Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2020 | Oct. 31, 2020 | |
Document information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Sep. 30, 2020 | |
Entity File Number | 001-38492 | |
Entity Registrant Name | Kiniksa Pharmaceuticals, Ltd. | |
Entity Incorporation, State or Country Code | D0 | |
Entity Tax Identification Number | 98-1327726 | |
Entity Address, Address Line One | Clarendon House | |
Entity Address, Address Line Two | 2 Church Street | |
Entity Address, City or Town | Hamilton | |
Entity Address, Country | BM | |
Entity Address, Postal Zip Code | HM11 | |
City Area Code | 808 | |
Local Phone Number | 451-3453 | |
Title of 12(b) Security | Class A Common Shares | |
Trading Symbol | KNSA | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | true | |
Entity Shell Company | false | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q3 | |
Entity Central Index Key | 0001730430 | |
Amendment Flag | false | |
Common Shares | ||
Document information | ||
Entity Common Stock, Shares Outstanding | 68,075,035 | |
Class A common shares | ||
Document information | ||
Entity Common Stock, Shares Outstanding | 31,637,433 | |
Class B common shares | ||
Document information | ||
Entity Common Stock, Shares Outstanding | 2,355,458 | |
Class A1 common shares | ||
Document information | ||
Entity Common Stock, Shares Outstanding | 18,024,526 | |
Class B1 common shares | ||
Document information | ||
Entity Common Stock, Shares Outstanding | 16,057,618 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 85,874 | $ 46,928 |
Short-term investments | 278,521 | 186,452 |
Prepaid expenses and other current assets | 14,018 | 8,247 |
Total current assets | 378,413 | 241,627 |
Property and equipment, net | 4,573 | 6,398 |
Operating lease right-of-use assets | 1,166 | 1,927 |
Restricted cash | 210 | 210 |
Other long-term assets | 48 | |
Deferred tax assets | 3 | 4,372 |
Total assets | 384,413 | 254,534 |
Current liabilities: | ||
Accounts payable | 3,925 | 5,693 |
Accrued expenses | 19,475 | 20,415 |
Operating lease liabilities | 1,492 | 1,697 |
Other current liabilities | 25 | |
Total current liabilities | 24,892 | 27,830 |
Non-current liabilities: | ||
Non-current operating lease liabilities | 55 | 955 |
Other long-term liabilities | 957 | 326 |
Total liabilities | 25,904 | 29,111 |
Commitments and contingencies (Note 12) | ||
Shareholders' equity: | ||
Additional paid-in capital | 822,301 | 581,467 |
Accumulated other comprehensive income | 6 | 33 |
Accumulated deficit | (463,816) | (356,092) |
Total shareholders' equity | 358,509 | 225,423 |
Total liabilities and shareholders' equity | 384,413 | 254,534 |
Class A common shares | ||
Shareholders' equity: | ||
Common stock value | 8 | 6 |
Class B common shares | ||
Shareholders' equity: | ||
Common stock value | 1 | 1 |
Class A1 common shares | ||
Shareholders' equity: | ||
Common stock value | 5 | 4 |
Class B1 common shares | ||
Shareholders' equity: | ||
Common stock value | $ 4 | $ 4 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Sep. 30, 2020 | Dec. 31, 2019 |
Class A common shares | ||
Common stock, par value (in dollars per share) | $ 0.000273235 | $ 0.000273235 |
Common stock, shares issued (in shares) | 31,479,648 | 19,245,201 |
Common stock, shares outstanding (in shares) | 31,479,648 | 19,245,201 |
Class B common shares | ||
Common stock, par value (in dollars per share) | $ 0.000273235 | $ 0.000273235 |
Common stock, shares issued (in shares) | 2,355,458 | 4,638,855 |
Common stock, shares outstanding (in shares) | 2,355,458 | 4,638,855 |
Class A1 common shares | ||
Common stock, par value (in dollars per share) | $ 0.000273235 | $ 0.000273235 |
Common stock, shares issued (in shares) | 18,024,526 | 14,995,954 |
Common stock, shares outstanding (in shares) | 18,024,526 | 14,995,954 |
Class B1 common shares | ||
Common stock, par value (in dollars per share) | $ 0.000273235 | $ 0.000273235 |
Common stock, shares issued (in shares) | 16,057,618 | 16,057,618 |
Common stock, shares outstanding (in shares) | 16,057,618 | 16,057,618 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Operating expenses: | ||||
Research and development | $ 31,419 | $ 22,014 | $ 74,644 | $ 112,115 |
General and administrative | 11,799 | 8,432 | 29,821 | 25,267 |
Total operating expenses | 43,218 | 30,446 | 104,465 | 137,382 |
Loss from operations | (43,218) | (30,446) | (104,465) | (137,382) |
Interest income | 49 | 1,386 | 1,104 | 4,919 |
Loss before (provision) benefit for income taxes | (43,169) | (29,060) | (103,361) | (132,463) |
(Provision) benefit for income taxes | (667) | 2,002 | (4,363) | 2,393 |
Net loss | $ (43,836) | $ (27,058) | $ (107,724) | $ (130,070) |
Net loss per share attributable to common shareholders-basic and diluted | $ (0.66) | $ (0.49) | $ (1.80) | $ (2.42) |
Weighted average common shares outstanding-basic and diluted | 65,958,513 | 54,831,308 | 59,754,495 | 53,767,003 |
Comprehensive loss: | ||||
Net loss | $ (43,836) | $ (27,058) | $ (107,724) | $ (130,070) |
Other comprehensive income (loss): | ||||
Unrealized gain (loss) on short-term investments and currency translation adjustments, net of tax | (3) | (39) | (27) | 66 |
Total other comprehensive income | (3) | (39) | (27) | 66 |
Total comprehensive loss | $ (43,839) | $ (27,097) | $ (107,751) | $ (130,004) |
CONSOLIDATED STATEMENTS OF SHAR
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($) $ in Thousands | Common SharesFollow-On Offering | Common SharesPrivate Placement | Common Shares | Additional Paid-In CapitalFollow-On Offering | Additional Paid-In CapitalPrivate Placement | Additional Paid-In Capital | Accumulated Other Comprehensive Income | Accumulated Deficit | Follow-On Offering | Private Placement | Total |
Balance at the beginning of the period at Dec. 31, 2018 | $ 13 | $ 473,483 | $ (4) | $ (194,225) | $ 279,267 | ||||||
Balance at the beginning of the period (in shares) at Dec. 31, 2018 | 49,489,647 | ||||||||||
Changes in equity | |||||||||||
Issuance of common shares upon completion of offering, net of placement agent fees | $ 2 | $ 48,474 | $ 34,511 | $ 48,476 | $ 34,511 | ||||||
Issuance of common shares upon completion of offering, net of placement agent fees (in shares) | 2,816,110 | 2,000,000 | |||||||||
Common shares issued or to be issued in connection with the acquisition of all issued and outstanding equity securities of Primatope Therapeutics, Inc. | 7,000 | 7,000 | |||||||||
Common shares issued or to be issued in connection with the acquisition of all issued and outstanding equity securities of Primatope Therapeutics, Inc. (in shares) | 337,008 | ||||||||||
Exercise of options | 181 | 181 | |||||||||
Exercise of options (in shares) | 50,070 | ||||||||||
Share-based compensation expense | 2,893 | 2,893 | |||||||||
Unrealized gain on short-term investments | 12 | 12 | |||||||||
Net loss | (65,821) | (65,821) | |||||||||
Balance at the end of the period at Mar. 31, 2019 | $ 15 | 566,542 | 8 | (260,046) | 306,519 | ||||||
Balance at the end of the period (in shares) at Mar. 31, 2019 | 54,692,835 | ||||||||||
Balance at the beginning of the period at Dec. 31, 2018 | $ 13 | 473,483 | (4) | (194,225) | 279,267 | ||||||
Balance at the beginning of the period (in shares) at Dec. 31, 2018 | 49,489,647 | ||||||||||
Changes in equity | |||||||||||
Unrealized gain on short-term investments | 66 | ||||||||||
Net loss | (130,070) | ||||||||||
Balance at the end of the period at Sep. 30, 2019 | $ 15 | 576,129 | 62 | (324,295) | 251,911 | ||||||
Balance at the end of the period (in shares) at Sep. 30, 2019 | 54,871,340 | ||||||||||
Balance at the beginning of the period at Mar. 31, 2019 | $ 15 | 566,542 | 8 | (260,046) | 306,519 | ||||||
Balance at the beginning of the period (in shares) at Mar. 31, 2019 | 54,692,835 | ||||||||||
Changes in equity | |||||||||||
Common shares issued or to be issued in connection with a milestone payment due to Primatope Therapeutics, Inc. | 1,800 | 1,800 | |||||||||
Common shares issued or to be issued in connection with a milestone payment due to Primatope Therapeutics, Inc. (in shares) | 94,284 | ||||||||||
Exercise of options | 512 | 512 | |||||||||
Exercise of options (in shares) | 70,573 | ||||||||||
Share-based compensation expense | 3,464 | 3,464 | |||||||||
Unrealized gain on short-term investments | 93 | 93 | |||||||||
Net loss | (37,191) | (37,191) | |||||||||
Balance at the end of the period at Jun. 30, 2019 | $ 15 | 572,318 | 101 | (297,237) | 275,197 | ||||||
Balance at the end of the period (in shares) at Jun. 30, 2019 | 54,857,692 | ||||||||||
Changes in equity | |||||||||||
Exercise of options | 53 | 53 | |||||||||
Exercise of options (in shares) | 13,648 | ||||||||||
Share-based compensation expense | 3,758 | 3,758 | |||||||||
Unrealized gain on short-term investments | (39) | (39) | |||||||||
Net loss | (27,058) | (27,058) | |||||||||
Balance at the end of the period at Sep. 30, 2019 | $ 15 | 576,129 | 62 | (324,295) | 251,911 | ||||||
Balance at the end of the period (in shares) at Sep. 30, 2019 | 54,871,340 | ||||||||||
Balance at the beginning of the period at Dec. 31, 2019 | $ 15 | 581,467 | 33 | (356,092) | 225,423 | ||||||
Balance at the beginning of the period (in shares) at Dec. 31, 2019 | 54,937,628 | ||||||||||
Changes in equity | |||||||||||
Exercise of options | 2,414 | 2,414 | |||||||||
Exercise of options (in shares) | 643,867 | ||||||||||
Share-based compensation expense | 4,209 | 4,209 | |||||||||
Unrealized gain on short-term investments | 207 | 207 | |||||||||
Net loss | (26,419) | (26,419) | |||||||||
Balance at the end of the period at Mar. 31, 2020 | $ 15 | 588,090 | 240 | (382,511) | 205,834 | ||||||
Balance at the end of the period (in shares) at Mar. 31, 2020 | 55,581,495 | ||||||||||
Balance at the beginning of the period at Dec. 31, 2019 | $ 15 | 581,467 | 33 | (356,092) | 225,423 | ||||||
Balance at the beginning of the period (in shares) at Dec. 31, 2019 | 54,937,628 | ||||||||||
Changes in equity | |||||||||||
Unrealized gain on short-term investments | (27) | ||||||||||
Net loss | (107,724) | ||||||||||
Balance at the end of the period at Sep. 30, 2020 | $ 18 | 822,301 | 6 | (463,816) | 358,509 | ||||||
Balance at the end of the period (in shares) at Sep. 30, 2020 | 67,917,250 | ||||||||||
Balance at the beginning of the period at Mar. 31, 2020 | $ 15 | 588,090 | 240 | (382,511) | 205,834 | ||||||
Balance at the beginning of the period (in shares) at Mar. 31, 2020 | 55,581,495 | ||||||||||
Changes in equity | |||||||||||
Issuance of common shares upon completion of offering, net of placement agent fees | $ 1 | 46,900 | 27,594 | 46,901 | 27,594 | ||||||
Issuance of common shares upon completion of offering, net of placement agent fees (in shares) | 2,760,000 | 1,600,000 | |||||||||
Common shares issued or to be issued in connection with the acquisition of all issued and outstanding equity securities of Primatope Therapeutics, Inc. (in shares) | 59,469 | ||||||||||
Exercise of options | 2,936 | 2,936 | |||||||||
Exercise of options (in shares) | 485,592 | ||||||||||
Share-based compensation expense | 4,851 | 4,851 | |||||||||
Unrealized gain on short-term investments | (231) | (231) | |||||||||
Net loss | (37,469) | (37,469) | |||||||||
Balance at the end of the period at Jun. 30, 2020 | $ 16 | 670,371 | 9 | (419,980) | 250,416 | ||||||
Balance at the end of the period (in shares) at Jun. 30, 2020 | 60,486,556 | ||||||||||
Changes in equity | |||||||||||
Issuance of common shares upon completion of offering, net of placement agent fees | $ 2 | $ 117,691 | $ 28,350 | $ 117,693 | $ 28,350 | ||||||
Issuance of common shares upon completion of offering, net of placement agent fees (in shares) | 5,952,381 | 1,428,572 | |||||||||
Common shares issued or to be issued in connection with a milestone payment due to Primatope Therapeutics, Inc. (in shares) | 16,634 | ||||||||||
Exercise of options | 331 | 331 | |||||||||
Exercise of options (in shares) | 33,107 | ||||||||||
Share-based compensation expense | 5,558 | 5,558 | |||||||||
Unrealized gain on short-term investments | (3) | (3) | |||||||||
Net loss | (43,836) | (43,836) | |||||||||
Balance at the end of the period at Sep. 30, 2020 | $ 18 | $ 822,301 | $ 6 | $ (463,816) | $ 358,509 | ||||||
Balance at the end of the period (in shares) at Sep. 30, 2020 | 67,917,250 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Cash flows from operating activities: | ||
Net loss | $ (107,724) | $ (130,070) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation expense | 1,838 | 1,502 |
Share-based compensation expense | 14,618 | 10,115 |
Class A common shares issued or to be issued as consideration for Primatope, including milestone payments | 8,800 | |
Loss on disposal of property and equipment | 23 | |
Non-cash lease expense | 761 | 919 |
Accretion of discounts on short-term investments | (239) | (3,044) |
Deferred income taxes | 4,321 | (3,411) |
Changes in operating assets and liabilities: | ||
Prepaid expenses and other assets | (5,768) | (2,391) |
Accounts payable | (1,704) | (4,504) |
Accrued expenses and other liabilities | (969) | 2,685 |
Accrued milestones | (14,850) | |
Operating lease liabilities | (1,105) | (916) |
Other long-term liabilities | 630 | 943 |
Net cash used in operating activities | (95,341) | (134,199) |
Cash flows from investing activities: | ||
Purchases of property and equipment | (228) | (1,207) |
Purchases of short-term investments | (344,159) | (406,135) |
Proceeds from the maturities of short-term investments | 252,300 | 454,640 |
Net cash provided by investing activities | (92,087) | 47,298 |
Cash flows from financing activities: | ||
Payments of offering costs | (976) | (118) |
Proceeds from exercise of options and employee share purchase plan | 5,681 | 746 |
Net cash provided by financing activities | 226,374 | 83,734 |
Net increase in cash, cash equivalents and restricted cash | 38,946 | (3,167) |
Cash, cash equivalents and restricted cash at beginning of period | 47,138 | 72,186 |
Cash, cash equivalents and restricted cash at end of period | 86,084 | 69,019 |
Supplemental information: | ||
Cash paid for income taxes | 482 | 1,727 |
Supplemental disclosure of non-cash investing and financing activities: | ||
Deferred offering costs included in accrued expenses and accounts payable | 154 | |
Property and equipment included in accrued expenses and accounts payable | 8 | 371 |
Follow-On Offering | Class A common shares | ||
Cash flows from financing activities: | ||
Proceeds from issuance of common shares, net of underwriting discounts and commissions inclusive of the over-allotment option exercise | 165,725 | 48,595 |
Private Placement | Class A1 common shares | ||
Cash flows from financing activities: | ||
Proceeds from issuance of common shares from private placement, net of placement agent fees | $ 55,944 | $ 34,511 |
Nature of the Business and Basi
Nature of the Business and Basis of Presentation | 9 Months Ended |
Sep. 30, 2020 | |
Nature of the Business and Basis of Presentation | |
Nature of the Business and Basis of Presentation | 1. Nature of the Business and Basis of Presentation Kiniksa Pharmaceuticals, Ltd. (the “Company”) is a biopharmaceutical company focused on discovering, acquiring, developing and commercializing therapeutic medicines for patients suffering from debilitating diseases with significant unmet medical need. The Company was incorporated in July 2015 as a Bermuda exempted company. The Company has a pipeline of product candidates across various stages of development that are designed to modulate the immunological signaling pathways that are implicated across a spectrum of diseases. The Company is subject to risks and uncertainties common to early-stage companies in the biopharmaceutical industry and global health, societal, economic and market conditions, including from the impact from the coronavirus disease 2019 (“COVID-19”) pandemic. There can be no assurance that the Company’s research and development will be successfully completed, that adequate protection for the Company’s technology will be obtained, that any products developed will obtain necessary government regulatory approval or that any products, if approved, will be commercially viable. The Company does not currently generate revenue from sales of any products, and it may never be able to develop or commercialize a marketable product. Upon approval from the U.S. Food and Drug Administration (“FDA”), if any, of a supplemental BLA (“sBLA”) submission for the commercial marketing of rilonacept in the United States for recurrent pericarditis, we will assume the sales and distribution of rilonacept for the approved indications in the United States and would evenly split profits on sales with Regeneron, after deducting certain commercialization expenses subject to specified limits. The Company has never obtained any regulatory approvals, manufactured a commercial-scale drug, or conducted sales and marketing activities. The Company operates in an environment of rapid technological innovation and substantial competition from pharmaceutical and biotechnology companies. In addition, the Company is dependent upon the services of its employees, consultants and other third parties, including contract research organizations (“CROs”), and contract manufacturing organizations (“CMOs”). Even if the Company’s product development efforts are successful, it is uncertain when, if ever, the Company will realize significant revenue from product sales. Risk and Uncertainties Related to COVID-19 In addition to risks and uncertainties common to the Company’s industry, the Company is subject to global societal, healthcare, economic and market conditions, including from the impact of the COVID-19 pandemic and measures taken in response to the pandemic or the easing of such measures, which continue to evolve. In December 2019, COVID-19 surfaced in Wuhan, China. The virus spread globally, and was declared a pandemic by the World Health Organization. The impact of this pandemic has been and will likely continue to be extensive on many aspects of society, which has resulted in and will likely continue to result in significant disruptions to healthcare systems, the global economy, as well as businesses and capital markets around the world. In an effort to halt the spread of the COVID-19 pandemic, federal and state governments in the United States and the governments of other countries around the globe have implemented various measures in response to the pandemic, including significant restrictions on businesses and travel as well as social-distancing measures and the easing of such measures. For example, in March 2020, the governors of Massachusetts and California, among other things, each enacted a stay-at-home advisory for workers in non-essential businesses. Because of the nature of the Company’s operations, it was and is considered to be an essential business so, to date, its operations have only been partially affected by these orders. In response to these orders, the Company implemented work-place rules and temporarily closed access to its California office space and restricted access to its Massachusetts facility to only those employees that needed to be in the office to execute their responsibilities and those employees who worked in the research and development laboratory space, with most of the employees continuing to carry out their responsibilities working outside of its offices. Subsequently in May and April 2020, the governors of Massachusetts and California, respectively, each announced a phased reopening plan for businesses and other organizations in their respective states. In response, the Company updated its work-place rules and designed a plan to reopen the Lexington and San Diego office spaces to additional groups of employees in phases, on an optional basis for now. Most of the employees continue to carry out their responsibilities working outside of the Company’s offices. As these measures implemented by federal and state governments in the United States in response to the pandemic continue to evolve, the Company continues to monitor the developments, restrictions and requirements in jurisdictions where it has offices, and plans to update the protocols for our offices as applicable. The COVID-19 pandemic, and measures undertaken in response to the pandemic, or the easing of any of such measures, may cause significant disruptions in the Company’s business or operations as well as in the business and operations of the Company’s CMOs, CROs and other third parties with whom the Company conducts business or otherwise engages now or in the future, including as a result of staffing shortages or reprioritizations, production slowdowns or stoppages, and disruptions in delivery systems. The COVID-19 pandemic may also adversely impact the Company’s preclinical studies and clinical trials, which could impede, delay, limit or prevent the clinical development of the Company’s product candidates and ultimately lead to the delay or denial of regulatory approval of its product candidates, which would materially adversely affect the Company’s business and operations, including its ability to generate revenue. Moreover, the COVID-19 pandemic is impacting the global economy, and the U.S. economy in particular, with the potential for the economic downturn to be severe and prolonged. A severe or prolonged economic downturn could result in continued disruptions in the financial markets, which could adversely impact the Company’s ability to raise additional capital when needed or on acceptable terms, if at all. While the Company continuously looks to identify business-critical activities and to develop contingencies and mitigation strategies for those activities to potentially minimize the impact of the COVID-19 pandemic on its business and operations, there can be no assurance that it will be able to identify all such activities or that any identified contingencies and mitigation strategies will be effective. Further, the COVID-19 pandemic, and measures undertaken in response to the pandemic continue to rapidly evolve. There is uncertainty relating to the potential effect of the pandemic on the Company’s business and operations. The extent of the impact on the Company’s business and operations will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the ultimate spread of the disease, duration of the pandemic, business and travel restrictions and social distancing measures, and the effectiveness of these and other actions taken to contain and treat the disease as well as the impact of the easement of any such restrictions, measures and actions. Principles of Consolidation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and include the accounts of the Company and its wholly owned subsidiaries, Kiniksa Pharmaceuticals Corp. (“Kiniksa US”), Primatope Therapeutics, Inc. (“Primatope”) and Kiniksa Pharmaceuticals (UK), Ltd. (“Kiniksa UK”) as well as the subsidiaries of Kiniksa UK, Kiniksa Pharmaceuticals (Germany) GmbH (“Kiniksa Germany”), Kiniksa Pharmaceuticals (France) SARL (“Kiniksa France”), and Kiniksa Pharmaceuticals GmbH (“Kiniksa Switzerland”), after elimination of all significant intercompany accounts and transactions. In assessing the consolidation requirement for variable interest entities (“VIE”s), the Company focuses on identifying whether it has both the power to direct the activities that most significantly impact the VIE’s economic performance and the obligation to absorb losses or the right to receive benefits from the VIE. In the event that the Company is the primary beneficiary of a VIE, the assets, liabilities, and results of operations of the VIE would be included in the Company’s consolidated financial statements. At September 30, 2020 and during the three and nine months then ended and at December 31, 2019 and during the year then ended, the Company was not the primary beneficiary of a VIE. Use of Estimates The preparation of the Company’s consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of expenses during the reporting period. Significant estimates and assumptions reflected in these consolidated financial statements include, but are not limited to, the accrual for research and development expenses and the valuation of common shares and share-based awards. 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 those estimates. Reporting and Functional Currency The financial results of the Company's global activities are reported in U.S. dollars (“USD”) and its foreign subsidiaries generally utilize their respective local currency to be their functional currency. Transactions in other currencies are recorded in the functional currency at the rate of exchange prevailing when the transactions occur. Monetary assets and liabilities denominated in other currencies are re-measured into the functional currency at the rate of exchange in effect at the balance sheet date. Exchange rate gains and losses arising from re-measurement of foreign currency-denominated monetary assets and liabilities are included in income or losses in the period in which they occur. For the Company’s foreign subsidiaries where the local currency is the functional currency, assets and liabilities denominated in local currencies are translated into USD at end-of-period exchange rates and the resulting translation adjustments are reported as a component of accumulated other comprehensive gain (loss) within shareholders' equity. Unaudited Interim Consolidated Financial Information The accompanying unaudited consolidated financial statements have been prepared in accordance with GAAP for interim financial information. The accompanying unaudited consolidated financial statements do not include all of the information and footnotes required by GAAP for complete consolidated financial statements. The accompanying year-end consolidated balance sheet was derived from audited financial statements but does not include all disclosures required by GAAP. The unaudited interim consolidated financial statements have been prepared on the same basis as the audited annual 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, 2020 and the results of its operations for the three and nine months ended September 30, 2020 and 2019 and its cash flows for the nine months ended September 30, 2020 and 2019. The results for the three and nine months ended September 30, 2020 are not necessarily indicative of results to be expected for the year ending December 31, 2020, any other interim periods or any future year or period. Follow-on Offering and Private Placement On February 4, 2019, the Company completed a follow-on offering of 2,654,984 Class A common shares at a public offering price of $18.26 and a concurrent private placement of 2,000,000 Class A1 common shares at an offering price of $18.26 per share for aggregate gross proceeds of $85,000. In addition, on March 1, 2019, the Company completed the sale of 161,126 Class A common shares to the underwriters of the follow-on offering following the exercise in part of their over-allotment option to purchase additional shares at a public offering price of $18.26 per share for gross proceeds of $2,942. The aggregate net proceeds to the Company from the follow-on offering and concurrent private placement, inclusive of the over-allotment option exercise, was $82,988 after deducting underwriting discounts and commissions, placement agent fees and other offering costs. On May 18, 2020, the Company completed a follow-on offering of 2,760,000 Class A common shares, inclusive of the exercise of the underwriters’ overallotment option at a public offering price of $18.25 and a concurrent private placement of 1,600,000 Class A1 common shares at an offering price of $18.25 per share for aggregate gross proceeds of $79,570. The aggregate net proceeds to the Company from the follow-on offering and concurrent private placement, inclusive of the over-allotment option exercise, was $74,495 after deducting underwriting discounts and commissions, placement agent fees and other offering costs. On July 24, 2020, the Company completed a follow-on offering of 5,952,381 Class A common shares, at a public offering price of $21.00 and a concurrent private placement of 1,428,572 Class A1 common shares at an offering price of $21.00 per share for aggregate gross proceeds of $155,000. The aggregate net proceeds to the Company from the follow-on offering and concurrent private placement was $146,043 after deducting underwriting discounts and commissions, placement agent fees and other offering costs. Liquidity In accordance with Accounting Standards Update (“ASU”) No. 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (Subtopic 205-40), the Company has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date the consolidated financial statements are issued. As of September 30, 2020, the Company had an accumulated deficit of $463,816. During the nine months ended September 30, 2020, the Company incurred a net loss of $107,724 and used $95,341 of cash in operating activities. The Company expects to continue to generate operating losses for the foreseeable future. As of September 30, 2020, the Company had cash, cash equivalents and short-term investments of $364,395. Based on its current operating plan, the Company expects that its cash, cash equivalents and short-term investments will be sufficient to fund its operating expenses and capital expenditure requirements for at least twelve months from the issuance date of these consolidated financial statements. The future viability of the Company beyond that point is dependent on its ability to raise additional capital to finance its operations. The Company will need to finance its operations through public or private securities offerings, debt financings, government funding or grants, or other sources, which may include licensing, collaborations or other strategic transactions or arrangements. Although the Company has been successful in raising capital in the past, there is no assurance that it will be successful in obtaining such additional financing on terms acceptable to the Company, if at all. If the Company is unable to obtain funding, the Company could be forced to delay, reduce or eliminate some or all of its research and development programs for product candidates, product portfolio expansion or commercialization efforts, which could adversely affect its business prospects, or the Company may be unable to continue operations. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2020 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Cash and Cash Equivalents The Company classifies deposits in banks, money market funds and cash invested temporarily in various instruments with maturities of three months or less at the time of purchase as cash and cash equivalents. At September 30, 2020 and December 31, 2019, cash and cash equivalents consisted principally of U.S. Treasury notes, amounts held in money market accounts and cash on deposit at commercial banks. Short-Term Investments The Company generally invests its excess cash in money market funds and short-term investments in U.S. Treasury notes. Such investments which are included in short-term investments on the Company's consolidated balance sheets are considered available-for-sale debt securities and are reported at fair value with unrealized gains and losses included as a component of shareholders’ equity. Realized gains and losses, if any, on short-term investments are included in interest income. The Company evaluates its short-term investments with unrealized losses for other-than-temporary impairment. When assessing short-term investments for other-than-temporary declines in value, the Company considers such factors as, among other things, how significant the decline in value is as a percentage of the original cost, the Company’s ability and intent to retain the investment for a period of time sufficient to allow for any anticipated recovery in fair value and market conditions in general. If any adjustment to fair value reflects a decline in the value of the investment that the Company considers to be “other than temporary,” the Company reduces the investment to fair value through a charge to the consolidated statement of operations and comprehensive loss. No such adjustments were necessary during the periods presented. Reclassifications The Company reclassified certain prior year balances on its consolidated statements of cash flows to conform to current year presentation. The balances related to prepaid expenses and other assets and non-cash lease expense. The reclassifications had no effect on net cash used by operating activities or the Company’s consolidated statements of operations and comprehensive loss. Concentrations of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash, cash equivalents and short-term investments. At September 30, 2020 and December 31, 2019, substantially all of the Company’s cash, cash equivalents and short-term investments were held at two financial institutions. The Company generally maintains balances in various operating accounts at financial institutions that management believes to be of high credit quality, in amounts that may exceed federally insured limits. The Company has not experienced any losses related to its cash, cash equivalents and short-term investments and does not believe that it is subject to unusual credit risk beyond the normal credit risk associated with commercial banking relationships. Restricted Cash In conjunction with the Company’s lease agreement entered into in March 2018 (see Note 5), the Company maintains a letter of credit for the benefit of the landlord. As of September 30, 2020 and December 31, 2019, the underlying cash balance of $210 securing this letter of credit, was classified as non-current in its consolidated balance sheet. Fair Value Measurements Certain assets and liabilities of the Company are carried at fair value under GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable: ● Level 1—Quoted prices in active markets for identical assets or liabilities. ● Level 2—Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data. ● Level 3—Unobservable inputs that are supported by little or no market activity that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques. The Company’s restricted cash, which is held in a money market fund, is carried at fair value, determined based on Level 1 inputs in the fair value hierarchy described above (see Note 3). The Company’s cash equivalents and short-term investments, consisting of money market accounts and U.S. Treasury notes, are carried at fair value, determined based on Level 1 and 2 inputs in the fair value hierarchy described above (see Note 3). The carrying values of the Company’s prepaid expenses and other current assets, accounts payable and accrued expenses approximate their fair values due to the short-term nature of these assets and liabilities. Leases In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-02, Leases (Topic 842) Leases (Topic 842) At the inception of an arrangement, the Company determines whether the arrangement is or contains a “lease” as defined by ASC 842. A lease is an arrangement, or part of an arrangement, that conveys the right to control the use of identified property, plant, or equipment (an identified asset) for a period of time in exchange for consideration. The Company determines if the arrangement conveys the right to control the use of an identified asset for a period of time. It assesses throughout the period of use whether the Company has both of the following (1) the right to obtain substantially all of the economic benefits from use of the identified asset and (2) the right to direct the use of the identified asset. This determination is reassessed if the terms of the arrangement are changed. Leases are classified as operating or finance leases based on the terms of the lease agreement and certain characteristics of the identified asset. Right-of-use (“ROU”) assets and lease liabilities are recognized at lease commencement date based on the present value of the minimum future lease payments. Most leases with a term greater than one year are recognized on the balance sheet as ROU assets with corresponding lease liabilities and, if applicable, long-term lease liabilities. The Company has elected not to recognize leases with a term of one year or less on its balance sheet. Operating leases, ROU assets and their corresponding lease liabilities are recorded based on the present value of lease payments over the expected remaining lease term. However, certain adjustments to the ROU assets may be required for items such as incentives received. The interest rate implicit in lease arrangements is typically not readily determinable. As a result, the Company utilizes its incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. In accordance with the guidance in ASU 2016-02, components of a lease should be split into three categories: lease components (e.g., land, building, etc.), non-lease components (e.g., common area maintenance, consumables, etc.), and non-components (e.g., property taxes, insurance, etc.); then the fixed and in-substance fixed contract consideration (including any related to non-components) must be allocated based on fair values to the lease components and non-lease components. Although separation of lease and non-lease components is required, certain practical expedients are available. Companies may elect the practical expedient to not separate lease and non-lease components. In which case, the Company would account for each lease component and the related non-lease component together as a single component. The Company has elected to account for the lease and non-lease components of each of its operating leases as a single lease component and allocate all of the arrangement consideration to the lease component only. The lease component results in an operating ROU asset being recorded on the balance sheet and amortized on a straight-line basis as lease expense. Research and Development Costs Research and development costs are expensed as incurred. Research and development expenses consist of costs incurred to discover, research and develop product candidates, including personnel expenses, share-based compensation expense, allocated facility-related and depreciation expenses, third-party license fees and external costs of outside vendors engaged to conduct preclinical and clinical development activities and clinical trials as well as to manufacture clinical trial materials. Non-refundable prepayments for goods or services that will be used or rendered for future research and development activities are recorded as prepaid expenses. Such amounts are recognized as an expense as the goods are delivered or the related services are performed, or until it is no longer expected that the goods will be delivered, or the services rendered. Milestone and other payments made to third parties with respect to in-process research and development, in accordance with the Company’s license, acquisition and other similar agreements are expensed when determined to be probable and estimable. Research Contract Costs and Accruals The Company has entered into various research and development-related contracts with companies both inside and outside of the United States. The related costs are recorded as research and development expenses as incurred. The Company records accruals for estimated ongoing research and development costs. When evaluating the adequacy of the accrued liabilities, the Company analyzes progress of the studies or clinical trials, including the phase or completion of events, invoices received and contracted costs. Significant judgments and estimates are made in determining the accrued balances at the end of any reporting period. Actual results could differ materially from the Company's estimates. The Company's historical accrual estimates have not been materially different from the actual costs. Share-Based Compensation The Company measures all share-based awards granted to employees and directors based on their fair value on the date of grant. The Company issues share-based awards with both service-based vesting conditions and performance-based vesting conditions. The Company recognizes compensation expense for awards with service conditions on a straight-line basis over the requisite service period. For awards with performance conditions, the Company recognizes compensation expense when the achievement of the performance milestone is probable and estimable through the vest date. For share-based awards granted to consultants and non-employees, compensation expense is recognized over the vesting period of the awards, which is generally the period during which services are rendered by such consultants and non-employees until completed. The Company classifies share-based compensation expense in its consolidated statements of operations and comprehensive loss in the same manner in which the award recipient's payroll costs are classified or in which the award recipient's service payments are classified. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model, which requires inputs based on certain subjective assumptions, including the expected share price volatility, the expected term of the award, the risk-free interest rate, and expected dividends (see Note 8). Prior to May 2018, the Company was a private company and, accordingly, lacks company-specific historical and implied volatility information for its shares. Therefore, it estimates its expected share price volatility based on the historical volatility of publicly traded peer companies and expects to continue to do so until such time as it has adequate historical data regarding the volatility of its own traded share price. The expected term of the Company’s options has been determined utilizing the “simplified” method for awards that qualify as “plain-vanilla” options. The expected term of options granted to non-employees is equal to the contractual term of the option award. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. Expected dividend yield is based on the fact that the Company has never paid cash dividends on common shares and does not expect to pay any cash dividends in the foreseeable future. The fair value of each restricted share unit award is based on the closing price of the Company’s Class A common shares on the date of grant. Restricted share unit awards with an associated performance condition are evaluated on a regular basis for probability of achievement to determine the timing of recording share-based compensation expense in the Company’s consolidated statements of operations and comprehensive loss. Comprehensive Loss Comprehensive loss includes net loss as well as other changes in shareholders’ equity that result from transactions and economic events other than those with shareholders. For the three and nine months ended September 30, 2020 and 2019, the Company’s other comprehensive loss was comprised of unrealized gain (loss) on short-term investments as well as cumulative translation adjustments, net of tax. Net Loss per Share The Company follows the two-class method when computing net loss per share as the Company has issued shares that meet the definition of participating securities. The two-class method determines net loss per share for each class of common shares and participating securities according to dividends declared or accumulated and participation rights in undistributed earnings. The two-class method requires income available to common shareholders for the period to be allocated between common and participating securities based upon their respective rights to receive dividends as if all income for the period had been distributed. Basic net loss per share attributable to common shareholders is computed by dividing the net loss attributable to common shareholders by the weighted average number of common shares outstanding for the period. Diluted net loss attributable to common shareholders is computed by adjusting net loss attributable to common shareholders to reallocate undistributed earnings based on the potential impact of dilutive securities. Diluted net loss per share attributable to common shareholders is computed by dividing the diluted net loss attributable to common shareholders by the weighted average number of common shares outstanding for the period, including potential dilutive common shares. For purpose of this calculation, outstanding options and unvested restricted common shares are considered potential dilutive common shares. In periods in which the Company reports a net loss attributable to common shareholders, diluted net loss per share attributable to common shareholders is the same as basic net loss per share attributable to common shareholders, since dilutive common shares are not assumed to have been issued if their effect is anti-dilutive. The Company reported a net loss attributable to common shareholders for the three and nine months ended September 30, 2020 and 2019. Income Taxes As an exempted company incorporated under the laws of Bermuda, the Company is principally subject to taxation in Bermuda. Under the current laws of Bermuda, tax on a company’s income is assessed at a zero percent tax rate. As a result, the Company has not recorded any income tax benefits from losses incurred in Bermuda during each reporting period, and no net operating loss carryforwards will be available to the Company for those losses. The Company’s wholly owned U.S. subsidiaries, Kiniksa US and Primatope, are subject to federal and state income taxes in the United States. The Company’s wholly owned subsidiary Kiniksa UK, and its wholly owned subsidiaries, Kiniksa Germany, Kiniksa France, and Kiniksa Switzerland, are subject to taxation in their respective countries. Certain of the Company’s subsidiaries, primarily Kiniksa US, operate under cost-plus arrangements. The Company’s U.S. provision for income taxes relates to current tax expense associated with the taxable income in the United States of its wholly owned subsidiary, Kiniksa US, as well as discrete tax events such as the recognition of a valuation allowance. The current income tax expense is a result of the taxable income earned by Kiniksa US under its cost-plus arrangement offset in part by tax benefits from the U.S. federal and state research and development tax credits, the Foreign Derived Intangible Income (“FDII”) deduction and share-based compensation taxable events. FDII was enacted as part of the tax reform enacted by the United States in December 2017, generally referred to as the U.S. Tax Cuts and Jobs Act. The Company has recorded an immaterial foreign provision for income taxes related to income in non-U.S. subsidiaries. The Company provides for income taxes on an interim basis according to management’s estimate of the effective tax rate expected to be applicable for the full fiscal year. Subsidiaries with losses for which no benefit can be claimed are excluded from this calculation, and their tax is recorded discretely in the period it arises. Certain other items such as changes in tax rates, tax benefits or expense related to settlements of share-based payment awards, changes in the valuation allowance against deferred tax, and uncertain tax positions are treated as discrete items and are recorded in the period in which they arise. Recently Adopted Accounting Pronouncements In June 2016, the FASB, issued ASU 2016-13, Financial Instruments: Credit Losses (Topic 326) In August 2018, the FASB issued ASU 2018-15, Intangibles—Goodwill and Other— Internal-Use Software (Subtopic 350-40) (“ASU 2018-15”) The standard became effective for the Company Recently Issued Accounting Pronouncements In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes (Topic 740)(“ASU 2019-12”) |
Fair Value of Financial Assets
Fair Value of Financial Assets and Liabilities | 9 Months Ended |
Sep. 30, 2020 | |
Fair Value of Financial Assets and Liabilities | |
Fair Value of Financial Assets and Liabilities | 3. Fair Value of Financial Assets and Liabilities The following tables present information about the Company’s financial instruments measured at fair value on a recurring basis and indicate the level of the fair value hierarchy used to determine such fair values: Fair Value Measurements as of September 30, 2020 Using: Level 1 Level 2 Level 3 Total Assets: Restricted cash — money market funds $ 210 $ — $ — $ 210 Cash equivalents — money market funds 31,043 — — 31,043 Cash equivalents — U.S. Treasury notes — 41,398 — 41,398 Short-term investments — U.S. Treasury notes — 278,521 — 278,521 $ 31,253 $ 319,919 $ — $ 351,172 Fair Value Measurements as of December 31, 2019 Using: Level 1 Level 2 Level 3 Total Assets: Restricted cash — money market funds $ 210 $ — $ — $ 210 Cash equivalents — money market funds 25,207 — — 25,207 Cash equivalents — U.S. Treasury notes — 10,192 — 10,192 Short-term investments — U.S. Treasury notes — 186,452 — 186,452 $ 25,417 $ 196,644 $ — $ 222,061 During the nine months ended September 30, 2020 and the year ended December 31, 2019 there were no transfers between Level 1, Level 2 and Level 3. The money market funds were valued using quoted prices in active markets, which represent a Level 1 measurement in the fair value hierarchy. The Company's cash equivalents and short-term investments as of September 30, 2020 and December 31, 2019 included U.S. Treasury notes, which are not traded on a daily basis and, therefore, represent a Level 2 measurement in the fair value hierarchy at each period end. Short-term investments as of September 30, 2020 and December 31, 2019 consisted of U.S. Treasury notes which investments were each due within six months of such date. Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value September 30, 2020 Short-term investments — U.S. Treasury notes $ 278,514 $ 9 $ (2) $ 278,521 $ 278,514 $ 9 $ (2) $ 278,521 Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value December 31, 2019 Short-term investments — U.S. Treasury notes $ 186,415 $ 44 $ (7) $ 186,452 $ 186,415 $ 44 $ (7) $ 186,452 As of September 30, 2020, the Company held eleven securities that were in an unrealized loss position. The aggregate fair value of securities held by the Company in an unrealized loss position was $78,056 at September 30, 2020. As of December 31, 2019, the Company held seven securities that were in an unrealized loss position. The aggregate fair value of securities held by the Company in an unrealized loss position was $43,107 at December 31, 2019. As of both September 30, 2020 and December 31, 2019, these securities were held by the Company in an unrealized loss position for less than 12 months. The Company determined that there was no material change in the credit risk of these securities. As a result, the Company determined it did not hold any investments with an other-than-temporary impairment as of September 30, 2020 and December 31, 2019. |
Property and Equipment, Net
Property and Equipment, Net | 9 Months Ended |
Sep. 30, 2020 | |
Property and Equipment, Net | |
Property and Equipment, Net | 4. Property and Equipment, Net Property and equipment, net consisted of the following: September 30, December 31, 2020 2019 Furniture, fixtures and vehicles $ 47 $ 47 Computer hardware and software 349 344 Leasehold improvements 3,627 3,627 Lab equipment 4,713 4,685 Construction in progress — 20 Total property and equipment 8,736 8,723 Less: Accumulated depreciation (4,163) (2,325) Total property and equipment, net $ 4,573 $ 6,398 Depreciation expense was $649 and $523 during the three months ended September 30, 2020 and 2019, respectively, and $1,838 and $1,502 during the nine months ended September 30, 2020 and 2019, respectively. |
Leases
Leases | 9 Months Ended |
Sep. 30, 2020 | |
Leases | |
Leases | 5. Leases Kiniksa US leases office and laboratory space under operating leases. Leases with an initial term of 12 months or less are not recorded on the balance sheet; the Company recognizes lease expense for these leases on a straight-line basis over the lease term. For lease agreements entered into or reassessed after the Company’s adoption of ASC 842, the Company will combine lease and non-lease components. Kiniksa US’s leases have remaining lease terms of less than 2 years. On March 13, 2018, Kiniksa US entered into an operating lease in Lexington, Massachusetts for office and laboratory space that comprises the headquarters for Kiniksa US and on June 26, 2018, Kiniksa US entered into an amendment to the lease expanding the rentable space to a total of 27,244 square feet. On November 7, 2018, Kiniksa US entered into an amendment (the “Third Amendment”) to the lease expanding the rentable space to a total of 55,924 square feet which were occupied in phases through December 2019. The lease expires on July 31, 2021. Monthly lease payments include base rent, as well as, ancillary charges such as the share of operating expenses and real estate taxes. Base rent under the Third Amendment is $138 per month as of December 2019. On December 21, 2018, Kiniksa US entered into an operating lease in San Diego, California for office space comprising a total of 4,400 square feet. The lease commenced on January 1, 2019 and expires on January 31, 2021. On July 17, 2020, Kiniksa US entered into an amendment to extend the lease through January 31, 2022. Monthly lease payments for base rent are $13 and increase to $14 in accordance with the extension. Additional fees for ancillary charges such as the share of operating expenses, parking and real estate taxes are not included in the base rent. The components of lease cost consisted of the following: Three Months Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019 Operating lease cost $ 341 $ 340 $ 1,022 $ 1,102 Variable lease cost 30 52 132 161 Total lease cost $ 371 $ 392 $ 1,154 $ 1,263 September 30, 2020 Weighted-average remaining lease term (years) 0.90 Weighted-average discount rate 7.16% Maturities of operating leases liabilities were as follows: As of September 30, 2020 $ 455 2021 1,124 2022 14 2023 and thereafter — Total future minimum lease payments $ 1,593 Less imputed interest (46) Present value of lease liabilities $ 1,547 |
Accrued Expenses
Accrued Expenses | 9 Months Ended |
Sep. 30, 2020 | |
Accrued Expenses | |
Accrued Expenses | 6. Accrued Expenses Accrued expenses consisted of the following: September 30, December 31, 2020 2019 Accrued research and development expenses $ 10,333 $ 11,813 Accrued employee compensation and benefits 6,747 7,089 Accrued legal and professional fees 1,621 1,087 Other 774 426 $ 19,475 $ 20,415 |
Common Shares
Common Shares | 9 Months Ended |
Sep. 30, 2020 | |
Common Shares. | |
Common Shares | 7. Common Shares On February 4, 2019, the Company completed a follow-on offering of 2,654,984 Class A common shares at a public offering price of $18.26 and a concurrent private placement of 2,000,000 Class A1 common shares at an offering price of $18.26 per share for aggregate gross proceeds of $85,000. In addition, on March 1, 2019, the Company completed the sale of 161,126 Class A common shares to the underwriters of the follow-on offering following the exercise in part of their over-allotment option to purchase additional shares at a public offering price of $18.26 per share for gross proceeds of $2,942. The aggregate net proceeds to the Company from the follow-on offering and concurrent private placement, inclusive of the over-allotment option exercise, was $82,988 after deducting underwriting discounts and commissions, placement agent fees and other offering costs. On May 18, 2020, the Company completed a follow-on offering of 2,760,000 Class A common shares, inclusive of the exercise of the underwriters’ overallotment option at a public offering price of $18.25 and a concurrent private placement of 1,600,000 Class A1 common shares at an offering price of $18.25 per share for aggregate gross proceeds of $79,570. The aggregate net proceeds to the Company from the follow-on offering and concurrent private placement, inclusive of the over-allotment option exercise, was $74,495 after deducting underwriting discounts and commissions, placement agent fees and other offering costs. On July 24, 2020, the Company completed a follow-on offering of 5,952,381 Class A common shares, at a public offering price of $21.00 and a concurrent private placement of 1,428,572 Class A1 common shares at an offering price of $21.00 per share for aggregate gross proceeds of $155,000. The aggregate net proceeds to the Company from the follow-on offering and concurrent private placement was $146,043 after deducting underwriting discounts and commissions, placement agent fees and other offering costs. The rights of the holders of the Company’s Class A common shares, Class B common shares, Class A1 common shares and Class B1 common shares are identical, except with respect to voting, transferability and conversion, as described below. As of September 30, 2020, no preferred shares were designated or issued . Voting Each Class A common share entitles the holder to one vote on all matters submitted to the shareholders for a vote. Each Class B common share entitles the holder to ten votes on all matters submitted to the shareholders for a vote. The holders of Class A and Class B common shares, voting together as a single class, are entitled to elect the directors of the Company. Holders of Class A1 Dividends The common shareholders are entitled to receive dividends, as may be declared by the Company’s board of directors. Through September 30, 2020, no cash dividends have been declared or paid. Conversion Each Class B common share shall automatically convert into one Class A common share upon certain transfers of such shares by the holder thereof (subject to certain exceptions). Each Class B common share is convertible, at the holder’s election into one Class A common share or one Class B1 common share. Each Class A1 common share is convertible into one Class A common share at the holder’s election (subject to certain exceptions). Each Class B1 common share shall automatically convert into one Class A common share upon certain transfers of such shares by the holder thereof (subject to certain exceptions). Each Class B1 common share is convertible into one Class A common share or one Class B common share at the holder’s election (subject to certain exceptions). There are no conversion rights associated with the Class A common shares. |
Share-Based Compensation
Share-Based Compensation | 9 Months Ended |
Sep. 30, 2020 | |
Share-Based Compensation | |
Share-Based Compensation | 8. Share-Based Compensation 2018 Incentive Award Plan In May 2018, the Company’s board of directors and shareholders approved the 2018 Incentive Award Plan (the “2018 Plan”), which became effective on May 23, 2018. The 2018 Plan provides for the grant of incentive share options, nonqualified share options, share appreciation rights, restricted shares, dividend equivalents, restricted share units and other share- or cash- based awards. Upon the effectiveness of the 2018 Plan, the Company ceased granting awards under its 2015 Equity Incentive Plan (as amended, the “2015 Plan” together with the 2018 Plan, the “Plans”). A total of 4,466,500 Class A common shares were initially reserved for issuance under the 2018 Plan. The number of Class A common shares that may be issued under the 2018 Plan will automatically increase on each January 1, beginning in 2019 and continuing for each fiscal year until, and including, the fiscal year ending December 31, 2028, equal to the lesser of (1) 4% of the Class A common shares outstanding (on an as-converted basis) on the final day of the immediately preceding calendar year and (2) a smaller number of Class A common shares determined by the Company’s board of directors. In December 2019, the board of directors approved the automatic increase as of January 1, 2020 of 2,197,505 shares, equal to 4% of the as-converted Class A common shares outstanding on December 31, 2019. No more than 27,915,000 Class A common shares may be issued under the 2018 Plan upon the exercise of incentive options. The Class A common shares underlying any awards issued under the 2018 Plan or the 2015 Plan that on or after the effective date of the 2018 Plan expire, lapses unexercised or are terminated, exchanged for cash, surrendered, repurchased, canceled without having been fully exercised, or forfeited under the 2018 Plan or the 2015 Plan will be added back to the Class A common shares available for issuance under the 2018 Plan. As of September 30, 2020, 1,610,263 shares remained available for future grant. 2015 Equity Incentive Plan Until May 23, 2018 (the effective date of the 2018 Plan), the 2015 Plan provided for the Company to grant incentive share options, nonqualified share options, share grants and other share-based awards to employees and non-employees to purchase the Company’s Class A common shares. On the effective date of the 2018 Plan, the Company ceased granting awards under the 2015 Plan. At that time, the 4,691,213 Class A common shares subject to outstanding awards under the 2015 Plan remained reserved for issuance under the plan pursuant to such awards and the 92,170 Class A common shares that had been available for future grant under the 2015 Plan were no longer authorized and reserved for issuance or available for future grant under the 2015 Plan. As of September 30, 2020, there were 2,973,717 Class A common shares subject to outstanding awards under the 2015 Plan and reserved for issuance thereunder pursuant to such awards. The 2015 Plan continues to govern the terms and conditions of the outstanding awards granted under it. Class A common shares subject to awards granted under the 2015 Plan that expire, lapse unexercised or are terminated, exchanged for cash, surrendered, repurchased, canceled without having been fully exercised, or forfeited become available for issuance under the 2018 Plan. The exercise price for incentive share options was determined by the Company’s board of directors. All incentive share options granted to any person possessing 10% or less of the total combined voting power of all classes of shares could not have an exercise price of less than 100% of the fair market value of the Class A common shares on the grant date. All incentive share options granted to any person possessing more than 10% of the total combined voting power of all classes of shares could not have an exercise price of less than 110% of the fair market value of the Class A common shares on the grant date. The option term for incentive share options could not be greater than 10 years. Incentive share options granted to persons possessing more than 10% of the total combined voting power of all classes of shares could not have an option term of greater than five years. The vesting period for equity-based awards was determined by the board of directors, which was generally four 2018 Employee Share Purchase Plan In May 2018, the Company’s board of directors and shareholders approved the 2018 Employee Share Purchase Plan (the “2018 ESPP”), which became effective on May 23, 2018. A total of 670,000 Class A common shares were initially reserved for issuance under the 2018 ESPP. The number of Class A common shares that may be issued under the 2018 ESPP will automatically increase on each January 1, beginning in 2019 and continuing for each fiscal year until, and including, the fiscal year ending December 31, 2028, equal to the lesser of (1) 1% of the Class A common shares outstanding (on an as-converted basis) on the final day of the immediately preceding calendar year and (2) a smaller number of Class A common shares determined by the Company’s board of directors, provided that no more than 6,420,000 Class A common shares may be issued under the 2018 ESPP. In December 2019, the Company’s board of directors determined that the January 1, 2020 automatic increase in shares available under the 2018 ESPP would be zero shares. As of September 30, 2020, 549,300 Class A common shares were available for future issuance under the 2018 ESPP. Options Share option activity under the Plans is summarized as follows: Weighted Number of Average Shares Fair Value Outstanding as of December 31, 2019 8,491,734 $ 7.68 Granted 3,588,735 $ 11.42 Exercised (1,113,532) $ 3.13 Forfeited (814,801) $ 11.58 Outstanding as of September 30, 2020 10,152,136 $ 9.19 Options exercisable as of September 30, 2020 3,611,646 $ 8.20 Options unvested as of September 30, 2020 6,540,490 $ 10.46 Option Valuation The assumptions that the Company used to determine the grant-date fair value of options granted to employees and directors under the Plans during the three and nine months ended September 30, 2020 and 2019 were as follows, presented on a weighted-average basis: Three Months Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019 Risk-free interest rate 0.36 % 1.69 % 0.56 % 2.13 % Expected term (in years) 6.24 6.24 6.21 6.21 Expected volatility 82.58 % 80.37 % 81.02 % 79.24 % Expected dividend yield — % — % — % — % Rilonacept Long-Term Incentive Plan In December 2019, the compensation committee of the Company’s board of directors approved the Company’s Rilonacept Long-Term Incentive Plan (“RLTIP”) under the 2018 Plan to incentivize eligible employees of the Company or any of its subsidiaries to achieve FDA approval for the commercial sale and marketing of rilonacept for recurrent pericarditis in the United States (“RLTIP Milestone”). The RLTIP provides for the potential to receive a cash award and two grants of restricted share unit (“RSU”) awards covering Class A common shares under the 2018 Plan. The target award value for each of the cash award and the two RSU awards will be equal to one-third of a participant’s annual target bonus for the year of grant, as determined in accordance with the RLTIP. Depending on the date-range within which the RLTIP Milestone is achieved (such date the “Achievement Date”), the RLTIP provides for (1) an earnout percentage that can be achieved as to 100%, 50%, 25% or 0% and (2) an upside earnout percentage that can be achieved as to 50%, 25% or 0%. No awards will be earned or vest, and the second RSU award will not be granted, in the event the Achievement Date does not occur by a specified date. The cash award is eligible to be earned and vested upon the Achievement Date with respect to an amount determined in accordance with the RLTIP based on the earnout percentage. The number of Class A common shares issuable under the first RSU award (“First RSU Award”) as a result of the RLTIP Milestone will be determined in accordance with the RLTIP based on the earnout percentage, and such RSUs will vest on the first anniversary of the Achievement Date, subject to continued employment through such date. The second RSU award will be granted on the Achievement Date with respect to a number of shares determined in accordance with the RLTIP, based on both the earnout percentage and the upside earnout percentage, and will vest on the second anniversary of the Achievement Date, subject to continued employment through such date. Restricted Share Units An RSU represents the right to receive shares of the Company’s Class A common shares upon vesting of the RSU. The fair value of each RSU is based on the closing price of the Company’s Class A common shares on the date of grant. In December 2019, the Company granted RSUs with service conditions (“Time-Based RSUs”) that vest in one installment on December 31, 2020, subject to the recipient’s continued employment through that date. During the nine months ended September 30, 2020 and the year ended December 31, 2019, the Company also granted the First RSU Award as part of the RLTIP, which becomes eligible to vest upon the Achievement Date and will vest upon the first anniversary of such date, subject to the recipient’s continued employment through that date. In the event the RLTIP Milestone is not achieved, the First RSU Award will not vest. The grant-date fair value of the outstanding Time-Based RSUs remaining as of September 30, 2020 was $1,045 and is being recognized on a straight-line basis through the vest date for these RSUs. For the three and nine months ended September 30, 2020, the Company recognized $250 and $733 in Time-Based RSU expense, respectively. The grant-date fair value of the outstanding First RSU Award remaining as of September 30, 2020 was $2,762 and will be recognized when the RLTIP Milestone is deemed probable of achievement through the date the First RSU Award will vest. During the three and nine months ended September 30, 2020, the Company did not recognize compensation expense related to the First RSU Award, as achievement of the RLTIP Milestone was determined to be not probable. The following table summarizes RSU activity for the nine months ended September 30, 2020: Weighted Average Number of Grant Date Shares Fair Value Unvested RSUs as of December 31, 2019 328,296 $ 12.93 Granted 12,052 $ 20.78 Vested — $ — Forfeited (52,837) $ 13.00 Unvested RSUs as of September 30, 2020 287,511 $ 13.24 Share-Based Compensation Share-based compensation expense was classified in the consolidated statements of operations and comprehensive loss as follows: Three Months Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019 Research and development expenses $ 2,345 $ 1,435 $ 6,303 $ 4,126 General and administrative expenses 3,213 2,323 8,315 5,989 $ 5,558 $ 3,758 $ 14,618 $ 10,115 |
License, Acquisition and Collab
License, Acquisition and Collaboration Agreements | 9 Months Ended |
Sep. 30, 2020 | |
License, Acquisition and Collaboration Agreements | |
License and Acquisition Agreements | 9 Biogen Asset Purchase Agreement In September 2016, the Company entered into an asset purchase agreement (the "Biogen Agreement") with Biogen MA Inc. ("Biogen") to acquire all of Biogen's right, title and interest in and to certain assets used in or relating to vixarelimab and other antibodies covered by certain patent rights, including patents and other intellectual property rights, clinical data, know-how, and clinical drug supply. In addition, Biogen granted to the Company a non-exclusive, sublicensable, worldwide license to certain background patent rights related to the vixarelimab program. The Company is obligated to use commercially reasonable efforts to develop and commercialize such acquired products. In exchange for these rights, the Company made an upfront payment to Biogen of $11,500 and a technology transfer payment of $500. The Company accounted for the acquisition of technology as an asset acquisition because it did not meet the definition of a business. The Company recorded the upfront payment and technology transfer payment as research and development expense in the consolidated statement of operations and comprehensive loss because the acquired technology represented in-process research and development and had no alternative future use. Under the Biogen Agreement, the Company is obligated to make milestone payments to Biogen of up to $179,000 upon the achievement of specified clinical and regulatory milestones in multiple indications in various territories, including milestone payments of $4,000 and $10,000 paid during the year ended December 31, 2017 and the year ended December 31, 2019, respectively, each payment was associated with the achievement of a specified clinical milestone event. No milestones were achieved or paid during the three and nine months ended September 30, 2020. Additionally, the Company could be obligated to make up to an aggregate of up to $150,000 of payments upon the achievement of specified annual net sales milestones and to pay tiered royalties on escalating tiers of annual net sales of licensed products starting in the high single-digit percentages and ending below the teens. The Company also agreed to pay certain obligations under third-party contracts retained by Biogen that relate to the vixarelimab program. Under these retained contracts, the Company paid a one-time upfront sublicense fee of $150 and is obligated to pay insignificant annual maintenance fees as well as clinical and regulatory milestone payments of up to an aggregate of $1,575. The Biogen Agreement will terminate upon the expiration of all payment obligations with respect to the last product in all countries in the territory. The Company has the right to terminate the agreement with 90 days’ prior written notice. Both parties may terminate by mutual written consent or in the event of material breach of the agreement by the other party that remains uncured for 90 days (or 30 days for payment-related breaches). During the three and nine months ended September 30, 2020, the Company recorded research and development expense of $14 and $92, respectively, primarily related to a milestone occurring in the first quarter of 2020 and the annual maintenance fee both in connection with the retained contracts. During the three and nine months ended September 30, 2019, the Company recorded research and development expense of $164 and $10,330, respectively, primarily related to a milestone payment and other payments associated with the achievement of a specified clinical milestone event due under the Biogen Agreement. Novo Nordisk License Agreement In August 2017, the Company entered into a license agreement (the “Novo Nordisk Agreement”) with Novo Nordisk A/S (“Novo Nordisk”), pursuant to which the Company was granted an exclusive, sublicensable, worldwide license under certain intellectual property rights controlled by Novo Nordisk to make, use, develop and commercialize KPL-045 for all indications. In consideration for the license, the Company made an upfront payment of $1,500 to Novo Nordisk. The Company accounted for the acquisition of technology as an asset acquisition because it did not meet the definition of a business. The Company recorded the upfront payment as research and development expense in the consolidated statement of operations and comprehensive loss because the acquired technology represented in-process research and development and had no alternative future use. In January 2020, the Company terminated the Novo Nordisk Agreement, inclusive of its rights to develop and commercialize KPL-045, in accordance with the terms and conditions of the agreement. The Company did no t record any research and development expense during the three and nine months ended September 30, 2020 and 2019, in connection with milestone payments due under the Novo Nordisk Agreement. Primatope Stock Purchase Option Agreement In September 2017, the Company entered into a stock purchase option agreement (the “Primatope Agreement”) with Primatope Therapeutics, Inc. (“Primatope”), pursuant to which the Company was granted a license to certain intellectual property rights owned or controlled by Primatope to research, develop, and manufacture the preclinical antibody, KPL-404. The agreement provided the Company with an exclusive call option to purchase 100% of the equity securities of Primatope. Upon execution of the agreement, the Company made $500 in upfront payments for the initial option period through April 2018 (the “Initial Option Period”). The Primatope Agreement allowed for up to three extensions of the Initial Option Period through January 2019 (including the initial option period, the “Option Period”) for total extension payments of up to $800. Through December 31, 2018, the Company made payments totaling $800 to extend the Option Period to January 15, 2019. During the Option Period, the Company could conduct research and preclinical work to assess the viability of the asset. The Company determined that the call option represented a variable interest in Primatope and that Primatope is a VIE. However, as the Company had no ability to control the board of directors or direct the ongoing activities of Primatope during the Option Period, the Company did not have power over the activities that most significantly impact Primatope’s economic performance and was not the primary beneficiary of Primatope. As a result, the Company did not consolidate the assets, liabilities, and results of operations of Primatope. In January 2019, the Company exercised the call option and in March 2019, the Company acquired all of the issued and outstanding equity securities of Primatope (the “Primatope Acquisition”). The aggregate amount of upfront and contingent payments the Company paid to the former Primatope shareholders to acquire the Company was comprised of (1) $15,000 paid at closing in March 2019, comprised of upfront consideration of $10,000 and milestone payments of $5,000, which had been achieved as of the closing date, and (2) $3,000 paid in June 2019 for the final milestone payment, which was achieved following the closing during the six months ended June 30, 2019, each paid in a combination of cash and Class A common shares (inclusive of escrow and holdback shares amounts) in accordance with the Primatope Agreement. At the closing of the Primatope Acquisition, Primatope became a wholly owned subsidiary of the Company and the acquisition was accounted for as an asset acquisition as it did not meet the definition of a business. The Company released the escrow and issued the shares that were held back at closing in June 2020 and issued the shares that were held back at the final milestone payment in September 2020. The Company recorded the upfront payment and milestone payments as research and development expense in the consolidated statement of operations and comprehensive loss because the acquired technology represented in-process research and development and had no alternative future use. During the three and nine months ended September 30, 2020, the Company did not incur any research and development expense directly in connection with milestone or other payments related to the Primatope Acquisition or the Primatope Agreement. During the three months ended September 30, 2019, the Company did not incur any research and development expense directly in connection with milestone or other payments related to the Primatope Acquisition or the Primatope Agreement. During the nine months ended September 30, 2019, the Company recorded research and development expense of $18,000 related to the Primatope Acquisition. Beth Israel Deaconess Medical Center License Agreement As a result of the Primatope Acquisition, the Company acquired the rights to an exclusive license to certain intellectual property rights controlled by Beth Israel Deaconess Medical Center, Inc. (“BIDMC”) to make, use, develop and commercialize KPL-404 (the “BIDMC Agreement”). Under the BIDMC Agreement, the Company is solely responsible for all development, regulatory and commercial activities and costs. The Company is also responsible for costs related to filing, prosecuting and maintaining the licensed patent rights. Under the BIDMC Agreement, the Company is obligated to pay an insignificant annual maintenance fee as well as clinical and regulatory milestone payments of up to an aggregate of $1,200 to BIDMC. The Company is also obligated to pay a low single-digit royalty on annual net sales of products licensed under the agreement. The Company did not incur any research and development expense in connection with the BIDMC Agreement during the three and nine months ended September 30, 2020 and 2019. Regeneron License Agreement In September 2017, the Company entered into a license agreement (the “Regeneron Agreement”) with Regeneron Pharmaceuticals, Inc. (“Regeneron”), pursuant to which the Company has been granted an exclusive, sublicensable license under certain intellectual property rights controlled by Regeneron to develop and commercialize rilonacept in certain fields and territories. The Company is obligated to use commercially reasonable efforts to develop and commercialize such licensed products. In exchange for these rights, the Company made an upfront payment of $5,000. The Company accounted for the acquisition of technology as an asset acquisition because it did not meet the definition of a business. The Company recorded the upfront payment as research and development expense in the consolidated statement of operations and comprehensive loss because the acquired technology represented in-process research and development and had no alternative future use. Under the Regeneron Agreement, the Company is also obligated to make payments to Regeneron of up to an aggregate of $27,500 upon the achievement of specified regulatory milestones, including, a $7,500 payment which may be met in the fourth quarter of 2020. Upon approval from the FDA, if any, of an sBLA submission for the commercial marketing of rilonacept in the United States for recurrent pericarditis, the Company will assume the sales and distribution of rilonacept for the approved indications in the United States and the Company would evenly split profits on sales of commercial products with Regeneron, after deducting certain commercialization expenses subject to specified limits. The Company did not incur any research and development expense directly related to milestone payments due under the Regeneron Agreement during the three and nine months ended September 30, 2020 and 2019. Under the Regeneron Agreement, the Company is solely responsible for all development and commercialization activities and costs in its territories. The Company is also responsible for costs related to the filing, prosecution and maintenance of certain licensed patent rights. The parties also entered into a clinical supply agreement under which Regeneron agreed to manufacture the developed product during the clinical phase. During the three and nine months ended September 30, 2020, the Company did not incur any research and development expense related to the purchase of drug materials under this agreement. During the three and nine months ended September 30, 2019, the Company recorded research and development expense of $85 and $3,727, respectively, related to the purchase of drug materials under this agreement. As of September 30, 2020 and December 31, 2019, the Company had non-cancelable purchase commitments under the clinical supply agreement (see Note 12). The Regeneron Agreement will expire when the Company is no longer developing or commercializing any licensed product under the Regeneron Agreement. Either party may terminate the agreement upon the other party’s insolvency or bankruptcy or for material breach of the agreement by the other party that remains uncured for 90 days (or 30 days for payment-related breaches). Regeneron has the right to terminate the agreement if the Company suspends its development or commercialization activities for a consecutive 12 month period or does not grant a sublicense to a third-party to perform such activities, or if the Company challenges any of the licensed patent rights. The Company may terminate the agreement at any time that is 18 months after the effective date of the agreement with 180 days’ written notice or with one year’s written notice if the Company terminates the agreement following U.S. marketing approval of a rilonacept product developed by the Company. The Company may also terminate the agreement with three months’ written notice if the products are determined to have certain safety concerns. MedImmune License Agreement In December 2017, the Company entered into a license agreement (as amended from time to time, the “MedImmune Agreement”) with MedImmune, Limited (“MedImmune”), pursuant to which MedImmune granted the Company an exclusive, sublicensable, worldwide license to certain intellectual property rights to make, use, develop and commercialize mavrilimumab. Under the MedImmune Agreement, the Company also acquired reference rights to relevant manufacturing and regulatory documents and MedImmune’s existing supply of mavrilimumab drug substance and product. The Company is obligated to use commercially reasonable efforts to develop and commercialize the licensed products. In exchange for these rights, the Company made an upfront payment of $8,000 . The Company accounted for the acquisition of technology as an asset acquisition because it did not meet the definition of a business. The Company recorded the upfront payment as research and development expense in the consolidated statement of operations and comprehensive loss because the acquired technology represented in-process research and development and had no alternative future use. In addition, the Company is obligated to make clinical, regulatory and initial sales milestone payments of up to $72,500 in aggregate for the first two indications, including, a $5,000 pass-through payment due upon the achievement of a specified clinical milestone event which was met in the fourth quarter of 2018. Also included is a milestone payment of $10,000 due upon the earlier to occur of a specified regulatory milestone and December 31, 2018, unless the MedImmune Agreement is earlier terminated by either party. As of December 31, 2018 and 2017, the Company determined that the payment related to this milestone was probable and, therefore, recognized research and development expense and an accrued milestone of $10,000 during the year ended December 31, 2017. During the year ended December 31, 2019, the Company made both the $5,000 and $10,000 previously accrued milestone payments in accordance with the MedImmune Agreement. In addition, the Company is obligated to make clinical and regulatory milestone payments of up to $15,000 in the aggregate for each subsequent indication. In July 2020, the Company entered into an amendment to the MedImmune Agreement to establish a new coronavirus field and defer the payment of certain development and regulatory milestones as applied to the new coronavirus field. The Company is obligated to make milestone payments to MedImmune of up to $85,000 upon the achievement of annual net sales thresholds up to, but excluding, $1,000,000 in annual net sales as well as additional milestone payments aggregating up to $1,100,000 upon the achievement of additional specified annual net sales thresholds starting at $1,000,000 and higher. The Company has also agreed to pay tiered royalties on escalating tiers of annual net sales of licensed products starting in the low double-digit percentages and ending at twenty percent. Royalty rates are subject to reductions upon certain events. The Company is solely responsible for all development, manufacturing, and commercial activities and costs of the licensed products, including clinical studies or other tests necessary to support the use of a licensed product. The Company is also responsible for costs related to the filing, prosecution and maintenance of the licensed patent rights. The MedImmune Agreement will expire upon the expiration of the royalty term in the last country for the last indication, as defined in the agreement. Either party may terminate the agreement upon the other party’s insolvency or bankruptcy or for material breach of the agreement by the other party that remains uncured for 90 days. MedImmune has the right to terminate the agreement if the Company challenges any of the licensed patent rights. The Company may terminate the agreement at any time upon 90 days’ prior written notice. During the three and nine months ended September 30, 2020 and 2019, the Company did not record research and development expense in connection with milestone payments due under the MedImmune Agreement. Kite Clinical Collaboration Agreement In December 2019, the Company entered into a clinical collaboration (the “Kite Agreement”) with Kite Pharma, Inc., a Gilead Company (“Kite”), to initiate a Phase 2 clinical trial evaluating the combination of Yescarta (axicabtagene ciloleucel) and mavrilimumab in relapsed or refractory large B-Cell lymphoma. The objective of the Phase 2 trial is to determine the effect of mavrilimumab on the safety of Yescarta. Treatment related induction of granulocyte-macrophage colony stimulating factor (“GM-CSF”) has been identified through clinical, translational and preclinical studies as a potential key signal associated with side effects of chimeric antigen receptor T (“CAR T”), cell therapy. Preclinical evidence suggest the potential for interruption of GM-CSF signaling to disrupt CAR T cell mediated inflammation without disrupting anti-tumor activity. In August 2020, Kite as the sponsor of the study which had not begun to enroll, informed the Company that the clinical collaboration was being discontinued under a portfolio strategy review and |
Net Loss per Share
Net Loss per Share | 9 Months Ended |
Sep. 30, 2020 | |
Net Loss per Share | |
Net Loss per Share | 10. Net Loss per Share The rights, including the liquidation and dividend rights, of the holders of Class A, Class B, Class A1 and Class B1 common shares are identical, except with respect to voting, transferability and conversion (see Note 7). As the liquidation and dividend rights are identical, losses are allocated on a proportionate basis, and the resulting net loss per share attributed to common shareholders will, therefore, be the same for both Class A and Class B common shares on an individual or combined basis. Basic and diluted net loss per share attributable to common shareholders was calculated as follows: Three Months Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019 Numerator: Net loss attributable to common shareholders $ (43,836) $ (27,058) $ (107,724) $ (130,070) Denominator: Weighted average common shares outstanding—basic and diluted 65,958,513 54,831,308 59,754,495 53,767,003 Net loss per share attributable to common shareholders— basic and diluted $ (0.66) $ (0.49) $ (1.80) $ (2.42) The Company’s unvested restricted shares and RSUs have been excluded from the computation of basic net loss per share attributable to common shareholders. The Company’s potentially dilutive securities, which include options, unvested restricted shares and unvested RSUs, have been excluded from the computation of diluted net loss per share attributable to common shareholders as the effect would be to reduce the net loss per share attributable to common shareholders. Therefore, the weighted average number of common shares outstanding used to calculate both basic and diluted net loss per share attributable to common shareholders is the same. The Company excluded the following potential common shares, presented based on amounts outstanding at each period end, from the computation of diluted net loss per share attributable to common shareholders for the periods indicated because including them would have had an anti-dilutive effect: As of September 30, 2020 2019 Options to purchase common shares 10,152,136 8,635,968 Unvested RSUs 287,511 — 10,439,647 8,635,968 |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2020 | |
Income Taxes | |
Income Taxes | 11. Income Taxes As an exempted company incorporated under the laws of Bermuda, the Company is principally subject to taxation in Bermuda. Under the current laws of Bermuda, tax on a company’s income is assessed at a zero percent tax rate. As a result, the Company has not recorded any income tax benefits from losses incurred in Bermuda during each reporting period, and no net operating loss carryforwards will be available to the Company for those losses. The Company’s wholly owned U.S. subsidiaries, Kiniksa US and Primatope, are subject to federal and state income taxes in the United States. The Company’s wholly owned subsidiary Kiniksa UK, and its wholly owned subsidiaries, Kiniksa Germany, Kiniksa France, and Kiniksa Switzerland are subject to taxation in their respective countries. Certain of the Company’s subsidiaries, primarily Kiniksa US, operate under cost plus arrangements. The income tax rate for the three and nine months ended September 30, 2020 varied from the Bermuda statutory rate of zero primarily due to income subject to United States taxation under the Kiniksa US cost-plus arrangement with the Company, net of the deduction for FDII, U.S. federal and state research tax credits and the recognition of a valuation allowance against deferred tax assets. Income tax expense for the three and nine months ended September 30, 2020 was $667 and $4,363, respectively, and includes discrete tax expense primarily related to the recognition of a valuation allowance against deferred tax assets, partially offset by the tax benefits from share-based compensation taxable events. Management examines all positive and negative evidence to estimate whether sufficient future taxable income in the U.S. will be generated to permit the use of existing deferred tax assets. As a result of significant cumulative tax benefits associated with share-based compensation taxable events recognized in the nine months ended September 30, 2020, the Company has significant negative evidence in the form of cumulative losses and believes that it is more likely than not that these United States deferred tax assets will not be utilized. As such, the Company recorded a valuation allowance against its U.S. deferred tax asset as of September 30, 2020. There are no material deferred tax assets in the other jurisdictions. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2020 | |
Commitments and Contingencies | |
Commitments and Contingencies | 12. Commitments and Contingencies License Agreements The Company entered into license agreements with various parties under which it is obligated to make contingent and non-contingent payments (see Note 9). Manufacturing Commitments The Company entered into agreements with several contract manufacturing organizations to provide the Company with preclinical and clinical trial materials. As of September 30, 2020, the Company had committed to minimum payments under these agreements totaling $5,463. Rilonacept Long-Term Incentive Plan During the nine months ended September 30, 2020 and the year ended December 31, 2019, the Company granted a cash award and the First RSU Award to employees under the RLTIP. The cash award vests upon the achievement of the RLTIP Milestone, subject to the recipient’s continued employment through the date. The First RSU Award becomes eligible to vest upon the Achievement Date, and will vest upon the first anniversary of such date, subject to the recipient’s continued employment through that date. As of September 30, 2020, the Company estimated cash payments of $1,990 under the RLTIP. In the event the RLTIP Milestone is not achieved, the cash award will not be paid and the First RSU Award will not vest. Indemnification Agreements In the ordinary course of business, the Company may provide indemnification of varying scope and terms to vendors, lessors, business partners and other parties with respect to certain matters including, but not limited to, losses arising out of breach of such agreements or from intellectual property infringement claims made by third parties. In addition, the Company has entered into indemnification agreements with members of its board of directors, officers and other key personnel that will require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors, officers or other key personnel. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is, in many cases, unlimited. To date, the Company has not incurred any material costs as a result of such indemnifications. The Company does not believe that the outcome of any claims under indemnification arrangements will have a material effect on its financial position, results of operations or cash flows, and it has not accrued any liabilities related to such obligations in its consolidated financial statements as of September 30, 2020 or December 31, 2019. Legal Proceedings The Company is not a party to any litigation and does not have contingency reserves established for any litigation liabilities. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2020 | |
Summary of Significant Accounting Policies | |
Principles of Consolidation | Principles of Consolidation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and include the accounts of the Company and its wholly owned subsidiaries, Kiniksa Pharmaceuticals Corp. (“Kiniksa US”), Primatope Therapeutics, Inc. (“Primatope”) and Kiniksa Pharmaceuticals (UK), Ltd. (“Kiniksa UK”) as well as the subsidiaries of Kiniksa UK, Kiniksa Pharmaceuticals (Germany) GmbH (“Kiniksa Germany”), Kiniksa Pharmaceuticals (France) SARL (“Kiniksa France”), and Kiniksa Pharmaceuticals GmbH (“Kiniksa Switzerland”), after elimination of all significant intercompany accounts and transactions. In assessing the consolidation requirement for variable interest entities (“VIE”s), the Company focuses on identifying whether it has both the power to direct the activities that most significantly impact the VIE’s economic performance and the obligation to absorb losses or the right to receive benefits from the VIE. In the event that the Company is the primary beneficiary of a VIE, the assets, liabilities, and results of operations of the VIE would be included in the Company’s consolidated financial statements. At September 30, 2020 and during the three and nine months then ended and at December 31, 2019 and during the year then ended, the Company was not the primary beneficiary of a VIE. |
Use of Estimates | Use of Estimates The preparation of the Company’s consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of expenses during the reporting period. Significant estimates and assumptions reflected in these consolidated financial statements include, but are not limited to, the accrual for research and development expenses and the valuation of common shares and share-based awards. 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 those estimates. |
Reporting and Functional Currency | Reporting and Functional Currency The financial results of the Company's global activities are reported in U.S. dollars (“USD”) and its foreign subsidiaries generally utilize their respective local currency to be their functional currency. Transactions in other currencies are recorded in the functional currency at the rate of exchange prevailing when the transactions occur. Monetary assets and liabilities denominated in other currencies are re-measured into the functional currency at the rate of exchange in effect at the balance sheet date. Exchange rate gains and losses arising from re-measurement of foreign currency-denominated monetary assets and liabilities are included in income or losses in the period in which they occur. For the Company’s foreign subsidiaries where the local currency is the functional currency, assets and liabilities denominated in local currencies are translated into USD at end-of-period exchange rates and the resulting translation adjustments are reported as a component of accumulated other comprehensive gain (loss) within shareholders' equity. |
Unaudited Interim Consolidated Financial Information | Unaudited Interim Consolidated Financial Information The accompanying unaudited consolidated financial statements have been prepared in accordance with GAAP for interim financial information. The accompanying unaudited consolidated financial statements do not include all of the information and footnotes required by GAAP for complete consolidated financial statements. The accompanying year-end consolidated balance sheet was derived from audited financial statements but does not include all disclosures required by GAAP. The unaudited interim consolidated financial statements have been prepared on the same basis as the audited annual 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, 2020 and the results of its operations for the three and nine months ended September 30, 2020 and 2019 and its cash flows for the nine months ended September 30, 2020 and 2019. The results for the three and nine months ended September 30, 2020 are not necessarily indicative of results to be expected for the year ending December 31, 2020, any other interim periods or any future year or period. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company classifies deposits in banks, money market funds and cash invested temporarily in various instruments with maturities of three months or less at the time of purchase as cash and cash equivalents. At September 30, 2020 and December 31, 2019, cash and cash equivalents consisted principally of U.S. Treasury notes, amounts held in money market accounts and cash on deposit at commercial banks. |
Short-Term Investments | Short-Term Investments The Company generally invests its excess cash in money market funds and short-term investments in U.S. Treasury notes. Such investments which are included in short-term investments on the Company's consolidated balance sheets are considered available-for-sale debt securities and are reported at fair value with unrealized gains and losses included as a component of shareholders’ equity. Realized gains and losses, if any, on short-term investments are included in interest income. The Company evaluates its short-term investments with unrealized losses for other-than-temporary impairment. When assessing short-term investments for other-than-temporary declines in value, the Company considers such factors as, among other things, how significant the decline in value is as a percentage of the original cost, the Company’s ability and intent to retain the investment for a period of time sufficient to allow for any anticipated recovery in fair value and market conditions in general. If any adjustment to fair value reflects a decline in the value of the investment that the Company considers to be “other than temporary,” the Company reduces the investment to fair value through a charge to the consolidated statement of operations and comprehensive loss. No such adjustments were necessary during the periods presented. |
Reclassifications | Reclassifications The Company reclassified certain prior year balances on its consolidated statements of cash flows to conform to current year presentation. The balances related to prepaid expenses and other assets and non-cash lease expense. The reclassifications had no effect on net cash used by operating activities or the Company’s consolidated statements of operations and comprehensive loss. |
Concentrations of Credit Risk | Concentrations of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash, cash equivalents and short-term investments. At September 30, 2020 and December 31, 2019, substantially all of the Company’s cash, cash equivalents and short-term investments were held at two financial institutions. The Company generally maintains balances in various operating accounts at financial institutions that management believes to be of high credit quality, in amounts that may exceed federally insured limits. The Company has not experienced any losses related to its cash, cash equivalents and short-term investments and does not believe that it is subject to unusual credit risk beyond the normal credit risk associated with commercial banking relationships. |
Restricted Cash | Restricted Cash In conjunction with the Company’s lease agreement entered into in March 2018 (see Note 5), the Company maintains a letter of credit for the benefit of the landlord. As of September 30, 2020 and December 31, 2019, the underlying cash balance of $210 securing this letter of credit, was classified as non-current in its consolidated balance sheet. |
Fair Value Measurements | Fair Value Measurements Certain assets and liabilities of the Company are carried at fair value under GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable: ● Level 1—Quoted prices in active markets for identical assets or liabilities. ● Level 2—Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data. ● Level 3—Unobservable inputs that are supported by little or no market activity that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques. The Company’s restricted cash, which is held in a money market fund, is carried at fair value, determined based on Level 1 inputs in the fair value hierarchy described above (see Note 3). The Company’s cash equivalents and short-term investments, consisting of money market accounts and U.S. Treasury notes, are carried at fair value, determined based on Level 1 and 2 inputs in the fair value hierarchy described above (see Note 3). The carrying values of the Company’s prepaid expenses and other current assets, accounts payable and accrued expenses approximate their fair values due to the short-term nature of these assets and liabilities. |
Leases | Leases In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-02, Leases (Topic 842) Leases (Topic 842) At the inception of an arrangement, the Company determines whether the arrangement is or contains a “lease” as defined by ASC 842. A lease is an arrangement, or part of an arrangement, that conveys the right to control the use of identified property, plant, or equipment (an identified asset) for a period of time in exchange for consideration. The Company determines if the arrangement conveys the right to control the use of an identified asset for a period of time. It assesses throughout the period of use whether the Company has both of the following (1) the right to obtain substantially all of the economic benefits from use of the identified asset and (2) the right to direct the use of the identified asset. This determination is reassessed if the terms of the arrangement are changed. Leases are classified as operating or finance leases based on the terms of the lease agreement and certain characteristics of the identified asset. Right-of-use (“ROU”) assets and lease liabilities are recognized at lease commencement date based on the present value of the minimum future lease payments. Most leases with a term greater than one year are recognized on the balance sheet as ROU assets with corresponding lease liabilities and, if applicable, long-term lease liabilities. The Company has elected not to recognize leases with a term of one year or less on its balance sheet. Operating leases, ROU assets and their corresponding lease liabilities are recorded based on the present value of lease payments over the expected remaining lease term. However, certain adjustments to the ROU assets may be required for items such as incentives received. The interest rate implicit in lease arrangements is typically not readily determinable. As a result, the Company utilizes its incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. In accordance with the guidance in ASU 2016-02, components of a lease should be split into three categories: lease components (e.g., land, building, etc.), non-lease components (e.g., common area maintenance, consumables, etc.), and non-components (e.g., property taxes, insurance, etc.); then the fixed and in-substance fixed contract consideration (including any related to non-components) must be allocated based on fair values to the lease components and non-lease components. Although separation of lease and non-lease components is required, certain practical expedients are available. Companies may elect the practical expedient to not separate lease and non-lease components. In which case, the Company would account for each lease component and the related non-lease component together as a single component. The Company has elected to account for the lease and non-lease components of each of its operating leases as a single lease component and allocate all of the arrangement consideration to the lease component only. The lease component results in an operating ROU asset being recorded on the balance sheet and amortized on a straight-line basis as lease expense. |
Research and Development Costs | Research and Development Costs Research and development costs are expensed as incurred. Research and development expenses consist of costs incurred to discover, research and develop product candidates, including personnel expenses, share-based compensation expense, allocated facility-related and depreciation expenses, third-party license fees and external costs of outside vendors engaged to conduct preclinical and clinical development activities and clinical trials as well as to manufacture clinical trial materials. Non-refundable prepayments for goods or services that will be used or rendered for future research and development activities are recorded as prepaid expenses. Such amounts are recognized as an expense as the goods are delivered or the related services are performed, or until it is no longer expected that the goods will be delivered, or the services rendered. Milestone and other payments made to third parties with respect to in-process research and development, in accordance with the Company’s license, acquisition and other similar agreements are expensed when determined to be probable and estimable. |
Research Contract Costs and Accruals | Research Contract Costs and Accruals The Company has entered into various research and development-related contracts with companies both inside and outside of the United States. The related costs are recorded as research and development expenses as incurred. The Company records accruals for estimated ongoing research and development costs. When evaluating the adequacy of the accrued liabilities, the Company analyzes progress of the studies or clinical trials, including the phase or completion of events, invoices received and contracted costs. Significant judgments and estimates are made in determining the accrued balances at the end of any reporting period. Actual results could differ materially from the Company's estimates. The Company's historical accrual estimates have not been materially different from the actual costs. |
Share-Based Compensation | Share-Based Compensation The Company measures all share-based awards granted to employees and directors based on their fair value on the date of grant. The Company issues share-based awards with both service-based vesting conditions and performance-based vesting conditions. The Company recognizes compensation expense for awards with service conditions on a straight-line basis over the requisite service period. For awards with performance conditions, the Company recognizes compensation expense when the achievement of the performance milestone is probable and estimable through the vest date. For share-based awards granted to consultants and non-employees, compensation expense is recognized over the vesting period of the awards, which is generally the period during which services are rendered by such consultants and non-employees until completed. The Company classifies share-based compensation expense in its consolidated statements of operations and comprehensive loss in the same manner in which the award recipient's payroll costs are classified or in which the award recipient's service payments are classified. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model, which requires inputs based on certain subjective assumptions, including the expected share price volatility, the expected term of the award, the risk-free interest rate, and expected dividends (see Note 8). Prior to May 2018, the Company was a private company and, accordingly, lacks company-specific historical and implied volatility information for its shares. Therefore, it estimates its expected share price volatility based on the historical volatility of publicly traded peer companies and expects to continue to do so until such time as it has adequate historical data regarding the volatility of its own traded share price. The expected term of the Company’s options has been determined utilizing the “simplified” method for awards that qualify as “plain-vanilla” options. The expected term of options granted to non-employees is equal to the contractual term of the option award. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. Expected dividend yield is based on the fact that the Company has never paid cash dividends on common shares and does not expect to pay any cash dividends in the foreseeable future. The fair value of each restricted share unit award is based on the closing price of the Company’s Class A common shares on the date of grant. Restricted share unit awards with an associated performance condition are evaluated on a regular basis for probability of achievement to determine the timing of recording share-based compensation expense in the Company’s consolidated statements of operations and comprehensive loss. |
Comprehensive Loss | Comprehensive Loss Comprehensive loss includes net loss as well as other changes in shareholders’ equity that result from transactions and economic events other than those with shareholders. For the three and nine months ended September 30, 2020 and 2019, the Company’s other comprehensive loss was comprised of unrealized gain (loss) on short-term investments as well as cumulative translation adjustments, net of tax. |
Net Loss per Share | Net Loss per Share The Company follows the two-class method when computing net loss per share as the Company has issued shares that meet the definition of participating securities. The two-class method determines net loss per share for each class of common shares and participating securities according to dividends declared or accumulated and participation rights in undistributed earnings. The two-class method requires income available to common shareholders for the period to be allocated between common and participating securities based upon their respective rights to receive dividends as if all income for the period had been distributed. Basic net loss per share attributable to common shareholders is computed by dividing the net loss attributable to common shareholders by the weighted average number of common shares outstanding for the period. Diluted net loss attributable to common shareholders is computed by adjusting net loss attributable to common shareholders to reallocate undistributed earnings based on the potential impact of dilutive securities. Diluted net loss per share attributable to common shareholders is computed by dividing the diluted net loss attributable to common shareholders by the weighted average number of common shares outstanding for the period, including potential dilutive common shares. For purpose of this calculation, outstanding options and unvested restricted common shares are considered potential dilutive common shares. In periods in which the Company reports a net loss attributable to common shareholders, diluted net loss per share attributable to common shareholders is the same as basic net loss per share attributable to common shareholders, since dilutive common shares are not assumed to have been issued if their effect is anti-dilutive. The Company reported a net loss attributable to common shareholders for the three and nine months ended September 30, 2020 and 2019. |
Income Taxes | Income Taxes As an exempted company incorporated under the laws of Bermuda, the Company is principally subject to taxation in Bermuda. Under the current laws of Bermuda, tax on a company’s income is assessed at a zero percent tax rate. As a result, the Company has not recorded any income tax benefits from losses incurred in Bermuda during each reporting period, and no net operating loss carryforwards will be available to the Company for those losses. The Company’s wholly owned U.S. subsidiaries, Kiniksa US and Primatope, are subject to federal and state income taxes in the United States. The Company’s wholly owned subsidiary Kiniksa UK, and its wholly owned subsidiaries, Kiniksa Germany, Kiniksa France, and Kiniksa Switzerland, are subject to taxation in their respective countries. Certain of the Company’s subsidiaries, primarily Kiniksa US, operate under cost-plus arrangements. The Company’s U.S. provision for income taxes relates to current tax expense associated with the taxable income in the United States of its wholly owned subsidiary, Kiniksa US, as well as discrete tax events such as the recognition of a valuation allowance. The current income tax expense is a result of the taxable income earned by Kiniksa US under its cost-plus arrangement offset in part by tax benefits from the U.S. federal and state research and development tax credits, the Foreign Derived Intangible Income (“FDII”) deduction and share-based compensation taxable events. FDII was enacted as part of the tax reform enacted by the United States in December 2017, generally referred to as the U.S. Tax Cuts and Jobs Act. The Company has recorded an immaterial foreign provision for income taxes related to income in non-U.S. subsidiaries. The Company provides for income taxes on an interim basis according to management’s estimate of the effective tax rate expected to be applicable for the full fiscal year. Subsidiaries with losses for which no benefit can be claimed are excluded from this calculation, and their tax is recorded discretely in the period it arises. Certain other items such as changes in tax rates, tax benefits or expense related to settlements of share-based payment awards, changes in the valuation allowance against deferred tax, and uncertain tax positions are treated as discrete items and are recorded in the period in which they arise. |
Recently Adopted and Recently Issued Accounting Pronouncements | Recently Adopted Accounting Pronouncements In June 2016, the FASB, issued ASU 2016-13, Financial Instruments: Credit Losses (Topic 326) In August 2018, the FASB issued ASU 2018-15, Intangibles—Goodwill and Other— Internal-Use Software (Subtopic 350-40) (“ASU 2018-15”) The standard became effective for the Company Recently Issued Accounting Pronouncements In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes (Topic 740)(“ASU 2019-12”) |
Fair Value of Financial Asset_2
Fair Value of Financial Assets and Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Fair Value of Financial Assets and Liabilities | |
Schedule of financial assets and liabilities measured at fair value on a recurring basis | Fair Value Measurements as of September 30, 2020 Using: Level 1 Level 2 Level 3 Total Assets: Restricted cash — money market funds $ 210 $ — $ — $ 210 Cash equivalents — money market funds 31,043 — — 31,043 Cash equivalents — U.S. Treasury notes — 41,398 — 41,398 Short-term investments — U.S. Treasury notes — 278,521 — 278,521 $ 31,253 $ 319,919 $ — $ 351,172 Fair Value Measurements as of December 31, 2019 Using: Level 1 Level 2 Level 3 Total Assets: Restricted cash — money market funds $ 210 $ — $ — $ 210 Cash equivalents — money market funds 25,207 — — 25,207 Cash equivalents — U.S. Treasury notes — 10,192 — 10,192 Short-term investments — U.S. Treasury notes — 186,452 — 186,452 $ 25,417 $ 196,644 $ — $ 222,061 |
Schedule of short-term investments | Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value September 30, 2020 Short-term investments — U.S. Treasury notes $ 278,514 $ 9 $ (2) $ 278,521 $ 278,514 $ 9 $ (2) $ 278,521 Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value December 31, 2019 Short-term investments — U.S. Treasury notes $ 186,415 $ 44 $ (7) $ 186,452 $ 186,415 $ 44 $ (7) $ 186,452 |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Property and Equipment, Net | |
Schedule of property and equipment, net | September 30, December 31, 2020 2019 Furniture, fixtures and vehicles $ 47 $ 47 Computer hardware and software 349 344 Leasehold improvements 3,627 3,627 Lab equipment 4,713 4,685 Construction in progress — 20 Total property and equipment 8,736 8,723 Less: Accumulated depreciation (4,163) (2,325) Total property and equipment, net $ 4,573 $ 6,398 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Leases | |
Schedule of the components of lease cost | Three Months Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019 Operating lease cost $ 341 $ 340 $ 1,022 $ 1,102 Variable lease cost 30 52 132 161 Total lease cost $ 371 $ 392 $ 1,154 $ 1,263 September 30, 2020 Weighted-average remaining lease term (years) 0.90 Weighted-average discount rate 7.16% |
Schedule of maturities of operating lease liabilities | As of September 30, 2020 $ 455 2021 1,124 2022 14 2023 and thereafter — Total future minimum lease payments $ 1,593 Less imputed interest (46) Present value of lease liabilities $ 1,547 |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Accrued Expenses | |
Schedule of accrued expenses | September 30, December 31, 2020 2019 Accrued research and development expenses $ 10,333 $ 11,813 Accrued employee compensation and benefits 6,747 7,089 Accrued legal and professional fees 1,621 1,087 Other 774 426 $ 19,475 $ 20,415 |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Share-Based Compensation | |
Schedule of share option activity under the Plans | Weighted Number of Average Shares Fair Value Outstanding as of December 31, 2019 8,491,734 $ 7.68 Granted 3,588,735 $ 11.42 Exercised (1,113,532) $ 3.13 Forfeited (814,801) $ 11.58 Outstanding as of September 30, 2020 10,152,136 $ 9.19 Options exercisable as of September 30, 2020 3,611,646 $ 8.20 Options unvested as of September 30, 2020 6,540,490 $ 10.46 |
Schedule of stock option valuation assumptions presented on weighted-average basis | Three Months Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019 Risk-free interest rate 0.36 % 1.69 % 0.56 % 2.13 % Expected term (in years) 6.24 6.24 6.21 6.21 Expected volatility 82.58 % 80.37 % 81.02 % 79.24 % Expected dividend yield — % — % — % — % |
Schedule of restricted share activity | Weighted Average Number of Grant Date Shares Fair Value Unvested RSUs as of December 31, 2019 328,296 $ 12.93 Granted 12,052 $ 20.78 Vested — $ — Forfeited (52,837) $ 13.00 Unvested RSUs as of September 30, 2020 287,511 $ 13.24 |
Schedule of share-based compensation expense was classified in the consolidated statements of operations and comprehensive loss | Three Months Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019 Research and development expenses $ 2,345 $ 1,435 $ 6,303 $ 4,126 General and administrative expenses 3,213 2,323 8,315 5,989 $ 5,558 $ 3,758 $ 14,618 $ 10,115 |
Net Loss per Share (Tables)
Net Loss per Share (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Net Loss per Share | |
Schedule of basic and diluted net loss per share attributable to common shareholders | Three Months Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019 Numerator: Net loss attributable to common shareholders $ (43,836) $ (27,058) $ (107,724) $ (130,070) Denominator: Weighted average common shares outstanding—basic and diluted 65,958,513 54,831,308 59,754,495 53,767,003 Net loss per share attributable to common shareholders— basic and diluted $ (0.66) $ (0.49) $ (1.80) $ (2.42) |
Schedule of anti-dilutive securities excluded from the computation of diluted net loss per share attributable to common shareholders | As of September 30, 2020 2019 Options to purchase common shares 10,152,136 8,635,968 Unvested RSUs 287,511 — 10,439,647 8,635,968 |
Nature of the Business and Ba_2
Nature of the Business and Basis of Presentation (Details) - USD ($) $ / shares in Units, $ in Thousands | Jul. 24, 2020 | May 18, 2020 | Mar. 01, 2019 | Feb. 04, 2019 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 |
Liquidity | |||||||||||||
Accumulated deficit | $ 463,816 | $ 463,816 | $ 356,092 | ||||||||||
Net losses | 43,836 | $ 37,469 | $ 26,419 | $ 27,058 | $ 37,191 | $ 65,821 | 107,724 | $ 130,070 | |||||
Cash used in operations | 95,341 | 134,199 | |||||||||||
Cash, cash equivalents and short-term investments | $ 364,395 | 364,395 | |||||||||||
Follow-On Public Offering and Private Placement Inclusive of Over-Allotment | |||||||||||||
Nature of the Business and Basis of Presentation | |||||||||||||
Aggregate proceeds from offerings net of underwriter discounts and commissions, placement agent fees and other offering costs | $ 146,043 | $ 74,495 | $ 82,988 | ||||||||||
Follow-On Public Offering and Private Placement | Common Class A and Class A1 common shares | |||||||||||||
Nature of the Business and Basis of Presentation | |||||||||||||
Gross proceeds from offering | $ 155,000 | $ 79,570 | $ 85,000 | ||||||||||
Follow-On Offering | Class A common shares | |||||||||||||
Nature of the Business and Basis of Presentation | |||||||||||||
Issuance of stock (in shares) | 5,952,381 | 2,760,000 | 2,654,984 | ||||||||||
Share price (in dollars per share) | $ 21 | $ 18.25 | $ 18.26 | ||||||||||
Gross proceeds from offering | $ 165,725 | $ 48,595 | |||||||||||
Private Placement | Class A1 common shares | |||||||||||||
Nature of the Business and Basis of Presentation | |||||||||||||
Issuance of stock (in shares) | 1,428,572 | 1,600,000 | 2,000,000 | ||||||||||
Share price (in dollars per share) | $ 21 | $ 18.25 | $ 18.26 | ||||||||||
Over-allotment | Class A common shares | |||||||||||||
Nature of the Business and Basis of Presentation | |||||||||||||
Issuance of stock (in shares) | 161,126 | ||||||||||||
Share price (in dollars per share) | $ 18.26 | ||||||||||||
Gross proceeds from offering | $ 2,942 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies - Concentrations of Credit Risk and Restricted Cash (Details) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020USD ($)item | Dec. 31, 2019USD ($)item | |
Restricted cash | ||
Cash securing letter of credit | $ | $ 210 | $ 210 |
Cash and cash equivalents | Credit concentration | ||
Concentration risk | ||
Number of financial institutions holding cash, cash equivalents and short-term investments | item | 2 | 2 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Income Taxes | ||||
Bermuda statutory income tax rate | 0.00% | 0.00% | 0.00% | 0.00% |
Income tax benefits - Bermuda | $ 0 | $ 0 | $ 0 | $ 0 |
Net operating loss carryforwards - Bermuda | $ 0 | $ 0 | $ 0 | $ 0 |
Fair Value of Financial Asset_3
Fair Value of Financial Assets and Liabilities (Details) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020USD ($)security | Dec. 31, 2019USD ($)security | |
Fair Value, Assets Transfers | ||
Fair value of assets transferred from Level 1 to Level 2 | $ 0 | $ 0 |
Fair value of assets transferred from Level 2 to Level 1 | 0 | 0 |
Fair value of assets transferred from Level 1 to Level 3 | 0 | 0 |
Fair value of assets transferred from Level 2 to Level 3 | 0 | 0 |
Fair value of assets transferred from Level 3 to Level 1 | 0 | 0 |
Fair value of assets transferred from Level 3 to Level 2 | $ 0 | $ 0 |
Number of securities | security | 11 | 7 |
Unrealized loss position | $ 78,056 | $ 43,107 |
Short-term Investments | ||
Assets - Fair Value | ||
Short-term investments | 278,521 | 186,452 |
Short-term investments | ||
Amortized Cost | 278,514 | 186,415 |
Gross Unrealized Gains | 9 | 44 |
Gross Unrealized Losses | (2) | (7) |
Short-term investments | 278,521 | 186,452 |
Short-term Investments | U.S. Treasury Notes | ||
Assets - Fair Value | ||
Short-term investments | 278,521 | 186,452 |
Short-term investments | ||
Amortized Cost | 278,514 | 186,415 |
Gross Unrealized Gains | 9 | 44 |
Gross Unrealized Losses | (2) | (7) |
Short-term investments | 278,521 | 186,452 |
Fair Value | Recurring basis | ||
Assets - Fair Value | ||
Assets | 351,172 | 222,061 |
Fair Value | Recurring basis | Money Market Funds | ||
Assets - Fair Value | ||
Restricted cash | 210 | 210 |
Cash equivalents | 31,043 | 25,207 |
Fair Value | Recurring basis | U.S. Treasury Notes | ||
Assets - Fair Value | ||
Cash equivalents | 41,398 | 10,192 |
Short-term investments | 278,521 | 186,452 |
Short-term investments | ||
Short-term investments | 278,521 | 186,452 |
Fair Value | Recurring basis | Level 1 | ||
Assets - Fair Value | ||
Assets | 31,253 | 25,417 |
Fair Value | Recurring basis | Level 1 | Money Market Funds | ||
Assets - Fair Value | ||
Restricted cash | 210 | 210 |
Cash equivalents | 31,043 | 25,207 |
Fair Value | Recurring basis | Level 2 | ||
Assets - Fair Value | ||
Assets | 319,919 | 196,644 |
Fair Value | Recurring basis | Level 2 | U.S. Treasury Notes | ||
Assets - Fair Value | ||
Cash equivalents | 41,398 | 10,192 |
Short-term investments | 278,521 | 186,452 |
Short-term investments | ||
Short-term investments | $ 278,521 | $ 186,452 |
Property and Equipment, Net (De
Property and Equipment, Net (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Property and Equipment, Net | |||||
Total property and equipment | $ 8,736 | $ 8,736 | $ 8,723 | ||
Less: Accumulated depreciation | (4,163) | (4,163) | (2,325) | ||
Total property and equipment, net | 4,573 | 4,573 | 6,398 | ||
Depreciation expense | 649 | $ 523 | 1,838 | $ 1,502 | |
Furniture, fixtures, and vehicles | |||||
Property and Equipment, Net | |||||
Total property and equipment | 47 | 47 | 47 | ||
Computer hardware and software | |||||
Property and Equipment, Net | |||||
Total property and equipment | 349 | 349 | 344 | ||
Leasehold improvements | |||||
Property and Equipment, Net | |||||
Total property and equipment | 3,627 | 3,627 | 3,627 | ||
Lab equipment | |||||
Property and Equipment, Net | |||||
Total property and equipment | $ 4,713 | $ 4,713 | 4,685 | ||
Construction in progress | |||||
Property and Equipment, Net | |||||
Total property and equipment | $ 20 |
Leases - Operating Leases (Deta
Leases - Operating Leases (Details) $ in Thousands | Jul. 17, 2020USD ($) | Dec. 21, 2018USD ($)ft² | Dec. 31, 2019USD ($) | Sep. 30, 2020 | Nov. 07, 2018ft² | Jun. 26, 2018ft² |
Maximum | ||||||
Operating leases | ||||||
Remaining lease terms | 2 years | |||||
Lexington office | ||||||
Operating leases | ||||||
Area of leased space after expansion | ft² | 55,924 | 27,244 | ||||
Monthly base rent payment | $ | $ 138 | |||||
San Diego office | ||||||
Operating leases | ||||||
Area of leased space after expansion | ft² | 4,400 | |||||
Monthly base rent payment | $ | $ 14 | $ 13 |
Leases - Lease Cost and Maturit
Leases - Lease Cost and Maturities of Operating Lease Liabilities (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Lease cost | ||||
Operating lease cost | $ 341 | $ 340 | $ 1,022 | $ 1,102 |
Variable lease cost | 30 | 52 | 132 | 161 |
Total lease cost | $ 371 | $ 392 | $ 1,154 | $ 1,263 |
Weighted average lease term | 10 months 24 days | 10 months 24 days | ||
Weighted average discount rate | 7.16% | 7.16% | ||
Maturities of operating lease liabilities | ||||
2020 | $ 455 | $ 455 | ||
2021 | 1,124 | 1,124 | ||
2022 | 14 | 14 | ||
Total future minimum lease payments | 1,593 | 1,593 | ||
Less imputed interest | (46) | (46) | ||
Present value of lease liabilities | $ 1,547 | $ 1,547 |
Accrued Expenses (Details)
Accrued Expenses (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Accrued Expenses | ||
Accrued research and development expenses | $ 10,333 | $ 11,813 |
Accrued employee compensation and benefits | 6,747 | 7,089 |
Accrued legal and professional fees | 1,621 | 1,087 |
Other | 774 | 426 |
Accrued expenses | $ 19,475 | $ 20,415 |
Common Shares (Details)
Common Shares (Details) $ / shares in Units, $ in Thousands | Jul. 24, 2020USD ($)$ / sharesshares | May 18, 2020USD ($)$ / sharesshares | Mar. 01, 2019USD ($)$ / sharesshares | Feb. 04, 2019USD ($)$ / sharesshares | Sep. 30, 2020USD ($)Voteshares | Sep. 30, 2019USD ($) |
Nature of the Business and Basis of Presentation | ||||||
Common stock, cash dividends declared or paid | $ | $ 0 | |||||
Class A common shares | ||||||
Nature of the Business and Basis of Presentation | ||||||
Number of votes (per share) | Vote | 1 | |||||
Class A1 common shares | ||||||
Nature of the Business and Basis of Presentation | ||||||
Number of votes (per share) | Vote | 0 | |||||
Convertible ratio to Class A common share | 1 | |||||
Class B common shares | ||||||
Nature of the Business and Basis of Presentation | ||||||
Number of votes (per share) | Vote | 10 | |||||
Convertible ratio to Class A common share | 1 | |||||
Convertible ratio to Class B1 common share | 1 | |||||
Class B1 common shares | ||||||
Nature of the Business and Basis of Presentation | ||||||
Number of votes (per share) | Vote | 0 | |||||
Convertible ratio to Class A common share | 1 | |||||
Convertible ratio to Class B common share | 1 | |||||
Convertible Preferred Shares | ||||||
Nature of the Business and Basis of Presentation | ||||||
Preferred shares designated | shares | 0 | |||||
Preferred stock, shares issued (in shares) | shares | 0 | |||||
Follow-On Public Offering and Private Placement Inclusive of Over-Allotment | ||||||
Nature of the Business and Basis of Presentation | ||||||
Aggregate proceeds from offerings net of underwriter discounts and commissions, placement agent fees and other offering costs | $ | $ 146,043 | $ 74,495 | $ 82,988 | |||
Follow-On Public Offering and Private Placement | Common Class A and Class A1 common shares | ||||||
Nature of the Business and Basis of Presentation | ||||||
Gross proceeds from offering | $ | $ 155,000 | $ 79,570 | $ 85,000 | |||
Follow-On Offering | Class A common shares | ||||||
Nature of the Business and Basis of Presentation | ||||||
Issuance of stock (in shares) | shares | 5,952,381 | 2,760,000 | 2,654,984 | |||
Share price (in dollars per share) | $ / shares | $ 21 | $ 18.25 | $ 18.26 | |||
Gross proceeds from offering | $ | $ 165,725 | $ 48,595 | ||||
Private Placement | Class A1 common shares | ||||||
Nature of the Business and Basis of Presentation | ||||||
Issuance of stock (in shares) | shares | 1,428,572 | 1,600,000 | 2,000,000 | |||
Share price (in dollars per share) | $ / shares | $ 21 | $ 18.25 | $ 18.26 | |||
Over-allotment | Class A common shares | ||||||
Nature of the Business and Basis of Presentation | ||||||
Issuance of stock (in shares) | shares | 161,126 | |||||
Share price (in dollars per share) | $ / shares | $ 18.26 | |||||
Gross proceeds from offering | $ | $ 2,942 |
Share Based Compensation (Detai
Share Based Compensation (Details) $ in Thousands | May 23, 2018shares | Dec. 31, 2019itemshares | Sep. 30, 2020USD ($)shares | Sep. 30, 2019USD ($) | Sep. 30, 2020USD ($)shares | Sep. 30, 2019USD ($) | Dec. 31, 2019shares |
Share-based compensation | |||||||
Share-based compensation expense | $ | $ 5,558 | $ 3,758 | $ 14,618 | $ 10,115 | |||
Stock options | Class A common shares | |||||||
Share-based compensation | |||||||
Shares outstanding (in shares) | 8,491,734 | 10,152,136 | 10,152,136 | 8,491,734 | |||
Number of options granted | 3,588,735 | ||||||
First RSU Award | |||||||
Share-based compensation | |||||||
Share-based compensation expense | $ | $ 0 | $ 0 | |||||
2018 Incentive Award Plan | Class A common shares | |||||||
Share-based compensation | |||||||
Total number of common shares authorized to issue | 4,466,500 | ||||||
Percentage of automatic increase in shares available for issue | 4.00% | ||||||
Additional shares authorized | 2,197,505 | ||||||
Number of common shares available for future grant | 1,610,263 | 1,610,263 | |||||
2018 Incentive Award Plan | Class A common shares | Maximum | |||||||
Share-based compensation | |||||||
Percentage of automatic increase in shares available for issue | 4.00% | ||||||
Maximum number of common shares may be issued | 27,915,000 | ||||||
Rilonacept Long-term Incentive Plan | Restricted Share Units (RSUs) | |||||||
Share-based compensation | |||||||
Number of grants of RSU awards that a participant may receive | item | 2 | ||||||
Number of awards that will be earned or vest if the milestone date does not occur by the specified date | item | 0 | ||||||
Rilonacept Long-term Incentive Plan | Restricted Share Units (RSUs) | Earnout Level 1 | |||||||
Share-based compensation | |||||||
Potential performance earnout percentage | 100.00% | ||||||
Rilonacept Long-term Incentive Plan | Restricted Share Units (RSUs) | Earnout Level 2 | |||||||
Share-based compensation | |||||||
Potential performance earnout percentage | 50.00% | ||||||
Rilonacept Long-term Incentive Plan | Restricted Share Units (RSUs) | Earnout Level 3 | |||||||
Share-based compensation | |||||||
Potential performance earnout percentage | 25.00% | ||||||
Rilonacept Long-term Incentive Plan | Restricted Share Units (RSUs) | Earnout Level 4 | |||||||
Share-based compensation | |||||||
Potential performance earnout percentage | 0.00% | ||||||
Rilonacept Long-term Incentive Plan | Restricted Share Units (RSUs) | Upside Earnout Level 1 | |||||||
Share-based compensation | |||||||
Potential performance earnout percentage | 50.00% | ||||||
Rilonacept Long-term Incentive Plan | Restricted Share Units (RSUs) | Upside Earnout Level 2 | |||||||
Share-based compensation | |||||||
Potential performance earnout percentage | 25.00% | ||||||
Rilonacept Long-term Incentive Plan | Restricted Share Units (RSUs) | Upside Earnout Level 3 | |||||||
Share-based compensation | |||||||
Potential performance earnout percentage | 0.00% | ||||||
2015 Equity Incentive Plan | Class A common shares | |||||||
Share-based compensation | |||||||
Total number of common shares authorized to issue | 4,691,213 | 2,973,717 | 2,973,717 | ||||
Number of shares no longer available for future grant | 92,170 | ||||||
2015 Equity Incentive Plan | Stock options | |||||||
Share-based compensation | |||||||
Voting power threshold percentage used to determine the exercise price for options | 10.00% | ||||||
Vesting percentage of options having four year vesting term on the first anniversary of the grant date | 25.00% | 25.00% | |||||
Vesting percentage of options having six year vesting term on the first anniversary of the grant date | 16.00% | 16.00% | |||||
2015 Equity Incentive Plan | Stock options | Employees | |||||||
Share-based compensation | |||||||
Vesting period | 6 years | ||||||
2015 Equity Incentive Plan | Stock options | Employees and non employees | |||||||
Share-based compensation | |||||||
Vesting period | 4 years | ||||||
2015 Equity Incentive Plan | Stock options | Minimum | |||||||
Share-based compensation | |||||||
Vesting period | 4 years | ||||||
2015 Equity Incentive Plan | Stock options | Maximum | |||||||
Share-based compensation | |||||||
Option term of incentive awards | 10 years | ||||||
Option term of awards for the persons possessing more than 10% of voting power | 5 years | ||||||
Vesting period | 6 years | ||||||
2015 Equity Incentive Plan | Stock options | Class A common shares | |||||||
Share-based compensation | |||||||
Minimum percentage of exercise price of the fair market value of shares for the persons possessing 10% or less of voting power | 100.00% | 100.00% | |||||
Minimum percentage of exercise price of the fair market value of shares for the persons possessing more than 10% of voting power | 110.00% | 110.00% | |||||
2018 Employee Share Purchase Plan | Class A common shares | |||||||
Share-based compensation | |||||||
Total number of common shares authorized to issue | 670,000 | ||||||
Automatic increase in number of shares available for issue | 0 | ||||||
Number of common shares available for future grant | 549,300 | 549,300 | |||||
2018 Employee Share Purchase Plan | Class A common shares | Maximum | |||||||
Share-based compensation | |||||||
Percentage of automatic increase in shares available for issue | 1.00% | ||||||
Maximum number of common shares may be issued | 6,420,000 |
Share-Based Compensation - Opti
Share-Based Compensation - Options (Details) - Class A common shares - Stock options - $ / shares | 9 Months Ended |
Sep. 30, 2020 | |
Number of Shares | |
Outstanding, beginning of the period | 8,491,734 |
Granted | 3,588,735 |
Exercised | (1,113,532) |
Forfeited | (814,801) |
Outstanding, end of the period | 10,152,136 |
Options exercisable | 3,611,646 |
Options unvested | 6,540,490 |
Weighted Average Grant Date Fair Value | |
Outstanding, beginning of the period | $ 7.68 |
Granted | 11.42 |
Exercised | 3.13 |
Forfeited | 11.58 |
Outstanding, end of the period | 9.19 |
Options exercisable | 8.20 |
Options unvested | $ 10.46 |
Share-Based Compensation - Op_2
Share-Based Compensation - Option Valuation (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Assumptions to determine fair value of options granted on weighted average basis: | ||||
Risk-free interest rate | 0.36% | 1.69% | 0.56% | 2.13% |
Expected term (in years) | 6 years 2 months 26 days | 6 years 2 months 26 days | 6 years 2 months 15 days | 6 years 2 months 15 days |
Expected volatility | 82.58% | 80.37% | 81.02% | 79.24% |
Share-Based Compensation - Rest
Share-Based Compensation - Restricted Shares and RSUs (Details) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||
Dec. 31, 2019installment$ / sharesshares | Sep. 30, 2020USD ($)$ / sharesshares | Sep. 30, 2019USD ($) | Sep. 30, 2020USD ($)$ / sharesshares | Sep. 30, 2019USD ($) | |
Share-based compensation | |||||
Share-based compensation expense | $ 5,558 | $ 3,758 | $ 14,618 | $ 10,115 | |
Restricted Share Units (RSUs) | |||||
Number of shares | |||||
Beginning of the period | shares | 328,296 | ||||
Granted | shares | 12,052 | ||||
Forfeited | shares | (52,837) | ||||
End of the period | shares | 328,296 | 287,511 | 287,511 | ||
Weighted Average Fair Value at Issuance | |||||
Beginning of the period | $ / shares | $ 12.93 | ||||
Granted | $ / shares | 20.78 | ||||
Forfeited | $ / shares | 13 | ||||
End of the period | $ / shares | $ 12.93 | $ 13.24 | $ 13.24 | ||
Time-based RSUs | |||||
Share-based compensation | |||||
Number of vesting installments | installment | 1 | ||||
Grant date fair value of non-vested awards | $ 1,045 | ||||
Share-based compensation expense | $ 250 | 733 | |||
First RSU Award | |||||
Share-based compensation | |||||
Grant date fair value of non-vested awards | 2,762 | ||||
Share-based compensation expense | $ 0 | $ 0 |
Share-Based Compensation - Clas
Share-Based Compensation - Classification of Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Share-based compensation | ||||
Share-based compensation expense | $ 5,558 | $ 3,758 | $ 14,618 | $ 10,115 |
Research and development expenses | ||||
Share-based compensation | ||||
Share-based compensation expense | 2,345 | 1,435 | 6,303 | 4,126 |
General and administrative expenses | ||||
Share-based compensation | ||||
Share-based compensation expense | $ 3,213 | $ 2,323 | $ 8,315 | $ 5,989 |
License, Acquisition and Coll_2
License, Acquisition and Collaboration Agreements - Biogen Asset Purchase Agreement (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | Dec. 31, 2017 | |
License and Acquisition Agreements | |||||||
Research and development | $ 31,419 | $ 22,014 | $ 74,644 | $ 112,115 | |||
Asset Purchase Agreement | Biogen | |||||||
License and Acquisition Agreements | |||||||
Upfront payment for exchange of rights | $ 11,500 | ||||||
Technology transfer payment | 500 | ||||||
Milestone payment upon achievement of clinical milestone event | 0 | 0 | $ 10,000 | $ 4,000 | |||
One-time payment of upfront sublicense fee on retained contracts | 150 | ||||||
Maximum aggregate obligation to pay insignificant annual maintenance fees as well as clinical and regulatory milestone payments | $ 1,575 | ||||||
Notice period to terminate the agreement | 90 days | ||||||
Uncured period which causes termination of the agreement, due to insolvency or bankruptcy or for material breach of the agreement by the other party that remains uncured | 90 days | ||||||
Notice period to terminate the agreement under payment-related breaches | 30 days | ||||||
Research and development | $ 14 | $ 164 | $ 92 | $ 10,330 | |||
Asset Purchase Agreement | Biogen | Maximum | |||||||
License and Acquisition Agreements | |||||||
Milestone payment to be paid upon clinical and regulatory milestone achievement | $ 179,000 | ||||||
Milestone payment to be paid upon net sales milestone achievement | $ 150,000 |
License, Acquisition and Coll_3
License, Acquisition and Collaboration Agreements - Novo Nordisk License Agreement (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||
Aug. 31, 2017 | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
License and Acquisition Agreements | |||||
Research and development | $ 31,419 | $ 22,014 | $ 74,644 | $ 112,115 | |
License Agreement | Novo Nordisk | |||||
License and Acquisition Agreements | |||||
Upfront payment for exchange of rights | $ 1,500 | ||||
Research and development | $ 0 | $ 0 | $ 0 | $ 0 |
License, Acquisition and Coll_4
License, Acquisition and Collaboration Agreements - Primatope Stock Purchase Option Agreement (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Mar. 31, 2019USD ($) | Sep. 30, 2017USD ($)item | Sep. 30, 2020USD ($) | Sep. 30, 2019USD ($) | Sep. 30, 2020USD ($) | Sep. 30, 2019USD ($) | Dec. 31, 2018USD ($) | Jun. 30, 2019USD ($) | |
License and Acquisition Agreements | ||||||||
Research and development | $ 31,419 | $ 22,014 | $ 74,644 | $ 112,115 | ||||
Primatope | Stock Option Purchase Agreement | ||||||||
License and Acquisition Agreements | ||||||||
Percentage of capital stock available to purchase in call option | 100.00% | |||||||
Payment for extension of option period | $ 800 | |||||||
Primatope Acquisition | ||||||||
License and Acquisition Agreements | ||||||||
Purchase price | $ 15,000 | |||||||
Upfront consideration payable on exercise of call option to acquire all outstanding equity | 10,000 | |||||||
Milestone payment payable after achievement of specified milestones | $ 5,000 | $ 3,000 | ||||||
Research and development | $ 18,000 | |||||||
Primatope Acquisition | Stock Option Purchase Agreement | ||||||||
License and Acquisition Agreements | ||||||||
Upfront payment for initial option period | $ 500 | |||||||
Maximum | Primatope | Stock Option Purchase Agreement | ||||||||
License and Acquisition Agreements | ||||||||
Number of extensions allowed for initial option period | item | 3 | |||||||
Total aggregate extension payments | $ 800 |
License, Acquisition and Coll_5
License, Acquisition and Collaboration Agreements - Beth Israel Deaconess Medical Center License Agreement (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
License and Acquisition Agreements | ||||
Research and development | $ 31,419 | $ 22,014 | $ 74,644 | $ 112,115 |
License Agreement | BIDMC | ||||
License and Acquisition Agreements | ||||
Research and development | 0 | $ 0 | 0 | $ 0 |
License Agreement | BIDMC | Maximum | ||||
License and Acquisition Agreements | ||||
Milestone payment to be paid upon clinical and regulatory milestone achievement | $ 1,200 | $ 1,200 |
License, Acquisition and Coll_6
License, Acquisition and Collaboration Agreements - Regeneron License Agreement (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2020 | |
License and Acquisition Agreements | ||||||
Research and development | $ 31,419 | $ 22,014 | $ 74,644 | $ 112,115 | ||
Regeneron | License Agreement | ||||||
License and Acquisition Agreements | ||||||
Upfront payment for exchange of rights | $ 5,000 | |||||
Milestone payment to be paid upon regulatory milestone achievement | $ 7,500 | |||||
Uncured period which causes termination of the agreement, due to insolvency or bankruptcy or for material breach of the agreement by the other party that remains uncured | 90 days | |||||
Research and development | $ 0 | 0 | $ 0 | 0 | ||
Notice period to terminate the agreement under payment-related breaches | 30 days | |||||
Consecutive suspension of activities period for termination of agreement | 12 months | |||||
Period after which the agreement can be terminated | 18 months | |||||
Notice period to terminate the agreement | 180 days | |||||
Notice period to terminate the agreement after US marketing approval of the developed product | 1 year | |||||
Notice period to terminate the agreement if products are having safety concerns | 3 months | |||||
Regeneron | Clinical Supply Agreement | ||||||
License and Acquisition Agreements | ||||||
Research and development expense related to purchase of drug materials | $ 85 | $ 3,727 | ||||
Maximum | Regeneron | License Agreement | ||||||
License and Acquisition Agreements | ||||||
Milestone payment to be paid upon regulatory milestone achievement | $ 27,500 |
License, Acquisition and Coll_7
License, Acquisition and Collaboration Agreements - MedImmune License Agreement (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Dec. 31, 2017 | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | |
License and Acquisition Agreements | |||||||
Research and development | $ 31,419 | $ 22,014 | $ 74,644 | $ 112,115 | |||
MedImmune | License Agreement | |||||||
License and Acquisition Agreements | |||||||
Upfront payment for exchange of rights | $ 8,000 | ||||||
Milestone payment to be paid upon regulatory milestone achievement | 10,000 | ||||||
Accrued milestone payments | 10,000 | $ 5,000 | |||||
Payment of accrued milestones | $ 10,000 | ||||||
Pass-through payment paid upon clinical milestone achievement | $ 5,000 | ||||||
Annual net sales excluded from calculation of specified annual net sales thresholds | $ 1,000,000 | ||||||
Maximum percentage of royalty payable on annual net sales of licensed products | 20.00% | ||||||
Notice period to terminate the agreement by both parties for material breaches | 90 days | ||||||
Notice period to terminate the agreement | 90 days | ||||||
Research and development | $ 0 | $ 0 | $ 0 | $ 0 | |||
Minimum | MedImmune | License Agreement | |||||||
License and Acquisition Agreements | |||||||
Additional specified annual net sales threshold for additional milestone payment. | $ 1,000,000 | ||||||
Maximum | MedImmune | License Agreement | |||||||
License and Acquisition Agreements | |||||||
Milestone payment to be paid upon specified milestone achievements for first two indications | 72,500 | ||||||
Milestone payment to be paid upon clinical and regulatory milestone achievement | 15,000 | ||||||
Milestone payment to be paid upon specified annual sales milestone achievements | 85,000 | ||||||
Additional milestone payments payable after achievement of additional annual sales | $ 1,100,000 |
License, Acquisition and Coll_8
License, Acquisition and Collaboration Agreements - Kite Clinical Collaboration Agreement (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
License and Acquisition Agreements | ||||
Research and development | $ 31,419 | $ 22,014 | $ 74,644 | $ 112,115 |
Clinical Collaboration Agreement | Kite | ||||
License and Acquisition Agreements | ||||
Research and development | $ 0 | $ 0 |
Net Loss per Share (Details)
Net Loss per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Numerator: | ||||||||
Net loss attributable to common shareholders | $ (43,836) | $ (37,469) | $ (26,419) | $ (27,058) | $ (37,191) | $ (65,821) | $ (107,724) | $ (130,070) |
Denominator: | ||||||||
Weighted average common shares outstanding - basic and diluted | 65,958,513 | 54,831,308 | 59,754,495 | 53,767,003 | ||||
Net loss per share attributable to common shareholders - basic and diluted | $ (0.66) | $ (0.49) | $ (1.80) | $ (2.42) |
Net Loss per Share - Anti-Dilut
Net Loss per Share - Anti-Dilutive Securities (Details) - shares | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Anti-dilutive securities excluded from computation of earnings per share | ||
Total, anti-dilutive securities excluded from computation of earnings per share | 10,439,647 | 8,635,968 |
Stock options | ||
Anti-dilutive securities excluded from computation of earnings per share | ||
Total, anti-dilutive securities excluded from computation of earnings per share | 10,152,136 | 8,635,968 |
Restricted Share Units (RSUs) | ||
Anti-dilutive securities excluded from computation of earnings per share | ||
Total, anti-dilutive securities excluded from computation of earnings per share | 287,511 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Income Taxes | ||||
Bermuda statutory income tax rate | 0.00% | 0.00% | 0.00% | 0.00% |
Income tax benefits - Bermuda | $ 0 | $ 0 | $ 0 | $ 0 |
Net operating loss carryforwards - Bermuda | 0 | 0 | 0 | 0 |
Income tax expense | $ 667 | $ (2,002) | $ 4,363 | $ (2,393) |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ in Thousands | Sep. 30, 2020USD ($) |
Manufacturing commitments | |
Non-cancelable purchase commitments | $ 5,463 |
Rilonacept Long-term Incentive Plan | First RSU Award | |
Long-term incentive plan | |
Estimated amount of cash award in the event performance goals are achieved | $ 1,990 |