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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, 2022 

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 10, 2022, there were 9,710,747 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, 2022 (unaudited) and December 31, 2021

3

 

 

 

 

Consolidated Statements of Loss and Comprehensive Loss (unaudited) for the three and nine months ended September 30, 2022 and September 30, 2021

4

 

 

 

 

Consolidated Statements of Cash Flows (unaudited) for the nine months ended September 30, 2022 and September 30, 2021

5

 

 

 

 

Consolidated Statements of Stockholders’ Equity (unaudited) for the nine months ended September 30, 2022 and September 30, 2021

6

 

 

 

 

Notes to Consolidated Financial Statements (unaudited)

8

 

 

 

Item 2.

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

20

 

 

 

 

 

 

Item 4.

Controls and Procedures

30

 

 

Part II.   Other Information

32

 

 

 

Item 1A.

Risk Factors

33

 

 

 

Item 6.

Exhibits

62

 

 

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

 

 

 

Signatures

63

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,

 

 

 

2022

 

 

2021

 

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents [note 6]

 

 

18,197

 

 

$

43,022

 

Grant receivable [note 3]

 

 

145

 

 

 

153

 

Prepaid expenses and other assets

 

 

2,615

 

 

 

1,419

 

Total current assets

 

 

20,957

 

 

 

44,594

 

Right-of-use assets [note 9]

 

 

18

 

 

 

64

 

Other assets and restricted cash [note 6]

 

 

239

 

 

 

183

 

License agreement [note 4 and 5]

 

 

1,475

 

 

 

1,641

 

Goodwill [note 5]

 

 

1,034

 

 

 

1,034

 

Total assets

 

$

23,723

 

 

$

47,516

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

412

 

 

$

841

 

Accrued liabilities other

 

 

539

 

 

 

348

 

Accrued clinical liabilities

 

 

4,552

 

 

 

1,352

 

Accrued compensation

 

 

1,390

 

 

 

1,940

 

Current portion of long-term obligations [note 9]

 

 

23

 

 

 

69

 

Total current liabilities

 

 

6,916

 

 

 

4,550

 

Convertible debt [note 7]

 

 

15,763

 

 

 

14,920

 

Long-term obligations [note 9]

 

 

 

 

 

4

 

Total liabilities

 

 

22,679

 

 

 

19,474

 

Commitments and contingencies [note 9]

 

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

 

 

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

issued and outstanding at September 30, 2022 and zero issued and outstanding at December 31, 2021

 

 

 

 

 

 

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

issued and outstanding at September 30, 2022 and zero issued and outstanding at December 31, 2021

 

 

 

 

 

 

Common stock, $0.001 par value, 150,000,000 shares authorized, 9,710,747 issued and outstanding at September 30, 2022 and 9,453,542 issued and outstanding at December 31, 2021

 

 

79

 

 

 

79

 

Additional paid-in capital

 

 

125,665

 

 

 

121,545

 

Accumulated deficit

 

 

(124,704

)

 

 

(93,586

)

Accumulated other comprehensive income

 

 

4

 

 

 

4

 

Total stockholders' equity

 

 

1,044

 

 

 

28,042

 

Total liabilities and stockholders' equity

 

$

23,723

 

 

$

47,516

 

Going concern [note 1]

 

 

 

 

 

 

 

 

 

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,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

9,869

 

 

 

4,591

 

 

 

21,464

 

 

 

19,460

 

General and administrative

 

 

2,770

 

 

 

2,102

 

 

 

8,474

 

 

 

6,519

 

Total operating expenses

 

 

12,639

 

 

 

6,693

 

 

 

29,938

 

 

 

25,979

 

OTHER INCOME (EXPENSE)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

73

 

 

 

3

 

 

 

81

 

 

 

14

 

Interest expense [note 7]

 

 

(481

)

 

 

 

 

 

(1,242

)

 

 

 

Other income (expense)

 

 

(30

)

 

 

(1

)

 

 

(19

)

 

 

(36

)

Total other (expense)

 

 

(438

)

 

 

2

 

 

 

(1,180

)

 

 

(22

)

Net loss and comprehensive loss

 

$

(13,077

)

 

$

(6,691

)

 

 

(31,118

)

 

 

(26,001

)

Basic and diluted net loss per common share [note 8[d]]

 

$

(1.35

)

 

$

(0.71

)

 

$

(3.24

)

 

$

(3.39

)

Weighted average shares used in computation of basic and diluted net loss per common share [note 8[d]]

 

 

9,693,788

 

 

 

9,452,238

 

 

 

9,600,947

 

 

 

7,670,383

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

\

 

See accompanying notes.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4


 

Achieve Life Sciences, Inc.

Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

 

 

 

Nine Months Ended

 

 

 

September 30,

 

 

 

2022

 

 

2021

 

Operating Activities:

 

 

 

 

 

 

 

 

Net loss

 

$

(31,118

)

 

$

(26,001

)

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

 

 

 

 

 

 

 

 

Depreciation and amortization [note 4]

 

 

171

 

 

 

188

 

Stock-based compensation [note 8[c], note 8[e], note 8[f] and note 8[g]]

 

 

2,492

 

 

 

1,693

 

Shares issued as settlement with trade vendor

 

 

26

 

 

 

41

 

Accrued interest on SVB convertible debt [note 7]

 

 

863

 

 

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Grant receivable [note 3]

 

 

8

 

 

 

(151

)

Prepaid expenses and other assets

 

 

(1,256

)

 

 

(146

)

Accounts payable

 

 

(429

)

 

 

483

 

Accrued liabilities other

 

 

191

 

 

 

(390

)

Accrued clinical liabilities

 

 

3,200

 

 

 

304

 

Accrued compensation

 

 

(550

)

 

 

(233

)

Lease obligation [note 9]

 

 

(4

)

 

 

(10

)

Net cash used in operating activities

 

 

(26,406

)

 

 

(24,222

)

Financing Activities:

 

 

 

 

 

 

 

 

Proceeds from exercise of warrants

 

 

24

 

 

 

339

 

Proceeds from ATM, net of issuance costs [note 8[b]]

 

 

1,499

 

 

 

 

Financing costs relating to convertible debt with SVB [note 7]

 

 

(20

)

 

 

 

Proceeds from the May 2021 public offering, net of issuance costs

 

 

 

 

 

21,343

 

Proceeds from employee stock purchase plan [note 8[g]]

 

 

126

 

 

 

 

Taxes paid related to net share settlement of equity awards

 

 

(47

)

 

 

 

Net cash provided by financing activities

 

 

1,582

 

 

 

21,682

 

Effect of exchange rate changes on cash

 

 

(1

)

 

 

(1

)

Net decrease in cash, cash equivalents and restricted cash

 

 

(24,825

)

 

 

(2,541

)

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

 

 

43,072

 

 

 

35,903

 

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

 

$

18,247

 

 

$

33,362

 

 

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, 2021

 

 

9,453,542

 

 

$

79

 

 

 

 

 

$

 

 

$

121,545

 

 

$

4

 

 

$

(93,586

)

 

$

28,042

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

823

 

 

 

 

 

 

 

 

 

823

 

Shares issued on exercise of warrants

 

 

3,709

 

 

 

 

 

 

 

 

 

 

 

 

24

 

 

 

 

 

 

 

 

 

24

 

Shares issued from purchase agreement with Virtu

 

 

12,742

 

 

 

 

 

 

 

 

 

 

 

 

91

 

 

 

 

 

 

 

 

 

91

 

Shares issued as settlement with trade vendor

 

 

3,584

 

 

 

 

 

 

 

 

 

 

 

 

26

 

 

 

 

 

 

 

 

 

26

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(7,573

)

 

 

(7,573

)

Balance, March 31, 2022

 

 

9,473,577

 

 

$

79

 

 

 

 

 

$

 

 

$

122,509

 

 

$

4

 

 

$

(101,159

)

 

$

21,433

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

840

 

 

 

 

 

 

 

 

 

840

 

Shares issued from purchase agreement with Virtu

 

 

187,258

 

 

 

 

 

 

 

 

 

 

 

 

1,408

 

 

 

 

 

 

 

 

 

1,408

 

Restricted stock unit settlements

 

 

26,625

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restricted stock unit settlements withheld and retired to treasury

 

 

(5,605

)

 

 

 

 

 

 

 

 

 

 

 

(47

)

 

 

 

 

 

 

 

 

(47

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(10,468

)

 

 

(10,468

)

Balance, June 30, 2022

 

 

9,681,855

 

 

$

79

 

 

 

 

 

$

 

 

$

124,710

 

 

$

4

 

 

$

(111,627

)

 

$

13,166

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

829

 

 

 

 

 

 

 

 

 

829

 

Shares issued under employee share purchase plan

 

 

28,892

 

 

 

 

 

 

 

 

 

 

 

 

126

 

 

 

 

 

 

 

 

 

126

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(13,077

)

 

 

(13,077

)

Balance, September 30, 2022

 

 

9,710,747

 

 

$

79

 

 

 

 

 

$

 

 

$

125,665

 

 

$

4

 

 

$

(124,704

)

 

$

1,044

 

 

 

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, 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