11 unchanged sentences
Based on our evaluation under the framework in Internal Control-Integrated Framework, our management concluded that our internal control over financial reporting was effective as of December 31, 2021.
−Removed: Our independent registered public accounting firm, Ernst & Young LLP has issued an opinion on the effectiveness of our internal control over financial reporting as of December 31, 2020.
−Removed: The report of Ernst & Young LLP is included with the financial statements appended to this Form 10-K pursuant to Item 8.
Changes in Internal Control over Financial Reporting
2 unchanged sentences
Not applicable.
+Added: Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
+Added: Not applicable.
Directors, Executive Officers and Corporate Governance
12 unchanged sentences
The information required by this item will be contained in the Proxy Statement and is incorporated into this Annual Report on Form 10-K by reference.
−Removed: Exhibits, Financial Statement Schedules
+Added: Exhibits, Finan cial Statement Schedules
(a) Exhibits.
4 unchanged sentences
Specimen of Common Stock Certificate.
−Removed: Form of Pre-Funded Warrant.
Description of Securities.
1 unchanged sentence
Exclusive License Agreement dated September 3, 2013 by and between The Indiana University Research and Technology Corporation and Assembly Pharmaceuticals, Inc.
−Removed: Description of Document
Amendment No.
8 unchanged sentences
McHutchison, A.O., M.D.
−Removed: Employment Agreement, dated September 30, 2019, between Assembly Biosciences, Inc.
−Removed: and Thomas J.
−Removed: Russo, effective as of October 28, 2019.
−Removed: Amendment No.
−Removed: 1 to Employment Agreement, dated February 26, 2020, between Assembly Biosciences, Inc.
−Removed: and Thomas J.
+Added: Amended and Restated Employment Agreement, dated July 30, 2021, between Assembly Biosciences, Inc.
+Added: Employment Agreement, dated July 30, 2021, between Assembly Biosciences, Inc.
+Added: and Michael P.
Employment Agreement, dated October 22, 2019, between Assembly Biosciences, Inc.
4 unchanged sentences
Stamm, M.D., Ph.D.
−Removed: Employment Agreement, dated March 23, 2020, between Assembly Biosciences, Inc.
−Removed: Okazaki, effective as of March 26, 2020.
Employment Agreement, dated May 1, 2020, between Assembly Biosciences, Inc.
8 unchanged sentences
Form of Restricted Stock Unit Award Notice and Restricted Stock Unit Award Agreement under the Amended and Restated 2014 Stock Incentive Plan.
+Added: Description of Document
Assembly Biosciences, Inc.
10 unchanged sentences
2018 Stock Incentive Plan.
+Added: Amendment No.
+Added: 4 to Assembly Biosciences, Inc.
+Added: 2018 Stock Incentive Plan.
Form of Notice of Stock Option Grant and Stock Option Agreement under the 2018 Stock Incentive Plan.
3 unchanged sentences
2018 Stock Incentive Plan.
−Removed: Assembly Biosciences, Inc.
+Added: Form of Performance-Based Stock Appreciation Right Award Agreement for Non-U.S.
+Added: Grantees under the Assembly Biosciences, Inc.
+Added: 2018 Stock Incentive Plan.
+Added: Amended and Restated Assembly Biosciences, Inc.
2018 Employee Stock Purchase Plan.
−Removed: Description of Document
Assembly Biosciences, Inc.
7 unchanged sentences
2021 Corporate Bonus Plan.
+Added: Open Market Sale Agreement by and between Assembly Biosciences, Inc.
+Added: and Jefferies LLC.
List of Subsidiaries of Assembly Biosciences, Inc.
7 unchanged sentences
Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
+Added: Description of Document
Inline XBRL Instance Document.
7 unchanged sentences
The schedules to this exhibit have been omitted pursuant to Item 601(a)(5) of Regulation S-K.
−Removed: Portions of this exhibit that are both not material and would likely cause competitive harm to the registrant if publicly disclosed have been omitted pursuant to Item 601(b)(10)(iv) of Regulation S-K.
+Added: Portions of this exhibit have been omitted pursuant to Item 601(b)(10)(iv) of Regulation S-K.
Represents management contracts or compensatory plans or arrangements.
4 unchanged sentences
ASSEMBLY BIOSCIENCES, INC.
−Removed: February 25, 2021
+Added: March 11, 2022
McHutchison, A.O., M.D.
3 unchanged sentences
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints John G.
−Removed: McHutchison, A.O., M.D., Thomas J.
−Removed: Russo, CFA and Jason A.
+Added: McHutchison, A.O., M.D.
Okazaki, jointly and severally, his or her attorneys-in-fact, each with the power of substitution, for him or her in any and all capacities, to sign any amendments to this report, and to file the same, with exhibits thereto and other documents in connection therewith with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact, or his or her substitute or substitutes may do or cause to be done by virtue hereof.
2 unchanged sentences
Chief Executive Officer, President and Director
−Removed: February 25, 2021
+Added: March 11, 2022
McHutchison, A.O., M.D.
(Principal Executive Officer)
−Removed: /s/ Thomas J.
+Added: /s/ Michael P.
Chief Financial Officer
−Removed: February 25, 2021
+Added: March 11, 2022
(Principal Financial and Principal Accounting Officer)
1 unchanged sentence
Chairman of the Board
−Removed: February 25, 2021
+Added: March 11, 2022
/s/ Anthony E.
−Removed: February 25, 2021
+Added: March 11, 2022
/s/ Gina Consylman
−Removed: February 25, 2021
+Added: March 11, 2022
Gina Consylman
1 unchanged sentence
DiMarchi, Ph.D.
−Removed: February 25, 2021
+Added: March 11, 2022
DiMarchi, Ph.D.
−Removed: February 25, 2021
+Added: March 11, 2022
+Added: /s/ Sir Michael Houghton, Ph.D.
+Added: March 11, 2022
+Added: Sir Michael Houghton, Ph.D.
+Added: Johnson-Pratt, M.D.
+Added: March 11, 2022
+Added: Johnson-Pratt, M.D.
/s/ Susan Mahony, Ph.D.
−Removed: February 25, 2021
+Added: March 11, 2022
Susan Mahony, Ph.D.
1 unchanged sentence
FINANCIAL STATEMENTS
−Removed: Reports of Independent Registered Public Accounting Firm
+Added: Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets as of December 31, 2021 and 2020
7 unchanged sentences
We have audited the accompanying consolidated balance sheets of Assembly Biosciences, Inc.
−Removed: (the Company) as of December 31, 2020 and 2019, the related consolidated statements of operations and comprehensive loss, changes in stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2020, and the related notes (collectively referred to as the “consolidated financial statements”).
−Removed: In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with U.S.
+Added: (the Company) as of December 31, 2021 and 2020, the related consolidated statements of operations and comprehensive loss, changes in stockholders’ equity and cash flows for each of the two years in the period ended December 31, 2021, and the related notes (collectively referred to as the “consolidated financial statements”).
+Added: In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2021, in conformity with U.S.
generally accepted accounting principles.
−Removed: We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework) and our report dated February 25, 2021 expressed an unqualified opinion thereon.
Basis for Opinion
1 unchanged sentence
Our responsibility is to express an opinion on the Company’s financial statements based on our audits.
−Removed: We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.
+Added: We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
1 unchanged sentence
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
+Added: The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.
+Added: As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.
+Added: Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
6 unchanged sentences
The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
−Removed: Accrued clinical trial expenses
+Added: Accrued research and development expenses
Description of the Matter
−Removed: For the year ended December 31, 2020, the Company incurred $106.8 million of research and development expenses and recorded $4.4 million for accrued clinical trial expenses at December 31, 2020.
−Removed: As described in Note 2 to the consolidated financial statements, the Company’s expense accruals for clinical trials are based on estimates of the services received and efforts expended pursuant to contracts with multiple contract research organizations (CROs) and manufacturing vendors that conduct and manage these activities on its behalf.
+Added: For the year ended December 31, 2021, the Company incurred $68.5 million of research and development expenses and recorded $3.4 million of accrued research and development expenses at December 31, 2021.
+Added: As described in Note 2 to the consolidated financial statements, the Company’s accrued research and development expenses are based on estimates of the services received and efforts expended pursuant to contracts with multiple contract research organizations (CROs) and manufacturing vendors that conduct and manage these activities on its behalf.
When billing terms under such contracts do not coincide with the timing of when the work is performed, management is required to make estimates of outstanding obligations to those third parties as of period end.
The accrual is based on a number of factors, including the time period over which services will be performed, enrollment of subjects, number of sites activated, and the level of effort to be expended in each period.
−Removed: At period end, accrued clinical trial expenses are recorded based upon estimates of the proportion of work completed over the term of the individual clinical trial and manufacturing activities in accordance with signed agreements with the third parties.
+Added: At period end, accrued research and development expenses are recorded based upon estimates of the proportion of work completed over the term of the individual clinical trial and manufacturing activities in accordance with signed agreements with the third parties.
If possible, the Company obtains information regarding unbilled services directly from these service providers and performs procedures to challenge these estimates based on their internal understanding of the services provided to date.
However, the Company may also be required to estimate these services based on information available to its internal clinical or administrative staff if such information is not able to be obtained timely from its services providers.
−Removed: Auditing accrued clinical trial expenses is complex because of the judgments applied by management to determine the commencement and completion date of vendor tasks and the cost and extent of work performed during the reporting period for services not yet billed by contracted third-party vendors.
−Removed: The testing of the Company’s accrued clinical trial expense models also involves a high level of effort to test the high volume of data used to determine the estimated accrual.
+Added: Auditing accrued research and development expenses is complex because of the judgments applied by management to determine the commencement and completion date of vendor tasks and the cost and extent of work performed during the reporting period for services not yet billed by contracted third-party vendors.
+Added: The testing of the Company’s accrued research and development expense models also involves a high level of effort to test the high volume of data used to determine the estimated accrual.
How We Addressed the Matter in Our Audit
−Removed: We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s process for estimating the accrued clinical trial expenses including controls over management’s assessment and measurement of clinical trial progress and related estimates of accrued clinical trial costs and the completeness and accuracy of underlying data used in the analysis.
−Removed: To test the estimate of accrued clinical trial expenses, we performed audit procedures that included, among others, direct confirmation of contract terms and conditions with a sample of the Company’s third-party vendors.
+Added: To test the completeness of accrued research and development expenses, we performed audit procedures that included, among others, direct confirmation of contract terms and conditions with a sample of the Company’s third-party vendors.
We also confirmed the progress of contracted clinical activities with these third-party vendors and compared such data to the Company’s estimates of progress as reflected in their accrual models.
2 unchanged sentences
Further, we inspected material invoices received from third parties after the balance sheet date and evaluated whether services performed prior to the consolidated balance sheet date had been properly included in the accrual.
−Removed: Revenue Recognition for the Collaborative Arrangement with BeiGene, Ltd.
+Added: Impairment of goodwill and indefinite-lived intangible asset
Description of the Matter
−Removed: As described in Note 9 to the consolidated financial statements, in July 2020, the Company entered into a collaboration agreement with BeiGene, Ltd.
−Removed: (BeiGene) to develop and commercialize the Company’s product candidates in China for the treatment of chronic Hepatitis B virus infection (the BeiGene Agreement).
−Removed: The BeiGene Agreement includes up-front fees, milestones, royalties, expense reimbursement, and potential cost share and profit sharing.
−Removed: Management was required to use judgment to determine what part of the BeiGene Agreement was within the scope of the contract with customers guidance and what part of the agreement was within the scope of the collaborative arrangement guidance.
−Removed: For the year ended December 31, 2020, the Company recognized $31.0 million as collaboration revenue and $9.0 million of long-term deferred revenue from the BeiGene Agreement.
−Removed: Auditing the Company’s accounting for revenues from its BeiGene Agreement was especially challenging due to the complex and highly judgmental nature of evaluating the terms of the agreement, evaluating whether analogies to the revenue accounting or collaborative arrangements guidance are appropriate, and allocating the transaction price to the performance obligations.
+Added: As discussed in Note 2 of the consolidated financial statements, both goodwill and the indefinite-lived intangible asset are tested for impairment at least annually.
+Added: To determine the estimated fair value of the Company’s single reporting unit and the indefinite-lived intangible asset included within it, management considered both market and income valuation approaches.
+Added: As further discussed in Note 5, in the fourth quarter of 2021 the Company recorded impairment of goodwill and IPR&D of $12.6 million and $29.0 million, respectively.
+Added: Auditing management’s impairment tests for goodwill and its indefinite-lived intangible asset was complex and highly judgmental due to the significant assumptions used in determining the fair value of the Company’s single reporting unit and the indefinite-lived intangible asset included within it.
+Added: Significant assumptions used include (i) estimating the expected timing and amount of projected future revenues;
+Added: (ii) costs to complete the in-process research and development;
+Added: and (iii) the discount rates used to estimate future cash flows which are affected by probabilities of technical success.
How We Addressed the Matter in Our Audit
−Removed: We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over management’s assessment of the accounting treatment of the BeiGene Agreement and identification of performance obligations and application of the accounting guidance.
−Removed: To test the accounting for revenue from the BeiGene Agreement, among other procedures, we tested and evaluated, the performance obligations identified and the allocation of transaction price to performance obligations.
−Removed: We also assessed whether management’s evaluation of the portions of the BeiGene Agreement subject to the scope of the contract with customers accounting standard and collaborative arrangements accounting standard, as well as their analogies to the revenue from contracts with customers accounting standard or the portion of the BeiGene Agreement subject to the collaborative arrangements guidance, was an appropriate application of an accounting policy.
+Added: To test the estimated fair value of the single reporting unit and the indefinite-lived intangible asset included within it, we performed audit procedures that included, among others, assessing the methodologies used by the Company, comparing the significant assumptions to current industry peers and economic trends, historical financial results, and other relevant factors that would affect the significant assumptions.
+Added: We involved valuation specialists to assist with assessing the methodologies and evaluating certain significant assumptions described above, such as projected future revenues, costs to complete the in-process research and development project and the discount rates.
+Added: We also performed sensitivity analyses of significant assumptions to evaluate the changes in the fair value of the reporting unit and indefinite-lived intangible asset that would result from changes in the assumptions.
/s/ Ernst & Young LLP
1 unchanged sentence
Redwood City, California
−Removed: February 25, 2021
−Removed: Report of Independent Registered Public Accounting Firm
−Removed: To the Stockholders and the Board of Directors of Assembly Biosciences, Inc.
−Removed: Opinion on Internal Control over Financial Reporting
−Removed: We have audited Assembly Biosciences, Inc.’s internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria).
−Removed: In our opinion, Assembly Biosciences, Inc.
−Removed: (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on the COSO criteria.
−Removed: We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2020 and 2019, the related consolidated statements of operations and comprehensive loss, changes in stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2020, and the related notes and our report dated February 25, 2021 expressed an unqualified opinion thereon.
−Removed: Basis for Opinion
−Removed: The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management's Annual Report on Internal Control Over Financial Reporting.
−Removed: Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.
−Removed: We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.
−Removed: federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
−Removed: We conducted our audit in accordance with the standards of the PCAOB.
−Removed: Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
−Removed: Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances.
−Removed: We believe that our audit provides a reasonable basis for our opinion.
−Removed: Definition and Limitations of Internal Control Over Financial Reporting
−Removed: A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
−Removed: A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;
−Removed: (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;
−Removed: and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
−Removed: Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
−Removed: Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
−Removed: /s/ Ernst & Young LLP
−Removed: Redwood City, California
−Removed: February 25, 2021
+Added: March 11, 2022
ASSEMBLY BIOSCIENCES, INC.
4 unchanged sentences
Cash and cash equivalents
−Removed: Marketable securities
+Added: Marketable securities - short-term
Accounts receivable from collaborations
1 unchanged sentence
Total current assets
+Added: Marketable securities - long-term
Property and equipment, net
4 unchanged sentences
Accounts payable
−Removed: Accrued clinical expenses
+Added: Accrued research and development expenses
Other accrued expenses
−Removed: Deferred revenue - short-term
Operating lease liabilities - short-term
1 unchanged sentence
Deferred tax liabilities
−Removed: Deferred revenue - long-term
+Added: Deferred revenue
Operating lease liabilities - long-term
6 unchanged sentences
Common stock, $ 0.001 par value;
−Removed: 100,000,000 shares authorized as of December 31, 2020 and 2019;
−Removed: 34,026,680 and 32,558,307 shares issued and outstanding as of December 31, 2020 and 2019, respectively
+Added: 100,000,000 shares authorized as of December 31, 2021 and December 31, 2020;
+Added: 48,120,437 and 34,026,680 shares issued and outstanding as of December 31, 2021 and December 31, 2020, respectively
Additional paid-in capital
12 unchanged sentences
General and administrative
+Added: Impairment of goodwill and indefinite-lived intangible asset
Total operating expenses
Loss from operations
−Removed: Interest and other income
+Added: Interest and other income, net
Total other income
Loss before income taxes
−Removed: Income tax benefit (expense)
−Removed: Other comprehensive income
−Removed: Unrealized gain (loss) on marketable securities, net of tax
+Added: Income tax benefit
+Added: Other comprehensive loss
+Added: Unrealized loss on marketable securities
Comprehensive loss
8 unchanged sentences
Balance as of December 31, 2019
−Removed: Sale of common stock, net of underwriters' discount and costs
+Added: Issuance of common stock under ATM equity offering program, net of issuance costs
Issuance of common stock upon exercise of stock options
Issuance of common stock under Employee Stock Purchase Plan (ESPP)
−Removed: Issuance of shares of common stock for settlement of restricted stock units (RSUs)
−Removed: Unrealized gain on marketable securities, net of tax
−Removed: Stock-based compensation
−Removed: Balance as of December 31, 2018
−Removed: Sale of common stock and pre-funded warrants, net of underwriters' discount and costs
−Removed: Issuance of common stock upon exercise of stock options
−Removed: Settlement of RSUs for cash
−Removed: Issuance of common stock under ESPP
−Removed: Issuance of shares of common stock for settlement of RSUs
−Removed: Unrealized gain on marketable securities, net of tax
+Added: Issuance of common stock for settlement of restricted stock units (RSUs)
+Added: Unrealized loss on marketable debt securities
Stock-based compensation
Balance as of December 31, 2020
−Removed: Sale of common stock, net of commissions and fees
−Removed: Issuance of common stock upon exercise of stock options
+Added: Issuance of common stock under ATM equity offering program, net of issuance costs
Issuance of common stock under ESPP
−Removed: Issuance of shares of common stock for settlement of RSUs
−Removed: Unrealized loss on marketable securities
+Added: Issuance of common stock for settlement of RSUs
+Added: Issuance of common stock upon cashless exercise of pre-funded warrants
+Added: Unrealized loss on marketable debt securities
Stock-based compensation
7 unchanged sentences
Adjustments to reconcile net loss to net cash used in operating activities:
+Added: Impairment of goodwill and indefinite-lived intangible asset
Depreciation and amortization
−Removed: Non-cash IPR&D expense
+Added: Non-cash in-process research and development (IPR&D) expense
Stock-based compensation
−Removed: Net accretion and amortization of investments in marketable securities
+Added: Net accretion and amortization of investments in marketable debt securities
Non-cash rent expense
−Removed: Deferred income tax (benefit) expense
−Removed: Loss on disposal of fixed assets
+Added: Deferred income tax benefit
+Added: Loss on disposal of property and equipment
+Added: Gain on the sale of Microbiome assets
Changes in operating assets and liabilities:
−Removed: Accounts receivable from collaborations
+Added: Accounts receivable from collaboration
Prepaid expenses and other current assets
Accounts payable
−Removed: Accrued clinical expenses
+Added: Accrued research and development expenses
Other accrued expenses
Deferred revenue
−Removed: Deferred rent
Operating lease liabilities
2 unchanged sentences
Purchases of property and equipment
−Removed: Purchase of IPR&D
+Added: Proceeds from sale of property and equipment
+Added: Purchase of IPR&D from an acquisition of assets
+Added: Proceeds from the sale of Microbiome assets
Purchases of marketable securities
1 unchanged sentence
Proceeds from sale of marketable securities
−Removed: Net cash provided by (used in) investing activities
+Added: Net cash provided by investing activities
Cash flows from financing activities
−Removed: Proceeds from common stock and pre-funded warrants sold, net of underwriters' discount, commissions and costs
+Added: Proceeds from the issuance of common stock under ATM equity offering program, net of issuance costs
Proceeds from the issuance of common stock under ESPP
5 unchanged sentences
Supplemental non-cash investing and financing activities
−Removed: Operating lease liabilities arising from obtaining right-of-use assets
+Added: Operating lease liabilities arising from obtaining ROU assets
+Added: Remeasurement of lease liabilities arising from modification of ROU assets
+Added: Receivable from sale of Microbiome assets included in prepaid expenses and other current assets
See Accompanying Notes to the Consolidated Financial Statements
2 unchanged sentences
Note 1 - Nature of Business
−Removed: Assembly Biosciences, Inc., together with its subsidiaries (Assembly or the Company), incorporated in Delaware in October 2005, is a clinical-stage biotechnology company advancing a novel class of oral therapeutic candidates for the treatment of hepatitis B virus (HBV) infection.
−Removed: The Company operates in one segment and is headquartered in South San Francisco, California with operations in California, Connecticut and China.
+Added: Assembly Biosciences, Inc., together with its subsidiaries (Assembly or the Company), incorporated in Delaware in October 2005, is a clinical-stage biotechnology company focused on discovery and development of novel therapeutics for the treatment of hepatitis B virus (HBV) infection and other viral diseases.
+Added: The Company operates in one segment and is headquartered in South San Francisco, California, with operations in California and China.
+Added: 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.
−Removed: Assembly has discovered multiple novel core inhibitors, which are small molecules that directly target and allosterically modify the HBV core (HBc) protein.
−Removed: In December 2020, the Company and its Board of Directors approved a plan to wind down its Microbiome program in order to prioritize and focus its resources entirely on discovering and developing finite and curative therapies for HBV.
−Removed: The Microbiome program had been developing a novel class of oral live microbial biotherapeutics candidates designed to treat disorders associated with the microbiome.
+Added: 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.
14 unchanged sentences
Use of Estimates
−Removed: The preparation of consolidated financial statements in conformity with the accounting principles generally accepted in the United States of America (U.S.
+Added: The preparation of consolidated financial statements in conformity with U.S.
GAAP requires management to make estimates and assumptions that may affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of expenses during the reporting period.
Actual results could differ from those estimates.
−Removed: Significant estimates inherent in the preparation of the accompanying consolidated financial statements include estimates for the cost-based input of revenue recognition and standalone selling price estimates for allocation of transaction price to performance obligations revenue recognition, estimates of costs incurred but not yet invoiced for clinical trial accruals, recoverability and useful lives of our long-lived assets, the estimated fair value of our indefinite-lived intangible assets, the estimated fair value of our reporting unit for purposes of evaluating goodwill impairment, provisions for income taxes, amounts receivable under collaboration agreements, measurement of operating lease liabilities, and the fair value of stock options, stock appreciation rights, and RSUs granted to employees, directors, and consultants.
+Added: Significant estimates inherent in the preparation of the accompanying consolidated financial statements include estimates of costs incurred but not yet invoiced for research and development accruals, the estimated fair value of our
+Added: indefinite-lived intangible asset and the estimated fair value of our reporting unit for purposes of evaluating goodwill impairment.
The Company’s estimates could be affected by external conditions, including those unique to the Company and general economic conditions.
2 unchanged sentences
In March 2020, the World Health Organization declared the COVID-19 outbreak a pandemic.
−Removed: To date, the Company’s operations have not been significantly impacted by the COVID-19 pandemic.
+Added: The ongoing COVID-19 pandemic and its broad, global impacts, including supply chain disruptions, have impacted certain aspects of the Company’s business, including where and how the Company’s employees work in its labs and offices and how and when the Company’s nonclinical and clinical studies are conducted.
+Added: Early in the pandemic, the Company’s current and future planned clinical trials and preclinical studies were largely unaffected, but as the pandemic has continued, the Company has experienced enrollment delays for its current clinical studies, particularly its two ongoing multi-drug combination studies.
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.
2 unchanged sentences
If the financial markets and/or the overall economy are impacted for an extended period, the Company’s results may be adversely affected.
+Added: In addition, the study design of an upcoming triple combination study initially included a site in Ukraine.
+Added: The Company will no longer be conducting the study there due to the instability resulting from Russia’s recent invasion of Ukraine.
+Added: These changes to the Company’s study plan will result in a delayed data readout.
Cash and Cash Equivalents
1 unchanged sentence
All of the Company’s cash equivalents have liquid markets and high credit ratings.
−Removed: The Company maintains its cash in bank deposits and other accounts, the balances of which, at times and at December 31, 2020 and 2019, exceed federally insured limits.
+Added: The Company maintains its cash in bank deposits and other accounts, the balances of which, at times as of and during the years ended December 31, 2021 and 2020, exceed federally insured limits.
Investments in Marketable Securities
3 unchanged sentences
Marketable securities are classified as short-term or long-term based on the maturity date and their availability to meet current operating requirements.
−Removed: Marketable securities that mature in one year or less are classified as short-term available-for-sale securities and are reported as a component of current assets.
+Added: Marketable securities that mature in one year or less from the consolidated balance sheet date are classified as short-term available-for-sale securities, while marketable securities with maturities in one year or beyond one year from the consolidated balance sheet date are classified as long-term.
Securities that are classified as available-for-sale are measured at fair value with temporary unrealized gains and losses reported in other comprehensive loss, and as a component of stockholders' equity until their disposition.
3 unchanged sentences
The Company may recognize an impairment charge when a decline in the fair value of investments below the cost basis is determined to be other-than-temporary.
−Removed: In determining whether a decline in market value is other-than-temporary, various factors are considered, including the cause, duration of time and severity of the impairment, any adverse changes in the investees’ financial condition, and the Company’s intent and ability to hold the security for a period of time sufficient to allow for an anticipated recovery in market value.
−Removed: To date, there have been no declines in value deemed to be other than temporary for any of our investments in marketable securities.
+Added: In determining whether a decline in market value is other-than-temporary, various factors are considered, including the cause, duration of time and severity of the impairment, any adverse changes in the investees’ financial condition, and the Company’s intent and ability to hold the security for a period of time sufficient to allow for an anticipated recovery
+Added: in market value.
+Added: To date, there have been no declines in value deemed to be other than temporary for any of the Company’s investments in marketable securities .
Goodwill and Indefinite-Lived Intangible Asset
−Removed: Goodwill and indefinite-lived intangible assets are reviewed for impairment at least annually in the fourth quarter, and more frequently if events or other changes in circumstances indicate that the carrying amount of the assets may not be recoverable.
−Removed: Impairment of goodwill and indefinite-lived intangibles is determined to exist when the fair value is less than the carrying value of the net assets being tested.
+Added: Goodwill and indefinite-lived intangible asset are reviewed for impairment at least annually in the fourth quarter, and more frequently if events or other changes in circumstances indicate that the carrying amount of the assets may not be recoverable.
The difference between the purchase price and the fair value of assets acquired and liabilities assumed in a business combination is allocated to goodwill.
−Removed: Goodwill is evaluated for impairment on an annual basis as of October 1, and more frequently if indicators are present or changes in circumstances suggest that impairment may exist.
−Removed: In performing each annual impairment assessment and any interim impairment assessment, the Company determines if it should qualitatively assess whether it is more likely than not that the fair value of goodwill is less than its carrying amount (the qualitative impairment test).
−Removed: If the Company concludes it is more likely than not that the fair value of the reporting unit is less than its carrying amount, or elect not to use the qualitative impairment test, a quantitative impairment test is performed The Company annual or interim quantitative impairment testing is performed by comparing the estimated fair value of the reporting unit to its carrying value.
+Added: Goodwill is evaluated for impairment on an annual basis as of October 1, and more frequently if indicators are present or changes in circumstances suggest impairment may exist.
+Added: In performing each annual impairment assessment and any interim impairment assessment, the Company determines if it should qualitatively assess whether it is more likely than not the fair value of goodwill is less than its carrying amount (the qualitative impairment test).
+Added: If the Company concludes it is more likely than not the fair value of the reporting unit is less than its carrying amount, or elect not to use the qualitative impairment test, a quantitative impairment test is performed.
+Added: The Company’s annual or interim quantitative impairment testing is performed by comparing the estimated fair value of the reporting unit to its carrying value.
An impairment charge is recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value, not to exceed the carrying value of goodwill.
−Removed: As of October 1, 2020 the Company has determined through its quantitative impairment test that the fair value of its goodwill significantly exceeded the carrying value of its single reporting unit and concluded that goodwill was not impaired.
−Removed: In November 2020, after the Company’s public announcement that it became clear that patients who stopped therapy in Study 211 had not achieved meaningful sustained virologic response rates most of the patients had relapsed, the Company’s stock price declined significantly.
−Removed: Due to a sustained decline in the Company’s stock price during the remainder of the fourth quarter of 2020, the Company determined these factors were an indication of a triggering event of impairment and an interim goodwill impairment test was performed as of December 31, 2020.
−Removed: However, the interim quantitative impairment test still determined the fair value, when considering a control premium based on a range of recent acquisitions of entities similar to the Company which were made on a non-minority basis, exceeded the carrying value of its single reporting unit, and concluded that goodwill was still not impaired.
−Removed: The Company has not recognized any goodwill impairment in any of the periods presented.
Indefinite-Lived Intangible Asset
−Removed: The Company’s indefinite-lived intangible asset consists of IPR&D acquired in a business combination that are used in research and development activities but have not yet reached technological feasibility, regardless of whether they have alternative future use.
+Added: The Company’s indefinite-lived intangible asset consists of IPR&D associated with small molecule core inhibitors that directly target and allosterically inhibit core protein functions associated with HBV which were acquired with the acquisition of Assembly Pharmaceutics, Inc.
+Added: IPR&D represents the fair value assigned to incomplete research projects the Company acquired through a business combination which, at the time of acquisition, had not reached technological feasibility, regardless of whether they had alternative future use.
The primary basis for determining the technological feasibility or completion of these projects is obtaining regulatory approval to market the underlying products in an applicable geographic region.
The Company classifies IPR&D acquired in a business combination as an indefinite-lived intangible asset until the completion or abandonment of the associated research and development efforts.
−Removed: Upon completion of the associated research and development efforts, the Company performed a final test for impairment and will determine the useful
−Removed: life of the technology and begin amortizing the assets to reflect their use over their remaining lives.
+Added: Upon completion of the associated research and development efforts, the Company performed a final test for impairment and will determine the useful life of the technology and begin amortizing the assets to reflect their use over their remaining lives.
Upon permanent abandonment, the Company would write-off the remaining carrying amount of the associated IPR&D intangible asset.
Indefinite-lived intangible assets are not amortized, but instead are reviewed for impairment at least annually, or more frequently if events occur or circumstances change that would indicate the carrying amount may be impaired.
−Removed: In performing each annual impairment assessment and any interim impairment assessment, the Company determines if it should qualitatively assess whether it is more likely than not that the fair value of its IPR&D asset is less than its carrying amount (the qualitative impairment test).
−Removed: If the Company concludes that is the case, or elect not to use qualitative impairment test, the Company would proceed with quantitatively determining the fair value of the IPR&D asset and comparing its fair value to its carrying value to determine the amount of impairment, if any (the quantitative impairment test).
−Removed: When performing the quantitative impairment assessment, the Company uses the income approach to determine the fair value of its IPR&D asset.
−Removed: This approach calculates fair value by estimating the after-tax cash flows attributable to an in-process project over its useful life and then discounting these after-tax cash flows back to a present value.
−Removed: This estimate includes judgmental assumptions regarding the estimates that market participants would make in evaluating the IPR&D asset, including the probability of successfully completing clinical trials and obtaining regulatory approval to market the IPR&D asset, the timing of and the expected costs to complete IPR&D projects, future net cash flows from potential drug sales, which are based on estimates of the sales price of the drug, the size of the patient population and cure rate, our competitive position in the marketplace, and appropriate discount and tax rates.
−Removed: Any impairment to be recorded is calculated as the difference between the fair value of the IPR&D asset as of the date of the assessment with the carrying value of the IPR&D asset on its consolidated balance sheet.
+Added: In performing each annual impairment assessment and any interim impairment assessment, the Company determines if it should qualitatively assess whether it is more likely than not the fair value of its IPR&D asset is less than its carrying amount (the qualitative impairment test).
+Added: If the Company concludes that is the case, or elects not to use the qualitative impairment test, the Company would proceed with quantitatively determining the fair value of the IPR&D asset and comparing its fair value to its carrying value to determine the amount of impairment, if any (the quantitative impairment test).
In performing the qualitative impairment test, the Company considers the results of the most recent quantitative impairment test and identifies the most relevant drivers of the fair value for the IPR&D asset.
−Removed: The most relevant drivers of fair value identified are consistent with the assumptions used in the quantitative estimate of the IPR&D asset discussed below.
−Removed: Using these drivers of fair value, the Company identifies events and circumstances that may have an effect on the fair value of the IPR&D asset since the last time the IPR&D’s fair value was quantitatively determined.
−Removed: The Company then weighs these factors to determine and conclude if it is not more likely than not that the IPR&D asset is impaired.
−Removed: If it is more likely than not that the IPR&D asset is impaired, the Company proceeds with quantitatively determining the fair value of the IPR&D asset.
−Removed: For the Company’s 2020 impairment test, the Company performed a qualitative test and concluded it was more-likely-than-not that the fair value of its IPR&D asset exceeded its carrying value and no further testing was required.
−Removed: This was based on a decrease in the probability of success based on the impact of the Study 211 and dual combination VBR and NrtI therapy’s ability to serve as a finite and curative therapy for chronic HBV infection offset by an increase in the probability of success of 2158 and 3733 based on their advancement into Phase 2 and Phase 1 trials during 2020, respectively and the significance of the future net cash flows from potential drug sales for a finite and curative therapy for chronic HBV infection as primarily driven by the number of patients who will be diagnosed and treated and the Company’s competitive position in the marketplace.
−Removed: The Company did not recognize any IPR&D impairment in any of the periods presented .
+Added: The most relevant drivers of fair value identified are consistent with the assumptions used in the quantitative estimate of the IPR&D asset.
+Added: Using these drivers of fair value, the Company identifies events and circumstances which may have an effect on the fair value of the IPR&D asset since the last time the IPR&D’s fair value was quantitatively determined.
+Added: The Company then weighs these factors to determine and conclude if it is not more likely than not the IPR&D asset is impaired.
+Added: If it is more likely than not the IPR&D asset is impaired, the Company proceeds with quantitatively determining the fair value of the IPR&D asset.
+Added: When performing the quantitative impairment test, the Company uses the income approach to determine the fair value of its IPR&D asset.
+Added: This approach calculates fair value by estimating the after-tax cash flows attributable to an
+Added: in-process project over its useful life and then discounting these after-tax cash flows back to a present value.
+Added: This estimate includes judgmental assumptions regarding the estimates that market participants would make in evaluating the IPR&D asset, including the probability of successfully completing clinical trials and obtaining regulatory approval to market the IPR&D asset, the timing of and the expected costs to complete IPR&D projects, future net cash flows from potential drug sales, which are based on estimates of the sales price of the drug, the size of the patient population and cure rate, our competitive position in the marketplace, and appropriate discount and tax rates.
+Added: Any impairment to be recorded is calculated as the difference between the estimated fair value and the carrying value of the IPR&D asset on the Company’s consolidated balance sheet.
All of the Company’s leases are operating leases for facilities and equipment.
−Removed: Prior to January 1, 2019, the Company recognized related rent expense on a straight-line basis over the term of the lease.
−Removed: Incentives granted under the Company’s facilities lease, including allowances for leasehold improvements and rent holidays, were recognized as reductions to rental expense on a straight-line basis over the term of the lease.
−Removed: Deferred rent consisted of the difference between cash payments and the rent expense recognized.
−Removed: Subsequent to the adoption of the new leasing standard on January 1, 2019, the Company recognizes a lease asset for its right to use the underlying asset and a lease liability for the corresponding lease obligation.
+Added: The Company recognizes a lease asset for its right to use the underlying asset and a lease liability for the corresponding lease obligation.
The Company determines whether an arrangement is or contains a lease at contract inception.
1 unchanged sentence
Operating lease right-of-use assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term.
−Removed: In determining the net present value of lease payments, the Company uses its incremental borrowing
−Removed: rate based on the information available at the lease commencement date.
+Added: In determining the net present value of lease payments, the Company uses its incremental borrowing rate based on the information available at the lease commencement date.
The incremental borrowing rate represents 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.
11 unchanged sentences
In conjunction with the decision to wind down the Microbiome program in December 2020, the Company evaluated its ROU assets and property and equipment used in the Microbiome program for impairment.
−Removed: The Company determined the carrying value was no longer recoverable and, based on a fair value of the assets determined from market quotes, recorded an impairment loss of $ 0.7 million included in research and development expenses.
−Removed: The Company did no t recognize any impairment on its long-lived assets in 2019 or 2018.
+Added: The Company determined the carrying value was no longer recoverable and, based on the fair value of the assets determined from market quotes, recorded an impairment loss of $ 0.7 million included in research and development expenses in 2020.
+Added: There were no indicators of impairment of long-lived assets during the year ended December 31, 2021.
Property and Equipment, Net
5 unchanged sentences
The Company follows accounting guidance on fair value measurements for financial instruments measured on a recurring basis, as well as for certain assets and liabilities that are initially recorded at their estimated fair values.
−Removed: Fair value is defined as the exit price, or the amount that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
+Added: value is defined as the exit price, or the amount that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
The Company uses the following three-level hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs to value its financial instruments:
3 unchanged sentences
Financial instruments measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.
−Removed: The assessment of the significance of a particular input to the fair value measurement in its entirety requires us to make judgments and consider factors specific to the asset or liability.
+Added: The assessment of the significance of a particular input to the fair value measurement in its entirety requires the Company to make judgments and consider factors specific to the asset or liability.
The use of different assumptions and/or estimation methodologies may have a material effect on estimated fair values.
−Removed: Accordingly, the fair value estimates disclosed or initial amounts recorded may not be indicative of the amount that the Company or holders of the instruments could realize in a current market exchange.
+Added: Accordingly, the fair value estimates disclosed or initial amounts recorded may not be indicative of the amount the Company or holders of the instruments could realize in a current market exchange.
The carrying amounts of cash equivalents and marketable securities approximate their fair value based upon quoted market prices.
−Removed: Certain of the Company’s financial instruments are not measured at fair value on a recurring basis, but are recorded at amounts that approximate their fair value due to their liquid or short-term nature, such as cash, accounts receivable, accounts payable and accrued expenses.
+Added: Certain of the Company’s financial instruments are not measured at fair value on a recurring basis but are recorded at amounts which approximate their fair value due to their liquid or short-term nature, such as cash, accounts receivable, accounts payable and accrued expenses.
The following tables present the fair value of the Company’s financial assets measured at fair value on a recurring basis using the above input categories (in thousands):
1 unchanged sentence
Cash equivalents
−Removed: Money market funds
−Removed: and foreign commercial paper
+Added: Money market fund
Total cash equivalents
−Removed: Short-term investments
+Added: Short-term marketable securities
and foreign corporate debt securities
Asset-backed securities
−Removed: treasury securities
and foreign commercial paper
−Removed: Total short-term investments
+Added: Total short-term marketable securities
+Added: Long-term marketable securities
+Added: and foreign corporate debt securities
+Added: treasury securities
+Added: Total long-term marketable securities
Total assets measured at fair value
2 unchanged sentences
Money market fund
−Removed: and foreign corporate debt securities
and foreign commercial paper
Total cash equivalents
−Removed: Short-term investments
+Added: Short-term marketable securities
and foreign corporate debt securities
2 unchanged sentences
and foreign commercial paper
−Removed: Total short-term investments
+Added: Total short-term marketable securities
Total assets measured at fair value
9 unchanged sentences
and other observable inputs.
+Added: During the quarter ended December 31, 2021, there was a triggering event that required the Company to perform an impairment analysis for both its goodwill and indefinite-lived asset.
+Added: As a result, the Company recognized an impairment charge of $ 41.6 million for its goodwill and indefinite-lived asset.
+Added: The Company considers the fair value used to determine the impairment charge to be a Level 3 measurement.
+Added: See additional discussion relating to the Company’s impairment of goodwill and indefinite-lived asset in Note 5.
There have been no transfers between Level 1, Level 2 or Level 3 for any of the periods presented.
−Removed: See Note 3 for further information regarding the carrying value of our investments in marketable securities.
+Added: See Note 3 for further information regarding the carrying value of the Company’s investments in marketable securities.
Revenue Recognition and Accounts Receivable from Collaborations
11 unchanged sentences
( 3 ) measurement of the transaction price, including the constraint on variable consideration;
−Removed: (4) allocation of the transaction price to the performance obligations;
+Added: ( 4 ) allocation of the transa ction price to the performance obligations;
and ( 5 ) recognition of revenue when (or as) the Company satisfies each performance obligation.
2 unchanged sentences
The Company only applies the five-step model to contracts when it is probable the Company will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer.
−Removed: As part of the accounting for contracts with customers, the Company must develop assumptions that require judgment to determine the standalone selling price of each performance obligation identified in the contract.
−Removed: The Company then allocates the total transaction price to each performance obligation based on the estimated standalone selling prices of each performance obligation.
+Added: As part of the accounting for contracts with customers, the Company must develop assumptions that require judgment to determine the SSP of each performance obligation identified in the contract.
+Added: The Company then allocates the total transaction price to each performance obligation based on the estimated standalone selling price (SSP) of each performance obligation.
The Company recognizes the amount of the transaction price that is allocated to the respective performance obligation when the performance obligation is satisfied or as it is satisfied as revenue.
12 unchanged sentences
Research and Development Service Payments
−Removed: Under the Research, Development, Collaboration and License Agreement (Allergan Agreement) with Allergan Pharmaecuticals International Limited (Allergan), the Company was reimbursed at a certain percentage for performing research and development services based on hours worked by the Company’s employees, at a fixed contractual rate per hour, and third-party pass-through costs the Company incurred on a quarterly basis.
+Added: Under the Research, Development, Collaboration and License Agreement (Allergan Agreement) with Allergan Pharmaceuticals International Limited (Allergan), the Company was reimbursed at a certain percentage for performing research and development services based on hours worked by the Company’s employees, at a fixed contractual rate per hour, and third-party pass-through costs the Company incurred on a quarterly basis.
Research and development service payments were included in the transaction price in the reporting period the Company concluded it was probable that recording revenue in the period would not result in a significant reversal in amounts recognized in future periods.
1 unchanged sentence
The Company recorded the full reimbursed portion of these expenses as collaboration revenue associated with the Allergan Agreement in its consolidated statements of operations as the Company consider performing research and development services to be a part of its ongoing and central operations.
−Removed: Sales-based Milestone and Royalty Payments
+Added: Sales-based Milestone and Royalty Payment s
The Company’s customer may be required to pay the Company sales-based milestone payments or royalties on future sales of commercial products.
The Company recognizes revenues related to sales-based milestone and royalty payments upon the later to occur of (i) achievement of the collaborator’s underlying sales or (ii) satisfaction of any performance obligation(s) related to these sales, in each case assuming the Company’s licensed intellectual property is deemed to be the predominant item to which the sales-based milestones and/or royalties relate.
−Removed: The Company receives payments from its customer based on billing schedules established in each contract.
+Added: The Company receives payments from its customer based on billing schedules established in the contract.
Upfront payments and fees are recorded as deferred revenue upon receipt or when due until the Company performs its obligations under the arrangement.
4 unchanged sentences
The Company does not assess whether a contract has a significant financing component if the expectation at contract inception is such that the period between payment by the customer and the transfer of the promised goods or services to the customer will be one year or less.
−Removed: At December 31, 2020 and 2019, all accounts receivable are deemed collectible.
+Added: At December 31, 2021 and 2020, all accounts receivable from collaborations are deemed collectible.
+Added: Contract Liabilities
+Added: The following tables present changes in the Company’s contract liabilities (in thousands):
+Added: Year Ended December 31, 2021
+Added: Contract liabilities:
+Added: Deferred revenue
+Added: Year Ended December 31, 2020
+Added: Contract liabilities:
+Added: Deferred revenue
+Added: Year Ended December 31,
+Added: Collaboration revenue recognized in the period from
+Added: Amounts included in deferred revenue at the beginning of the period
+Added: Performance obligations satisfied in previous period
Stock-Based Compensation
−Removed: The Company measures stock-based compensation to employees, consultants, and Board members at fair value on the grant date of the award.
+Added: The Company measures stock-based compensation to employees, consultants, Board members, and non-employees at fair value on the grant date of the award.
The fair value of RSUs is determined based on the number of shares granted and the quoted market price of the Company’s common stock on the date of grant.
8 unchanged sentences
If actual results are not consistent with the Company’s assumptions and judgments used in making these estimates, the Company may be required to increase or decrease compensation expense, which could be material to the Company’s consolidated results of operations.
−Removed: Prior to January 1, 2019, the Company remeasured the fair value of the non-employee awards at each reporting period prior to vesting and finally at the vesting date of the award.
−Removed: Changes in the estimated fair value of these non-employee awards were recognized as compensation expense in the period of change.
−Removed: After January 1, 2019, the Company recognizes non-employee compensation costs over the requisite service period based on a measurement of fair value for each stock award.
Research and Development Expense and Accruals
−Removed: Research and development costs include personnel-related costs, outside contracted services including clinical study costs, facilities costs, fees paid to consultants, milestone payments prior to FDA approval, license fees prior to FDA approval, professional services, travel costs, dues and subscriptions, depreciation and materials used in clinical trials and research and development and costs incurred under the Collaboration Agreement.
+Added: Research and development costs include personnel-related costs, outside contracted services including clinical study costs, facilities costs, fees paid to consultants, milestone payments prior to FDA approval, license fees prior to FDA approval, professional services, travel costs, dues and subscriptions, depreciation and materials used in clinical trials and research and development and costs incurred under the Company’s collaboration agreements.
Research and development costs are expensed as incurred unless there is an alternative future use in other research and development projects.
26 unchanged sentences
At the end of each reporting period, the Company evaluates the remaining accrued restructuring balances to ensure that no excess accruals are retained, and the utilization of t he provisions are for their intended purpose in accordance with developed restructuring plans.
+Added: For gains and losses on the derecognition of nonfinancial assets the Company determines if a contract exists, identifies the distinct non-financial assets, and determines when control transfers and, therefore, when to derecognize the asset.
+Added: Additionally, the Company applies the measurement principles of revenue from contracts with customers within U.S.
+Added: GAAP to determine the amount of consideration to include in the calculation of the gain or loss for the non-financial asset.
+Added: Any gains or losses have been included within research and development expenses.
Variable Interest Entities
17 unchanged sentences
The evaluations are based on a number of factors, including changes in facts and circumstances, changes in tax law, correspondence with tax authorities during the course of the audit, and effective settlement of audit issues.
−Removed: The provision for income taxes includes the effects of any accruals that the Company believes are appropriate.
−Removed: It is the Company’s policy to recognize interest and penalties related to income tax matters in income tax expense.
+Added: The provision for income taxes includes the effects of any accruals which the Company believes are appropriate.
+Added: It is the Company’s policy to
+Added: recognize interest and penalties related to income tax matters in income tax expense.
No interest or penalties related to uncertain tax positions has been incurred or accrued for any periods presented .
7 unchanged sentences
85 also requires that business incentive tax credits including carryovers may not reduce the applicable tax by more than $5.0 million for taxable years 2020, 2021 and 2022.
+Added: On February 9, 2022, Senate Bill No.
+Added: 113 was enacted that removed the limitations on the use of NOLs and the cap on the business incentive tax credits that were suspended in accordance with AB 85 effective for tax year 2022.
In December 2020, the Consolidated Appropriations Act, 2021 (CAA) was signed into law.
The CAA included additional funding through tax credits as part of its economic package for 2021.
+Added: In March 2021, the American Rescue Plan (H.R.
+Added: 1319) was signed into law.
+Added: This legislation extends and enhances a number of current-law tax incentives for businesses, but also expands the definition of a “covered employee” as defined by Section 162(m)(1) of the Internal Revenue Code.
The FFCR Act, CARES Act, A.B.
−Removed: 85 did and CAA not have a material impact on the Company’s consolidated financial statements;
−Removed: however, the Company continues to examine the impacts the FFCR Act, CARES Act, A.B.
−Removed: 85 and CAA may have on its business, results of operations, financial condition and liquidity.
+Added: 85, CAA and H.R.
+Added: 1319 did not have a material impact on the Company’s consolidated financial statements.
Net Loss per Share
2 unchanged sentences
Since the Company has only incurred losses, basic and diluted net loss per share is the same.
−Removed: 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 (see Note 7).
−Removed: The pre-funded warrants are exercisable for shares of common stock at a price of $ 0.001 per share.
−Removed: 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.
+Added: The Company had pre-funded warrants to purchase up to 2,424,242 shares of common stock outstanding as of December 31, 2020.
+Added: All 2,424,242 of the pre-funded warrants were exercised through a cashless exercise (see Note 8) in 2021.
+Added: Prior to these exercises, the pre-funded warrants were exercisable for shares of common stock at a price of $ 0.001 per share.
+Added: 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, they were fully vested, and were exercisable after the original issuance date.
+Added: 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):
+Added: Year Ended December 31,
+Added: Weighted average common shares and
+Added: pre-funded warrants outstanding - basic and diluted
+Added: Net loss per share - basic and diluted
Securities excluded from the computation of diluted loss from per share because including them would have been antidilutive are as follows:
Year Ended December 31,
−Removed: Warrants to purchase common stock
Options to purchase common stock
15 unchanged sentences
Adoption of Recent Accounting Pronouncements
−Removed: In January 2017, the Financial Accounting Standards Board (FASB) issued ASU 2017-04, Intangibles-Goodwill and Other (Topic 350):
−Removed: Simplifying the Test for Goodwill Impairment (ASU 2017-04), which simplifies how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test.
−Removed: Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit's goodwill with the carrying amount of that goodwill.
−Removed: Under the amendments in ASU 2017-04, an entity should recognize an impairment charge for the amount by which the carrying amount of a reporting unit exceeds its fair value;
−Removed: however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit.
−Removed: The updated accounting standard requires a prospective adoption.
−Removed: In November 2019, the FASB issued ASU 2019-10, Financial Instruments – Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842):
−Removed: Effective Dates (ASU 2019-10), 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.
−Removed: Early adoption is permitted for goodwill impairment tests performed on testing dates after January 1, 2017.
−Removed: The Company early adopted ASU 2017-04 effective January 1, 2020 .
−Removed: The adoption of this standard had no material impact on the Company’s consolidated financial statements.
−Removed: On January 1, 2020 , the Company adopted ASU 2018-13, Fair Value Measurement (Topic 820):
−Removed: Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement, which makes a number of changes meant to add, modify or remove certain disclosure requirements associated with the movement amongst or hierarchy associated with Level 1, Level 2 and Level 3 fair value measurements.
+Added: On January 1, 2021 , the Company adopted Accounting Standards Update (ASU) 2020-10, Codification Improvements – Disclosures (ASU 2020-10).
+Added: 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 consolidated financial statements and related disclosures.
−Removed: On January 1, 2020 , the Company adopted ASU 2018-18, Collaborative Arrangements (Topic 808):
−Removed: Clarifying the Interaction between Topic 808 and Topic 606 , which clarifies that certain transactions between collaborative arrangement participants should be accounted for as revenue under Topic 606 when the collaborative arrangement participant is a customer in the context of a unit of account.
−Removed: In those situations, all the guidance in Topic 606 should be applied, including recognition, measurement, presentation, and disclosure requirements.
−Removed: The standard adds unit-of-account guidance in Topic 808 to align with the guidance in Topic 606 (that is, a distinct good or service) when an entity is assessing whether the collaborative arrangement or a part of the arrangement is within the scope of Topic 606 and requires that in a transaction with a collaborative arrangement participant that is not directly related to sales to third parties, presenting the transaction together with revenue recognized under Topic 606 is precluded if the collaborative arrangement participant is not a customer.
−Removed: Amendments in the standard should be applied retrospectively to the date of initial application of Topic 606, but entities may elect to apply the amendments in Topic 808 retrospectively either to all contracts or only to contracts that are not completed at the date of initial application of Topic 606, and should disclose the election.
−Removed: An entity may also elect to apply the practical expedient for contract modifications that is permitted for entities using the modified retrospective transition method in Topic 606.
−Removed: The adoption of this standard had no impact on the Company’s consolidated financial statements and related disclosures.
−Removed: In December 2019, the FASB issued ASU No.
−Removed: 2019-12, Simplifying the Accounting for Income Taxes (ASU 2019-12), which eliminates certain exceptions to the guidance in Income Taxes (Topic 740) related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences.
−Removed: The new accounting standard also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill.
−Removed: The standard is effective for fiscal years beginning after December 15, 2020 and interim periods within those fiscal years.
−Removed: Early adoption is permitted in an interim or annual period.
−Removed: Entities that elect to early adopt the amendments in an interim period should reflect any adjustments as of the beginning of the annual period that includes that interim period.
−Removed: Additionally, entities that elect early adoption must adopt all the amendments in the same period.
−Removed: Entities will apply the accounting standard prospectively, except for certain amendments.
−Removed: The Company early adopted ASU 2019-12 effective January 1, 2020 .
−Removed: The adoption of this standard did not have a material impact on the Company’s consolidated financial statements and related disclosures.
Accounting Pronouncements to Be Adopted
−Removed: In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses:
+Added: In June 2016, the Financial Accounting Standards Board (the FASB) issued ASU 2016-13, Financial Instruments – Credit Losses:
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.
−Removed: 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.
−Removed: In April, May and November 2019, the FASB issued additional amendments to the new accounting standard related to transition and clarification.
+Added: 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.
+Added: 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 and Hedging (Topic 815) , and Leases (Topic 842):
−Removed: Effective Dates (ASU 2019-10), 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.
+Added: 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.
Early adoption is permitted.
−Removed: The Company is currently evaluating the timing and impact of adopting this new accounting standard on its consolidated financial statements and related disclosures.
+Added: The Company is currently evaluating the timing and impact of adopting ASU 2016-13 on its 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):
1 unchanged sentence
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.
−Removed: 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 EPS calculation in certain areas.
−Removed: The ASU is effective for interim and annual periods beginning after December 15, 2021, with early adoption permitted after December 15, 2020.
−Removed: Adoption of the ASU can either be on a modified retrospective or full retrospective basis.
−Removed: The Company is currently evaluating the impacts of ASU 2020-06 on its consolidated financial statements and related disclosures.
−Removed: In October 2020, the FASB issued ASU 2020-10, Codification Improvements – Disclosures.
−Removed: 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.
−Removed: This ASU is effective for fiscal years beginning after December 15, 2020.
−Removed: The adoption of the ASU will not impact the Company’s consolidated financial statements or related disclosures.
+Added: 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.
+Added: ASU 2020-06 is effective for interim and annual periods beginning after December 15, 2021, with early adoption permitted.
+Added: Adoption of ASU 2020-06 can either be on a modified retrospective or full retrospective basis.
+Added: The Company does not expect ASU 2020-06 to have a material impact on its consolidated financial statements and related disclosures.
+Added: 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.
+Added: 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.
+Added: The result is a change in the fair value of the written call option dependent on the reason for the modification.
+Added: ASU 2021-04 is effective for interim and annual periods beginning after December 15, 2021, with early adoption permitted.
+Added: Adoption of ASU 2021-04 is applied on a prospective basis.
+Added: The Company does not expect ASU 2021-04 to have a material impact on its consolidated financial statements and related disclosures.
Note 3 - Investments in Marketable Securities
3 unchanged sentences
Money market funds
−Removed: and foreign commercial paper
Total cash equivalents
−Removed: Short-term investments
+Added: Short-term marketable securities
and foreign corporate debt securities
Asset-backed securities
−Removed: treasury securities
and foreign commercial paper
−Removed: Total short-term investments
−Removed: Total cash equivalents and investments
+Added: Total short-term marketable securities
+Added: Long-term marketable securities
+Added: and foreign corporate debt securities
+Added: treasury securities
+Added: Total long-term marketable securities
+Added: Total cash equivalents and marketable securities
December 31, 2020
1 unchanged sentence
Money market funds
−Removed: and foreign corporate debt securities
and foreign commercial paper
Total cash equivalents
−Removed: Short-term investments
+Added: Short-term marketable securities
and foreign corporate debt securities
2 unchanged sentences
and foreign commercial paper
−Removed: Total short-term investments
−Removed: Total cash equivalents and investments
−Removed: Gross unrealized gain (loss) is pre-tax.
−Removed: As of December 31, 2020, the contractual term to maturity of short-term marketable securities held by the Company is less than one year .
−Removed: There were no long-term marketable securities held by the Company as of December 31, 2020.
+Added: Total short-term marketable securities
+Added: Total cash equivalents and marketable securities
+Added: Short-term marketable securities held as of December 31, 2021 had contractual maturities of less than one year .
+Added: Long-term marketable securities held as of December 31, 2021 had contractual maturities of at least one year but
+Added: less than two years .
Realized gains and losses for the years ended December 31, 2021 and 2020 were not significant.
2 unchanged sentences
Note 4 - Property and Equipment, Net
−Removed: Property and equipment consist of the following (in thousands):
−Removed: As of December 31,
+Added: Property and equipment, net consists of the following (in thousands):
Lab equipment
4 unchanged sentences
Property and equipment, net
−Removed: Depreciation expense for the years ended December 31, 2020, 2019 and 2018 was $ 0.7 million, $ 0.5 million, and $ 0.6 million, respectively, and was recorded in both research and development expense and general and administrative expense in the consolidated statements of operations and comprehensive loss.
−Removed: Primarily all of property and equipment is located in the U.S.
+Added: Depreciation expense for the years ended December 31, 2021 and 2020 was $ 0.5 million, and $ 0.7 million, respectively, and was recorded in both research and development expense and general and administrative expense in the consolidated statements of operations and comprehensive loss.
+Added: Primarily all of the Company’s property and equipment is located in the U.S.
+Added: Note 5 - Goodwill and Indefinite-Lived Intangible Asset Impairment
+Added: The Company elected to perform a quantitative impairment assessment of goodwill for its single reporting unit in the fourth quarter of 2021 due to a sustained decline in its market capitalization, an increase in negative economic outlook for biotech markets and a fourth quarter unfavorable clinical trial result for a competitor’s curative combination therapy for HBV infection.
+Added: The Company estimated and reconciled the fair value of its reporting unit using both a market approach, utilizing the Company’s market capitalization adjusted for an estimated control premium, and the income approach, discounting future cash flows based on management’s expectations of timelines to complete clinical trials, regulatory and commercial probabilities of technical success as well as future earnings forecast.
+Added: Based on this analysis, and after completing an impairment assessment of its indefinite-lived and long-lived assets, the Company
+Added: concluded the fair value of its single reporting unit was less than its carrying value and therefore recognized a goodwill impairment charge of $ 12.6 million.
+Added: This was primarily driven by increased risks impacting the Company that, from the standpoint of a market participant, were captured through an increase in estimated discount rates.
+Added: The calculation of the impairment charge includes substantial fact-based determinations and estimates including discount rates, future revenue, profitability, cash flows, probabilities of technical success and fair values of assets and liabilities, and any changes to these assumptions could result in changes to the fair value of our single reporting unit.
+Added: The goodwill impairment charge is reflected in impairment of goodwill and indefinite-lived intangible asset in the consolidated statements of operations and comprehensive loss.
+Added: No goodwill impairment charges were recorded in 2020.
+Added: Indefinite-Lived Intangible Asset
+Added: During the fourth quarter of 2021 and prior to the goodwill impairment test, the Company also completed a quantitative impairment test for its IPR&D asset associated with the Assembly Pharmaceuticals, Inc.
+Added: The Company utilized the discounted cash flow model of the income approach and determined the carrying value of its IPR&D asset was fully impaired resulting in an impairment charge of $ 29.0 million.
+Added: This was primarily driven by a higher discount rate applied to future cash flows based on a market participant’s view of increased risk associated with a negative economic outlook for biotech markets and a fourth quarter unfavorable clinical trial result for a competitor’s curative combination therapy for HBV infection.
+Added: More significant assumptions inherent in the development of the model included the estimated annual cash flows, particularly net revenues, the appropriate discount rate to select in order to measure the risk inherent in the future cash flows, cost to complete the IPR&D project as well as other factors.
+Added: The impairment charge recorded is reflected in impairment of goodwill and indefinite-lived intangible asset in the consolidated statements of operations and comprehensive loss.
+Added: No indefinite-lived intangible asset impairment charges were recorded in 2020.
Note 6 – Other Accrued Expenses
Other accrued expenses consist of the following (in thousands):
−Removed: As of December 31,
−Removed: Other accrued expenses:
+Added: Accrued expenses:
Accrued compensation
1 unchanged sentence
Accrued professional fees and other
−Removed: Total other accrued expenses
+Added: Total accrued expenses
Note 7 – Restructurings
−Removed: 2019 Restructuring
−Removed: In November 2019, the Company’s Board of Directors approved the relocation of the Company corporate headquarters to South San Francisco, California which became effective January 1, 2020.
−Removed: The Company accrued restructuring charges of $ 2.1 million in 2019 related to one-time termination severance payments and other employee-related costs associated with the relocation plan.
−Removed: This represents the total amount expected to be incurred in connection with the relocation.
+Added: 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 effective January 2020 and the December 2020 wind-down of the Company’s Microbiome program.
+Added: The following table summarizes the Company’s costs incurred (in thousands):
Restructuring
−Removed: In December 2020, the Company and its Board of Directors determined that it was in the Company’s best interest to wind down its Microbiome program, enabling the Company to prioritize resources and focus on the advancement of its pipeline of novel core inhibitors for chronic HBV infection.
−Removed: The Company expects to complete the wind-down of the Microbiome program in early 2021.
−Removed: The following table summarizes the Company’s estimates of costs incurred and expected to be incurred (in thousands):
−Removed: Total Restructuring Cost
−Removed: Employee Severance and Related Benefits
−Removed: Asset Impairment and Other Costs
−Removed: Total estimated restructuring costs to be incurred
−Removed: Restructuring costs incurred during the period:
−Removed: Total restructuring costs incurred for the year ended December 31, 2019
−Removed: Total restructuring costs incurred for the year ended December 31, 2020
Cumulative restructuring costs incurred through December 31, 2021
−Removed: The following table presents the activity in the accrued restructuring charges during the period, all of which are related to employee severance and related benefits (in thousands):
−Removed: Accrued balance as of January 1, 2019
+Added: Restructuring costs incurred for the year ended December 31, 2021
+Added: Restructuring costs incurred for the year ended December 31, 2020
+Added: The reversal of $ 3.0 million in employee severance and related benefits recognized during the year ended December 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.
+Added: The cumulative restructuring costs incurred through December 31, 2021 represents all costs to be incurred.
+Added: The following table presents where the restructuring charges were recognized (in thousands):
+Added: Year Ended December 31,
+Added: Research and development
+Added: General and administrative
+Added: The following table presents the activity in the accrued restructuring charges during the period (in thousands):
+Added: Restructuring
+Added: Accrued balance as of December 31, 2019
Costs incurred
+Added: Reductions for cash payments
Accrued balance as of December 31, 2020
2 unchanged sentences
Accrued balance as of December 31, 2021
−Removed: The Company also recognized $ 0.3 million of accelerated vesting for stock-based compensation for employees subject to the restructuring activities during 2020.
−Removed: The Company expects the accrued restructuring liability to be fully paid in 2021 .
−Removed: The following table presents where the restructuring charges were recognized (in thousands):
−Removed: Year Ended December 31,
−Removed: Research and development
−Removed: General and administrative
+Added: Cash payments are presented net of proceeds received from the sale of assets of $ 0.9 million.
+Added: The asset impairment and other costs includes $ 1.4 million for the remaining payment obligations of leased equipment the Company purchased and sold to third parties.
+Added: Microbiome Purchase Agreement
+Added: In December 2021, the Company entered into an asset purchase agreement (the Microbiome Purchase Agreement) with a third party pursuant to which the Company sold know-how, patents, materials and regulatory filings for the Company’s Microbiome program.
+Added: The sale included ABI-M201 (M201), which had been the Company’s lead candidate in its Microbiome program.
+Added: As consideration for the sale, the Company was entitled to receive $ 3.0 million, of which $ 1.5 million was received in December 2021 and the remaining $ 1.5 million was received in February 2022.
+Added: The Company is also entitled to receive a $ 10.0 million milestone payment upon the achievement of a regulatory approval milestone as defined in the purchase agreement.
+Added: The Microbiome Purchase Agreement is within the scope of gains and losses from the derecognition of nonfinancial assets guidance since the Company had previously wound-down the Microbiome program, M201 was no longer a part of the Company’s ongoing major or central operations.
+Added: The Company determined all assets sold under the Microbiome Purchase Agreement represent one distinct nonfinancial asset as individually, they do not have standalone value.
+Added: The transaction price at the inception of the agreement was limited to the $ 3.0 million upfront payments.
+Added: The variable consideration relating to the $ 10 .0 million milestone has not been included in the transaction price as it was fully constrained as of December 31, 2021.
+Added: As part of the Company’s evaluation of the development milestone constraint, it determined the achievement of the milestone is contingent upon success in future clinical studies and regulatory approvals which are not within its control and uncertain at this stage.
+Added: The assets sold had no carrying value and the full $ 3.0 million transaction price resulted in the recognition of a gain.
+Added: The Company determined the transfer of control of the assets sold was completed in December 2021.
+Added: The $ 3.0 million gain is included as a reduction of research and development expenses in the Company’s consolidated statements of operations and comprehensive loss.
+Added: The $ 1.5 million due as of December 31, 2021 is included in prepaid expenses and other current assets on the Company’s consolidated balance sheet.
Note 8 - Stockholders’ Equity
−Removed: The Company is authorized to issue 5,000,000 shares of preferred stock as of December 31, 2020 and 2019, respectively.
+Added: The Company is authorized to issue 5,000,000 shares of preferred stock as of December 31, 2021 and 2020.
As of December 31, 2021 and 2020, no shares of preferred stock were issued and outstanding.
−Removed: The Company is authorized to issue 100,000,000 shares of common stock as of December 31, 2020 and 2019, respectively.
−Removed: Sale of Common Stock and Pre-Funded Warrants
−Removed: In December 2017, the Company filed a registration statement on Form S-3 with the SEC, File No.
−Removed: 333-222366, that became effective January 10, 2018 (the 2018 Registration Statement).
−Removed: The 2018 Registration Statement gave the Company the ability to sell any combination of the securities described in the 2018 Registration Statement in one or more offerings up to an aggregate offering price of $ 250.0 million.
−Removed: In connection with the filing of the 2018 Registration Statement, the Company entered into a sales agreement that gave the Company the ability to sell shares of its common stock having an aggregate offering price of up to $ 75.0 million through “at the market offerings” (the 2017 ATM).
−Removed: The 2017 ATM was terminated effective September 6, 2020, and no shares were sold under the 2017 ATM prior to the termination.
−Removed: In July 2018, the Company sold to various investors an aggregate of 4,600,000 shares of common stock in a public offering at $ 36.00 per share, which included the exercise in full by the underwriters of their option to purchase 600,000 additional shares of common stock.
−Removed: The Company received aggregate net proceeds of $ 155.4 million from the offering and the option exercise, after deducting underwriting discounts and commissions and offering expenses payable by the Company.
+Added: The Company is authorized to issue 100,000,000 shares of common stock as of December 31, 2021 and 2020.
+Added: Sale of Common Stock
+Added: In August 2020, the Company filed a shelf registration statement on Form S-3 with the SEC, File No.
+Added: 333-248469, that became effective on September 4, 2020 (the 2020 Registration Statement).
+Added: The Company may from time to time sell any combination of the securities described in the 2020 Registration Statement in one or more offerings up to an aggregate offering price of $ 300.0 million.
+Added: 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.
+Added: During the year ended December 31, 2020, the Company issued and sold 892,840 shares of common stock under the 2020 ATM, for which the Company received net proceeds of $ 5.5 million, after deducting commissions, fees and expenses.
+Added: During the year ended December 31, 2021, the Company issued and sold 11,234,207 shares of common stock under the 2020 ATM, for which the Company received net proceeds of $ 52.8 million, after deducting commissions, fees and expenses.
+Added: Common Stock Warrants
In December 2019, the Company sold to various investors an aggregate of 6,287,878 shares of common stock at a public offering price of $ 16.50 per share, which included the exercise in full by the underwriters of their option to purchase 1,136,363 shares of common stock, and pre-funded warrants to purchase 2,424,242 shares of common stock at a public offering price of $ 16.499 .
1 unchanged sentence
The pre-funded warrants became immediately exercisable upon issuance at an exercise price of $ 0.001 per share, but under their terms, the outstanding pre-funded warrants to purchase shares of the Company’s common stock generally may not be exercised if the holder’s ownership of the Company’s common stock would exceed 19.99 % following such exercise.
−Removed: The exercise price and number of shares of common stock issuable upon the exercise of the pre-funded warrants (Warrant Shares) are subject to adjustment in the event of any stock dividends and splits, reverse stock split, recapitalization, reorganization or similar transaction, as described in the pre-funded warrant agreements.
+Added: The exercise price and number of shares of common stock issuable upon the exercise of the pre-funded warrants (Warrant Shares) are subject to adjustment in the event of any stock dividends and
+Added: splits, reverse stock split, recapitalization, reorganization or similar transaction, as described in the pre-funded warrant agreements.
Under certain circumstances, the pre-funded warrants may be exercisable on a “cashless” basis.
1 unchanged sentence
The pre-funded warrants were classified as a component of permanent stockholders’ equity within additional paid-in-capital and were recorded at the issuance date using a relative fair value allocation method.
−Removed: The pre-funded warrants are equity classified because they are freestanding financial instruments that are legally detachable and separately exercisable from the equity instruments, are immediately exercisable, do not embody an obligation for the Company to repurchase its shares, permit the holders to receive a fixed number of common shares upon exercise, are indexed to the Company’s common stock and meet the equity classification criteria.
−Removed: In addition, such pre-funded warrants do not provide any guarantee of value or return.
The Company valued the pre-funded warrants at issuance, concluding their sales price approximated their fair value, and allocated net proceeds from the sale proportionately to the common stock and pre-funded warrants of which $ 37.5 million allocated to the pre-funded warrants and recorded as a component of additional paid-in-capital.
−Removed: In August 2020, the Company filed a shelf registration statement on Form S-3 with the SEC, File No.
−Removed: 333-248469, that became effective on September 4, 2020 (the 2020 Registration Statement).
−Removed: The Company may from time to time sell any combination of the securities described in the 2020 Registration Statement in one or more offerings up to an aggregate offering price of $ 300.0 million.
−Removed: 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.
−Removed: During the year ended December 31, 2020, the Company issued and sold 892,840 shares of common stock under the 2020 Registration Statement, for which the Company received net proceeds of $ 5.5 million, after deducting commissions, fees and expenses.
−Removed: The Company carried forward registration fees paid with respect to $ 21.4 million of securities that remained available under the 2018 Registration Statement.
−Removed: As such, as of the effectiveness of the 2020 Registration Statement, the 2018 Registration Statement was deemed terminated.
−Removed: Common Stock Warrants
−Removed: As of December 31, 2020, the following warrants to purchase shares of the Company’s common stock were issued and outstanding:
+Added: T he following warrants to purchase shares of the Company’s common stock were issued and outstanding:
Exercise Price
−Removed: December 31, 2020
−Removed: December 31, 2019
−Removed: September 10, 2010
−Removed: September 10, 2020
+Added: As of December 31, 2021
+Added: As of December 31, 2020
December 16, 2019
−Removed: There were no warrants exercised during the years ended December 31, 2020, 2019 and 2018.
−Removed: During the year ended December 31, 2020, 15,296 warrants to purchase common stock expired unexercised.
+Added: During the year ended December 31, 2021, there were 2,424,242 pre-funded warrants exercised through a cashless exercise, resulting in the issuance of 2,423,634 shares of the Company’s common stock.
+Added: There were no pre-funded warrants exercised during the year ended December 31, 2020.
During the year ended December 31, 2020, 15,296 warrants to purchase common stock expired unexercised.
1 unchanged sentence
Equity Incentive Plans
−Removed: In May 2018, the Company’s stockholders approved (1) the Assembly Biosciences, Inc.
−Removed: 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.
−Removed: 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.
−Removed: In May 2019, the Company’s stockholders approved an amendment to the 2018 Plan that increased the aggregate shares of common stock reserved under the 2018 Plan to 3,000,000 .
−Removed: 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 .
+Added: In June 2020, the Company’s stockholders approved an amendment to the Assembly Biosciences, Inc.
+Added: 2018 Stock Incentive Plan (the 2018 Plan) that increased the aggregate number of shares of common stock reserved under the 2018 Plan to 4,600,000 .
+Added: 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 the Assembly Biosciences, Inc.
+Added: 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 December 31, 2021, the Company had awards outstanding under the following shareholder approved plans:
11 unchanged sentences
The following table summarizes the stock option activity and related information for 2021:
−Removed: (in thousands)
Outstanding as of December 31, 2020
Outstanding as of December 31, 2021
−Removed: Exercisable as of December 31, 2020
+Added: Options vested and exercisable as of December 31, 2021
The weighted-average grant-date fair value of options granted was $ 3.05 and $ 10.64 during the years ended December 31, 2021 and 2020, respectively.
−Removed: The total intrinsic value of options exercised in 2020, 2019 and 2018 was $ 2.0 million, $ 5.0 million and $ 31.1 million, respectively.
+Added: The total intrinsic value of options exercised in 2020 was $ 2.0 million.
+Added: There were no options exercised in 2021.
The following table summarizes RSU activity and related information for 2021:
3 unchanged sentences
Nonvested as of December 31, 2021
−Removed: Includes 140,000 RSUs that have vested but are subject to deferred settlement, which have a weighted average remaining contractual term of 2.2 years.
−Removed: The total fair value of RSUs vested and settled during 2020, 2019 and 2018 was $ 7.8 million, $ 5.7 million, and $5.3 million, respectively.
+Added: The total fair value of RSUs vested and settled during 2021 and 2020 was $ 3.7 million and $ 7.8 million, respectively.
The total intrinsic value of RSUs vested and settled during 2021 and 2020 was $ 1.4 million and $ 4.4 million, respectively.
−Removed: The total intrinsic value of RSUs vested and settled during 2018 was nominal.
−Removed: As of December 31, 2020, RSUs outstanding include 100,000 RSUs granted in September 2019 to the Company’s chief executive officer with performance-based conditions.
−Removed: The 100,000 awards with an aggregate fair value of $ 1.2 million vest upon performance conditions not yet deemed probable and accordingly no stock-based compensation expense has been recognized as of December 31, 2020.
+Added: In September 2019, the Company granted 100,000 RSUs with performance-based vesting conditions to its chief executive officer.
+Added: 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.
+Added: 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.
+Added: The outstanding 50,000 awards with an aggregate fair value of $ 0.4 million vest upon performance conditions not yet deemed probable.
+Added: Accordingly, no stock-based compensation expense has been recognized as of December 31, 2021.
In July 2020, the performance condition for 45,000 RSUs granted in December 2017 to a former executive officer was met associated with the execution of an HBV business development transaction.
The Company recognized $ 0.7 million as a cumulative catch-up adjustment of stock-based compensation expense for this award for the year ended December 31, 2020.
−Removed: In the second quarter of 2019, 100,000 RSUs granted to a former officer were forfeited due to his departure.
−Removed: These RSUs had a grant date fair value of $ 2.4 million and were vesting over time but would have accelerated upon the achievement of certain performance-based conditions.
−Removed: The Company reversed the previously recognized expense of $ 0.5 million related to these forfeited awards upon the departure of the former officer in 2019.
+Added: 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 executive officers.
+Added: The awards had a grant
+Added: date fair value of $ 1.2 million and vest upon performance conditions not yet deemed probable.
+Added: Accordingly, no stock-based compensation expense has been recognized as of December 31, 2021.
Employee Stock Purchase Plan
The 2018 ESPP provides for the purchase by employees of up to an aggregate of 1,300,000 shares of the Company’s common stock at a discount to the market price.
−Removed: Subject to the annual statutory limits and the 2018 ESPP’s limit of 1,000 shares of common stock per offering, an eligible employee may participate through payroll deductions of up to 15 % of such employee’s compensation for each pay period
+Added: Eligible employee may participate through payroll deductions of up to 15 % of such employee’s compensation for each pay period subject to annual statutory limits and the 2018 ESPP’s limit, which the Company’s stockholders approved in May 2021 to increase from 1,000 to 2,500 shares of common stock per offering.
Eligible employees can purchase the Company’s common stock at the end of a predetermined offering period at 85 % of the lower of the fair market value at the beginning or end of the offering period.
1 unchanged sentence
The ESPP is compensatory and results in stock-based compensation expense.
−Removed: In November 2018, employees purchased 21,483 shares of common stock under the 2018 ESPP.
In May and November 2020, employees purchased 42,266 and 44,546 shares of common stock, respectively, under the 2018 ESPP.
1 unchanged sentence
As of December 31, 2021, 1,043,515 shares of common stock are available for future sale under the Company’s 2018 ESPP.
−Removed: Stock-based compensation expense recorded in connection with the 2018 ESPP was $ 0.5 million, $ 0.4 million and $ 0.2 million for the years December 31, 2020, 2019 and 2018, respectively.
+Added: Stock-based compensation expense recorded in connection with the 2018 ESPP was $ 0.1 million and $ 0.5 million for the years December 31, 2021 and 2020, respectively.
Valuation Assumptions
5 unchanged sentences
$5.62 - $23.30
−Removed: $23.78 - $57.53
Expected volatility
1 unchanged sentence
66.4% - 92.3%
−Removed: 75.6% - 86.1%
−Removed: Risk-free interest rate
−Removed: 0.26% - 1.44%
+Added: Risk-free rate
0.50% - 1.37%
9 unchanged sentences
Stock-Based Compensation Expense
−Removed: The Company recognized stock-based compensation expense included in the consolidated statement of operations and comprehensive loss for the periods presented (in thousands):
+Added: The Company recognized stock-based compensation expense included in the consolidated statement of operations and comprehensive loss for the years presented (in thousands):
Year Ended December 31,
2 unchanged sentences
Total stock-based compensation expense
−Removed: Includes the reversal of previously recognized expense of $ 1.7 million related to forfeited awards resulting from the departure of one of our former executive officers during the year.
−Removed: Includes the reversal of previously recognized expense of $ 3.6 million related to forfeited awards resulting from the departure of one of our former executive officers during the year.
+Added: Stock-based compensation expense for the year ended December 31, 2021 includes the reversal of previously recognized stock-based compensation expense related to awards forfeited by terminated employees of $ 4.8 million and $ 2.1 million included in research and development expenses and general and administrative expenses, respectively.
As of December 31, 2021 , there was $ 9.7 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 1.6 years.
1 unchanged sentence
Allergan Agreement
−Removed: In January 2017, the Company and Allergan entered into the Allergan Agreement to develop and commercialize select microbiome gastrointestinal disease therapies.
−Removed: Pursuant to the Allergan Agreement, the Company granted Allergan an exclusive worldwide license to certain of its intellectual property, including its intellectual property arising under the Allergan Agreement, to develop and commercialize licensed compounds for ulcerative colitis (UC), Crohn’s disease, and two compounds for irritable bowel syndrome (IBS).
−Removed: Allergan and the Company also agreed to collaborate on research and development activities with respect to the licensed compounds in accordance with a mutually agreed upon research and development plan.
−Removed: Per the terms of the Allergan Agreement, Allergan could select backups and additional target indications to add to the licenses granted for additional consideration and also had the ability to enter into a contract manufacturing agreement with the Company for compound supply at cost plus an agreed upon margin.
−Removed: In addition, the Company participated on a Joint Development Committee (JDC) and Joint Patent Committee (JPC).
−Removed: Allergan had the right to terminate the Allergan Agreement at any time upon advance written notice.
+Added: In January 2017, the Company and Allergan Pharmaceuticals International Limited (Allergan) entered into the Research, Development, Collaboration and License Agreement (the Allergan Agreement) to develop and commercialize select microbiome gastrointestinal disease therapies.
In June 2020, following its acquisition of Allergan, AbbVie Inc.
−Removed: (AbbVie), on behalf of Allergan, gave written notice of termination of the Allergan Agreement effective 120 days following the delivery of notice, on October 10, 2020.
+Added: (AbbVie), on behalf of Allergan, gave written notice of termination of the Allergan Agreement, which subsequently became effective in October 2020.
Upon termination, the licenses granted by the Company and its know-how reverted to the Company.
−Removed: Under the terms of the Allergan Agreement, AbbVie was obligated to continue to reimburse the Company for certain research and development costs through October 10, 2020.
−Removed: Upon effectiveness of the termination, such reimbursements ceased.
−Removed: Due to the delivery of the termination notice, the Company determined there were no further enforceable rights and obligations under the Allergan Agreement beyond June 2020 and the remaining $ 36.0 million of deferred revenue was recognized in 2020.
−Removed: Allergan paid the Company an upfront non-refundable payment of $ 50.0 million which was received in 2017.
−Removed: Additionally, the Company was eligible to receive variable consideration in the form of research and development cost reimbursements, up to $ 631.0 million related to seven development milestones and up to $ 2.14 billion related to 12 commercial development and sales milestones in connection with the successful development and commercialization of licensed compounds.
−Removed: In addition, the Company was eligible to receive tiered royalties at rates ranging from the mid-single digits to the mid-teens based on net sales.
−Removed: Allergan and the Company agreed to share research and development costs up to an aggregate of $ 75.0 million through proof-of-concept (POC) studies on a ⅔, ⅓ basis, respectively, and Allergan agreed to assume all post-POC development costs.
−Removed: In the event any pre-POC development costs would have exceeded $ 75.0 million in the aggregate, the Company may have elected either (a) to fund ⅓ of such costs in excess of $ 75.0 million or (b) to allow Allergan to deduct from future development milestone payments ⅓ of the development costs funded by Allergan in excess of $ 75.0 million plus a premium of 25 %.
−Removed: The Company had an option to co-promote the licensed programs in the U.S.
−Removed: and China, subject to certain conditions set forth in the Allergan Agreement.
−Removed: The Company concluded that Allegan was a customer, and the contract was not subject to accounting literature on collaborative arrangements.
−Removed: This is because the Company granted to Allergan licenses to its intellectual property and agreed to perform research and development services, all of which are outputs of the Company’s ongoing activities, in exchange for consideration.
−Removed: The Company identified the following material promises under the Allergan Agreement:
−Removed: (1) grant of a licenses to intellectual property for the four initial indications, inclusive of the related technology know-how (Licenses) and (2) the obligation to perform research development services through POC (Development Services).
−Removed: The Company’s participation on the JDC and JPC were considered to be immaterial in the context of the contract.
−Removed: The Company’s co-promotion option was not considered to be a performance obligation.
−Removed: Allergan’s selection of backups or additional target indications to add to the licenses granted for additional consideration and ability to enter into a contract manufacturing agreement with the Company for compound supply at cost plus an agreed upon margin were not considered to be performance obligations as the Company concluded the options were not offered at a discount that exceeds discounts available to other customers, and therefore were not material rights.
−Removed: The grant of additional licensing rights upon option exercises and contract manufacturing agreements were to be accounted for as separate contracts when or if they occurred.
−Removed: The Company concluded the Licenses each were considered to be functional as they had significant standalone functionality and were capable of being distinct.
−Removed: However, the Company determined that each of the Licenses individually were not distinct from the Development Services within the context of the agreement.
−Removed: This is because Allergan was dependent on the Company to execute the Development Services, which it was uniquely able to perform, in order for Allergan to benefit from the Licenses.
−Removed: As such, t he Company determined that it had four performance obligations under the Allergan Agreement associated with the grant of the four compound Licenses combined with the performance of the Development Services for each of the four compound indications.
−Removed: The Company determined that the four performance obligations would have be en performed over the duration of the contract, which began in February 2017 and ends upon receipt of the termination notice .
−Removed: The Company used a cost-based input method to measure proportional performance and to calculate the corresponding amount of revenue to recognize.
−Removed: The Company believe d this wa s the best measure of progress because other measures do not reflect how the Company transfers its performance obligation to Allegan.
−Removed: In applying the cost-based input method of revenue recognition, the Company measure d costs incurred relative to budgeted costs to fulfill the four performance obligations.
−Removed: These costs consist ed primarily of third-party contract costs and internal labor costs.
−Removed: Revenue will be recognized based on actual costs incurred as a percentage of total budgeted costs as the Company complete d its performance obligations.
−Removed: To allocate transaction price among the four performance obligations, the Company estimated their standalone selling price (SSP) using an income-based valuation approach for the estimated value a licensor of the compounds would receive considering the stage of the compounds’ development.
−Removed: A change in the assumptions used to determine its best estimate of selling price for the four performance obligations would not have had a significant effect on the allocation of consideration received to the four performance obligations.
−Removed: The transaction price at the inception of the agreement and upon adoption of the revenue from contracts with customers guidance was limited to the $ 50.0 million upfront payment.
−Removed: Of this amount, the Company allocated $ 12.5 million to each of the four performance obligations.
−Removed: Research and development cost reimbursement payments were included in the transaction price in the reporting period that the Company concludes that it was probable that recording revenue in the period would not have resulted in a significant reversal in amounts recognized.
−Removed: The variable consideration related to the remaining development and commercialization milestone payments was not included in the transaction price as these were fully constrained.
−Removed: As part of the Company’s evaluation of the development and commercialization milestones constraint, the Company determined the achievement of such milestones was contingent upon success in future clinical trials and regulatory approvals which was not within its control and uncertain at this stage.
−Removed: Any variable consideration related to sales-based milestones (including royalties) would have been recognized when the related sales occur as they were determined to relate predominantly to the license granted to Allergan.
−Removed: The Company re-evaluated the transaction price in each reporting period and as uncertain events were resolved or other changes in circumstances occurred.
−Removed: The Company did not incur any significant incremental costs of obtaining the Allergan contract.
−Removed: For the year ended December 31, 2020, 2019, and 2018 the Company recognized $ 48.1 million , $ 16.0 million and $ 14.8 million respectively, in collaboration revenue associated with the Allergan Agreement.
−Removed: Short-term and long-term deferred revenue contract liabilities related to the Allergan Agreement were $ 6.4 million and $ 30.6 million at December 31, 2019, respectively.
−Removed: There were no deferred revenue contract liabilities as of December 31, 2020 due to the Company recognizing a cumulative catch-up adjustment of the remaining deferred revenue balance during the year ended December 31, 2020 for the determined completion of the Company’s performance obligations under the Allergan Agreement upon receipt of the notice of termination from AbbVie.
−Removed: Contract asset balances of $ 1.0 million and $ 3.4 million were recorded as of December 31, 2020 and 2019, respectively.
+Added: For the year ended December 31, 2020, the Company recognized $ 48.1 million in collaboration revenue associated with the Allergan Agreement.
+Added: A contract asset balance of $ 1.0 million was recorded as of December 31, 2020.
+Added: 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 year ended December 31, 2021 due to the termination of the Allergan Agreement in 2020.
BeiGene Agreement
4 unchanged sentences
Development and regulatory costs for the Licensed Product Candidates for the Territory in excess of $ 45.0 million will be shared equally by the Company and BeiGene.
−Removed: If the Company conducts certain ancillary trials outside of the plan to develop these candidates in the Territory, BeiGene may elect to obtain access to
−Removed: the know-how and clinical data resulting for such ancillary trials and shall reimburse the Company proportionally for the Territory of the costs of such trials.
+Added: If the Company conducts certain ancillary trials outside of the plan to develop these candidates in the Territory, BeiGene may elect to obtain access to the know-how and clinical data resulting for such ancillary trials and shall reimburse the Company proportionally for the Territory of the costs of such trials.
Activities under the BeiGene Agreement will be governed by a joint steering committee (JSC) consisting of equal representatives from each party to the agreement.
5 unchanged sentences
Such a termination would result in the Company regaining all rights to the applicable compound in the Territory.
−Removed: In addition, BeiGene may terminate the BeiGene Agreement for convenience at any time upon 90 days’ advance written notice to us.
+Added: In addition, BeiGene may terminate the BeiGene Agreement for convenience at any time upon 90 days’ advance written notice to Assembly.
The BeiGene Agreement also contains customary provisions for termination by either party, including in the event of breach of the BeiGene Agreement, subject to cure.
−Removed: Pursuant to the terms of the BeiGene Agreement, the Company received an upfront cash payment of $ 40.0 million from BeiGene for the delivery of exclusive, royalty-bearing licenses to develop and commercialize the Licensed Product Candidates in the Territory, and the Company is eligible to receive up to approximately $ 500.0 million in cash milestone payments, comprised of up to $ 113.8 million for development and regulatory milestones and up to $ 385.0 million in net sales milestones.
+Added: Pursuant to the terms of the BeiGene Agreement, the Company received an upfront cash payment of $ 40.0 million from BeiGene for the delivery of exclusive, royalty-bearing licenses to develop and commercialize the Licensed Product Candidates in the Territory, and the Company was eligible to receive up to approximately $ 500.0 million in
+Added: cash milestone payments, comprised of up to $ 113.8 million for development and regulatory milestones and up to $ 385.0 million in net sales milestones.
In addition, the Company is eligible to receive tiered royalties at percentages ranging from the mid-teens to the low thirties of net sales.
+Added: In September 2021, the Company discontinued development of ABI-H2158 following the observation of elevated alanine transaminase levels in the Phase 2 clinical study consistent with drug-induced hepatotoxicity.
+Added: Due to the discontinuation of development of ABI-H2158, the maximum cash milestone payments the Company is eligible to receive for VBR and ABI-H3733 is $ 427.5 million, comprised of up to $ 97.5 million for development and regulatory milestones and up to $ 330.0 million in net sales milestones.
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.
5 unchanged sentences
The ABI-H2158 and ABI-H3733 Licenses have a continuing technology transfer obligation that is considered to be an attribute of these licenses.
−Removed: 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.
+Added: 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 SSP an entity would typically pay for such a product in that region or market.
There are also no minimum purchase commitments.
−Removed: The Company estimated the standalone selling price (SSP) of the Licenses using an income-based valuation approach for the estimated value a licensor of the compounds would receive considering the stage of the compound’s development.
−Removed: The Company believes a change in the assumptions used to determine its best estimate of SSP would not have a significant value on the allocation of consideration received.
+Added: The Company estimated the SSP of the Licenses using an income-based valuation approach for the estimated value a licensor of the compounds would receive considering the stage of the compound’s development.
+Added: The Company believes a change in the assumptions used to determine its best estimate of SSP would not have a significant value or significant impact on the allocation of consideration received.
The transaction price at the inception of the agreement was limited to the $ 40.0 million upfront payment.
−Removed: 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 December 31, 2020.
+Added: 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 December 31, 2021 and 2020.
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 trials and regulatory approvals which are not within its control and uncertain at this stage.
1 unchanged sentence
The Company will reevaluate the transaction price in each reporting period as uncertain events are resolved or other changes in circumstances occur.
−Removed: During the year ended December 31, 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 has occurred.
+Added: During the year ended December 31, 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 consolidated balance sheet as of December 31, 2020.
−Removed: Revenue for these performance obligations will be recognized when the Company provides pre-Phase 3 clinical trial know-how and development results for these compounds to BeiGene or a termination of the BeiGene Agreement for the respective compound.
+Added: Following the discontinuation of development of ABI-H2158 in September 2021, the obligation related to the technology transfer associated with the license of ABI-H2158 was considered to be complete.
+Added: Accordingly, the Company recognized $ 6.3 million as collaboration revenue for the amount allocated to ABI-H2158 during the year ended December 31, 2021.
+Added: 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 consolidated balance sheet as of December 31, 2021.
+Added: 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.
−Removed: During the year ended December 31, 2020, the Company did no t recognize any increase or reduction of research and development expense under the BeiGene Agreement.
+Added: During the years ended December 31, 2021 and 2020, 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.
−Removed: As of December 31, 2020, $ 2.7 million has been amortized to general and administrative expenses and $ 0.8 million is included in other assets on the condensed consolidated balance sheet.
+Added: As of December 31, 2021 and 2020, the remaining unamortized contract costs are $ 0.2 million and $ 0.8 million, respectively, and are included in other assets on the consolidated balance sheet.
Arbutus Agreement
5 unchanged sentences
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 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.
−Removed: During the year ended December 31 , 2020, the Company recognized a reduction of research and development expense of $ 0.2 million under the Arbutus Agreement.
−Removed: Contract Liabilities
−Removed: The following tables present changes in the Company’s contract liabilities (in thousands):
−Removed: Year Ended December 31, 2020
−Removed: Contract liabilities:
−Removed: Deferred revenue
−Removed: Year Ended December 31, 2019
−Removed: Contract liabilities:
−Removed: Deferred revenue
−Removed: Year Ended December 31,
−Removed: Collaboration revenue recognized in the period from
−Removed: Amounts included in deferred revenue at the beginning of the period
−Removed: Performance obligations satisfied in previous periods
−Removed: Note 10 – Strategic License Agreements
+Added: T he Company recognized a reduction of research and development expense of $ 2.0 million and $ 0.2 million under the Arbutus Agreement during t he years ended December 31 , 2021 and 2020, respectively.
+Added: Antios Agreement
+Added: In July 2021, the Company and Antios Therapeutics, Inc.
+Added: (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.
+Added: Assembly and Antios will individually be responsible for the study’s manufacturing costs but will equally share the remaining costs of the study.
+Added: 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.
+Added: Due to the discontinuation of development of ABI-H2158 in September 2021, any study under the Antios Agreement would be with VBR.
+Added: 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.
+Added: 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.
+Added: In October 2021, the JDC agreed to initiate a collaboration trial cohort to evaluate a triple combination treatment in patients with chronic HBV infection.
+Added: There were no costs incurred during the year ended December 31, 2021.
+Added: Note 11 – Milestones and Research Agreements
HBV Research Agreement with Indiana University
6 unchanged sentences
Additionally, the Company paid IURTC $ 0.7 million as a sublicensing fee during the year ended December 31, 2020.
−Removed: The Company made $ 0.1 million in milestone payments for the year ended December 31, 2018.
−Removed: No milestone payments were incurred or accrued for under this agreement as of and for the year ended December 31, 2019.
+Added: No milestone payments were incurred or accrued under the License Agreement during the year ended December 31, 2021.
The milestone and license fees are included in research and development expenses in the consolidated statements of operations and comprehensive loss.
2 unchanged sentences
The Company will be solely responsible for all research and development activities with respect to any product it develops under the license.
−Removed: The Company must pay Therabiome clinical and regulatory milestones for each product or therapy advanced from the platform for U.S.
+Added: The Company was obligated to pay Therabiome clinical and regulatory milestones for each product or therapy advanced from the platform for U.S.
regulatory milestones.
−Removed: The Company also must pay Therabiome lesser amounts for foreign regulatory milestones, which vary by country and region.
−Removed: The Company also must pay Therabiome royalties on annual net sales of a product in the low to mid-single digit percentages plus, once annual net sales exceed certain thresholds, a one-time cash payment upon reaching the thresholds.
−Removed: Therabiome must pay the Company royalties on annual net sales of any product Therabiome is 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.
−Removed: Two regulatory milestones resulting in payments totaling $ 0.4 million were determined to have occurred under this agreement and were paid in the year ended December 31, 2019.
+Added: In addition, the Company was obligated to pay Therabiome lesser amounts for foreign regulatory milestones, which varied by country and region.
+Added: The Company was also required to pay Therabiome royalties on annual net sales of a product in the low to mid-single digit percentages plus, once annual net sales exceeded certain thresholds, a one-time cash payment upon reaching such thresholds.
+Added: 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.
No amounts were incurred or accrued for this agreement as of and for the years ended December 31, 2021 and 2020.
−Removed: In connection with the wind-down of the Microbiome program, the License and Collaboration Agreement with Therabiome was terminated in January 2021.
+Added: 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 in April 2021.
Door Agreement
−Removed: In November 2020, the Company and Door Pharmaceuticals, LLC (Door) entered into an exclusive, two-year Collaboration Agreement and Sublicense Agreement (collectively, Door Agreement) focused on the development of a novel class of HBV inhibitors.
−Removed: Under the terms of the agreement, Door will build upon its previous efforts to lead and conduct new discovery research, which Assembly will fund.
+Added: 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.
+Added: 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.
−Removed: For the period ended December 31, 2020, the Company incurred $ 0.3 million of research and development funding in addition to the $ 1.8 million up-front payment.
−Removed: Under the consolidation accounting standard, the Company determined that Door is a VIE.
−Removed: 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.
−Removed: As of December 31, 2020, the Company has not provided financial or other support to Door that was not contractually required.
+Added: During the years ended December 31, 2021 and 2020, the Company incurred research and development funding of $ 1.8 million and $ 0.3 million, respectively.
+Added: Additionally, a performance milestone totaling $ 0.2 million was determined to have occurred under this agreement and was paid during the year ended December 31, 2021.
+Added: Under the consolidation accounting standard , the Company determined that Door Pharma is a VIE.
+Added: 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.
+Added: As of December 31, 202 1 , the Company has not provided financial or other support to Door Pharma that was not contractually required.
Note 12 - Income Taxes
−Removed: There was no current income tax provision for the years ended December 31, 2020, 2019 and 2018.
−Removed: The deferred income tax expense for the year ended December 31, 2020 was no t material.
−Removed: The Company recognized deferred income tax benefit of $ 0.8 million for the year ended December 31, 2019 and a deferred income tax expense of $ 1.1 million for the year ended December 31, 2018.
+Added: Income tax benefit is as follows (in thousands):
+Added: As of December 31,
+Added: Income tax benefit
The effective tax rate of our provision for income taxes differs from the federal statutory rate as follows:
2 unchanged sentences
State taxes, net of federal tax benefit
−Removed: Stock based compensation
Research and development tax credits
−Removed: State rate change
−Removed: Uncertain tax positions
Return to provision adjustments
+Added: Uncertain tax positions
+Added: Impairment of goodwill
+Added: Stock-based compensation
Change in valuation allowance
−Removed: Income taxes provision (benefit)
+Added: Income taxes benefit
Significant components of the Company’s deferred taxes are as follows (in thousands):
3 unchanged sentences
Stock-based compensation
−Removed: Intangible assets
−Removed: Deferred revenue
Operating lease liabilities
9 unchanged sentences
The Company maintains a valuation allowance on deferred tax assets due to the uncertainty regarding the ability to utilize these deferred tax assets in the future.
−Removed: The increase in the valuation allowance for both the years ended December 31, 2020 and 2019 is primarily due to an increase in the Company’s federal and state-operating loss carryforwards.
+Added: The valuation allowance increased by $ 25.8 million and $ 22.8 million for the years ended December 31, 2021 and 2020 , respectively, primarily due to an increase in the Company’s federal and state-operating loss carryforwards.
The in-process research and development deferred tax liability was recorded in connection with the merger with Assembly Pharmaceuticals, Inc.
in 2014 and relates to the difference between the carrying amount of in-process research and development for financial statement purposes relative to the amount used for income tax purposes.
−Removed: As of December 31, 2020, the Company had potentially utilizable gross federal net operating loss carryforwards of $ 378.8 million with $ 264.1 million of net operating losses that carry forward indefinitely and $ 114.7 million of net operating losses which begin to expire in 2027 if not utilized.
−Removed: There are state net operating loss carryforwards of $ 446.8 million with $ 0.7 million carrying forward indefinitely and $ 446.1 million beginning to expire in 2031 .
−Removed: In addition, the Company has federal research and development credit carryforwards of $ 8.5 million which begin to expire in 2028 if not utilized and California research and development credit carryforwards of $ 3.6 million, which will carryforward indefinitely.
+Added: The impairment of the Company’s in-process research and development asset resulted in the deferred tax liability related to this indefinite-lived intangible asset no longer being considered a source of income when assessing the realizability of the Company’s deferred tax assets.
+Added: This resulted in the recognition of a $ 2.5 million income tax benefit with a corresponding reduction to the Company’s valuation allowance during the year ended December 31, 2021.
+Added: Net operating loss and tax credit carryforwards as of December 31, 2021 are as follows (in thousands):
+Added: Expiration Years
+Added: Net operating losses, federal (post December 31, 2017)
+Added: Net operating losses, federal (pre January 1, 2018)
+Added: Net operating loss, state (Indefinite)
+Added: Net operating loss, state (Definite)
+Added: Research and development tax credits, federal
+Added: Research and development tax credits, state
Pursuant to Internal Revenue Code (IRC), Section 382 and 383, use of the Company’s U.S.
17 unchanged sentences
The Company files income tax returns in the U.S.
−Removed: federal, California and other state jurisdictions and is not currently under examination by federal, state, or local taxing authorities for any open tax years.
+Added: federal, California and other state and foreign jurisdictions and is not currently under examination by federal, state, or local taxing authorities for any open tax years.
Due to net operating loss carryforwards, all years effectively remain open for income tax examination by tax authorities in the U.S.
2 unchanged sentences
Operating Leases
−Removed: The Company leases corporate office and laboratory space in South San Francisco, California under a sub-sublease that expires in December 2023.
+Added: The Company leases office and laboratory space in South San Francisco, California under a sub-sublease that expires in December 2023.
The sub-sublease contains scheduled rent increases over the lease term.
−Removed: Prior to moving into the South San Francisco office and laboratory space in February 2019, the Company leased office and laboratory space in San Francisco, California, under a sublease that expired in February 2019.
−Removed: The Company also leases office space for administrative functions in Carmel, Indiana under a lease agreement that expires in August 2023.
−Removed: In February 2021, the Company subleased substantially all of the office space under the Carmel, Indiana lease.
−Removed: The Company also leases office and laboratory space in Groton, Connecticut that supports the Microbiome program under a lease that expires in March 2021.
−Removed: Due to the wind-down of the Microbiome program, the lease will not be renewed.
−Removed: The Company’s China subsidiary leases office space and lab space in Shanghai.
−Removed: The lab space expired in December 2020 and the office space expires March 2021, neither of which are being renewed.
−Removed: Additionally, the Company’s China subsidiary leases office space in Beijing under a lease agreement that expires in December 2021.
+Added: The Company also leases office space in Carmel, Indiana under a lease agreement that expires in August 2023.
+Added: In February 2021, the Company subleased substantially all of the office space under lease in Carmel, Indiana for the remainder of its term.
+Added: The Company also leased office and laboratory space in Groton, Connecticut that supported the Microbiome program under a lease that expired in June 2021.
+Added: Due to the wind-down of the Microbiome program, the lease was not renewed.
+Added: 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.
+Added: The Company’s also leased office space in Beijing under a lease agreement which the Company let expire in December 2021.
+Added: The Company’s China subsidiary leases registrational offices in Shanghai and Beijing under leases which expire in May 2022 and October 2022, respectively.
Certain lease contracts contain renewal clauses that the Company assesses on a case-by-case basis.
The Company also leases certain laboratory equipment accounted for as operating leases expiring at various dates, with the final lease expiring in 2024.
−Removed: 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 a third party.
−Removed: The loss on the sale is equal to the impairment loss the Company recognized on these assets for the year ended December 31, 2020 of $ 0.7 million.
+Added: 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 7).
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.
6 unchanged sentences
Variable lease cost
−Removed: Total lease cost
+Added: Sublease income
+Added: Total lease cost, net
Year Ended December 31,
Operating cash flows from operating leases
−Removed: Right-of-use assets exchanged for new operating lease liabilities
+Added: ROU assets exchanged for new operating lease liabilities
As of December 31, 2021, the weighted-average remaining lease term for operating leases was 1.9 years and the weighted-average discount rate for operating leases was 9.7 %.
2 unchanged sentences
Operating lease liabilities
−Removed: Operating lease costs were $ 7.1 million, $ 6.3 million and $ 4.2 million for the years ended December 31, 2020, 2019 and 2018, respectively.
Note 14 - Employee Benefit Plan
3 unchanged sentences
The Plan also permits the Company to make discretionary matching contributions.
−Removed: In 2020, 2019 and 2018, the Company made discretionary matching contributions of $ 0.9 million, $ 0.7 million and $ 0.7 million, respectively.
−Removed: Note 14 - Selected Quarterly Financial Data (Unaudited)
−Removed: The following table contains quarterly financial information for the four quarters of 2020 and 2019 which has been prepared in accordance with GAAP for interim financial information.
−Removed: The Company believes that the following information reflects all normal recurring adjustments necessary for a fair statement of the information for the periods presented.
−Removed: 2020 Quarter Ended
−Removed: (in thousands except for per share amounts)
−Removed: Collaboration revenue
−Removed: Operating expenses
−Removed: Interest and other income
−Removed: Net income (loss)
−Removed: Unrealized gain (loss) from marketable securities, net of tax
−Removed: Basic net income (loss) per common share
−Removed: Diluted net income (loss) per common share
−Removed: 2019 Quarter Ended
−Removed: (in thousands except for per share amounts)
−Removed: Collaboration revenue
−Removed: Operating expenses
−Removed: Interest and other income
−Removed: Unrealized gain (loss) from marketable securities, net of tax
−Removed: Basic and diluted net loss per common share
−Removed: Note 15 – Subsequent Events
−Removed: Subsequent to December 31, 2020, the Company sold 4,177,080 shares of common stock through its 2020 ATM resulting in net proceeds of $ 25.5 million.
+Added: In both 2021 and 2020, the Company made discretionary matching contributions of $ 0.9 million.
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.