What changed in this filing

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Item 1. Financial Statements

2022-08-09 compared with 2022-05-12 · 121 added, 78 removed, 296 unchanged (40% of the section changed)

28 unchanged sentences

Common stock, $ 0.001 par value;

100,000,000 shares authorized as of March 31, 2022 and December 31, 2021;

48,132,937 and 48,120,437 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively

150,000,000 and 100,000,000 shares authorized as of June 30, 2022 and December 31, 2021, respectively;

48,362,736 and 48,120,437 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively

Additional paid-in capital

7 unchanged sentences

(In thousands except for share and per share amounts)

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Operating expenses

14 unchanged sentences

(In thousands except for share amounts)

For the Three Month Period

Comprehensive

Stockholders'

Balance as of December 31, 2021

Balance as of March 31, 2022

Issuance of common stock under Employee Stock Purchase Plan (ESPP)

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

1 unchanged sentence

Stock-based compensation

Balance as of June 30, 2022

Comprehensive

Stockholders'

Balance as of March 31, 2021

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

Issuance of common stock under ESPP

Issuance of common stock for settlement of RSUs

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

Unrealized loss on marketable debt securities

Stock-based compensation

Balance as of June 30, 2021

For the Six Month Period

Comprehensive

1 unchanged sentence

Balance as of December 31, 2021

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

Issuance of common stock under ESPP

Issuance of common stock for settlement of RSUs

1 unchanged sentence

Stock-based compensation

Balance as of March 31, 2021

Balance as of June 30, 2022

Comprehensive

Stockholders'

Balance as of December 31, 2020

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

Issuance of common stock under ESPP

Issuance of common stock for settlement of RSUs

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

Unrealized loss on marketable debt securities

Stock-based compensation

Balance as of June 30, 2021

See Accompanying Notes to Condensed Consolidated Financial Statements

2 unchanged sentences

(In thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities

14 unchanged sentences

Cash flows from investing activities

Purchases of property and equipment

Proceeds from sale of property and equipment

Purchases of marketable securities

1 unchanged sentence

Proceeds from sale of marketable securities

Purchases of property and equipment

Proceeds from sale of property and equipment

Net cash provided by investing activities

Cash flows from financing activities

Proceeds from the issuance of common stock under ESPP

Proceeds from the issuance of common stock under ATM equity offering program, net of issuance costs

Net cash provided by financing activities

Net increase in cash and cash equivalents

Net (decrease) increase in cash and cash equivalents

Cash and cash equivalents at the beginning of the period

10 unchanged sentences

The Company operates in one segment and is headquartered in South San Francisco, California, with operations in California and China.

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

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 and is currently advancing early-stage programs evaluating (1) a novel small molecule approach to inhibit entry for both HBV and hepatitis delta viruses (HDV), (2) a novel, small molecule interferon-α receptor (IFNAR) agonist designed to selectively activate the interferon-α pathway within the liver and offer the convenience of oral dosing and (3) two additional undisclosed viral targets.

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

18 unchanged sentences

notes for the fiscal year ended December 31, 2021 , which are contained in the 2021 Annual Report .

The results for the three months ended March 31, 2022 are not necessarily indicative of results to be expected for the entire year ending December 31, 2022 or future operating periods.

The results for the three and six months ended June 30, 2022 are not necessarily indicative of results to be expected for the entire year ending December 31, 2022 or future operating periods.

Use of Estimates

8 unchanged sentences

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.

Early in the pandemic, the Company’s clinical and preclinical studies were largely unaffected, but as the pandemic has continued, the Company has experienced enrollment delays for two of its multi-drug combination clinical studies, delayed animal studies and delayed shipping of compounds necessary for the Company’s research programs.

Although the clinical studies that experienced enrollment delays are now fully enrolled, the lockdowns resulting from China’s strict “zero covid” policy are also impacting execution of one of these multi-drug clinical studies.

The Company relies on contract research organizations (CROs), some of which are in China and India.

While these CROs have experienced pandemic-related impacts from time to time, the latest shutdowns in China have impacted the Company more than earlier in the pandemic.

Early in the pandemic, the Company’s clinical and nonclinical studies were largely unaffected, but as the pandemic has continued, its impacts have increased.

Certain nonclinical animal studies and shipping of compounds necessary for the Company’s research programs have been delayed, and conduct of Study 203, which is currently in the process of being closed, has also been impacted by the shutdowns occurring in the first half of 2022 in China.

The Company relies on contract research organizations (CROs), some of which are in China and India, and these CROs have experienced pandemic-related impacts from time to time.

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.

1 unchanged sentence

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

If the financial markets and/or the overall economy are impacted for an extended period, the Company’s results may be adversely affected.

In addition, the study plan of the Company’s triple combination study with Antios Therapeutics, Inc.

(Antios) initially included a site in Ukraine, but the study will no longer be conducted there due to the instability resulting from Russia’s invasion.

These changes to the Company’s study plan will result in a delayed data readout.

Effective January 1, 2022, a provision of the Tax Cuts and Jobs Act (TCJA) has taken effect creating a significant change to the treatment of research and experimental expenditures under Section 174 of the IRC (Sec.

If the financial markets and/or the overall economy continue to be impacted for an extended period, the Company’s results may be adversely affected.

In addition to the Company’s CROs in China and India, the Company also contracts with a CRO in Ukraine, which shut down operations due to Russia’s invasion of Ukraine.

Though this CRO has resumed operations, the Company has reallocated certain work to other global CROs incase the CRO shuts down operations again.

Effective January 1, 2022, a provision of the Tax Cuts and Jobs Act (TCJA) took effect creating a significant change to the treatment of research and experimental expenditures under Section 174 of the IRC (Sec.

174 expenses).

5 unchanged sentences

174 expenses will be capitalized and amortized over a 15 -year period.

The Company prepared an analysis of the tax impact of capitalizing and amortizing these costs over the required periods and for calendar year 2022, it is expecting to be in a loss position after the estimated addback.

This provision is not expected to have a significant impact to the consolidated financial statements.

Net Loss per Share

2 unchanged sentences

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

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Weighted average common shares and

1 unchanged sentence

Net loss per share - basic and diluted

(1) All pre-funded warrants were exercised in 2021.

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

Options to purchase common stock

Common stock subject to purchase under our Employee Stock Purchase Plan (ESPP)

Common stock subject to purchase under ESPP

Unvested RSUs

7 unchanged sentences

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

March 31, 2022

June 30, 2022

Cash equivalents

25 unchanged sentences

Total cash equivalents and marketable securities

Short-term marketable securities held as of March 31, 2022 had contractual maturities of less than one year .

Long-term marketable securities held as of March 31, 2022 had contractual maturities of at least one year but less than two years.

Realized gains and losses for the three months ended March 31, 2022 and 2021 were not significant.

None of the Company’s investments have been in a continuous unrealized loss position for more than 12 months as of March 31, 2022.

Short-term marketable securities held as of June 30, 2022 had contractual maturities of less than one year .

Long-term marketable securities held as of June 30, 2022 had contractual maturities of at least one year but less than two years.

Realized gains and losses for the three and six months ended June 30, 2022 and 2021 were not significant.

None of the Company’s investments have been in a continuous unrealized loss position for more than 12 months as of June 30, 2022.

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

March 31, 2022

June 30, 2022

Cash equivalents

40 unchanged sentences

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

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

The Company did no t sell any shares of common stock under the 2020 ATM during the three months ended March 31, 2022.

The Company did no t sell any shares of common stock under the 2020 ATM during the six months ended June 30, 2022.

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

Note 6 – Stock Plans and Stock-Based Compensation

1 unchanged sentence

In May 2022, the Company’s stockholders approved an amendment to the Assembly Biosciences, Inc.

2018 Stock Incentive Plan (2018 Plan) that increased the aggregate number of shares of common stock reserved under the 2018 Plan to 6,600,000 and an Amended and Restated Assembly Biosciences, Inc.

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

As of March 31, 2022, the Company had awards outstanding under the following shareholder-approved plans:

2018 Stock Incentive Plan (2018 Plan) that increased the aggregate number of shares of common stock reserved under the 2018 Plan to 8,600,000 and an amendment and restatement to the Fifth Amended and Restated Certificate of Incorporation to increase the authorized number of shares of common stock to 150,000,000 .

As of June 30, 2022, the Company had awards outstanding under the following shareholder-approved plans:

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

2 unchanged sentences

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

As of March 31, 2022, the Company also had awards outstanding under the Assembly Biosciences, Inc.

As of June 30, 2022, the Company also had awards outstanding under the Assembly Biosciences, Inc.

2017 Inducement Award Plan, the Assembly Biosciences, Inc.

2 unchanged sentences

The Company issues new shares of common stock to settle options exercised and vested RSUs.

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

The Company also issues new shares of common stock in connection with purchases of shares of common stock by eligible employees under the Company’s Amended and Restated Assembly Biosciences, Inc.

2018 Employee Stock Purchase Plan.

Stock Plan Activity

Stock Options

A summary of the Company’s option activity and related information for the three months ended March 31, 2022 is as follows:

A summary of the Company’s option activity and related information for the six months ended June 30, 2022 is as follows:

Outstanding as of December 31, 2021

Outstanding as of March 31, 2022

Options vested and exercisable as of March 31, 2022

The weighted-average grant-date fair value of options granted was $ 1.63 and $ 3.15 during the three months ended March 31, 2022 and 2021, respectively.

There were no options exercised during the three months ended March 31, 2022 or 2021.

A summary of the Company’s RSUs and related information for the three months ended March 31, 2022 is as follows:

Outstanding as of June 30, 2022

Options vested and exercisable as of June 30, 2022

The weighted-average grant-date fair value of options granted was $ 1.57 and $ 3.12 during the six months ended June 30, 2022 and 2021, respectively.

There were no options exercised during the three and six months ended June 30, 2022 or 2021.

A summary of the Company’s RSUs and related information for the six months ended June 30, 2022 is as follows:

Value Per RSU

1 unchanged sentence

Nonvested as of December 31, 2021

Nonvested as of March 31, 2022

The total fair value of RSUs vested and settled during the three months ended March 31, 2022 and 2021 was $ 1.1 million and $ 2.5 million, respectively.

The total intrinsic value of RSUs vested and settled during the three months ended March 31, 2022 and 2021 was $ 0.2 million and $ 0.6 million, respectively.

Nonvested as of June 30, 2022

The total fair value of RSUs vested and settled during the six months ended June 30, 2022 and 2021 was $ 1.4 million and $ 2.8 million, respectively.

The total intrinsic value of RSUs vested and settled during the six months ended June 30, 2022 and 2021 was $ 0.2 million and $ 0.7 million, respectively.

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

2 unchanged sentences

The outstanding 50,000 awards with an aggregate fair value of $ 0.4 million vest upon performance conditions not yet deemed probable.

Accordingly, no stock-based compensation expense has been recognized as of March 31, 2022.

Accordingly, no stock-based compensation expense has been recognized as of June 30, 2022.

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 its executive officers.

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

Accordingly, no stock-based compensation expense has been recognized as of March 31, 2022.

Accordingly, no stock-based compensation expense has been recognized as of June 30, 2022.

In March 2022, the Company granted 255,000 RSUs with market-based vesting conditions to members of management, including its executive officers.

The awards had a grant date fair value of $ 0.4 million and are being recognized over the derived service period of 1.5 years and vest upon the achievement of certain market-based conditions which have not been achieved as of March 31, 2022.

Stock-based compensation expense for the awards was nominal during the three months ended March 31, 2022.

There were no shares purchased under the 2018 ESPP during the three months ended March 31, 2022 or 2021.

The Company recognized stock-based compensation expense of $ 0.1 million for these RSUs during the three and six months ended June 30, 2022.

Employees purchased 134,888 and 42,803 shares of common stock under the 2018 ESPP during the six months ended June 30, 2022 and 2021, respectively.

Valuation Assumptions

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

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Exercise price

1 unchanged sentence

$4.03 - $4.16

$1.53 - $2.45

$4.03 - $5.79

Expected volatility

1 unchanged sentence

80.7% - 88.9%

78.9% - 81.7%

80.7% - 91.2%

Risk-free rate

1 unchanged sentence

0.93% - 1.34%

1.41% - 3.02%

0.50% - 1.37%

Expected term (years)

2 unchanged sentences

The fair value of market-based RSUs granted is determined using the Monte-Carlo simulation model.

The fair value of ESPP purchase rights were not material for any period presented.

The fair value of ESPP purchase rights and stock appreciation rights was not material for any period presented.

Stock-Based Compensation Expense

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

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Research and development

1 unchanged sentence

Total stock-based compensation expense

Includes the reversal of previously recognized stock-based compensation expense of $ 3.6 million related to forfeited awards of terminated employees, $ 2.7 million of which resulted from the wind-down of the Company’s Microbiome program.

As of March 31, 2022, there was $ 10.9 million of total unrecognized stock-based compensation related to outstanding equity awards, which is expected to be recognized over a weighted average remaining amortization period of 1.8 years.

Includes the reversal of previously recognized stock-based compensation expense of $ 4.1 million related to forfeited awards of terminated employees, $ 2.7 million of which resulted from the wind-down of the Company’s Microbiome program in January 2021.

As of June 30, 2022, there was $ 9.2 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.

Note 7 - Collaboration Agreements

1 unchanged sentence

In July 2020, the Company and BeiGene, Ltd.

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

As of March 31, 2022 the only remaining performance obligation under the BeiGene Agreement not considered to be complete is the transfer of the ABI-H3733 License.

The transaction price allocated to ABI-H3733 of $ 2.7 million was recognized as a long-term deferred revenue contract liability as of both March 31, 2022 and December 31, 2021, and will be recognized as revenue 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.

During the three months ended March 31, 2022 and 2021, the Company did no t recognize any revenue or increase or reduction of research and development expense under the BeiGene Agreement.

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

As of June 30, 2022, the only remaining performance obligation under the BeiGene Agreement not considered to be complete is the transfer of the ABI-H3733 License.

The transaction price allocated to ABI-H3733 of $ 2.7 million was recognized as a long-term deferred revenue contract liability as of both June 30, 2022 and December 31, 2021, and will be recognized as revenue 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.

During the three and six months ended June 30, 2022 and 2021, the Company did no t recognize any revenue or 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 in 2020.

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

As of March 31, 2022 and December 31, 2021, the remaining unamortized contract costs are $ 0.2 million and are included in other assets on the condensed consolidated balance sheet.

As of June 30, 2022 and December 31, 2021, the remaining unamortized contract costs are $ 0.2 million and are included in other assets on the condensed consolidated balance sheet.

Arbutus Biopharma Agreement

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

In August 2020, the Company and Arbutus Biopharma Corporation (Arbutus Biopharma) entered into a Clinical Trial Collaboration Agreement (the Arbutus Biopharma Agreement) to conduct a randomized, multi-center, open-label Phase 2 clinical trial to explore the safety, pharmacokinetics and antiviral activity of the triple combination of VBR, AB-729 and an NrtI compared to the double combinations of VBR with an NrtI and AB-729 with an NrtI.

Under the Arbutus Biopharma Agreement, Assembly and Arbutus Biopharma share responsibility for the costs of the trial equally, excluding manufacturing supply which are the burden of each company to supply their respective drugs, VBR and AB-729.

During the three months ended March 31, 2022 and 2021, the Company recognized a reduction of research and development expenses of $ 0.6 million and $ 0.5 million, respectively, under the Arbutus Biopharma Agreement.

Assembly is responsible for conducting this clinical trial with Arbutus reimbursing Assembly its share of expenses.

Reimbursements and cost-sharing portions from Arbutus are reflected as a reduction of research and development expense when realized in the Company’s condensed consolidated statements of operations.

During the three and six months ended June 30, 2022, the Company recognized a reduction of research and development expenses of $ 0.6 million and $ 1.2 million, respectively, under the Arbutus Biopharma Agreement.

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

Antios Agreement

In July 2021, the Company and Antios entered into a Clinical Trial Collaboration Agreement (the Antios Agreement) to collaborate on a triple combination therapy using VBR and Antios’s active site polymerase inhibitor nucleotide ATI-2173 for the treatment of HBV.

Assembly and Antios are individually responsible for the study’s manufacturing costs but will equally share the remaining costs of the study.

During the three months ended March 31, 2022 , the Company incurred $ 0.1 million in research and development expenses under the Antios Agreement.

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

(Antios) entered into a Clinical Trial Collaboration Agreement (the Antios Agreement) to collaborate on a triple combination therapy using VBR and Antios’s active site polymerase inhibitor nucleotide ATI-2173 for the treatment of HBV.

Assembly and Antios were individually responsible for the study’s manufacturing costs but equally shared the remaining costs of the study.

Antios was responsible for conducting the clinical trial with Assembly reimbursing Antios its share of expenses.

In May 2022, the Company was notified by Antios that ATI-2173 had been placed on clinical hold by the FDA following submission of a safety report involving a patient who received a triple combination of VBR, ATI-2173 and a nucleos(t)ide analog reverse transcriptase inhibitor.

Due to the clinical hold, the Company terminated the Antios Agreement effective May 2022.

During the three and six months ended June 30, 2022 , the Company incurred $ 0.2 million and $ 0.3 million, respectively, in research and development expenses under the Antios Agreement.

Note 8 - Milestones and Research Agreements

5 unchanged sentences

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

The Company paid IURTC $ 0.1 million in diligence maintenance fees during the three months ended March 31, 2022.

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

Microbiome Targeted Colonic Delivery Platform

In November 2013, the Company entered into a License and Collaboration Agreement with Therabiome, LLC (Therabiome), for all intellectual property and know-how owned or controlled by Therabiome relating to the oral delivery of pharmaceutical drugs to specific sites in the intestine, using a pH sensitive controlled release capsule-in-capsule technology.

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.

No amounts were accrued for this agreement as of and for the three months ended March 31, 2022 or 2021.

The Company paid IURTC $ 0.1 million in diligence maintenance fees during the six months ended June 30, 2022.

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

Door Pharma Agreement

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

During the three months ended March 31, 2022 and 2021, the Company incurred research and development funding of $ 0.7 million and $ 0.4 million, respectively, under the Door Pharma Agreement.

No success-based milestones were determined to have occurred under this agreement during the three months ended March 31, 2022 or 2021.

The Company terminated the Door Pharma Agreement in May 2022, effective September 2022, to focus its resources on its other internal HBV programs and its programs targeting other viruses .

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

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

As of March 31, 2022, the Company has not provided financial or other support to Door Pharma that was not contractually required.

Under the terms of the Door Pharma Agreement, the Company is obligated to continue to reimburse Door Pharma for certain research and development costs through September 2022.

Upon effectiveness of the termination, such reimbursements will cease.

During the three and six months ended June 30, 2022, the Company incurred research and development funding of $ 0.5 million and $ 1.2 million , respectively, under the Door Pharma Agreement.

During the three and six months ended June 30, 2021, the Company incurred research and development funding of $ 0.5 million and $ 0.8 million, respectively, under the Door Pharma Agreement.

No success-based milestones were determined to have occurred under this agreement during the six months ended June 30, 2022 or 2021.

Note 9 – Subsequent Events

In July 2022, the Company’s Board of Directors approved a strategic plan to discontinue clinical development of the Company’s first-generation core inhibitor, VBR, and prioritize its resources on its next-generation core inhibitors, ABI-H3733 and ABI-4334, and research activities, including a small molecule HBV and HDV entry inhibitor, a small molecule interferon-α receptor agonist and two additional undisclosed viral targets.

The Company intends to align the organization to reflect its refocused pipeline and reduce its workforce by approximately 30 %.

The Company accrued restructuring charges of $ 1.0 million as of June 30, 2022 related to severance benefits to executive officers impacted by the restructuring as the severance benefits in their employment agreements were deemed to be probable of being paid.

The Company expects to incur an additional $ 0.7 million in one-time termination severance payments and other employee-related costs associated with the restructuring, which the Company expects to recognize in the second half of 2022.

This total of $ 1.7 million represents the total amount expected to be incurred in connection with the restructuring and is expected to be fully paid by mid-2023.

In July 2022, the Company's Board of Directors also approved $ 2.5 million in retention bonuses to non-executive officers, 525,000 RSUs with performance-based vesting conditions with a grant date fair value of $ 1.1 million to executive officers and 2,288,200 options with a grant date fair value of $ 3.2 million to all retained employees, all of which will be recognized in future quarters.

The $ 1.0 million accrued restructuring charges as of June 30, 2022 are included in other accrued expenses on the Company’s condensed consolidated balance sheet, of which $ 0.5 million are included in research and development expenses and $ 0.5 million in general and administrative expenses in the condensed consolidated statement of operations and comprehensive loss for the three and six months ended June 30, 2022.

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

What changed 10-Q

Item 1. Financial Statements