Axsome Therapeutics (AXSM) 10-Q 14 Nov 16 2016 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2016	Nov. 09, 2016
Document and Entity Information [Abstract]
Entity Registrant Name	Axsome Therapeutics, Inc.
Entity Central Index Key	1,579,428
Document Type	10-Q
Document Period End Date	Sep. 30, 2016
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		19,153,417
Document Fiscal Year Focus	2,016
Document Fiscal Period Focus	Q3

Consolidated Balance Sheets

Consolidated Balance Sheets - USD ($)	Sep. 30, 2016	Dec. 31, 2015
Current assets:
Cash	$ 33,887,804	$ 48,036,260
Prepaid and other current assets	867,099	996,618
Total current assets	34,754,903	49,032,878
Equipment, net	104,426	16,653
Other assets	59,125	26,625
Total assets	34,918,454	49,076,156
Current liabilities:
Accounts payable	3,867,584	1,892,363
Accrued expenses	2,867,952	739,532
Total current liabilities	6,735,536	2,631,895
Stockholders’ equity:
Common stock, $0.0001 par value per share (150,000,000 shares authorized, 19,149,417 shares issued and outstanding at June 30, 2016 and December 31, 2015,	1,915	1,915
Additional paid-in capital	68,493,516	66,882,144
Accumulated deficit	(40,312,513)	(20,439,798)
Total stockholders’ equity	28,182,918	46,444,261
Total liabilities and stockholders’ equity	$ 34,918,454	$ 49,076,156

Consolidated Balance Sheets (Pa

Consolidated Balance Sheets (Parenthetical) - $ / shares	Sep. 30, 2016	Dec. 31, 2015
Statement of Financial Position [Abstract]
Preferred stock, par value	$ 0.0001	$ 0.0001
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	$ 0.0001	$ 0.0001
Common stock, shares authorized	150,000,000	150,000,000
Common stock, shares issued	19,153,417	19,149,417
Common stock, shares outstanding	19,153,417	19,149,417

Consolidated Statements of Oper

Consolidated Statements of Operations - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Operating expenses:
Research and development	$ 5,568,777	$ 1,524,395	$ 15,393,089	$ 4,569,072
General and administrative	1,639,026	499,421	4,524,859	1,472,671
Total operating expenses	7,207,803	2,023,816	19,917,948	6,041,743
Loss from operations	(7,207,803)	(2,023,816)	(19,917,948)	(6,041,743)
Interest and other income (expense)	13,219	(279,802)	45,233	(619,645)
Change in fair value of warrant liability		(32,005)		(14,563)
Change in fair value of embedded derivative liabilities		204,000		274,800
Loss on extinguishment of debt		(2,444,516)		(2,444,516)
Net loss	$ (7,194,584)	$ (4,576,139)	$ (19,872,715)	$ (8,845,667)
Net loss per common share, basic and diluted	$ (0.38)	$ (0.41)	$ (1.04)	$ (0.80)
Weighted average common shares outstanding, basic and diluted	19,149,906	11,108,144	19,149,579	11,108,144

Consolidated Statements of Cash

Consolidated Statements of Cash Flows - USD ($)	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Cash flows from operating activities
Net loss	$ (19,872,715)	$ (8,845,667)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation expense	1,596,693	620,918
Amortization of debt discount		73,965
Amortization of debt issuance costs		7,757
Non-cash interest expense		542,397
Change in fair value of warrant and embedded derivative liabilities		(260,237)
Loss on extinguishment of debt		2,444,516
Depreciation	10,733	2,291
Changes in operating assets and liabilities:
Prepaid expenses and other current assets	129,519	(218,464)
Other assets	(32,500)	(23,000)
Accounts payable	1,975,221	(14,134)
Accrued expenses	2,128,420	481,521
Net cash used in operating activities	(14,064,629)	(5,188,137)
Cash flows from investing activities
Purchases of equipment	(98,506)	(16,083)
Net cash used in investing activities	(98,506)	(16,083)
Cash flows from financing activities
Proceeds from issuance of convertible notes		7,382,468
Debt issuance costs		(12,489)
Deferred financing fees		(121,238)
Proceeds from exercise of options	14,679
Payment of loan from related party		(41,469)
Net cash provided by financing activities	14,679	7,207,272
Net increase in cash	(14,148,456)	2,003,052
Cash at beginning of period	48,036,260	2,617,815
Cash at end of period	$ 33,887,804	4,620,867
Supplemental disclosures of non-cash financing activity:
Deferred financing fees		$ 971,672

Nature of Business and Basis of

Nature of Business and Basis of Presentation	9 Months Ended
	Sep. 30, 2016
Nature of Business and Basis of Presentation
Nature of Business and Basis of Presentation	Axsome Therapeutics, Inc. Notes to Consolidated Financial Statements (Unaudited) Note 1. Nature of Business and Basis of Presentation Axsome Therapeutics, Inc. (“Axsome” or the “Company”) was incorporated on January 12, 2012 in the State of Delaware. The Company is a clinical-stage biopharmaceutical company developing novel therapies for the management of central nervous system (“CNS”) disorders for which there are limited existing treatment options. Axsome’s product candidate portfolio includes two late-stage candidates, AXS-02 and AXS-05. AXS-02 is currently in Phase 3 trials in complex regional pain syndrome (“CRPS”) and knee osteoarthritis (“OA”) associated with bone marrow lesions (“BMLs”) with an additional Phase 3 trial planned in chronic low back pain (“CLBP”) associated with Modic changes (“MCs”). AXS-05 is currently in a Phase 3 trial in treatment resistant depression (“TRD”), and a Phase 2/3 trial in agitation in patients with Alzheimer’s disease (“AD”) is planned . The accompanying unaudited interim consolidated financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim information and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for reporting on Form 10-Q. Accordingly, certain information and footnote disclosure normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. These interim consolidated financial statements should be read in conjunction with the audited financial statements and related notes included in the Company’s annual report on Form 10-K/A for the year ended December 31, 2015 filed with the SEC on August 9, 2016. In the opinion of management, the unaudited interim consolidated financial statements reflect all adjustments, which are normal recurring adjustments, necessary for the fair presentation of the financial information for the interim periods. The results of operations for the nine months ended September 30, 2016 are not necessarily indicative of the operating results for the full fiscal year or any future period. Liquidity and Capital Resources The Company has incurred operating losses since its inception, and expects to continue to incur operating losses for the foreseeable future and may never become profitable. As of September 30, 2016, the Company had an accumulated deficit of $40.3 million. The Company’s primary sources of cash have been proceeds from its initial public offering and through private placements of its convertible notes. The Company has not yet commercialized any of its product candidates and cannot be sure if it will ever be able to do so. Even if the Company commercializes one or more of its product candidates, it may not become profitable. The Company’s ability to achieve profitability depends on a number of factors, including its ability to obtain regulatory approval for its product candidates, successfully complete any post-approval regulatory obligations and successfully commercialize its product candidates alone or in partnership. The Company may continue to incur substantial operating losses even if it begins to generate revenues from its product candidates. As of September 30, 2016, the Company had $33.9 million in cash. The Company currently anticipates its cash, along with the net proceeds from its debt financing in November 2016 (see Note 8 – Subsequent Event) to be sufficient to fund its anticipated operating cash requirements through the end of 2017. The actual amount of cash that the Company will need to operate is subject to many factors, including, but not limited to, the timing, design and conduct of clinical trials for its product candidates. The Company is dependent upon significant future financing to provide the cash necessary to execute its current operations, including the commercialization of any of its product candidates. The Company’s common stock is listed on the NASDAQ Capital Market and trades under the symbol “AXSM”.

Summary of Significant Accounti

Summary of Significant Accounting Policies	9 Months Ended
	Sep. 30, 2016
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies	Note 2. Summary of Significant Accounting Policies Significant Risks and Uncertainties The Company’s operations are subject to a number of factors that can affect its operating results and financial condition. Such factors include, but are not limited to: the results of clinical testing and trial activities of the Company’s product candidates; the Company’s ability to obtain regulatory approval to market its products, if approved; competition from products manufactured and sold or being developed by other companies; the price of, and demand for, Company products, if approved; the Company’s ability to negotiate favorable licensing or other manufacturing and marketing agreements for its products, if approved; and the Company’s ability to raise additional financing. If the Company does not successfully commercialize any of its product candidates, it will be unable to generate recurring product revenue or achieve and maintain profitability. Use of Estimates Management considers many factors in developing the estimates and assumptions that are used in the preparation of these financial statements. Management must apply significant judgment in this process. In addition, other factors may affect estimates, including expected business and operational changes, sensitivity and volatility associated with the assumptions used in developing estimates, and whether historical trends are expected to be representative of future trends. The estimation process often may yield a range of potentially reasonable estimates of the ultimate future outcomes and management must select an amount that falls within that range of reasonable estimates. This process may result in actual results differing materially from those estimated amounts used in the preparation of the financial statements if these results differ from historical experience, or other assumptions do not turn out to be substantially accurate, even if such assumptions are reasonable when made. In preparing these financial statements, management used significant estimates in the following areas, among others: stock‑based compensation expense; the determination of the fair value of the warrant and embedded derivative liabilities; the accounting for research and development costs; and the recoverability of the Company’s net deferred tax assets and related valuation allowance. Fair Value of Financial Instruments Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. Assets and liabilities that are measured at fair value are reported using a three‑level fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy maximizes the use of observable inputs and minimizes the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows: Level 1 —Quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. Level 2 —Inputs other than quoted prices in active markets that are observable for the asset or liability, either directly or indirectly. Level 3 —Inputs that are unobservable for the asset or liability. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level 3. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The carrying amounts reported in the accompanying consolidated financial statements for accounts payable and accrued expenses approximate their respective fair values due to their short‑term maturities. Research and Development Costs Research and development expenses primarily consist of costs incurred in performing research and development activities, including preclinical studies, clinical trials, manufacturing costs, employee salaries and benefits, stock‑based compensation expense, contract services, including external research and development expenses incurred under arrangements with third parties, such as contract research organizations (“CROs”), facilities costs, overhead costs, depreciation, and other related costs. Generally, research and development costs are expensed as incurred. Nonrefundable advance payments for goods or services that will be used or rendered for future research and development activities are deferred and amortized over the period that the goods are delivered or the related services are performed, subject to an assessment of recoverability. The Company makes estimates of costs incurred in relation to external CROs and clinical site costs. The Company analyzes the progress of clinical trials, including levels of patient enrollment, invoices received and contracted costs when evaluating the adequacy of the amount expensed and the related prepaid asset and accrued liability. Significant judgments and estimates must be made and used in determining the accrued balance and expense in any accounting period. The Company reviews and accrues CRO expenses and clinical trial study expenses based on work performed and relies upon estimates of those costs applicable to the stage of completion of a study. Accrued CRO costs are subject to revisions as such trials progress to completion. Revisions are charged to expense in the period in which the facts that give rise to the revision become known. With respect to clinical site costs, the financial terms of these agreements are subject to negotiation and vary from contract to contract. Payments under these contracts may be uneven, and depend on factors such as the achievement of certain events, the successful recruitment of patients, the completion of portions of the clinical trial or similar conditions. The objective of our policy is to match the recording of expenses in our financial statements to the actual services received and efforts expended. As such, expense accruals related to clinical site costs are recognized based on our estimate of the degree of completion of the event or events specified in the specific clinical study or trial contract. Basic and Diluted Net Loss per Common Share Basic net loss per share of common stock is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. Diluted net loss per share of common stock includes the effect, if any, from the potential exercise or conversion of securities, such as convertible notes, warrants, and stock options, which would result in the issuance of incremental shares of common stock. As the impact of these items is anti‑dilutive during periods of net loss, there was no difference between basic and diluted net loss per share of common stock for the nine months ended September 30, 2016, and no difference between basic and diluted net loss per common stock for the nine months ended September 30, 2015. Recent Accounting Pronouncements In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-09, Compensation—Stock Compensation (Topic 718): Improvements To Employee Share-Based Payment Accounting , which allows for the simplification of several aspects of the accounting for share-based payment transactions. The standard is effective for interim and annual periods beginning after December 15, 2016. The Company is currently evaluating the effect that the updated standard will have on its financial statements and related disclosures.

Fair Value Measurements

Fair Value Measurements	9 Months Ended
	Sep. 30, 2016
Fair Value Measurements
Fair Value Measurements	Note 3. Fair Value Measurements There were no financial liabilities measured at fair value on a recurring basis as of September 30, 2016 or December 31, 2015. The following table sets forth a summary of changes in the fair value of Level 3 liabilities for the three and nine months ended September 30, 2015. There were no Level 3 liabilities during the three and nine months ended September 30, 2016. Three months ended September 30, 2015 Beginning of period Issuances Change in fair value (3) Extinguishments End of period Warrant liability (1) $ $ — $ $ — $ Embedded derivative liabilities (2) — Total $ $ $ $ $ Nine months ended September 30, 2015 Beginning of period Issuances Change in fair value (3) Extinguishments End of period Warrant liability (1) $ $ — $ $ — $ Embedded derivative liabilities (2) — Total $ $ $ $ $ (1) Prior to the close of the Company’s IPO on November 24, 2015, the Company considered its convertible note related warrant liability as a Level 3 financial instrument. The Company determined the fair value of the liability immediately prior to the Company’s IPO and then reclassified the balance to additional paid-in capital upon the closing of the IPO. (2) Prior to the amendment of the Company’s outstanding convertible notes in September 2015, the Company considered its convertible note related embedded derivative liabilities as Level 3 financial instruments. The amendment was deemed to be a substantive change and resulted in extinguishment accounting, which included the extinguishment of the embedded derivative liabilities. (3) The change in the fair values of the warrant and embedded derivative liabilities are recorded in the statements of operations.

Accrued Expenses

Accrued Expenses	9 Months Ended
	Sep. 30, 2016
Accrued Expenses
Accrued Expenses	Note 4. Accrued Expenses At September 30, 2016 and December 31, 2015 accrued expenses consisted of the following: September 30, December 31, 2016 2015 Accrued compensation $ $ Research and development Other $ $

Net Loss per Common Share

Net Loss per Common Share	9 Months Ended
	Sep. 30, 2016
Net Loss per Common Share
Net Loss per Common Share	Note 5. Net Loss per Common Share The following table sets forth the computation of basic and diluted net loss per common share: Three months ended September 30, Nine months ended September 30, 2016 2015 2016 2015 Basic and diluted net loss per common share: Net loss $ $ $ $ Weighted average common shares outstanding—basic and diluted Net loss per common share—basic and diluted $ $ $ $ The following potentially dilutive securities outstanding at September 30, 2016 and 2015 have been excluded from the computation of diluted weighted average shares outstanding, as they would be anti‑dilutive: September 30, 2016 2015 Convertible notes — Stock options Warrants

Stockholders' Equity

Stockholders' Equity	9 Months Ended
	Sep. 30, 2016
Stockholders’ Equity
Stockholders’ Equity	Note 6. Stockholders’ Equity Capital Structure In November 2015, the Company completed its IPO, whereby it sold 5,666,667 shares of common stock at a public offering price of $9.00 per share. The Company received gross proceeds of approximately $51.0 million and net proceeds of approximately $45.5 million, after deducting underwriting discounts and commissions and offering-related transaction costs. Upon the close of the IPO, all of the Company’s outstanding convertible notes, including accrued and unpaid interest, converted into 2,374,606 shares of common stock. In April 2015, the Company’s board of directors and stockholders approved an increase of the Company’s authorized shares of common stock to 22,033,500 shares. In connection with the close of the Company’s IPO on November 24, 2015, the Company’s stockholders approved an amended and restated certificate of incorporation increasing the number of authorized shares of common stock to 150,000,000 and the number of authorized shares of preferred stock to 10,000,000, par value $0.0001 per share. The holders of shares of common stock are entitled to one vote for each share of common stock held at all meetings of stockholders and written actions in lieu of meetings. The holders of shares of common stock are entitled to receive dividends, if and when declared by the board of directors. Equity Incentive Plans Shares available for the issuance of stock options or other stock-based awards under the Company’s 2015 Omnibus Incentive Compensation Plan was 2,718,919 shares at September 30, 2016. Stock Options The following table sets forth the stock option activity for the nine months ended September 30, 2016: Weighted Weighted average Aggregate Number average contractual intrinsic of shares exercise price term value Outstanding at December 31, 2015 $ Granted Exercised Forfeited Expired — — Outstanding at September 30, 2016 $ $ Vested and expected to vest at September 30, 2016 $ $ Exercisable at September 30, 2016 $ $ The fair value of each stock option grant is estimated on the date of grant using the Black‑Scholes option pricing model. The Company periodically remeasures the fair value of stock‑based awards issued to non‑employees and records the expense over the requisite service period. The expected term of the Company’s stock options has been determined utilizing the “simplified” method as described in the Securities and Exchange Commission’s Staff Accounting Bulletin No. 107 relating to stock‑based compensation. The simplified method was chosen because the Company has limited historical option exercise experience due to its short operating history. The risk‑free interest rate is based on the U.S. Treasury yield in effect at the time of grant for a period approximately equal to the expected term of the award. Expected dividend yield is based on the fact that the Company has never paid cash dividends and does not expect to pay any cash dividends in the foreseeable future. Expected volatility is based on historical volatilities of similar entities within the Company’s industry. The weighted average valuation date fair value of options granted was $5.14 and $2.64 per option for the nine months ended September 30, 2016 and 2015, respectively. As of September 30, 2016, there was $4.7 million of total unrecognized compensation cost related to non‑vested stock options which is expected to be recognized over a weighted average period of 3.1 years. These amounts do not include 6,169 options outstanding as of September 30, 2016, which are performance‑based and vest upon the achievement of certain corporate milestones. Stock‑based compensation will be measured and recorded if and when it is probable that the milestone will occur. Stock‑based compensation expense recognized for the three and nine months ended September 30, 2016 and 2015 was as follows: Three months ended September 30, Nine months ended September 30, 2016 2015 2016 2015 Research and development $ $ $ $ General and administrative $ $ $ $ Performance‑Based Awards The Company issued no performance-based awards during the nine months ended September 30, 2016. During the nine months ended September 30, 2015, the Company issued 81,346 options with a weighted average exercise price of $6.47 to employees that vest upon the completion of certain corporate events. For awards granted to employees with performance conditions, no expense will be recognized, and no measurement date can occur, until the occurrence of the event is probable. For awards granted to non‑employees, the Company will recognize the lowest aggregate amount within the range of potential values as expense until the measurement date is established. For the nine months ended September 30, 2016 and 2015, the Company recognized $573,708 and $245,196, respectively, as expense related to performance‑based awards. Warrants As of September 30, 2016 and December 31, 2015, the Company had outstanding warrants to purchase 272,468 shares of common stock, consisting of 230,409 warrants with an exercise price of $1.30 per share and 42,059 warrants with an exercise price of $5.94 per share.

Restatement of Previously Issue

Restatement of Previously Issued Financial Statements	9 Months Ended
	Sep. 30, 2016
Accounting Changes and Error Corrections [Abstract]
Restatement of Previously Issued Financial Statements	Note 7. Restatement of Previously Issued Financial Statements On August 9, 2016, the Company restated its audited financial statements for the year ended December 31, 2015 and its unaudited financial statements for the quarter ended March 31, 2016, to record a non-cash premium associated with its convertible notes, which converted in November 2015, to additional paid-in capital. The restatement had no impact on the Company’s cash, total assets, total stockholders’ equity, loss from operations, or total cash flows.

Subsequent Events

Subsequent Events	9 Months Ended
	Sep. 30, 2016
Subsequent Events [Abstract]
Subsequent Event	Note 8. Subsequent Event In November 2016, the Company entered into a $20.0 million term loan agreement with Silicon Valley Bank (“SVB”). The three-tranche loan agreement consists of an initial $10.0 million tranche triggered upon closing, with the remaining $10.0 million available to be drawn in two $5.0 million tranches, at the Company’s option, subject to the achievement of certain clinical and financial milestones. The loan bears interest at an annual rate equal to 4.50% plus the prime rate, which is the greater of 3.50% or the Wall Street Journal prime rate. It matures in November 2020 and has an interest-only payment period of 12 months, which may be extended to 18 months upon the drawing of the second tranche. In connection with the loan agreement, the Company issued warrants, which have a 7-year term, to purchase shares of the Company’s common stock at a price per share equal to approximately $7.41. The warrants will be exercisable for shares of common stock as follows: 65,228 upon the effective date of the loan agreement, 13,978 upon the drawing of the second tranche, and 13,976 upon the drawing of the third tranche. The Company intends to use the proceeds from the term loan agreement to support the ongoing development of its late-stage clinical pipeline.

Summary of Significant Accoun14

Summary of Significant Accounting Policies (Policies)	9 Months Ended
	Sep. 30, 2016
Summary of Significant Accounting Policies
Significant Risks and Uncertainties	Significant Risks and Uncertainties The Company’s operations are subject to a number of factors that can affect its operating results and financial condition. Such factors include, but are not limited to: the results of clinical testing and trial activities of the Company’s product candidates; the Company’s ability to obtain regulatory approval to market its products, if approved; competition from products manufactured and sold or being developed by other companies; the price of, and demand for, Company products, if approved; the Company’s ability to negotiate favorable licensing or other manufacturing and marketing agreements for its products, if approved; and the Company’s ability to raise additional financing. If the Company does not successfully commercialize any of its product candidates, it will be unable to generate recurring product revenue or achieve and maintain profitability.
Use of Estimates	Use of Estimates Management considers many factors in developing the estimates and assumptions that are used in the preparation of these financial statements. Management must apply significant judgment in this process. In addition, other factors may affect estimates, including expected business and operational changes, sensitivity and volatility associated with the assumptions used in developing estimates, and whether historical trends are expected to be representative of future trends. The estimation process often may yield a range of potentially reasonable estimates of the ultimate future outcomes and management must select an amount that falls within that range of reasonable estimates. This process may result in actual results differing materially from those estimated amounts used in the preparation of the financial statements if these results differ from historical experience, or other assumptions do not turn out to be substantially accurate, even if such assumptions are reasonable when made. In preparing these financial statements, management used significant estimates in the following areas, among others: stock‑based compensation expense; the determination of the fair value of the warrant and embedded derivative liabilities; the accounting for research and development costs; and the recoverability of the Company’s net deferred tax assets and related valuation allowance.
Fair Value of Financial Instruments	Fair Value of Financial Instruments Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. Assets and liabilities that are measured at fair value are reported using a three‑level fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy maximizes the use of observable inputs and minimizes the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows: Level 1 —Quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. Level 2 —Inputs other than quoted prices in active markets that are observable for the asset or liability, either directly or indirectly. Level 3 —Inputs that are unobservable for the asset or liability. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level 3. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The carrying amounts reported in the accompanying consolidated financial statements for accounts payable and accrued expenses approximate their respective fair values due to their short‑term maturities.
Research and Development Costs	Research and Development Costs Research and development expenses primarily consist of costs incurred in performing research and development activities, including preclinical studies, clinical trials, manufacturing costs, employee salaries and benefits, stock‑based compensation expense, contract services, including external research and development expenses incurred under arrangements with third parties, such as contract research organizations (“CROs”), facilities costs, overhead costs, depreciation, and other related costs. Generally, research and development costs are expensed as incurred. Nonrefundable advance payments for goods or services that will be used or rendered for future research and development activities are deferred and amortized over the period that the goods are delivered or the related services are performed, subject to an assessment of recoverability. The Company makes estimates of costs incurred in relation to external CROs and clinical site costs. The Company analyzes the progress of clinical trials, including levels of patient enrollment, invoices received and contracted costs when evaluating the adequacy of the amount expensed and the related prepaid asset and accrued liability. Significant judgments and estimates must be made and used in determining the accrued balance and expense in any accounting period. The Company reviews and accrues CRO expenses and clinical trial study expenses based on work performed and relies upon estimates of those costs applicable to the stage of completion of a study. Accrued CRO costs are subject to revisions as such trials progress to completion. Revisions are charged to expense in the period in which the facts that give rise to the revision become known. With respect to clinical site costs, the financial terms of these agreements are subject to negotiation and vary from contract to contract. Payments under these contracts may be uneven, and depend on factors such as the achievement of certain events, the successful recruitment of patients, the completion of portions of the clinical trial or similar conditions. The objective of our policy is to match the recording of expenses in our financial statements to the actual services received and efforts expended. As such, expense accruals related to clinical site costs are recognized based on our estimate of the degree of completion of the event or events specified in the specific clinical study or trial contract.
Basic and Diluted Net Loss per Common Share	Basic and Diluted Net Loss per Common Share Basic net loss per share of common stock is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. Diluted net loss per share of common stock includes the effect, if any, from the potential exercise or conversion of securities, such as convertible notes, warrants, and stock options, which would result in the issuance of incremental shares of common stock. As the impact of these items is anti‑dilutive during periods of net loss, there was no difference between basic and diluted net loss per share of common stock for the nine months ended September 30, 2016, and no difference between basic and diluted net loss per common stock for the nine months ended September 30, 2015.
Recent Accounting Pronouncements	Recent Accounting Pronouncements In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-09, Compensation—Stock Compensation (Topic 718): Improvements To Employee Share-Based Payment Accounting , which allows for the simplification of several aspects of the accounting for share-based payment transactions. The standard is effective for interim and annual periods beginning after December 15, 2016. The Company is currently evaluating the effect that the updated standard will have on its financial statements and related disclosures.

Fair Value Measurements (Tables

Fair Value Measurements (Tables)	9 Months Ended
	Sep. 30, 2016
Fair Value Measurements
Summary of changes in the fair value of Level 3 liabilities	Three months ended September 30, 2015 Beginning of period Issuances Change in fair value (3) Extinguishments End of period Warrant liability (1) $ $ — $ $ — $ Embedded derivative liabilities (2) — Total $ $ $ $ $ Nine months ended September 30, 2015 Beginning of period Issuances Change in fair value (3) Extinguishments End of period Warrant liability (1) $ $ — $ $ — $ Embedded derivative liabilities (2) — Total $ $ $ $ $ (1) Prior to the close of the Company’s IPO on November 24, 2015, the Company considered its convertible note related warrant liability as a Level 3 financial instrument. The Company determined the fair value of the liability immediately prior to the Company’s IPO and then reclassified the balance to additional paid-in capital upon the closing of the IPO. (2) Prior to the amendment of the Company’s outstanding convertible notes in September 2015, the Company considered its convertible note related embedded derivative liabilities as Level 3 financial instruments. The amendment was deemed to be a substantive change and resulted in extinguishment accounting, which included the extinguishment of the embedded derivative liabilities. (3) The change in the fair values of the warrant and embedded derivative liabilities are recorded in the statements of operations.

Accrued Expenses (Tables)

Accrued Expenses (Tables)	9 Months Ended
	Sep. 30, 2016
Accrued Expenses
Schedule of accrued expenses	September 30, December 31, 2016 2015 Accrued compensation $ $ Research and development Other $ $

Net Loss per Common Share (Tabl

Net Loss per Common Share (Tables)	9 Months Ended
	Sep. 30, 2016
Net Loss per Common Share
Computation of basic and diluted net loss per common share	Three months ended September 30, Nine months ended September 30, 2016 2015 2016 2015 Basic and diluted net loss per common share: Net loss $ $ $ $ Weighted average common shares outstanding—basic and diluted Net loss per common share—basic and diluted $ $ $ $
Schedule of potentially dilutive securities	September 30, 2016 2015 Convertible notes — Stock options Warrants

Stockholders' Equity (Tables)

Stockholders' Equity (Tables)	9 Months Ended
	Sep. 30, 2016
Stockholders’ Equity
Schedule of stock option activity	Weighted Weighted average Aggregate Number average contractual intrinsic of shares exercise price term value Outstanding at December 31, 2015 $ Granted Exercised Forfeited Expired — — Outstanding at September 30, 2016 $ $ Vested and expected to vest at September 30, 2016 $ $ Exercisable at September 30, 2016 $ $
Schedule of stock-based compensation expense	Three months ended September 30, Nine months ended September 30, 2016 2015 2016 2015 Research and development $ $ $ $ General and administrative $ $ $ $

Nature of Business and Basis 19

Nature of Business and Basis of Presentation (Details) - USD ($)	Sep. 30, 2016	Dec. 31, 2015	Sep. 30, 2015	Dec. 31, 2014
Nature of Business and Basis of Presentation
Accumulated deficit	$ 40,312,513	$ 20,439,798
Cash	$ 33,887,804	$ 48,036,260	$ 4,620,867	$ 2,617,815

Nature of Business and Basis 20

Nature of Business and Basis of Presentation - Restatement of Consolidated Financials (Details) - USD ($)	Sep. 30, 2016	Dec. 31, 2015
Nature of Business and Basis of Presentation
Additional paid-in capital	$ 68,493,516	$ 66,882,144
Accumulated deficit	$ (40,312,513)	$ (20,439,798)

Fair Value Measurements - Recur

Fair Value Measurements - Recurring Basis (Details) - USD ($)	Sep. 30, 2016	Dec. 31, 2015
Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial liabilities	$ 0	$ 0

Fair Value Measurements - Chang

Fair Value Measurements - Changes in Fair Value of Level 3 Liabilities (Details) - USD ($)	3 Months Ended	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Level 3 liabilities, amount during the period		$ 0
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Beginning of period	$ 1,404,393		$ 632,635
Issuances	11,000		871,000
Change in fair value	171,995		260,237
Extinguishments	(1,092,600)		(1,092,600)
End of period	150,798		150,798
Warrant liability
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Beginning of period	118,793		136,235
Change in fair value	(32,005)		(14,563)
End of period	150,798		150,798
Embedded derivative liabilities
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Beginning of period	1,285,600		496,400
Issuances	11,000		871,000
Change in fair value	204,000		274,800
Extinguishments	$ (1,092,600)		$ (1,092,600)

Accrued Expenses (Details)

Accrued Expenses (Details) - USD ($)	Sep. 30, 2016	Dec. 31, 2015
Accrued Expenses
Accrued compensation	$ 379,000	$ 330,707
Research and development	2,293,893	284,057
Other	195,059	124,768
Accrued expenses	$ 2,867,952	$ 739,532

Net Loss per Common Share - Com

Net Loss per Common Share - Computation of Basic and Diluted Net Loss per Common Share (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Basic and diluted net loss per common share:
Net loss	$ (7,194,584)	$ (4,576,139)	$ (19,872,715)	$ (8,845,667)
Weighted average common shares outstanding, basic and diluted	19,149,906	11,108,144	19,149,579	11,108,144
Net loss per common share, basic and diluted	$ (0.38)	$ (0.41)	$ (1.04)	$ (0.80)

Net Loss per Common Share - Pot

Net Loss per Common Share - Potentially Dilutive Securities Outstanding (Details) - shares	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities	2,049,324	3,580,916
Convertible notes
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities		2,347,633
Stock Options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities	1,776,856	960,815
Warrants
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities	272,468	272,468

Stockholders' Equity - Capital

Stockholders' Equity - Capital Structure (Details) $ / shares in Units, $ in Millions	1 Months Ended	9 Months Ended
	Nov. 30, 2015USD ($)$ / sharesshares	Sep. 30, 2016Vote / shares$ / sharesshares	Dec. 31, 2015$ / sharesshares	Nov. 24, 2015$ / sharesshares	Apr. 30, 2015shares
Subsidiary, Sale of Stock [Line Items]
Gross proceeds from initial public offering | $	$ 51
Proceeds from initial public offering, net | $	$ 45.5
Shares issued in conversion of outstanding convertible notes	2,374,606
Common Stock, Shares Authorized		150,000,000	150,000,000	150,000,000	22,033,500
Preferred Stock, Shares Authorized		10,000,000	10,000,000	10,000,000
Preferred Stock, Par or Stated Value Per Share | $ / shares		$ 0.0001	$ 0.0001	$ 0.0001
Common stock, voting right per share | Vote / shares		1
IPO
Subsidiary, Sale of Stock [Line Items]
Shares issued	5,666,667
Share Price | $ / shares	$ 9

Stockholders' Equity - Stock Op

Stockholders' Equity - Stock Option Activity (Details)	9 Months Ended
	Sep. 30, 2016USD ($)$ / sharesshares
Stockholders’ Equity
Shares available for issuance under omnibus incentive compensation plan	2,718,919
Number of shares
Beginning balance outstanding (in shares)	998,198
Granted (in shares)	786,654
Exercised (in shares)	(4,000)
Forfeited (in shares)	(3,996)
Ending balance outstanding (in shares)	1,776,856
Vested and expected to vest (in shares)	1,770,687
Exercisable (in shares)	747,830
Weighted average exercise price
Beginning balance outstanding (in dollars per share) | $ / shares	$ 3.94
Granted (in dollars per share) | $ / shares	8
Exercised (in dollars per share) | $ / shares	3.67
Forfeited (in dollars per share) | $ / shares	6.47
Ending balance outstanding (in dollars per share) | $ / shares	5.73
Vested and expected to vest (in dollars per share) | $ / shares	5.75
Exercisable (in dollars per share) | $ / shares	$ 3.31
Weighted average contractual term
Outstanding (in years)	8 years 9 months 18 days
Vested and expected to vest (in years)	8 years 9 months 18 days
Exercisable (in years)	8 years
Aggregate intrinsic value
Outstanding (in dollars) | $	$ 4,001,441
Vested and expected to vest (in dollars) | $	3,960,849
Exercisable (in dollars) | $	$ 3,436,797

Stockholders' Equity - Addition

Stockholders' Equity - Additional Information (Details) - USD ($) $ / shares in Units, $ in Millions	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation cost related to non-vested stock options expected to be recognized	$ 4.7
Weighted average
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted average grant date fair value (in dollars per share)	$ 5.14	$ 2.64
Performance-based
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Non-vested options outstanding	6,169
Stock Options | Weighted average
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected vesting period for non-vested share-based compensation	3 years 1 month 6 days

Stockholders' Equity - Stock-ba

Stockholders' Equity - Stock-based Compensation Expense (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock-based compensation expense	$ 458,468	$ 360,745	$ 1,596,693	$ 620,918
Research and development
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock-based compensation expense	174,287	323,555	942,228	518,534
General and administrative
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock-based compensation expense	$ 284,181	$ 37,190	$ 654,465	$ 102,384

Stockholders' Equity - Performa

Stockholders' Equity - Performance-Based Awards Expense (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	$ 458,468	$ 360,745	$ 1,596,693	$ 620,918
Performance-based
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based awards issued			0	81,346
Weighted average exercise price		$ 6.47		$ 6.47
Stock-based compensation expense			$ 573,708	$ 245,196

Stockholders' Equity - Warrants

Stockholders' Equity - Warrants (Details) - $ / shares	Sep. 30, 2016	Dec. 31, 2015
Class of Warrant or Right [Line Items]
Warrants outstanding	272,468	272,468
$1.30 per share
Class of Warrant or Right [Line Items]
Warrants outstanding	230,409	230,409
Exercise price of warrants (in dollars per share)	$ 1.30	$ 1.30
$5.94 per share
Class of Warrant or Right [Line Items]
Warrants outstanding	42,059	42,059
Exercise price of warrants (in dollars per share)	$ 5.94	$ 5.94

Subsequent Events (Details)

Subsequent Events (Details) - Subsequent Event $ / shares in Units, $ in Millions	Nov. 14, 2016USD ($)tranche$ / sharesshares
Term Loan
Loan amount	$ 20
Number of loan tranches | tranche	3
Base interest rate	4.50%
Interest rate spread	3.50%
Interest-only payment period	12 months
Term of warrants (in years)	7 years
Exercise price of warrants (in dollars per share) | $ / shares	$ 7.41
Term Loan, Tranche One, triggered upon closing
Loan amount	$ 10
Common stock to be issued if warrants are excercised (in shares) | shares	65,228
Term Loan, Tranches Two and Three
Loan amount	$ 10
Number of loan tranches | tranche	2
Term Loan, Tranche Two
Loan amount	$ 5
Interest-only payment period	18 months
Common stock to be issued if warrants are excercised (in shares) | shares	13,978
Term Loan, Tranche Three
Loan amount	$ 5
Common stock to be issued if warrants are excercised (in shares) | shares	13,976