|
|
12,395 |
|
Issuance of common stock under ESPP |
|
|
7,252 |
|
|
|
— |
|
|
|
55 |
|
|
|
— |
|
|
|
— |
|
|
|
55 |
|
Issuance of common stock for settlement of RSUs |
|
|
41,143 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Issuance of common stock upon exercise of stock options |
|
|
414 |
|
|
|
— |
|
|
|
4 |
|
|
|
— |
|
|
|
— |
|
|
|
4 |
|
Unrealized loss on marketable debt securities |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(212 |
) |
|
|
— |
|
|
|
(212 |
) |
Stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
1,572 |
|
|
|
— |
|
|
|
— |
|
|
|
1,572 |
|
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(20,229 |
) |
|
|
(20,229 |
) |
Balance as of June 30, 2024 |
|
|
6,345,561 |
|
|
$ |
6 |
|
|
$ |
840,946 |
|
|
$ |
(293 |
) |
|
$ |
(805,977 |
) |
|
$ |
34,682 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock |
|
|
Additional |
|
|
Accumulated
Other |
|
|
|
|
|
Total |
|
|
|
Shares |
|
|
Amount |
|
|
Paid-in
Capital |
|
|
Comprehensive
Loss |
|
|
Accumulated
Deficit |
|
|
Stockholders'
Equity |
|
Balance as of December 31, 2022 |
|
|
4,074,552 |
|
|
$ |
4 |
|
|
$ |
807,983 |
|
|
$ |
(803 |
) |
|
$ |
(724,520 |
) |
|
$ |
82,664 |
|
Issuance of common stock under ATM equity offering program, net of issuance costs |
|
|
261,170 |
|
|
|
— |
|
|
|
4,546 |
|
|
|
— |
|
|
|
— |
|
|
|
4,546 |
|
Issuance of common stock under ESPP |
|
|
7,533 |
|
|
|
— |
|
|
|
80 |
|
|
|
— |
|
|
|
— |
|
|
|
80 |
|
Issuance of common stock for settlement of RSUs |
|
|
27,608 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Unrealized gain on marketable debt securities |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
478 |
|
|
|
— |
|
|
|
478 |
|
Stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
3,027 |
|
|
|
— |
|
|
|
— |
|
|
|
3,027 |
|
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(35,846 |
) |
|
|
(35,846 |
) |
Balance as of June 30, 2023 |
|
|
4,370,863 |
|
|
$ |
4 |
|
|
$ |
815,636 |
|
|
$ |
(325 |
) |
|
$ |
(760,366 |
) |
|
$ |
54,949 |
|
See Accompanying Notes to Condensed Consolidated Financial Statements
ASSEMBLY BIOSCIENCES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, |
|
|
|
2024 |
|
|
2023 |
|
Cash flows from operating activities |
|
|
|
|
|
|
Net loss |
|
$ |
(20,229 |
) |
|
$ |
(35,846 |
) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
Depreciation and amortization |
|
|
64 |
|
|
|
250 |
|
Stock-based compensation |
|
|
1,572 |
|
|
|
3,025 |
|
Net accretion of investments in marketable debt securities |
|
|
(2,224 |
) |
|
|
(221 |
) |
Non-cash rent expense |
|
|
713 |
|
|
|
1,709 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
Accounts receivable from collaboration |
|
|
43 |
|
|
|
602 |
|
Prepaid expenses and other current assets |
|
|
(215 |
) |
|
|
505 |
|
Other assets |
|
|
— |
|
|
|
557 |
|
Accounts payable |
|
|
340 |
|
|
|
(1,589 |
) |
Accrued research and development expenses |
|
|
1,646 |
|
|
|
(1,085 |
) |
Other accrued expenses |
|
|
(2,157 |
) |
|
|
(3,127 |
) |
Deferred revenue from a related party |
|
|
(14,318 |
) |
|
|
— |
|
Operating lease liabilities |
|
|
(701 |
) |
|
|
(1,836 |
) |
Net cash used in operating activities |
|
|
(35,466 |
) |
|
|
(37,056 |
) |
|
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
|
|
Proceeds from maturities of marketable securities |
|
|
57,300 |
|
|
|
24,645 |
|
Purchases of marketable securities |
|
|
(34,893 |
) |
|
|
(22,962 |
) |
Purchases of property and equipment |
|
|
(28 |
) |
|
|
(48 |
) |
Net cash provided by investing activities |
|
|
22,379 |
|
|
|
1,635 |
|
|
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
|
|
Proceeds from the issuance of common stock and warrants in a registered direct offering and a private placement, net of issuance costs |
|
|
12,395 |
|
|
|
— |
|
Proceeds from the issuance of common stock under ATM equity offering program, net of issuance costs |
|
|
— |
|
|
|
4,546 |
|
Proceeds from the issuance of common stock under ESPP |
|
|
55 |
|
|
|
80 |
|
Proceeds from the exercise of stock options |
|
|
4 |
|
|
|
— |
|
Net cash provided by financing activities |
|
|
12,454 |
|
|
|
4,626 |
|
|
|
|
|
|
|
|
Net decrease in cash and cash equivalents |
|
|
(633 |
) |
|
|
(30,795 |
) |
Cash and cash equivalents at the beginning of the period |
|
|
19,841 |
|
|
|
52,418 |
|
Cash and cash equivalents at the end of the period |
|
$ |
19,208 |
|
|
$ |
21,623 |
|
See Accompanying Notes to Condensed Consolidated Financial Statements
ASSEMBLY BIOSCIENCES, INC.
NOTES TO THE 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 biotechnology company developing innovative therapeutics. The Company's pipeline includes two helicase-primase inhibitors (HPI) for the treatment of recurrent genital herpes, an orally bioavailable hepatitis delta virus (HDV) entry inhibitor, a clinical stage capsid assembly modulator candidate designed to disrupt the replication cycle of hepatitis B virus (HBV) and research programs focused on a non-nucleoside polymerase inhibitor (NNPI) targeting transplant-related herpesviruses and a small molecule interferon-α (IFN-α) receptor (IFNAR) agonist targeting HBV and HDV. The Company operates in one segment and is headquartered in South San Francisco, California.
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 through the sale of equity securities, the proceeds from the exercise of warrants and stock options, the 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 financial statements are issued.
Note 2 - Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited 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 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 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, 2023, which are contained in the 2023 Annual Report. The results for the three and six months ended June 30, 2024 are not necessarily indicative of results to be expected for the entire year ending December 31, 2024 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.
Significant estimates inherent in the preparation of the accompanying unaudited condensed consolidated financial statements include estimates for revenue recognition and costs incurred but not yet invoiced for research and development accruals.
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
U.S. and global financial markets have experienced volatility and disruption due to macroeconomic and geopolitical events such as rising inflation, rising interest rates to combat inflation, the risk of a recession, the war between Russia and Ukraine and the Israel-Hamas war. The Company cannot predict at this time to what extent, if at all, it and its employees, contract research organizations, vendors and/or collaborators could potentially be negatively impacted by these events.
Reverse Stock Split
In September 2023, the Company received a letter from the Listing Qualifications Department of the Nasdaq Stock Market notifying the Company, as the bid price for its common stock had closed below $1.00 per share for the last 30 consecutive business days, it was not in compliance with Nasdaq Listing Rule 5450(a)(1), which is the minimum bid price requirement for continued listing on the Nasdaq Global Select Market. In accordance with Nasdaq Listing Rule 5810(c)(3)(A), the Company was provided a 180-calendar day period, or until March 25, 2024, to regain compliance with the minimum bid price requirement. The continued listing standard would be met once the closing bid price of the Company’s common stock was at least $1.00 per share for a minimum of ten consecutive business days during the 180-calendar day period. In January 2024, the Company's stockholders approved a reverse stock split of its common stock at a range of ratios between 1-for-7 to 1-for-17, and the Company's board of directors approved the implementation of the reverse stock split at a ratio of 1-for-12 (the Reverse Stock Split). The Reverse Stock Split was effective as of February 9, 2024 and the Company regained compliance with the minimum bid price requirement in February 2024.
As of the effective time of the Reverse Stock Split, every 12 issued and outstanding shares of the Company’s common stock was automatically reclassified into one issued and outstanding share of the Company’s common stock. This reduced the number of shares outstanding from 65.8 million shares to 5.5 million shares. The Reverse Stock Split did not affect the number of authorized shares of common stock or the par value of the common stock. No fractional shares of common stock were issued in connection with the Reverse Stock Split and all fractional shares were rounded down to the nearest whole share with respect to outstanding shares of common stock. Any holders of common stock who would have otherwise received a fractional share of common stock pursuant to the Reverse Stock Split, received cash in lieu of the fractional share. All prior period share and per share amounts of the Company's common stock presented have been retroactively adjusted to reflect the 1-for-12 Reverse Stock Split, including reclassifying an amount equal to the reduction in par value of common stock to additional paid-in capital.
Net Loss per Share
Basic net loss per share of common stock excludes dilution and is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. Diluted net loss per share of common stock 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. Diluted net loss per share is the same as basic net loss per share, since the effects of potentially dilutive securities are antidilutive given the net loss for each period presented.
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 for share and per share amounts):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
Numerator: |
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(11,152 |
) |
|
$ |
(16,896 |
) |
|
$ |
(20,229 |
) |
|
$ |
(35,846 |
) |
Denominator: |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding - basic and diluted |
|
|
5,642,752 |
|
|
|
4,355,007 |
|
|
|
5,563,033 |
|
|
|
4,303,244 |
|
Net loss per share - basic and diluted |
|
$ |
(1.98 |
) |
|
$ |
(3.88 |
) |
|
$ |
(3.64 |
) |
|
$ |
(8.33 |
) |
Securities excluded from the computation of diluted net loss per share because including them would have been antidilutive are as follows:
|
|
|
|
|
|
|
|
|
|
|
June 30, |
|
|
|
2024 |
|
|
2023 |
|
Warrants to purchase common stock |
|
|
814,000 |
|
|
|
— |
|
Options to purchase common stock |
|
|
1,003,111 |
|
|
|
844,383 |
|
Common stock subject to purchase under ESPP |
|
|
5,243 |
|
|
|
5,335 |
|
Unvested RSUs |
|
|
78,020 |
|
|
|
116,986 |
|
Total |
|
|
1,900,374 |
|
|
|
966,704 |
|
Note 3 – Related Party
In October 2023, the Company entered into an Option, License and Collaboration agreement (the Gilead Collaboration Agreement), and a Common Stock Purchase Agreement and an Investor Rights Agreement (collectively, the Gilead Equity Agreements) under which it received aggregate gross proceeds of $100.0 million from Gilead Sciences, Inc. (Gilead). During the three and six months ended June 30, 2024, the Company recognized $8.5 million and $14.3 million of collaboration revenue under the Gilead Collaboration Agreement, respectively (see Note 8).
In June 2024, the Company entered into a Securities Purchase Agreement with Gilead for the issuance and sale of 179,500 shares of the Company’s common stock and a warrant to purchase up to 179,500 shares of the Company’s common stock in a private placement (see Note 6). The common stock and warrant were sold at a combined offering price of $15.46, for aggregate gross proceeds to the Company of approximately $2.8 million.
Also in June 2024, the Gilead Equity Agreements were amended to extend deadlines relating to the Company’s efforts to complete an equity financing and its ability to require Gilead to purchase additional shares of the Company’s common stock by three months. The amendments also explicitly include the shares of the Company's common stock and warrant sold to Gilead in June 2024 in the definition of registrable securities. The amendments to the Gilead Equity Agreements did not have an impact to the Company's condensed consolidated financial statements.
As of June 30, 2024, Gilead held approximately 19.9% of the Company’s outstanding voting common stock. Additionally, Gilead may, at the Company’s or Gilead’s option, subject to certain conditions, purchase additional shares to increase its holdings up to a maximum of 29.9% of the Company’s then-outstanding voting common stock. Under the Investor Rights Agreement, Gilead has the right to designate two directors to the Company’s board of directors. The Company appointed each of Gilead’s designees to its board of directors in December 2023 and February 2024.
Note 4 – 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 and accrued expenses.
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):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2024 |
|
|
|
Amortized
Cost |
|
|
Gross
Unrealized
Gain |
|
|
Gross
Unrealized
Loss |
|
|
Fair Value |
|
Cash equivalents |
|
|
|
|
|
|
|
|
|
|
|
|
Money market fund |
|
$ |
18,601 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
18,601 |
|
Total cash equivalents |
|
|
18,601 |
|
|
|
— |
|
|
|
— |
|
|
|
18,601 |
|
Short-term marketable securities |
|
|
|
|
|
|
|
|
|
|
|
|
U.S. and foreign corporate debt securities |
|
|
18,684 |
|
|
|
3 |
|
|
|
(3 |
) |
|
|
18,684 |
|
U.S. treasury securities |
|
|
59,789 |
|
|
|
— |
|
|
|
(14 |
) |
|
|
59,775 |
|
U.S. and foreign commercial paper |
|
|
11,558 |
|
|
|
— |
|
|
|
(6 |
) |
|
|
11,552 |
|
Total short-term marketable securities |
|
|
90,031 |
|
|
|
3 |
|
|
|
(23 |
) |
|
|
90,011 |
|
Total cash equivalents and marketable securities |
|
$ |
108,632 |
|
|
$ |
3 |
|
|
$ |
(23 |
) |
|
$ |
108,612 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2023 |
|
|
|
Amortized
Cost |
|
|
Gross
Unrealized
Gain |
|
|
Gross
Unrealized
Loss |
|
|
Fair Value |
|
Cash equivalents |
|
|
|
|
|
|
|
|
|
|
|
|
Money market fund |
|
$ |
18,982 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
18,982 |
|
Total cash equivalents |
|
|
18,982 |
|
|
|
— |
|
|
|
— |
|
|
|
18,982 |
|
Short-term marketable securities |
|
|
|
|
|
|
|
|
|
|
|
|
U.S. and foreign corporate debt securities |
|
|
17,595 |
|
|
|
41 |
|
|
|
(3 |
) |
|
|
17,633 |
|
U.S. treasury securities |
|
|
76,891 |
|
|
|
127 |
|
|
|
— |
|
|
|
77,018 |
|
U.S. and foreign commercial paper |
|
|
15,728 |
|
|
|
27 |
|
|
|
— |
|
|
|
15,755 |
|
Total short-term marketable securities |
|
|
110,214 |
|
|
|
195 |
|
|
|
(3 |
) |
|
|
110,406 |
|
Total cash equivalents and marketable securities |
|
$ |
129,196 |
|
|
$ |
195 |
|
|
$ |
(3 |
) |
|
$ |
129,388 |
|
There were no realized gains and losses for the three and six months ended June 30, 2024 and 2023. As of June 30, 2024 and 2023, investments which were in an unrealized loss position were not material and generally due to interest rate fluctuations, as opposed to declines in credit quality. The Company determined it has the intent and ability to hold all marketable securities that have been in a continuous loss position until recovery of their amortized cost basis, which may be until maturity. As a result, the Company did not recognize any credit losses related to its investments and all unrealized gains and losses on available-for-sale securities are recorded in accumulated other comprehensive loss on the condensed consolidated balance sheets during the three and six months ended June 30, 2024 and 2023.
Accrued interest receivable was $0.4 million and $0.3 million as of June 30, 2024 and December 31, 2023, respectively, and was recorded in prepaid expenses and other current assets on the condensed consolidated balance sheets. The Company did not write off any accrued interest receivable during the three and six months ended June 30, 2024 and 2023.
The following tables present the fair value of the Company’s financial assets measured at fair value on a recurring basis (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2024 |
|
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Fair Value |
|
Cash equivalents |
|
|
|
|
|
|
|
|
|
|
|
|
Money market fund |
|
$ |
|