TRACON Pharmaceuticals (TCON) 10-Q 11 Aug 16 2016 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2016	Aug. 05, 2016
Document And Entity Information [Abstract]
Entity Registrant Name	Tracon Pharmaceuticals, Inc.
Entity Central Index Key	1,394,319
Document Type	10-Q
Document Period End Date	Jun. 30, 2016
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		12,203,886
Document Fiscal Year Focus	2,016
Document Fiscal Period Focus	Q2
Trading Symbol	TCON

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Current assets:
Cash and cash equivalents	$ 34,020	$ 41,373
Short-term investments	2,137	10,783
Prepaid and other assets	1,570	1,150
Total current assets	37,727	53,306
Property and equipment, net	128	173
Other assets	43	43
Total assets	37,898	53,522
Current liabilities:
Accounts payable and accrued expenses	6,600	8,281
Accrued compensation and related expenses	979	1,163
Current portion of deferred revenue	2,186	3,353
Long-term debt, current portion	3,471	1,378
Total current liabilities	13,236	14,175
Other long-term liabilities	877	905
Long-term debt, less current portion	5,694	7,464
Commitments and contingencies (Note 5)
Stockholders’ equity:
Preferred stock, $0.001 par value, authorized shares — 10,000,000 at June 30, 2016 and December 31, 2015; issued and outstanding shares—none
Common stock, $0.001 par value; authorized shares — 200,000,000 at June 30, 2016 and December 31, 2015; issued and outstanding shares — 12,203,886 and 12,175,942 at June 30, 2016 and December 31, 2015, respectively	12	12
Additional paid-in capital	91,492	89,556
Accumulated deficit	(73,413)	(58,590)
Total stockholders’ equity	18,091	30,978
Total liabilities and stockholders’ equity	$ 37,898	$ 53,522

Condensed Consolidated Balance3

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Jun. 30, 2016	Dec. 31, 2015
Statement Of Financial Position [Abstract]
Preferred Stock, Par or Stated Value Per Share	$ 0.001	$ 0.001
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 (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized	200,000,000	200,000,000
Common stock, shares issued	12,203,886	12,175,942
Common stock, shares outstanding	12,203,886	12,175,942

Condensed Consolidated Statemen

Condensed Consolidated Statements of Operations - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Income Statement [Abstract]
Collaboration revenue	$ 807	$ 4,197	$ 2,017	$ 5,329
Operating expenses:
Research and development	6,773	5,405	12,268	9,236
General and administrative	2,044	1,476	4,053	2,489
Total operating expenses	8,817	6,881	16,321	11,725
Loss from operations	(8,010)	(2,684)	(14,304)	(6,396)
Other income (expense):
Interest expense, net	(291)	(224)	(584)	(480)
Other income (expense), net	4	(13)	65	(40)
Total other income (expense)	(287)	(237)	(519)	(520)
Net loss	(8,297)	(2,921)	(14,823)	(6,916)
Accretion to redemption value of redeemable convertible preferred stock				(31)
Net loss attributable to common stockholders	$ (8,297)	$ (2,921)	$ (14,823)	$ (6,947)
Net loss per share attributable to common stockholders, basic and diluted	$ (0.68)	$ (0.24)	$ (1.22)	$ (0.69)
Weighted-average shares outstanding, basic and diluted	12,195,070	12,096,599	12,187,256	10,071,838

Condensed Consolidated Stateme5

Condensed Consolidated Statements of Cash Flows - USD ($)	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Cash flows from operating activities
Net loss	$ (14,823,000)	$ (6,916,000)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation	1,800,000	674,000
Depreciation and amortization	48,000	18,000
Amortization of debt discount	52,000	60,000
Amortization of premium/discount on short-term investments	3,000
Noncash interest	271,000	232,000
Change in fair value of preferred stock warrant liability		65,000
Deferred rent	(25,000)	5,000
Deferred revenue	(1,167,000)	(1,714,000)
Changes in assets and liabilities:
Prepaid expenses and other assets	(420,000)	(3,599,000)
Accounts payable and accrued expenses	(1,677,000)	3,168,000
Accrued compensation and related expenses	(184,000)	(105,000)
Net cash used in operating activities	(16,122,000)	(8,112,000)
Cash flows from investing activities
Purchase of property and equipment	(3,000)	(64,000)
Purchases of available-for-sale short-term investments	(3,582,000)
Proceeds from the maturity of available-for-sale short-term investments	12,226,000
Net cash provided by (used in) investing activities	8,641,000	(64,000)
Cash flows from financing activities
Proceeds from long-term debt		8,000,000
Repayment of long-term debt		(9,930,000)
Proceeds from sale of common stock, net of offering costs paid in the current period		36,263,000
Proceeds from issuance of common stock under equity plans	128,000	7,000
Net cash provided by financing activities	128,000	34,340,000
(Decrease) increase in cash and cash equivalents	(7,353,000)	26,164,000
Cash and cash equivalents at beginning of period	41,373,000	35,000,000
Cash and cash equivalents at end of period	$ 34,020,000	$ 61,164,000

Organization and Summary of Sig

Organization and Summary of Significant Accounting Policies	6 Months Ended
	Jun. 30, 2016
Organization And Accounting Policies [Abstract]
Organization and Summary of Significant Accounting Policies	1. Organization and Summary of Significant Accounting Policies Organization and Business TRACON Pharmaceuticals, Inc. (formerly Lexington Pharmaceuticals, Inc.) (TRACON or the Company) was incorporated in the state of Delaware on October 28, 2004. TRACON is a clinical stage biopharmaceutical company focused on the development and commercialization of novel targeted therapeutics for cancer, wet age-related macular degeneration and fibrotic diseases. The Company’s research focuses on antibodies that bind to the endoglin receptor, which is essential to angiogenesis (the process of new blood vessel formation) and a key contributor to fibrosis (tissue scarring). The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, TRACON Pharma Limited, which was formed in September 2015. All significant intercompany accounts and transactions have been eliminated. Basis of Presentation As of June 30, 2016, the Company has devoted substantially all of its efforts to product development, raising capital, and building infrastructure and has not realized revenues from its planned principal operations. The Company has incurred operating losses since inception. As of June 30, 2016, the Company had an accumulated deficit of $73.4 million. The Company anticipates that it will continue to incur net losses into the foreseeable future as it: (i) continues the development and commercialization of its product candidates; (ii) works to develop additional product candidates through research and development programs; and (iii) continues to expand its corporate infrastructure. At June 30, 2016, the Company had cash, cash equivalents and short-term investments of $36.2 million. Based on the Company’s current business plan, management believes that existing cash, cash equivalents and short-term investments will be sufficient to fund the Company’s obligations to the middle of 2017. The Company plans to continue to fund its losses from operations and capital funding needs through cash and investments on hand, as well as future debt and equity financing and potential collaboration arrangements. If the Company is not able to secure adequate additional funding, it may be forced to make reductions in spending, extend payment terms with suppliers, liquidate assets where possible, and/or delay or reduce the scope of its planned development programs. Any of these actions could materially harm the Company’s business, results of operations and future prospects. Unaudited Interim Financial Information The unaudited condensed consolidated financial statements at June 30, 2016, and for the three and six months ended June 30, 2016 and 2015, have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (SEC), and with accounting principles generally accepted in the United States (GAAP) applicable to interim financial statements. These unaudited condensed consolidated financial statements have been prepared on the same basis as the audited financial statements and include all adjustments, consisting of only normal recurring accruals, which in the opinion of management are necessary to present fairly the Company’s financial position as of the interim date and results of operations for the interim periods presented. Interim results are not necessarily indicative of results for a full year or future periods. The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ materially from those estimates. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements for the year ended December 31, 2015, included in its Annual Report on Form 10-K filed with the SEC on February 19, 2016. Use of Estimates The Company’s condensed consolidated financial statements are prepared in accordance with GAAP. The preparation of the Company’s condensed consolidated financial statements requires management to make estimates and assumptions that impact the reported amounts of assets, liabilities, revenue and expenses and the disclosure of contingent assets and liabilities in the Company’s financial statements and accompanying notes. The most significant estimates in the Company’s financial statements relate to revenue recognition and the valuation of equity awards. Although these estimates are based on the Company’s knowledge of current events and actions it may undertake in the future, actual results may ultimately materially differ from these estimates and assumptions. Cash and Cash Equivalents Cash and cash equivalents consist of cash and highly liquid investments with original maturities of three months or less at the date of purchase. Cash and cash equivalents include cash in readily available checking and money market funds, as well as certificates of deposit. Concentration of Credit Risk Financial instruments that potentially subject the Company to significant concentration of credit risk consist primarily of cash and cash equivalents. The Company maintains deposits in federally insured financial institutions in excess of federally insured limits. The Company has not experienced any losses in such accounts and management believes that the Company is not exposed to significant credit risk due to the financial position of the depository institutions in which those deposits are held. Preferred Stock Warrant Liabilities Prior to the completion of the Company’s initial public offering in February 2015, the Company had outstanding freestanding warrants to purchase shares of its Series A redeemable convertible preferred stock. Since the underlying Series A redeemable convertible preferred stock was classified outside of permanent equity, these preferred stock warrants were classified as liabilities in the December 31, 2014 balance sheet. The Company adjusted the carrying value of such preferred stock warrants to their estimated fair value at each reporting date, with any related increases or decreases in the fair value recorded as an increase or decrease to other income (expense) in the statements of operations. Upon the completion of the Company’s initial public offering, the warrants no longer required liability accounting and the then fair value of the warrant liability was reclassified into stockholders’ equity. The Company performed the final remeasurement of the warrant liability as of the initial public offering date and recorded the $65,000 change in fair value into other income (expense) for the six months ended June 30, 2015. Revenue Recognition The Company’s revenue is derived from its license agreement with Santen Pharmaceutical Co., Ltd. (Santen) as described in Note 7. The Company recognizes revenue when all four of the following criteria are met: (1) there is persuasive evidence that an arrangement exists; (2) delivery of the products and/or services has occurred; (3) the selling price is fixed or determinable; and (4) collectability is reasonably assured. Amounts received prior to satisfying the revenue recognition criteria are recorded as deferred revenue. The Company evaluates multiple-element arrangements to determine: (1) the deliverables included in the arrangement and (2) whether the individual deliverables represent separate units of accounting or whether they must be accounted for as a combined unit of accounting. Deliverables are considered separate units of accounting provided that: (a) the delivered items have value to the customer on a standalone basis and (b) if the arrangement includes a general right of return relative to the delivered items, delivery or performance of the undelivered items is considered probable and substantially in the Company’s control. In assessing whether an item has standalone value, the Company considers factors such as the research, manufacturing and commercialization capabilities of the partner and the availability of the associated expertise in the general marketplace. In addition, the Company considers whether the partner can use the other deliverables for their intended purpose without the receipt of the remaining elements, whether the value of the deliverable is dependent on the undelivered items and whether there are other vendors that can provide the undelivered elements. Arrangement consideration that is fixed or determinable is allocated among the separate units of accounting using the relative selling price method. The Company uses the following hierarchy of values to estimate the selling price of each deliverable: (1) vendor-specific objective evidence of fair value; (2) third party evidence of selling price; and (3) best estimate of selling price (BESP). The BESP reflects the Company’s best estimate of what the selling price would be if the Company regularly sold the deliverable on a standalone basis. In developing the BESP for a unit of accounting, the Company considers applicable market conditions and relevant entity-specific factors, including factors that are contemplated in negotiating an arrangement and estimated costs. The Company validates the BESP for units of accounting by evaluating whether changes in the key assumptions used to determine the BESP will have a significant effect on the allocation of arrangement consideration between multiple units of accounting. The Company then applies the applicable revenue recognition criteria to each of the separate units of accounting in determining the appropriate period and pattern of recognition. If there is no discernible pattern of performance and/or objectively measurable performance measures do not exist, then the Company recognizes revenue under the arrangement on a straight-line basis over the period the Company expects to complete its performance obligations. With respect to revenue derived from reimbursement of direct, out-of-pocket expenses for research and development costs associated with collaborations, where the Company acts as a principal with discretion to choose suppliers, bear credit risk, and perform part of the services required in the transaction, the Company records revenue for the gross amount of the reimbursement. The costs associated with these reimbursements are reflected as a component of research and development expense in the statements of operations. Milestones The Company uses the milestone method of accounting and revenue is recognized when earned, as evidenced by written acknowledgement from the collaborator or other persuasive evidence that the milestone has been achieved and the payment is non-refundable, provided that the milestone event is substantive. A milestone event is defined as an event: (1) that can only be achieved based in whole or in part on either the Company’s performance or on the occurrence of a specific outcome resulting from the Company’s performance; (2) for which there is substantive uncertainty at the inception of the arrangement that the event will be achieved; and (3) that would result in additional payments being due to the Company. Events for which the occurrence is either contingent solely upon the passage of time or the result of a counterparty’s performance are not considered to be milestone events. A milestone event is substantive if all of the following conditions are met: (a) the consideration is commensurate with either the Company’s performance to achieve the milestone, or the enhancement of the value to the delivered item(s) as a result of a specific outcome resulting from the Company’s performance to achieve the milestone; (b) the consideration relates solely to past performance; and (c) the consideration is reasonable relative to all the deliverables and payment terms (including other potential milestone consideration) within the arrangement. The Company assesses whether a milestone is substantive at the inception of each arrangement. If a milestone is deemed non-substantive, the Company will account for that milestone payment in accordance with the multiple element arrangements guidance and recognize it consistent with the related units of accounting for the arrangement over the related performance period. Clinical Trial Expense Accruals As part of the process of preparing the Company’s financial statements, the Company is required to estimate expenses resulting from its obligations under contracts with vendors, contract research organizations (CROs), and consultants and under clinical site agreements in connection with conducting clinical trials. The financial terms of these contracts vary and may result in payment flows that do not match the periods over which materials or services are provided under such contracts. The Company’s objective is to reflect the appropriate trial expenses in its financial statements by recording those expenses in the period in which services are performed and efforts are expended. The Company accounts for these expenses according to the progress of the trial as measured by patient progression and the timing of various aspects of the trial. The Company determines accrual estimates through discussion with applicable personnel and outside service providers as to the progress or state of completion of trials. During the course of a clinical trial, the Company adjusts the clinical expense recognition if actual results differ from its estimates. The Company makes estimates of accrued expenses as of each balance sheet date based on the facts and circumstances known at that time. The Company’s clinical trial accruals are dependent upon accurate reporting by CROs and other third-party vendors. Although the Company does not expect its estimates to differ materially from amounts actually incurred, its understanding of the status and timing of services performed relative to the actual status and timing of services performed may vary and may result in reporting amounts that are too high or too low for any particular period. For the three and six months ended June 30, 2016 and 2015, there were no material adjustments to the Company’s prior period estimates of accrued expenses for clinical trials. Stock-Based Compensation Stock-based compensation expense represents the grant date fair value of employee stock option grants, employee restricted stock unit grants and employee stock purchase plan (ESPP) rights recognized as expense over the requisite service period of the awards (usually the vesting period) on a straight-line basis, net of estimated forfeitures. The Company estimates the fair value of stock option grants and ESPP rights using the Black-Scholes option pricing model. The Company accounts for stock options granted to non-employees using the fair value approach. These option grants, if any, are subject to periodic revaluation over their vesting terms. Comprehensive Loss Comprehensive loss is defined as a change in equity during a period from transactions and other events and circumstances from non-owner sources. Net loss and comprehensive loss were the same for all periods presented. Net Loss Per Share Basic net loss per share is calculated by dividing the net loss by the weighted-average shares of common stock outstanding for the period, without consideration for common stock equivalents and adjusted for the weighted-average number of common shares outstanding that are subject to repurchase. The Company has excluded 4,719 and 4,981 weighted-average shares subject to repurchase from the weighted-average number of common shares outstanding for the three and six months ended June 30, 2016, respectively, and 6,822 and 7,082 weighted-average shares subject to repurchase for the three and six months ended June 30, 2015, respectively. Diluted net loss per share is calculated by dividing the net loss by the weighted-average number of common stock equivalents outstanding for the period determined using the treasury-stock method. For all periods presented, there is no difference in the number of shares used to calculate basic and diluted shares outstanding due to the Company’s net loss position. Potentially outstanding dilutive securities not included in the calculation of diluted net loss per share because to do so would be anti-dilutive are as follows (in common stock equivalent shares): Six Months Ended June 30, 2016 2015 Warrants to purchase common stock 57,173 53,490 Common stock options and restricted stock units 2,142,886 1,463,451 ESPP shares 4,619 2,118 2,204,678 1,519,059 Recent Accounting Pronouncements Not Yet Adopted In May 2014, the FASB issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers In August 2014, the FASB issued ASU 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting Recently Adopted Accounting Standards In April 2015, the FASB issued ASU 2015-03, Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs

Short-Term Investments and Fair

Short-Term Investments and Fair Value Measurements	6 Months Ended
	Jun. 30, 2016
Fair Value Disclosures [Abstract]
Short-Term Investments and Fair Value Measurements	2. Short-Term Investments and Fair Value Measurements At June 30, 2016, short-term investments consisted of certificates of deposit. The Company classifies all investments as available-for-sale, as the sale of such investments may be required prior to maturity to implement management strategies. These investments are carried at amortized cost which approximates fair value, with the unrealized gains and losses reported as a component of other comprehensive income in equity until realized. A decline in the market value of any short-term investment below cost that is determined to be other-than-temporary will result in a revaluation of its carrying amount to fair value. The impairment is charged to earnings and a new cost basis for the security is established. No such impairment charges were recorded for any period presented. Realized gains and losses from the sale of short-term investments, if any, are determined on a specific identification basis. Realized gains and losses and declines in value judged to be other-than-temporary, if any, on available-for-sale securities are included in other income or expense on the consolidated statements of operations. Realized and unrealized gains and losses during the periods presented were immaterial. Premiums and discounts are amortized or accreted over the life of the related security as an adjustment to yield using the straight-line method and are included in interest income on the consolidated statements of operations. Interest and dividends on securities classified as available-for-sale are included in interest income on the consolidated statements of operations. At June 30, 2016, the remaining contractual maturities of all available-for-sale investments were less than one year. The accounting guidance defines fair value, establishes a consistent framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on either a recurring or nonrecurring basis. Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the accounting guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: Level 1: Observable inputs such as quoted prices in active markets. Level 2: Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly. Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. Assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurements. No transfers between levels have occurred during the periods presented. The fair values of the Company’s assets and liabilities, which are measured at fair value on a recurring basis, were determined using the following inputs (in thousands): Fair Value Measurements at Reporting Date Using Quoted Prices in Significant Active Markets Other Significant for Identical Observable Unobservable Assets Inputs Inputs Total (Level 1) (Level 2) (Level 3) At June 30, 2016 Certificates of deposit and money market funds, included in Cash equivalents and Short-term investments $ 15,033 $ — $ 15,033 $ — At December 31, 2015 Certificates of deposit and money market funds, included in Cash equivalents and Short-term investments $ 14,996 $ — $ 14,996 $ — The carrying amounts of cash and cash equivalents, prepaid and other assets, accounts payable and accrued liabilities are considered to be representative of their respective fair values because of the short-term nature of those instruments. Based on the borrowing rates currently available to the Company for loans with similar terms, which is considered a Level 2 input, the Company believes that the fair value of long-term debt approximates its carrying value.

Property and Equipment

Property and Equipment	6 Months Ended
	Jun. 30, 2016
Property Plant And Equipment [Abstract]
Property and Equipment	3. Property and Equipment Property and equipment consist of the following (in thousands): June 30, December 31, 2016 2015 Computer and office equipment $ 115 $ 112 Furniture and fixtures 19 19 Leasehold improvements 124 99 Construction in process — 25 258 255 Less accumulated depreciation and amortization (130 ) (82 ) $ 128 $ 173 Depreciation expense related to property and equipment totaled approximately $24,000 and $10,000 for the three months ended June 30, 2016 and 2015, respectively, and $48,000 and $18,000 for the six months ended June 30, 2016 and 2015, respectively.

Long-Term Debt

Long-Term Debt	6 Months Ended
	Jun. 30, 2016
Debt Disclosure [Abstract]
Long-Term Debt	4. Long-Term Debt Long-term debt and unamortized debt discount balances are as follows (in thousands): June 30, December 31, 2016 2015 Long-term debt $ 10,000 $ 10,000 Less debt discount, net of current portion (306 ) (536 ) Long-term debt, net of debt discount 9,694 9,464 Less current portion of long-term debt (4,000 ) (2,000 ) Long-term debt, net of current portion $ 5,694 $ 7,464 Current portion of long-term debt $ 4,000 $ 2,000 Current portion of debt discount (529 ) (622 ) Current portion of long-term debt, net $ 3,471 $ 1,378 In May 2015, the Company entered into an Amended and Restated Loan and Security Agreement with Silicon Valley Bank (the 2015 Amended SVB Loan) under which the Company could borrow up to $10.0 million. At December 31, 2015, the Company had borrowed the full $10.0 million available under the 2015 Amended SVB Loan, of which, borrowings of approximately $8.0 million were used to refinance amounts outstanding under the prior loan and security agreements (the SVB loan), which was first entered into in November 2013 (SVB Loan Agreement) and amended and restated in June 2014 (Amended SVB Loan Agreement). In connection with the 2015 Amended SVB Loan, the Company issued warrants to purchase up to 18,415 shares of common stock at an exercise price of $10.86 per share. The warrants are fully exercisable and expire on May 13, 2022. The transaction was accounted for as a debt modification. The 2015 Amended SVB Loan provides for interest to be paid at a rate of 6.5% per annum. Interest-only payments are due monthly through June 2016. Thereafter, in addition to interest accrued during such period, the monthly payments will include an amount equal to the outstanding principal at July 1, 2016 divided by 30 months. At maturity (or earlier prepayment), the Company is also required to make a final payment equal to 8.5% of the original principal amount of the amounts borrowed. The 2015 Amended SVB Loan provides for prepayment fees of 2.0% of the amount prepaid if the prepayment occurs after May 13, 2016 but prior to May 13, 2017 and 1.0% of the amount prepaid if the prepayment occurs thereafter. The fair value of the warrants and the final payment related to the 2015 Amended SVB Loan were recorded as debt discounts and are being amortized to interest expense using the effective interest method over the term of the debt, in addition to the remaining unamortized discounts related to the SVB Loan and the Amended SVB Loan Agreements. Consistent with the terms of the SVB Loan and the Amended SVB Loan Agreements, the 2015 Amended SVB Loan is collateralized by substantially all of the Company’s assets, other than the Company’s intellectual property, and contains customary conditions of borrowing, events of default and covenants, including covenants that restrict the Company’s ability to dispose of assets, merge with or acquire other entities, incur indebtedness and make distributions to holders of the Company’s capital stock. Should an event of default occur, including the occurrence of a material adverse change, the Company could be liable for immediate repayment of all obligations under the 2015 Amended SVB Loan. In connection with the SVB Loan and the Amended SVB Loan, the Company issued warrants to purchase 37,500 shares and 112,500 shares of Series A redeemable convertible preferred stock, respectively, at an exercise price of $2.00 per share. The warrants are fully exercisable and expire on November 14, 2023 and June 4, 2024, respectively. The initial fair value of the warrants as of the November 2013 and June 2014 issuance dates was estimated to be $0.1 million and $0.2 million, respectively, based on the application of the Black-Scholes option pricing model, and these discounts are being amortized to interest expense using the effective interest method over the term of the debt. Upon completion of the Company’s initial public offering in February 2015, the warrants became exercisable for an aggregate of 38,758 shares of common stock at an exercise price of $7.74 per share. Future minimum principal and interest payments under the 2015 Amended SVB Loan, including the final payment, as of June 30, 2016 are as follows (in thousands): Remaining 2016 $ 2,303 2017 4,406 2018 4,993 11,702 Less interest and final payment (1,702 ) Long-term debt $ 10,000

Commitments and Contingencies

Commitments and Contingencies	6 Months Ended
	Jun. 30, 2016
Commitments And Contingencies Disclosure [Abstract]
Commitments and Contingencies	5. Commitments and Contingencies License Agreements The Company has entered into various license agreements pursuant to which the Company acquired licenses to certain intellectual property. The agreements generally required an upfront license fee and, in some cases, reimbursement of patent costs. Additionally, under each agreement, the Company may be required to pay annual maintenance fees, royalties, milestone payments and sublicensing fees. Each of the license agreements is generally cancelable by the Company, given appropriate prior written notice. At June 30, 2016, potential future milestone payments under these agreements totaled an aggregate of approximately $22.0 million.

Stockholders_ Equity

Stockholders’ Equity	6 Months Ended
	Jun. 30, 2016
Stockholders Equity Note [Abstract]
Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)	6. Stockholders’ Equity Initial Public Offering and Related Transactions In February 2015, the Company completed its initial public offering in which it sold 3,600,000 shares of common stock at an initial public offering price of $10.00 per share. In addition, a concurrent private placement to an existing stockholder was completed in which the Company sold 500,000 shares of common stock, also at $10.00 per share. Proceeds from the initial public offering and concurrent private placement, net of underwriting discounts, commissions and offering costs paid by us of approximately $6.0 million, were approximately $35.0 million. In addition, in connection with the completion of the Company’s initial public offering on February 4, 2015, all of the outstanding shares of redeemable convertible preferred stock were converted into 6,369,567 shares of the Company’s common stock; outstanding warrants to purchase 150,000 shares of Series A redeemable convertible preferred stock were converted into warrants to purchase 38,758 shares of the Company’s common stock, and the Company’s certificate of incorporation was amended and restated to authorize 200,000,000 shares of common stock and 10,000,000 shares of undesignated preferred stock. Redeemable Convertible Preferred Stock Prior to its automatic conversion in the initial public offering, the Company classified its redeemable convertible preferred stock outside of permanent equity since such stock was contractually redeemable outside of the Company’s control. As a result, the carrying value was increased to its redemption value by periodic accretion charges over the estimated redemption period. In the absence of retained earnings, these accretion charges were recorded against additional paid-in capital. Stock-Based Compensation Expense The weighted-average assumptions used in the Black-Scholes option pricing model to determine the fair value of the employee stock option grants were as follows: Three Months Ended Six Months Ended June 30, June 30, 2016 2015 2016 2015 Risk-free interest rate 1.6 % — % 1.6 % 1.6 % Expected volatility 84 % — % 78 % 74 % Expected term (in years) 6.3 - 6.3 6.2 Expected dividend yield — % — % — % — % Stock compensation expense for the Employee Stock Purchase Plan was immaterial for the three and six months ended June 30, 2016 and 2015. The allocation of stock-based compensation is as follows (in thousands): Three Months Ended Six Months Ended June 30, June 30, 2016 2015 2016 2015 Research and development $ 357 $ 229 $ 710 $ 382 General and administrative 586 198 1,090 292 $ 943 $ 427 $ 1,800 $ 674

Collaboration

Collaboration	6 Months Ended
	Jun. 30, 2016
Collaboration Disclosure [Abstract]
Collaboration	7. Collaboration In March 2014, the Company entered into a license agreement with Santen, under which the Company granted Santen an exclusive, worldwide license to certain patents, information and know-how related to TRC105. Under the agreement, Santen is permitted to use, develop, manufacture and commercialize TRC105 products for ophthalmology indications, excluding systemic treatment of ocular tumors. Santen also has the right to grant sublicenses to affiliates and third party collaborators. In the event Santen sublicenses any of its rights under the agreement, Santen will be obligated to pay the Company a portion of any upfront and certain milestone payments received under such sublicense. Santen has sole responsibility for funding, developing, seeking regulatory approval for and commercializing TRC105 products in the field of ophthalmology. In the event that Santen fails to meet certain commercial diligence obligations, the Company will have the option to co-promote TRC105 products in the field of ophthalmology in the United States with Santen. If the Company exercises this option, the Company will pay Santen a percentage of certain development expenses, and the Company will receive a percentage of profits from sales of the licensed products in the ophthalmology field in the United States, but will not receive royalties on such sales. In consideration of the rights granted to Santen under the agreement, the Company received a one-time upfront fee of $10.0 million. The license agreement provides for various types of payments, including the upfront payment, payment for various technical and regulatory support, payments for delivery of drug substance, reimbursement of certain development costs, milestone payments, and royalties on net product sales. The Company has identified multiple deliverables, which include at inception: (1) a license to patents, information and know-how related to TRC105, (2) technology transfer, (3) collaboration, including technical and regulatory support provided by the Company, (4) manufacturing and supply obligations, and (5) shared chemistry, manufacturing and controls (CMC) development activities. Deliverables 1 and 2 above were substantially delivered at the inception of the agreement, and deliverables 3 through 5 are expected to be delivered during the estimated 40-month period over which the Company will provide technical and regulatory support to Santen. At inception and through June 30, 2016, the Company has identified one single unit of accounting for all the deliverables under the agreement since the delivered elements do not have standalone value. The Company’s technical and regulatory expertise, including manufacturing and CMC activities, in the development of biologic therapeutics, specifically TRC105, is a significant component of Santen’s ability to utilize the license and know-how related to TRC105. Given the early stage of development of TRC105 for ophthalmology, the Company is the only party capable of performing the level and type of technical and regulatory collaboration services required by Santen under the agreement. As a result, the Company has determined that the license, including the ability to sublicense, and know-how related to TRC105 do not have standalone value to a licensee. As such, the Company is recognizing revenue for the fixed or determinable collaboration consideration on a straight-line basis over the estimated 40-month period over which it will deliver its technical and regulatory support. During the three and six months ended June 30, 2016, the expected term over which the Company will provide technical and regulatory support to Santen was extended from 31 to 40 months. The changes in the estimated term increased net loss by $0.8 million, or $0.06 per share, and $1.1 million, or $0.09 per share, for the three and six months ended June 30, 2016, respectively. In addition, the Company is eligible to receive up to a total of $155.0 million in milestone payments upon the achievement of certain milestones, of which $20.0 million relates to the initiation of certain development activities, $52.5 million relates to the submission of certain regulatory filings and receipt of certain regulatory approvals and $82.5 million relates to commercialization activities and the achievement of specified levels of product sales. The Company has determined that $10.0 million related to the initiation of certain clinical development activities will be based upon its efforts and meet the criteria of substantive milestones and therefore will be recognized as revenue upon achievement of the milestone in accordance with the milestone method of accounting. As of June 30, 2016, the Company had received a $3.0 million milestone payment related to development activities, revenue for which was recognized in the year ended December 31, 2015. The remaining $145.0 million of potential milestone payments are not substantive milestones as they do not require the efforts of the Company. If TRC105 products are successfully commercialized in the field of ophthalmology, Santen will be required to pay the Company tiered royalties on net sales ranging from high single digits to low teens, depending on the volume of sales, subject to adjustments in certain circumstances. In addition, Santen will reimburse the Company for all royalties due by the Company under certain third party agreements with respect to the use, manufacture or commercialization of TRC105 products in the field of ophthalmology by Santen and its affiliates and sublicensees. Royalties will continue on a country-by-country basis through the later of the expiration of the Company’s patent rights applicable to the TRC105 products in a given country or 12 years after the first commercial sale of the first TRC105 product commercially launched in such country. Santen may unilaterally terminate this agreement in its entirety, or on a country-by-country basis, upon written notice to the Company. Either party may terminate the agreement in the event of the other party’s bankruptcy or dissolution or for the other party’s material breach of the agreement that remains uncured 90 days (or 30 days with respect to a payment breach) after receiving notice from the non-breaching party. Unless earlier terminated, the agreement continues in effect until the termination of Santen’s payment obligations. In connection with the collaboration with Santen, the Company recognized revenue of $0.8 million and $4.2 million for the three months ended June 30, 2016 and 2015, respectively, and $2.0 million and $5.3 million for the six months ended June 30, 2016 and 2015, respectively. At June 30, 2016, deferred revenue totaled $2.2 million.

Organization and Summary of S13

Organization and Summary of Significant Accounting Policies (Policies)	6 Months Ended
	Jun. 30, 2016
Organization And Accounting Policies [Abstract]
Organization and Business	Organization and Business TRACON Pharmaceuticals, Inc. (formerly Lexington Pharmaceuticals, Inc.) (TRACON or the Company) was incorporated in the state of Delaware on October 28, 2004. TRACON is a clinical stage biopharmaceutical company focused on the development and commercialization of novel targeted therapeutics for cancer, wet age-related macular degeneration and fibrotic diseases. The Company’s research focuses on antibodies that bind to the endoglin receptor, which is essential to angiogenesis (the process of new blood vessel formation) and a key contributor to fibrosis (tissue scarring). The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, TRACON Pharma Limited, which was formed in September 2015. All significant intercompany accounts and transactions have been eliminated.
Basis of Presentation	Basis of Presentation As of June 30, 2016, the Company has devoted substantially all of its efforts to product development, raising capital, and building infrastructure and has not realized revenues from its planned principal operations. The Company has incurred operating losses since inception. As of June 30, 2016, the Company had an accumulated deficit of $73.4 million. The Company anticipates that it will continue to incur net losses into the foreseeable future as it: (i) continues the development and commercialization of its product candidates; (ii) works to develop additional product candidates through research and development programs; and (iii) continues to expand its corporate infrastructure. At June 30, 2016, the Company had cash, cash equivalents and short-term investments of $36.2 million. Based on the Company’s current business plan, management believes that existing cash, cash equivalents and short-term investments will be sufficient to fund the Company’s obligations to the middle of 2017. The Company plans to continue to fund its losses from operations and capital funding needs through cash and investments on hand, as well as future debt and equity financing and potential collaboration arrangements. If the Company is not able to secure adequate additional funding, it may be forced to make reductions in spending, extend payment terms with suppliers, liquidate assets where possible, and/or delay or reduce the scope of its planned development programs. Any of these actions could materially harm the Company’s business, results of operations and future prospects. Unaudited Interim Financial Information The unaudited condensed consolidated financial statements at June 30, 2016, and for the three and six months ended June 30, 2016 and 2015, have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (SEC), and with accounting principles generally accepted in the United States (GAAP) applicable to interim financial statements. These unaudited condensed consolidated financial statements have been prepared on the same basis as the audited financial statements and include all adjustments, consisting of only normal recurring accruals, which in the opinion of management are necessary to present fairly the Company’s financial position as of the interim date and results of operations for the interim periods presented. Interim results are not necessarily indicative of results for a full year or future periods. The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ materially from those estimates. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements for the year ended December 31, 2015, included in its Annual Report on Form 10-K filed with the SEC on February 19, 2016.
Use of Estimates	Use of Estimates The Company’s condensed consolidated financial statements are prepared in accordance with GAAP. The preparation of the Company’s condensed consolidated financial statements requires management to make estimates and assumptions that impact the reported amounts of assets, liabilities, revenue and expenses and the disclosure of contingent assets and liabilities in the Company’s financial statements and accompanying notes. The most significant estimates in the Company’s financial statements relate to revenue recognition and the valuation of equity awards. Although these estimates are based on the Company’s knowledge of current events and actions it may undertake in the future, actual results may ultimately materially differ from these estimates and assumptions.
Cash and Cash Equivalents	Cash and Cash Equivalents Cash and cash equivalents consist of cash and highly liquid investments with original maturities of three months or less at the date of purchase. Cash and cash equivalents include cash in readily available checking and money market funds, as well as certificates of deposit.
Concentration of Credit Risk	Concentration of Credit Risk Financial instruments that potentially subject the Company to significant concentration of credit risk consist primarily of cash and cash equivalents. The Company maintains deposits in federally insured financial institutions in excess of federally insured limits. The Company has not experienced any losses in such accounts and management believes that the Company is not exposed to significant credit risk due to the financial position of the depository institutions in which those deposits are held.
Preferred Stock Warrant Liabilities	Preferred Stock Warrant Liabilities Prior to the completion of the Company’s initial public offering in February 2015, the Company had outstanding freestanding warrants to purchase shares of its Series A redeemable convertible preferred stock. Since the underlying Series A redeemable convertible preferred stock was classified outside of permanent equity, these preferred stock warrants were classified as liabilities in the December 31, 2014 balance sheet. The Company adjusted the carrying value of such preferred stock warrants to their estimated fair value at each reporting date, with any related increases or decreases in the fair value recorded as an increase or decrease to other income (expense) in the statements of operations. Upon the completion of the Company’s initial public offering, the warrants no longer required liability accounting and the then fair value of the warrant liability was reclassified into stockholders’ equity. The Company performed the final remeasurement of the warrant liability as of the initial public offering date and recorded the $65,000 change in fair value into other income (expense) for the six months ended June 30, 2015.
Revenue Recognition	Revenue Recognition The Company’s revenue is derived from its license agreement with Santen Pharmaceutical Co., Ltd. (Santen) as described in Note 7. The Company recognizes revenue when all four of the following criteria are met: (1) there is persuasive evidence that an arrangement exists; (2) delivery of the products and/or services has occurred; (3) the selling price is fixed or determinable; and (4) collectability is reasonably assured. Amounts received prior to satisfying the revenue recognition criteria are recorded as deferred revenue. The Company evaluates multiple-element arrangements to determine: (1) the deliverables included in the arrangement and (2) whether the individual deliverables represent separate units of accounting or whether they must be accounted for as a combined unit of accounting. Deliverables are considered separate units of accounting provided that: (a) the delivered items have value to the customer on a standalone basis and (b) if the arrangement includes a general right of return relative to the delivered items, delivery or performance of the undelivered items is considered probable and substantially in the Company’s control. In assessing whether an item has standalone value, the Company considers factors such as the research, manufacturing and commercialization capabilities of the partner and the availability of the associated expertise in the general marketplace. In addition, the Company considers whether the partner can use the other deliverables for their intended purpose without the receipt of the remaining elements, whether the value of the deliverable is dependent on the undelivered items and whether there are other vendors that can provide the undelivered elements. Arrangement consideration that is fixed or determinable is allocated among the separate units of accounting using the relative selling price method. The Company uses the following hierarchy of values to estimate the selling price of each deliverable: (1) vendor-specific objective evidence of fair value; (2) third party evidence of selling price; and (3) best estimate of selling price (BESP). The BESP reflects the Company’s best estimate of what the selling price would be if the Company regularly sold the deliverable on a standalone basis. In developing the BESP for a unit of accounting, the Company considers applicable market conditions and relevant entity-specific factors, including factors that are contemplated in negotiating an arrangement and estimated costs. The Company validates the BESP for units of accounting by evaluating whether changes in the key assumptions used to determine the BESP will have a significant effect on the allocation of arrangement consideration between multiple units of accounting. The Company then applies the applicable revenue recognition criteria to each of the separate units of accounting in determining the appropriate period and pattern of recognition. If there is no discernible pattern of performance and/or objectively measurable performance measures do not exist, then the Company recognizes revenue under the arrangement on a straight-line basis over the period the Company expects to complete its performance obligations. With respect to revenue derived from reimbursement of direct, out-of-pocket expenses for research and development costs associated with collaborations, where the Company acts as a principal with discretion to choose suppliers, bear credit risk, and perform part of the services required in the transaction, the Company records revenue for the gross amount of the reimbursement. The costs associated with these reimbursements are reflected as a component of research and development expense in the statements of operations. Milestones The Company uses the milestone method of accounting and revenue is recognized when earned, as evidenced by written acknowledgement from the collaborator or other persuasive evidence that the milestone has been achieved and the payment is non-refundable, provided that the milestone event is substantive. A milestone event is defined as an event: (1) that can only be achieved based in whole or in part on either the Company’s performance or on the occurrence of a specific outcome resulting from the Company’s performance; (2) for which there is substantive uncertainty at the inception of the arrangement that the event will be achieved; and (3) that would result in additional payments being due to the Company. Events for which the occurrence is either contingent solely upon the passage of time or the result of a counterparty’s performance are not considered to be milestone events. A milestone event is substantive if all of the following conditions are met: (a) the consideration is commensurate with either the Company’s performance to achieve the milestone, or the enhancement of the value to the delivered item(s) as a result of a specific outcome resulting from the Company’s performance to achieve the milestone; (b) the consideration relates solely to past performance; and (c) the consideration is reasonable relative to all the deliverables and payment terms (including other potential milestone consideration) within the arrangement. The Company assesses whether a milestone is substantive at the inception of each arrangement. If a milestone is deemed non-substantive, the Company will account for that milestone payment in accordance with the multiple element arrangements guidance and recognize it consistent with the related units of accounting for the arrangement over the related performance period.
Clinical Trial Expense Accruals	Clinical Trial Expense Accruals As part of the process of preparing the Company’s financial statements, the Company is required to estimate expenses resulting from its obligations under contracts with vendors, contract research organizations (CROs), and consultants and under clinical site agreements in connection with conducting clinical trials. The financial terms of these contracts vary and may result in payment flows that do not match the periods over which materials or services are provided under such contracts. The Company’s objective is to reflect the appropriate trial expenses in its financial statements by recording those expenses in the period in which services are performed and efforts are expended. The Company accounts for these expenses according to the progress of the trial as measured by patient progression and the timing of various aspects of the trial. The Company determines accrual estimates through discussion with applicable personnel and outside service providers as to the progress or state of completion of trials. During the course of a clinical trial, the Company adjusts the clinical expense recognition if actual results differ from its estimates. The Company makes estimates of accrued expenses as of each balance sheet date based on the facts and circumstances known at that time. The Company’s clinical trial accruals are dependent upon accurate reporting by CROs and other third-party vendors. Although the Company does not expect its estimates to differ materially from amounts actually incurred, its understanding of the status and timing of services performed relative to the actual status and timing of services performed may vary and may result in reporting amounts that are too high or too low for any particular period. For the three and six months ended June 30, 2016 and 2015, there were no material adjustments to the Company’s prior period estimates of accrued expenses for clinical trials.
Stock-Based Compensation	Stock-Based Compensation Stock-based compensation expense represents the grant date fair value of employee stock option grants, employee restricted stock unit grants and employee stock purchase plan (ESPP) rights recognized as expense over the requisite service period of the awards (usually the vesting period) on a straight-line basis, net of estimated forfeitures. The Company estimates the fair value of stock option grants and ESPP rights using the Black-Scholes option pricing model. The Company accounts for stock options granted to non-employees using the fair value approach. These option grants, if any, are subject to periodic revaluation over their vesting terms.
Comprehensive Loss	Comprehensive Loss Comprehensive loss is defined as a change in equity during a period from transactions and other events and circumstances from non-owner sources. Net loss and comprehensive loss were the same for all periods presented.
Net Loss Per Share	Net Loss Per Share Basic net loss per share is calculated by dividing the net loss by the weighted-average shares of common stock outstanding for the period, without consideration for common stock equivalents and adjusted for the weighted-average number of common shares outstanding that are subject to repurchase. The Company has excluded 4,719 and 4,981 weighted-average shares subject to repurchase from the weighted-average number of common shares outstanding for the three and six months ended June 30, 2016, respectively, and 6,822 and 7,082 weighted-average shares subject to repurchase for the three and six months ended June 30, 2015, respectively. Diluted net loss per share is calculated by dividing the net loss by the weighted-average number of common stock equivalents outstanding for the period determined using the treasury-stock method. For all periods presented, there is no difference in the number of shares used to calculate basic and diluted shares outstanding due to the Company’s net loss position. Potentially outstanding dilutive securities not included in the calculation of diluted net loss per share because to do so would be anti-dilutive are as follows (in common stock equivalent shares): Six Months Ended June 30, 2016 2015 Warrants to purchase common stock 57,173 53,490 Common stock options and restricted stock units 2,142,886 1,463,451 ESPP shares 4,619 2,118 2,204,678 1,519,059
Recent Accounting Pronouncements	Recent Accounting Pronouncements Not Yet Adopted In May 2014, the FASB issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers In August 2014, the FASB issued ASU 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting Recently Adopted Accounting Standards In April 2015, the FASB issued ASU 2015-03, Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs

Organization and Summary of S14

Organization and Summary of Significant Accounting Policies (Tables)	6 Months Ended
	Jun. 30, 2016
Organization And Accounting Policies [Abstract]
Schedule of potentially outstanding dilutive securities not included in the calculation of diluted net loss per share	Potentially outstanding dilutive securities not included in the calculation of diluted net loss per share because to do so would be anti-dilutive are as follows (in common stock equivalent shares): Six Months Ended June 30, 2016 2015 Warrants to purchase common stock 57,173 53,490 Common stock options and restricted stock units 2,142,886 1,463,451 ESPP shares 4,619 2,118 2,204,678 1,519,059

Short-Term Investments and Fa15

Short-Term Investments and Fair Value Measurements (Tables)	6 Months Ended
	Jun. 30, 2016
Fair Value Disclosures [Abstract]
Schedule of assets and liabilities measured at fair value on a recurring basis	The fair values of the Company’s assets and liabilities, which are measured at fair value on a recurring basis, were determined using the following inputs (in thousands): Fair Value Measurements at Reporting Date Using Quoted Prices in Significant Active Markets Other Significant for Identical Observable Unobservable Assets Inputs Inputs Total (Level 1) (Level 2) (Level 3) At June 30, 2016 Certificates of deposit and money market funds, included in Cash equivalents and Short-term investments $ 15,033 $ — $ 15,033 $ — At December 31, 2015 Certificates of deposit and money market funds, included in Cash equivalents and Short-term investments $ 14,996 $ — $ 14,996 $ —

Property and Equipment (Tables)

Property and Equipment (Tables)	6 Months Ended
	Jun. 30, 2016
Property Plant And Equipment [Abstract]
Schedule of property and equipment	Property and equipment consist of the following (in thousands): June 30, December 31, 2016 2015 Computer and office equipment $ 115 $ 112 Furniture and fixtures 19 19 Leasehold improvements 124 99 Construction in process — 25 258 255 Less accumulated depreciation and amortization (130 ) (82 ) $ 128 $ 173

Long-Term Debt (Tables)

Long-Term Debt (Tables)	6 Months Ended
	Jun. 30, 2016
Debt Disclosure [Abstract]
Schedule of Long-term debt and unamortized debt discount balances	Long-term debt and unamortized debt discount balances are as follows (in thousands): June 30, December 31, 2016 2015 Long-term debt $ 10,000 $ 10,000 Less debt discount, net of current portion (306 ) (536 ) Long-term debt, net of debt discount 9,694 9,464 Less current portion of long-term debt (4,000 ) (2,000 ) Long-term debt, net of current portion $ 5,694 $ 7,464 Current portion of long-term debt $ 4,000 $ 2,000 Current portion of debt discount (529 ) (622 ) Current portion of long-term debt, net $ 3,471 $ 1,378
Schedule of future minimum principal and interest payments	Future minimum principal and interest payments under the 2015 Amended SVB Loan, including the final payment, as of June 30, 2016 are as follows (in thousands): Remaining 2016 $ 2,303 2017 4,406 2018 4,993 11,702 Less interest and final payment (1,702 ) Long-term debt $ 10,000

Redeemable Convertible Preferre

Redeemable Convertible Preferred Stock and Stockholders' Equity (Deficit) (Tables)	6 Months Ended
	Jun. 30, 2016
Stockholders Equity Note [Abstract]
Summary of weighted-average assumptions used Black-Scholes option pricing model to determine the fair value	Three Months Ended Six Months Ended June 30, June 30, 2016 2015 2016 2015 Risk-free interest rate 1.6 % — % 1.6 % 1.6 % Expected volatility 84 % — % 78 % 74 % Expected term (in years) 6.3 - 6.3 6.2 Expected dividend yield — % — % — % — %
Summary of allocation of stock-based compensation	The allocation of stock-based compensation is as follows (in thousands): Three Months Ended Six Months Ended June 30, June 30, 2016 2015 2016 2015 Research and development $ 357 $ 229 $ 710 $ 382 General and administrative 586 198 1,090 292 $ 943 $ 427 $ 1,800 $ 674

Organization and Summary of S19

Organization and Summary of Significant Accounting Policies (Details) - USD ($)	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2016	Dec. 31, 2015
Basis of Presentation
Accumulated deficit		$ 73,413,000	$ 58,590,000
Cash, cash equivalents and short-term investments		$ 36,200,000
Shareholders' equity
Change in fair value of preferred stock warrant liability	$ 65,000
Other income (expense)
Shareholders' equity
Change in fair value of preferred stock warrant liability	$ 65,000

Organization and Summary of S20

Organization and Summary of Significant Accounting Policies (EPS) (Details) - shares	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Antidilutive securities
Weighted-average shares subject to repurchase (in shares)	4,719	6,822	4,981	7,082
Antidilutive securities			2,204,678	1,519,059
Warrants to purchase common stock
Antidilutive securities
Antidilutive securities			57,173	53,490
Common stock options and restricted stock units
Antidilutive securities
Antidilutive securities			2,142,886	1,463,451
ESPP shares
Antidilutive securities
Antidilutive securities			4,619	2,118

Short-Term Investments and Fa21

Short-Term Investments and Fair Value Measurements (Details) - USD ($)	6 Months Ended
	Jun. 30, 2016	Dec. 31, 2015
Short-Term Investments and Fair Value Measurements
Maximum period for remaining contractual maturities of available-for-sale investments	1 year
Amount of transfers between levels	$ 0	$ 0
Recurring | Certificates of deposit and money market funds, included in Cash and cash equivalents and Short-term investments
Assets:
Fair value, assets	15,033,000	14,996,000
Recurring | Level 2 | Certificates of deposit and money market funds, included in Cash and cash equivalents and Short-term investments
Assets:
Fair value, assets	$ 15,033,000	$ 14,996,000

Property and Equipment (Details

Property and Equipment (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Property and Equipment
Property and equipment, gross	$ 258,000		$ 258,000		$ 255,000
Less accumulated depreciation and amortization	(130,000)		(130,000)		(82,000)
Property and equipment, net	128,000		128,000		173,000
Depreciation and amortization	24,000	$ 10,000	48,000	$ 18,000
Computer and office equipment
Property and Equipment
Property and equipment, gross	115,000		115,000		112,000
Furniture and fixtures
Property and Equipment
Property and equipment, gross	19,000		19,000		19,000
Leasehold improvements
Property and Equipment
Property and equipment, gross	$ 124,000		$ 124,000		99,000
Construction-in-process
Property and Equipment
Property and equipment, gross					$ 25,000

Long-Term Debt (Details)

Long-Term Debt (Details) - USD ($)	Dec. 31, 2015	May 31, 2015	Jun. 30, 2014	Nov. 30, 2013	Jun. 30, 2015	Dec. 31, 2015	Jun. 30, 2016	Feb. 04, 2015
Long-term debt
Long-term debt	$ 10,000,000					$ 10,000,000	$ 10,000,000
Less debt discount, net of current portion	(536,000)					(536,000)	(306,000)
Long-term debt, net of debt discount	9,464,000					9,464,000	9,694,000
Less current portion of long-term debt	(2,000,000)					(2,000,000)	(4,000,000)
Long-term debt, net of current portion	7,464,000					7,464,000	5,694,000
Current portion of long-term debt	2,000,000					2,000,000	4,000,000
Current portion of debt discount	(622,000)					(622,000)	(529,000)
Current portion of long-term debt, net	1,378,000					1,378,000	3,471,000
Proceeds from long-term debt					$ 8,000,000
Common Stock
Long-term debt
Warrants issued								38,758
Redeemable Convertible Preferred Stock
Long-term debt
Warrants issued								150,000
Silicon Valley Bank
Long-term debt
Long-term debt							$ 10,000,000
Silicon Valley Bank | Common Stock
Long-term debt
Warrants issued								38,758
Exercise price (per share)								$ 7.74
Silicon Valley Bank | Redeemable Convertible Preferred Stock
Long-term debt
Warrants issued			112,500	37,500
Exercise price (per share)			$ 2	$ 2
Initial fair value of warrants			$ 200,000	$ 100,000
2015 SVB Loan | Silicon Valley Bank
Long-term debt
Maximum borrowing capacity		$ 10,000,000
Proceeds from long-term debt	$ 10,000,000
Debt repaid						$ 8,000,000
Warrants issued		18,415
Exercise price (per share)		$ 10.86
Interest rate		6.50%
Repayment period		30 months
Additional fee on final payment due (as a percent)		8.50%
2015 SVB Loan | Silicon Valley Bank | After May 13, 2016-Prior to May 13, 2017
Long-term debt
Prepayment fee (as a percent)		2.00%
2015 SVB Loan | Silicon Valley Bank | After May 13, 2017
Long-term debt
Prepayment fee (as a percent)		1.00%

Long-Term Debt (Maturities) (De

Long-Term Debt (Maturities) (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Future minimum principal and interest payments
Long-term debt	$ 10,000	$ 10,000
Silicon Valley Bank
Future minimum principal and interest payments
Remaining 2,016	2,303
2,017	4,406
2,018	4,993
Debt, including interest and final payment	11,702
Less interest and final payment	(1,702)
Long-term debt	$ 10,000

Commitments and Contingencies (

Commitments and Contingencies (Details) $ in Millions	Jun. 30, 2016USD ($)
Research and development arrangement
Commitments and Contingencies
Potential milestone payable	$ 22

Stockholders' Equity (Details)

Stockholders' Equity (Details) - USD ($) $ / shares in Units, $ in Millions	1 Months Ended
	Feb. 28, 2015	Jun. 30, 2016	Dec. 31, 2015	Feb. 04, 2015
Stockholders' equity
Common stock, shares authorized		200,000,000	200,000,000	200,000,000
Undesignated preferred stock authorized		10,000,000	10,000,000	10,000,000
Redeemable Convertible Preferred Stock
Stockholders' equity
Conversion of warrants to purchase shares				150,000
Common Stock
Stockholders' equity
Payments of Stock Issuance Costs	$ 6
Proceeds from initial public offering and concurrent private placement	$ 35
Number of redeemable convertible preferred stock converted into common stock				6,369,567
Conversion of warrants to purchase shares				38,758
IPO | Common Stock
Stockholders' equity
Stock Issued During Period, Shares, New Issues	3,600,000
Share Price	$ 10
Private Placement | Common Stock
Stockholders' equity
Stock Issued During Period, Shares, New Issues	500,000
Share Price	$ 10

Stockholders' Equity (SBC) (Det

Stockholders' Equity (SBC) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Weighted-average assumptions
Risk-free interest rate	1.60%		1.60%	1.60%
Expected volatility	84.00%		78.00%	74.00%
Expected term (in years)	6 years 3 months 18 days	0 years	6 years 3 months 18 days	6 years 2 months 12 days
Expected dividend yield	0.00%	0.00%	0.00%	0.00%
Share-based compensation
Stock based compensation expense	$ 943	$ 427	$ 1,800	$ 674
Research and development
Share-based compensation
Stock based compensation expense	357	229	710	382
General and administrative
Share-based compensation
Stock based compensation expense	$ 586	$ 198	$ 1,090	$ 292

Collaboration (Details)

Collaboration (Details) - USD ($) $ / shares in Units, $ in Thousands	1 Months Ended	3 Months Ended		6 Months Ended		12 Months Ended
	Mar. 31, 2014	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Contracts Revenue		$ 807	$ 4,197	$ 2,017	$ 5,329
Collaborative Arrangement | Santen
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
One-time upfront fee	$ 10,000
Period for recognition of revenue		40 months		40 months		31 months
Potential milestone that could be received	155,000
Balance of potential milestone that could be received		$ 145,000		$ 145,000
Royalty continuation term				12 years
Cure period for bankruptcy or dissolution				90 days
Cure period for breach of payment				30 days
Contracts Revenue		800	$ 4,200	$ 2,000	$ 5,300
Deferred revenue		2,200		2,200
Collaborative Arrangement | Santen | Development Milestones
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Potential milestone that could be received	20,000
Collaborative Arrangement | Santen | Regulatory Milestones
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Potential milestone that could be received	52,500
Collaborative Arrangement | Santen | Commercialization Milestones
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Potential milestone that could be received	$ 82,500
Revenue recognized upon achievement of milestone				10,000
Aggregate milestone revenue recognized				3,000
Collaborative Arrangement | Santen | Change in Accounting Estimate
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Change in accounting estimate increase in net loss		$ 800		$ 1,100
Change in accounting estimate increase in net loss (in dollars per share)		$ 0.06		$ 0.09