Aclaris Therapeutics (ACRS) 10-Q 7 Nov 17 2017 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2017	Nov. 06, 2017
Document and Entity Information
Entity Registrant Name	Aclaris Therapeutics, Inc.
Entity Central Index Key	1,557,746
Document Type	10-Q
Document Period End Date	Sep. 30, 2017
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		30,834,679
Document Fiscal Year Focus	2,017
Document Fiscal Period Focus	Q3

CONSOLIIDATED BALANCE SHEETS

CONSOLIIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Current assets:
Cash and cash equivalents	$ 60,055	$ 30,171
Marketable securities	167,793	107,051
Accounts receivable, net	658
Prepaid expenses and other current assets	5,616	1,334
Total current assets	234,122	138,556
Marketable securities		36,912
Property and equipment, net	1,203	481
Intangible assets	7,367
Goodwill	18,504
Other assets	195	136
Total assets	261,391	176,085
Current liabilities:
Accounts payable	6,483	2,845
Accrued expenses	3,510	3,378
Total current liabilities	9,993	6,223
Contingent consideration	4,378
Other liabilities	375	372
Deferred tax liability	2,386
Total liabilities	17,132	6,595
Stockholders' Equity:
Preferred stock, $0.0001 par value; 10,000,000 shares authorized and no shares issued or outstanding at September 30, 2017 and December 31, 2016
Common stock, $0.00001 par value; 100,000,000 shares authorized at September 30, 2017 and December 31, 2016; 30,834,679 and 26,059,181 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively
Additional paid-in capital	380,873	260,671
Accumulated other comprehensive loss	(113)	(269)
Accumulated deficit	(136,501)	(90,912)
Total stockholders’ equity	244,259	169,490
Total liabilities and stockholders’ equity	$ 261,391	$ 176,085

CONSOLIDATED BALANCE SHEETS (Pa

CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Sep. 30, 2017	Dec. 31, 2016
Consolidated Balance Sheets
Preferred stock, par value (in dollars per share)	$ 0.00001	$ 0.00001
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value (in dollars per share)	$ 0.00001	$ 0.00001
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares issued	30,834,679	26,059,181
Common stock, shares outstanding	30,834,679	26,059,181

CONSOLIDATED STATEMENTS OF OPER

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Consolidated Statements Of Operations And Comprehensive Loss
Revenue	$ 684		$ 684
Cost of revenue	453		453
Gross profit	231		231
Operating expenses:
Research and development	10,864	$ 7,162	26,601	$ 26,533
General and administrative	8,123	3,650	20,611	10,407
Total operating expenses	18,987	10,812	47,212	36,940
Loss from operations	(18,756)	(10,812)	(46,981)	(36,940)
Other income, net	564	118	1,392	336
Net loss	$ (18,192)	$ (10,694)	$ (45,589)	$ (36,604)
Net loss per share, basic and diluted (in dollars per share)	$ (0.63)	$ (0.50)	$ (1.68)	$ (1.76)
Weighted average common shares outstanding, basic and diluted (in shares)	28,834,808	21,415,871	27,180,244	20,752,590
Other comprehensive loss:
Unrealized gain (loss) on marketable securities, net of tax of $0	$ 63	$ (12)	$ 7	$ 144
Foreign currency translation adjustments	(10)	(43)	149	(49)
Total other comprehensive income (loss)	53	(55)	156	95
Comprehensive loss	$ (18,139)	$ (10,749)	$ (45,433)	$ (36,509)

CONSOLIDATED STATEMENTS OF OPE5

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Parenthetical) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Consolidated Statements Of Operations And Comprehensive Loss
Unrealized gain (loss) on marketable securities, tax	$ 0	$ 0

CONSOLIDATED STATEMENT OF STOCK

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY - 9 months ended Sep. 30, 2017 - USD ($) $ in Thousands	Common StockPrivate Placement	Common StockIPO	Common Stock	Additional Paid-In CapitalPrivate Placement	Additional Paid-In CapitalIPO	Additional Paid-In Capital	Accumulated Other Comprehensive Loss	Accumulated Deficit	Private Placement	IPO	Total
Balance at Dec. 31, 2016						$ 260,671	$ (269)	$ (90,912)			$ 169,490
Balance (in shares) at Dec. 31, 2016			26,059,181								26,059,181
Increase (Decrease) in Stockholders' Equity
Issuance of common stock in connection with acquisition						9,675					$ 9,675
Issuance of common stock in connection with acquisition, shares			349,527
Issuance of common stock				$ 19,311	$ 80,918				$ 19,311	$ 80,918
Number of shares issued	635,000	3,747,602
Exercise of stock options and vesting of RSUs						168					168
Exercise of stock options and vesting of RSUs, shares			43,369
Unrealized loss on marketable securities							7				7
Foreign currency translation adjustment							149				149
Stock-based compensation expense						10,130					10,130
Net loss								(45,589)			(45,589)
Balance at Sep. 30, 2017						$ 380,873	$ (113)	$ (136,501)			$ 244,259
Balance (in shares) at Sep. 30, 2017			30,834,679								30,834,679

CONSOLIDATED STATEMENT OF STOC7

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (Parenthetical) $ in Thousands	9 Months Ended
	Sep. 30, 2017USD ($)
IPO
Underwriting discounts, commissions, and offering costs incurred	$ 5,352
Private Placement
Underwriting discounts, commissions, and offering costs incurred	$ 691

CONSOLIDATED STATEMENTS OF CASH

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Cash flows from operating activities:
Net loss	$ (45,589)	$ (36,604)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	221	80
Stock-based compensation expense	10,130	4,194
Non-cash charges related to Vixen acquisition		2,784
Changes in operating assets and liabilities:
Prepaid expenses and other assets	(4,331)	110
Accounts payable	3,130	915
Accrued expenses	(14)	1,990
Net cash used in operating activities	(36,453)	(26,531)
Cash flows from investing activities:
Purchases of property and equipment	(658)	(170)
Acquisition of Confluence, net of cash acquired	(9,647)
Purchases of marketable securities	(120,496)	(33,747)
Proceeds from sales and maturities of marketable securities	96,674	49,832
Net cash provided by investing activities	(34,127)	15,915
Cash flows from financing activities
Proceeds from issuance of common stock in connection with private placement, net of issuance costs		18,547
Proceeds from sale of stock, net of issuance costs	19,311
Proceeds from issuance of common stock in connection with public offering, net of issuance costs	80,918
Proceeds from the exercise of employee stock options	235	14
Net cash provided by financing activities	100,464	18,561
Net increase in cash and cash equivalents	29,884	7,945
Cash and cash equivalents at beginning of period	30,171	9,851
Cash and cash equivalents at end of period	60,055	17,796
Supplemental disclosures of non-cash investing and financing activities:
Additions to property and equipment included in accounts payable	20	13
Fair value of stock issued in connection with acquisition	9,675	$ 2,355
Offering costs included in accounts payable	$ 107

Organization and Nature of Busi

Organization and Nature of Business	9 Months Ended
	Sep. 30, 2017
Organization and Nature of Business
Organization and Nature of Business	1. Organization and Nature of Business Aclaris Therapeutics, Inc. was incorporated under the laws of the State of Delaware in 2012. On July 17, 2015, Aclaris Therapeutics International Limited (“ATIL”) was established under the laws of the United Kingdom as a wholly-owned subsidiary of Aclaris Therapeutics, Inc. On March 24, 2016, Vixen Pharmaceuticals, Inc. (“Vixen”) became a wholly-owned subsidiary of Aclaris Therapeutics, Inc. (see Note 12). On August 3, 2017, Confluence Life Sciences Inc. (“Confluence”) was acquired by Aclaris Therapeutics, Inc. and became a wholly-owned subsidiary thereof (see Note 3). Aclaris Therapeutics, Inc., ATIL, Vixen and Confluence are referred to collectively as the “Company”. The Company is a dermatologist-led biopharmaceutical company focused on identifying, developing and commercializing innovative and differentiated therapies to address significant unmet needs in medical and aesthetic dermatology. The Company’s lead drug candidate, A-101 40% Topical Solution, is a proprietary high‑concentration formulation of hydrogen peroxide topical solution that the Company is developing as a prescription treatment for seborrheic keratosis (“SK”), a common non‑malignant skin tumor. The Company has completed three Phase 3 clinical trials of A-101 40% Topical Solution in patients with SK, and in February 2017 submitted a New Drug Application (“NDA”) to the U.S. Food and Drug Administration (“FDA”). The NDA was accepted by the FDA in May 2017 and the Prescription Drug User Fee Act (“PDUFA”) target action date for the completion of the FDA’s review of the NDA is December 24, 2017. Liquidity The Company’s condensed consolidated financial statements have been prepared on the basis of continuity of operations, realization of assets and the satisfaction of liabilities in the ordinary course of business. At September 30, 2017, the Company had cash, cash equivalents and marketable securities of $227,848 and an accumulated deficit of $136,501. Since inception, the Company has incurred net losses and negative cash flows from its operations. Prior to the acquisition of Confluence in August 2017, the Company had never generated any revenue. There is no assurance that profitable operations will ever be achieved, and, if achieved, will be sustained on a continuing basis. In addition, development activities, clinical and preclinical testing, and commercialization of the Company’s products will require significant additional financing. The future viability of the Company is dependent on its ability to generate cash from operating activities or to raise additional capital to finance its operations. The Company’s failure to raise capital as and when needed could have a negative impact on its financial condition and ability to pursue its business strategies.

Summary of Significant Accounti

Summary of Significant Accounting Policies	9 Months Ended
	Sep. 30, 2017
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies	2. Summary of Significant Accounting Policies Basis of Presentation The accompanying condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The financial statements include the consolidated accounts of the Company and its wholly-owned subsidiaries, ATIL, Confluence and Vixen. All material intercompany transactions have been eliminated. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting periods. Significant estimates and assumptions reflected in these financial statements include, but are not limited to, research and development expenses, contingent consideration and the valuation of stock-based awards. Estimates are periodically reviewed in light of changes in circumstances, facts and experience. Actual results could differ from the Company’s estimates. Unaudited Interim Financial Information The accompanying condensed consolidated balance sheet as of September 30, 2017, the condensed consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, 2017 and 2016, the condensed consolidated statement of stockholders’ equity for the nine months ended September 30, 2017, and the condensed consolidated statements of cash flows for the nine months ended September 30, 2017 and 2016 are unaudited. The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited annual financial statements contained in the Company’s annual report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 15, 2017 and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair statement of the Company’s financial position as of September 30, 2017, the results of its operations and comprehensive loss for the three and nine months ended September 30, 2017 and 2016 and its cash flows for the nine months ended September 30, 2017 and 2016. The condensed consolidated balance sheet data as of December 31, 2016 was derived from audited financial statements but does not include all disclosures required by GAAP. The financial data and other information disclosed in these notes related to the three and nine months ended September 30, 2017 and 2016 are unaudited. The results for the three and nine months ended September 30, 2017 are not necessarily indicative of results to be expected for the year ending December 31, 2017, any other interim periods, or any future year or period. The unaudited interim financial statements of the Company included herein have been prepared, pursuant to the rules and regulations of the SEC. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted from this report, as is permitted by such rules and regulations. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto for the year ended December 31, 2016 included in the Company’s annual report on Form 10-K filed with the SEC on March 15, 2017. Significant Accounting Policies The Company’s significant accounting policies are disclosed in the audited consolidated financial statements for the year ended December 31, 2016 included in the Company’s annual report on Form 10-K filed with the SEC on March 15, 2017. Since the date of such financial statements, there have been no changes to the Company’s significant accounting policies other than those noted below. In February 2017, the Company paid a $2.0 million PDUFA fee to the FDA in conjunction with the filing of its NDA for A-101 40% Topical Solution. The Company has requested a waiver and refund of this PDUFA fee from the FDA, and the amount has been recorded in prepaid expenses and other current assets on the Company’s condensed consolidated balance sheet. Revenue Recognition The Company recognizes revenue when the earnings process is complete, which under SEC Staff Accounting Bulletin No. 104, Topic No. 13, “Revenue Recognition,” is when revenue is realized or realizable and earned, there is persuasive evidence a revenue arrangement exists, delivery of goods or services has occurred, the sales price is fixed or determinable, and collectability is reasonably assured. The Company earns revenue from the provision of laboratory services to clients through Confluence, its wholly-owned subsidiary. Laboratory service revenue is generally evidenced by contracts with clients which are on an agreed upon fixed-price, fee-for-service basis and are generally billed on a monthly basis in arrears for services rendered. Revenue related to these contracts is generally recognized as the laboratory services are performed, based upon the rates specified in the contracts. The Company also receives revenue from grants under the Small Business Innovation Research program of the National Institutes of Health (“NIH”). The Company, through its Confluence subsidiary, currently has two active grants from NIH which are related to early-stage research. The Company recognizes revenue related to these grants as amounts become reimbursable under each grant, which is generally when research is performed and the related costs are incurred. Intangible Assets Intangible assets include both finite lived and indefinite lived assets. Finite lived intangible assets are amortized over their estimated useful life based on the pattern over which the intangible assets are consumed or otherwise used up. If that pattern cannot be reliably determined, the straight-line method of amortization is used. Indefinite lived intangible assets are not amortized. In-process research and development (“IPR&D”) assets acquired in a business combination are considered indefinite lived until the completion or abandonment of the associated research and development efforts. The Company tests intangible assets for impairment at least annually, or if indicators of impairment are present. The Company recognizes impairment losses when and to the extent that the estimated fair value of an intangible asset is less than its carrying value. Contingent Consideration The Company initially recorded the contingent consideration related to future potential payments based upon the achievement of certain development, regulatory and commercial milestones, resulting from the acquisition of Confluence, at its estimated fair value on the date of acquisition. Changes in fair value reflect new information about the likelihood of the payment of the contingent consideration and the passage of time. Future changes in the fair value of the contingent consideration, if any, will be recorded as income or expense in the Company’s consolidated statement of operations. Recently Issued Accounting Pronouncements In January 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2017-01, Business Combinations-Clarifying the Definition of a Business (Topic 805). The amendments in this ASU provide a screen to determine when a set of acquired assets and/or activities is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired, or disposed of, is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. The amendments in this ASU will reduce the number of transactions that meet the definition of a business. ASU 2017-01 is effective for annual reporting periods beginning after December 15, 2017, including interim periods within those years, and early adoption will be permitted. The Company is assessing the potential impact of ASU 2017-01 on its consolidated financial statements. In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other-Simplifying the Test for Goodwill Impairment (Topic 350) . Under the amendments in this ASU, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The amendments in this ASU eliminate Step 2 from the goodwill impairment test. ASU 2017-04 is effective for fiscal years beginning after December 15, 2019, and early adoption is permitted. The Company is assessing the potential impact of ASU 2017-04 on its consolidated financial statements. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). Under this ASU, entities should recognize revenue in an amount that reflects the consideration to which they expect to be entitled to in exchange for goods and services provided. ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2017. The Company is assessing the potential impact of ASU 2014-09 on its consolidated financial statements.

Acquisition of Confluence

Acquisition of Confluence	9 Months Ended
	Sep. 30, 2017
Acquisition of Confluence
Acquisition of Confluence	3. Acquisition of Confluence On August 3, 2017, the Company entered into an Agreement and Plan of Merger with Confluence, Aclaris Life Sciences, Inc., a Delaware corporation and wholly-owned subsidiary of the Company (the “Merger Sub”), and Fortis Advisors LLC, as representative of the holders of Confluence equity (the “Agreement and Plan of Merger”). Pursuant to the terms of the Agreement and Plan of Merger, the Merger Sub merged with and into Confluence, with Confluence surviving as a wholly-owned subsidiary of the Company, resulting in the Company’s acquisition of 100% of the outstanding shares of Confluence. Pursuant to the terms of the Agreement and Plan of Merger, the Company gave aggregate consideration with a fair value of $24,322 to the equity holders of Confluence, subject to a customary post-closing working capital adjustment. Confluence was a privately held biotechnology company focused on the discovery and development of kinase inhibitors to treat inflammatory and immunological disorders and cancer. Confluence also provides laboratory services under contract research arrangements to pharmaceutical and biotech companies looking to supplement their research and development efforts with difficult-to-execute specialty skills and programs. The acquisition of Confluence will add small molecule drug discovery and preclinical development capabilities, which the Company expects will allow it to bring early-stage research and development activities in-house that the Company currently outsources to third parties. The Company has also agreed to pay the Confluence equity holders contingent consideration of up to $80,000, based upon the achievement of certain development, regulatory and commercial milestones set forth in the Agreement and Plan of Merger. Of the contingent consideration, $2,500 may be paid in shares of the Company’s common stock upon the achievement of a specified development milestone. In addition, the Company has agreed to pay the Confluence equity holders specified future royalty payments calculated as a low single-digit percentage of annual net sales, subject to specified reductions, limitations and other adjustments, until the date that all of the patent rights for that product have expired, as determined on a country-by-country and product-by-product basis or, in specified circumstances, ten years from the first commercial sale of such product. In addition, if the Company sells, licenses or transfers any of the intellectual property acquired from Confluence pursuant to the Agreement and Plan of Merger to a third party, the Company will be obligated to pay the Confluence equity holders a portion of any incremental consideration (in excess of the development and milestone payments described above) that the Company receives from such sales, licenses or transfers in specified circumstances. The following table summarizes the fair value of total consideration given to the Confluence equity holders pursuant to the Agreement and Plan of Merger: Cash consideration paid $ 10,269 Aclaris common stock issued 9,675 Contingent consideration 4,378 Total fair value of consideration to Confluence equity holders $ 24,322 The Company funded the acquisition and transaction expenses with cash on hand. The Company accounted for this transaction as a business combination using the acquisition method of accounting. Under the acquisition method of accounting, the assets acquired and liabilities assumed in this transaction were recorded at their respective fair values on the date of acquisition using assumptions that are subject to change. The Company expects to finalize its allocation of the purchase price upon the finalization of valuations for the identified intangible assets, final resolution of the post-closing working capital adjustment and certain tax accounts that are based on the best estimates of management. The completion and filing of federal and state tax returns for the acquired entity may result in adjustments to the carrying value of assets and liabilities. The following table summarizes the preliminary fair value of assets acquired and liabilities assumed in the acquisition of Confluence as of the acquisition date: Cash and cash equivalents $ 622 Accounts receivable, net 574 Other current assets 89 Property and equipment 268 Other intangible assets 751 IPR&D 6,629 Goodwill 18,504 Total assets acquired 27,437 Accounts payable and accrued expenses 656 Deferred tax liability 2,386 Other liabilities 73 Total liabilities assumed 3,115 Total net assets acquired $ 24,322 The estimated fair value of the IPR&D, and other identified intangibles, acquired was determined using a replacement cost method which estimates the cost that would be required to rebuild the intangible assets identified in the acquisition of Confluence. The acquisition of Confluence resulted in the recognition of goodwill in the amount $18,504 which represents the value of new products and technologies to be developed in the future as well as the value of the employee workforce acquired. The following supplemental unaudited pro forma information presents the Company’s financial results, for the periods presented, as if the acquisition of Confluence had occurred on January 1, 2016. This supplemental unaudited pro forma financial information has been prepared for comparative purposes only, and is not necessarily indicative of what actual results would have been had the acquisition of Confluence occurred on January 1, 2016, nor is this information indicative of future results. Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 Revenue $ 1,063 $ 937 $ 3,366 $ 2,617 Gross profit 384 452 1,102 1,184 Total operating expenses 18,822 11,464 48,122 39,273 Net loss (17,875) (10,891) (45,627) (37,769) The supplemental unaudited pro forma financial results for the three and nine months ended September 30, 2017 include adjustments to exclude $997 and $1,351, respectively, of acquisition-related expenses, as well as $217 and $888, respectively, to exclude revenue billed to the Company by Confluence. The supplemental unaudited pro forma financial results for the three and nine months ended September 30, 2017 includes an adjustment for amortization expense related to the other intangible assets acquired. There were no acquisition-related expenses incurred, or revenue billed to the Company by Confluence, for the three and nine months ended September 30, 2016, and accordingly, no adjustments are necessary for these items in the supplemental pro forma financial results for those time periods. The supplemental unaudited pro forma financial results for the three and nine months ended September 30, 2016 includes an adjustment for amortization expense related to the other intangible assets acquired.

Fair Value of Financial Assets

Fair Value of Financial Assets and Liabilities	9 Months Ended
	Sep. 30, 2017
Fair Value of Financial Assets and Liabilities
Fair Value of Financial Assets and Liabilities	4. Fair Value of Financial Assets and Liabilities The following tables present information about the Company’s assets and liabilities, which are measured at fair value on a recurring basis and indicate the level of the fair value hierarchy utilized to determine such fair values: September 30, 2017 Level 1 Level 2 Level 3 Total Assets: Cash equivalents $ 44,670 $ 13,983 $ — $ 58,653 Marketable securities — 167,793 — 167,793 Total Assets $ 44,670 $ 181,776 $ — $ 226,446 Liabilities: Acquisition-related contingent consideration $ — $ — $ 4,378 $ 4,378 Total liabilities $ — $ — $ 4,378 $ 4,378 December 31, 2016 Level 1 Level 2 Level 3 Total Assets: Cash equivalents $ 11,522 $ 12,691 $ — $ 24,213 Marketable securities — 143,963 — 143,963 Total $ 11,522 $ 156,654 $ — $ 168,176 As of September 30, 2017 and December 31, 2016, the Company’s cash equivalents consisted of investments with maturities of less than three months and included a money market fund, which was valued based upon Level 1 inputs, and commercial paper and asset-backed securities, which were valued based upon Level 2 inputs. In determining the fair value of its Level 2 investments the Company relied on quoted prices for identical securities in markets that are not active. These quoted prices were obtained by the Company with the assistance of a third-party pricing service based on available trade, bid and other observable market data for identical securities. On a quarterly basis, the Company compares the quoted prices obtained from the third-party pricing service to other available independent pricing information to validate the reasonableness of those quoted prices. The Company evaluates whether adjustments to third-party pricing is necessary and, historically, the Company has not made adjustments to the quoted prices obtained from the third-party pricing service. During the nine months ended September 30, 2017 and the year ended December 31, 2016, there were no transfers between Level 1, Level 2 and Level 3. As of September 30, 2017 and December 31, 2016, the fair value of the Company’s available for sale marketable securities by type of security was as follows: September 30, 2017 Gross Gross Amortized Unrealized Unrealized Fair Cost Gain Loss Value Marketable securities: Corporate debt securities $ 39,432 $ — $ (9) $ 39,423 Commercial paper 76,130 — — 76,130 Asset-backed securities 20,752 — (3) 20,749 U.S. government agency debt securities 31,521 — (30) 31,491 Total marketable securities $ 167,835 $ — $ (42) $ 167,793 December 31, 2016 Gross Gross Amortized Unrealized Unrealized Fair Cost Gain Loss Value Marketable securities: Corporate debt securities $ 51,352 $ — $ (59) $ 51,293 Commercial paper 20,463 — — 20,463 Asset-backed securities 28,692 6 (1) 28,697 U.S. government agency debt securities 43,505 8 (3) 43,510 Total marketable securities $ 144,012 $ 14 $ (63) $ 143,963

Property and Equipment, Net

Property and Equipment, Net	9 Months Ended
	Sep. 30, 2017
Property and Equipment, Net
Property and Equipment, Net	5. Property and Equipment, Net Property and equipment, net consisted of the following: September 30, December 31, 2017 2016 Computer equipment $ 593 $ 310 Manufacturing equipment 518 149 Lab equipment 265 — Furniture and fixtures 125 115 Leasehold improvements 33 33 Property and equipment, gross 1,534 607 Accumulated depreciation (331) (126) Property and equipment, net $ 1,203 $ 481 Depreciation expense was $103 and $32 for the three months ended September 30, 2017 and 2016, respectively, and $208 and $80 for the nine months ended September 30, 2017 and 2016, respectively.

Accrued Expenses

Accrued Expenses	9 Months Ended
	Sep. 30, 2017
Accrued Expenses
Accrued Expenses	6. Accrued Expenses Accrued expenses consisted of the following: September 30, December 31, 2017 2016 Research and development expenses $ 866 $ 1,166 Employee compensation expenses 1,899 1,732 Commercial expenses 322 — Vixen contract payable 100 100 Other 323 380 Total accrued expenses $ 3,510 $ 3,378

Stockholders' Equity

Stockholders' Equity	9 Months Ended
	Sep. 30, 2017
Stockholders' Equity
Stockholders' Equity	7. Stockholders’ Equity Preferred Stock As of September 30, 2017 and December 31, 2016, the Company’s amended and restated certificate of incorporation authorized the Company to issue 10,000,000 shares of undesignated preferred stock. No shares of preferred stock were outstanding as of September 30, 2017 or December 31, 2016. Common Stock As of September 30, 2017 and December 31, 2016, the Company’s amended and restated certificate of incorporation authorized the Company to issue 100,000,000 shares of $0.00001 par value common stock. Each share of common stock entitles the holder to one vote on all matters submitted to a vote of the Company’s stockholders. Common stockholders are entitled to receive dividends, as may be declared by the board of directors, if any, subject to any preferential dividend rights of any series of preferred stock that may be outstanding. No dividends have been declared through September 30, 2017. At-The-Market Equity Offering On November 2, 2016, the Company entered into an at-the-market sales agreement with Cowen and Company, LLC to sell the Company’s securities under a shelf registration statement filed in November 2016. During the three months ended September 30, 2017, the Company did not issue any shares of common stock under the at-the-market sales agreement. As of September 30, 2017, the Company had issued and sold an aggregate of 635,000 shares of common stock under the at-the-market sales agreement at a weighted average price per share of $31.50, for aggregate gross proceeds of $20,003. The Company incurred expenses of $691 in connection with the shares issued under the at-the-market sales agreement. Public Offering of Common Stock On August 10, 2017, the Company entered into an underwriting agreement pursuant to which the Company issued and sold 3,747,602 shares of common stock under a registration statement on Form S-3 (the “Public Offering”), including the underwriters’ partial exercise of their option to purchase additional shares. The shares of common stock were sold to the public at a price of $23.02 per share, for gross proceeds of $86,270. The Company paid underwriting discounts and commissions of $5,176 to the underwriters in connection with the Public Offering. In addition, the Company incurred expenses of $176 in connection with the Public Offering. The net offering proceeds received by the Company, after deducting underwriting discounts and commissions and offering expenses, were $80,918.

Stock-Based Awards

Stock-Based Awards	9 Months Ended
	Sep. 30, 2017
Stock-Based Awards
Stock-Based Awards	8. Stock‑Based Awards 2017 Inducement Plan On July 31, 2017, the Company’s board of directors adopted the 2017 Inducement Plan (the “2017 Inducement Plan”). The 2017 Inducement Plan is a non-shareholder approved stock plan adopted pursuant to the “inducement exception” provided under NASDAQ listing rules. The only employees eligible to receive grants of awards under the 2017 Inducement Plan are individuals who satisfy the standards for inducement grants under NASDAQ rules, generally including individuals who were not previously an employee or director of the Company. Under the terms of the 2017 Inducement Plan upon adoption, the Company may grant up to 1,000,000 shares of common stock pursuant to nonqualified stock options, stock appreciation rights, restricted stock awards, restricted stock unit (“RSU”) awards, and other stock awards. The shares of common stock underlying any awards that expire, or are otherwise terminated, settled in cash or repurchased by the Company under the 2017 Inducement Plan will be added back to the shares of common stock available for issuance under the 2017 Inducement Plan. As of September 30, 2017, 622,452 shares of common stock were available for grant under the 2017 Inducement Plan. 2015 Equity Incentive Plan On September 15, 2015, the Company’s board of directors adopted the 2015 Equity Incentive Plan (the “2015 Plan”), and on September 16, 2015, the Company’s stockholders approved the 2015 Plan. The 2015 Plan became effective in connection with the Company’s initial public offering in October 2015. Beginning at the time the 2015 Plan became effective, no further grants may be made under the Company’s 2012 Equity Compensation Plan, as amended and restated (the “2012 Plan”). The 2015 Plan provides for the grant of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock awards, RSU awards, performance stock awards, cash-based awards and other stock-based awards. The number of shares initially reserved for issuance under the 2015 Plan was 1,643,872 shares of common stock. The number of shares of common stock that may be issued under the 2015 Plan will automatically increase on January 1 of each year, beginning on January 1, 2016 and ending on January 1, 2025, in an amount equal to the lesser of (i) 4.0% of the shares of the Company’s common stock outstanding on December 31 of the preceding calendar year or (ii) an amount determined by the Company’s board of directors. The shares of common stock underlying any awards that expire, are otherwise terminated, settled in cash or repurchased by the Company under the 2015 Plan and the 2012 Plan will be added back to the shares of common stock available for issuance under the 2015 Plan. As of January 1, 2017, the number of shares of common stock that may be issued under the 2015 Plan was automatically increased by 1,042,367 shares. As of September 30, 2017, 1,368,904 shares remained available for grant under the 2015 Plan. 2012 Equity Compensation Plan Upon the 2015 Plan becoming effective, no further grants can be made under the 2012 Plan. The Company granted stock options to purchase a total of 1,140,524 shares under the 2012 Plan, of which 1,003,647 and 1,049,667 were outstanding as of September 30, 2017 and December 31, 2016, respectively. Stock options granted under the 2012 Plan vest over four years and expire after ten years. As required, the exercise price for the stock options granted under the 2012 Plan was not less than the fair value of common shares as determined by the Company as of the date of grant. Stock Option Valuation The weighted average assumptions the Company used to estimate the fair value of stock options granted were as follows: Nine Months Ended September 30, 2017 2016 Risk-free interest rate 1.89 % 1.41 % Expected term (in years) 6.2 6.5 Expected volatility 93.84 % 96.60 % Expected dividend yield 0 % 0 % The Company recognizes compensation expense for awards over their vesting period. Compensation expense for awards includes the impact of forfeitures in the period when they occur. Stock Options The following table summarizes stock option activity from January 1, 2017 through September 30, 2017: Weighted Weighted Average Average Remaining Aggregate Number Exercise Contractual Intrinsic of Shares Price Term Value (in years) Outstanding as of December 31, 2016 2,702,350 $ 18.94 9.05 $ 24,434 Granted 617,500 26.47 Exercised (36,738) 6.40 Forfeited and cancelled (40,281) 21.09 Outstanding as of September 30, 2017 3,242,831 $ 20.49 8.60 $ 21,704 Options vested and expected to vest as of September 30, 2017 3,242,831 $ 20.49 8.60 $ 21,704 Options exercisable as of September 30, 2017 828,823 (1) $ 10.95 7.73 $ 12,666 (1) All options granted under the 2012 Plan are exercisable immediately, subject to a repurchase right in the Company’s favor that lapses as the option vests. This amount reflects the number of shares under options that were vested, as opposed to exercisable, as of September 30, 2017. The weighted average grant date fair value of stock options granted during the nine months ended September 30, 2017 was $20.41 per share. The intrinsic value of a stock option is calculated as the difference between the exercise price of the stock option and the fair value of the underlying common stock, and cannot be less than zero. Restricted Stock Units The following table summarizes RSU activity from January 1, 2017 through September 30, 2017: Weighted Average Grant Date Number Fair Value of Shares Per Share Outstanding as of December 31, 2016 219,614 $ 27.43 Granted 88,547 26.59 Vested (9,299) 20.32 Forfeited and cancelled (4,531) 27.05 Outstanding as of September 30, 2017 294,331 $ 27.41 Stock‑Based Compensation The following table summarizes stock‑based compensation expense recorded by the Company: Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 Cost of revenue $ 130 $ — $ 130 $ — Research and development 1,332 623 3,853 1,577 General and administrative 2,211 995 6,147 2,617 Total stock-based compensation expense $ 3,673 $ 1,618 $ 10,130 $ 4,194 As of September 30, 2017, the Company had unrecognized stock‑based compensation expense for stock options and RSUs of $37,674 and $6,090, respectively, which is expected to be recognized over weighted average periods of 3.06 years and 2.93 years, respectively.

Net Loss per Share

Net Loss per Share	9 Months Ended
	Sep. 30, 2017
Net Loss per Share
Net Loss per Share	9. Net Loss per Share Basic and diluted net loss per share is summarized in the following table: Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 Numerator: Net loss $ (18,192) $ (10,694) $ (45,589) $ (36,604) Denominator: Weighted average shares of common stock outstanding 28,834,808 21,415,871 27,180,244 20,752,590 Net loss per share, basic and diluted $ (0.63) $ (0.50) $ (1.68) $ (1.76) The Company’s potentially dilutive securities, which included stock options and RSUs, have been excluded from the computation of diluted net loss per share since the effect would be to reduce the net loss per share. Therefore, the weighted average number of common shares outstanding used to calculate both basic and diluted net loss per share is the same. The following table presents potential common shares excluded from the calculation of diluted net loss per share for both the three and nine months ended September 30, 2017 and 2016. All share amounts presented in the table below represent the total number outstanding as of September 30, 2017 and 2016. September 30, 2017 2016 Options to purchase common stock 3,242,831 1,913,419 Restricted stock unit awards 294,331 85,000 Total potential common shares 3,537,162 1,998,419

Commitments and Contingencies

Commitments and Contingencies	9 Months Ended
	Sep. 30, 2017
Commitments and Contingencies
Commitments and Contingencies	10. Commitments and Contingencies Agreements for Office Space In August 2013, the Company entered into a sublease agreement with a related party (see Note 11) for office space which is its corporate headquarters. The sublease was subsequently amended and restated in March 2014, for its office space with a term ending on November 30, 2016. The Company further amended the terms of this sublease agreement in December 2014, August 2015, February 2016, October 2016 and July 2017 to increase the square footage of the space being subleased and/or agree to new sublease terms. The August 2015 amendment extended the term of the lease to November 2019. In November 2016, the Company entered into a lease agreement with a third party for additional office space in the same building as its headquarters with a term beginning in February 2017 and ending in November 2019. Confluence occupies office and laboratory space in St. Louis, Missouri under the terms of an agreement which it entered into in March 2017 and which expires in December 2017. Rent expense was $110 and $66 for the three months ended September 30, 2017 and 2016, respectively, and $284 and $178 for the nine months ended September 30, 2017 and 2016, respectively. The Company recognizes rent expense on a straight-line basis over the term of the lease and has accrued for rent expense incurred but not yet paid. As of September 30, 2017, future minimum lease payments under these agreements were as follows: Year Ending December 31, 2017 $ 114 2018 394 2019 368 2020 — 2021 — Thereafter — Total $ 876

Related Party Transactions

Related Party Transactions	9 Months Ended
	Sep. 30, 2017
Related Party Transactions
Related Party Transactions	11. Related Party Transactions In August 2013, the Company entered into a sublease agreement with NeXeption, Inc. ("NeXeption"), which was subsequently amended and restated in March 2014 and further amended in December 2014. In August 2015, pursuant to an Assignment and Assumption Agreement, NeXeption, Inc. assigned all interests, rights, duties and obligations under the sublease to NST Consulting, LLC, a wholly-owned subsidiary of NST, LLC. Following the Assignment and Assumption Agreement, the sublease was further amended in August 2015, February 2016, October 2016 and July 2017. Mr. Stephen Tullman, the chairman of the Company’s board of directors, was an executive officer of NeXeption and is also the manager of NST Consulting, LLC and NST, LLC. Total payments made under the sublease during the three months ended September 30, 2017 and 2016 were $106 and $64, respectively, and during the nine months ended September 30, 2017 and 2016 were $231 and $179, respectively. In February 2014, the Company entered into a services agreement with NST, LLC (the “NST Services Agreement”), pursuant to which NST, LLC provided certain pharmaceutical development, management and other administrative services to the Company. Under the same agreement, the Company also provided services to another company under common control with the Company and NST, LLC and was reimbursed by NST, LLC for those services. In addition to Mr. Tullman’s role as manager of NST, LLC, several of the Company’s executive officers are members of NST, LLC. The NST Services Agreement was amended in December 2014 pursuant to which NST, LLC assigned all interests, rights, duties and obligations under the NST Services Agreement to NST Consulting, LLC. Under the NST Services Agreement, as amended, NST Consulting, LLC provides services to the Company and the Company provides services to another company under common control with the Company and NST Consulting, LLC. The NST Services Agreement was further amended in August 2015, November 2015, January 2016, December 2016 and May 2017 to reduce the amount of services the Company is obligated to provide to NST Consulting, LLC and the amount of services NST Consulting, LLC is obligated to provide to the Company. The Company may offset any payments owed by the Company to NST Consulting, LLC against payments that are owed by NST Consulting, LLC to the Company for the provision of personnel, including consultants, to the Company. During the three and nine months ended September 30, 2017 and 2016, amounts included in the consolidated statement of operations and comprehensive loss for the NST Services Agreement are summarized in the following table: Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 Services provided by NST Consulting, LLC $ 49 $ 79 $ 161 $ 237 Services provided to NST Consulting, LLC — (15) (18) (45) General and administrative expense, net $ 49 $ 64 $ 143 $ 192 Services provided by NST Consulting, LLC $ — $ 60 $ — $ 181 Services provided to NST Consulting, LLC — (21) — (63) Research and development expense, net $ — $ 39 $ — $ 118 Services provided by NST Consulting, LLC $ 49 $ 139 $ 161 $ 418 Services provided to NST Consulting, LLC — (36) (18) (108) Total, net $ 49 $ 103 $ 143 $ 310 Net payments made to NST $ 35 $ 88 $ 218 $ 263 The Company had $17 and $91 payable to NST Consulting, LLC under the NST Services Agreement as of September 30, 2017 and December 31, 2016, respectively.

Agreements Related to Intellect

Agreements Related to Intellectual Property	9 Months Ended
	Sep. 30, 2017
Agreements Related to Intellectual Property
Agreements Related to Intellectual Property	12. Agreements Related to Intellectual Property Assignment Agreement and Finder’s Services Agreement In August 2012, the Company entered into an assignment agreement with the Estate of Mickey Miller, or the Miller Estate, under which the Company acquired some of the intellectual property rights covering A-101. In connection with obtaining the assignment of the intellectual property from the Miller Estate, the Company also entered into a separate finder’s services agreement with KPT Consulting, LLC. In February 2016, under the terms of the assignment agreement and the finder’s services agreement, the Company made a milestone payment of $300 upon the dosing of the first human subject with A-101 40% Topical Solution in the Company’s Phase 3 clinical trial. In April 2017, the Company made an additional milestone payment of $1,000 upon the achievement of specified regulatory milestones. The payments were recorded as general and administrative expenses in the Company’s consolidated statement of operations. Under the finder’s services agreement, the Company is obligated to make additional milestone payments of up to $4,500 upon the achievement of specified commercial milestones. Under each of the assignment agreement and the finder’s services agreement, the Company is also obligated to pay royalties on sales of A-101 or related products, at low single-digit percentages of net sales, subject to reduction in specified circumstances. The Company has not made any royalty payments to date under either agreement. Both agreements will terminate upon the expiration of the last pending, viable patent claim of the patents acquired under the assignment agreement, but no sooner than 15 years from the effective date of the agreements. Stock Purchase Agreement with Vixen Pharmaceuticals, Inc. and License Agreement with Columbia University On March 24, 2016, the Company entered into a stock purchase agreement (the “Vixen Agreement”) with Vixen, JAK1, LLC, JAK2, LLC and JAK3, LLC (together with JAK1, LLC and JAK2, LLC, the “Selling Stockholders”) and Shareholder Representative Services LLC, a Colorado limited liability company, solely in its capacity as the representative of the Selling Stockholders. Pursuant to the Vixen Agreement, the Company acquired all shares of Vixen’s capital stock from the Selling Stockholders (the “Vixen Acquisition”). Following the Vixen Acquisition, Vixen became a wholly-owned subsidiary of the Company. Pursuant to the Vixen Agreement, the Company paid $600 upfront and issued an aggregate of 159,420 shares of the Company’s common stock to the Selling Stockholders. The Company is obligated to make annual payments of $100 on March 24 th of each year, through March 24, 2022, with such amounts being creditable against specified future payments that may be paid under the Vixen Agreement. The Company is obligated to make aggregate payments of up to $18,000 to the Selling Stockholders upon the achievement of specified pre-commercialization milestones for three products in the United States, the European Union and Japan, and aggregate payments of up to $22,500 upon the achievement of specified commercial milestones. With respect to any commercialized products covered by the Vixen Agreement, the Company is obligated to pay low single-digit royalties on net sales, subject to specified reductions, limitations and other adjustments, until the date that all of the patent rights for that product have expired, as determined on a country-by-country and product-by-product basis or, in specified circumstances, ten years from the first commercial sale of such product. If the Company sublicenses any of Vixen’s patent rights and know-how acquired pursuant to the Vixen Agreement, the Company will be obligated to pay a portion of any consideration the Company receives from such sublicenses in specified circumstances. As a result of the transaction with Vixen, the Company became party to the Exclusive License Agreement, by and between Vixen and the Trustees of Columbia University in the City of New York (“Columbia”), dated as of December 31, 2015 (the “License Agreement”). Under the License Agreement, the Company is obligated to pay Columbia an annual license fee of $10, subject to specified adjustments for patent expenses incurred by Columbia and creditable against any royalties that may be paid under the License Agreement. The Company is also obligated to pay up to an aggregate of $11,600 upon the achievement of specified commercial milestones, including specified levels of net sales of products covered by Columbia patent rights and/or know-how, and royalties at a sub-single-digit percentage of annual net sales of products covered by Columbia patent rights and/or know-how, subject to specified adjustments. If the Company sublicenses any of Columbia’s patent rights and know-how acquired pursuant to the License Agreement, it will be obligated to pay Columbia a portion of any consideration received from such sublicenses in specified circumstances. The royalties, as determined on a country-by-country and product-by-product basis, are payable until the date that all of the patent rights for that product have expired, the expiration of any market exclusivity period granted by a regulatory body or, in specified circumstances, ten years from the first commercial sale of such product. The License Agreement terminates on the date of expiration of all royalty obligations thereunder unless earlier terminated by either party for a material breach, subject to a specified cure period. The Company may also terminate the License Agreement without cause at any time upon advance written notice to Columbia. The Company accounted for the transaction with Vixen as an asset acquisition as the arrangement did not meet the definition of a business pursuant to the guidance prescribed in Accounting Standards Codification Topic 805, Business Combinations . The Company concluded the transaction with Vixen did not meet the definition of a business because the transaction principally resulted in the acquisition of the License Agreement. The Company did not acquire tangible assets, processes, protocols or operating systems. In addition, at the time of the transaction, there were no activities being conducted related to the licensed patents. The Company expensed the acquired intellectual property as of the acquisition date on the basis that the cost of intangible assets purchased from others for use in research and development activities, and that have no alternative future uses, are expensed at the time the costs are incurred. Accordingly, the Company recorded the $600 upfront payment, the fair value of the shares of common stock issued of $2,355, and the present value of the six non-contingent annual payments as research and development expense in the nine months ended September 30, 2016. Additionally, the Company will record as expense any contingent milestone payments or royalties in the period in which such liabilities are incurred.

Income Taxes

Income Taxes	9 Months Ended
	Sep. 30, 2017
Income Taxes
Income Taxes	13. Income Taxes The Company did not record a federal or state income tax benefit for losses incurred during the three and nine months ended September 30, 2017 and 2016 due to the Company’s conclusion that a valuation allowance is required.

Subsequent Events

Subsequent Events	9 Months Ended
	Sep. 30, 2017
Subsequent Events
Subsequent Events	14. Subsequent Events On November 2, 2017, the Company entered into a Sublease Agreement (the “Sublease”) with Auxilium Pharmaceuticals, LLC, a Delaware limited liability company (the “Sublandlord”), under which the Company will lease 33,019 square feet of space for its corporate headquarters. The term of the Sublease will begin on December 1, 2017 and expire on October 31, 2023. Under the Sublease, base rent for the period from December 1, 2017 through February 28, 2018 shall be abated, after which the Company will pay an initial base rent of $47 per month through February 28, 2019. Beginning March 1, 2019, the monthly base rent will increase annually as specified in the Sublease. In addition, the Company will pay its pro rata share of the annual operating expenses associated with the premises, calculated as set forth in the Sublease.

Summary of Significant Accoun23

Summary of Significant Accounting Policies (Policies)	9 Months Ended
	Sep. 30, 2017
Summary of Significant Accounting Policies
Basis of Presentation	Basis of Presentation The accompanying condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The financial statements include the consolidated accounts of the Company and its wholly-owned subsidiaries, ATIL, Confluence and Vixen. All material intercompany transactions have been eliminated.
Use of Estimates	Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting periods. Significant estimates and assumptions reflected in these financial statements include, but are not limited to, research and development expenses, contingent consideration and the valuation of stock-based awards. Estimates are periodically reviewed in light of changes in circumstances, facts and experience. Actual results could differ from the Company’s estimates.
Unaudited Interim Financial Information	Unaudited Interim Financial Information The accompanying condensed consolidated balance sheet as of September 30, 2017, the condensed consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, 2017 and 2016, the condensed consolidated statement of stockholders’ equity for the nine months ended September 30, 2017, and the condensed consolidated statements of cash flows for the nine months ended September 30, 2017 and 2016 are unaudited. The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited annual financial statements contained in the Company’s annual report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 15, 2017 and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair statement of the Company’s financial position as of September 30, 2017, the results of its operations and comprehensive loss for the three and nine months ended September 30, 2017 and 2016 and its cash flows for the nine months ended September 30, 2017 and 2016. The condensed consolidated balance sheet data as of December 31, 2016 was derived from audited financial statements but does not include all disclosures required by GAAP. The financial data and other information disclosed in these notes related to the three and nine months ended September 30, 2017 and 2016 are unaudited. The results for the three and nine months ended September 30, 2017 are not necessarily indicative of results to be expected for the year ending December 31, 2017, any other interim periods, or any future year or period. The unaudited interim financial statements of the Company included herein have been prepared, pursuant to the rules and regulations of the SEC. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted from this report, as is permitted by such rules and regulations. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto for the year ended December 31, 2016 included in the Company’s annual report on Form 10-K filed with the SEC on March 15, 2017.
Significant Accounting Policies	Significant Accounting Policies The Company’s significant accounting policies are disclosed in the audited consolidated financial statements for the year ended December 31, 2016 included in the Company’s annual report on Form 10-K filed with the SEC on March 15, 2017. Since the date of such financial statements, there have been no changes to the Company’s significant accounting policies other than those noted below. In February 2017, the Company paid a $2.0 million PDUFA fee to the FDA in conjunction with the filing of its NDA for A-101 40% Topical Solution. The Company has requested a waiver and refund of this PDUFA fee from the FDA, and the amount has been recorded in prepaid expenses and other current assets on the Company’s condensed consolidated balance sheet.
Revenue Recognition	Revenue Recognition The Company recognizes revenue when the earnings process is complete, which under SEC Staff Accounting Bulletin No. 104, Topic No. 13, “Revenue Recognition,” is when revenue is realized or realizable and earned, there is persuasive evidence a revenue arrangement exists, delivery of goods or services has occurred, the sales price is fixed or determinable, and collectability is reasonably assured. The Company earns revenue from the provision of laboratory services to clients through Confluence, its wholly-owned subsidiary. Laboratory service revenue is generally evidenced by contracts with clients which are on an agreed upon fixed-price, fee-for-service basis and are generally billed on a monthly basis in arrears for services rendered. Revenue related to these contracts is generally recognized as the laboratory services are performed, based upon the rates specified in the contracts. The Company also receives revenue from grants under the Small Business Innovation Research program of the National Institutes of Health (“NIH”). The Company, through its Confluence subsidiary, currently has two active grants from NIH which are related to early-stage research. The Company recognizes revenue related to these grants as amounts become reimbursable under each grant, which is generally when research is performed and the related costs are incurred.
Intangible Assets	Intangible Assets Intangible assets include both finite lived and indefinite lived assets. Finite lived intangible assets are amortized over their estimated useful life based on the pattern over which the intangible assets are consumed or otherwise used up. If that pattern cannot be reliably determined, the straight-line method of amortization is used. Indefinite lived intangible assets are not amortized. In-process research and development (“IPR&D”) assets acquired in a business combination are considered indefinite lived until the completion or abandonment of the associated research and development efforts. The Company tests intangible assets for impairment at least annually, or if indicators of impairment are present. The Company recognizes impairment losses when and to the extent that the estimated fair value of an intangible asset is less than its carrying value.
Contingent consideration	Contingent Consideration The Company initially recorded the contingent consideration related to future potential payments based upon the achievement of certain development, regulatory and commercial milestones, resulting from the acquisition of Confluence, at its estimated fair value on the date of acquisition. Changes in fair value reflect new information about the likelihood of the payment of the contingent consideration and the passage of time. Future changes in the fair value of the contingent consideration, if any, will be recorded as income or expense in the Company’s consolidated statement of operations.
Recently Issued Accounting Pronouncements	Recently Issued Accounting Pronouncements In January 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2017-01, Business Combinations-Clarifying the Definition of a Business (Topic 805). The amendments in this ASU provide a screen to determine when a set of acquired assets and/or activities is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired, or disposed of, is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. The amendments in this ASU will reduce the number of transactions that meet the definition of a business. ASU 2017-01 is effective for annual reporting periods beginning after December 15, 2017, including interim periods within those years, and early adoption will be permitted. The Company is assessing the potential impact of ASU 2017-01 on its consolidated financial statements. In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other-Simplifying the Test for Goodwill Impairment (Topic 350) . Under the amendments in this ASU, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The amendments in this ASU eliminate Step 2 from the goodwill impairment test. ASU 2017-04 is effective for fiscal years beginning after December 15, 2019, and early adoption is permitted. The Company is assessing the potential impact of ASU 2017-04 on its consolidated financial statements. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). Under this ASU, entities should recognize revenue in an amount that reflects the consideration to which they expect to be entitled to in exchange for goods and services provided. ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2017. The Company is assessing the potential impact of ASU 2014-09 on its consolidated financial statements.

Acquisition of Confluence (Tabl

Acquisition of Confluence (Tables) - Confluence	9 Months Ended
	Sep. 30, 2017
Business Acquisition [Line Items]
Schedule of Consideration Transferred	Cash consideration paid $ 10,269 Aclaris common stock issued 9,675 Contingent consideration 4,378 Total fair value of consideration to Confluence equity holders $ 24,322
Schedule of Assets Acquired and Liabilities Assumed	Cash and cash equivalents $ 622 Accounts receivable, net 574 Other current assets 89 Property and equipment 268 Other intangible assets 751 IPR&D 6,629 Goodwill 18,504 Total assets acquired 27,437 Accounts payable and accrued expenses 656 Deferred tax liability 2,386 Other liabilities 73 Total liabilities assumed 3,115 Total net assets acquired $ 24,322
Schedule of Pro Forma Information	Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 Revenue $ 1,063 $ 937 $ 3,366 $ 2,617 Gross profit 384 452 1,102 1,184 Total operating expenses 18,822 11,464 48,122 39,273 Net loss (17,875) (10,891) (45,627) (37,769)

Fair Value of Financial Asset25

Fair Value of Financial Assets and Liabilities (Tables)	9 Months Ended
	Sep. 30, 2017
Fair Value of Financial Assets and Liabilities
Schedule of assets and liabilities measured at fair value on a recurring basis	September 30, 2017 Level 1 Level 2 Level 3 Total Assets: Cash equivalents $ 44,670 $ 13,983 $ — $ 58,653 Marketable securities — 167,793 — 167,793 Total Assets $ 44,670 $ 181,776 $ — $ 226,446 Liabilities: Acquisition-related contingent consideration $ — $ — $ 4,378 $ 4,378 Total liabilities $ — $ — $ 4,378 $ 4,378 December 31, 2016 Level 1 Level 2 Level 3 Total Assets: Cash equivalents $ 11,522 $ 12,691 $ — $ 24,213 Marketable securities — 143,963 — 143,963 Total $ 11,522 $ 156,654 $ — $ 168,176
Schedule of the fair value of available for sale marketable securities by type of security	September 30, 2017 Gross Gross Amortized Unrealized Unrealized Fair Cost Gain Loss Value Marketable securities: Corporate debt securities $ 39,432 $ — $ (9) $ 39,423 Commercial paper 76,130 — — 76,130 Asset-backed securities 20,752 — (3) 20,749 U.S. government agency debt securities 31,521 — (30) 31,491 Total marketable securities $ 167,835 $ — $ (42) $ 167,793 December 31, 2016 Gross Gross Amortized Unrealized Unrealized Fair Cost Gain Loss Value Marketable securities: Corporate debt securities $ 51,352 $ — $ (59) $ 51,293 Commercial paper 20,463 — — 20,463 Asset-backed securities 28,692 6 (1) 28,697 U.S. government agency debt securities 43,505 8 (3) 43,510 Total marketable securities $ 144,012 $ 14 $ (63) $ 143,963

Property and Equipment, Net (Ta

Property and Equipment, Net (Tables)	9 Months Ended
	Sep. 30, 2017
Property and Equipment, Net
Schedule of property and equipment, net	September 30, December 31, 2017 2016 Computer equipment $ 593 $ 310 Manufacturing equipment 518 149 Lab equipment 265 — Furniture and fixtures 125 115 Leasehold improvements 33 33 Property and equipment, gross 1,534 607 Accumulated depreciation (331) (126) Property and equipment, net $ 1,203 $ 481

Accrued Expenses (Tables)

Accrued Expenses (Tables)	9 Months Ended
	Sep. 30, 2017
Accrued Expenses
Schedule of accrued expenses	September 30, December 31, 2017 2016 Research and development expenses $ 866 $ 1,166 Employee compensation expenses 1,899 1,732 Commercial expenses 322 — Vixen contract payable 100 100 Other 323 380 Total accrued expenses $ 3,510 $ 3,378

Stock-Based Awards (Tables)

Stock-Based Awards (Tables)	9 Months Ended
	Sep. 30, 2017
Stock-Based Awards
Assumptions used to determine fair value of stock options granted	Nine Months Ended September 30, 2017 2016 Risk-free interest rate 1.89 % 1.41 % Expected term (in years) 6.2 6.5 Expected volatility 93.84 % 96.60 % Expected dividend yield 0 % 0 %
Summary of stock option activity	Weighted Weighted Average Average Remaining Aggregate Number Exercise Contractual Intrinsic of Shares Price Term Value (in years) Outstanding as of December 31, 2016 2,702,350 $ 18.94 9.05 $ 24,434 Granted 617,500 26.47 Exercised (36,738) 6.40 Forfeited and cancelled (40,281) 21.09 Outstanding as of September 30, 2017 3,242,831 $ 20.49 8.60 $ 21,704 Options vested and expected to vest as of September 30, 2017 3,242,831 $ 20.49 8.60 $ 21,704 Options exercisable as of September 30, 2017 828,823 (1) $ 10.95 7.73 $ 12,666 (1) All options granted under the 2012 Plan are exercisable immediately, subject to a repurchase right in the Company’s favor that lapses as the option vests. This amount reflects the number of shares under options that were vested, as opposed to exercisable, as of September 30, 2017.
Summary of restricted stock activity	Weighted Average Grant Date Number Fair Value of Shares Per Share Outstanding as of December 31, 2016 219,614 $ 27.43 Granted 88,547 26.59 Vested (9,299) 20.32 Forfeited and cancelled (4,531) 27.05 Outstanding as of September 30, 2017 294,331 $ 27.41
Stock-based compensation expense	Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 Cost of revenue $ 130 $ — $ 130 $ — Research and development 1,332 623 3,853 1,577 General and administrative 2,211 995 6,147 2,617 Total stock-based compensation expense $ 3,673 $ 1,618 $ 10,130 $ 4,194

Net Loss per Share (Tables)

Net Loss per Share (Tables)	9 Months Ended
	Sep. 30, 2017
Net Loss per Share
Basic and diluted net loss per share	Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 Numerator: Net loss $ (18,192) $ (10,694) $ (45,589) $ (36,604) Denominator: Weighted average shares of common stock outstanding 28,834,808 21,415,871 27,180,244 20,752,590 Net loss per share, basic and diluted $ (0.63) $ (0.50) $ (1.68) $ (1.76)
Potential common shares excluded from the calculation of diluted net loss per share attributable to common stockholders	September 30, 2017 2016 Options to purchase common stock 3,242,831 1,913,419 Restricted stock unit awards 294,331 85,000 Total potential common shares 3,537,162 1,998,419

Commitments and Contingencies (

Commitments and Contingencies (Tables)	9 Months Ended
	Sep. 30, 2017
Commitments and Contingencies
Schedule of future minimum lease payments	Year Ending December 31, 2017 $ 114 2018 394 2019 368 2020 — 2021 — Thereafter — Total $ 876

Related Party Transactions (Tab

Related Party Transactions (Tables)	9 Months Ended
	Sep. 30, 2017
Related Party Transactions
Schedule of Related Party Amounts Included in the Statements of Operations	Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 Services provided by NST Consulting, LLC $ 49 $ 79 $ 161 $ 237 Services provided to NST Consulting, LLC — (15) (18) (45) General and administrative expense, net $ 49 $ 64 $ 143 $ 192 Services provided by NST Consulting, LLC $ — $ 60 $ — $ 181 Services provided to NST Consulting, LLC — (21) — (63) Research and development expense, net $ — $ 39 $ — $ 118 Services provided by NST Consulting, LLC $ 49 $ 139 $ 161 $ 418 Services provided to NST Consulting, LLC — (36) (18) (108) Total, net $ 49 $ 103 $ 143 $ 310 Net payments made to NST $ 35 $ 88 $ 218 $ 263

Organization and Nature of Bu32

Organization and Nature of Business (Details)	Sep. 30, 2017item
A-101 40% Topical Solution
Production information
Number of clinical trials completed	3

Organization and Nature of Bu33

Organization and Nature of Business - IPO, Stock Split, Liquidity (Details) - USD ($) $ in Thousands	Aug. 08, 2017	Sep. 30, 2017	Dec. 31, 2016
Stock offerings
Cash, cash equivalents and marketable securities		$ 227,848
Accumulated deficit		136,501	$ 90,912
IPO
Stock offerings
Offering costs	$ 176
Exercise of over-allotment option
Stock offerings
Offering costs	$ 5,176
Private Placement
Stock offerings
Offering costs		$ 691

Summary of Significant Accoun34

Summary of Significant Accounting Policies (Details) $ in Millions	9 Months Ended
	Sep. 30, 2017item	Feb. 28, 2017USD ($)
Summary of Significant Accounting Policies
PDUFA fee paid for which waiver has been applied | $		$ 2
Number of active research grants | item	2

Acquisition of Confluence - Sum

Acquisition of Confluence - Summary of fair valuel consideration (Details) - USD ($) $ in Thousands	Aug. 03, 2017	Sep. 30, 2017
Fair value of consideration
Cash consideration paid		$ 9,647
Confluence
Business Acquisition [Line Items]
Acquisition of outstanding common shares (as a percent)	100.00%
Additional contingent consideration based on milestones, maximum, per Agreement	$ 80,000
Additional contingent consideration based on milestones, portion payable in shares	$ 2,500
Royalty term	10 years
Fair value of consideration
Cash consideration paid	$ 10,269
Aclaris common stock issued	9,675
Contingent consideration	4,378
Total fair value of consideration to Confluence equity holders	$ 24,322

Acquisition of Confluence - Fai

Acquisition of Confluence - Fair value of assets acquired and liabilities assumed (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Aug. 03, 2017
Business Acquisition [Line Items]
Goodwill	$ 18,504
Confluence
Business Acquisition [Line Items]
Cash and cash equivalents		$ 622
Accounts receivable, net		574
Other current assets		89
Property and equipment		268
Other intangible assets		751
IPR&D		6,629
Goodwill		18,504
Total assets acquired		27,437
Accounts payable and accrued expenses		656
Deferred tax liability		2,386
Other liabilities		73
Total liabilities assumed		3,115
Total net assets acquired		$ 24,322

Acquisition of Confluence - Sup

Acquisition of Confluence - Supplemental pro forma financial information (Details) - Confluence - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Business Acquisition [Line Items]
Revenue	$ 1,063	$ 937	$ 3,366	$ 2,617
Gross profit	384	452	1,102	1,184
Total operating expenses	18,822	11,464	48,122	39,273
Net loss	(17,875)	(10,891)	(45,627)	(37,769)
Acquisition-related expenses
Business Acquisition [Line Items]
Net loss	997	0	1,351	0
Billed revenues
Business Acquisition [Line Items]
Net loss	$ (217)	$ 0	$ (888)	$ 0

Fair Value of Financial Asset38

Fair Value of Financial Assets and Liabilities (Detail) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Assets:
Marketable securities	$ 167,793	$ 143,963
Liabilities:
Transfers from Level 1 to Level 2	0	0
Transfers from Level 2 to Level 1	0	0
Transfers into or out of Level 3	0	0
Recurring
Assets:
Cash equivalents	58,653	24,213
Marketable securities	167,793	143,963
Total assets measured at fair value	226,446	168,176
Liabilities:
Acquisition-related contingent consideration	4,378
Total liabilities measured at fair value	4,378
Recurring | Level 1
Assets:
Cash equivalents	44,670	11,522
Total assets measured at fair value	44,670	11,522
Recurring | Level 2
Assets:
Cash equivalents	13,983	12,691
Marketable securities	167,793	143,963
Total assets measured at fair value	181,776	$ 156,654
Recurring | Level 3
Liabilities:
Acquisition-related contingent consideration	4,378
Total liabilities measured at fair value	$ 4,378

Fair Value of Financial Asset39

Fair Value of Financial Assets and Liabilities - by type (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Marketable securities:
Amortized Cost	$ 167,835	$ 144,012
Gross Unrealized Gain		14
Gross Unrealized Loss	(42)	(63)
Fair Value	167,793	143,963
Corporate debt securities
Marketable securities:
Amortized Cost	39,432	51,352
Gross Unrealized Loss	(9)	(59)
Fair Value	39,423	51,293
Commercial paper
Marketable securities:
Amortized Cost	76,130	20,463
Fair Value	76,130	20,463
Asset-backed securities
Marketable securities:
Amortized Cost	20,752	28,692
Gross Unrealized Gain		6
Gross Unrealized Loss	(3)	(1)
Fair Value	20,749	28,697
U.S. government agency debt securities
Marketable securities:
Amortized Cost	31,521	43,505
Gross Unrealized Gain		8
Gross Unrealized Loss	(30)	(3)
Fair Value	$ 31,491	$ 43,510

Property and Equipment, Net (De

Property and Equipment, Net (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Property and Equipment, net
Property and equipment	$ 1,534		$ 1,534		$ 607
Accumulated depreciation	(331)		(331)		(126)
Property and equipment, net	1,203		1,203		481
Depreciation expense	103	$ 32	208	$ 80
Computer equipment
Property and Equipment, net
Property and equipment	593		593		310
Manufacturing equipment
Property and Equipment, net
Property and equipment	518		518		149
Laboratory Equipment [Member]
Property and Equipment, net
Property and equipment	265		265
Furniture and Fixtures
Property and Equipment, net
Property and equipment	125		125		115
Leasehold Improvements
Property and Equipment, net
Property and equipment	$ 33		$ 33		$ 33

Accrued Expenses (Details)

Accrued Expenses (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Accrued Expenses
Research and development expenses	$ 866	$ 1,166
Employee compensation expenses	1,899	1,732
Commercial expenses	322
Vixen contract payable.	100	100
Other	323	380
Total accrued expenses	$ 3,510	$ 3,378

Stockholders' Equity (Details)

Stockholders' Equity (Details)	Aug. 10, 2017USD ($)$ / sharesshares	Aug. 08, 2017USD ($)	Sep. 30, 2017$ / sharesshares	Sep. 30, 2017USD ($)Vote$ / sharesshares	Dec. 31, 2016$ / sharesshares
Class of Stock [Line Items]
Preferred stock, shares authorized | shares			10,000,000	10,000,000	10,000,000
Preferred stock, shares outstanding | shares			0	0	0
Common stock shares authorized | shares			100,000,000	100,000,000	100,000,000
Common stock par value (in dollars per share) | $ / shares			$ 0.00001	$ 0.00001	$ 0.00001
Number of votes per share | Vote				1
Dividends declared				$ 0
Common stock, shares outstanding | shares			30,834,679	30,834,679	26,059,181
Proceeds from issuance of common stock in connection with private placement, gross				$ 20,003,000
Proceeds from initial public offering, gross	$ 86,270,000	$ 86,270,000
Proceeds from issuance of common stock in connection with public offering, net of issuance costs		80,918,000		80,918,000
Exercise of over-allotment option
Class of Stock [Line Items]
Payments of Stock Issuance Costs		5,176,000
IPO
Class of Stock [Line Items]
Number of shares issued | shares	3,747,602
Issuance of common stock				80,918,000
Share Price | $ / shares	$ 23.02
Payments of Stock Issuance Costs		$ 176,000
Private Placement
Class of Stock [Line Items]
Number of shares issued | shares			0
Issuance of common stock				$ 19,311,000
Common stock, shares outstanding | shares			635,000	635,000
Share Price | $ / shares			$ 31.50	$ 31.50
Payments of Stock Issuance Costs				$ 691,000

Stock-Based Awards (Details)

Stock-Based Awards (Details) - shares	Jan. 01, 2017	Sep. 30, 2017	Sep. 30, 2016	Jul. 31, 2017	Dec. 31, 2016	Sep. 15, 2015
Stock-based awards
Options granted (in shares)		617,500
Options outstanding		3,242,831			2,702,350
Stock Option Valuation
Risk-free interest rate (as a percent)		1.89%	1.41%
Expected term (in years)		6 years 2 months 12 days	6 years 6 months
Expected volatility (as a percent)		93.84%	96.60%
Expected dividend yield (as a percent)		0.00%	0.00%
2017 Inducement Plan
Stock-based awards
Number of shares authorized				1,000,000
Number of shares available for grant		622,452
2012 Equity Compensation Plan
Stock-based awards
Number of shares available for grant		0
Term of award (in years)		10 years
Options granted (in shares)		1,140,524
Options outstanding		1,003,647			1,049,667
Vesting period (in years)		4 years
2015 Equity Incentive Plan
Stock-based awards
Number of shares authorized						1,643,872
Percentage increase to shares available for grant from common outstanding as of preceding December 31 (as a percent)		4.00%
Additional shares available	1,042,367
Number of shares available for grant		1,368,904

Stock-Based Awards - Option Act

Stock-Based Awards - Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Options, Number of Shares
Number of Shares, beginning balance	2,702,350
Number of Shares, Granted	617,500
Number of Shares, Exercised	(36,738)
Number of Shares, Forfeited and cancelled	(40,281)
Number of Shares, ending balance	3,242,831	2,702,350
Number of Shares, Options vested and expected to vest	3,242,831
Number of Shares, Options exercisable	828,823
Options, Weighted Average Exercise Price
Weighted Average Exercise Price, beginning balance (in dollars per share)	$ 18.94
Weighted Average Exercise Price, Granted (in dollars per share)	26.47
Weighted Average Exercise Price, Exercised (in dollars per share)	6.40
Weighted Average Exercise Price, Forfeited and cancelled (in dollars per share)	21.09
Weighted Average Exercise Price, ending balance (in dollars per share)	20.49	$ 18.94
Weighted Average Exercise Price, Options vested and expected to vest (in dollars per share)	20.49
Weighted Average Exercise Price, Options exercisable (in dollars per share)	$ 10.95
Options, Weighted Average Remaining Contractual Term
Weighted Average Remaining Contractual Term (in years)	8 years 7 months 6 days	9 years 18 days
Weighted Average Remaining Contractual Term, Options vested and expected to vest (in years)	8 years 7 months 6 days
Weighted Average Remaining Contractual Term, Options exercisable (in years)	7 years 8 months 23 days
Aggregate Intrinsic Value
Aggregate Intrinsic Value	$ 21,704	$ 24,434
Aggregate Intrinsic Value, Options vested and expected to vest	21,704
Aggregate Intrinsic Value, Options exercisable	$ 12,666
Weighted average grant-date fair value of stock options granted (in dollars per share)	$ 20.41

Stock-Based Awards - RSUs (Deta

Stock-Based Awards - RSUs (Details)	9 Months Ended
	Sep. 30, 2017$ / sharesshares
RSU, Number of Units
Units outstanding, beginning of period | shares	219,614
Granted | shares	88,547
Vested | shares	(9,299)
Forfeited and cancelled | shares	(4,531)
Units outstanding, end of period | shares	294,331
RSU, Weighted Average Grant Date Fair Value Per Unit
Weighted average grant date fair value, beginning balance (in dollars per share) | $ / shares	$ 27.43
Granted, estimated grant-date fair value (in dollars per share) | $ / shares	26.59
Weighted average grant date fair value, vested (in dollars per share) | $ / shares	20.32
Forfeited and cancelled, estimated grant date fair value (in dollars per share) | $ / shares	27.05
Weighted average grant date fair value, ending balance (in dollars per share) | $ / shares	$ 27.41

Stock-Based Awards - Compensati

Stock-Based Awards - Compensation (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Stock-based compensation expense
Stock-based compensation expense	$ 3,673	$ 1,618	$ 10,130	$ 4,194
Unrecognized stock-based compensation cost, options	37,674		37,674
Unrecognized compensation, RSUs	6,090		$ 6,090
Weighted average recognition period unrecognized stock-based compensation cost (in years)			3 years 22 days
Cost of revenue
Stock-based compensation expense
Stock-based compensation expense	130		$ 130
Research and development expense.
Stock-based compensation expense
Stock-based compensation expense	1,332	623	3,853	1,577
General and administrative expense.
Stock-based compensation expense
Stock-based compensation expense	$ 2,211	$ 995	$ 6,147	$ 2,617
Options to Purchase Common Stock
Stock-based compensation expense
Weighted average recognition period unrecognized stock-based compensation cost (in years)			3 years 22 days
Restricted Stock Unit Awards
Stock-based compensation expense
Weighted average recognition period unrecognized stock-based compensation cost (in years)			2 years 11 months 5 days

Net Loss per Share (Details)

Net Loss per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Numerator:
Net loss	$ (18,192)	$ (10,694)	$ (45,589)	$ (36,604)
Denominator:
Weighted average shares of common stock outstanding (in shares)	28,834,808	21,415,871	27,180,244	20,752,590
Weighted average shares of common stock outstanding	28,834,808	21,415,871	27,180,244	20,752,590
Net loss per share, basic and diluted (in dollars per share)	$ (0.63)	$ (0.50)	$ (1.68)	$ (1.76)

Net Loss per Share - Anti-dilut

Net Loss per Share - Anti-dilution (Details) - shares	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potential common shares excluded from the calculation of diluted net loss per share attributable to common stockholders	3,537,162	1,998,419
Options to Purchase Common Stock
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potential common shares excluded from the calculation of diluted net loss per share attributable to common stockholders	3,242,831	1,913,419
Restricted Stock Unit Awards
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potential common shares excluded from the calculation of diluted net loss per share attributable to common stockholders	294,331	85,000

Commitments and Contingencies49

Commitments and Contingencies (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Agreements for Office Space
Rent expense under operating leases	$ 110	$ 66	$ 284	$ 178
Future minimum lease payments under the sublease
2,017	114		114
2,018	394		394
2,019	368		368
Total	$ 876		$ 876

Related Party Transactions (Det

Related Party Transactions (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Direct sublease agreement | NST, LLC [Member]
Related Party Transactions
Expenses incurred under related party transactions	$ 106	$ 64	$ 231	$ 179
Services agreement
Related Party Transactions
Net expenses (revenues) from related party transactions	49	103	143	310
Services agreement | General and administrative expense.
Related Party Transactions
Net expenses (revenues) from related party transactions	49	64	143	192
Services agreement | Research and development expense.
Related Party Transactions
Net expenses (revenues) from related party transactions		39		118
Services agreement | NST, LLC [Member]
Related Party Transactions
Expenses incurred under related party transactions	49	139	161	418
Other revenue earned from related party transactions		(36)	(18)	(108)
Amount due to related party	17		17		$ 91
Payments to related party	35	88	218	263
Services agreement | NST, LLC [Member] | General and administrative expense.
Related Party Transactions
Expenses incurred under related party transactions	$ 49	79	161	237
Other revenue earned from related party transactions		(15)	$ (18)	(45)
Services agreement | NST, LLC [Member] | Research and development expense.
Related Party Transactions
Expenses incurred under related party transactions		60		181
Other revenue earned from related party transactions		$ (21)		$ (63)

Agreements Related to Intelle51

Agreements Related to Intellectual Property (Details) $ in Thousands	Mar. 24, 2016USD ($)itemshares	Dec. 31, 2015USD ($)	Apr. 30, 2017USD ($)	Feb. 29, 2016USD ($)	Aug. 31, 2012USD ($)	Sep. 30, 2016USD ($)installment
Assignment Agreement and Finder's Services Agreement [Member]
Agreements Related to Intellectual Property
Term of agreement, minimum					15 years
Assignment Agreement and Finder's Services Agreement [Member] | Achievement Of Dosing Of First Subject With A101
Agreements Related to Intellectual Property
Milestone payment				$ 300
Assignment Agreement and Finder's Services Agreement [Member] | Achievement Of Specified Regulatory Milestones [Member]
Agreements Related to Intellectual Property
Milestone payment			$ 1,000
Finders Services Agreement | Achievement Of Specified Commercial Milestones | Maximum
Agreements Related to Intellectual Property
Potential future milestone payments					$ 4,500
Stock Purchase Agreement [Member] | Achievement Of Specified Commercial Milestones
Agreements Related to Intellectual Property
Period from first commercial product sale that royalties are owed (in years)	10 years
Stock Purchase Agreement [Member] | Achievement Of Pre Commercialization Milestones
Agreements Related to Intellectual Property
Number of products | item	3
Stock Purchase Agreement [Member] | Selling Stockholders
Agreements Related to Intellectual Property
Upfront payment made	$ 600
Entity stock issued in stock purchase | shares	159,420
Amount of required annual payment under the contract	$ 100
Fair value of common stock issued						$ 2,355
Number of annual payments | installment						6
Stock Purchase Agreement [Member] | Selling Stockholders | Achievement Of Specified Commercial Milestones | Maximum
Agreements Related to Intellectual Property
Potential future milestone payments	22,500
Stock Purchase Agreement [Member] | Selling Stockholders | Achievement Of Pre Commercialization Milestones | Maximum
Agreements Related to Intellectual Property
Potential future milestone payments	$ 18,000
License Agreement | Columbia
Agreements Related to Intellectual Property
Amount of required annual payment under the contract		$ 10
License Agreement | Columbia | Achievement Of Specified Commercial Milestones
Agreements Related to Intellectual Property
Period from first commercial product sale that royalties are owed (in years)		10 years
License Agreement | Columbia | Achievement Of Specified Commercial Milestones | Maximum
Agreements Related to Intellectual Property
Potential future milestone payments		$ 11,600

Income Taxes (Details)

Income Taxes (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Income Taxes
Federal income tax benefit	$ 0	$ 0
State income tax benefit	$ 0	$ 0

Subsequent Events (Details)

Subsequent Events (Details) - Subsequent event	Nov. 03, 2017USD ($)ft²
Subsequent events
Area Of Building | ft²	33,019
Base rent per month | $	$ 47