Kala Pharmaceuticals (KALA) 10-Q 8 Nov 18 2018 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2018	Nov. 06, 2018
Document and Entity Information
Entity Registrant Name	Kala Pharmaceuticals, Inc.
Entity Central Index Key	1,479,419
Trading Symbol	kala
Document Type	10-Q
Document Period End Date	Sep. 30, 2018
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	true
Entity Common Stock, Shares Outstanding		33,795,656
Document Fiscal Year Focus	2,018
Document Fiscal Period Focus	Q3

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Current assets:
Cash	$ 74,910	$ 114,565
Inventory	976
Prepaid expenses and other current assets	4,569	648
Total current assets	80,455	115,213
Property and equipment, net	1,311	786
Right-of-use asset	131	413
Restricted cash	2,178	134
Total assets	84,075	116,546
Current liabilities:
Accounts payable	1,283	1,202
Accrued expenses	7,968	6,606
Lease liabilities	101	397
Current portion of long-term debt	3,333	6,667
Total current liabilities	12,685	14,872
Long-term liabilities:
Long-term debt - less current portion	16,456	11,987
Other long-term liabilities		8
Total long-term liabilities	16,456	11,995
Total liabilities	29,141	26,867
Commitments and Contingencies (Note 11)
Stockholders' equity:
Preferred stock, $0.001 par value; 5,000,000 shares authorized as of September 30, 2018 and December 31, 2017; no shares issued or outstanding as of September 30, 2018 or December 31, 2017
Common stock, $0.001 par value; 120,000,000 shares authorized as of September 30, 2018 and December 31, 2017; 24,645,542 and 24,538,309 shares issued and outstanding as of September 30, 2018 and December 31, 2017, respectively	25	25
Additional paid-in capital	230,799	224,025
Accumulated deficit	(175,890)	(134,371)
Total stockholders' equity	54,934	89,679
Total liabilities and stockholders' equity	$ 84,075	$ 116,546

CONDENSED CONSOLIDATED BALANC_2

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Sep. 30, 2018	Dec. 31, 2017
CONDENSED CONSOLIDATED BALANCE SHEETS
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, authorized	5,000,000	5,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.001	$ 0.001
Common stock, authorized	120,000,000	120,000,000
Common stock, shares issued	24,645,542	24,538,309
Common stock, shares outstanding	24,645,542	24,538,309

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Operating expenses:
Research and development	$ 7,027	$ 7,018	$ 20,051	$ 23,128
General and administrative	8,469	2,516	21,102	5,607
Total operating expenses	15,496	9,534	41,153	28,735
Loss from operations	(15,496)	(9,534)	(41,153)	(28,735)
Other income (expense):
Interest income	325	194	848	276
Interest expense	(432)	(212)	(1,214)	(618)
Change in fair value of warrant liability		(623)		(1,844)
Total other income (expense)	(107)	(641)	(366)	(2,186)
Net loss	$ (15,603)	$ (10,175)	$ (41,519)	$ (30,921)
Net loss per share—basic and diluted	$ (0.63)	$ (0.56)	$ (1.69)	$ (4.51)
Weighted average shares outstanding—basic and diluted	24,600,080	18,034,278	24,570,081	6,860,777

CONDENSED CONSOLIDATED STATEM_2

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS $ in Thousands	9 Months Ended
	Sep. 30, 2018USD ($)	Sep. 30, 2017USD ($)
Cash flows from operating activities:
Net loss	$ (41,519)	$ (30,921)
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation	243	213
Amortization of right-of-use asset	283	265
Change in fair value of warrant liability		1,844
Amortization of debt discount	75	86
Stock-based compensation	6,417	2,070
Loss on disposal of fixed asset	9
Change in operating assets and liabilities
Prepaid expenses and other current assets	(3,350)	(732)
Inventory	(910)
Accounts payable	(220)	74
Accrued expenses	1,143	(163)
Lease liabilities	(295)	(268)
Other long-term liabilities	(8)	(2)
Net cash used in operating activities	(38,132)	(27,534)
Cash flows from investing activities:
Purchases of property and equipment	(668)	(198)
Net cash used in investing activities	(668)	(198)
Cash flows from financing activities:
Proceeds from common stock offering, net of underwriters discounts		96,255
Proceeds from venture debt, net of debt issuance costs of $50 and $0	2,728	10,000
Payment of principal on venture debt	(1,667)
Payment of common stock offering costs		(2,111)
Payment of deferred offering costs	(163)
Proceeds from exercise of stock options	291	189
Net cash provided by financing activities	1,189	104,333
Net (decrease) increase in cash and restricted cash	(37,611)	76,601
Cash and restricted cash at beginning of period	114,699	45,581
Cash and restricted cash at end of period	77,088	122,182
Reconciliation of cash and restricted cash:
Cash and restricted cash at end of period	77,088	122,182
Less restricted cash	(2,178)	(133)
Cash at end of period	74,910	122,049
Non-cash investing and financing activities:
Conversion of convertible preferred stock into common stock		118,391
Reclassification of warrants to additional paid-in capital		2,883
Common stock offering cost included in accounts payable and accrual		131
Purchases of property and equipment in accounts payable	110	45
Supplemental disclosure:
Cash paid for interest	$ 1,138	$ 532

CONDENSED CONSOLIDATED STATEM_3

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2018	Sep. 30, 2017
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Debt issuance costs	$ 50	$ 0

NATURE OF BUSINESS AND BASIS OF

NATURE OF BUSINESS AND BASIS OF PRESENTATION	9 Months Ended
	Sep. 30, 2018
NATURE OF BUSINESS AND BASIS OF PRESENTATION
NATURE OF BUSINESS AND BASIS OF PRESENTATION	1. NATURE OF BUSINESS AND BASIS OF PRESENTATION Nature of Business —Kala Pharmaceuticals, Inc. (the “Company”) was incorporated on July 7, 2009, and is a biopharmaceutical company focused on the development and commercialization of therapeutics using its AMPPLIFY™ mucus-penetrating particle (“MPP”) Drug Delivery Technology (“AMPPLIFY”), with an initial focus on the treatment of eye diseases. The Company has applied the AMPPLIFY technology to loteprednol etabonate, (“LE”), a corticosteroid designed for ocular applications, resulting in the U.S. Food and Drug Administration’s (the “FDA”), approval of INVELTYS™ (loteprednol etabonate ophthalmic suspension) 1% as a twice-daily ocular corticosteroid for treatment of post-operative inflammation and pain following ocular surgery on August 22, 2018, and its lead product candidate KPI-121 0.25% for the temporary relief of the signs and symptoms of dry eye disease. On October 16, 2018, the Company submitted a New Drug Application (“NDA”) to the FDA for KPI-121 0.25%. In addition, based upon the recommendation of the FDA, the Company initiated an additional Phase 3 clinical trial (“STRIDE 3”) ( STRIDE- S hort T erm R elief I n D ry E ye), in the third quarter of 2018 evaluating KPI-121 0.25% for the temporary relief of the signs and symptoms of dry eye disease. The Company expects to receive top-line results for STRIDE 3 in the fourth quarter of 2019. The Company is evaluating opportunities for MPP nanosuspensions of LE with less frequent daily dosing regimens for the treatment of inflammation and pain following ocular surgery, for the temporary relief of the signs and symptoms of dry eye disease and for potential chronic treatment of dry eye disease. The Company is also evaluating compounds in its topically applied MPP receptor Tyrosine Kinase Inhibitor program, or rTKI program, that inhibit the vascular endothelial growth factor, or VEGF, pathway, for the potential treatment of a number of retinal diseases. The Company is engaged in commercializing a product, research and development activities, raising capital and recruiting skilled personnel. The Company is subject to a number of risks similar to those of other companies conducting high‑risk, early‑stage research and development of pharmaceutical product candidates and launching a product for the first time. Principal among these risks are dependence on key individuals and intellectual property, competition from other products and companies and the technical risks associated with the successful research, development and marketing of its product candidates. The Company’s success is dependent upon its ability to raise additional capital in order to fund ongoing and future research and development, obtain regulatory approval of its product candidates, successfully commercialize its products, generate revenue, meet its obligations, and, ultimately, attain profitable operations. Initial Public Offering —On July 25, 2017, the Company completed its initial public offering (“IPO”) of common stock pursuant to its registration statement on Form S‑1, as amended (File No. 333‑218936), which was declared effective by the Securities Exchange Commission (the “SEC”) on July 19, 2017. Pursuant to the registration statement, the Company issued and sold 6,900,000 shares of $0.001 par value common stock at an initial offering price of $15.00 per share, which included 900,000 shares of common stock pursuant to the underwriters’ option to purchase additional shares. The Company’s shares began trading on the Nasdaq Global Select Market under the symbol “KALA” on July 20, 2017. Proceeds from the Company’s IPO were approximately $94.0 million after deducting underwriting discounts and commissions of $7.3 million and offering costs of $2.2 million. Upon the closing of the IPO, all of the Company’s outstanding shares of convertible preferred stock automatically converted into 16,101,970 shares of common stock at the applicable conversion ratio then in effect. All of the Company’s outstanding warrants to purchase preferred stock automatically converted into warrants to purchase 202,020 shares of common stock. October 2018 Financings — On August 9, 2018, the Company filed a shelf registration statement on Form S-3 with the SEC, which was declared effective on August 27, 2018 (the “Shelf”). Under the Shelf, the Company may offer and sell up to $250.0 million of a variety of securities including common stock, preferred stock, warrants, depositary shares, debt securities, purchase contracts, purchase units or any combination of such securities during the three-year period that commenced upon the Shelf becoming effective. Under the Shelf, the Company may periodically offer one or more types of securities in amounts, at prices and on terms announced, if and when the securities are ever offered. In connection with the filing of the Shelf, the Company entered into a sales agreement with Jefferies, LLC (the “Sales Agreement”) pursuant to which the Company may issue and sell, from time to time, up to an aggregate of $50.0 million of its common stock in an at-the-market equity offering (“ATM Offering”) through Jefferies, LLC., as sales agent. On October 1, 2018, the Company entered into a credit agreement (the “Athyrium Credit Facility”), with Athyrium Opportunities III Acquisition LP (“Athyrium”). The Athyrium Credit Facility provides for a term A loan in the aggregate principal amount of $75.0 million (the “Term A Loan”), and a term B loan in the aggregate principal amount of $35.0 million (the “Term B Loan”). On October 1, 2018, the Company borrowed the entire principal amount of the Term A Loan. The Company may draw down the Term B Loan upon either (i) FDA approval of KPI-121 0.25% for a dry eye disease indication or (ii) reaching certain net product revenues for INVELTYS, in each case on or prior to June 30, 2020. On October 5, 2018, the Company sold 7,500,000 shares of the Company’s common stock (the “Shares”) in an underwritten offering pursuant to the Shelf at a public offering price of $8.25 per share, before underwriting discounts and commissions. In addition, the underwriters were granted an overallotment option to purchase an additional 1,125,000 shares of the common stock at the same public offering price, less underwriting discounts and commissions (the “Overallotment Shares”). On October 11, 2018, the underwriters exercised in full their option to purchase the Overallotment Shares. The total number of Shares and Overallotment Shares sold by the Company in the offering was 8,625,000 shares, resulting in net proceeds to the Company, after underwriting discounts and offering expenses, of approximately $66.4 million. Between September 30, 2018 and November 8, 2018, the Company issued 518,135 shares of its common stock under the ATM Offering resulting in net proceeds to the Company of approximately $4.7 million. Liquidity — Since inception, we have incurred significant losses from operations and negative cash flows from operations. As of September 30, 2018, we had an accumulated deficit of $175.9 million. The Company has not generated any revenues to date from product sales and has financed operations primarily through the IPO, private placements of preferred stock, convertible debt financings, borrowings under credit facilities, warrants and public common stock offerings and to a lesser extent, payments received in connection with various feasibility studies . The Company has devoted substantially all of its financial resources and efforts to research and development, including preclinical studies and clinical trials. The Company expects to continue to incur significant expenses and operating losses over the next several years. Net losses may fluctuate significantly from quarter-to-quarter and year-to-year. The Company believes that its existing cash on hand as of September 30, 2018, together with the procceds from the October 2018 Financings, will enable it to fund its planned operating expenses, debt service obligations and capital expenditure requirements for at least twelve months from the date these condensed consolidated financial statements were issued and through at least early 2020. This evaluation is based on relevant conditions and events that are known and reasonably knowable at the date that the condensed consolidated financial statements are issued. As a result, the Company could deplete its available capital resources sooner than it currently expects. Use of Estimates —The preparation of condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America Net Loss per Share —Basic net loss per share is computed using the weighted average number of common shares outstanding during the period. Diluted net loss per share is computed using the sum of the weighted average number of common shares outstanding during the period and, if dilutive, the weighted average number of potential shares of common stock, including the assumed exercise of stock options and warrants. The Company applies the two-class method to calculate basic and diluted net loss per share attributable to common stockholders as its warrants to purchase common stock are participating securities. The two-class method is an earnings allocation formula that treats a participating security as having rights to earnings that otherwise would have been available to common stockholders. However, the two-class method does not impact the net loss per share of common stock as the Company has been in a net loss position and the warrant holders do not participate in losses. Basic and diluted shares outstanding are the same for each period presented as all common stock equivalents would be antidilutive due to the net losses incurred. Unaudited Interim Financial Information —The condensed consolidated financial statements of the Company included herein have been prepared, without audit, pursuant to the rules and regulations of the SEC. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted from this report, as is permitted by such rules and regulations. The accompanying condensed consolidated financial statements reflect all adjustments consisting of normal, recurring adjustments, that are necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods presented. Interim results are not necessarily indicative of results for a full year. Accordingly, these condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017 (the “Annual Report”). The unaudited condensed consolidated financial statements include the accounts of Kala Pharmaceuticals, Inc. and its wholly owned subsidiary, Kala Pharmaceuticals Security Corporation, which was established in November 2017. All intercompany transactions and balances have been eliminated in consolidation.

SUMMARY OF SIGNIFICANT ACCOUNTI

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	9 Months Ended
	Sep. 30, 2018
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Company’s significant accounting policies are described in Note 2, “Summary of Significant Accounting Policies,” to the consolidated financial statements included in the Annual Report. There have been no material changes to the significant accounting policies during the period ended September 30, 2018 other than those noted below. Inventory Inventory is stated at the lower of cost or net realizable value, on a first-in, first-out (“FIFO”) method. Costs include amounts related to third party manufacturing, transportation, internal labor and overhead. Capitalization of costs as inventory begins when the product has received regulatory approval in the U.S. We expense inventory costs related to product candidates as research and development expenses prior to regulatory approval in the respective territory, even if this inventory may later be sold. For INVELTYS, capitalization of costs as inventory began upon U.S. regulatory approval on August 22, 2018. Leases At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the unique facts and circumstances present. Most leases with a term greater than one-year are recognized on the balance sheet as right-of-use assets, lease liabilities and, if applicable, long-term lease liabilities. The Company has elected not to recognize on the balance sheet leases with terms of one-year or less. Lease liabilities and their corresponding right-of-use assets are recorded based on the present value of lease payments over the expected lease term. The interest rate implicit in lease contracts is typically not readily determinable. As such, the Company utilizes the appropriate incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. Certain adjustments to the right-of-use asset may be required for items such as initial direct costs paid or incentives received. The components of a lease should be split into three categories: lease components (e.g., land, building, etc.), non-lease components (e.g., common area maintenance, maintenance, consumables, etc.), and non-components (e.g., property taxes, insurance, etc.). Then the fixed and in-substance fixed contract consideration (including any related to non-components) must be allocated based on fair values to the lease components and non-lease components. Although separation of lease and non-lease components is required, certain practical expedients are available to entities. Entities electing the practical expedient would not separate lease and non-lease components. Rather, they would account for each lease component and the related non-lease component together as a single component. The Company’s facilities operating leases have lease and non-lease components which the Company has elected to account for as one single lease component. The lease component results in a right-of-use asset being recorded on the balance sheet and amortized as lease expense on a straight-line basis to the statements of operations. Recently Adopted Accounting Pronouncements In May 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2017-09, Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting (“ ASU 2017-09”), which provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. The amendments in ASU 2017-09 are effective f or all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017, with early adoption permitted. The Company has prospectively adopted this new standard as of January 1, 2018. The adoption of this standard did not have a material impact on the Company’s condensed consolidated financial statements. In August 2016, the FASB issued ASU No. 2016‑15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments (“ASU 2016‑15”), to address diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The standard is effective for annual periods beginning after December 15, 2017, including interim periods within those fiscal years. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) (“ASU 2016-02”), which provides guidance to enhance the transparency and comparability of financial reporting related to leasing arrangements. Under this new lease standard, most leases are required to be recognized on the balance sheet as right-of-use assets and corresponding lease liabilities. Disclosure requirements have been enhanced with the objective of enabling financial statement users to assess the amount, timing, and uncertainty of cash flows arising from leases. The Company elected to early adopt ASU 2016-02, effective January 1, 2018, as permitted in the guidance. The standard has been implemented using the required modified retrospective approach and the Company has also elected to utilize the available practical expedients. In using the modified retrospective approach, the Company was required to recognize and measure leases existing at, or entered into after, the beginning of the earliest comparative period presented. Prior period results have been restated resulting in adjustments to the condensed consolidated balance sheets and the condensed consolidated statement of cash flows. The adoption of this standard did not have a material impact on the condensed consolidated statement of operations. The impact on the consolidated balance sheet as of December 31, 2017 and the condensed consolidated statement of cash flows for the nine months ended September 30, 2017 is shown below. Impact to Previously Reported Results From December 31, 2017 consolidated balance sheet (in thousands): As Previously Reported New Lease Standard Adjustment As Restated Right-of-use asset $ — $ $ Accrued expenses $ $ $ Other current and long-term liabilities $ $ (1) $ Lease liabilities $ — $ $ For the nine months ended September 30, 2017 condensed consolidated statement of cash flows (in thousands): As Previously Reported New Lease Standard Adjustment As Restated Amortization of right-of-use asset $ — $ 265 $ 265 Accrued expenses $ (166) 3 $ (163) Lease liabilities $ — $ (268) $ (268)

INVENTORY

INVENTORY	9 Months Ended
	Sep. 30, 2018
INVENTORY
INVENTORY	3. INVENTORY Inventory consists of the following (in thousands): September 30, December 31, 2018 2017 Raw Materials $ — $ — Work in Progress 976 — Finished Goods — — Inventory $ 976 $ —

ACCRUED EXPENSES

ACCRUED EXPENSES	9 Months Ended
	Sep. 30, 2018
ACCRUED EXPENSES
ACCRUED EXPENSES	4. ACCRUED EXPENSES Accrued expenses consist of the following (in thousands): September 30, December 31, 2018 2017 Development costs $ 2,803 $ 3,054 Compensation and benefits 3,067 2,402 Professional fees 1,122 666 General and administrative consulting 642 229 Other 334 255 Accrued expenses $ 7,968 $ 6,606

LEASES

LEASES	9 Months Ended
	Sep. 30, 2018
LEASES
LEASES	5. LEASES The Company entered into a three‑year lease agreement for its headquarters on September 30, 2013, with a commencement date of February 1, 2014. On June 30, 2016, the lease was amended to extend the term from January 31, 2017 to January 31, 2019. In connection with the lease agreement, the Company issued a letter of credit to the landlord for $84,000. The Company secured the letter of credit for the full amount of the letter with cash on deposit, which is reported as restricted cash. With the adoption of ASU 2016-02, the Company has recorded a right-of-use asset and corresponding lease liability. On February 28, 2018, the Company entered into a lease agreement with 480 Arsenal Group LLC (the “Arsenal Group”) for the lease of a portion of the building located at 490 Arsenal Way Watertown, Massachusetts (the “Watertown Lease”). The initial term of the Watertown Lease is eight years with an option to extend for an additional five years. The Company expects to occupy the premises in early 2019. The Company plans to use the premises as its new corporate headquarters and for research and development. The Company has not yet occupied this space as it is being renovated for the Company’s use. The Company has concluded that it does not control the space as defined in ASU 2016-02 during the construction period and does not expect to gain control of the space until on or near construction completion and , as such, a right-of-use asset and corresponding lease liability have not been recorded. In connection with the Watertown Lease, the Company issued a letter of credit to the Arsenal Group for $2.0 million. The Company secured the letter of credit for the full amount of the letter with cash on deposit, which is reported as restricted cash. On March 15, 2018, the Company entered into a lease agreement with Duffy Associates, LLC for the lease of a portion of the building located at 465 Waverley Oaks Road, Suite 301, Waltham, Massachusetts (the “Waverley Oaks Lease”). The term of the Waverley Oaks Lease is one-year, and as such a right-of-use asset and corresponding lease liability has not been recorded. The Company plans to use this location for additional corporate offices before moving to its new corporate headquarters in Watertown, Massachusetts. The components of lease expense and related cash flows were as follows (in thousands): For the three months ended September 30, 2018 2017 Lease cost Operating lease cost $ $ Short-term lease cost — Total lease cost $ $ Operating cash flows from operating leases $ $ For the nine months ended September 30, 2018 2017 Lease cost Operating lease cost $ $ Short-term lease cost — Total lease cost $ $ Operating cash flows from operating leases $ $ As of September 30, 2018, and December 31, 2017, the remaining lease term on the operating lease was 0.33 years and 1.08 years, respectively. As of September 30, 2018, and December 31, 2017, the discount rate was 6.50%. Future minimum commitments due under these lease agreements as of September 30, 2018 are as follows (in thousands): Years Ending December 31, Operating Lease Other Lease Obligations (2) Total 2018 (remaining three months) $ 69 $ 63 $ 132 2019 34 52 86 2020 — — — 2021 — — — 2022 — — — Present value adjustment (2) — (2) Total minimum lease payments $ 101 $ 115 $ 216 (1) Future minimum lease payments under the Company’s operating lease for its current corporate headquarters and lab space in Waltham, Massachusetts. (2) Future minimum lease payments under the Company’s Waverley Oaks Lease. Excluded from the table above is the Watertown Lease because the Company has concluded that it does not control the space during the construction period and does not expect to gain control of the space until on or near construction completion.

DEBT

DEBT	9 Months Ended
	Sep. 30, 2018
DEBT
DEBT	6. DEBT 2014 Debt Facility In November 2014, the Company entered into a venture debt facility (“2014 Debt Facility”) for a total loan commitment of $10.0 million. On October 13, 2016, the Company entered into a First Amendment to the 2014 Debt Facility the (“First Amendment”), which reaffirmed the initial commitment to a total of $10.0 million of funding (“Term Loan A”) and increased the Company’s total borrowing capacity by an additional $10.0 million (“Term Loan B” and together with Term Loan A, “Term Loans”). On September 28, 2017, the Company drew the additional $10.0 million available under Term Loan B. On November 22, 2017, the Company entered into a Second Amendment to the 2014 Debt Facility to account for the formation of the Company’s wholly-owned subsidiary. On March 29, 2018, the Company entered into a Third Amendment to the 2014 Debt Facility the (“Third Amendment”), which reaffirmed the initial commitment to a total of $20.0 million of funding (“Term Loan A”), increased the Company’s total borrowing capacity by an additional $5.0 million and extended the interest-only end date for 12 months following the execution of the Third Amendment. The maturity date of the 2014 Debt Facility was also extended from October 13, 2020 to March 29, 2022. Under the terms of the facility, the borrowings accrue interest at an annual rate equal to 3.00% above the Prime Rate then in effect. The interest rate was 8.25% as of September 30, 2018 and 7.50% as of December 31, 2017. The unpaid principal balance under the 2014 Debt Facility was $20.0 million and $18.9 million as of September 30, 2018 and December 31, 2017, respectively. The unamortized discount was $210,000 and $235,000 as of September 30, 2018 and December 31, 2017, respectively. During the three months ended September 30, 2018 and 2017, the Company recognized interest expense of $432,000 and $212,000, respectively, which consisted of amortization of the debt discount of $23,000 and $29,000, respectively and the contractual coupon interest of $409,000 and $183,000, respectively. During the nine months ended September 30, 2018 and 2017, the Company recognized interest expense of $1,214,000 and $618,000, respectively, which consisted of amortization of the debt discount of $74,000 and $86,000, respectively, and the contractual coupon interest of $1,138,000 and $532,000, respectively. The 2014 Debt Facility, as amended, is senior debt and is secured by substantially all of the assets of the Company other than intellectual property. The Company’s ability to pay cash dividends is currently restricted by the terms of the 2014 Debt Facility. In the event the Company is determined to be in default under the 2014 Debt Facility, the outstanding balance accrues interest at five percentage points above the interest rate applicable immediately prior to the occurrence of the event of default and the lender has the right to declare all outstanding principal and interest payable. Under the terms of the 2014 Debt Facility, certain events including but not limited to, the Company’s failure to pay obligations when due, failure to perform obligations under the agreement, insolvency or the occurrence of any circumstance that could reasonably be expected to have a material adverse effect on the Company, constitute events of default. In connection with its borrowings under the 2014 Debt Facility, the Company issued preferred stock warrants. Upon each issuance of such preferred stock warrants, the Company estimated the fair value using the Black‑Scholes option‑pricing model, and recorded the estimated fair value as a liability separate from the loan balance, and an additional debt discount included within long‑term debt that is amortized to interest expense over the term of the loan using the effective interest method. The initial fair value of all issuances of such preferred stock warrants on an aggregate basis was $365,000. Upon the closing of the Company's IPO on July 25, 2017, all of the underlying preferred stock warrants were converted into warrants for common stock (see Note 7), and the warrant liability was re-measured to fair value and reclassified to additional paid-in capital. The future annual principal payments due under the 2014 Debt Facility as of September 30, 2018 were as follows (in thousands): Years Ending December 31, 2018 (remaining three months) $ — 2019 5,000 2020 6,667 2021 6,667 2022 1,666 Total $ 20,000 Athyrium Credit Facility On October 1, 2018, the Company entered into the Athyrium Credit Facility. The Athyrium Credit Facility provides for a Term A loan in the aggregate principal amount of $75.0 million, and a Term B loan in the aggregate principal amount of $35.0 million . On October 1, 2018, the Company borrowed the entire principal amount of the Term A Loan. The Company may draw down the Term B Loan upon either (i) FDA approval of KPI-121 0.25% for a dry eye disease indication or (ii) reaching certain net product revenues for INVELTYS, in each case on or prior to June 30, 2020. The Athyrium Credit Facility has a six-year term and bears interest at a rate of 9.875% per annum. A portion of the proceeds from the Term A Loan was used to replace and repay in full the 2014 Debt Facility scheduled to mature on March 29, 2022. In connection with the Company’s repayment of the 2014 Debt Facility, the Company paid a prepayment fee of $180,000.

WARRANTS

WARRANTS	9 Months Ended
	Sep. 30, 2018
WARRANTS
WARRANTS	7. WARRANTS The Company has issued warrants in connection with debt transactions that were completed prior to 2017. Upon the completion of the IPO, the Company’s outstanding warrants to purchase preferred stock converted into warrants to purchase common stock. The following table summarizes the common stock warrants outstanding as of September 30, 2018 and December 31, 2017, each exercisable into the number of shares of common stock set forth below as of the specified dates: Shares Exercisable at Exercise Expiration Exercisable September 30, December 31, Issued Price Date From 2018 2017 2013 $ 7.50 April 2021 July 2017 82,816 82,816 2014 $ 7.50 November 2024 July 2017 16,000 16,000 2016 $ 8.27 October 2026 September 2017 14,512 14,512 113,328 113,328 In connection with and in consideration for the commitment of the Athyrium Credit Facility, on October 1, 2018, the Company issued to Athyrium a warrant (“Warrant”), to purchase up to 270,835 shares of the Company’s common stock, at an exercise price per share of $12.18456. The Warrant is immediately exercisable as to 184,660 shares and will become exercisable as to the remaining 86,175 shares only upon the Company’s draw of the Term B Loan. The Warrant expires and is no longer exercisable on October 1, 2025, the seven-year anniversary of the closing of the Athyrium Credit Facility.

FAIR VALUE OF FINANCIAL INSTRUM

FAIR VALUE OF FINANCIAL INSTRUMENTS	9 Months Ended
	Sep. 30, 2018
FAIR VALUE OF FINANCIAL INSTRUMENTS
FAIR VALUE OF FINANCIAL INSTRUMENTS	8. FAIR VALUE OF FINANCIAL INSTRUMENTS The Company classifies fair value based measurements using a three-level hierarchy that prioritizes the inputs used to measure fair value. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows: Level 1, quoted market prices in active markets for identical assets or liabilities; Level 2, observable inputs other than quoted market prices included in Level 1 such as quoted market prices for markets that are not active or other inputs that are observable or can be corroborated by observable market data; and 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, including estimates and assumptions developed by the Company, reflective of those that a market participant would use, as inputs to certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs. The carrying value of accounts payable and accrued expenses approximate their fair value due to the short‑term nature of these assets and liabilities. Management believes that the Company’s long‑term debt (See Note 6) bears interest at the prevailing market rate for instruments with similar characteristics and, accordingly, the carrying value of long‑term debt, including the current portion, also approximates its fair value. The fair value of the outstanding debt was estimated using a discounted cash flow analysis based on current market interest rates for debt issuances with similar remaining years to maturity, adjusted for credit risk, which represents a Level 3 measurement. There were no transfers between fair value measurement levels during the nine months ended September 30, 2018 or September 30, 2017. The Company has historically classified the value of the warrant liability as a Level 3 measurement within the fair value hierarchy because the fair value is derived using significant unobservable inputs, which included the estimated volatility, the estimated fair value of the underlying preferred stock, and to the extent that the number of exercisable shares underlying the warrants were adjustable based on the amount of the 2014 Term Loans drawn down or the probability that the Company would draw down on the 2014 Debt facility. Upon the completion of the IPO, the Company’s outstanding warrants to purchase preferred stock converted into warrants to purchase common stock and the Company reclassified the fair value of the warrant liability to additional paid-in capital. All warrants are currently classified as equity and their fair value is not recorded or re-measured. The following table provides a summary of changes in the fair value of the Company’s warrant liability, which is included as a component of other (income) expense (in thousands) which was subsequently remeasured to the fair value at the date of the IPO and reclassified to additional paid-in capital at that time: Three Months Ended September 30, 2018 2017 Warrant Warrant Liability Liability Fair value -June 30, $ — $ 2,260 Change in fair value of warrant liability — 623 Reclassification of preferred warrant liability — (2,883) Fair value - September 30, $ — $ — Nine Months Ended September 30, 2018 2017 Warrant Warrant Liability Liability Fair value - December 31, $ — $ 1,039 Change in fair value of warrant liability — 1,844 Reclassification of preferred warrant liability — (2,883) Fair value - September 30, $ — $ —

STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION	9 Months Ended
	Sep. 30, 2018
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION	9. STOCK‑BASED COMPENSATION Stock Incentive Plans —In December 2009, the Board of Directors (the “Board”) adopted the 2009 Employee, Director and Consultant Equity Incentive Plan (the “2009 Plan”) for the issuance of common stock and stock options to employees, officers, directors, consultants, and advisors. In July 2017, the Company’s 2017 Also approved under the 2017 Plan is an annual increase for each of the years through December 31, 2027, equal to the least of (i) 3,573,766 shares of common stock, (ii) 4% of the shares of common stock outstanding on December 31 of the prior year and (iii) an amount determined by the Board. Under the plans, the Board determines the number of shares of common stock to be granted pursuant to the awards, as well as the exercise price and terms of such awards. The exercise price of incentive stock options could not be less than the fair value of the common stock on the date of grant. Stock options awarded under the plans expire 10 years after the grant date, unless the Board sets a shorter term. Options granted under the plans generally vest over a four‑year period. A portion of the unvested stock options will vest upon the sale of all or substantially all of the stock or assets of the Company. In the past, the Company had granted stock options which contain performance‑based vesting criteria. These criteria were milestone events that were specific to the Company’s corporate goals. Stock‑based compensation expense associated with performance‑based stock options is recognized if the achievement of the performance condition is considered probable using management’s best estimates. As of September 30, 2018 there were no performance-based awards outstanding. For the three months ended September 30, 2018 and 2017, the Company did not grant any stock options to non-employee consultants. For the nine months ended September 30, 2018 and 2017, the Company granted 0 and 4,224 stock options to non‑employee consultants, respectively. During the three months ended September 30, 2018 and 2017, the Company recognized $0 and $46,000, respectively, in stock compensation expense related to non‑employee consultants. During the nine months ended September 30, 2018 and 2017, the Company recognized $11,000 and $83,000, respectively, in stock compensation expense related to non‑employee consultants. Inducement Stock Option Awards —During the three months ended September 2018, the Company granted non-statutory stock options to purchase an aggregate of 69,500 shares of the Company’s common stock to seven new employees. During the nine months ended September 2018, the Company granted non-statutory stock options to purchase 219,500 shares of Company’s common stock to a total of eight new employees. These stock options will vest over a four-year period, with 25% of the shares underlying each option award vesting on the one-year anniversary of the applicable employees’ new hire date and the remaining 75% of the shares underlying each award vesting monthly thereafter for three-years. Vesting of each option is subject to such employee’s continued service with the Company through the applicable vesting dates. These stock options were granted outside of the 2017 Plan as an inducement material to each employee’s acceptance of employment with the Company in accordance with Nasdaq Listing Rule 5635(c)(4). A summary of option activity for employee and non‑employee awards under the 2009 Plan, the 2017 Plan and inducement grants for the nine months ended September 30, 2018 is as follows (in thousands, except share and per share amounts): Weighted Weighted Average Average Remaining Aggregate Number of Exercise Contractual Intrinsic Shares Price Term Value (Years) Outstanding at January 1, 2018 $ 6.93 $ 44,578 Granted 1,449,690 13.74 Exercised 2.71 Forfeited 5.85 Outstanding at September 30, 2018 4,937,233 $ 9.04 $ 16,968 Vested or expected to vest at September 30, 2018 4,937,233 $ 9.04 $ 16,968 Options exercisable at September 30, 2018 2,414,308 $ 5.29 $ 13,198 The Company records stock‑based compensation related to stock options granted at fair value. The Company utilizes the Black‑Scholes option‑pricing model to estimate the fair value of stock option grants and to determine the related compensation expense. The assumptions used in calculating the fair value of stock‑based payment awards represent management’s best estimates. There were 747,892 options granted during the nine months ended September 30, 2017. The assumptions used in determining fair value of the stock options granted in the nine months ended September 30, 2018 and 2017 are as follows: Nine Months Ended September 30, 2018 2017 Expected volatility – 85% – 122% Risk-free interest rate – 2.96% – 2.29% Expected dividend yield 0% 0% Expected term (in years) 5.27 – 6.13 – 9.82 The Company derived the risk‑free interest rate assumption from the U.S. Treasury rates for U.S. Treasury zero‑coupon bonds with maturities similar to those of the expected term of the awards being valued. The Company based the assumed dividend yield on its expectation of not paying dividends in the foreseeable future. The Company calculated the weighted‑average expected term of options using the simplified method, as the Company lacks relevant historical data due to the Company’s limited operating experience. The estimated volatility is based upon the historical volatility of comparable companies with publicly available share prices. The impact of forfeitures on compensation expense is recorded as they occur. During the three months ended September 30, 2018 and 2017, the weighted average grant‑date fair value of options granted was $8.83 and $14.74, respectively. During the nine months ended September 30, 2018 and 2017, the weighted average grant‑date fair value of options granted was $9.99 and $13.19, respectively. The fair value is being expensed over the vesting period of the options on a straight‑line basis as the services are being provided. As of September 30, 2018, there was $22.7 million of unrecognized compensation cost related to the stock options granted, which is expected to be expensed over a weighted‑average period of 2.98 years. Employee Stock Purchase Plan —In 2017, the Company approved the 2017 Employee Stock Purchase Plan (the “ESPP”). Under the ESPP, participating employees can authorize the Company to withhold a portion of their base pay during consecutive six-month payment periods for the purchase of shares of the Company’s common stock. At the conclusion of the period, participating employees can purchase shares of the Company’s common stock at 85% of the lesser of the closing price of the common stock on (i) the first business day of the plan period or (ii) the exercise date. The initial six-month period will not commence until January 1, 2019. Reserved Shares —As of September 30, 2018 and December 31, 2017, the Company had reserved the following shares of common stock issuable upon exercise of rights under equity compensation plans and inducement stock option awards: September 30, December 31, 2018 2017 ESPP 223,341 223,341 Shares reserved for outstanding inducement stock option award 219,500 — 2009 Plan 2,649,952 2,868,449 2017 Plan 3,118,430 2,025,633 Total 6,211,223 5,117,423 Stock-based Compensation Expenses —Stock‑based compensation expense was classified in the statements of operations as follows (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2018 2017 2018 2017 Research and development $ 684 $ 357 $ 2,064 $ 749 General and administrative 1,581 624 4,353 1,321 Total $ 2,265 $ 981 $ 6,417 $ 2,070 For three and nine months ended September 30, 2018, stock-based compensation expense for the Company’s manufacturing employees related to INVELTYS manufactured since the FDA approval of $66,000, has been capitalized into inventory

INCOME TAXES

INCOME TAXES	9 Months Ended
	Sep. 30, 2018
INCOME TAXES
INCOME TAXES	10. INCOME TAXES The Company did not record a provision or benefit for income taxes during the three and nine months ended September 30, 2018 and 2017. The Company continues to maintain a full valuation allowance for its U.S. federal and state deferred tax assets. The Company has evaluated the positive and negative evidence bearing upon its ability to realize the deferred tax assets. Management has considered the Company’s history of cumulative net losses incurred since inception and its lack of commercialization of any products or generation of any revenue from product sales since inception and has concluded that it is more likely than not that the Company will not realize the benefits of the deferred tax assets. Management reevaluates the positive and negative evidence at each reporting period. Realization of the future tax benefits is dependent on many factors, including the Company’s ability to generate taxable income within the net operating loss carryforward period. As of September 30, 2018 and 2017, the Company had no uncertain tax positions. The Company’s policy is to recognize interest and penalties related to income tax matters as a component of income tax expense, of which no interest or penalties were recorded for the nine months ended September 30, 2018 and 2017.

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES	9 Months Ended
	Sep. 30, 2018
COMMITMENTS AND CONTINGENCIES.
COMMITMENTS AND CONTINGENCIES.	11. COMMITMENTS AND CONTINGENCIES License Agreement —In 2009, the Company entered into an exclusive license agreement with The Johns Hopkins University (“JHU”), as amended in November 2012, May 2014, August 2014, October 2014 and June 2018, which licensed to the Company a portfolio of specified patent rights and remains in full force and effect. Pursuant to the terms of the agreement, as amended, the Company agreed to pay an initial license fee, minimum annual payments beginning in 2017, certain development and commercial milestone payments, royalties on product sales and reimburse all or a portion of the costs associated with the preparation, filing, prosecution and maintenance of the agreed‑upon patents and patent applications to JHU. After 2016 and until the first commercial sale of product, the minimum annual payment will be $38,000. If the Company achieves the first commercial sale of the product in the United States, European Union, or Japan, the annual minimum payment will increase to $113,000. The Company is obligated to pay JHU low single‑digit running royalties based upon a percentage of net sales of the licensed products. The Company also has an obligation to pay JHU certain one‑time development and commercial milestone payments. The Company recorded research and development expenses related to the JHU agreement of $100,000 and $97,000, respectively, for the three months ended September 30, 2018 and 2017 and $300,000 and $108,000, respectively, for the nine months ended September 30, 2018 and 2017. Litigation —The Company is not currently subject to any material legal proceedings.

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS	9 Months Ended
	Sep. 30, 2018
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS	12. SUBSEQUENT EVENTS Underwritten Equity Offering — On October 5, 2018, the Company sold 7,500,000 shares of the Company’s Shares in an underwritten offering pursuant to the Shelf at an underwritten offering price of $8.25 per share, before underwriting discounts and commissions. In addition, the underwriters were granted an Overallotment option to purchase an additional 1,125,000 shares of the common stock at the same public offering price, less underwriting discounts and commissions. On October 11, 2018, the underwriters exercised in full their option to purchase the Overallotment shares. The total number of shares sold by the Company in the offering was 8,625,000 shares, resulting in net proceeds to the Company, after underwriting discounts and offering expenses, of approximately $66.4 million. ATM OFFERING - Between September 30, 2018 and November 8, 2018, the Company issued 518,135 shares of its common stock under the ATM Offering resulting in net proceeds to the Company of approximately $4.7 million. Athyrium Credit Facility — On October 1, 2018, the Company entered into the Athyrium Credit Facility. The Athyrium Credit Facility provides for a Term A loan in the aggregate principal amount of $75.0 million, and a Term B loan in the aggregate principal amount of $35.0 million . On October 1, 2018, the Company borrowed the entire principal amount of the Term A Loan. The Company may draw down the Term B Loan upon either (i) FDA approval of KPI-121 0.25% for a dry eye disease indication or (ii) reaching certain net product revenues for INVELTYS, in each case on or prior to June 30, 2020. The Athyrium Credit Facility has a six-year term and bears interest at a rate of 9.875% per annum. A portion of the proceeds from the Term Loan A was used to replace and repay in full the 2014 Debt Facility scheduled to mature on March 29, 2022. In connection with the Company’s repayment of the 2014 Debt Facility, the Company paid a prepayment fee of $180,000. Warrants — In connection with the Athyrium Credit Facility and in consideration for the commitment of the Athyrium Credit Facility, on October 1, 2018, the Company issued to Athyrium a Warrant to purchase up to 270,835 shares of the Company’s common stock, at an exercise price per share of $12.18456. The Warrant is immediately exercisable as to 184,660 shares and will become exercisable as to the remaining 86,175 shares only upon the Company’s draw of the Term B Loan. The Warrant expires and is no longer exercisable on October 1, 2025, the seven-year anniversary of the closing of the Athyrium Credit Facility.

SUMMARY OF SIGNIFICANT ACCOUN_2

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	9 Months Ended
	Sep. 30, 2018
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Inventory	Inventory Inventory is stated at the lower of cost or net realizable value, on a first-in, first-out (“FIFO”) method. Costs include amounts related to third party manufacturing, transportation, internal labor and overhead. Capitalization of costs as inventory begins when the product has received regulatory approval in the U.S. We expense inventory costs related to product candidates as research and development expenses prior to regulatory approval in the respective territory, even if this inventory may later be sold. For INVELTYS, capitalization of costs as inventory began upon U.S. regulatory approval on August 22, 2018.
Leases	Leases At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the unique facts and circumstances present. Most leases with a term greater than one-year are recognized on the balance sheet as right-of-use assets, lease liabilities and, if applicable, long-term lease liabilities. The Company has elected not to recognize on the balance sheet leases with terms of one-year or less. Lease liabilities and their corresponding right-of-use assets are recorded based on the present value of lease payments over the expected lease term. The interest rate implicit in lease contracts is typically not readily determinable. As such, the Company utilizes the appropriate incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. Certain adjustments to the right-of-use asset may be required for items such as initial direct costs paid or incentives received. The components of a lease should be split into three categories: lease components (e.g., land, building, etc.), non-lease components (e.g., common area maintenance, maintenance, consumables, etc.), and non-components (e.g., property taxes, insurance, etc.). Then the fixed and in-substance fixed contract consideration (including any related to non-components) must be allocated based on fair values to the lease components and non-lease components. Although separation of lease and non-lease components is required, certain practical expedients are available to entities. Entities electing the practical expedient would not separate lease and non-lease components. Rather, they would account for each lease component and the related non-lease component together as a single component. The Company’s facilities operating leases have lease and non-lease components which the Company has elected to account for as one single lease component. The lease component results in a right-of-use asset being recorded on the balance sheet and amortized as lease expense on a straight-line basis to the statements of operations.
Recently Adopted Accounting Pronouncements	Recently Adopted Accounting Pronouncements In May 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2017-09, Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting (“ ASU 2017-09”), which provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. The amendments in ASU 2017-09 are effective f or all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017, with early adoption permitted. The Company has prospectively adopted this new standard as of January 1, 2018. The adoption of this standard did not have a material impact on the Company’s condensed consolidated financial statements. In August 2016, the FASB issued ASU No. 2016‑15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments (“ASU 2016‑15”), to address diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The standard is effective for annual periods beginning after December 15, 2017, including interim periods within those fiscal years. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) (“ASU 2016-02”), which provides guidance to enhance the transparency and comparability of financial reporting related to leasing arrangements. Under this new lease standard, most leases are required to be recognized on the balance sheet as right-of-use assets and corresponding lease liabilities. Disclosure requirements have been enhanced with the objective of enabling financial statement users to assess the amount, timing, and uncertainty of cash flows arising from leases. The Company elected to early adopt ASU 2016-02, effective January 1, 2018, as permitted in the guidance. The standard has been implemented using the required modified retrospective approach and the Company has also elected to utilize the available practical expedients. In using the modified retrospective approach, the Company was required to recognize and measure leases existing at, or entered into after, the beginning of the earliest comparative period presented. Prior period results have been restated resulting in adjustments to the condensed consolidated balance sheets and the condensed consolidated statement of cash flows. The adoption of this standard did not have a material impact on the condensed consolidated statement of operations. The impact on the consolidated balance sheet as of December 31, 2017 and the condensed consolidated statement of cash flows for the nine months ended September 30, 2017 is shown below.
Impact to Previously Reported Results	Impact to Previously Reported Results From December 31, 2017 consolidated balance sheet (in thousands): As Previously Reported New Lease Standard Adjustment As Restated Right-of-use asset $ — $ $ Accrued expenses $ $ $ Other current and long-term liabilities $ $ (1) $ Lease liabilities $ — $ $ For the nine months ended September 30, 2017 condensed consolidated statement of cash flows (in thousands): As Previously Reported New Lease Standard Adjustment As Restated Amortization of right-of-use asset $ — $ 265 $ 265 Accrued expenses $ (166) 3 $ (163) Lease liabilities $ — $ (268) $ (268)

SUMMARY OF SIGNIFICANT ACCOUN_3

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)	9 Months Ended
	Sep. 30, 2018
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Schedule of the impacts to previously reported results	From December 31, 2017 consolidated balance sheet (in thousands): As Previously Reported New Lease Standard Adjustment As Restated Right-of-use asset $ — $ $ Accrued expenses $ $ $ Other current and long-term liabilities $ $ (1) $ Lease liabilities $ — $ $ For the nine months ended September 30, 2017 condensed consolidated statement of cash flows (in thousands): As Previously Reported New Lease Standard Adjustment As Restated Amortization of right-of-use asset $ — $ 265 $ 265 Accrued expenses $ (166) 3 $ (163) Lease liabilities $ — $ (268) $ (268)

INVENTORY (Tables)

INVENTORY (Tables)	9 Months Ended
	Sep. 30, 2018
INVENTORY
Schedule of Inventory	Inventory consists of the following (in thousands): September 30, December 31, 2018 2017 Raw Materials $ — $ — Work in Progress 976 — Finished Goods — — Inventory $ 976 $ —

ACCRUED EXPENSES (Tables)

ACCRUED EXPENSES (Tables)	9 Months Ended
	Sep. 30, 2018
ACCRUED EXPENSES
Schedule of accrued expenses	Accrued expenses consist of the following (in thousands): September 30, December 31, 2018 2017 Development costs $ 2,803 $ 3,054 Compensation and benefits 3,067 2,402 Professional fees 1,122 666 General and administrative consulting 642 229 Other 334 255 Accrued expenses $ 7,968 $ 6,606

LEASES (Tables)

LEASES (Tables)	9 Months Ended
	Sep. 30, 2018
LEASES
Schedule of components of lease expense and related cash flows	The components of lease expense and related cash flows were as follows (in thousands): For the three months ended September 30, 2018 2017 Lease cost Operating lease cost $ $ Short-term lease cost — Total lease cost $ $ Operating cash flows from operating leases $ $ For the nine months ended September 30, 2018 2017 Lease cost Operating lease cost $ $ Short-term lease cost — Total lease cost $ $ Operating cash flows from operating leases $ $
Schedule of future minimum commitments	Future minimum commitments due under these lease agreements as of September 30, 2018 are as follows (in thousands): Years Ending December 31, Operating Lease Other Lease Obligations (2) Total 2018 (remaining three months) $ 69 $ 63 $ 132 2019 34 52 86 2020 — — — 2021 — — — 2022 — — — Present value adjustment (2) — (2) Total minimum lease payments $ 101 $ 115 $ 216 (1) Future minimum lease payments under the Company’s operating lease for its current corporate headquarters and lab space in Waltham, Massachusetts. Future minimum lease payments under the Company’s Waverley Oaks Lease. Excluded from the table above is the Watertown Lease because the Company has concluded that it does not control the space during the construction period and does not expect to gain control of the space until on or near construction completion.

DEBT (Tables)

DEBT (Tables)	9 Months Ended
	Sep. 30, 2018
DEBT
Schedule of maturities of long-term debt	The future annual principal payments due under the 2014 Debt Facility as of September 30, 2018 were as follows (in thousands): Years Ending December 31, 2018 (remaining three months) $ — 2019 5,000 2020 6,667 2021 6,667 2022 1,666 Total $ 20,000

WARRANTS (Tables)

WARRANTS (Tables)	9 Months Ended
	Sep. 30, 2018
WARRANTS
Schedule of outstanding warrants	Shares Exercisable at Exercise Expiration Exercisable September 30, December 31, Issued Price Date From 2018 2017 2013 $ 7.50 April 2021 July 2017 82,816 82,816 2014 $ 7.50 November 2024 July 2017 16,000 16,000 2016 $ 8.27 October 2026 September 2017 14,512 14,512 113,328 113,328

FAIR VALUE OF FINANCIAL INSTR_2

FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)	9 Months Ended
	Sep. 30, 2018
FAIR VALUE OF FINANCIAL INSTRUMENTS
Schedule of changes in Level 3 fair value measurements	The following table provides a summary of changes in the fair value of the Company’s warrant liability, which is included as a component of other (income) expense (in thousands) which was subsequently remeasured to the fair value at the date of the IPO and reclassified to additional paid-in capital at that time: Three Months Ended September 30, 2018 2017 Warrant Warrant Liability Liability Fair value -June 30, $ — $ 2,260 Change in fair value of warrant liability — 623 Reclassification of preferred warrant liability — (2,883) Fair value - September 30, $ — $ — Nine Months Ended September 30, 2018 2017 Warrant Warrant Liability Liability Fair value - December 31, $ — $ 1,039 Change in fair value of warrant liability — 1,844 Reclassification of preferred warrant liability — (2,883) Fair value - September 30, $ — $ —

STOCK-BASED COMPENSATION (Table

STOCK-BASED COMPENSATION (Tables)	9 Months Ended
	Sep. 30, 2018
STOCK-BASED COMPENSATION
Summary of option activity for employee and non employee awards	A summary of option activity for employee and non‑employee awards under the 2009 Plan, the 2017 Plan and inducement grants for the nine months ended September 30, 2018 is as follows (in thousands, except share and per share amounts): Weighted Weighted Average Average Remaining Aggregate Number of Exercise Contractual Intrinsic Shares Price Term Value (Years) Outstanding at January 1, 2018 $ 6.93 $ 44,578 Granted 1,449,690 13.74 Exercised 2.71 Forfeited 5.85 Outstanding at September 30, 2018 4,937,233 $ 9.04 $ 16,968 Vested or expected to vest at September 30, 2018 4,937,233 $ 9.04 $ 16,968 Options exercisable at September 30, 2018 2,414,308 $ 5.29 $ 13,198
Schedule of assumptions used in determining fair value of the stock options granted	Nine Months Ended September 30, 2018 2017 Expected volatility – 85% – 122% Risk-free interest rate – 2.96% – 2.29% Expected dividend yield 0% 0% Expected term (in years) 5.27 – 6.13 – 9.82
Schedule of reserved common stock shares upon exercise of rights under equity compensation plans	Reserved Shares —As of September 30, 2018 and December 31, 2017, the Company had reserved the following shares of common stock issuable upon exercise of rights under equity compensation plans and inducement stock option awards: September 30, December 31, 2018 2017 ESPP 223,341 223,341 Shares reserved for outstanding inducement stock option award 219,500 — 2009 Plan 2,649,952 2,868,449 2017 Plan 3,118,430 2,025,633 Total 6,211,223 5,117,423
Schedule of stock based compensation expense	Stock-based Compensation Expenses —Stock‑based compensation expense was classified in the statements of operations as follows (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2018 2017 2018 2017 Research and development $ 684 $ 357 $ 2,064 $ 749 General and administrative 1,581 624 4,353 1,321 Total $ 2,265 $ 981 $ 6,417 $ 2,070

NATURE OF BUSINESS AND BASIS _2

NATURE OF BUSINESS AND BASIS OF PRESENTATION (Details) - USD ($) $ / shares in Units, $ in Thousands	Oct. 11, 2018	Oct. 05, 2018	Aug. 09, 2018	Jul. 25, 2017	Nov. 08, 2018	Sep. 30, 2017	Oct. 01, 2018	Sep. 30, 2018	Dec. 31, 2017
Equity Offerings
Common stock, par value								$ 0.001	$ 0.001
Net proceeds						$ 96,255
Common stock shares issued				16,101,970
Accumulated deficit								$ (175,890)	$ (134,371)
Common stock.
Equity Offerings
Shares warrants may purchase				202,020
IPO
Equity Offerings
Issuance of common stock upon IPO, net of underwriters discount and offering costs (in shares)				6,900,000
Share price (in dollars per share)				$ 15
Net proceeds				$ 94,000
IPO | Common stock.
Equity Offerings
Common stock, par value				$ 0.001
Underwriter's option
Equity Offerings
Issuance of common stock upon IPO, net of underwriters discount and offering costs (in shares)				900,000
Underwriting discounts and commissions				$ 7,300
Offering costs				$ 2,200
Underwriter's option | Subsequent Event
Equity Offerings
Issuance of common stock upon IPO, net of underwriters discount and offering costs (in shares)		1,125,000
Shelf
Equity Offerings
Share authorized value			$ 250,000
Registration period			3 years
Sales agreement			$ 50,000
Shelf | Subsequent Event
Equity Offerings
Issuance of common stock upon IPO, net of underwriters discount and offering costs (in shares)	8,625,000	7,500,000
Price per share		$ 8.25
Net proceeds	$ 66,400
ATM | Subsequent Event
Equity Offerings
Issuance of common stock upon IPO, net of underwriters discount and offering costs (in shares)					518,135
Net proceeds					$ 4,700
Athyrium | Subsequent Event
Equity Offerings
Shares warrants may purchase							270,835
Athyrium | Term Loan A | Subsequent Event
Equity Offerings
Aggregate principal amount							$ 75,000
Athyrium | Term Loan B | Subsequent Event
Equity Offerings
Aggregate principal amount							$ 35,000

SUMMARY OF SIGNIFICANT ACCOUN_4

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017	Sep. 30, 2013
Lease term	1 year			3 years
Impacts to Previously Reported Results
Right-of-use asset	$ 131		$ 413
Accrued expenses	7,968		6,606
Other current and long-term liabilities			8
Lease liabilities	101		397
Amortization of right-of-use asset	283	$ 265
Accrued expenses	1,143	(163)
Lease liabilities	$ (295)	(268)
As Previously Reported | Accounting Standards Update 2016-02
Impacts to Previously Reported Results
Accrued expenses			6,589
Other current and long-term liabilities			9
Accrued expenses		(166)
Adjustment | Accounting Standards Update 2016-02
Impacts to Previously Reported Results
Right-of-use asset			413
Accrued expenses			17
Other current and long-term liabilities			(1)
Lease liabilities			$ 397
Amortization of right-of-use asset		265
Accrued expenses		3
Lease liabilities		$ (268)
Minimum
Lease term	1 year

INVENTORY (Details)

INVENTORY (Details) $ in Thousands	Sep. 30, 2018USD ($)
INVENTORY
Work in Progress	$ 976
Inventory	$ 976

ACCRUED EXPENSES (Details)

ACCRUED EXPENSES (Details) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
ACCRUED EXPENSES
Development costs	$ 2,803	$ 3,054
Compensation and benefits	3,067	2,402
Professional fees	1,122	666
General and administrative consulting	642	229
Other	334	255
Accrued expenses	$ 7,968	$ 6,606

LEASES (Details)

LEASES (Details) - USD ($)	Feb. 28, 2018	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017	Mar. 15, 2018	Dec. 31, 2017	Sep. 30, 2013
Leases
Lease term		1 year		1 year				3 years
Restricted cash		$ 2,178,000		$ 2,178,000			$ 134,000
Lease cost
Operating lease cost		99,000	$ 99,000	296,000	$ 296,000
Short-term lease cost		55,000		117,000
Total lease cost		154,000	99,000	413,000	296,000
Operating cash flows from operating leases		$ 103,000	$ 100,000	$ 307,000	$ 296,000
Remaining lease term		3 months 29 days		3 months 29 days			1 year 29 days
Discount rate (as a percent)		6.50%		6.50%			6.50%
Watertown Lease
Leases
Lease term	8 years
Restricted cash		$ 2,000,000		$ 2,000,000				$ 84,000
Existence of option to extend	true
Waverley Oaks Lease
Leases
Lease term						1 year

LEASES - Future Minimum Commitm

LEASES - Future Minimum Commitments Due (Details) $ in Thousands	Sep. 30, 2018USD ($)
Future Minimum Lease Payments
2018 (remaining three months)	$ 132
2,019	86
Present value adjustment	(2)
Total minimum lease payments	216
Watertown Lease | Operating Lease Obligations
Future Minimum Lease Payments
2018 (remaining three months)	69
2,019	34
Present value adjustment	(2)
Total minimum lease payments	101
Waverley Oaks Lease | Short-Term Lease Obligations
Future Minimum Lease Payments
2018 (remaining three months)	63
2,019	52
Total minimum lease payments	$ 115

DEBT (Details)

DEBT (Details)	Oct. 01, 2018USD ($)	Mar. 29, 2018USD ($)	Sep. 28, 2017USD ($)	Oct. 13, 2016USD ($)	Sep. 30, 2018USD ($)	Sep. 30, 2017USD ($)	Sep. 30, 2018USD ($)	Sep. 30, 2017USD ($)	Dec. 31, 2017USD ($)	Nov. 30, 2014USD ($)
Debt instruments
Term loan							$ 2,728,000	$ 10,000,000
Interest expense					$ 432,000	$ 212,000	$ 1,214,000	618,000
2016 Series C Warrants
Debt instruments
Fair value of warrants				$ 365,000
2014 Debt Facility
Debt instruments
Total loan commitment										$ 10,000,000
Additional borrowing capacity		$ 5,000,000		$ 10,000,000
Interest rate (as a percent)					8.25%		8.25%		7.50%
Unpaid principal balance					$ 20,000,000		$ 20,000,000		$ 18,900,000
Unamortized discount					210,000		210,000		$ 235,000
Interest expense					432,000	212,000	1,214,000	618,000
Amortization of debt discount					23,000	29,000	74,000	86,000
Contractual coupon interest					$ 409,000	$ 183,000	$ 1,138,000	$ 532,000
Percentage points over and above the applicable interest rate in case of default							5
2014 Debt Facility | Prime Rate
Debt instruments
Variable rate of interest				3.00%
Term Loan A
Debt instruments
Total loan commitment		$ 20,000,000		$ 10,000,000
Term Loan B
Debt instruments
Term loan			$ 10,000,000
Athyrium | Subsequent Event
Debt instruments
Debt term	6 years
Interest rate	9.875%
Prepayment fees paid	$ 180,000
Athyrium | Subsequent Event | Term Loan A
Debt instruments
Aggregate principal amount	75,000,000
Athyrium | Subsequent Event | Term Loan B
Debt instruments
Aggregate principal amount	$ 35,000,000

DEBT - Future annual principal

DEBT - Future annual principal payments (Details) $ in Thousands	Sep. 30, 2018USD ($)
Maturities of long-term debt
2,019	$ 5,000
2,020	6,667
2,021	6,667
2,022	1,666
Total	$ 20,000

WARRANTS (Details)

WARRANTS (Details) - $ / shares	Oct. 01, 2018	Sep. 30, 2018	Dec. 31, 2017
Preferred stock warrants
Shares Exercisable		113,328	113,328
Warrants 2,013
Preferred stock warrants
Exercise Price		$ 7.50
Shares Exercisable		82,816	82,816
Warrants 2,014
Preferred stock warrants
Exercise Price		$ 7.50
Shares Exercisable		16,000	16,000
Warrants 2,016
Preferred stock warrants
Exercise Price		$ 8.27
Shares Exercisable		14,512	14,512
Athyrium | Subsequent Event
Preferred stock warrants
Shares warrants may purchase	270,835
Exercise Price	$ 12.18456
Shares Exercisable	184,660
Shares Exercisable upon condition	86,175
Term Of Warrant After The Closing Of Credit Facility	7 years

FAIR VALUE OF FINANCIAL INSTR_3

FAIR VALUE OF FINANCIAL INSTRUMENTS - fair value measurement levels (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
FAIR VALUE OF FINANCIAL INSTRUMENTS
Transfer from level 1 to level 2, Assets	$ 0	$ 0
Transfer from level 2 to level 1, Assets	0	0
Transfer from level 1 to level 2, Liabilities	0	0
Transfer from level 2 to level 1, Liabilities	0	0
Transfer into level 3, Assets	0	0
Transfer out of level 3, Liability	$ 0	$ 0

FAIR VALUE OF FINANCIAL INSTR_4

FAIR VALUE OF FINANCIAL INSTRUMENTS - Derivative liability (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2017
Reconciliation of Liabilities Measured at Fair Value on a Recurring Basis Using Significant Unobservable Inputs (Level 3)
Balance at beginning of period	$ 2,260	$ 1,039
Change in fair value of warrant liability	623	1,844
Reclassification of preferred warrant liability	(2,883)	(2,883)
Balance at end of period	$ 2,883	$ 2,883

STOCK-BASED COMPENSATION (Detai

STOCK-BASED COMPENSATION (Details)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2018USD ($)employee$ / sharesshares	Sep. 30, 2017USD ($)$ / sharesshares	Sep. 30, 2018USD ($)employeeshares	Sep. 30, 2017USD ($)shares	Dec. 31, 2017shares
Stock-based compensation
Anniversary of the share-based compensation arrangement			1 year
Options granted			747,892
Weighted average grant date fair value of options granted | $ / shares	$ 8.83	$ 14.74
Stock based compensation expense | $	$ 2,265,000	$ 981,000	$ 6,417,000	$ 2,070,000
Cash proceeds from the exercise of stock options | $			$ 291,000	189,000
Employee
Stock-based compensation
Number of common stock issuable upon exercise of rights under equity compensation plans	219,500		219,500
2009 plan
Stock-based compensation
Number of common stock issuable upon exercise of rights under equity compensation plans	2,649,952		2,649,952		2,868,449
Number of shares outstanding	4,937,233		4,937,233		3,738,928
Options granted			1,449,690
Unrecognized compensation expense | $	$ 22,700,000		$ 22,700,000
Weighted average expense recognition period			2 years 11 months 23 days
Weighted average period			8 years 11 days		8 years 4 months 24 days
Employee and Non-Employee Stock Options | Consultant
Stock-based compensation
Stock based compensation expense | $			$ 11,000	$ 83,000
Employee and Non-Employee Stock Options | Non-employees
Stock-based compensation
Options granted	0	4,224	0	4,224
Stock based compensation expense | $	$ 0	$ 46,000
Employee and Non-Employee Stock Options | 2009 plan
Stock-based compensation
Options Expiry Term			10 years
Vesting Period			4 years
Performance Stock Options
Stock-based compensation
Number of shares outstanding	0		0
Non-statutory Stock Options | Employee
Stock-based compensation
Number of employees | employee	7		8
Number of common stock issuable upon exercise of rights under equity compensation plans	69,500		69,500
Options Expiry Term			4 years
Vesting Period			3 years
Percentage of vesting of share-based compensation awards on the one year anniversary of the grant date			25.00%
Percentage of vesting of share-based compensation awards after the year anniversary of the grant date			75.00%

STOCK-BASED COMPENSATION - Stoc

STOCK-BASED COMPENSATION - Stock Options (Details) - USD ($) $ / shares in Units, $ in Thousands	9 Months Ended		12 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017
Number of Shares
Granted (in shares)	747,892
Weighted Average Exercise Price
Granted (in dollars per share)	$ 9.99	$ 13.19
2009 plan
Number of Shares
Outstanding at the beginning of the period (in shares)	3,738,928
Granted (in shares)	1,449,690
Exercised (in shares)	(107,233)
Forfeited	(144,152)
Outstanding at the end of the period (in shares)	4,937,233		3,738,928
Vested and expected to vest (in shares)	4,937,233
Options exercisable (in shares)	2,414,308
Weighted Average Exercise Price
Outstanding at the beginning of the period (in dollars per share)	$ 6.93
Granted (in dollars per share)	13.74
Exercised (in dollars per share)	2.71
Forfeited (in dollars per share)	5.85
Outstanding at the end of the period (in dollars per share)	9.04		$ 6.93
Vested and expected to vest (in dollars per share )	9.04
Options exercisable (in dollars per shares)	$ 5.29
Weighted Average Remaining Contractual Term
Weighted average period	8 years 11 days		8 years 4 months 24 days
Vested and expected to vest	8 years 11 days
Options exercisable	7 years 1 month 21 days
Aggregate Intrinsic Value
Outstanding at the beginning of the period (in dollars)	$ 44,578
Outstanding at the end of the period (in dollars)	16,968		$ 44,578
Vested and expected to vest (in dollars)	16,968
Options exercisable (in dollars)	$ 13,198

STOCK-BASED COMPENSATION - Fair

STOCK-BASED COMPENSATION - Fair Value Assumptions (Details)	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
Assumptions used in determining fair value of the stock options granted
Expected volatility (minimum)	80.00%	103.00%
Expected volatility (maximum)	85.00%	122.00%
Risk-free interest rate (minimum)	2.63%	1.81%
Risk-free interest rate (maximum)	2.96%	2.29%
Expected dividend yield	0.00%	0.00%
Minimum
Assumptions used in determining fair value of the stock options granted
Expected term (in years)	5 years 3 months 7 days	5 years 15 days
Maximum
Assumptions used in determining fair value of the stock options granted
Expected term (in years)	6 years 1 month 17 days	9 years 9 months 26 days

STOCK-BASED COMPENSATION (Det_2

STOCK-BASED COMPENSATION (Details) - $ / shares	9 Months Ended	12 Months Ended
	Sep. 30, 2018	Dec. 31, 2017
Common stock and preferred stock
Common stock, authorized	120,000,000	120,000,000
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares issued	24,645,542	24,538,309
Common stock, shares outstanding	24,645,542	24,538,309
Preferred stock, authorized	5,000,000	5,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Closing price of common stock (as percent)	85.00%
Employee basic pay holding period	6 months
Common stock shares reserved for future issuance	6,211,223	5,117,423
Stock Options
Common stock and preferred stock
Common stock shares reserved for future issuance	219,500
2017 Employee Stock Purchase Plan
Common stock and preferred stock
Number of common stock issuable upon exercise of rights under equity compensation plans	223,341	223,341
2009 plan
Common stock and preferred stock
Number of common stock issuable upon exercise of rights under equity compensation plans	2,649,952	2,868,449
2017 Equity Incentive Plan
Common stock and preferred stock
Common stock shares reserved for future issuance	1,050,649
Number of common stock issuable upon exercise of rights under equity compensation plans	3,118,430	2,025,633
2017 Equity Incentive Plan | Maximum
Common stock and preferred stock
Common stock shares reserved for future issuance	2,649,952
2017 Equity Incentive Plan | Minimum
Common stock and preferred stock
Common stock shares reserved for future issuance		3,573,766
Percentage of aggregate number of common shares reserved for future issuance (as a percent)		4.00%

STOCK-BASED COMPENSATION - St_2

STOCK-BASED COMPENSATION - Stock-based compensation expense (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Stock-based compensation
Stock based compensation expense	$ 2,265,000	$ 981,000	$ 6,417,000	$ 2,070,000
Research and development
Stock-based compensation
Stock based compensation expense	684,000	357,000	2,064,000	749,000
General and administrative
Stock-based compensation
Stock based compensation expense	1,581,000	$ 624,000	4,353,000	$ 1,321,000
INVELTYS | Inventories
Stock-based compensation
Stock based compensation expense	$ 66,000		$ 66,000

INCOME TAXES (Details)

INCOME TAXES (Details) - USD ($)	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
INCOME TAXES
Uncertain tax positions	$ 0	$ 0
Interest or penalties recorded	$ 0	$ 0

COMMITMENTS AND CONTINGENCIES -

COMMITMENTS AND CONTINGENCIES - License Agreement (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Contingencies
Research and development expenses	$ 7,027,000	$ 7,018,000	$ 20,051,000	$ 23,128,000
The Johns Hopkins University (“JHU”)
Contingencies
Minimum annual payment			38,000
License fee, if the company achieves the first commercial sale			113,000
Research and development expenses	$ 100,000	$ 97,000	$ 300,000	$ 108,000

SUBSEQUENT EVENTS (Details)

SUBSEQUENT EVENTS (Details) - USD ($)	Oct. 11, 2018	Oct. 05, 2018	Oct. 01, 2018	Jul. 25, 2017	Nov. 08, 2018	Sep. 30, 2018	Dec. 31, 2017
Subsequent Events
Shares Exercisable						113,328	113,328
Underwriter's option
Subsequent Events
Issuance of common stock upon IPO, net of underwriters discount and offering costs (in shares)				900,000
Subsequent Event | Athyrium
Subsequent Events
Debt term			6 years
Interest rate			9.875%
Prepayment fees paid			$ 180,000
Shares warrants may purchase			270,835
Exercise Price			$ 12.18456
Shares Exercisable			184,660
Shares Exercisable upon condition			86,175
Credit facility term			7 years
Subsequent Event | Underwriter's option
Subsequent Events
Issuance of common stock upon IPO, net of underwriters discount and offering costs (in shares)		1,125,000
Subsequent Event | Shelf
Subsequent Events
Issuance of common stock upon IPO, net of underwriters discount and offering costs (in shares)	8,625,000	7,500,000
Share Price		$ 8.25
Net proceeds	$ 66,400,000
Subsequent Event | ATM
Subsequent Events
Issuance of common stock upon IPO, net of underwriters discount and offering costs (in shares)					518,135
Net proceeds					$ 4,700,000
Term Loan A | Subsequent Event | Athyrium
Subsequent Events
Aggregate principal amount			$ 75,000,000
Term Loan B | Subsequent Event | Athyrium
Subsequent Events
Aggregate principal amount			$ 35,000,000