ARCUS BIOSCIENCES, INC., 10-Q filed on 8/6/2019
Quarterly Report
v3.19.2
Document and Entity Information - shares
6 Months Ended
Jun. 30, 2019
Jul. 30, 2019
Document And Entity Information [Abstract]    
Document Type 10-Q  
Amendment Flag false  
Document Period End Date Jun. 30, 2019  
Document Fiscal Year Focus 2019  
Document Fiscal Period Focus Q2  
Trading Symbol RCUS  
Entity Registrant Name Arcus Biosciences, Inc.  
Entity Central Index Key 0001724521  
Current Fiscal Year End Date --12-31  
Entity Filer Category Non-accelerated Filer  
Entity Small Business true  
Entity Emerging Growth Company true  
Entity Ex Transition Period false  
Entity Current Reporting Status Yes  
Entity Shell Company false  
Entity File Number 001-38419  
Entity Tax Identification Number 473898435  
Entity Address, Address Line One 3928 Point Eden Way  
Entity Address, City or Town Hayward  
Entity Address, State or Province CA  
Entity Address, Postal Zip Code 94545  
City Area Code 510  
Local Phone Number 694-6200  
Entity Common Stock, Shares Outstanding   45,849,189
v3.19.2
Condensed Consolidated Balance Sheets - USD ($)
$ in Thousands
Jun. 30, 2019
Dec. 31, 2018
[1]
Current assets:    
Cash and cash equivalents $ 76,068 $ 71,064
Short-term investments 148,330 185,480
Prepaid expenses and other current assets 3,273 2,321
Amounts owed by a related party 62 83
Total current assets 227,733 258,948
Long-term investments 0 3,181
Property and equipment, net 10,362 11,107
Equity investment in related party 357 1,202
Restricted cash 203 203
Other long-term assets 319 284
Total assets 238,974 274,925
Current liabilities    
Accounts payable 2,448 3,102
Accrued liabilities 15,552 6,023
Deferred revenue, current 7,000 6,250
Other current liabilities 1,513 1,560
Total current liabilities 26,513 16,935
Deferred revenue, noncurrent 10,522 16,984
Deferred rent 4,010 4,272
Other long-term liabilities 1,283 1,792
Total liabilities 42,328 39,983
Stockholders’ equity:    
Preferred stock, $0.0001 par value, 10,000,000 shares authorized as of June 30, 2019 and December 31, 2018; no shares issued and outstanding as of June 30, 2019 and December 31, 2018 0
Common stock, $0.0001 par value, 400,000,000 shares authorized as of June 30, 2019 and December 31, 2018, respectively; 45,854,213 and 44,537,946 shares issued and outstanding as of June 30, 2019 and December 31, 2018 respectively 4 4
Additional paid-in capital 362,905 357,873
Accumulated deficit (166,376) (122,828)
Accumulated other comprehensive income (loss) 113 (107)
Total stockholders’ equity 196,646 234,942
Total liabilities, convertible preferred stock and stockholders’ equity $ 238,974 $ 274,925
[1] The Condensed Consolidated Balance Sheet as of December 31, 2018 has been derived from the audited financial statements as of that date.
v3.19.2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares
Jun. 30, 2019
Dec. 31, 2018
Statement Of Financial Position [Abstract]    
Preferred stock, par value $ 0.0001 $ 0.0001
Preferred stock, shares authorized 10,000,000 10,000,000
Preferred stock, shares issued 0 0
Preferred stock, shares outstanding 0 0
Common stock, par value $ 0.0001 $ 0.0001
Common stock, shares authorized 400,000,000 400,000,000
Common stock, shares issued 45,854,213 44,537,946
Common stock, shares outstanding 45,854,213 44,537,946
v3.19.2
Condensed Consolidated Statements of Operations and Comprehensive Loss - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2019
Jun. 30, 2018
Jun. 30, 2019
Jun. 30, 2018
Income Statement [Abstract]        
Collaboration and license revenue $ 1,750 $ 1,250 $ 3,500 $ 2,500
Type of Revenue [Extensible List] us-gaap:LicenseAndServiceMember us-gaap:LicenseAndServiceMember us-gaap:LicenseAndServiceMember us-gaap:LicenseAndServiceMember
Operation expenses:        
Research and development $ 24,999 $ 13,699 $ 40,553 $ 25,352
General and administrative 5,911 3,450 10,879 6,379
Total operating expenses 30,910 17,149 51,432 31,731
Loss from operations (29,160) (15,899) (47,932) (29,231)
Non-operating income (expense):        
Interest and other income, net 1,482 1,288 3,016 1,891
Gain on deemed sale from equity method investee 0 1,229 0 1,229
Share of loss from equity method investee (412) (151) (844) (377)
Total non-operating income, net 1,070 2,366 2,172 2,743
Net loss (28,090) (13,533) (45,760) (26,488)
Other comprehensive income (loss) 84 14 220 (41)
Comprehensive loss $ (28,006) $ (13,519) $ (45,540) $ (26,529)
Net loss per share, basic and diluted $ (0.64) $ (0.32) $ (1.05) $ (1.01)
Weighted-average number of shares used to compute basic and diluted net loss per share 43,797,718 42,533,641 43,653,325 26,236,007
v3.19.2
Consolidated Statements of Convertible Preferred Stock and Stockholders' Equity - USD ($)
$ in Thousands
Total
Convertible Preferred Stock
Common Stock
Additional Paid-in Capital
Accumulated Deficit
Accumulated Other Comprehensive Loss
Balance at Dec. 31, 2017 $ (72,328)     $ 948 $ (73,234) $ (42)
Balance, shares at Dec. 31, 2017   30,459,574        
Balance at Dec. 31, 2017   $ 226,196        
Balance, shares at Dec. 31, 2017     3,278,129      
Conversion of preferred stock to common stock 226,198   $ 3 226,195    
Conversion of preferred stock to common stock, shares   (30,459,574)        
Conversion of preferred stock to common stock   $ (226,196)        
Conversion of preferred stock to common stock, shares     30,459,574      
Issuance of common stock upon IPO 124,716   $ 1 124,715    
Issuance of common stock upon IPO, shares     9,200,000      
Issuance of common stock upon exercise of stock options, net of amounts related to unvested shares 80     80    
Issuance of common stock upon exercise of stock options, net of amounts related to unvested shares, shares     60,524      
Vesting of early exercised stock options and restricted stock 278     278    
Vesting of early exercised stock options and restricted stock, shares     129,152      
Stock-based compensation 656     656    
Other comprehensive income (loss) (55)         (55)
Net loss (12,955)       (12,955)  
Balance at Mar. 31, 2018 266,590   $ 4 352,872 (86,189) (97)
Balance, shares at Mar. 31, 2018     43,127,379      
Balance at Dec. 31, 2017 $ (72,328)     948 (73,234) (42)
Balance, shares at Dec. 31, 2017   30,459,574        
Balance at Dec. 31, 2017   $ 226,196        
Balance, shares at Dec. 31, 2017     3,278,129      
Issuance of common stock upon exercise of stock options, net of amounts related to unvested shares, shares 713,931          
Net loss $ (26,488)          
Balance at Jun. 30, 2018 254,574   $ 4 354,375 (99,722) (83)
Balance, shares at Jun. 30, 2018     43,276,717      
Balance at Mar. 31, 2018 $ 266,590   $ 4 352,872 (86,189) (97)
Balance, shares at Mar. 31, 2018     43,127,379      
Issuance of common stock upon exercise of stock options, net of amounts related to unvested shares, shares 5,171          
Vesting of early exercised stock options and restricted stock $ 387     387    
Vesting of early exercised stock options and restricted stock, shares     149,338      
Stock-based compensation 1,116     1,116    
Other comprehensive income (loss) 14         14
Net loss (13,533)       (13,533)  
Balance at Jun. 30, 2018 254,574   $ 4 354,375 (99,722) (83)
Balance, shares at Jun. 30, 2018     43,276,717      
Balance at Dec. 31, 2018 $ 234,942 [1]   $ 4 357,873 (122,828) (107)
Balance, shares at Dec. 31, 2018 44,537,946   43,610,823      
Cumulative effect adjustment upon adoption of ASC 606 | ASC 606 $ 2,212       2,212  
Issuance of common stock upon exercise of stock options, net of amounts related to unvested shares, shares     69      
Vesting of early exercised stock options and restricted stock 273     273    
Vesting of early exercised stock options and restricted stock, shares     114,934      
Stock-based compensation 1,674     1,674    
Other comprehensive income (loss) 136         136
Net loss (17,670)       (17,670)  
Balance at Mar. 31, 2019 221,567   $ 4 359,820 (138,286) 29
Balance, shares at Mar. 31, 2019     43,725,826      
Balance at Dec. 31, 2018 $ 234,942 [1]   $ 4 357,873 (122,828) (107)
Balance, shares at Dec. 31, 2018 44,537,946   43,610,823      
Issuance of common stock upon exercise of stock options, net of amounts related to unvested shares, shares 18,770          
Net loss $ (45,760)          
Balance at Jun. 30, 2019 $ 196,646   $ 4 362,905 (166,376) 113
Balance, shares at Jun. 30, 2019 45,854,213   43,934,108      
Balance at Mar. 31, 2019 $ 221,567   $ 4 359,820 (138,286) 29
Balance, shares at Mar. 31, 2019     43,725,826      
Issuance of common stock upon exercise of stock options, net of amounts related to unvested shares $ 99     99    
Issuance of common stock upon exercise of stock options, net of amounts related to unvested shares, shares 18,701   17,649      
Vesting of early exercised stock options and restricted stock $ 260     260    
Vesting of early exercised stock options and restricted stock, shares     107,952      
Issuance of common stock under Employee Stock Purchase Plan 596     596    
Issuance of common stock under Employee Stock Purchase Plan, shares     82,681      
Stock-based compensation 2,130     2,130    
Other comprehensive income (loss) 84         84
Net loss (28,090)       (28,090)  
Balance at Jun. 30, 2019 $ 196,646   $ 4 $ 362,905 $ (166,376) $ 113
Balance, shares at Jun. 30, 2019 45,854,213   43,934,108      
[1] The Condensed Consolidated Balance Sheet as of December 31, 2018 has been derived from the audited financial statements as of that date.
v3.19.2
Condensed Consolidated Statements of Cash Flows - USD ($)
$ in Thousands
6 Months Ended
Jun. 30, 2019
Jun. 30, 2018
Cash flow from operating activities    
Net loss $ (45,760) $ (26,488)
Adjustments to reconcile net loss to net cash used in operating activities:    
Stock-based compensation expense 3,804 1,772
Depreciation and amortization 1,836 1,743
Share of loss from equity method investee 844 377
Gain on deemed sale from equity method investee 0 (1,229)
Amortization of premiums on investments (1,580) 0
Other non-operating income 0 (177)
Changes in operating assets and liabilities:    
Amounts owed by a related party 21 (168)
Other long-term assets (35) 0
Prepaid expenses and other current assets (952) (409)
Accounts payable (566) 1,347
Accrued liabilities 9,529 1,812
Other current liabilities 29 20
Deferred revenue (3,500) (2,500)
Deferred rent (262) (224)
Net cash used in operating activities (36,592) (24,124)
Cash flow from investing activities    
Purchases of short-term and long-term investments (123,837) (90,671)
Proceeds from maturities of short-term and long-term investments 165,968 60,415
Purchases of property and equipment (1,179) (2,358)
Net cash provided by (used in) investing activities 40,952 (32,614)
Cash flow from financing activities    
Repurchase of unvested shares of stock (51) 0
Proceeds from initial public offering, net of issuance costs 0 125,114
Proceeds from issuance of common stock upon exercise of stock options, net of repurchases 695 3,331
Payment of preferred stock issuance costs 0 (135)
Net cash provided by financing activities 644 128,310
Net decrease (increase) in cash and cash equivalents 5,004 71,572
Cash, cash equivalents and restricted cash at beginning of period 71,267 98,629
Cash, cash equivalents and restricted cash at end of period 76,271 170,201
Non-cash investing and financing activities:    
Unpaid portion of property and equipment purchases included in accounts payable and accrued liabilities 48 1,007
Vesting of early exercised stock options and restricted stock $ 533 $ 647
v3.19.2
Organization
6 Months Ended
Jun. 30, 2019
Organization Consolidation And Presentation Of Financial Statements [Abstract]  
Organization

Note 1. Organization

Description of Business

Arcus Biosciences, Inc. (Company or the Company) is a clinical-stage biopharmaceutical company focused on creating innovative cancer immunotherapies by leveraging underexploited biological opportunities. Specifically, the Company targets well-characterized biological pathways with significant scientific data supporting their importance in regulating the immune response against cancer and for which either there are no molecules in development or those that exist have suboptimal profiles. To exploit these pathways, the Company has built a robust and highly efficient discovery and clinical development capability to create and optimize highly differentiated small-molecule immuno-oncology product candidates. Since its inception in 2015, the Company has built a broad portfolio of small molecule and antibody product candidates that it plans to develop together as intra-portfolio combinations.

Liquidity and Capital Resources

As of June 30, 2019, the Company had cash and investments of $224.4 million, which are cash, cash equivalents, and short-term investments that the Company believes will be sufficient to fund its planned operations for a period of at least twelve months following the filing date of this report.

v3.19.2
Significant Accounting Policies
6 Months Ended
Jun. 30, 2019
Accounting Policies [Abstract]  
Significant Accounting Policies

Note 2. Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP) for interim financial information and pursuant to Form 10-Q and Article 10 of Regulation S-X of the Securities and Exchange Commission (SEC). Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the Company’s opinion, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation of the results of operations and cash flows for the periods presented have been included.

Operating results for the three and six months ended June 30, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019 or for any future period. The balance sheet as of December 31, 2018 has been derived from audited consolidated financial statements at that date but does not include all of the information required by U.S. GAAP for complete financial statements.

The accompanying condensed consolidated financial statements and related financial information should be read in conjunction with the audited consolidated financial statements and the related notes thereto for the year ended December 31, 2018 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 5, 2019.

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (FASB), or other standard setting bodies and adopted by the Company as of the specified effective date. Unless otherwise discussed, the impact of recently issued standards that are not yet effective will not have a material impact on the Company’s condensed consolidated financial statements upon adoption. Under the Jumpstart Our Business Startups Act of 2012, as amended (the JOBS Act), the Company meets the definition of an emerging growth company and has elected the extended transition period for complying with new or revised accounting standards pursuant to Section 107(b) of the JOBS Act. The Company will remain an emerging growth company until the earliest of (1) the last day of its first fiscal year (a) following the fifth anniversary of the completion of its initial public offering, (b) in which the Company has a total annual gross revenue of at least $1.07 billion, or (c) in which the Company is deemed to be a large accelerated filer, which means the market value of the common stock that is held by non-affiliates exceeds $700.0 million of the prior June 30th or (2) the date on which the Company has issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.

Principles of Consolidation

During 2017, the Company established a wholly-owned subsidiary in Australia. The condensed consolidated financial statements include the Company’s accounts and those of its wholly-owned subsidiary. All intercompany accounts, transactions and balances have been eliminated.

Use of Estimates

The preparation of the Company’s condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, as well as related disclosure of contingent assets and liabilities. Estimates were used to determine stock-based awards and other issuances, accruals for research and development costs, useful lives of long-lived assets, and uncertain tax positions. Actual results could differ materially from the Company’s estimates.

Cash Equivalents, Short-Term and Long-Term Investments

Cash equivalents include marketable securities having an original maturity of three months or less at the time of purchase. Short-term investments have maturities of greater than three months and up to twelve months at the time of purchase. Long-term investments have maturities greater than twelve months at the time of purchase. Collectively, cash equivalents, short-term and long-term investments are considered available-for-sale and are recorded at fair value. Unrealized gains and losses are recorded in accumulated other comprehensive loss. Realized gains and losses are included in interest and other income, net in the condensed consolidated statements of operations and comprehensive income or loss. The basis on which the cost of a security sold or amount reclassified out of accumulated other comprehensive income or loss into earnings is determined using the specific identification method.

Restricted Cash

Restricted cash at June 30, 2019 and December 31, 2018 comprises cash balances primarily held as security in connection with the Company’s facility lease agreement and is included in long-term assets in the condensed consolidated balance sheets.

Concentration of Credit Risk

Cash equivalents, short-term and long-term investments are financial instruments that potentially subject the Company to concentrations of credit risk.  The Company invests in money market funds, treasury bills and notes, government bonds, commercial paper and corporate notes.  The Company limits its credit risk associated with cash equivalents, short-term and long-term investments by placing them with banks and institutions it believes are credit worthy and in highly rated investments.

Research and Development Expenses

Research and development costs are expensed as incurred. Research and development expenses consist primarily of personnel costs for the Company’s research and development activities, non-personnel costs such as costs payable to third parties for preclinical and clinical studies and research services, laboratory supplies and equipment maintenance, product licenses, and other consulting costs. The Company estimates preclinical and clinical study and research expenses based on its knowledge of the services performed, pursuant to contracts with research institutions and other service providers that conduct and manage preclinical and clinical studies and research services on its behalf. The Company estimates these expenses based on discussions with internal management personnel and external service providers as to the progress or stage of completion of services and the contracted fees to be paid for such services. If the actual timing of the performance of services or the level of effort varies from the original estimates, the Company will adjust the accrual accordingly. Payments associated with licensing agreements to acquire exclusive licenses to develop, use, manufacture and commercialize products that have not reached technological feasibility and do not have alternative future use are expensed as incurred. Payments made to third parties under these arrangements in advance of the performance of the related services by the third parties are recorded as prepaid expenses until the services are rendered.

Adopted Accounting Pronouncements – Revenue Recognition

 

Effective January 1, 2019, the Company adopted Accounting Standards Codification Topic 606, Revenue from Contracts with Customers (ASC 606) using the modified retrospective transition method.  This standard applies to all contracts with customers, except for contracts that are within the scope of other standards, such as leases, insurance, collaboration arrangements and financial instruments.  Under ASC 606, the Company recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services.  To determine revenue recognition for arrangements that the Company determines are within the scope of ASC 606, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the Company satisfies a performance obligation.  The Company only applies the five-step model to contracts when it is probable that Company will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer.  At contract inception, once the contract is determined to be within the scope of ASC 606, the Company assesses the goods or services promised within each contract and determines those that are performance obligations and assesses whether each promised good or service is distinct.  The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.

 

The Company enters into collaborative arrangements with partners that fall under the scope of both ASC 606 and Accounting Standards Codification, Topic 808, Collaborative Arrangements (ASC 808), as applicable. The terms of these arrangements typically include one or more of the following: non-refundable upfront research and development fees, option fees to obtain development and commercialization licenses for the Company’s products, milestone payments based on achievement of defined development, regulatory and sales targets, and royalties on sales of commercialized products and are further described below.

 

As part of the accounting for these arrangements, the Company must develop estimates and assumptions that require judgment to determine the underlying stand-alone selling price for each performance obligation which determines how the transaction price is allocated among the performance obligations. The estimation of the stand-alone selling price may include such estimates as forecasted revenues or costs, development timelines, discount rates, and probabilities of technical and regulatory success. The Company evaluates each performance obligation to determine if they can be satisfied at a point in time or over time, and the Company measures the services delivered to the customer, which are periodically reviewed based on the progress of the related program. The effect of any change made to an estimated input component and, therefore revenue or expense recognized, would be recorded as a change in estimate. In addition, variable consideration (e.g. milestone payments) must be evaluated to determine if it is constrained and, therefore, excluded from the transaction price.

 

Upfront Research and Development Fees: The Company identifies the performance obligations associated with the upfront research and development fees and determines if any of the promised services are distinct from each other.  If a promised service is determined to be distinct, then the Company allocates the transaction price amongst the promised services based on its best judgment of their estimated stand-alone selling prices.  If the promised services are not distinct, then all of the services are bundled together, and the Company utilizes judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time. If the performance obligation is considered to be satisfied over time, the Company selects the revenue recognition method that it believes most faithfully depicts the Company’s performance in transferring control of the services.  

 

ASC 606 allows entities to choose between two methods to measure progress toward complete satisfaction of a performance obligation over time: input methods or output methods.  Input methods recognize revenue on the basis of the entity’s efforts or inputs to the satisfaction of a performance obligation (e.g., resources consumed, labor hours expended, costs incurred, or time elapsed) relative to the total expected inputs to the satisfaction of that performance obligation.  Output methods recognize revenue on the basis of direct measurements of the value to the customer of the goods or services transferred to date relative to the remaining goods or services promised under the contract (e.g. surveys of performance completed to date, appraisals of results achieved, milestones reached, time elapsed, and units produced or units delivered).  The Company evaluates the measure of progress each reporting period and, if necessary, adjusts the measure of performance and related revenue recognition.

Option Fees:  At the inception of each arrangement that includes option exercise fees to obtain development and commercialization licenses for the Company’s products, the Company determines whether or not such option fee is considered a material right.  If the option is considered a material right, then that option is considered a separate performance obligation in the contract and the transaction price includes the option fee in the allocation amongst the performance obligations.  If the option is not considered a material right, then the option is accounted for as a separate contract.    

Milestone Payments: For arrangements that include development milestone payments, the Company consider the milestone payments to be variable consideration under ASC 606 at the inception of the arrangement, evaluates whether the milestones are considered probable of being reached and estimates the amount to be included in the transaction price using the most likely amount method. If it is probable that a significant revenue reversal would not occur, the associated milestone value is included in the transaction price. Milestone payments that are not within the Company’s or the licensee’s control, such as regulatory approvals, are not considered probable of being earned until the uncertainty associated with the approvals has been resolved. The transaction price is then allocated to each performance obligation, on a relative standalone selling price basis, which the Company recognizes as revenue when the performance obligations under the contract are satisfied. At the end of each subsequent reporting period, the Company re-evaluates the probability of earning such development milestones and any related constraint, and if necessary, adjusts the estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect revenue and earnings in the period of adjustment.

 

Royalties:  For arrangements that include sales-based royalties, including milestone payments based on the level of sales, and the license is deemed to be the predominant item to which the royalties relate, the Company recognizes revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied).

Upfront payments and fees are recorded as deferred revenue when due and payable, and may require deferral of revenue recognition to a future period until the Company performs its obligations under these arrangements. Amounts payable to the Company are recorded as accounts receivable when the Company’s right to consideration is unconditional. The Company does not assess whether a contract has a significant financing component if the expectation at contract inception is such that the period between payment by the customer and the transfer of the promised goods or services to the customer will be one year or less.

Impact of Adoption – ASC 606

 

The Company entered into a license and collaboration agreement (the Taiho Agreement) in September 2017, an agreement that is within the scope of ASC 606, under which it has provided Taiho Pharmaceutical Co., Ltd (Taiho) exclusive options, over a five-year period (the Option Period) to obtain an exclusive development and commercialization license to clinical stage product candidates from the Company’s programs.  The terms of the arrangement include non-refundable upfront research and development fees, option fees to obtain development and commercialization licenses for the Company’s products, milestone payments based on achievement of defined development, regulatory and sales targets, and royalties on sales of commercialized product.

 

The Company has applied the five-step model of the new standard to the Taiho Agreement, the only Company contract that has been impacted by the adoption of the new revenue standards. The Company implemented the new revenue standard using the modified retrospective transition method. Results for the three and six months ended June 30, 2019 are presented under Topic 606, while prior period amounts are not adjusted and continue to be reported in accordance with the Company’s historic accounting under previous revenue recognition guidance, Accounting Standards Codification Topic 605: Revenue Recognition (Topic 605).

 

Upon the adoption, the Company recorded a net reduction of $2.2 million to its opening accumulated deficit as of January 1, 2019, due to the cumulative impact of adopting Topic 606, with the impact primarily relating to an increase in the transaction price recognized for the non-refundable upfront research and development fees over the five-year term.

 

The impact of the adoption of Topic 606 on contract liabilities and accumulated deficit balances as of January 1, 2019 was as follows (in thousands):

 

 

 

December 31, 2018

 

 

Adjustment Due to

the Adoption of

Topic 606

 

 

January 1, 2019

 

Current portion of deferred revenue

 

$

6,250

 

 

$

750

 

 

$

7,000

 

Long-term portion of deferred revenue

 

 

16,984

 

 

 

(2,962

)

 

 

14,022

 

Accumulated deficit

 

$

(122,828

)

 

$

2,212

 

 

$

(120,616

)

 

The adjustments due to the adoption of Topic 606 primarily relate to an increase in the transaction price recognized for the non-refundable upfront research and development fees over the five-year term.  Under Topic 606, the Company recognized as the transaction price the total amount that the Company expects to receive related to the non-refundable upfront fees.  As of December 31, 2018, the Company had received $30.0 million of the $35.0 million in upfront fees, which consisted of payments of $25.0 million in 2017 at the inception of the contract and an anniversary payment of $5.0 million in 2018.  Given both the history of successful collection of all payments due and payable to-date and the exercise of an option by Taiho in 2018 on one of the Company’s programs, the Company believes the remaining $5.0 million due in October 2019 will also be received.  Under Topic 605, the Company recognized as the initial transaction price only the $25.0 million payment received in 2017.  The additional $2.2 million recorded in the adoption adjustment and attributable as revenue  through December 31, 2018 under Topic 606 resulted in both a lower accumulated deficit and a lower total amount of deferred revenue as of January 1, 2019.

 

The impact of the adoption of Topic 606 on the Company’s Condensed Consolidated Balance Sheet and Statement of Operations as of and for the period ended June 30, 2019 was as follows (in thousands):

 

 

 

As of June 30, 2019

 

 

 

As Reported

 

 

Balances without

the Adoption of

Topic 606

 

 

Effect of Adoption

Higher/ (Lower)

 

Current portion of deferred revenue

 

$

7,000

 

 

$

6,250

 

 

$

750

 

Long-term portion of deferred revenue

 

 

10,522

 

 

 

13,859

 

 

 

(3,337

)

Accumulated deficit

 

$

 

 

$

 

 

$

(2,399

)

 

 

 

Three Months Ended June 30, 2019

 

 

 

As Reported

 

 

Without

the Adoption of

Topic 606

 

 

Effect of Adoption

Higher/ (Lower)

 

Collaboration revenues

 

$

1,750

 

 

$

1,563

 

 

$

187

 

Net loss

 

 

(28,090

)

 

 

(28,277

)

 

$

187

 

Net loss per share, basic and diluted

 

$

(0.64

)

 

$

(0.65

)

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30, 2019

 

 

 

As Reported

 

 

Without

the Adoption of

Topic 606

 

 

Effect of Adoption

Higher/ (Lower)

 

Collaboration revenues

 

$

3,500

 

 

$

3,126

 

 

$

374

 

Net loss

 

 

(45,760

)

 

 

(46,134

)

 

$

374

 

Net loss per share, basic and diluted

 

$

(1.05

)

 

$

(1.06

)

 

$

 

 

Adopted Accounting Pronouncements – Others

In November 2016, the FASB issued ASU No. 2016-18 (Topic 230), Restricted Cash, Statement of Cash Flows (ASU 2016-18). ASU 2016-18 requires that a statement of cash flows explain the change during the period in the total of cash and, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the condensed consolidated statement of cash flows. The amendments in this ASU should be applied using a retrospective transition method to each period presented. The adoption of this standard changes the presentation in the accompanying consolidated statement of cash flows. The adoption had no material impact on the Company’s condensed consolidated financial statements.

Impact of Adoption – ASU 2016-18

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the same such amount shown on the condensed consolidated statements of cash flows (in thousands):

 

 

 

June 30, 2019

 

 

December 31, 2018

 

 

June 30, 2018

 

 

December 31, 2017

 

Cash and cash equivalents

 

$

76,068

 

 

$

71,064

 

 

$

169,998

 

 

$

98,426

 

Restricted cash

 

 

203

 

 

 

203

 

 

 

203

 

 

 

203

 

Cash, cash equivalents and restricted cash

 

$

76,271

 

 

$

71,267

 

 

$

170,201

 

 

$

98,629

 

 

In June 2018, the FASB issued ASU No. 2018-07 (Topic 718), Compensation – Stock Compensation (ASU 2018-07). ASU 2018-07 requires an entity to expand the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from non-employees. The Company adopted ASU No.2018-07 as of January 1, 2019, to simplify the calculation of nonemployee share-based payment transactions. The Company measured the estimated fair value of the unvested portion of the non-employee awards as of January 1, 2019. The fair value of options granted to non-employees was estimated using the Black-Scholes method. The adoption had an no material impact on the Company’s financial position, results of operations or liquidity.

Recently Issued Accounting Standards or Updates Not Yet Effective

In January 2016, the FASB issued ASU No. 2016-01 (Subtopic 825-10), Financial Instruments (ASU 2016-01). ASU 2016-01 requires management to measure equity investments at fair value with changes in fair value recognized in net income or loss. ASU 2016-01 will impact the disclosure and presentation of financial assets and liabilities. The Company evaluated the pronouncement and determined it is not applicable to the Company.

In February 2016, the FASB issued ASU No. 2016-02 (Topic 842), Leases (ASU 2016-02). ASU 2016-02 requires an entity to recognize assets and liabilities arising from a lease for both financing and operating leases. The ASU will also require new qualitative and quantitative disclosures to help investors and other financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases. For public entities, ASU 2016-02 is effective for fiscal years beginning after December 15, 2018. As a result of the Company having elected the extended transition period for complying with new or revised accounting standards pursuant to Section 107(b) of the JOBS Act, ASU 2016-02 is effective for the Company for the year ended December 31, 2020, and all interim periods thereafter. Early adoption is permitted. The Company is assessing the impact of Topic 842 and believes it will likely have a material impact on its condensed consolidated financial statements.

In August 2018, the FASB issued ASU No.2018-13 (Topic 820), Fair Value Measurement. ASU 2018-13 modifies the disclosure requirements on fair value measurement in Topic 820. For public entities, ASU 2018-013 is effective for fiscal years beginning after December 15, 2019. As a result of the Company having elected the extended transition period for complying with new or revised accounting standards pursuant to Section 107(b) of the JOBS Act, ASU 2018-13 is effective for the Company for the year ended December 31, 2021, and all interim periods within that fiscal year. Early adoption is permitted. The adoption of this standard is not expected to have a material impact on the Company’s condensed consolidated financial statements.

In November 2018, the FASB issued ASU No. 2018-18 (Topic 808), Collaborative Arrangements. ASU 2018-18 clarifies certain transactions between collaborative arrangement participants should be accounted for as revenue under ASC 606 when the collaborative arrangement participant is a customer in the context of a unit of account and precludes recognizing as revenue consideration received from a collaborative arrangement participant if the participant is not a customer. For public entities, ASU 2018-18 is effective for fiscal years beginning after December 15, 2019. As a result of the Company having elected the extended transition period for complying with new or revised accounting standards pursuant to Section 107(b) of the JOBS Act, ASU 2018-18 is effective for the Company for the year ended December 31, 2021, and all interim periods within that fiscal year. Early adoption is permitted. The Company has not yet determined the potential effects of this ASU on its condensed consolidated financial statements.

 

v3.19.2
Fair Value Measurements
6 Months Ended
Jun. 30, 2019
Fair Value Disclosures [Abstract]  
Fair Value Measurements

Note 3. Fair Value Measurements

Financial assets and liabilities are recorded at fair value. The accounting guidance for fair value provides a framework for measuring fair value, clarifies the definition of fair value and expands disclosures regarding fair value measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. The accounting guidance establishes a three-tiered hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value as follows:

Level 1—Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.

Level 2—Inputs (other than quoted market prices included in Level 1) are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life.

Level 3—Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model.

Assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires management to make judgments and consider factors specific to the asset or liability.

During the periods presented, the Company has not changed the manner in which it values assets and liabilities that are measured at fair value. The Company recognizes transfers between levels of the fair value hierarchy as of the end of the reporting period. There were no transfers within the hierarchy as of June 30, 2019 and December 31, 2018. The following tables set forth the Company’s financial instruments that were measured at fair value on a recurring basis by level within the fair value hierarchy (in thousands):

 

 

 

Fair Value Measurements at June 30, 2019

 

 

 

Total

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

$

64,578

 

 

$

64,578

 

 

$

 

 

$

 

Corporate securities and commercial paper

 

 

60,268

 

 

 

 

 

 

60,268

 

 

 

 

U.S. government treasury and agency securities

 

 

99,552

 

 

 

 

 

 

99,552

 

 

 

 

 

 

$

224,398

 

 

$

64,578

 

 

$

159,820

 

 

$

 

 

 

 

Fair Value Measurements at December 31, 2018

 

 

 

Total

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

$

45,017

 

 

$

45,017

 

 

$

 

 

$

 

U.S. government treasury and agency securities

 

 

103,940

 

 

 

 

 

 

103,940

 

 

 

 

Corporate securities and commercial paper

 

 

110,768

 

 

 

 

 

 

110,768

 

 

 

 

 

 

$

259,725

 

 

$

45,017

 

 

$

214,708

 

 

$

 

 

Classified as (with contractual maturities):

 

 

 

June 30, 2019

 

 

December 31, 2018

 

Cash and Cash equivalents

 

$

76,068

 

 

$

71,064

 

Short-term investments (due within one year)

 

 

148,330

 

 

 

185,480

 

Long-term investments (due between one and two years)

 

 

 

 

 

3,181

 

 

 

$

224,398

 

 

$

259,725

 

 

The investments are classified as available-for-sale marketable securities. At June 30, 2019 and December 31, 2018, the balance in the Company’s accumulated other comprehensive loss comprised activity related to the Company’s available-for-sale marketable securities. There were no realized gains or losses recognized on the sale or maturity of available-for-sale marketable securities as of June 30, 2019 and December 31, 2018, and as a result, the Company did not reclassify any amounts out of accumulated other comprehensive loss for the periods then ended. The Company has a limited number of available-for-sale marketable securities in loss positions as of June 30, 2019, which the Company does not intend to sell and has concluded it will not be required to sell before recovery of the amortized cost for the investment at maturity (in thousands).

 

 

 

Fair Value Measurements at June 30, 2019

 

 

 

Amortized

Cost

 

 

Unrealized

Gain

 

 

Unrealized

Loss

 

 

Fair

Value

 

Money market funds

 

$

64,578

 

 

$

 

 

$

 

 

$

64,578

 

Corporate securities and commercial paper

 

 

60,241

 

 

 

27

 

 

 

 

 

 

60,268

 

U.S. government treasury and agency securities

 

 

99,468

 

 

 

84

 

 

 

 

 

 

99,552

 

 

 

$

224,287

 

 

$

111

 

 

$

 

 

$

224,398

 

 

 

 

Fair Value Measurements at December 31, 2018

 

 

 

Amortized

Cost

 

 

Unrealized

Gain

 

 

Unrealized

Loss

 

 

Fair

Value

 

Money market funds

 

$

45,017

 

 

$

 

 

$

 

 

$

45,017

 

U.S. government treasury and agency securities

 

 

103,957

 

 

 

 

 

 

(17

)

 

 

103,940

 

Corporate securities and commercial paper

 

 

110,859

 

 

 

 

 

 

(91

)

 

 

110,768

 

 

 

$

259,833

 

 

$

 

 

$

(108

)

 

$

259,725

 

 

v3.19.2
Equity Investment
6 Months Ended
Jun. 30, 2019
Inventory Disclosure [Abstract]  
Equity Investment

Note 4: Equity Investment

In September 2016, the Company purchased approximately 3.6 million shares of common stock of PACT Pharma, Inc. (PACT Pharma), a privately funded, early-stage biopharmaceutical company focused on adoptive cell therapy. The Company determined the fair value of such investment to be insignificant to the Company’s 2016 financial statements given the start-up nature of operations of PACT Pharma, and it was recorded at a nominal amount. In December 2016, the Company and PACT Pharma entered into a Master Services Agreement (the PACT Agreement) under which the Company provided PACT Pharma with general administrative support, including finance, human resources, legal, and other operational support. The Company also received certain warrants to purchase PACT Pharma common stock exercisable upon PACT Pharma’s achievement of certain valuation thresholds pursuant to the PACT Agreement. Also, in December 2016, the Company purchased 1.0 million shares of Series A preferred stock of PACT Pharma for $1.0 million. The Company determined PACT Pharma to be a variable interest entity, and that the Company has a variable interest in PACT. However, because the Company is not the primary beneficiary of PACT Pharma, it is not consolidating the results of operations of PACT Pharma in its condensed consolidated financial statements.

The Company’s investment in PACT Pharma is accounted for as an equity method investment, and as a result the Company records its share of PACT Pharma’s operating results in interest and other income, net, in its condensed consolidated statement of operations and comprehensive loss.

For the three and six months ended June 30, 2019, the Company recorded $0.4 million and $0.8 million and for the three and six months ended June 30, 2018, the Company recorded $0.2 million and $0.4 million, respectively, relating to its share of PACT Pharma’s operating losses. As of June 30, 2019 and December 31, 2018, the Company had a zero and $0.1 million receivable from PACT Pharma, respectively, for expenses the Company paid on PACT Pharma’s behalf. As of June 30, 2019 and December 31, 2018, the Company recorded $0.1 million and zero payable to PACT Pharma, respectively, for expenses incurred from PACT Pharma.

In May 2018, PACT Pharma closed its Series B convertible preferred stock financing. The Company did not participate in this financing and therefore its equity ownership percentage in PACT Pharma decreased. As a result of the dilution in its equity ownership percentage and an increase in PACT Pharma’s estimated fair value per share, the Company recorded a gain of $1.2 million in interest and other income, net, in 2018 and an increase in the fair value of the investment balance in the condensed consolidated balance sheet by the same amount. The PACT Agreement also expired in accordance with its terms at the closing of PACT Pharma’s Series B convertible preferred stock financing.  

The Company monitors the investment in PACT Pharma for events or circumstances indicative of potential other-than-temporary impairment and will make appropriate reductions in carrying values if it is determined that an impairment charge is required. As of June 30, 2019 and 2018, no impairment charge was recorded. For the three and six months ended June 30, 2019 and for the year ended December 31, 2018, the Company determined the fair value of the warrants to be insignificant to the condensed consolidated financial statements.

v3.19.2
License and Collaboration Agreements
6 Months Ended
Jun. 30, 2019
Organization Consolidation And Presentation Of Financial Statements [Abstract]  
License and Collaboration Agreements

Note 5. License and Collaboration Agreements

Taiho Pharmaceutical Co., Ltd

In September 2017, the Company and Taiho entered into an option and license agreement (the Taiho Agreement) to collaborate on the potential development and commercialization of certain product candidates from the Company’s portfolio in Japan and certain other territories in Asia (excluding China) (the Taiho Territory). The Taiho Agreement provides Taiho with exclusive options, over a five-year period (the Option Period), to obtain an exclusive development and commercialization license to clinical stage product candidates from the Company’s programs (each, an Arcus Program).

In consideration for the exclusive options and other rights contained in the Taiho Agreement, Taiho will make non-refundable, non-creditable cash payments to the Company totaling $35.0 million, of which the Company received $25.0 million during 2017. An additional $5.0 million was received in October 2018 and the remaining $5.0 million is expected to be received in 2019.  

In the event that the Company has not initiated IND enabling studies for at least five Arcus Programs prior to the expiration of the Option Period, Taiho may elect to extend the Option Period, up to a maximum of seven years for the Option Period, subject to an extension fee. If Taiho elects to exercise an option it will be obligated to make an exercise option payment for each option exercise of between $3.0 million to $15.0 million, dependent on the development stage of the applicable Arcus Program for which the option is exercised. In addition, the Taiho Agreement provides that the Company is eligible to receive additional clinical and regulatory milestones totaling up to $130.0 million per Arcus Program, and it will be eligible to receive contingent payments of up to $145.0 million per Arcus Program associated with the achievement of specified levels of Taiho net sales in the Taiho Territory.

In addition, the Company will receive royalties ranging from high single-digits to mid-teens on net sales of licensed products in the Taiho Territory. Royalties will be payable on a licensed product-by-licensed product and country-by-country basis during the period of time commencing on the first commercial sale of a licensed product in a country and ending upon the later of: (a) ten (10) years from the date of first commercial sale of such licensed product in such country; and (b) expiration of the last-to-expire valid claim of the Company’s patents covering the manufacture, use or sale or exploitation of such licensed product in such country (the Royalty Term).

The Company evaluated the Taiho Agreement under ASC 606 and determined that the current performance obligations consist of (1) the research and development services, in which the Company will use commercially reasonable efforts to initiate IND enabling studies for at least five Arcus Programs, as well as further develop such Arcus Programs during the term of the Agreement, and (2) the obligation to participate on the joint steering committee. These deliverables are non-contingent in nature. The Company determined that the obligation to participate in the joint steering committee does not have stand-alone value to Taiho because the committee’s primary purpose is to monitor and govern the research and development activities and, hence, it is inseparable from the research and development services.

The Company’s assessment of the transaction price included an analysis of amounts it expected to receive, which at contract inception consisted of the upfront cash payment of $20.0 million due upon contract execution in September 2017, a $5.0 million payment due within 30 days of contract execution, an anniversary payment of $5.0 million due in 2018, and a final anniversary payment of $5.0 million due in 2019.  All payments were made by Taiho as they became due and payable so given this successful collection history, the Company considers that the entire $35.0 million in non-refundable fees to be the initial transaction price.

 

The Company determined that the combined performance obligation of the research and development services and the obligation to participate on the joint steering committee are satisfied over time. The Company uses a time-elapsed input method to measure progress toward satisfying its performance obligation, which is the method the Company believes most faithfully depicts the Company’s performance in transferring the promised services during the time period in which Taiho has access to the Company’s research and development activities.  Accordingly, the transaction price of $35.0 million will be recognized using this input method over the estimated performance period of five years.

The Company also concluded that, at the inception of the agreement, Taiho’s exclusive options are not considered material rights as the options do not contain a significant and incremental discount. The Company will therefore exclude the exclusive options from the initial transaction price and account for them as separate contracts.  In 2018, Taiho exercised its option to the Company’s adenosine receptor antagonist program for a fee of $3.0 million, which was recognized by the Company as revenue during the year ended December 31, 2018 under both Topic 606 and Topic 605.  Upon this option exercise, Taiho now has the sole responsibility for the development and commercialization of licensed products from within the program in the Taiho Territory.  No options were exercised by Taiho during the six months ended June 30, 2019.  

The Company also determined that the clinical and regulatory milestone payments under the Taiho Agreement are variable consideration under Topic 606 which need to be added to the transaction price when it is probable that a significant revenue reversal will not occur.  Based on the nature of the clinical and regulatory milestones, such as the regulatory approvals which are not within the Company’s control, the Company will not consider achievement of such milestones to be probable until the uncertainty associated with the approvals has been resolved. When it is probable that a significant reversal of revenue will not occur, the milestone payment will be added to the transaction price, which will then be allocated to each performance obligation, on a relative standalone selling price basis, for which the Company recognizes revenue. As of June 30, 2019, no clinical and regulatory milestones had been achieved under the Taiho Agreement.

The Company also considers the contingent payments due from Taiho upon the achievement of specified sales volumes to be similar to royalty payments. The Company considers the license to be the predominant item to which the royalties relate. The Company will recognize revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied).  As of June 30, 2019, no sales milestone or royalty revenue has been recognized.

The Taiho Agreement shall remain in effect until (a) expiration of the last exercise period if Taiho has not exercised any of its exclusive options prior to such expiration or (b) if Taiho has exercised any of its exclusive options prior to the expiration of the applicable exercise period, expiry of all Royalty Terms for the licensed products, in each case subject to certain exceptions.

During the three and six months ended June 30, 2019, the Company recognized a total of $1.8 million and $3.5 million, respectively, of revenue under the Taiho Agreement in accordance with Topic 606, consisting of revenue recognized for the non-refundable upfront research and development fees. As of June 30, 2019, the Company recorded deferred revenue, current and deferred revenue, noncurrent of $7.0 million and $10.5 million, respectively, in its condensed consolidated balance sheet.

Changes in Deferred Revenue Balances

The Company recognized the following revenue as a result of changes in the deferred revenue balance during the period below (in thousands):

 

 

 

Three months ended

June 30,

 

Six months ended

June 30,

 

Revenue recognized in the period from:

 

2019

 

2019

 

Amounts included in deferred revenue at the beginning of the period

 

$

1,750

 

$

3,500

 

Performance obligations satisfied in previous period

 

$

 

$

 

 

WuXi Biologics License Agreement

The Company entered into a license agreement (the WuXi Agreement) with WuXi Biologics (Cayman) Inc. (WuXi Biologics) in August 2017, as subsequently amended in June 2019, in which it obtained an exclusive license to develop, use, manufacture, and commercialize products including an anti-PD-1 antibody worldwide except for Greater China and Thailand. The Company paid upfront and milestone payments of $18.5 million during the second half of 2017 which were recorded within research and development expenses, as the products had not reached technological feasibility and did not have alternative future use. A $7.5 million development milestone was reached and recorded within research and development expenses during June 2019 and was paid in July 2019. No milestones payments were made during the three and six months ended June 30, 2019 and 2018. The WuXi Agreement also provides for clinical and regulatory milestone payments, commercialization milestone payments of up to $375.0 million, and tiered royalty payments to be made to WuXi Biologics that range from the high single-digits to low teens of net sales by the Company of licensed products.

Abmuno License Agreement

In December 2016, the Company entered into a license agreement (the Abmuno Agreement) with Abmuno Therapeutics LLC (Abmuno) in which it obtained a worldwide exclusive license to develop, use, manufacture, and commercialize products that include an anti-TIGIT antibody. No milestone payments were made during the three and six months ended June 30, 2019. The Company made upfront and milestone payments of zero and $0.8 million for the three and six months ended June 30, 2018, respectively, which were recorded within research and development expenses, as the products have not reached technological feasibility and do not have alternative future use and therefore were expensed as incurred. In June 2018, a $2.0 million milestone was reached and recorded within research and development expenses in June 2018 and paid in July 2018. The Abmuno Agreement also provides for additional clinical, regulatory and commercialization milestone remaining payments of up to $101.0 million as of June 30, 2019.

Strata Collaboration Agreement

On April 30, 2019, the Company and Strata Oncology, Inc. (Strata) entered into a Co-Development and Collaboration Agreement (the Co-Development and Collaboration Agreement) to pursue a clinical development collaboration utilizing Strata’s precision drug development platform and proprietary biomarkers to evaluate AB122, the Company’s clinical-stage anti-PD-1 antibody, in patients in a tumor-agnostic fashion.

 

Under the terms of the Co-Development and Collaboration Agreement, the parties will share a portion of development costs for the clinical collaboration. Strata is eligible to receive $2.5 million upon the achievement of a development milestone, as well as regulatory and commercial milestones of up to $125.0 million and up to double-digit royalties on U.S. net sales of AB122 in the biomarker-identified indication. As of June 30, 2019, the Company incurred expenses of $0.3 million net of development cost sharing that was recorded within research and development expenses. As further consideration in connection with the Co-Development and Collaboration Agreement, the Company issued to Strata 1,257,651 restricted shares of its common stock with an initial measured fair value of $15.0 million, which are subject to vesting based upon the achievement of specified regulatory milestones within certain timelines, unless such vesting is modified pursuant to a change of control at the acquiror’s option. Expense relating to the restricted shares subject to these milestones is recognized if it is considered probable that the associated shares will vest. The probability of achievement is assessed at the end of each quarterly period. As of June 30, 2019, the Company determined that none of the restricted shares were probable of vesting and, as a result, no compensation expense related to the restricted shares has been recognized to date.

v3.19.2
Stock-Based Compensation
6 Months Ended
Jun. 30, 2019
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]  
Stock-Based Compensation

Note 6: Stock-Based Compensation

In March 2018, the Company adopted the 2018 Equity Incentive Plan (2018 Plan). The 2018 Plan replaced the Company’s 2015 Stock Plan (2015 Plan) and 3,570,000 shares were reserved under the 2018 Plan, along with any shares remaining available for issuance under the Company’s 2015 Plan or outstanding awards under its 2015 Plan that subsequently expire, lapse unexercised or are forfeited to or repurchased by the Company.    

 

Total stock-based compensation expense was recognized in the condensed consolidated statements of operations and comprehensive loss as follows (in thousands):

 

 

 

Three months ended June 30,

 

 

Six months ended June 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Research and development

 

 

868

 

 

$

701

 

 

 

1,715

 

 

$

1,041

 

General and administrative

 

 

1,262

 

 

 

415

 

 

 

2,089

 

 

 

731

 

Total stock-based compensation

 

$

2,130

 

 

$

1,116

 

 

$

3,804

 

 

$

1,772

 

 

The Company granted 1,311,750 and 3,087,650 stock options during the three and six months ended June 30, 2019, respectively and 210,808 and 1,396,989 for the three and six months ended June 30, 2018, respectively. These options had a weighted average grant-date fair value of $6.28 and $6.63 per share for the three and six months ended June 30, 2019, respectively, and $11.23 and $7.29 for the three and six months ended June 30,2018, respectively.

Under the Company’s stock plans, 18,701 and 18,770 stock options were exercised during the three and six months ended June 30, 2019, respectively, and 5,171 and 713,931 for the three and six months ended June 30, 2018, respectively.

As a result of early exercises under the 2015 Plan, approximately 665,301 and 927,123 shares had not vested and were subject to repurchase as of June 30, 2019 and December 31, 2018, respectively. The Company treats cash received from the exercise of unvested options as a refundable deposit and classifies such amounts as a liability in its condensed consolidated balance sheets. As of June 30, 2019 and December 31, 2018, the Company included cash received from the early exercise of unvested options of $2.3 million and $2.8 million, in its other current and long-term liabilities, respectively based on the timing of their expected vesting. Amounts included in liabilities are transferred into common stock and additional paid-in capital as the shares vest, which is generally over a period of 48 months.

v3.19.2
Condensed Consolidated Balance Sheet Components
6 Months Ended
Jun. 30, 2019
Balance Sheet Related Disclosures [Abstract]  
Condensed Consolidated Balance Sheet Components

Note 7. Condensed Consolidated Balance Sheet Components

Property and Equipment

Property and equipment, net consisted of the following (in thousands):

 

 

 

As of June 30, 2019

 

 

As of December 31, 2018

 

Scientific equipment

 

$

7,536

 

 

$

6,628

 

Furniture and equipment

 

 

1,040

 

 

 

813

 

Capitalized software

 

 

146

 

 

 

146

 

Leasehold improvements

 

 

10,834

 

 

 

10,828

 

Construction in progress

 

 

285

 

 

 

335

 

Total

 

 

19,841

 

 

 

18,750

 

Less: Accumulated depreciation and amortization

 

 

(9,479

)

 

 

(7,643

)

Property and equipment, net

 

$

10,362

 

 

$

11,107

 

 

Depreciation and amortization expense was $0.8 million and $1.8 million for the three and six months ended June 30, 2019, respectively and $0.9 million and $1.7 million for the three and six months ended June 30, 2018, respectively.

Accrued Liabilities

Accrued liabilities consisted of the following (in thousands):

 

 

 

As of June 30, 2019

 

 

As of December 31, 2018

 

Accrued personnel expenses

 

$

2,301

 

 

$

2,833

 

Accrued research and development expenses

 

 

12,910

 

 

 

2,816

 

Professional fees

 

 

268

 

 

 

211

 

Other

 

 

73

 

 

 

163

 

Total

 

$

15,552

 

 

$

6,023

 

 

 

v3.19.2
Net Loss per Share
6 Months Ended
Jun. 30, 2019
Earnings Per Share [Abstract]  
Net Loss per Share

Note 8. Net Loss per Share

 

The following table sets forth the computation of basic and diluted net loss per share (in thousands, except share and per share data):

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Numerator:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(28,090

)

 

$

(13,533

)

 

$

(45,760

)

 

$

(26,488

)

Denominator:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding

 

 

45,409,588

 

 

 

44,450,312

 

 

 

44,970,831

 

 

 

28,248,337

 

Less: weighted-average common shares subject to vesting

 

 

(1,611,870

)

 

 

(1,916,671

)

 

 

(1,317,506

)

 

 

(2,012,330

)

Weighted-average common shares used to compute basic and diluted net loss per share

 

 

43,797,718

 

 

 

42,533,641

 

 

 

43,653,325

 

 

 

26,236,007

 

Net loss per share: basic and diluted

 

$

(0.64

)

 

$

(0.32

)

 

$

(1.05

)

 

$

(1.01

)

 

The following outstanding potentially dilutive securities were excluded from the computation of diluted net loss per share for the periods presented because including them would have been antidilutive:

 

 

 

Six Months Ended June 30,

 

 

 

2019

 

 

2018

 

Common stock options issued and outstanding

 

 

4,449,690

 

 

 

1,221,862

 

Unvested restricted common stock

 

 

1,257,651

 

 

 

636,574

 

Unvested early exercised common stock options

 

 

665,301

 

 

 

1,181,717

 

Total

 

 

6,372,642

 

 

 

3,040,153

 

 

v3.19.2
Significant Accounting Policies (Policies)
6 Months Ended
Jun. 30, 2019
Accounting Policies [Abstract]  
Basis of Presentation

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP) for interim financial information and pursuant to Form 10-Q and Article 10 of Regulation S-X of the Securities and Exchange Commission (SEC). Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the Company’s opinion, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation of the results of operations and cash flows for the periods presented have been included.

Operating results for the three and six months ended June 30, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019 or for any future period. The balance sheet as of December 31, 2018 has been derived from audited consolidated financial statements at that date but does not include all of the information required by U.S. GAAP for complete financial statements.

The accompanying condensed consolidated financial statements and related financial information should be read in conjunction with the audited consolidated financial statements and the related notes thereto for the year ended December 31, 2018 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 5, 2019.

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (FASB), or other standard setting bodies and adopted by the Company as of the specified effective date. Unless otherwise discussed, the impact of recently issued standards that are not yet effective will not have a material impact on the Company’s condensed consolidated financial statements upon adoption. Under the Jumpstart Our Business Startups Act of 2012, as amended (the JOBS Act), the Company meets the definition of an emerging growth company and has elected the extended transition period for complying with new or revised accounting standards pursuant to Section 107(b) of the JOBS Act. The Company will remain an emerging growth company until the earliest of (1) the last day of its first fiscal year (a) following the fifth anniversary of the completion of its initial public offering, (b) in which the Company has a total annual gross revenue of at least $1.07 billion, or (c) in which the Company is deemed to be a large accelerated filer, which means the market value of the common stock that is held by non-affiliates exceeds $700.0 million of the prior June 30th or (2) the date on which the Company has issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.

Principles of Consolidation

Principles of Consolidation

During 2017, the Company established a wholly-owned subsidiary in Australia. The condensed consolidated financial statements include the Company’s accounts and those of its wholly-owned subsidiary. All intercompany accounts, transactions and balances have been eliminated.

Use of Estimates

Use of Estimates

The preparation of the Company’s condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, as well as related disclosure of contingent assets and liabilities. Estimates were used to determine stock-based awards and other issuances, accruals for research and development costs, useful lives of long-lived assets, and uncertain tax positions. Actual results could differ materially from the Company’s estimates.

Cash Equivalents, Short-Term and Long-Term Investments

Cash Equivalents, Short-Term and Long-Term Investments

Cash equivalents include marketable securities having an original maturity of three months or less at the time of purchase. Short-term investments have maturities of greater than three months and up to twelve months at the time of purchase. Long-term investments have maturities greater than twelve months at the time of purchase. Collectively, cash equivalents, short-term and long-term investments are considered available-for-sale and are recorded at fair value. Unrealized gains and losses are recorded in accumulated other comprehensive loss. Realized gains and losses are included in interest and other income, net in the condensed consolidated statements of operations and comprehensive income or loss. The basis on which the cost of a security sold or amount reclassified out of accumulated other comprehensive income or loss into earnings is determined using the specific identification method.

Restricted Cash

Restricted Cash

Restricted cash at June 30, 2019 and December 31, 2018 comprises cash balances primarily held as security in connection with the Company’s facility lease agreement and is included in long-term assets in the condensed consolidated balance sheets.

Concentration of Credit Risk

Concentration of Credit Risk

Cash equivalents, short-term and long-term investments are financial instruments that potentially subject the Company to concentrations of credit risk.  The Company invests in money market funds, treasury bills and notes, government bonds, commercial paper and corporate notes.  The Company limits its credit risk associated with cash equivalents, short-term and long-term investments by placing them with banks and institutions it believes are credit worthy and in highly rated investments.

Research and Development Expenses

Research and Development Expenses

Research and development costs are expensed as incurred. Research and development expenses consist primarily of personnel costs for the Company’s research and development activities, non-personnel costs such as costs payable to third parties for preclinical and clinical studies and research services, laboratory supplies and equipment maintenance, product licenses, and other consulting costs. The Company estimates preclinical and clinical study and research expenses based on its knowledge of the services performed, pursuant to contracts with research institutions and other service providers that conduct and manage preclinical and clinical studies and research services on its behalf. The Company estimates these expenses based on discussions with internal management personnel and external service providers as to the progress or stage of completion of services and the contracted fees to be paid for such services. If the actual timing of the performance of services or the level of effort varies from the original estimates, the Company will adjust the accrual accordingly. Payments associated with licensing agreements to acquire exclusive licenses to develop, use, manufacture and commercialize products that have not reached technological feasibility and do not have alternative future use are expensed as incurred. Payments made to third parties under these arrangements in advance of the performance of the related services by the third parties are recorded as prepaid expenses until the services are rendered.

Adopted Accounting Pronouncements

Adopted Accounting Pronouncements – Revenue Recognition

 

Effective January 1, 2019, the Company adopted Accounting Standards Codification Topic 606, Revenue from Contracts with Customers (ASC 606) using the modified retrospective transition method.  This standard applies to all contracts with customers, except for contracts that are within the scope of other standards, such as leases, insurance, collaboration arrangements and financial instruments.  Under ASC 606, the Company recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services.  To determine revenue recognition for arrangements that the Company determines are within the scope of ASC 606, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the Company satisfies a performance obligation.  The Company only applies the five-step model to contracts when it is probable that Company will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer.  At contract inception, once the contract is determined to be within the scope of ASC 606, the Company assesses the goods or services promised within each contract and determines those that are performance obligations and assesses whether each promised good or service is distinct.  The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.

 

The Company enters into collaborative arrangements with partners that fall under the scope of both ASC 606 and Accounting Standards Codification, Topic 808, Collaborative Arrangements (ASC 808), as applicable. The terms of these arrangements typically include one or more of the following: non-refundable upfront research and development fees, option fees to obtain development and commercialization licenses for the Company’s products, milestone payments based on achievement of defined development, regulatory and sales targets, and royalties on sales of commercialized products and are further described below.

 

As part of the accounting for these arrangements, the Company must develop estimates and assumptions that require judgment to determine the underlying stand-alone selling price for each performance obligation which determines how the transaction price is allocated among the performance obligations. The estimation of the stand-alone selling price may include such estimates as forecasted revenues or costs, development timelines, discount rates, and probabilities of technical and regulatory success. The Company evaluates each performance obligation to determine if they can be satisfied at a point in time or over time, and the Company measures the services delivered to the customer, which are periodically reviewed based on the progress of the related program. The effect of any change made to an estimated input component and, therefore revenue or expense recognized, would be recorded as a change in estimate. In addition, variable consideration (e.g. milestone payments) must be evaluated to determine if it is constrained and, therefore, excluded from the transaction price.

 

Upfront Research and Development Fees: The Company identifies the performance obligations associated with the upfront research and development fees and determines if any of the promised services are distinct from each other.  If a promised service is determined to be distinct, then the Company allocates the transaction price amongst the promised services based on its best judgment of their estimated stand-alone selling prices.  If the promised services are not distinct, then all of the services are bundled together, and the Company utilizes judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time. If the performance obligation is considered to be satisfied over time, the Company selects the revenue recognition method that it believes most faithfully depicts the Company’s performance in transferring control of the services.  

 

ASC 606 allows entities to choose between two methods to measure progress toward complete satisfaction of a performance obligation over time: input methods or output methods.  Input methods recognize revenue on the basis of the entity’s efforts or inputs to the satisfaction of a performance obligation (e.g., resources consumed, labor hours expended, costs incurred, or time elapsed) relative to the total expected inputs to the satisfaction of that performance obligation.  Output methods recognize revenue on the basis of direct measurements of the value to the customer of the goods or services transferred to date relative to the remaining goods or services promised under the contract (e.g. surveys of performance completed to date, appraisals of results achieved, milestones reached, time elapsed, and units produced or units delivered).  The Company evaluates the measure of progress each reporting period and, if necessary, adjusts the measure of performance and related revenue recognition.

Option Fees:  At the inception of each arrangement that includes option exercise fees to obtain development and commercialization licenses for the Company’s products, the Company determines whether or not such option fee is considered a material right.  If the option is considered a material right, then that option is considered a separate performance obligation in the contract and the transaction price includes the option fee in the allocation amongst the performance obligations.  If the option is not considered a material right, then the option is accounted for as a separate contract.    

Milestone Payments: For arrangements that include development milestone payments, the Company consider the milestone payments to be variable consideration under ASC 606 at the inception of the arrangement, evaluates whether the milestones are considered probable of being reached and estimates the amount to be included in the transaction price using the most likely amount method. If it is probable that a significant revenue reversal would not occur, the associated milestone value is included in the transaction price. Milestone payments that are not within the Company’s or the licensee’s control, such as regulatory approvals, are not considered probable of being earned until the uncertainty associated with the approvals has been resolved. The transaction price is then allocated to each performance obligation, on a relative standalone selling price basis, which the Company recognizes as revenue when the performance obligations under the contract are satisfied. At the end of each subsequent reporting period, the Company re-evaluates the probability of earning such development milestones and any related constraint, and if necessary, adjusts the estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect revenue and earnings in the period of adjustment.

 

Royalties:  For arrangements that include sales-based royalties, including milestone payments based on the level of sales, and the license is deemed to be the predominant item to which the royalties relate, the Company recognizes revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied).

Upfront payments and fees are recorded as deferred revenue when due and payable, and may require deferral of revenue recognition to a future period until the Company performs its obligations under these arrangements. Amounts payable to the Company are recorded as accounts receivable when the Company’s right to consideration is unconditional. The Company does not assess whether a contract has a significant financing component if the expectation at contract inception is such that the period between payment by the customer and the transfer of the promised goods or services to the customer will be one year or less.

Impact of Adoption – ASC 606

 

The Company entered into a license and collaboration agreement (the Taiho Agreement) in September 2017, an agreement that is within the scope of ASC 606, under which it has provided Taiho Pharmaceutical Co., Ltd (Taiho) exclusive options, over a five-year period (the Option Period) to obtain an exclusive development and commercialization license to clinical stage product candidates from the Company’s programs.  The terms of the arrangement include non-refundable upfront research and development fees, option fees to obtain development and commercialization licenses for the Company’s products, milestone payments based on achievement of defined development, regulatory and sales targets, and royalties on sales of commercialized product.

 

The Company has applied the five-step model of the new standard to the Taiho Agreement, the only Company contract that has been impacted by the adoption of the new revenue standards. The Company implemented the new revenue standard using the modified retrospective transition method. Results for the three and six months ended June 30, 2019 are presented under Topic 606, while prior period amounts are not adjusted and continue to be reported in accordance with the Company’s historic accounting under previous revenue recognition guidance, Accounting Standards Codification Topic 605: Revenue Recognition (Topic 605).

 

Upon the adoption, the Company recorded a net reduction of $2.2 million to its opening accumulated deficit as of January 1, 2019, due to the cumulative impact of adopting Topic 606, with the impact primarily relating to an increase in the transaction price recognized for the non-refundable upfront research and development fees over the five-year term.

 

The impact of the adoption of Topic 606 on contract liabilities and accumulated deficit balances as of January 1, 2019 was as follows (in thousands):

 

 

 

December 31, 2018

 

 

Adjustment Due to

the Adoption of

Topic 606

 

 

January 1, 2019

 

Current portion of deferred revenue

 

$

6,250

 

 

$

750

 

 

$

7,000

 

Long-term portion of deferred revenue

 

 

16,984

 

 

 

(2,962

)

 

 

14,022

 

Accumulated deficit

 

$

(122,828

)

 

$

2,212

 

 

$

(120,616

)

 

The adjustments due to the adoption of Topic 606 primarily relate to an increase in the transaction price recognized for the non-refundable upfront research and development fees over the five-year term.  Under Topic 606, the Company recognized as the transaction price the total amount that the Company expects to receive related to the non-refundable upfront fees.  As of December 31, 2018, the Company had received $30.0 million of the $35.0 million in upfront fees, which consisted of payments of $25.0 million in 2017 at the inception of the contract and an anniversary payment of $5.0 million in 2018.  Given both the history of successful collection of all payments due and payable to-date and the exercise of an option by Taiho in 2018 on one of the Company’s programs, the Company believes the remaining $5.0 million due in October 2019 will also be received.  Under Topic 605, the Company recognized as the initial transaction price only the $25.0 million payment received in 2017.  The additional $2.2 million recorded in the adoption adjustment and attributable as revenue  through December 31, 2018 under Topic 606 resulted in both a lower accumulated deficit and a lower total amount of deferred revenue as of January 1, 2019.

 

The impact of the adoption of Topic 606 on the Company’s Condensed Consolidated Balance Sheet and Statement of Operations as of and for the period ended June 30, 2019 was as follows (in thousands):

 

 

 

As of June 30, 2019

 

 

 

As Reported

 

 

Balances without

the Adoption of

Topic 606

 

 

Effect of Adoption

Higher/ (Lower)

 

Current portion of deferred revenue

 

$

7,000

 

 

$

6,250

 

 

$

750

 

Long-term portion of deferred revenue

 

 

10,522

 

 

 

13,859

 

 

 

(3,337

)

Accumulated deficit

 

$

 

 

$

 

 

$

(2,399

)

 

 

 

Three Months Ended June 30, 2019

 

 

 

As Reported

 

 

Without

the Adoption of

Topic 606

 

 

Effect of Adoption

Higher/ (Lower)

 

Collaboration revenues

 

$

1,750

 

 

$

1,563

 

 

$

187

 

Net loss

 

 

(28,090

)

 

 

(28,277

)

 

$

187

 

Net loss per share, basic and diluted

 

$

(0.64

)

 

$

(0.65

)

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30, 2019

 

 

 

As Reported

 

 

Without

the Adoption of

Topic 606

 

 

Effect of Adoption

Higher/ (Lower)

 

Collaboration revenues

 

$

3,500

 

 

$

3,126

 

 

$

374

 

Net loss

 

 

(45,760

)

 

 

(46,134

)

 

$

374

 

Net loss per share, basic and diluted

 

$

(1.05

)

 

$

(1.06

)

 

$

 

 

Adopted Accounting Pronouncements – Others

In November 2016, the FASB issued ASU No. 2016-18 (Topic 230), Restricted Cash, Statement of Cash Flows (ASU 2016-18). ASU 2016-18 requires that a statement of cash flows explain the change during the period in the total of cash and, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the condensed consolidated statement of cash flows. The amendments in this ASU should be applied using a retrospective transition method to each period presented. The adoption of this standard changes the presentation in the accompanying consolidated statement of cash flows. The adoption had no material impact on the Company’s condensed consolidated financial statements.

Impact of Adoption – ASU 2016-18

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the same such amount shown on the condensed consolidated statements of cash flows (in thousands):

 

 

 

June 30, 2019

 

 

December 31, 2018

 

 

June 30, 2018

 

 

December 31, 2017

 

Cash and cash equivalents

 

$

76,068

 

 

$

71,064

 

 

$

169,998

 

 

$

98,426

 

Restricted cash

 

 

203

 

 

 

203

 

 

 

203

 

 

 

203

 

Cash, cash equivalents and restricted cash

 

$

76,271

 

 

$

71,267

 

 

$

170,201

 

 

$

98,629

 

 

In June 2018, the FASB issued ASU No. 2018-07 (Topic 718), Compensation – Stock Compensation (ASU 2018-07). ASU 2018-07 requires an entity to expand the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from non-employees. The Company adopted ASU No.2018-07 as of January 1, 2019, to simplify the calculation of nonemployee share-based payment transactions. The Company measured the estimated fair value of the unvested portion of the non-employee awards as of January 1, 2019. The fair value of options granted to non-employees was estimated using the Black-Scholes method. The adoption had an no material impact on the Company’s financial position, results of operations or liquidity.

Recently Issued Accounting Standards or Updates Not Yet Effective

Recently Issued Accounting Standards or Updates Not Yet Effective

In January 2016, the FASB issued ASU No. 2016-01 (Subtopic 825-10), Financial Instruments (ASU 2016-01). ASU 2016-01 requires management to measure equity investments at fair value with changes in fair value recognized in net income or loss. ASU 2016-01 will impact the disclosure and presentation of financial assets and liabilities. The Company evaluated the pronouncement and determined it is not applicable to the Company.

In February 2016, the FASB issued ASU No. 2016-02 (Topic 842), Leases (ASU 2016-02). ASU 2016-02 requires an entity to recognize assets and liabilities arising from a lease for both financing and operating leases. The ASU will also require new qualitative and quantitative disclosures to help investors and other financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases. For public entities, ASU 2016-02 is effective for fiscal years beginning after December 15, 2018. As a result of the Company having elected the extended transition period for complying with new or revised accounting standards pursuant to Section 107(b) of the JOBS Act, ASU 2016-02 is effective for the Company for the year ended December 31, 2020, and all interim periods thereafter. Early adoption is permitted. The Company is assessing the impact of Topic 842 and believes it will likely have a material impact on its condensed consolidated financial statements.

In August 2018, the FASB issued ASU No.2018-13 (Topic 820), Fair Value Measurement. ASU 2018-13 modifies the disclosure requirements on fair value measurement in Topic 820. For public entities, ASU 2018-013 is effective for fiscal years beginning after December 15, 2019. As a result of the Company having elected the extended transition period for complying with new or revised accounting standards pursuant to Section 107(b) of the JOBS Act, ASU 2018-13 is effective for the Company for the year ended December 31, 2021, and all interim periods within that fiscal year. Early adoption is permitted. The adoption of this standard is not expected to have a material impact on the Company’s condensed consolidated financial statements.

In November 2018, the FASB issued ASU No. 2018-18 (Topic 808), Collaborative Arrangements. ASU 2018-18 clarifies certain transactions between collaborative arrangement participants should be accounted for as revenue under ASC 606 when the collaborative arrangement participant is a customer in the context of a unit of account and precludes recognizing as revenue consideration received from a collaborative arrangement participant if the participant is not a customer. For public entities, ASU 2018-18 is effective for fiscal years beginning after December 15, 2019. As a result of the Company having elected the extended transition period for complying with new or revised accounting standards pursuant to Section 107(b) of the JOBS Act, ASU 2018-18 is effective for the Company for the year ended December 31, 2021, and all interim periods within that fiscal year. Early adoption is permitted. The Company has not yet determined the potential effects of this ASU on its condensed consolidated financial statements.

 

v3.19.2
Summary of Significant Accounting Policies (Tables)
6 Months Ended
Jun. 30, 2019
ASC 606  
Significant Accounting Policies [Line Items]  
Impact of Adoption

The impact of the adoption of Topic 606 on contract liabilities and accumulated deficit balances as of January 1, 2019 was as follows (in thousands):

 

 

 

December 31, 2018

 

 

Adjustment Due to

the Adoption of

Topic 606

 

 

January 1, 2019

 

Current portion of deferred revenue

 

$

6,250

 

 

$

750

 

 

$

7,000

 

Long-term portion of deferred revenue

 

 

16,984

 

 

 

(2,962

)

 

 

14,022

 

Accumulated deficit

 

$

(122,828

)

 

$

2,212

 

 

$

(120,616

)

 

The impact of the adoption of Topic 606 on the Company’s Condensed Consolidated Balance Sheet and Statement of Operations as of and for the period ended June 30, 2019 was as follows (in thousands):

 

 

 

As of June 30, 2019

 

 

 

As Reported

 

 

Balances without

the Adoption of

Topic 606

 

 

Effect of Adoption

Higher/ (Lower)

 

Current portion of deferred revenue

 

$

7,000

 

 

$

6,250

 

 

$

750

 

Long-term portion of deferred revenue

 

 

10,522

 

 

 

13,859

 

 

 

(3,337

)

Accumulated deficit

 

$

 

 

$

 

 

$

(2,399

)

 

 

 

Three Months Ended June 30, 2019

 

 

 

As Reported

 

 

Without

the Adoption of

Topic 606

 

 

Effect of Adoption

Higher/ (Lower)

 

Collaboration revenues

 

$

1,750

 

 

$

1,563

 

 

$

187

 

Net loss

 

 

(28,090

)

 

 

(28,277

)

 

$

187

 

Net loss per share, basic and diluted

 

$

(0.64

)

 

$

(0.65

)

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30, 2019

 

 

 

As Reported

 

 

Without

the Adoption of

Topic 606

 

 

Effect of Adoption

Higher/ (Lower)

 

Collaboration revenues

 

$

3,500

 

 

$

3,126

 

 

$

374

 

Net loss

 

 

(45,760

)

 

 

(46,134

)

 

$

374

 

Net loss per share, basic and diluted

 

$

(1.05

)

 

$

(1.06

)

 

$

 

 

ASU 2016-18  
Significant Accounting Policies [Line Items]  
Impact of Adoption

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the same such amount shown on the condensed consolidated statements of cash flows (in thousands):

 

 

 

June 30, 2019

 

 

December 31, 2018

 

 

June 30, 2018

 

 

December 31, 2017

 

Cash and cash equivalents

 

$

76,068

 

 

$

71,064

 

 

$

169,998

 

 

$

98,426

 

Restricted cash

 

 

203

 

 

 

203

 

 

 

203

 

 

 

203

 

Cash, cash equivalents and restricted cash

 

$

76,271

 

 

$

71,267

 

 

$

170,201

 

 

$

98,629

 

 

v3.19.2
Fair Value Measurements (Tables)
6 Months Ended
Jun. 30, 2019
Fair Value Disclosures [Abstract]  
Schedule of Fair Value, Assets Measured on Recurring Basis The following tables set forth the Company’s financial instruments that were measured at fair value on a recurring basis by level within the fair value hierarchy (in thousands):

 

 

 

Fair Value Measurements at June 30, 2019

 

 

 

Total

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

$

64,578

 

 

$

64,578

 

 

$

 

 

$

 

Corporate securities and commercial paper

 

 

60,268

 

 

 

 

 

 

60,268

 

 

 

 

U.S. government treasury and agency securities

 

 

99,552

 

 

 

 

 

 

99,552

 

 

 

 

 

 

$

224,398

 

 

$

64,578

 

 

$

159,820

 

 

$

 

 

 

 

Fair Value Measurements at December 31, 2018

 

 

 

Total

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

$

45,017

 

 

$

45,017

 

 

$

 

 

$

 

U.S. government treasury and agency securities

 

 

103,940

 

 

 

 

 

 

103,940

 

 

 

 

Corporate securities and commercial paper

 

 

110,768

 

 

 

 

 

 

110,768

 

 

 

 

 

 

$

259,725

 

 

$

45,017

 

 

$

214,708

 

 

$

 

Schedule of Investments Classified as Available for Sale Securities with Contractual Maturities

Classified as (with contractual maturities):

 

 

 

June 30, 2019

 

 

December 31, 2018

 

Cash and Cash equivalents

 

$

76,068

 

 

$

71,064

 

Short-term investments (due within one year)

 

 

148,330

 

 

 

185,480

 

Long-term investments (due between one and two years)

 

 

 

 

 

3,181

 

 

 

$

224,398

 

 

$

259,725

 

Schedule of Available for Sale Securities at Fair Value Measurements

 

 

 

Fair Value Measurements at June 30, 2019

 

 

 

Amortized

Cost

 

 

Unrealized

Gain

 

 

Unrealized

Loss

 

 

Fair

Value

 

Money market funds

 

$

64,578

 

 

$

 

 

$

 

 

$

64,578

 

Corporate securities and commercial paper

 

 

60,241

 

 

 

27

 

 

 

 

 

 

60,268

 

U.S. government treasury and agency securities

 

 

99,468

 

 

 

84

 

 

 

 

 

 

99,552

 

 

 

$

224,287

 

 

$

111

 

 

$

 

 

$

224,398

 

 

 

 

Fair Value Measurements at December 31, 2018

 

 

 

Amortized

Cost

 

 

Unrealized

Gain

 

 

Unrealized

Loss

 

 

Fair

Value

 

Money market funds

 

$

45,017

 

 

$

 

 

$

 

 

$

45,017

 

U.S. government treasury and agency securities

 

 

103,957

 

 

 

 

 

 

(17

)

 

 

103,940

 

Corporate securities and commercial paper

 

 

110,859

 

 

 

 

 

 

(91

)

 

 

110,768

 

 

 

$

259,833

 

 

$

 

 

$

(108

)

 

$

259,725

 

v3.19.2
License and Collaboration Agreements (Tables)
6 Months Ended
Jun. 30, 2019
License And Collaboration Agreements [Abstract]  
Summary of Revenue Recognized as a Result of Changes in Deferred Revenue

The Company recognized the following revenue as a result of changes in the deferred revenue balance during the period below (in thousands):

 

 

 

Three months ended

June 30,

 

Six months ended

June 30,

 

Revenue recognized in the period from:

 

2019

 

2019

 

Amounts included in deferred revenue at the beginning of the period

 

$

1,750

 

$

3,500

 

Performance obligations satisfied in previous period

 

$

 

$

 

 

v3.19.2
Stock-Based Compensation (Tables)
6 Months Ended
Jun. 30, 2019
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]  
Summary of Stock-Based Compensation Expense

Total stock-based compensation expense was recognized in the condensed consolidated statements of operations and comprehensive loss as follows (in thousands):

 

 

 

Three months ended June 30,

 

 

Six months ended June 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Research and development

 

 

868

 

 

$

701

 

 

 

1,715

 

 

$

1,041

 

General and administrative

 

 

1,262

 

 

 

415

 

 

 

2,089

 

 

 

731

 

Total stock-based compensation

 

$

2,130

 

 

$

1,116

 

 

$

3,804

 

 

$

1,772

 

v3.19.2
Condensed Consolidated Balance Sheet Components (Tables)
6 Months Ended
Jun. 30, 2019
Balance Sheet Related Disclosures [Abstract]  
Summary of Property and Equipment, Net

Property and equipment, net consisted of the following (in thousands):

 

 

 

As of June 30, 2019

 

 

As of December 31, 2018

 

Scientific equipment

 

$

7,536

 

 

$

6,628

 

Furniture and equipment

 

 

1,040

 

 

 

813

 

Capitalized software

 

 

146

 

 

 

146

 

Leasehold improvements

 

 

10,834

 

 

 

10,828

 

Construction in progress

 

 

285

 

 

 

335

 

Total

 

 

19,841

 

 

 

18,750

 

Less: Accumulated depreciation and amortization

 

 

(9,479

)

 

 

(7,643

)

Property and equipment, net

 

$

10,362

 

 

$

11,107

 

Summary of Accrued Liabilities

Accrued liabilities consisted of the following (in thousands):

 

 

 

As of June 30, 2019

 

 

As of December 31, 2018

 

Accrued personnel expenses

 

$

2,301

 

 

$

2,833

 

Accrued research and development expenses

 

 

12,910

 

 

 

2,816

 

Professional fees

 

 

268

 

 

 

211

 

Other

 

 

73

 

 

 

163

 

Total

 

$

15,552

 

 

$

6,023

 

 

v3.19.2
Net Loss per Share (Tables)
6 Months Ended
Jun. 30, 2019
Earnings Per Share [Abstract]  
Computation of Basic and Diluted Net Loss Per Share

The following table sets forth the computation of basic and diluted net loss per share (in thousands, except share and per share data):

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Numerator:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(28,090

)

 

$

(13,533

)

 

$

(45,760

)

 

$

(26,488

)

Denominator:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding

 

 

45,409,588

 

 

 

44,450,312

 

 

 

44,970,831

 

 

 

28,248,337

 

Less: weighted-average common shares subject to vesting

 

 

(1,611,870

)

 

 

(1,916,671

)

 

 

(1,317,506

)

 

 

(2,012,330

)

Weighted-average common shares used to compute basic and diluted net loss per share

 

 

43,797,718

 

 

 

42,533,641

 

 

 

43,653,325

 

 

 

26,236,007

 

Net loss per share: basic and diluted

 

$

(0.64

)

 

$

(0.32

)

 

$

(1.05

)

 

$

(1.01

)

Summary of Outstanding Potentially Dilutive Securities Excluded from Computation of Diluted Net Loss per Share

The following outstanding potentially dilutive securities were excluded from the computation of diluted net loss per share for the periods presented because including them would have been antidilutive:

 

 

 

Six Months Ended June 30,

 

 

 

2019

 

 

2018

 

Common stock options issued and outstanding

 

 

4,449,690

 

 

 

1,221,862

 

Unvested restricted common stock

 

 

1,257,651

 

 

 

636,574

 

Unvested early exercised common stock options

 

 

665,301

 

 

 

1,181,717

 

Total

 

 

6,372,642

 

 

 

3,040,153

 

v3.19.2
Organization - Additional Information (Details)
$ in Millions
Jun. 30, 2019
USD ($)
Cash, Cash Equivalents and Short-term Investments  
Class Of Stock [Line Items]  
Cash and investments $ 224.4
v3.19.2
Significant Accounting Policies - Additional Information (Detail) - USD ($)
$ in Thousands
1 Months Ended 6 Months Ended 12 Months Ended
Oct. 31, 2018
Oct. 31, 2017
Jun. 30, 2019
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Oct. 31, 2019
Jan. 01, 2019
Jun. 29, 2017
Significant Accounting Policies [Line Items]                  
Description to be remained in emerging growth company     The Company will remain an emerging growth company until the earliest of (1) the last day of its first fiscal year (a) following the fifth anniversary of the completion of its initial public offering, (b) in which the Company has a total annual gross revenue of at least $1.07 billion, or (c) in which the Company is deemed to be a large accelerated filer, which means the market value of the common stock that is held by non-affiliates exceeds $700.0 million of the prior June 30th or (2) the date on which the Company has issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.            
Minimum annual gross revenue in order to remain classified as emerging growth company     $ 1,070,000            
Maximum market value of common stock held by non-affiliates to be remained in emerging growth company                 $ 700,000
Additional non-convertible debt securities to be remained in emerging growth company     1,000,000            
Accumulated deficit     (166,376)   $ (122,828) [1]        
Taiho Pharmaceutical Co Ltd | Taiho Agreement                  
Significant Accounting Policies [Line Items]                  
Non-refundable, non-creditable upfront cash payments     $ 35,000            
Payment received for license agreement   $ 5,000     5,000 $ 25,000      
Additional payment to be received for license agreement $ 5,000                
Taiho Pharmaceutical Co Ltd | Taiho Agreement | Scenario Forecast                  
Significant Accounting Policies [Line Items]                  
Payment received for license agreement       $ 5,000          
Additional payment to be received for license agreement       $ 5,000          
ASC 606                  
Significant Accounting Policies [Line Items]                  
Accumulated deficit               $ (120,616)  
Non-refundable upfront research and development fees term     5 years            
ASC 606 | Taiho Pharmaceutical Co Ltd | Taiho Agreement                  
Significant Accounting Policies [Line Items]                  
Accumulated deficit         2,200        
Non-refundable upfront research and development fees term     5 years            
Non refundable and non creditable upfront cash payment received         30,000        
Non-refundable, non-creditable upfront cash payments     $ 35,000            
Payment received for license agreement           $ 25,000      
Additional payment to be received for license agreement         5,000        
Net reduction to deferred revenue         $ 2,200        
ASC 606 | Taiho Pharmaceutical Co Ltd | Taiho Agreement | Scenario Forecast                  
Significant Accounting Policies [Line Items]                  
Remaining non refundable and non creditable cash payments receivable             $ 5,000    
ASC 606 | Adjustment due to The Adoption of Topic 606                  
Significant Accounting Policies [Line Items]                  
Accumulated deficit               $ 2,212  
[1] The Condensed Consolidated Balance Sheet as of December 31, 2018 has been derived from the audited financial statements as of that date.
v3.19.2
Significant Accounting Policies - Summary of Impact of Adoption of Topic 606 on Contract Liabilities and Accumulated Deficit (Detail) - USD ($)
$ in Thousands
Jun. 30, 2019
Jan. 01, 2019
Dec. 31, 2018
Significant Accounting Policies [Line Items]      
Current portion of deferred revenue $ 7,000    
Long-term portion of deferred revenue 10,522    
Accumulated deficit (166,376)   $ (122,828) [1]
Before Adoption of Topic 606      
Significant Accounting Policies [Line Items]      
Current portion of deferred revenue 6,250   6,250
Long-term portion of deferred revenue $ 13,859   16,984
Accumulated deficit     $ (122,828)
ASC 606      
Significant Accounting Policies [Line Items]      
Current portion of deferred revenue   $ 7,000  
Long-term portion of deferred revenue   14,022  
Accumulated deficit   (120,616)  
ASC 606 | Adjustment due to The Adoption of Topic 606      
Significant Accounting Policies [Line Items]      
Current portion of deferred revenue   750  
Long-term portion of deferred revenue   (2,962)  
Accumulated deficit   $ 2,212  
[1] The Condensed Consolidated Balance Sheet as of December 31, 2018 has been derived from the audited financial statements as of that date.
v3.19.2
Significant Accounting Policies - Summary of Impact of Adoption of Topic 606 on Condensed Consolidated Balance Sheet and Statement of Operations (Details) - USD ($)
$ / shares in Units, $ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2019
Mar. 31, 2019
Jun. 30, 2018
Mar. 31, 2018
Jun. 30, 2019
Jun. 30, 2018
Jan. 01, 2019
Dec. 31, 2018
Significant Accounting Policies [Line Items]                
Current portion of deferred revenue $ 7,000       $ 7,000      
Long-term portion of deferred revenue 10,522       10,522      
Accumulated deficit (166,376)       (166,376)     $ (122,828) [1]
Collaboration revenues 1,750       3,500      
Net loss $ (28,090) $ (17,670) $ (13,533) $ (12,955) $ (45,760) $ (26,488)    
Net loss per share, basic and diluted $ (0.64)   $ (0.32)   $ (1.05) $ (1.01)    
Balances Without the Adoption of Topic 606                
Significant Accounting Policies [Line Items]                
Current portion of deferred revenue $ 6,250       $ 6,250     6,250
Long-term portion of deferred revenue 13,859       13,859     16,984
Accumulated deficit               $ (122,828)
Collaboration revenues 1,563       3,126      
Net loss $ (28,277)       $ (46,134)      
Net loss per share, basic and diluted $ (0.65)       $ (1.06)      
ASC 606                
Significant Accounting Policies [Line Items]                
Current portion of deferred revenue             $ 7,000  
Long-term portion of deferred revenue             14,022  
Accumulated deficit             $ (120,616)  
ASC 606 | Effect of Adoption Higher/ (Lower)                
Significant Accounting Policies [Line Items]                
Current portion of deferred revenue $ 750       $ 750      
Long-term portion of deferred revenue (3,337)       (3,337)      
Accumulated deficit (2,399)       (2,399)      
Collaboration revenues 187       374      
Net loss $ 187       $ 374      
[1] The Condensed Consolidated Balance Sheet as of December 31, 2018 has been derived from the audited financial statements as of that date.
v3.19.2
Significant Accounting Policies - Summary of Cash After Implementing ASU 2016-18 (Details) - USD ($)
$ in Thousands
Jun. 30, 2019
Dec. 31, 2018
Jun. 30, 2018
Dec. 31, 2017
Significant Accounting Policies [Line Items]        
Cash and cash equivalents $ 76,068 $ 71,064 [1]    
Restricted cash 203 203 [1]    
ASU 2016-18        
Significant Accounting Policies [Line Items]        
Cash and cash equivalents 76,068 71,064 $ 169,998 $ 98,426
Restricted cash 203 203 203 203
Cash, cash equivalents and restricted cash $ 76,271 $ 71,267 $ 170,201 $ 98,629
[1] The Condensed Consolidated Balance Sheet as of December 31, 2018 has been derived from the audited financial statements as of that date.
v3.19.2
Fair Value Measurements - Additional Information (Details) - USD ($)
6 Months Ended 12 Months Ended
Jun. 30, 2019
Dec. 31, 2018
Fair Value Disclosures [Abstract]    
Fair value assets transferred from level 1 to level 2 $ 0 $ 0
Fair value assets transferred from level 2 to level 1 0 0
Fair value liabilities transferred from level 1 to level 2 0 0
Fair value liabilities transferred from level 2 to level 1 0 0
Fair value assets transferred into level 3 0 0
Fair value assets transferred out of level 3 0 0
Fair value liabilities transferred into level 3 0 0
Fair value liabilities transferred out of level 3 0 0
Realized gains (loss) on sale or maturity of available-for-sale marketable securities 0 0
Reclassification out of accumulated other comprehensive loss $ 0 $ 0
v3.19.2
Fair Value Measurements - Schedule of Fair Value, Assets Measured on Recurring Basis (Details) - Fair Value On Recurring Basis - USD ($)
$ in Thousands
Jun. 30, 2019
Dec. 31, 2018
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]    
Assets, fair value $ 224,398 $ 259,725
Money Market Funds    
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]    
Assets, fair value 64,578 45,017
Corporate Securities and Commercial Paper    
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]    
Assets, fair value 60,268 110,768
U.S. Government Treasury and Agency Securities    
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]    
Assets, fair value 99,552 103,940
Level 1    
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]    
Assets, fair value 64,578 45,017
Level 1 | Money Market Funds    
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]    
Assets, fair value 64,578 45,017
Level 2    
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]    
Assets, fair value 159,820 214,708
Level 2 | Corporate Securities and Commercial Paper    
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]    
Assets, fair value 60,268 110,768
Level 2 | U.S. Government Treasury and Agency Securities    
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]    
Assets, fair value $ 99,552 $ 103,940
v3.19.2
Fair Value Measurements - Schedule of Investments Classified as Available for Sale Securities with Contractual Maturities (Details) - USD ($)
$ in Thousands
Jun. 30, 2019
Dec. 31, 2018
Fair Value Disclosures [Abstract]    
Cash and Cash equivalents $ 76,068 $ 71,064
Short-term investments (due within one year) 148,330 185,480 [1]
Long-term investments (due between one and two years) 0 3,181 [1]
Total cash and investments in marketable securities $ 224,398 $ 259,725
[1] The Condensed Consolidated Balance Sheet as of December 31, 2018 has been derived from the audited financial statements as of that date.
v3.19.2
Fair Value Measurements - Schedule of Available for Sale Securities at Fair Value Measurements (Details) - USD ($)
$ in Thousands
Jun. 30, 2019
Dec. 31, 2018
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]    
Amortized Cost $ 224,287 $ 259,833
Unrealized Gain 111  
Unrealized Loss   (108)
Fair Value 224,398 259,725
Money Market Funds    
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]    
Amortized Cost 64,578 45,017
Fair Value 64,578 45,017
Corporate Securities and Commercial Paper    
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]    
Amortized Cost 60,241 110,859
Unrealized Gain 27  
Unrealized Loss   (91)
Fair Value 60,268 110,768
U.S. Government Treasury and Agency Securities    
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]    
Amortized Cost 99,468 103,957
Unrealized Gain 84  
Unrealized Loss   (17)
Fair Value $ 99,552 $ 103,940
v3.19.2
Equity Investment - Additional Information (Details) - USD ($)
shares in Millions
1 Months Ended 3 Months Ended 6 Months Ended 12 Months Ended
Dec. 31, 2016
Sep. 30, 2016
Jun. 30, 2019
Jun. 30, 2018
Jun. 30, 2019
Jun. 30, 2018
Dec. 31, 2018
Schedule of Equity Method Investments [Line Items]              
Loss from equity method investments     $ 412,000 $ 151,000 $ 844,000 $ 377,000  
PACT Pharma              
Schedule of Equity Method Investments [Line Items]              
Loss from equity method investments     400,000 $ 200,000 $ 800,000 400,000  
Equity method investment agreement termination date         May 31, 2018    
Gain in interest and other income             $ 1,200,000
Equity method investments impairment         $ 0 $ 0  
PACT Pharma | Variable Interest Entity              
Schedule of Equity Method Investments [Line Items]              
Receivable from PACT Pharma     0   0   100,000
Payable to PACT Pharma     $ 100,000   $ 100,000   $ 0
PACT Pharma | Series A Preferred Stock              
Schedule of Equity Method Investments [Line Items]              
Purchase of common stock, shares 1.0            
Purchase of common stock, value $ 1,000,000            
PACT Pharma | Common Stock              
Schedule of Equity Method Investments [Line Items]              
Purchase of common stock, shares   3.6          
v3.19.2
License and Collaboration Agreements - Additional Information (Details)
1 Months Ended 3 Months Ended 6 Months Ended 12 Months Ended
Apr. 30, 2019
USD ($)
shares
Jun. 30, 2019
USD ($)
shares
Oct. 31, 2018
USD ($)
Jun. 30, 2018
USD ($)
Oct. 31, 2017
USD ($)
Sep. 30, 2017
USD ($)
Program
Aug. 31, 2017
USD ($)
Jun. 30, 2019
USD ($)
shares
Jun. 30, 2018
USD ($)
shares
Jun. 30, 2019
USD ($)
shares
Jun. 30, 2018
USD ($)
shares
Dec. 31, 2017
USD ($)
Dec. 31, 2019
USD ($)
Dec. 31, 2018
USD ($)
Dec. 31, 2017
USD ($)
License And Collaboration Agreements [Line Items]                              
Issuance of common stock upon exercise of stock options, net of amounts related to unvested shares, shares | shares               18,701 5,171 18,770 713,931        
Revenue recognized               $ 1,750,000   $ 3,500,000          
Deferred revenue, current   $ 7,000,000           7,000,000   7,000,000       $ 6,250,000 [1]  
Deferred revenue, noncurrent   10,522,000           10,522,000   10,522,000       16,984,000 [1]  
Compensation expense recognized               2,130,000 $ 1,116,000 3,804,000 $ 1,772,000        
Research and Development Expenses                              
License And Collaboration Agreements [Line Items]                              
Compensation expense recognized               868,000 701,000 $ 1,715,000 1,041,000        
Taiho Pharmaceutical Co Ltd | Taiho Agreement                              
License And Collaboration Agreements [Line Items]                              
Option period           5 years                  
Non refundable and non creditable cash payments                             $ 35,000,000
Payment received for license agreement         $ 5,000,000                 5,000,000 $ 25,000,000
Additional payment to be received for license agreement     $ 5,000,000                        
Range of royalties receivable on net sales                   high single-digits to mid-teens          
Royalties payable description                   Royalties will be payable on a licensed product-by-licensed product and country-by-country basis during the period of time commencing on the first commercial sale of a licensed product in a country and ending upon the later of: (a) ten (10) years from the date of first commercial sale of such licensed product in such country; and (b) expiration of the last-to-expire valid claim of the Company’s patents covering the manufacture, use or sale or exploitation of such licensed product in such country (the Royalty Term).          
Upfront cash payment           $ 20,000,000                  
Non-refundable, non-creditable upfront cash payments                   $ 35,000,000          
Estimated performance period                   5 years          
Payment for first option exercise                           $ 3,000,000  
Issuance of common stock upon exercise of stock options, net of amounts related to unvested shares, shares | shares                   0          
Clinical and regulatory milestones achieved                   $ 0          
Sales milestone or royalty revenue recognized                   0          
Revenue recognized               1,800,000   3,500,000          
Deferred revenue, current   7,000,000           7,000,000   7,000,000          
Deferred revenue, noncurrent   10,500,000           10,500,000   10,500,000          
Taiho Pharmaceutical Co Ltd | Taiho Agreement | Scenario Forecast                              
License And Collaboration Agreements [Line Items]                              
Payment received for license agreement                         $ 5,000,000    
Additional payment to be received for license agreement                         $ 5,000,000    
Taiho Pharmaceutical Co Ltd | Taiho Agreement | Minimum                              
License And Collaboration Agreements [Line Items]                              
Number of programs, IND enabling studies not initiated | Program           5                  
Payment for option exercise           $ 3,000,000                  
Taiho Pharmaceutical Co Ltd | Taiho Agreement | Maximum                              
License And Collaboration Agreements [Line Items]                              
Extended option agreement period           7 years                  
Payment for option exercise           $ 15,000,000                  
Additional clinical and regulatory milestone payments receivable           130,000,000                  
Contingent payments receivable           $ 145,000,000                  
WuXi Biologics License Agreement                              
License And Collaboration Agreements [Line Items]                              
Upfront and milestone payments                       $ 18,500,000      
Milestone payments               0 0 $ 0 0        
Range of tiered royalty payments on net sales                   high single-digits to low teens          
WuXi Biologics License Agreement | Research and Development Expenses                              
License And Collaboration Agreements [Line Items]                              
Upfront and milestone payments   $ 7,500,000                          
WuXi Biologics License Agreement | Maximum                              
License And Collaboration Agreements [Line Items]                              
Clinical, regulatory and commercialization milestone payments             $ 375,000,000                
Abmuno License Agreement                              
License And Collaboration Agreements [Line Items]                              
Upfront and milestone payments                 $ 0   $ 800,000        
Milestone payments               $ 0   $ 0          
Abmuno License Agreement | Research and Development Expenses                              
License And Collaboration Agreements [Line Items]                              
Upfront and milestone payments       $ 2,000,000                      
Abmuno License Agreement | Maximum                              
License And Collaboration Agreements [Line Items]                              
Clinical, regulatory and commercialization remaining milestone payments                   101,000,000          
Strata Oncology Inc | Co-Development and Collaboration Agreement                              
License And Collaboration Agreements [Line Items]                              
Development milestone payable $ 2,500,000                            
Development cost recorded within research and development expenses                   $ 300,000          
Number of restricted shares of common stock issued | shares 1,257,651                            
Fair value of restricted shares of common stock issued $ 15,000,000                            
Strata Oncology Inc | Co-Development and Collaboration Agreement | Restricted Shares                              
License And Collaboration Agreements [Line Items]                              
Shares probable of vesting | shares   0           0   0          
Compensation expense recognized                   $ 0          
Strata Oncology Inc | Co-Development and Collaboration Agreement | Maximum                              
License And Collaboration Agreements [Line Items]                              
Regulatory and commercial milestone payable $ 125,000,000                            
[1] The Condensed Consolidated Balance Sheet as of December 31, 2018 has been derived from the audited financial statements as of that date.
v3.19.2
License and Collaboration Agreements - Summary of Revenue Recognized as a Result of Changes in Deferred Revenue (Details) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2019
Jun. 30, 2019
License And Collaboration Agreements [Abstract]    
Amounts included in deferred revenue at the beginning of the period $ 1,750 $ 3,500
v3.19.2
Stock-Based Compensation - Additional Information (Details) - USD ($)
$ / shares in Units, $ in Millions
3 Months Ended 6 Months Ended
Jun. 30, 2019
Jun. 30, 2018
Jun. 30, 2019
Jun. 30, 2018
Dec. 31, 2018
Mar. 31, 2018
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]            
Stock options, grants in period, shares 1,311,750 210,808 3,087,650 1,396,989    
Stock options, grants in period, weighted average grant date fair value per share $ 6.28 $ 11.23 $ 6.63 $ 7.29    
Stock options, exercised 18,701 5,171 18,770 713,931    
2018 Equity Incentive Plan            
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]            
Number of shares issued or transferred           3,570,000
2015 Stock Plan            
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]            
Shares not vested and subject to repurchase 665,301   665,301   927,123  
Cash received from early exercise of unvested options $ 2.3   $ 2.3   $ 2.8  
Award vesting period     48 months      
v3.19.2
Stock-Based Compensation - Summary of Stock-Based Compensation Expense (Details) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2019
Jun. 30, 2018
Jun. 30, 2019
Jun. 30, 2018
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]        
Total stock-based compensation $ 2,130 $ 1,116 $ 3,804 $ 1,772
Research and Development        
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]        
Total stock-based compensation 868 701 1,715 1,041
General and Administrative        
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]        
Total stock-based compensation $ 1,262 $ 415 $ 2,089 $ 731
v3.19.2
Condensed Consolidated Balance Sheet Components - Summary of Property and Equipment, Net (Details) - USD ($)
$ in Thousands
Jun. 30, 2019
Dec. 31, 2018
Property Plant And Equipment [Line Items]    
Total $ 19,841 $ 18,750
Less: Accumulated depreciation and amortization (9,479) (7,643)
Property and equipment, net 10,362 11,107 [1]
Scientific Equipment    
Property Plant And Equipment [Line Items]    
Total 7,536 6,628
Furniture and Equipment    
Property Plant And Equipment [Line Items]    
Total 1,040 813
Capitalized Software    
Property Plant And Equipment [Line Items]    
Total 146 146
Leasehold Improvements    
Property Plant And Equipment [Line Items]    
Total 10,834 10,828
Construction in Progress    
Property Plant And Equipment [Line Items]    
Total $ 285 $ 335
[1] The Condensed Consolidated Balance Sheet as of December 31, 2018 has been derived from the audited financial statements as of that date.
v3.19.2
Condensed Consolidated Balance Sheet Components - Additional Information (Details) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2019
Jun. 30, 2018
Jun. 30, 2019
Jun. 30, 2018
Property Plant And Equipment [Abstract]        
Depreciation and amortization $ 800 $ 900 $ 1,836 $ 1,743
v3.19.2
Condensed Consolidated Balance Sheet Components - Summary of Accrued Liabilities (Details) - USD ($)
$ in Thousands
Jun. 30, 2019
Dec. 31, 2018
Accrued Liabilities Current [Abstract]    
Accrued personnel expenses $ 2,301 $ 2,833
Accrued research and development expenses 12,910 2,816
Professional fees 268 211
Other 73 163
Total $ 15,552 $ 6,023 [1]
[1] The Condensed Consolidated Balance Sheet as of December 31, 2018 has been derived from the audited financial statements as of that date.
v3.19.2
Net Loss per Share - Computation of Basic and Diluted Net Loss Per Share (Details) - USD ($)
$ / shares in Units, $ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2019
Mar. 31, 2019
Jun. 30, 2018
Mar. 31, 2018
Jun. 30, 2019
Jun. 30, 2018
Numerator:            
Net loss $ (28,090) $ (17,670) $ (13,533) $ (12,955) $ (45,760) $ (26,488)
Denominator:            
Weighted-average common shares outstanding 45,409,588   44,450,312   44,970,831 28,248,337
Less: weighted-average common shares subject to vesting (1,611,870)   (1,916,671)   (1,317,506) (2,012,330)
Weighted-average number of shares used to compute basic and diluted net loss per share 43,797,718   42,533,641   43,653,325 26,236,007
Net loss per share: basic and diluted $ (0.64)   $ (0.32)   $ (1.05) $ (1.01)
v3.19.2
Net Loss per Share - Summary of Outstanding Potentially Dilutive Securities Excluded from Computation of Diluted Net Loss per Share (Details) - shares
6 Months Ended
Jun. 30, 2019
Jun. 30, 2018
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]    
Antidilutive securities excluded from computation of diluted net loss per share 6,372,642 3,040,153
Common Stock Options Issued and Outstanding    
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]    
Antidilutive securities excluded from computation of diluted net loss per share 4,449,690 1,221,862
Unvested Restricted Common Stock    
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]    
Antidilutive securities excluded from computation of diluted net loss per share 1,257,651 636,574
Unvested Early Exercised Common Stock Options    
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]    
Antidilutive securities excluded from computation of diluted net loss per share 665,301 1,181,717