Neurogene (NGNE) 10-Q 7 Nov 18 2018 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2018	Nov. 07, 2018
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2018
Document Fiscal Year Focus	2,018
Document Fiscal Period Focus	Q3
Trading Symbol	AQXP
Entity Registrant Name	AQUINOX PHARMACEUTICALS, INC
Entity Central Index Key	1,404,644
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Extended Transition Period	true
Entity Common Stock, Shares Outstanding		23,537,368

Condensed consolidated balance

Condensed consolidated balance sheets - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Current assets
Cash and cash equivalents (Note 3)	$ 86,731	$ 52,032
Short-term investments (Note 9)	0	56,053
Receivables, prepayments and deposits	562	740
Total current assets	87,293	108,825
Property and equipment, net	467	905
Long-term prepayments and deposits	54	599
Total assets	87,814	110,329
Current liabilities
Accounts payable and other liabilities	10,749	10,956
Total current liabilities	10,749	10,956
Other liabilities (Note 5)	343	486
Total liabilities	11,092	11,442
Share capital: (Note 6)
Common stock	0	0
Additional paid-in capital	301,922	297,459
Accumulated deficit	(225,200)	(198,502)
Accumulated other comprehensive loss		(70)
Total stockholders' equity	76,722	98,887
Total liabilities and stockholders' equity	$ 87,814	$ 110,329

Condensed consolidated balanc_2

Condensed consolidated balance sheets (Parenthetical) - $ / shares	Sep. 30, 2018	Dec. 31, 2017
Statement of Financial Position [Abstract]
Common stock, par value	$ 0.000001	$ 0.000001
Common stock, shares authorized	50,000,000	50,000,000
Common stock, shares issued	23,537,368	23,472,430
Common stock, shares outstanding	23,537,368	23,472,430

Condensed consolidated statemen

Condensed consolidated statements of operations and comprehensive loss - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Income Statement [Abstract]
Revenue (Note 4)			$ 25,000
Operating expenses
Research and development (Note 10)	$ 10,713	$ 8,456	39,217	$ 24,708
General and administrative (Note 10)	4,484	3,614	13,107	9,879
Total operating expenses	15,197	12,070	52,324	34,587
Loss from operations	(15,197)	(12,070)	(27,324)	(34,587)
Other income, net (Note 7)	204	237	626	672
Net loss	$ (14,993)	$ (11,833)	$ (26,698)	$ (33,915)
Net loss per common stock - basic and diluted (Note 8)	$ (0.64)	$ (0.50)	$ (1.14)	$ (1.45)
Basic and diluted weighted average number of common stock outstanding	23,537,368	23,464,785	23,513,489	23,444,181
Comprehensive loss:
Net loss	$ (14,993)	$ (11,833)	$ (26,698)	$ (33,915)
Other comprehensive income - unrealized gain on available-for-salesecurities	2	102	70	66
Comprehensive loss	$ (14,991)	$ (11,731)	$ (26,628)	$ (33,849)

Condensed consolidated statem_2

Condensed consolidated statements of cash flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
Operating activities
Net loss	$ (26,698)	$ (33,915)
Non-cash items:
Stock-based compensation (Note 6(c))	3,861	2,868
Unrealized foreign exchange loss and others	628	481
Changes in operating assets and liabilities:
Receivable, prepayments and deposits	720	(444)
Accounts payable and other liabilities	(313)	(2,103)
Cash used in operating activities	(21,802)	(33,113)
Investing activities
Purchase of investments		(5,995)
Proceeds from maturity of investments	56,000	54,000
Purchase of property and equipment	(49)	(478)
Cash provided by investing activities	55,951	47,527
Financing activities
Proceeds from exercise of stock options	602	380
Payment on capital lease obligations	(30)	(11)
Cash provided by financing activities	572	369
Effect of exchange rate changes on cash and cash equivalents	(22)	21
Net change in cash and cash equivalents during the period	34,699	14,804
Cash and cash equivalents, beginning of period	52,032	32,301
Cash and cash equivalents, end of period	86,731	47,105
Supplemental disclosure of cash flow information:
Interest received	$ 1,210	996
Non-cash investing and financing activities:
Accrued purchase of property & equipment		(77)
Accrued offering costs		$ (30)

Nature of operations

Nature of operations	9 Months Ended
	Sep. 30, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Nature of operations	1. Nature of operations Aquinox Pharmaceuticals, Inc. and its subsidiary, Aquinox Pharmaceuticals (Canada) Inc., (consolidated, the “Company”) is a pharmaceutical company discovering and developing novel therapeutics for conditions marked by inflammation, inflammatory pain, and blood cancers. On June 27, 2018, the Company announced that its Phase 3 Leadership 301 clinical trial evaluating once-daily, oral rosiptor for the treatment of interstitial cystitis/bladder pain syndrome (IC/BPS) failed to meet its primary endpoint. As a result, all further development activities with rosiptor were halted. In July 2018, the Company announced a restructuring plan to reduce operating costs and better align the Company’s workforce with the needs of its business. On November 6, 2018, the Company’s Board of Directors approved further restructuring to reduce operating costs (see Note 11. Subsequent Event). The Company is currently evaluating strategic options. Aquinox Pharmaceuticals, Inc. was originally incorporated under the name of Aquinox Pharmaceuticals (USA) Inc. on May 31, 2007 in the State of Delaware, United States. On January 27, 2014, Aquinox Pharmaceuticals (USA) Inc. changed its name to Aquinox Pharmaceuticals, Inc. (“Aquinox USA”). Aquinox Pharmaceuticals (Canada) Inc. (“AQXP Canada”) was originally incorporated under the name of 6175813 Canada Inc. on December 26, 2003 under the Canada Business Corporations Act. In May 2014, after a corporate restructuring, the name was changed to Aquinox Pharmaceuticals (Canada) Inc. The Company operates in Vancouver, British Columbia, Canada.

Condensed summary of significan

Condensed summary of significant accounting policies	9 Months Ended
	Sep. 30, 2018
Accounting Policies [Abstract]
Condensed summary of significant accounting policies	2. Condensed summary of significant accounting policies (a) Basis of presentation The accompanying unaudited condensed consolidated financial statements are presented in United States (“U.S.”) dollars and have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”) for interim financial information. Accordingly, these financial statements do not include all of the information and footnotes required for complete financial statements and should be read in conjunction with the audited consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K In management’s opinion, the unaudited condensed consolidated financial statements reflect all adjustments (including reclassifications and normal recurring adjustments) necessary to present fairly the financial position as of September 30, 2018, and results of operations and cash flows for all periods presented. The interim results presented are not necessarily indicative of results that can be expected for a full year. (b) Use of estimates and assumptions The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Significant areas requiring management estimates include valuation of stock options, amortization and depreciation, accrual of expenses, valuation allowance for deferred income taxes, and contingencies. Actual results could differ from those estimates. (c) Short-term investments Short-term investments consist of bank term deposits and U.S. government securities with initial maturities of less than a year. Short-term investments are classified as available-for-sale (d) Accounting for stock-based compensation The Company measures the cost of services received in exchange for an award of equity instruments based on the grant-date fair value of the award. The cost of such award will be recognized over the period during which services are provided in exchange for the award, generally the vesting period. The Company accounts for forfeitures as they occur. All share-based payments to employees are recognized in the consolidated financial statements based upon their respective grant date fair values. The Company estimates the fair value of options granted using the Black-Scholes option pricing model. This approximation uses assumptions regarding a number of inputs that requires management to make significant estimates and judgments. Prior to the completion of the Company’s initial public offering in March 2014, the Company’s common stock was not publicly traded. As a result, the expected volatility assumption is based on industry peer information due to insufficient trading history of the Company’s common stock. Additionally, because the Company has no significant history to calculate the expected term, the simplified method calculation is used. (e) Revenue recognition The Company adopted the Financial Accounting Standards Board, or FASB, issued ASU 2014-09, “Revenue (f) Segment reporting The Company operates in one segment, the development of novel therapeutics for conditions marked by inflammation, inflammatory pain and blood cancers. The Company has significant Canadian operations but its assets are mostly held in the United States with an immaterial amount of long lived assets in Canada. (g) Net loss per common stock Basic net loss per common stock is computed by dividing net loss by the weighted-average number of common stock outstanding during the period. Diluted net loss per common stock is determined using the weighted-average number of common stock outstanding during the period, adjusted for the dilutive effect of common stock equivalents, consisting of shares that might be issued upon exercise of common stock options. In periods where losses are reported, the weighted-average number of common stock outstanding excludes common stock equivalents because their inclusion would be anti-dilutive. (h) Recently issued and recently adopted accounting standards The Company adopted FASB ASU 2014-09, “Revenue ASU 2014-09 did The Company adopted FASB ASU 2016-01 825-10): In February 2016, the FASB issued ASU 2016-02 right-of-use 2016-02, 2016-02 2016-02 right-of-use In August 2018, the FASB issued ASU 2018-13 2018-13 2018-13 (i) Risks and uncertainties The Company is subject to numerous risks and uncertainties. These risks, among others, included the following: • the Company has no source of recurring revenue, has an accumulated deficit of $225.2 million as of September 30, 2018, may never become profitable and may incur substantial and increasing net losses for the foreseeable future as it continues its research and development programs; • the Company is likely to require additional capital to finance its operations which may not be available to it on acceptable terms, or at all; • the Company’s success is primarily dependent on the successful development, regulatory approval and commercialization of drug product candidates; • in June 2018, the Company announced that its Phase 3 Leadership 301 clinical trial evaluating its lead product candidate, rosiptor, for the treatment of IC/BPS failed to meet its primary endpoint and all further development activities with rosiptor were halted; the Company may be unable to identify or acquire another lead product candidate to replace rosiptor; • the Company is subject to regulatory approval processes that are lengthy, time consuming and inherently unpredictable; the Company may not be able to obtain approval for any drug product candidates from the U.S. Food and Drug Administration, or FDA, or foreign regulatory authorities; • the Company’s intellectual property rights may be subject to claims by third parties and can be difficult and costly to protect; • the Company may not be able to recruit or retain key employees, including its senior management team; • the Company depends on the performance of third parties, including contract research organizations and third-party manufacturers; and • the Company faces competition from other pharmaceutical and biotechnology companies, academic institutions, governmental agencies, and public and private research institutions, among others.

Cash and cash equivalents

Cash and cash equivalents	9 Months Ended
	Sep. 30, 2018
Cash and Cash Equivalents [Abstract]
Cash and cash equivalents	3. Cash and cash equivalents (in thousands) SEPTEMBER 30, 2018 DECEMBER 31, Cash $ 35,152 $ 12,583 Cash equivalents 51,579 39,449 $ 86,731 $ 52,032

License and collaboration agree

License and collaboration agreement	9 Months Ended
	Sep. 30, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]
License and collaboration agreement	4. License and collaboration agreement In May 2018, the Company entered into an exclusive license and collaboration agreement with Astellas US LLC, a subsidiary of Astellas Pharma Inc. (“Astellas”). The Company has granted Astellas an exclusive, royalty-bearing license to use, research, develop, manufacture and commercialize the Company’s drug candidate, rosiptor, and related compounds for all human diseases and conditions in Japan and certain other countries in the Asia-Pacific region, including major markets such as Taiwan, Indonesia, Malaysia, South Korea, and Australia, but excluding China and India (the “Licensed Territory”). The Company’s license and collaboration agreement includes contractual milestones. These consist of development and regulatory milestones (such as the initiation of phase 2b, or phase 3 clinical trials in the primary and other indication), and commercialization milestones (such as product sales in excess of a pre-specified The Company determined that its performance obligations under the agreement are the license and transfer of data, ongoing information sharing with Astellas and the material right granted to Astellas to acquire rosiptor at the Company’s cost. The upfront payment of $25.0 million was allocated between each of the performance obligations. On June 27, 2018, the Company announced the Phase 3 trial of rosiptor failed to meet its primary endpoint and that all further development activities with rosiptor would be halted. As such, the Company will have no further performance obligations under the agreement. On September 4, 2018, Astellas provided notice to the Company that it was terminating the exclusive license and collaboration agreement between the Company and Astellas effective March 4, 2019, unless an earlier termination date is agreed to by the parties. The $25.0 million upfront payment is non-refundable

Other liabilities

Other liabilities	9 Months Ended
	Sep. 30, 2018
Other Liabilities Disclosure [Abstract]
Other liabilities	5. Other liabilities (in thousands) SEPTEMBER 30, 2018 DECEMBER 31, Capital lease obligations $ 10 $ 33 Deferred rent liability 333 453 $ 343 $ 486

Stockholders' equity

Stockholders' equity	9 Months Ended
	Sep. 30, 2018
Equity [Abstract]
Stockholders' equity	6. Stockholders’ equity (a) Share capital Aquinox USA is authorized to issue two classes of stock, common and preferred. The total number of shares Aquinox USA is authorized to issue is 55,000,000 shares, comprised of 50,000,000 common stock and 5,000,000 preferred stock both with a par value of $0.000001 per share. As of September 30, 2018, the total number of shares of common stock issued and outstanding was 23,537,368 (December 31, 2017 – 23,472,430). As of September 30, 2018 and December 31, 2017, no shares of preferred stock were issued or outstanding. (b) Stock option plan On January 27, 2014, the stockholders of Aquinox USA approved a 2014 Equity Incentive Plan (“2014 Plan”). The 2014 Plan became effective on March 6, 2014. The 2014 Plan is the successor to and continuation of the Joint Canadian Stock Option Plan (the “2006 Plan”). No further grants will be made under the 2006 Plan. The 2014 Plan provides for the grant of stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance stock awards, performance cash awards, and other forms of equity awards to employees, directors, and consultants. As at September 30, 2018, the maximum number of shares of common stock that may be issued under the 2014 Plan was 3,746,696 shares. Additionally, the number of shares of common stock reserved for issuance under the 2014 Plan will automatically increase on January 1 of each year for a period of up to 10 years, beginning on January 1, 2015 and ending on and including January 1, 2024, by 4% of the total number of shares of capital outstanding on December 31 of the preceding calendar year, or a lesser number of shares determined by the board of directors. Stock option transactions and the number of stock options outstanding are summarized below: NUMBER OF SHARES WEIGHTED WEIGHTED (IN YEARS) AGGREGATE Outstanding at December 31, 2017 2,069,167 $ 12.18 7.76 $ 3,187 Options granted 2,054,540 9.10 Options exercised (64,938 ) 9.28 Options expired (520 ) 10.56 Options forfeited (700,985 ) 14.86 Outstanding at September 30, 2018 3,357,264 $ 9.79 8.27 $ — Exercisable as of September 30, 2018 1,248,644 $ 11.03 6.39 $ — During the nine months ended September 30, 2018, the Company granted 1,949,540 stock options to employees and 105,000 stock options to non-employee thirty-six non-employee 10-year During the nine months ended September 30, 2018, 64,938 shares of common stock were issued upon exercise of options with an aggregate intrinsic value of $0.3 million. (c) Stock-based compensation The fair value of stock options granted is estimated using the Black-Scholes option pricing model with the following weighted average assumptions: THREE MONTHS ENDED NINE MONTHS ENDED 2018 2017 2018 2017 Expected volatility 83 % 91 % 80 % 91 % Expected dividends 0 % 0 % 0 % 0 % Expected terms (years) 6.00 6.00 6.00 6.00 Risk free rate 2.86 % 1.87 % 2.80 % 1.89 % Weighted average grant-date fair value of stock options $ 2.20 $ 11.13 $ 6.25 $ 12.69 The Company amortizes the fair value of the stock options on a straight-line basis over the applicable requisite service periods of the awards, which is generally the vesting period. Stock-based compensation expense charged to operating expenses was $1.0 million and $3.9 million for the three and nine months ended September 30, 2018, respectively, and $1.2 million and $2.9 million for the three and nine months ended September 30, 2017, respectively. Total unrecognized compensation cost for all stock-based compensation plans was $12.1 million and $11.6 million as of September 30, 2018 and September 30, 2017, respectively, which is expected to be recognized over a weighted-average period of 2.93 years (September 30, 2017 – 2.88 years)

Other income, net

Other income, net	9 Months Ended
	Sep. 30, 2018
Other Income and Expenses [Abstract]
Other income, net	7. Other income, net THREE MONTHS ENDED NINE MONTHS ENDED (in thousands) 2018 2017 2018 2017 Interest income $ 469 $ 236 $ 1,093 $ 720 Foreign exchange (losses) gains (3 ) 8 (34 ) (12 ) Miscellaneous expenses (Note 10) (262 ) (7 ) (433 ) (36 ) $ 204 $ 237 $ 626 $ 672

Net loss per common stock

Net loss per common stock	9 Months Ended
	Sep. 30, 2018
Earnings Per Share [Abstract]
Net loss per common stock	8. Net loss per common stock Basic and diluted net loss per common stock is computed by dividing net loss by the weighted average number of common stock outstanding. The Company excluded outstanding stock options to purchase 3,357,264 shares for the three and nine months ended September 30, 2018 and 2,073,542 shares for the three and nine months ended September 30, 2017 from the computation of basic and diluted net loss per common stock as the effect would have been antidilutive for all periods presented.

Financial instruments

Financial instruments	9 Months Ended
	Sep. 30, 2018
Investments, All Other Investments [Abstract]
Financial instruments	9. Financial instruments Securities classified as available for sale The Company has no short-term investments as of September 30, 2018. The Company’s short-term investments as at December 31, 2017, consisted of available-for-sale (in thousands) December 31, 2017 Amortized Gross Gross Fair Short-term investments: U.S. treasury securities $ 56,123 $ — $ (70 ) $ 56,053 Contractual maturities: Due within one year $ 56,123 $ 56,053 The aggregate estimated fair value of the Company’s investments with unrealized losses are as follows: Period of continuous unrealized loss 12 months or less Greater than 12 months (in thousands) December 31, 2017 Fair value Gross Fair value Gross U.S. treasury securities $ 15,983 $ (27 ) $ 40,070 $ (43 ) Fair value of financial instruments Fair value is defined as the amounts that would be received upon sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The fair value of the Company’s financial instruments are determined according to a fair value hierarchy that prioritizes the inputs and assumptions used, and the valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the hierarchy are as follows: Level 1 – Quoted prices in active markets for identical assets or liabilities. Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The determination of a financial instrument’s level within the fair value hierarchy is based on an assessment of the lowest level of any input that is significant to the fair value measurement. The Company considers observable data to be market data which is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant market. The carrying amounts of certain of the Company’s financial instruments including cash, cash equivalents, receivables, accounts payable and other liabilities, approximate their fair values because of their nature and/or short maturities. The Company holds short-term investments that are classified as available-for-sale The following table presents the fair value of our financial instruments that are measured at fair value on a recurring basis: (in thousands) QUOTED (LEVEL 1) OTHER (LEVEL 2) SIGNIFICANT UN- OBSERVABLE (LEVEL 3) TOTAL BALANCES – December 31, 2017 Short-term investments – U.S. treasury securities $ 56,053 $ — $ — $ 56,053 $ 56,053 $ — $ — $ 56,053 Level 1 instruments, which include investments that are valued based on quoted market prices in active markets, consisted of U.S. treasury securities. The Company had no Level 2 or 3 investments as at September 30, 2018 and December 31, 2017. There were no transfers between Levels 1, 2, and 3 during the three and nine months ended September 30, 2018 and the year ended December 31, 2017. Total gains for securities were $0.3 million for each of the three months ended September 30, 2018 and 2017 and $0.7 million for each of the nine months ended September 30, 2018 and 2017.

Restructuring

Restructuring	9 Months Ended
	Sep. 30, 2018
Restructuring and Related Activities [Abstract]
Restructuring	10. Restructuring In July 2018, the Company’s Board of Directors approved a restructuring plan to reduce operating costs and better align the Company’s workforce with the needs of its business following the June 27, 2018 announcement that its Phase 3 Leadership 301 clinical trial evaluating once-daily, oral rosiptor for the treatment of IC/BPS failed to meet its primary endpoint. The Company has halted all further development activities with rosiptor. Under the restructuring plan, the Company reduced its workforce by 30 employees (approximately 53% of total employees) and closed its office in San Bruno, California. Affected employees are eligible to receive severance payments and outplacement services. The Company estimates that it will incur aggregate restructuring charges of approximately $9.2 million related to clinical trial closing costs, contract cancellations, closing of its office in San Bruno, severance payments and other employee-related costs. During the three months ended September 30, 2018, $3.3 million of the estimated restructuring charges was paid. The charges that the Company expects to incur in connection with the restructuring are subject to a number of assumptions, and actual results may differ materially. The Company may also incur additional costs not currently contemplated due to events that may occur as a result of, or that are associated with, the restructuring plan. The Company accounts for the restructuring cost in accordance with ASC 420, Exit or Disposal Cost Obligations. ASC 420 specifies that a liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred, except for a liability where employees are required to render service until they are terminated in order to receive termination benefits and will be retained to render service beyond the minimum retention period. A liability for such one-time The following table shows the total amount expected to be incurred and the liability as at September 30, 2018: (in thousands) Total Clinical trial closing costs $ 5,703 One-time 1,879 Contract termination costs 1,108 San Bruno office closing costs 465 Total restructuring costs expected to be incurred 9,155 Amounts to be incurred in the fourth quarter (184 ) Amounts paid during the period (3,340 ) Amounts accrued at September 30, 2018 $ 5,631 Restructuring costs of $7.9 million is recorded in research and development expenses, $0.9 million in general and administrative expenses and $0.2 million in miscellaneous expenses. The majority of the amounts accrued will be paid by December 31, 2018.

Subsequent event

Subsequent event	9 Months Ended
	Sep. 30, 2018
Subsequent Events [Abstract]
Subsequent event	11. Subsequent event On November 6, 2018, the Company’s Board of Directors approved an additional restructuring plan to further reduce operating costs. Under the restructuring plan, the Company reduced its workforce by 16 employees, including its Chief Operating Officer, Mr. Lloyd Mackenzie, effective December 31, 2018. Further reduction of staff may occur in 2019 pending corporate development activities. Affected employees are eligible to receive severance payments and outplacement services. The Company estimates that for this second restructuring plan, it will incur aggregate restructuring charges of approximately $1.0 million in 2018 related to one-time

Condensed summary of signific_2

Condensed summary of significant accounting policies (Policies)	9 Months Ended
	Sep. 30, 2018
Accounting Policies [Abstract]
Basis of presentation	(a) Basis of presentation The accompanying unaudited condensed consolidated financial statements are presented in United States (“U.S.”) dollars and have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”) for interim financial information. Accordingly, these financial statements do not include all of the information and footnotes required for complete financial statements and should be read in conjunction with the audited consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K In management’s opinion, the unaudited condensed consolidated financial statements reflect all adjustments (including reclassifications and normal recurring adjustments) necessary to present fairly the financial position as of September 30, 2018, and results of operations and cash flows for all periods presented. The interim results presented are not necessarily indicative of results that can be expected for a full year.
Use of estimates and assumptions	(b) Use of estimates and assumptions The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Significant areas requiring management estimates include valuation of stock options, amortization and depreciation, accrual of expenses, valuation allowance for deferred income taxes, and contingencies. Actual results could differ from those estimates.
Short-term investments	(c) Short-term investments Short-term investments consist of bank term deposits and U.S. government securities with initial maturities of less than a year. Short-term investments are classified as available-for-sale
Accounting for stock-based compensation	(d) Accounting for stock-based compensation The Company measures the cost of services received in exchange for an award of equity instruments based on the grant-date fair value of the award. The cost of such award will be recognized over the period during which services are provided in exchange for the award, generally the vesting period. The Company accounts for forfeitures as they occur. All share-based payments to employees are recognized in the consolidated financial statements based upon their respective grant date fair values. The Company estimates the fair value of options granted using the Black-Scholes option pricing model. This approximation uses assumptions regarding a number of inputs that requires management to make significant estimates and judgments. Prior to the completion of the Company’s initial public offering in March 2014, the Company’s common stock was not publicly traded. As a result, the expected volatility assumption is based on industry peer information due to insufficient trading history of the Company’s common stock. Additionally, because the Company has no significant history to calculate the expected term, the simplified method calculation is used.
Revenue recognition	(e) Revenue recognition The Company adopted the Financial Accounting Standards Board, or FASB, issued ASU 2014-09, “Revenue
Segment reporting	(f) Segment reporting The Company operates in one segment, the development of novel therapeutics for conditions marked by inflammation, inflammatory pain and blood cancers. The Company has significant Canadian operations but its assets are mostly held in the United States with an immaterial amount of long lived assets in Canada.
Net loss per common stock	(g) Net loss per common stock Basic net loss per common stock is computed by dividing net loss by the weighted-average number of common stock outstanding during the period. Diluted net loss per common stock is determined using the weighted-average number of common stock outstanding during the period, adjusted for the dilutive effect of common stock equivalents, consisting of shares that might be issued upon exercise of common stock options. In periods where losses are reported, the weighted-average number of common stock outstanding excludes common stock equivalents because their inclusion would be anti-dilutive.
Recently issued and recently adopted accounting standards	(h) Recently issued and recently adopted accounting standards The Company adopted FASB ASU 2014-09, “Revenue ASU 2014-09 did The Company adopted FASB ASU 2016-01 825-10): In February 2016, the FASB issued ASU 2016-02 right-of-use 2016-02, 2016-02 2016-02 right-of-use In August 2018, the FASB issued ASU 2018-13 2018-13 2018-13
Risks and uncertainties	(i) Risks and uncertainties The Company is subject to numerous risks and uncertainties. These risks, among others, included the following: • the Company has no source of recurring revenue, has an accumulated deficit of $225.2 million as of September 30, 2018, may never become profitable and may incur substantial and increasing net losses for the foreseeable future as it continues its research and development programs; • the Company is likely to require additional capital to finance its operations which may not be available to it on acceptable terms, or at all; • the Company’s success is primarily dependent on the successful development, regulatory approval and commercialization of drug product candidates; • in June 2018, the Company announced that its Phase 3 Leadership 301 clinical trial evaluating its lead product candidate, rosiptor, for the treatment of IC/BPS failed to meet its primary endpoint and all further development activities with rosiptor were halted; the Company may be unable to identify or acquire another lead product candidate to replace rosiptor; • the Company is subject to regulatory approval processes that are lengthy, time consuming and inherently unpredictable; the Company may not be able to obtain approval for any drug product candidates from the U.S. Food and Drug Administration, or FDA, or foreign regulatory authorities; • the Company’s intellectual property rights may be subject to claims by third parties and can be difficult and costly to protect; • the Company may not be able to recruit or retain key employees, including its senior management team; • the Company depends on the performance of third parties, including contract research organizations and third-party manufacturers; and • the Company faces competition from other pharmaceutical and biotechnology companies, academic institutions, governmental agencies, and public and private research institutions, among others.

Cash and cash equivalents (Tabl

Cash and cash equivalents (Tables)	9 Months Ended
	Sep. 30, 2018
Cash and Cash Equivalents [Abstract]
Schedule of Cash and Cash Equivalents	(in thousands) SEPTEMBER 30, 2018 DECEMBER 31, Cash $ 35,152 $ 12,583 Cash equivalents 51,579 39,449 $ 86,731 $ 52,032

Other liabilities (Tables)

Other liabilities (Tables)	9 Months Ended
	Sep. 30, 2018
Other Liabilities Disclosure [Abstract]
Schedule of Other Liabilities	(in thousands) SEPTEMBER 30, 2018 DECEMBER 31, Capital lease obligations $ 10 $ 33 Deferred rent liability 333 453 $ 343 $ 486

Stockholders' equity (Tables)

Stockholders' equity (Tables)	9 Months Ended
	Sep. 30, 2018
Equity [Abstract]
Schedule of Stock Option Transactions and Number of Stock Options Outstanding	Stock option transactions and the number of stock options outstanding are summarized below: NUMBER OF SHARES WEIGHTED WEIGHTED (IN YEARS) AGGREGATE Outstanding at December 31, 2017 2,069,167 $ 12.18 7.76 $ 3,187 Options granted 2,054,540 9.10 Options exercised (64,938 ) 9.28 Options expired (520 ) 10.56 Options forfeited (700,985 ) 14.86 Outstanding at September 30, 2018 3,357,264 $ 9.79 8.27 $ — Exercisable as of September 30, 2018 1,248,644 $ 11.03 6.39 $ —
Schedule of Weighted Average Assumptions	The fair value of stock options granted is estimated using the Black-Scholes option pricing model with the following weighted average assumptions: THREE MONTHS ENDED NINE MONTHS ENDED 2018 2017 2018 2017 Expected volatility 83 % 91 % 80 % 91 % Expected dividends 0 % 0 % 0 % 0 % Expected terms (years) 6.00 6.00 6.00 6.00 Risk free rate 2.86 % 1.87 % 2.80 % 1.89 % Weighted average grant-date fair value of stock options $ 2.20 $ 11.13 $ 6.25 $ 12.69

Other income, net (Tables)

Other income, net (Tables)	9 Months Ended
	Sep. 30, 2018
Other Income and Expenses [Abstract]
Schedule of Other Income, Net	THREE MONTHS ENDED NINE MONTHS ENDED (in thousands) 2018 2017 2018 2017 Interest income $ 469 $ 236 $ 1,093 $ 720 Foreign exchange (losses) gains (3 ) 8 (34 ) (12 ) Miscellaneous expenses (Note 10) (262 ) (7 ) (433 ) (36 ) $ 204 $ 237 $ 626 $ 672

Financial instruments (Tables)

Financial instruments (Tables)	9 Months Ended
	Sep. 30, 2018
Investments, All Other Investments [Abstract]
Summary of Short-Term Investments of Available-for-Sale Securities	The Company has no short-term investments as of September 30, 2018. The Company’s short-term investments as at December 31, 2017, consisted of available-for-sale (in thousands) December 31, 2017 Amortized Gross Gross Fair Short-term investments: U.S. treasury securities $ 56,123 $ — $ (70 ) $ 56,053 Contractual maturities: Due within one year $ 56,123 $ 56,053
Aggregate Estimated Fair Value of Investments with Unrealized Losses	The aggregate estimated fair value of the Company’s investments with unrealized losses are as follows: Period of continuous unrealized loss 12 months or less Greater than 12 months (in thousands) December 31, 2017 Fair value Gross Fair value Gross U.S. treasury securities $ 15,983 $ (27 ) $ 40,070 $ (43 )
Fair Value of Financial Instruments Measured At Fair Value on a Recurring Basis	The following table presents the fair value of our financial instruments that are measured at fair value on a recurring basis: (in thousands) QUOTED (LEVEL 1) OTHER (LEVEL 2) SIGNIFICANT UN- OBSERVABLE (LEVEL 3) TOTAL BALANCES – December 31, 2017 Short-term investments – U.S. treasury securities $ 56,053 $ — $ — $ 56,053 $ 56,053 $ — $ — $ 56,053

Restructuring (Tables)

Restructuring (Tables)	9 Months Ended
	Sep. 30, 2018
Restructuring and Related Activities [Abstract]
Summary of Total Amount Expected to Be Incurred and Liability	The following table shows the total amount expected to be incurred and the liability as at September 30, 2018: (in thousands) Total Clinical trial closing costs $ 5,703 One-time 1,879 Contract termination costs 1,108 San Bruno office closing costs 465 Total restructuring costs expected to be incurred 9,155 Amounts to be incurred in the fourth quarter (184 ) Amounts paid during the period (3,340 ) Amounts accrued at September 30, 2018 $ 5,631

Nature of operations - Addition

Nature of operations - Additional Information (Detail)	9 Months Ended
	Sep. 30, 2018
Entity Information [Line Items]
Date of incorporation	May 31, 2007
Aquinox Pharmaceuticals (Canada) Inc. [Member]
Entity Information [Line Items]
Date of incorporation	Dec. 26, 2003

Condensed summary of signific_3

Condensed summary of significant accounting policies - Additional Information (Detail) $ in Thousands	9 Months Ended
	Sep. 30, 2018USD ($)Segment	Dec. 31, 2017USD ($)
Accounting Policies [Abstract]
Operating segment | Segment	1
Accumulated deficit | $	$ (225,200)	$ (198,502)

Cash and cash equivalents - Sch

Cash and cash equivalents - Schedule of Cash and Cash Equivalents (Detail) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Cash and Cash Equivalents [Abstract]
Cash	$ 35,152	$ 12,583
Cash equivalents	51,579	39,449
Cash and cash equivalents	$ 86,731	$ 52,032

License and Collaboration Agr_2

License and Collaboration Agreement - Additional Information (Detail) $ in Thousands	9 Months Ended
	Sep. 30, 2018USD ($)
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Non-refundable upfront payment	$ 25,000
Revenue	$ 25,000

Other liabilities - Schedule of

Other liabilities - Schedule of Other Liabilities (Detail) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Other Liabilities [Abstract]
Capital lease obligations	$ 10	$ 33
Deferred rent liability	333	453
Other liabilities	$ 343	$ 486

Stockholders' equity - Addition

Stockholders' equity - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017
Equity Transactions And Share Based Compensation [Line Items]
Total number of shares authorized	55,000,000		55,000,000
Common stock, shares authorized	50,000,000		50,000,000		50,000,000
Common stock, par value	$ 0.000001		$ 0.000001		$ 0.000001
Preferred stock, shares authorized	5,000,000		5,000,000
Preferred stock, par value	$ 0.000001		$ 0.000001
Common stock, shares issued	23,537,368		23,537,368		23,472,430
Common stock, shares outstanding	23,537,368		23,537,368		23,472,430
Preferred stock, shares issued	0		0		0
Preferred stock, shares outstanding	0		0		0
Maximum number of shares of common stock that may be issued	3,746,696		3,746,696
Shares of common stock reserved for issuance description			Additionally, the number of shares of common stock reserved for issuance under the 2014 Plan will automatically increase on January 1 of each year for a period of up to 10 years, beginning on January 1, 2015 and ending on and including January 1, 2024, by 4% of the total number of shares of capital outstanding on December 31 of the preceding calendar year, or a lesser number of shares determined by the board of directors.
Shares of common stock reserved for issuance percentage			4.00%
Years of increase in shares of common stock reserved for issuance			10 years
Stock options granted			2,054,540
Stock options granted, exercise price per share			$ 9.10
Common stock issued upon exercise of options			64,938
Common stock issued upon exercise of options aggregate intrinsic value			$ 0.3
Stock-based compensation expense	$ 1	$ 1.2	3.9	$ 2.9
Unrecognized stock-based compensation cost	$ 12.1	$ 11.6	$ 12.1	$ 11.6
Unrecognized stock-based compensation cost, weighted-average period recognized			2 years 11 months 4 days	2 years 10 months 17 days
Employees [Member]
Equity Transactions And Share Based Compensation [Line Items]
Stock options granted			1,949,540
Stock options, expiration period			10 years
Employees [Member] | Minimum [Member]
Equity Transactions And Share Based Compensation [Line Items]
Stock options granted, exercise price per share			$ 3.07
Employees [Member] | Maximum [Member]
Equity Transactions And Share Based Compensation [Line Items]
Stock options granted, exercise price per share			$ 16.55
Employees [Member] | Vesting 25% One Year After the Beginning of the Vesting Period and Monthly Thereafter [Member]
Equity Transactions And Share Based Compensation [Line Items]
Stock options, vesting period from grant date			1 year
Stock options, vesting percentage			25.00%
Stock options, vesting period			36 months
Non-Employee Directors [Member]
Equity Transactions And Share Based Compensation [Line Items]
Stock options granted			105,000
Stock options granted, exercise price per share			$ 13.10
Stock options, vesting period			1 year

Stockholders' equity - Schedule

Stockholders' equity - Schedule of Stock Option Transactions and Number of Stock Options Outstanding (Detail) - USD ($) $ / shares in Units, $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2018	Dec. 31, 2017
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Options Outstanding, Number of Shares, beginning balance	2,069,167
Options granted, Number of Shares	2,054,540
Options exercised, Number of Shares	(64,938)
Options expired, Number of Shares	(520)
Options forfeited, Number of Shares	(700,985)
Options Outstanding, Number of Shares, ending balance	3,357,264	2,069,167
Exercisable, Number of Shares, ending balance	1,248,644
Options Outstanding, Weighted Average Exercise Price, beginning balance	$ 12.18
Options granted, Weighted Average Exercise Price	9.10
Options exercised, Weighted Average Exercise Price	9.28
Options expired, Weighted Average Exercise Price	10.56
Options forfeited, Weighted Average Exercise Price	14.86
Options Outstanding, Weighted Average Exercise Price, ending balance	9.79	$ 12.18
Exercisable, Weighted Average Exercise Price, ending balance	$ 11.03
Options Outstanding, Weighted Average Remaining Contractual Life (Years), ending balance	8 years 3 months 7 days	7 years 9 months 3 days
Exercisable, Weighted Average Remaining Contractual Life (Years), ending balance	6 years 4 months 20 days
Options Outstanding, Aggregate Intrinsic Value		$ 3,187
Exercisable, Aggregate Intrinsic Value	$ 0

Stockholders' equity - Schedu_2

Stockholders' equity - Schedule of Weighted Average Assumptions (Detail) - $ / shares	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Expected volatility	83.00%	91.00%	80.00%	91.00%
Expected dividends	0.00%	0.00%	0.00%	0.00%
Expected terms (years)	6 years	6 years	6 years	6 years
Risk free rate	2.86%	1.87%	2.80%	1.89%
Weighted average grant-date fair value of stock options	$ 2.20	$ 11.13	$ 6.25	$ 12.69

Other income, net - Schedule of

Other income, net - Schedule of Other Income Net (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Other Income and Expenses [Abstract]
Interest income	$ 469	$ 236	$ 1,093	$ 720
Foreign exchange (losses) gains	(3)	8	(34)	(12)
Miscellaneous expenses (Note 10)	(262)	(7)	(433)	(36)
Other income, net	$ 204	$ 237	$ 626	$ 672

Net loss per common stock - Add

Net loss per common stock - Additional Information (Detail) - shares	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Earnings Per Share [Abstract]
Antidilutive securities excluded from the computation of basic and diluted net loss per share - outstanding stock options	3,357,264	2,073,542	3,357,264	2,073,542

Financial instruments - Additio

Financial instruments - Additional Information (Detail) - USD ($)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Short-term investments	$ 0		$ 0		$ 56,053,000
Fair Value of Financial instruments					56,053,000
Transfers between Levels 1, 2 and 3	0		0		0
Net realized gains for securities	300,000	$ 300,000	700,000	$ 700,000
Other Observable Inputs (Level 2) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value of Financial instruments	0		0		0
Significant Unobservable Inputs (Level 3) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value of Financial instruments	$ 0		$ 0		$ 0

Financial instruments -Summary

Financial instruments -Summary of Short-Term Investments of Available-for-Sale Securities (Detail) $ in Thousands	Dec. 31, 2017USD ($)
Schedule of Available-for-sale Securities [Line Items]
Due within one year, Amortized cost	$ 56,123
Due within one year, Fair value	56,053
Short-term Investments [Member] | U.S. Treasury Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	56,123
Gross unrealized gains	0
Gross unrealized losses	(70)
Fair value	$ 56,053

Financial instruments - Aggrega

Financial instruments - Aggregate Estimated Fair Value of Investments with Unrealized Losses (Detail) - U.S. Treasury Securities [Member] $ in Thousands	Dec. 31, 2017USD ($)
Schedule of Available-for-sale Securities [Line Items]
Period of continuous unrealized loss, 12 months or less, Fair value	$ 15,983
Period of continuous unrealized loss, 12 months or less, Gross unrealized losses	(27)
Period of continuous unrealized loss, Greater than 12 months, Fair value	40,070
Period of continuous unrealized loss, Greater than 12 months, Gross unrealized losses	$ (43)

Financial instruments - Fair Va

Financial instruments - Fair Value of Financial Instruments Measured At Fair Value on a Recurring Basis (Detail) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Short-term investments	$ 0	$ 56,053
Fair Value of Financial instruments		56,053
U.S. Treasury Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Short-term investments		56,053
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value of Financial instruments		56,053
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Fair Value, Measurements, Recurring [Member] | U.S. Treasury Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Short-term investments		$ 56,053

Restructuring - Additional Info

Restructuring - Additional Information (Detail) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2018USD ($)	Sep. 30, 2018USD ($)Employee
Restructuring Cost and Reserve [Line Items]
Restructuring charges		$ 9,155
Payments for restructuring	$ 3,300	$ 3,340
Restructuring Plan, July 2018 [Member]
Restructuring Cost and Reserve [Line Items]
Number of positions eliminated | Employee		30
Number of positions eliminated, period percent		53.00%
Research and Development Expenses [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring charges		$ 7,900
General and Administrative Expenses [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring charges		900
Miscellaneous Expenses [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring charges		$ 200

Restructuring - Summary of Tota

Restructuring - Summary of Total Amount Expected to Be Incurred and Liability (Detail) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2018USD ($)	Sep. 30, 2018USD ($)
Restructuring Cost and Reserve [Line Items]
Restructuring costs expected to be incurred		$ 9,155
Amounts to be incurred in the fourth quarter	$ (184)	(184)
Amounts paid during the period	(3,300)	(3,340)
Amounts accrued at September 30, 2018	$ 5,631	5,631
Clinical Trial Closing Costs [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring costs expected to be incurred		5,703
One-time Employee Termination Benefits [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring costs expected to be incurred		1,879
Contract Termination Costs [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring costs expected to be incurred		1,108
San Bruno Office Closing Costs [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring costs expected to be incurred		$ 465

Subsequent event - Additional I

Subsequent event - Additional Information (Detail) - Scenario, Forecast [Member] $ in Millions	Dec. 31, 2018USD ($)Employees
Restructuring Plan, November 2018 [Member]
Subsequent Event [Line Items]
Number of employees | Employees	16
Second Restructuring Plan Member | One-time Employee Termination Benefits [Member]
Subsequent Event [Line Items]
Restructuring charges | $	$ 1