Reata Pharmaceuticals (RETA) 10-Q 9 May 19 2019 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2019	May 06, 2019
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q1
Trading Symbol	RETA
Entity Registrant Name	REATA PHARMACEUTICALS INC
Entity Central Index Key	0001358762
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	true
Entity Ex Transition Period	true
Common Stock A
Document Information [Line Items]
Entity Common Stock Shares Outstanding		24,416,773
Common Stock B
Document Information [Line Items]
Entity Common Stock Shares Outstanding		5,639,204

Consolidated Balance Sheets

Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Assets
Cash and cash equivalents	$ 313,056	$ 337,790
Prepaid expenses and other current assets	4,416	4,483
Total current assets	317,472	342,273
Property and equipment, net	2,693	1,445
Other assets	11,120	1,490
Total assets	331,285	345,208
Liabilities and stockholders’ (deficit) equity
Accounts payable	3,500	4,473
Accrued direct research liabilities	16,263	15,416
Other current liabilities	10,107	4,696
Current portion of deferred revenue	31,335	31,335
Total current liabilities	61,205	55,920
Other long-term liabilities	8,472	524
Term loan, net of current portion and debt issuance costs	79,558	79,219
Deferred revenue, net of current portion	186,660	194,386
Total noncurrent liabilities	274,690	274,129
Commitments and contingencies
Stockholders’ (deficit) equity:
Additional paid-in capital	444,837	435,452
Accumulated deficit	(449,477)	(420,323)
Total stockholders’ (deficit) equity	(4,610)	15,159
Total liabilities and stockholders’ (deficit) equity	331,285	345,208
Common Stock A
Stockholders’ (deficit) equity:
Common stock value	24	24
Total stockholders’ (deficit) equity	24	24
Common Stock B
Stockholders’ (deficit) equity:
Common stock value	6	6
Total stockholders’ (deficit) equity	$ 6	$ 6

Consolidated Balance Sheets (Pa

Consolidated Balance Sheets (Parenthetical) - $ / shares	Mar. 31, 2019	Dec. 31, 2018
Common Stock A
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	500,000,000	500,000,000
Common stock, shares issued	24,403,477	24,000,683
Common stock, shares outstanding	24,403,477	24,000,683
Common Stock B
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	150,000,000	150,000,000
Common stock, shares issued	5,639,666	5,728,175
Common stock, shares outstanding	5,639,666	5,728,175

Unaudited Consolidated Statemen

Unaudited Consolidated Statements of Operations - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Collaboration revenue
Collaboration revenue	$ 7,770	$ 32,392
Expenses
Research and development	26,114	21,407
General and administrative	10,038	6,628
Depreciation	170	101
Total expenses	36,322	28,136
Other income (expense)
Investment income	1,797	335
Interest expense	(2,397)	(509)
Total other income (expense)	(600)	(174)
(Loss) income before taxes on income	(29,152)	4,082
Provision for taxes on income	2
Net (loss) income	$ (29,154)	$ 4,082
Net (loss) income per share—basic	$ (0.98)	$ 0.16
Net (loss) income per share—diluted	$ (0.98)	$ 0.15
Weighted-average number of common shares used in net (loss) income per share basic	29,830,114	26,155,141
Weighted-average number of common shares used in net (loss) income per share diluted	29,830,114	26,633,521
License and milestone
Collaboration revenue
Collaboration revenue	$ 7,726	$ 32,168
Other revenue
Collaboration revenue
Collaboration revenue	$ 44	$ 224

Unaudited Consolidated Statem_2

Unaudited Consolidated Statements of Stockholders' (Deficit) Equity - USD ($) $ in Thousands	Total	Common Stock A	Common Stock B	Additional Paid-In Capital	Shareholder Notes Receivable	Total Accumulated Deficit
Balance, value at Dec. 31, 2017	$ (146,973)	$ 20	$ 7	$ 190,145	$ (2)	$ (337,143)
Balance, shares at Dec. 31, 2017		19,975,340	6,166,166
Net income (loss)	4,082					4,082
Compensation expense related to stock options	2,492			2,485		7
Exercise of options, value	332			332
Exercise of options, shares			21,093
Conversion of common stock Class B to Class A, shares		15,742	(15,742)
Adoption of new accounting guidance	(2,634)					(2,634)
Balance, value at Mar. 31, 2018	(142,701)	$ 20	$ 7	192,962	$ (2)	(335,688)
Balance, shares at Mar. 31, 2018		19,991,082	6,171,517
Balance, value at Dec. 31, 2018	15,159	$ 24	$ 6	435,452		(420,323)
Balance, shares at Dec. 31, 2018		24,000,683	5,728,175
Net income (loss)	(29,154)					(29,154)
Compensation expense related to stock options	4,227			4,227
Exercise of options, value	$ 5,051			5,051
Exercise of options, shares	314,285		314,285
Conversion of common stock Class B to Class A, shares		402,794	(402,794)
Other shareholder transactions	$ 107			107
Balance, value at Mar. 31, 2019	$ (4,610)	$ 24	$ 6	$ 444,837		$ (449,477)
Balance, shares at Mar. 31, 2019		24,403,477	5,639,666

Unaudited Consolidated Statem_3

Unaudited Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Operating activities
Net (loss) income	$ (29,154)	$ 4,082
Adjustments to reconcile net (loss) income to net cash used in operating activities:
Depreciation	170	101
Amortization of debt issuance costs	339	59
Stock-based compensation expense	4,227	2,485
Changes in operating assets and liabilities:
Amounts earned or due from collaboration agreements	573	(25,307)
Prepaid expenses and other current assets	(506)	(174)
Other assets	6	273
Accounts payable	(522)	(1,065)
Accrued direct research and other current and long-term liabilities	3,861	2,636
Deferred revenue	(7,726)	(7,111)
Net cash used in operating activities	(28,732)	(24,021)
Investing activities
Purchases of property and equipment	(1,160)	(151)
Net cash used in investing activities	(1,160)	(151)
Financing activities
Payments on deferred issuance costs		(3)
Exercise of options	5,051	332
Other shareholder transactions	107
Net cash provided by financing activities	5,158	329
Net decrease in cash and cash equivalents	(24,734)	(23,843)
Cash and cash equivalents at beginning of year	337,790	129,780
Cash and cash equivalents at end of period	313,056	105,937
Supplemental disclosures
Cash paid for interest	2,052	445
Purchases of equipment in accounts payable and other current liabilities	750	$ 74
Non-cash activity:
Right-of-use assets obtained in exchange for lease obligations	$ 9,636

Description of Business

Description of Business	3 Months Ended
	Mar. 31, 2019
Organization Consolidation And Presentation Of Financial Statements [Abstract]
Description of Business	1. Description of Business The Company’s mission is to develop innovative therapies that change patients’ lives for the better. The Company focuses on developing small-molecule therapeutics with novel mechanisms of action for the treatment of severe, life-threatening diseases with few or no approved therapies. The Company’s lead product candidates, bardoxolone methyl (Bard) and omaveloxolone (Omav), activate the transcription factor Nrf2, which plays an important role in regulating the cellular response to injury. By activating Nrf2, Bard and Omav normalize mitochondrial function, restore redox balance, and resolve inflammation. The Company has fully enrolled two registrational clinical trials: CARDINAL, studying Bard in chronic kidney disease (CKD) caused by Alport syndrome, and MOXIe, studying Omav in Friedreich’s ataxia (FA). CKD caused by Alport syndrome and FA are rare, serious diseases with no approved therapy. The Company designed CARDINAL and MOXIe based on the results of earlier clinical studies and guidance from the FDA on a potential path to approval. The Company expects to have top-line data from both of these clinical trials in the second half of 2019. With each of these indications, FDA approval may provide expansion opportunities into other related indications. The Company is also conducting two additional registrational trials, CATALYST, to study Bard in patients with a rare and serious form of pulmonary arterial hypertension caused by connective tissue disease (CTD-PAH) and FALCON, to study Bard in patients with autosomal dominant polycystic kidney disease (ADPKD). The Company expects to have top-line data from CATALYST during the first half of 2020 and to initiate enrollment in FALCON in May 2019. The Company expects its current cash to fund its operations through data readouts for CARDINAL, MOXIe, and CATALYST. In addition to its lead programs, the Company is currently exploring a battery of additional clinical and preclinical programs in diseases that may include meaningful expansion opportunities for Bard and Omav. The Company’s consolidated financial statements include the accounts of all majority-owned subsidiaries. Accordingly, the Company’s share of net earnings and losses from these subsidiaries is included in the consolidated statements of operations. Intercompany profits, transactions, and balances have been eliminated in consolidation.

Summary of Significant Accounti

Summary of Significant Accounting Policies	3 Months Ended
	Mar. 31, 2019
Accounting Policies [Abstract]
Summary of Significant Accounting Policies	2. Summary of Significant Accounting Policies Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019. The consolidated balance sheet at December 31, 2018, has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements. For further information, refer to the annual consolidated financial statements and footnotes thereto of the Company. The Company’s significant accounting policies are described in Note 2 of Notes to Consolidated Financial Statements included in its Annual Report on Form 10-K for the year ended December 31, 2018 (2018 Annual Report on Form 10-K). During the first quarter of 2019, the Company adopted Accounting Standards Update (ASU) No. 2016-02, Leases Leases The Company determines if an arrangement is a lease at inception. Lease assets represent the Company’s right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make lease payments arising from the lease. These assets and liabilities are initially recognized at the lease commencement date based on the present value of lease payments over the lease term calculated using its incremental borrowing rate based on the information available at commencement unless the implicit rate is readily determinable. Lease assets also include upfront lease payments, lease incentives paid, and direct costs incurred and exclude lease incentives received. The lease term used to calculate the lease assets and related lease liabilities includes the options to extend or terminate the lease when it is reasonably certain that the Company will exercise those options. Lease expense for operating leases is recognized on a straight-line basis over the expected lease term as an operating expense while the expense for finance leases is recognized as depreciation expense over the expected lease term unless there is a transfer of title or purchase option reasonably certain of exercise. The Company will account for each separate lease component separately from the nonlease components. The depreciable life of lease assets and leasehold improvements is limited by the expected lease term unless there is a transfer of title or purchase option reasonably certain of its exercise. Leases with an initial term of 12 months or less are not recorded on the balance sheet, and the expense for these short-term leases and operating leases is recognized on a straight-line basis over the lease term. Recently Adopted Accounting Pronouncements The Company is an “emerging growth company,” as defined in the JOBS Act. Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. The Company has irrevocably elected not to avail itself of this exemption from new or revised accounting standards, and, therefore, will be subject to the same new or revised accounting standards as public companies that are not emerging growth companies. In February 2016, the Financial Accounting Standards Board (FASB) issued Topic 842, amended by ASU 2018-11, Leases (Topic 842): Targeted Improvements As a result of implementing Topic 842, the Company recognized an operating lease right-of-use asset of $1,544,000 and an operating lease liability of $1,659,000 on January 1, 2019, with no impact on its beginning retained earnings, consolidated statements of income (loss), or cash flows. See Note 5, Leases In July 2018, the FASB issued ASU No. 2018-09, Codification Improvements Recently Issued Accounting Pronouncements Not Yet Adopted In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement: Disclosure Framework In November 2018, the FASB issued ASU No. 2018-18, Collaborative Arrangements Revenue Recognition Collaborative Arrangements

Collaboration Agreements

Collaboration Agreements	3 Months Ended
	Mar. 31, 2019
Organization Consolidation And Presentation Of Financial Statements [Abstract]
Collaboration Agreements	3. Collaboration Agreements AbbVie In December 2011, the Company entered into a collaboration agreement with AbbVie Inc. (AbbVie) (the AbbVie Collaboration Agreement) to jointly research, develop, and commercialize the Company’s portfolio of second and later generation oral Nrf2 activators. The terms of the agreement include payment to the Company of a nonrefundable, up-front payment of $400,000,000. The Company is also participating with AbbVie on joint steering committees. The up-front payment and the Company’s collaboration on research, development, and commercialization are accounted for as a single unit of accounting. Revenue is being recognized ratably through December 2026, which is the estimated minimum period that is needed to complete the deliverables under the terms of the AbbVie Collaboration Agreement. The Company began recognizing revenue related to the up-front payment upon execution of the agreement and, accordingly, recognized approximately $6,570,000 as collaboration revenue during the three months ended March 31, 2019 and 2018. As of March 31, 2019, the Company recorded deferred revenue totaling approximately $205,074,000 of which approximately $26,720,000 is reflected as the current portion of deferred revenue. KHK In December 2009, the Company entered a license agreement with Kyowa Hakko Kirin Co., Ltd. (KHK) (the KHK agreement), which granted KHK an exclusive license to develop and commercialize Bard in the licensed territory. The Company received a nonrefundable, up-front license fee of $35,000,000 in 2009 and regulatory milestones totaling $45,000,000 in 2010, 2012, and 2018 and could receive additional regulatory milestones of $52,000,000 and commercial milestones of $140,000,000, as well as tiered royalties ranging from the low teens to the low 20 percent range, depending on the country of sale and the amount of annual net sales, on net sales by KHK in the licensed territory. The up-front payment and regulatory milestones are accounted for as a single unit of accounting. Revenue is being recognized ratably through December 2021, which is the estimated minimum period that is needed to complete the deliverables under the terms of the KHK agreement. The Company began recognizing revenue related to the up-front payment upon execution of the agreement and, accordingly, recognized approximately $1,156,000 and $25,598,000 as collaboration revenue during the three months ended March 31, 2019, and 2018, respectively. As of March 31, 2019, the Company recorded deferred revenue totaling approximately $12,922,000 of which approximately $4,701,000 is reflected as the current portion of deferred revenue.

Term Loan

Term Loan	3 Months Ended
	Mar. 31, 2019
Debt Disclosure [Abstract]
Term Loan	4. Term Loan On June 14, 2018, the Company entered into an Amended and Restated Loan and Security Agreement (Restated Loan Agreement) with Oxford Finance LLC and Silicon Valley Bank (collectively, the Lenders), which amended and restated the Loan and Security Agreement entered into among Reata and the Lenders on March 31, 2017, as amended on November 3, 2017 (Loan Agreement). Under the Restated Loan Agreement, the Term A Loan was increased to $80,000,000, and the Term B Loan availability was increased to $45,000,000 upon the achievement of one of two milestones by the earlier of 30 days after the achievement of a milestone or December 31, 2019. If the Company is entitled to draw the Term B Loan but does not draw the Term B Loan by December 31, 2019, the Company is obligated to pay a non-utilization fee of $450,000. All outstanding Term Loans will mature on June 1, 2023. Under the Term A Loan, the Company will make interest-only payments for 24 months through June 1, 2020; however, if the Company draws the Term B Loan, the Company will make interest-only payments for 36 months through June 1, 2021. The interest-only payment period will be followed by 36 equal monthly payments, or 24 equal monthly payments if the Company draws the Term B Loan, of principal and interest payments. The Term Loans will bear interest at a floating per annum rate calculated as 7.79% plus the greater of the 30-day U.S. Dollar LIBOR rate reported in The Wall Street Journal on the last business day of the month that immediately precedes the month in which the interest will accrue or 1.91%, with a minimum rate of 9.7% and maximum rate of 12.29%. The Company has the option to prepay all, but not less than all, of the borrowed amounts, provided that the Company will be obligated to pay a prepayment fee equal to (a) the aggregate amount of interest that the Company would have paid through the maturity date if prepayment is made on or before the first anniversary of the applicable funding date of the Term Loan, (b) 4.0% of the outstanding principal balance of the applicable Term Loan if prepayment is made after the first anniversary date and on or before the second anniversary of the applicable funding date, (c) 3.0% of the outstanding principal balance of the applicable Term Loan if prepayment is made after the second anniversary date and on or before the third anniversary of the applicable funding date, or (d) 1.5% of the outstanding principal balance of the applicable Term Loan if prepayment is made after the third anniversary date and on or before the fourth anniversary of the applicable funding date. The Company will also be required to make a final exit fee payment of 6.5% of the principal balance of the Term A Loan and 4.0% of the Term B Loan, payable on the earliest of the prepayment of the Term Loans, acceleration of any Term Loan, or at maturity of the Term Loans. The Company may use the proceeds from the Term Loans for working capital and to fund its general business requirements. The Company’s obligations under the Restated Loan Agreement are secured by substantially all of its current and future assets, including its owned intellectual property. As of March 31, 2019, the Company had $80,000,000 outstanding under the Term A Loan, which was recorded at its initial carrying value of $80,000,000, less unamortized discount and debt issuance costs of approximately $5,642,000. In connection with the Term A Loan, the discount and debt issuance costs were recorded as a reduction to debt on its balance sheet and are being accreted to interest expense over the life of the Term A Loan. Additionally, the final exit fee of approximately $5,200,000 is being accrued over the life of the Term A Loan through interest expense. The Term A Loan has a current effective interest rate of 11.05% before debt issuance costs and final exit fee and 13.60% including debt issuance costs and final exit fee. The Company is in compliance with all covenants under the Restated Loan Agreement as of March 31, 2019. The future principal payments for the Company’s Term A Loan as of March 31, 2019 are as follows (in thousands): 2019 $ — 2020 15,555 2021 26,667 2022 26,667 2023 11,111 $ 80,000

Leases

Leases	3 Months Ended
	Mar. 31, 2019
Leases [Abstract]
Leases	5. Leases The Company’s corporate headquarters are located in Irving, Texas, where it leases approximately 34,890 square feet of office and laboratory space. In February 2019, the Company commenced a lease for approximately 122,000 square feet of additional office space in Plano, Texas. The Company’s leases have remaining contractual terms of up to approximately 39 months, which includes the options to extend the leases for up to one year. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. At March 31, 2019, the weighted average incremental borrowing rate and the weighted average remaining lease term for the operating leases held by the Company were 8.3% and 3.0 years, respectively. During the three months ended March 31, 2019, cash paid for amounts included for the measurement of lease liabilities was $237,000 and the Company recorded operating lease expense of $663,000. The Company has elected to net the amortization of the right-of-use assets and the reduction of the lease liabilities principal in accrued direct research and other current and long-term liabilities in the consolidated statements of cash flows. Supplemental balance sheet information related to our operating leases is as follows: Balance Sheet Classification As of March 31, 2019 (in thousands) Non-current right-of-use assets Other assets $ 9,636 Current lease liabilities Other current liabilities 2,149 Non-current lease liabilities Other long-term liabilities 7,972 Maturities of lease liabilities by fiscal year for our operating leases: As of March 31, 2019 (in thousands) 2019 $ 2,149 2020 3,999 2021 4,090 2022 1,178 Total lease payments 11,416 Less: Imputed interest (1,295 ) Present value of lease liabilities $ 10,121

Income Taxes

Income Taxes	3 Months Ended
	Mar. 31, 2019
Income Tax Disclosure [Abstract]
Income Taxes	6. Income Taxes The Company’s effective tax rate varies with the statutory rate due primarily to the impact of nondeductible stock-based compensation and the changes in valuation allowance related to certain deferred tax assets generated or utilized in the applicable period. The Company’s deferred tax assets have been fully offset by a valuation allowance at March 31, 2019, and the Company expects to maintain this valuation allowance until there is sufficient evidence that future earnings can be achieved, which is uncertain at this time. The IRS examination team has completed its examination of the Company’s 2013, 2014, and 2015 U.S. tax returns and proposed adjustments with respect to certain items that were reported by the Company for the 2013 tax year. In June 2018, the Company received the Revenue Agent Report from the IRS. The Company believes that it has accurately reported all amounts in its tax returns and has submitted an administrative protest with the IRS contesting the examination team’s proposed adjustments. The Company intends to vigorously defend its reported positions and believes the ultimate resolution of the adjustments proposed by the IRS examination team will not have a material adverse effect on its consolidated financial statements.

Stock-Based Compensation

Stock-Based Compensation	3 Months Ended
	Mar. 31, 2019
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]
Stock-Based Compensation	7. Stock-Based Compensation Stock Options The following table summarizes stock-based compensation expense reflected in the consolidated statements of operations (in thousands): Three Months Ended March 31, 2019 2018 Research and development $ 1,691 $ 961 General and administrative 2,536 1,524 $ 4,227 $ 2,485 The following table summarizes stock option activity as of March 31, 2019, and changes during the three months ended March 31, 2019, under the 2007 Long Term Incentive Plan (the 2007 LTIP) and standalone option agreements: Number of Options Weighted- Average Exercise Price Outstanding at January 1, 2019 3,320,571 21.20 Granted 1,032,375 57.33 Exercised (314,285 ) 16.07 Forfeited (257,897 ) 33.07 Expired — — Outstanding at March 31, 2019 3,780,764 30.78 Exercisable at March 31, 2019 1,405,785 19.96 The total intrinsic value of all outstanding options and exercisable options at March 31, 2019 was $206,899,000 and $92,094,000, respectively.

Net (Loss) Income per Share

Net (Loss) Income per Share	3 Months Ended
	Mar. 31, 2019
Earnings Per Share [Abstract]
Net (Loss) Income per Share	8. Net (Loss) Income per Share The following table sets forth the computation of basic and diluted net (loss) income per share attributable to common stockholders: Three Months Ended March 31, 2019 2018 (in thousands, except share and per share data) Numerator Net (loss) income (in thousands) $ (29,154 ) $ 4,082 Denominator Weighted-average number of common shares used in net (loss) income per share – basic 29,830,114 26,155,141 Dilutive potential common shares — 478,380 Weighted-average number of common shares used in net (loss) income per share – diluted 29,830,114 26,633,521 Net (loss) income per share – basic $ (0.98 ) $ 0.16 Net (loss) income per share – diluted $ (0.98 ) $ 0.15 The number of weighted average options that were not included in the diluted earnings per share calculation because the effect would have been anti-dilutive represented 3,780,764 and 2,131,219 shares for the three months ended March 31, 2019 and 2018, respectively.

Summary of Significant Accoun_2

Summary of Significant Accounting Policies (Policies)	3 Months Ended
	Mar. 31, 2019
Accounting Policies [Abstract]
Basis of Presentation	Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019. The consolidated balance sheet at December 31, 2018, has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements. For further information, refer to the annual consolidated financial statements and footnotes thereto of the Company. The Company’s significant accounting policies are described in Note 2 of Notes to Consolidated Financial Statements included in its Annual Report on Form 10-K for the year ended December 31, 2018 (2018 Annual Report on Form 10-K). During the first quarter of 2019, the Company adopted Accounting Standards Update (ASU) No. 2016-02, Leases
Leases	Leases The Company determines if an arrangement is a lease at inception. Lease assets represent the Company’s right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make lease payments arising from the lease. These assets and liabilities are initially recognized at the lease commencement date based on the present value of lease payments over the lease term calculated using its incremental borrowing rate based on the information available at commencement unless the implicit rate is readily determinable. Lease assets also include upfront lease payments, lease incentives paid, and direct costs incurred and exclude lease incentives received. The lease term used to calculate the lease assets and related lease liabilities includes the options to extend or terminate the lease when it is reasonably certain that the Company will exercise those options. Lease expense for operating leases is recognized on a straight-line basis over the expected lease term as an operating expense while the expense for finance leases is recognized as depreciation expense over the expected lease term unless there is a transfer of title or purchase option reasonably certain of exercise. The Company will account for each separate lease component separately from the nonlease components. The depreciable life of lease assets and leasehold improvements is limited by the expected lease term unless there is a transfer of title or purchase option reasonably certain of its exercise. Leases with an initial term of 12 months or less are not recorded on the balance sheet, and the expense for these short-term leases and operating leases is recognized on a straight-line basis over the lease term.
Recent Accounting Pronouncements	Recently Adopted Accounting Pronouncements The Company is an “emerging growth company,” as defined in the JOBS Act. Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. The Company has irrevocably elected not to avail itself of this exemption from new or revised accounting standards, and, therefore, will be subject to the same new or revised accounting standards as public companies that are not emerging growth companies. In February 2016, the Financial Accounting Standards Board (FASB) issued Topic 842, amended by ASU 2018-11, Leases (Topic 842): Targeted Improvements As a result of implementing Topic 842, the Company recognized an operating lease right-of-use asset of $1,544,000 and an operating lease liability of $1,659,000 on January 1, 2019, with no impact on its beginning retained earnings, consolidated statements of income (loss), or cash flows. See Note 5, Leases In July 2018, the FASB issued ASU No. 2018-09, Codification Improvements Recently Issued Accounting Pronouncements Not Yet Adopted In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement: Disclosure Framework In November 2018, the FASB issued ASU No. 2018-18, Collaborative Arrangements Revenue Recognition Collaborative Arrangements

Term Loan (Tables)

Term Loan (Tables)	3 Months Ended
	Mar. 31, 2019
Term Loan A
Debt Instrument [Line Items]
Schedule of Future Principal Payments for Term A Loan	The future principal payments for the Company’s Term A Loan as of March 31, 2019 are as follows (in thousands): 2019 $ — 2020 15,555 2021 26,667 2022 26,667 2023 11,111 $ 80,000

Leases (Tables)

Leases (Tables)	3 Months Ended
	Mar. 31, 2019
Leases [Abstract]
Summary of Supplemental Balance Sheet Information Related to Operating Leases	Supplemental balance sheet information related to our operating leases is as follows: Balance Sheet Classification As of March 31, 2019 (in thousands) Non-current right-of-use assets Other assets $ 9,636 Current lease liabilities Other current liabilities 2,149 Non-current lease liabilities Other long-term liabilities 7,972
Schedule of Maturities of Lease Liabilities	Maturities of lease liabilities by fiscal year for our operating leases: As of March 31, 2019 (in thousands) 2019 $ 2,149 2020 3,999 2021 4,090 2022 1,178 Total lease payments 11,416 Less: Imputed interest (1,295 ) Present value of lease liabilities $ 10,121

Stock-Based Compensation (Table

Stock-Based Compensation (Tables)	3 Months Ended
	Mar. 31, 2019
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]
Summary of Stock Based Compensation Expense	The following table summarizes stock-based compensation expense reflected in the consolidated statements of operations (in thousands): Three Months Ended March 31, 2019 2018 Research and development $ 1,691 $ 961 General and administrative 2,536 1,524 $ 4,227 $ 2,485
Summary of Stock Option Activity	The following table summarizes stock option activity as of March 31, 2019, and changes during the three months ended March 31, 2019, under the 2007 Long Term Incentive Plan (the 2007 LTIP) and standalone option agreements: Number of Options Weighted- Average Exercise Price Outstanding at January 1, 2019 3,320,571 21.20 Granted 1,032,375 57.33 Exercised (314,285 ) 16.07 Forfeited (257,897 ) 33.07 Expired — — Outstanding at March 31, 2019 3,780,764 30.78 Exercisable at March 31, 2019 1,405,785 19.96

Net (Loss) Income per Share (Ta

Net (Loss) Income per Share (Tables)	3 Months Ended
	Mar. 31, 2019
Earnings Per Share [Abstract]
Computation of Basic and Diluted Net (Loss) Income per Share	The following table sets forth the computation of basic and diluted net (loss) income per share attributable to common stockholders: Three Months Ended March 31, 2019 2018 (in thousands, except share and per share data) Numerator Net (loss) income (in thousands) $ (29,154 ) $ 4,082 Denominator Weighted-average number of common shares used in net (loss) income per share – basic 29,830,114 26,155,141 Dilutive potential common shares — 478,380 Weighted-average number of common shares used in net (loss) income per share – diluted 29,830,114 26,633,521 Net (loss) income per share – basic $ (0.98 ) $ 0.16 Net (loss) income per share – diluted $ (0.98 ) $ 0.15

Summary of Significant Accoun_3

Summary of Significant Accounting Policies - Additional Information (Details) - USD ($)	Mar. 31, 2019	Jan. 01, 2019
Accounting Policies [Abstract]
Operating lease, right-of-use asset		$ 1,544,000
Operating lease, liability	$ 10,121,000	$ 1,659,000

Collaboration Agreements - Addi

Collaboration Agreements - Additional Information (Details) - USD ($)	1 Months Ended		3 Months Ended
	Dec. 31, 2011	Dec. 31, 2009	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Collaboration revenue			$ 7,770,000	$ 32,392,000
Deferred revenue, current			$ 31,335,000		$ 31,335,000
AbbVie | Collaborative Arrangement
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Up-front collaboration payment received	$ 400,000,000
Deferred revenue, expected timing of recognition			2026-12
Collaboration revenue			$ 6,570,000	6,570,000
Deferred revenue			205,074,000
Deferred revenue, current			$ 26,720,000
KHK Agreement | License Agreement Terms
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Deferred revenue, expected timing of recognition			2021-12
Collaboration revenue			$ 1,156,000	$ 25,598,000
Deferred revenue			12,922,000
Deferred revenue, current			4,701,000
Upfront license fee received		$ 35,000,000
Collaboration revenue, total milestone payments received in 2010, 2012, 2018			45,000,000
Collaboration revenue, potential milestone payments			52,000,000
Collaboration revenue, additional potential commercial milestone payments			$ 140,000,000

Term Loan - Additional Informat

Term Loan - Additional Information (Details) - USD ($)	3 Months Ended
	Mar. 31, 2019	Jun. 14, 2018
Term Loan A
Debt Instrument [Line Items]
Debt instrument, carrying value	$ 80,000,000
Amended and Restated Loan and Security Agreement
Debt Instrument [Line Items]
Debt instrument, prepayment terms	The Company has the option to prepay all, but not less than all, of the borrowed amounts, provided that the Company will be obligated to pay a prepayment fee equal to (a) the aggregate amount of interest that the Company would have paid through the maturity date if prepayment is made on or before the first anniversary of the applicable funding date of the Term Loan, (b) 4.0% of the outstanding principal balance of the applicable Term Loan if prepayment is made after the first anniversary date and on or before the second anniversary of the applicable funding date, (c) 3.0% of the outstanding principal balance of the applicable Term Loan if prepayment is made after the second anniversary date and on or before the third anniversary of the applicable funding date, or (d) 1.5% of the outstanding principal balance of the applicable Term Loan if prepayment is made after the third anniversary date and on or before the fourth anniversary of the applicable funding date.
Amended and Restated Loan and Security Agreement | Loan Prepayment After First Anniversary
Debt Instrument [Line Items]
Debt instrument prepayment fee percentage	4.00%
Amended and Restated Loan and Security Agreement | Loan Prepayment After Second Anniversary
Debt Instrument [Line Items]
Debt instrument prepayment fee percentage	3.00%
Amended and Restated Loan and Security Agreement | Loan Prepayment After Third Anniversary
Debt Instrument [Line Items]
Debt instrument prepayment fee percentage	1.50%
Amended and Restated Loan and Security Agreement | Term Loan A
Debt Instrument [Line Items]
Debt instrument, interest only payments period	24 months through June 1, 2020
Debt instrument final exit fee payment percentage	6.50%
Debt instrument, carrying value	$ 80,000,000
Debt instrument, unamortized discount and debt issuance costs	$ 5,642,000
Debt instrument, effective interest rate before debt issuance costs and final exit fee	11.05%
Debt instrument, effective interest rate including debt issuance costs and final exit fee	13.60%
Debt instrument, final exit fee accrued	$ 5,200,000
Amended and Restated Loan and Security Agreement | Term Loan A | Achievement of One of Two Milestones
Debt Instrument [Line Items]
Maximum borrowing capacity		$ 80,000,000
Amended and Restated Loan and Security Agreement | Term Loan B
Debt Instrument [Line Items]
Period to borrow funds after achievement of milestone	30 days
Debt instrument, possible borrowing date	Dec. 31, 2019
Payment of unused line fee	$ 450,000
Debt instrument, interest only payments period	36 months through June 1, 2021
Debt instrument final exit fee payment percentage	4.00%
Amended and Restated Loan and Security Agreement | Term Loan B | Achievement of One of Two Milestones
Debt Instrument [Line Items]
Maximum borrowing capacity		$ 45,000,000
Amended and Restated Loan and Security Agreement | Term Loans
Debt Instrument [Line Items]
Debt instrument, payment terms	All outstanding Term Loans will mature on June 1, 2023. Under the Term A Loan, the Company will make interest-only payments for 24 months through June 1, 2020; however, if the Company draws the Term B Loan, the Company will make interest-only payments for 36 months through June 1, 2021. The interest-only payment period will be followed by 36 equal monthly payments, or 24 equal monthly payments if the Company draws the Term B Loan, of principal and interest payments.
Debt instrument, maturity date	Jun. 1, 2023
Debt instrument, interest rate terms	The Term Loans will bear interest at a floating per annum rate calculated as 7.79% plus the greater of the 30-day U.S. Dollar LIBOR rate reported in The Wall Street Journal on the last business day of the month that immediately precedes the month in which the interest will accrue or 1.91%, with a minimum rate of 9.7% and maximum rate of 12.29%.
Debt instrument, annual interest rate	7.79%
Debt instrument, basis spread on variable rate	1.91%
Amended and Restated Loan and Security Agreement | Term Loans | Minimum
Debt Instrument [Line Items]
Debt instrument, annual interest rate	9.70%
Amended and Restated Loan and Security Agreement | Term Loans | Maximum
Debt Instrument [Line Items]
Debt instrument, annual interest rate	12.29%

Term Loan - Schedule of Future

Term Loan - Schedule of Future Principal Payments for Term A Loan (Details) - Term Loan A $ in Thousands	Mar. 31, 2019USD ($)
Debt Instrument [Line Items]
2019	$ 0
2020	15,555
2021	26,667
2022	26,667
2023	11,111
Term Loan	$ 80,000

Leases - Additional Information

Leases - Additional Information (Detail)	3 Months Ended
	Mar. 31, 2019USD ($)Squareft
Leases [Abstract]
Number of square feet | Squareft	34,890
Additional number of square feet | Squareft	122,000
Contractual term	39 months
Weighted-average remaining lease term	3 years
Cash paid for amounts included in the measurement of lease liabilities | $	$ 237,000
Operating lease, expense | $	$ 663,000
Weighted average incremental borrowing rate	8.30%

Leases - Summary of Supplementa

Leases - Summary of Supplemental Balance Sheet Information Related to Operating Leases (Details) $ in Thousands	Mar. 31, 2019USD ($)
Operating Leased Assets [Line Items]
Current lease liabilities	$ 2,149
Operating lease, liability, current, statement of financial position [Extensible List]	us-gaap:OtherLiabilitiesCurrent
Non-current lease liabilities	$ 7,972
Operating lease, liability, noncurrent, statement of financial position [Extensible List]	us-gaap:OtherLiabilitiesNoncurrent
Other Assets [Member]
Operating Leased Assets [Line Items]
Non-current right-of-use assets	$ 9,636

Leases - Schedule of Maturities

Leases - Schedule of Maturities of Lease Liabilities (Details) - USD ($)	Mar. 31, 2019	Jan. 01, 2019
Leases [Abstract]
2019	$ 2,149,000
2020	3,999,000
2021	4,090,000
2022	1,178,000
Total lease payments	11,416,000
Less: Imputed interest	(1,295,000)
Operating lease, liability	$ 10,121,000	$ 1,659,000

Income Taxes - Additional Infor

Income Taxes - Additional Information (Details)	3 Months Ended
	Mar. 31, 2019
Internal Revenue Service (IRS)
Income Tax Disclosure [Line Items]
Examination of U.S. income tax returns, year	2013 2014 2015

Stock-Based Compensation - Summ

Stock-Based Compensation - Summary of Stock Based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share based compensation expense	$ 4,227	$ 2,485
Research and development
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share based compensation expense	1,691	961
General and administrative
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share based compensation expense	$ 2,536	$ 1,524

Stock-Based Compensation - Su_2

Stock-Based Compensation - Summary of Stock Option Activity (Details)	3 Months Ended
	Mar. 31, 2019$ / sharesshares
Number of Options, Abstract
Number of Options, Outstanding - Beginning balance | shares	3,320,571
Number of Options, Granted | shares	1,032,375
Number of Options, Exercised | shares	(314,285)
Number of Options, Forfeited | shares	(257,897)
Number of Options, Outstanding - Ending balance | shares	3,780,764
Number of Options, Exercisable | shares	1,405,785
Weighted Average Exercise Price, Abstract
Weighted-Average Exercise Price, Outstanding - Beginning balance | $ / shares	$ 21.20
Weighted-Average Exercise Price, Granted | $ / shares	57.33
Weighted-Average Exercise Price, Exercised | $ / shares	16.07
Weighted-Average Exercise Price, Forfeited | $ / shares	33.07
Weighted-Average Exercise Price, Outstanding - Ending balance | $ / shares	30.78
Weighted-Average Exercise Price, Exercisable | $ / shares	$ 19.96

Stock-Based Compensation - Addi

Stock-Based Compensation - Additional Information (Details)	Mar. 31, 2019USD ($)
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]
Total intrinsic value of outstanding options	$ 206,899,000
Total intrinsic value of exercisable options	$ 92,094,000

Net (Loss) Income per Share - C

Net (Loss) Income per Share - Computation of Basic and Diluted Net (Loss) Income per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Numerator
Net (loss) income	$ (29,154)	$ 4,082
Denominator
Weighted-average number of common shares used in net (loss) income per share – basic	29,830,114	26,155,141
Dilutive potential common shares		478,380
Weighted-average number of common shares used in net (loss) income per share – diluted	29,830,114	26,633,521
Net (loss) income per share – basic	$ (0.98)	$ 0.16
Net (loss) income per share – diluted	$ (0.98)	$ 0.15

Net (Loss) Income per Share - A

Net (Loss) Income per Share - Additional Information (Details) - shares	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Earnings Per Share [Abstract]
Weighted average anti-dilutive shares excludes from computation of earnings per share	3,780,764	2,131,219