Avexis (AVXS) 10-Q 11 May 17 2017 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2017	May 11, 2017
Document and Entity Information [Abstract]
Entity Registrant Name	AveXis, Inc.
Entity Central Index Key	1,652,923
Document Type	10-Q
Document Period End Date	Mar. 31, 2017
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		27,794,558
Document Fiscal Year Focus	2,017
Document Fiscal Period Focus	Q1

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets - USD ($)	Mar. 31, 2017	Dec. 31, 2016
Current assets:
Cash and cash equivalents	$ 204,453,779	$ 240,429,839
Prepaid expenses and other current assets	7,269,779	4,750,469
Total current assets	211,723,558	245,180,308
Property and equipment, net	33,682,337	24,200,582
Other long-term assets	1,836,157	1,194,541
Total assets	247,242,052	270,575,431
Current liabilities:
Accounts payable	11,789,322	3,197,274
Accrued expenses	8,625,514	16,794,003
Accrued indemnification obligation	4,519,700	4,452,500
Total current liabilities	24,934,536	24,443,777
Other long-term liabilities	596,037
Total liabilities	25,530,573	24,443,777
Common stock; par value $0.0001 per share, 100,000,000 shares authorized; 27,743,174 shares issued and outstanding at March 31, 2017; 27,700,054 shares issued and outstanding at December 31, 2016	2,774	2,770
Additional paid-in capital	392,989,983	387,691,208
Accumulated deficit	(171,281,278)	(141,562,324)
Total stockholders' equity	221,711,479	246,131,654
Total liabilities, redeemable common stock and stockholders' equity	$ 247,242,052	$ 270,575,431

Condensed Consolidated Balance3

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Mar. 31, 2017	Dec. 31, 2016
Common stock
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized (in shares)	100,000,000	100,000,000
Common stock, shares issued (in shares)	27,743,174	27,700,054
Common stock, shares outstanding (in shares)	27,743,174	27,700,054

Condensed Consolidated Statemen

Condensed Consolidated Statements of Operations and Comprehensive Loss - USD ($)	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Operating expenses:
General and administrative	$ 9,637,807	$ 4,823,913
Research and development	20,327,087	16,065,089
Total operating expenses	29,964,894	20,889,002
Loss from operations	(29,964,894)	(20,889,002)
Interest income	245,940	52,895
Net loss	(29,718,954)	(20,836,107)
Comprehensive loss	$ (29,718,954)	$ (20,836,107)
Basic and diluted net loss per common share (in dollars per share)	$ (1.07)	$ (1.24)
Weighted-average basic and diluted common shares outstanding (in shares)	27,733,701	16,774,718

Condensed Consolidated Stateme5

Condensed Consolidated Statements of Cash Flows - USD ($)	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Cash flows from operating activities
Net loss	$ (29,718,954)	$ (20,836,107)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	244,137	11,045
Stock-based compensation	5,083,878	13,543,547
Changes in operating assets and liabilities:
Prepaid expenses and other current assets	(2,532,858)	(420,180)
Other long-term assets	(641,616)	(731,663)
Accounts payable	6,525,937	580,688
Accrued expenses	(7,154,442)	169,971
Accrued indemnification obligation	67,200
Net cash used in operating activities	(28,126,718)	(7,682,699)
Cash flows from investing activities
Capital expenditures	(8,064,242)	(3,659,718)
Net cash used in investing activities	(8,064,242)	(3,659,718)
Cash flows from financing activities
Proceeds from issuance of common stock, net of issuance costs		98,169,703
Payments of deferred offering costs		(883,713)
Proceeds from exercise of stock options	214,900
Proceeds from exercise of stock warrants	0	42,000
Net cash provided by financing activities	214,900	97,327,990
Net (decrease) increase in cash and cash equivalents	(35,976,060)	85,985,573
Cash and cash equivalents, beginning of period	240,429,839	62,251,860
Cash and cash equivalents, end of period	204,453,779	148,237,433
Supplemental cash flow information:
Purchases of property and equipment in accounts payable and accrued liabilities	$ 5,841,793	2,060,392
Deferred offering costs recorded in accounts payable and accrued liabilities		$ 290,848

Background

Background	3 Months Ended
	Mar. 31, 2017
Background
Background	1. Background AveXis, Inc. was formed on March 8, 2010 in the state of Delaware as Biolife Cell Bank, LLC. In January 2012, the Company converted from a limited liability company to a corporation, Biolife Cell Bank, Inc. In January 2014, the Company amended and restated its Certificate of Incorporation to change its name to AveXis, Inc. (“AveXis” or “the Company”). The Company is a clinical-stage gene therapy company dedicated to developing and commercializing gene therapy treatments for patients suffering from rare and life-threatening neurological genetic diseases. The Company’s initial product candidate, AVXS-101, is a gene therapy product candidate currently in a Phase 1 clinical trial for the treatment of spinal muscular atrophy, (“SMA”), Type 1, the leading genetic cause of infant mortality. Initial Public Offering On February 10, 2016, the Company completed an initial public offering (“IPO”), which resulted in the issuance and sale of 4,750,000 shares of its common stock at a public offering price of $20.00 per share, resulting in net proceeds of approximately $88,350,000 after deducting underwriting discounts. Upon the closing of the IPO, the 3,278,938 shares of Class B-1 preferred stock, 326,557 shares of Class B-2 preferred stock, 2,365,020 shares of Class C preferred stock and 3,105,000 of Class D preferred stock were automatically converted into shares of the Company’s common stock. On March 3, 2016, the underwriters of the Company’s IPO exercised their over-allotment option to purchase an additional 527,941 shares of the Company’s common stock at the initial public offering price of $20.00 per share, less underwriting discounts and commissions, resulting in additional net proceeds of approximately $9,800,000. Underwritten Public Offering On September 13, 2016, the Company completed an underwritten public offering (the “Follow-On Offering”) of 4,887,500 shares of its common stock, 4,597,645 shares of which were issued and sold by the Company, including the exercise in full by the underwriters of their option to purchase 637,500 shares from the Company, and 289,855 shares of which were sold by PBM Capital Investments, LLC (“PBM”), an existing stockholder of the Company, each at a public offering price of $34.50 per share. After deducting the underwriting discounts and commissions, the net proceeds to the Company were approximately $149.1 million. The Company did not receive proceeds from the sale of the common stock by PBM.

Summary of Significant Accounti

Summary of Significant Accounting Policies	3 Months Ended
	Mar. 31, 2017
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies	2. Summary of Significant Accounting Policies Basis of Presentation The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial reporting and the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) and, therefore, do not include all information and footnote disclosures normally included in the annual consolidated financial statements. In the opinion of management, the unaudited condensed consolidated financial statements reflect all adjustments of a normal recurring nature that are necessary for a fair statement of the results for the interim periods presented. Interim results are not necessarily indicative of results for a full year. The December 31, 2016 condensed consolidated balance sheet data contained within this Form 10-Q was derived from audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 (“Annual Report on Form 10-K”), but does not include all disclosures required by GAAP. Significant Accounting Policies There have been no material changes in the Company’s significant accounting policies as of and for the three months ended March 31, 2017, as compared with the significant accounting policies described in the Company’s Annual Report on Form 10-K. Use of Estimates The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues, if any, and expenses during the reporting period. Actual results could differ from those estimates. In the Company’s opinion, the accompanying unaudited condensed consolidated financial statements include all normal recurring adjustments necessary for a fair presentation of the Company’s financial position, results of operations and cash flows for the interim periods presented. Recent Accounting Pronouncements In May 2014, the FASB and the International Accounting Standards Board (IASB) issued Accounting Standard Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606). The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In doing so, companies will need to use more judgment and make more estimates than under previous guidance. Early adoption is permitted after December 15, 2016, and the standard is effective for public entities for annual reporting periods beginning after December 15, 2017 and interim periods therein. The Company has not recognized revenue through March 31, 2017. The Company will not early adopt this standard and will evaluate the adoption of Topic 606 when the Company begins to recognize revenue and determine the effects it may have on the Company’s consolidated financial statements. In November 2015, the FASB issued ASU No. 2015-17, Balance Sheet Classification of Deferred Taxes (“ASU 2015-17”). To simplify presentation, the new guidance requires that all deferred tax assets and liabilities, along with any related valuation allowance, be classified as noncurrent on the balance sheet. As a result, each jurisdiction will now only have one net noncurrent deferred tax asset or liability. ASU 2015-17 is effective for public business entities in fiscal years beginning after December 15, 2016, including interim periods within those years. Early adoption is permitted for all entities as of the beginning of an interim or annual reporting period. The Company is evaluating the adoption of ASU 2015-17, but has not determined the effects it may have on the Company’s consolidated financial statements. In February 2016, the FASB issued Accounting Standards Codification (“ASC”) No. 2016-02, Leases (“ASC 842”). The guidance requires lessees to recognize almost all leases on their balance sheet as a right-of-use asset and a lease liability. For income statement purposes, the FASB retained a dual model, requiring leases to be classified as either operating or finance. Lessor accounting is similar to the current model, but updated to align with certain changes to the lessee model and the new revenue recognition standard. Existing sale-leaseback guidance, including guidance for real estate, is replaced with a new model applicable to both lessees and lessors. ASC 842 is effective for fiscal years beginning after December 15, 2018. The Company is evaluating the adoption of ASC 842, but has not determined the effects it may have on the Company’s consolidated financial statements. In August 2016, the FASB issued Accounting Standards Update, or ASU, 2016-15, Statement of Cash Flows (Topic 230). ASU 2016-15 is intended to reduce the diversity in practice regarding how certain transactions are classified within the statement of cash flows. ASU 2016-15 is effective for public business entities for annual periods beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted with retrospective application. The Company is evaluating the adoption of ASU 2016-15, but has not determined the effects it may have on the Company’s consolidated financial statements.

Property and Equipment, Net

Property and Equipment, Net	3 Months Ended
	Mar. 31, 2017
Property and Equipment, Net
Property and Equipment, Net	3. Property and Equipment, Net Property and equipment, net, consists of the following: March 31, December 31, Office furniture and equipment $ $ Leasehold improvements Construction in progress Property and equipment, gross Less: accumulated depreciation ) ) Property and equipment, net $ $ Depreciation expense was $244,137 and $11,045 for the three months ended March 31, 2017 and 2016, respectively. Construction in progress increased by $2,123,654 for the three months ended March 31, 2017.

Accrued Expenses

Accrued Expenses	3 Months Ended
	Mar. 31, 2017
Accrued Expenses
Accrued Expenses	4. Accrued Expenses Accrued expenses consist of the following: March 31, December 31, Accrued manufacturing development costs $ $ Accrued construction in progress Accrued payroll, bonus and deferred compensation Accrued clinical trial costs Accrued professional fees Accrued consulting Accrued business taxes Deferred rent Accrued severance Other Accrued expenses $ $

Accrued Indemnification Obligat

Accrued Indemnification Obligation	3 Months Ended
	Mar. 31, 2017
Accrued Indemnification Obligation
Accrued Indemnification Obligation	5. Accrued Indemnification Obligation In January 2014, the Company issued 2,334,391 shares of restricted common stock to a member of its Board of Directors (Dr. Brian Kaspar, see Note 6) pursuant to a consulting agreement for scientific advisory services to be performed by the director on behalf of the Company. In connection with the restricted stock purchase agreement, the Company agreed to indemnify Dr. Kaspar for any taxes, interest, fines, penalties or other costs and expenses that Dr. Kaspar may incur in the future should the Internal Revenue Service succeed in a tax determination that the stock price paid by Dr. Kaspar (which was par value) was lower than the fair market value of the stock on the date of grant. The indemnification term is in effect for six years after the due date of the tax return for the year in which the stock was issued. In January 2016, the Company entered into an employment agreement with Dr. Kaspar. In connection with the preparation of the Company’s audited consolidated financial statements for the year ended December 31, 2014, the Company determined that the per share fair value of the Company’s common stock on January 28, 2014, the grant date, was $1.51. As a result, the Company issued Dr. Kaspar an amended Form 1099 for the 2014 tax year reflecting an aggregate fair value of the restricted stock grant of $3,535,419. Due to the indemnity obligation contained in Dr. Kaspar’s restricted stock purchase agreement, the Company will ultimately be required to reimburse Dr. Kaspar for the taxes he will pay following the amendment of Dr. Kaspar’s 2014 personal income tax return. As a result, the Company has concluded that payment of such indemnity is probable as of December 31, 2016 and March 31, 2017. Additionally, the Company intends to gross-up such indemnification payment for the tax that will be payable by Dr. Kaspar on the indemnity payment. As a result, the Company has accrued balances of $4,519,700 and $4,452,500 at March 31, 2017 and December 31, 2016, respectively, representing the Company’s best estimate of the ultimate tax indemnification and gross-up payment to be made to Dr. Kaspar. The increase in the accrued indemnification obligation was due to the accrual of additional interest through March 31, 2017. The Company expects to pay this entire amount in 2017.

Stock-Based Compensation

Stock-Based Compensation	3 Months Ended
	Mar. 31, 2017
Stock-Based Compensation
Stock-Based Compensation	6. Stock-Based Compensation 2014 Stock Plan (the “2014 Plan”) and 2016 Equity Incentive Plan (the “2016 Plan”) The following table summarizes stock option activity under the Plans for the three months ended March 31, 2017: Weighted Average Number of Weighted Remaining Aggregate Outstanding at December 31, 2016 $ $ Granted $ Exercised ) $ Cancelled or forfeited ) $ Outstanding at March 31, 2017 $ $ Exercisable at March 31, 2017 $ $ Exercisable and expected to vest at March 31, 2017 $ $ (a) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying options and the estimated fair value of the common stock for the options that were in-the-money at March 31, 2017 and December 31, 2016. For the three months ended March 31, 2017 and 2016, the total number of stock options exercised was 43,120 and 0, respectively, resulting in total proceeds of $214,900 and $0, respectively. As of March 31, 2017 and December 31, 2016, there was $25,179,386 and $20,583,606, respectively, of unrecognized stock-based compensation expense related to stock option awards that is expected to be recognized over a weighted-average period of 1.4 and 1.4 years, respectively. The Company has recorded total stock-based compensation expense related to the issuance of stock option awards under the Plans in the consolidated statements of operations and comprehensive loss as follows: Three Months Ended March 31, 2017 2016 Research and development $ $ General and administrative $ $ Stock Options Granted to Employees The weighted-average grant date fair value of options granted during the three months ended March 31, 2017 and 2016 was $47.20 and $11.16, respectively, on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions: Three Months Ended March 31, 2017 2016 Expected volatility % % Risk-free interest rate % % Expected terms (in years) Expected dividend yield % % Options generally expire ten years following the date of grant. Options typically vest over a period of two to four years, but vesting provisions can vary by award based on the discretion of the Board of Directors. Certain awards issued by the Company include performance conditions that must be achieved in order for vesting to occur. Options to purchase common stock carry an exercise price equal to the estimated fair value of the Company’s common stock on the date of grant. Options to purchase shares of the Company’s common stock may be exercised by payment of the exercise price in cash, by the delivery of previously acquired shares of common stock having a fair value equal to the exercise price payable or the withholding of common shares equal to the fair value of the aggregate exercise price. Upon the termination of service of a holder of stock options awarded under the Plan, all unvested options are immediately forfeited and vested options may be exercised within three months of termination. Service-Based Restricted Stock Units As of March 31, 2017 and December 31, 2016, there were 56,900 and 57,500, respectively, outstanding service-based restricted stock units granted to employees. During the three months ended March 31, 2017, 15,233 service-based restricted stock units vested and remained outstanding, 600 were forfeited and cancelled and the Company recognized stock-based compensation expense of $341,457 during the three months ended March 31, 2017. No service-based restricted stock units were issued and outstanding as of March 31, 2016. At March 31, 2017 and 2016, there was $885,716 and $0, respectively, of unrecognized compensation cost related to service-based unvested restricted stock units that will be recognized as expense over a weighted-average period of 1.3 years. A summary of the status of the Company’s restricted stock units at March 31, 2017 and of changes in service-based restricted stock units outstanding under the 2016 Plan for the three months ended March 31, 2017 is as follows: Weighted Average Grant Number Fair of Shares Per Share Outstanding at December 31, 2016 $ Granted — — Forfeited and cancelled ) Outstanding at March 31, 2017 $ The Company granted restricted stock units with service-based vesting terms. The outstanding service-based restricted stock units vest over a period of three years. For awards that vest subject to the satisfaction of service requirements, compensation expense is measured based on the fair value of the RSUs on the date of grant and is recognized as expense on a straight-line basis, net of estimated forfeitures, over the requisite service period. All service-based restricted stock units issued vest over time as stipulated in the individual service-based restricted stock unit agreements. Performance-Based Restricted Stock Units On March 20, 2017, the Company granted to certain individuals a total of 49,332 performance-based restricted stock units. As of March 31, 2017, all 49,332 of these performance-based restricted stock units were outstanding, none had vested and the weighted average grant date fair value of all shares was $79.75 per share. There were no performance-based restricted stock units issued and outstanding during the first quarter ended March 31, 2016. Restricted Stock Granted to Non-Employees In January 2014, the Company issued 2,334,391 shares of restricted common stock to Dr. Brian Kaspar pursuant to a consulting agreement for scientific advisory services. Of these shares, 583,597 common shares were vested at the time of grant and the remaining restricted shares were scheduled to vest in the amount of 25% per year on the second, third and fourth anniversary of the grant date pursuant to a restricted stock purchase agreement, which became effective upon the effectiveness of the consulting agreement. In January 2016, the Company entered into an employment agreement with Dr. Kaspar. Upon the effectiveness of the employment agreement, Dr. Kaspar’s 1,750,794 unvested shares granted pursuant to the restricted stock purchase agreement vested in full. As a result of the vesting of the remainder of this award the Company recorded $10,370,762 of additional stock compensation expense for the year ended December 31, 2016. Warrants Granted to Non-Employees During the three month periods ended March 31, 2017, there were no warrants exercised and as a result no proceeds received by the Company. As of March 31, 2017, there were 305,775 common stock warrants vested and outstanding issued to non-employees with a weighted-average exercise price of $2.57.

Net Loss Per Common Share

Net Loss Per Common Share	3 Months Ended
	Mar. 31, 2017
Net Loss Per Common Share
Net Loss Per Common Share	7. Net Loss Per Common Share Basic net loss per common share is computed using the weighted average number of common shares outstanding during the period. Diluted net loss per common share is computed using the sum of the weighted average number of common shares outstanding during the period and, if dilutive, the weighted average number of potential shares of common stock, including the assumed exercise of stock options, stock warrants and unvested restricted common stock. The Company applies the two-class method to calculate its basic and diluted net loss per share attributable to common stockholders, as its preferred stock and common stock are participating securities. The two-class method is an earnings allocation formula that treats a participating security as having rights to earnings that otherwise would have been available to common stockholders. However, the two-class method does not impact the net loss per share of common stock as the Company was in a net loss position for each of the periods presented and preferred stockholders do not participate in losses. For the three months ended March 31, 2017 and 2016, the following potentially dilutive securities have been excluded from the computations of diluted weighted-average shares outstanding because the effect would be anti-dilutive: Three Months Ended March 31, 2017 2016 Stock options Stock warrants Unvested restricted stock units — Unvested performance-based restricted stock units — Amounts in the table above reflect the common stock equivalents of the noted instruments. The following table summarizes the calculation of the basic and diluted net loss per common share: Three Months Ended March 31, 2017 2016 Numerator: Net loss and comprehensive loss $ ) $ ) Denominator: Weighted-average basic and diluted common shares Basic and diluted net loss per common share $ ) $ )

Commitments and Contingencies

Commitments and Contingencies	3 Months Ended
	Mar. 31, 2017
Commitments and Contingencies
Commitments and Contingencies	8. Commitments and Contingencies Operating Leases In March 2014, the Company entered into a lease agreement, which expired in April 2017, for approximately 2,418 square feet of office space in Dallas, Texas. The Company leases a 15,668 square foot facility for its corporate headquarters in Bannockburn, Illinois, pursuant to a lease that expires in July 2024. The lease agreement provides for annual escalation in rent payments during the lease term. The Company is amortizing the escalation in rental payments on a straight-line basis over the term of the lease. The Company also leases a 1,318 square foot facility in Columbus, Ohio for research and development activities, pursuant to a lease that expires in March 2019. In March 2016, the Company entered into a lease agreement, which expires in August 2026, for approximately 48,529 square feet of warehouse and office space Libertyville, Illinois. A portion of the warehouse space was converted into manufacturing space. The lease agreement provides for annual escalation in rent payments during the lease term. The lease agreement provides the Company with a one-time right to terminate the lease effective as of the last day of the ninety-sixth full calendar month of the lease subject to a termination fee. The Company is amortizing the escalation in rental payments on a straight-line basis over the term of the lease. Future minimum lease payments under all of the Company’s leases are as follows: Year ending December 31, 2017 $ 2018 2019 2020 2021 Thereafter Total $ Guarantees and Indemnifications The Company has accrued $4,519,700 and $4,452,500 at March 31, 2017 and December 31, 2016, respectively, representing the Company’s best estimate of the ultimate tax indemnification and gross-up payment to be made to Dr. Kaspar pursuant to a tax indemnification granted to Dr. Kaspar in connection with a restricted common stock grant (see Note 5). Additionally, in the normal course of business, the Company has entered into agreements that contain a variety of representations and provide for general indemnification. The Company’s exposure under these agreements is unknown because it involves claims that may be made against the Company in the future. To date, the Company has not paid any claims or been required to defend any action related to these indemnification obligations. As of March 31, 2017 and December 31, 2016, the Company did not have any material indemnification claims related to these agreements that were probable or reasonably possible and consequently has not recorded any related liabilities. Litigation On September 8, 2016, Sophia’s Cure Foundation (“SCF”), a non-profit 501(c)(3) public charity, filed a complaint in U.S. District Court, Southern District of Ohio, naming as defendants Nationwide Children’s Hospital (“NCH”) and other entities affiliated with NCH, the Company and certain of the Company’s present and former executives (the “Complaint”). According to the complaint, in 2012, SCF and Nationwide Children’s Hospital Foundation (“NCH Foundation”) entered into a donation agreement under which SCF provided NCH a gift of $550,000 to fund clinical work associated with the study of the product candidate that the Company now refers to as AVXS-101 for SMA Type 1 patients, and NCH Foundation agreed in such donation agreement to reference SCF as the “primary sponsor” of such clinical work in all publications issued by NCH Foundation. The complaint also alleges that NCH breached the donation agreement by not naming SCF as the sponsor of the investigational new drug application (the “IND”) that it filed for AVXS-101. Additionally, the complaint alleges that the Company and the named Company executives tortiously interfered with SCF’s rights under the donation agreement by assuming sponsorship of the IND under the NCH License. There is no contractual relationship between the Company and SCF. The complaint seeks, among other relief, monetary damages of $500 million and equitable relief, including taking steps to designate SCF as the sponsor of the IND. The Company filed a motion to dismiss this action on October 28, 2016. On December 5, 2016, SCF filed an amended complaint, asserting similar allegations against the Company as in the original complaint. The Company filed a motion to dismiss the amended complaint on December 19, 2016. On March 20, 2017, SCF filed an opposition brief to the Company’s motion to dismiss, and on April 10, 2017, the Company filed a reply memorandum in support of its motion to dismiss. The Court has not yet ruled on the Company’s motion to dismiss. A pre-trial conference was held on May 9, 2017. The Company believes that the complaint is without merit and intends to vigorously defend itself and its current executives from the allegations. The Company views the probability of loss in this matter to be remote. Lawsuits may be asserted against the Company in the normal course of business. Based on information currently available, management believes that the disposition of any matters, including the matter involving SCF described above, will not have a material adverse effect on the financial position, results of operations or cash flows of the Company.

Taxes

Taxes	3 Months Ended
	Mar. 31, 2017
Taxes
Taxes	9. Taxes Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Valuation allowances are provided if based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The Company has evaluated the positive and negative evidence bearing upon the realizability of its deferred tax assets, including its net operating losses. Based on its history of operating losses, the Company believes that it is more likely than not that the benefit of its deferred tax assets will not be realized. Accordingly, the Company has provided a full valuation allowance for deferred tax assets as of March 31, 2017 and December 31, 2016.

Summary of Significant Accoun15

Summary of Significant Accounting Policies (Policies)	3 Months Ended
	Mar. 31, 2017
Summary of Significant Accounting Policies
Basis of Presentation	Basis of Presentation The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial reporting and the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) and, therefore, do not include all information and footnote disclosures normally included in the annual consolidated financial statements. In the opinion of management, the unaudited condensed consolidated financial statements reflect all adjustments of a normal recurring nature that are necessary for a fair statement of the results for the interim periods presented. Interim results are not necessarily indicative of results for a full year. The December 31, 2016 condensed consolidated balance sheet data contained within this Form 10-Q was derived from audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 (“Annual Report on Form 10-K”), but does not include all disclosures required by GAAP.
Use of Estimates	Use of Estimates The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues, if any, and expenses during the reporting period. Actual results could differ from those estimates. In the Company’s opinion, the accompanying unaudited condensed consolidated financial statements include all normal recurring adjustments necessary for a fair presentation of the Company’s financial position, results of operations and cash flows for the interim periods presented.
Recent Accounting Pronouncements	Recent Accounting Pronouncements In May 2014, the FASB and the International Accounting Standards Board (IASB) issued Accounting Standard Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606). The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In doing so, companies will need to use more judgment and make more estimates than under previous guidance. Early adoption is permitted after December 15, 2016, and the standard is effective for public entities for annual reporting periods beginning after December 15, 2017 and interim periods therein. The Company has not recognized revenue through March 31, 2017. The Company will not early adopt this standard and will evaluate the adoption of Topic 606 when the Company begins to recognize revenue and determine the effects it may have on the Company’s consolidated financial statements. In November 2015, the FASB issued ASU No. 2015-17, Balance Sheet Classification of Deferred Taxes (“ASU 2015-17”). To simplify presentation, the new guidance requires that all deferred tax assets and liabilities, along with any related valuation allowance, be classified as noncurrent on the balance sheet. As a result, each jurisdiction will now only have one net noncurrent deferred tax asset or liability. ASU 2015-17 is effective for public business entities in fiscal years beginning after December 15, 2016, including interim periods within those years. Early adoption is permitted for all entities as of the beginning of an interim or annual reporting period. The Company is evaluating the adoption of ASU 2015-17, but has not determined the effects it may have on the Company’s consolidated financial statements. In February 2016, the FASB issued Accounting Standards Codification (“ASC”) No. 2016-02, Leases (“ASC 842”). The guidance requires lessees to recognize almost all leases on their balance sheet as a right-of-use asset and a lease liability. For income statement purposes, the FASB retained a dual model, requiring leases to be classified as either operating or finance. Lessor accounting is similar to the current model, but updated to align with certain changes to the lessee model and the new revenue recognition standard. Existing sale-leaseback guidance, including guidance for real estate, is replaced with a new model applicable to both lessees and lessors. ASC 842 is effective for fiscal years beginning after December 15, 2018. The Company is evaluating the adoption of ASC 842, but has not determined the effects it may have on the Company’s consolidated financial statements. In August 2016, the FASB issued Accounting Standards Update, or ASU, 2016-15, Statement of Cash Flows (Topic 230). ASU 2016-15 is intended to reduce the diversity in practice regarding how certain transactions are classified within the statement of cash flows. ASU 2016-15 is effective for public business entities for annual periods beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted with retrospective application. The Company is evaluating the adoption of ASU 2016-15, but has not determined the effects it may have on the Company’s consolidated financial statements.

Property and Equipment, Net (Ta

Property and Equipment, Net (Tables)	3 Months Ended
	Mar. 31, 2017
Property and Equipment, Net
Summary of property and equipment, net	March 31, December 31, Office furniture and equipment $ $ Leasehold improvements Construction in progress Property and equipment, gross Less: accumulated depreciation ) ) Property and equipment, net $ $

Accrued Expenses (Tables)

Accrued Expenses (Tables)	3 Months Ended
	Mar. 31, 2017
Accrued Expenses
Schedule of accrued expenses	March 31, December 31, Accrued manufacturing development costs $ $ Accrued construction in progress Accrued payroll, bonus and deferred compensation Accrued clinical trial costs Accrued professional fees Accrued consulting Accrued business taxes Deferred rent Accrued severance Other Accrued expenses $ $

Stock-Based Compensation (Table

Stock-Based Compensation (Tables)	3 Months Ended
	Mar. 31, 2017
Stock-Based Compensation
Summary of stock option activity	Weighted Average Number of Weighted Remaining Aggregate Outstanding at December 31, 2016 $ $ Granted $ Exercised ) $ Cancelled or forfeited ) $ Outstanding at March 31, 2017 $ $ Exercisable at March 31, 2017 $ $ Exercisable and expected to vest at March 31, 2017 $ $ (a) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying options and the estimated fair value of the common stock for the options that were in-the-money at March 31, 2017 and December 31, 2016.
Summary of aggregate stock-based compensation recorded in consolidated statements of operations and comprehensive loss	Three Months Ended March 31, 2017 2016 Research and development $ $ General and administrative $ $
Summary of grant date fair value and assumptions used in determining fair value of stock options	Three Months Ended March 31, 2017 2016 Expected volatility % % Risk-free interest rate % % Expected terms (in years) Expected dividend yield % %
Summary of restricted stock units activity	Weighted Average Grant Number Fair of Shares Per Share Outstanding at December 31, 2016 $ Granted — — Forfeited and cancelled ) Outstanding at March 31, 2017 $

Net Loss Per Common Share (Tabl

Net Loss Per Common Share (Tables)	3 Months Ended
	Mar. 31, 2017
Net Loss Per Common Share
Potentially dilutive securities excluded from computations of diluted weighted-average shares outstanding	Three Months Ended March 31, 2017 2016 Stock options Stock warrants Unvested restricted stock units — Unvested performance-based restricted stock units —
Summary of the basic and diluted net loss per common share	Three Months Ended March 31, 2017 2016 Numerator: Net loss and comprehensive loss $ ) $ ) Denominator: Weighted-average basic and diluted common shares Basic and diluted net loss per common share $ ) $ )

Commitments and Contingencies (

Commitments and Contingencies (Tables)	3 Months Ended
	Mar. 31, 2017
Commitments and Contingencies
Future minimum lease payments	Year ending December 31, 2017 $ 2018 2019 2020 2021 Thereafter Total $

Background (Details)

Background (Details) - USD ($)	Sep. 13, 2016	Mar. 03, 2016	Feb. 10, 2016	Mar. 31, 2016
Public Offering
Net proceeds from issuance of common stock				$ 98,169,703
Class B-1 Preferred Stock
Public Offering
Shares converted (in shares)			3,278,938
Class B-2 Preferred Stock
Public Offering
Shares converted (in shares)			326,557
Class C Preferred Stock
Public Offering
Shares converted (in shares)			2,365,020
Class D Preferred Stock
Public Offering
Shares converted (in shares)			3,105,000
Common Stock | IPO
Public Offering
Shares issued (in shares)			4,750,000
Share price (in dollars per share)			$ 20
Net Proceeds from Initial Public Offering			$ 88,350,000
Common Stock | Over-Allotment Option
Public Offering
Shares issued (in shares)	637,500	527,941
Share price (in dollars per share)		$ 20
Net Proceeds from Initial Public Offering		$ 9,800,000
Common Stock | Follow-On Offering
Public Offering
Number of common shares to be sold under public offering	4,887,500
Shares issued (in shares)	4,597,645
Share price (in dollars per share)	$ 34.50
Net proceeds from issuance of common stock	$ 149,100,000
Common Stock | Stock Sold by Selling Stockholder
Public Offering
Shares issued (in shares)	289,855

Property and Equipment, Net - T

Property and Equipment, Net - Tabular Disclosure (Details) - USD ($)	Mar. 31, 2017	Dec. 31, 2016
Property and Equipment, Net
Property and equipment, gross	$ 34,002,929	$ 24,277,037
Less: accumulated depreciation	(320,592)	(76,455)
Property and equipment, net	33,682,337	24,200,582
Office furniture and equipment
Property and Equipment, Net
Property and equipment, gross	4,259,838	337,753
Leasehold improvement
Property and Equipment, Net
Property and equipment, gross	4,457,609	777,456
Construction in progress
Property and Equipment, Net
Property and equipment, gross	$ 25,285,482	$ 23,161,828

Property and Equipment, Net - D

Property and Equipment, Net - Depreciation Expense (Details) - USD ($)	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Property and Equipment, Net
Depreciation expense	$ 244,137	$ 11,045

Property and Equipment, Net - C

Property and Equipment, Net - Construction in Progress (Details)	3 Months Ended
	Mar. 31, 2017USD ($)
Construction in progress
Property and Equipment, Net
Increase in construction in progress	$ 2,123,654

Accrued Expenses (Details)

Accrued Expenses (Details) - USD ($)	Mar. 31, 2017	Dec. 31, 2016
Accrued Expenses
Accrued manufacturing development costs	$ 3,052,803	$ 7,167,430
Accrued construction in progress	1,819,086	2,978,498
Accrued payroll, bonus and deferred compensation	956,323	3,841,171
Accrued clinical trial costs	874,758	388,935
Accrued professional fees	571,985	382,874
Accrued consulting	425,329	1,204,601
Accrued business taxes	364,381	226,044
Deferred rent	266,741	97,362
Accrued severance	15,527	167,065
Other	278,581	340,023
Accrued expenses	$ 8,625,514	$ 16,794,003

Accrued Indemnification Oblig26

Accrued Indemnification Obligation (Details) - USD ($)	1 Months Ended	3 Months Ended
	Jan. 31, 2014	Mar. 31, 2017	Dec. 31, 2016	Dec. 31, 2014	Jan. 28, 2014
Accrued Indemnification Obligation
Accrued indemnification obligation		$ 4,519,700	$ 4,452,500
Restricted Stock | Member of Board of Directors
Accrued Indemnification Obligation
Shares granted (in shares)	2,334,391
Share price (in dollars per share)					$ 1.51
Aggregate fair value				$ 3,535,419
Tax indemnification | Member of Board of Directors
Accrued Indemnification Obligation
Indemnification term (in years)		6 years
Accrued indemnification obligation		$ 4,519,700	$ 4,452,500

Stock-Based Compensation - Stoc

Stock-Based Compensation - Stock Option Activity (Details) - Employee Stock Options - USD ($)	3 Months Ended		12 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2016
Number of Shares
Outstanding at the beginning of the period (in shares)	2,577,111
Granted (in shares)	201,250
Exercised (in shares)	(43,120)	0
Cancelled or forfeited (in shares)	(1,100)
Outstanding at the end of the period (in shares)	2,734,141		2,577,111
Weighted Average Exercise Price
Outstanding at the beginning of the period (in dollars per share)	$ 22.01
Granted (in dollars per share)	64.44
Exercised (in dollars per share)	4.98
Cancelled or forfeited (in dollars per share)	34.90
Outstanding at the end of the period (in dollars per share)	$ 25.40		$ 22.01
Weighted Average
Remaining Contractual Life (Years)	8 years 7 months 28 days		8 years 9 months 15 days
Aggregate Intrinsic Value (in dollars)	$ 138,600,297		$ 66,466,245
Exercisable and Vested and Expected to Vest
Number of Shares - exercisable (in shares)	828,183
Weighted Average Exercise Price - exercisable (in dollars per share)	$ 16.28
Remaining Contractual Life (Years) - exercisable	8 years 3 months 15 days
Aggregate Intrinsic Value - exercisable (in dollars)	$ 49,483,455
Number of Shares - vested and expected to vest (in shares)	2,734,141
Weighted Average Exercise Price - vested and expected to vest (in dollars per share)	$ 25.40
Remaining Contractual Life (Years) - vested and expected to vest	8 years 7 months 28 days
Aggregate Intrinsic Value - vested and expected to vest (in dollars)	$ 138,600,297

Stock-Based Compensation - St28

Stock-Based Compensation - Stock Options Exercised (Details) - USD ($)	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Stock-Based Compensation
Proceeds from exercise of stock options	$ 214,900
Employee Stock Options
Stock-Based Compensation
Exercised (in shares)	43,120	0
Proceeds from exercise of stock options	$ 214,900	$ 0

Stock-Based Compensation - Unre

Stock-Based Compensation - Unrecognized Stock-based Compensation Expense (Details) - Employee Stock Options - USD ($)	3 Months Ended	12 Months Ended
	Mar. 31, 2017	Dec. 31, 2016
Unrecognized stock-based compensation expense
Unrecognized stock-based compensation expense	$ 25,179,386	$ 20,583,606
Unrecognized stock-based compensation expense, weighted average recognition period (in years)	1 year 4 months 24 days	1 year 4 months 24 days

Stock-Based Compensation - Aggr

Stock-Based Compensation - Aggregate Stock-based Compensation Expense (Details) - USD ($)	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Aggregate stock-based compensation expense
Aggregate stock-based compensation expense	$ 4,742,421	$ 3,172,785
Research and development expenses
Aggregate stock-based compensation expense
Aggregate stock-based compensation expense	1,977,864	1,089,580
General and administrative expenses
Aggregate stock-based compensation expense
Aggregate stock-based compensation expense	$ 2,764,557	$ 2,083,205

Stock-Based Compensation - Weig

Stock-Based Compensation - Weighted Average Grant Date Fair Value (Details) - $ / shares	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Employee Stock Options
Weighted Average Grant Date Fair Value
Weighted-average grant date fair value of options granted during the period (in dollars per share)	$ 47.20	$ 11.16

Stock-Based Compensation - We32

Stock-Based Compensation - Weighted-average Assumptions (Details) - Employee Stock Options	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Weighted-average fair value assumptions
Expected volatility (as a percent)	86.88%	90.00%
Risk-free interest rate (as a percent)	1.94%	1.57%
Expected term (in years)	6 years 29 days	6 years 29 days
Expected dividend yield (as a percent)	0.00%	0.00%
Stock Options
Plan expiration period (in years)	10 years
Expiration period (in years)	3 months
Minimum
Stock Options
Vesting period (in years)	2 years
Maximum
Stock Options
Vesting period (in years)	4 years

Stock-Based Compensation - Rest

Stock-Based Compensation - Restricted Stock Units - General Information (Details) - USD ($)	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2016
Stock Based Compensation
Stock-based compensation expense	$ 4,742,421	$ 3,172,785
Restricted Stock Units
Stock Based Compensation
Service-based restricted stock units granted to employees (in shares)	56,900	0	57,500
Shares vested (in shares)	15,233
Forfeited and cancelled (in shares)	600
Stock-based compensation expense	$ 341,457
Granted (in shares)		0
Unrecognized compensation cost	$ 885,716	$ 0
Unrecognized stock-based compensation expense, weighted average recognition period (in years)	1 year 3 months 18 days

Stock-Based Compensation - Re34

Stock-Based Compensation - Restricted Stock Units - Activity (Details) - Restricted Stock Units - $ / shares	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Number of Shares
Outstanding at the beginning of the period (in shares)	57,500
Granted (in shares)		0
Forfeited and cancelled (in shares)	(600)
Outstanding at the end of the period (in shares)	56,900	0
Weighted Average Grant Date Fair Value Per Share
Outstanding at the beginning of the period (in dollars per share)	$ 34.90
Forfeited and cancelled (in dollars per share)	34.90
Outstanding at the end of the period (in dollars per share)	$ 34.90

Stock-Based Compensation - Re35

Stock-Based Compensation - Restricted Stock Units - Additional Information (Details)	3 Months Ended
	Mar. 31, 2017
Restricted Stock Units
Stock Based Compensation
Vesting period (in years)	3 years

Stock-Based Compensation - Perf

Stock-Based Compensation - Performance-Based Restricted Stock Units (Details) - Performance Based RSU - $ / shares	Mar. 20, 2017	Mar. 31, 2017	Mar. 31, 2016
Stock Based Compensation
Shares granted (in shares)	49,332		0
Shares outstanding (in shares)		49,332	0
Shares vested (in shares)		0
Weighted average grant date fair value		$ 79.75

Stock-Based Compensation - Re37

Stock-Based Compensation - Restricted Stock Granted to Non-Employees - Consulting Agreement (Details) - Member of Board of Directors - Restricted Stock	1 Months Ended
	Jan. 31, 2014shares
Stock Based Compensation
Shares granted (in shares)	2,334,391
Shares vested (in shares)	583,597
Shares vesting upon grant
Stock Based Compensation
Vesting percentage (as a percent)	25.00%
Shares vesting on second anniversary
Stock Based Compensation
Vesting percentage (as a percent)	25.00%
Shares vesting on third anniversary
Stock Based Compensation
Vesting percentage (as a percent)	25.00%
Shares vesting on fourth anniversary
Stock Based Compensation
Vesting percentage (as a percent)	25.00%

Stock-Based Compensation - Re38

Stock-Based Compensation - Restricted Stock Granted to Non-Employees - Employment Agreement (Details) - USD ($)	1 Months Ended	3 Months Ended		12 Months Ended
	Jan. 31, 2016	Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2016
Number of Shares
Aggregate stock-based compensation expense		$ 4,742,421	$ 3,172,785
Employee | Restricted Stock
Number of Shares
Shares granted (in shares)	1,750,794
Shares vested (in shares)	1,750,794
Research and development expenses
Number of Shares
Aggregate stock-based compensation expense		$ 1,977,864	$ 1,089,580
Research and development expenses | Employee | Restricted Stock
Number of Shares
Aggregate stock-based compensation expense				$ 10,370,762

Stock-Based Compensation - Warr

Stock-Based Compensation - Warrants Granted to Non-Employees - General Information (Details) - USD ($)	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Warrant information
Stock warrants exercised (in shares)	0
Proceeds from exercise of stock warrants	$ 0	$ 42,000
Common Stock | Non-Employee
Warrant information
Stock warrants vested ( in shares)	305,775
Stock warrants outstanding (in shares)	305,775
Warrants, exercise price (in dollars per share)	$ 2.57

Net Loss Per Common Share - Dil

Net Loss Per Common Share - Dilutive Securities (Details) - shares	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Antidilutive securities not included:
Antidilutive securities	3,130,915	2,397,837
Employee Stock Options
Antidilutive securities not included:
Antidilutive securities	2,734,141	2,087,617
Stock warrants
Antidilutive securities not included:
Antidilutive securities	305,775	310,220
Restricted Stock Units
Antidilutive securities not included:
Antidilutive securities	41,667
Performance Based RSU
Antidilutive securities not included:
Antidilutive securities	49,332

Net Loss Per Common Share - Cal

Net Loss Per Common Share - Calculation (Details) - USD ($)	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Numerator:
Net loss and comprehensive loss	$ (29,718,954)	$ (20,836,107)
Denominator:
Weighted-average basic and diluted common shares (in shares)	27,733,701	16,774,718
Basic and diluted net loss per common share (in dollars per share)	$ (1.07)	$ (1.24)

Commitments and Contingencies -

Commitments and Contingencies - Operating Lease - General Information (Details) - ft²	Mar. 31, 2016	Mar. 31, 2014
Office space in Dallas, Texas
Operating Leases
Approximate size of office space (in square feet)		2,418
Facility for corporate headquarters Bannockburn, Illinois
Operating Leases
Approximate size of office space (in square feet)		15,668
Facility in Columbus, Ohio
Operating Leases
Approximate size of office space (in square feet)		1,318
Office and warehouse space in Libertyville, Illinois
Operating Leases
Approximate size of office space (in square feet)	48,529

Commitments and Contingencies43

Commitments and Contingencies - Operating Lease - Future Minimum Lease Payments (Details)	Mar. 31, 2017USD ($)
Operating Leases
2,017	$ 400,870
2,018	660,572
2,019	674,850
2,020	689,289
2,021	703,894
Thereafter	2,514,993
Total	$ 5,644,468

Commitments and Contingencies44

Commitments and Contingencies - Guarantees and Indemnifications (Details) - USD ($)	Mar. 31, 2017	Dec. 31, 2016
Accrued Indemnification Obligation
Accrued indemnification obligation	$ 4,519,700	$ 4,452,500
Member of Board of Directors | Tax indemnification
Accrued Indemnification Obligation
Accrued indemnification obligation	$ 4,519,700	$ 4,452,500

Commitments and Contingencies45

Commitments and Contingencies - Litigation (Details) - Sophia's Cure Foundation - Nationwide Children's Hospital - Breach of donation agreement - USD ($)	Sep. 08, 2016	Dec. 31, 2012
Litigation
Gift received under donation agreement		$ 550,000
Monetary damages sought	$ 500,000,000