Ra Pharmaceuticals (RARX) 10-Q 9 Aug 17 2017 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2017	Jul. 31, 2017
Document and Entity Information
Entity Registrant Name	Ra Pharmaceuticals, Inc.
Entity Central Index Key	1,481,512
Document Type	10-Q
Document Period End Date	Jun. 30, 2017
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		22,609,646
Document Fiscal Year Focus	2,017
Document Fiscal Period Focus	Q2

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Current assets:
Cash and cash equivalents	$ 96,605	$ 117,812
Prepaid expenses and other current assets	1,231	1,690
Total current assets	97,836	119,502
Property and equipment, net	6,239	5,537
Intangible assets, net	229	262
Goodwill	183	183
Restricted cash	1,334	1,334
Total assets	105,821	126,818
Current liabilities:
Accounts payable	3,134	3,252
Accrued expenses	3,444	3,182
Deferred rent	422	303
Total current liabilities	7,000	6,737
Deferred rent, net of current portion	2,586	2,800
Deferred tax liabilities	59	59
Total liabilities	9,645	9,596
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.001 par value; 5,000 shares authorized; no shares issued and outstanding
Common stock, $0.001 par value; 150,000 shares authorized; 22,597 and 22,546 shares issued and outstanding as of June 30, 2017 and December 31, 2016, respectively	23	23
Additional paid-in capital	188,951	185,963
Accumulated deficit	(92,798)	(68,764)
Total stockholders' equity	96,176	117,222
Total liabilities and stockholders' equity	$ 105,821	$ 126,818

CONDENSED CONSOLIDATED BALANCE3

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares shares in Thousands	Jun. 30, 2017	Dec. 31, 2016
Preferred stock
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized	5,000	5,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized	150,000	150,000
Common stock, shares issued	22,597	22,546
Common stock, shares outstanding	22,597	22,546

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Revenue		$ 3,044		$ 4,928
Operating expenses:
Research and development	$ 10,464	6,505	$ 19,476	11,462
General and administrative	2,348	1,085	4,817	2,376
Total operating expenses	12,812	7,590	24,293	13,838
Loss from operations	(12,812)	(4,546)	(24,293)	(8,910)
Other income (expense), net	149	(260)	270	(952)
Net loss	$ (12,663)	$ (4,806)	$ (24,023)	$ (9,862)
Net loss per common share - basic and diluted (in dollars per share)	$ (0.56)	$ (8.90)	$ (1.06)	$ (18.32)
Weighted average number of common shares outstanding - basic and diluted (in shares)	22,575	540	22,562	538

CONDENSED CONSOLIDATED STATEME5

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Cash flows from operating activities
Net loss	$ (24,023)	$ (9,862)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	730	669
Stock-based compensation	2,250	271
Change in fair value of preferred stock tranche rights		960
Other, net	7	19
Changes in operating assets and liabilities:
Prepaid expenses and other current assets	313	(419)
Non-current assets		(27)
Accounts payable and accrued expenses	(96)	2,499
Deferred rent	(95)	2,428
Deferred revenue		(1,862)
Net cash used in operating activities	(20,914)	(5,324)
Cash flows from investing activities
Purchase of property and equipment	(1,128)	(3,221)
Other, net		133
Net cash used in investing activities	(1,128)	(3,088)
Cash flows from financing activities
Proceeds from issuance of preferred stock, net of underwriter discounts		29,250
Payment of preferred stock issuance costs		(21)
Proceeds from disgorgement of stockholder's short-swing profits	670
Proceeds from exercises of stock options	165	43
Net cash provided by financing activities	835	29,272
Net increase (decrease) in cash and cash equivalents	(21,207)	20,860
Cash and cash equivalents, beginning of period	117,812	19,386
Cash and cash equivalents, end of period	$ 96,605	$ 40,246

Nature of Business and Basis of

Nature of Business and Basis of Presentation	6 Months Ended
	Jun. 30, 2017
Nature of Business and Basis of Presentation
Nature of Business and Basis of Presentation	1. Nature of Business and Basis of Presentation The accompanying condensed consolidated financial statements are unaudited and have been prepared by Ra Pharmaceuticals, Inc. (the “Company”) in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission. The year-end condensed consolidated balance sheet data was derived from the Company’s audited financial statements, but does not include all disclosures required by U.S. GAAP. These condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. The condensed consolidated financial statements, in the opinion of management, reflect all normal and recurring adjustments necessary for a fair statement of the Company’s financial position and results of operations. Description of Business The Company is a clinical-stage biopharmaceutical company using its proprietary peptide chemistry platform to create novel therapeutics to treat life-threatening diseases that are caused by excessive or uncontrolled activation of the complement system, an essential component of the body’s innate immune system. The Company’s lead product candidate, RA101495, is being developed as a convenient self-administered subcutaneous (“SC”) injection, which is an injection into the tissue under the skin, for the treatment of paroxysmal nocturnal hemoglobinuria (“PNH”), a rare, chronic, life-threatening, blood disorder where red blood cells are mistakenly attacked and destroyed by the complement system. The Company is also developing RA101495, administered SC, to treat other debilitating complement-mediated diseases such as refractory generalized myasthenia gravis (“rMG”) and lupus nephritis (“LN”). The Company is also pursuing discovery and preclinical programs targeting selective inhibition of other uncontrolled complement pathway factors to treat a variety of ophthalmologic, renal and inflammatory diseases. In addition to its focus on developing novel therapeutics to treat complement-mediated diseases, the Company has a collaboration with Merck & Co., Inc. (“Merck”) for a non-complement cardiovascular target. The Company was incorporated in Delaware on June 27, 2008 and is located in Cambridge, Massachusetts. During 2011, the Company acquired Cosmix Verwaltungs GmbH (“Cosmix”), organized in Germany. In January 2016, the Company formed a wholly-owned subsidiary organized in the United Kingdom (“UK”), Ra Europe Limited, for the purpose of conducting clinical trials in Europe and the UK. Since inception, the Company has generated an accumulated deficit of $92.8 million as of June 30, 2017 and has devoted substantially all of its efforts to research and development, business planning, acquiring operating assets, seeking protection for its technology and product candidates, and raising capital. Initial Public Offering On October 31, 2016, the Company completed an initial public offering (“IPO”), in which the Company issued and sold 7,049,230 shares of common stock (“Common Stock”) at a public offering price of $13.00 per share, resulting in net proceeds of $82.8 million after deducting $6.4 million of underwriting discounts and commissions and offering costs of $2.4 million. On November 29, 2016, the Company completed the sale of an additional 1,057,385 shares of Common Stock to the underwriters under the underwriters’ option in the IPO to purchase additional shares at the public offering price of $13.00 per share, resulting in net proceeds of $12.8 million after deducting underwriting discounts and commissions of $1.0 million. The shares began trading on the NASDAQ Global Market on October 26, 2016. Use of Estimates The preparation of condensed consolidated financial statements in accordance with U.S. GAAP requires that the Company make estimates and judgments that may affect the reported amounts of assets, liabilities, revenues, expenses and related disclosure of contingent assets and liabilities. On an on-going basis, the Company evaluates its estimates, judgments and methodologies. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions. Changes in estimates are reflected in reported results in the period in which they become known. Consolidation The Company’s condensed consolidated financial statements reflect its financial statements and those of its subsidiaries in which the Company holds a controlling financial interest, including Cosmix and Ra Europe Limited. Intercompany balances and transactions are eliminated in consolidation. Summary of Significant Accounting Policies The Company’s significant accounting policies are described in Note 2, “Summary of Significant Accounting Policies,” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. Newly Adopted Accounting Pronouncements In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-09, “ Improvements to Employee Share-Based Payment Accounting .” The standard reduces complexity in several aspects of the accounting for employee share-based compensation, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The ASU is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. The adoption of ASU 2016-09 during the quarter ended March 31, 2017 did not have a significant impact on the Company’s financial statements and related disclosures. Upon adoption, the Company elected to account for forfeitures when they occur and recorded a cumulative effect adjustment of $11,200 to accumulated deficit. In November 2015, the FASB issued ASU 2015-17, “ Balance Sheet Classification of Deferred Taxes ,” that requires companies to classify all deferred tax assets and liabilities, along with any valuation allowance, as noncurrent on the balance sheet instead of separating deferred taxes into current and noncurrent amounts. The guidance does not change the existing requirement that only permits offsetting within a jurisdiction. The ASU is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. The adoption of ASU 2015-17 during the quarter ended March 31, 2017 did not have a significant impact on the Company’s financial statements and related disclosures. Newly Issued Accounting Pronouncements In May 2014, the FASB issued ASU 2014-09, “ Revenue from Contracts with Customers .” The standard, including subsequently issued amendments, will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective and permits the use of either the retrospective or cumulative effect transition method. The standard will require an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The standard will be effective for annual and interim periods beginning after December 15, 2017. The Company has not yet selected a transition method and is evaluating the impact the adoption will have on its consolidated financial statements and related disclosures. In February 2016, the FASB issued ASU 2016-02, “ Leases .” The standard established the principles that lessees and lessors will apply to report useful information to users of financial statements about the amount, timing and uncertainty of cash flows arising from a lease. The ASU is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. The Company is still evaluating the full impact this standard will have on its consolidated financial statements and related disclosures, but expects to recognize substantially all of its leases on the balance sheet by recording a right-to-use asset and a corresponding lease liability. In August 2016, the FASB issued ASU 2016-15, “ Classification of Certain Cash Receipts and Cash Payments .” The standard addresses the classification of certain transactions within the statement of cash flows, including cash payments for debt prepayment or debt extinguishment costs, contingent consideration payments made after a business combination, and distributions received from equity method investments. The ASU is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. The adoption of this standard is not expected to have a material impact on the consolidated financial statements and related disclosures. In November 2016, the FASB issued ASU 2016-18, “ Restricted Cash .” The standard addresses the classification and presentation of restricted cash and restricted cash equivalents within the statement of cash flows. The ASU is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. The Company is still evaluating the impact this standard will have on its consolidated financial statements and related disclosures. In January 2017, the FASB issued ASU 2017-04, “ Simplifying the Test for Goodwill Impairment .” The standard simplifies the accounting for goodwill impairment by removing Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. The ASU is effective for annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019, and should be applied on a prospective basis. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The adoption of this standard is not expected to have a material impact on the consolidated financial statements and related disclosures. In May 2017, the FASB issued ASU 2017-09, “ Scope of Modification Accounting .” The standard clarifies when changes to the terms or conditions of a share-based payment award must be accounted for as modifications. The ASU is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. The adoption of this standard is not expected to have a material impact on the consolidated financial statements and related disclosures.

Supplemental Balance Sheet Info

Supplemental Balance Sheet Information	6 Months Ended
	Jun. 30, 2017
Supplemental Balance Sheet Information
Supplemental Balance Sheet Information	2. Supplemental Balance Sheet Information Property and equipment, net consists of the following (in thousands): June 30, 2017 December 31, 2016 Computer equipment and software $ $ — Furniture, fixtures, and other Laboratory equipment Construction in progress — Leasehold improvements Accumulated depreciation ) ) Property and equipment, net $ $ Depreciation expense was $0.4 million and $0.3 million for the three months ended June 30, 2017 and 2016 and $0.7 million and $0.6 million for the six months ended June 30, 2017 and 2016, respectively. Accrued expenses consist of the following (in thousands): June 30, 2017 December 31, 2016 Payroll and employee-related costs $ $ Research and development costs Other Total $ $

Fair Value Measurements

Fair Value Measurements	6 Months Ended
	Jun. 30, 2017
Fair Value Measurements
Fair Value Measurements	3. Fair Value Measurements The Company has certain assets recorded at fair value, which may be classified as Level 1, 2, or 3 within the fair value hierarchy: · Level 1 - Fair values are determined utilizing prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access. · Level 2 - Fair values are determined by utilizing quoted prices for identical or similar assets and liabilities in active markets or other market observable inputs such as interest rates, yield curves, and foreign currency spot rates. · Level 3 - Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable. The fair value hierarchy level is determined by asset and liability class based on the lowest level of significant input. The observability of inputs may change for certain assets or liabilities. This condition could cause an asset or liability to be reclassified between levels. The Company recognizes transfers between levels within the fair value hierarchy, if any, at the end of each quarter. During the three and six months ended June 30, 2017, there were no transfers between levels. Valuation methodologies used for assets measured or disclosed at fair value are as follows: · Cash equivalents - Valued at market prices determined through third-party pricing services. Assets measured at fair value on a recurring basis are summarized below (in thousands): June 30, 2017 Level 1 Level 2 Level 3 Total Cash equivalents — Money market funds $ $ — $ — $ Total assets measured at fair value $ $ — $ — $ December 31, 2016 Level 1 Level 2 Level 3 Total Cash equivalents — Money market funds $ $ — $ — $ Total assets measured at fair value $ $ — $ — $

Redeemable Convertible Preferre

Redeemable Convertible Preferred Stock	6 Months Ended
	Jun. 30, 2017
Redeemable Convertible Preferred Stock
Redeemable Convertible Preferred Stock	4. Redeemable Convertible Preferred Stock Series A Preferred Stock In February 2010, the Company issued 12,887,999 shares of Series A Preferred Stock pursuant to the Series A Preferred Stock agreement at a price of $0.80176 per share. Additionally, investors were granted the right to purchase up to an additional 21,552,566 shares of the Company’s Series A Preferred Stock at a price of $0.80176 per share, in two subsequent closings upon the Company meeting certain milestone criteria. In February 2012 and March 2014, the Board of Directors waived certain milestone events provided for in the Series A Preferred Stock agreement and the Company issued 10,776,283 and 10,776,283 shares, respectively, of Series A Preferred Stock at a price of $0.80176 per share. In October 2016, upon the closing of the Company’s IPO, all outstanding shares of Series A Preferred Stock converted into 4,920,074 shares of the Company’s common stock. Series B Preferred Stock In July 2015, the Company issued 31,564,630 shares of Series B-1 Preferred Stock pursuant to the Series B Preferred Stock agreement at a price of $0.92667 per share. Additionally, investors were granted the right to purchase up to an additional 29,362,452 shares of the Company’s Series B-2 Preferred Stock at a price of $0.99617, in any number of subsequent closings upon the request of each investor or in a mandatory closing upon the Company meeting certain milestone criteria. In June 2016, the Board of Directors and required certain investors waived certain milestone events provided for in the Series B Preferred Stock agreement and the Company issued 29,362,452 shares of Series B-2 Preferred Stock at a price of $0.99617 per share. In October 2016, upon the closing of the Company’s IPO, all outstanding shares of Series B-1 and B-2 Preferred Stock converted into 8,703,859 shares of the Company’s common stock. Series A and Series B-2 Preferred Stock Tranche Rights The Company determined the rights of the investors to purchase additional shares of Series A and Series B-2 Preferred Stock met the definition of a freestanding financial instrument and were recognized as a liability at fair value upon the initial issuance of Series A and Series B-1 Preferred Stock in February 2010 and July 2015, respectively. The Company adjusted the carrying value of the Series A and Series B-2 Preferred Stock Tranche Rights liability to its estimated fair value at each subsequent reporting date and immediately prior to the subsequent issuances through charges to other income (expense), net in the condensed consolidated statement of operations. The Series A Preferred Stock Tranche Rights liability was extinguished in March 2014 and the Series B-2 Preferred Stock Tranche Rights liability was extinguished in June 2016. During the three and six months ended June 30, 2016, the Company adjusted the Series B-2 Preferred Stock Tranche Rights liability to its fair value and recorded a charge of $0.2 million and $1.0 million, respectively.

Revenue Recognition

Revenue Recognition	6 Months Ended
	Jun. 30, 2017
Revenue Recognition
Revenue Recognition	5. Revenue Recognition In April 2013, the Company entered into a multi-target collaboration and license agreement with Merck (“Merck Agreement”) to use its proprietary drug discovery technology platform to identify orally available cyclic peptides for non-complement program targets nominated by Merck and provide specific research and development services. Under the agreement, the Company granted Merck licenses under certain of its intellectual property rights to manufacture, develop and commercialize compounds and products directed to selected program targets. The agreement consists of a research phase, where the Company and Merck collaborated on identifying and pre-clinically developing orally available cyclic peptides suitable for further development by Merck, and a development and commercialization phase pursuant to which Merck has sole discretion and responsibility, including financial responsibility, for further development and commercialization of these peptides, on a program-by-program basis, from the collaboration. The research term ended in April 2016. At the signing of the Merck Agreement, Merck made an upfront non-refundable, technology license fee of $4.5 million. In addition, the Merck Agreement provides for reimbursement of research and development services provided by the Company and includes milestone payments that could total up to $65.0 million. The Company has identified two deliverables in connection with the Merck Agreement: (1) rights to access the Company’s technology platform for each program target, and (2) the research and development services provided during the research term. The Company has determined that none of the deliverables have standalone value. Since the separability criteria have not been met for any of the deliverables, the deliverables were accounted for as a single combined unit of accounting. The Company has recognized revenue in connection with the upfront non-refundable license fee ratably over the research term. Payments for research and development services and reimbursement for certain lab supplies and reagents have been recognized as services are performed. The Company has determined that the $3.5 million in milestone payments received was substantive in nature as they were commensurate with the enhancement of value resulting from the Company’s performance under the Merck Agreement, related solely to past performance and were reasonable relative to all of the deliverables and payment terms within the arrangement. Accordingly, the Company has accounted for these milestone payments under the milestone method. The Company is entitled to receive future aggregate milestone payments of up to $61.5 million for the non-complement cardiovascular target selected, consisting of remaining preclinical and clinical milestones of $16.5 million, regulatory milestones of $19.0 million, and commercial milestones of $26.0 million, and low-to-mid single digit percentage royalties on future sales, if any. Following the end of the research term, any future milestone payments will be recognized as revenue upon achievement, assuming all other revenue recognition criteria are met, as no further performance obligations exist for the Company under the Merck Agreement. During the three and six months ended June 30, 2016, the Company recognized revenue of $3.0 million and $4.2 million related to upfront, non-refundable payments, respectively. For the three and six months ended June 30, 2016, the Company recognized less than $0.1 million and $0.7 million related to research and development services and reimbursable expenses, respectively. No revenue was recognized during the six months ended June 30, 2017.

Stock-Based Compensation

Stock-Based Compensation	6 Months Ended
	Jun. 30, 2017
Stock-Based Compensation
Stock-Based Compensation	6. Stock-Based Compensation The Company has stock-based compensation plans under which employees, directors and non-employees may be granted stock-based awards such as stock options, stock appreciation rights, restricted stock awards, unrestricted stock awards, restricted stock units, performance based awards or dividend equivalent rights. The following table provides stock-based compensation by the financial statement line item in which it is reflected (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 Research and development $ $ $ $ General and administrative Total $ $ $ $ During the six months ended June 30, 2017, the Company issued 1.3 million stock options with a per share weighted average grant date fair value of $11.90.

Net Loss Per Share

Net Loss Per Share	6 Months Ended
	Jun. 30, 2017
Net Loss Per Share
Net Loss Per Share	7. Net Loss Per Share The Company computes basic and diluted earnings (loss) per share using a methodology that gives effect to the impact of outstanding participating securities (the “two-class method”). As the three and six months ended June 30, 2017 and 2016 resulted in net losses, there is no income allocation required under the two-class method or dilution attributed to weighted average shares outstanding in the calculation of diluted loss per share. The following Common Stock equivalents, presented on an as converted basis, were excluded from the computation of diluted weighted average shares outstanding as their effect would be anti-dilutive (in thousands): As of June 30, 2017 2016 Convertible preferred stock — Common stock warrants — Stock options Total On April 1, 2015, the Company entered into a Convertible Note Purchase Agreement with the holders of Series A Preferred Stock and issued Convertible Notes and warrants to purchase 222,775 shares of the Company’s Common Stock. In October 2016, upon the closing of the IPO, all of the outstanding warrants net exercised, in accordance with their terms, into 221,573 shares of Common Stock.

Nature of Business and Basis 13

Nature of Business and Basis of Presentation (Policies)	6 Months Ended
	Jun. 30, 2017
Nature of Business and Basis of Presentation
Initial Public Offering	Initial Public Offering On October 31, 2016, the Company completed an initial public offering (“IPO”), in which the Company issued and sold 7,049,230 shares of common stock (“Common Stock”) at a public offering price of $13.00 per share, resulting in net proceeds of $82.8 million after deducting $6.4 million of underwriting discounts and commissions and offering costs of $2.4 million. On November 29, 2016, the Company completed the sale of an additional 1,057,385 shares of Common Stock to the underwriters under the underwriters’ option in the IPO to purchase additional shares at the public offering price of $13.00 per share, resulting in net proceeds of $12.8 million after deducting underwriting discounts and commissions of $1.0 million. The shares began trading on the NASDAQ Global Market on October 26, 2016.
Use of Estimates	Use of Estimates The preparation of condensed consolidated financial statements in accordance with U.S. GAAP requires that the Company make estimates and judgments that may affect the reported amounts of assets, liabilities, revenues, expenses and related disclosure of contingent assets and liabilities. On an on-going basis, the Company evaluates its estimates, judgments and methodologies. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions. Changes in estimates are reflected in reported results in the period in which they become known.
Consolidation	Consolidation The Company’s condensed consolidated financial statements reflect its financial statements and those of its subsidiaries in which the Company holds a controlling financial interest, including Cosmix and Ra Europe Limited. Intercompany balances and transactions are eliminated in consolidation.
Newly Adopted and Newly Issued Accounting Pronouncements	Newly Adopted Accounting Pronouncements In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-09, “ Improvements to Employee Share-Based Payment Accounting .” The standard reduces complexity in several aspects of the accounting for employee share-based compensation, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The ASU is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. The adoption of ASU 2016-09 during the quarter ended March 31, 2017 did not have a significant impact on the Company’s financial statements and related disclosures. Upon adoption, the Company elected to account for forfeitures when they occur and recorded a cumulative effect adjustment of $11,200 to accumulated deficit. In November 2015, the FASB issued ASU 2015-17, “ Balance Sheet Classification of Deferred Taxes ,” that requires companies to classify all deferred tax assets and liabilities, along with any valuation allowance, as noncurrent on the balance sheet instead of separating deferred taxes into current and noncurrent amounts. The guidance does not change the existing requirement that only permits offsetting within a jurisdiction. The ASU is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. The adoption of ASU 2015-17 during the quarter ended March 31, 2017 did not have a significant impact on the Company’s financial statements and related disclosures. Newly Issued Accounting Pronouncements In May 2014, the FASB issued ASU 2014-09, “ Revenue from Contracts with Customers .” The standard, including subsequently issued amendments, will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective and permits the use of either the retrospective or cumulative effect transition method. The standard will require an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The standard will be effective for annual and interim periods beginning after December 15, 2017. The Company has not yet selected a transition method and is evaluating the impact the adoption will have on its consolidated financial statements and related disclosures. In February 2016, the FASB issued ASU 2016-02, “ Leases .” The standard established the principles that lessees and lessors will apply to report useful information to users of financial statements about the amount, timing and uncertainty of cash flows arising from a lease. The ASU is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. The Company is still evaluating the full impact this standard will have on its consolidated financial statements and related disclosures, but expects to recognize substantially all of its leases on the balance sheet by recording a right-to-use asset and a corresponding lease liability. In August 2016, the FASB issued ASU 2016-15, “ Classification of Certain Cash Receipts and Cash Payments .” The standard addresses the classification of certain transactions within the statement of cash flows, including cash payments for debt prepayment or debt extinguishment costs, contingent consideration payments made after a business combination, and distributions received from equity method investments. The ASU is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. The adoption of this standard is not expected to have a material impact on the consolidated financial statements and related disclosures. In November 2016, the FASB issued ASU 2016-18, “ Restricted Cash .” The standard addresses the classification and presentation of restricted cash and restricted cash equivalents within the statement of cash flows. The ASU is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. The Company is still evaluating the impact this standard will have on its consolidated financial statements and related disclosures. In January 2017, the FASB issued ASU 2017-04, “ Simplifying the Test for Goodwill Impairment .” The standard simplifies the accounting for goodwill impairment by removing Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. The ASU is effective for annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019, and should be applied on a prospective basis. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The adoption of this standard is not expected to have a material impact on the consolidated financial statements and related disclosures. In May 2017, the FASB issued ASU 2017-09, “ Scope of Modification Accounting .” The standard clarifies when changes to the terms or conditions of a share-based payment award must be accounted for as modifications. The ASU is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. The adoption of this standard is not expected to have a material impact on the consolidated financial statements and related disclosures.

Supplemental Balance Sheet In14

Supplemental Balance Sheet Information (Tables)	6 Months Ended
	Jun. 30, 2017
Supplemental Balance Sheet Information
Schedule of property and equipment, net	Property and equipment, net consists of the following (in thousands): June 30, 2017 December 31, 2016 Computer equipment and software $ $ — Furniture, fixtures, and other Laboratory equipment Construction in progress — Leasehold improvements Accumulated depreciation ) ) Property and equipment, net $ $
Schedule of accrued expenses	Accrued expenses consist of the following (in thousands): June 30, 2017 December 31, 2016 Payroll and employee-related costs $ $ Research and development costs Other Total $ $

Fair Value Measurements (Tables

Fair Value Measurements (Tables)	6 Months Ended
	Jun. 30, 2017
Fair Value Measurements
Schedule of assets measured at fair value	Assets measured at fair value on a recurring basis are summarized below (in thousands): June 30, 2017 Level 1 Level 2 Level 3 Total Cash equivalents — Money market funds $ $ — $ — $ Total assets measured at fair value $ $ — $ — $ December 31, 2016 Level 1 Level 2 Level 3 Total Cash equivalents — Money market funds $ $ — $ — $ Total assets measured at fair value $ $ — $ — $

Stock-Based Compensation (Table

Stock-Based Compensation (Tables)	6 Months Ended
	Jun. 30, 2017
Stock-Based Compensation
Schedule of stock-based compensation expense	The following table provides stock-based compensation by the financial statement line item in which it is reflected (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 Research and development $ $ $ $ General and administrative Total $ $ $ $

Net Loss Per Share (Tables)

Net Loss Per Share (Tables)	6 Months Ended
	Jun. 30, 2017
Net Loss Per Share
Schedule of Common Stock equivalents excluded from the computation of diluted weighted average shares outstanding due to anti-dilutive effect	The following Common Stock equivalents, presented on an as converted basis, were excluded from the computation of diluted weighted average shares outstanding as their effect would be anti-dilutive (in thousands): As of June 30, 2017 2016 Convertible preferred stock — Common stock warrants — Stock options Total

Nature of Business and Basis 18

Nature of Business and Basis of Presentation - Accumulated deficit (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Nature of Business and Basis of Presentation
Accumulated deficit	$ 92,798	$ 68,764

Nature of Business and Basis 19

Nature of Business and Basis of Presentation - Initial public offering (Details) - USD ($) $ / shares in Units, $ in Thousands	Nov. 29, 2016	Oct. 31, 2016	Jun. 30, 2016
Sale of stock
Payment of offering expenses			$ 21
IPO | Common Stock
Sale of stock
New share issues		7,049,230
Share price (in dollars per share)		$ 13
Proceeds from initial public offering		$ 82,800
Underwriting discounts and commissions		6,400
Payment of offering expenses		$ 2,400
Over-Allotment Option | Common Stock
Sale of stock
New share issues	1,057,385
Share price (in dollars per share)	$ 13
Proceeds from initial public offering	$ 12,800
Underwriting discounts and commissions	$ 1,000

Nature of Business and Basis 20

Nature of Business and Basis of Presentation - Newly adopted accounting pronouncements (Details) $ in Thousands	Mar. 31, 2017USD ($)
Accounting Standards Update 2016-09
Newly Adopted Accounting Pronouncements
Cumulative effect adjustment to accumulated deficit.	$ 11,200

Supplemental Balance Sheet In21

Supplemental Balance Sheet Information - Property and equipment, net (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016	Dec. 31, 2016
Property and Equipment, net
Property and equipment, gross	$ 9,137		$ 9,137		$ 7,739
Accumulated depreciation	(2,898)		(2,898)		(2,202)
Property and equipment, net	6,239		6,239		5,537
Depreciation expense	400	$ 300	700	$ 600
Computer equipment and software
Property and Equipment, net
Property and equipment, gross	20		20
Furniture, fixtures, and other
Property and Equipment, net
Property and equipment, gross	378		378		365
Laboratory equipment
Property and Equipment, net
Property and equipment, gross	4,667		4,667		3,642
Construction in progress
Property and Equipment, net
Property and equipment, gross	328		328
Leasehold improvements
Property and Equipment, net
Property and equipment, gross	$ 3,744		$ 3,744		$ 3,732

Supplemental Balance Sheet In22

Supplemental Balance Sheet Information - Accrued expenses (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Supplemental Balance Sheet Information
Payroll and employee-related costs	$ 1,194	$ 1,451
Research and development costs	1,768	1,326
Other	482	405
Total	$ 3,444	$ 3,182

Fair Value Measurements (Detail

Fair Value Measurements (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Assets and liabilities measured at fair value
Fair value assets, amount transferred between measurement levels	$ 0
Fair value liabilities, amount transferred between measurement levels	0
Total
Financial Assets
Total	97,147	$ 117,708
Total | Level 1
Financial Assets
Total	97,147	117,708
Total | Money market funds
Financial Assets
Cash equivalents	97,147	117,708
Total | Money market funds | Level 1
Financial Assets
Cash equivalents	$ 97,147	$ 117,708

Redeemable Convertible Prefer24

Redeemable Convertible Preferred Stock - Series A preferred stock (Details) - Series A Preferred Stock	1 Months Ended
	Oct. 31, 2016shares	Mar. 31, 2014$ / sharesshares	Feb. 29, 2012$ / sharesshares	Feb. 28, 2010tranche$ / sharesshares
Redeemable Convertible Preferred Stock
Shares issued (in shares)		10,776,283	10,776,283	12,887,999
Share price (in dollars per share) | $ / shares		$ 0.80176	$ 0.80176	$ 0.80176
Investors granted right to purchase shares (in shares)				21,552,566
Investors granted right to purchase shares, share price (in dollars per share) | $ / shares				$ 0.80176
Number of tranches | tranche				2
Conversion of preferred stock into common stock (in shares)	4,920,074

Redeemable Convertible Prefer25

Redeemable Convertible Preferred Stock - Series B preferred stock (Details) - $ / shares	1 Months Ended
	Oct. 31, 2016	Jun. 30, 2016	Jul. 31, 2015
Series B Preferred Stock
Redeemable Convertible Preferred Stock
Conversion of preferred stock into common stock (in shares)	8,703,859
Series B-1 Preferred Stock
Redeemable Convertible Preferred Stock
Shares issued (in shares)			31,564,630
Share price (in dollars per share)			$ 0.92667
Series B-2 Preferred Stock
Redeemable Convertible Preferred Stock
Shares issued (in shares)		29,362,452
Share price (in dollars per share)		$ 0.99617
Investors granted right to purchase shares (in shares)			29,362,452
Investors granted right to purchase shares, share price (in dollars per share)			$ 0.99617

Redeemable Convertible Prefer26

Redeemable Convertible Preferred Stock - Series A and Series B-2 Preferred Stock Tranche Rights (Details) - USD ($) $ in Millions	3 Months Ended	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2016
Series B-2 Preferred Stock
Redeemable Convertible Preferred Stock
Gain (Loss) on change in fair value	$ 0.2	$ 1

Revenue Recognition (Details)

Revenue Recognition (Details) - USD ($) $ in Thousands	1 Months Ended	3 Months Ended	6 Months Ended
	Apr. 30, 2013	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Collaborative Arrangements
Revenues		$ 3,044		$ 4,928
Merck | Product related collaborative arrangement
Collaborative Arrangements
Payments received	$ 4,500
Revenues			$ 0
Merck | Product related collaborative arrangement | Upfront non-refundable payments
Collaborative Arrangements
Revenues		3,000		4,200
Merck | Product related collaborative arrangement | Research and development
Collaborative Arrangements
Revenues		$ 100		$ 700
Merck | Product related collaborative arrangement | Preclinical milestones
Collaborative Arrangements
Milestone payment received			3,500
Merck | Product related collaborative arrangement | Preclinical and clinical milestones
Collaborative Arrangements
Future milestone payments			16,500
Merck | Product related collaborative arrangement | Regulatory milestones
Collaborative Arrangements
Future milestone payments			19,000
Merck | Product related collaborative arrangement | Commercial milestones
Collaborative Arrangements
Future milestone payments			26,000
Merck | Product related collaborative arrangement | Maximum
Collaborative Arrangements
Future milestone payments			$ 61,500
Merck | Product related collaborative arrangement | Maximum | Research and development
Collaborative Arrangements
Total milestone payments	$ 65,000

Stock-Based Compensation (Detai

Stock-Based Compensation (Details) - USD ($) $ / shares in Units, $ in Thousands, shares in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Stock-Based Compensation
Stock-based compensation expense	$ 1,232	$ 146	$ 2,250	$ 271
Number of options granted			1.3
Weighted-average grant date fair value per share (in dollars per share)			$ 11.90
Research and development
Stock-Based Compensation
Stock-based compensation expense	725	69	$ 1,366	161
General and administrative
Stock-Based Compensation
Stock-based compensation expense	$ 507	$ 77	$ 884	$ 110

Net Loss Per Share - Common sto

Net Loss Per Share - Common stock equivalents excluded from the computation of diluted weighted average shares outstanding due to anti-dilutive effect (Details) - shares shares in Thousands	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Common stock equivalents excluded from the computation of diluted weighted average shares outstanding due to anti-dilutive effect
Total	3,182	15,242
Convertible preferred stock
Common stock equivalents excluded from the computation of diluted weighted average shares outstanding due to anti-dilutive effect
Total		13,624
Common stock warrants
Common stock equivalents excluded from the computation of diluted weighted average shares outstanding due to anti-dilutive effect
Total		223
Stock options
Common stock equivalents excluded from the computation of diluted weighted average shares outstanding due to anti-dilutive effect
Total	3,182	1,395

Net Loss Per Share - Additional

Net Loss Per Share - Additional information (Details) - Common Stock - shares	1 Months Ended
	Oct. 31, 2016	Apr. 01, 2015
Sale of stock
Number of shares into which the warrants may be converted		222,775
IPO
Sale of stock
Shares issued from warrants exercised	221,573