Kala Pharmaceuticals (KALA) 10-Q 9 May 19 2019 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2019	May 07, 2019
Document and Entity Information
Entity Registrant Name	Kala Pharmaceuticals, Inc.
Entity Central Index Key	0001479419
Trading Symbol	kala
Document Type	10-Q
Document Period End Date	Mar. 31, 2019
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	true
Entity Common Stock, Shares Outstanding		33,882,857
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q1

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Current assets:
Cash	$ 138,944	$ 170,898
Accounts receivable, net	4,674
Inventory	5,415	4,095
Prepaid expenses and other current assets	1,416	2,035
Total current assets	150,449	177,028
Noncurrent assets:
Property and equipment, net	2,849	2,166
Right-of-use assets	31,143	29,566
Restricted cash	12,575	12,206
Total assets	197,016	220,966
Current liabilities:
Accounts payable	2,647	5,446
Accrued expenses and other current liabilities	10,335	11,101
Current portion of lease liabilities	1,620	463
Total current liabilities	14,602	17,010
Long-term liabilities:
Long-term lease liability - less current portion	29,590	28,752
Long-term debt	70,457	70,226
Total long-term liabilities	100,047	98,978
Total liabilities	114,649	115,988
Commitments and Contingencies (Note 11)
Stockholders' equity:
Common stock, $0.001 par value; 120,000,000 shares authorized as of March 31, 2019 and December 31, 2018; 33,882,857 and 33,863,077 shares issued and outstanding as of March 31, 2019 and December 31, 2018, respectively	34	34
Additional paid-in capital	308,830	306,053
Accumulated deficit	(226,497)	(201,109)
Total stockholders' equity	82,367	104,978
Total liabilities and stockholders' equity	$ 197,016	$ 220,966

CONDENSED CONSOLIDATED BALANC_2

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Mar. 31, 2019	Dec. 31, 2018
CONDENSED CONSOLIDATED BALANCE SHEETS
Common stock, par value	$ 0.001	$ 0.001
Common stock, authorized	120,000,000	120,000,000
Common stock, shares issued	33,882,857	33,863,077
Common stock, shares outstanding	33,882,857	33,863,077

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Product revenues, net	$ 1,386
Costs and expenses:
Cost of product revenues	241
Selling, general and administrative	18,236	$ 5,482
Research and development	6,959	5,657
Total costs and expenses	25,436	11,139
Loss from operations	(24,050)	(11,139)
Other income (expense):
Interest income	756	209
Interest expense	(2,094)	(367)
Total other income (expense)	(1,338)	(158)
Net loss	$ (25,388)	$ (11,297)
Net loss per share—basic and diluted	$ (0.75)	$ (0.46)
Weighted average shares outstanding—basic and diluted	33,878,021	24,542,428

CONDENSED CONSOLIDATED STATEM_2

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY - USD ($) $ in Thousands	Common Stock	Additional Paid-In Capital	Accumulated Deficit	Total
Balance as of beginning of period at Dec. 31, 2017	$ 25	$ 224,025	$ (134,371)	$ 89,679
Balance as of beginning of period (in shares) at Dec. 31, 2017	24,538,309
Stockholders' Equity
Exercise of stock options		28		28
Exercise of stock options (in shares)	17,785
Stock-based compensation expense		1,861		1,861
Net loss			(11,297)	(11,297)
Balance as of end of period at Mar. 31, 2018	$ 25	225,914	(145,668)	80,271
Balance as of end of period (in shares) at Mar. 31, 2018	24,556,094
Balance as of beginning of period at Dec. 31, 2018	$ 34	306,053	(201,109)	104,978
Balance as of beginning of period (in shares) at Dec. 31, 2018	33,863,077
Stockholders' Equity
Exercise of stock options		39		39
Exercise of stock options (in shares)	19,780
Stock-based compensation expense		2,738		2,738
Net loss			(25,388)	(25,388)
Balance as of end of period at Mar. 31, 2019	$ 34	$ 308,830	$ (226,497)	$ 82,367
Balance as of end of period (in shares) at Mar. 31, 2019	33,882,857

CONDENSED CONSOLIDATED STATEM_3

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Cash flows from operating activities:
Net loss	$ (25,388)	$ (11,297)
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation	170	81
Amortization of right-of-use assets	437	93
Amortization of debt discount and other non-cash interest	231	31
Stock-based compensation	2,473	1,861
Change in operating assets and liabilities:
Accounts receivable	(4,674)
Prepaid expenses and other current assets	619	(241)
Inventory	(1,056)
Accounts payable	(3,206)	(229)
Accrued expenses	(766)	(2,916)
Lease liabilities and other long-term liabilities	(10)	(97)
Net cash used in operating activities	(31,170)	(12,714)
Cash flows from investing activities:
Purchases of property and equipment	(444)	(373)
Net cash used in investing activities	(444)	(373)
Cash flows from financing activities:
Proceeds from venture debt, net of debt issuance costs of $0 and $50		2,728
Payment of principal and prepayment penalty on venture debt		(1,667)
Payment of principal on finance leases	(10)
Proceeds from exercise of stock options	39	28
Net cash provided by financing activities	29	1,089
Net decrease in cash and restricted cash:	(31,585)	(11,998)
Cash and restricted cash at beginning of period	183,104	114,699
Cash and restricted cash at end of period	151,519	102,701
Reconciliation of cash and restricted cash:
Cash and restricted cash at end of period	151,519	102,701
Less: restricted cash	(12,575)	(2,176)
Cash at end of period	138,944	100,525
Non-cash investing and financing activities:
Right-of-use asset obtained in exchange for finance lease obligation	136
Purchases of property and equipment in accounts payable	409
Supplemental disclosure:
Cash paid for interest	1,862	$ 406
Right-of-use asset obtained in exchange of operating lease obligation	$ 1,878

CONDENSED CONSOLIDATED STATEM_4

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2019	Mar. 31, 2018
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Debt issuance costs	$ 0	$ 50

Nature of business and basis of

Nature of business and basis of presentation	3 Months Ended
	Mar. 31, 2019
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, 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 the first and only twice-daily ocular corticosteroid for treatment of post-operative inflammation and pain following ocular surgery, and the development of 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 to the FDA for KPI-121 0.25%, for which the FDA has granted a target action date under the Prescription Drug User Fee Act (“PDUFA”) of August 15, 2019. 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 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 receptor Tyrosine Kinase Inhibitor program (the “rTKI program”), that inhibit the vascular endothelial growth factor (“VEGF”), pathway, for the potential treatment of a number of retinal diseases. In January 2019, the Company launched its first commercial product, INVELTYS, in the United States. The Company is currently engaged in the commercialization of INVELTYS, 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. Liquidity — Since inception, the Company has incurred significant losses from operations and negative cash flows from operations. As of March 31 2019, the Company had an accumulated deficit of $226.5 million. The Company has generated only limited revenues to date from product sales and has financed operations primarily through its initial public offering of common stock (“IPO”), private placements of preferred stock, convertible debt financings, borrowings under credit facilities, warrants, public common stock offerings, sales of its common stock under its at-the-market offering facility 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 and engaging in activities to commercialize INVELTYS. 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 March 31, 2019, 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. 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. 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 Securities Exchange Commission (“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, statement of stockholders’ equity 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, 2018 (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. All intercompany transactions and balances have been eliminated in consolidation.

Summary of Significant Accounti

Summary of Significant Accounting Policies	3 Months Ended
	Mar. 31, 2019
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 March 31, 2019 other than those noted below. Revenue The Company accounts for revenue in accordance with Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers . Under ASC Topic 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration that the entity expects to be entitled in exchange for those goods or services. The Company performs the following five steps to recognize revenue under ASC Topic 606: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only recognizes revenue when it is probable that it will collect the consideration to which it is entitled in exchange for the goods or services that will be transferred to the customer. Product revenues, net The Company sells INVELTYS to wholesalers and/ or specialty distributors in the United States (collectively, “Customers”). These Customers subsequently resell the Company’s products to specialty and other retail pharmacies. In addition to agreements with Customers, the Company enters into arrangements with payors that provide for government-mandated and/or privately-negotiated rebates, chargebacks and discounts for the purchase of the Company’s products. The goods promised in the Company’s product sales contracts represent a single performance obligation; as the promise to transfer the individual products to the Customer is not separately identifiable from other promises in the contracts and, therefore, not distinct. The Company recognizes revenue from product sales at the point the Customer obtains control of the product, which occurs upon delivery. The transaction price (“net sales price”) that is recognized as revenue for product sales includes the selling price to the Customer and an estimate of variable consideration. Components of variable consideration include prompt pay and other discounts, product returns, government rebates, third-party payor rebates, coverage gap rebates, incentives such as patient co-pay assistance, and other fees paid to Customers where a distinct good or service is not received. Variable consideration is recorded on the consolidated balance sheet as either a reduction of accounts receivable, if payable to a Customer, or as a current liability, if payable to a third-party other than a Customer. The Company considers all relevant information when estimating variable consideration such as assessment of its current and anticipated sales and demand forecasts, specific known market events and trends, industry data and current contractual and statutory requirements that are reasonably available. The Company includes estimated amounts in the net sales price to the extent it is determined probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. Payment terms with Customers do not exceed one year and, therefore, the Company does not account for a significant financing component in its arrangements. The Company expenses incremental cost of obtaining a contract with a Customer when incurred as the period of benefit is less than one year. Reserves for Variable Consideration : Trade Discounts and Allowances The Company provides its Customers with certain trade discounts and allowances including discounts for prompt payments and fees paid for distribution, data and administrative services. These discounts and fees are based on contractually-determined percentages and are recorded as a reduction of revenue and accounts receivable in the period in which the related product revenue is recognized. Chargeback Chargebacks for fees and discounts to providers represent the estimated obligations resulting from contractual commitments to sell products to qualified healthcare providers at prices lower than the list prices charged to Customers who directly purchase the product from the Company. Customers charge the Company for the difference between what they pay for the product and the ultimate selling price to the qualified healthcare providers. These components of variable consideration are established in the same period that the related revenue is recognized, resulting in a reduction of product revenue and accounts receivable. Reserves for chargebacks consist of credits the Company expects to issue for units that remain in the distribution channel at the end of each reporting period and that the Company expects will be sold to qualified healthcare providers, as well as chargebacks that Customers have claimed, but for which the Company has not yet issued a credit. Product Returns Consistent with industry practice, the Company has a product returns policy that provides Customers a right of return for product purchased within a specified period prior to and subsequent to the product’s expiration date. The Company estimates the amount of its products that may be returned and presents this amount as a reduction of revenue in the period the related product revenue is recognized, in addition to establishing a liability. The Company’s estimates for product returns are based upon available industry data and its own sales information, including its visibility into the inventory remaining in the distribution channel. Commercial Payor and Medicare Part D Rebates The Company contracts with certain third-party payors, primarily pharmacy benefit managers (“PBMs”) and health plans (“Plans”), for the payment of rebates with respect to utilization of its product. These rebates are based on contractual percentages applied to the amount of product prescribed to patients who are covered by the PBMs or the Plans with which it contracts. The Company estimates the rebates for commercial and Medicare Part D payors based on the contractual discount percentage, the various payor mix for INVELTYS as well as future rebates that will be made for product that has been recognized as revenue but remains in the distribution channel at the end of each reporting period. The Company also estimates the number of patients in the prescription drug coverage gap for whom it will owe an additional liability under the Medicare Part D program. Such estimates are recorded in the same period the related revenue is recognized, resulting in a reduction of product revenue and the establishment of a current liability. Government Rebates The Company is subject to discount obligations under Medicaid and other government programs. For Medicaid, reserves are based on estimates of future Medicaid beneficiary utilization applied to the Medicaid unit rebate formula established by the Centers for Medicaid and Medicare Services. The Company’s liability for these rebates consists of estimates of claims for the current period and estimated future claims that will be made for product that has been recognized as revenue but remains in the distribution channel at the end of each reporting period. These reserves are recorded in the same period the related revenue is recognized, resulting in a reduction of product revenue and the establishment of a current liability. Co-pay Assistance The Company offers a co-pay assistance program (the “co-pay program”), which is intended to provide financial assistance to p atients who may or may not be covered by commercial insurance or who opt out of government insurance programs . The calculation of accruals for the co-pay program is based on actual claims processed during the period as well as an estimate of the number and cost per claim that the Company expects to receive associated with product that has been recognized as revenue but remains in the distribution channel at the end of each reporting period. Allowances for estimated co-pay claims are recorded in the same period the related revenue is recognized, resulting in a reduction of product revenue and the establishment of a current liability. Accounts Receivable, net Accounts receivable are reported on the consolidated balance sheets at outstanding amounts due from Customers for product sales. The Company deducts sales discounts for prompt payments and contractual fees for service arrangements from accounts receivable. The Company evaluates the collectability of accounts receivable on a regular basis, by reviewing the financial condition and payment history of customers, an overall review of collections experience on other accounts, and economic factors or events expected to affect future collections experience. An allowance for doubtful accounts is recorded when a receivable is deemed to be uncollectible. The Company recorded no allowance for doubtful accounts as of March 31, 2019. The Company recorded an allowance of approximately $0.8 million for expected sales discounts, related to initial stocking discounts, prompt pay discounts and contractual fee for service arrangements, to wholesalers and distributors as of March 31, 2019. Cost of Product Revenues The cost of product revenues consists primarily of materials, third-party manufacturing costs, freight and distribution costs, royalty expense, allocation of labor, quality control and assurance, spoilage and other manufacturing overhead costs. The Company expenses costs of product revenues related to product candidates as research and development expenses prior to regulatory approval in the respective territory. The Company received regulatory approval for INVELTYS on August 22, 2018. Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”). ASU 2014-09 states that an entity should recognize revenue based on the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The FASB subsequently issued amendments to ASU 2014-09 that had the same effective date of January 1, 2018. Revenue from sales of INVELTYS, as well as any other future revenue arrangements, are and will be recognized under the provisions of ASU 2014-09. While the Company adopted ASU 2014-09 effective January 1, 2018, the Company did not generate any revenue from product sales prior to 2019. In June 2018, the FASB issued ASU 2018-07, Compensation-Stock Compensation Improvements to Nonemployee Share-Based Payment Accounting (“ASU 2018-07”). ASU 2018-07 substantially aligns accounting for share-based payments to employees and non-employees. This ASU became effective for annual periods beginning after December 15, 2018, including interim periods within that period, and early adoption is permitted. The new standard was effective on January 1, 2019 and the adoption of ASU 2018-07 did not have an impact on the Company’s condensed consolidated financial statements and related disclosures. In August 2018, the FASB issued ASU 2018-13, Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measuremen t (“ASU 2018-13”). ASU 2018-13 is intended to improve the effectiveness of disclosures in the notes to financial statements related to fair value measurements in Topic 820. This ASU will become effective for annual periods beginning after December 15, 2019, including interim periods within that period, and early adoption is permitted. The Company is currently evaluating the effect of this new guidance on its condensed consolidated financial statements. In August 2018, the FASB issued ASU 2018-15 , Intangibles - Goodwill and Other - Internal-Use Software -Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (“ASU 2018-15”). ASU 2018-15 aligns the accounting for implementation costs incurred in a hosting arrangement that is a service contract with the guidance on capitalizing costs associated with developing or obtaining internal-use software. This ASU will become effective for annual periods beginning after December 15, 2019, including interim periods within that period, and early adoption is permitted. The Company does not expect the adoption of ASU 2018-15 to have a material effect on its condensed consolidated financial statements.

Inventory

Inventory	3 Months Ended
	Mar. 31, 2019
Inventory
Inventory	3. INVENTORY Inventory is stated at the lower of cost or net realizable value, on a first in, first out (“FIFO”) basis. 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 United States. The Company expensed inventory costs related to product candidates as research and development expenses prior to regulatory approval. For INVELTYS, capitalization of costs as inventory began upon U.S. regulatory approval on August 22, 2018. Inventory produced that will be used in a promotional sample program is expensed to selling, general and administrative expense when it is selected for use and shipped as part of a marketing program. Inventory consists of the following (in thousands): March 31, December 31, 2019 2018 Raw materials $ 491 $ 350 Work in progress 4,252 3,357 Finished goods 672 388 Inventory $ 5,415 $ 4,095

Accrued Expenses

Accrued Expenses	3 Months Ended
	Mar. 31, 2019
Accrued Expenses
Accrued Expenses	4. ACCRUED EXPENSES Accrued expenses consist of the following (in thousands): March 31, December 31, 2019 2018 Compensation and benefits $ 3,062 $ 5,352 Accrued revenue reserves (1) 2,718 — Development costs 1,623 1,223 Professional services 1,186 1,019 Commercial cost 662 1,722 Contract manufacturing 569 434 Payable related to construction of facility — 1,026 Other 515 325 Accrued expenses $ 10,335 $ 11,101 .

Leases

Leases	3 Months Ended
	Mar. 31, 2019
Leases
Leases	5. LEASES Operating leases The Company entered into a three‑year lease agreement for its former headquarters (the “Waltham Lease”) 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 was reported as restricted cash as of December 31, 2018. With the adoption of ASU 2016-02, the Company has recorded a right-of-use asset and corresponding lease liability. 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 was one-year, and as a result, a right-of-use asset and corresponding lease liability was not recorded. 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”) to be used as its new corporate headquarters. T he Company recognized the right-of-use asset and corresponding lease liability on November 15, 2018, by calculating the present value of lease payments, discounted at 9.9%, the Company’s estimated incremental borrowing rate, over the 13-year expected term. 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 as of March 31, 2019 and December 31, 2018. As of March 31, 2019, the variable lease expense for the Watertown Lease, which includes common area maintenance and real estate taxes was $0.1 million and the remaining lease term was 12.7 years. As of December 31, 2018, the remaining lease term on the lease for the Waltham Lease was 0.08 years and for the Watertown Lease was 12.83 years. Vehicle Fleet lease During the three months ended March 31, 2019, the Company entered into a master fleet lease agreement (the “Vehicle Fleet Lease”), pursuant to which it currently leases 65 vehicles. Each lease is for a period of 36 months, which commenced upon the delivery of the vehicles in March 2019. The components of lease expense and related cash flows were as follows (in thousands): For the three months ended March 31, 2019 2018 Lease cost Operating lease cost $ $ Short-term lease cost — Total lease cost $ $ Operating cash outflows from operating leases $ $ Future minimum commitments due under these lease agreements as of March 31, 2019 were as follows (in thousands): Years Ending December 31, Operating Lease Finance Lease Obligation (2) Total 2019 (remaining nine months) $ 3,479 $ 31 $ 3,510 2020 4,140 41 4,181 2021 4,231 41 4,272 2022 3,926 41 3,967 2023 3,960 — 3,960 Thereafter 35,415 — 35,415 Present value adjustment (24,070) (25) (24,095) Present value of lease payments $ 31,081 $ 129 $ 31,210 (1) Future minimum lease payments under the Company’s Watertown Lease and its Vehicle Fleet Lease. (2) F uture minimum lease payments under the Company’s other Finance lease obligation.

Debt

Debt	3 Months Ended
	Mar. 31, 2019
Debt
Debt	6. DEBT 2014 Debt Facility In November 2014, the Company entered into a venture debt facility (“2014 Debt Facility”), which was subsequently amended in October 2016, November 2017 and March 2018. The 2014 Debt Facility, as amended, increased the initial commitment under the debt facility to a total of $20.0 million of funding and extended the interest-only end date for 12 months following the execution of the March 2018 amendment. The maturity date of the 2014 Debt Facility was also extended from October 13, 2020 to March 29, 2022. The unpaid principal balance under the 2014 Debt Facility was $20.0 million as of March 31, 2018. The unamortized discount was $0.3 million as of March 31, 2018. During the three months ended March 31, 2018, the Company recognized interest expense of $0.4 million which consisted of amortization of the debt discount of $31,000 and the contractual coupon interest expense of $0.3 million. On October 1, 2018, the Company repaid the outstanding principal balance under the 2014 Debt Facility of $20.0 million. In connection with the repayment of the 2014 Debt Facility, the Company paid a prepayment fee of $0.2 million. Athyrium Credit Facility On October 1, 2018, the Company entered into a credit agreement (the “Athyrium Credit Facility”), with Athyrium Opportunities III Acquisition LP (“Athyrium”) for up to $110.0 million . The Athyrium Credit Facility provides for a Term Loan A in the aggregate principal amount of $75.0 million (the “Term Loan A”), and a Term Loan B in the aggregate principal amount of $35.0 million (the “Term Loan B”). On October 1, 2018, the Company borrowed the entire principal amount of the Term Loan A. The Company may draw down the Term Loan B 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 maturity date of the Athyrium Credit Facility is October 1, 2024. The Term Loan A bears interest at a rate of 9.875% per annum, with quarterly, interest-only payments until the fourth anniversary of the Term Loan A. The unpaid principal amount of the Term Loan A is due and payable in quarterly installments starting on the fourth anniversary of the loan. The Company may make voluntary prepayments, in whole or in part, and subject to certain exceptions, is required to make mandatory prepayments upon the occurrence of certain events of default as defined in the agreement, including but not limited to, the occurrence of a change of control. In addition, upon payment or repayment of any outstanding balance under the Athyrium Credit Facility, the Company will have to pay a 1% exit fee of All mandatory and voluntary prepayments of the Athyrium Credit Facility are subject to the payment of prepayment premiums as follows: (i) if prepayment occurs prior to the second anniversary of the applicable date of issuance, an amount equal to the amount by which (a) the present value of 105% of the principal prepaid plus all interest that would have accrued on such principal through such second anniversary exceeds (b) the amount of principal prepaid, (ii) if prepayment occurs on or after the second anniversary of the applicable date of issuance but prior to the third anniversary of such issuance, an amount equal to 3% of the principal prepaid, and (iii) if prepayment occurs on or after the third anniversary of the applicable date of issuance but prior to the fourth anniversary of such issuance, an amount equal to 2% of the principal prepaid. No prepayment premium is due on any principal prepaid after the fourth anniversary of the applicable date of issuance. The Athyrium Credit Facility includes features requiring (1) additional interest rate upon an event of default accrued at an additional 3%, or a total interest rate of 12.875%, and (2) the lender’s right to declare all outstanding principal and interest immediately payable upon an event of default. These two features were analyzed and determined to be embedded derivatives to be valued as separate financial instruments. These embedded derivatives were bundled and valued as one compound derivative in accordance with the applicable accounting guidance for derivatives and hedging transactions. The Company determined that, due to the unlikely event of default, the embedded derivatives have a de minimus value as of March 31, 2019. The derivative liability will be remeasured at fair value at each reporting date, with changes in fair value being recorded as other income (expense) in the consolidated statements of operations. The Athyrium Credit Facility is secured by a pledge of substantially all of the Company’s assets and contains affirmative and negative covenants customary for financings of this type, including limitations on the Company’s and its subsidiaries’ ability to, among other things, incur and prepay additional debt, grant or permit additional liens, make investments and acquisitions, merge or consolidate with others, dispose of assets, change in the nature of business, enter into sale and leaseback transactions, make distributions, and enter into affiliate transactions, in each case, subject to certain exceptions. In addition, the Athyrium Credit Facility also contains a financial covenant requiring the Company to maintain at least $10.0 million of cash and cash equivalents. As a result of this financial covenant, the Company has recorded $10.0 million as restricted cash as of March 31, 2019 and December 31, 2018. In connection with the Athyrium Credit Facility, the Company issued 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 Loan B. The Warrant is exercisable through October 1, 2025 and is In addition, the Company paid certain fees to Athyrium and other third party service providers in the aggregate amount of $3.0 million. These fees paid to Athyrium were recorded as a debt discount while the fees paid to other third party service providers were recorded as debt issuance cost, respectively, in the aggregate amount of $3.0 million. These costs, along with the fair value of the Warrant of $1.9 million are being amortized using the effective interest method over the term of the Athyrium Credit Facility. The amortization of debt discount and debt issuance cost is included in interest expense within the Condensed Consolidated Statements of Operations. As of March 31, 2019, the effective interest rate was 11.42%, which takes into consideration the non-cash accretion of the exit fee and the amortization of the debt discount and issuance costs. During the three months ended March 31, 2019, the Company recognized interest expense of $2.0 million which consisted of amortization of the debt discount of $0.2 million, and the contractual coupon interest expense of $1.8 million. The components of the carrying value of the debt as of March 31, 2019, are detailed below (in thousands): March 31, 2019 Principal loan balance $ 75,000 Unamortized debt discount and issuance cost (4,615) Accretion of exit fee 72 Long-term debt, net $ 70,457 The future annual principal payments due under the Athyrium Credit Facility as of March 31, 2019 were as follows (in thousands): Years Ending December 31, 2019 (remaining nine months) — 2020 — 2021 — 2022 16,665 2023 33,330 Thereafter 25,005 Total $ 75,000

Warrants

Warrants	3 Months Ended
	Mar. 31, 2019
Warrants
Warrants	7. WARRANTS The Company issued warrants in connection with debt transactions that were completed prior to 2017. Upon the completion of the IPO, the Company’s then outstanding warrants to purchase preferred stock converted into warrants to purchase common stock. The Company also issued the Warrant to purchase common stock in connection with the Athyrium Credit Facility, described further in Note 6. The following table summarizes the common stock warrants outstanding as of March 31, 2019 and December 31, 2018, each exercisable into the number of shares of common stock set forth below as of the specified dates: Shares Exercisable at Exercise Expiration Exercisable March 31, December 31, Issued Price Date From 2019 2018 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 2018 $ 12.18 October 2025 October 2018 184,660 184,660 2018 $ 12.18 October 2025 (1) — — 297,988 297,988 (1) As of March 31, 2019 and December 31, 2018, warrants outstanding to acquire 86,175 of common stock are not exercisable and are only exercisable upon draw down of Term Loan B.

Equity Financings

Equity Financings	3 Months Ended
	Mar. 31, 2019
Equity Financings
Equity Financings	8. EQUITY 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 Registration”). Under the Shelf Registration, 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 Registration becoming effective. 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 Registration 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 $66.1 million. In connection with the filing of the Shelf Registration, 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. The Company has issued an aggregate of 518,135 shares of its common stock under the ATM Offering, resulting in net proceeds to the Company of approximately $4.6 million. Under the Shelf Registration, 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, of up to an additional $174.0 million.

Stock-based Compensation

Stock-based Compensation	3 Months Ended
	Mar. 31, 2019
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 March 31, 2019 there were no performance-based awards outstanding. Employee Stock Purchase Plan — In 2017, the Company approved the 2017 Employee Stock Purchase Plan, which was amended and restated in December 2018 (as amended, the “ESPP”). The ESPP reserved an aggregate of 223,341 shares of common stock and provides for an annual increase on the first day of each fiscal year, beginning on January 1, 2019 and ending on December 31, 2029, in an amount equal to the lowest of: (1) 893,441 shares of the Company’s common stock; (2) 1% of the total number of shares of the Company’s common stock outstanding on the first day of the applicable fiscal year; and (3) an amount determined by the Company’s board of directors. The ESPP provides for two six-month offering periods each year; the first offering period begins on the first trading day on or after each January 1; the second offering period begins on the first trading day on or after each July 1. 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 fair value of the purchase rights granted under this plan was estimated on the date of grant, using the Black-Scholes option-pricing model. No shares of the Company’s common stock were purchased under the ESPP during the three months ended March 31, 2019 as the current six-month offering period ends on June 30, 2019. Inducement Stock Option Awards —During the three months ended March 31, 2019, the Company granted non-statutory stock options to purchase an aggregate of 85,500 shares of the Company’s common stock to fourteen 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 three months ended March 31, 2019 is as follows: A summary of option activity for employee and non‑employee awards under the 2009 Plan, the 2017 Plan and inducement grants for the three months ended March 31, 2019 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) (in thousands) Outstanding at January 1, 2019 $ 8.96 $ 3,771 Granted 5.24 Exercised 1.96 Forfeited 15.46 Outstanding at March 31, 2019 $ 7.90 $ 18,582 Vested or expected to vest at March 31, 2019 6,918,392 $ 7.90 $ 18,582 Options exercisable at March 31, 2019 2,954,722 $ 6.27 $ 10,905 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 791,170 options granted during the three months ended March 31, 2018. The assumptions used in determining fair value of the stock options granted and shares purchasable under the ESPP during the three months ended March 31, 2019 and 2018 are as follows: Three Months Ended March 31, 2019 2018 Expected volatility – 82% – 83% Risk-free interest rate – 2.58% – 2.71% Expected dividend yield 0% 0% Expected term (in years) 0.50 – 6.63 – 6.06 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 March 31, 2019 and 2018, the weighted average grant‑date fair value of options granted was $3.71 and $9.25, 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 March 31, 2019, there was $25.2 million of unrecognized compensation cost related to the stock options granted, which is expected to be expensed over a weighted‑average period of 2.91 years. Reserved Shares —As of March 31, 2019 and December 31, 2018, the Company had reserved the following shares of common stock issuable upon exercise of rights under equity compensation plans and inducement stock option awards: March 31, December 31, 2019 2018 Warrant rights to acquire Common Stock 384,163 384,163 ESPP 561,971 223,341 Shares reserved for outstanding inducement stock option awards 583,500 498,000 2009 Plan 2,543,292 2,563,072 2017 Plan 4,485,433 3,130,910 Total 8,558,359 6,799,486 Stock-based Compensation Expenses —Stock‑based compensation expense was classified in the statements of operations as follows (in thousands): Three Months Ended March 31, 2019 2018 Cost of product revenues $ 2 $ – Research and development 607 639 Selling, general and administrative 1,864 1,222 Total $ 2,473 $ 1,861 For three months ended March 31, 2019, stock-based compensation expense for the Company’s manufacturing employees related to INVELTYS manufactured since the FDA approval of $0.3 million has been capitalized into inventory

Income Taxes

Income Taxes	3 Months Ended
	Mar. 31, 2019
Income Taxes
Income Taxes	10. INCOME TAXES The Company did not record a provision or benefit for income taxes during the three months ended March 31, 2019 and 2018. 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 generation of limited 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. Under the provisions of Section 382 of the Internal Revenue Code of 1986, as amended, certain substantial changes in the Company’s ownership, including a sale of the Company, or significant changes in ownership due to sales of equity, may have limited, or may limit in the future, the amount of net operating loss carryforwards, which could be used annually to offset future taxable income. The Company has determined that ownership changes have occurred as of April 2016, and such changes have not materially impacted the Company’s ability to utilize its net operating loss carryforwards and research and development tax credits to offset future tax liabilities. The Company may be further limited by any changes that may have occurred or may occur subsequent to December 31, 2017. The Company files its corporate income tax returns in the United States and Massachusetts, Alabama, California, Montana, Oklahoma, Illinois, Kentucky, Pennsylvania, New Hampshire, New York, North Carolina and Texas. All tax years since the date of incorporation remain open to examination by the major taxing jurisdictions (state and federal) to which the Company is subject, as carryforward attributes generated in years past may still be adjusted upon examination by the Internal Revenue Service (“IRS”) or other authorities if they have or will be used in a future period. The Company is not currently under examination by the IRS or any other jurisdictions for any tax year. As of March 31, 2019 and 2018, 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 three months ended March 31, 2019 and 2018.

Commitments and Contingencies

Commitments and Contingencies	3 Months Ended
	Mar. 31, 2019
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, which occurred in January 2019, the minimum annual payment was $37,500. Upon the first commercial sale of INVELTYS, the annual minimum payment increased to $0.1 million. 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. During the three months ended March 31, 2019 the Company paid JHU $0.3 million related to the first commercial sale milestone. The Company recorded research and development expenses related to the JHU agreement of $0 and $82,000, respectively, for the three months ended March 31, 2019 and 2018. Litigation —The Company is not currently subject to any material legal proceedings. Other Commitments — The Company entered into a commercial supply agreement with Catalent Pharma Solutions, LLC to manufacture commercial supplies of INVELTYS and KPI-121 0.25%, with annual minimum purchase requirements. The Company became subject to the minimum purchase requirements for INVELTYS upon receiving FDA approval for the product.

Subsequent Events

Subsequent Events	3 Months Ended
	Mar. 31, 2019
Subsequent Events
Subsequent Events	12. SUBSEQUENT EVENTS The Company has evaluated all events and transactions that occurred after the balance sheet date through the date of this filing. During this period, the Company did not have any material subsequent events that impacted its consolidated financial statements or disclosures.

Summary of Significant Accoun_2

Summary of Significant Accounting Policies (Policies)	3 Months Ended
	Mar. 31, 2019
Summary of Significant Accounting Policies
Revenue	Revenue The Company accounts for revenue in accordance with Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers . Under ASC Topic 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration that the entity expects to be entitled in exchange for those goods or services. The Company performs the following five steps to recognize revenue under ASC Topic 606: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only recognizes revenue when it is probable that it will collect the consideration to which it is entitled in exchange for the goods or services that will be transferred to the customer. Product revenues, net The Company sells INVELTYS to wholesalers and/ or specialty distributors in the United States (collectively, “Customers”). These Customers subsequently resell the Company’s products to specialty and other retail pharmacies. In addition to agreements with Customers, the Company enters into arrangements with payors that provide for government-mandated and/or privately-negotiated rebates, chargebacks and discounts for the purchase of the Company’s products. The goods promised in the Company’s product sales contracts represent a single performance obligation; as the promise to transfer the individual products to the Customer is not separately identifiable from other promises in the contracts and, therefore, not distinct. The Company recognizes revenue from product sales at the point the Customer obtains control of the product, which occurs upon delivery. The transaction price (“net sales price”) that is recognized as revenue for product sales includes the selling price to the Customer and an estimate of variable consideration. Components of variable consideration include prompt pay and other discounts, product returns, government rebates, third-party payor rebates, coverage gap rebates, incentives such as patient co-pay assistance, and other fees paid to Customers where a distinct good or service is not received. Variable consideration is recorded on the consolidated balance sheet as either a reduction of accounts receivable, if payable to a Customer, or as a current liability, if payable to a third-party other than a Customer. The Company considers all relevant information when estimating variable consideration such as assessment of its current and anticipated sales and demand forecasts, specific known market events and trends, industry data and current contractual and statutory requirements that are reasonably available. The Company includes estimated amounts in the net sales price to the extent it is determined probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. Payment terms with Customers do not exceed one year and, therefore, the Company does not account for a significant financing component in its arrangements. The Company expenses incremental cost of obtaining a contract with a Customer when incurred as the period of benefit is less than one year. Reserves for Variable Consideration : Trade Discounts and Allowances The Company provides its Customers with certain trade discounts and allowances including discounts for prompt payments and fees paid for distribution, data and administrative services. These discounts and fees are based on contractually-determined percentages and are recorded as a reduction of revenue and accounts receivable in the period in which the related product revenue is recognized. Chargeback Chargebacks for fees and discounts to providers represent the estimated obligations resulting from contractual commitments to sell products to qualified healthcare providers at prices lower than the list prices charged to Customers who directly purchase the product from the Company. Customers charge the Company for the difference between what they pay for the product and the ultimate selling price to the qualified healthcare providers. These components of variable consideration are established in the same period that the related revenue is recognized, resulting in a reduction of product revenue and accounts receivable. Reserves for chargebacks consist of credits the Company expects to issue for units that remain in the distribution channel at the end of each reporting period and that the Company expects will be sold to qualified healthcare providers, as well as chargebacks that Customers have claimed, but for which the Company has not yet issued a credit. Product Returns Consistent with industry practice, the Company has a product returns policy that provides Customers a right of return for product purchased within a specified period prior to and subsequent to the product’s expiration date. The Company estimates the amount of its products that may be returned and presents this amount as a reduction of revenue in the period the related product revenue is recognized, in addition to establishing a liability. The Company’s estimates for product returns are based upon available industry data and its own sales information, including its visibility into the inventory remaining in the distribution channel. Commercial Payor and Medicare Part D Rebates The Company contracts with certain third-party payors, primarily pharmacy benefit managers (“PBMs”) and health plans (“Plans”), for the payment of rebates with respect to utilization of its product. These rebates are based on contractual percentages applied to the amount of product prescribed to patients who are covered by the PBMs or the Plans with which it contracts. The Company estimates the rebates for commercial and Medicare Part D payors based on the contractual discount percentage, the various payor mix for INVELTYS as well as future rebates that will be made for product that has been recognized as revenue but remains in the distribution channel at the end of each reporting period. The Company also estimates the number of patients in the prescription drug coverage gap for whom it will owe an additional liability under the Medicare Part D program. Such estimates are recorded in the same period the related revenue is recognized, resulting in a reduction of product revenue and the establishment of a current liability. Government Rebates The Company is subject to discount obligations under Medicaid and other government programs. For Medicaid, reserves are based on estimates of future Medicaid beneficiary utilization applied to the Medicaid unit rebate formula established by the Centers for Medicaid and Medicare Services. The Company’s liability for these rebates consists of estimates of claims for the current period and estimated future claims that will be made for product that has been recognized as revenue but remains in the distribution channel at the end of each reporting period. These reserves are recorded in the same period the related revenue is recognized, resulting in a reduction of product revenue and the establishment of a current liability. Co-pay Assistance The Company offers a co-pay assistance program (the “co-pay program”), which is intended to provide financial assistance to p atients who may or may not be covered by commercial insurance or who opt out of government insurance programs . The calculation of accruals for the co-pay program is based on actual claims processed during the period as well as an estimate of the number and cost per claim that the Company expects to receive associated with product that has been recognized as revenue but remains in the distribution channel at the end of each reporting period. Allowances for estimated co-pay claims are recorded in the same period the related revenue is recognized, resulting in a reduction of product revenue and the establishment of a current liability.
Accounts Receivable, net	Accounts Receivable, net Accounts receivable are reported on the consolidated balance sheets at outstanding amounts due from Customers for product sales. The Company deducts sales discounts for prompt payments and contractual fees for service arrangements from accounts receivable. The Company evaluates the collectability of accounts receivable on a regular basis, by reviewing the financial condition and payment history of customers, an overall review of collections experience on other accounts, and economic factors or events expected to affect future collections experience. An allowance for doubtful accounts is recorded when a receivable is deemed to be uncollectible. The Company recorded no allowance for doubtful accounts as of March 31, 2019. The Company recorded an allowance of approximately $0.8 million for expected sales discounts, related to initial stocking discounts, prompt pay discounts and contractual fee for service arrangements, to wholesalers and distributors as of March 31, 2019.
Cost of Product Revenues	Cost of Product Revenues The cost of product revenues consists primarily of materials, third-party manufacturing costs, freight and distribution costs, royalty expense, allocation of labor, quality control and assurance, spoilage and other manufacturing overhead costs. The Company expenses costs of product revenues related to product candidates as research and development expenses prior to regulatory approval in the respective territory. The Company received regulatory approval for INVELTYS on August 22, 2018.
Recent Accounting Pronouncements	Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”). ASU 2014-09 states that an entity should recognize revenue based on the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The FASB subsequently issued amendments to ASU 2014-09 that had the same effective date of January 1, 2018. Revenue from sales of INVELTYS, as well as any other future revenue arrangements, are and will be recognized under the provisions of ASU 2014-09. While the Company adopted ASU 2014-09 effective January 1, 2018, the Company did not generate any revenue from product sales prior to 2019. In June 2018, the FASB issued ASU 2018-07, Compensation-Stock Compensation Improvements to Nonemployee Share-Based Payment Accounting (“ASU 2018-07”). ASU 2018-07 substantially aligns accounting for share-based payments to employees and non-employees. This ASU became effective for annual periods beginning after December 15, 2018, including interim periods within that period, and early adoption is permitted. The new standard was effective on January 1, 2019 and the adoption of ASU 2018-07 did not have an impact on the Company’s condensed consolidated financial statements and related disclosures. In August 2018, the FASB issued ASU 2018-13, Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measuremen t (“ASU 2018-13”). ASU 2018-13 is intended to improve the effectiveness of disclosures in the notes to financial statements related to fair value measurements in Topic 820. This ASU will become effective for annual periods beginning after December 15, 2019, including interim periods within that period, and early adoption is permitted. The Company is currently evaluating the effect of this new guidance on its condensed consolidated financial statements. In August 2018, the FASB issued ASU 2018-15 , Intangibles - Goodwill and Other - Internal-Use Software -Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (“ASU 2018-15”). ASU 2018-15 aligns the accounting for implementation costs incurred in a hosting arrangement that is a service contract with the guidance on capitalizing costs associated with developing or obtaining internal-use software. This ASU will become effective for annual periods beginning after December 15, 2019, including interim periods within that period, and early adoption is permitted. The Company does not expect the adoption of ASU 2018-15 to have a material effect on its condensed consolidated financial statements.

Inventory (Tables)

Inventory (Tables)	3 Months Ended
	Mar. 31, 2019
Inventory
Schedule of Inventory	Inventory consists of the following (in thousands): March 31, December 31, 2019 2018 Raw materials $ 491 $ 350 Work in progress 4,252 3,357 Finished goods 672 388 Inventory $ 5,415 $ 4,095

Accrued Expenses (Tables)

Accrued Expenses (Tables)	3 Months Ended
	Mar. 31, 2019
Accrued Expenses
Schedule of accrued expenses	March 31, December 31, 2019 2018 Compensation and benefits $ 3,062 $ 5,352 Accrued revenue reserves (1) 2,718 — Development costs 1,623 1,223 Professional services 1,186 1,019 Commercial cost 662 1,722 Contract manufacturing 569 434 Payable related to construction of facility — 1,026 Other 515 325 Accrued expenses $ 10,335 $ 11,101

Lease (Tables)

Lease (Tables)	3 Months Ended
	Mar. 31, 2019
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 March 31, 2019 2018 Lease cost Operating lease cost $ $ Short-term lease cost — Total lease cost $ $ Operating cash outflows from operating leases $ $
Schedule of maturities of lease liability	Future minimum commitments due under these lease agreements as of March 31, 2019 were as follows (in thousands): Years Ending December 31, Operating Lease Finance Lease Obligation (2) Total 2019 (remaining nine months) $ 3,479 $ 31 $ 3,510 2020 4,140 41 4,181 2021 4,231 41 4,272 2022 3,926 41 3,967 2023 3,960 — 3,960 Thereafter 35,415 — 35,415 Present value adjustment (24,070) (25) (24,095) Present value of lease payments $ 31,081 $ 129 $ 31,210 (1) Future minimum lease payments under the Company’s Watertown Lease and its Vehicle Fleet Lease. (2) F uture minimum lease payments under the Company’s other Finance lease obligation.

Debt (Tables)

Debt (Tables)	3 Months Ended
	Mar. 31, 2019
Debt
Schedule of carrying value of debt	The components of the carrying value of the debt as of March 31, 2019, are detailed below (in thousands): March 31, 2019 Principal loan balance $ 75,000 Unamortized debt discount and issuance cost (4,615) Accretion of exit fee 72 Long-term debt, net $ 70,457
Schedule of maturities of long-term debt	The future annual principal payments due under the Athyrium Credit Facility as of March 31, 2019 were as follows (in thousands): Years Ending December 31, 2019 (remaining nine months) — 2020 — 2021 — 2022 16,665 2023 33,330 Thereafter 25,005 Total $ 75,000

Warrants (Tables)

Warrants (Tables)	3 Months Ended
	Mar. 31, 2019
Warrants
Schedule of outstanding warrants	Shares Exercisable at Exercise Expiration Exercisable March 31, December 31, Issued Price Date From 2019 2018 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 2018 $ 12.18 October 2025 October 2018 184,660 184,660 2018 $ 12.18 October 2025 (1) — — 297,988 297,988 (1) As of March 31, 2019 and December 31, 2018, warrants outstanding to acquire 86,175 of common stock are not exercisable and are only exercisable upon draw down of Term Loan B.

Stock-based Compensation (Table

Stock-based Compensation (Tables)	3 Months Ended
	Mar. 31, 2019
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 three months ended March 31, 2019 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) (in thousands) Outstanding at January 1, 2019 $ 8.96 $ 3,771 Granted 5.24 Exercised 1.96 Forfeited 15.46 Outstanding at March 31, 2019 $ 7.90 $ 18,582 Vested or expected to vest at March 31, 2019 6,918,392 $ 7.90 $ 18,582 Options exercisable at March 31, 2019 2,954,722 $ 6.27 $ 10,905
Schedule of assumptions used in determining fair value of the stock options granted	Three Months Ended March 31, 2019 2018 Expected volatility – 82% – 83% Risk-free interest rate – 2.58% – 2.71% Expected dividend yield 0% 0% Expected term (in years) 0.50 – 6.63 – 6.06
Schedule of reserved common stock shares upon exercise of rights under equity compensation plans	March 31, December 31, 2019 2018 Warrant rights to acquire Common Stock 384,163 384,163 ESPP 561,971 223,341 Shares reserved for outstanding inducement stock option awards 583,500 498,000 2009 Plan 2,543,292 2,563,072 2017 Plan 4,485,433 3,130,910 Total 8,558,359 6,799,486
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 March 31, 2019 2018 Cost of product revenues $ 2 $ – Research and development 607 639 Selling, general and administrative 1,864 1,222 Total $ 2,473 $ 1,861

Nature of business and basis _2

Nature of business and basis of presentation (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Nature of business and basis of presentation
Accumulated deficit	$ (226,497)	$ (201,109)

Summary of Significant Accoun_3

Summary of Significant Accounting Policies (Details) $ in Thousands	Mar. 31, 2019USD ($)
Allowance for bad debts	$ 0
Maximum
Payment terms	1 year
Sales discounts and contractual fee for service arrangements
Allowance for bad debts	$ 800

Inventory (Details)

Inventory (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Inventory
Raw Materials	$ 491	$ 350
Work in Progress	4,252	3,357
Finished Goods	672	388
Inventory	$ 5,415	$ 4,095

Accrued Expenses (Details)

Accrued Expenses (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Compensation and benefits	$ 3,062	$ 5,352
Accrued revenue reserves	2,718
Development costs	1,623	1,223
Professional services	1,186	1,019
Commercial cost	662	1,722
Contract manufacturing	569	434
Payable related to construction of facility		1,026
Other	515	325
Accrued expenses	10,335	$ 11,101
Accounts Payable [Member]
Accrued revenue reserves	$ 200

Leases (Details)

Leases (Details)	3 Months Ended		12 Months Ended
	Mar. 31, 2019USD ($)item	Mar. 31, 2018USD ($)	Dec. 31, 2018USD ($)	Nov. 15, 2018	Mar. 15, 2018	Sep. 30, 2013USD ($)
Leases
Restricted cash	$ 12,575,000	$ 2,176,000	$ 12,206,000
Number of vehicles leased under a master fleet lease agreement | item	65
Term of vehicle lease	36 months
Lease cost
Operating lease cost	$ 1,102,000	99,000
Short-term lease cost		9,000
Total lease cost	1,102,000	108,000
Operating cash flows from operating leases	$ 743,000	$ 102,000
Watertown Lease
Leases
Lease term	13 years
Restricted cash	$ 2,000,000					$ 84,000
Discount rate (as a percent)				9.90%
Variable lease cost	$ 100,000
Remaining lease term	12 years 8 months 12 days		12 years 9 months 29 days
Waltham Lease
Leases
Lease term						3 years
Existence of option to extend	true
Remaining lease term			29 days
Waverley Oaks Lease
Leases
Lease term					1 year

Leases - Future Minimum Commitm

Leases - Future Minimum Commitments Due (Details) $ in Thousands	Mar. 31, 2019USD ($)
Future minimum commitments due
2019 (remaining nine months)	$ 3,479
2020	4,140
2021	4,231
2022	3,926
2023	3,960
Thereafter	35,415
Present value adjustment	(24,070)
Present value of lease payments, operating	31,081
Finance Lease Payments
2019 (remaining nine months)	31
2020	41
2021	41
2022	41
Present value adjustment	(25)
Present value of lease payments, financing	129
Operating and Finance Leases Payments
2019 (remaining nine months)	3,510
2020	4,181
2021	4,272
2022	3,967
2023	3,960
Thereafter	35,415
Present value adjustment	(24,095)
Present value of lease payments	$ 31,210

Debt (Details)

Debt (Details) - USD ($)	Oct. 01, 2018	Mar. 31, 2018	Mar. 31, 2019	Mar. 31, 2018
Debt instruments
Interest expense			$ 2,094,000	$ 367,000
2014 Debt Facility
Debt instruments
Interest-only end date extension period		12 months
Unpaid principal balance		$ 20,000,000		20,000,000
Unamortized discount		$ 300,000		300,000
Interest expense				400,000
Amortization of debt discount				31,000
Contractual coupon interest				$ 300,000
Debt repayments	$ 20,000,000
Prepayment fees paid	200,000
Athyrium Credit Facility
Debt instruments
Interest expense			2,000,000
Amortization of debt discount			200,000
Contractual coupon interest			1,800,000
Debt instrument fees	3,000,000
Aggregate principal amount	$ 110,000,000		$ 75,000,000
Term Loan A
Debt instruments
Interest rate (as a percent)	9.875%
Aggregate principal amount	$ 75,000,000
Term Loan B
Debt instruments
Aggregate principal amount	$ 35,000,000

Debt - Athyrium Credit Facility

Debt - Athyrium Credit Facility (Details) $ / shares in Units, $ in Thousands	Oct. 01, 2018USD ($)$ / sharesshares	Mar. 31, 2019USD ($)item$ / sharesshares	Mar. 31, 2018USD ($)	Dec. 31, 2018USD ($)shares
Debt instruments
Warrant exercisable | shares		297,988		297,988
Debt issuance costs		$ 0	$ 50
Interest expense		$ 2,094	$ 367
Warrants 2018
Debt instruments
Exercise Price | $ / shares		$ 12.18
Warrant exercisable | shares		184,660		184,660
Remaining warrant exercisable upon condition | shares		86,175		86,175
Athyrium Credit Facility
Debt instruments
Aggregate principal amount	$ 110,000	$ 75,000
Accretion of exit fee		$ 72
Present value of prepayments if prepayment occurs prior to the second anniversary (as a percent)	105.00%
Prepayments if prepayment occurs on or after the second anniversary of the applicable date of issuance but prior to the third anniversary (as a percent)	3.00%
Prepayments if prepayment occurs on or after the third anniversary (as a percent)	2.00%
Prepayments if prepayment occurs after the fourth anniversary (as a percent)	0.00%
Additional interest rate upon an event of default accrued (as a percent)	3.00%
Total interest rate (as a percent)	12.875%
Number of features of embedded derivative | item		2
Number of derivatives | item		1
Financial covenant amount	$ 10,000
Restricted Cash and Cash Equivalents		$ 10,000		$ 10,000
Fees to service provider	3,000
Debt issuance costs	$ 3,000	$ 4,615
Effective interest rate		11.42%
Interest expense		$ 2,000
Amortization of debt discount		200
Contractual coupon interest		$ 1,800
Athyrium Credit Facility | Warrants 2018
Debt instruments
Warrant to purchase shares of common stock | shares	270,835
Exercise Price | $ / shares	$ 12.18456
Warrant exercisable | shares	184,660
Remaining warrant exercisable upon condition | shares	86,175
Initial fair value of the Warrant	$ 1,900
Term Loan A
Debt instruments
Aggregate principal amount	$ 75,000
Exit fee of the total principal payments (as a percent)	1.00%
Accretion of exit fee	$ 700
Term Loan B
Debt instruments
Aggregate principal amount	$ 35,000

Debt - Carrying Value (Details)

Debt - Carrying Value (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018	Oct. 01, 2018	Mar. 31, 2018
Debt instruments
Unamortized debt discount and issuance cost	$ 0			$ (50)
Long-term debt, net	70,457	$ 70,226
Athyrium Credit Facility
Debt instruments
Principal Loan Balance	75,000		$ 110,000
Unamortized debt discount and issuance cost	(4,615)		$ (3,000)
Accretion of exit fee	72
Long-term debt, net	$ 70,457

Debt - Future annual principal

Debt - Future annual principal payments (Details) - Athyrium Credit Facility $ in Thousands	Mar. 31, 2019USD ($)
Maturities of long-term debt
2022	$ 16,665
2023	33,330
Thereafter	25,005
Total	$ 75,000

Warrants (Details)

Warrants (Details) - $ / shares	3 Months Ended	12 Months Ended
	Mar. 31, 2019	Dec. 31, 2018
Preferred stock warrants
Shares Exercisable	297,988	297,988
Warrants 2013
Preferred stock warrants
Exercise Price	$ 7.50
Shares Exercisable	82,816	82,816
Warrants 2014
Preferred stock warrants
Exercise Price	$ 7.50
Shares Exercisable	16,000	16,000
Warrants 2016
Preferred stock warrants
Exercise Price	$ 8.27
Shares Exercisable	14,512	14,512
Warrants 2018
Preferred stock warrants
Exercise Price	$ 12.18
Shares Exercisable	184,660	184,660
Shares Exercisable upon condition	86,175	86,175

Equity Financings (Details)

Equity Financings (Details) - USD ($) $ / shares in Units, $ in Millions	Oct. 11, 2018	Oct. 05, 2018	Oct. 31, 2018	Mar. 31, 2019	Aug. 27, 2018
Equity Offerings
Net proceeds	$ 66.1
Underwriter's option
Equity Offerings
Issuance of common stock		1,125,000
Shelf
Equity Offerings
Issuance of common stock		7,500,000
Share price (in dollars per share)		$ 8.25
Shelf | Maximum
Equity Offerings
Additional authorized value of securities				$ 174	$ 250
Overallotment Shares and Shelf Registration
Equity Offerings
Issuance of common stock	8,625,000
ATM
Equity Offerings
Additional authorized value of securities					$ 50
Issuance of common stock			518,135
Net proceeds			$ 4.6

Stock-based Compensation (Detai

Stock-based Compensation (Details) $ / shares in Units, $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2019USD ($)employee$ / sharesshares	Mar. 31, 2018USD ($)$ / shares	Dec. 31, 2018periodshares
Stock-based compensation
Common stock available for future grant	8,558,359		6,799,486
Options granted	791,170
Weighted average grant date fair value of options granted | $ / shares	$ 3.71	$ 9.25
Stock based compensation expense | $	$ 2,473	$ 1,861
Inventories | INVELTYS
Stock-based compensation
Stock based compensation expense | $	$ 300
2017 Employee Stock Purchase Plan
Stock-based compensation
Common stock available for future grant	4,485,433		3,130,910
2017 Equity Incentive Plan
Stock-based compensation
Common stock available for future grant	689,833
2017 Equity Incentive Plan | Maximum
Stock-based compensation
Common stock available for future grant	2,543,292
2017 Equity Incentive Plan | Minimum
Stock-based compensation
Common stock available for future grant			3,573,766
Percentage of aggregate number of common shares reserved for future issuance (as a percent)			4.00%
2009 plan
Stock-based compensation
Common stock available for future grant	2,543,292		2,563,072
Number of shares outstanding	6,918,392		5,111,690
Options granted	1,894,425
Unrecognized compensation expense | $	$ 25,200
Weighted average expense recognition period	2 years 10 months 28 days
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
ESPP
Stock-based compensation
Common stock available for future grant	561,971		223,341
Number of offering period | period			2
Term of offering period			6 months
Closing price of common stock (as percent)			85.00%
Number of share purchased	0
Number of common stock issuable upon exercise of rights under equity compensation plans			223,341
ESPP | Minimum
Stock-based compensation
Common stock available for future grant			893,441
Percentage of aggregate number of common shares reserved for future issuance (as a percent)			1.00%
Non-statutory Stock Options | Employee
Stock-based compensation
Options Expiry Term	4 years
Vesting Period	3 years
Number of common stock issuable upon exercise of rights under equity compensation plans	85,500
Number of employees | employee	14
Percentage of vesting of share-based compensation awards on the one year anniversary of the grant date	25.00%
Anniversary of the share-based compensation arrangement	1 year
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	3 Months Ended	12 Months Ended
	Mar. 31, 2019	Dec. 31, 2018
Number of Shares
Granted (in shares)	791,170
2009 plan
Number of Shares
Outstanding at the beginning of the period (in shares)	5,111,690
Granted (in shares)	1,894,425
Exercised (in shares)	(19,780)
Forfeited	(67,943)
Outstanding at the end of the period (in shares)	6,918,392	5,111,690
Vested and expected to vest (in shares)	6,918,392
Options exercisable (in shares)	2,954,722
Weighted Average Exercise Price
Outstanding at the beginning of the period (in dollars per share)	$ 8.96
Granted (in dollars per share)	5.24
Exercised (in dollars per share)	1.96
Forfeited (in dollars per share)	15.46
Outstanding at the end of the period (in dollars per share)	7.90	$ 8.96
Vested and expected to vest (in dollars per share )	7.90
Options exercisable (in dollars per shares)	$ 6.27
Weighted Average Remaining Contractual Term
Weighted average period	8 years 3 months 18 days	8 years
Vested and expected to vest	8 years 3 months 18 days
Options exercisable	7 years 1 month 6 days
Aggregate Intrinsic Value
Outstanding at the beginning of the period (in dollars)	$ 3,771
Outstanding at the end of the period (in dollars)	18,582	$ 3,771
Vested and expected to vest (in dollars)	18,582
Options exercisable (in dollars)	$ 10,905

Stock-based Compensation - Fair

Stock-based Compensation - Fair Value Assumptions (Details)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Assumptions used in determining fair value of the stock options granted
Expected volatility (minimum)	61.00%	83.00%
Expected volatility (maximum)	82.00%	83.00%
Risk-free interest rate (minimum)	2.49%	2.63%
Risk-free interest rate (maximum)	2.58%	2.71%
Expected dividend yield	0.00%	0.00%
Minimum
Assumptions used in determining fair value of the stock options granted
Expected term (in years)	6 months	5 years 9 months 22 days
Maximum
Assumptions used in determining fair value of the stock options granted
Expected term (in years)	6 years 7 months 17 days	6 years 22 days

Stock-based Compensation - Rese

Stock-based Compensation - Reserved Shares (Details) - shares	Mar. 31, 2019	Dec. 31, 2018
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock shares reserved for future issuance	8,558,359	6,799,486
Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock shares reserved for future issuance	583,500	498,000
ESPP
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of common stock issuable upon exercise of rights under equity compensation plans		223,341
Common stock shares reserved for future issuance	561,971	223,341
Warrants
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock shares reserved for future issuance	384,163	384,163
2017 Employee Stock Purchase Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock shares reserved for future issuance	4,485,433	3,130,910
2009 plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock shares reserved for future issuance	2,543,292	2,563,072

Stock-based Compensation - St_2

Stock-based Compensation - Stock-based compensation expense (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Stock-based compensation
Stock based compensation expense	$ 2,473	$ 1,861
Cost of product revenues
Stock-based compensation
Stock based compensation expense	2
Research and development
Stock-based compensation
Stock based compensation expense	607	639
Selling, general and administrative
Stock-based compensation
Stock based compensation expense	$ 1,864	$ 1,222

Income Taxes (Details)

Income Taxes (Details) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Income Taxes
Income tax expense	$ 0	$ 0
Uncertain tax positions	0	0
Interest or penalties recorded	$ 0	$ 0

Commitments and Contingencies -

Commitments and Contingencies - License Agreement (Details) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Contingencies
Research and development expenses	$ 6,959,000	$ 5,657,000
The Johns Hopkins University (“JHU”)
Contingencies
Minimum annual payment	37,500
License fee, if the company achieves the first commercial sale	100,000
First commercial sale milestone	300,000
Research and development expenses	$ 0	$ 82,000