Loxo Oncology (LOXO) 10-Q 4 May 16 2016 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2016	Apr. 30, 2016
Document and Entity Information
Entity Registrant Name	Loxo Oncology, Inc.
Entity Central Index Key	1,581,720
Document Type	10-Q
Document Period End Date	Mar. 31, 2016
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		19,708,528
Document Fiscal Year Focus	2,016
Document Fiscal Period Focus	Q1

Condensed Balance Sheets

Condensed Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Current assets:
Cash and cash equivalents	$ 47,547	$ 68,177
Short-term investments	97,296	85,715
Prepaid expenses with related party		922
Other prepaid expenses and current assets	2,411	1,830
Total current assets	147,254	156,644
Property and equipment, net	303	88
Other assets	496	726
Total assets	148,053	157,458
Current liabilities:
Accounts payable	758	269
Accrued expenses and other current liabilities	2,147	2,584
Total liabilities	$ 2,905	$ 2,853
Commitments and contingencies
Stockholders' equity:
Common stock, $0.0001 par value; 125,000,000 shares authorized; 19,690,710 and 19,577,707 shares issued and outstanding at March 31, 2016 and December 31, 2015, respectively	$ 2	$ 2
Additional paid-in capital	223,540	221,457
Accumulated deficit	(78,435)	(66,838)
Accumulated other comprehensive income (loss)	41	(16)
Total stockholders' equity	145,148	154,605
Total liabilities and stockholders' equity	$ 148,053	$ 157,458

Condensed Balance Sheets (Paren

Condensed Balance Sheets (Parenthetical) - $ / shares	Mar. 31, 2016	Dec. 31, 2015
Condensed Balance Sheets
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized	125,000,000	125,000,000
Common stock, shares issued	19,690,710	19,577,707
Common stock, shares outstanding		19,577,707

Condensed Statements of Operati

Condensed Statements of Operations - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Operating expenses:
Research and development with related party		$ 1,918
Research and development	$ 8,356	1,915
General and administrative	3,394	2,392
Total operating expenses and loss from operations	(11,750)	(6,225)
Interest income, net	153	43
Net loss	$ (11,597)	$ (6,182)
Per share information:
Net loss per share of common stock, basic and diluted (in dollars per share)	$ (0.59)	$ (0.38)
Weighted average shares outstanding, basic and diluted (in shares)	19,544,748	16,474,269

Condensed Statements of Compreh

Condensed Statements of Comprehensive Loss - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Condensed Statements of Comprehensive Loss
Net loss	$ (11,597)	$ (6,182)
Other comprehensive income:
Unrealized gain on available for sale securities	57	21
Comprehensive loss	$ (11,540)	$ (6,161)

Condensed Statements of Stockho

Condensed Statements of Stockholders' Equity - 3 months ended Mar. 31, 2016 - USD ($) $ in Thousands	Common Stock	Additional Paid-in Capital	Accumulated Deficit	Accumulated Other Comprehensive Income (Loss)	Total
Balance at Dec. 31, 2015	$ 2	$ 221,457	$ (66,838)	$ (16)	$ 154,605
Balance (in shares) at Dec. 31, 2015	19,577,707
Changes in Stockholders' Equity
Stock-based compensation expense		1,342			1,342
Stock options exercises		741			741
Stock option exercises (in shares)	113,003
Other comprehensive income				57	57
Net loss			(11,597)		(11,597)
Balance at Mar. 31, 2016	$ 2	$ 223,540	$ (78,435)	$ 41	$ 145,148
Balance (in shares) at Mar. 31, 2016	19,690,710

Condensed Statements of Cash Fl

Condensed Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Operating activities:
Net loss	$ (11,597)	$ (6,182)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of premium and discounts on investments	107	59
Depreciation of property and equipment	14	1
Stock-based compensation	1,342	1,049
Changes in operating assets and liabilities:
Prepaid expenses and other assets	571	271
Accounts payable	489	46
Accrued expenses and other current liabilities	(437)	(524)
Net cash used in operating activities	(9,511)	(5,280)
Investing activities:
Purchases of available-for-sale securities	(43,499)	(10,275)
Proceeds from maturing available-for-sale securities	31,868	8,900
Purchase of property and equipment	(229)	(20)
Net cash used in investing activities	(11,860)	(1,395)
Financing activities:
Proceeds from the exercise of stock options	741
Net cash provided by financing activities	741
Net decrease in cash and cash equivalents	(20,630)	(6,675)
Cash and cash equivalents-beginning of period	68,177	43,930
Cash and cash equivalents-end of period	47,547	37,255
Supplemental schedule of noncash investing activities:
Unrealized gain on available for sale securities	$ 57	$ 21

Organization and Description of

Organization and Description of the Business	3 Months Ended
	Mar. 31, 2016
Organization and Description of the Business
Organization and Description of the Business	1. Organization and Description of the Business Loxo Oncology, Inc. (the “Company”) was incorporated on May 9, 2013 in the State of Delaware. The Company is a biopharmaceutical company innovating the development of highly selective medicines for patients with genetically defined cancers. Its pipeline focuses on cancers that are uniquely dependent on single gene abnormalities, such that a single drug has the potential to treat the cancer with dramatic effect. The Company operates in one segment and has its principal office in Stamford, Connecticut. Liquidity At March 31, 2016, the Company had working capital of $144.3 million, an accumulated deficit of $78.4 million and cash, cash equivalents and investments of $144.8 million. The Company has not generated any product revenues and has not achieved profitable operations. There is no assurance that profitable operations will ever be achieved, and, if achieved, could be sustained on a continuing basis. In addition, development activities, clinical and pre-clinical testing, and commercialization of the Company’s products will require significant additional capital. The Company believes that its existing cash, cash equivalents, and investments will be sufficient to enable the Company to continue as a going-concern for a reasonable period of time beyond March 31, 2016. However, the Company will need to secure additional funding in the future, from one or more equity or debt financings, collaborations, or other sources, in order to carry out all of its planned research and development activities. If the Company is unable to obtain additional financing or generate license or product revenue, the lack of liquidity could have a material adverse effect on the Company’s future prospects.

Summary of Significant Accounti

Summary of Significant Accounting Policies	3 Months Ended
	Mar. 31, 2016
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies	2. Summary of Significant Accounting Policies Basis of Presentation The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). Any reference in these notes to applicable guidance is meant to refer to GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Update (“ASU”) of the Financial Accounting Standards Board (“FASB”). Unaudited Interim Financial Information The accompanying balance sheet as of December 31, 2015, was derived from the Company’s audited financial statements included in Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 15, 2016. It is suggested that the interim unaudited condensed financial statements be read in conjunction with the annual financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K. The accompanying balance sheet as of March 31, 2016, the statements of operations for the three months ended March 31, 2016 and 2015, the statements of comprehensive loss for the three months ended March 31, 2016 and 2015, the statement of stockholders’ equity for the period from January 1, 2016 to March 31, 2016 and the statements of cash flows for the three months ended March 31, 2016 and 2015 are unaudited. The interim unaudited condensed financial statements have been prepared on the same basis as the annual audited financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair presentation of the Company’s financial position as of March 31, 2016, the results of its operations for the three months ended March 31, 2016 and 2015 and its cash flows for the three months ended March 31, 2016 and 2015. The interim unaudited condensed financial statements have been prepared pursuant to the rules and regulations of the SEC. Certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading. Significant Accounting Policies The Company’s significant accounting policies are disclosed in the audited financial statements for the year ended December 31, 2015 included in the Company’s Form 10-K filed with the SEC on March 15, 2016. Since the date of such financial statements, there have been no changes to the Company’s significant accounting policies. Recent Accounting Pronouncements In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”), which provides for simplification of certain aspects of employee share-based payment accounting including income taxes, classification of awards as either equity or liabilities, accounting for forfeitures and classification on the statement of cash flows. ASU 2016-09 will be effective for the Company in the first quarter of 2017 and will be applied either prospectively, retrospectively or using a modified retrospective transition approach depending on the area covered in this update. The Company is currently in the process of assessing the impact of ASU 2016-09 on the Company’s financial statements and related disclosures. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”) , which requires lessees to recognize assets and liabilities for the rights and obligations created by most leases on their balance sheet. The guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application is permitted. ASU 2016-02 requires modified retrospective adoption for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. The Company is currently evaluating the impact the standard may have on the Company’s financial statements and related disclosures. In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments - Overall (Subtopic 825-10), Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”), which addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. ASU 2016-01 will be effective for annual periods and interim periods within those annual periods beginning after December 15, 2017 and early adoption is not permitted. The Company is currently evaluating the impact that the standard will have on the Company’s financial statements and related disclosures.

Net Loss Per Common Share

Net Loss Per Common Share	3 Months Ended
	Mar. 31, 2016
Net Loss Per Common Share
Net Loss Per Common Share	3. Net Loss Per Common Share The following table sets forth the computation of basic and diluted net loss per common share for the periods indicated (in thousands, except share and per share data): Three Months Three Months Ended Ended March 31, 2016 March 31, 2015 Basic and diluted net loss per common share calculation: Net loss $ ) $ ) Weighted average common shares outstanding — basic and diluted Net loss per share of common stock — basic and diluted $ ) $ ) The following outstanding securities at March 31, 2016 and 2015 have been excluded from the computation of diluted weighted average shares outstanding, as they would have been anti-dilutive: 2016 2015 Unvested restricted stock Stock options

Fair Value Measurements

Fair Value Measurements	3 Months Ended
	Mar. 31, 2016
Fair Value Measurements.
Fair Value Measurements	4. Fair Value Measurements Financial Instruments The financial instruments recorded in the Company’s balance sheets include cash and cash equivalents, investments, and accounts payable. Included in cash and cash equivalents are money market funds representing a type of mutual fund required by law to invest in low-risk securities (for example, U.S. government bonds, U.S. treasury bills and commercial paper) and overnight repurchase agreements. Money market funds are structured to maintain the fund’s net asset value at $1.00 per unit, which assists in providing adequate liquidity upon demand by the holder. Money market funds pay dividends that generally reflect short-term interest rates. Thus, only the dividend yield fluctuates. Also included in cash and cash equivalents are U.S. government sponsored enterprise debt securities that have a maturity of 3 months or less from their original acquisition date. Due to their short-term maturity, the carrying amounts of cash and cash equivalents (including money market funds), and accounts payable approximate their fair values. The Company classifies its remaining investments as available-for-sale. Gains or losses on securities sold are based on the specific identification method. For investments classified as available-for-sale, the Company records unrealized gains or losses resulting from changes in fair value between measurement dates as a component of other comprehensive income (loss). (amounts in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized (Losses) Fair Value March 31, 2016 Overnight repurchase agreements $ $ — $ — $ Money market funds — — Government enterprise debt securities — — Total included in cash and cash equivalents — — Government enterprise debt securities — US Government debt securities — Short-term available-for-sale securities — Total fair value financial instruments $ $ $ — $ December 31, 2015 Overnight repurchase agreements $ $ — $ — $ Money market funds — — Government enterprise debt securities ) Total included in cash and cash equivalents ) Government enterprise debt securities ) US Government debt securities — ) Short-term available-for-sale securities ) Total fair value financial instruments $ $ $ ) $ Fair value guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: · Level 1—Quoted prices in active markets for identical assets or liabilities. · Level 2—Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. · Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The Company’s financial assets measured at fair value on a recurring basis at March 31, 2016 were as follows (in thousands): Fair Value Measurements at Measurement Date: Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total As Of March 31, 2016 Assets: Government enterprise debt securities $ — $ $ — $ Overnight repurchase agreements — — Money market funds — — US Government debt securities — — Totals $ $ $ — $ The Company’s financial assets measured at fair value on a recurring basis at December 31, 2015 were as follows (in thousands): Fair Value Measurements at Measurement Date: Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total As Of December 31, 2015 Assets: Government enterprise debt securities $ — $ $ — $ Overnight repurchase agreements — — Money market funds — — US Government debt securities — — Totals $ $ $ — $ There were no items that were accounted for at fair value on a non-recurring basis for the three months ended March 31, 2016 and 2015. Financial instruments that potentially subject the Company to a concentration of credit risk consist of cash and cash equivalents. At March 31, 2016 and December 31, 2015, the Company’s cash and cash equivalents were held by two financial institutions and the amounts on deposit were in excess of Federal Deposit Insurance Company insurance limits. The Company mitigates this risk by depositing its uninsured cash in major well capitalized financial institutions, and by investing excess operating cash in overnight repurchase agreements which are 100% collateralized by U.S. government backed securities with the Company’s bank. The Company has not recognized any losses on its cash and cash equivalents.

Accrued Expenses and Other Curr

Accrued Expenses and Other Current Liabilities	3 Months Ended
	Mar. 31, 2016
Accrued Expenses and Other Current Liabilities.
Accrued Expenses and Other Current Liabilities	5. Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consisted of the following (in thousands): March 31, 2016 December 31, 2015 Research and development expenses $ $ General and administrative expenses $ $ Included in the above amounts is $0.3 million and $1.1 million of accrued bonuses at March 31, 2016 and December 31, 2015, respectively.

Stock-Based Compensation

Stock-Based Compensation	3 Months Ended
	Mar. 31, 2016
Stock-Based Compensation.
Stock-Based Compensation	6. Stock-Based Compensation Effective July 2013, the Company adopted the 2013 Equity Incentive Plan, which was amended in November 2013 (the “2013 Plan”). The 2013 Plan provided for the granting of incentive stock options, non-statutory stock options and the issuance of restricted stock awards. As of March 31, 2016, the Company reserved 1,544,615 shares of common stock authorized for issuance in connection with the 2013 Plan. Certain options are eligible for exercise prior to vesting. Exercised but unvested shares are subject to repurchase by the Company at the initial exercise price. In connection with the Company’s initial public offering, no further grants will be made under this plan and all remaining shares available for grant were transferred to the 2014 Equity Incentive Plan. The Company adopted the 2014 Equity Incentive Plan (the “2014 Plan”) that became effective on July 30, 2014 and serves as the successor to the 2013 Plan. The 2014 Plan provides for the grant of awards to employees, directors, consultants, independent contractors and advisors, provided the consultants, independent contractors, directors and advisors are natural persons that render services other than in connection with the offer and sale of securities in a capital-raising transaction. The exercise price of stock options must be at least equal to the fair market value of the Company’s common stock on the date of grant. The Company has reserved 2,178,437 shares of its common stock to be issued under the 2014 Plan of which 1,218,117 shares were available for future issuance as of March 31, 2016. Shares authorized will increase automatically on January 1 of each of 2015 through 2024 by the number of shares equal to 3.0% of the aggregate number of outstanding shares of the Company’s common stock as of the immediately preceding December 31. The Company’s Board may reduce the amount of the increase in any particular year. The 2014 Plan authorizes the award of stock options, restricted stock awards, or RSAs, stock appreciation rights, or SARs, restricted stock units, or RSUs, performance awards and stock bonuses. The following table summarizes stock option activity under the 2014 Plan for the period from January 1, 2016 through March 31, 2016: Average Weighted- Remaining Aggregate Number Average Contractual Intrinsic Value of Shares Exercise Price Term (in years) (in thousands) Outstanding at January 1, 2016 $ $ Granted Exercised ) Forfeited and expired — — Outstanding at March 31, 2016 $ $ Vested and expected to vest at March 31, 2016 $ $ Exercisable at March 31, 2016 $ $ Weighted-average grant date fair value of options granted during the three months ended March 31, 2016 $ As of March 31, 2016, there was $17.1 million of total unrecognized compensation expense related to options granted but not yet vested of which $3.3 million is attributable to non-employee awards and subject to re-measurement until vested. The total unrecognized compensation expense of $17.1 million will be recognized as expense over a weighted-average period of 2.9 years. The Company uses the Black-Scholes option pricing model to estimate the fair value of option awards with the following weighted-average assumptions, certain of which are based on industry comparative information, for the period indicated: Three Months Ended March 31, 2016 Risk-free interest rate % Expected dividend yield % Expected stock price volatility % Expected term of options (in years) Expected forfeiture rate % The weighted-average valuation assumptions were determined as follows: · Risk-free interest rate: The Company bases the risk-free interest rate on the interest rate payable on U.S. Treasury securities in effect at the time of grant for a period that is commensurate with the assumed expected option term. · Expected annual dividends: The estimate for annual dividends is 0%, because the Company has not historically paid, and does not expect for the foreseeable future to pay, a dividend. · Expected stock price volatility: The expected volatility used is based on historical volatilities of similar entities within the Company’s industry which were commensurate with the Company’s expected term assumption. · Expected term of options: The expected term of options represents the period of time options are expected to be outstanding. The expected term of the options granted to employees is derived from the “simplified” method as described in Staff Accounting Bulletin 107 relating to stock-based compensation. The expected term for options granted to non-employees is equal to the contractual term of the awards. · Expected forfeiture rate: The Company’s estimated annual forfeiture rate is based on historical forfeiture experience of its various employee groups. · Estimated fair value of the Company’s stock-based awards: The estimated fair value of the Company’s stock-based awards is amortized on a straight-line basis over the awards’ service period for those awards with graded vesting and which contain only a service condition. For awards with graded vesting and a performance and service condition, when achievement of the performance condition is deemed probable, the Company recognizes compensation cost using the accelerated recognition method over the awards’ service period. Share-based compensation expense recognized was as follows (in thousands): Three Months Ended March 31, 2016 Three Months Ended March 31, 2015 Research and development $ $ General and administrative $ $

Commitments and Contingencies

Commitments and Contingencies	3 Months Ended
	Mar. 31, 2016
Commitments and Contingencies.
Commitments and Contingencies	7. Commitments and Contingencies Operating Leases The Company leases office space under operating leases for its location in South San Francisco, California and in Stamford, Connecticut. The Company’s lease agreements contain escalation clauses, accordingly, the Company straight-lines the rent expense over the lease term. Rent expense under operating leases for the three months ended March 31, 2016 and 2015 was $178,976 and $32,510, respectively. Future minimum lease payments as of March 31, 2016 are as follows (in thousands): Operating Leases 2016 $ 2017 2018 2019 2020 Thereafter $ The Company has the option to extend the term of its existing Stamford, CT lease for one additional five-year period, and it has an option to terminate the lease after 5.5 years subject to payment of an early termination fee both of which are excluded from the table above. Array Collaboration On July 3, 2013, the Company signed a multi-year strategic collaboration agreement with Array, and this agreement was subsequently amended on November 26, 2013, April 10, 2014, October 13, 2014, March 31, 2015 and February 18, 2016. Under the terms of the collaboration agreement, the Company obtained certain rights to Array’s tropomyosin receptor kinase (TRK) inhibitor program, as well as additional novel oncology targets, including LOXO-195, rearranged during transfection (RET), and fibroblast growth factor receptor (FGFR). The Company has worldwide commercial rights to each product candidate from the collaboration and Array participates in any potential successes through milestones and royalties. With respect to the discovery and preclinical program, the collaboration agreement, as amended, runs through September 30, 2017, and the Company has the option to extend the term for up to one additional one-year renewal period by providing written notice to Array at least three months before the end of the initial discovery and preclinical development programs term. Before the February 2016 amendment, in addition to LOXO-101, the parties designated 12 discovery targets, of which seven were selected for additional study in January 2015, which was to be reduced to four on or before January 2016. The Company had the option to maintain the total target number at five for an additional payment, and the Company exercised this option to maintain five discovery programs in January 2016. In the February 2016 amendment, the parties designated a total of six discovery targets. An additional payment was due at contract signing, satisfying a prior obligation of the April 2014 amendment. As part of the agreement the Company agreed to pay Array a fixed amount per month, based on Array’s commitment to provide full-time equivalents and other support relating to the conduct of the discovery and preclinical development programs. See Note 8 for amounts the Company recorded in related party research and development expenses for the three months ended March 31, 2015. The Company incurred $3.3 million of research and development expenses under the Array Agreement for the three months ended March 31, 2016. Milestones With respect to product candidates directed to TRK, including LOXO-101 and its back-up compounds, the Company could be required to pay Array up to $223 million in milestone payments, the substantial majority of which are due upon the achievement of commercial milestones. With respect to product candidates directed to targets other than TRK, the Company could be required to pay Array up to $213 million in milestone payments, the substantial majority of which are due upon the achievement of commercial milestones. Royalties The Company is required to pay Array mid-single digit royalties on worldwide net sales of products. With respect to the royalty on products directed to targets other than TRK, the Company has the right to credit certain milestone payments against royalties on sales of products directed to such target. Research and Development Arrangements In the course of normal business operations, the Company enters into agreements with clinical research organizations, or CROs, to assist in the performance of research and development and preclinical activities. Expenditures to CROs may represent a significant cost in preclinical and clinical development for the Company in future periods. The Company can elect to discontinue the work under these agreements at any time. The Company could also enter into additional collaborative research, contract research, manufacturing, and supplier agreements in the future, which may require upfront payments and even long-term commitments of cash. Legal Proceedings The Company is not involved in any legal proceeding that it expects to have a material effect on its business, financial condition, results of operations and cash flows.

Related Party Transactions

Related Party Transactions	3 Months Ended
	Mar. 31, 2016
Related Party Transactions
Related Party Transactions	8. Related Party Transactions As of December 31, 2015, Array had indicated that it is no longer a holder of more than 5% of the Company’s common stock, therefore, the Company is not reporting expenses with Array as related-party research and development expense for the three months ended March 31, 2016. The Company recorded related-party research and development expenses of $1.9 million for the three months ended March 31, 2015 for services provided by Array under a collaboration agreement. Dr. Lori Kunkel, a board member, had a consulting agreement with the Company to assist in the Company’s drug development process which was modified effective as of October 31, 2015, to provide that she receives only the standard director compensation for her services. Dr. Kunkel was eligible to receive a maximum of $15,000 monthly for her consulting work. Payments were expensed as incurred and recorded as a component of research and development expenses. During the three months ended March 31, 2015, the Company recognized expenses of $45,000 in accordance with the terms of the consulting agreement.

Summary of Significant Accoun16

Summary of Significant Accounting Policies (Policies)	3 Months Ended
	Mar. 31, 2016
Summary of Significant Accounting Policies
Basis of Presentation	Basis of Presentation The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). Any reference in these notes to applicable guidance is meant to refer to GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Update (“ASU”) of the Financial Accounting Standards Board (“FASB”).
Unaudited Interim Financial Information	Unaudited Interim Financial Information The accompanying balance sheet as of December 31, 2015, was derived from the Company’s audited financial statements included in Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 15, 2016. It is suggested that the interim unaudited condensed financial statements be read in conjunction with the annual financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K. The accompanying balance sheet as of March 31, 2016, the statements of operations for the three months ended March 31, 2016 and 2015, the statements of comprehensive loss for the three months ended March 31, 2016 and 2015, the statement of stockholders’ equity for the period from January 1, 2016 to March 31, 2016 and the statements of cash flows for the three months ended March 31, 2016 and 2015 are unaudited. The interim unaudited condensed financial statements have been prepared on the same basis as the annual audited financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair presentation of the Company’s financial position as of March 31, 2016, the results of its operations for the three months ended March 31, 2016 and 2015 and its cash flows for the three months ended March 31, 2016 and 2015. The interim unaudited condensed financial statements have been prepared pursuant to the rules and regulations of the SEC. Certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading.
Significant Accounting Policies	Significant Accounting Policies The Company’s significant accounting policies are disclosed in the audited financial statements for the year ended December 31, 2015 included in the Company’s Form 10-K filed with the SEC on March 15, 2016. Since the date of such financial statements, there have been no changes to the Company’s significant accounting policies.
Recent Accounting Pronouncements	Recent Accounting Pronouncements In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”), which provides for simplification of certain aspects of employee share-based payment accounting including income taxes, classification of awards as either equity or liabilities, accounting for forfeitures and classification on the statement of cash flows. ASU 2016-09 will be effective for the Company in the first quarter of 2017 and will be applied either prospectively, retrospectively or using a modified retrospective transition approach depending on the area covered in this update. The Company is currently in the process of assessing the impact of ASU 2016-09 on the Company’s financial statements and related disclosures. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”) , which requires lessees to recognize assets and liabilities for the rights and obligations created by most leases on their balance sheet. The guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application is permitted. ASU 2016-02 requires modified retrospective adoption for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. The Company is currently evaluating the impact the standard may have on the Company’s financial statements and related disclosures. In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments - Overall (Subtopic 825-10), Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”), which addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. ASU 2016-01 will be effective for annual periods and interim periods within those annual periods beginning after December 15, 2017 and early adoption is not permitted. The Company is currently evaluating the impact that the standard will have on the Company’s financial statements and related disclosures.

Net Loss Per Common Share (Tabl

Net Loss Per Common Share (Tables)	3 Months Ended
	Mar. 31, 2016
Net Loss Per Common Share
Schedule of computation of basic and diluted net loss per common share	The following table sets forth the computation of basic and diluted net loss per common share for the periods indicated (in thousands, except share and per share data): Three Months Three Months Ended Ended March 31, 2016 March 31, 2015 Basic and diluted net loss per common share calculation: Net loss $ ) $ ) Weighted average common shares outstanding — basic and diluted Net loss per share of common stock — basic and diluted $ ) $ )
Schedule of outstanding securities excluded from the computation of diluted weighted average shares outstanding, as they would have been anti-dilutive	2016 2015 Unvested restricted stock Stock options

Fair Value Measurements (Table)

Fair Value Measurements (Table)	3 Months Ended
	Mar. 31, 2016
Fair Value Measurements.
Schedule of available-for-sale securities unrealized gains and losses from changes in fair value	(amounts in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized (Losses) Fair Value March 31, 2016 Overnight repurchase agreements $ $ — $ — $ Money market funds — — Government enterprise debt securities — — Total included in cash and cash equivalents — — Government enterprise debt securities — US Government debt securities — Short-term available-for-sale securities — Total fair value financial instruments $ $ $ — $ December 31, 2015 Overnight repurchase agreements $ $ — $ — $ Money market funds — — Government enterprise debt securities ) Total included in cash and cash equivalents ) Government enterprise debt securities ) US Government debt securities — ) Short-term available-for-sale securities ) Total fair value financial instruments $ $ $ ) $
Schedule of financial assets measured at fair value on a recurring basis	The Company’s financial assets measured at fair value on a recurring basis at March 31, 2016 were as follows (in thousands): Fair Value Measurements at Measurement Date: Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total As Of March 31, 2016 Assets: Government enterprise debt securities $ — $ $ — $ Overnight repurchase agreements — — Money market funds — — US Government debt securities — — Totals $ $ $ — $ The Company’s financial assets measured at fair value on a recurring basis at December 31, 2015 were as follows (in thousands): Fair Value Measurements at Measurement Date: Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total As Of December 31, 2015 Assets: Government enterprise debt securities $ — $ $ — $ Overnight repurchase agreements — — Money market funds — — US Government debt securities — — Totals $ $ $ — $

Accrued Expenses and Other Cu19

Accrued Expenses and Other Current Liabilities (Tables)	3 Months Ended
	Mar. 31, 2016
Accrued Expenses and Other Current Liabilities.
Schedule of accrued expenses and other current liabilities	Accrued expenses and other current liabilities consisted of the following (in thousands): March 31, 2016 December 31, 2015 Research and development expenses $ $ General and administrative expenses $ $

Stock-Based Compensation (Table

Stock-Based Compensation (Tables)	3 Months Ended
	Mar. 31, 2016
Stock-Based Compensation.
Summary of stock option activity under the 2014 Plan	Average Weighted- Remaining Aggregate Number Average Contractual Intrinsic Value of Shares Exercise Price Term (in years) (in thousands) Outstanding at January 1, 2016 $ $ Granted Exercised ) Forfeited and expired — — Outstanding at March 31, 2016 $ $ Vested and expected to vest at March 31, 2016 $ $ Exercisable at March 31, 2016 $ $ Weighted-average grant date fair value of options granted during the three months ended March 31, 2016 $
Schedule of weighted-average assumptions under the Black-Scholes option pricing model estimate the fair value of option awards	Three Months Ended March 31, 2016 Risk-free interest rate % Expected dividend yield % Expected stock price volatility % Expected term of options (in years) Expected forfeiture rate %
Schedule of Share-based compensation expense recognized	Share-based compensation expense recognized was as follows (in thousands): Three Months Ended March 31, 2016 Three Months Ended March 31, 2015 Research and development $ $ General and administrative $ $

Commitments and Contingencies (

Commitments and Contingencies (Tables)	3 Months Ended
	Mar. 31, 2016
Commitments and Contingencies.
Schedule of future minimum lease payments	Future minimum lease payments as of March 31, 2016 are as follows (in thousands): Operating Leases 2016 $ 2017 2018 2019 2020 Thereafter $

Organization and Description 22

Organization and Description of the Business (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2016USD ($)item	Dec. 31, 2015USD ($)
Organization and Description of the Business
Number of operating segments | item	1
Working capital	$ 144,300
Accumulated deficit	78,435	$ 66,838
Cash, cash equivalents and investments	144,800
Revenues	$ 0

Net Loss Per Common Share (Deta

Net Loss Per Common Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total (in shares)	2,296,514	2,184,152
Basic and diluted net loss per common share calculation:
Net loss	$ (11,597)	$ (6,182)
Weighted average common shares outstanding-basic and diluted (in shares)	19,544,748	16,474,269
Net loss per share of common stock-basic and diluted (in dollars per share)	$ (0.59)	$ (0.38)
Unvested restricted stock
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total (in shares)	88,062	154,110
Stock options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total (in shares)	2,208,452	2,030,042

Fair Value Measurements - Amort

Fair Value Measurements - Amortized Costs and Fair Values (Detail) - USD ($) $ / shares in Units, $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Net asset value for money market funds (in dollars per unit)	$ 1
Overnight repurchase agreements
Amortized Cost	$ 16,750	$ 16,750
Fair Value	16,750	16,750
US Government-sponsored Enterprises Debt Securities
Amortized Cost	3,007	33,207
Gross Unrealized Gains		1
Gross Unrealized (Losses)		(2)
Fair Value	3,007	33,206
Money Market Funds
Amortized Cost	20,025	10,270
Fair Value	20,025	10,270
Cash and cash equivalents
Amortized Cost	39,782	60,227
Gross Unrealized Gains		1
Gross Unrealized (Losses)		(2)
Fair Value	39,782	60,226
Government enterprise Short-term available-for-sale securities
Amortized Cost	97,255	85,730
Gross Unrealized Gains	41	10
Gross Unrealized (Losses)		(25)
Fair Value	97,296	85,715
Government enterprise AFS securities
Amortized Cost	71,605	73,193
Gross Unrealized Gains	31	10
Gross Unrealized (Losses)		(20)
Fair Value	71,636	73,183
US Government Debt Securities
Amortized Cost	25,650	12,537
Gross Unrealized Gains	10
Gross Unrealized (Losses)		(5)
Fair Value	25,660	12,532
Available-for-sale securities.
Amortized Cost	137,037	145,957
Gross Unrealized Gains	41	11
Gross Unrealized (Losses)		(27)
Fair Value	$ 137,078	$ 145,941

Fair Value Measurements - Recur

Fair Value Measurements - Recurring Basis of Measurement (Details) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2016USD ($)Institution	Dec. 31, 2015USD ($)Institution	Mar. 31, 2015USD ($)
Number of financial institutions that hold cash and cash equivalents for the Company | Institution	2	2
Percentage of repurchase agreements collateralized by US Government backed securities (as a percent)	100.00%	100.00%
Recurring
Available-for-sale	$ 137,078	$ 145,941
Non-recurring
Investments	0		$ 0
Fair Value, Inputs, Level 1 | Recurring
Available-for-sale	62,435	39,552
Fair Value, Inputs, Level 2 | Recurring
Available-for-sale	74,643	106,389
US Government-sponsored Enterprises Debt Securities | Recurring
Available-for-sale	74,643	106,389
US Government-sponsored Enterprises Debt Securities | Fair Value, Inputs, Level 2 | Recurring
Available-for-sale	74,643	106,389
Overnight repurchase agreements | Recurring
Available-for-sale	16,750	16,750
Overnight repurchase agreements | Fair Value, Inputs, Level 1 | Recurring
Available-for-sale	16,750	16,750
Money Market Funds | Recurring
Available-for-sale	20,025	10,270
Money Market Funds | Fair Value, Inputs, Level 1 | Recurring
Available-for-sale	20,025	10,270
US Government Debt Securities | Recurring
Available-for-sale	25,660	12,532
US Government Debt Securities | Fair Value, Inputs, Level 1 | Recurring
Available-for-sale	$ 25,660	$ 12,532

Accrued Expenses and Other Cu26

Accrued Expenses and Other Current Liabilities (Detail) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Accrued Expenses and Other Current Liabilities
Accrued Expenses	$ 2,147	$ 2,584
Accrued bonuses	300	1,100
Research and development
Accrued Expenses and Other Current Liabilities
Accrued Expenses	1,324	1,512
General and administrative
Accrued Expenses and Other Current Liabilities
Accrued Expenses	$ 823	$ 1,072

Stock-Based Compensation - Ince

Stock-Based Compensation - Incentive Plans (Details)	3 Months Ended
	Mar. 31, 2016shares
2013 Plan
2013 and 2014 Equity Incentive Plan
Shares authorized for issuance	1,544,615
Shares available for future issuance (in shares)	0
2014 Plan
2013 and 2014 Equity Incentive Plan
Shares authorized for issuance	2,178,437
Shares available for future issuance (in shares)	1,218,117
Increase in common stock reserved for issuance as percentage of the aggregate number of outstanding shares of common stock (as a percent)	3.00%

Stock-Based Compensation - Stoc

Stock-Based Compensation - Stock Options Activity (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2016	Dec. 31, 2015
Weighted average assumptions used to estimate fair value of option awards using Black Scholes option pricing model
Unrecognized compensation expense	$ 17,100
2013 and 2014 Equity Incentive Plans | Stock option
Weighted average assumptions used to estimate fair value of option awards using Black Scholes option pricing model
Unrecognized compensation expense	$ 17,100
2014 Plan | Stock option
Number of Shares
Outstanding at the beginning of the period (in shares)	2,240,955
Granted (in shares)	80,500
Exercised (in shares)	(113,003)
Outstanding at the end of the period (in shares)	2,208,452	2,240,955
Vested and expected to vest at the end of the period (in shares)	2,080,758
Exercisable at the end of the period (in shares)	901,956
Weighted Average Exercise Price
Outstanding at the beginning of the period (in dollars per share)	$ 11.05
Granted (in dollars per share)	20.56
Exercised (in dollars per share)	6.56
Outstanding at the end of the period (in dollars per share)	11.63	$ 11.05
Vested and expected to vest at the end of the period (in dollars per share)	11.31
Exercisable at the end of the period (in dollars per share)	$ 6.14
Average Remaining Contractual Term
Outstanding at the beginning of the period	8 years 6 months 26 days	8 years 5 months 23 days
Outstanding at the end of the period	8 years 6 months 26 days	8 years 5 months 23 days
Vested and expected to vest at the end of the period	8 years 6 months 18 days
Exercisable at the end of the period	7 years 1 month 10 days
Aggregate Intrinsic Value
Outstanding at the beginning of the period	$ 36,084	$ 40,021
Outstanding at the end of the period	36,084	$ 40,021
Vested and expected to vest at the end of the period	34,580
Exercisable at the end of the period	$ 16,051
Weighted average assumptions used to estimate fair value of option awards using Black Scholes option pricing model
Risk-free interest rate	1.56%
Expected dividend yield	0.00%
Expected stock price volatility	76.82%
Expected term of options (in years)	7 years 2 months 12 days
Expected forfeiture rate	12.95%
Weighted-average period for recognition	2 years 10 months 24 days
Weighted average grant date fair value of options granted (in dollars per share)	$ 14.59
Non-employees
Weighted average assumptions used to estimate fair value of option awards using Black Scholes option pricing model
Unrecognized compensation expense	$ 3,300

Stock-Based Compensation - Rest

Stock-Based Compensation - Restricted Stock Information (Details) - 2013 and 2014 Equity Incentive Plans - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Stock based compensation expense
Share-based compensation expense	$ 1,342	$ 1,049
Research and development
Stock based compensation expense
Share-based compensation expense	297	462
General and administrative
Stock based compensation expense
Share-based compensation expense	$ 1,045	$ 587

Commitments and Contingencies30

Commitments and Contingencies (Details)	1 Months Ended		3 Months Ended
	Feb. 29, 2016item	Jan. 31, 2016item	Mar. 31, 2016USD ($)item	Mar. 31, 2015USD ($)
Commitments and contingencies
Rent expense under operating leases			$ 178,976	$ 32,510
2,016			363,000
2,017			675,000
2,018			683,000
2,019			670,000
2,020			684,000
Thereafter			1,380,000
Total			$ 4,455,000
Number of additional renewal periods options available to the entity to extend agreement term (in periods) | item			1
Minimum term before lease termination option can be exercised			5 years 6 months
Term of additional renewal periods options available to the entity to extend agreement term (in options)			5 years
Related party research and development expenses				1,918,000
Collaboration agreement | Array
Commitments and contingencies
Term of additional renewal periods options available to the entity to extend agreement term (in options)			1 year
Number of discovery targets designated by the parties (in targets) | item	6	5	12
Number of discovery targets which are to be selected for additional study on or before January 2015 (in targets) | item			7
Number of discovery targets which are to be selected for additional study after reduction on or before January 2016 (in targets) | item			4
Maximum number of candidates which can be selected by the entity for modest additional payment (in candidates) | item			5
Related party research and development expenses			$ 3,300,000	$ 1,900,000
Collaboration agreement | Maximum | Array
Commitments and contingencies
Number of additional renewal periods options available to the entity to extend agreement term (in periods) | item			1
Collaboration agreement | Product candidates directed to TRK | Array
Commitments and contingencies
Maximum milestone payments which the entity could be required to pay			$ 223,000,000
Collaboration agreement | Product candidates directed to targets other than TRK | Array
Commitments and contingencies
Maximum milestone payments which the entity could be required to pay			$ 213,000,000

Related Party Transactions (Det

Related Party Transactions (Details) - USD ($)	Oct. 23, 2014	Mar. 31, 2016	Mar. 31, 2015
Related party transactions
Related party research and development expenses			$ 1,918,000
Collaboration agreement | Array
Related party transactions
Related party research and development expenses		$ 3,300,000	1,900,000
Consulting Letter Agreement | Dr. Lori Kunkel
Related party transactions
Maximum monthly fees for consulting work	$ 15,000
Expenses recognized for consulting work			$ 45,000