achv-10q_20220930.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, 2022

☐	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

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.

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.

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.

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

											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