Assembly Biosciences, Inc. (ASMB) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by, and welcome to the Assembly Biosciences, Inc. 2020 Annual Meeting of Stockholders. [Operator Instructions] I would now like to hand the conference over to Mr. Bill Ringo. Thank you. Please go ahead, sir.

Thank you, Shelby. I appreciate it. Good morning, everyone. I'm Bill Ringo, Assembly's Chairman of the Board, and I'd like to welcome you to the 2020 Annual Meeting of our Stockholders of Assembly Biosciences. As you know, we are holding this meeting through a virtual-only online platform for the first time. We've made this change to protect the safety, health and well-being of our stockholders, directors, employees and the public during the shelter-in-place guidance resulting from the ongoing COVID-19 pandemic. Thank you all for taking the time to join us. The meeting is now called to order. Please note that in addition to me, the following members of management are in attendance; John McHutchison, our Chief Executive Officer and President; Tom Russo, our Chief Financial Officer; Jason Okazaki, our Chief Legal and Business Officer; Elizabeth Lacy, our Senior VP of Legal Operations, General Counsel and Corporate Secretary; and John Gunderson, our Senior Director, Corporate Counsel and Assistant Secretary. As noted in the notice of this meeting and the proxy statement previously provided to stockholders, the record date for voting at this meeting was the close of business on April 13, 2020. Please note that a list of stockholders of record as of the record date was available for your review prior to the commencement of this meeting and will remain available during the meeting. [Operator Instructions] As Chairman of the Board, I will act as share the meeting. Mrs. Lacy will act as secretary of the meeting and inspector of election. She signed both to act as inspector of elections, which will be filed with the minutes of the meeting. Mrs. Lacy will now report on the meeting attendance and the presence of a quorum.

Thank you, Bill. The list of stockholders of record of Assembly as of April 13, 2020, the record date of this meeting, shows that as of that date, there were 32,707,348 shares of common stock outstanding and entitled to vote at the meeting. According to an affidavit of distribution from Broadridge Financial Services, Inc., on April 27, 2020, Broadridge commenced the mailing of a notice of Annual Meeting of Stockholders or notice of internet availability of proxy materials to all stockholders of record as of April 13, 2020. The affidavit is available if any stockholder wants to examine it, and it will be filed with the minutes of this meeting. A preliminary count of the shares represented by proxy at this meeting indicates that substantially more than a majority of the shares of common stock outstanding as of the record date and entitled to vote are present at the meeting by proxy. A quorum is present.

Thank you, Elizabeth. The meeting is duly convened and open for business. It is now 8:05 a.m. Eastern Daylight Time and the polls are now open for voting. Should any stockholder want to vote online at this time or change their vote previously submitted, please click the Vote Here button on the meeting website to submit or change your vote. If you've already delivered your proxy and do not wish to change your vote, you do not need to vote online at this time. Let's now move on to the formal business of the meeting. As described in the agenda, which has been posted in the meeting portal, along with the rules of conduct for the meeting, we are considering 5 management proposals and 1 stockholder proposal at this meeting. Each of these items has been described in the proxy materials previously mailed to all stockholders of record. After presentation of the proposals, we will take questions. [Operator Instructions] The first item is to elect 8 directors to serve on our Board until the Annual Meeting of Stockholders in 2021 and until their successors are duly elected and qualified. The nominees are: Anthony Altig, Richard DiMarchi, Myron Holubiak, Helen Kim, Alan Lewis, Sue Mahony, John McHutchison and myself. The Board recommends a vote for each of this year's nominees. The second item of business is the approval on a nonbinding advisory basis the company's named executive officers' compensation as disclosed in the proxy statement and also as required by the SEC's compensation disclosure rules. The Board recommends a vote for the approval of the named executive officers' compensation. The third item to be considered is the ratification of the selection of Ernst & Young as the company's independent registered public accounting firm for the 2020 fiscal year by the Board's Audit Committee. We have with us on the line today, Phil Howard, Ernst & Young's lead audit partner for the Assembly audit, who will respond to appropriate questions after presentation of the proposals. The Board recommends a vote for the ratification of Ernst & Young LLP as the company's independent registered public accounting firm. The fourth item for consideration is the amendment of the Assembly Biosciences 2018 stock incentive plan to increase the number of shares reserved for issuance under the plan by 1.6 million shares. The entire 2018 stock incentive plan, including the proposed amendment, was included in the proxy statement that was previously made available to you. The Board of Directors recommends a vote for the amendment of the 2018 stock incentive plan. The fifth item to be voted upon is the approval of the fifth amended and restated certificate of incorporation to enable stockholders who hold in aggregate at least 25% of our outstanding common stock to request special stockholders' meetings. The Board recommends a vote for the amendment and restatement of the certificate of incorporation. The sixth and final item to be considered is the single stockholder proposal on the agenda. I understand that John Chevedden is on the line today to present the proposal on behalf of James McRitchie. Operator, would you please open the line for Mr. Chevedden?

This is James McRitchie of CorpGov.Net requesting the Board gives shareholders with an aggregate of 15% net long of our outstanding common stock the power to call special meeting of shareholders. In response to my proposal, the Board seeks to create such a right but with a threshold of 25% in proposal #5. That threshold would be among the highest special meeting levels required. Many companies have thresholds as low as 10%. Getting 25% of shareholders to agree to a meeting under urgent circumstances would be difficult. The requested 15% is a reasonable compromise, especially when considering that shareholders at Assembly Bio have no right of written consent. Recently, similar proposals to reduce special meeting threshold have won majority votes at Laboratory Corporation of America Holdings, Cadence Design, Rite Aid, Discover Financial Services, Occidental Petroleum, O'Reilly Automotive and Citigroup. I ask that you vote against proposal #5 and for proposal #6, establish the special meeting threshold at 15%. Thank you very much.

Thank you, Mr. McRitchie. We appreciate your inputs. The Board recommends a vote against this proposal for the reasons set forth on Page 50 through 52 of the proxy statement. The Board recommends a vote for each of this year's nominees. The second item is the approval on a nonbinding advisory basis of the company's named executive officers' compensation as disclosed in the proxy statement as required by SEC. The Board recommends a vote for the approval of the named executive officers. The third item to be considered is the ratification of Ernst & Young as the company's independent registered accounting firm. We have with us today on the line, Phil Howard, Ernst & Young's lead auditor partner for the Assembly audit, who will respond to the appropriate questions after presentation of proposals. The Board recommends a vote for. The fourth item for consideration is the amendment of the Assembly Biosciences 2018 stock incentive plan to increase the number of shares reserved for issuance under the plan by 1.6 million. The entire -- the fifth item to be voted upon is the approval of the fifth amended and restated certificate of incorporation to enable stockholders who hold in the aggregate at least 25% of our outstanding common stock to request a special stockholder meeting. The Board recommends a vote for the amendment and restatement of the certificate of incorporation. And the sixth and final item, you heard from earlier, Mr. McRitchie, and the fact that the Board recommends approval against. Those are the management proposals and the stockholder proposal. [Operator Instructions]

Mr. Ringo, there's no questions in the portal regarding these proposals.

Okay. Thank you very much, Elizabeth. For any stockholders present who have not yet voted, the polls will close momentarily. If you have already submitted a vote, you only need to vote now if you want to change your vote. To vote now, use the Vote Here button on the meeting's website. Any votes submitted during the meeting will be reflected in the final results, which we will report after the meeting. [Voting]

It is now 8:15 a.m. Pacific Daylight Time on June 11, 2020, and the polls are now closed. Let's move to the next item on the agenda, the inspector's report. Mrs. Lacy will now present the results of the voting.

The preliminary results of voting are as follows: the nominees for election to the Board of Directors have each been duly elected pursuant to proposal 1. And proposals 2, 3, 4 and 5 have each been approved by the necessary votes identified in the proxy statement that was made available to the stockholders. Proposal 6 received the approval of approximately 43% of the stockholders voting at the meeting and entitled to vote on the proposal and has not been approved. The final voting results will be filed with the minutes of this meeting and will be publicly reported on a current report on Form 8-K within 4 business days of the end of this meeting.

Thank you, Mrs. Lacy. There being no other business properly brought before this meeting, this brings the formal business of the meeting to an end. I declare the meeting adjourned. Thank you all for attending today's meeting and for your continued support of Assembly Biosciences.

Operator, would you please disconnect the call?

Ladies and gentlemen, this concludes today's conference call. You may now disconnect.