Aclaris Therapeutics (ACRS) 10-Q 7 Nov 19 2019 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2019	Nov. 07, 2019
Document and Entity Information
Entity Registrant Name	Aclaris Therapeutics, Inc.
Entity Central Index Key	0001557746
Document Type	10-Q
Document Period End Date	Sep. 30, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q3
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	true
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		41,388,432

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Current assets:
Cash and cash equivalents	$ 29,898	$ 57,019
Marketable securities	61,530	110,953
Accounts receivable, net	673	563
Inventory	189	791
Prepaid expenses and other current assets	2,089	4,802
Discontinued operations - current assets	51,180	6,162
Total current assets	145,370	179,499
Property and equipment, net	2,854	2,287
Intangible assets	7,217	7,273
Goodwill		18,504
Other assets	4,975	332
Discontinued operations - non-current assets		67,671
Total assets	160,416	275,566
Current liabilities:
Accounts payable	17,780	14,755
Accrued expenses	6,066	8,090
Current portion of lease liabilities	642	142
Discontinued operations - current liabilities	14,501	4,355
Total current liabilities	38,989	27,342
Other liabilities	4,005	476
Long-term debt	29,930	29,914
Contingent consideration	1,668	934
Deferred tax liability	549	549
Discontinued operations - non-current liabilities		1,227
Total liabilities	75,141	60,442
Stockholders' Equity:
Preferred stock, $0.00001 par value; 10,000,000 shares authorized and no shares issued or outstanding at September 30, 2019 and December 31, 2018
Common stock, $0.00001 par value; 100,000,000 shares authorized at September 30, 2019 and December 31, 2018; 41,380,811 and 41,210,725 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively
Additional paid-in capital	520,209	507,366
Accumulated other comprehensive loss	(1)	(69)
Accumulated deficit	(434,933)	(292,173)
Total stockholders’ equity	85,275	215,124
Total liabilities and stockholders’ equity	$ 160,416	$ 275,566

CONDENSED CONSOLIDATED BALANC_2

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Sep. 30, 2019	Dec. 31, 2018
Condensed 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	41,380,811	41,210,725
Common stock, shares outstanding	41,380,811	41,210,725

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Revenue, net	$ 983	$ 1,118	$ 3,132	$ 4,379
Cost of revenue		1,067		3,063
Costs and expenses:
Cost of revenue	826		3,028
Research and development	16,183	15,189	53,334	41,482
Sales and marketing	112	63	629	89
General and administrative	6,726	6,141	21,142	20,481
Goodwill impairment			18,504
Total costs and expenses	23,847	22,460	96,637	65,115
Loss from operations	(22,864)	(21,342)	(93,505)	(60,736)
Other income (expense), net	(274)	710	(589)	2,189
Loss from continuing operations	(23,138)	(20,632)	(94,094)	(58,547)
Loss from discontinued operations	(32,181)	(12,108)	(48,666)	(35,640)
Net loss	$ (55,319)	$ (32,740)	$ (142,760)	$ (94,187)
Net loss per share, basic and diluted	$ (1.34)	$ (1.06)	$ (3.46)	$ (3.04)
Weighted average common shares outstanding, basic and diluted (in shares)	41,364,387	30,982,192	41,296,377	30,938,026
Other comprehensive income (loss):
Unrealized gain (loss) on marketable securities, net of tax of $0	$ (23)	$ 65	$ 41	$ 111
Foreign currency translation adjustments	14	7	27	19
Total other comprehensive income (loss)	(9)	72	68	130
Comprehensive loss	(55,328)	(32,668)	(142,692)	(94,057)
Contract research
Revenue, net	$ 983	$ 1,118	$ 3,132	3,379
Other revenue
Revenue, net				$ 1,000

CONDENSED CONSOLIDATED STATEM_2

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Parenthetical) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
Condensed Consolidated Statements Of Operations And Comprehensive Loss
Unrealized gain (loss) on marketable securities, tax	$ 0	$ 0

CONDENSED CONSOLIDATED STATEM_3

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands	Common Stock	Additional Paid-in Capital	Accumulated Other Comprehensive Gain (Loss)	Accumulated Deficit	Total
Balance at beginning of period at Dec. 31, 2017		$ 384,943	$ (246)	$ (159,435)	$ 225,262
Balance at beginning of period (in shares) at Dec. 31, 2017	30,856,505
Increase (Decrease) in Stockholders' Equity
Exercise of stock options and vesting of RSUs		378			378
Exercise of stock options and vesting of RSUs, shares	49,124
Unrealized gain (loss) on marketable securities			(65)		(65)
Foreign currency translation adjustment			(17)		(17)
Stock-based compensation expense		5,143			5,143
Net loss				(30,229)	(30,229)
Balance at end of period at Mar. 31, 2018		390,464	(328)	(189,664)	200,472
Balance at end of period (in shares) at Mar. 31, 2018	30,905,629
Balance at beginning of period at Dec. 31, 2017		384,943	(246)	(159,435)	225,262
Balance at beginning of period (in shares) at Dec. 31, 2017	30,856,505
Increase (Decrease) in Stockholders' Equity
Unrealized gain (loss) on marketable securities					111
Net loss					(94,187)
Balance at end of period at Sep. 30, 2018		400,066	(116)	(253,622)	146,328
Balance at end of period (in shares) at Sep. 30, 2018	30,991,060
Balance at beginning of period at Mar. 31, 2018		390,464	(328)	(189,664)	200,472
Balance at beginning of period (in shares) at Mar. 31, 2018	30,905,629
Increase (Decrease) in Stockholders' Equity
Exercise of stock options and vesting of RSUs		(440)			(440)
Exercise of stock options and vesting of RSUs, shares	59,667
Unrealized gain (loss) on marketable securities			111		111
Foreign currency translation adjustment			29		29
Stock-based compensation expense		5,249			5,249
Net loss				(31,218)	(31,218)
Balance at end of period at Jun. 30, 2018		395,273	(188)	(220,882)	174,203
Balance at end of period (in shares) at Jun. 30, 2018	30,965,296
Increase (Decrease) in Stockholders' Equity
Exercise of stock options and vesting of RSUs		86			86
Exercise of stock options and vesting of RSUs, shares	25,764
Unrealized gain (loss) on marketable securities			65		65
Foreign currency translation adjustment			7		7
Stock-based compensation expense		4,707			4,707
Net loss				(32,740)	(32,740)
Balance at end of period at Sep. 30, 2018		400,066	(116)	(253,622)	146,328
Balance at end of period (in shares) at Sep. 30, 2018	30,991,060
Balance at beginning of period at Dec. 31, 2018		507,366	(69)	(292,173)	$ 215,124
Balance at beginning of period (in shares) at Dec. 31, 2018	41,210,725				41,210,725
Increase (Decrease) in Stockholders' Equity
Exercise of stock options and vesting of RSUs		(188)			$ (188)
Exercise of stock options and vesting of RSUs, shares	58,918
Unrealized gain (loss) on marketable securities			34		34
Foreign currency translation adjustment			(14)		(14)
Stock-based compensation expense		4,862			4,862
Net loss				(37,565)	(37,565)
Balance at end of period at Mar. 31, 2019		512,040	(49)	(329,738)	182,253
Balance at end of period (in shares) at Mar. 31, 2019	41,269,643
Balance at beginning of period at Dec. 31, 2018		507,366	(69)	(292,173)	$ 215,124
Balance at beginning of period (in shares) at Dec. 31, 2018	41,210,725				41,210,725
Increase (Decrease) in Stockholders' Equity
Unrealized gain (loss) on marketable securities					$ 41
Net loss					(142,760)
Balance at end of period at Sep. 30, 2019		520,209	(1)	(434,933)	$ 85,275
Balance at end of period (in shares) at Sep. 30, 2019	41,380,811				41,380,811
Balance at beginning of period at Mar. 31, 2019		512,040	(49)	(329,738)	$ 182,253
Balance at beginning of period (in shares) at Mar. 31, 2019	41,269,643
Increase (Decrease) in Stockholders' Equity
Exercise of stock options and vesting of RSUs		(18)			(18)
Exercise of stock options and vesting of RSUs, shares	8,927
Unrealized gain (loss) on marketable securities			30		30
Foreign currency translation adjustment			27		27
Stock-based compensation expense		4,814			4,814
Net loss				(49,876)	(49,876)
Balance at end of period at Jun. 30, 2019		516,836	8	(379,614)	137,230
Balance at end of period (in shares) at Jun. 30, 2019	41,278,570
Increase (Decrease) in Stockholders' Equity
Exercise of stock options and vesting of RSUs		53			53
Exercise of stock options and vesting of RSUs, shares	102,241
Unrealized gain (loss) on marketable securities			(23)		(23)
Foreign currency translation adjustment			14		14
Stock-based compensation expense		3,320			3,320
Net loss				(55,319)	(55,319)
Balance at end of period at Sep. 30, 2019		$ 520,209	$ (1)	$ (434,933)	$ 85,275
Balance at end of period (in shares) at Sep. 30, 2019	41,380,811				41,380,811

CONDENSED CONSOLIDATED STATEM_4

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
Cash flows from operating activities:
Net loss	$ (142,760)	$ (94,187)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	6,089	921
Stock-based compensation expense	12,996	15,099
Change in fair value of contingent consideration	734	866
Goodwill impairment charge	18,504
Intangible asset impairment charge	27,638
Changes in operating assets and liabilities:
Accounts receivable	(13,003)	(552)
Inventory	602	(1,044)
Prepaid expenses and other assets	3,278	(3,461)
Accounts payable	3,050	5,932
Accrued expenses	6,817	2,863
Net cash used in operating activities	(76,055)	(73,563)
Cash flows from investing activities:
Purchases of property and equipment	(1,347)	(1,210)
Purchases of marketable securities	(121,303)	(112,344)
Proceeds from sales and maturities of marketable securities	171,891	193,427
Net cash provided by investing activities	49,241	79,873
Cash flows from financing activities:
Finance lease payments	(392)	(499)
Proceeds from the exercise of employee stock options	85	577
Net cash (used in) provided by financing activities	(307)	78
Net increase (decrease) in cash and cash equivalents	(27,121)	6,388
Cash and cash equivalents at beginning of period	57,019	20,202
Cash and cash equivalents at end of period	29,898	26,590
Supplemental disclosure of non-cash investing and financing activities:
Additions to property and equipment included in accounts payable	$ 207	102
Property and equipment obtained pursuant to capital lease financing arrangements		2,076
Offering costs included in accounts payable		$ 20

Organization and Nature of Busi

Organization and Nature of Business	9 Months Ended
	Sep. 30, 2019
Organization and Nature of Business
Organization and Nature of Business	1. Organization and Nature of Business Overview Aclaris Therapeutics, Inc. was incorporated under the laws of the State of Delaware in 2012. In July 2015, Aclaris Therapeutics International Limited (“ATIL”) was established under the laws of the United Kingdom as a wholly-owned subsidiary of Aclaris Therapeutics, Inc. In March 2016, Vixen Pharmaceuticals, Inc. (“Vixen”) became a wholly-owned subsidiary of Aclaris Therapeutics, Inc., and in September 2018, Vixen was dissolved. In August 2017, Confluence Life Sciences, Inc. (now known as Aclaris Life Sciences, Inc.) (“Confluence”) was acquired by Aclaris Therapeutics, Inc. and became a wholly-owned subsidiary thereof. Aclaris Therapeutics, Inc., ATIL, Vixen and Confluence are referred to collectively as the “Company.” The Company is a physician-led biopharmaceutical company focused on immuno-inflammatory diseases. The Company currently has one commercial product and a diverse pipeline of drug candidates, including one late-stage investigational drug candidate. In October 2019, the Company sold the worldwide rights to one of its commercial products, RHOFADE (oxymetazoline hydrochloride) cream, 1% (“RHOFADE”), which includes the assignment of certain licenses for related intellectual property assets (see Note 19). The Company’s other commercial product, ESKATA (hydrogen peroxide) topical solution, 40% (w/w) (“ESKATA”), is a proprietary formulation of high concentration hydrogen peroxide which was approved by the U.S. Food and Drug Administration (“FDA”) as an office-based prescription treatment for raised seborrheic keratosis (“SK”), a common non-malignant skin tumor. In August 2019, the Company voluntarily discontinued the commercialization of ESKATA in the United States and withdrew the marketing authorizations it had previously received for the product in all countries outside of the United States. The Company continues to maintain the New Drug Application (“NDA”) for ESKATA in the United States. The Company is currently seeking a strategic partner to commercialize ESKATA worldwide. 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, 2019, the Company had cash, cash equivalents and marketable securities of $91,428 and an accumulated deficit of $434,933. 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 can be no assurance that profitable operations will ever be achieved, and, if achieved, will be sustained on a continuing basis. In addition, research and development activities, including preclinical and clinical testing of the Company’s drug candidates will require significant additional financing. The future viability of the Company is dependent on its ability to successfully develop its drug candidates and generate revenue from identifying and consummating transactions with potential third-party partners to further develop, obtain marketing approval for and/or commercialize its development assets 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, 2019
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 condensed consolidated financial statements of the Company include the accounts of the operating parent company, Aclaris Therapeutics, Inc., and its wholly-owned subsidiaries, ATIL, Confluence and Vixen. All significant intercompany transactions have been eliminated. Based upon the revenue from contract research services, the Company believes that gross profit does not provide a meaningful measure of profitability and, therefore, has not included a line item for gross profit on the condensed consolidated statement of operations. Discontinued Operations On September 5, 2019, the Company announced the completion of a strategic review and its decision to refocus its resources on its immuno-inflammatory development programs and to actively seek partners for its commercial products. The Company also announced a plan to terminate 86 employees (see Note 16). The accompanying condensed consolidated financial statements have been recast for all periods presented to reflect the assets, liabilities, revenue and expenses related to the Company’s commercial products as discontinued operations (see Note 15). The accompanying condensed consolidated financial statements are generally presented in conformity with the Company’s historical format, even in situations where reclassifications to discontinued operations have resulted in $0 values being presented. The Company believes this format provides comparability with its previously filed financial statements. 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, variable consideration included in product sales, net, 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, 2019, the condensed consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, 2019 and 2018, the condensed consolidated statement of stockholders’ equity for the three and nine months ended September 30, 2019 and 2018, and the condensed consolidated statements of cash flows for the nine months ended September 30, 2019 and 2018 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 18, 2019 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, 2019, the results of its operations and comprehensive loss for the three and nine months ended September 30, 2019 and 2018, its changes in stockholders’ equity for the three and nine months ended September 30, 2019 and 2018 and its cash flows for the nine months ended September 30, 2019 and 2018. The condensed consolidated balance sheet data as of December 31, 2018 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, 2019 and 2018 are unaudited. The results for the three and nine months ended September 30, 2019 are not necessarily indicative of results to be expected for the year ending December 31, 2019, 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, 2018 included in the Company’s annual report on Form 10-K filed with the SEC on March 18, 2019. Significant Accounting Policies The Company’s significant accounting policies are disclosed in the audited consolidated financial statements for the year ended December 31, 2018 included in the Company’s annual report on Form 10-K filed with the SEC on March 18, 2019. Since the date of such financial statements, there have been no changes to the Company’s significant accounting policies. Revenue Recognition The Company accounts for revenue in accordance with Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers. Under ASC Topic 606, revenue is recognized when a customer obtains control of promised goods or services in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. To determine revenue recognition in accordance with ASC Topic 606, the Company performs the following five steps: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) performance obligations are satisfied. At contract inception, the Company assesses the goods or services promised within a contract with a customer to identify the performance obligations, and to determine if they are distinct. The Company recognizes the revenue that is allocated to each distinct performance obligation when (or as) that performance obligation is satisfied. The Company only recognizes revenue when collection of the consideration it is entitled to under a contract with a customer is probable. Product Sales, net The Company sold RHOFADE during the nine months ended September 30, 2019 and sold ESKATA during the nine months ended September 30, 2019 and 2018 to a limited number of wholesalers in the United States (collectively, its “Customers”). These Customers subsequently resold the Company’s products to pharmacies and health care providers. In addition to distribution agreements with Customers, the Company entered into arrangements with third-party payors, including pharmacy benefit managers and government agencies, and group purchasing organizations (“GPOs”), which provided for government mandated or privately negotiated rebates, chargebacks, and discounts with respect to the purchase of the Company’s commercial products. The Company discontinued selling ESKATA in August 2019. The Company sold the worldwide rights to RHOFADE in October 2019 (see Note 19). Product sales, net has been reclassified to discontinued operations for all periods presented. The Company recognizes revenue from product sales at the point the Customer obtains control of the product, which generally occurs upon delivery, and includes estimates of variable consideration in the same period revenue is recognized. Components of variable consideration include trade discounts and allowances, product returns, government rebates, discounts and rebates, other incentives such as patient co-pay assistance, and other fee for service amounts. Variable consideration is recorded on the condensed consolidated balance sheet as either a reduction of accounts receivable, if payable to a Customer, or as a current liability, if payable to a third party other than a Customer. The Company considers all relevant information when estimating variable consideration such as current contractual and statutory requirements, specific known market events and trends, industry data and forecasted customer buying and payment patterns. The amount of net revenue the Company can recognize is constrained by estimates of variable consideration which are included in the transaction price. Payment terms with Customers do not exceed one year and, therefore, the Company does not account for a financing component in its arrangements. The Company expenses incremental costs of obtaining a contract with a Customer, including sales commissions, when incurred as the period of benefit is less than one year. Shipping and handling costs for product shipments to Customers are recorded as sales and marketing expenses in the condensed consolidated statement of operations. Trade Discounts and Allowances - The Company provided Customers with trade discounts, rebates, allowances and other incentives. The Company records an estimate for these items as a reduction of revenue in the same period the revenue is recognized. Government and Payor Rebates - The Company contracted with certain third-party payors, including pharmacy benefit managers and government agencies, for the payment of rebates with respect to utilization of its commercial products. The Company also entered into agreements with GPOs that provided for administrative fees and discounted pricing in the form of volume-based rebates. The Company is also subject to discount and rebate obligations under state Medicaid programs and Medicare. The Company records an estimate for these discounts and rebates as a reduction of revenue in the same period the revenue is recognized. Other Incentives - Other incentives include the Company’s co-pay assistance program which is intended to provide financial assistance to qualified commercially-insured patients with prescription drug co-payments required by third-party payors. The Company estimates and records an accrual for these incentives as a reduction of revenue in the period the revenue is recognized. The Company estimates amounts for co-pay assistance based upon the number of claims and the cost per claim that the Company expects to receive associated with product that has been sold to Customers but remains in the distribution channel at the end of each reporting period. Product Returns - Consistent with industry practice, the Company has a product returns policy that provides Customers a right of return for product purchased within a specified period prior to and subsequent to the product’s expiration date. The right of return lapses upon shipment of the product to a patient. The Company records an estimate for the amount of its products which may be returned as a reduction of revenue in the period the related revenue is recognized. The Company’s estimate for product returns are based upon available industry data and its own sales information, including its visibility into the inventory remaining in the distribution channel. There is no returns liability associated with sales of ESKATA as the Company has a no returns policy for this product. Contract Research The Company earns contract research revenue from the provision of laboratory services to clients through Confluence, its wholly-owned subsidiary. Contract research 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. Under ASC Topic 606, the Company elected to apply the “right to invoice” practical expedient when recognizing contract research revenue. The Company recognizes contract research revenue in the amount to which it has the right to invoice. The Company has also received revenue from grants under the Small Business Innovation Research program of the National Institutes of Health (“NIH”). During the nine months ended September 30, 2018, the Company had two active grants from NIH which were related to early-stage research. There are no remaining funds available to the Company under the grants. The Company recognizes revenue related to grants as amounts become reimbursable under each grant, which is generally when research is performed, and the related costs are incurred. Other Revenue Licenses of Intellectual Property – The Company recognizes revenue received from non-refundable, upfront fees related to the licensing of intellectual property when the intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, the license has been transferred to the customer, and the customer is able to use and benefit from the license. Milestone Payments - At the inception of each arrangement that includes milestone payments, the Company evaluates whether the milestones are considered probable of being reached and estimates the amount to be included in the transaction price using the most likely amount method. If it is probable that a significant revenue reversal would not occur, the associated milestone value is included in the amount allocated to the license of intellectual property. Milestone payments that are not within the control of the Company or the customer, such as regulatory approvals, are not considered probable of being achieved until those approvals are received. Inventory Inventory includes the third-party cost of manufacturing and assembly of finished product, quality control and other overhead costs. Inventory is stated at the lower of cost or net realizable value. Inventory is adjusted for short-dated, unmarketable inventory equal to the difference between the cost of inventory and the estimated value based upon assumptions about future demand and market conditions. The Company had $189 and $791 of inventory as of September 30, 2019 and December 31, 2018, respectively, which was comprised primarily of finished goods and has been reclassified to discontinued operations for all periods presented. Intangible Assets Intangible assets include both definite-lived and indefinite-lived assets. Definite-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. Definite-lived intangible assets consist of a research technology platform the Company acquired through the acquisition of Confluence and the intellectual property rights related to RHOFADE. Indefinite-lived intangible assets consist of an in-process research and development (“IPR&D”) drug candidate acquired through the acquisition of Confluence. IPR&D assets are considered indefinite-lived until the completion or abandonment of the associated research and development efforts. The cost of IPR&D assets is either amortized over their estimated useful life beginning when the underlying drug candidate is approved and launched commercially, or expensed immediately if development of the drug candidate is abandoned. Definite-lived intangible assets are tested for impairment when events or changes in circumstances indicate that the carrying value of the asset may not be recoverable. Indefinite-lived intangible assets are tested for impairment at least annually, which the Company performs during the fourth quarter, or when indicators of an impairment are present. The Company recognizes impairment losses when and to the extent that the estimated fair value of an indefinite-lived intangible asset is less than its carrying value. During the three months ended September 30, 2019, the Company performed an interim impairment analysis of the RHOFADE intangible asset due to its decision to discontinue commercial operations and actively seek a commercialization partner for RHOFADE. The Company classified the RHOFADE intangible asset as held for sale, in discontinued operations, on its condensed consolidated balance sheet as of September 30, 2019. The Company’s impairment analysis, which primarily utilized a market-participant’s indication of fair value, resulted in a fair value for the RHOFADE intangible asset which was less than its carrying value. As a result, the Company recorded an impairment charge of $27,638 to adjust the carrying value of the RHOFADE intangible asset to its net realizable value as of September 30, 2019 (see Note 19). Goodwill Goodwill is not amortized, but rather is subject to testing for impairment at least annually, which the Company performs during the fourth quarter, or when indicators of an impairment are present. The Company considers each of its operating segments, therapeutics and contract research, to be a reporting unit since this is the lowest level for which discrete financial information is available. The Company attributed the full amount of the goodwill acquired with Confluence, or $18,504, to the therapeutics segment. The annual impairment test performed by the Company is a qualitative assessment based upon current facts and circumstances related to operations of the therapeutics segment. If the qualitative assessment indicates an impairment may be present, the Company would perform the required quantitative analysis and an impairment charge would be recognized to the extent that the estimated fair value of the reporting unit is less than its carrying amount. However, any loss recognized would not exceed the total amount of goodwill allocated to that reporting unit. During the nine months ended September 30, 2019, the Company performed an interim impairment analysis due to the decline in its stock price, which was considered a triggering event to evaluate goodwill for impairment. The Company’s impairment analysis, using a market approach, noted that its stock price, including a reasonable control premium, resulted in a fair value for the therapeutics reporting unit which was less than its carrying value. As a result, the Company recorded an impairment charge of $18,504, the full balance of goodwill, in the nine months ended September 30, 2019. Leases Leases represent a company’s right to use an underlying asset and a corresponding obligation to make payments to a lessor for the right to use those assets. The Company evaluates leases at their inception to determine if they are an operating lease or a finance lease. A lease is accounted for as a finance lease if it meets one of the following five criteria: the lease has a purchase option that is reasonably certain of being exercised, the present value of the future cash flows are substantially all of the fair market value of the underlying asset, the lease term is for a significant portion of the remaining economic life of the underlying asset, the title to the underlying asset transfers at the end of the lease term, or if the underlying asset is of such a specialized nature that it is expected to have no alternative uses to the lessor at the end of the term. Leases that do not meet the finance lease criteria are accounted for as an operating lease. The Company recognizes assets and liabilities for leases at their inception based upon the present value of all payments due under the lease. The Company uses an implicit interest rate to determine the present value of finance leases, and its incremental borrowing rate to determine the present value of operating leases. The Company determines incremental borrowing rates by referencing collateralized borrowing rates for debt instruments with terms similar to the respective lease. The Company recognizes expense for operating and finance leases on a straight-line basis over the term of each lease, and interest expense related to finance leases is recognized over the lease term based on the effective interest method. The Company includes estimates for any residual value guarantee obligations under its leases in lease liabilities recorded on its condensed consolidated balance sheet. Right-of-use assets are included in other assets and property and equipment, net on the Company’s condensed consolidated balance sheet for operating and finance leases, respectively. Obligations for lease payments are included in current portion of lease liabilities and other liabilities on the Company’s condensed consolidated balance sheet for both operating and finance leases. 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 condensed consolidated statement of operations. Concentration of Credit Risk and of Significant Customers and Suppliers Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash, cash equivalents and marketable securities. The Company holds all cash, cash equivalents and marketable securities balances at one accredited financial institution, in amounts that exceed federally insured limits. The Company does not believe that it is subject to unusual credit risk beyond the normal credit risk associated with commercial banking relationships. The Company’s top five customers represented 67% and 85% of contract research revenue for the nine months ended September 30, 2019 and 2018, respectively. The Company is dependent on third-party manufacturers to supply drug product, including all underlying components, for its research and development activities, including preclinical and clinical testing. These activities could be adversely affected by a significant interruption in the supply of active pharmaceutical ingredients or other components. Recently Issued Accounting Pronouncements In November 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-18, Collaborative Arrangements (Topic 808): Clarifying the Interaction Between Topic 808 and Topic 606, which, among other things, provides guidance on how to assess whether certain collaborative arrangement transactions should be accounted for under Topic 606. The amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019, with early adoption permitted. The Company is evaluating the impact of ASU 2018-18 on its consolidated financial statements. In August 2018, the FASB issued ASU 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40). ASU 2018-15 requires a customer in a cloud computing arrangement that is a service contract to follow the internal-use software guidance in ASC 350-40 to determine which implementation costs to capitalize as assets or expense as incurred. The standard will be effective for fiscal years beginning after December 15, 2019, including interim periods within such fiscal years, with early adoption permitted. The Company is evaluating the impact of ASU 2018-15 on its consolidated financial statements. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820). The FASB developed the amendments to ASC 820 as part of its broader disclosure framework project, which aims to improve the effectiveness of disclosures in the notes to financial statements by focusing on requirements that clearly communicate the most important information to users of the financial statements. This update eliminates certain disclosure requirements for fair value measurements for all entities, requires public entities to disclose certain new information and modifies some of the existing disclosure requirements. The standard will be effective for fiscal years beginning after December 15, 2019, including interim periods within such fiscal years, with early adoption permitted. The Company is evaluating the impact of ASU 2018-13 on its consolidated financial statements. In June 2018, the FASB issued ASU 2018-07, Compensation—Stock Compensation (Topic 718). The amendments in this ASU expand the scope of Topic 718 to include stock-based compensation arrangements with nonemployees except for specific guidance on option pricing model inputs and cost attribution. ASU 2018-07 is effective for annual reporting periods beginning after December 31, 2018, including interim periods within that year. The Company adopted the provisions of this standard on January 1, 2019, the impact of which on its consolidated financial statements was not significant. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). In July 2018, the FASB issued ASU 2018-10, Codification Improvements to Topic 842, Leases, and 2018-11, Targeted Improvements, which included a number of technical corrections and improvements, including additional options for transition. The new standard establishes a right-of-use model that requires a lessee to record a right-of-use asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases are classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. ASU 2016-02 is effective for annual periods beginning after December 15, 2018, including interim periods within those annual periods. The amendments in ASU 2016-02 must be applied to all leases existing at the date a company initially applies the standard. The Company adopted the new standard on January 1, 2019, using the effective date as the date of its initial application, and used the modified retrospective approach. In addition, the Company elected the practical expedients permitted under the transition guidance within the new standard which, among other things, allowed the Company to carry forward the historical lease identification and classification. The Company also elected the practical expedient to not separate lease and non-lease components, as well as the short-term lease practical expedient which allowed the Company to not capitalize leases with terms less than 12 months that do not contain a reasonably certain purchase option. The Company’s consolidated financial statements have not been restated, and disclosures required by the new standard have not been provided, for periods before January 1, 2019. The adoption of ASU 2016-02 resulted in recording additional assets and liabilities of $2,132 and $2,317, respectively upon adoption on January 1, 2019. The adoption of ASU 2016-02 did not have a material impact on the Company’s consolidated statement of operations or cash flows.

Fair Value of Financial Assets

Fair Value of Financial Assets and Liabilities	9 Months Ended
	Sep. 30, 2019
Fair Value of Financial Assets and Liabilities
Fair Value of Financial Assets and Liabilities	3. Fair Value of Financial Assets and Liabilities The following tables present information about the Company’s assets and liabilities that 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, 2019 Level 1 Level 2 Level 3 Total Assets: Cash equivalents $ 23,567 $ — $ — $ 23,567 Marketable securities — 61,530 — 61,530 Total assets $ 23,567 $ 61,530 $ — $ 85,097 Liabilities: Acquisition-related contingent consideration $ — $ — $ 1,668 $ 1,668 Total liabilities $ — $ — $ 1,668 $ 1,668 December 31, 2018 Level 1 Level 2 Level 3 Total Assets: Cash equivalents $ 49,766 $ 4,992 $ — $ 54,758 Marketable securities — 110,953 — 110,953 Total assets $ 49,766 $ 115,945 $ — $ 165,711 Liabilities: Acquisition-related contingent consideration $ — $ — $ 934 $ 934 Total liabilities $ — $ — $ 934 $ 934 As of September 30, 2019 and December 31, 2018, the Company’s cash equivalents consisted of investments with maturities of less than three months and included a money market fund and commercial paper, which were valued based upon Level 1 inputs. The Company’s marketable securities consisted of investments with maturities of more than three months and included commercial paper, corporate debt and government obligations, 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, 2019 and the year ended December 31, 2018, there were no transfers between Level 1, Level 2 and Level 3. The change in acquisition-related contingent consideration related to Confluence of $734 was the result of updates to the Company’s assumptions as a result of the filing of an Investigational New Drug Application (“IND”) for ATI-450 during the nine months ended September 30, 2019. The following tables present the fair value of the Company’s available for sale marketable securities by type of security: September 30, 2019 Gross Gross Amortized Unrealized Unrealized Fair Cost Gain Loss Value Marketable securities: Corporate debt securities $ 14,359 $ 13 $ — $ 14,372 Commercial paper 28,643 — (1) 28,642 Asset-backed securities 5,998 4 — 6,002 U.S. government agency debt securities 12,514 — — 12,514 Total marketable securities $ 61,514 $ 17 $ (1) $ 61,530 December 31, 2018 Gross Gross Amortized Unrealized Unrealized Fair Cost Gain Loss Value Marketable securities: Corporate debt securities $ 5,030 $ — $ (14) $ 5,016 Commercial paper 67,159 — — 67,159 Asset-backed securities 21,745 — (8) 21,737 U.S. government agency debt securities 17,044 — (3) 17,041 Total marketable securities $ 110,978 $ — $ (25) $ 110,953

Property and Equipment, Net

Property and Equipment, Net	9 Months Ended
	Sep. 30, 2019
Property and Equipment, Net
Property and Equipment, Net	4. Property and Equipment, Net Property and equipment, net consisted of the following: September 30, December 31, 2019 2018 Computer equipment $ 1,362 $ 1,292 Fleet vehicles — — Finance lease right-of-use assets 435 — Manufacturing equipment 607 604 Lab equipment 1,067 1,068 Furniture and fixtures 647 313 Leasehold improvements 889 332 Property and equipment, gross 5,007 3,609 Accumulated depreciation (2,153) (1,322) Property and equipment, net $ 2,854 $ 2,287 Depreciation expense was $324 and $264 for the three months ended September 30, 2019 and 2018, respectively, and was $886 and $704 for the nine months ended September 30, 2019 and 2018, respectively.

Intangible Assets

Intangible Assets	9 Months Ended
	Sep. 30, 2019
Intangible Assets
Intangible Assets	5. Intangible Assets Intangible assets consisted of the following: Gross Cost Accumulated Amortization Remaining September 30, December 31, September 30, December 31, Life (years) 2019 2018 2019 2018 Other intangible assets 7.8 751 751 163 107 Total definite-lived intangible assets 751 751 163 107 IPR&D na 6,629 6,629 — — Total intangible assets $ 7,380 $ 7,380 $ 163 $ 107 As of September 30, 2019, estimated future amortization expenses are as follows: Year Ending December 31, 2019 $ 20 2020 75 2021 75 2022 75 2023 75 Thereafter 268 Total $ 588

Accrued Expenses

Accrued Expenses	9 Months Ended
	Sep. 30, 2019
Accrued Expenses
Accrued Expenses	6. Accrued Expenses Accrued expenses consisted of the following: September 30, December 31, 2019 2018 Employee compensation expenses $ 2,665 $ 4,948 Sales discounts and allowances — — Research and development expenses 2,045 1,437 Professional fees 276 1,123 Selling and marketing expenses — — Other 1,080 582 Total accrued expenses $ 6,066 $ 8,090

Debt

Debt	9 Months Ended
	Sep. 30, 2019
Debt
Debt	7. Debt Loan and Security Agreement – Oxford Finance LLC In October 2018, the Company entered into a Loan and Security Agreement (“Loan Agreement”) with Oxford Finance LLC, a Delaware limited liability company (“Oxford”). The Loan Agreement provided for up to $65,000 in term loans (the “Term Loan Facility”). Of the $65,000, the Company borrowed $30,000 in October 2018. In October 2019, the Company repaid in full the $30,000 that was outstanding under the Loan Agreement, together with all accrued and unpaid interest and fees (see Note 19). The Loan Agreement provided for interest only payments through November 2021, followed by 24 consecutive equal monthly payments of principal and interest in arrears starting on November 2021 and continuing through the maturity date of October 2023. The Loan Agreement provided for an annual interest rate equal to the greater of (i) 8.35% and (ii) the 30-day U.S. LIBOR rate plus 6.25%. The Loan Agreement also provided for a final payment fee equal to 5.75% of the original principal amount of the term loans drawn under the Term Loan Facility. The Company had the option to prepay the outstanding balance of the term loans in full, subject to a prepayment fee of (i) 3% of the original principal amount of the aggregate term loans drawn for any prepayment prior to the first anniversary of the date such term loan was funded, (ii) 2% of the original principal amount of the aggregate term loans drawn for any prepayment between the first and second anniversaries of the date such term loan was funded or (iii) 1% of the original principal amount of the aggregate term loans drawn for any prepayment after the second anniversary of the funding date but before October 1, 2023. The carrying value of the Loan Agreement approximated fair value because the interest rate was a floating rate based on the 30-day U.S. LIBOR rate and was therefore reflective of market rates.

Stockholders' Equity

Stockholders' Equity	9 Months Ended
	Sep. 30, 2019
Stockholders' Equity
Stockholders' Equity	8. Stockholders’ Equity Preferred Stock As of September 30, 2019 and December 31, 2018, 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, 2019 or December 31, 2018. Common Stock As of September 30, 2019 and December 31, 2018, 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. The Company did not declare any dividends through September 30, 2019.

Stock-Based Awards

Stock-Based Awards	9 Months Ended
	Sep. 30, 2019
Stock-Based Awards
Stock-Based Awards	9. Stock‑Based Awards 2017 Inducement Plan In July 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 listing rules, generally including individuals who were not previously an employee or director of the Company. Under the terms of the 2017 Inducement Plan, up to 1,000,000 shares of common stock were available for issuance pursuant to nonqualified stock options, stock appreciation rights, restricted stock awards, restricted stock unit (“RSU”) awards, and other stock awards. All shares of common stock that were eligible for issuance under the 2017 Inducement Plan after October 1, 2018, including any shares underlying any awards that expire or are otherwise terminated, reacquired to satisfy tax withholding obligations, settled in cash or repurchased by the Company in the future that would have been eligible for re-issuance under the 2017 Inducement Plan, were retired. 2015 Equity Incentive Plan In September 2015, the Company’s board of directors adopted the 2015 Equity Incentive Plan (the “2015 Plan”), and 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 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, 2019, the number of shares of common stock that may be issued under the 2015 Plan was automatically increased by 1,648,429 shares. As of September 30, 2019, 2,460,900 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 856,603 and 948,761 were outstanding as of September 30, 2019 and December 31, 2018, 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 the shares of common stock underlying the awards 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, 2019 2018 Risk-free interest rate 2.27 % 2.65 % Expected term (in years) 6.2 6.3 Expected volatility 101.70 % 96.56 % 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, 2019 through September 30, 2019: Weighted Weighted Average Average Remaining Aggregate Number Exercise Contractual Intrinsic of Shares Price Term Value (in years) Outstanding as of December 31, 2018 4,282,081 $ 20.53 7.91 $ 2,404 Granted 44,500 5.75 Exercised (66,376) 1.29 Forfeited and cancelled (686,811) 23.35 Outstanding as of September 30, 2019 3,573,394 $ 20.16 6.54 $ 29 Options vested and expected to vest as of September 30, 2019 3,573,394 $ 20.16 6.54 $ 29 Options exercisable as of September 30, 2019 2,276,088 (1) $ 18.25 5.74 $ 29 (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 options vest. This amount reflects the number of shares under options that were vested, as opposed to exercisable. The weighted average grant date fair value of stock options granted during the nine months ended September 30, 2019 was $4.63 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, 2019 through September 30, 2019: Weighted Average Grant Date Number Fair Value of Shares Per Share Outstanding as of December 31, 2018 626,407 $ 20.30 Granted 1,520,942 6.26 Vested (150,271) 20.50 Forfeited and cancelled (361,440) 11.41 Outstanding as of September 30, 2019 1,635,638 $ 9.19 Stock‑Based Compensation Stock‑based compensation expense included in total costs and expenses on the condensed consolidated statement of operations included the following: Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Cost of revenue $ 25 $ 194 $ 454 $ 560 Research and development 1,418 1,433 4,733 4,916 Sales and marketing — — — — General and administrative 2,581 2,320 7,707 6,936 Total stock-based compensation expense $ 4,024 $ 3,947 $ 12,894 $ 12,412 As of September 30, 2019, the Company had unrecognized stock‑based compensation expense for stock options and RSUs of $17,068 and $11,506, respectively, which is expected to be recognized over weighted average periods of 1.96 years and 2.90 years, respectively.

Net Loss per Share

Net Loss per Share	9 Months Ended
	Sep. 30, 2019
Net Loss per Share
Net Loss per Share	10. 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, 2019 2018 2019 2018 Numerator: Net loss $ (55,319) $ (32,740) $ (142,760) $ (94,187) Denominator: Weighted average shares of common stock outstanding 41,364,387 30,982,192 41,296,377 30,938,026 Net loss per share, basic and diluted $ (1.34) $ (1.06) $ (3.46) $ (3.04) 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 shares of common stock outstanding used to calculate both basic and diluted net loss per share is the same. The following table presents potential shares of common stock excluded from the calculation of diluted net loss per share for the three and nine months ended September 30, 2019 and 2018. All share amounts presented in the table below represent the total number outstanding as of September 30, 2019 and 2018. September 30, 2019 2018 Options to purchase common stock 3,573,394 4,323,353 Restricted stock unit awards 1,635,638 541,628 Total potential shares of common stock 5,209,032 4,864,981

Leases

Leases	9 Months Ended
	Sep. 30, 2019
Leases
Leases	11. Leases The Company has operating leases for office space and laboratory facilities, and finance leases for its laboratory equipment. As a result of the Company’s decision to actively seek partners for its commercial products (see Note 2), the Company terminated the finance leases for its fleet vehicles and recognized a loss on lease termination of $306 in the three months ended September 30, 2019. The components of lease expense were as follows: Nine Months Ended September 30, 2019 Operating lease expense $ 555 Finance Leases: Amortization of right-to-use assets $ 416 Interest expense 84 Total finance lease expenses $ 500 During the three and nine months ended September 30, 2018 the Company recorded $204 and $682, respectively, of rent expense which was recognized on a straight-line basis over the term of the lease. Operating Leases Agreements for Office Space In November 2017, the Company entered into a sublease agreement with Auxilium Pharmaceuticals, LLC (the “Sublandlord”) pursuant to which it subleases 33,019 square feet of office space for its headquarters in Wayne, Pennsylvania. Subject to the consent of Chesterbrook Partners, LP (“Landlord”) as set forth in the lease by and between them and Sublandlord, the sublease has a term that runs through October 2023. If for any reason the lease between the Landlord and Sublandlord is terminated or expires prior to October 2023, the Company’s sublease will automatically terminate. In February 2019, the Company entered into a sublease agreement with a third party for 21,056 square feet of office and laboratory space in St. Louis, Missouri with total future total rent payments of $3,538. The Company has also agreed to pay $1,472 of the total renovation and improvement costs incurred by the landlord, which is collateralized by a standby letter of credit held by the Company. The lease commenced in June 2019 and has a term that runs through June 2029. Supplemental balance sheet information related to operating leases is as follows: September 30, Operating Leases: 2019 Gross cost $ 5,213 Accumulated amortization (331) Operating lease right-of-use assets $ 4,882 Other current liabilities $ 507 Other liabilities 3,686 Total operating lease liabilities $ 4,193 Finance Leases Laboratory Equipment The Company leases laboratory equipment which is used in its laboratory space in St. Louis, Missouri under two lease financing arrangements which the Company entered into in August 2017 and October 2017, respectively. The leases have terms which end in October 2020 and December 2020, respectively. Fleet Vehicles The Company leased automobiles for its sales force and other field-based employees under the terms of a master lease agreement with a third party. The lease term for each automobile began on the date the Company took delivery and continued for a period of four years. The Company returned all leased vehicles during the three months ended September 30, 2019. Supplemental balance sheet information related to finance leases is as follows: September 30, Finance Leases: 2019 Property and equipment, gross $ 435 Accumulated depreciation (296) Property and equipment, net $ 139 Other current liabilities $ 135 Other liabilities 159 Total finance lease liabilities $ 294 Supplemental information related to operating and finance leases is as follows: Nine Months Ended September 30, Supplemental Cash Flow Lease Information: 2019 Operating cash flows from operating leases $ 530 Operating cash flows from finance leases 86 Financing cash flows from finance leases 447 Leased assets obtained in exchange for new operating lease liabilities $ 3,060 Weighted-Average Remaining Lease Term (in years): Operating leases Finance leases Weighted-Average Discount Rate: Operating leases % Finance leases % Future maturities of lease liabilities under operating and finance leases as of September 30, 2019 are as follows: Operating Finance Year Ending December 31, Leases Leases 2019 $ 223 $ 36 2020 909 116 2021 934 — 2022 959 — 2023 877 — Thereafter 2,024 — Total undiscounted lease payments 5,926 152 Less: unrecognized interest Total lease liability $ 4,193 $ 144 The undiscounted lease payments presented in the table above are consistent with the future minimum lease payments disclosed in the Company’s Annual Report on Form 10-K filed with the SEC on March 18, 2019 under the prior lease guidance, with the exception of the undiscounted lease payments related to leased vehicles, which were returned during the three months ended September 30, 2019.

Related Party Transactions

Related Party Transactions	9 Months Ended
	Sep. 30, 2019
Related Party Transactions
Related Party Transactions	12. Related Party Transactions Sublease In August 2013, the Company entered into a sublease agreement with NeXeption, Inc. ("NeXeption"), which was subsequently assigned to NST Consulting, LLC, a wholly-owned subsidiary of NST, LLC. In November 2017, the Company terminated the sublease with NST Consulting, LLC effective March 31, 2018. The Company paid $590 to NST Consulting, LLC, which amount represented accelerated rent payments. Total payments made under the sublease during the nine months ended September 30, 2019 and 2018 were $0 and $570, respectively. Mr. Stephen Tullman, the former 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, and certain of the Company’s executive officers are and have been members of entities affiliated with NST, LLC. The Company had no amounts payable to NST Consulting, LLC as of September 30, 2019 and December 31, 2018. Asset Purchase Agreement with Allergan In November 2018, the Company closed the acquisition of RHOFADE, which includes an exclusive license to certain intellectual property for RHOFADE, as well as additional intellectual property, from Allergan Sales, LLC (“Allergan”) pursuant to the terms of the Asset Purchase Agreement dated as of October 15, 2018 (as amended, the “Asset Purchase Agreement”). Pursuant to the Asset Purchase Agreement, the Company agreed to assume the obligation to pay specified royalties and milestone payments under agreements with Aspect Pharmaceuticals, LLC and Vicept Therapeutics, Inc. Certain current and former members of the Company’s management team and board of directors are former holders of equity interests in Vicept Therapeutics, Inc. and Aspect Pharmaceuticals, LLC . In such capacities, these individuals may be entitled to receive a portion of the potential future payments payable by the Company. For the nine months ended September 30, 2019, the Company incurred an expense of $576 and $0 related to royalties and/or milestones earned by Aspect Pharmaceuticals, LLC and Vicept Therapeutics, Inc., respectively, under those agreements. In October 2019, the Company sold the worldwide rights to RHOFADE to EPI Health, LLC (“EPI Health”), who agreed to assume the Company’s obligation to pay the royalties and milestone payments under its existing agreements with Aspect Pharmaceuticals, LLC and Vicept Therapeutics, Inc. (see Note 19).

Agreements Related to Intellect

Agreements Related to Intellectual Property	9 Months Ended
	Sep. 30, 2019
Agreements Related to Intellectual Property
Agreements Related to Intellectual Property	13. Agreements Related to Intellectual Property Asset Purchase Agreement – Allergan Sales, LLC In November 2018, the Company closed the acquisition of RHOFADE from Allergan pursuant to the Asset Purchase Agreement (see Note 12). The Company agreed to pay Allergan specified royalties, ranging from a mid-single digit percentage to a mid-teen percentage of net sales, subject to specified reductions, limitations and other adjustments, on a country-by-country basis until the date that the patent rights related to RHOFADE have expired or, if later, November 30, 2028. The Company incurred royalties earned by Allergan under the Asset Purchase Agreement of $ 440 and $0 during the three months ended September 30, 2019 and 2018, respectively, and $ 1,281 and $0 during the nine months ended September 30, 2019 and 2018, respectively. The Company also agreed to pay Allergan a one-time payment of $5,000 upon the achievement of a specified development milestone related to the potential development of an additional dermatology product. In October 2019, the Company sold the worldwide rights to RHOFADE to EPI Health, who agreed to assume the obligation to pay the royalties and milestone payments under the Asset Purchase Agreement (see Note 19). License and Collaboration Agreement – Rigel Pharmaceuticals, Inc. In August 2015, the Company entered into an exclusive, worldwide license and collaboration agreement with Rigel Pharmaceuticals, Inc. (“Rigel”) for the development and commercialization of products containing two specified JAK inhibitors, which the Company refers to as ATI-501 and ATI-502. Under the agreement, the Company agreed to make aggregate payments of up to $80,000 upon the achievement of specified development milestones. During the three months ended September 30, 2019, the Company made a milestone payment of $4,000 to Rigel upon the achievement of a specified development milestone. With respect to any products the Company commercializes under the agreement, the Company will pay Rigel quarterly tiered royalties on its annual net sales of each product at a high single‑digit percentage of annual net sales, subject to specified reductions, 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 countries under specified circumstances, ten years from the first commercial sale of such product. In connection with the amendment of the agreement in October 2019, the Company agreed to pay Rigel an amendment fee of $1,500 in three installments of $500 in January 2020, April 2020 and July 2020. In addition, the parties modified certain other development milestones, and the Company agreed to increase the potential payments payable upon the achievement of such milestones from $10,000 to $10,500 in the aggregate. License, Development and Commercialization Agreement – Cipher Pharmaceuticals Inc. In April 2018, the Company entered into an exclusive license agreement with Cipher Pharmaceuticals Inc. (“Cipher”) for the rights to obtain regulatory approval of and commercialize A-101 40% Topical Solution, which the Company marketed under the brand name ESKATA in the United States, in Canada for the treatment of seborrheic keratosis (“SK”). In September 2019, the Company and Cipher mutually terminated the exclusive license agreement. Assignment Agreement – Estate of Mickey Miller and Finder’s Services Agreement – KPT Consulting, LLC In August 2012, the Company entered into an assignment agreement with the Estate of Mickey Miller (the “Miller Estate”), under which the Company acquired some of the intellectual property rights covering ESKATA and A-101 45% Topical Solution. 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. Under the terms of the finder’s services agreement, the Company made a milestone payment of $1,000 upon the achievement of a specified regulatory milestone in April 2017 and a milestone payment of $1,500 upon the achievement of a specified commercial milestone in May 2018. The payments were recorded as general and administrative expenses in the Company’s condensed consolidated statement of operations. Under the finder’s services agreement, the Company is obligated to make an additional milestone payment of $3,000 upon the achievement of a specified commercial milestone. Under each of the assignment agreement and the finder’s services agreement, the Company is also obligated to pay royalties on sales of ESKATA and any related products, at low single-digit percentages of net sales, subject to reduction in specified circumstances. During the nine months ended September 30, 2019 and 2018, the Company incurred an aggregate expense of $14 and $0, respectively, related to royalty payments under these agreements. 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.

Income Taxes

Income Taxes	9 Months Ended
	Sep. 30, 2019
Income Taxes
Income Taxes	14. Income Taxes The Company did not record a federal or state income tax benefit for losses incurred during the nine months ended September 30, 2019 and 2018 due to the Company’s conclusion that a valuation allowance was required for those periods.

Discontinued Operations

Discontinued Operations	9 Months Ended
	Sep. 30, 2019
Discontinued Operations
Discontinued Operations	15. Discontinued Operations The components of loss from discontinued operations as reported in the Company’s condensed consolidated statement of operations were as follows: Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Revenues: Product sales, net $ 4,977 $ 510 $ 13,734 $ 2,043 Total revenue, net 4,977 510 13,734 2,043 Costs and expenses: Cost of revenue (excludes amortization) 1,118 126 4,396 278 Research and development 132 742 522 1,990 Sales and marketing 5,897 11,317 22,388 34,941 General and administrative 960 433 2,724 474 Intangible asset impairment 27,638 — 27,638 — Amortization of definite-lived intangible 1,107 — 4,426 — Total costs and expenses 36,852 12,618 62,094 37,683 Loss from discontinued operations (31,875) (12,108) (48,360) (35,640) Other expense, net (306) — (306) — Net loss from discontinued operations $ (32,181) $ (12,108) $ (48,666) $ (35,640) Net loss from discontinued operations per share, basic and diluted $ (0.78) $ (0.39) $ (1.18) $ (1.15) Weighted average common shares outstanding, basic and diluted 41,364,387 30,982,192 41,296,377 30,938,026 The following table presents the details of product sales, net included in discontinued operations: Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 ESKATA $ (32) $ 510 $ 312 $ 2,043 RHOFADE 5,009 — 13,422 — Total product sales, net $ 4,977 $ 510 $ 13,734 $ 2,043 The following table presents information related to assets and liabilities reported as discontinued operations in the Company’s condensed consolidated balance sheet: September 30, December 31, 2019 2018 Accounts receivable, net $ 17,191 $ 4,298 Inventory 189 791 Prepaid expenses and other current assets — 1,073 Intangible asset held for sale 33,800 — Discontinued operations - current assets $ 51,180 $ 6,162 Property and equipment, net $ — $ 1,993 Intangible assets, net of accumulated amortization — 65,678 Discontinued operations - non-current assets $ — $ 67,671 Accrued expenses $ 14,501 $ 3,896 Current portion of lease liabilities — 459 Discontinued operations - current liabilities $ 14,501 $ 4,355 Other liabilities $ — $ 1,227 Discontinued operations - non- current liabilities $ — $ 1,227 The following table presents cash flow information related to discontinued operations: Nine Months Ended September 30, 2019 2018 Depreciation and amortization $ 302 $ 160 Stock-based compensation expense Intangible asset impairment charge 27,638 — Loss on disposal of property and equipment — $ 28,433 $ 2,847 The Company relied on Allergan to distribute RHOFADE on its behalf pursuant to the terms of a transition services agreement. Accounts receivable, net as of September 30, 2019 and December 31, 2018 included $17,191 and $3,838, respectively, related to amounts invoiced by Allergan for sales of RHOFADE. As a result of the Company’s decision to actively seek partners for its commercial products, the Company terminated the finance leases for its fleet vehicles and recognized a loss on lease termination of $306 in the three months ended September 30, 2019. During the three months ended September 30, 2019, the Company also performed an interim impairment analysis of the RHOFADE intangible asset due its decision to discontinue commercial operations and actively seek a commercialization partner for RHOFADE. The Company classified the RHOFADE intangible asset as held for sale on its condensed consolidated balance sheet as of September 30, 2019. The Company’s impairment analysis, which primarily utilized a third-party indication of fair value, resulted in a fair value for the RHOFADE intangible asset which was less than its carrying value. As a result, the Company recorded an impairment charge of $27,638 to adjust the carrying value of the RHOFADE intangible asset to its net realizable value of $33,800, as of September 30, 2019 (see Note 19).

Restructuring Charges

Restructuring Charges	9 Months Ended
	Sep. 30, 2019
Restructuring Charges
Restructuring Charges	16. Restructuring Charges On September 5, 2019, the Company announced the completion of a strategic review and its decision to refocus on its immuno-inflammatory development programs and to actively seek partners for its commercial products. As a result, on September 5, 2019, the Company terminated 63 employees (“terminated employees”) and gave notice to an additional 23 employees (“noticed employees”) who were asked to provide transition services through termination dates ranging between 4 to 6 months from the date notice was given. The terminated employees were entitled to receive cash severance payments as well as cash payments in lieu of sixty days’ notice required by the Worker Adjustment and Retraining Notification Act (the “WARN Act”). The noticed employees are entitled to receive one-time cash severance payments which are not contingent upon providing additional services to the Company beyond September 5, 2019. In addition, certain noticed employees can earn retention bonuses if they continue to be employed by the Company through certain termination dates. The Company recorded a restructuring charge for the one-time severance and WARN Act payments, which was triggered immediately upon either terminating or giving notice to the impacted employees. The Company will expense the cost of retention bonuses for noticed employees over their respective service terms. During the three months ended September 30, 2019, the Company recognized expenses of $2,248 and $257 related to one-time cash payments for terminated employees and noticed employees, respectively. The Company committed to paying up to $388 for contingent retention bonuses, of which $75 was recognized in the three months ended September 30, 2019.

Segment Information

Segment Information	9 Months Ended
	Sep. 30, 2019
Segment Information
Segment Information	17. Segment Information The Company has two reportable segments, therapeutics and contract research. The therapeutics segment is focused on identifying and developing innovative therapies to address significant unmet needs for immuno-inflammatory diseases. The Company marketed and sold RHOFADE during the nine months ended September 30, 2019 . In October 2019, the Company sold the worldwide rights to RHOFADE (see Note 19). RHOFADE is a topical treatment for persistent facial erythema, or redness, associated with rosacea in adults. The Company marketed and sold ESKATA in the United States during the nine months ended September 30, 2019 and 2018 and discontinued sales and marketing of ESKATA in August 2019. ESKATA is a proprietary formulation of high-concentration hydrogen peroxide topical solution that the Company was marketing as an office-based prescription treatment for raised SKs. The Company is currently seeking a strategic partner to commercialize ESKATA worldwide. The contract research segment earns revenue from the provision of laboratory services to clients through Confluence, the Company’s wholly-owned subsidiary. Contract research revenue is generally evidenced by contracts with clients which are on an agreed upon fixed-price, fee-for-service basis. Corporate and other includes general and administrative expenses as well as eliminations of intercompany transactions. The Company does not report balance sheet information by segment since it is not reviewed by the chief operating decision maker, and all of the Company’s tangible assets are held in the United States. The Company’s results of operations by segment for the three and nine months ended September 30, 2019 and 2018 are summarized in the tables below: Contract Corporate Total Three Months Ended September 30, 2019 Therapeutics Research and Other Company Revenue, net $ — $ 2,943 $ (1,960) $ 983 Cost of revenue (excludes amortization) — 2,724 (1,898) 826 Research and development 16,245 — (62) 16,183 Sales and marketing 96 16 — 112 General and administrative — 956 5,770 6,726 Amortization of definite-lived intangible — — — — Loss from operations $ (16,341) $ (753) $ (5,770) $ (22,864) Loss from discontinued operations $ (30,915) $ — $ (960) $ (31,875) Contract Corporate Total Three Months Ended September 30, 2018 Therapeutics Research and Other Company Revenue, net $ — $ 3,225 $ (2,107) $ 1,118 Cost of revenue — 2,823 (1,756) 1,067 Research and development 15,189 — — 15,189 Sales and marketing 49 14 — 63 General and administrative — 566 5,575 6,141 Loss from operations $ (15,238) $ (178) $ (5,926) $ (21,342) Loss from discontinued operations $ (11,675) $ — $ (433) $ (12,108) Contract Corporate Total Nine Months Ended September 30, 2019 Therapeutics Research and Other Company Revenue, net $ — $ 11,940 $ (8,808) $ 3,132 Cost of revenue (excludes amortization) — 11,584 (8,556) 3,028 Research and development 53,585 — (251) 53,334 Sales and marketing 581 48 — 629 General and administrative — 2,069 19,073 21,142 Goodwill impairment 18,504 — — 18,504 Amortization of definite-lived intangible — — — — Loss from operations $ (72,670) $ (1,761) $ (19,074) $ (93,505) Loss from discontinued operations $ (45,636) $ — $ (2,724) $ (48,360) Contract Corporate Total Nine Months Ended September 30, 2018 Therapeutics Research and Other Company Revenue, net $ 1,000 $ 8,779 $ (5,400) $ 4,379 Cost of revenue — 7,564 (4,501) 3,063 Research and development 41,482 — — 41,482 Sales and marketing 55 34 — 89 General and administrative — 1,557 18,924 20,481 Loss from operations $ (40,537) $ (376) $ (19,823) $ (60,736) Loss from discontinued operations $ (35,166) $ — $ (474) $ (35,640) Intersegment Revenue Revenue for the contract research segment included $1,960 and $2,107 for services performed on behalf of the therapeutics segment for the three months ended September 30, 2019 and 2018, respectively, and $8,807 and $5,400 for the nine months ended September 30, 2019 and 2018, respectively. All intersegment revenue has been eliminated in the Company’s condensed consolidated statement of operations.

Legal Proceedings

Legal Proceedings	9 Months Ended
	Sep. 30, 2019
Legal Proceedings
Legal Proceedings	18. Legal Proceedings Securities Class Actions On July 30, 2019, plaintiff Linda Rosi (“Rosi”) filed a putative class action complaint captioned Rosi v. Aclaris Therapeutics, Inc., et al. , in the U.S. District Court for the Southern District of New York against the Company and certain of its executive officers (“Defendants”). The complaint alleges that Defendants violated federal securities laws by, among other things, failing to disclose an alleged likelihood that regulators would scrutinize advertising materials related to ESKATA and find that the materials minimized the risks or overstated the efficacy of the product. The complaint seeks unspecified compensatory damages on behalf of Rosi and all other persons and entities that purchased or otherwise acquired the Company’s securities between May 8, 2018 and June 20, 2019. On September 9, 2019, an additional plaintiff, Robert Fulcher (“Fulcher”), filed a substantially identical putative class action complaint captioned Fulcher v. Aclaris Therapeutics, Inc., et al. , in the same court against the same Defendants. On September 30, 2019, Rosi and Fulcher each filed separate motions to consolidate the cases and to be appointed “lead plaintiff” for the putative class. On October 15, 2019, Rosi filed a “notice of non-opposition” to Fulcher’s motion to consolidate cases and to serve as lead plaintiff. The court has not yet appointed a lead plaintiff and no consolidated complaint has been filed. Defendants dispute plaintiffs’ claims and intend to defend the matter vigorously. Patent Infringement On October 8, 2019, the Company, together with Allergan, Inc., filed a patent infringement lawsuit in the U.S. District Court for the District of Delaware against Taro Pharmaceuticals, Inc. (“Taro”), related to an Abbreviated New Drug Application (“ANDA”) that Taro filed with the FDA to market a generic version of RHOFADE. The lawsuit claims infringement of U.S. Patent Nos. 7,812,049, 8,420,688, 8,815,929, 9,974,773 and 10,335,391, which are listed in the FDA’s Approved Drug Products with Therapeutic Equivalence Evaluations, commonly known as the Orange Book, for RHOFADE. The Company received a Paragraph IV Notice Letter from Taro dated August 28, 2019, advising that Taro had submitted an ANDA to the FDA seeking approval from the FDA to manufacture and market a generic version of RHOFADE prior to the expiration of the Orange Book-listed patents. Under the Asset Purchase Agreement (the “APA”) with EPI Health, EPI Health agreed to file a motion to be substituted for the Company as a plaintiff party and has agreed to reimburse the Company for its reasonable fees and expenses so long as it remains a plaintiff party.

Subsequent Events

Subsequent Events	9 Months Ended
	Sep. 30, 2019
Subsequent Events
Subsequent Events	19. Subsequent Events Asset Purchase Agreement with EPI Health On October 10, 2019, the Company entered into an APA with EPI Health, pursuant to which the Company sold the worldwide rights to RHOFADE, which includes the assignment of certain licenses for related intellectual property assets (the “Disposition”). Pursuant to the APA, EPI Health has agreed to pay the Company total cash consideration of up to $55,000, consisting of (i) an upfront payment of $35,000 ($1,750 of which was placed in escrow) and (ii) potential sales milestone payments of up to $20,000 in the aggregate upon the achievement of specified levels of net sales (as defined in the APA) of products covered by the APA. In addition, EPI Health has agreed to pay the Company (i) a specified high single-digit royalty calculated as a percentage of net sales, on a product-by-product and country-by-country basis, until the date that the patent rights related to a particular product, such as RHOFADE, have expired, provided, that with respect to sales of RHOFADE in any territory outside of the United States, such royalty shall be paid on a country-by-country basis until the date that the RHOFADE patent rights in the particular country have expired or, if later, 10 years from the date of the first commercial sale of RHOFADE in such country, (ii) 25% of any upfront, license, milestone, maintenance or fixed payment received by EPI Health in connection with any license or sublicense of the assets transferred in the Disposition in any territory outside of the United States, subject to specified exceptions and (iii) approximately $200 for certain inventory, subject to a specified post-closing inventory-related adjustment. In addition, EPI Health has agreed to assume the Company’s obligation to pay specified royalties and milestone payments under its existing agreements with Allergan, Aspect Pharmaceuticals, LLC and Vicept Therapeutics, Inc. Repayment of the Term Loan Facility with Oxford On October 10, 2019, the Company repaid in full the $30,000 borrowed under the Loan Agreement with Oxford (see Note 7). In addition, in accordance with the terms of the Loan Agreement, the Company paid (i) accrued and unpaid interest of approximately $70, (ii) a final payment fee of $1,725 and (iii) a prepayment fee of $600. Following this repayment, all of the Company’s obligations under the Loan Agreement are deemed to be terminated, except as set forth in the agreement.

Summary of Significant Accoun_2

Summary of Significant Accounting Policies (Policies)	9 Months Ended
	Sep. 30, 2019
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 condensed consolidated financial statements of the Company include the accounts of the operating parent company, Aclaris Therapeutics, Inc., and its wholly-owned subsidiaries, ATIL, Confluence and Vixen. All significant intercompany transactions have been eliminated. Based upon the revenue from contract research services, the Company believes that gross profit does not provide a meaningful measure of profitability and, therefore, has not included a line item for gross profit on the condensed consolidated statement of operations.
Discontinued Operations	Discontinued Operations On September 5, 2019, the Company announced the completion of a strategic review and its decision to refocus its resources on its immuno-inflammatory development programs and to actively seek partners for its commercial products. The Company also announced a plan to terminate 86 employees (see Note 16). The accompanying condensed consolidated financial statements have been recast for all periods presented to reflect the assets, liabilities, revenue and expenses related to the Company’s commercial products as discontinued operations (see Note 15). The accompanying condensed consolidated financial statements are generally presented in conformity with the Company’s historical format, even in situations where reclassifications to discontinued operations have resulted in $0 values being presented. The Company believes this format provides comparability with its previously filed financial statements.
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, variable consideration included in product sales, net, 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, 2019, the condensed consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, 2019 and 2018, the condensed consolidated statement of stockholders’ equity for the three and nine months ended September 30, 2019 and 2018, and the condensed consolidated statements of cash flows for the nine months ended September 30, 2019 and 2018 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 18, 2019 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, 2019, the results of its operations and comprehensive loss for the three and nine months ended September 30, 2019 and 2018, its changes in stockholders’ equity for the three and nine months ended September 30, 2019 and 2018 and its cash flows for the nine months ended September 30, 2019 and 2018. The condensed consolidated balance sheet data as of December 31, 2018 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, 2019 and 2018 are unaudited. The results for the three and nine months ended September 30, 2019 are not necessarily indicative of results to be expected for the year ending December 31, 2019, 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, 2018 included in the Company’s annual report on Form 10-K filed with the SEC on March 18, 2019.
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, 2018 included in the Company’s annual report on Form 10-K filed with the SEC on March 18, 2019. Since the date of such financial statements, there have been no changes to the Company’s significant accounting policies.
Revenue Recognition	Revenue Recognition The Company accounts for revenue in accordance with Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers. Under ASC Topic 606, revenue is recognized when a customer obtains control of promised goods or services in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. To determine revenue recognition in accordance with ASC Topic 606, the Company performs the following five steps: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) performance obligations are satisfied. At contract inception, the Company assesses the goods or services promised within a contract with a customer to identify the performance obligations, and to determine if they are distinct. The Company recognizes the revenue that is allocated to each distinct performance obligation when (or as) that performance obligation is satisfied. The Company only recognizes revenue when collection of the consideration it is entitled to under a contract with a customer is probable. Product Sales, net The Company sold RHOFADE during the nine months ended September 30, 2019 and sold ESKATA during the nine months ended September 30, 2019 and 2018 to a limited number of wholesalers in the United States (collectively, its “Customers”). These Customers subsequently resold the Company’s products to pharmacies and health care providers. In addition to distribution agreements with Customers, the Company entered into arrangements with third-party payors, including pharmacy benefit managers and government agencies, and group purchasing organizations (“GPOs”), which provided for government mandated or privately negotiated rebates, chargebacks, and discounts with respect to the purchase of the Company’s commercial products. The Company discontinued selling ESKATA in August 2019. The Company sold the worldwide rights to RHOFADE in October 2019 (see Note 19). Product sales, net has been reclassified to discontinued operations for all periods presented. The Company recognizes revenue from product sales at the point the Customer obtains control of the product, which generally occurs upon delivery, and includes estimates of variable consideration in the same period revenue is recognized. Components of variable consideration include trade discounts and allowances, product returns, government rebates, discounts and rebates, other incentives such as patient co-pay assistance, and other fee for service amounts. Variable consideration is recorded on the condensed consolidated balance sheet as either a reduction of accounts receivable, if payable to a Customer, or as a current liability, if payable to a third party other than a Customer. The Company considers all relevant information when estimating variable consideration such as current contractual and statutory requirements, specific known market events and trends, industry data and forecasted customer buying and payment patterns. The amount of net revenue the Company can recognize is constrained by estimates of variable consideration which are included in the transaction price. Payment terms with Customers do not exceed one year and, therefore, the Company does not account for a financing component in its arrangements. The Company expenses incremental costs of obtaining a contract with a Customer, including sales commissions, when incurred as the period of benefit is less than one year. Shipping and handling costs for product shipments to Customers are recorded as sales and marketing expenses in the condensed consolidated statement of operations. Trade Discounts and Allowances - The Company provided Customers with trade discounts, rebates, allowances and other incentives. The Company records an estimate for these items as a reduction of revenue in the same period the revenue is recognized. Government and Payor Rebates - The Company contracted with certain third-party payors, including pharmacy benefit managers and government agencies, for the payment of rebates with respect to utilization of its commercial products. The Company also entered into agreements with GPOs that provided for administrative fees and discounted pricing in the form of volume-based rebates. The Company is also subject to discount and rebate obligations under state Medicaid programs and Medicare. The Company records an estimate for these discounts and rebates as a reduction of revenue in the same period the revenue is recognized. Other Incentives - Other incentives include the Company’s co-pay assistance program which is intended to provide financial assistance to qualified commercially-insured patients with prescription drug co-payments required by third-party payors. The Company estimates and records an accrual for these incentives as a reduction of revenue in the period the revenue is recognized. The Company estimates amounts for co-pay assistance based upon the number of claims and the cost per claim that the Company expects to receive associated with product that has been sold to Customers but remains in the distribution channel at the end of each reporting period. Product Returns - Consistent with industry practice, the Company has a product returns policy that provides Customers a right of return for product purchased within a specified period prior to and subsequent to the product’s expiration date. The right of return lapses upon shipment of the product to a patient. The Company records an estimate for the amount of its products which may be returned as a reduction of revenue in the period the related revenue is recognized. The Company’s estimate for product returns are based upon available industry data and its own sales information, including its visibility into the inventory remaining in the distribution channel. There is no returns liability associated with sales of ESKATA as the Company has a no returns policy for this product. Contract Research The Company earns contract research revenue from the provision of laboratory services to clients through Confluence, its wholly-owned subsidiary. Contract research 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. Under ASC Topic 606, the Company elected to apply the “right to invoice” practical expedient when recognizing contract research revenue. The Company recognizes contract research revenue in the amount to which it has the right to invoice. The Company has also received revenue from grants under the Small Business Innovation Research program of the National Institutes of Health (“NIH”). During the nine months ended September 30, 2018, the Company had two active grants from NIH which were related to early-stage research. There are no remaining funds available to the Company under the grants. The Company recognizes revenue related to grants as amounts become reimbursable under each grant, which is generally when research is performed, and the related costs are incurred. Other Revenue Licenses of Intellectual Property – The Company recognizes revenue received from non-refundable, upfront fees related to the licensing of intellectual property when the intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, the license has been transferred to the customer, and the customer is able to use and benefit from the license. Milestone Payments - At the inception of each arrangement that includes milestone payments, the Company evaluates whether the milestones are considered probable of being reached and estimates the amount to be included in the transaction price using the most likely amount method. If it is probable that a significant revenue reversal would not occur, the associated milestone value is included in the amount allocated to the license of intellectual property. Milestone payments that are not within the control of the Company or the customer, such as regulatory approvals, are not considered probable of being achieved until those approvals are received.
Inventory	Inventory Inventory includes the third-party cost of manufacturing and assembly of finished product, quality control and other overhead costs. Inventory is stated at the lower of cost or net realizable value. Inventory is adjusted for short-dated, unmarketable inventory equal to the difference between the cost of inventory and the estimated value based upon assumptions about future demand and market conditions. The Company had $189 and $791 of inventory as of September 30, 2019 and December 31, 2018, respectively, which was comprised primarily of finished goods and has been reclassified to discontinued operations for all periods presented.
Intangible Assets	Intangible Assets Intangible assets include both definite-lived and indefinite-lived assets. Definite-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. Definite-lived intangible assets consist of a research technology platform the Company acquired through the acquisition of Confluence and the intellectual property rights related to RHOFADE. Indefinite-lived intangible assets consist of an in-process research and development (“IPR&D”) drug candidate acquired through the acquisition of Confluence. IPR&D assets are considered indefinite-lived until the completion or abandonment of the associated research and development efforts. The cost of IPR&D assets is either amortized over their estimated useful life beginning when the underlying drug candidate is approved and launched commercially, or expensed immediately if development of the drug candidate is abandoned. Definite-lived intangible assets are tested for impairment when events or changes in circumstances indicate that the carrying value of the asset may not be recoverable. Indefinite-lived intangible assets are tested for impairment at least annually, which the Company performs during the fourth quarter, or when indicators of an impairment are present. The Company recognizes impairment losses when and to the extent that the estimated fair value of an indefinite-lived intangible asset is less than its carrying value. During the three months ended September 30, 2019, the Company performed an interim impairment analysis of the RHOFADE intangible asset due to its decision to discontinue commercial operations and actively seek a commercialization partner for RHOFADE. The Company classified the RHOFADE intangible asset as held for sale, in discontinued operations, on its condensed consolidated balance sheet as of September 30, 2019. The Company’s impairment analysis, which primarily utilized a market-participant’s indication of fair value, resulted in a fair value for the RHOFADE intangible asset which was less than its carrying value. As a result, the Company recorded an impairment charge of $27,638 to adjust the carrying value of the RHOFADE intangible asset to its net realizable value as of September 30, 2019 (see Note 19).
Goodwill	Goodwill Goodwill is not amortized, but rather is subject to testing for impairment at least annually, which the Company performs during the fourth quarter, or when indicators of an impairment are present. The Company considers each of its operating segments, therapeutics and contract research, to be a reporting unit since this is the lowest level for which discrete financial information is available. The Company attributed the full amount of the goodwill acquired with Confluence, or $18,504, to the therapeutics segment. The annual impairment test performed by the Company is a qualitative assessment based upon current facts and circumstances related to operations of the therapeutics segment. If the qualitative assessment indicates an impairment may be present, the Company would perform the required quantitative analysis and an impairment charge would be recognized to the extent that the estimated fair value of the reporting unit is less than its carrying amount. However, any loss recognized would not exceed the total amount of goodwill allocated to that reporting unit. During the nine months ended September 30, 2019, the Company performed an interim impairment analysis due to the decline in its stock price, which was considered a triggering event to evaluate goodwill for impairment. The Company’s impairment analysis, using a market approach, noted that its stock price, including a reasonable control premium, resulted in a fair value for the therapeutics reporting unit which was less than its carrying value. As a result, the Company recorded an impairment charge of $18,504, the full balance of goodwill, in the nine months ended September 30, 2019.
Leases	Leases Leases represent a company’s right to use an underlying asset and a corresponding obligation to make payments to a lessor for the right to use those assets. The Company evaluates leases at their inception to determine if they are an operating lease or a finance lease. A lease is accounted for as a finance lease if it meets one of the following five criteria: the lease has a purchase option that is reasonably certain of being exercised, the present value of the future cash flows are substantially all of the fair market value of the underlying asset, the lease term is for a significant portion of the remaining economic life of the underlying asset, the title to the underlying asset transfers at the end of the lease term, or if the underlying asset is of such a specialized nature that it is expected to have no alternative uses to the lessor at the end of the term. Leases that do not meet the finance lease criteria are accounted for as an operating lease. The Company recognizes assets and liabilities for leases at their inception based upon the present value of all payments due under the lease. The Company uses an implicit interest rate to determine the present value of finance leases, and its incremental borrowing rate to determine the present value of operating leases. The Company determines incremental borrowing rates by referencing collateralized borrowing rates for debt instruments with terms similar to the respective lease. The Company recognizes expense for operating and finance leases on a straight-line basis over the term of each lease, and interest expense related to finance leases is recognized over the lease term based on the effective interest method. The Company includes estimates for any residual value guarantee obligations under its leases in lease liabilities recorded on its condensed consolidated balance sheet. Right-of-use assets are included in other assets and property and equipment, net on the Company’s condensed consolidated balance sheet for operating and finance leases, respectively. Obligations for lease payments are included in current portion of lease liabilities and other liabilities on the Company’s condensed consolidated balance sheet for both operating and finance leases.
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 condensed consolidated statement of operations.
Concentration of Credit Risk and of Significant Suppliers	Concentration of Credit Risk and of Significant Customers and Suppliers Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash, cash equivalents and marketable securities. The Company holds all cash, cash equivalents and marketable securities balances at one accredited financial institution, in amounts that exceed federally insured limits. The Company does not believe that it is subject to unusual credit risk beyond the normal credit risk associated with commercial banking relationships. The Company’s top five customers represented 67% and 85% of contract research revenue for the nine months ended September 30, 2019 and 2018, respectively. The Company is dependent on third-party manufacturers to supply drug product, including all underlying components, for its research and development activities, including preclinical and clinical testing. These activities could be adversely affected by a significant interruption in the supply of active pharmaceutical ingredients or other components.
Recently Issued Accounting Pronouncements	Recently Issued Accounting Pronouncements In November 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-18, Collaborative Arrangements (Topic 808): Clarifying the Interaction Between Topic 808 and Topic 606, which, among other things, provides guidance on how to assess whether certain collaborative arrangement transactions should be accounted for under Topic 606. The amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019, with early adoption permitted. The Company is evaluating the impact of ASU 2018-18 on its consolidated financial statements. In August 2018, the FASB issued ASU 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40). ASU 2018-15 requires a customer in a cloud computing arrangement that is a service contract to follow the internal-use software guidance in ASC 350-40 to determine which implementation costs to capitalize as assets or expense as incurred. The standard will be effective for fiscal years beginning after December 15, 2019, including interim periods within such fiscal years, with early adoption permitted. The Company is evaluating the impact of ASU 2018-15 on its consolidated financial statements. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820). The FASB developed the amendments to ASC 820 as part of its broader disclosure framework project, which aims to improve the effectiveness of disclosures in the notes to financial statements by focusing on requirements that clearly communicate the most important information to users of the financial statements. This update eliminates certain disclosure requirements for fair value measurements for all entities, requires public entities to disclose certain new information and modifies some of the existing disclosure requirements. The standard will be effective for fiscal years beginning after December 15, 2019, including interim periods within such fiscal years, with early adoption permitted. The Company is evaluating the impact of ASU 2018-13 on its consolidated financial statements. In June 2018, the FASB issued ASU 2018-07, Compensation—Stock Compensation (Topic 718). The amendments in this ASU expand the scope of Topic 718 to include stock-based compensation arrangements with nonemployees except for specific guidance on option pricing model inputs and cost attribution. ASU 2018-07 is effective for annual reporting periods beginning after December 31, 2018, including interim periods within that year. The Company adopted the provisions of this standard on January 1, 2019, the impact of which on its consolidated financial statements was not significant. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). In July 2018, the FASB issued ASU 2018-10, Codification Improvements to Topic 842, Leases, and 2018-11, Targeted Improvements, which included a number of technical corrections and improvements, including additional options for transition. The new standard establishes a right-of-use model that requires a lessee to record a right-of-use asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases are classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. ASU 2016-02 is effective for annual periods beginning after December 15, 2018, including interim periods within those annual periods. The amendments in ASU 2016-02 must be applied to all leases existing at the date a company initially applies the standard. The Company adopted the new standard on January 1, 2019, using the effective date as the date of its initial application, and used the modified retrospective approach. In addition, the Company elected the practical expedients permitted under the transition guidance within the new standard which, among other things, allowed the Company to carry forward the historical lease identification and classification. The Company also elected the practical expedient to not separate lease and non-lease components, as well as the short-term lease practical expedient which allowed the Company to not capitalize leases with terms less than 12 months that do not contain a reasonably certain purchase option. The Company’s consolidated financial statements have not been restated, and disclosures required by the new standard have not been provided, for periods before January 1, 2019. The adoption of ASU 2016-02 resulted in recording additional assets and liabilities of $2,132 and $2,317, respectively upon adoption on January 1, 2019. The adoption of ASU 2016-02 did not have a material impact on the Company’s consolidated statement of operations or cash flows.

Fair Value of Financial Asset_2

Fair Value of Financial Assets and Liabilities (Tables)	9 Months Ended
	Sep. 30, 2019
Fair Value of Financial Assets and Liabilities
Schedule of assets and liabilities measured at fair value on a recurring basis	September 30, 2019 Level 1 Level 2 Level 3 Total Assets: Cash equivalents $ 23,567 $ — $ — $ 23,567 Marketable securities — 61,530 — 61,530 Total assets $ 23,567 $ 61,530 $ — $ 85,097 Liabilities: Acquisition-related contingent consideration $ — $ — $ 1,668 $ 1,668 Total liabilities $ — $ — $ 1,668 $ 1,668 December 31, 2018 Level 1 Level 2 Level 3 Total Assets: Cash equivalents $ 49,766 $ 4,992 $ — $ 54,758 Marketable securities — 110,953 — 110,953 Total assets $ 49,766 $ 115,945 $ — $ 165,711 Liabilities: Acquisition-related contingent consideration $ — $ — $ 934 $ 934 Total liabilities $ — $ — $ 934 $ 934
Schedule of the fair value of available for sale marketable securities	September 30, 2019 Gross Gross Amortized Unrealized Unrealized Fair Cost Gain Loss Value Marketable securities: Corporate debt securities $ 14,359 $ 13 $ — $ 14,372 Commercial paper 28,643 — (1) 28,642 Asset-backed securities 5,998 4 — 6,002 U.S. government agency debt securities 12,514 — — 12,514 Total marketable securities $ 61,514 $ 17 $ (1) $ 61,530 December 31, 2018 Gross Gross Amortized Unrealized Unrealized Fair Cost Gain Loss Value Marketable securities: Corporate debt securities $ 5,030 $ — $ (14) $ 5,016 Commercial paper 67,159 — — 67,159 Asset-backed securities 21,745 — (8) 21,737 U.S. government agency debt securities 17,044 — (3) 17,041 Total marketable securities $ 110,978 $ — $ (25) $ 110,953

Property and Equipment, Net (Ta

Property and Equipment, Net (Tables)	9 Months Ended
	Sep. 30, 2019
Property and Equipment, Net
Schedule of property and equipment, net	September 30, December 31, 2019 2018 Computer equipment $ 1,362 $ 1,292 Fleet vehicles — — Finance lease right-of-use assets 435 — Manufacturing equipment 607 604 Lab equipment 1,067 1,068 Furniture and fixtures 647 313 Leasehold improvements 889 332 Property and equipment, gross 5,007 3,609 Accumulated depreciation (2,153) (1,322) Property and equipment, net $ 2,854 $ 2,287

Intangible Assets (Tables)

Intangible Assets (Tables)	9 Months Ended
	Sep. 30, 2019
Intangible Assets
Schedule of intangible assets	Gross Cost Accumulated Amortization Remaining September 30, December 31, September 30, December 31, Life (years) 2019 2018 2019 2018 Other intangible assets 7.8 751 751 163 107 Total definite-lived intangible assets 751 751 163 107 IPR&D na 6,629 6,629 — — Total intangible assets $ 7,380 $ 7,380 $ 163 $ 107
Schedule of estimated future amortization expenses	Year Ending December 31, 2019 $ 20 2020 75 2021 75 2022 75 2023 75 Thereafter 268 Total $ 588

Accrued Expenses (Tables)

Accrued Expenses (Tables)	9 Months Ended
	Sep. 30, 2019
Accrued Expenses
Schedule of accrued expenses	September 30, December 31, 2019 2018 Employee compensation expenses $ 2,665 $ 4,948 Sales discounts and allowances — — Research and development expenses 2,045 1,437 Professional fees 276 1,123 Selling and marketing expenses — — Other 1,080 582 Total accrued expenses $ 6,066 $ 8,090

Stock-Based Awards (Tables)

Stock-Based Awards (Tables)	9 Months Ended
	Sep. 30, 2019
Stock-Based Awards
Assumptions used to determine fair value of stock options granted	Nine Months Ended September 30, 2019 2018 Risk-free interest rate 2.27 % 2.65 % Expected term (in years) 6.2 6.3 Expected volatility 101.70 % 96.56 % 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, 2018 4,282,081 $ 20.53 7.91 $ 2,404 Granted 44,500 5.75 Exercised (66,376) 1.29 Forfeited and cancelled (686,811) 23.35 Outstanding as of September 30, 2019 3,573,394 $ 20.16 6.54 $ 29 Options vested and expected to vest as of September 30, 2019 3,573,394 $ 20.16 6.54 $ 29 Options exercisable as of September 30, 2019 2,276,088 (1) $ 18.25 5.74 $ 29 (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 options vest. This amount reflects the number of shares under options that were vested, as opposed to exercisable.
Summary of restricted stock units activity	Weighted Average Grant Date Number Fair Value of Shares Per Share Outstanding as of December 31, 2018 626,407 $ 20.30 Granted 1,520,942 6.26 Vested (150,271) 20.50 Forfeited and cancelled (361,440) 11.41 Outstanding as of September 30, 2019 1,635,638 $ 9.19
Stock-based compensation expense	Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Cost of revenue $ 25 $ 194 $ 454 $ 560 Research and development 1,418 1,433 4,733 4,916 Sales and marketing — — — — General and administrative 2,581 2,320 7,707 6,936 Total stock-based compensation expense $ 4,024 $ 3,947 $ 12,894 $ 12,412

Net Loss per Share (Tables)

Net Loss per Share (Tables)	9 Months Ended
	Sep. 30, 2019
Net Loss per Share
Basic and diluted net loss per share	Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Numerator: Net loss $ (55,319) $ (32,740) $ (142,760) $ (94,187) Denominator: Weighted average shares of common stock outstanding 41,364,387 30,982,192 41,296,377 30,938,026 Net loss per share, basic and diluted $ (1.34) $ (1.06) $ (3.46) $ (3.04)
Potential common shares excluded from the calculation of diluted net loss per share attributable to common stockholders	September 30, 2019 2018 Options to purchase common stock 3,573,394 4,323,353 Restricted stock unit awards 1,635,638 541,628 Total potential shares of common stock 5,209,032 4,864,981

Leases (Tables)

Leases (Tables)	9 Months Ended
	Sep. 30, 2019
Leases
Schedule of lease expense	Nine Months Ended September 30, 2019 Operating lease expense $ 555 Finance Leases: Amortization of right-to-use assets $ 416 Interest expense 84 Total finance lease expenses $ 500
Schedule of supplemental balance sheet information related to operating leases	September 30, Operating Leases: 2019 Gross cost $ 5,213 Accumulated amortization (331) Operating lease right-of-use assets $ 4,882 Other current liabilities $ 507 Other liabilities 3,686 Total operating lease liabilities $ 4,193
Schedule of supplemental balance sheet information related to finance leases	September 30, Finance Leases: 2019 Property and equipment, gross $ 435 Accumulated depreciation (296) Property and equipment, net $ 139 Other current liabilities $ 135 Other liabilities 159 Total finance lease liabilities $ 294
Schedule of supplemental information related to operating and finance leases	Nine Months Ended September 30, Supplemental Cash Flow Lease Information: 2019 Operating cash flows from operating leases $ 530 Operating cash flows from finance leases 86 Financing cash flows from finance leases 447 Leased assets obtained in exchange for new operating lease liabilities $ 3,060 Weighted-Average Remaining Lease Term (in years): Operating leases Finance leases Weighted-Average Discount Rate: Operating leases % Finance leases %
Schedule of future maturities lease liabilities under operating leases	Future maturities of lease liabilities under operating and finance leases as of September 30, 2019 are as follows: Operating Finance Year Ending December 31, Leases Leases 2019 $ 223 $ 36 2020 909 116 2021 934 — 2022 959 — 2023 877 — Thereafter 2,024 — Total undiscounted lease payments 5,926 152 Less: unrecognized interest Total lease liability $ 4,193 $ 144
Schedule of future maturities lease liabilities under finance leases	Operating Finance Year Ending December 31, Leases Leases 2019 $ 223 $ 36 2020 909 116 2021 934 — 2022 959 — 2023 877 — Thereafter 2,024 — Total undiscounted lease payments 5,926 152 Less: unrecognized interest Total lease liability $ 4,193 $ 144

Discontinued Operations (Tables

Discontinued Operations (Tables)	9 Months Ended
	Sep. 30, 2019
Discontinued Operations
Schedule of discontinued operations	The components of loss from discontinued operations as reported in the Company’s condensed consolidated statement of operations were as follows: Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Revenues: Product sales, net $ 4,977 $ 510 $ 13,734 $ 2,043 Total revenue, net 4,977 510 13,734 2,043 Costs and expenses: Cost of revenue (excludes amortization) 1,118 126 4,396 278 Research and development 132 742 522 1,990 Sales and marketing 5,897 11,317 22,388 34,941 General and administrative 960 433 2,724 474 Intangible asset impairment 27,638 — 27,638 — Amortization of definite-lived intangible 1,107 — 4,426 — Total costs and expenses 36,852 12,618 62,094 37,683 Loss from discontinued operations (31,875) (12,108) (48,360) (35,640) Other expense, net (306) — (306) — Net loss from discontinued operations $ (32,181) $ (12,108) $ (48,666) $ (35,640) Net loss from discontinued operations per share, basic and diluted $ (0.78) $ (0.39) $ (1.18) $ (1.15) Weighted average common shares outstanding, basic and diluted 41,364,387 30,982,192 41,296,377 30,938,026 The following table presents the details of product sales, net included in discontinued operations: Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 ESKATA $ (32) $ 510 $ 312 $ 2,043 RHOFADE 5,009 — 13,422 — Total product sales, net $ 4,977 $ 510 $ 13,734 $ 2,043 The following table presents information related to assets and liabilities reported as discontinued operations in the Company’s condensed consolidated balance sheet: September 30, December 31, 2019 2018 Accounts receivable, net $ 17,191 $ 4,298 Inventory 189 791 Prepaid expenses and other current assets — 1,073 Intangible asset held for sale 33,800 — Discontinued operations - current assets $ 51,180 $ 6,162 Property and equipment, net $ — $ 1,993 Intangible assets, net of accumulated amortization — 65,678 Discontinued operations - non-current assets $ — $ 67,671 Accrued expenses $ 14,501 $ 3,896 Current portion of lease liabilities — 459 Discontinued operations - current liabilities $ 14,501 $ 4,355 Other liabilities $ — $ 1,227 Discontinued operations - non- current liabilities $ — $ 1,227 The following table presents cash flow information related to discontinued operations: Nine Months Ended September 30, 2019 2018 Depreciation and amortization $ 302 $ 160 Stock-based compensation expense Intangible asset impairment charge 27,638 — Loss on disposal of property and equipment — $ 28,433 $ 2,847

Segment Information (Tables)

Segment Information (Tables)	9 Months Ended
	Sep. 30, 2019
Segment Information
Summary of results of operations by segment	Contract Corporate Total Three Months Ended September 30, 2019 Therapeutics Research and Other Company Revenue, net $ — $ 2,943 $ (1,960) $ 983 Cost of revenue (excludes amortization) — 2,724 (1,898) 826 Research and development 16,245 — (62) 16,183 Sales and marketing 96 16 — 112 General and administrative — 956 5,770 6,726 Amortization of definite-lived intangible — — — — Loss from operations $ (16,341) $ (753) $ (5,770) $ (22,864) Loss from discontinued operations $ (30,915) $ — $ (960) $ (31,875) Contract Corporate Total Three Months Ended September 30, 2018 Therapeutics Research and Other Company Revenue, net $ — $ 3,225 $ (2,107) $ 1,118 Cost of revenue — 2,823 (1,756) 1,067 Research and development 15,189 — — 15,189 Sales and marketing 49 14 — 63 General and administrative — 566 5,575 6,141 Loss from operations $ (15,238) $ (178) $ (5,926) $ (21,342) Loss from discontinued operations $ (11,675) $ — $ (433) $ (12,108) Contract Corporate Total Nine Months Ended September 30, 2019 Therapeutics Research and Other Company Revenue, net $ — $ 11,940 $ (8,808) $ 3,132 Cost of revenue (excludes amortization) — 11,584 (8,556) 3,028 Research and development 53,585 — (251) 53,334 Sales and marketing 581 48 — 629 General and administrative — 2,069 19,073 21,142 Goodwill impairment 18,504 — — 18,504 Amortization of definite-lived intangible — — — — Loss from operations $ (72,670) $ (1,761) $ (19,074) $ (93,505) Loss from discontinued operations $ (45,636) $ — $ (2,724) $ (48,360) Contract Corporate Total Nine Months Ended September 30, 2018 Therapeutics Research and Other Company Revenue, net $ 1,000 $ 8,779 $ (5,400) $ 4,379 Cost of revenue — 7,564 (4,501) 3,063 Research and development 41,482 — — 41,482 Sales and marketing 55 34 — 89 General and administrative — 1,557 18,924 20,481 Loss from operations $ (40,537) $ (376) $ (19,823) $ (60,736) Loss from discontinued operations $ (35,166) $ — $ (474) $ (35,640)

Organization and Nature of Bu_2

Organization and Nature of Business (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Organization and Nature of Business
Cash, cash equivalents and marketable securities	$ 91,428
Accumulated deficit	$ 434,933	$ 292,173

Summary of Significant Accoun_3

Summary of Significant Accounting Policies (Details)	Sep. 05, 2019employee	Sep. 30, 2019USD ($)	Sep. 30, 2018item	Dec. 31, 2018USD ($)
Summary of Significant Accounting Policies
Number of employees to be terminated | employee	86
Revenue Recognition
Revenue, Practical Expedient, Financing Component [true false]		true
Revenue, Practical Expedient, Incremental Cost of Obtaining Contract [true false]		true
Number of active research grants | item			2
Remaining funds available to the Company under grants		$ 0
Inventory
Inventory		$ 189,000		$ 791,000

Summary of Significant Accoun_4

Summary of Significant Accounting Policies - Intangible Assets (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2019USD ($)
Disaggregation of Revenue [Line Items]
Impairment of Intangible Assets, Finite-lived	$ 27,638
RHOFADE
Disaggregation of Revenue [Line Items]
Impairment of Intangible Assets, Finite-lived	$ 27,638

Summary of Significant Accoun_5

Summary of Significant Accounting Policies - Goodwill (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2019	Dec. 31, 2018	Aug. 31, 2017
Summary Of Accounting Policies [Line Items]
Goodwill		$ 18,504
Goodwill impairment charge	$ 18,504
Confluence
Summary Of Accounting Policies [Line Items]
Goodwill			$ 18,504

Summary of Significant Accoun_6

Summary of Significant Accounting Policies - Risk (Details)	9 Months Ended
	Sep. 30, 2019customeritem	Sep. 30, 2018
Concentration Risk [Line Items]
Number of financial institutions holding entity funds | item	1
Laboratory Servicer Revenues [Member] | Customer Concentration Risk [Member]
Concentration Risk [Line Items]
Number of customers comprising risk percentage | customer	5
Concentration of risk (as a percent)	67.00%	85.00%

Summary of Significant Accoun_7

Summary of Significant Accounting Policies - Recent Pronouncements (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Jan. 01, 2019
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Lease liability	$ 4,193
Adjustment | ASU 2016-02
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
ROU assets		$ 2,132
Lease liability		$ 2,317

Fair Value of Financial Asset_3

Fair Value of Financial Assets and Liabilities (Details) - USD ($) $ in Thousands	9 Months Ended		12 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018
Assets:
Marketable securities	$ 61,530		$ 110,953
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
Change in fair value of contingent consideration	734	$ 866
Confluence
Liabilities:
Change in fair value of contingent consideration	734
Recurring
Assets:
Cash equivalents	23,567		54,758
Marketable securities	61,530		110,953
Total assets measured at fair value	85,097		165,711
Liabilities:
Acquisition-related contingent consideration	1,668		934
Total liabilities measured at fair value	1,668		934
Recurring | Level 1
Assets:
Cash equivalents	23,567		49,766
Total assets measured at fair value	23,567		49,766
Recurring | Level 2
Assets:
Cash equivalents			4,992
Marketable securities	61,530		110,953
Total assets measured at fair value	61,530		115,945
Recurring | Level 3
Liabilities:
Acquisition-related contingent consideration	1,668		934
Total liabilities measured at fair value	$ 1,668		$ 934

Fair Value of Financial Asset_4

Fair Value of Financial Assets and Liabilities - By Type (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Marketable securities:
Amortized Cost	$ 61,514	$ 110,978
Gross Unrealized Gain	17
Gross Unrealized Loss	(1)	(25)
Fair Value	61,530	110,953
Corporate debt securities
Marketable securities:
Amortized Cost	14,359	5,030
Gross Unrealized Gain	13
Gross Unrealized Loss		(14)
Fair Value	14,372	5,016
Commercial paper
Marketable securities:
Amortized Cost	28,643	67,159
Gross Unrealized Loss	(1)
Fair Value	28,642	67,159
Asset-backed securities
Marketable securities:
Amortized Cost	5,998	21,745
Gross Unrealized Gain	4
Gross Unrealized Loss		(8)
Fair Value	6,002	21,737
U.S. government agency debt securities
Marketable securities:
Amortized Cost	12,514	17,044
Gross Unrealized Loss		(3)
Fair Value	$ 12,514	$ 17,041

Property and Equipment, Net (De

Property and Equipment, Net (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018
Property and Equipment, Net
Finance lease right-of-use assets	$ 435		$ 435
Property and equipment, gross	5,007		5,007		$ 3,609
Accumulated depreciation	(2,153)		(2,153)		(1,322)
Operating lease right-of-use assets	2,854		2,854		2,287
Depreciation	324	$ 264	886	$ 704
Computer equipment
Property and Equipment, Net
Property and equipment, gross	1,362		1,362		1,292
Manufacturing equipment
Property and Equipment, Net
Property and equipment, gross	607		607		604
Lab equipment
Property and Equipment, Net
Property and equipment, gross	1,067		1,067		1,068
Furniture and fixtures
Property and Equipment, Net
Property and equipment, gross	647		647		313
Leasehold improvements
Property and Equipment, Net
Property and equipment, gross	$ 889		$ 889		$ 332

Intangible Assets (Details)

Intangible Assets (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2019	Dec. 31, 2018
Definite-lived intangible assets
Gross Cost	$ 751	$ 751
Accumulated Amortization	163	107
Intangible assets, net
Gross cost	7,380	7,380
IPR&D
Definite-lived intangible assets
Gross Cost	$ 6,629	6,629
Other intangible assets
Finite Lived And Indefinite Lived Intangible Assets By Major Class [Line Items]
Remaining life	7 years 9 months 18 days
Definite-lived intangible assets
Gross Cost	$ 751	751
Accumulated Amortization	$ 163	$ 107

Intangible Assets - Future Amor

Intangible Assets - Future Amortization Expenses (Details) $ in Thousands	Sep. 30, 2019USD ($)
Future amortization expenses
2019	$ 20
2020	75
2021	75
2022	75
2023	75
Thereafter	268
Total	$ 588

Accrued Expenses (Details)

Accrued Expenses (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Accrued Expenses
Employee compensation expenses	$ 2,665	$ 4,948
Research and development expenses	2,045	1,437
Professional fees	276	1,123
Other	1,080	582
Total accrued expenses	$ 6,066	$ 8,090

Debt (Details)

Debt (Details) - USD ($) $ in Thousands	Oct. 10, 2019	Oct. 15, 2018	Oct. 31, 2018
Debt Instrument [Line Items]
Loan, maximum borrowing capacity		$ 65,000
Loan amount borrowed			$ 30,000
Number of consecutive monthly payments		24 months
Final payment fee percentage		5.75%
Minimum
Debt Instrument [Line Items]
Annual interest rate		8.35%
Prepayment prior to the first anniversary of the Funding Date
Debt Instrument [Line Items]
Prepayment fee percentage		3.00%
Prepayment between the first and second anniversaries of the Funding Date
Debt Instrument [Line Items]
Prepayment fee percentage		2.00%
Prepayment after the second anniversary of the Funding Date but before October 1, 2023
Debt Instrument [Line Items]
Prepayment fee percentage		1.00%
London Interbank Offered Rate (LIBOR)
Debt Instrument [Line Items]
Basis spread over LIBOR		6.25%
Subsequent event
Debt Instrument [Line Items]
Repayment of loan	$ 30,000

Stockholders' Equity (Details)

Stockholders' Equity (Details)	9 Months Ended
	Sep. 30, 2019USD ($)Vote$ / sharesshares	Dec. 31, 2018$ / sharesshares
Stockholders' Equity
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares outstanding	0	0
Common stock, shares authorized	100,000,000	100,000,000
Common stock, par value (in dollars per share) | $ / shares	$ 0.00001	$ 0.00001
Number of votes per share | Vote	1
Dividends declared | $	$ 0

Stock-Based Awards (Details)

Stock-Based Awards (Details) - shares	Jan. 01, 2019	Sep. 30, 2019	Sep. 30, 2018	Sep. 14, 2015	Dec. 31, 2018	Jul. 31, 2017	Sep. 30, 2015
Stock-based awards
Options granted (in shares)		44,500
Options outstanding		3,573,394			4,282,081
Stock Option Valuation
Risk-free interest rate (as a percent)		2.27%	2.65%
Expected term (in years)		6 years 2 months 12 days	6 years 3 months 18 days
Expected volatility (as a percent)		101.70%	96.56%
Expected dividend yield (as a percent)		0.00%	0.00%
2017 Inducement Plan
Stock-based awards
Number of shares authorized						1,000,000
2015 Equity Incentive Plan
Stock-based awards
Number of shares authorized							1,643,872
Number of shares available for grant		2,460,900
Percentage increase to shares available for grant from common outstanding as of preceding December 31 (as a percent)		4.00%
Additional shares available	1,648,429
2012 Equity Compensation Plan
Stock-based awards
Number of shares available for grant		0
Options granted (in shares)				1,140,524
Options outstanding		856,603			948,761
Vesting period (in years)		4 years
Term of award (in years)		10 years

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, 2019	Dec. 31, 2018
Options, Number of Shares
Number of Shares, beginning balance	4,282,081
Number of Shares, Granted	44,500
Number of Shares, Exercised	(66,376)
Number of Shares, Forfeited and cancelled	(686,811)
Number of Shares, ending balance	3,573,394	4,282,081
Number of Shares, Options vested and expected to vest	3,573,394
Number of Shares, Options exercisable	2,276,088
Options, Weighted Average Exercise Price
Weighted Average Exercise Price, beginning balance (in dollars per share)	$ 20.53
Weighted Average Exercise Price, Granted (in dollars per share)	5.75
Weighted Average Exercise Price, Exercised (in dollars per share)	1.29
Weighted Average Exercise Price, Forfeited and cancelled (in dollars per share)	23.35
Weighted Average Exercise Price, ending balance (in dollars per share)	20.16	$ 20.53
Weighted Average Exercise Price, Options vested and expected to vest (in dollars per share)	20.16
Weighted Average Exercise Price, Options exercisable (in dollars per share)	$ 18.25
Options, Weighted Average Remaining Contractual Term
Weighted Average Remaining Contractual Term (in years)	6 years 6 months 15 days	7 years 10 months 28 days
Weighted Average Remaining Contractual Term, Options vested and expected to vest (in years)	6 years 6 months 15 days
Weighted Average Remaining Contractual Term, Options exercisable (in years)	5 years 8 months 27 days
Aggregate Intrinsic Value
Aggregate Intrinsic Value	$ 29	$ 2,404
Aggregate Intrinsic Value, Options vested and expected to vest	29
Aggregate Intrinsic Value, Options exercisable	$ 29
Weighted average grant-date fair value of stock options granted (in dollars per share)	$ 4.63

Stock-Based Awards - RSUs (Deta

Stock-Based Awards - RSUs (Details) - Restricted stock unit awards	9 Months Ended
	Sep. 30, 2019$ / sharesshares
RSU, Number of Units
Units outstanding, beginning of period | shares	626,407
Granted | shares	1,520,942
Vested | shares	(150,271)
Forfeited and cancelled | shares	(361,440)
Units outstanding, end of period | shares	1,635,638
RSU, Weighted Average Grant Date Fair Value Per Unit
Weighted average grant date fair value, beginning balance (in dollars per share) | $ / shares	$ 20.30
Granted, estimated grant-date fair value (in dollars per share) | $ / shares	6.26
Weighted average grant date fair value, vested (in dollars per share) | $ / shares	20.50
Forfeited and cancelled, estimated grant date fair value (in dollars per share) | $ / shares	11.41
Weighted average grant date fair value, ending balance (in dollars per share) | $ / shares	$ 9.19

Stock-Based Awards - Compensati

Stock-Based Awards - Compensation (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Stock-based compensation expense
Stock-based compensation expense	$ 4,024	$ 3,947	$ 12,894	$ 12,412
Unrecognized stock-based compensation cost, options	17,068		17,068
Unrecognized compensation, RSUs	11,506		11,506
Cost of revenue.
Stock-based compensation expense
Stock-based compensation expense	25	194	454	560
Research and development
Stock-based compensation expense
Stock-based compensation expense	1,418	1,433	4,733	4,916
General and administrative
Stock-based compensation expense
Stock-based compensation expense	$ 2,581	$ 2,320	$ 7,707	$ 6,936
Options to purchase common stock
Stock-based compensation expense
Weighted average recognition period unrecognized stock-based compensation cost (in years)			1 year 11 months 16 days
Restricted stock unit awards
Stock-based compensation expense
Weighted average recognition period unrecognized stock-based compensation cost (in years)			2 years 10 months 24 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, 2019	Jun. 30, 2019	Mar. 31, 2019	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Sep. 30, 2019	Sep. 30, 2018
Numerator:
Net loss	$ (55,319)	$ (49,876)	$ (37,565)	$ (32,740)	$ (31,218)	$ (30,229)	$ (142,760)	$ (94,187)
Denominator:
Weighted average shares of common stock outstanding (in shares)	41,364,387			30,982,192			41,296,377	30,938,026
Net loss per share, basic and diluted	$ (1.34)			$ (1.06)			$ (3.46)	$ (3.04)

Net Loss per Share - Anti-dilut

Net Loss per Share - Anti-dilution (Details) - shares	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
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	5,209,032	4,864,981
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	3,573,394	4,323,353
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	1,635,638	541,628

Leases - Lease Costs (Details)

Leases - Lease Costs (Details) - USD ($) $ in Thousands	1 Months Ended	9 Months Ended
	Feb. 28, 2019	Sep. 30, 2019
Lease Costs
Operating lease expense	$ 1,472	$ 555
Finance Leases:
Amortization of right-to-use assets		416
Interest expense		84
Total finance lease expenses		$ 500

Leases (Details)

Leases (Details) $ in Thousands	1 Months Ended	3 Months Ended		9 Months Ended
	Feb. 28, 2019USD ($)ft²	Sep. 30, 2019USD ($)	Sep. 30, 2018USD ($)	Sep. 30, 2019USD ($)item	Sep. 30, 2018USD ($)	Dec. 31, 2018USD ($)	Nov. 30, 2017ft²
Lessee, Lease, Description [Line Items]
Loss on lease termination		$ 306
Rent expense			$ 204		$ 682
Area leased, sublease agreement | ft²	21,056						33,019
Total renovation and improvement costs	$ 1,472			$ 555
Number of lease financing arrangements | item				2
Finance lease term				4 years
Operating Leases:
Gross cost		5,007		$ 5,007		$ 3,609
Accumulated depreciation		(2,153)		(2,153)		(1,322)
Operating lease right-of-use assets		2,854		2,854		$ 2,287
Other current liabilities		507		507
Other liabilities		3,686		3,686
Total operating lease liabilities		4,193		4,193
Operating Leases
Lessee, Lease, Description [Line Items]
Total future total rent payments	$ 3,538
Operating Leases:
Gross cost		5,213		5,213
Accumulated depreciation		(331)		(331)
Operating lease right-of-use assets		$ 4,882		$ 4,882
Financial position		us-gaap:OtherLiabilitiesCurrent		us-gaap:OtherLiabilitiesCurrent
Financial position		us-gaap:OtherLiabilitiesNoncurrent		us-gaap:OtherLiabilitiesNoncurrent

Leases - Finance Leases (Detail

Leases - Finance Leases (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Finance Leases:
Gross cost	$ 5,007	$ 3,609
Accumulated depreciation	(2,153)	(1,322)
Operating lease right-of-use assets	2,854	$ 2,287
Total finance lease liabilities	144
Finance Leases
Finance Leases:
Gross cost	435
Accumulated depreciation	(296)
Operating lease right-of-use assets	139
Other current liabilities	$ 135
Financial position	us-gaap:OtherLiabilitiesCurrent
Other liabilities	$ 159
Financial position	us-gaap:OtherLiabilitiesNoncurrent
Total finance lease liabilities	$ 294

Leases - Supplemental Informati

Leases - Supplemental Information Related to Operating and Finance Leases (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2019USD ($)
Leases
Operating cash flows from operating leases	$ 530
Operating cash flows from finance leases	86
Financing cash flows from finance leases	447
Leased assets obtained in exchange for new operating lease liabilities	$ 3,060
Weighted-Average Remaining Lease Term (in years):
Operating leases	6 years 11 months 23 days
Finance leases	10 months 21 days
Weighted-Average Discount Rate:
Operating leases	10.10%
Finance leases	9.96%

Leases - Future Maturities of L

Leases - Future Maturities of Lease Liabilities (Details) $ in Thousands	Sep. 30, 2019USD ($)
Operating Leases
2019	$ 223
2020	909
2021	934
2022	959
2023	877
Thereafter	2,024
Total undiscounted lease payments	5,926
Less: unrecognized interest	(1,733)
Total lease liability	4,193
Finance Leases
2019	36
2020	116
Total undiscounted lease payments	152
Less: unrecognized interest	(8)
Total lease liability	$ 144

Related Party Transactions (Det

Related Party Transactions (Details) - USD ($) $ in Thousands	1 Months Ended	9 Months Ended	12 Months Ended
	Nov. 30, 2017	Sep. 30, 2019	Dec. 31, 2018
Aspect Pharmaceuticals, LLC and Vicept Therapeutics, Inc [Member]
Related Party Transactions
Royalty expense		$ 576
Milestone payments		0
Board of Directors Chairman [Member] | Direct sublease agreement
Related Party Transactions
Lease termination charge	$ (590)
Expenses incurred under related party transactions		0	$ 570
Board of Directors Chairman [Member] | Services agreement
Related Party Transactions
Amount due to related party		$ 0	$ 0

Agreements Related to Intelle_2

Agreements Related to Intellectual Property (Details) $ in Thousands	1 Months Ended				3 Months Ended		9 Months Ended
	Nov. 30, 2018USD ($)	May 31, 2018USD ($)	Apr. 30, 2017USD ($)	Aug. 31, 2012	Sep. 30, 2019USD ($)	Sep. 30, 2018USD ($)	Sep. 30, 2019USD ($)	Sep. 30, 2018USD ($)	Oct. 31, 2019USD ($)installment	Aug. 31, 2015USD ($)
Allergan | Achievement Of Development Milestones
Agreements Related to Intellectual Property
Milestone payment	$ 5,000
Rigel
Agreements Related to Intellectual Property
Potential milestones payable					$ 10,000		$ 10,000
Milestone payment					4,000
Aggregate milestone payments										$ 80,000
Assignment Agreement and Finder's Services Agreement | A-101 45% Topical Solution
Agreements Related to Intellectual Property
Term of agreement, minimum				15 years
Finder's Services Agreement | Achievement Of Specified Commercial Milestones
Agreements Related to Intellectual Property
Aggregate royalty payments							14	$ 0
Finder's Services Agreement | Achievement Of Specified Commercial Milestones | A-101 45% Topical Solution
Agreements Related to Intellectual Property
Milestone payment		$ 1,500	$ 1,000
Potential future milestone payments							3,000
APA | Allergan
Agreements Related to Intellectual Property
Aggregate royalty payments					$ 440	$ 0	$ 1,281	$ 0
Subsequent event | Rigel
Agreements Related to Intellectual Property
Potential milestones payable									$ 10,500
Amendment fees payable									$ 1,500
Number of installments | installment									3
Amendment fees payable, per installment									$ 500

Income Taxes - Rate Reconciliat

Income Taxes - Rate Reconciliation (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
Income Taxes
Federal income tax benefit	$ 0	$ 0
State income tax benefit	$ 0	$ 0

Discontinued Operations - Loss

Discontinued Operations - Loss (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Disposal Group, Including Discontinued Operation, Income Statement Disclosures [Abstract]
Total revenue, net	$ 4,977	$ 510	$ 13,734	$ 2,043
Cost of revenue (excludes amortization)	1,118	126	4,396	278
Research and development	132	742	522	1,990
Sales and marketing	5,897	11,317	22,388	34,941
General and administrative	960	433	2,724	474
Intangible asset impairment	27,638		27,638
Amortization of definite-lived intangible	1,107		4,426
Total costs and expenses	36,852	12,618	62,094	37,683
Loss from discontinued operations	(31,875)	(12,108)	(48,360)	(35,640)
Other expense, net	(306)		(306)
Net loss from discontinued operations	$ (32,181)	$ (12,108)	$ (48,666)	$ (35,640)
Net loss from discontinued operations per share, basic and diluted	$ (0.78)	$ (0.39)	$ (1.18)	$ (1.15)
Weighted average common shares outstanding, basic and diluted (in shares)	41,364,387	30,982,192	41,296,377	30,938,026
Product sales
Disposal Group, Including Discontinued Operation, Income Statement Disclosures [Abstract]
Total revenue, net	$ 4,977	$ 510	$ 13,734	$ 2,043
ESKATA
Disposal Group, Including Discontinued Operation, Income Statement Disclosures [Abstract]
Total revenue, net	(32)	$ 510	312	$ 2,043
RHOFADE
Disposal Group, Including Discontinued Operation, Income Statement Disclosures [Abstract]
Total revenue, net	$ 5,009		$ 13,422

Discontinued Operations - Asset

Discontinued Operations - Assets and Liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Disposal Group, Including Discontinued Operation, Balance Sheet Disclosures [Abstract]
Accounts receivable, net	$ 17,191	$ 4,298
Inventory	189	791
Prepaid expenses and other current assets		1,073
Intangible asset held for sale	33,800
Discontinued operations - current assets	51,180	6,162
Property and equipment, net		1,993
Intangible assets, net of accumulated amortization		65,678
Discontinued operations - non-current assets		67,671
Accrued expenses	14,501	3,896
Current portion of lease liabilities		459
Discontinued operations - current liabilities	$ 14,501	4,355
Other liabilities		1,227
Discontinued operations - non- current liabilities		$ 1,227

Discontinued Operations - Cash

Discontinued Operations - Cash Flow (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
Net Cash Provided by (Used in) Discontinued Operations [Abstract]
Depreciation and amortization	$ 302	$ 160
Stock-based compensation expense	102	2,687
Intangible asset impairment charge	27,638
Loss on disposal of property and equipment	391
Cash flows from operating activities	$ 28,433	$ 2,847

Discontinued Operations (Detail

Discontinued Operations (Details) $ in Thousands	Sep. 05, 2019employee	Sep. 30, 2019USD ($)	Sep. 30, 2019USD ($)	Dec. 31, 2018USD ($)
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Accounts receivable, net		$ 17,191	$ 17,191	$ 4,298
Number of employees to be terminated | employee	86
Loss on lease termination		306
Impairment charge			27,638
Intangible asset realizable value		33,800	33,800
RHOFADE
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Accounts receivable, net		17,191	17,191	$ 3,838
Impairment charge			27,638
Intangible asset realizable value		$ 33,800	$ 33,800

Restructuring Charges (Details)

Restructuring Charges (Details) $ in Thousands	Sep. 05, 2019employee	Sep. 30, 2019USD ($)
Restructuring Cost and Reserve [Line Items]
Number of employees | employee	86
Contingent retention bonus		$ 388
Retention bonus recognized		75
Minimum
Restructuring Cost and Reserve [Line Items]
Period for which transition services is provided by noticed employees	4 months
Maximum
Restructuring Cost and Reserve [Line Items]
Period for which transition services is provided by noticed employees	6 months
Terminated employees
Restructuring Cost and Reserve [Line Items]
Number of employees | employee	63
Expenses recognized		2,248
Noticed employees
Restructuring Cost and Reserve [Line Items]
Number of employees | employee	23
Expenses recognized		$ 257

Segment Information (Details)

Segment Information (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019USD ($)	Sep. 30, 2018USD ($)	Sep. 30, 2019USD ($)item	Sep. 30, 2018USD ($)
Segment Reporting Information [Line Items]
Number of reportable segments | item			2
Revenue, net	$ 983	$ 1,118	$ 3,132	$ 4,379
Cost of revenue		1,067		3,063
Cost of revenue	826		3,028
Research and development	16,183	15,189	53,334	41,482
Sales and marketing	112	63	629	89
General and administrative	6,726	6,141	21,142	20,481
Goodwill impairment			18,504
Loss from operations	(22,864)	(21,342)	(93,505)	(60,736)
Loss from discontinued operations	(31,875)	(12,108)	(48,360)	(35,640)
Dermatology Therapeutics Segment
Segment Reporting Information [Line Items]
Revenue, net				1,000
Research and development	16,245	15,189	53,585	41,482
Sales and marketing	96	49	581	55
Goodwill impairment			18,504
Loss from operations	(16,341)	(15,238)	(72,670)	(40,537)
Loss from discontinued operations	(30,915)	(11,675)	(45,636)	(35,166)
Contract Research Segment
Segment Reporting Information [Line Items]
Revenue, net	2,943	3,225	11,940	8,779
Cost of revenue		2,823		7,564
Cost of revenue	2,724		11,584
Sales and marketing	16	14	48	34
General and administrative	956	566	2,069	1,557
Loss from operations	(753)	(178)	(1,761)	(376)
Corporate and Other
Segment Reporting Information [Line Items]
Revenue, net	(1,960)	(2,107)	(8,808)	(5,400)
Cost of revenue		(1,756)		(4,501)
Cost of revenue	(1,898)		(8,556)
Research and development	(62)		(251)
General and administrative	5,770	5,575	19,073	18,924
Loss from operations	(5,770)	(5,926)	(19,074)	(19,823)
Loss from discontinued operations	(960)	(433)	(2,724)	(474)
Intersegment Eliminations | Contract Research Segment
Segment Reporting Information [Line Items]
Revenue, net	$ (1,960)	$ (2,107)	$ 8,807	$ 5,400

Subsequent Events (Details)

Subsequent Events (Details) - Subsequent event $ in Thousands	Oct. 10, 2019USD ($)
Subsequent events
Repayment of loan	$ 30,000
Loan and Security Agreement
Subsequent events
Repayment of loan	30,000
Payment of interest	70
Final payment fee	1,725
Prepayment fee	600
EPI Health
Subsequent events
Cash consideration	55,000
Upfront payment receivable	35,000
Escrow deposit	1,750
Potential threshold sales milestone	$ 20,000
Period of royalty payment from first commercial sale	10 years
Percentage of payments received in connection with license or sublicense of assets transferred	25.00%
Payment for certain inventory	$ 200