Attached files

file filename
EX-32.2 - EX-32.2 - ACHIEVE LIFE SCIENCES, INC.achv-ex322_7.htm
EX-32.1 - EX-32.1 - ACHIEVE LIFE SCIENCES, INC.achv-ex321_6.htm
EX-31.2 - EX-31.2 - ACHIEVE LIFE SCIENCES, INC.achv-ex312_9.htm
EX-31.1 - EX-31.1 - ACHIEVE LIFE SCIENCES, INC.achv-ex311_8.htm
EX-10.4 - EX-10.4 - ACHIEVE LIFE SCIENCES, INC.achv-ex104_271.htm
EX-10.3 - EX-10.3 - ACHIEVE LIFE SCIENCES, INC.achv-ex103_270.htm
EX-10.2 - EX-10.2 - ACHIEVE LIFE SCIENCES, INC.achv-ex102_272.htm
EX-10.1 - EX-10.1 - ACHIEVE LIFE SCIENCES, INC.achv-ex101_273.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED September 30, 2020 

or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM ______________ TO ____________.

Commission file number 033-80623

Achieve Life Sciences, Inc.

(Exact Name of Registrant as Specified in Its Charter)

 

Delaware

 

95-4343413

(State or Other Jurisdiction of

 

(I.R.S. Employer

Incorporation or Organization)

 

Identification Number)

1040 West Georgia Street, Suite 1030, Vancouver, British Columbia, Canada V6E 4H1

(Address of Principal Executive Offices)

(604) 210-2217

(Registrant’s telephone number, including area code)

 

    Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading Symbol

Name of exchange on which registered

 

Common Stock, par value $0.001 per share

ACHV

The NASDAQ Capital Market

 

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes     No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).   Yes     No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

Accelerated filer

 

 

 

 

 

Non-accelerated filer

 

Smaller reporting company  

 

 

 

 

Emerging growth company  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes     No  

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

As of November 12, 2020, there were 3,617,664 shares of the registrant’s Common Stock, $0.001 par value per share, outstanding.

 


Achieve Life Sciences, Inc.

Index to Form 10-Q

 

 

Page
Number

 

 

Part I.   Financial Information

3

 

 

 

Item 1

Consolidated Financial Statements (unaudited)

3

 

 

 

 

Consolidated Balance Sheets as of September 30, 2020 (unaudited) and December 31, 2019

3

 

 

 

 

Consolidated Statements of Loss and Comprehensive Loss (unaudited) for the three and nine months ended September 30, 2020 and September 30, 2019

4

 

 

 

 

Consolidated Statements of Cash Flows (unaudited) for the nine months ended September 30, 2020 and September 30, 2019

5

 

 

 

 

Consolidated Statements of Stockholders’ Equity (unaudited) for the three and nine months ended September 30, 2020 and September 30, 2019

6

 

 

 

 

Notes to Consolidated Financial Statements (unaudited)

8

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

21

 

 

 

 

 

 

Item 4.

Controls and Procedures

31

 

 

Part II.   Other Information

33

 

 

 

Item 1A.

Risk Factors

34

 

 

 

Item 6.

Exhibits

59

 

 

Items 2, 3 and 4 are not applicable and therefore have been omitted.

 

 

 

Signatures

61

2


PART I. FINANCIAL INFORMATION

Item 1.

Consolidated Financial Statements

Achieve Life Sciences, Inc.

Consolidated Balance Sheets

(Unaudited)

(In thousands, except per share and share amounts) 

 

 

 

September 30,

 

 

December 31,

 

 

 

2020

 

 

2019

 

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents [note 5]

 

$

22,393

 

 

$

16,664

 

Prepaid expenses and other assets

 

 

1,669

 

 

 

670

 

Total current assets

 

 

24,062

 

 

 

17,334

 

Restricted cash [note 5]

 

 

50

 

 

 

50

 

Property and equipment, net

 

 

50

 

 

 

57

 

Right-of-use assets [note 7]

 

 

193

 

 

 

329

 

Other assets

 

 

308

 

 

 

187

 

License agreement [note 3 and 4]

 

 

1,920

 

 

 

2,087

 

Goodwill [note 4]

 

 

1,034

 

 

 

1,034

 

Total assets

 

$

27,617

 

 

$

21,078

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

326

 

 

$

859

 

Accrued liabilities other

 

 

360

 

 

 

304

 

Accrued clinical liabilities

 

 

93

 

 

 

387

 

Accrued compensation

 

 

940

 

 

 

1,116

 

Current portion of long-term obligations [note 7]

 

 

129

 

 

 

203

 

Total current liabilities

 

 

1,848

 

 

 

2,869

 

Long-term obligations [note 7]

 

 

94

 

 

 

159

 

Total liabilities

 

 

1,942

 

 

 

3,028

 

Commitments and contingencies [note 7]

 

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

 

 

Series A convertible preferred stock, $0.001 par value, 9,158 shares designated, zero

issued and outstanding at September 30, 2020 and zero issued and outstanding at December 31, 2019.

 

 

 

 

 

 

Series B convertible preferred stock, $0.001 par value, 6,256 shares designated, zero

issued and outstanding at September 30, 2020 and 1,121 issued and outstanding at December 31, 2019

 

 

 

 

 

 

Common stock, $0.001 par value, 150,000,000 shares authorized, 3,616,414 issued and outstanding at September 30, 2020 and 1,474,258 issued and outstanding at December 31, 2019, respectively.

 

 

74

 

 

 

41

 

Additional paid-in capital

 

 

81,307

 

 

 

63,709

 

Accumulated deficit

 

 

(55,710

)

 

 

(45,704

)

Accumulated other comprehensive income

 

 

4

 

 

 

4

 

Total stockholders' equity

 

 

25,675

 

 

 

18,050

 

Total liabilities and stockholders' equity

 

$

27,617

 

 

$

21,078

 

Going concern [note 1]

 

 

 

 

 

 

 

 

Subsequent events [note 8]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes.

3


Achieve Life Sciences, Inc.

Consolidated Statements of Loss and Comprehensive Loss

(Unaudited)

(In thousands, except per share and share amounts)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

1,891

 

 

 

1,824

 

 

 

4,535

 

 

 

7,911

 

General and administrative

 

 

1,863

 

 

 

1,893

 

 

 

5,494

 

 

 

5,408

 

Total operating expenses

 

 

3,754

 

 

 

3,717

 

 

 

10,029

 

 

 

13,319

 

OTHER INCOME (EXPENSE)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

2

 

 

 

40

 

 

 

47

 

 

 

143

 

Other expenses

 

 

(12

)

 

 

4

 

 

 

(24

)

 

 

(25

)

Total other income (expense)

 

 

(10

)

 

 

44

 

 

 

23

 

 

 

118

 

Net loss and comprehensive loss

 

$

(3,764

)

 

$

(3,673

)

 

 

(10,006

)

 

 

(13,201

)

Basic and diluted net loss per common share

 

$

(1.14

)

 

$

(9.07

)

 

$

(4.55

)

 

$

(35.96

)

Weighted average shares used in computation of basic and diluted net loss per common share

 

 

3,289,252

 

 

 

405,012

 

 

 

2,197,368

 

 

 

367,103

 

 

See accompanying notes.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4


Achieve Life Sciences, Inc.

Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

 

 

 

Nine Months Ended

 

 

 

September 30,

 

 

 

2020

 

 

2019

 

Operating Activities:

 

 

 

 

 

 

 

 

Net loss

 

$

(10,006

)

 

$

(13,201

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization [note 3]

 

 

191

 

 

 

192

 

Stock-based compensation [note 6 [c] and note 6 [d]]

 

 

891

 

 

 

917

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Amounts receivable

 

 

8

 

 

 

 

Prepaid expenses and other assets

 

 

(1,128

)

 

 

597

 

Accounts payable

 

 

(533

)

 

 

430

 

Accrued liabilities other

 

 

56

 

 

 

(320

)

Accrued clinical liabilities

 

 

(294

)

 

 

(462

)

Accrued compensation

 

 

(176

)

 

 

39

 

Lease obligation [note 7]

 

 

(3

)

 

 

6

 

Net cash used in operating activities

 

 

(10,994

)

 

 

(11,802

)

Financing Activities:

 

 

 

 

 

 

 

 

Proceeds from the April 2020 financing, net of issuance costs

 

 

1,579

 

 

 

 

Financing costs relating to December 2019 public offering

 

 

(34

)

 

 

 

Proceeds from exercise of warrants

 

 

3,080

 

 

 

4,199

 

Proceeds from the July 2020 Registered Direct Offering, net of issuance costs

 

 

5,307

 

 

 

 

Proceeds from the August 2020 Public Offering, net of issuance costs

 

 

6,822

 

 

 

 

Proceeds from purchase agreement with Lincoln Park Capital, net of issuance costs

 

 

 

 

 

423

 

Financing costs relating to purchase agreement with Lincoln Park Capital

 

 

(14

)

 

 

 

Net cash provided by financing activities

 

 

16,740

 

 

 

4,622

 

Investing Activities:

 

 

 

 

 

 

 

 

Purchase of property and equipment

 

 

(17

)

 

 

(52

)

Purchase of investments

 

 

 

 

 

(25

)

Proceeds from maturities of investments

 

 

 

 

 

5,114

 

Net cash provided by (used in) investing activities

 

 

(17

)

 

 

5,037

 

Effect of exchange rate changes on cash

 

 

 

 

 

3

 

Net increase (decrease) in cash, cash equivalents and restricted cash

 

 

5,729

 

 

 

(2,140

)

Cash, cash equivalents and restricted cash at beginning of the period

 

 

16,714

 

 

 

9,565

 

Cash, cash equivalents and restricted cash at end of the period

 

$

22,443

 

 

$

7,425

 

 

See accompanying notes.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5


 

 

 

 

 

 

Achieve Life Sciences, Inc.

 

Consolidated Statements of Stockholders’ Equity

(Unaudited)

(In thousands, except share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Other

 

 

 

 

 

 

Total,

 

 

 

Common Stock

 

 

Preferred Stock

 

 

Paid-in

 

 

Comprehensive

 

 

Accumulated

 

 

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income (Loss)

 

 

Deficit

 

 

Equity

 

Balance, December 31, 2019

 

 

1,474,258

 

 

$

41

 

 

 

1,121

 

 

$

 

 

$

63,709

 

 

$

4

 

 

$

(45,704

)

 

$

18,050

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

302

 

 

 

 

 

 

 

 

 

302

 

Costs relating to December 2019 financing

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(34

)

 

 

 

 

 

 

 

 

(34

)

Costs relating to purchase agreement with Lincoln Park Capital

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(13

)

 

 

 

 

 

 

 

 

(13

)

Shares issued on conversion of Series B preferred shares

 

 

93,379

 

 

 

2

 

 

 

(1,121

)

 

 

 

 

 

(2

)

 

 

 

 

 

 

 

 

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,320

)

 

 

(3,320

)

Balance, March 31, 2020

 

 

1,567,637

 

 

$

43

 

 

 

 

 

$

 

 

$

63,962

 

 

$

4

 

 

$

(49,024

)

 

$

14,985

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

308

 

 

 

 

 

 

 

 

 

308

 

Costs relating to purchase agreement with Lincoln Park Capital

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1

)

 

 

 

 

 

 

 

 

(1

)

Shares issued on exercise of warrants

 

 

89,281

 

 

 

 

 

 

 

 

 

 

 

 

589

 

 

 

 

 

 

 

 

 

589

 

Shares issued - April 2020 private placement

 

 

280,782

 

 

 

6

 

 

 

 

 

 

 

 

 

1,573

 

 

 

 

 

 

 

 

 

1,579

 

Shares issued on conversion of preferred shares

 

 

 

 

 

2

 

 

 

 

 

 

 

 

 

(2

)

 

 

 

 

 

 

 

 

 

Adjustment of fractional shares on reverse stock split

 

 

3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,922

)

 

 

(2,922

)

Balance, June 30, 2020

 

 

1,937,703

 

 

$

51

 

 

 

 

 

$

 

 

$

66,429

 

 

$

4

 

 

$

(51,946

)

 

$

14,538

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

281

 

 

 

 

 

 

 

 

 

281

 

Shares issued - July 2020 Registered Direct Offering

 

 

731,707

 

 

 

15

 

 

 

 

 

 

 

 

 

5,292

 

 

 

 

 

 

 

 

 

5,307

 

Shares issued - August 2020 Public Offering

 

 

569,043

 

 

 

1

 

 

 

 

 

 

 

 

 

6,821

 

 

 

 

 

 

 

 

 

6,822

 

Shares issued on exercise of warrants

 

 

377,845

 

 

 

7

 

 

 

 

 

 

 

 

 

2,484

 

 

 

 

 

 

 

 

 

2,491

 

Restricted stock unit settlements

 

 

128

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustment of fractional shares on reverse stock split

 

 

(12

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,764

)

 

 

(3,764

)

Balance, September 30, 2020

 

 

3,616,414

 

 

$

74

 

 

 

 

 

$

 

 

$

81,307

 

 

$

4

 

 

$

(55,710

)

 

$

25,675

 

 

 

 

6


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Other

 

 

 

 

 

 

Total,

 

 

 

Common Stock

 

 

Preferred Stock

 

 

Paid-in

 

 

Comprehensive

 

 

Accumulated

 

 

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income (Loss)

 

 

Deficit

 

 

Equity

 

Balance, December 31, 2018

 

 

336,055

 

 

$

18

 

 

 

579

 

 

$

 

 

$

41,161

 

 

$

4

 

 

$

(25,381

)

 

$

15,802

 

Restricted stock unit settlements

 

 

4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

290

 

 

 

 

 

 

 

 

 

290

 

Adjustments to final October 2018 financing costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4

 

 

 

 

 

 

 

 

 

4

 

Cumulative adjustment on adoption of lease standard

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3

)

 

 

(3

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5,904

)

 

 

(5,904

)

Balance, March 31, 2019

 

 

336,059

 

 

$

18

 

 

 

579

 

 

$

 

 

$

41,455

 

 

$

4

 

 

$

(31,288

)

 

$

10,189

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

317

 

 

 

 

 

 

 

 

 

317

 

Shares issued - from purchase agreement with Lincoln Park Capital

 

 

6,200

 

 

 

 

 

 

 

 

 

 

 

 

423

 

 

 

 

 

 

 

 

 

423

 

Shares issued on exercise of warrants

 

 

55,390

 

 

 

1

 

 

 

 

 

 

 

 

 

4,198

 

 

 

 

 

 

 

 

 

4,199

 

Issuance of inducement warrants

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,925

 

 

 

 

 

 

(3,925

)

 

 

 

Shares issued on conversion of preferred shares

 

 

7,237

 

 

 

 

 

 

(579

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,624

)

 

 

(3,624

)

Balance, June 30, 2019

 

 

404,886

 

 

$

19

 

 

 

 

 

$

 

 

$

50,318

 

 

$

4

 

 

$

(38,837

)

 

$

11,504

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

310

 

 

 

 

 

 

 

 

 

310

 

Restricted stock unit settlements

 

 

250

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,673

)

 

 

(3,673

)

Balance, September 30, 2019

 

 

405,136