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Stockholders' equity (Tables)

12 Months Ended

Dec. 31, 2019

Schedule for number of common stock reserved for exercise of outstanding stock options and warrants


	December 31,	December 31,
	2019	2018
Stock options	4,720,772	3,746,567
Restricted stock units	447,336	—
Exchange warrants	2,575,000	—
Warrants	39,474	110,365
	7,782,582	3,856,932

- Definition

Tabular disclosure of an entity's stock, including par or stated value per share, number and dollar amount of share subscriptions, shares authorized, shares issued, shares outstanding, number and dollar amount of shares held in an employee trust, dividend per share, total dividends, share conversion features, par value plus additional paid in capital, the value of treasury stock and other information necessary to a fair presentation, and EPS information. Stock by class includes common, convertible, and preferred stocks which are not redeemable or redeemable solely at the option of the issuer. Includes preferred stock with redemption features that are solely within the control of the issuer and mandatorily redeemable stock if redemption is required to occur only upon liquidation or termination of the reporting entity. If more than one issue is outstanding, state the title of each issue and the corresponding dollar amount; dollar amount of any shares subscribed but unissued and the deduction of subscriptions receivable there from; number of shares authorized, issued, and outstanding.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
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Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 210
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02(28))
-URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682

Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef
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-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 10
-URI http://asc.fasb.org/extlink&oid=109259400&loc=d3e21553-112644

Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 480
-SubTopic 10
-Section S99
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=65877616&loc=d3e177068-122764

Reference 5: http://fasb.org/us-gaap/role/ref/legacyRef
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-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 8
-URI http://asc.fasb.org/extlink&oid=109259400&loc=d3e21538-112644

Reference 6: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 7
-URI http://asc.fasb.org/extlink&oid=109259400&loc=d3e21521-112644

Reference 7: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 210
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02(29))
-URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682

Reference 8: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(d))
-URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690

Reference 9: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 5
-URI http://asc.fasb.org/extlink&oid=109259400&loc=d3e21488-112644

Reference 10: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.3-04)
-URI http://asc.fasb.org/extlink&oid=27012166&loc=d3e187085-122770

Reference 11: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 6
-URI http://asc.fasb.org/extlink&oid=109259400&loc=d3e21506-112644

Reference 12: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 210
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02(27))
-URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682

Reference 13: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 4
-URI http://asc.fasb.org/extlink&oid=109259400&loc=d3e21484-112644

Reference 14: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
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-Section 50
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-URI http://asc.fasb.org/extlink&oid=109259400&loc=d3e21475-112644

+ Details

Consolidated Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Current assets:
Cash and cash equivalents	$ 62,351	$ 59,634
Short-term marketable securities	37,439	10,497
Accounts receivable		459
Prepaid expenses and other current assets	1,536	3,715
Total current assets	101,326	74,305
Property and equipment, net	2,164	2,694
Operating lease right-of-use assets	2,598
Other assets	1,453	1,503
Total assets	107,541	78,502
Current liabilities:
Accounts payable	7,296	10,727
Accrued expenses	8,986	12,375
Deferred revenue	4,815	46,196
Operating lease liabilities	2,219
Short-term debt	667
Other liabilities	87	127
Total current liabilities	24,070	69,425
Operating lease liabilities	677
Long-term debt, net	4,201
Other liabilities	275	282
Total liabilities	29,223	69,707
Commitments (Note 15)
Stockholders' equity
Common stock, $0.0001 par value; 175,000,000 shares authorized; 45,388,023 and 23,234,472 shares issued and outstanding at December 31, 2019 and December 31, 2018, respectively	5	3
Additional paid-in capital	270,662	172,966
Accumulated other comprehensive income (loss)	25	(8)
Accumulated deficit	(192,374)	(164,166)
Total stockholders’ equity	78,318	8,795
Total liabilities and stockholders’ equity	$ 107,541	$ 78,502

Consolidated Statements of Convertible Preferred Stock $ in Thousands	12 Months Ended
	Dec. 31, 2017 USD ($) shares
Series A-1 convertible preferred stock
Increase (Decrease) in Temporary Equity
Balance (in shares) \| shares	25,085,153
Balance \| $	$ 26,336
Conversion of preferred stock into common stock (in shares) \| shares	(25,085,153)
Conversion of preferred stock into common stock \| $	$ (26,336)
Series B-1 convertible preferred stock
Increase (Decrease) in Temporary Equity
Balance (in shares) \| shares	32,936,919
Balance \| $	$ 35,232
Conversion of preferred stock into common stock (in shares) \| shares	(32,936,919)
Conversion of preferred stock into common stock \| $	$ (35,232)
Series C-1 convertible preferred stock
Increase (Decrease) in Temporary Equity
Balance (in shares) \| shares	14,674,062
Balance \| $	$ 32,882
Conversion of preferred stock into common stock (in shares) \| shares	(14,674,062)
Conversion of preferred stock into common stock \| $	$ (32,882)

Collaboration agreements - Takeda strategic R & D partnership (Details) - 2016 Restated Tokeda Agreement - item	Jan. 02, 2019	Jan. 31, 2016
Collaboration agreements
Number of targets		7
Period of time until agreement terminated	45 days

Leases - Description (Details) - USD ($) $ in Thousands	12 Months Ended
Leases - Description (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Mar. 31, 2019	Dec. 31, 2018
Leases
Letter of credit for security deposit	$ 321		$ 321
Finance leases
Property and equipment, gross	$ 9,373		$ 9,055
Office space, Cambridge, MA, Leased
Leases
Lessee, Operating Lease, Existence of Option to Extend	true
Renewal term	5 years
Equipment, Leased \| Minimum
Leases
Remaining lease terms	3 years
Equipment, Leased \| Maximum
Leases
Remaining lease terms	5 years
Property and equipment, Finance lease
Finance leases
Property and equipment, gross	$ 429	$ 429

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Cash flows from operating activities
Net loss	$ (28,208)	$ (64,257)	$ (38,707)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	1,245	1,257	928
Loss on disposal of fixed assets		20
Net amortization of premiums and discounts on investments	(222)	(296)	(293)
Stock-based compensation	4,872	3,884	1,422
Change in deferred rent		110	(159)
Other non-cash items	103
Changes in operating assets and liabilities:
Accounts receivable	459	325	267
Prepaid expenses and other current assets	2,179	(1,690)	(1,200)
Other assets		(1,132)	60
Accounts payable	(3,110)	7,375	1,335
Accrued expenses	(3,569)	5,431	3,562
Operating lease assets	1,771
Operating lease liabilities	(1,883)
Deferred revenue	(41,381)	(6,243)	(9,894)
Net cash used in operating activities	(67,744)	(55,216)	(42,679)
Cash flows from investing activities
Maturities of marketable securities	27,000	88,565	47,220
Purchase of marketable securities	(53,688)		(145,701)
Purchase of property and equipment	(605)	(1,370)	(1,143)
Net cash provided by (used in) investing activities	(27,293)	87,195	(99,624)
Cash flows from financing activities
Net proceeds from public offering of common stock	92,162
Proceeds from exercise of stock options	175	918	452
Proceeds from purchases of common stock under ESPP	489	146
Proceeds from issuance of debt, net of issuance costs	4,965
Payments under capital lease obligations	(87)
Net cash provided by financing activities	97,704	1,064	68,597
Increase (decrease) in cash, cash equivalents and restricted cash	2,667	33,043	(73,706)
Cash, cash equivalents and restricted cash, beginning of period	60,005	26,962	100,668
Cash, cash equivalents and restricted cash, end of period	62,672	60,005	26,962
Supplemental disclosures of non-cash activities:
Fair value of common stock retired in exchange for issuance of common stock warrant	8,986
Conversion of preferred stock to common stock upon closing of initial public offering			94,450
Purchases of property and equipment in accounts payable and accrued expenses		317	35
Debt financing costs in accrued expenses	180
Cash paid for interest	132
Right-of-use assets obtained in exchange for operating lease liabilities	4,369
Right-of-use assets obtained in exchange for financing lease liabilities	$ 429
Adjustment to accumulated deficit and deferred revenue upon adoption of Topic 606		$ 2,031
IPO
Cash flows from financing activities
Net proceeds from initial public offering			67,420
Over allotment option
Cash flows from financing activities
Net proceeds from initial public offering			$ 725

Stock options - Plans (Details) - shares		1 Months Ended	12 Months Ended
Stock options - Plans (Details) - shares	Jan. 01, 2019	Jun. 30, 2017	Dec. 31, 2019	Dec. 31, 2018
Share-based awards
Number of shares outstanding			4,720,772	3,746,567
2007 Plan
Share-based awards
Number of shares outstanding		3,141,625
2017 Plan
Share-based awards
Number of shares authorized		2,255,000
Cumulative increase in number of shares issuable (as a percent)		4.00%
Number of shares available for future issuance			1,511,587
Additional shares authorized	929,378
Vesting period (in years)			4 years
2017 Plan \| Maximum
Share-based awards
Expiration period			10 years

Income Taxes - Reconciliation (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Reconciliation of income taxes
Income tax benefit	$ 0	$ 0	$ 0
Income tax computed at federal statutory tax rate	21.00%	21.00%	34.00%
State taxes, net of federal benefit	6.10%	6.50%	5.10%
Permanent differences	(2.00%)	0.60%	(0.80%)
Research and development expenditures			(2.30%)
General business credits	10.30%	4.20%	8.20%
Impact of tax reform			(27.3)
Other	(53.30%)
Change in valuation allowance	17.90%	(32.30%)	(16.90%)

Collaboration agreements - Merck KGaA (Detail) - Merck KGaA $ in Thousands	1 Months Ended	12 Months Ended		36 Months Ended
	Jun. 30, 2014 USD ($) item	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($) item
Collaboration agreements
Upfront payment received	$ 12,000
Number of targets \| item	6
Amount of additional fees receivable when target is designated and commercial license to target is granted	$ 0
Number of targets designated \| item				6
Aggregate milestones	780,000
Development milestones	84,000
Regulatory milestones	264,000
Sales milestones	$ 432,000
Number of individual development milestones per target \| item	6
Number of individual regulatory milestones per target \| item	5
Number of individual commercial milestones \| item	3
Amount of development milestone payment received		$ 0	$ 0	$ 3,000
Next potential development milestone payment eligible to receive		$ 500
Prior written notice for termination period		60 days

Accrued Expenses

12 Months Ended

Dec. 31, 2019

Accrued expenses

Accrued expenses

7. Accrued Expenses

Accrued expenses consist of the following as of December 31, 2019 and 2018:


	December 31,		December 31,
	2019		2018
Accrued payroll and related expenses	$	4,037	$	3,042
Accrued preclinical, manufacturing and clinical expenses		4,230		8,314
Accrued professional fees		675		567
Accrued other		44		452
	$	8,986	$	12,375

Stockholders' Equity - Warrants (Details) - Warrants - $ / shares	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2013	Dec. 31, 2018
Warrants
Number of shares into which warrant issued during period may be converted		129,491
Warrant exercise price per share (in dollars per share)		$ 0.05
Contractual life of warrants		10 years
Warrants outstanding (in shares)			110,365
Common stock issued upon exercise of warrant (in shares)	69,680

Commitments - License agreements (Details) - License agreements $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($) item	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)
Commitments
Number of biotechnology companies where Company has licensed intellectual property \| item	2
Milestone payments \| $	$ 600	$ 0	$ 2,750

Income Taxes - Tax credit carryforward (Details) - Research and Development $ in Thousands	Dec. 31, 2019 USD ($)
Federal
Tax credit carryforwards
Tax credit carryforwards	$ 1,989
State
Tax credit carryforwards
Tax credit carryforwards	$ 687

Collaboration agreements - 2016 Takeda and XMT-1522 Agreements - Additional Accounting (Details) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2019 USD ($) item	Sep. 30, 2019 USD ($)	Jun. 30, 2019 USD ($)	Mar. 31, 2019 USD ($)	Dec. 31, 2018 USD ($) item	Sep. 30, 2018 USD ($)	Jun. 30, 2018 USD ($)	Mar. 31, 2018 USD ($)	Dec. 31, 2019 USD ($) item	Dec. 31, 2018 USD ($) item	Dec. 31, 2017 USD ($)
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction
Collaboration revenue	$ 42	$ 844	$ 202	$ 41,035	$ 1,188	$ 2,151	$ 4,191	$ 3,064	$ 42,123	$ 10,594	$ 17,545
Accounts payable	7,296				10,727				7,296	10,727
Deferred revenue	4,815				46,196				4,815	46,196	52,439
Research and development	12,430	$ 13,701	$ 13,766	$ 15,143	$ 19,816	$ 15,180	$ 12,663	$ 12,256	55,040	59,915	46,700
2016 Restated Tokeda Agreement and XMT-1522 Agreement
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction
Collaboration revenue									39,965	$ 5,868	13,784
Number of performance obligations \| item					14					14
Accounts payable	2,310				$ 2,749				2,310	$ 2,749
Deferred revenue	$ 0				$ 39,965				$ 0	39,965
2016 Restated Tokeda Agreement and XMT-1522 Agreement \| License and related research and development services, including Phase 1 development and transfer certain materials and know how
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction
Number of performance obligations \| item	1								1
XMT-1522 Agreement
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction
Research and development									$ 200	8,046	3,408
ASC 808 costs billed to Takeda									$ 195	$ 3,746	$ 0

Stock options - Restricted stock units (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Restricted stock units
Share-based compensation expense	$ 4,872	$ 3,884	$ 1,422
Restricted stock units
Restricted stock units
Vesting period (in years)	2 years
Number of Shares, Granted (in shares)	449,331
Number of Shares, Forfeited (in shares)	(1,995)
Number of Shares, Unvested, End of period (in shares)	447,336
Weighted-Average Remaining Contractual Term	1 year 6 months
Aggregate Intrinsic Value (in dollars)	$ 2,564
Weighted-Average Grant Date Fair Value, Awarded (in dollars per share)	$ 4.00
Weighted-Average Grant Date Fair Value, Forfeited (in dollars per share)	4.00
Weighted-Average Grant Date Fair Value, End of period (in dollars per share)	$ 4.00
Share-based compensation expense	$ 410

Related party transactions	12 Months Ended
Related party transactions	Dec. 31, 2019
Related party transactions
Related party transactions	16. Related Party Transactions Included in Series C‑1 financing and the Company’s initial public offering were investments of $10,000 and $10,000, respectively, by Takeda.

Summary of significant accounting policies - Net loss per share (Details) - shares	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Net Loss per Share
Anti-dilutive securities	5,207,582	3,856,932	3,315,850
Stock options.
Net Loss per Share
Anti-dilutive securities	4,720,772	3,746,567	3,205,485
Restricted stock units
Net Loss per Share
Anti-dilutive securities	447,336
Warrants
Net Loss per Share
Anti-dilutive securities	39,474	110,365	110,365
Exchange warrants
Net Loss per Share
Warrants outstanding (in shares)	2,575,000

Stockholders' Equity - Exchange Warrants (Details) - Exchange warrants - $ / shares		12 Months Ended
	Nov. 26, 2019	Dec. 31, 2019
Warrants
Number of common shares exchanged for warrants	2,575,000
Number of shares of common stock into which warrants may be converted	2,575,000
Warrant exercise price per share (in dollars per share)	$ 0.0001
Contractual life of warrants	10 years
Beneficial ownership threshold (as a percent)	9.99%
Warrants exercised (in shares)		0

Commitments	12 Months Ended
Commitments	Dec. 31, 2019
Commitments
Commitments	15. Commitments License Agreements Through December 31, 2019 the Company has licensed intellectual property from two biotechnology companies. The consideration included upfront payments and a commitment to pay annual license fees, milestone payments, and, upon product commercialization, royalties on revenue generated from the sale of products covered by the licenses. During the years ended December 31, 2019, 2018 and 2017, the Company recorded expense related to milestone payments of $600, $0 and $2,750, respectively, related to these agreements. See Note 12 for the Company’s future obligations related to leases as of December 31, 2019.

Collaboration agreements - Merck KGaA - Accounting Analysis (Details) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2019 USD ($)	Sep. 30, 2019 USD ($)	Jun. 30, 2019 USD ($)	Mar. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)	Sep. 30, 2018 USD ($)	Jun. 30, 2018 USD ($)	Mar. 31, 2018 USD ($)	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($) item	Jan. 01, 2018 USD ($)
Collaboration agreements
Collaboration revenue	$ 42	$ 844	$ 202	$ 41,035	$ 1,188	$ 2,151	$ 4,191	$ 3,064	$ 42,123	$ 10,594	$ 17,545
Research and development	12,430	13,701	$ 13,766	$ 15,143	19,816	$ 15,180	$ 12,663	$ 12,256	55,040	59,915	46,700
Accounts receivable					459					459
Deferred revenue	4,815				46,196				4,815	46,196	$ 52,439
Merck KGaA Agreement and Merck KGaA Supply Agreement
Collaboration agreements
Accounts receivable	0				450				0	450
Deferred revenue	4,815				5,462				4,815	5,462
Merck KGaA
Collaboration agreements
Number of targets designated \| item											6
Amount of milestone payments, which had not been received, included in the estimated transaction price												$ 0
Transaction price	21,500	21,500			$ 22,070				21,500	22,070
Amount of research and development fees expected to be received		6,500
Decrease in fees expected to be received for research and development activities		$ 570
Collaboration revenue									853	2,444	$ 3,636
Merck KGaA \| License and corresponding research and development services, First and second targets
Collaboration agreements
Transaction price	3,941								3,941
Merck KGaA \| License and corresponding research and development services, Third target
Collaboration agreements
Transaction price	3,439								3,439
Merck KGaA \| License and corresponding research and development services, Fourth target
Collaboration agreements
Transaction price	3,152								3,152
Merck KGaA \| License and corresponding research and development services, Fifth target
Collaboration agreements
Transaction price	2,921								2,921
Merck KGaA \| License and corresponding research and development services, Sixth target
Collaboration agreements
Transaction price												$ 3,439
Merck KGaA \| Rights to future technological improvements
Collaboration agreements
Transaction price	$ 425								$ 425
Merck KGaA \| Rights to future technological improvements \| Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2018-01-01
Collaboration agreements
Expected recognition period	10 years								10 years
Merck KGaA \| Joint research committee services
Collaboration agreements
Transaction price	$ 242								$ 242
Merck KGaA \| Joint research committee services \| Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2018-01-01
Collaboration agreements
Expected recognition period	5 years								5 years
Merck KGaA Supply Agreement
Collaboration agreements
Collaboration revenue									$ 1,280	0	0
Research and development									$ 1,279	$ 0	$ 0

Collaboration Agreements - Other Revenue (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Collaboration agreements
Collaboration revenue	$ 42	$ 844	$ 202	$ 41,035	$ 1,188	$ 2,151	$ 4,191	$ 3,064	$ 42,123	$ 10,594	$ 17,545
Type of Revenue									us-gaap:CollaborationMember	us-gaap:CollaborationMember	us-gaap:CollaborationMember
Accounts receivable					$ 459					$ 459
Asana BioSciences
Collaboration agreements
Next potential milestone payment eligible to receive	$ 2,500								$ 2,500
Asana BioSciences \| Limited services
Collaboration agreements
Collaboration revenue									$ 25	782	$ 125
Asana BioSciences \| Milestone
Collaboration agreements
Collaboration revenue										$ 1,500

Fair value measurements (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Fair value measurements
Marketable securities	$ 37,439	$ 10,497
Transfers between fair value measurement level 1 to level 2	0	0
Transfers between fair value measurement level 2 to level 1	0	0
Recurring basis
Fair value measurements
Total assets regularly measured and carried at fair value	37,439	10,497
Recurring basis \| Commercial paper
Fair value measurements
Marketable securities	11,940
Recurring basis \| Corporate bonds
Fair value measurements
Marketable securities	12,010
Recurring basis \| U.S. Treasuries
Fair value measurements
Marketable securities	13,489	10,497
Recurring basis \| Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair value measurements
Total assets regularly measured and carried at fair value	13,489	10,497
Recurring basis \| Quoted Prices in Active Markets for Identical Assets (Level 1) \| U.S. Treasuries
Fair value measurements
Marketable securities	13,489	$ 10,497
Recurring basis \| Significant Other Observable Inputs (Level 2)
Fair value measurements
Total assets regularly measured and carried at fair value	23,950
Recurring basis \| Significant Other Observable Inputs (Level 2) \| Commercial paper
Fair value measurements
Marketable securities	11,940
Recurring basis \| Significant Other Observable Inputs (Level 2) \| Corporate bonds
Fair value measurements
Marketable securities	$ 12,010

Summary of significant accounting policies - Risks (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($)
Concentration of Credit Risk and Off-balance Sheet Risk
Financial instruments with off-balance sheet risk	$ 0

Debt - Future payments (Details) $ in Thousands	12 Months Ended
Debt - Future payments (Details) $ in Thousands	Dec. 31, 2019 USD ($)
Estimated future principal payments
2020	$ 667
2021	2,000
2022	2,000
2023	333
Total debt	5,000
Credit Facility
Estimated future principal payments
Total debt	5,000
Interest expense	$ 214

Stock options - Employee Stock Purchase Plan (Details) - shares		12 Months Ended
	Jan. 01, 2019	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Employee Stock Purchase Plan
Purchase of common stock under ESPP (in shares)		140,073	42,186
Employee Stock Purchase Plan
Employee Stock Purchase Plan
Number of shares reserved for future issuance				225,000
Additional shares authorized	232,344
Number of shares available for future issuance		275,085

Stockholders' equity

12 Months Ended

Dec. 31, 2019

Stockholders' equity

Stockholders’ equity

10. Stockholders’ Equity (Deficit)

Common Stock

The holders of the common stock are entitled to one vote for each share held. Common stockholders are not entitled to receive dividends, unless declared by the Board of Directors (the Board).

As of December 31, 2019 and 2018 there were 7,782,582 and 3,856,932, respectively, shares of common stock reserved for the exercise of outstanding stock options and warrants.


	December 31,	December 31,
	2019	2018
Stock options	4,720,772	3,746,567
Restricted stock units	447,336	—
Exchange warrants	2,575,000	—
Warrants	39,474	110,365
	7,782,582	3,856,932

Warrants

In connection with a 2013 Series A‑1 Preferred Stock issuance, the Company granted to certain investors warrants to purchase 129,491 shares of common stock. The warrants have a $0.05 per share exercise price and a contractual life of 10 years. The fair value of these warrants was recorded as a component of equity at the time of issuance. As of December 31, 2018, there were warrants to purchase 110,365 shares of common stock. During the year ended December 31, 2019, the Company issued 69,680 shares of common stock upon the exercise of warrants.

Exchange Warrants

On November 26, 2019, the Company entered into an exchange agreement with entities affiliated with Biotechnology Value Fund, L.P. (the “Exchanging Stockholders”), pursuant to which the Exchanging Stockholders exchanged an aggregate of 2,575,000 shares of common stock for pre-funded warrants (the “Exchange Warrants”) to purchase an aggregate of 2,575,000 shares of common stock (subject to adjustment in the event of any stock dividends and splits, reverse stock split, merger or consolidation, change of control, reorganization or similar transaction, as described in the Exchange Warrants), with an exercise price of $0.0001 per share. The Exchange Warrants will expire ten years from the date of issuance. The Exchange Warrants are exercisable at any time prior to expiration except that the Exchange Warrants cannot be exercised by the Exchanging Stockholders if, after giving effect thereto, the Exchanging Stockholders would beneficially own more than 9.99% of the Company’s common stock, subject to certain exceptions.

In accordance with Accounting Standards Codification Topic 505, Equity, the Company recorded the retirement of the common stock exchanged as a reduction of common shares outstanding and a corresponding debit to additional paid-in-capital at the fair value of the Exchange Warrants on the issuance date. The Exchange Warrants are classified as equity in accordance with Accounting Standards Codification Topic 480, Distinguishing Liabilities from Equity, and fair value of the Exchange Warrants was recorded as a credit to additional paid-in capital and is not subject to remeasurement. The Company determined that the fair value of the Exchange Warrants is substantially similar to the fair value of the retired shares on the issuance date due to the negligible exercise price for the Exchange Warrants. As of December 31, 2019, none of the Exchange Warrants had been exercised.

Income Taxes - Valuation allowance (Details) $ in Thousands	12 Months Ended
Income Taxes - Valuation allowance (Details) $ in Thousands	Dec. 31, 2019 USD ($) item	Dec. 31, 2018 USD ($)
Valuation allowance
Valuation allowance	$ 48,889	$ 53,940
Increase (decrease) in valuation allowance	(5,051)	21,338
Unrecognized tax benefits	0	0
Accrued interest or penalties related to uncertain tax position	$ 0	$ 0
Number of state jurisdictions in which entity files income tax returns \| item	1
Number of federal or state audits in progress \| item	0

Summary of significant accounting policies - Recently Issued Accounting Pronouncement (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Jan. 01, 2019
New Accounting pronouncements
Lease liability	$ 2,895
Operating lease right-of-use assets	$ 2,598
ASU-02, Leases (ASC 842) \| Adjustment
New Accounting pronouncements
Lease liability		$ 4,778
Operating lease right-of-use assets		4,369
Deferred rent		$ 409

Selected quarterly financial data (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Quarterly Financial Data
Collaboration revenue	$ 42	$ 844	$ 202	$ 41,035	$ 1,188	$ 2,151	$ 4,191	$ 3,064	$ 42,123	$ 10,594	$ 17,545
Operating expenses:
Research and development	12,430	13,701	13,766	15,143	19,816	15,180	12,663	12,256	55,040	59,915	46,700
General and administrative	4,212	4,436	4,192	4,443	4,152	4,380	4,231	3,571	17,283	16,334	10,462
Total operating expenses	16,642	18,137	17,958	19,586	23,968	19,560	16,894	15,827	72,323	76,249	57,162
Nonoperating Income (Expense) [Abstract]
Interest income	441	608	725	452	349	340	349	360	2,226	1,398	910
Interest expense	(87)	(107)	(40)						(234)
Total other income (expense), net	354	501	685	452	349	340	349	360	1,992	1,398	910
Net loss	$ (16,246)	$ (16,792)	$ (17,071)	$ 21,901	$ (22,431)	$ (17,069)	$ (12,354)	$ (12,403)	$ (28,208)	$ (64,257)	$ (38,707)
Net loss per share attributable to common stockholders — basic and diluted (in dollars per share)					$ 0.97	$ 0.74	$ 0.54	$ 0.54	$ (0.65)	$ (2.79)	$ (3.22)
Net income (loss) per share - basic (in dollars per share)	$ (0.34)	$ (0.35)	$ (0.36)	$ 0.72
Net income (loss) per share - diluted (in dollars per share)	$ (0.34)	$ (0.35)	$ (0.36)	$ 0.70
Weighted-average number of shares of common stock used in net loss per share attributable to common stockholders — basic and diluted					23,184,459	23,152,019	22,966,314	22,816,521	43,492,113	23,032,250	12,022,733
Weighted-average number of shares of common stock used in net income (loss) per share attributable to common stockholders — basic (in shares)	47,886,144	47,833,607	47,708,085	30,299,650
Weighted-average number of shares of common stock used in net income (loss) per share attributable to common stockholders — diluted (in shares)	47,886,144	47,833,607	47,708,085	31,461,696

Marketable securities

12 Months Ended

Dec. 31, 2019

Marketable securities

Marketable securities

5. Marketable Securities

The following table summarizes marketable securities held at December 31, 2019 and 2018.


			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
December 31, 2019
Commercial paper	$	11,940	$	—	$	—	$	11,940
Corporate bonds		11,990		20		—		12,010
U.S. Treasuries		13,484		5		—		13,489
	$	37,414	$	25	$	—	$	37,439


			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
December 31, 2018
U.S. Treasuries	$	10,505	$	—	$	(8)	$	10,497
	$	10,505	$	—	$	(8)	$	10,497

As of December 31, 2019, the Company did not hold any securities that were in an unrealized loss position. As of December 31, 2018, the Company held three securities that were in an unrealized loss position. The aggregate fair value of securities held by the Company in an unrealized loss position at December 31, 2018 was $10,497. These securities were held by the Company in an unrealized loss position for more than 12 months. The Company determined that there was no material change in the credit risk of these securities. As a result, the Company determined it did not hold any investments with an other-than-temporary impairment as of December 31, 2019 and 2018.

Income Taxes - Net operating loss carryforwards (Details) $ in Thousands	Dec. 31, 2019 USD ($)
Federal
Operating loss carry-forwards
Net operating loss carry forwards	$ 163,465
Net operating loss carryforwards subject to expiration	34,149
Net operating loss carryforwards not subject to expiration	129,316
State
Operating loss carry-forwards
Net operating loss carry forwards	$ 98,517

Income Taxes

12 Months Ended

Dec. 31, 2019

Income Taxes

Income Taxes

13. Income Taxes

For the years ended December 31, 2019, 2018 and 2017, the Company recorded no income tax benefit for the net operating losses incurred in each year, due to its uncertainty of realizing a benefit from those items.

A reconciliation of income taxes computed using the U.S. federal statutory rate to that reflected in operations as of December 31, 2019, 2018 and 2017 are as follows:


	2019		2018		2017
Income tax computed at federal statutory tax rate	21.0	%	21.0	%	34.0	%
State taxes, net of federal benefit	6.1	%	6.5	%	5.1	%
Permanent differences	(2.0)	%	0.6	%	(0.8)	%
Research and development expenditures	—	%	—	%	(2.3)	%
General business credits	10.3	%	4.2	%	8.2	%
Impact of tax reform	—	%	—	%	(27.3)	%
Impact of ownership shift	(53.3)	%	—	%	—	%
Change in valuation allowance	17.9	%	(32.3)	%	(16.9)	%
	—	%	—	%	—	%

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s net deferred tax assets as of December 31, 2019 and 2018 are as follows:


	2019		2018
Deferred tax assets:
Net operating losses	$	40,554	$	27,916
Accrued expenses		2,520		1,585
Tax credit carryforwards		2,448		10,178
Licensed technology		1,402		1,160
Deferred revenue		1,315		12,410
Lease liabilities		791		—
Depreciation		492		405
Deferred expenses		—		112
Other		77		174
Total gross deferred tax assets		49,599		53,940
Valuation allowance		(48,889)		(53,940)
Net deferred tax assets less valuation allowance		710		—
Deferred tax liabilities
Right-of-use assets		(710)		—
Total gross deferred tax liabilities		(710)		—
Net deferred taxes	$	—	$	—

The Company has incurred net operating losses (NOL) since inception. At December 31, 2019, the Company had Federal and State net operating loss carryforwards of approximately $163,465 and $98,517, respectively. Of the $163,465 of Federal net operating loss carryforwards, $34,149 expire at various dates through 2037. The remaining $129,316 of Federal net operating loss carryforwards do not expire. The State net operating loss carryforwards expire at various dates through 2039. At December 31, 2019, the Company had Federal and State research and development tax credit carryforwards of approximately $1,989 and $687, respectively, which expire at various dates through 2039.

As required by ASC 740, management of the Company has evaluated the evidence bearing upon the reliability of its deferred tax assets. Based on the weight of available evidence, both positive and negative, management has determined that it is more likely than not that the Company will not realize the benefits of all of these assets. Accordingly, the Company recorded a valuation allowance of $48,889 and $53,940 at December 31, 2019 and December 31, 2018, respectively. The valuation allowance decreased by $5,051 and increased $21,338 during the years ended December 31, 2019 and 2018, respectively, primarily as a result of the Company’s 382 limitation and net operating losses generated during the periods, respectively.

Utilization of the NOLs and research and development tax credit carryforwards may be subject to a substantial annual limitation under Section 382 due to ownership change limitations that have occurred previously or that could occur in the future in accordance with Section 382, as well as similar state provisions. These ownership changes may limit the amount of NOLs and research and development tax credit carryforwards that can be utilized annually to offset future taxable income and tax, respectively. If a change in control as defined by Section 382 has occurred at any time since the Company’s formation, utilization of its NOLs or research and development tax credit carryforwards would be subject to an annual limitation under Section 382, which is determined by first multiplying the value of the Company’s stock at the time of the ownership change by the applicable long-term tax-exempt rate, which could then be subject to additional adjustments, as required. Any limitation may result in expiration of a portion of the NOLs or research and development tax carryforwards before their utilization. The Company has determined that ownership changes have occurred through November 4, 2019 and that certain NOLs and research and development tax credit carryforwards will be subject to limitation. The amounts presented do not include NOLs or research and development tax credit carryforwards that will expire unused due to ownership changes.

The Company applies the accounting guidance in ASC 740 related to accounting for uncertainty in income taxes. The Company’s reserves related to taxes are based on a determination of whether, and how much of, a tax benefit taken by the Company in its tax filings or positions is more likely than not to be realized following resolution of any potential contingencies present related to the tax benefit. As of December 31, 2019 and 2018, the Company had no unrecognized tax benefits.

The Company has not conducted a study of its research and development credit carryforwards. This study may result in an adjustment to research and development credit carryforwards; however, until a study is completed and any adjustment is known, no amounts are being presented as an uncertain tax position. A full valuation allowance has been provided against the Company’s research and development credits and, if an adjustment is required, this adjustment would be offset by an adjustment to the valuation allowance. Thus, there would be no impact to the balance sheets or statements of operations if an adjustment were required.

Interest and penalties related to uncertain tax positions would be classified as income tax expense in the accompanying statements of operations. As of December 31, 2019 and 2018, the Company had no accrued interest or penalties related to uncertain tax positions.

The Company files income tax returns in the United States federal tax jurisdiction and one state jurisdiction. The Company did not have any foreign operations during the years ended December 31, 2019, 2018 and 2017. The statute of limitations for assessment by the Internal Revenue Service and state tax authorities is closed for tax years prior to 2016, although carryforward attributes that were generated prior to tax year 2015 may still be adjusted upon examination to the extent utilized in a future period. There are no federal or state audits currently in progress.

Property and Equipment

12 Months Ended

Dec. 31, 2019

Property and Equipment

Property and Equipment

6. Property and Equipment

Property and equipment consists of the following as of December 31, 2019 and 2018:


	December 31,		December 31,
	2019		2018
Laboratory equipment	$	6,419	$	6,134
Computer equipment and office equipment		1,068		1,035
Leasehold improvements		1,886		1,886
Total property and equipment at cost		9,373		9,055
Less: Accumulated depreciation		(7,209)		(6,361)
	$	2,164	$	2,694

The Company recorded assets under finance leases of $429 as laboratory equipment during the year ended December 31, 2019. Financing leases are discussed in more detail in Note 12 “Leases”. Depreciation expense for the years ended December 31, 2019, 2018 and 2017 was $1,245, $1,257 and $928, respectively.

Leases - Supplemental cash flow information (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($)
Leases
Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases	$ 2,271
Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from finance leases	20
Cash paid for amounts included in the measurement of lease liabilities: Financing cash flows from finance leases	$ 87

Collaboration Agreements - Contract Assets and Liabilities (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2019	Dec. 31, 2019	Dec. 31, 2018
Contract liabilities
Deferred revenue, Balance at Beginning of Period	$ 46,196	$ 46,196	$ 52,439
Deferred revenue, Additions		210	2,851
Deferred revenue, Deductions		41,591	9,094
Deferred revenue, Balance at End of Period		4,815	46,196
Revenue recognized in the period from:
Amounts included in the contract liability at the beginning of the period		41,591	8,704
2016 Restated Tokeda Agreement and XMT-1522 Agreement
Contract liabilities
Deferred revenue, Balance at Beginning of Period	39,965	39,965
Deferred revenue, Balance at End of Period		$ 0	$ 39,965
Revenue recognized in the period from:
Amounts included in the contract liability at the beginning of the period	$ 39,965

Selected quarterly financial data (Unaudited) (Tables)

12 Months Ended

Dec. 31, 2019

Selected quarterly financial data (unaudited)

Selected quarterly financial data (unaudited)


	Three months ended

	March 31, 2019		June 30, 2019		September 30, 2019		December 31, 2019
Collaboration revenue	$	41,035	$	202	$	844	$	42
Operating expenses:
Research and development		15,143		13,766		13,701		12,430
General and administrative		4,443		4,192		4,436		4,212
Total operating expenses		19,586		17,958		18,137		16,642
Other income:
Interest income		452		725		608		441
Interest expense		—		(40)		(107)		(87)
Total other income (expense), net		452		685		501		354
Net loss	$	21,901	$	(17,071)	$	(16,792)	$	(16,246)
Net loss per share attributable to common stockholders — basic	$	0.72	$	(0.36)	$	(0.35)	$	(0.34)
Net loss per share attributable to common stockholders — diluted	$	0.70	$	(0.36)	$	(0.35)	$	(0.34)
Weighted-average number of common shares used in net loss per share attributable to common stockholders — basic		30,299,650		47,708,085		47,833,607		47,886,144
Weighted-average number of common shares used in net loss per share attributable to common stockholders — diluted		31,461,696		47,708,085		47,833,607		47,886,144


	Three months ended

	March 31, 2018		June 30, 2018		September 30, 2018		December 31, 2018
Collaboration revenue	$	3,064	$	4,191	$	2,151	$	1,188
Operating expenses:
Research and development		12,256		12,663		15,180		19,816
General and administrative		3,571		4,231		4,380		4,152
Total operating expenses		15,827		16,894		19,560		23,968
Other income:
Interest income		360		349		340		349
Total other income		360		349		340		349
Net loss	$	(12,403)	$	(12,354)	$	(17,069)	$	(22,431)
Net loss per share attributable to common stockholders — basic and diluted	$	(0.54)	$	(0.54)	$	(0.74)	$	(0.97)
Weighted-average number of common shares used in net loss per share attributable to common stockholders — basic and diluted		22,816,521		22,966,314		23,152,019		23,184,459

Debt (Tables)

12 Months Ended

Dec. 31, 2019

Debt

Schedule of debt


	December 31,
	2019
Total debt	$	5,000
Less: Current portion of long-term-debt		(667)
Total debt, net of current portion		4,333
Debt financing costs, net of accretion		(177)
Accretion related to final payment		45
Long-term debt, net	$	4,201

Schedule of estimated future payments


2020	$	667
2021		2,000
2022		2,000
2023		333
Total debt	$	5,000

Employee Benefit Plan (Details) - USD ($) $ in Thousands	1 Months Ended	5 Months Ended	6 Months Ended	12 Months Ended
Employee Benefit Plan (Details) - USD ($) $ in Thousands	Jul. 31, 2019	Dec. 31, 2019	Jun. 30, 2019	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Employee Benefit Plan
Eligible age to participate				21 years
Maximum contribution by employee (as a percent)				75.00%
Percentage employer matches of the employee's percentage contribution matched	50.00%	100.00%	50.00%		50.00%	50.00%
Employer matching contribution (as a percent)	6.00%	4.00%	6.00%		6.00%	6.00%
Maximum annual amount employer contributes per employee	$ 6	$ 7	$ 6		$ 6	$ 6
Employee benefit expenses				$ 404	$ 332	$ 273

Summary of significant accounting policies - Revenue Recognition (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Jan. 01, 2018	Dec. 31, 2017
Collaboration agreements
Deferred revenue	$ 4,815	$ 46,196		$ 52,439
Accumulated deficit	$ (192,374)	$ (164,166)
Billing term	30 days
ASU 2014-09
Collaboration agreements
Change in Accounting Principle, Accounting Standards Update, Adopted			true
Difference between Revenue Guidance in Effect before and after Topic 606 \| ASU 2014-09
Collaboration agreements
Deferred revenue			$ 2,031
Accumulated deficit			$ (2,031)

Document and Entity Information - USD ($)	12 Months Ended
Document and Entity Information - USD ($)	Dec. 31, 2019	Feb. 25, 2020	Jun. 28, 2019
Document and Entity Information
Document Type	10-K
Document Period End Date	Dec. 31, 2019
Entity Registrant Name	Mersana Therapeutics, Inc.
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	true
Entity Shell Company	false
Entity Public Float			$ 163,614,650
Entity Common Stock, Shares Outstanding		45,429,985
Entity Central Index Key	0001442836
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	FY
Amendment Flag	false

Marketable securities (Tables)

12 Months Ended

Dec. 31, 2019

Marketable securities

Schedule of reconciliation of marketable securities from cost basis to fair value


			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
December 31, 2019
Commercial paper	$	11,940	$	—	$	—	$	11,940
Corporate bonds		11,990		20		—		12,010
U.S. Treasuries		13,484		5		—		13,489
	$	37,414	$	25	$	—	$	37,439


			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
December 31, 2018
U.S. Treasuries	$	10,505	$	—	$	(8)	$	10,497
	$	10,505	$	—	$	(8)	$	10,497

Leases

12 Months Ended

Dec. 31, 2019

Leases

Leases

12. Leases

The Company has an operating lease for its facility and operating and finance leases for certain equipment. The Company leases office space in Cambridge, MA under an operating lease, which was last amended in January 2018, and is effective through March 2021. The Company has an option to extend the lease term for an additional five years. The Company’s exercise of this option was not considered reasonably certain as of December 31, 2019. The Company has remaining lease terms of three years to five years for certain equipment, some of which may include options to purchase at fair value.

In connection with the office lease, the Company had a letter of credit agreement for the benefit of its landlord in the amount of $321 as of each December 31, 2019 and 2018, collateralized by a money market account.

During the first quarter of 2019, the Company entered into finance leases for certain equipment. The Company recorded assets under finance leases of $429 as property and equipment.

The components of lease expense were as follows:



	Year ended
	December 31, 2019
Operating lease cost	$	2,160

Finance lease cost:
Amortization of right-of-use assets	$	75
Interest on lease liabilities		20
	$	95

Supplemental balance sheet information related to leases was as follows:


	Year ended
	December 31, 2019
Operating leases:
Operating lease right-of-use assets	$	2,598
Operating lease liabilities, current		2,219
Operating lease liabilities		677

Finance leases:
Property and equipment, gross	$	429
Property and equipment, accumulated depreciation		(75)
Other liabilities, current		87
Other liabilities		275

Weighted-average remaining lease term:
Operating leases		1.3 years
Finance leases		3.7 years

Weighted-average discount rate:
Operating leases		10.3%
Finance leases		6.9%

Supplemental cash flow information related to leases was as follows:


	Year ended
	December 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	2,271
Operating cash flows from finance leases		20
Financing cash flows from finance leases		87

Rent expense was $2,160, $1,994 and $1,834 for the years ended December 31, 2019, 2018 and 2017, respectively.

Future minimum lease payments under non-cancellable leases as of December 31, 2019 were as follows:


	Operating leases		Finance leases
2020	$	2,394	$	116
2021		687		116
2022		—		84
2023		—		74
2024		—		18
Total lease payments		3,081		408
Present value adjustment		(186)		(46)
Present value of lease liabilities	$	2,895	$	362

Leases - Future minimum lease payments (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Leases
Rent expense	$ 2,160
Rent expense		$ 1,994	$ 1,834
Operating leases
2020	2,394
2021	687
Total lease payments	3,081
Present value adjustment	(186)
Present value of operating lease liabilities	$ 2,895
Operating Lease, Liability, Statement of Financial Position	us-gaap:OperatingLeaseLiabilityCurrent us-gaap:OperatingLeaseLiabilityNoncurrent
Finance leases
2020	$ 116
2021	116
2022	84
2023	74
2024	18
Total lease payments	408
Present value adjustment	(46)
Present value of finance lease liabilities	$ 362

Consolidated Balance Sheets (Parenthetical) - $ / shares	Dec. 31, 2019	Dec. 31, 2018
Consolidated Balance Sheets
Preferred stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Preferred stock, shares authorized	25,000,000	25,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized	175,000,000	175,000,000
Common stock, shares issued	45,388,023	23,234,472
Common stock, shares outstanding	45,388,023	23,234,472

Consolidated Statements of Stockholders' (Deficit) Equity (Parenthetical) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2017
IPO
Issuance costs		$ 7,580
Over allotment option
Issuance costs		$ 55
Secondary public offering
Issuance costs	$ 5,587

Income Taxes (Tables)

12 Months Ended

Dec. 31, 2019

Income Taxes

Schedule of reconciliation of income tax rates


	2019		2018		2017
Income tax computed at federal statutory tax rate	21.0	%	21.0	%	34.0	%
State taxes, net of federal benefit	6.1	%	6.5	%	5.1	%
Permanent differences	(2.0)	%	0.6	%	(0.8)	%
Research and development expenditures	—	%	—	%	(2.3)	%
General business credits	10.3	%	4.2	%	8.2	%
Impact of tax reform	—	%	—	%	(27.3)	%
Impact of ownership shift	(53.3)	%	—	%	—	%
Change in valuation allowance	17.9	%	(32.3)	%	(16.9)	%
	—	%	—	%	—	%

Schedule of significant components of net deferred tax assets


	2019		2018
Deferred tax assets:
Net operating losses	$	40,554	$	27,916
Accrued expenses		2,520		1,585
Tax credit carryforwards		2,448		10,178
Licensed technology		1,402		1,160
Deferred revenue		1,315		12,410
Lease liabilities		791		—
Depreciation		492		405
Deferred expenses		—		112
Other		77		174
Total gross deferred tax assets		49,599		53,940
Valuation allowance		(48,889)		(53,940)
Net deferred tax assets less valuation allowance		710		—
Deferred tax liabilities
Right-of-use assets		(710)		—
Total gross deferred tax liabilities		(710)		—
Net deferred taxes	$	—	$	—

Subsequent events	12 Months Ended
Subsequent events	Dec. 31, 2019
Subsequent events
Subsequent events	17. Subsequent Events The Company considered the events or transactions occurring after the balance sheet date, but prior to the issuance of the consolidated financial statements, for potential recognition or disclosure in its consolidated financial statements. All significant subsequent events have been properly disclosed in the consolidated financial statements.

Accrued expenses (Tables)

12 Months Ended

Dec. 31, 2019

Accrued expenses

Schedule of accrued expenses


	December 31,		December 31,
	2019		2018
Accrued payroll and related expenses	$	4,037	$	3,042
Accrued preclinical, manufacturing and clinical expenses		4,230		8,314
Accrued professional fees		675		567
Accrued other		44		452
	$	8,986	$	12,375

Convertible Preferred Stock	12 Months Ended
Convertible Preferred Stock	Dec. 31, 2019
Preferred Stock
Preferred Stock	9. Preferred Stock As of December 31, 2019, the Company has 25,000,000 shares of authorized preferred stock. No shares of preferred stock have been issued.

Selected quarterly financial data (Unaudited)

12 Months Ended

Dec. 31, 2019

Selected quarterly financial data (unaudited)

Selected quarterly financial data (unaudited)

18. Selected Quarterly Financial Data (unaudited)

The following table contains selected quarterly financial information for 2019 and 2018. The Company believes that the following information reflects all normal recurring adjustments necessary for a fair statement of the information for the periods presented. The operating results for any quarter are not necessarily indicative of results for any future period.


	Three months ended

	March 31, 2019		June 30, 2019		September 30, 2019		December 31, 2019
Collaboration revenue	$	41,035	$	202	$	844	$	42
Operating expenses:
Research and development		15,143		13,766		13,701		12,430
General and administrative		4,443		4,192		4,436		4,212
Total operating expenses		19,586		17,958		18,137		16,642
Other income:
Interest income		452		725		608		441
Interest expense		—		(40)		(107)		(87)
Total other income (expense), net		452		685		501		354
Net loss	$	21,901	$	(17,071)	$	(16,792)	$	(16,246)
Net loss per share attributable to common stockholders — basic	$	0.72	$	(0.36)	$	(0.35)	$	(0.34)
Net loss per share attributable to common stockholders — diluted	$	0.70	$	(0.36)	$	(0.35)	$	(0.34)
Weighted-average number of common shares used in net loss per share attributable to common stockholders — basic		30,299,650		47,708,085		47,833,607		47,886,144
Weighted-average number of common shares used in net loss per share attributable to common stockholders — diluted		31,461,696		47,708,085		47,833,607		47,886,144


	Three months ended

	March 31, 2018		June 30, 2018		September 30, 2018		December 31, 2018
Collaboration revenue	$	3,064	$	4,191	$	2,151	$	1,188
Operating expenses:
Research and development		12,256		12,663		15,180		19,816
General and administrative		3,571		4,231		4,380		4,152
Total operating expenses		15,827		16,894		19,560		23,968
Other income:
Interest income		360		349		340		349
Total other income		360		349		340		349
Net loss	$	(12,403)	$	(12,354)	$	(17,069)	$	(22,431)
Net loss per share attributable to common stockholders — basic and diluted	$	(0.54)	$	(0.54)	$	(0.74)	$	(0.97)
Weighted-average number of common shares used in net loss per share attributable to common stockholders — basic and diluted		22,816,521		22,966,314		23,152,019		23,184,459

Debt

12 Months Ended

Dec. 31, 2019

Debt

Debt

8. Debt

On May 8, 2019, the Company entered into a loan and security agreement (the Credit Facility) with Silicon Valley Bank (SVB) pursuant to which the Company can borrow, at its option, up to $20,000, in up to four principal advances of at least $5,000 each (each, a Term Loan or collectively, the Term Loans) through August 31, 2020. The Company drew $5,000 on the Term Loan upon execution of the Credit Facility.

The Term Loans bear interest at a floating per annum rate equal to the greater of (i) 4.0% and (ii) 1.50% below the Prime Rate, as defined. The Company is obligated to make monthly interest only payments on each outstanding Term Loan commencing on the first calendar day of the month following the funding date of such Term Loan and continuing on the first calendar day of each month thereafter through August 31, 2020. Commencing on September 1, 2020 and continuing on the first calendar day of each month thereafter, the Company is obligated to make 30 consecutive equal payments of principal, together with applicable interest in arrears to SVB.

All outstanding principal and accrued and unpaid interest with respect to the Term Loans are due and payable in full on February 1, 2023. Upon repayment of the Term Loans, the Company is also required to make a final payment to SVB equal to 5.0% of the principal amount of the Term Loans then extended to the Company. This final payment is accreted under the effective interest method over the life of each loan. The Term Loans are secured by substantially all of the Company’s assets, except for its intellectual property which is subject to a negative pledge, and certain other customary exclusions.

At the Company’s option, it may prepay the outstanding principal balance of any Term Loans in whole but not in part, subject to a prepayment fee of: (a) 3.0% of the Term Loans then extended to the Company if the prepayment occurs on or prior to May 8, 2020, (b) 2.0% of the Term Loans then extended to the Company if the prepayment occurs after May 8, 2020 but on or prior to May 8, 2021, or (c) 1.0% of the Term Loans then extended to the Company if the prepayment occurs after May 8, 2021 but before February 1, 2023. In the event the Company has not borrowed a total of $20,000 upon the earlier of August 21, 2020, acceleration of the Company’s payment obligations or Company’s prepayment of the then extended Term Loans, the Company is required to pay an additional fee equal to 3.0% of any unborrowed portion of the committed funding (the Unused Term Loan Commitment Fee).

The Credit Facility includes customary affirmative, financial, and restrictive covenants applicable to the Company. Affirmative covenants include, among others, covenants requiring the Company to maintain its corporate existence and governmental approvals, deliver certain financial reports, maintain insurance coverage and satisfy certain requirements regarding deposit accounts. Financial covenants include maintaining a liquidity ratio (as defined in the Credit Facility) of 1.50 to 1.00. The restrictive covenants include, among others, requirements relating to the Company’s ability to transfer collateral, incur additional indebtedness, engage in mergers or acquisitions, pay dividends or make other distributions, make investments, create liens, sell assets and agree to a change in control, in each case subject to certain customary exceptions.

The Company’s payment obligations under the Credit Facility are subject to acceleration upon the occurrence of specified events of default, which include, but are not limited to, the occurrence of a material adverse change in the Company’s business, operations, or financial or other condition. Amounts outstanding upon the occurrence of an event of default are payable upon SVB’s demand and shall accrue interest at an additional rate of 5.0% per annum of the past due amount outstanding. As of December 31, 2019, the Company was in compliance with all covenants under the Credit Facility. As such, as of December 31, 2019, the classification of the loan balance as stated on the balance sheet was based on the timing of defined future payment obligations.

The Company incurred $215 of debt issuance costs related to external legal and transaction fees. The Company recorded the debt issuance costs as a direct deduction from the carrying value of the Term Loans which are amortized as interest expense using the effective-interest method over the term of the Term Loans.

As of December 31, 2019, the Company had drawn a Term Loan of $5,000.

As of December 31, 2019, Debt consisted of the following:


	December 31,
	2019
Total debt	$	5,000
Less: Current portion of long-term-debt		(667)
Total debt, net of current portion		4,333
Debt financing costs, net of accretion		(177)
Accretion related to final payment		45
Long-term debt, net	$	4,201

As of December 31, 2019, the estimated future principal payments due are as follows:


2020	$	667
2021		2,000
2022		2,000
2023		333
Total debt	$	5,000

During the year ended December 31, 2019 the Company recognized $214 of interest expense related to the Credit Facility.

Employee Benefit Plan	12 Months Ended
Employee Benefit Plan	Dec. 31, 2019
Employee Benefit Plan
Employee Benefit Plan	14. Employee Benefit Plan The Company has a defined contribution plan established under Section 401(k) of the Internal Revenue Code (401(k) Plan), which covers substantially all employees. Employees who have attained the age of 21 are eligible to participate in the 401(k) Plan with no service requirement. Employees may contribute up to 75% of eligible pay on a pre–tax basis up to the federal annual limits. For the years ended December 31, 2018 and 2017 and the period from January 1, 2019 to July 31, 2019, the Company matched the employees’ contributions at 50% on the first 6% up to $6. For the period from August 1, 2019 to December 31, 2019, the Company matched the employees’ contributions at 100% on the first 4% up to $7. For the years ended December 31, 2019, 2018 and 2017, the Company recorded expense of $404, $332 and $273, respectively, related to its contribution to its 401(k) Plan.

Consolidated Statements of Operations and Comprehensive Loss - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Consolidated Statements of Operations and Comprehensive Loss
Collaboration revenue	$ 42,123	$ 10,594	$ 17,545
Operating expenses:
Research and development	55,040	59,915	46,700
General and administrative	17,283	16,334	10,462
Total operating expenses	72,323	76,249	57,162
Other income (expense):
Interest income	2,226	1,398	910
Interest expense	(234)
Total other income (expense), net	1,992	1,398	910
Net loss	(28,208)	(64,257)	(38,707)
Other comprehensive loss:
Unrealized gain (loss) on marketable securities	33	141	(149)
Comprehensive loss	(28,175)	(64,116)	(38,856)
Net loss attributable to common stockholders - basic	(28,208)	(64,257)	(38,707)
Net loss attributable to common stockholders - diluted	$ (28,208)	$ (64,257)	$ (38,707)
Net loss per share attributable to common stockholders — basic and diluted (in dollars per share)	$ (0.65)	$ (2.79)	$ (3.22)
Weighted-average number of shares of common stock used in net loss per share attributable to common stockholders — basic and diluted	43,492,113	23,032,250	12,022,733
Type of Revenue	us-gaap:CollaborationMember	us-gaap:CollaborationMember	us-gaap:CollaborationMember

Property and Equipment (Details) - USD ($) $ in Thousands	12 Months Ended
Property and Equipment (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Property, equipment and software, net
Total property and equipment at cost	$ 9,373	$ 9,055
Property and equipment, accumulated depreciation	(7,209)	(6,361)
Property and equipment	2,164	2,694
Depreciation expense	1,245	1,257	$ 928
Laboratory equipment
Property, equipment and software, net
Total property and equipment at cost	6,419	6,134
Computer equipment, office equipment and software
Property, equipment and software, net
Total property and equipment at cost	1,068	1,035
Leasehold improvement
Property, equipment and software, net
Total property and equipment at cost	1,886	$ 1,886
Laboratory equipment , Under finance lease
Property, equipment and software, net
Total property and equipment at cost	$ 429

Leases - Supplemental balance sheet information (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Mar. 31, 2019	Dec. 31, 2018
Operating leases:
Operating lease right-of-use assets	$ 2,598
Operating lease liabilities, current	2,219
Operating lease liabilities	677
Finance leases
Property and equipment, gross	9,373		$ 9,055
Property and equipment, accumulated depreciation	$ (7,209)		$ (6,361)
Weighted-average remaining lease term: Operating leases	1 year 3 months 18 days
Weighted-average remaining lease term: Finance leases	3 years 8 months 12 days
Weighted-average discount rate: Operating leases (as a percent)	10.30%
Weighted-average discount rate: finance leases (as a percent)	6.90%
Property and equipment, Finance lease
Finance leases
Property and equipment, gross	$ 429	$ 429
Property and equipment, accumulated depreciation	(75)
Finance lease liability, current	$ 87
Finance Lease, Liability, Current, Statement of Financial Position	us-gaap:OtherLiabilitiesCurrent
Finance lease liability, noncurrent	$ 275
Finance Lease, Liability, Noncurrent, Statement of Financial Position	us-gaap:OtherLiabilitiesNoncurrent

Stock options - Stock based compensation expense (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Stock options
Stock-based compensation expense included in total operating expenses	$ 4,872	$ 3,884	$ 1,422
Stock options.
Stock options
Stock-based compensation expense included in total operating expenses	4,230	3,754	1,422
Unrecognized stock compensation cost	$ 7,450
Weighted-average amortization period of unrecognized stock compensation cost	2 years 6 months
Restricted stock units
Stock options
Stock-based compensation expense included in total operating expenses	$ 410
Unrecognized stock compensation cost	$ 1,379
Weighted-average amortization period of unrecognized stock compensation cost	1 year 6 months
Employee stock purchase plan
Stock options
Stock-based compensation expense included in total operating expenses	$ 232	130
Research and development
Stock options
Stock-based compensation expense included in total operating expenses	2,245	1,788	770
General and administrative
Stock options
Stock-based compensation expense included in total operating expenses	$ 2,627	$ 2,096	$ 652

Stock options

12 Months Ended

Dec. 31, 2019

Stock options

Stock options

11. Stock Options

Stock option plans

As of June 30, 2017, there were 3,141,625 options outstanding under the Company’s 2007 Stock Incentive Plan. The 2007 Plan expired in June 2017. Any cancellations under the 2007 Stock Incentive Plan will increase the options available under the 2017 Stock Incentive Plan as described below.

In June 2017 the Company’s shareholders approved the 2017 Stock Incentive Plan (the 2017 Plan or the Plan). Under the 2017 Plan initially, up to 2,255,000 shares of common stock may be granted to the Company's employees, officers, directors, consultants and advisors in the form of options, restricted stock units (RSUs) or other stock-based awards. The number of shares of common stock issuable under the Plan will be cumulatively increased annually by 4% of the outstanding shares or such lesser amount specified by the Board. The terms of the awards are determined by the Board, subject to the provisions of the Plan. As of December 31, 2019 there were 1,511,587 shares available for future issuance under the Plan, including 929,378 shares automatically added to the plan on January 1, 2019.

With respect to incentive stock options, the exercise price per share will equal the fair market value of the common stock on the date of grant, as determined by the Board, and the vesting period is generally four years. Nonqualified stock options will be granted at an exercise price established by the Board at its sole discretion (which has not been less than fair market value on the date of grant) and the vesting periods may vary. Options granted under the Plan expire no later than 10 years from the date of grant. The Board may accelerate vesting or extend the expiration of granted options in the case of a merger, consolidation, dissolution, or liquidation of the Company.

Stock option activity

A summary of the activity under the Plan is as follows:


		Weighted-		Weighted Average
	Number	Average		Remaining	Aggregate
	of Shares	Exercise Price		Contractual Term	Intrinsic Value

Outstanding at January 1, 2019	3,746,567	$	6.58	7.6	$	3,897
Granted	1,698,383		3.74
Exercised	(81,298)		2.15
Cancelled	(642,880)		9.42
Outstanding at December 31, 2019	4,720,772	$	5.24	7.3	$	9,836

Exercisable at December 31, 2019	2,684,095	$	4.49	6.3	$	7,064

The weighted-average grant date fair value of options granted during the years ended December 31, 2019, 2018 and 2017, was $2.47, $8.78 and $5.53 per share, respectively.

Cash received from the exercise of stock options was $175, $918 and $452 for the years ended December 31, 2019, 2018 and 2017, respectively.

Restricted stock units

In July 2019, the Company issued RSUs with service conditions to employees. Vesting of these awards is contingent on the fulfillment of the service conditions during the vesting term. The awards cliff-vest two years after the grant date.


		Weighted-Average			Weighted-Average
	Number	Remaining	Aggregate		Grant Date
	of Shares	Contractual Term	Intrinsic Value		Fair Value

Unvested at January 1, 2019	—	—	$	—	$	—
Granted	449,331	—				4.00
Vested	—	—				—
Forfeited	(1,995)	—				4.00
Unvested at December 31, 2019	447,336	1.5	$	2,564	$	4.00

Stock-based compensation expense

The Company uses the provisions of ASC 718, Stock Compensation, to account for all stock-based awards to employees and nonemployees.

The measurement date for employee awards is generally the date of grant. Stock-based compensation expense is recognized over the requisite service period, which is generally the vesting period, using the straight-line method.

The following table presents stock-based compensation expense by award type included within the Company’s consolidated statement of operations and comprehensive loss:


	Year ended
	December 31,
		2019		2018		2017
Stock options	$	4,230	$	3,754	$	1,422
Restricted stock units		410		—		—
Employee stock purchase plan		232		130		—
Stock-based compensation expense included in Total operating expenses	$	4,872	$	3,884	$	1,422

The following table presents stock-based compensation expense as reflected in the Company’s consolidated statements of operations and comprehensive loss:


	Year ended
	December 31,
		2019		2018		2017
Research and development	$	2,245	$	1,788	$	770
General and administrative		2,627		2,096		652
Stock-based compensation expense included in Total operating expenses	$	4,872	$	3,884	$	1,422

As of December 31, 2019, there was $7,450 and $1,379 of unrecognized compensation expense related to unvested stock options and unvested RSUs, respectively, that is expected to be recognized over a weighted average period of 2.5 and 1.5 years.

The fair value of each option award is estimated on the date of grant using the Black–Scholes option pricing model with the following weighted average assumptions:


	December 31,
	2019		2018		2017

Risk-free interest rate	2.3	%	2.7	%	2.2	%
Expected dividend yield	—	%	—	%	—	%
Expected term (years)	5.99		6.07		6.21
Expected stock price volatility	74	%	73	%	67	%

Expected volatility for the Company’s common stock was determined based on the historical volatility of comparable publicly traded companies. The risk-free interest rate is based on the yield of U.S. Treasury securities consistent with the expected term of the option. No dividend yield was assumed as the Company has not historically and does not expect to pay dividends on its common stock. The expected term of the options granted is based on the use of the simplified method, in which the expected term is presumed to be the mid-point between the vesting date and the end of the contractual term.

Prior to the Company’s initial public offering in June 2017, the fair value of the common stock had been determined by the Board at each date of grant based on the variety of factors, including the Company’s financial position and historical financial performance, the status of developments within the Company’s research and development activities, the composition and ability of the current research and management team, an evaluation of the Company’s competition, the current climate in the marketplace, the illiquid nature of the common stock, the effect of the rights and preferences of the preferred shareholders, and the prospects of the liquidity event, among others.

The fair value of RSUs is determined based on the closing price of the Company’s common stock on the date of grant.

Employee Stock Purchase Plan

During the year ended December 31, 2017, the Board adopted and the Company's stockholders approved the 2017 employee stock purchase plan (the 2017 ESPP). The Company initially reserved 225,000 shares of common stock for issuance under the 2017 ESPP. During the years ended December 31, 2019 and 2018 the Company issued 140,073 and 42,186 shares, respectively, under the 2017 ESPP. As of December 31, 2019, there were 275,085 available for issuance, including 232,344 shares automatically added to the 2017 ESPP on January 1, 2019.

Debt - Agreement (Details) - Credit Facility	May 08, 2019 USD ($) installment
Debt
Maximum borrowing capacity	$ 20,000,000
Number of principal advances	4
Drawn amount	$ 5,000,000
Number of monthly payments of principal to be paid following period of monthly interest only payments \| installment	30
Final payment as percentage of original principal amount	5.00%
Commitment fee (as a percent)	3.00%
Liquidity ratio	1.50
Additional rate in event of default (as a percent)	5.00%
Debt issuance costs	$ 215,000
Prepayment occurs prior to May 8, 2020
Debt
Prepayment fee (as a percent)	3.00%
Prepayment occurs between May 8, 2020 and May 8, 2021
Debt
Prepayment fee (as a percent)	2.00%
Prepayment occurs after May 8, 2021 but before maturity date and first anniversary of funding date
Debt
Prepayment fee (as a percent)	1.00%
Minimum
Debt
Term loan tranche amount	$ 5,000,000
Interest rate (as a percent)	4.00%
Prime rate
Debt
Spread (as a percent)	(1.50%)

Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2019

Summary of Significant Accounting Policies

Schedule of cash, cash equivalents and restricted cash


	Year ended				Year ended
	December 31, 2019				December 31, 2018
	Beginning		End		Beginning		End
	of period		of period		of period		of period
Cash and cash equivalents	$	59,634	$	62,351	$	26,591	$	59,634
Restricted cash included in other assets, noncurrent		371		321		371		371
Total cash, cash equivalents and restricted cash per statement of cash flows	$	60,005	$	62,672	$	26,962	$	60,005

Schedule of outstanding potentially dilutive securities excluded from calculation of diluted net loss per share

The following table sets forth the outstanding potentially dilutive securities that have been excluded from the calculation of diluted net loss per share because to include them would be anti-dilutive (in common stock equivalent shares):


	Year ended
	December 31,
	2019	2018	2017
Stock options	4,720,772	3,746,567	3,205,485
Unvested restricted stock units	447,336	—	—
Warrants	39,474	110,365	110,365
	5,207,582	3,856,932	3,315,850

Schedule of estimated useful life of property and equipment


Computer equipment, office equipment and software		3 years
Laboratory equipment		5 years
Leasehold improvements		Shorter of useful life or life of lease

Nature of business and basis of presentation	12 Months Ended
Nature of business and basis of presentation	Dec. 31, 2019
Nature of business and basis of presentation
Nature of business and basis of presentation	1. Nature of Business and Basis of Presentation Mersana Therapeutics, Inc. is a clinical-stage biopharmaceutical company focused on developing antibody drug conjugates (ADCs) that offer a clinically meaningful benefit for cancer patients with significant unmet need. The Company leveraged 20 years of industry learning in the ADC field to develop proprietary and differentiated technology platforms that enable it to design ADCs to have improved efficacy, safety and tolerability relative to existing ADC therapies. The Company’s innovative platforms which include Dolaflexin and Dolasynthen, delivering its DolaLock payload, as well as Immunosynthen, delivering a novel stimulator of interferon genes (STING) agonist, compose a highly efficient product engine that has enabled a robust discovery pipeline for the Company and its partners. The Company’s product candidates include XMT‑1536 and XMT-1592. XMT-1536, an ADC utilizing the Company’s Dolaflexin platform and targeting NaPi2b, an antigen broadly expressed in ovarian cancer and non-small cell lung cancer (NSCLC) adenocarcinoma is currently in a Phase 1 study including both a dose escalation cohort and two expansion cohorts in ovarian cancer and NSCLC adenocarcinoma. XMT-1592 uses one of the Company’s new platforms, Dolasynthen, and also targets NaPi2b. The Company expects to file an Investigational New Drug (IND) application and initiate a Phase 1 dose escalation study of XMT-1592 in patients with tumors likely to express NaPi2b in the first half of 2020. The Company is subject to risks common to companies in the biotechnology industry, including but not limited to, the need for additional capital, risks of failure of preclinical and clinical studies, the need to obtain marketing approval and reimbursement for any drug product candidate that it may identify and develop, the need to successfully commercialize and gain market acceptance of its product candidates, dependence on key personnel, protection of proprietary technology, compliance with government regulations, development of technological innovations by competitors, reliance on third party manufacturers and the ability to transition from pilot-scale production to large-scale manufacturing of products. The Company has incurred net losses since inception. The Company’s net loss was $28,208, $64,257 and $38,707 for the years ended December 31, 2019, 2018 and 2017, respectively. The Company expects to continue to incur operating losses for at least the next several years. As of December 31, 2019, the Company had an accumulated deficit of $192,374. The future success of the Company is dependent on its ability to identify and develop its product candidates, and ultimately upon its ability to attain profitable operations. The Company has devoted substantially all of its financial resources and efforts to research and development and general and administrative expense to support such research and development. Net losses and negative cash flows have had, and will continue to have, an adverse effect on the Company’s stockholders’ equity and working capital, and accordingly, its ability to execute its future operating plans. The Company plans to obtain funding from collaborations, licensing agreements or other strategic partnerships or raise additional capital through the issuance and sale of its common stock. There is inherent uncertainty associated with these fundraising activities and they are not considered probable. In the absence of such funding, the Company plans to strategically manage its uncommitted spend to execute its priorities and implement cost saving measures to reduce research and development and general and administrative expenditures which could include limiting or delaying or terminating preclinical studies or other development activities for one or more of the Company’s ADC product candidates. It is considered probable that the Company can successfully implement efforts to manage uncommitted spending and carry out necessary cost saving measures. Therefore, the Company expects its plans will enable its cash, cash equivalents and marketable securities as of the filing of its Annual Report on Form 10-K to be sufficient to fund its projected operating plan through at least the next twelve months, including the Phase 1 clinical study for XMT-1536 and the planned dose escalation study for XMT-1592. The funding requirements of the Company’s operating plan, however, are based on estimates that are subject to risks and uncertainties and may change as a result of many factors currently unknown. Although management continues to pursue the plans described above, there is no assurance that the Company will be successful in obtaining sufficient funding on terms acceptable to the Company to fund continuing operations, if at all. Until such time as the Company can generate substantial product revenues, if ever, the Company expects to finance its cash needs through a combination of equity offerings, debt financings, strategic partnerships and licensing arrangements. The terms of any future financing may adversely affect the holdings or the rights of the Company’s existing stockholders. The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP) and the rules and regulations of the Securities and Exchange Commission (SEC). Any reference in these notes to applicable guidance is meant to refer to the authoritative U.S. GAAP as found in the Accounting Standards Codification (ASC) and Accounting Standards Updates (ASU) of the Financial Accounting Standards Board (FASB). All dollar amounts, except per share data in the text and tables herein, are stated in thousands unless otherwise indicated.

Collaboration agreements

12 Months Ended

Dec. 31, 2019

Collaboration agreements

Collaboration agreements

3. Collaboration Agreements

Merck KGaA

In June 2014, the Company entered into a Collaboration and Commercial License Agreement with Merck KGaA (the Merck KGaA Agreement). Upon the execution of the Merck KGaA Agreement, Merck KGaA paid the Company a nonrefundable technology access fee of $12,000 for the right to develop ADCs directed to six exclusive targets over a specified period of time. No additional fees are due when a target is designated and the commercial license to the target is granted. Merck KGaA will be responsible for the product development and marketing of any products resulting from this collaboration. All six targets were designated prior to 2018.

Under the terms of the Merck KGaA Agreement, the Company and Merck KGaA develop research plans to evaluate Merck KGaA's antibodies as ADCs incorporating the Company's technology. The Company receives reimbursement for its efforts under the research plans. The goal of the research plans is to provide Merck KGaA with sufficient information to formally nominate a development candidate and begin IND-enabling studies or cease development on the designated target.

In addition to the payments received for research and development activities performed on behalf of Merck KGaA, the Company is also eligible to receive up to a total of $780,000 in future milestones related to all targets under the Merck KGaA Agreement, plus low to mid single digit royalties on the commercial sales of any resulting products during the applicable royalty term. The total milestones are categorized as follows: development milestones $84,000; regulatory milestones $264,000; and sales milestones $432,000. There are six individual development milestones per target, payable upon the completion of various activities from the delivery of ADCs meeting defined specifications, through the dosing in a Phase 3 clinical trial. There are five regulatory milestones, which are payable upon regulatory approvals for a first indication in each of the U.S., European Union and Japanese markets and regulatory approvals for both a second and a third indication in the United States. There are three individual commercial milestones, which are payable upon the attainment of certain defined thresholds for annual net sales.

Prior to 2018, the Company had received $3,000 related to development milestones under the Merck KGaA Agreement. There have been no additional milestone payments in the years ended December 31, 2018 or 2019. The next potential milestone payment the Company will be eligible to receive will be a development milestone of $500 on Merck KGaA's designation of a preclinical development candidate for any target. Revenue will be recognized when achievement of the milestone is considered probable.

Unless earlier terminated, the Merck KGaA Agreement will expire upon the expiration of the last royalty term for a product under the Merck KGaA Agreement, after which time, Merck KGaA will have a perpetual, royalty-free license, or if Merck KGaA does not designate any ADC product candidates produced by the Company under the Merck KGaA Agreement as preclinical development candidates, upon the expiration of the last to expire research program. Merck KGaA may terminate the Merck KGaA Agreement in its entirety or with respect to any target for convenience upon 60 days' prior written notice. Each party may terminate the Merck KGaA Agreement in its entirety upon bankruptcy or similar proceedings of the other party or upon an uncured material breach of the Merck KGaA Agreement by the other party. However, if such breach only relates to one target, the agreement may only be terminated with respect to such target.

In May 2018, the Company entered into a Supply Agreement with Merck KGaA (the Merck KGaA Supply Agreement). Under the terms of the Merck KGaA Supply Agreement, the Company will provide Merck KGaA preclinical non-GMP ADC Drug Substance and clinical GMP Drug Substance for use in clinical trials associated with one of the antibodies designated under the Merck KGaA Agreement. The Company receives fees for its efforts under the Merck KGaA Supply Agreement and reimbursement equal to the supply cost. The Company may also enter into future supply agreements to provide clinical supply material should Merck KGaA pursue clinical development of any other candidates nominated under the Merck KGaA Agreement.

Accounting Analysis

The Company identified the following performance obligations under the Merck KGaA Agreement: (i) exclusive license and research services for six designated targets, (ii) rights to future technological improvements and (iii) participation of project team leaders and providing joint research committee services.

The Company has concluded that each license for a designated target is not distinct from the research services performed related to the designated target as Merck KGaA cannot obtain the benefit of the license without the related research services. Each license for a designated target and the related services performance obligation is considered distinct from every other license for a designated target and related services performance obligation as each research plan is pursued independent of every other research plans for other designated targets.

The Company utilizes the expected value approach to estimate the amount of consideration related to the payment of fees associated with development and research services. The Company utilizes the most likely amount approach to estimate any development and regulatory milestone payments to be received. As of the date of initial application of Topic 606, there were no milestones payments that had not already been received, included in the estimated transaction price. The Company considered the stage of development and the remaining risks associated with the remaining development required to achieve the milestone, as well as whether the achievement of the milestone is outside the control of the Company or Merck KGaA. The milestone payment amounts were fully constrained, as a result of the uncertainty whether any of the associated milestones would be achieved. The Company has determined that any commercial milestones and sales based royalties will be recognized when the related sales occur as they were determined to relate predominantly to the license granted and therefore have also been excluded from the transaction price.

The transaction price was allocated to the performance obligations based on the relative estimated standalone selling prices of each performance obligation or in the case of certain variable consideration to one or more performance obligations. The estimated standalone selling prices for performance obligations, that include a license and research services, were developed using the estimated selling price of the license and an estimate of the overall effort to perform the research service and an estimated market rate for research services. The estimated standalone selling price of the licenses was established based on comparable transactions. The estimated standalone selling price for the rights to future technological improvements was developed based on the estimated selling prices of a license or rights received, as well as considering the probability that additional technology would be made available or the probability the counterpart would utilize the technology. The estimated standalone selling price for the joint research committee services was developed using an estimate of the time and costs incurred to participate in the committees.

The Company re-evaluates the transaction price in each reporting period and as uncertain events are resolved or other changes in circumstances occur. As of December 31, 2018, the total transaction price for the Merck KGaA Agreement was $22,070. In the third quarter of 2019, the Company revised its estimate for fees associated with research and development activities under the Merck KGaA Agreement to $6,500, a decrease of $570. The revised total transaction price for the Merck KGaA Agreement is $21,500. The transaction price of $21,500 was allocated to the performance obligations as follows: approximately $3,941 for each of the license and corresponding research and development services units of account for the first and second designated targets; $3,439 for each of the license and corresponding research and development services units of account for the third and sixth designated target; $3,152 for the license and corresponding research and development services unit of account for the fourth designated target; $2,921 for the license and corresponding research and development services unit of account for the fifth designated target; $425 for rights to future technological improvements; and $242 for joint research committee services.

The Company is recognizing revenue related to the exclusive license and research and development services performance obligation over the estimated period of the research and development services using a proportional performance model. The Company measures proportional performance based on the costs incurred relative to the total costs expected to be incurred. To the extent that the Company receives fees for the research services as they are preformed, these amounts are recorded as deferred revenue. Revenue related to future technological improvements and joint research committee services will be recognized ratably over the performance period (which in the case of the joint research committee services approximate the time and cost incurred each period), which are 10 and 5 years, respectively. The Company is continuing to reassess the estimated remaining term at each subsequent reporting period.

During the years ended December 31, 2019, 2018 and 2017, the Company recorded collaboration revenue of $853, $2,444 and $3,636, respectively, related to its efforts under the Merck KGaA Agreement. During the year ended December 31, 2019, the Company recognized collaboration revenue and corresponding research and development expense of $1,280 related to the Merck KGaA Supply Agreement. There were no amounts recognized during the years ended December 31, 2018 and 2017 related to the Merck KGaA Supply Agreement. Included in accounts receivable as of December 31, 2019 and 2018 was $0 and $450, respectively, related to the Merck KGaA Agreement and Merck KGaA Supply Agreement.

As of December 31, 2019 and 2018, the Company had recorded $4,815 and $5,462, respectively, in deferred revenue related to the Merck KGaA Agreement and Merck KGaA Supply Agreement that will be recognized over the remaining performance period.

Takeda XMT-1522 Strategic Partnership

In January 2016, the Company entered into a Development Collaboration and Commercial License Agreement with Takeda’s wholly owned subsidiary, Millennium Pharmaceuticals, Inc. for the development and commercialization of XMT-1522 (the XMT-1522 Agreement). Under the XMT-1522 Agreement, Takeda was granted the exclusive right to commercialize XMT-1522 outside of the United States and Canada. Under the XMT-1522 Agreement, the Company was responsible for conducting certain Phase 1 development activities for XMT-1522, including the ongoing Phase 1 clinical trial, at its own expense. The parties agreed to collaborate on the further development of XMT-1522 in accordance with a global development plan (Post-Phase 1 Development). On January 2, 2019, the Company received notice from Takeda stating that Takeda was exercising its right to terminate the XMT-1522 Agreement upon 30 days’ prior written notice. The XMT-1522 Agreement terminated in accordance with its provisions, and the Company and Takeda wound down activities related to the XMT-1522 Agreement as of March 31, 2019. Under the XMT-1522 Agreement, the Company and Takeda shared equally all agreed Post-Phase 1 Development costs through the date of termination and for a period of 30 days after the effective termination date.

Takeda Strategic Research and Development Partnership

In March 2014, the Company entered into a Research Collaboration and Commercial License Agreement with Takeda’s wholly owned subsidiary, Millennium Pharmaceuticals, Inc. (the 2014 Agreement). The 2014 Agreement was amended in January 2015 and amended and restated in January 2016 (the 2016 Restated Agreement). The agreements provided Takeda with the right to develop ADCs directed to a total of seven exclusive targets, designated by Takeda, over a specified period of time. On January 2, 2019, the Company received notice from Takeda stating that Takeda was exercising its right to terminate the 2016 Restated Agreement upon 45 days’ prior written notice. The 2016 Restated Agreement terminated in accordance with its provisions, and the Company and Takeda wound down activities related to the 2016 Restated Agreement as of March 31, 2019.

Accounting Analysis

The Company’s collaboration agreements with Takeda were terminated following receipt of written notices during the first quarter of 2019. As there are no further performance obligation, the Company recognized the remaining deferred revenue of $39,965 related to the termination of the Takeda agreements in the first quarter of 2019.

Prior to the termination of the agreements, the Company had identified 14 performance obligations in the agreements. The Company concluded that the license related to each of the designated targets was not distinct from the research services performed related to each of the designated targets as Takeda could not have obtain the benefit of the license without the related research services. Each license to a designated target and the related service performance obligation was considered distinct from every other license to a designated target and related services performance obligation as each research plan was pursued independent of the any other research plans for other designated targets. Further, the material rights provided were determined to be distinct from the other performance obligations in the arrangement as they were options in the contract Takeda agreements and not required for Takeda to obtain the benefit of the other promised goods or services in the arrangement. Similarly, the Company concluded that the XMT-1522 license and the related research and development services, including the Phase 1 development and the transfer of certain materials and know-how related to the Company's manufacturing processes, were one performance obligation. The license to the Company's intellectual property was not determined to be distinct from the research and related development services that the Company was obligated to perform. For the years ended December 31, 2019, 2018 and 2017, the Company recorded total revenue of $39,965, $5,868 and $13,784, respectively, related to its efforts under the 2016 Restated Agreement and the XMT-1522 Agreement. Included in accounts payable as of December 31, 2019 and 2018 was $2,310 and $2,749, respectively, related to the Takeda agreements. As of December 31, 2019 and 2018, the Company had $0 and $39,965, respectively, of deferred revenue related to the Takeda agreements.

The Company concluded that the Post-Phase 1 Development activities under the XMT-1522 Agreement represented joint operating activities in which both parties were active participants and of which both parties were exposed to significant risks and rewards that are dependent on the commercial success of the activities. Accordingly, the Company accounted for the Post-Phase 1 Development activities in accordance with ASC 808. For the years ended December 31, 2019, 2018 and 2017, the Company was billed approximately $200, $8,046 and $3,408, respectively, from Takeda representing Post-Phase 1 Development costs incurred by Takeda. These amounts have been reflected as research and development costs in the consolidated statement of operations. The Company did not perform any Post-Phase 1 Development activities or incur any associated costs prior to January 1, 2018. During the years ended December 31, 2019, 2018 and 2017, the Company billed Takeda $195, $3,746 and $0, respectively, related to ASC 808 costs.

Summary of Contract Assets and Liabilities

The following table presents changes in the balances of our contract assets and liabilities during the years ended December 31, 2019 and December 31, 2018:


	Balance at
	Beginning						Balance at
	of Period		Additions		Deductions		End of Period
Year ended December 31, 2019
Contract assets	$	—	$	—	$	—	$	—
Contract liabilities:
Deferred revenue	$	46,196	$	210	$	41,591	$	4,815

	Balance at
	Beginning						Balance at
	of Period		Additions		Deductions		End of Period
Year ended December 31, 2018
Contract assets	$	—	$	—	$	—	$	—
Contract liabilities:
Deferred revenue	$	52,439	$	2,851	$	9,094	$	46,196

During the year ended December 31, 2019, the Company recognized the following revenues as a result of changes in the contract asset and the contract liability balances in the respective periods.


	Year ended
	December 31,
	2019		2018
Revenue recognized in the period from:
Amounts included in the contract liability at the beginning of the period	$	41,591	$	8,704
Performance obligations satisfied in previous periods	$	—	$	—

Other Revenue

The Company has provided limited services for a collaboration partner, Asana BioSciences. For the years ended December 31, 2019, 2018 and 2017, the Company recorded revenue of $25, $782 and $125, respectively, related to these services. In addition, during the year ended December 31, 2018, the Company recognized revenue of $1,500 related to a milestone achieved upon the completion of a GLP toxicology study by Asana BioSciences. The next potential milestone the Company is eligible to receive is $2,500 upon dosing the fifth patient in a Phase 1 clinical study by Asana BioSciences. As of December 31, 2019, the Company considered this next milestone to be fully constrained as there is considerable judgment involved in determining whether it is probable that a significant revenue reversal would occur. As part of its evaluation of the constraint, the Company considered numerous factors, including the fact that achievement of the milestone is outside the control of the Company and there is a high level of uncertainty in achieving this milestone, as this would require initiation of clinical trials by the collaboration partner. The Company reevaluates the probability of achievement of a milestone subject to constraint at each reporting period and as uncertain events are resolved or other changes in circumstances occur.

Accrued Expenses (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Accrued expenses
Accrued payroll and related expenses	$ 4,037	$ 3,042
Accrued preclinical, manufacturing and clinical expenses	4,230	8,314
Accrued professional fees	675	567
Accrued other	44	452
Total	$ 8,986	$ 12,375

Summary of Significant Accounting Policies - Property and Equipment (Details)	12 Months Ended
	Dec. 31, 2019
Computer equipment, office equipment and software
Property, equipment and software, net
Estimated useful life	3 years
Laboratory equipment
Property, equipment and software, net
Estimated useful life	5 years

Collaboration Agreements (Tables)

12 Months Ended

Dec. 31, 2019

Collaboration agreements

Schedule of changes in the balances of our contract assets and liabilities and recognized revenue

The following table presents changes in the balances of our contract assets and liabilities during the years ended December 31, 2019 and December 31, 2018:


	Balance at
	Beginning						Balance at
	of Period		Additions		Deductions		End of Period
Year ended December 31, 2019
Contract assets	$	—	$	—	$	—	$	—
Contract liabilities:
Deferred revenue	$	46,196	$	210	$	41,591	$	4,815

	Balance at
	Beginning						Balance at
	of Period		Additions		Deductions		End of Period
Year ended December 31, 2018
Contract assets	$	—	$	—	$	—	$	—
Contract liabilities:
Deferred revenue	$	52,439	$	2,851	$	9,094	$	46,196

During the year ended December 31, 2019, the Company recognized the following revenues as a result of changes in the contract asset and the contract liability balances in the respective periods.


	Year ended
	December 31,
	2019		2018
Revenue recognized in the period from:
Amounts included in the contract liability at the beginning of the period	$	41,591	$	8,704
Performance obligations satisfied in previous periods	$	—	$	—

Marketable securities (Details) $ in Thousands	Dec. 31, 2019 USD ($) security	Dec. 31, 2018 USD ($) security
Marketable securities
Amortized Cost	$ 37,414	$ 10,505
Gross Unrealized Gains	25
Gross Unrealized Losses		(8)
Marketable securities	$ 37,439	$ 10,497
Number of securities in an unrealized loss position \| security	0	3
Aggregate fair value of securities in an unrealized loss position for more than 12 months		$ 10,497
Commercial paper
Marketable securities
Amortized Cost	$ 11,940
Marketable securities	11,940
Corporate bonds
Marketable securities
Amortized Cost	11,990
Gross Unrealized Gains	20
Marketable securities	12,010
U.S. Treasuries
Marketable securities
Amortized Cost	13,484	10,505
Gross Unrealized Gains	5
Gross Unrealized Losses		(8)
Marketable securities	$ 13,489	$ 10,497

Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2019

Summary of Significant Accounting Policies

Principles of Consolidation

The accompanying consolidated financial statements include those of the Company and its wholly-owned subsidiary, Mersana Securities Corp. All intercompany balances and transactions have been eliminated.

Use of Estimates

The preparation of the Company's consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, equity, revenue, expenses and related disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenue and expenses during the reporting period. On an ongoing basis, the Company's management evaluates its estimates which include, but are not limited to, management's judgments with respect to the separate units of accounting and best estimate of selling price of those units of accounting within its revenue arrangements, accrued expenses, valuation of stock-based awards and income taxes. Actual results could differ from those estimates.

Segment Information

Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision-maker, or decision making group, in deciding how to allocate resources and assess performance. The Company views its operations and manage its business as a single operating segment, which is the business of discovering and developing ADCs.

Research and Development

Research and development costs are expensed as incurred and include:

employee-related expenses, including salaries, bonuses, benefits, travel and stock-based compensation expense;

fees and expenses incurred under agreements with contract research organizations, investigative sites and other entities in connection with the conduct of preclinical and clinical studies and related services;

the cost of acquiring, developing and manufacturing ADC product candidates, clinical study materials and other research and development materials;

fees and costs related to regulatory filings and activities;

costs associated with collaboration agreements and license fees and milestone payments related to license agreements;

facilities, depreciation and other expenses, which include direct and allocated expenses for rent, utilities, maintenance of facilities, insurance and other supplies; and

other costs associated with clinical, preclinical, discovery and other research activities.

Costs for certain development activities, such as clinical studies and manufacturing development activities, are recognized based on an evaluation of the progress to completion of specific tasks using data such as patient enrollment, clinical site activations, and information provided to the Company by its vendors on their actual costs incurred or level of effort expended. Payments for these activities are based on the terms of the individual arrangements, which may differ from the pattern of costs incurred, and are reflected on the consolidated balance sheets as prepaid or accrued research and development expenses.

Revenue Recognition

The Company enters into collaboration agreements which are within the scope of Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers (Topic 606), under which the Company licenses rights to its technology and certain of the Company’s product candidates and performs research and development services for third parties. The terms of these arrangements typically include payment of one or more of the following: non-refundable, up-front fees; reimbursement of research and development costs; development, regulatory and commercial milestone payments; and royalties on net sales of licensed products.

Under Topic 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To determine the appropriate amount of revenue to be recognized for arrangements determined to be within the scope of Topic 606, the Company performs the following five steps: (i) identification of the promised goods or services in the contract; (ii) determination of whether the promised goods or services are performance obligations; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect consideration it is entitled to in exchange for the goods or services it transfers to the customer.

The promised good or services in the Company’s arrangement typically consist of license rights to the Company’s intellectual property and research and development services. The Company also has optional additional items in contracts, which are considered marketing offers and are accounted for as separate contracts with the customer if such option is elected by the customer, unless the option provides a material right which would not be provided without entering into the contract. Performance obligations are promised goods or services in a contract to transfer a distinct good or service to the customer. Promised goods or services are considered distinct when (i) the customer can benefit from the good or service on its own or together with other readily available resources or (ii) the promised good or service is separately identifiable from other promises in the contract. In assessing whether promised goods or services are distinct, the Company considers factors such as the stage of development of the underlying intellectual property, the capabilities of the customer to develop the intellectual property on their own or whether the required expertise is readily available.

The Company estimates the transaction price based on the amount expected to be received for transferring the promised goods or services in the contract. The consideration may include both fixed consideration and variable consideration. At the inception of each arrangement that includes variable consideration and at each reporting period, the Company evaluates the amount of potential payment and the likelihood that the payments will be received. The Company utilizes either the most likely amount method or expected amount method to estimate the amount expected to be received based on which method better predicts the amount expected to be received. If it is probable that a significant revenue reversal would not occur, the variable consideration is included in the transaction price. We assessed each of our revenue generating arrangements in order to determine whether a significant financing component exists and concluded that a significant financing component does not exist in any of our arrangements because: (a) the promised consideration approximates the cash selling price of the promised goods and services; and (b) timing of payment approximates the transfer of goods and services and performance is over a relatively short period of time within the context of the entire term of the contract.

The Company’s contracts often include development and regulatory milestone payments. At contract inception and at each reporting period, the Company evaluates whether the milestones are considered probable of being reached and estimates the amount to be included in the transaction price using the most likely amount method. If it is probable that a significant revenue reversal would not occur, the associated milestone value is included in the transaction price. Milestone payments that are not within the Company’s control or the licensee’s control, such as regulatory approvals, are not included in the transaction price. At the end of each subsequent reporting period, the Company re-evaluates the probability of achievement of such development milestones and any related constraint, and if necessary, adjusts its estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect license, collaboration and other revenues and earnings in the period of adjustment.

For arrangements that include sales-based royalties, including milestone payments based on the level of sales, and the license is deemed to be the predominant item to which the royalties relate, the Company recognizes revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied). To date, the Company has not recognized any royalty revenue resulting from any of the Company’s collaboration arrangements.

The Company allocates the transaction price based on the estimated standalone selling price of the underlying performance obligations or in the case of certain variable consideration to one or more performance obligations. The Company must develop assumptions that require judgment to determine the stand-alone selling price for each performance obligation identified in the contract. The Company utilizes key assumptions to determine the stand-alone selling price, which may include other comparable transactions, pricing considered in negotiating the transaction and the estimated costs to complete the respective performance obligation. Certain variable consideration is allocated specifically to one or more performance obligations in a contract when the terms of the variable consideration relate to the satisfaction of the performance obligation and the resulting amounts allocated to each performance obligation are consistent with the amounts the Company would expect to receive for each performance obligation.

For performance obligations consisting of licenses and other promises, the Company utilizes judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue from non-refundable, up-front fees. The Company evaluates the measure of progress each reporting period and, if necessary, adjusts the measure of performance and related revenue recognition. If the license to the Company’s intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, the Company will recognize revenue from non-refundable, up-front fees allocated to the license when the license is transferred to the customer and the customer is able to use and benefit from the license.

The Company receives payments from its customers based on billing schedules established in each contract. Such billings generally have 30-day terms. Up-front payments and fees are recorded as deferred revenue upon receipt or when due until the Company performs its obligations under these arrangements. Amounts are recorded as accounts receivable when the right to consideration is unconditional.

Effective January 1, 2018, the Company adopted the provisions of Topic 606, using the modified retrospective transition method. Under this method, the Company recorded the cumulative effect of initially applying the new standard to all contracts in process as of the date of adoption. This standard applied to all contracts with customers, except for contracts that are within the scope of other standards, such as leases, insurance, collaboration arrangements and financial instruments. The adoption of the new revenue recognition guidance resulted in increases of $2,031 in deferred revenue and accumulated deficit as of January 1, 2018. For the years ended December 31, 2019 and 2018, revenue was not materially impacted as compared to the Company’s prior revenue recognition methodology under ASC 605 Revenue Recognition.

Collaborative Arrangements

The Company records the elements of its collaboration agreements that represent joint operating activities in accordance with ASC Topic 808, Collaborative Arrangements (ASC 808). Accordingly, the elements of the collaboration agreements that represent activities in which both parties are active participants and to which both parties are exposed to the significant risks and rewards that are dependent on the commercial success of the activities, are recorded as collaborative arrangements. The Company considers the guidance in ASC Topic 606 in determining the appropriate treatment for the transactions between the Company and its collaborative partners and the transactions between the Company and third parties. Generally, the classification of transactions under the collaborative arrangements is determined based on the nature and contractual terms of the arrangement along with the nature of the operations of the participants. To the extent revenue is generated from a collaboration, the Company will recognize its share of the net sales on a gross basis if it is deemed to be the principal in the transactions with customers, or on a net basis if it is instead deemed to be the agent in the transactions with customers, consistent with the guidance in Topic 606.

Fair Value Measurements

Fair value is defined as the price that would be received upon sale of an asset or paid to transfer a liability between market participants at measurement dates. ASC Topic 820 Fair Value Measurement (ASC 820), establishes a three-level valuation hierarchy for instruments measured at fair value. The hierarchy is based on the transparency of inputs to the valuation of an asset or liability as of the measurement date. The three levels are defined as follows:

Level 1—Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2—Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

Level 3—Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity, or a remaining maturity at the time of purchase, of three months or less to be cash equivalents. The Company invests excess cash primarily in money market funds, commercial paper and government agency securities, which are highly liquid and have strong credit ratings. These investments are subject to minimal credit and market risks. Cash and cash equivalents are stated at cost, which approximates market value.


	Year ended				Year ended
	December 31, 2019				December 31, 2018
	Beginning		End		Beginning		End
	of period		of period		of period		of period
Cash and cash equivalents	$	59,634	$	62,351	$	26,591	$	59,634
Restricted cash included in other assets, noncurrent		371		321		371		371
Total cash, cash equivalents and restricted cash per statement of cash flows	$	60,005	$	62,672	$	26,962	$	60,005

Marketable Securities

Short-term marketable securities consist of investments in debt securities with maturities greater than three months and less than one year from the balance sheet date. The Company classifies all of its marketable securities as available-for-sale. Accordingly, these investments are recorded at fair value. Amortization and accretion of discounts and premiums are recorded as interest income within other income. Unrealized gains and losses on available-for-sale securities are included in other accumulated comprehensive loss as a component of stockholders’ equity (deficit) until realized.

Other Assets

The Company recorded other assets of $1,453 and $1,503 as of December 31, 2019 and 2018, respectively. The December 31, 2019 and 2018 amounts are comprised of restricted cash of $321 and $371, respectively, held as security deposit for a standby letter of credit related to a facility lease and $1,132 held by a service provider.

Accounting for Stock-based Compensation

The Company accounts for its stock-based compensation in accordance with ASC Topic 718 Compensation—Stock Compensation (ASC 718). ASC 718 requires all stock-based payments to employees, directors and non-employees to be recognized as expense in the statements of operations based on their grant date fair values. The Company estimates the fair value of options granted using the Black-Scholes option pricing model. The Black-Scholes option pricing model requires inputs based on certain subjective assumptions, including (a) the expected stock price volatility, (b) the calculation of expected term of the award, (c) the risk-free interest rate and (d) expected dividends. Due to the lack of a public market for the Company's common stock prior to completion of the initial public offering and a lack of company-specific historical and implied volatility data, the Company has based its estimate of expected volatility on the historical volatility of a group of similar companies that are publicly traded. The historical volatility is calculated based on a period of time commensurate with the expected term assumption. The historical volatility is calculated based on a period of time commensurate with the expected term assumption. The computation of expected volatility is based on the historical volatility of a representative group of companies with similar characteristics to the Company, including stage of product development and life science industry focus. The Company uses the simplified method as prescribed by the SEC Staff Accounting Bulletin No. 107, Share-Based Payment, to calculate the expected term for options granted to employees as it does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected term. For options granted to non-employees, the Company utilizes the contractual term of the arrangement as the basis for the expected term assumption. The risk-free interest rate is based on a treasury instrument whose term is consistent with the expected term of the stock options. The expected dividend yield is assumed to be zero as the Company has never paid dividends and has no current plans to do so.

The Company determines the fair value of each restricted stock unit, or RSU, at its grant date based on the closing market price of the Company’s common stock on that date. For stock-based compensation subject to service-based vesting conditions, the Company recognizes stock-based compensation expense equal to the grant date fair value of stock-based compensation on a straight-line basis over the requisite service period.

The Company records forfeitures as a cumulative adjustment in the period in which they occur.

Net Loss per Share

Basic net loss per common share is calculated by dividing the net loss attributable to common stockholders by the weighted-average number of common shares outstanding and 2,575,000 Exchange Warrants (as defined in footnote 10) outstanding during the period, without further consideration for potentially dilutive securities. In accordance with Accounting Standards Codification Topic 260, Earnings Per Share, the Exchange Warrants are included in the computation of basic net loss per share because the exercise price is negligible and they are fully vested and exercisable at any time after the original issuance date. Diluted net loss per share is computed by dividing the net loss attributable to common stockholders by the weighted-average number of common shares and potentially dilutive securities outstanding for the period determined using the treasury stock method.

For purposes of the diluted net loss per share calculation, stock options, unvested restricted stock units (RSUs) and warrants to purchase common stock and options to purchase common stock are considered to be potentially dilutive securities, but are excluded from the calculation of diluted net loss per share because their effect would be anti-dilutive and therefore, basic and diluted net loss per share were the same for all periods presented.


	Year ended
	December 31,
	2019	2018	2017
Stock options	4,720,772	3,746,567	3,205,485
Unvested restricted stock units	447,336	—	—
Warrants	39,474	110,365	110,365
	5,207,582	3,856,932	3,315,850

Property and Equipment

Property and equipment is stated at cost, less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful life of each asset as follows:


Computer equipment, office equipment and software		3 years
Laboratory equipment		5 years
Leasehold improvements		Shorter of useful life or life of lease

Upon retirement or sale, the cost of the assets disposed of and the related accumulated depreciation are eliminated from the balance sheet and related gains or losses are reflected in the statement of operations. There were no material sales of assets during the years ended December 31, 2019, 2018 and 2017.

The Company reviews its long-lived assets for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable. If an impairment review is performed to evaluate an asset for recoverability, the Company compares forecasts of undiscounted cash flows expected to result from the use and eventual disposition of the asset to its carrying value. If the carrying amount of the asset exceeds its estimated undiscounted future net cash flows, an impairment charge is recognized in the amount by which the carrying amount of the asset exceeds the fair value of the asset. The Company did not recognize impairment charges during the years ended December 31, 2019, 2018 and 2017.

Leases

Consistent with ASC 842, the Company determines if an arrangement is a lease at inception. Operating leases are included in right-of-use lease assets (ROU assets), current portion of lease obligations and long-term lease obligations on the Company’s consolidated balance sheets. Assets subject to finance leases are included in property and equipment, and the related lease obligation is included in other current liabilities and other long-term liabilities on the Company’s consolidated balance sheets. Lease assets are tested for impairment in the same manner as long-lived assets used in operations. Lease expense for operating leases is recognized on a straight-line basis over the lease term as an operating expense while expense for financing leases is recognized as depreciation expense and interest expense using the effective interest method. The Company has elected the short-term lease recognition exemption for short-term leases, which allows the Company not to recognize lease liabilities and ROU assets on the consolidated balance sheets for leases with an original term of twelve months or less.

ROU assets represent the Company’s right to use an underlying asset for the lease term, and lease obligations represent the Company’s obligation to make lease payments arising from the lease. Operating lease liabilities and their corresponding ROU assets are initially recorded based on the present value of lease payments over the expected remaining lease term. When determining the lease term, the Company includes options to extend or terminate the lease when it is reasonably certain that the option will be exercised. Certain adjustments to the ROU asset may be required for items such as incentives received. The interest rate implicit in lease contracts is typically not readily determinable. As a result, the Company utilizes its incremental borrowing rate to discount lease payments. The incremental borrowing rate reflects the fixed rate at which the Company could borrow, on a collateralized basis, the amount of the lease payments in the same currency, for a similar term, in a similar economic environment. Prospectively, the Company will adjust the ROU assets for straight-line rent expense, or any incentives received and remeasure the lease liability at the net present value using the same incremental borrowing rate that was in effect as of the lease commencement or transition date.

The Company has lease agreements with lease and non-lease components, which are generally accounted for separately.

Patent Costs

The Company expenses patent application and related legal costs as incurred and classifies such costs as general and administrative expenses in the accompanying consolidated statements of operations.

Income Taxes

The Company accounts for income taxes in accordance with ASC Topic 740, Accounting for Income Taxes, which provides for deferred taxes using an asset and liability approach. The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. The Company determines its deferred tax assets and liabilities based on differences between financial reporting and tax bases of assets and liabilities, which are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Valuation allowances are provided if, based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.

The Company recognizes the effect of income tax positions only if those positions are more likely than not to be sustained. Recognized income tax positions are measured at the largest amount that is more likely than not to be realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs.

Comprehensive Income (Loss)

Comprehensive income (loss) comprises net loss and other comprehensive loss. For the years ended December 31, 2019, 2018 and 2017, other comprehensive income (loss) consisted of unrealized income and loss on marketable securities.

Concentration of Credit Risk and Off-balance Sheet Risk

The Company has no financial instruments with off-balance sheet risk, such as foreign exchange contracts, option contracts, or other foreign hedging arrangements. Financial instruments that potentially subject the Company to concentrations of credit risk primarily consist of cash equivalents and marketable securities. Under its investment policy, the Company limits amounts invested in such securities by credit rating, maturity, industry group, investment type and issuer, except for securities issued by the U.S. government. The Company is not exposed to any significant concentrations of credit risk from these financial instruments.

Recently Issued Accounting Pronouncements

In February 2016, the FASB issued ASU No. 2016-02, Leases (ASC 842), which replaced the guidance in ASC 840, Leases. The updated standard aims to increase transparency and comparability among organizations by requiring lessees to recognize lease assets and lease liabilities on the balance sheet and requiring disclosure of key information about leasing arrangements. This standard became effective for fiscal years beginning after December 15, 2018. The Company adopted the new standard effective January 1, 2019 using the modified retrospective method as of the beginning of the period of adoption. The Company has elected the package of practical expedients permitted in ASC Topic 842. Accordingly, the Company accounted for its existing operating leases as operating leases under the new guidance, without reassessing (a) whether the contracts contain a lease under ASC Topic 842, (b) whether classification of the operating leases would be different in accordance with ASC Topic 842, or (c) whether the unamortized initial direct costs would have met the definition of initial direct costs in ASC Topic 842 at lease commencement. The Company also elected not to include leases with an initial term of twelve months or less in the recognized ROU asset and lease liabilities. As a result of the adoption of the new lease accounting guidance, the Company recognized on January 1, 2019 (a) an operating lease liability of $4,778, and (b) an operating ROU asset of $4,369 which represents the lease liability of $4,778 adjusted for deferred rent of $409. This standard had a material impact on the Company’s balance sheets but had no impact on the Company’s results of operations and cash flows from operations. The most significant impact was the recognition of ROU assets, lease obligations, and disclosures regarding the amount, timing, and uncertainty of cash flows arising from leases.

In June 2018, the FASB issued ASU No. 2018-07, Improvements to Nonemployee Share-Based Payment Accounting. This guidance simplifies the accounting for share-based payments to non-employees by aligning it with the accounting for share-based payments to employees, with certain exceptions. This guidance became effective for annual reporting periods beginning after December 15, 2018, including interim periods within those annual reporting periods, and early adoption is permitted. The guidance per ASU 2018-07 is to be adopted by using a modified retrospective approach with the cumulative effect of initially applying the new standard at the date of initial application. The Company adopted the new standard effective January 1, 2019. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements.

In November 2018, the FASB issued ASU No. 2018-18, Collaborative Arrangements (Topic 808): Clarifying the Interaction between Topic 808 and Topic 606. The main provisions of ASU 2018-18 include: (i) clarifying that certain transactions between collaborative arrangement participants should be accounted for as revenue when the collaborative arrangement participant is a customer in the context of a unit of account and (ii) precluding the presentation of transactions with collaborative arrangement participants that are not directly related to sales to third parties together with revenue. This guidance will be effective for annual reporting periods beginning after December 15, 2019, including interim periods within those annual reporting periods, and early adoption is permitted. The guidance per ASU 2018-18 is to be adopted retrospectively to the date of initial application of Topic 606. The Company does not anticipate a material impact to the consolidated financial statements as a result of the adoption of this guidance.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires that financial assets measured at amortized cost be presented at the net amount expected to be collected. Currently, U.S. GAAP delays recognition of the full amount of credit losses until the loss is probable of occurring. Under this ASU, the income statement will reflect an entity’s current estimate of all expected credit losses. The measurement of expected credit losses will be based upon historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. Credit losses relating to available-for-sale debt securities will be recorded through an allowance for credit losses rather than as a direct write-down of the security. This ASU is effective for annual periods beginning after December 15, 2019, including interim periods within those annual reporting periods, and early adoption is permitted. The Company is currently evaluating the potential impact that ASU 2016-13 may have on its financial position and results of operations.

Consolidated Statements of Stockholders' Equity (Deficit) - USD ($) $ in Thousands	Common Stock IPO	Common Stock Over allotment option	Common Stock Secondary public offering	Common Stock	Additional paid-in capital IPO	Additional paid-in capital Over allotment option	Additional paid-in capital Secondary public offering	Additional paid-in capital	Accumulated other comprehensive income/(loss)	Accumulated deficit	IPO	Over allotment option	Secondary public offering	Total
Balance at beginning of period at Dec. 31, 2016				$ 1				$ 3,551		$ (59,171)				$ (55,619)
Balance at beginning of period (in shares) at Dec. 31, 2016				1,294,352
Increase (Decrease) in Stockholders' Equity
Conversion of preferred shares into common stock				$ 2				94,448						94,450
Conversion of preferred shares into common stock (in shares)				16,154,671
Issuance of stock					$ 67,420	$ 725					$ 67,420	$ 725
Issuance of stock (in shares)	5,000,000	51,977
Exercise of stock options and warrants								452						452
Exercise of stock options and warrants (in shares)				264,017
Stock-based compensation expense								1,422						1,422
Other comprehensive income (loss)									$ (149)					(149)
Net loss										(38,707)				(38,707)
Balance at end of period at Dec. 31, 2017				$ 3				168,018	(149)	(97,878)				69,994
Balance at end of period (in shares) at Dec. 31, 2017				22,765,017
Increase (Decrease) in Stockholders' Equity
Cumulative effect adjustment for adoption of ASC 606										(2,031)				(2,031)
Exercise of stock options								918						918
Exercise of stock options (in shares)				427,269
Purchase of common stock under ESPP								146						$ 146
Purchase of common stock under ESPP (in shares)				42,186										42,186
Stock-based compensation expense								3,884						$ 3,884
Other comprehensive income (loss)									141					141
Net loss										(64,257)				(64,257)
Balance at end of period at Dec. 31, 2018				$ 3				172,966	(8)	(164,166)				$ 8,795
Balance at end of period (in shares) at Dec. 31, 2018				23,234,472
Increase (Decrease) in Stockholders' Equity
Exercise of stock options (in shares)														81,298
Issuance of stock			$ 2				$ 92,160						$ 92,162
Issuance of stock (in shares)			24,437,500
Exercise of stock options and warrants								175						$ 175
Exercise of stock options and warrants (in shares)				150,978
Purchase of common stock under ESPP								489						$ 489
Purchase of common stock under ESPP (in shares)				140,073										140,073
Retirement of common stock in exchange for common stock warrant								(8,986)						$ (8,986)
Retirement of common stock in exchange for common stock warrant (in shares)				(2,575,000)
Issuance of common stock warrant in exchange for retirement of common stock								8,986						8,986
Stock-based compensation expense								4,872						4,872
Other comprehensive income (loss)									33					33
Net loss										(28,208)				(28,208)
Balance at end of period at Dec. 31, 2019				$ 5				$ 270,662	$ 25	$ (192,374)				$ 78,318
Balance at end of period (in shares) at Dec. 31, 2019				45,388,023

Nature of business and basis of presentation (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Nature of business and basis of presentation
Net loss	$ (16,246)	$ (16,792)	$ (17,071)	$ 21,901	$ (22,431)	$ (17,069)	$ (12,354)	$ (12,403)	$ (28,208)	$ (64,257)	$ (38,707)
Accumulated deficit	$ (192,374)				$ (164,166)				$ (192,374)	$ (164,166)

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References + Details

Property and Equipment (Tables)

12 Months Ended

Dec. 31, 2019

Property and Equipment

Schedule of property and equipment


	December 31,		December 31,
	2019		2018
Laboratory equipment	$	6,419	$	6,134
Computer equipment and office equipment		1,068		1,035
Leasehold improvements		1,886		1,886
Total property and equipment at cost		9,373		9,055
Less: Accumulated depreciation		(7,209)		(6,361)
	$	2,164	$	2,694

Related party transactions (Details) - Takeda - USD ($) $ in Thousands	1 Months Ended	12 Months Ended
	Jun. 30, 2016	Dec. 31, 2017
Related party transactions
Proceeds from IPO		$ 10,000
Series C-1 convertible preferred stock
Related party transactions
Amount invested in Company	$ 10,000

Summary of significant accounting policies - Cash and Cash Equivalents (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Cash, cash equivalents and restricted cash
Cash and cash equivalents	$ 62,351	$ 59,634	$ 26,591
Restricted cash included in other assets, noncurrent	321	371	371
Total cash, cash equivalents and restricted cash per statement of cash flows	$ 62,672	$ 60,005	$ 26,962	$ 100,668
Restricted cash, Balance Sheet Location	us-gaap:OtherAssetsNoncurrent	us-gaap:OtherAssetsNoncurrent

Income Taxes - Components of deferred tax assets (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Deferred tax assets:
Net operating losses	$ 40,554	$ 27,916
Accrued expenses	2,520	1,585
Tax credit carryforwards	2,448	10,178
Licensed technology	1,402	1,160
Deferred revenue	1,315	12,410
Lease liabilities	791
Depreciation	492	405
Deferred expenses		112
Other	77	174
Total gross deferred tax assets	49,599	53,940
Valuation allowance	(48,889)	$ (53,940)
Net deferred tax assets less valuation allowance	710
Deferred tax liabilities
Right-of-use assets	(710)
Total gross deferred tax liabilities	$ (710)

Stockholders' Equity - Common stock (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($) Vote shares	Dec. 31, 2018 shares
Common stock
Net proceeds from public offering of common stock \| $	$ 92,162
Common Stock
Common stock
Number of votes for each shares held \| Vote	1
Warrants and share-based payment awards
Common stock
Number of shares reserved for future issuance	7,782,582	3,856,932
Exchange warrants
Common stock
Number of shares reserved for future issuance	2,575,000
Warrants
Common stock
Number of shares reserved for future issuance	39,474	110,365
Share-based payments \| Restricted stock units
Common stock
Number of shares reserved for future issuance	447,336
Share-based payments \| Stock options.
Common stock
Number of shares reserved for future issuance	4,720,772	3,746,567

Stock options (Tables)

12 Months Ended

Dec. 31, 2019

Stock options

Schedule of stock option activity


		Weighted-		Weighted Average
	Number	Average		Remaining	Aggregate
	of Shares	Exercise Price		Contractual Term	Intrinsic Value

Outstanding at January 1, 2019	3,746,567	$	6.58	7.6	$	3,897
Granted	1,698,383		3.74
Exercised	(81,298)		2.15
Cancelled	(642,880)		9.42
Outstanding at December 31, 2019	4,720,772	$	5.24	7.3	$	9,836

Exercisable at December 31, 2019	2,684,095	$	4.49	6.3	$	7,064

Schedule of restricted stock unit activity


		Weighted-Average			Weighted-Average
	Number	Remaining	Aggregate		Grant Date
	of Shares	Contractual Term	Intrinsic Value		Fair Value

Unvested at January 1, 2019	—	—	$	—	$	—
Granted	449,331	—				4.00
Vested	—	—				—
Forfeited	(1,995)	—				4.00
Unvested at December 31, 2019	447,336	1.5	$	2,564	$	4.00

Schedule of stock-based compensation expense by award type


	Year ended
	December 31,
		2019		2018		2017
Stock options	$	4,230	$	3,754	$	1,422
Restricted stock units		410		—		—
Employee stock purchase plan		232		130		—
Stock-based compensation expense included in Total operating expenses	$	4,872	$	3,884	$	1,422

Schedule of stock-based compensation expense as reflected in the Company’s condensed consolidated statements of operations and comprehensive loss


	Year ended
	December 31,
		2019		2018		2017
Research and development	$	2,245	$	1,788	$	770
General and administrative		2,627		2,096		652
Stock-based compensation expense included in Total operating expenses	$	4,872	$	3,884	$	1,422

Schedule of weighted average assumptions for estimating fair value of option awards


	December 31,
	2019		2018		2017

Risk-free interest rate	2.3	%	2.7	%	2.2	%
Expected dividend yield	—	%	—	%	—	%
Expected term (years)	5.99		6.07		6.21
Expected stock price volatility	74	%	73	%	67	%

Collaboration agreements - XMT-1522 Strategic Partnership (Details) - XMT-1522 Agreement	Jan. 02, 2019
Collaboration agreements
Period of time until agreement terminated	30 days
Period of shared development costs following effective termination date	30 days

Debt - Components (Details) $ in Thousands	Dec. 31, 2019 USD ($)
Debt
Total debt	$ 5,000
Less: Current portion of long-term-debt	(667)
Total debt, net of current portion	4,333
Debt financing costs, net of accretion	(177)
Accretion related to final payment	45
Long-term debt, net	4,201
Credit Facility
Debt
Total debt	$ 5,000

Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2019

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

Principles of Consolidation

Use of Estimates

Segment Information

Research and Development

Research and development costs are expensed as incurred and include:

employee-related expenses, including salaries, bonuses, benefits, travel and stock-based compensation expense;

the cost of acquiring, developing and manufacturing ADC product candidates, clinical study materials and other research and development materials;

fees and costs related to regulatory filings and activities;

costs associated with collaboration agreements and license fees and milestone payments related to license agreements;

facilities, depreciation and other expenses, which include direct and allocated expenses for rent, utilities, maintenance of facilities, insurance and other supplies; and

other costs associated with clinical, preclinical, discovery and other research activities.

Revenue Recognition

Collaborative Arrangements

Fair Value Measurements

Level 1—Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 3—Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

Cash and Cash Equivalents


	Year ended				Year ended
	December 31, 2019				December 31, 2018
	Beginning		End		Beginning		End
	of period		of period		of period		of period
Cash and cash equivalents	$	59,634	$	62,351	$	26,591	$	59,634
Restricted cash included in other assets, noncurrent		371		321		371		371
Total cash, cash equivalents and restricted cash per statement of cash flows	$	60,005	$	62,672	$	26,962	$	60,005

Marketable Securities

Other Assets

Accounting for Stock-based Compensation

The Company records forfeitures as a cumulative adjustment in the period in which they occur.

Net Loss per Share


	Year ended
	December 31,
	2019	2018	2017
Stock options	4,720,772	3,746,567	3,205,485
Unvested restricted stock units	447,336	—	—
Warrants	39,474	110,365	110,365
	5,207,582	3,856,932	3,315,850

Property and Equipment

Property and equipment is stated at cost, less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful life of each asset as follows:


Computer equipment, office equipment and software		3 years
Laboratory equipment		5 years
Leasehold improvements		Shorter of useful life or life of lease

Leases

The Company has lease agreements with lease and non-lease components, which are generally accounted for separately.

Patent Costs

The Company expenses patent application and related legal costs as incurred and classifies such costs as general and administrative expenses in the accompanying consolidated statements of operations.

Income Taxes

Comprehensive Income (Loss)

Concentration of Credit Risk and Off-balance Sheet Risk

Recently Issued Accounting Pronouncements

Leases (Tables)

12 Months Ended

Dec. 31, 2019

Leases

Schedule of components of lease expense



	Year ended
	December 31, 2019
Operating lease cost	$	2,160

Finance lease cost:
Amortization of right-of-use assets	$	75
Interest on lease liabilities		20
	$	95

Schedule of supplemental balance sheet information related to leases


	Year ended
	December 31, 2019
Operating leases:
Operating lease right-of-use assets	$	2,598
Operating lease liabilities, current		2,219
Operating lease liabilities		677

Finance leases:
Property and equipment, gross	$	429
Property and equipment, accumulated depreciation		(75)
Other liabilities, current		87
Other liabilities		275

Weighted-average remaining lease term:
Operating leases		1.3 years
Finance leases		3.7 years

Weighted-average discount rate:
Operating leases		10.3%
Finance leases		6.9%

Schedule of supplemental cash flow information related to leases


	Year ended
	December 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	2,271
Operating cash flows from finance leases		20
Financing cash flows from finance leases		87

Schedule of future minimum lease payments under non-cancellable leases


	Operating leases		Finance leases
2020	$	2,394	$	116
2021		687		116
2022		—		84
2023		—		74
2024		—		18
Total lease payments		3,081		408
Present value adjustment		(186)		(46)
Present value of lease liabilities	$	2,895	$	362

Stock options - Activity under stock option plan (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Number of Shares
Outstanding at beginning of period (in shares)	3,746,567
Granted (in shares)	1,698,383
Exercised (in shares)	(81,298)
Cancelled (in shares)	(642,880)
Outstanding at end of period (in shares)	4,720,772	3,746,567
Options exercisable, at end of period (in shares)	2,684,095
Weighted- Average Exercise Price
Outstanding at beginning of period (in dollars per share)	$ 6.58
Granted (in dollars per share)	3.74
Exercised (in dollars per share)	2.15
Cancelled (in dollars per share)	9.42
Outstanding at end of period (in dollars per share)	5.24	$ 6.58
Options exercisable, at end of period (in dollars per share)	$ 4.49
Additional Disclosures
Weighted Average Remaining Contractual Term, Options outstanding	7 years 3 months 18 days	7 years 7 months 6 days
Weighted Average Remaining Contractual Term, Options exercisable	6 years 3 months 18 days
Aggregate Intrinsic Value, Options outstanding (in dollars)	$ 9,836	$ 3,897
Aggregate Intrinsic Value, Options exercisable (in dollars)	$ 7,064
Weighted-average grant date fair value of options granted (in dollars per share)	$ 2.47	$ 8.78	$ 5.53
Cash received from the exercise of stock options (in dollars)	$ 175	$ 918	$ 452

Preferred Stock (Details) - shares	Dec. 31, 2019	Dec. 31, 2018
Preferred Stock
Preferred stock, shares authorized	25,000,000	25,000,000
Preferred stock, shares issued	0	0

Fair value measurements (Tables)

12 Months Ended

Dec. 31, 2019

Fair value measurements

Schedule of assets and liabilities measured and carried at fair value


					Significant
			Quoted Prices		Other		Significant
			in Active		Observable		Unobservable
	Fair		Markets		Inputs		Inputs
	Value		(Level 1)		(Level 2)		(Level 3)
December 31, 2019
Marketable securities:
Commercial paper	$	11,940	$	—	$	11,940	$	—
Corporate bonds		12,010		—		12,010		—
U.S. Treasuries		13,489		13,489		—		—
	$	37,439	$	13,489	$	23,950	$	—


					Significant
			Quoted Prices		Other		Significant
			in Active		Observable		Unobservable
	Fair		Markets		Inputs		Inputs
	Value		(Level 1)		(Level 2)		(Level 3)
December 31, 2018
Marketable securities:
U.S. Treasuries	$	10,497	$	10,497	$	—	$	—
	$	10,497	$	10,497	$	—	$	—

- Definition

Tabular disclosure of financial instruments measured at fair value, including those classified in shareholders' equity measured on a recurring or nonrecurring basis. Disclosures include, but are not limited to, fair value measurements recorded and the reasons for the measurements, level within the fair value hierarchy in which the fair value measurements are categorized and transfers between levels 1 and 2. Nonrecurring fair value measurements are those that are required or permitted in the statement of financial position in particular circumstances.

+ References + Details

Fair value measurements

12 Months Ended

Dec. 31, 2019

Fair value measurements

Fair value measurements

4. Fair Value Measurements

The following table presents information about the Company’s assets and liabilities regularly measured and carried at a fair value and indicates the level within fair value hierarchy of the valuation techniques utilized to determine such value as of December 31, 2019 and 2018:


					Significant
			Quoted Prices		Other		Significant
			in Active		Observable		Unobservable
	Fair		Markets		Inputs		Inputs
	Value		(Level 1)		(Level 2)		(Level 3)
December 31, 2019
Marketable securities:
Commercial paper	$	11,940	$	—	$	11,940	$	—
Corporate bonds		12,010		—		12,010		—
U.S. Treasuries		13,489		13,489		—		—
	$	37,439	$	13,489	$	23,950	$	—


					Significant
			Quoted Prices		Other		Significant
			in Active		Observable		Unobservable
	Fair		Markets		Inputs		Inputs
	Value		(Level 1)		(Level 2)		(Level 3)
December 31, 2018
Marketable securities:
U.S. Treasuries	$	10,497	$	10,497	$	—	$	—
	$	10,497	$	10,497	$	—	$	—

There were no changes in valuation techniques or transfers between fair value measurement levels during the years ended December 31, 2019 and 2018.

The carrying amounts reflected in the consolidated balance sheets for prepaid expenses and other current assets, accounts payable and accrued expenses approximate their fair values due to their short-term nature.

As of December 31, 2019, the carrying value of the Company’s outstanding borrowing under the Credit Facility approximated fair value (a Level 2 fair value measurement), reflecting interest rates currently available to the Company. The Credit Facility is discussed more detail in Note 8, “Debt”.

Summary of significant accounting policies - Other Assets (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Other Assets
Other assets	$ 1,453	$ 1,503
Restricted cash included in other assets, noncurrent	$ 321	$ 371	$ 371
Restricted cash, Balance Sheet Location	us-gaap:OtherAssetsNoncurrent	us-gaap:OtherAssetsNoncurrent
Held by service provider	$ 1,132	$ 1,132

Leases - Components of Lease Expense (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($)
Components of lease expense
Operating lease cost	$ 2,160
Amortization of right-of-use assets	75
Interest on lease liabilities	20
Finance lease cost	$ 95

Stock options - Fair value assumptions (Details)	12 Months Ended
Stock options - Fair value assumptions (Details)	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Weighted average fair value assumptions
Risk-free interest rate (as a percent)	2.30%	2.70%	2.20%
Expected term (years)	5 years 11 months 27 days	6 years 26 days	6 years 2 months 16 days
Expected stock price volatility (as a percent)	74.00%	73.00%	67.00%