What changed in this filing

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Item 1. Financial Statements

2021-08-05 compared with 2021-05-06 · 200 added, 137 removed, 393 unchanged (46% of the section changed)

29 unchanged sentences

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

100,000,000 shares authorized as of June 30, 2021 and December 31, 2020;

43,779,059 and 34,026,680 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively

Additional paid-in capital

5 unchanged sentences

ASSEMBLY BIOSCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME

(In thousands except for share and per share amounts)

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Collaboration revenue

3 unchanged sentences

Total operating expenses

Loss from operations

(Loss) income from operations

Other income:

1 unchanged sentence

Total other income

Net (loss) income

Other comprehensive (loss) income

Unrealized (loss) gain on marketable securities

Comprehensive loss

Net loss per share, basic and diluted

Weighted average common shares outstanding, basic and diluted

Comprehensive (loss) income

Net (loss) income per share, basic

Weighted average common shares outstanding, basic

Net (loss) income per share, diluted

Weighted average common shares outstanding, diluted

See Accompanying Notes to Condensed Consolidated Financial Statements

2 unchanged sentences

(In thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities

23 unchanged sentences

Proceeds from the exercise of stock options

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

Proceeds from sale of common stock, net of issuance costs

Net cash provided by financing activities

Net increase (decrease) in cash and cash equivalents

Net increase in cash and cash equivalents

Cash and cash equivalents at the beginning of the period

7 unchanged sentences

(In thousands except for share amounts)

For the Three Month Period

Comprehensive

1 unchanged sentence

Stockholders'

Balance as of December 31, 2020

Balance as of March 31, 2021

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

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

Issuance of common stock under ESPP

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

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

Unrealized loss on marketable debt securities

Stock-based compensation

Balance as of June 30, 2021

Comprehensive

Income (Loss)

Stockholders'

Balance as of March 31, 2020

Issuance of common stock upon exercise of stock options

Issuance of common stock under ESPP

Issuance of common stock for settlement of RSUs

Unrealized gain on marketable securities

Stock-based compensation

Balance as of June 30, 2020

For the Six Month Period

Comprehensive

Income (Loss)

Stockholders'

Balance as of December 31, 2020

Issuance of common stock under ATM equity offering program, net of issuance costs

Issuance of common stock under ESPP

Issuance of common stock for settlement of RSUs

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

Unrealized loss on marketable debt securities

Stock-based compensation

Balance as of June 30, 2021

Comprehensive

Income (Loss)

Stockholders'

Balance as of December 31, 2019

Issuance of common stock upon exercise of stock options

Issuance of shares of common stock for settlement of RSUs

Unrealized gain on marketable securities

Issuance of common stock under ESPP

Issuance of common stock for settlement of RSUs

Unrealized gain on marketable debt securities

Stock-based compensation

Balance as of March 31, 2020

Balance as of June 30, 2020

See Accompanying Notes to Condensed Consolidated Financial Statements

ASSEMBLY BIOSCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1 - Nature of Business

2 unchanged sentences

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.

Prior to the Company’s wind-down of its Microbiome program in January 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.

5 unchanged sentences

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).

2 unchanged sentences

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.

ASSEMBLY BIOSCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

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 interim condensed consolidated financial statements have been prepared in accordance with the accounting principles generally accepted in the United States of America (U.S.

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 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.

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, 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.

The results for

ASSEMBLY BIOSCIENCES, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

the three and six months ended June 30, 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

16 unchanged sentences

The corporate tax provisions included within the bill are not expected to have a material impact on the Company.

ASSEMBLY BIOSCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

Net Income (Loss) per Share

Basic net income (loss) per share of common stock excludes dilution and is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period.

Diluted net income (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.

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,

The shares of common stock into which the outstanding 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.

During the three and six months ended June 30, 2021, 2,109,140 of the pre-funded warrants were exercised through a cashless exercise and the remaining 315,102 pre-funded warrants were subsequently exercised in July 2021 (see Note 6).

ASSEMBLY BIOSCIENCES, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

A reconciliation of the numerators and the denominators of the basic and diluted net income (loss) per common share computations is as follows (in thousands, except per share amounts):

Three Months Ended June 30,

Six Months Ended June 30,

Net (loss) income

Shares used in per share calculation - basic

Dilutive effect of securities

Weighted average common shares and

pre-funded warrants outstanding -

basic and diluted

Net loss per share - basic and diluted

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

pre-funded warrants outstanding - diluted

Net (loss) income per share:

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

Three Months Ended June 30,

Six Months Ended June 30,

Warrants to purchase common stock

3 unchanged sentences

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.

On January 1, 2021 , the Company adopted Accounting Standards Update (ASU) 2020-10, Codification Improvements – Disclosures (ASU 2020-10).

ASU 2020-10 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.

4 unchanged sentences

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

ASSEMBLY BIOSCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

and Hedging (Topic 815), and Leases (Topic 842):

In November 2019, the FASB issued ASU 2019-10, Financial Instruments – Credit Losses (Topic 326), Derivatives 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.

2 unchanged sentences

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.

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (ASU 2020-06), which simplifies the accounting for certain

ASSEMBLY BIOSCIENCES, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

ASU 2020-06 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 calculation in certain areas.

ASU 2020-06 is effective for interim and annual periods beginning after December 15, 2021, with early adoption permitted.

Adoption of ASU 2020-06 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.

In May 2021, the FASB issued ASU 2021-04, Issuer's Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options (ASU 2021-04), which requires issuers to account for a modification or exchange of freestanding equity-classified written call options that remain equity classified after the modification or exchange based on the economic substance of the modification or exchange.

Specifically, under ASU 2021-04, an issuer determines the accounting for the modification or exchange based on whether the transaction was done to issue equity, issue and or modify debt, or for other reasons.

The result is a change in the fair value of the written call option dependent on the reason for the modification.

ASU 2021-04 is effective for interim and annual periods beginning after December 15, 2021, with early adoption permitted.

Adoption of ASU 2021-04 is applied on a prospective basis.

The Company does not expect the ASU to impact its condensed consolidated financial statements and related disclosures.

Note 3 – Fair Value Measurements and Investments in Marketable Securities

6 unchanged sentences

Investments in marketable securities consisted of the following (in thousands):

March 31, 2021

June 30, 2021

Cash equivalents

8 unchanged sentences

ASSEMBLY BIOSCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2020

10 unchanged sentences

Total cash equivalents and investments

The contractual term to maturity of short-term marketable securities held by the Company as of March 31, 2021 is less than one year .

There were no long-term marketable securities held by the Company as of March 31, 2021.

Realized gains and losses for the three months ended March 31, 2021 and 2020 were not significant.

None of the Company’s investments have been in a continuous unrealized loss position for more than 12 months as of March 31, 2021.

The contractual term to maturity of short-term marketable securities held by the Company as of June 30, 2021 is less than one year .

There were no long-term marketable securities held by the Company as of June 30, 2021.

Realized gains and losses for the three and six months ended June 30, 2021 and 2020 were not significant.

None of the Company’s investments have been in a continuous unrealized loss position for more than 12 months as of June 30, 2021.

The following tables present the fair value of the Company’s financial assets measured at fair value on a recurring basis (in thousands):

March 31, 2021

June 30, 2021

Cash equivalents

7 unchanged sentences

Total assets measured at fair value

ASSEMBLY BIOSCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2020

10 unchanged sentences

Total assets measured at fair value

ASSEMBLY BIOSCIENCES, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The Company estimates the fair value of its investments in marketable securities by taking into consideration valuations obtained from third-party pricing services.

9 unchanged sentences

Total accrued expenses

ASSEMBLY BIOSCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 5 – Restructurings

Restructuring charges relate to the Company’s decision to relocate its headquarters to South San Francisco, California, which was approved by the Board of Directors in November 2019 and effective January 1, 2020 and the wind-down of the Company’s Microbiome program, which the Company and its Board of Directors determined in December 2020 was in the Company’s best interest, enabling the Company to prioritize resources and focus on the advancement of its pipeline of novel core inhibitors for chronic HBV infection.

The following table summarizes the Company’s estimates of costs to be incurred and expected to be incurred (in thousands):

The following table summarizes the Company’s costs incurred (in thousands):

Restructuring

Total estimated restructuring costs to be incurred

Restructuring costs incurred for the three months ended March 31, 2021

Cumulative restructuring costs incurred through March 31, 2021

The reversal of $ 2.7 million in employee severance and related benefits recognized during the three months ended March 31, 2021 reflects the reversal of previously recognized stock-based compensation expense related to forfeited awards based on the Company’s policy of recognizing stock-based awards with graded vesting schedules using an accelerated attribution method on a straight-line basis over the requisite service period for each separately vesting portion of the award and to recognize forfeitures when they occur.

The following table presents where the restructuring charges were recognized during the three months ended March 31, 2021 (in thousands):

Restructuring costs incurred for the three months ended June 30, 2021

Restructuring costs incurred for the six months ended June 30, 2021

Cumulative restructuring costs incurred through June 30, 2021

ASSEMBLY BIOSCIENCES, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The reversal of $ 0.3 million and $ 3.0 million in employee severance and related benefits recognized during the three and six months ended June 30, 2021 reflects the reversal of previously recognized stock-based compensation expense related to forfeited awards based on the Company’s policy of recognizing stock-based awards with graded vesting schedules using an accelerated attribution method on a straight-line basis over the requisite service period for each separately vesting portion of the award and to recognize forfeitures when they occur.

The cumulative restructuring costs incurred through June 30, 2021 represents the total amount expected to be incurred.

The following table presents where the restructuring charges were recognized during the six months ended June 30, 2021 (in thousands):

Research and development

General and administrative

There were no restructuring costs incurred for the three months ended March 31, 2020.

The following table presents the activity in the accrued restructuring charges during the three months ended March 31, 2021 (in thousands):

All restructuring costs incurred for the three months ended June 30, 2021 were included in research and development.

There were no restructuring costs incurred f or the three and six months ended June 30, 2020.

The following table presents the activity in the accrued restructuring charges during the six months ended June 30, 2021 (in thousands):

Restructuring

2 unchanged sentences

Reductions for cash payments

Accrued balance as of March 31, 2021

Accrued balance as of June 30, 2021

Cash payments are presented net of proceeds received from the sale of assets of $ 0.9 million .

1 unchanged sentence

The Company expects the accrued restructuring liability to be fully paid in 2021.

ASSEMBLY BIOSCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 6 – Stockholders’ Equity

The Company was authorized to issue 5,000,000 shares of preferred stock as of March 31, 2021 and December 31, 2020, respectively.

As of March 31, 2021 and December 31, 2020, no shares of preferred stock were issued and outstanding.

The Company was authorized to issue 100,000,000 shares of common stock as of March 31, 2021 and December 31, 2020, respectively.

The Company was authorized to issue 5,000,000 shares of preferred stock as of June 30, 2021 and December 31, 2020, respectively.

As of June 30, 2021 and December 31, 2020, no shares of preferred stock were issued and outstanding.

The Company was authorized to issue 100,000,000 shares of common stock as of June 30, 2021 and December 31, 2020, respectively.

Sale of Common Stock

3 unchanged sentences

In connection with the filing of the 2020 Registration Statement, the Company entered into a sales agreement under which the Company may offer and sell shares of its common stock having an aggregate offering price of up to $ 100.0 million through “at-the-market” offerings (2020 ATM), which shares are included in the $ 300.0 million of securities registered pursuant to the 2020 Registration Statement.

During the three months ended March 31, 2021, the Company sold 5,991,858 shares of common stock under the 2020 ATM, for which the Company received net proceeds of $ 34.1 million, after deducting commissions, fees and expenses.

ASSEMBLY BIOSCIENCES, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

the six months ended June 30, 2021 , the Company sold 7,449,901 shares of common stock under the 2020 ATM, for which the Company received net proceeds of $ 40.2 million , after deducting commissions, fees and expenses.

Common Stock Warrants

1 unchanged sentence

Exercise Price

Number of warrants outstanding

June 30, 2021

December 31, 2020

There were no warrants exercised during the three months ended March 31, 2021 or 2020.

December 16, 2019

During the three and six months ended June 30, 2021, 2,109,140 warrants were exercised through a cashless exercise resulting in the issuance of 2,108,621 shares of the Company’s common stock.

The remaining 315,102 warrants were cashless exercised in July 2021.

There were no warrants exercised during the three and six months ended June 30, 2020 .

Note 7 – Stock Plans and Stock-Based Compensation

2 unchanged sentences

2018 Stock Incentive Plan (the 2018 Plan) pursuant to which the Company reserved 1,900,000 shares of its common stock for issuance in connection with equity incentive awards and (2) the Assembly Biosciences Inc.

Employee Stock Purchase Plan (the 2018 ESPP) pursuant to which the Company reserved 400,000 shares of its common stock for issuance in connection with purchases by employees pursuant to this plan.

Employee Stock Purchase Plan pursuant to which the Company reserved 400,000 shares of its common stock for issuance in connection with purchases by employees pursuant to this plan.

In May 2019, the Company’s stockholders approved an amendment to the 2018 Plan that increased the aggregate number of shares of common stock reserved under the 2018 Plan to 3,000,000 .

In June 2020, the Company’s stockholders approved an amendment to the 2018 Plan that increased the aggregate number of shares of common stock reserved under the 2018 Plan to 4,600,000 .

As of March 31, 2021, the Company had awards outstanding under the following shareholder-approved plans:

In May 2021, the Company’s stockholders approved an amendment to the 2018 Plan that increased the aggregate number of shares of common stock reserved under the 2018 Plan to 6,600,000 and an Amended and Restated Assembly Biosciences, Inc.

2018 Employee Stock Purchase Plan (the 2018 ESPP) that, among other things, increased the number of shares of common stock reserved to an aggregate of 1,300,000 .

As of June 30, 2021, the Company had awards outstanding under the following shareholder-approved plans:

the 2010 Equity Incentive Plan (the 2010 Plan), which has been frozen;

2 unchanged sentences

Shares of common stock underlying awards that are forfeited under the 2010 Plan on or after June 2, 2016 will become available for issuance under the 2014 Plan.

As of March 31, 2021, the Company also had awards outstanding under the Assembly Biosciences, Inc.

As of June 30, 2021, the Company also had awards outstanding under the Assembly Biosciences, Inc.

2017 Inducement Award Plan (the 2017 Plan), the Assembly Biosciences, Inc.

4 unchanged sentences

ASSEMBLY BIOSCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Stock Plan Activity

Stock Options

A summary of the Company’s option activity and related information for the three months ended March 31, 2021 is as follows:

A summary of the Company’s option activity and related information for the six months ended June 30, 2021 is as follows:

Outstanding as of December 31, 2020

Outstanding as of March 31, 2021

Options vested and exercisable as of March 31, 2021

The weighted-average grant-date fair value of options granted was $ 3.15 and $ 9.74 during the three months ended March 31, 2021 and 2020, respectively.

The total intrinsic value of options exercised during the three months ended March 31, 2020 was $ 0.2 million.

There were no options exercised during the three months ended March 31, 2021.

A summary of the Company’s RSUs and related information for the three months ended March 31, 2021 is as follows:

Outstanding as of June 30, 2021

Options vested and exercisable as of June 30, 2021

The weighted-average grant-date fair value of options granted was $ 3.12 and $ 10.52 during the six months ended June 30, 2021 and 2020, respectively.

The total intrinsic value of options exercised during the six months ended June 30, 2020 was $ 1.0 million.

There were no options exercised during the six months ended June 30, 2021.

A summary of the Company’s RSUs and related information for the six months ended June 30, 2021 is as follows:

Value Per RSU

1 unchanged sentence

Nonvested as of December 31, 2020

Nonvested as of March 31, 2021

Nonvested as of June 30, 2021

Includes 140,000 RSUs that have vested but are subject to deferred settlement, which have a weighted average remaining contractual term of 1.7 years.

The total fair value of RSUs vested and settled during the three months ended March 31, 2021 and 2020 was $ 2.5 million and $ 2.4 million, respectively.

The total intrinsic value of RSUs vested and settled during the three months ended March 31, 2021 and 2020 was $ 0.6 million and $ 1.5 million, respectively.

The total fair value of RSUs vested and settled during the six months ended June 30, 2021 and 2020 was $ 2.8 million and $ 3.1 million, respectively.

The total intrinsic value of RSUs vested and settled during the six months ended June 30, 2021 and 2020 was $ 0.7 million and $ 1.6 million, respectively.

In September 2019, the Company granted 100,000 RSUs with performance-based vesting conditions to its chief executive officer.

On March 31, 2021, 25,000 of these awards were forfeited back to the Company due to the time period to complete one of the performance conditions expiring.

On March 31, 2021, 25,000 of these awards were forfeited back to the Company due to the expiration of the time period to complete one of the performance conditions.

The outstanding 75,000 awards with an aggregate fair value of $ 0.8 million vest upon performance conditions not yet deemed probable.

Accordingly, no stock-based compensation expense has been recognized as of March 31, 2021.

Accordingly, no stock-based compensation expense has been recognized as of June 30, 2021.

ASSEMBLY BIOSCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

There were no shares purchased under the 2018 ESPP during the three months ended March 31, 2021 or 2020.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Employees purchased 42,803 and 42,266 shares of common stock under the 2018 ESPP during the six months ended June 30, 2021 and 2020, respectively.

Valuation Assumptions

The fair value of the stock options granted or modified during the periods indicated was estimated using the Black-Scholes option pricing model, based on the following assumptions:

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Exercise price

1 unchanged sentence

$14.57 - $20.52

$4.03 - $5.79

$14.45 - $20.52

Expected volatility

1 unchanged sentence

69.1% - 82.2%

80.7% - 91.2%

66.4% - 82.2%

Risk-free rate

1 unchanged sentence

0.36% - 0.60%

0.50% - 1.37%

0.36% - 1.44%

Expected term (years)

4 unchanged sentences

The following table summarizes the components of total stock-based compensation expense included in the condensed consolidated statements of operations and comprehensive loss (in thousands):

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Research and development

2 unchanged sentences

Includes the reversal of previously recognized stock-based compensation expense of $ 4.1 million related to forfeited awards of terminated employees, $ 2.7 million of which resulted from the wind-down of the Company’s Microbiome program (see Note 5).

As of March 31, 2021, there was $ 18.6 million of total unrecognized stock-based compensation related to outstanding equity awards, which is expected to be recognized over a weighted average remaining amortization period of 1.8 years.

As of June 30, 2021, there was $ 14.5 million of total unrecognized stock-based compensation related to outstanding equity awards, which is expected to be recognized over a weighted average remaining amortization period of 1.8 years.

Note 8 - Collaboration Agreements

4 unchanged sentences

Upon termination, the licenses granted by the Company and its know-how reverted to the Company.

For the three months ended March 31, 2020, the Company recognized $ 4.1 million in revenue associated with the Allergan Agreement.

For the three and six months ended June 30, 2020, the Company recognized $ 39.4 million and $ 43.5 million, respectively, in revenue associated with the Allergan Agreement.

A contract asset balance of $ 1.0 million was recorded as of December 31, 2020.

There were no deferred revenue contract liabilities as of December 31, 2020 and no revenue, contract assets or contract liabilities recognized as of and for the three months ended March 31, 2021 due to the termination of the Allergan Agreement in 2020.

There were no deferred revenue contract liabilities as of December 31, 2020 and

ASSEMBLY BIOSCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

no revenue, contract assets or contract liabilities recognized as of and for the three and six months ended June 30, 2021 due to the termination of the Allergan Agreement in 2020 .

BeiGene Agreement

1 unchanged sentence

(BeiGene) entered into a Collaboration Agreement (the BeiGene Agreement) to develop and commercialize the Company’s novel core inhibitor product candidates VBR, ABI-H2158 and ABI-H3733 for chronic HBV infection (the Licensed Product Candidates) in the People’s Republic of China, Hong Kong, Taiwan and Macau (the Territory).

Under the agreement, the Company and BeiGene are collaborating on certain global clinical studies and both the Company and BeiGene will independently conduct other clinical studies in their own respective territories.

Under the agreement, the Company and BeiGene will collaborate on certain global clinical studies and both the Company and BeiGene will independently conduct other clinical studies in their own respective territories.

BeiGene agreed to pay all development and regulatory costs for the Licensed Product Candidates in the Territory up to an aggregate of $ 45.0 million.

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In addition, the Company is eligible to receive tiered royalties at percentages ranging from the mid-teens to the low thirties of net sales.

The BeiGene Agreement is within the scope of the collaborative arrangements guidance as both parties are active participants and are exposed to significant risks and rewards dependent on the success of commercializing the Licensed Product Candidates in the Territory but that the unit of account related to the delivery of Licensed Product Candidates is within the scope of the contract with customers guidance.

However, the unit of account related to the delivery of Licensed Product Candidates is within the scope of the contract with customers guidance.

The remaining units of account related to participation on the JSC and subcommittees, clinical supply and other in Territory and global development activities (the Collaboration Activities) are within the scope of the collaborative arrangements guidance.

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The Company concluded each of these licenses to be functional as they have significant standalone functionality and grants BeiGene the right to use the Company’s intellectual property as it exists on the effective date of the license .

The ABI-H2158 and ABI-H3733 Licenses have a continuing technology transfer obligation that is considered to be an attribute of these licenses.

The agreed upon prices for the clinical and

The ABI-H2158 and ABI-H3733 Licenses have a continuing technology

ASSEMBLY BIOSCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

commercial supply of the Licensed Product Candidates to BeiGene do not represent material right s , and therefore are not performance obligation s , and such pricing on an aggregate basis represents the standalone selling price an entity would typically pay for such a product in that region or market.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

transfer obligation that is considered to be an attribute of these licenses.

The agreed upon price s for the clinical and commercial supply of the Licensed Product Candidates to BeiGene do not represent material right s , and therefore are not performance obligation s , and such pricing on an aggregate basis represents the standalone selling price an entity would typically pay for such a product in that region or market.

There are also no minimum purchase commitments.

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The transaction price at the inception of the agreement was limited to the $ 40.0 million upfront payment.

The variable consideration related to the remaining development and commercialization milestone payments has not been included in the transaction price as these were fully constrained as of March 31, 2021.

As part of the Company’s evaluation of the development and commercialization milestones constraint, the Company determined the achievement of such milestones are contingent upon success in future clinical studies and regulatory approvals which are not within its control and uncertain at this stage.

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Upon entering into the BeiGene Agreement in July 2020, the Company recognized $ 31.0 million as collaboration revenue for the amount allocated to the VBR License as substantial completion of the license technology transfer had occurred.

The remaining transaction price allocated to the ABI-H2158 and ABI-H3733 Licenses of $ 9.0 million was recorded as a long-term deferred revenue contract liability on the unaudited condensed consolidated balance sheet as of March 31, 2021 and December 31, 2020.

Revenue for these performance obligations will be recognized when the Company provides pre-Phase 3 clinical study know-how and development results for these compounds to BeiGene or a termination of the BeiGene Agreement for the respective compound.

Payments to, or reimbursements from, BeiGene related to the Collaboration Activities will be accounted for as an increase to or reduction of research and development expenses when incurred or realized, respectively.

During the three months ended March 31, 2021, the Company did no t recognize any increase or reduction of research and development expense under the BeiGene Agreement.

During the three and six months ended June 30, 2021, the Company did no t recognize any increase or reduction of research and development expense under the BeiGene Agreement.

The Company incurred $ 3.5 million in incremental costs of obtaining the BeiGene Agreement.

These contract costs have been capitalized and are being recognized consistent with the pattern of recognition of revenue associated with the Licensed Product Candidates.

As of March 31, 2021 and December 31, 2020, $ 0.8 million remains unamortized and is included in other assets on the condensed consolidated balance sheet.

As of June 30, 2021 and December 31, 2020, $ 0.8 million remains unamortized and is included in other assets on the condensed consolidated balance sheet.

Arbutus Agreement

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Arbutus is not a customer as it does not obtain an output from the collaborative activities as they were not provided an exclusive license to VBR or the ability to manufacture VBR, and the Company does not consider performing such collaborative activities to be a part of its ongoing activities.

The revenue from contracts with customers guidance was considered by analogy in determining the unit of account, and the recognition and measurement of such unit of account for collaborative activities under the Arbutus Agreement and concluded there is one activity, to run an open-label Phase 2 clinical study, which is akin to performance obligation related to collaborative activities.

Reimbursements and cost-sharing portions of this

ASSEMBLY BIOSCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

performance obligation will be reflected as a reduction of research and development expense when realized in the Company’s condensed consolidated statements of operations, as the Company does not consider performing research and development services for reimbursement to be a part of its ongoing major or central operations .

During the three months ended March 31, 2021 , the Company recognized a reduction of research and development expenses of $ 0.5 million under the Arbutus Agreement.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

performance obligation related to collaborative activities.

Reimbursements and cost-sharing portions of this performance obligation will be reflected as a reduction of research and development expense when realized in the Company’s condensed consolidated statements of operations, as the Company does not consider performing research and development services for reimbursement to be a part of its ongoing major or central operations .

During the three and six months ended June 30, 2021 , the Company recognized a reduction of research and development expenses of $ 0.4 million and $ 0.8 million , respectively under the Arbutus Agreement.

Contract Liabilities

The following table presents changes in the Company’s contract liabilities (in thousands):

Three Months Ended March 31, 2021

Six Months Ended June 30, 2021

Contract liabilities:

Deferred revenue

Three Months Ended March 31, 2020

Six Months Ended June 30, 2020

Contract liabilities:

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The Company is also required to pay diligence maintenance fees each year to the extent that the royalty, sublicensing, and milestone payments to IURTC are less than such fees for that year.

No amounts were paid in the three months ended March 31, 2021.

Amounts paid in the three months ended March 31, 2020 were insignificant.

No amounts were paid in the six months ended June 30, 2021.

Amounts paid in the six months ended June 30, 2020 were insignificant.

Microbiome Targeted Colonic Delivery Platform

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ASSEMBLY BIOSCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

No amounts were accrued for this agreement as of and for the three months ended March 31, 2021 or 2020.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

No amounts were accrued for this agreement as of and for the six months ended June 30, 2021 or 2020.

In connection with the wind-down of the Microbiome program, the License and Collaboration Agreement with Therabiome was terminated in January 2021 , and the termination bec ame effective on April 21, 2021.

Door Agreement

In November 2020, the Company and Door Pharmaceuticals, LLC (Door) entered into an exclusive, two-year Collaboration Agreement and Sublicense Agreement (collectively, the Door Agreement) focused on the development of a novel class of HBV inhibitors.

Under the terms of the agreement, Door will build upon its previous efforts to lead and conduct new discovery research, which the Company will fund.

Door Pharma Agreement

In November 2020, the Company and Door Pharmaceuticals, LLC (Door Pharma) entered into an exclusive, two-year Collaboration Agreement and Sublicense Agreement (collectively, the Door Pharma Agreement) focused on the development of a novel class of HBV inhibitors.

Under the terms of the agreement, Door Pharma will build upon its previous efforts to lead and conduct new discovery research, which the Company will fund.

In return for an up-front payment of $ 1.8 million, success-based milestones up to $ 35.0 million, exercise and annual fees ranging from $ 0.1 million to $ 2.0 million and royalties in the low to mid-single digits, the Company will be granted an exclusive option to license compounds arising from the collaboration and will be responsible for the continued development and commercialization of optioned compounds.

For the three months ended March 31, 2021, the Company incurred $ 0.4 million of research and development funding.

Under the consolidation accounting standard, the Company determined that Door is a variable interest entity.

The Company does not have the power to direct the activities that most significantly affect the economic performance of Door and as such the Company is not the primary beneficiary and consolidation is not required.

As of March 31, 2021, the Company has not provided financial or other support to Door that was not contractually required.

For the three and six months ended June 30, 2021, the Company incurred $ 0.5 million and $ 0.8 million, respectively, of research and development funding.

Under the consolidation accounting standard, the Company determined that Door Pharma is a variable interest entity.

The Company does not have the power to direct the activities that most significantly affect the economic performance of Door Pharma and as such the Company is not the primary beneficiary and consolidation is not required.

As of June 30, 2021, the Company has not provided financial or other support to Door Pharma that was not contractually required.

Note 10 - Leases

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In February 2021, the Company subleased substantially all of the office space under the Carmel, Indiana lease.

The Company also leases office and laboratory space in Groton, Connecticut that supported the Microbiome program under a lease that expires in June 2021.

Due to the wind-down of the Microbiome program, the lease will not be renewed.

The Company also leased office and laboratory space in Groton, Connecticut that supported the Microbiome program under a lease that expired in June 2021.

Due to the wind-down of the Microbiome program, the lease was not renewed.

The Company’s China subsidiary leased office space and lab space in Shanghai, which the Company let expire in March 2021 and December 2020, respectively.

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The incremental borrowing rate represents an estimate of the interest rate the Company would incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis over the term of a lease within a particular currency environment.

At March 31, 2021, the Company had operating lease liabilities of $ 8.6 million and ROU assets of $ 8.1 million.

At June 30, 2021, the Company had operating lease liabilities of $ 8.0 million and ROU assets of $ 7.5 million.

The following summarizes quantitative information about the Company’s operating leases (in thousands):

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Operating lease cost

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ASSEMBLY BIOSCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Three Months Ended March 31,

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Six Months Ended June 30,

Operating cash flows from operating leases

ROU assets exchanged for new operating lease liabilities

As of both March 31, 2021 and December 31, 2020, the weighted-average remaining lease term for operating leases was 2.7 years .

As of March 31, 2021 and December 31, 2020, the weighted-average discount rate for operating leases was 9.7 % and 9.2 %, respectively.

As of March 31, 2021, the maturities of the Company’s operating lease liabilities were as follows (in thousands):

Nine months ending December 31, 2021

As of both June 30, 2021 and December 31, 2020, the weighted-average remaining lease term for operating leases was 2.4 years .

As of June 30, 2021 and December 31, 2020, the weighted-average discount rate for operating leases was 9.7 % and 9.2 %, respectively.

As of June 30, 2021, the maturities of the Company’s operating lease liabilities were as follows (in thousands):

Six months ending December 31, 2021

Year Ending December 31, 2022

Year Ending December 31, 2023

Year Ended December 31, 2024

present value discount

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements