What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-11-04 compared with 2021-08-05 · 155 added, 170 removed, 423 unchanged (43% of the section changed)

3 unchanged sentences

(In thousands except for share amounts and par value)

September 30,

Current assets

Cash and cash equivalents

Marketable securities

Marketable securities - short-term

Accounts receivable from collaborations

1 unchanged sentence

Total current assets

Marketable securities - long-term

Property and equipment, net

18 unchanged sentences

Common stock, $ 0.001 par value;

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

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

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

Additional paid-in capital

5 unchanged sentences

ASSEMBLY BIOSCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(In thousands except for share and per share amounts)

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Collaboration revenue

3 unchanged sentences

Total operating expenses

(Loss) income from operations

Loss 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) 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

Comprehensive loss

Net loss per share, basic and diluted

Weighted average common shares outstanding, basic and diluted

See Accompanying Notes to Condensed Consolidated Financial Statements

2 unchanged sentences

(In thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities

38 unchanged sentences

Comprehensive

Income (Loss)

Stockholders'

Balance as of March 31, 2021

Balance as of June 30, 2021

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

Issuance of common stock under ESPP

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

2 unchanged sentences

Stock-based compensation

Balance as of June 30, 2021

Balance as of September 30, 2021

Comprehensive

1 unchanged sentence

Stockholders'

Balance as of March 31, 2020

Balance as of June 30, 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

Unrealized loss on marketable debt securities

Stock-based compensation

Balance as of June 30, 2020

For the Six Month Period

Balance as of September 30, 2020

For the Nine Month Period

Comprehensive

Income (Loss)

Stockholders'

6 unchanged sentences

Stock-based compensation

Balance as of June 30, 2021

Balance as of September 30, 2021

Comprehensive

7 unchanged sentences

Stock-based compensation

Balance as of June 30, 2020

Balance as of September 30, 2020

See Accompanying Notes to Condensed Consolidated Financial Statements

7 unchanged sentences

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.

Assembly has discovered several novel core inhibitors, which are small molecules that directly target and allosterically modify the HBV core (HBc) protein in a way that affects assembly and stability of HBV nucleocapsids.

The Company has discovered several novel core inhibitors, which are small molecules that directly target and allosterically modify the HBV core (HBc) protein in a way that affects assembly and stability of HBV nucleocapsids.

The Company has not derived any revenue from product sales to date and currently has no approved products.

18 unchanged sentences

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.

the three and nine months ended September 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

9 unchanged sentences

However, the Company cannot at this time predict the specific extent, duration, or full impact the COVID-19 pandemic will have on its business, operations, strategy, prospects and financial condition and results.

The impact of the COVID-19 pandemic on the Company’s financial performance will depend on future developments, including the duration and spread of the outbreak and related governmental advisories and restrictions.

The impact of the COVID-19 pandemic on the Company’s financial performance will depend on future developments, including the duration of the outbreak and related governmental advisories and restrictions.

These developments and the impact of the COVID-19 pandemic on the financial markets and the overall economy are highly uncertain.

4 unchanged sentences

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

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.

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.

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 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

In June 2021, 2,109,140 of the pre-funded warrants were exercised through a cashless exercise, and in July 2021, the remaining 315,102 pre-funded warrants were exercised through a cashless exercise (see Note 6).

Prior to these exercises, the pre-funded warrants were exercisable for shares of common stock at an exercise price of $ 0.001 per share.

The shares of common stock into which the then-outstanding pre-funded warrants could be exercised were considered outstanding for the purposes of computing earnings per share because the shares were issuable for little or no consideration, were fully vested, and were 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 September 30,

Nine Months Ended September 30,

Weighted average common shares and

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

pre-funded warrants outstanding - basic and diluted

Net loss per share - basic and diluted

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

September 30,

Options to purchase common stock

8 unchanged sentences

Measurement of Credit Losses on Financial Instruments (ASU 2016-13), which requires that expected credit losses relating to financial assets measured on an amortized cost basis and available-for-sale debt securities be recorded through an allowance for credit losses.

ASU 2016-13 limits the amount of credit losses to be recognized for available-for-sale debt securities to the amount by which carrying value exceeds fair value and also requires the reversal of previously recognized credit losses if fair value increases.

ASU 2016-13 limits the amount of credit losses to be recognized for available-for-sale debt securities to the amount by which carrying value exceeds fair value and requires the reversal of previously recognized credit losses if fair value increases.

In April, May and November 2019, the FASB issued additional amendments to the new guidance related to transition and clarification.

2 unchanged sentences

Early adoption is permitted.

The Company is currently evaluating the timing and impact of adopting this new accounting standard on its condensed consolidated financial statements and related disclosures.

The Company is currently evaluating the timing and impact of adopting ASU 2016-13 on its condensed consolidated financial statements and related disclosures.

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

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.

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.

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.

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 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.

6 unchanged sentences

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.

The Company does not expect ASU 2021-04 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):

June 30, 2021

September 30, 2021

Cash equivalents

1 unchanged sentence

Total cash equivalents

Short-term investments

Short-term marketable securities

and foreign corporate debt securities

1 unchanged sentence

and foreign commercial paper

Total short-term investments

Total cash equivalents and investments

ASSEMBLY BIOSCIENCES, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Total short-term marketable securities

Long-term marketable securities

and foreign corporate debt securities

Total long-term marketable securities

Total cash equivalents and marketable securities

December 31, 2020

3 unchanged sentences

Total cash equivalents

Short-term investments

Short-term marketable securities

and foreign corporate debt securities

2 unchanged sentences

and foreign commercial paper

Total short-term investments

Total cash equivalents and investments

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.

Total short-term marketable securities

Total cash equivalents and marketable securities

All marketable securities held as of September 30, 2021 had contractual maturities of less than two years .

Realized gains and losses for the three and nine months ended September 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 September 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):

June 30, 2021

September 30, 2021

Cash equivalents

1 unchanged sentence

Total cash equivalents

Short-term investments

Short-term marketable securities

and foreign corporate debt securities

1 unchanged sentence

and foreign commercial paper

Total short-term investments

Total short-term marketable securities

Long-term marketable securities

and foreign corporate debt securities

Total long-term marketable securities

Total assets measured at fair value

4 unchanged sentences

Total cash equivalents

Short-term investments

Short-term marketable securities

and foreign corporate debt securities

2 unchanged sentences

and foreign commercial paper

Total short-term investments

Total short-term marketable securities

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.

4 unchanged sentences

Other accrued expenses consist of the following (in thousands):

September 30,

Accrued expenses:

7 unchanged sentences

Restructuring

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):

Restructuring costs incurred for the nine months ended September 30, 2021

Cumulative restructuring costs incurred through September 30, 2021

The reversal of $ 3.0 million in employee severance and related benefits recognized during the nine months ended September 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.

There were no restructuring costs incurred during the three months ended September 30, 2021.

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

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

Research and development

General and administrative

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):

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

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

Restructuring

2 unchanged sentences

Reductions for cash payments

Accrued balance as of June 30, 2021

Accrued balance as of September 30, 2021

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

2 unchanged sentences

Note 6 – Stockholders’ Equity

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.

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

As of September 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 September 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.

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.

During the nine months ended September 30, 2021, the Company sold 10,399,548 shares of common stock under the 2020 ATM, for which the Company received net proceeds of $ 50.2 million, after deducting commissions, fees and expenses.

Common Stock Warrants

1 unchanged sentence

Exercise Price

June 30, 2021

September 30, 2021

December 31, 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 .

During the three and nine months ended September 30, 2021, 315,102 and 2,424,242 warrants were exercised through a cashless exercise, respectively, resulting in the issuance of 2,423,634 shares of the Company’s common stock.

There were no warrants exercised during the three and nine months ended September 30, 2020 .

Note 7 – Stock Plans and Stock-Based Compensation

7 unchanged sentences

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:

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

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

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

3 unchanged sentences

The Company also issues new shares of common stock in connection with purchases of shares of common stock by eligible employees under the Company’s 2018 ESPP.

ASSEMBLY BIOSCIENCES, INC.

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 six months ended June 30, 2021 is as follows:

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

Outstanding as of December 31, 2020

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:

Outstanding as of September 30, 2021

Options vested and exercisable as of September 30, 2021

The weighted-average grant-date fair value of options granted was $ 3.08 and $ 11.01 during the nine months ended September 30, 2021 and 2020, respectively.

The total intrinsic value of options exercised during the nine months ended September 30, 2020 was $ 2.0 million.

There were no options exercised during the nine months ended September 30, 2021.

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

Value Per RSU

1 unchanged sentence

Nonvested as of December 31, 2020

Nonvested as of June 30, 2021

Nonvested as of September 30, 2021

Includes 140,000 RSUs that have vested but are subject to deferred settlement, which have a weighted average remaining contractual term of 0.1 years.

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.

The total fair value of RSUs vested and settled during the nine months ended September 30, 2021 and 2020 was $ 3.5 million and $ 6.2 million, respectively.

The total intrinsic value of RSUs vested and settled during the nine months ended September 30, 2021 and 2020 was $ 0.8 million and $ 3.9 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 expiration of the time period to complete one of the performance conditions.

On July 31, 2021, an additional 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 50,000 awards with an aggregate fair value of $ 0.4 million vest upon performance conditions not yet deemed probable.

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

ASSEMBLY BIOSCIENCES, INC.

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.

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

In July 2021, the Company granted a total of 324,214 RSUs with performance-based vesting conditions upon the achievement of clinical milestones to the majority of employees, including our executive officers.

The awards had a grant date fair value of $ 1.2 million and vest upon performance conditions not yet deemed probable.

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

Employees purchased 42,803 and 42,266 shares of common stock under the 2018 ESPP during the nine months ended September 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 June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Exercise price

19 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 June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 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 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.

As of September 30, 2021, there was $ 12.0 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 1.7 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 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.

For the three and nine months ended September 30, 2020, the Company recognized $ 3.6 million and $ 47.1 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

ASSEMBLY BIOSCIENCES, INC.

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 .

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 and nine months ended September 30, 2021 due to the termination of the Allergan Agreement in 2020.

BeiGene Agreement

25 unchanged sentences

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

ASSEMBLY BIOSCIENCES, INC.

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.

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 commercial supply of the Licensed Product Candidates to BeiGene do not represent material rights, and therefore are not performance obligations, 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.

2 unchanged sentences

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 June 30, 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.

2 unchanged sentences

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 June 30, 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.

The remaining transaction price allocated to the ABI-H2158 and ABI-H3733 Licenses of $ 9.0 million was recorded as long-term deferred revenue contract liability as of December 31, 2020.

In September 2021, the

Company discontinued development of ABI-H2158 following the observation of elevated alanine transaminase levels in the Phase 2 clinical stud y consistent with drug-induced hepatotoxicity .

The obligation related to the technology transfer associated with the license of ABI-H2158 was considered to be completed upon the Company's discontinuation of the development of this compound.

Accordingly, t he Company recognized $ 6.3 million as collaboration revenue for the amount allocated to ABI-H2158 during the three months ended September 30, 2021 .

The remaining transaction price allocated to the ABI-H3733 License of $ 2.7 million was recorded as a long-term deferred revenue contract liability on the unaudited condensed consolidated balance sheet as of September 30, 2021 .

Revenue for the remaining performance obligation will be recognized when the Company provides pre-Phase 3 clinical study know-how and development results for ABI-H3733 to BeiGene or a termination of the BeiGene Agreement for ABI-H3733 .

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 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.

During the three and nine months ended September 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 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

In August 2020, the Company and Arbutus Biopharma Corporation (Arbutus) entered into a Clinical Trial Collaboration Agreement (the Arbutus Agreement) to conduct a randomized, multi-center, open-label Phase 2 clinical study to explore the safety, PK and antiviral activity of the triple combination of VBR, AB-729 and a nucleos(t)ide reverse transcriptase inhibitor (NrtI) compared to the double combinations of VBR plus NrtI and AB-729 plus NrtI.

Assembly and Arbutus will share responsibility for the costs of the study equally, excluding manufacturing supply which will be the burden of each company to supply their respective drugs VBR and AB-729.

The Arbutus 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 the collaborative activity.

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 a

ASSEMBLY BIOSCIENCES, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

performance obligation related to collaborative activities.

As of September 30, 2021 and December 31, 2020, the remaining unamortized contract costs are $ 0.2 million and $ 0.8 million, respectively, and are included in other assets on the condensed consolidated balance sheet.

Arbutus Biopharma Agreement

In August 2020, the Company and Arbutus Biopharma Corporation (Arbutus Biopharma) entered into a Clinical Trial Collaboration Agreement (the Arbutus Biopharma Agreement) to conduct a randomized, multi-center, open-label Phase 2 clinical study to explore the safety, PK and antiviral activity of the triple combination of VBR, AB-729 and a nucleos(t)ide reverse transcriptase inhibitor (NrtI) compared to the double combinations of VBR plus NrtI and AB-729 plus NrtI.

Assembly and Arbutus Biopharma will share responsibility for the costs of the study equally, excluding manufacturing supply.

Each company will need to supply their respective drugs, VBR and AB-729.

The Arbutus Biopharma 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 the collaborative activity.

Arbutus Biopharma 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 Biopharma Agreement and concluded there is one activity, to run an open-label Phase 2 clinical study, which is akin to a 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.

During the three and nine months ended September 30, 2021, the Company recognized a reduction of research and development expenses of $ 0.5 million and $ 1.3 million, respectively under the Arbutus Biopharma Agreement.

Antios Agreement

In July 2021, the Company and Antios Therapeutics, Inc.

(Antios) entered into a Clinical Trial Collaboration Agreement (the Antios Agreement) to collaborate on a clinical trial of a combination therapy using either or both of the Company’s core inhibitors, VBR and ABI-H2158, and Antios’s active site polymerase inhibitor nucleotide ATI-2173 for the treatment of HBV.

Assembly and Antios will share responsibility for the costs of the study equally, excluding manufacturing supply, which each company will need to supply their respective drugs.

The Antios Agreement does not bind either party to conducting a collaboration trial or collaboration trial cohort unless and until a Joint Development Committee (the JDC) formed by both parties decides to initiate a collaboration trial or collaboration trial cohort.

Due to the discontinuation of development of ABH-H2158 in September 2021, any study under the Antios Agreement would be with VBR.

The Antios 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 the collaborative activity.

Antios is not a customer as it does not obtain an output from the collaborative activities as they were not provided an exclusive license to ABI-H2158 or VBR or the ability to manufacture ABI-H2158 or VBR, and the Company does not consider performing such collaborative activities to be a part of its ongoing activities.

In October 2021, the JDC agreed to initiate a collaboration trial cohort to evaluate a triple combination treatment in patients with chronic HBV infection.

There were no costs incurred during the three and nine months ended September 30, 2021 .

Contract Liabilities

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

Six Months Ended June 30, 2021

Nine Months Ended September 30, 2021

Contract liabilities:

Deferred revenue

Six Months Ended June 30, 2020

Nine Months Ended September 30, 2020

Contract liabilities:

7 unchanged sentences

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 six months ended June 30, 2021.

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

No amounts were paid in the nine months ended September 30, 2021.

Amounts paid in the nine months ended September 30, 2020 were insignificant.

Microbiome Targeted Colonic Delivery Platform

6 unchanged sentences

Therabiome was obligated to pay the Company royalties on annual net sales of any product Therabiome was permitted to develop using the intellectual property in the low double to mid-double-digit percentages, depending on the level of development or involvement the Company had in the product.

ASSEMBLY BIOSCIENCES, INC.

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.

No amounts were accrued for this agreement as of and for the nine months ended September 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 became effective on April 21, 2021.

Door Pharma Agreement

2 unchanged sentences

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

Door Pharma met a milestone for which the Company paid $ 0.2 million during the three months ended September 30, 2021.

For the three and nine months ended September 30, 2021, the Company incurred $ 0.5 million and $ 1.3 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.

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

Note 10 – Leases

6 unchanged sentences

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.

The Company’s China subsidiary leases a registrational office in Shanghai under a lease that expires in May 2022.

Additionally, the Company’s China subsidiary leases office space in Beijing under a lease agreement that expires in December 2021.

1 unchanged sentence

The Company also leases certain laboratory equipment accounted for as operating leases expiring at various dates, with the final lease expiring in 2024.

In February 2021, the Company purchased substantially all of the leased equipment used for the Microbiome program from its leasing agency and sold them to third parties (see Note 5).

In February 2021, the Company purchased substantially all of the leased equipment used for the Microbiome program from its leasing agency and sold this equipment to third parties (see Note 5).

When the Company cannot determine the implicit rate in its leasing arrangements , the Company uses its incremental borrowing rate as the discount rate when measuring operating lease liabilities.

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

At September 30, 2021, the Company had operating lease liabilities of $ 7.2 million and ROU assets of $ 6.8 million.

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

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Operating lease cost

3 unchanged sentences

Total lease cost

ASSEMBLY BIOSCIENCES, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Six Months Ended June 30,

Nine Months Ended September 30,

Operating cash flows from operating leases

ROU assets exchanged for new operating lease liabilities

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

As of September 30, 2021 and December 31, 2020, the weighted-average remaining lease term for operating leases was 2.2 years and 2.7 years, respectively.

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

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

Three months ending December 31, 2021

Year Ending December 31, 2022

4 unchanged sentences

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