achv-10q_20210930.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, 2021

☐	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 9, 2021, there were 9,453,542 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, 2021 (unaudited) and December 31, 2020	3

	Consolidated Statements of Loss and Comprehensive Loss (unaudited) for the three and nine months ended September 30, 2021 and September 30, 2020	4

	Consolidated Statements of Cash Flows (unaudited) for the nine months ended September 30, 2021 and September 30, 2020	5

	Consolidated Statements of Stockholders’ Equity (unaudited) for the three and nine months ended September 30, 2021 and September 30, 2020	6

	Notes to Consolidated Financial Statements (unaudited)	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19


Item 4.	Controls and Procedures	28

Part II. Other Information		29

Item 1A.	Risk Factors	30

Item 6.	Exhibits	55

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

Signatures		56

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,
	2021			2020

ASSETS
Current assets:
Cash and cash equivalents [note 5]	$	33,312		$	35,853
Grant receivable [note 2]		151			—
Prepaid expenses and other assets		1,270			1,122
Total current assets		34,733			36,975
Property and equipment, net		21			42
Right-of-use assets [note 7]		79			146
Other assets and restricted cash [note 5]		235			237
License agreement [note 3 and 4]		1,697			1,864
Goodwill [note 4]		1,034			1,034
Total assets	$	37,799		$	40,298
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	815		$	332
Accrued liabilities other		194			584
Accrued clinical liabilities		757			453
Accrued compensation		1,241			1,474
Current portion of long-term obligations [note 7]		69			92
Total current liabilities		3,076			2,935
Long-term obligations [note 7]		23			77
Total liabilities		3,099			3,012
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, 2021 and zero issued and outstanding at December 31, 2020.		—			—
Series B convertible preferred stock, $0.001 par value, 6,256 shares designated, zero issued and outstanding at September 30, 2021 and zero issued and outstanding at December 31, 2020		—			—
Common stock, $0.001 par value, 150,000,000 shares authorized, 9,453,542 issued and outstanding at September 30, 2021 and 6,111,735 issued and outstanding at December 31, 2020.		79			76
Additional paid-in capital		121,052			97,640
Accumulated deficit		(86,435	)		(60,434	)
Accumulated other comprehensive income		4			4
Total stockholders' equity		34,700			37,286
Total liabilities and stockholders' equity	$	37,799		$	40,298

See accompanying notes.

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,
	2021			2020			2021			2020
EXPENSES
Research and development		4,591			1,891			19,460			4,535
General and administrative		2,102			1,863			6,519			5,494
Total operating expenses		6,693			3,754			25,979			10,029
OTHER INCOME (EXPENSE)
Interest income		3			2			14			47
Other expenses		(1	)		(12	)		(36	)		(24	)
Total other income (expense)		2			(10	)		(22	)		23
Net loss and comprehensive loss	$	(6,691	)	$	(3,764	)		(26,001	)		(10,006	)
Basic and diluted net loss per common share	$	(0.71	)	$	(1.14	)	$	(3.39	)	$	(4.55	)
Weighted average shares used in computation of basic and diluted net loss per common share		9,452,238			3,289,252			7,670,383			2,197,368

See accompanying notes.

Achieve Life Sciences, Inc.

Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

	Nine Months Ended
	September 30,
	2021			2020
Operating Activities:
Net loss	$	(26,001	)	$	(10,006	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization [note 3]		188			191
Stock-based compensation [note 6 [c] and note 6 [d]]		1,693			891
Shares issued as settlement with trade vendor		41			—
Changes in operating assets and liabilities:
Grant receivable [note 2]		(151	)		—
Prepaid expenses and other assets		(146	)		(1,120	)
Accounts payable		483			(533	)
Accrued liabilities other		(390	)		56
Accrued clinical liabilities		304			(294	)
Accrued compensation		(233	)		(176	)
Lease obligation [note 7]		(10	)		(3	)
Net cash used in operating activities		(24,222	)		(10,994	)
Financing Activities:
Proceeds from the April 2020 private placement, net of issuance costs		—			1,579
Financing costs relating to December 2019 public offering		—			(34	)
Proceeds from exercise of warrants		339			3,080
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 the May 2021 public offering, net of issuance costs		21,343			—
Financing costs relating to purchase agreement with Lincoln Park Capital		—			(14	)
Net cash provided by financing activities		21,682			16,740
Investing Activities:
Purchase of property and equipment		—			(17	)
Net cash used in investing activities		—			(17	)
Effect of exchange rate changes on cash		(1	)		—
Net increase (decrease) in cash, cash equivalents and restricted cash		(2,541	)		5,729
Cash, cash equivalents and restricted cash at beginning of the period		35,903			16,714
Cash, cash equivalents and restricted cash at end of the period	$	33,362		$	22,443

See accompanying notes.

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, 2020		6,111,735	$	76		—	$	—	$	97,640		$	4	$	(60,434	)	$	37,286
Stock-based compensation expense		—		—		—		—		542			—		—			542
Shares issued on exercise of warrants		35,217		—		—		—		236			—		—			236
Shares issued as settlement with trade vendor		2,965		—		—		—		23			—		—			23
Net loss		—		—		—		—		—			—		(7,999	)		(7,999	)
Balance, March 31, 2021		6,149,917	$	76		—	$	—	$	98,441		$	4	$	(68,433	)	$	30,088
Stock-based compensation expense		—		—		—		—		621			—		—			621
Shares issued on exercise of warrants		14,443		—		—		—		95			—		—			95
Shares issued - May 2021 public offering		3,285,714		3		—		—		21,340			—		—			21,343
Shares issued as settlement with trade vendor		2,149		—		—		—		18			—		—			18
Net loss		—		—		—		—		—			—		(11,311	)		(11,311	)
Balance, June 30, 2021		9,452,223	$	79		—	$	—	$	120,515		$	4	$	(79,744	)	$	40,854
Stock-based compensation expense		—		—		—		—		530			—		—			530
Shares issued on exercise of warrants		1,174		—		—		—		8			—		—			8
Restricted stock unit settlements		145		—		—		—		(1	)		—		—			(1	)
Net loss		—		—		—		—		—			—		(6,691	)		(6,691	)
Balance, September 30, 2021		9,453,542	$	79		—	$	—	$	121,052		$	4	$	(86,435	)	$	34,700

													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			—