Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2022 | Oct. 31, 2022 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2022 | |
Document Transition Report | false | |
Entity File Number | 001-37581 | |
Entity Registrant Name | Aclaris Therapeutics, Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 46-0571712 | |
Entity Address, Address Line One | 640 Lee Road, Suite 200 | |
Entity Address, City or Town | Wayne | |
Entity Address, State or Province | PA | |
Entity Address, Postal Zip Code | 19087 | |
City Area Code | 484 | |
Local Phone Number | 324-7933 | |
Title of 12(b) Security | Common Stock, $0.00001 par value | |
Trading Symbol | ACRS | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 66,683,191 | |
Entity Central Index Key | 0001557746 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 61,653 | $ 27,349 |
Short-term marketable securities | 186,409 | 164,065 |
Accounts receivable, net | 597 | 623 |
Prepaid expenses and other current assets | 7,914 | 12,995 |
Total current assets | 256,573 | 205,032 |
Marketable securities | 34,242 | |
Property and equipment, net | 1,145 | 1,335 |
Intangible assets | 6,992 | 7,048 |
Other assets | 2,922 | 3,554 |
Total assets | 267,632 | 251,211 |
Current liabilities: | ||
Accounts payable | 7,667 | 9,985 |
Accrued expenses | 9,154 | 10,051 |
Current portion of lease liabilities | 766 | 693 |
Discontinued operations | 2,202 | 2,202 |
Total current liabilities | 19,789 | 22,931 |
Other liabilities | 1,638 | 2,172 |
Contingent consideration | 26,000 | 28,400 |
Deferred tax liability | 367 | 367 |
Total liabilities | 47,794 | 53,870 |
Commitments and contingencies (Note 16) | ||
Stockholders' Equity: | ||
Preferred stock, $0.00001 par value; 10,000,000 shares authorized and no shares issued or outstanding at September 30, 2022 and December 31, 2021 | ||
Common stock, $0.00001 par value; 100,000,000 shares authorized at September 30, 2022 and December 31, 2021; 66,679,641 and 61,228,446 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively | 1 | 1 |
Additional paid-in capital | 875,982 | 792,971 |
Accumulated other comprehensive loss | (1,465) | (224) |
Accumulated deficit | (654,680) | (595,407) |
Total stockholders' equity | 219,838 | 197,341 |
Total liabilities and stockholders' equity | $ 267,632 | $ 251,211 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Sep. 30, 2022 | Dec. 31, 2021 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Preferred stock, par value (in dollars per share) | $ 0.00001 | $ 0.00001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.00001 | $ 0.00001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 66,679,641 | 61,228,446 |
Common stock, shares outstanding | 66,679,641 | 61,228,446 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Revenues: | ||||
Total revenue | $ 19,018 | $ 1,659 | $ 21,999 | $ 5,260 |
Costs and expenses: | ||||
Cost of revenue | 923 | 1,099 | 3,146 | 3,564 |
Research and development expense | 23,656 | 13,976 | 56,741 | 29,711 |
General and administrative expense | 5,813 | 5,979 | 17,987 | 16,676 |
Licensing | 7,300 | 7,300 | ||
Revaluation of contingent consideration | 2,200 | 900 | (2,400) | 22,139 |
Total costs and expenses | 39,892 | 21,954 | 82,774 | 72,090 |
Loss from operations | (20,874) | (20,295) | (60,775) | (66,830) |
Other income (expense), net | 922 | (851) | 1,502 | (1,231) |
Net loss | $ (19,952) | $ (21,146) | $ (59,273) | $ (68,061) |
Net loss per share, basic | $ (0.30) | $ (0.35) | $ (0.92) | $ (1.23) |
Net loss per share, diluted | $ (0.30) | $ (0.35) | $ (0.92) | $ (1.23) |
Weighted average common shares outstanding, basic | 66,675,337 | 61,219,321 | 64,718,008 | 55,215,037 |
Weighted average common shares outstanding, diluted | 66,675,337 | 61,219,321 | 64,718,008 | 55,215,037 |
Other comprehensive (loss) income: | ||||
Unrealized gain (loss) on marketable securities, net of tax of $0 | $ (139) | $ 5 | $ (1,241) | $ (5) |
Foreign currency translation adjustment | 176 | 96 | ||
Total other comprehensive (loss) income | (139) | 181 | (1,241) | 91 |
Comprehensive loss | (20,091) | (20,965) | (60,514) | (67,970) |
Contract research | ||||
Revenues: | ||||
Total revenue | 1,090 | 1,415 | 3,529 | 4,556 |
Licensing | ||||
Revenues: | ||||
Total revenue | 17,898 | 214 | 18,378 | 612 |
Other | ||||
Revenues: | ||||
Total revenue | $ 30 | $ 30 | $ 92 | $ 92 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS | ||||
Unrealized loss on marketable securities, tax | $ 0 | $ 0 | $ 0 | $ 0 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands | Common Stock Public Offering | Common Stock At The Market Offering | Common Stock | Additional Paid-in Capital Public Offering | Additional Paid-in Capital At The Market Offering | Additional Paid-in Capital | Accumulated Other Comprehensive Loss | Accumulated Deficit | Public Offering | At The Market Offering | Total |
Balance at beginning of period at Dec. 31, 2020 | $ 542,286 | $ (94) | $ (504,542) | $ 37,650 | |||||||
Balance at beginning of period (in shares) at Dec. 31, 2020 | 45,109,314 | ||||||||||
Increase (Decrease) in Stockholders' Equity | |||||||||||
Issuance of common stock in connection with exercise of stock options and warrants and vesting of restricted stock units | (2,579) | (2,579) | |||||||||
Issuance of common stock in connection with exercise of stock options and warrants and vesting of restricted stock units (in shares) | 666,144 | ||||||||||
Issuance of common stock, net of offering costs | $ 103,348 | $ 103,348 | |||||||||
Issuance of common stock, net of offering costs (in shares) | 6,306,271 | ||||||||||
Unrealized gain (loss) on marketable securities | (35) | (35) | |||||||||
Foreign currency translation adjustment | (11) | (11) | |||||||||
Stock-based compensation expense | 2,675 | 2,675 | |||||||||
Net loss | (28,754) | (28,754) | |||||||||
Balance at end of period at Mar. 31, 2021 | 645,730 | (140) | (533,296) | 112,294 | |||||||
Balance at end of period (in shares) at Mar. 31, 2021 | 52,081,729 | ||||||||||
Balance at beginning of period at Dec. 31, 2020 | 542,286 | (94) | (504,542) | 37,650 | |||||||
Balance at beginning of period (in shares) at Dec. 31, 2020 | 45,109,314 | ||||||||||
Increase (Decrease) in Stockholders' Equity | |||||||||||
Net loss | (68,061) | ||||||||||
Balance at end of period at Sep. 30, 2021 | $ 1 | 789,186 | (3) | (572,603) | 216,581 | ||||||
Balance at end of period (in shares) at Sep. 30, 2021 | 61,226,750 | ||||||||||
Balance at beginning of period at Mar. 31, 2021 | 645,730 | (140) | (533,296) | 112,294 | |||||||
Balance at beginning of period (in shares) at Mar. 31, 2021 | 52,081,729 | ||||||||||
Increase (Decrease) in Stockholders' Equity | |||||||||||
Issuance of common stock in connection with exercise of stock options and warrants and vesting of restricted stock units | 1,041 | 1,041 | |||||||||
Issuance of common stock in connection with exercise of stock options and warrants and vesting of restricted stock units (in shares) | 1,024,666 | ||||||||||
Issuance of common stock, net of offering costs | $ 1 | $ 134,851 | $ 134,852 | ||||||||
Issuance of common stock, net of offering costs (in shares) | 8,098,592 | ||||||||||
Unrealized gain (loss) on marketable securities | 25 | 25 | |||||||||
Foreign currency translation adjustment | (69) | (69) | |||||||||
Stock-based compensation expense | 3,833 | 3,833 | |||||||||
Net loss | (18,161) | (18,161) | |||||||||
Balance at end of period at Jun. 30, 2021 | $ 1 | 785,455 | (184) | (551,457) | 233,815 | ||||||
Balance at end of period (in shares) at Jun. 30, 2021 | 61,204,987 | ||||||||||
Increase (Decrease) in Stockholders' Equity | |||||||||||
Issuance of common stock in connection with exercise of stock options and warrants and vesting of restricted stock units | 29 | 29 | |||||||||
Issuance of common stock in connection with exercise of stock options and warrants and vesting of restricted stock units (in shares) | 21,763 | ||||||||||
Unrealized gain (loss) on marketable securities | 5 | 5 | |||||||||
Foreign currency translation adjustment | 176 | 176 | |||||||||
Stock-based compensation expense | 3,702 | 3,702 | |||||||||
Net loss | (21,146) | (21,146) | |||||||||
Balance at end of period at Sep. 30, 2021 | $ 1 | 789,186 | (3) | (572,603) | 216,581 | ||||||
Balance at end of period (in shares) at Sep. 30, 2021 | 61,226,750 | ||||||||||
Balance at beginning of period at Dec. 31, 2021 | $ 1 | 792,971 | (224) | (595,407) | $ 197,341 | ||||||
Balance at beginning of period (in shares) at Dec. 31, 2021 | 61,228,446 | 61,228,446 | |||||||||
Increase (Decrease) in Stockholders' Equity | |||||||||||
Issuance of common stock in connection with exercise of stock options and warrants and vesting of restricted stock units | 49 | $ 49 | |||||||||
Issuance of common stock in connection with exercise of stock options and warrants and vesting of restricted stock units (in shares) | 509,037 | ||||||||||
Unrealized gain (loss) on marketable securities | (748) | (748) | |||||||||
Stock-based compensation expense | 2,346 | 2,346 | |||||||||
Net loss | (18,789) | (18,789) | |||||||||
Balance at end of period at Mar. 31, 2022 | $ 1 | 795,366 | (972) | (614,196) | 180,199 | ||||||
Balance at end of period (in shares) at Mar. 31, 2022 | 61,737,483 | ||||||||||
Balance at beginning of period at Dec. 31, 2021 | $ 1 | 792,971 | (224) | (595,407) | $ 197,341 | ||||||
Balance at beginning of period (in shares) at Dec. 31, 2021 | 61,228,446 | 61,228,446 | |||||||||
Increase (Decrease) in Stockholders' Equity | |||||||||||
Net loss | $ (59,273) | ||||||||||
Balance at end of period at Sep. 30, 2022 | $ 1 | 875,982 | (1,465) | (654,680) | $ 219,838 | ||||||
Balance at end of period (in shares) at Sep. 30, 2022 | 66,679,641 | 66,679,641 | |||||||||
Balance at beginning of period at Mar. 31, 2022 | $ 1 | 795,366 | (972) | (614,196) | $ 180,199 | ||||||
Balance at beginning of period (in shares) at Mar. 31, 2022 | 61,737,483 | ||||||||||
Increase (Decrease) in Stockholders' Equity | |||||||||||
Issuance of common stock in connection with exercise of stock options and warrants and vesting of restricted stock units | 88 | 88 | |||||||||
Issuance of common stock in connection with exercise of stock options and warrants and vesting of restricted stock units (in shares) | 91,388 | ||||||||||
Issuance of common stock, net of offering costs | $ 72,659 | $ 72,659 | |||||||||
Issuance of common stock, net of offering costs (in shares) | 4,838,709 | ||||||||||
Unrealized gain (loss) on marketable securities | (354) | (354) | |||||||||
Stock-based compensation expense | 3,692 | 3,692 | |||||||||
Net loss | (20,532) | (20,532) | |||||||||
Balance at end of period at Jun. 30, 2022 | $ 1 | 871,805 | (1,326) | (634,728) | 235,752 | ||||||
Balance at end of period (in shares) at Jun. 30, 2022 | 66,667,580 | ||||||||||
Increase (Decrease) in Stockholders' Equity | |||||||||||
Issuance of common stock in connection with exercise of stock options and warrants and vesting of restricted stock units | (11) | (11) | |||||||||
Issuance of common stock in connection with exercise of stock options and warrants and vesting of restricted stock units (in shares) | 12,061 | ||||||||||
Unrealized gain (loss) on marketable securities | (139) | (139) | |||||||||
Stock-based compensation expense | 4,188 | 4,188 | |||||||||
Net loss | (19,952) | (19,952) | |||||||||
Balance at end of period at Sep. 30, 2022 | $ 1 | $ 875,982 | $ (1,465) | $ (654,680) | $ 219,838 | ||||||
Balance at end of period (in shares) at Sep. 30, 2022 | 66,679,641 | 66,679,641 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Mar. 31, 2021 | |
Public Offering | |||
Offering costs netted against proceeds | $ 8,899 | $ 7,011 | |
At The Market Offering | |||
Offering costs netted against proceeds | $ 2,341 |
CONDENSED CONSOLIDATED STATEM_5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Cash flows from operating activities: | ||
Net loss | $ (59,273) | $ (68,061) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 607 | 726 |
Stock-based compensation expense | 10,226 | 10,209 |
Revaluation of contingent consideration | (2,400) | 22,139 |
Loss on extinguishment of debt | 752 | |
Changes in operating assets and liabilities: | ||
Accounts receivable | 26 | (39) |
Prepaid expenses and other assets | 3,408 | (8) |
Accounts payable | (2,319) | 1,293 |
Accrued expenses | 1,273 | (2,070) |
Net cash used in operating activities | (48,452) | (35,059) |
Cash flows from investing activities: | ||
Purchases of property and equipment | (500) | (108) |
Purchases of marketable securities | (118,729) | (199,862) |
Proceeds from sales and maturities of marketable securities | 129,155 | 41,514 |
Net cash provided by (used in) investing activities | 9,926 | (158,456) |
Cash flows from financing activities: | ||
Repayment of debt | (11,483) | |
Payments of employee withholding taxes related to restricted stock unit award vesting | (34) | (3,122) |
Proceeds from exercise of employee stock options and the issuance of stock | 120 | 1,459 |
Net cash provided by financing activities | 72,830 | 225,054 |
Net increase in cash and cash equivalents | 34,304 | 31,539 |
Cash and cash equivalents at beginning of period | 27,349 | 22,063 |
Cash and cash equivalents at end of period | 61,653 | 53,602 |
Supplemental disclosure of non-cash investing and financing activities: | ||
Additions to property and equipment included in accounts payable | 4 | |
Public Offering | ||
Cash flows from financing activities: | ||
Proceeds from issuance of common stock, net of issuance costs | $ 238,200 | |
At The Market Offering | ||
Cash flows from financing activities: | ||
Proceeds from issuance of common stock, net of issuance costs | $ 72,744 |
Organization and Nature of Busi
Organization and Nature of Business | 9 Months Ended |
Sep. 30, 2022 | |
Organization and Nature of Business | |
Organization and Nature of Business | 1. Organization and Nature of Business Overview Aclaris Therapeutics, Inc. was incorporated under the laws of the State of Delaware in 2012. In 2015, Aclaris Therapeutics International Limited (“ATIL”) was established under the laws of the United Kingdom as a wholly-owned subsidiary of Aclaris Therapeutics, Inc. In 2017, Confluence Life Sciences, Inc. (now known as Aclaris Life Sciences, Inc.) (“Confluence”) was acquired by Aclaris Therapeutics, Inc. and became a wholly-owned subsidiary thereof. Aclaris Therapeutics, Inc., ATIL and Confluence are referred to collectively as the “Company.” The Company is a clinical-stage biopharmaceutical company focused on developing novel drug candidates for immuno-inflammatory diseases. In addition to developing its novel drug candidates, the Company is pursuing strategic alternatives, including identifying and consummating transactions with third-party partners, to further develop, obtain marketing approval for and/or commercialize its novel drug candidates. Liquidity The Company’s condensed consolidated financial statements have been prepared on the basis of continuity of operations, realization of assets and the satisfaction of liabilities in the ordinary course of business. As of September 30, 2022, the Company had cash, cash equivalents and marketable securities of $248.1 million and an accumulated deficit of $654.7 million. Since inception, the Company has incurred net losses and negative cash flows from its operations. Prior to the acquisition of Confluence, the Company had never generated revenue. There can be no assurance that profitable operations will ever be achieved, and, if achieved, will be sustained on a continuing basis. In addition, development activities, including clinical and preclinical testing of the Company’s drug candidates, will require significant additional financing. The future viability of the Company is dependent on its ability to successfully develop its drug candidates and to generate revenue from identifying and consummating transactions with third-party partners to further develop, obtain marketing approval for and/or commercialize its development assets or to raise additional capital to finance its operations. The Company will require additional capital to complete the clinical development of zunsemetinib (ATI-450), ATI-1777 and ATI-2138, to develop its preclinical compounds, and to support its discovery efforts. Additional funds may not be available on a timely basis, on commercially acceptable terms, or at all, and such funds, if raised, may not be sufficient to enable the Company to continue to implement its long-term business strategy. The Company’s ability to raise additional capital may be adversely impacted by the potential worsening of global economic conditions, including inflationary pressures, and the recent disruptions to, and volatility in, the credit and financial markets in the United States and worldwide resulting from the COVID-19 pandemic and geopolitical tensions. If the Company is unable to raise sufficient additional capital or generate revenue from transactions with potential third-party partners for the development and/or commercialization of its drug candidates, it may need to substantially curtail planned operations. The Company’s failure to raise capital as and when needed could have a negative impact on its financial condition and ability to pursue its business strategies. 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 that its condensed consolidated financial statements are issued. As of the report date, the Company does not believe that substantial doubt exists about its ability to continue as a going concern. The Company believes its existing cash, cash equivalents and marketable securities are sufficient to fund its operating and capital expenditure requirements for a period greater than 12 months from the date of issuance of these condensed consolidated financial statements. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2022 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Unaudited Interim Financial Information The accompanying condensed consolidated balance sheet as of September 30, 2022, the condensed consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, 2022 and 2021, the condensed consolidated statement of stockholders’ equity for the three and nine months ended September 30, 2022 and 2021, and the condensed consolidated statements of cash flows for the nine months ended September 30, 2022 and 2021 are unaudited. The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited annual financial statements contained in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on February 24, 2022 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, 2022, the results of its operations and comprehensive loss for the three and nine months ended September 30, 2022 and 2021, its changes in stockholders’ equity for the three and nine months ended September 30, 2022 and 2021 and its cash flows for the nine months ended September 30, 2022 and 2021. The condensed consolidated balance sheet data as of December 31, 2021 was derived from audited financial statements but does not include all disclosures required by generally accepted accounting principles in the United States (“GAAP”). The financial data and other information disclosed in these notes related to the three and nine months ended September 30, 2022 and 2021 are unaudited. The results for the three and nine months ended September 30, 2022 are not necessarily indicative of results to be expected for the year ending December 31, 2022, any other interim periods, or any future year or period. The unaudited interim financial statements of the Company included herein have been prepared, pursuant to the rules and regulations of the SEC. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted from this report, as is permitted by such rules and regulations. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto for the year ended December 31, 2021 included in the Company’s Annual Report on Form 10-K filed with the SEC on February 24, 2022. Basis of Presentation The accompanying condensed consolidated financial statements have been prepared in conformity with GAAP. The condensed consolidated financial statements of the Company include the accounts of the operating parent company, Aclaris Therapeutics, Inc., and its wholly-owned subsidiaries, ATIL and Confluence. All intercompany transactions have been eliminated. Based upon the Company’s revenue, the Company believes that gross profit does not provide a meaningful measure of profitability and, therefore, has not included a line item for gross profit on the condensed consolidated statement of operations. Use of Estimates The preparation of 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 financial statements and the reported amounts of expenses during the reporting periods. Significant estimates and assumptions reflected in these financial statements include, but are not limited to, contingent consideration and the valuation of stock-based awards. Estimates are periodically reviewed in light of changes in circumstances, facts and experience. As of the date of issuance of these financial statements, the Company is not aware of any specific event or circumstance that would require an update to its estimates, assumptions and judgments or revise the carrying value of its assets or liabilities. Actual results could differ from the Company’s estimates. Reclassifications Certain prior year amounts have been reclassified to conform to the current year financial statement presentation. Significant Accounting Policies The Company’s significant accounting policies are disclosed in the audited consolidated financial statements for the year ended December 31, 2021 included in the Company’s Annual Report on Form 10-K filed with the SEC on February 24, 2022. Except as set forth below, there have been no changes to the Company’s significant accounting policies from those disclosed in the annual report. Contingent Consideration The Company initially recorded a contingent consideration liability at fair value on the date of acquisition related to future potential payments resulting from the acquisition of Confluence based upon significant unobservable inputs including the achievement of development, regulatory and commercial milestones, as well as estimated future sales levels and the discount rates applied to calculate the present value of the potential payments. Significant judgement was involved in determining the appropriateness of these assumptions. These assumptions are considered Level 3 inputs. Revaluation of the contingent consideration liability can result from changes to one or more of these assumptions. The Company evaluates the fair value estimate of the contingent consideration liability on a quarterly basis with changes, if any, recorded as income or expense in the condensed consolidated statement of operations. The fair value of contingent consideration is estimated using a probability-weighted expected payment model for regulatory milestone payments and a Monte Carlo simulation model for commercial milestone and royalty payments and then applying a risk-adjusted discount rate to calculate the present value of the potential payments. Significant assumptions used in the Company’s estimates include the probability of achieving regulatory milestones and commencing commercialization, which are based on an asset’s current stage of development and a review of existing clinical data. Probability of success on the year of each potential payment . Revenue Recognition The Company accounts for revenue in accordance with Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers. Under ASC Topic 606, revenue is recognized when a customer obtains control of promised goods or services in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. To determine revenue recognition in accordance with ASC Topic 606, the Company performs the following five steps: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) performance obligations are satisfied. At contract inception, the Company assesses the goods or services promised within a contract with a customer to identify the performance obligations, and to determine if they are distinct. The Company recognizes the revenue that is allocated to each distinct performance obligation when (or as) that performance obligation is satisfied. The Company only recognizes revenue when collection of the consideration it is entitled to under a contract with a customer is probable. Licensing Revenue Licenses of Intellectual Property Milestone and Royalty Payments – The Company considers any future potential milestones and sales-based royalties to be variable consideration. The Company recognizes royalties and commercial milestone payments as revenue when the sales occur or the milestones are achieved pursuant to the sales-based royalty exception under ASC 606 - 10-55-65. The Company recognizes revenue from regulatory milestones when the regulatory milestone is achieved. |
Fair Value of Financial Assets
Fair Value of Financial Assets and Liabilities | 9 Months Ended |
Sep. 30, 2022 | |
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 fair value measurements of the Company’s financial assets and liabilities which are measured at fair value on a recurring and non-recurring basis, and indicate the level of the fair value hierarchy utilized to determine such fair values: September 30, 2022 (In thousands) Level 1 Level 2 Level 3 Total Assets: Cash equivalents $ 46,713 $ — $ — $ 46,713 Marketable securities — 186,409 — 186,409 Total assets $ 46,713 $ 186,409 $ — $ 233,122 Liabilities: Contingent consideration $ — $ — $ 26,000 $ 26,000 Total liabilities $ — $ — $ 26,000 $ 26,000 December 31, 2021 (In thousands) Level 1 Level 2 Level 3 Total Assets: Cash equivalents $ 21,678 $ — $ — $ 21,678 Marketable securities — 198,307 — 198,307 Total assets $ 21,678 $ 198,307 $ — $ 219,985 Liabilities: Contingent consideration $ — $ — $ 28,400 $ 28,400 Total liabilities $ — $ — $ 28,400 $ 28,400 As of September 30, 2022 and December 31, 2021, the Company’s cash equivalents consisted of a money market fund, which was valued based upon Level 1 inputs. The Company’s marketable securities as of September 30, 2022 and December 31, 2021 consisted of commercial paper, and asset-backed, U.S. government, foreign government agency and corporate debt securities, which were all valued based upon Level 2 inputs. Marketable securities also included U.S. government agency debt securities as of September 30, 2022, which were valued based upon Level 2 inputs. In determining the fair value of its Level 2 investments, the Company relies on quoted prices for identical securities in markets that are not active. These quoted prices are obtained by the Company with the assistance of a third-party pricing service based on available trade, bid and other observable market data for identical securities. The Company compares the quoted prices obtained from the third-party pricing service to other available independent pricing information to validate the reasonableness of the quoted prices provided. The Company evaluates whether adjustments to third-party pricing are necessary and, historically, the Company has not made adjustments to quoted prices obtained from the third-party pricing service. During the three and nine months ended September 30, 2022 and 2021, there were no transfers into or out of Level 3. The overall $2.4 million decrease in the fair value of the contingent consideration liability during the nine months ended September 30, 2022 was mainly due to higher discount rates, resulting from higher risk-free rates and wider credit spreads, being applied to potential payments relative to prior periods. The decrease was partially offset by an increase in the contingent consideration liability as a result of the impact of the passage of time and other valuation model assumption modifications. As of September 30, 2022 and December 31, 2021, the fair value of the Company’s available-for-sale marketable securities by type of security was as follows: September 30, 2022 Gross Gross Amortized Unrealized Unrealized Fair (In thousands) Cost Gain Loss Value Marketable securities: Corporate debt securities $ 47,270 $ — $ (472) $ 46,798 Commercial paper 59,659 — — 59,659 Asset-backed debt securities 21,366 — (176) 21,190 Foreign government agency debt securities 4,039 — (27) 4,012 U.S. government and agency debt securities 55,542 — (792) 54,750 Total marketable securities $ 187,876 $ — $ (1,467) $ 186,409 December 31, 2021 Gross Gross Amortized Unrealized Unrealized Fair (In thousands) Cost Gain Loss Value Marketable securities: Corporate debt securities (1) $ 40,993 $ 6 $ (50) $ 40,949 Commercial paper 71,837 — — 71,837 Asset-backed debt securities 36,166 — (43) 36,123 Foreign government agency debt securities 4,073 — (13) 4,060 U.S. government debt securities (2) 45,465 — (127) 45,338 Total marketable securities $ 198,534 $ 6 $ (233) $ 198,307 (1) (2) |
Property and Equipment, Net
Property and Equipment, Net | 9 Months Ended |
Sep. 30, 2022 | |
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, (In thousands) 2022 2021 Computer equipment $ 1,381 $ 1,380 Lab equipment 1,886 1,605 Furniture and fixtures 620 620 Leasehold improvements 1,123 1,123 Property and equipment, gross 5,010 4,728 Accumulated depreciation (3,865) (3,393) Property and equipment, net $ 1,145 $ 1,335 Depreciation expense was $0.2 million for each of the three months ended September 30, 2022 and 2021, and $0.6 million for each of the nine months ended September 30, 2022 and 2021. |
Intangible Assets
Intangible Assets | 9 Months Ended |
Sep. 30, 2022 | |
Intangible Assets | |
Intangible Assets | 5. Intangible Assets Intangible assets consisted of the following: Gross Cost Accumulated Amortization Remaining September 30, December 31, September 30, December 31, (In thousands, except years) Life (years) 2022 2021 2022 2021 Other intangible assets 4.8 $ 751 $ 751 $ 388 $ 332 In-process research and development n/a 6,629 6,629 — — Total intangible assets $ 7,380 $ 7,380 $ 388 $ 332 Amortization expense was $19 thousand for each of the three months ended September 30, 2022 and 2021, and $56 thousand for each of the nine months ended September 30, 2022 and 2021. As of September 30, 2022, estimated future amortization expense was as follows: Year Ending (In thousands) December 31, 2022 $ 18 2023 75 2024 75 2025 75 2026 75 Thereafter 45 Total $ 363 |
Accrued Expenses
Accrued Expenses | 9 Months Ended |
Sep. 30, 2022 | |
Accrued Expenses | |
Accrued Expenses | 6. Accrued Expenses Accrued expenses consisted of the following: September 30, December 31, (In thousands) 2022 2021 Employee compensation expenses $ 3,830 $ 4,389 Research and development expenses 3,587 1,278 Litigation settlements (see Note 16) — 2,650 Other 1,737 1,734 Total accrued expenses $ 9,154 $ 10,051 |
Debt
Debt | 9 Months Ended |
Sep. 30, 2022 | |
Debt | |
Debt | 7. Debt Loan and Security Agreement – Silicon Valley Bank In March 2020, the Company entered into a Loan and Security Agreement with Silicon Valley Bank (“SVB”). The Loan and Security Agreement provided for $11.0 million in term loans, of which the Company borrowed the entire amount on March 30, 2020. In connection with the Loan and Security Agreement, the Company issued to SVB a warrant to purchase up to 460,251 shares of common stock (the “Warrant”) (see Note 8). The proceeds of the Loan and Security Agreement were allocated to the term loan and Warrant using a relative fair value approach. In July 2021, the Company repaid in full the $11.0 million that was outstanding under the Loan and Security Agreement, together with all accrued and unpaid interest and fees as of the payoff date, for a total payment of $11.7 million. |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2022 | |
Stockholders' Equity | |
Stockholders' Equity | 8. Stockholders’ Equity Preferred Stock As of September 30, 2022 and December 31, 2021, the Company’s amended and restated certificate of incorporation authorized the Company to issue 10,000,000 shares of undesignated preferred stock. There were no shares of preferred stock outstanding as of September 30, 2022 or December 31, 2021. Common Stock As of September 30, 2022 and December 31, 2021, the Company’s amended and restated certificate of incorporation authorized the Company to issue 100,000,000 shares of $0.00001 par value common stock. There were 66,679,641 and 61,228,446 shares of common stock issued outstanding Each share of common stock entitles the holder to one vote on all matters submitted to a vote of the Company’s stockholders. Common stockholders are entitled to receive dividends, as may be declared by the board of directors, if any, subject to any preferential dividend rights of any series of preferred stock that may be outstanding. No dividends have been declared through September 30, 2022. Warrants The Warrant issued to SVB in March 2020 had an initial exercise price of $0.956 per share, subject to adjustment as provided in the Warrant. The Warrant became immediately exercisable in full upon the funding of the term loan facility. The Company assigned a fair value of $0.4 million to the Warrant using a Black-Scholes valuation methodology, and also concluded that the Warrant was indexed to its own stock and therefore classified the Warrant as an equity instrument. In January 2021, SVB net exercised the Warrant in full, and the Company issued 388,119 shares of common stock to SVB. January 2021 Public Offering In January 2021, the Company closed a public offering in which it sold 6,306,271 shares of common stock at a price to the public of $17.50 per share, for aggregate gross proceeds of $110.4 million. The Company paid underwriting discounts and commissions of $6.6 million, and also incurred expenses of $0.4 million in connection with the offering. As a result, the net offering proceeds received by the Company, after deducting underwriting discounts, commissions and offering expenses, were $103.3 million. June 2021 Public Offering In June 2021, the Company closed a public offering in which it sold 8,098,592 shares of common stock at a price to the public of $17.75 per share, for aggregate gross proceeds of $143.8 million. The Company paid underwriting discounts and commissions of $8.6 million, and also incurred expenses of $0.3 million in connection with the offering. As a result, the net offering proceeds received by the Company, after deducting underwriting discounts, commissions and offering expenses, were $134.9 million. Sales of Common Stock Pursuant to At-The-Market Facility In April 2022, the Company sold 4,838,709 shares of its common stock at a weighted average price per share of $15.50 , for aggregate gross proceeds of $75.0 million, pursuant to a sales agreement with SVB Securities LLC and Cantor Fitzgerald & Co., as sales agents, dated May 20, 2021. The Company paid selling commissions and other fees of $2.2 million in connection with the sale. |
Stock-Based Awards
Stock-Based Awards | 9 Months Ended |
Sep. 30, 2022 | |
Stock-Based Awards | |
Stock-Based Awards | 9. Stock-Based Awards 2015 Equity Incentive Plan In September 2015, the Company’s board of directors adopted the 2015 Equity Incentive Plan (the “2015 Plan”), and the Company’s stockholders approved the 2015 Plan. The 2015 Plan became effective in connection with the Company’s initial public offering in October 2015. Beginning at the time the 2015 Plan became effective, no further grants may be made under the Company’s 2012 Equity Compensation Plan, as amended and restated (the “2012 Plan”). The 2015 Plan provides for the grant of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock awards, restricted stock unit (“RSU”) awards, performance stock awards, cash-based awards and other stock-based awards. The number of shares initially reserved for issuance under the 2015 Plan was 1,643,872 shares of common stock. The number of shares of common stock that may be issued under the 2015 Plan will automatically increase on January 1 of each year ending on January 1, 2025, in an amount equal to the lesser of (i) 4.0% of the shares of the Company’s common stock outstanding on December 31st of the preceding calendar year or (ii) an amount determined by the Company’s board of directors. The shares of common stock underlying any awards that expire, are otherwise terminated, settled in cash or repurchased by the Company under the 2015 Plan and the 2012 Plan will be added back to the shares of common stock available for issuance under the 2015 Plan. As of January 1, 2022, the number of shares of common stock that may be issued under the 2015 Plan was automatically increased by 2,449,137 shares. As of September 30, 2022, 3,019,432 shares remained available for grant under the 2015 Plan. The Company had 4,343,087 stock options and 1,585,184 RSUs outstanding as of September 30, 2022 under the 2015 Plan. 2017 Inducement Plan In July 2017, the Company’s board of directors adopted the 2017 Inducement Plan (the “2017 Inducement Plan”). The 2017 Inducement Plan is a non-stockholder approved stock plan adopted pursuant to the “inducement exception” provided under Nasdaq listing rules. The Company had 370,600 stock options outstanding as of September 30, 2022 under the 2017 Inducement Plan. All shares of common stock that were eligible for issuance under the 2017 Inducement Plan after October 1, 2018, including any shares underlying any awards that expire or are otherwise terminated, reacquired to satisfy tax withholding obligations, settled in cash or repurchased by the Company in the future that would have been eligible for re-issuance under the 2017 Inducement Plan, were retired. 2012 Equity Compensation Plan Upon the 2015 Plan becoming effective, no further grants can be made under the 2012 Plan. The Company granted stock options to purchase a total of 1,140,524 shares under the 2012 Plan, of which 473,977 were outstanding as of September 30, 2022. Stock options granted under the 2012 Plan expire after ten years. Stock Option Valuation The weighted average assumptions the Company used to estimate the fair value of stock options granted during the nine months ended September 30, 2022 and 2021 were as follows: Nine Months Ended September 30, 2022 2021 Risk-free interest rate 2.07 % 0.90 % Expected term (in years) 6.2 6.2 Expected volatility 77.95 % 76.60 % Expected dividend yield 0 % 0 % The Company recognizes compensation expense for awards over their vesting period. Compensation expense for awards includes the impact of forfeitures in the period when they occur. Stock Options The following table summarizes stock option activity for the nine months ended September 30, 2022: Weighted Weighted Average Average Remaining Aggregate Number Exercise Contractual Intrinsic (In thousands, except share and per share data and years) of Shares Price Term Value (in years) Outstanding as of December 31, 2021 3,792,450 $ 17.50 6.8 $ 13,710 Granted 2,334,750 14.27 Exercised (85,672) 1.40 1,115 Forfeited and cancelled (853,864) 18.70 Outstanding as of September 30, 2022 5,187,664 $ 16.11 7.4 $ 15,376 Options vested and expected to vest as of September 30, 2022 5,187,664 $ 16.11 7.4 $ 15,376 Options exercisable as of September 30, 2022 2,307,984 $ 17.35 5.2 $ 9,345 The weighted average grant date fair value of stock options granted during the nine months ended September 30, 2022 was $9.83 per share. Restricted Stock Units The following table summarizes RSU activity for the nine months ended September 30, 2022: Weighted Average Grant Date Aggregate Number Fair Value Intrinsic (In thousands, except share and per share data) of Shares Per Share Value Outstanding as of December 31, 2021 1,496,946 $ 12.75 Granted 867,707 14.33 Vested (526,706) 11.55 $ 7,839 Forfeited and cancelled (252,763) 12.30 Outstanding as of September 30, 2022 1,585,184 $ 14.09 Stock-Based Compensation Stock-based compensation expense included in total costs and expenses on the condensed consolidated statement of operations included the following: Three Months Ended Nine Months Ended September 30, September 30, (In thousands) 2022 2021 2022 2021 Cost of revenue $ 307 $ 206 $ 837 $ 787 Research and development 1,400 939 2,228 2,969 General and administrative 2,481 2,557 7,161 6,453 Total stock-based compensation expense $ 4,188 $ 3,702 $ 10,226 $ 10,209 As of September 30, 2022, the Company had unrecognized stock-based compensation expense for stock options and RSUs of $25.5 million and $18.3 million, respectively, which is expected to be recognized over weighted average periods of 3.1 years and 2.9 years, respectively. |
Net Loss per Share
Net Loss per Share | 9 Months Ended |
Sep. 30, 2022 | |
Net Loss per Share | |
Net Loss per Share | 10. Net Loss per Share Basic and diluted net loss per share is summarized in the following table: Three Months Ended Nine Months Ended September 30, September 30, (In thousands, except for share and per share data) 2022 2021 2022 2021 Numerator: Net loss $ (19,952) $ (21,146) $ (59,273) $ (68,061) Denominator: Weighted average shares of common stock outstanding, basic and diluted 66,675,337 61,219,321 64,718,008 55,215,037 Net loss per share, basic and diluted $ (0.30) $ (0.35) $ (0.92) $ (1.23) The Company’s potentially dilutive securities, which include stock options and RSUs, have been excluded from the computation of diluted net loss per share since the effect would be to reduce the net loss per share. Therefore, the weighted average number of shares of common stock outstanding used to calculate both basic and diluted net loss per share is the same. The following table presents potential shares of common stock excluded from the calculation of diluted net loss per share for the three and nine months ended September 30, 2022 and 2021. All share amounts presented in the table below represent the total number outstanding as of September 30, 2022 and 2021. September 30, 2022 2021 Options to purchase common stock 5,187,664 3,743,725 Restricted stock unit awards 1,585,184 1,465,963 Total potential shares of common stock 6,772,848 5,209,688 |
Leases
Leases | 9 Months Ended |
Sep. 30, 2022 | |
Leases | |
Leases | 11. Leases Operating Leases Agreements for Office and Laboratory Space The Company has a sublease agreement pursuant to which it subleases 33,019 square feet of office space for its headquarters in Wayne, Pennsylvania. The sublease has a term that runs through October 2023. If for any reason the lease between the landlord and sublandlord is terminated or expires prior to October 2023, the Company’s sublease will automatically terminate. In December 2020, the Company entered into a sub-sublease agreement under which it sub-subleased 8,115 square feet to a third party. The sub-sublease term runs concurrently with the original sublease agreement. In February 2019, the Company entered into a sublease agreement with a third party for 20,433 square feet of office and laboratory space in St. Louis, Missouri. The lease commenced in June 2019 and has a term that runs through June 2029. Supplemental balance sheet information related to operating leases is as follows: September 30, December 31, (In thousands) 2022 2021 Operating Leases: Gross cost $ 5,240 $ 5,240 Accumulated amortization (2,364) (1,803) Other assets $ 2,876 $ 3,437 Current portion of lease liabilities $ 766 $ 693 Other liabilities 1,617 2,151 Total operating lease liabilities $ 2,383 $ 2,844 Amortization expense related to operating lease right-of-use assets and accretion of operating lease liabilities totaled $0.3 million for each of the three months ended September 30, 2022 and 2021 and $0.8 million for each of the nine months ended September 30, 2022 and 2021. |
Agreements Related to Intellect
Agreements Related to Intellectual Property | 9 Months Ended |
Sep. 30, 2022 | |
Agreements Related to Intellectual Property | |
Agreements Related to Intellectual Property | 12. Agreements Related to Intellectual Property Asset Purchase Agreement – EPI Health, LLC In October 2019, the Company sold RHOFADE (oxymetazoline hydrochloride) cream, 1% (“RHOFADE”) to EPI Health, LLC (“EPI Health”) pursuant to an asset purchase agreement. EPI Health agreed to pay the Company a high single-digit royalty calculated as a percentage of net sales on a country-by-country basis until the date that the patent rights related to RHOFADE have expired or, if later, ten years from the date of the first commercial sale of RHOFADE in such country. The Company recorded royalty income under the asset purchase agreement of $0.3 million and $0.2 million during the three months ended September 30, 2022 and 2021, respectively, and $0.8 million and $0.6 million during the nine months ended September 30, 2022 and 2021, respectively. Royalty income is included in licensing revenue on the condensed consolidated statements of operations and comprehensive loss. EPI Health has also agreed to pay the Company potential sales milestone payments of up to $20.0 million in the aggregate upon the achievement of specified levels of net sales of products covered by the asset purchase agreement, and 25% of any upfront, license, milestone, maintenance or fixed payment received by EPI Health in connection with any license or sublicense of the assets transferred in the disposition in any territory outside of the United States, subject to specified exceptions. Agreement and Plan of Merger – Confluence The Company entered into an Agreement and Plan of Merger, pursuant to which it acquired Confluence (the “Confluence Agreement”). Under the Confluence Agreement, the Company has agreed to pay the former Confluence equity holders aggregate remaining contingent consideration of up to $75.0 million based upon the achievement of specified future regulatory and commercial milestones set forth in the Confluence Agreement. In addition, the Company has agreed to pay the former Confluence equity holders future royalty payments calculated as a low single-digit percentage of annual net sales, subject to specified reductions, limitations and other adjustments, until the date that all of the patent rights for that product have expired, as determined on a country-by-country and product-by-product basis or, in specified circumstances, ten years from the first commercial sale of such product. In addition to the payments described above, if the Company sells, licenses or transfers any of the intellectual property acquired from Confluence pursuant to the Confluence Agreement to a third party, the Company will be obligated to pay the former Confluence equity holders a portion of any consideration received from such sale, license or transfer in specified circumstances. As of September 30, 2022 and December 31, 2021, the balance of the Company’s contingent consideration liability was $26.0 million and $28.4 million, respectively (see Note 3). License Agreement – Eli Lilly and Company In August 2022, the Company entered into a non-exclusive patent license agreement with Eli Lilly and Company (“Lilly”). Under the license agreement, the Company granted Lilly non-exclusive rights under certain patents and patent applications that the Company exclusively licenses from a third party. The patents and patent applications relate to the use of baricitinib, Lilly’s JAK inhibitor, to treat alopecia areata. Under the license agreement, Lilly has agreed to pay the Company an upfront payment, regulatory and commercial milestone payments, anniversary payments, and a low single-digit royalty calculated as a percentage of Lilly’s net sales of baricitinib for the treatment of alopecia areata. The Company has separate contractual obligations under which the Company has agreed to pay to third parties an amount equal to any regulatory and commercial milestone payments it receives under the Lilly license agreement, as well as a portion of the upfront consideration and a portion of the royalties it may receive under the license agreement. The Company accounts for the Lilly license agreement under ASC Topic 606 and identified the non-exclusive license as a distinct performance obligation, since Lilly can benefit from the license on its own by developing and commercializing the underlying product using its own resources. The Company determined that the license was a right to use the intellectual property and that the Company had provided all necessary information to Lilly to benefit from the license. During the three months ended September 30, 2022, the Company received $17.6 million from Lilly, a portion of which represented payments for regulatory and commercial milestones that were deemed to have been achieved as of the execution of the license agreement. The Company remains eligible to receive future milestone payments, all of which will be paid by the Company to third parties following receipt as described above. The Company recognized the upfront payment and milestone payments received during the three months ended September 30, 2022, and will recognize future anniversary payments, milestone payments and royalties that may be received from Lilly under the license agreement, as licensing revenue on its condensed consolidated statements of operations and comprehensive loss. During each of the three and nine months ended September 30, 2022, the Company recorded amounts paid to third parties of $7.3 million, and will record amounts it pays out to third parties under its contractual obligations in the future, as licensing expense on its condensed consolidated statements of operations and comprehensive loss. The Company considers any future potential milestones and the sales-based royalty to be variable consideration. The Company expects that the royalties and commercial milestone payments will be recognized as revenue when the sales occur or the milestones are achieved pursuant to the sales-based royalty exception under ASC Subtopic 606-10-55-65 because the license is the predominant item to which the royalty or sales-based milestones relate. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2022 | |
Income Taxes | |
Income Taxes | 13. Income Taxes The Company did not record a federal or state income tax benefit for losses incurred during the three and nine months ended September 30, 2022 and 2021. The Company concluded that it is more likely than not that its deferred tax assets will not be realized which resulted in recording a full valuation allowance during those periods. |
Discontinued Operations
Discontinued Operations | 9 Months Ended |
Sep. 30, 2022 | |
Discontinued Operations. | |
Discontinued Operations | 14. Discontinued Operations The following table presents information related to liabilities reported as discontinued operations in the Company’s condensed consolidated balance sheet: September 30, December 31, (In thousands) 2022 2021 Accrued expenses $ 2,202 $ 2,202 Discontinued operations - current liabilities $ 2,202 $ 2,202 |
Segment Information
Segment Information | 9 Months Ended |
Sep. 30, 2022 | |
Segment Information | |
Segment Information | 15. Segment Information The Company has two reportable segments, therapeutics and contract research. The therapeutics segment is focused on identifying and developing innovative therapies to address significant unmet needs for immuno-inflammatory diseases. The contract research segment earns revenue from the provision of laboratory services. Contract research revenue is generally evidenced by contracts with clients which are on an agreed upon fixed-price, fee-for-service basis. Corporate and other includes general and administrative expenses as well as eliminations of intercompany transactions. The Company does not report balance sheet information by segment since it is not reviewed by the chief operating decision maker, and all of the Company’s tangible assets are held in the United States. The Company’s results of operations by segment for the three and nine months ended September 30, 2022 and 2021 are summarized in the tables below: (In thousands) Contract Corporate Total Three Months Ended September 30, 2022 Therapeutics Research and Other Company Total revenue $ 17,928 $ 4,299 $ (3,209) $ 19,018 Cost of revenue — 3,925 (3,002) 923 Research and development expense 23,863 — (207) 23,656 General and administrative expense — 875 4,938 5,813 Licensing expense 7,300 — — 7,300 Revaluation of contingent consideration 2,200 — — 2,200 Loss from operations $ (15,435) $ (501) $ (4,938) $ (20,874) (In thousands) Contract Corporate Total Three Months Ended September 30, 2021 Therapeutics Research and Other Company Total revenue $ 244 $ 3,335 $ (1,920) $ 1,659 Cost of revenue — 2,912 (1,813) 1,099 Research and development expense 14,083 — (107) 13,976 General and administrative expense — 837 5,142 5,979 Revaluation of contingent consideration 900 — — 900 Loss from operations $ (14,739) $ (414) $ (5,142) $ (20,295) (In thousands) Contract Corporate Total Nine Months Ended September 30, 2022 Therapeutics Research and Other Company Total revenue $ 18,469 $ 12,795 $ (9,265) $ 21,999 Cost of revenue — 11,823 (8,677) 3,146 Research and development expense 57,329 — (588) 56,741 General and administrative expense — 2,570 15,417 17,987 Licensing expense 7,300 — — 7,300 Revaluation of contingent consideration (2,400) — — (2,400) Loss from operations $ (43,760) $ (1,598) $ (15,417) $ (60,775) (In thousands) Contract Corporate Total Nine Months Ended September 30, 2021 Therapeutics Research and Other Company Total revenue $ 704 $ 10,016 $ (5,460) $ 5,260 Cost of revenue — 8,705 (5,141) 3,564 Research and development expense 30,030 — (319) 29,711 General and administrative expense — 2,344 14,332 16,676 Revaluation of contingent consideration 22,139 — — 22,139 Loss from operations $ (51,465) $ (1,033) $ (14,332) $ (66,830) Intersegment Revenue Revenue for the contract research segment included $3.2 million and $1.9 million for services performed on behalf of the therapeutics segment for the three months ended September 30, 2022 and 2021, respectively, and $9.3 million and $5.5 million for the nine months ended September 30, 2022 and 2021, respectively. All intersegment revenue has been eliminated in the Company’s condensed consolidated statement of operations. |
Legal Proceedings
Legal Proceedings | 9 Months Ended |
Sep. 30, 2022 | |
Legal Proceedings | |
Legal Proceedings | 16. Legal Proceedings Securities Class Action On July 30, 2019, plaintiff Linda Rosi (“Rosi”) filed a putative class action complaint captioned Rosi v. Aclaris Therapeutics, Inc., et al. On September 5, 2019, an additional plaintiff, Robert Fulcher (“Fulcher”), filed a substantially identical putative class action complaint captioned Fulcher v. Aclaris Therapeutics, Inc., et al. On November 6, 2019, the court consolidated the Rosi and Fulcher actions (together, the “Consolidated Securities Action”) and appointed Fulcher “lead plaintiff” for the putative class. On January 24, 2020, Fulcher filed a consolidated amended complaint in the Consolidated Securities Action, naming two additional executive officers as defendants, extending the putative class period to August 12, 2019, and adding allegations concerning, among other things, alleged statements and omissions throughout the putative class period concerning ESKATA’s risks, tolerability and effectiveness. The defendants filed a motion to dismiss the consolidated amended complaint on April 17, 2020. Following briefing and oral argument on February 25, 2021, the motion was granted in part and denied in part on March 29, 2021, and the issues in dispute significantly narrowed. The defendants filed an answer to the remaining aspects of the consolidated amended complaint on April 19, 2021. In June 2021, the defendants and the plaintiffs agreed to settle the Consolidated Securities Action. The parties signed and filed a settlement agreement in July 2021. On August 18, 2021, the court preliminarily approved the proposed settlement, directed that notice be given to the putative class and scheduled the final approval settlement hearing for November 30, 2021. Notice was subsequently given to the putative class. The court granted final approval of the settlement on December 9, 2021. The Company’s financial obligation under the settlement was $2.7 million, which was within the limits of its insurance coverage. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2022 | |
Summary of Significant Accounting Policies | |
Unaudited Interim Financial Information | Unaudited Interim Financial Information The accompanying condensed consolidated balance sheet as of September 30, 2022, the condensed consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, 2022 and 2021, the condensed consolidated statement of stockholders’ equity for the three and nine months ended September 30, 2022 and 2021, and the condensed consolidated statements of cash flows for the nine months ended September 30, 2022 and 2021 are unaudited. The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited annual financial statements contained in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on February 24, 2022 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, 2022, the results of its operations and comprehensive loss for the three and nine months ended September 30, 2022 and 2021, its changes in stockholders’ equity for the three and nine months ended September 30, 2022 and 2021 and its cash flows for the nine months ended September 30, 2022 and 2021. The condensed consolidated balance sheet data as of December 31, 2021 was derived from audited financial statements but does not include all disclosures required by generally accepted accounting principles in the United States (“GAAP”). The financial data and other information disclosed in these notes related to the three and nine months ended September 30, 2022 and 2021 are unaudited. The results for the three and nine months ended September 30, 2022 are not necessarily indicative of results to be expected for the year ending December 31, 2022, any other interim periods, or any future year or period. The unaudited interim financial statements of the Company included herein have been prepared, pursuant to the rules and regulations of the SEC. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted from this report, as is permitted by such rules and regulations. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto for the year ended December 31, 2021 included in the Company’s Annual Report on Form 10-K filed with the SEC on February 24, 2022. |
Basis of Presentation | Basis of Presentation The accompanying condensed consolidated financial statements have been prepared in conformity with GAAP. The condensed consolidated financial statements of the Company include the accounts of the operating parent company, Aclaris Therapeutics, Inc., and its wholly-owned subsidiaries, ATIL and Confluence. All intercompany transactions have been eliminated. Based upon the Company’s revenue, the Company believes that gross profit does not provide a meaningful measure of profitability and, therefore, has not included a line item for gross profit on the condensed consolidated statement of operations. |
Use of Estimates | Use of Estimates The preparation of 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 financial statements and the reported amounts of expenses during the reporting periods. Significant estimates and assumptions reflected in these financial statements include, but are not limited to, contingent consideration and the valuation of stock-based awards. Estimates are periodically reviewed in light of changes in circumstances, facts and experience. As of the date of issuance of these financial statements, the Company is not aware of any specific event or circumstance that would require an update to its estimates, assumptions and judgments or revise the carrying value of its assets or liabilities. Actual results could differ from the Company’s estimates. |
Reclassifications | Reclassifications Certain prior year amounts have been reclassified to conform to the current year financial statement presentation. |
Significant Accounting Policies | Significant Accounting Policies The Company’s significant accounting policies are disclosed in the audited consolidated financial statements for the year ended December 31, 2021 included in the Company’s Annual Report on Form 10-K filed with the SEC on February 24, 2022. Except as set forth below, there have been no changes to the Company’s significant accounting policies from those disclosed in the annual report. |
Contingent Consideration | Contingent Consideration The Company initially recorded a contingent consideration liability at fair value on the date of acquisition related to future potential payments resulting from the acquisition of Confluence based upon significant unobservable inputs including the achievement of development, regulatory and commercial milestones, as well as estimated future sales levels and the discount rates applied to calculate the present value of the potential payments. Significant judgement was involved in determining the appropriateness of these assumptions. These assumptions are considered Level 3 inputs. Revaluation of the contingent consideration liability can result from changes to one or more of these assumptions. The Company evaluates the fair value estimate of the contingent consideration liability on a quarterly basis with changes, if any, recorded as income or expense in the condensed consolidated statement of operations. The fair value of contingent consideration is estimated using a probability-weighted expected payment model for regulatory milestone payments and a Monte Carlo simulation model for commercial milestone and royalty payments and then applying a risk-adjusted discount rate to calculate the present value of the potential payments. Significant assumptions used in the Company’s estimates include the probability of achieving regulatory milestones and commencing commercialization, which are based on an asset’s current stage of development and a review of existing clinical data. Probability of success on the year of each potential payment . |
Revenue Recognition | Revenue Recognition The Company accounts for revenue in accordance with Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers. Under ASC Topic 606, revenue is recognized when a customer obtains control of promised goods or services in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. To determine revenue recognition in accordance with ASC Topic 606, the Company performs the following five steps: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) performance obligations are satisfied. At contract inception, the Company assesses the goods or services promised within a contract with a customer to identify the performance obligations, and to determine if they are distinct. The Company recognizes the revenue that is allocated to each distinct performance obligation when (or as) that performance obligation is satisfied. The Company only recognizes revenue when collection of the consideration it is entitled to under a contract with a customer is probable. Licensing Revenue Licenses of Intellectual Property Milestone and Royalty Payments – The Company considers any future potential milestones and sales-based royalties to be variable consideration. The Company recognizes royalties and commercial milestone payments as revenue when the sales occur or the milestones are achieved pursuant to the sales-based royalty exception under ASC 606 - 10-55-65. The Company recognizes revenue from regulatory milestones when the regulatory milestone is achieved. |
Fair Value of Financial Asset_2
Fair Value of Financial Assets and Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Fair Value of Financial Assets and Liabilities | |
Schedule of assets and liabilities measured at fair value on a recurring basis | September 30, 2022 (In thousands) Level 1 Level 2 Level 3 Total Assets: Cash equivalents $ 46,713 $ — $ — $ 46,713 Marketable securities — 186,409 — 186,409 Total assets $ 46,713 $ 186,409 $ — $ 233,122 Liabilities: Contingent consideration $ — $ — $ 26,000 $ 26,000 Total liabilities $ — $ — $ 26,000 $ 26,000 December 31, 2021 (In thousands) Level 1 Level 2 Level 3 Total Assets: Cash equivalents $ 21,678 $ — $ — $ 21,678 Marketable securities — 198,307 — 198,307 Total assets $ 21,678 $ 198,307 $ — $ 219,985 Liabilities: Contingent consideration $ — $ — $ 28,400 $ 28,400 Total liabilities $ — $ — $ 28,400 $ 28,400 |
Schedule of the fair value of available for sale marketable securities | September 30, 2022 Gross Gross Amortized Unrealized Unrealized Fair (In thousands) Cost Gain Loss Value Marketable securities: Corporate debt securities $ 47,270 $ — $ (472) $ 46,798 Commercial paper 59,659 — — 59,659 Asset-backed debt securities 21,366 — (176) 21,190 Foreign government agency debt securities 4,039 — (27) 4,012 U.S. government and agency debt securities 55,542 — (792) 54,750 Total marketable securities $ 187,876 $ — $ (1,467) $ 186,409 December 31, 2021 Gross Gross Amortized Unrealized Unrealized Fair (In thousands) Cost Gain Loss Value Marketable securities: Corporate debt securities (1) $ 40,993 $ 6 $ (50) $ 40,949 Commercial paper 71,837 — — 71,837 Asset-backed debt securities 36,166 — (43) 36,123 Foreign government agency debt securities 4,073 — (13) 4,060 U.S. government debt securities (2) 45,465 — (127) 45,338 Total marketable securities $ 198,534 $ 6 $ (233) $ 198,307 (1) (2) |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Property and Equipment, Net | |
Schedule of property and equipment, net | September 30, December 31, (In thousands) 2022 2021 Computer equipment $ 1,381 $ 1,380 Lab equipment 1,886 1,605 Furniture and fixtures 620 620 Leasehold improvements 1,123 1,123 Property and equipment, gross 5,010 4,728 Accumulated depreciation (3,865) (3,393) Property and equipment, net $ 1,145 $ 1,335 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Intangible Assets | |
Schedule of intangible assets | Gross Cost Accumulated Amortization Remaining September 30, December 31, September 30, December 31, (In thousands, except years) Life (years) 2022 2021 2022 2021 Other intangible assets 4.8 $ 751 $ 751 $ 388 $ 332 In-process research and development n/a 6,629 6,629 — — Total intangible assets $ 7,380 $ 7,380 $ 388 $ 332 |
Schedule of estimated future amortization expenses | Year Ending (In thousands) December 31, 2022 $ 18 2023 75 2024 75 2025 75 2026 75 Thereafter 45 Total $ 363 |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Accrued Expenses | |
Schedule of accrued expenses | September 30, December 31, (In thousands) 2022 2021 Employee compensation expenses $ 3,830 $ 4,389 Research and development expenses 3,587 1,278 Litigation settlements (see Note 16) — 2,650 Other 1,737 1,734 Total accrued expenses $ 9,154 $ 10,051 |
Stock-Based Awards (Tables)
Stock-Based Awards (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Stock-Based Awards | |
Assumptions used to determine fair value of stock options granted | Nine Months Ended September 30, 2022 2021 Risk-free interest rate 2.07 % 0.90 % Expected term (in years) 6.2 6.2 Expected volatility 77.95 % 76.60 % Expected dividend yield 0 % 0 % |
Summary of stock option activity | Weighted Weighted Average Average Remaining Aggregate Number Exercise Contractual Intrinsic (In thousands, except share and per share data and years) of Shares Price Term Value (in years) Outstanding as of December 31, 2021 3,792,450 $ 17.50 6.8 $ 13,710 Granted 2,334,750 14.27 Exercised (85,672) 1.40 1,115 Forfeited and cancelled (853,864) 18.70 Outstanding as of September 30, 2022 5,187,664 $ 16.11 7.4 $ 15,376 Options vested and expected to vest as of September 30, 2022 5,187,664 $ 16.11 7.4 $ 15,376 Options exercisable as of September 30, 2022 2,307,984 $ 17.35 5.2 $ 9,345 |
Summary of restricted stock units activity | Weighted Average Grant Date Aggregate Number Fair Value Intrinsic (In thousands, except share and per share data) of Shares Per Share Value Outstanding as of December 31, 2021 1,496,946 $ 12.75 Granted 867,707 14.33 Vested (526,706) 11.55 $ 7,839 Forfeited and cancelled (252,763) 12.30 Outstanding as of September 30, 2022 1,585,184 $ 14.09 |
Stock-based compensation expense | Three Months Ended Nine Months Ended September 30, September 30, (In thousands) 2022 2021 2022 2021 Cost of revenue $ 307 $ 206 $ 837 $ 787 Research and development 1,400 939 2,228 2,969 General and administrative 2,481 2,557 7,161 6,453 Total stock-based compensation expense $ 4,188 $ 3,702 $ 10,226 $ 10,209 |
Net Loss per Share (Tables)
Net Loss per Share (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Net Loss per Share | |
Basic and diluted net loss per share | Three Months Ended Nine Months Ended September 30, September 30, (In thousands, except for share and per share data) 2022 2021 2022 2021 Numerator: Net loss $ (19,952) $ (21,146) $ (59,273) $ (68,061) Denominator: Weighted average shares of common stock outstanding, basic and diluted 66,675,337 61,219,321 64,718,008 55,215,037 Net loss per share, basic and diluted $ (0.30) $ (0.35) $ (0.92) $ (1.23) |
Potential common shares excluded from the calculation of diluted net loss per share attributable to common stockholders | September 30, 2022 2021 Options to purchase common stock 5,187,664 3,743,725 Restricted stock unit awards 1,585,184 1,465,963 Total potential shares of common stock 6,772,848 5,209,688 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Leases | |
Schedule of supplemental balance sheet information related to operating leases | September 30, December 31, (In thousands) 2022 2021 Operating Leases: Gross cost $ 5,240 $ 5,240 Accumulated amortization (2,364) (1,803) Other assets $ 2,876 $ 3,437 Current portion of lease liabilities $ 766 $ 693 Other liabilities 1,617 2,151 Total operating lease liabilities $ 2,383 $ 2,844 |
Discontinued Operations (Tables
Discontinued Operations (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Discontinued Operations. | |
Schedule of discontinued operations | September 30, December 31, (In thousands) 2022 2021 Accrued expenses $ 2,202 $ 2,202 Discontinued operations - current liabilities $ 2,202 $ 2,202 |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Segment Information | |
Summary of results of operations by segment | (In thousands) Contract Corporate Total Three Months Ended September 30, 2022 Therapeutics Research and Other Company Total revenue $ 17,928 $ 4,299 $ (3,209) $ 19,018 Cost of revenue — 3,925 (3,002) 923 Research and development expense 23,863 — (207) 23,656 General and administrative expense — 875 4,938 5,813 Licensing expense 7,300 — — 7,300 Revaluation of contingent consideration 2,200 — — 2,200 Loss from operations $ (15,435) $ (501) $ (4,938) $ (20,874) (In thousands) Contract Corporate Total Three Months Ended September 30, 2021 Therapeutics Research and Other Company Total revenue $ 244 $ 3,335 $ (1,920) $ 1,659 Cost of revenue — 2,912 (1,813) 1,099 Research and development expense 14,083 — (107) 13,976 General and administrative expense — 837 5,142 5,979 Revaluation of contingent consideration 900 — — 900 Loss from operations $ (14,739) $ (414) $ (5,142) $ (20,295) (In thousands) Contract Corporate Total Nine Months Ended September 30, 2022 Therapeutics Research and Other Company Total revenue $ 18,469 $ 12,795 $ (9,265) $ 21,999 Cost of revenue — 11,823 (8,677) 3,146 Research and development expense 57,329 — (588) 56,741 General and administrative expense — 2,570 15,417 17,987 Licensing expense 7,300 — — 7,300 Revaluation of contingent consideration (2,400) — — (2,400) Loss from operations $ (43,760) $ (1,598) $ (15,417) $ (60,775) (In thousands) Contract Corporate Total Nine Months Ended September 30, 2021 Therapeutics Research and Other Company Total revenue $ 704 $ 10,016 $ (5,460) $ 5,260 Cost of revenue — 8,705 (5,141) 3,564 Research and development expense 30,030 — (319) 29,711 General and administrative expense — 2,344 14,332 16,676 Revaluation of contingent consideration 22,139 — — 22,139 Loss from operations $ (51,465) $ (1,033) $ (14,332) $ (66,830) |
Organization and Nature of Bu_2
Organization and Nature of Business (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Organization and Nature of Business | ||
Cash, cash equivalents and marketable securities | $ 248,100 | |
Accumulated deficit | $ 654,680 | $ 595,407 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details) | 9 Months Ended |
Sep. 30, 2022 | |
Minimum | |
Contingent Consideration [Abstract] | |
Probability of success assumptions | 10% |
Discount range | 10.90% |
Maximum | |
Contingent Consideration [Abstract] | |
Probability of success assumptions | 40% |
Discount range | 11.60% |
Fair Value of Financial Asset_3
Fair Value of Financial Assets and Liabilities (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Assets: | |||||
Marketable securities | $ 186,409 | $ 186,409 | $ 198,307 | ||
Liabilities: | |||||
Transfers into or out of Level 3 | 0 | $ 0 | 0 | $ 0 | |
Revaluation of contingent consideration | 2,200 | $ 900 | (2,400) | $ 22,139 | |
Confluence | |||||
Liabilities: | |||||
Revaluation of contingent consideration | 2,400 | ||||
Recurring | |||||
Assets: | |||||
Cash equivalents | 46,713 | 46,713 | 21,678 | ||
Marketable securities | 186,409 | 186,409 | 198,307 | ||
Total assets measured at fair value | 233,122 | 233,122 | 219,985 | ||
Liabilities: | |||||
Contingent consideration | 26,000 | 26,000 | 28,400 | ||
Total liabilities measured at fair value | 26,000 | 26,000 | 28,400 | ||
Recurring | Level 1 | |||||
Assets: | |||||
Cash equivalents | 46,713 | 46,713 | 21,678 | ||
Total assets measured at fair value | 46,713 | 46,713 | 21,678 | ||
Recurring | Level 2 | |||||
Assets: | |||||
Marketable securities | 186,409 | 186,409 | 198,307 | ||
Total assets measured at fair value | 186,409 | 186,409 | 198,307 | ||
Recurring | Level 3 | |||||
Liabilities: | |||||
Contingent consideration | 26,000 | 26,000 | 28,400 | ||
Total liabilities measured at fair value | $ 26,000 | $ 26,000 | $ 28,400 |
Fair Value of Financial Asset_4
Fair Value of Financial Assets and Liabilities - By Type (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Marketable securities: | ||
Amortized Cost | $ 187,876 | $ 198,534 |
Gross Unrealized Gain | 6 | |
Gross Unrealized Loss | (1,467) | (233) |
Fair Value | 186,409 | 198,307 |
Corporate debt securities | ||
Marketable securities: | ||
Amortized Cost | 47,270 | 40,993 |
Gross Unrealized Gain | 6 | |
Gross Unrealized Loss | (472) | (50) |
Fair Value | 46,798 | 40,949 |
Debt securities, maturity dates between one and five years | 9,200 | |
Commercial paper | ||
Marketable securities: | ||
Amortized Cost | 59,659 | 71,837 |
Fair Value | 59,659 | 71,837 |
Asset-backed securities | ||
Marketable securities: | ||
Amortized Cost | 21,366 | 36,166 |
Gross Unrealized Loss | (176) | (43) |
Fair Value | 21,190 | 36,123 |
Foreign Government Agency Debt Securities | ||
Marketable securities: | ||
Amortized Cost | 4,039 | 4,073 |
Gross Unrealized Loss | (27) | (13) |
Fair Value | 4,012 | 4,060 |
U.S. government and agency debt securities | ||
Marketable securities: | ||
Amortized Cost | 55,542 | 45,465 |
Gross Unrealized Loss | (792) | (127) |
Fair Value | $ 54,750 | 45,338 |
Debt securities, maturity dates between one and five years | $ 25,000 |
Property and Equipment, Net (De
Property and Equipment, Net (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Property and Equipment, Net | |||||
Property and equipment, gross | $ 5,010 | $ 5,010 | $ 4,728 | ||
Accumulated depreciation | (3,865) | (3,865) | (3,393) | ||
Property and equipment, net | 1,145 | 1,145 | 1,335 | ||
Depreciation expense | 200 | $ 200 | 600 | $ 600 | |
Computer equipment | |||||
Property and Equipment, Net | |||||
Property and equipment, gross | 1,381 | 1,381 | 1,380 | ||
Lab equipment | |||||
Property and Equipment, Net | |||||
Property and equipment, gross | 1,886 | 1,886 | 1,605 | ||
Furniture and fixtures | |||||
Property and Equipment, Net | |||||
Property and equipment, gross | 620 | 620 | 620 | ||
Leasehold improvements | |||||
Property and Equipment, Net | |||||
Property and equipment, gross | $ 1,123 | $ 1,123 | $ 1,123 |
Intangible Assets (Details)
Intangible Assets (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2022 | Dec. 31, 2021 | |
Definite-lived intangible assets | ||
Accumulated Amortization | $ 388 | $ 332 |
Intangible assets, net | ||
Gross cost | 7,380 | 7,380 |
In-process research and development | ||
Indefinite-lived intangible assets | ||
Gross cost | $ 6,629 | 6,629 |
Other intangible assets | ||
Finite Lived And Indefinite Lived Intangible Assets By Major Class [Line Items] | ||
Remaining life | 4 years 9 months 18 days | |
Definite-lived intangible assets | ||
Gross Cost | $ 751 | 751 |
Accumulated Amortization | $ 388 | $ 332 |
Intangible Assets - Future Amor
Intangible Assets - Future Amortization Expenses (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Amortization expense | $ 19 | $ 19 | $ 56,000 | $ 56,000 |
Future amortization expenses | ||||
2022 | 18 | 18 | ||
2023 | 75 | 75 | ||
2024 | 75 | 75 | ||
2025 | 75 | 75 | ||
2026 | 75 | 75 | ||
Thereafter | 45 | 45 | ||
Total | $ 363 | $ 363 |
Accrued Expenses (Details)
Accrued Expenses (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Accrued Expenses | ||
Employee compensation expenses | $ 3,830 | $ 4,389 |
Research and development expenses | 3,587 | 1,278 |
Litigation settlements (see Note 16) | 2,650 | |
Other | 1,737 | 1,734 |
Total accrued expenses | $ 9,154 | $ 10,051 |
Debt (Details)
Debt (Details) - USD ($) $ in Millions | 1 Months Ended | ||
Jul. 31, 2021 | Jan. 31, 2021 | Mar. 31, 2020 | |
SVB | |||
Debt Instrument [Line Items] | |||
Common stock warrants | 388,119 | 460,251 | |
Term Loan Facility | |||
Debt Instrument [Line Items] | |||
Loan borrowed | $ 11 | ||
Term Loan Facility | SVB | |||
Debt Instrument [Line Items] | |||
Loan borrowed | $ 11 | ||
Loan repaid | $ 11.7 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) $ / shares in Units, $ in Thousands | 9 Months Ended | |||
Sep. 30, 2022 USD ($) Vote $ / shares shares | Dec. 31, 2021 $ / shares shares | Jan. 31, 2021 shares | Mar. 31, 2020 USD ($) $ / shares shares | |
Class of Stock [Line Items] | ||||
Preferred stock, shares authorized | 10,000,000 | 10,000,000 | ||
Preferred stock, shares outstanding | 0 | 0 | ||
Common stock, shares authorized | 100,000,000 | 100,000,000 | ||
Common stock, par value (in dollars per share) | $ / shares | $ 0.00001 | $ 0.00001 | ||
Common stock, shares issued | 66,679,641 | 61,228,446 | ||
Common stock, shares outstanding | 66,679,641 | 61,228,446 | ||
Dividend declared | $ | $ 0 | |||
Number of votes per share | Vote | 1 | |||
SVB | ||||
Class of Stock [Line Items] | ||||
Common stock warrants | 388,119 | 460,251 | ||
Initial exercise price | $ / shares | $ 0.956 | |||
Fair value of warrants | $ | $ 400 |
Stockholders' Equity - Other Of
Stockholders' Equity - Other Offerings and ATM Facility (Details) - USD ($) $ / shares in Units, $ in Millions | 1 Months Ended | ||
Apr. 30, 2022 | Jun. 30, 2021 | Jan. 31, 2021 | |
January 2021 Public Offering | |||
Subsidiary, Sale of Stock [Line Items] | |||
Common stock, sold | 6,306,271 | ||
Common stock, price per share | $ 17.50 | ||
Aggregate gross proceeds | $ 110.4 | ||
Underwriting discounts and commissions | 6.6 | ||
Payments of stock offering costs | 0.4 | ||
Proceeds from common stock | $ 103.3 | ||
June 2021 Public Offering | |||
Subsidiary, Sale of Stock [Line Items] | |||
Common stock, sold | 8,098,592 | ||
Common stock, price per share | $ 17.75 | ||
Aggregate gross proceeds | $ 143.8 | ||
Underwriting discounts and commissions | 8.6 | ||
Payments of stock offering costs | 0.3 | ||
Proceeds from common stock | $ 134.9 | ||
At The Market Offering | Silicon Valley Bank Securities LLC and Cantor Fitzgerald & Co. | |||
Subsidiary, Sale of Stock [Line Items] | |||
Common stock, sold | 4,838,709 | ||
Common stock, price per share | $ 15.50 | ||
Payments of stock offering costs | $ 2.2 | ||
Proceeds from common stock | $ 75 |
Stock-Based Awards (Details)
Stock-Based Awards (Details) - shares | 9 Months Ended | 44 Months Ended | ||||
Jan. 01, 2022 | Sep. 30, 2022 | Sep. 30, 2021 | Sep. 14, 2015 | Dec. 31, 2021 | Sep. 30, 2015 | |
Stock-based awards | ||||||
Options granted (in shares) | 2,334,750 | |||||
Options outstanding | 5,187,664 | 3,792,450 | ||||
Stock Option Valuation | ||||||
Risk-free interest rate (as a percent) | 2.07% | 0.90% | ||||
Expected term (in years) | 6 years 2 months 12 days | 6 years 2 months 12 days | ||||
Expected volatility (as a percent) | 77.95% | 76.60% | ||||
Expected dividend yield (as a percent) | 0% | 0% | ||||
2017 Inducement Plan | ||||||
Stock-based awards | ||||||
Options outstanding | 370,600 | |||||
2015 Equity Incentive Plan | ||||||
Stock-based awards | ||||||
Number of shares authorized | 1,643,872 | |||||
Number of shares available for grant | 3,019,432 | |||||
Percentage increase to shares available for grant from common outstanding as of preceding December 31 (as a percent) | 4% | |||||
Additional shares available | 2,449,137 | |||||
Options outstanding | 4,343,087 | |||||
2015 Equity Incentive Plan | Restricted stock unit awards | ||||||
Stock-based awards | ||||||
Number of shares outstanding | 1,585,184 | |||||
2012 Equity Compensation Plan | ||||||
Stock-based awards | ||||||
Number of shares available for grant | 0 | |||||
Options granted (in shares) | 1,140,524 | |||||
Options outstanding | 473,977 | |||||
Term of award (in years) | 10 years |
Stock-Based Awards - Option Act
Stock-Based Awards - Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Options, Number of Shares | ||
Number of Shares, beginning balance | 3,792,450 | |
Number of Shares, Granted | 2,334,750 | |
Number of Shares, Exercised | (85,672) | |
Number of Shares, Forfeited and cancelled | (853,864) | |
Number of Shares, ending balance | 5,187,664 | 3,792,450 |
Number of Shares, Options vested and expected to vest | 5,187,664 | |
Number of Shares, Options exercisable | 2,307,984 | |
Options, Weighted Average Exercise Price | ||
Weighted Average Exercise Price, beginning balance (in dollars per share) | $ 17.50 | |
Weighted Average Exercise Price, Granted (in dollars per share) | 14.27 | |
Weighted Average Exercise Price, Exercised (in dollars per share) | 1.40 | |
Weighted Average Exercise Price, Forfeited and cancelled (in dollars per share) | 18.70 | |
Weighted Average Exercise Price, ending balance (in dollars per share) | 16.11 | $ 17.50 |
Weighted Average Exercise Price, Options vested and expected to vest (in dollars per share) | 16.11 | |
Weighted Average Exercise Price, Options exercisable (in dollars per share) | $ 17.35 | |
Options, Weighted Average Remaining Contractual Term | ||
Weighted Average Remaining Contractual Term (in years) | 7 years 4 months 24 days | 6 years 9 months 18 days |
Weighted Average Remaining Contractual Term, Options vested and expected to vest (in years) | 7 years 4 months 24 days | |
Weighted Average Remaining Contractual Term, Options exercisable (in years) | 5 years 2 months 12 days | |
Aggregate Intrinsic Value | ||
Aggregate Intrinsic Value | $ 15,376 | $ 13,710 |
Aggregate Intrinsic Value, Exercised | 1,115 | |
Aggregate Intrinsic Value, Options vested and expected to vest | 15,376 | |
Aggregate Intrinsic Value, Options exercisable | $ 9,345 | |
Weighted average grant-date fair value of stock options granted (in dollars per share) | $ 9.83 |
Stock-Based Awards - RSUs (Deta
Stock-Based Awards - RSUs (Details) - Restricted stock unit awards $ / shares in Units, $ in Thousands | 9 Months Ended |
Sep. 30, 2022 USD ($) $ / shares shares | |
RSU, Number of Units | |
Units outstanding, beginning of period | shares | 1,496,946 |
Granted | shares | 867,707 |
Vested | shares | (526,706) |
Forfeited and cancelled | shares | (252,763) |
Units outstanding, end of period | shares | 1,585,184 |
RSU, Weighted Average Grant Date Fair Value Per Unit | |
Weighted average grant date fair value, beginning balance (in dollars per share) | $ / shares | $ 12.75 |
Weighted average grant date fair value, granted (in dollars per share) | $ / shares | 14.33 |
Weighted average grant date fair value, vested (in dollars per share) | $ / shares | 11.55 |
Weighted average grant date fair value, forfeited and cancelled (in dollars per share) | $ / shares | 12.30 |
Weighted average grant date fair value, ending balance (in dollars per share) | $ / shares | $ 14.09 |
Aggregate intrinsic value of awards that vested during the period | $ | $ 7,839 |
Stock-Based Awards - Compensati
Stock-Based Awards - Compensation (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Stock-based compensation expense | ||||
Stock-based compensation expense | $ 4,188 | $ 3,702 | $ 10,226 | $ 10,209 |
Unrecognized stock-based compensation expense, options | 25,500 | 25,500 | ||
Unrecognized stock-based compensation expense, RSUs | 18,300 | 18,300 | ||
Cost of revenue. | ||||
Stock-based compensation expense | ||||
Stock-based compensation expense | 307 | 206 | 837 | 787 |
Research and development | ||||
Stock-based compensation expense | ||||
Stock-based compensation expense | 1,400 | 939 | 2,228 | 2,969 |
General and administrative | ||||
Stock-based compensation expense | ||||
Stock-based compensation expense | $ 2,481 | $ 2,557 | $ 7,161 | $ 6,453 |
Options to purchase common stock | ||||
Stock-based compensation expense | ||||
Weighted average recognition period unrecognized stock-based compensation cost (in years) | 3 years 1 month 6 days | |||
Restricted stock unit awards | ||||
Stock-based compensation expense | ||||
Weighted average recognition period unrecognized stock-based compensation cost (in years) | 2 years 10 months 24 days |
Net Loss per Share (Details)
Net Loss per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Numerator: | ||||||||
Net loss | $ (19,952) | $ (20,532) | $ (18,789) | $ (21,146) | $ (18,161) | $ (28,754) | $ (59,273) | $ (68,061) |
Denominator: | ||||||||
Weighted average common shares outstanding, basic | 66,675,337 | 61,219,321 | 64,718,008 | 55,215,037 | ||||
Weighted average common shares outstanding, diluted | 66,675,337 | 61,219,321 | 64,718,008 | 55,215,037 | ||||
Net loss per share, basic | $ (0.30) | $ (0.35) | $ (0.92) | $ (1.23) | ||||
Net loss per share, diluted | $ (0.30) | $ (0.35) | $ (0.92) | $ (1.23) |
Net Loss per Share - Anti-dilut
Net Loss per Share - Anti-dilution (Details) - shares | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Potential common shares excluded from the calculation of diluted net loss per share attributable to common stockholders | 6,772,848 | 5,209,688 |
Options to purchase common stock | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Potential common shares excluded from the calculation of diluted net loss per share attributable to common stockholders | 5,187,664 | 3,743,725 |
Restricted stock unit awards | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Potential common shares excluded from the calculation of diluted net loss per share attributable to common stockholders | 1,585,184 | 1,465,963 |
Leases (Details)
Leases (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||||
Dec. 31, 2020 ft² | Sep. 30, 2022 USD ($) ft² | Sep. 30, 2021 USD ($) | Sep. 30, 2022 USD ($) ft² | Sep. 30, 2021 USD ($) | Dec. 31, 2021 USD ($) | Feb. 28, 2019 ft² | |
Lessee, Lease, Description [Line Items] | |||||||
Area leased, sublease agreement | ft² | 33,019 | 33,019 | 20,433 | ||||
Sub-subleased | ft² | 8,115 | ||||||
Amortization expense | $ 300 | $ 300 | $ 800 | $ 800 | |||
Operating Leases: | |||||||
Accumulated amortization | 388 | 388 | $ 332 | ||||
Other assets | 6,992 | 6,992 | 7,048 | ||||
Current portion of lease liabilities | 766 | 766 | 693 | ||||
Other liabilities | $ 1,617 | $ 1,617 | $ 2,151 | ||||
Financial position | Other liabilities | Other liabilities | Other liabilities | ||||
Total operating lease liabilities | $ 2,383 | $ 2,383 | $ 2,844 | ||||
Operating Leases | |||||||
Operating Leases: | |||||||
Gross cost | 5,240 | 5,240 | 5,240 | ||||
Accumulated amortization | 2,364 | 2,364 | 1,803 | ||||
Other assets | $ 2,876 | $ 2,876 | $ 3,437 |
Agreements Related to Intelle_2
Agreements Related to Intellectual Property (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
Oct. 31, 2019 | Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Agreements Related to Intellectual Property | ||||||
Revenue, Net | $ 19,018 | $ 1,659 | $ 21,999 | $ 5,260 | ||
Contingent consideration | 26,000 | 26,000 | $ 28,400 | |||
Licensing Expenses | 7,300 | $ 7,300 | ||||
Agreement and Plan of Merger | ||||||
Agreements Related to Intellectual Property | ||||||
Term of agreement | 10 years | |||||
Additional contingent consideration based on milestones, maximum, per Agreement | 75,000 | $ 75,000 | ||||
Patent License Agreement | Eli Lilly and Company [Member] | ||||||
Agreements Related to Intellectual Property | ||||||
Regulatory and commercial milestones | 17,600 | |||||
Licensing Expenses | 7,300 | 7,300 | ||||
APA | ||||||
Agreements Related to Intellectual Property | ||||||
Potential milestone payments | 20,000 | 20,000 | ||||
Percentage of upfront and license fees | 25% | |||||
Term of agreement | 10 years | |||||
APA | Royalty | ||||||
Agreements Related to Intellectual Property | ||||||
Revenue, Net | $ 300 | $ 200 | $ 800 | $ 600 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Income Taxes | ||||
Federal income tax benefit | $ 0 | $ 0 | $ 0 | $ 0 |
State income tax benefit | $ 0 | $ 0 | $ 0 | $ 0 |
Discontinued Operations - Asset
Discontinued Operations - Assets and Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Disposal Group, Including Discontinued Operation, Balance Sheet Disclosures [Abstract] | ||
Accrued expenses | $ 2,202 | $ 2,202 |
Discontinued operations - current liabilities | $ 2,202 | $ 2,202 |
Segment Information (Details)
Segment Information (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 USD ($) | Sep. 30, 2021 USD ($) | Sep. 30, 2022 USD ($) segment | Sep. 30, 2021 USD ($) | |
Segment Reporting Information [Line Items] | ||||
Number of reportable segments | segment | 2 | |||
Total revenue | $ 19,018 | $ 1,659 | $ 21,999 | $ 5,260 |
Cost of revenue | 923 | 1,099 | 3,146 | 3,564 |
Research and development expense | 23,656 | 13,976 | 56,741 | 29,711 |
General and administrative expense | 5,813 | 5,979 | 17,987 | 16,676 |
Licensing expense | 7,300 | 7,300 | ||
Revaluation of contingent consideration | 2,200 | 900 | (2,400) | 22,139 |
Loss from operations | (20,874) | (20,295) | (60,775) | (66,830) |
Dermatology Therapeutics Segment | ||||
Segment Reporting Information [Line Items] | ||||
Total revenue | 17,928 | 244 | 18,469 | 704 |
Research and development expense | 23,863 | 14,083 | 57,329 | 30,030 |
Licensing expense | 7,300 | 7,300 | ||
Revaluation of contingent consideration | 2,200 | 900 | (2,400) | 22,139 |
Loss from operations | (15,435) | (14,739) | (43,760) | (51,465) |
Contract Research Segment | ||||
Segment Reporting Information [Line Items] | ||||
Total revenue | 4,299 | 3,335 | 12,795 | 10,016 |
Cost of revenue | 3,925 | 2,912 | 11,823 | 8,705 |
General and administrative expense | 875 | 837 | 2,570 | 2,344 |
Loss from operations | (501) | (414) | (1,598) | (1,033) |
Corporate and Other | ||||
Segment Reporting Information [Line Items] | ||||
Total revenue | (3,209) | (1,920) | (9,265) | (5,460) |
Cost of revenue | (3,002) | (1,813) | (8,677) | (5,141) |
Research and development expense | (207) | (107) | (588) | (319) |
General and administrative expense | 4,938 | 5,142 | 15,417 | 14,332 |
Loss from operations | (4,938) | (5,142) | (15,417) | (14,332) |
Intersegment Eliminations | Contract Research Segment | ||||
Segment Reporting Information [Line Items] | ||||
Total revenue | $ 3,200 | $ 1,900 | $ 9,300 | $ 5,500 |
Legal Proceedings (Details)
Legal Proceedings (Details) $ in Thousands | Jan. 24, 2020 item | Sep. 30, 2022 USD ($) | Dec. 31, 2021 USD ($) |
Other Commitments [Line Items] | |||
Accrual for estimated financial obligation | $ 2,650 | ||
Consolidated Securities Action | |||
Other Commitments [Line Items] | |||
Accrual for estimated financial obligation | $ 2,700 | ||
Consolidated Securities Action | Executive officer | |||
Other Commitments [Line Items] | |||
Number of defendants | item | 2 |