Entasis Therapeutics (ETTX) 10-Q 14 Nov 18 2018 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2018	Nov. 09, 2018
Document And Entity Information Abstract
Entity Registrant Name	Entasis Therapeutics Holdings Inc.
Entity Central Index Key	1,724,344
Document Type	10-Q
Document Period End Date	Sep. 30, 2018
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	true
Entity Common Stock, Shares Outstanding		13,099,735
Document Fiscal Year Focus	2,018
Document Fiscal Period Focus	Q3

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Current assets:
Cash and cash equivalents	$ 94,021	$ 55,101
Grants receivable	2,930	722
Prepaid expenses and other current assets	2,392	497
Total current assets	99,343	56,320
Property and equipment, net	654	646
Deferred Offering Costs		1,765
Other assets	63	63
Total assets	100,060	58,794
Current liabilities:
Accounts payable	1,735	2,218
Accrued expenses and other current liabilities	7,695	7,615
Total current liabilities	9,430	9,833
Deferred rent	147	38
Total liabilities	9,577	9,871
Commitments (Note 8)
Shareholders' Equity:
Common stock	13	3
Additional paid-in capital	172,500	1,377
Accumulated deficit	(82,030)	(57,170)
Total stockholders' equity (deficit)	90,483	(55,790)
Total liabilities, redeemable convertible preferred stock and stockholders' equity (deficit)	$ 100,060	58,794
Series A Redeemable Convertible Preferred Stock
Temporary Equity
Redeemable Convertible Preferred Stock		23,866
Series B Redeemable Convertible Preferred Stock
Temporary Equity
Redeemable Convertible Preferred Stock		24,550
Series B1 Tranche A Redeemable Convertible Preferred Stock
Temporary Equity
Redeemable Convertible Preferred Stock		24,423
Series B1 Tranche B Redeemable Convertible Preferred Stock
Temporary Equity
Redeemable Convertible Preferred Stock		$ 31,874

CONSOLIDATED BALANCE SHEETS (Pa

CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Sep. 30, 2018	Dec. 31, 2017
Common stock par value	$ 0.001	$ 0.001
Common stock authorized	125,000,000	250,000,000
Common stock issued	13,097,961	12,639
Common stock outstanding	13,097,961	12,639
Series A Redeemable Convertible Preferred Stock
Temporary Equity
Redeemable Convertible Preferred Shares par value	$ 0.001	$ 0.001
Redeemable Convertible Preferred Shares authorized	0	33,499,900
Redeemable Convertible Preferred Shares issued	0	33,499,900
Redeemable Convertible Preferred Shares outstanding	0	33,499,900
Series B Redeemable Convertible Preferred Stock
Temporary Equity
Redeemable Convertible Preferred Shares par value	$ 0.001	$ 0.001
Redeemable Convertible Preferred Shares authorized	0	25,000,000
Redeemable Convertible Preferred Shares issued	0	25,000,000
Redeemable Convertible Preferred Shares outstanding	0	25,000,000
Series B1 Tranche A Redeemable Convertible Preferred Stock
Temporary Equity
Redeemable Convertible Preferred Shares par value	$ 0.001	$ 0.001
Redeemable Convertible Preferred Shares authorized	0	42,372,882
Redeemable Convertible Preferred Shares issued	0	42,372,882
Redeemable Convertible Preferred Shares outstanding	0	42,372,882
Series B1 Tranche B Redeemable Convertible Preferred Stock
Temporary Equity
Redeemable Convertible Preferred Shares par value	$ 0.001	$ 0.001
Redeemable Convertible Preferred Shares authorized	0	54,067,796
Redeemable Convertible Preferred Shares issued	0	54,067,796
Redeemable Convertible Preferred Shares outstanding	0	54,067,796

CONSOLIDATED STATEMENTS OF OPER

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
CONSOLIDATED STATEMENTS OF OPERATIONS
Revenue			$ 5,000
Operating expenses:
Research and development	$ 8,086	$ 7,167	26,115	$ 17,995
General and administrative	2,075	1,346	7,840	3,448
Total operating expenses	10,161	8,513	33,955	21,443
Loss from operations	(10,161)	(8,513)	(28,955)	(21,443)
Other income:
Grant income	1,669	183	4,507	674
Interest income	19	6	47	18
Total other income	1,688	189	4,554	692
Loss before income taxes	(8,473)	(8,324)	(24,401)	(20,751)
Provision for income taxes			472
Net loss	(8,473)	(8,324)	(24,873)	(20,751)
Dividends declared	(9,142)		(9,142)
Net Loss per Share
Net loss attributable to common Shareholders-basic and diluted	$ (17,615)	$ (8,324)	$ (34,015)	$ (20,751)
Net loss per share attributable to common shareholders-basic and diluted	$ (20.33)	$ (5,106.75)	$ (113.22)	$ (25,183.25)
Weighted average common shares outstanding-basic and diluted	866,641	1,630	300,435	824

CONSOLIDATED STATEMENTS OF REDE

CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY (DEFICIT) - 9 months ended Sep. 30, 2018 - USD ($) $ in Thousands	Series A Redeemable Convertible Preferred Stock	Series B Redeemable Convertible Preferred Stock	Series B1 Tranche A Redeemable Convertible Preferred Stock	Series B1 Tranche B Redeemable Convertible Preferred Stock	Common Stock	Additional Paid-in CapitalASU 2018-07	Additional Paid-in Capital	Retained EarningsASU 2018-07	Retained Earnings	Total
Balance at Dec. 31, 2017	$ 23,866	$ 24,550	$ 24,423	$ 31,874
Balance (in shares) at Dec. 31, 2017	33,499,900	25,000,000	42,372,882	54,067,796
Balance (in shares) at Sep. 30, 2018	0	0	0	0
Balance at Dec. 31, 2017					$ 3		$ 1,377		$ (57,170)	$ (55,790)
Balance (in shares) at Dec. 31, 2017					12,639
Increase (Decrease) in Temporary Equity [Roll Forward]
Stock-based compensation expense							806			806
Reorganization adjustment					$ (3)		3
Conversion of preferred stock into common stock upon initial public offering	$ (23,866)	$ (24,550)	$ (24,423)	$ (31,874)	$ 8		104,705			104,713
Conversion of preferred stock into common stock upon initial public offering (in shares)	(33,499,900)	(25,000,000)	(42,372,882)	(54,067,796)	8,084,414
Issuance of common stock upon initial public offering, net of issuance costs of $9,378					$ 5		65,619			65,624
Issuance of common stock upon initial public offering, net of issuance costs of $9,378 (in shares)					5,000,000
Exercise of stock options							3			3
Exercise of stock options (in shares)					908
Net loss									(24,873)	(24,873)
Balance at Sep. 30, 2018					$ 13		$ 172,500		$ (82,030)	$ 90,483
Balance (in shares) at Sep. 30, 2018					13,097,961
Increase (Decrease) in Temporary Equity [Roll Forward]
ASU 201807 modified retrospective adjustment						$ (13)		$ 13

CONSOLIDATED STATEMENTS OF RE_2

CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY (DEFICIT) (Parenthetical) $ in Thousands	9 Months Ended
	Sep. 30, 2018USD ($)
CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY (DEFICIT)
Issuance of common stock upon initial public offering, net of issuance costs	$ 9,376

CONSOLIDATED STATEMENTS OF CASH

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
Cash flows from operating activities:
Net loss	$ (24,873)	$ (20,751)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization expense	125	146
Stock-based compensation expense	806	269
Changes in operating assets and liabilities:
Grants receivable	(2,208)	(622)
Prepaid expenses and other assets	(1,896)	(875)
Accounts payable	536	490
Due to related party		(620)
Accrued expenses and other current liabilities	(386)	241
Deferred rent	109	4
Net cash used in operating activities	(27,787)	(21,718)
Cash flows from investing activities:
Purchase of property and equipment	(322)	(15)
Net cash used in investing activities	(322)	(15)
Cash flows from financing activities:
Proceeds from issuance of redeemable convertible preferred stock, net of issuance costs		24,657
Proceeds from exercise of stock options	3	16
Proceeds from initial public offering, net of issuance costs paid in the period	67,026
Net cash provided by financing activities	67,029	24,673
Net increase in cash and cash equivalents	38,920	2,940
Cash and cash equivalents at beginning of period	55,101	26,256
Cash and cash equivalents at end of period	94,021	29,196
Supplemental disclosure of non-cash investing and financing activities:
Purchase of property and equipment included in accounts payable		$ 11
Initial public offering costs included in accounts payable and accrued expenses	1,105
Conversion of preferred stock into common stock upon initial public offering	$ 104,713

Organization and Description of

Organization and Description of Business	9 Months Ended
	Sep. 30, 2018
Organization and Description of Business
Organization and Description of Business	1. Organization and Description of Business Entasis Therapeutics Holdings Inc. (“Entasis” or the “Company”) and its subsidiaries is a clinical‑stage biopharmaceutical company focused on the discovery, development and commercialization of novel antibacterial products to treat serious infections caused by multi‑drug resistant Gram‑negative bacteria. The Company was initially formed as Entasis Therapeutics Limited (“Entasis Limited”) on March 6, 2015 in the United Kingdom (“U.K.”) as a wholly owned subsidiary of AstraZeneca AB (“AstraZeneca”). In connection with the spin‑out of Entasis Limited from AstraZeneca in May 2015, Entasis Limited issued 4 ordinary shares to AstraZeneca. Additionally, pursuant to a business transfer and subscription agreement with AstraZeneca (the “A Subscription Agreement”), Entasis Limited also issued 33,499,900 shares of A redeemable convertible preference shares (“A Preferred Stock”) to AstraZeneca in May 2015. In March 2016, Entasis Limited issued 25,000,000 shares of B redeemable convertible preference shares (“B Preferred Stock”) to third‑party investors, at which point AstraZeneca no longer held a controlling interest in Entasis Limited. On April 23, 2018, Entasis Limited completed a corporate reorganization (the “Reorganization”). As part of the Reorganization, Entasis Limited formed Entasis Therapeutics Holdings Inc., a Delaware corporation, in March 2018 with nominal assets and liabilities for the purpose of consummating the Reorganization. In connection with the Reorganization, the existing shareholders of Entasis Limited exchanged each of their classes of shares of Entasis Limited for the same number and classes of common stock and preferred stock of Entasis Therapeutics Holdings Inc. on a one‑to‑one basis. The newly issued stock of Entasis Therapeutics Holdings Inc. have substantially identical rights to the exchanged shares of Entasis Limited. As a result of the exchange, Entasis Therapeutics Holdings Inc. became the sole shareholder of Entasis Limited. In connection with the Reorganization, Entasis Therapeutics Holdings Inc. assumed the Entasis Limited amended and restated stock incentive plan, and each outstanding share option to purchase ordinary shares of Entasis Limited was assumed by Entasis Therapeutics Holdings Inc. and converted into an option to purchase the same number of shares of common stock of Entasis Therapeutics Holdings Inc. at the same exercise price per share and on the same vesting schedule. Each new option has and is subject to the same terms and conditions as were in effect immediately prior to the assumption and conversion. No share options of Entasis Limited are outstanding following the assumption and conversion. Upon the completion of the Reorganization on April 23, 2018, the historical consolidated financial statements of Entasis Limited became the historical consolidated financial statements of Entasis Therapeutics Holdings Inc. On September 28, 2018, the Company completed an initial public offering of its common stock, in which the Company issued and sold 5,000,000 shares of common stock at a price to the public of $15.00 per share. The aggregate net proceeds to the Company from the initial public offering were approximately $65.6 million after deducting underwriting discounts and commissions and estimated offering expenses payable by the Company. The shares began trading on The Nasdaq Global Market on September 26, 2018. Upon the completion of the Company’s initial public offering, all of the outstanding shares of redeemable convertible preferred stock of the Company, including accrued dividends, automatically converted into 8,084,414 shares of the Company’s common stock. Risks and Uncertainties As of September 30, 2018, the Company had $94.0 million in cash and cash equivalents and an accumulated deficit of $82.0 million. Since its inception through September 25, 2018, the Company had funded its operations primarily with proceeds from the sale of redeemable convertible preferred stock. The Company has also either directly received funding or financial commitments from, or has had its program activities conducted and funded by, United States (“U.S.”) government agencies and non-profit entities. In the absence of positive cash flows from operations, the Company is highly dependent on its ability to find additional sources of funding in the form of debt or equity financing. The Company believes it's existing cash and cash equivalents will enable it to fund its operating expenses and capital expenditure requirements through 2020. As an early-stage company, the Company is subject to a number of risks common to other life science companies, including, but not limited to, raising additional capital, development by its competitors of new technological innovations, risk of failure in preclinical and clinical studies, safety and efficacy of its product candidates in clinical trials, the risk of relying on external parties such as contract research organizations (“CROs”) and contract manufacturing organizations (“CMOs”), the regulatory approval process, market acceptance of the Company’s products once approved, lack of marketing and sales history, dependence on key personnel and protection of proprietary technology. The Company’s therapeutic programs are currently pre-commercial, spanning discovery through early development and will require significant additional research and development efforts, including extensive preclinical and clinical testing and regulatory approval, prior to commercialization of any product candidates. These efforts require significant amounts of additional capital, adequate personnel, infrastructure, and extensive compliance-reporting capabilities. There can be no assurance that the Company’s research and development will be successfully completed, that adequate protection for the Company’s intellectual property will be obtained, that any products developed will obtain necessary regulatory approval or that any approved products will be commercially viable. Even if the Company’s product development efforts are successful, it is uncertain when, if ever, the Company will generate revenue from product sales. The Company may never achieve profitability, and unless and until it does, it will continue to need to raise additional capital or obtain financing from other sources, such as strategic collaborations or partnerships. Reverse Stock Split In September 2018, the Company’s board of directors and stockholders approved, and on September 17, 2018, the Company filed, an Amended and Restated Certificate of Incorporation effecting a 1-for-20.728 reverse stock split of its issued and outstanding common stock. All common share and per share data included in the consolidated financial statements reflect the reverse stock split.

Summary of Significant Accounti

Summary of Significant Accounting Policies	9 Months Ended
	Sep. 30, 2018
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies	2. Summary of Significant Accounting Policies Significant Accounting Policies The Company’s significant accounting policies are disclosed in the audited consolidated financial statements for the year ended December 31, 2017 and the notes thereto, which are included in the Company’s prospectus that forms a part of the Company’s Registration Statement on Form S-1 (File No. 333-226920), which was filed with the Securities and Exchange Commission pursuant to Rule 424(b)(4) on September 26, 2018 (the “Prospectus”). Since the date of those financial statements, there have been no material changes to its significant accounting policies. Basis of Presentation and Consolidation The accompanying consolidated balance sheet as of September 30, 2018, the consolidated statements of operations for the three and nine months ended September 30, 2018 and 2017, redeemable convertible preferred stock and stockholders’ equity (deficit) for the nine months ended September 30, 2018 and cash flows for the nine months ended September 30, 2018 and 2017 are unaudited. The interim unaudited consolidated financial statements have been prepared on the same basis as the annual audited consolidated financial statements; and in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair statement of the Company’s financial position as of September 30, 2018, the results of operations for the three and nine months ended and cash flows for the nine months ended September 30, 2018 and 2017. The financial data and other information disclosed in these notes as of September 30, 2018 and for the nine months ended September 30, 2018 and 2017 are unaudited. The results for the three and nine months ended September 30, 2018 are not necessarily indicative of the results to be expected for the year ending December 31, 2018, any other interim periods, or any future year or period. The consolidated financial statements include the accounts of Entasis Therapeutics Holdings Inc. and its wholly owned subsidiaries Entasis Limited (a U.K. corporation) and Entasis Therapeutics Inc. (a U.S. corporation). The functional and reporting currency of the parent entity, Entasis Therapeutics Holdings Inc., and subsidiaries is U.S. dollars. All intercompany accounts and transactions have been eliminated in consolidation. These interim unaudited consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements contained in the Prospectus. Use of Estimates The preparation of the Company’s consolidated financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Significant estimates and assumptions reflected in these consolidated financial statements include, but are not limited to, the recognition of revenue, the recognition of research and development expenses and the valuation of common stock and options to purchase common stock. Estimates are periodically reviewed in light of changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. Actual results could differ from the Company’s estimates. Revenue Recognition The Company recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services. To determine revenue recognition, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the Company satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. See Note 5 for a further discussion of accounting for revenue. Recently Adopted Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”), which supersedes existing revenue recognition guidance under GAAP. 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. The standard defines a five‑step process to achieve this principle, and will require companies to use more judgment and make more estimates than under the current guidance. ASU 2014‑09 also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, and is effective for public entities for annual periods beginning after December 15, 2017, including interim periods within those fiscal years. In March 2016, the FASB issued ASU No. 2016‑08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (“ASU 2016‑08”), which further clarifies the implementation guidance on principal versus agent considerations in ASU 2014‑09. In April 2016, the FASB issued ASU No. 2016‑10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing , clarifying the implementation guidance on identifying performance obligations and licensing. Specifically, the amendments in this update reduce the cost and complexity of identifying promised goods or services and improve the guidance for determining whether promises are separately identifiable. The amendments in this update also provide implementation guidance on determining whether an entity’s promise to grant a license provides a customer with either a right to use the entity’s intellectual property (which is satisfied at a point in time) or a right to access the entity’s intellectual property (which is satisfied over time). The Company adopted this guidance in connection with the execution of the license and collaboration agreement (the “Zai Agreement”) with Zai Lab (Shanghai) Co., Ltd. (“Zai Lab”) in April 2018. See Note 5. Prior to the Zai Agreement, the Company did not have any revenue from contracts with customers. In October 2016, the FASB issued ASU No. 2016‑16, Income Taxes (Topic 740): Intra‑Entity Transfer of Assets Other than Inventory (“ASU 2016‑16”), which requires the recognition of the income tax consequences of an intra‑entity transfer of an asset, other than inventory, when the transfer occurs. The standard is effective for annual periods beginning after December 15, 2017, including interim periods within those fiscal years. On January 1, 2018, the Company adopted this guidance, and the adoption did not have a material impact on the Company’s unaudited consolidated financial statements and related disclosures. In August 2016, the FASB issued ASU No. 2016‑15, Statement of Cash Flows (Topic 230), Classification of Certain Cash Receipts and Cash Payments (“ASU 2016‑15”). The amendments of ASU 2016‑15 were issued to address eight specific cash flow issues for which stakeholders have indicated to the FASB that a diversity in practice existed in how entities were presenting and classifying these items in the statement of cash flows. The issues addressed by ASU 2016‑15 include but are not limited to the classification of debt prepayment and debt extinguishment costs, payments made for contingent consideration for a business combination, proceeds from the settlement of insurance proceeds, distributions received from equity method investees and separately identifiable cash flows and the application of the predominance principle. The amendments of ASU 2016‑15 are effective for public entities for fiscal years beginning after December 15, 2017 and interim periods in those fiscal years. The adoption of ASU 2016‑15 is required to be applied retrospectively. On January 1, 2018, the Company adopted this guidance and the adoption did not have a material impact on the Company’s unaudited consolidated financial statements and related disclosures. In May 2017, the FASB issued ASU No. 2017‑09, Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting (“ASU 2017‑09”), which clarifies when to account for a change to the terms or conditions of a share‑based payment award as a modification. Under the new guidance, modification accounting is required only if the fair value, the vesting conditions or the classification of the award (as equity or liability) changes as a result of the change in terms or conditions. The standard is effective for annual periods beginning after December 15, 2017. On January 1, 2018, the Company adopted this guidance and the adoption did not have a material impact on the Company’s consolidated financial statements and related disclosures. In June 2018, the FASB issued ASU No. 2018‑07, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share‑Based Payment Accounting (“ASU 2018‑07”), which expands the scope of Topic 718 to include share‑based payment awards to nonemployees. The amendments in ASU 2018‑07 are effective for public business entities for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted, but no earlier than an entity’s adoption date of Topic 606. During the nine months ended September 30, 2018, the Company early adopted this guidance and the adoption did not have a material impact on the Company’s consolidated financial statements and related disclosures. Recently Issued Accounting Pronouncements In February 2016, the FASB issued ASU No.2016-02 – Leases (Topic 842) , which replaces the existing accounting guidance for leases. This standard requires entities that lease assets to recognize the assets and liabilities for the rights and obligations created by those leases on the balance sheet. The standard is effective for fiscal years and the interim periods within those fiscal years beginning after December 15, 2018. The guidance is required to be applied by the modified retrospective transition approach and early adoption is permitted. The Company is continuing to evaluate the new lease guidance and is in the process of evaluating its existing population of contracts to ensure all contracts that meet the definition of a lease contract under the new standard are identified. As a result, the Company is currently assessing the impact that adoption of this guidance will have on its financial statements and footnote disclosures and it anticipates it will result in an increase in assets and liabilities.

Accrued Expenses and Other Curr

Accrued Expenses and Other Current Liabilities	9 Months Ended
	Sep. 30, 2018
Accrued Expenses and Other Current Liabilities
Accrued Expenses and Other Current Liabilities	3. Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consisted of the following (in thousands): September 30, December 31, 2018 2017 Accued compensation and benefits $ 1,214 $ 1,286 Accrued contract manufacturing 1,992 3,633 Accrued clinical costs 1,250 1,096 Accrued professional services 1,816 1,246 Accrued research costs 742 135 Other 681 219 Total accrued expenses and other current liabilities $ 7,695 $ 7,615

Funding Arrangements

Funding Arrangements	9 Months Ended
	Sep. 30, 2018
Funding Arrangements
Funding Arrangements	4. Funding Arrangements In December 2016, the Company entered into a funding arrangement with the U.S. Army Medical Research Acquisition Activity (the “USAMRAA grant”) that covers up to $1.1 million of specified research expenditures of the Company incurred from December 2016 through December 2018 (the “performance period”). The Company has until September 2022 to obtain the reimbursements from USAMRAA for the specified research expenditures incurred and paid by the Company during the performance period. The Company recognized grant income of $0.1 million for both of the three month periods ended September 30, 2018 and 2017, and $0.4 million for both of the nine month periods ended September 30, 2018 and 2017. The Company received $0.7 million of funding under the grant for the nine months ended September 30, 2018 and no funding under the grant for the nine months ended September 30, 2017. The Company recorded a receivable to reflect unreimbursed, eligible costs incurred under the grant in the amount of $0.2 million and $0.5 million as of September 30, 2018 and December 31, 2017, respectively. In March 2017 and October 2017, the Company entered into funding arrangements with the Trustees of Boston University to utilize funds from the U.S. government through the Combating Antibiotic Resistant Bacteria Biopharmaceutical Accelerator (CARB‑X) program. These funding arrangements will cover up to $16.4 million of specified research expenditures of the Company from April 2017 through September 2021. The Company recognized grant income in connection with the CARB-X agreements of $1.5 million and $0.1 million for the three months ended September 30, 2018 and 2017, respectively, and $4.1 million and $0.3 million for the nine months ended September 30, 2018 and 2017, respectively. The Company received $1.9 million and $0.1 million of funding under the grant for the nine months ended September 30, 2018 and 2017, respectively. The Company recorded a receivable to reflect unreimbursed, eligible costs incurred under the CARB-X agreements in the amount of $2.7 million and $0.2 million as of September 30, 2018 and December 31, 2017, respectively. Collaboration Agreement In July 2017, the Company entered into a collaboration agreement (the “Agreement”) with the Drugs for Neglected Disease Initiative (“DNDi”) for the development, manufacture and commercialization of a product candidate containing zoliflodacin in certain countries. The Phase 3 clinical trial has not commenced and there have been no material transactions with respect to the agreement as of September 30, 2018. We have also had zoliflodacin program activities conducted and funded by the U.S. government through our arrangements with the U.S. National Institute of Allergy and Infectious Diseases, or NIAID.

License and Collaboration Agree

License and Collaboration Agreement with Zai Lab	9 Months Ended
	Sep. 30, 2018
License and Collaboration Agreement with Zai Lab
License and Collaboration Agreement with Zai Lab	5. License and Collaboration Agreement with Zai Lab In April 2018, the Company entered into a license and collaboration agreement with Zai Lab, pursuant to which Zai Lab licensed exclusive rights to ETX2514 and ETX2514SUL in the Asia‑Pacific region (the “Zai Agreement”). Under the terms of the Zai Agreement, Zai Lab will fund most of the Company’s clinical trial costs in China for ETX2514SUL, including all costs in China for the Company’s planned Phase 3 clinical trial of ETX2514SUL, with the exception of patient drug supply. Zai Lab will conduct development activities, plan and obtain regulatory approval in a specified number of countries in the Asia‑Pacific region beyond China after regulatory approval of a licensed product in China. Zai Lab is also solely responsible for commercializing licensed products in the Asia‑Pacific region and will commercialize licensed products for which it has obtained regulatory approval. The Company is obligated to conduct specified development activities for the Asia‑Pacific region. The Company is also obligated to supply Zai Lab with the licensed products for clinical development, although Zai Lab may take over manufacturing responsibilities for its own commercialization activities within a specified time period following the effective date of the Zai Agreement. Both parties are prohibited from developing and commercializing products in the Asia‑Pacific region that would compete with the licensed products. In addition, under the Zai Agreement, either party may propose that Zai Lab pursue a combination of imipenem together with ETX2514SUL in the territory. If the parties decide to pursue an imipenem combination, Zai Lab would provide the Company with limited research and development support for the combination. The Company received an upfront, non‑refundable payment of $5.0 million, less applicable taxes of $0.8 million, from Zai Lab and the Company is eligible to receive up to an aggregate of $98.6 million in research and development support payments and development, regulatory and sales milestone payments related to ETX2514SUL, imipenem and other combinations with the licensed products. In the event the China Food and Drug Administration requires a modification or supplement to the trial protocol, and the Company delays Zai Lab from providing the required information and subsequently from obtaining regulatory approval for the pivotal study of ETX2514SUL in China, then the sales‑based milestone payments that become due to the Company will be reduced by an agreed amount that increases with the length of the delay. Zai Lab will pay the Company a tiered royalty equal to a high‑single digit to low‑double digit percentage based on annual net sales of licensed products in the territory, subject to specified reductions for the market entry of competing products, loss of patent coverage of licensed products and for payments owed to third parties for additional rights necessary to commercialize licensed products in the territory. The Company evaluated the Zai Agreement under Topic 606 and identified two material promises: (1) an exclusive license to develop, manufacture and commercialize products containing ETX2514 or ETX2514SUL in the territory and (2) the initial technology transfer of licensed know‑how. The Company determined that the exclusive license and initial technology transfer were not distinct from one another, as the license has limited value without the transfer of the Company’s technology and Zai Lab would incur additional costs to recreate the Company’s know‑how. Therefore, the license and initial technology transfer were combined as a single performance obligation. The Company determined the $5.0 million non‑refundable upfront payment is the entire transaction price at the outset of the Zai Agreement. All other future potential milestone payments were excluded from the transaction price as they are fully constrained as the risk of significant reversal has not yet been resolved. The achievement of the future potential milestones is not within the Company’s control and is subject to certain research and development success, regulatory approvals or commercial success and therefore carry significant uncertainty. The Company will reevaluate the likelihood of achieving future milestones at the end of each reporting period. Future development milestone revenue from the arrangement will be recognized as revenue in the period when it is no longer probable that revenue attributable to the milestone will result in a significant reversal. The Company delivered the exclusive license and performed the initial technology transfer of licensed know-how prior to June 30, 2018 and recognized the entire $5.0 million transaction price as revenue during the three months ended June 30, 2018. The Company recognized $5.0 million of revenue during the nine months ended September 30, 2018. Additionally, the Company recorded a provision for income taxes of $0.5 million for the nine months ended September 30, 2018, associated with China withholding taxes on the upfront payment under the Zai Agreement.

Stock-Based Compensation

Stock-Based Compensation	9 Months Ended
	Sep. 30, 2018
Stock-Based Compensation
Stock-Based Compensation	6. Stock‑Based Compensation Stock Incentive Plan In September 2018, the Company’s board of directors adopted and its stockholders approved the 2018 Equity Incentive Plan (the “2018 Plan”), which became effective on September 25, 2018, at which point no further grants will be made under the 2015 Stock Incentive Plan (the “2015 Plan”) described below. Under the 2018 Plan, the Company may grant incentive stock options (“ISOs”), non-statutory stock options, stock appreciation rights, restricted stock awards, restricted stock units and other stock-based awards. As of September 30, 2018, options to purchase an aggregate of 243,106 shares had been granted and 944,725 shares were available for future issuance under the 2018 Plan. Initially, subject to adjustment as provided in the 2018 Plan, the aggregate number of shares of the Company’s common stock available for issuance under the 2018 Plan was 1,181,972. The number of shares of the Company’s common stock reserved for issuance under the 2018 Plan will automatically increase on January 1 of each year, for a period of 10 years, from January 1, 2019 continuing through January 1, 2028, by 4% of the total number of shares of the Company’s common stock outstanding on December 31 of the preceding calendar year, or a lesser number of shares as may be determined by the Company’s board of directors. The maximum number of shares that may be issued pursuant to the exercise of ISOs under the 2018 Plan is 7,500,000. The maximum number of shares of the Company’s common stock subject to awards granted under the 2018 Plan or otherwise during a single calendar year to any non-employee directors, taken together with any cash fees paid by us to such non-employee director during the calendar year for serving on the Company’s board of directors, will not exceed $500,000 in total value, or, with respect to the calendar year in which a non-employee director is first appointed or elected to the Company’s board of directors, $800,000. All options and awards granted under the 2015 Plan consisted of the Company’s common stock. As of September 25, 2018, no additional stock awards have been or will be granted under the 2015 plan. The 2015 Plan was terminated as to future awards in September 2018, although it continues to govern the terms of options that remain outstanding under the 2015 Plan. Stock Option Activity Stock option activity under both plans for the nine months ended September 30, 2018 is summarized as follows: Weighted- Weighted- Average Average Remaining Aggregate Number of Exercise Contractual Intrinsic Options Price Term (Years) Value Outstanding as of December 31, 2017 811,627 $ 3.73 9.09 $ 6,062 Granted 606,349 10.12 Exercised (908) 3.74 Cancelled or forfeited (11,793) 3.97 Outstanding as of September 30, 2018 1,405,275 $ 6.48 8.95 $ 7,181 Options exercisable as of September 30, 2018 385,178 $ 7.89 7.89 $ 2,618 Options unvested as of September 30, 2018 1,020,097 $ 9.35 9.35 $ 4,562 The aggregate intrinsic value of options is calculated as the difference between the exercise price of the options and the fair value of the Company’s common stock for those options that had exercise prices lower than the fair value of the Company’s common stock. During the nine months ended September 30, 2018 and 2017 the weighted-average grant date fair value per granted option was $6.22 and $2.33, respectively. The total fair value of options vested during the three months ended September 30, 2018 and 2017 was $0.6 million and $0.2 million, respectively. The total fair value of options vested during the nine months ended September 30, 2018 and 2017 was $0.8 million and $0.4 million, respectively. Employee Stock Purchase Plan In September 2018, the Company’s board of directors and its stockholders approved the 2018 Employee Stock Purchase Plan (the “ESPP”), which became effective as of September 25, 2018. The ESPP is intended to qualify as an “employee stock purchase plan” within the meaning of Section 423 of the U.S. Internal Revenue Code of 1986, as amended. The number of shares of common stock initially reserved for issuance under the ESPP was 140,000 shares. The ESPP provides for an annual increase on the first day of each year beginning in 2019 and ending in 2028, in each case subject to the approval of the board of directors, equal to the lesser of (i) 1% of the shares of common stock outstanding on the last day of the prior fiscal year or (ii) 250,000 shares; provided, that prior to the date of any such increase, the board of directors may determine that such increase will be less than the amount set forth in clauses (i) and (ii). As of September 30, 2018, no shares of common stock had been issued under the ESPP and 140,000 shares remained available for future issuance under the ESPP. No offering period under the ESPP has been set by the Company’s board of directors. AstraZeneca Shares Option and Incentive Plan Certain employees of the Company participated in the AstraZeneca Shares Option and Incentive Plan (the “AstraZeneca Plan”), whereby employees of the Company continue to vest in the restricted shares (“AstraZeneca RSUs”) of AstraZeneca ordinary shares issued by AstraZeneca to the employees prior to employment by the Company. AstraZeneca RSUs vested 100% after 36 months and were fully vested in March 2017 and therefore stock‑based compensation expense for the AstraZeneca RSUs was recognized in full by September 30, 2017. The Company recorded stock‑based compensation expense for AstraZeneca RSUs of $14,604 during the nine months ended September 30, 2017. Stock‑Based Compensation Stock‑based compensation expense was classified in the consolidated statement of operations as follows (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2018 2017 2018 2017 Research and development $ 128 $ 30 $ 307 $ 173 General and administrative 205 34 499 96 Total stock-based compensation expense $ 333 $ 64 $ 806 $ 269 As of September 30, 2018, total unrecognized stock‑based compensation expense related to unvested options was $7.9 million, which is expected to be recognized over the weighted average period of approximately 2.7 years. The total unrecognized stock-based compensation expense will be adjusted for actual forfeitures as they occur.

Net Loss per Share

Net Loss per Share	9 Months Ended
	Sep. 30, 2018
Net Loss per Share
Net Loss per Share	7. Net Loss per Share Basic and diluted net loss per share is determined by dividing net loss attributable to common shareholders by the weighted average number of shares of common stock outstanding during the period. For all periods presented, outstanding share options, outstanding A Preferred Stock, outstanding B Preferred Stock and outstanding Series B-1 A redeemable convertible preferred stock (“B-1 A Preferred Stock”) and Series B-1 B redeemable convertible preferred stock (“B-1 B Preferred Stock”) have been excluded from the calculation because their effects would be anti-dilutive. Therefore, the weighted-average shares used to calculate both basic and diluted loss per share are the same. Basic and diluted net loss per share of the Company was calculated as follows (in thousands, except share and per share amounts): Three Months Ended Nine Months Ended September 30, September 30, 2018 2017 2018 2017 Numerator: Net loss $ (8,473) $ (8,324) $ (24,873) $ (20,751) Less: Dividends declared (9,142) — (9,142) — Net loss attributable to common shareholders — basic and diluted $ (17,615) $ (8,324) $ (34,015) $ (20,751) Denominator: Weighted average common shares outstanding — basic and diluted 866,641 1,630 300,435 824 Net loss per share attributable to common shareholders — basic and diluted $ (20.33) $ (5,106.75) $ (113.22) $ (25,183.25) The Company excluded the following potential shares of common stock, presented based on amounts outstanding at each period end, from the computation of diluted net loss per share for the periods indicated because including them would have had an anti‑dilutive effect. Therefore, the weighted average number of shares of common stock outstanding used to calculate both basic and diluted net loss per share attributable to common stockholders is the same. As of September 30, 2018 2017 Options to purchase shares of common stock 1,405,275 434,933 Redeemable convertible preferred stock (as converted to common stock) — 4,866,491 1,405,275 5,301,424

Commitments

Commitments	9 Months Ended
	Sep. 30, 2018
Commitments
Commitments	8. Commitments Lease Commitments In May 2015, the Company entered into an operating lease agreement for its office and laboratory space with AstraZeneca, which extended through May 2020. In February 2018, the Company amended its operating lease to extend the term through December 2022 and expand the premises to include an additional 7,257 square feet. The facility lease requires the Company to pay certain operating costs. During the three months September 30, 2018 and 2017, the Company recorded rental expense of $0.2 million and $0.1 million, respectively. During the nine months ended September 30, 2018 and 2017, the Company recorded rental expense of $0.5 million and $0.3 million, respectively. Future minimum lease payments for the combined spaces as of September 30, 2018 were as follows (in thousands): Year Ending December 31, 2018 $ 130 2019 597 2020 656 2021 710 2022 730 $ 2,823 A Subscription Agreement In connection with the A Subscription Agreement, the Company agreed to pay AstraZeneca a one‑time milestone payment of $5.0 million within three months of achieving a specified cumulative net sales milestone for ETX2514. This milestone payment will be automatically waived should the Company’s common stock trade on Nasdaq at or above a specified price at the time it achieves such specified cumulative net sales milestone for ETX2514. The Company is also obligated to pay AstraZeneca a one‑time milestone payment of $10.0 million within two years of achieving the first commercial sale of zoliflodacin. At the Company’s election, either milestone payment may be paid in cash, common stock, or a combination of cash and common stock. Additionally, the Company is obligated to pay AstraZeneca tiered, single‑digit, per‑country royalties on the annual worldwide net sales of ETX2514 and zoliflodacin.

Related Party Transactions

Related Party Transactions	9 Months Ended
	Sep. 30, 2018
Related Party Transactions
Related Party Transactions	9. Related Party Transactions The Company was formed in May 2015 as a wholly owned subsidiary of AstraZeneca, which maintained a controlling interest in the Company until the B Preferred Stock were issued in March 2016. Prior to the closing of the initial public offering on September 28, 2018, AstraZeneca was the sole A Preferred Stockholder. Upon the closing of the initial public offering, all shares of preferred stock converted into shares of common stock. Subscription Receivable Due from AstraZeneca In connection with the issuance and sale of A Preferred Stock, AstraZeneca agreed to provide cash management services for the net proceeds due to the Company under the A Preferred Stock financing for as long as the Company remained a majority-controlled subsidiary. As a result, the full amount of the funds due to the Company were held by AstraZeneca, as property of the Company. This arrangement ceased upon the closing the B Preferred Stock financing in March 2016. During 2016, $17.6 million of the funds were transferred to the Company, with the remaining $0.2 million received during the nine months ended September 30, 2017. Lease Commitments The Company has an operating lease agreement for its office and laboratory space with AstraZeneca. See Note 8. AstraZeneca Transition Services Agreement The Company and AstraZeneca entered into a transition services agreement (the “Transition Agreement”), which commenced on May 11, 2015 and expired in November 2015. The Company owed $0.6 million as of December 31, 2016 related to this arrangement, included in due to related party on the consolidated balance sheet, which it paid during the nine months ended September 30, 2017.

Summary of Significant Accoun_2

Summary of Significant Accounting Policies (Policies)	9 Months Ended
	Sep. 30, 2018
Summary of Significant Accounting Policies
Basis of Presentation and Consolidation	Basis of Presentation and Consolidation The accompanying consolidated balance sheet as of September 30, 2018, the consolidated statements of operations for the three and nine months ended September 30, 2018 and 2017, redeemable convertible preferred stock and stockholders’ equity (deficit) for the nine months ended September 30, 2018 and cash flows for the nine months ended September 30, 2018 and 2017 are unaudited. The interim unaudited consolidated financial statements have been prepared on the same basis as the annual audited consolidated financial statements; and in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair statement of the Company’s financial position as of September 30, 2018, the results of operations for the three and nine months ended and cash flows for the nine months ended September 30, 2018 and 2017. The financial data and other information disclosed in these notes as of September 30, 2018 and for the nine months ended September 30, 2018 and 2017 are unaudited. The results for the three and nine months ended September 30, 2018 are not necessarily indicative of the results to be expected for the year ending December 31, 2018, any other interim periods, or any future year or period. The consolidated financial statements include the accounts of Entasis Therapeutics Holdings Inc. and its wholly owned subsidiaries Entasis Limited (a U.K. corporation) and Entasis Therapeutics Inc. (a U.S. corporation). The functional and reporting currency of the parent entity, Entasis Therapeutics Holdings Inc., and subsidiaries is U.S. dollars. All intercompany accounts and transactions have been eliminated in consolidation. These interim unaudited consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements contained in the Prospectus.
Use of Estimates	Use of Estimates The preparation of the Company’s consolidated financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Significant estimates and assumptions reflected in these consolidated financial statements include, but are not limited to, the recognition of revenue, the recognition of research and development expenses and the valuation of common stock and options to purchase common stock. Estimates are periodically reviewed in light of changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. Actual results could differ from the Company’s estimates.
Revenue Recognition	Revenue Recognition The Company recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services. To determine revenue recognition, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the Company satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. See Note 5 for a further discussion of accounting for revenue.
Recently Adopted Accounting Pronouncements	Recently Adopted Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”), which supersedes existing revenue recognition guidance under GAAP. 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. The standard defines a five‑step process to achieve this principle, and will require companies to use more judgment and make more estimates than under the current guidance. ASU 2014‑09 also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, and is effective for public entities for annual periods beginning after December 15, 2017, including interim periods within those fiscal years. In March 2016, the FASB issued ASU No. 2016‑08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (“ASU 2016‑08”), which further clarifies the implementation guidance on principal versus agent considerations in ASU 2014‑09. In April 2016, the FASB issued ASU No. 2016‑10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing , clarifying the implementation guidance on identifying performance obligations and licensing. Specifically, the amendments in this update reduce the cost and complexity of identifying promised goods or services and improve the guidance for determining whether promises are separately identifiable. The amendments in this update also provide implementation guidance on determining whether an entity’s promise to grant a license provides a customer with either a right to use the entity’s intellectual property (which is satisfied at a point in time) or a right to access the entity’s intellectual property (which is satisfied over time). The Company adopted this guidance in connection with the execution of the license and collaboration agreement (the “Zai Agreement”) with Zai Lab (Shanghai) Co., Ltd. (“Zai Lab”) in April 2018. See Note 5. Prior to the Zai Agreement, the Company did not have any revenue from contracts with customers. In October 2016, the FASB issued ASU No. 2016‑16, Income Taxes (Topic 740): Intra‑Entity Transfer of Assets Other than Inventory (“ASU 2016‑16”), which requires the recognition of the income tax consequences of an intra‑entity transfer of an asset, other than inventory, when the transfer occurs. The standard is effective for annual periods beginning after December 15, 2017, including interim periods within those fiscal years. On January 1, 2018, the Company adopted this guidance, and the adoption did not have a material impact on the Company’s unaudited consolidated financial statements and related disclosures. In August 2016, the FASB issued ASU No. 2016‑15, Statement of Cash Flows (Topic 230), Classification of Certain Cash Receipts and Cash Payments (“ASU 2016‑15”). The amendments of ASU 2016‑15 were issued to address eight specific cash flow issues for which stakeholders have indicated to the FASB that a diversity in practice existed in how entities were presenting and classifying these items in the statement of cash flows. The issues addressed by ASU 2016‑15 include but are not limited to the classification of debt prepayment and debt extinguishment costs, payments made for contingent consideration for a business combination, proceeds from the settlement of insurance proceeds, distributions received from equity method investees and separately identifiable cash flows and the application of the predominance principle. The amendments of ASU 2016‑15 are effective for public entities for fiscal years beginning after December 15, 2017 and interim periods in those fiscal years. The adoption of ASU 2016‑15 is required to be applied retrospectively. On January 1, 2018, the Company adopted this guidance and the adoption did not have a material impact on the Company’s unaudited consolidated financial statements and related disclosures. In May 2017, the FASB issued ASU No. 2017‑09, Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting (“ASU 2017‑09”), which clarifies when to account for a change to the terms or conditions of a share‑based payment award as a modification. Under the new guidance, modification accounting is required only if the fair value, the vesting conditions or the classification of the award (as equity or liability) changes as a result of the change in terms or conditions. The standard is effective for annual periods beginning after December 15, 2017. On January 1, 2018, the Company adopted this guidance and the adoption did not have a material impact on the Company’s consolidated financial statements and related disclosures. In June 2018, the FASB issued ASU No. 2018‑07, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share‑Based Payment Accounting (“ASU 2018‑07”), which expands the scope of Topic 718 to include share‑based payment awards to nonemployees. The amendments in ASU 2018‑07 are effective for public business entities for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted, but no earlier than an entity’s adoption date of Topic 606. During the nine months ended September 30, 2018, the Company early adopted this guidance and the adoption did not have a material impact on the Company’s consolidated financial statements and related disclosures.
Recently Issued Accounting Pronouncements	Recently Issued Accounting Pronouncements In February 2016, the FASB issued ASU No.2016-02 – Leases (Topic 842) , which replaces the existing accounting guidance for leases. This standard requires entities that lease assets to recognize the assets and liabilities for the rights and obligations created by those leases on the balance sheet. The standard is effective for fiscal years and the interim periods within those fiscal years beginning after December 15, 2018. The guidance is required to be applied by the modified retrospective transition approach and early adoption is permitted. The Company is continuing to evaluate the new lease guidance and is in the process of evaluating its existing population of contracts to ensure all contracts that meet the definition of a lease contract under the new standard are identified. As a result, the Company is currently assessing the impact that adoption of this guidance will have on its financial statements and footnote disclosures and it anticipates it will result in an increase in assets and liabilities.

Accrued Expenses and Other Cu_2

Accrued Expenses and Other Current Liabilities (Tables)	9 Months Ended
	Sep. 30, 2018
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): September 30, December 31, 2018 2017 Accued compensation and benefits $ 1,214 $ 1,286 Accrued contract manufacturing 1,992 3,633 Accrued clinical costs 1,250 1,096 Accrued professional services 1,816 1,246 Accrued research costs 742 135 Other 681 219 Total accrued expenses and other current liabilities $ 7,695 $ 7,615

Stock-Based Compensation (Table

Stock-Based Compensation (Tables)	9 Months Ended
	Sep. 30, 2018
Stock-Based Compensation
Summary of Stock option activity under the 2015 and 2018 Plan	Weighted- Weighted- Average Average Remaining Aggregate Number of Exercise Contractual Intrinsic Options Price Term (Years) Value Outstanding as of December 31, 2017 811,627 $ 3.73 9.09 $ 6,062 Granted 606,349 10.12 Exercised (908) 3.74 Cancelled or forfeited (11,793) 3.97 Outstanding as of September 30, 2018 1,405,275 $ 6.48 8.95 $ 7,181 Options exercisable as of September 30, 2018 385,178 $ 7.89 7.89 $ 2,618 Options unvested as of September 30, 2018 1,020,097 $ 9.35 9.35 $ 4,562
Schedule of stock-based compensation expense	Stock‑based compensation expense was classified in the consolidated statement of operations as follows (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2018 2017 2018 2017 Research and development $ 128 $ 30 $ 307 $ 173 General and administrative 205 34 499 96 Total stock-based compensation expense $ 333 $ 64 $ 806 $ 269

Net Loss per Share (Tables)

Net Loss per Share (Tables)	9 Months Ended
	Sep. 30, 2018
Net Loss per Share
Schedule of computation of basic and diluted net loss per share	Basic and diluted net loss per share of the Company was calculated as follows (in thousands, except share and per share amounts): Three Months Ended Nine Months Ended September 30, September 30, 2018 2017 2018 2017 Numerator: Net loss $ (8,473) $ (8,324) $ (24,873) $ (20,751) Less: Dividends declared (9,142) — (9,142) — Net loss attributable to common shareholders — basic and diluted $ (17,615) $ (8,324) $ (34,015) $ (20,751) Denominator: Weighted average common shares outstanding — basic and diluted 866,641 1,630 300,435 824 Net loss per share attributable to common shareholders — basic and diluted $ (20.33) $ (5,106.75) $ (113.22) $ (25,183.25)
Schedule of anti-dilutive securities	As of September 30, 2018 2017 Options to purchase shares of common stock 1,405,275 434,933 Redeemable convertible preferred stock (as converted to common stock) — 4,866,491 1,405,275 5,301,424

Commitments (Tables)

Commitments (Tables)	9 Months Ended
	Sep. 30, 2018
Commitments
Schedule of future minimum lease payments for the combined spaces	Future minimum lease payments for the combined spaces as of September 30, 2018 were as follows (in thousands): Year Ending December 31, 2018 $ 130 2019 597 2020 656 2021 710 2022 730 $ 2,823

Organization and Description _2

Organization and Description of Business (Details) $ / shares in Units, $ in Thousands	Sep. 28, 2018USD ($)$ / sharesshares	Apr. 23, 2018shares	Sep. 30, 2018USD ($)	Mar. 31, 2016shares	May 31, 2015shares	Sep. 30, 2018USD ($)shares	Dec. 31, 2017USD ($)
Shares issued					4
Shares exchange ratio		1
Share options		0
Proceeds from initial public offering, net | $						$ 67,026
Risks and Uncertainties
Cash and cash equivalents | $			$ 94,021			94,021	$ 55,101
Accumulated deficit | $			$ (82,030)			$ (82,030)	$ (57,170)
Reverse stock split ratio			20.728
Initial Public Offering
Shares issued	5,000,000
Share price (in dollars per share) | $ / shares	$ 15
Proceeds from initial public offering, net | $	$ 65,600
Conversion of preferred shares including accrued dividends into common stock upon initial public offering (in shares)	8,084,414
Series A Redeemable Convertible Preferred Stock
Shares issued					33,499,900
Conversion of preferred shares including accrued dividends into common stock upon initial public offering (in shares)						(33,499,900)
Series B Redeemable Convertible Preferred Stock
Shares issued				25,000,000
Conversion of preferred shares including accrued dividends into common stock upon initial public offering (in shares)						(25,000,000)

Accrued Expenses and Other Cu_3

Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Accrued Expenses and Other Current Liabilities
Accrued compensation and benefits	$ 1,214	$ 1,286
Accrued contract manufacturing	1,992	3,633
Accrued clinical costs	1,250	1,096
Accrued professional services	1,816	1,246
Accrued research costs	742	135
Other	681	219
Total accrued expenses and other current liabilities	$ 7,695	$ 7,615

Funding Arrangements (Details)

Funding Arrangements (Details) - USD ($) $ in Millions	1 Months Ended	3 Months Ended		8 Months Ended	9 Months Ended
	Dec. 31, 2016	Sep. 30, 2018	Sep. 30, 2017	Oct. 31, 2017	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017
USAMRAA grant
Funding Arrangements
Maximum reimbursable research expenditures	$ 1.1
Grant income recognized		$ 0.1	$ 0.1		$ 0.4	$ 0.4
Funds received during the period					0.7	0
Grants receivable		0.2			0.2		$ 0.5
CARB-X program
Funding Arrangements
Maximum reimbursable research expenditures				$ 16.4
Grant income recognized		1.5	$ 0.1		4.1	0.3
Funds received during the period					1.9	$ 0.1
Grants receivable		$ 2.7			$ 2.7		$ 0.2

License and Collaboration Agr_2

License and Collaboration Agreement with Zai Lab (Details) - USD ($) $ in Thousands	1 Months Ended	3 Months Ended	9 Months Ended
	Apr. 30, 2018	Jun. 30, 2018	Sep. 30, 2018
License and Collaboration Agreement with Zai Lab
Revenue			$ 5,000
Provision for income taxes			472
License and collaboration agreement with Zai Lab
License and Collaboration Agreement with Zai Lab
Upfront, non-refundable payment received	$ 5,000
Upfront, non-refundable payment received, tax expense	800
Eligible amount receivable in research and development support payments and development, regulatory and sales milestone payments	$ 98,600
Revenue		$ 5,000	5,000
Provision for income taxes			$ 500

Stock-Based Compensation - Stoc

Stock-Based Compensation - Stock Incentive Plan (Details) - USD ($)	Sep. 25, 2018	Sep. 30, 2018	Sep. 30, 2018
2015 Stock Incentive Plan
Stock-Based Compensation
Number of options granted	0
2018 Stock Incentive Plan | Non-employee directors
Stock-Based Compensation
Maximum cash fee paid		$ 500,000
2018 Stock Incentive Plan | Board of directors
Stock-Based Compensation
Maximum cash fee paid		$ 800,000
2018 Stock Incentive Plan | Stock Options
Stock-Based Compensation
Number of options granted			243,106
Number of shares available for future issuance		944,725	944,725
Number of shares available for grant		1,181,972	1,181,972
Period of options		10 years
Percentage of annual increase to the total number of common stock outstanding		4.00%
2018 Stock Incentive Plan | Incentive stock options
Stock-Based Compensation
Maximum number of shares issued		7,500,000

Stock-Based Compensation - St_2

Stock-Based Compensation - Stock Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands	Sep. 25, 2018	Sep. 30, 2018	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017
Employee Stock Purchase Plan
Aggregate Intrinsic Value
Number of shares available for future issuance		140,000	140,000		140,000
Percentage of annual increase to the total number of common stock outstanding		1.00%
Annual increase in the number of shares to the shares of common stock		250,000
Maximum number of shares issued					0
2015 Stock Incentive Plan
Number of Options
Granted	0
2015 and 2018 Stock Incentive Plan
Number of Options
Outstanding, as of beginning of period					811,627
Granted					606,349
Exercised					(908)
Cancelled or forfeited					(11,793)
Outstanding, as of end of period		1,405,275	1,405,275		1,405,275		811,627
Options exercisable		385,178	385,178		385,178
Options unvested		1,020,097	1,020,097		1,020,097
Weighted Average Exercise Price
Outstanding, as of beginning of period					$ 3.73
Granted					10.12
Exercised					3.74
Cancelled or forfeited					3.97
Outstanding, as of end of period		$ 6.48	$ 6.48		6.48		$ 3.73
Options exercisable		7.89	7.89		7.89
Options unvested		$ 9.35	$ 9.35		$ 9.35
Weighted Average Remaining Contractual Term (Years)
Options outstanding					8 years 11 months 12 days		9 years 1 month 2 days
Options exercisable					7 years 10 months 21 days
Options unvested					9 years 4 months 6 days
Aggregate Intrinsic Value
Options outstanding		$ 7,181	$ 7,181		$ 7,181		$ 6,062
Options exercisable		2,618	2,618		2,618
Options unvested		$ 4,562	4,562		$ 4,562
Weighted average grant date fair value per share of options granted					$ 6.22	$ 2.33
Total fair value of options vested			$ 600	$ 200	$ 800	$ 400

Stock-Based Compensation - Astr

Stock-Based Compensation - AstraZeneca Shares Option and Incentive Plan (Details) - AstraZeneca Plan - RSUs - USD ($)	1 Months Ended	9 Months Ended
	Mar. 31, 2017	Sep. 30, 2017
Stock-Based Compensation
Vesting percentage	100.00%
Vesting period	36 months
RSU compensation expense		$ 14,604

Stock-Based Compensation - St_3

Stock-Based Compensation - Stock-Based Compensation (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Stock-Based Compensation
Total stock-based compensation expense	$ 333	$ 64	$ 806	$ 269
Unrecognized compensation cost	7,900		$ 7,900
Period for recognition			2 years 8 months 12 days
Research and development
Stock-Based Compensation
Total stock-based compensation expense	128	30	$ 307	173
General and administrative
Stock-Based Compensation
Total stock-based compensation expense	$ 205	$ 34	$ 499	$ 96

Net Loss per Share - Calculatio

Net Loss per Share - Calculation (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Numerator:
Net loss	$ (8,473)	$ (8,324)	$ (24,873)	$ (20,751)
Less: Dividends declared	(9,142)		(9,142)
Net loss attributable to common shareholders-basic and diluted	$ (17,615)	$ (8,324)	$ (34,015)	$ (20,751)
Denominator:
Weighted average common shares outstanding-basic and diluted	866,641	1,630	300,435	824
Net loss per share attributable to common shareholders-basic and diluted	$ (20.33)	$ (5,106.75)	$ (113.22)	$ (25,183.25)

Net Loss per Share - Antidiluti

Net Loss per Share - Antidilutive Securities Excluded from Computation (Details) - shares	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
Net Loss per Share
Antidilutive securities excluded from computation of earnings per share	1,405,275	5,301,424
Stock Options
Net Loss per Share
Antidilutive securities excluded from computation of earnings per share	1,405,275	434,933
Redeemable convertible preferred stock
Net Loss per Share
Antidilutive securities excluded from computation of earnings per share		4,866,491

Commitments - Lease Commitments

Commitments - Lease Commitments (Details) - AstraZeneca $ in Millions	1 Months Ended	3 Months Ended		9 Months Ended
	Feb. 28, 2018ft²	Sep. 30, 2018USD ($)	Sep. 30, 2017USD ($)	Sep. 30, 2018USD ($)	Sep. 30, 2017USD ($)
Commitments and Contingencies
Additional space | ft²	7,257
Rental expense | $		$ 0.2	$ 0.1	$ 0.5	$ 0.3

Commitments - Future minimum le

Commitments - Future minimum lease payments (Details) $ in Thousands	Sep. 30, 2018USD ($)
Future minimum lease payments for the combined spaces
2,018	$ 130
2,019	597
2,020	656
2,021	710
2,022	730
Total	$ 2,823

Commitments and Contingencies -

Commitments and Contingencies - A Subscription Agreement (Details) - AstraZeneca $ in Millions	1 Months Ended
	Apr. 30, 2018USD ($)
Commitments and Contingencies
Subscription agreement one-time milestone payment on net sales	$ 5
Subscription agreement one-time milestone payment on first commercial sale	$ 10
Term of the milestone payment on net sales	3 months
Term of the milestone payment on first commercial sale	2 years

Related Party Transactions (Det

Related Party Transactions (Details) - AstraZeneca - USD ($) $ in Millions	9 Months Ended	12 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Related Party Transactions
Funds received	$ 0.2	$ 17.6
Owed to related party		$ 0.6