ACHV Achieve Life Sciences Inc

 

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, 2024

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)

22722 29th Drive SE, Suite 100, Bothell, WA 98021

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 LLC

 

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 7, 2024 there were 34,389,946 shares of the registrant’s Common Stock, $0.001 par value per share, outstanding.

 

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Achieve Life Sciences, Inc.

Index to Form 10-Q

 

		Page Number
Part I. Financial Information		5
Item 1	Consolidated Financial Statements (unaudited)	5
	Consolidated Balance Sheets as of September 30, 2024 (unaudited) and December 31, 2023	5
	Consolidated Statements of Loss and Comprehensive Loss (unaudited) for the three and nine months ended September 30, 2024 and September 30, 2023	6
	Consolidated Statements of Cash Flows (unaudited) for the nine months ended September 30, 2024 and September 30, 2023	7
	Consolidated Statements of Stockholders’ Equity (unaudited) for the nine months ended September 30, 2024 and September 30, 2023	8
	Notes to Consolidated Financial Statements (unaudited)	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 4.	Controls and Procedures	35
Part II. Other Information		37
Item 1A.	Risk Factors	37
Item 6.	Exhibits	69
Items 2, 3, 4 and 5 are not applicable and therefore have been omitted.
Signatures		71

 

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INFORMATION REGARDING FORWARD LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve a number of risks and uncertainties. We caution readers that any forward-looking statement is not a guarantee of future performance and that actual results could differ materially from those contained in the forward-looking statement. These statements are based on current expectations of future events. Such statements include, but are not limited to, statements about future financial and operating results, plans, objectives, expectations and intentions, costs and expenses, interest rates, outcome of contingencies, financial condition, results of operations, liquidity, business strategies, cost savings, objectives of management and other statements that are not historical facts. You can find many of these statements by looking for words like “believes,” “expects,” “anticipates,” “estimates,” “may,” “should,” “will,” “could,” “plan,” “intend” or similar expressions in this Quarterly Report on Form 10-Q or in documents incorporated by reference into this Quarterly Report on Form 10-Q. We intend that such forward-looking statements be subject to the safe harbors created thereby. Examples of these forward-looking statements include, but are not limited to:

 

These forward-looking statements are based on the current beliefs and expectations of our management and are subject to significant risks and uncertainties. If underlying assumptions prove inaccurate or unknown risks or uncertainties materialize, actual results may differ materially from current expectations and projections. Factors that might cause such a difference include those discussed in Item 1A “Risk Factors,” as well as those discussed elsewhere in the Quarterly Report on Form 10-Q. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this Quarterly Report on Form 10-Q or, in the case of documents referred to or incorporated by reference, the date of those documents.

All subsequent written or oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. We do not undertake any obligation to release publicly any revisions to these forward-looking statements to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect the occurrence of unanticipated events, except as may be required under applicable U.S. securities law. If we do update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements.

 

Summary of Risk Factors

An investment in our common stock involves various risks, and prospective investors are urged to carefully consider the matters discussed in the section titled “Risk Factors” prior to making an investment in our common stock. These risks include, but are not limited to, the following:

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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,
		2024				2023
ASSETS
Current assets:
Cash and cash equivalents [note 6]		$	9,544			$	15,546
Short-term investments [note 6]			33,367				—
Grant receivable [note 3]			—				111
Prepaid expenses and other assets			2,618				1,325
Total current assets			45,529				16,982
Other assets and restricted cash [note 6]			304				92
Right-of-use assets [note 9]			20				66
License agreement [note 4 and note 5]			1,030				1,197
Goodwill			1,034				1,034
Total assets		$	47,917			$	19,371
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	1,011			$	618
Accrued liabilities other			898				351
Contingent consideration [note 5 and note 6]			699				528
Accrued clinical liabilities			1,745				280
Accrued compensation			2,341				2,311
Current portion of long-term obligations [note 9]			22				63
Current portion of convertible debt [note 6 and note 7]			—				16,662
Total current liabilities			6,716				20,813
Non-current portion of convertible debt [note 6 and note 7]			9,823				—
Long-term obligations [note 9]			—				6
Total liabilities			16,539				20,819
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, 2024 and zero issued and outstanding at December 31, 2023			—				—
Series B convertible preferred stock, $0.001 par value, 6,256 shares designated, zero issued and outstanding at September 30, 2024 and zero issued and outstanding at December 31, 2023			—				—
Common stock, $0.001 par value, 150,000,000 shares authorized, 34,389,946 issued and outstanding at September 30, 2024 and 21,165,760 issued and outstanding at December 31, 2023			103				90
Additional paid-in capital			224,418				164,209
Accumulated deficit			(193,218	)			(165,751	)
Accumulated other comprehensive income			75				4
Total stockholders' equity			31,378				(1,448	)
Total liabilities and stockholders' equity		$	47,917			$	19,371
Going concern [note 1]

 

See accompanying notes.

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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,
		2024				2023				2024				2023
EXPENSES
Research and development			7,609				3,581				15,521				13,700
General and administrative			4,857				2,991				11,358				9,164
Total operating expenses			12,466				6,572				26,879				22,864
OTHER INCOME (EXPENSE)
Interest income			673				262				1,874				617
Interest expense [note 7]			(366	)			(781	)			(1,983	)			(2,066	)
Change in fair value of contingent consideration [note 5 and note 6]			(62	)			—				(171	)			—
Loss on extinguishment of 2023 SVB convertible term loan [note 7]			(283	)			—				(283	)			—
Other expense			(8	)			(17	)			(25	)			(26	)
Total other expense			(46	)			(536	)			(588	)			(1,475	)
Net loss		$	(12,512	)		$	(7,108	)			(27,467	)			(24,339	)
OTHER COMPREHENSIVE LOSS
Net unrealized loss on securities			82				—				71				—
Total other comprehensive loss			82				—				71				—
Comprehensive loss		$	(12,430	)		$	(7,108	)			(27,396	)			(24,339	)
Basic and diluted net loss per common share [note 8[d]]		$	(0.36	)		$	(0.34	)		$	(0.88	)		$	(1.26	)
Weighted average shares used in computation of basic and diluted net loss per common share [note 8[d]]			34,355,050				21,127,281				31,251,997				19,376,316

See accompanying notes.

 

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Achieve Life Sciences, Inc.

Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

		Nine Months Ended
		September 30,
		2024				2023
Operating Activities:
Net loss		$	(27,467	)		$	(24,339	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization [note 4]			171				171
Stock-based compensation [note 8[c], note 8[e], note 8[f] and note 8[g]]			4,082				3,449
Shares issued as settlement with trade vendor			—				273
Accrued interest on 2023 SVB convertible term loan [note 7]			799				910
Amortization of 2024 SVB convertible term loan transaction costs [note 7]			9				—
Accretion of discount on modification of debt			365				268
Loss on extinguishment of 2023 SVB convertible term loan			283				—
Change in fair value of contingent consideration [note 5 and note 6]			171				—
Changes in operating assets and liabilities:
Grant receivable [note 3]			111				22
Prepaid expenses and other assets			(1,539	)			618
Accounts payable			393				(1,022	)
Accrued liabilities other			547				310
Accrued clinical liabilities			1,465				(739	)
Accrued compensation			30				22
Lease obligation [note 9]			(1	)			(58	)
Net cash used in operating activities			(20,581	)			(20,115	)
Financing Activities:
Proceeds from exercise of warrants			—				227
Financing costs relating to November 2022 private placement			—				(30	)
Taxes paid related to net share settlement of equity awards			(114	)			(220	)
Proceeds from May 2023 registered direct offering, net of issuance costs			—				15,301
Proceeds from February 2024 registered direct offering, net of issuance costs			56,076				—
Proceeds from employee share purchase plan			178				—
Repayment of 2023 SVB convertible term loan [note 7]			(18,109	)			—
Receipt of 2024 SVB convertible term loan less transaction costs [note 7]			9,814				—
Net cash provided by financing activities			47,845				15,278
Investing Activities:
Purchase of property and equipment			—				(15	)
Purchase of investments			(46,957	)			—
Maturities of investments			13,660
Net cash used in investing activities			(33,297	)			(15	)
Effect of exchange rate changes on cash			1				—
Net increase/(decrease) in cash, cash equivalents and restricted cash			(6,032	)			(4,852	)
Cash, cash equivalents and restricted cash at beginning of the period			15,596				24,821
Cash, cash equivalents and restricted cash at end of the period		$	9,564			$	19,969

See accompanying notes.

 

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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, 2023			21,165,760			$	90				—			$	—			$	164,209			$	4			$	(165,751	)		$	(1,448	)
Stock-based compensation expense			—				—				—				—				1,288				—				—				1,288
Shares issued - February 2024 registered direct offering			13,086,151				13				—				—				56,097				—				—				56,110
Net loss			—				—				—				—				—				—				(6,494	)			(6,494	)
Balance, March 31, 2024			34,251,911			$	103				—			$	—			$	221,594			$	4			$	(172,245	)		$	49,456
Stock-based compensation expense			—				—				—				—				1,454				—				—				1,454
Financing costs relating to February 2024 registered direct offering			—				—				—				—				(39	)			—				—				(39	)
Restricted stock unit settlements			113,125				—				—				—				—				—				—				—
Restricted stock unit settlements withheld and retired to treasury			(23,733	)			—				—				—				(114	)			—				—				(114	)
Other comprehensive income			—				—				—				—				—				(11	)			—				(11	)
Net loss			—				—				—				—				—				—				(8,461	)			(8,461	)
Balance, June 30, 2024			34,341,303			$	103				—			$	—			$	222,895			$	(7	)		$	(180,706	)		$	42,285
Stock-based compensation expense			—				—				—				—				1,340				—				—				1,340
Financing costs relating to February 2024 registered direct offering			—				—				—				—				5				—				—				5
Shares issued under employee share purchase plan			48,643				—				—				—				178				—				—				178
Other comprehensive income			—				—				—				—				—				82				—				82
Net loss			—				—				—				—				—				—				(12,512	)			(12,512	)
Balance, September 30, 2024			34,389,946			$	103				—			$	—			$	224,418			$	75			$	(193,218	)		$	31,378

 

																						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, 2022			17,897,029			$	87				—			$	—			$	144,148			$	4			$	(135,936	)		$	8,303
Stock-based compensation expense			—				—				—				—				1,085				—				—				1,085
Shares issued on exercise of warrants			33,333				—				—				—				77				—				—				77
Financing costs relating to November 2022 private placement			—				—				—				—				(30	)			—				—				(30	)
Net loss			—				—				—				—				—				—				(8,992	)			(8,992	)
Balance, March 31, 2023			17,930,362			$	87				—			$	—			$	145,280			$	4			$	(144,928	)		$	443
Stock-based compensation expense			—				—				—				—				1,190				—				—				1,190
Shares issued on exercise of warrants			65,000				—				—				—				150				—				—				150
Shares issued - May 2023 registered direct offering			3,000,000				3				—				—				15,298				—				—				15,301
SVB convertible debt refinancing discount			—				—				—				—				1,074				—				—				1,074
Restricted stock unit settlements			139,750				—				—				—				—				—				—				—
Restricted stock unit settlements withheld and retired to treasury			(29,352	)			—				—				—				(220	)			—				—				(220	)
Net loss			—				—				—				—				—				—				(8,239	)			(8,239	)
Balance, June 30, 2023			21,105,760			$	90				—			$	—			$	162,772			$	4			$	(153,167	)		$	9,699
Stock-based compensation expense			—				—				—				—				1,174				—				—				1,174
Shares issued as settlement with trade vendor			60,000				—				—				—				273				—				—				273
Net loss			—				—				—				—				—				—				(7,108	)			(7,108	)
Balance, September 30, 2023			21,165,760			$	90				—			$	—			$	164,219			$	4			$	(160,275	)		$	4,038

 

See accompanying notes.

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Achieve Life Sciences, Inc.

Notes to Consolidated Financial Statements

(Unaudited)

 

 

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