Document and Entity Information	9 Months Ended
Document and Entity Information	Sep. 30, 2019
[DocumentAndEntityInformationAbstract]
Entity Registrant Name	NextCure, Inc.
Entity Central Index	0001661059
Document Type	S-1
Document Period End Date	Sep. 30, 2019
Amendment Flag	false
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	false

BALANCE SHEETS - USD ($)	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Current assets:
Cash and cash equivalents	$ 9,935,000			$ 135,173,000				$ 8,427,000
Restricted cash	1,289,000			460,000				860,000
Prepaid expenses and other current assets	3,777,000			152,000				133,000
Total current assets	189,148,000			135,785,000				9,420,000
Property and equipment, net	12,031,000			11,407,000				10,021,000
Other assets	3,945,000			436,000				26,000
Total assets	205,124,000			147,628,000				19,467,000
Current liabilities:
Accounts payable	2,576,000			2,483,000				1,141,000
Accrued liabilities	2,582,000			2,411,000				1,564,000
Deferred rent, current portion				28,000				19,000
Term loan, current portion	1,250,000			387,000				400,000
Deferred revenue from related party, current portion	6,199,000			4,989,000
Total current liabilities	12,607,000			10,298,000				3,124,000
Deferred rent, net of current portion	434,000			242,000				295,000
Term loan, net of current portion	3,750,000			73,000				460,000
Deferred revenue, net of current portion	17,684,000			21,736,000
Total liabilities	34,475,000			32,349,000				3,879,000
Commitments and contingencies (Note 7)
Redeemable preferred stock:
Total redeemable preferred stock				162,223,000				40,000,000
Stockholders' equity (deficit):
Common stock, par value of $0.001 per share; 158,745,671 and 84,045,455 shares authorized at December 31, 2018 and 2017, respectively, 1,374,812 and 1,369,212 shares issued and outstanding at December 31, 2018 and 2017, respectively	23,000			1,000				11,000
Additional paid-in capital	240,791,000			352,000				75,000
Accumulated deficit	(70,107,000)			(47,297,000)				(24,498,000)
Total stockholders' equity (deficit)	170,649,000	$ 178,595,000	$ (52,712,000)	(46,944,000)	$ (40,212,000)	$ (34,592,000)	$ (29,385,000)	(24,413,000)	$ (9,018,000)
Total liabilities, preferred stock and stockholders' equity (deficit)	$ 205,124,000			147,628,000				19,467,000
Series A Preferred Stock
Redeemable preferred stock:
Total redeemable preferred stock				71,000,000				$ 40,000,000
Series B Preferred Stock
Redeemable preferred stock:
Total redeemable preferred stock				$ 91,223,000

BALANCE SHEETS - (Parenthetical) - $ / shares	Sep. 30, 2019	Jun. 30, 2019	May 13, 2019	Dec. 31, 2018	Dec. 31, 2017
Preferred stock, par value per share	$ 0.001		$ 0.001	$ 0.001
Preferred stock, number of shares authorized	10,000,000		10,000,000	0
Preferred stock, shares issued	0			0
Preferred stock, shares outstanding	0		0	0
Common stock, par value per share	$ 0.001	$ 0.001	$ 0.001	$ 0.001	$ 0.001
Common stock, number of shares authorized	100,000,000		100,000,000	158,745,671	84,045,455
Common stock, shares issued	22,739,345			1,374,812	1,369,212
Common stock, shares outstanding	22,739,345		15,560,569	1,374,812	1,369,212
Series A Preferred Stock
Preferred stock, par value per share	$ 0.001			$ 0.001	$ 0.001
Preferred stock, number of shares authorized	0			68,181,819	64,545,455
Preferred stock, shares issued	0			68,181,819	40,000,000
Preferred stock, shares outstanding	0			68,181,819	40,000,000
Series B Preferred Stock
Preferred stock, par value per share	$ 0.001			$ 0.001	$ 0.001
Preferred stock, number of shares authorized	0			56,828,852	0
Preferred stock, shares issued	0			56,828,851	0
Preferred stock, shares outstanding	0			56,828,851	0

STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) $ in Thousands	3 Months Ended						9 Months Ended		12 Months Ended
	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018	Dec. 31, 2017
Revenue:
Revenue	$ 1,583						$ 4,342
Operating expenses:
Research and development	8,663			$ 4,895			22,819	$ 13,539	$ 19,787	$ 12,954
General and administrative	2,622			925			6,995	2,590	3,409	2,595
Total operating expenses	11,285			5,820			29,814	16,129	23,196	15,549
Loss from operations	(9,702)			(5,820)			(25,472)	(16,129)	(23,196)	(15,549)
Other income, net	1,268			110			2,662	192	397	80
Net loss	(8,434)	$ (8,221)	$ (6,155)	(5,710)	$ (5,231)	$ (4,996)	(22,810)	(15,937)	(22,799)	(15,469)
Total comprehensive loss	$ (8,492)			$ (5,710)			$ (22,868)	$ (15,937)	$ (22,799)	$ (15,469)
Net loss per share attributable to common stockholders-basic and diluted (in dollars per share)	$ (0.37)			$ (4.17)			$ (1.81)	$ (11.64)	$ (16.64)	$ (11.30)
Weighted average common shares outstanding-basic and diluted (in shares)	22,715,567			1,369,212			12,609,219	1,369,212	1,369,846	1,369,212

STATEMENTS OF PREFERRED STOCK AND STOCKHOLDERS' DEFICIT - USD ($)	Preferred Stock Series A Preferred Stock	Preferred Stock Series A-2 preferred stock	Preferred Stock Series A-3 preferred stock	Preferred Stock Series B Preferred Stock	Common Stock	Additional Paid-in Capital	Accumulated Deficit	Series A Preferred Stock	Series B Preferred Stock	Total
Balance at the beginning at Dec. 31, 2016					$ 11,000		$ (9,029,000)			$ (9,018,000)
Balance at the beginning (in shares) at Dec. 31, 2016					1,369,212
Balance at the beginning at Dec. 31, 2016	$ 15,000,000
Balance at the beginning (in shares) at Dec. 31, 2016	15,000,000
Increase (Decrease) in Stockholders' Deficit
Stock based compensation						$ 75,000				75,000
Issuance of stock		$ 25,000,000
Issuance of stock (in shares)		25,000,000
Net loss							(15,469,000)			(15,469,000)
Balance at the end at Dec. 31, 2017					$ 1,000	84,000	(24,498,000)			$ (24,413,000)
Balance at the end (in shares) at Dec. 31, 2017					1,369,212					1,369,212
Balance at the end at Dec. 31, 2017	$ 40,000,000							$ 40,000,000		$ 40,000,000
Balance at the end (in shares) at Dec. 31, 2017	40,000,000
Increase (Decrease) in Stockholders' Deficit
Stock based compensation						24,000				24,000
Net loss							(4,996,000)			(4,996,000)
Balance at the end at Mar. 31, 2018					$ 1,000	108,000	(29,494,000)			(29,385,000)
Balance at the end (in shares) at Mar. 31, 2018					1,369,212
Balance at the end at Mar. 31, 2018	$ 40,000,000
Balance at the end (in shares) at Mar. 31, 2018	40,000,000
Balance at the beginning at Dec. 31, 2017					$ 1,000	84,000	(24,498,000)			$ (24,413,000)
Balance at the beginning (in shares) at Dec. 31, 2017					1,369,212					1,369,212
Balance at the beginning at Dec. 31, 2017	$ 40,000,000							40,000,000		$ 40,000,000
Balance at the beginning (in shares) at Dec. 31, 2017	40,000,000
Increase (Decrease) in Stockholders' Deficit
Net loss										(15,937,000)
Balance at the end at Sep. 30, 2018					$ 1,000	222,000	(40,435,000)			(40,212,000)
Balance at the end (in shares) at Sep. 30, 2018					1,369,212
Balance at the end at Sep. 30, 2018	$ 71,000,000
Balance at the end (in shares) at Sep. 30, 2018	68,181,819
Balance at the beginning at Dec. 31, 2017					$ 1,000	84,000	(24,498,000)			$ (24,413,000)
Balance at the beginning (in shares) at Dec. 31, 2017					1,369,212					1,369,212
Balance at the beginning at Dec. 31, 2017	$ 40,000,000							40,000,000		$ 40,000,000
Balance at the beginning (in shares) at Dec. 31, 2017	40,000,000
Increase (Decrease) in Stockholders' Deficit
Stock based compensation						263,000				263,000
Issuance of stock			$ 31,000,000	$ 91,223,000	$ 5,600	4,000				4,000
Issuance of stock (in shares)			28,181,819	56,828,851
Net loss							(22,799,000)			(22,799,000)
Balance at the end at Dec. 31, 2018					$ 1,000	352,000	(47,297,000)			$ (46,944,000)
Balance at the end (in shares) at Dec. 31, 2018					1,374,812					1,374,812
Balance at the end at Dec. 31, 2018	$ 71,000,000			$ 91,223,000				71,000,000	$ 91,223,000	$ 162,223,000
Balance at the end (in shares) at Dec. 31, 2018	68,181,819			56,828,851
Balance at the beginning at Mar. 31, 2018					$ 1,000	108,000	(29,494,000)			(29,385,000)
Balance at the beginning (in shares) at Mar. 31, 2018					1,369,212
Balance at the beginning at Mar. 31, 2018	$ 40,000,000
Balance at the beginning (in shares) at Mar. 31, 2018	40,000,000
Increase (Decrease) in Stockholders' Deficit
Stock based compensation						24,000				24,000
Net loss							(5,231,000)			(5,231,000)
Balance at the end at Jun. 30, 2018					$ 1,000	132,000	(34,725,000)			(34,592,000)
Balance at the end (in shares) at Jun. 30, 2018					1,369,212
Balance at the end at Jun. 30, 2018	$ 71,000,000
Balance at the end (in shares) at Jun. 30, 2018	68,181,819
Increase (Decrease) in Stockholders' Deficit
Stock based compensation						90,000				90,000
Net loss							(5,710,000)			(5,710,000)
Balance at the end at Sep. 30, 2018					$ 1,000	222,000	(40,435,000)			(40,212,000)
Balance at the end (in shares) at Sep. 30, 2018					1,369,212
Balance at the end at Sep. 30, 2018	$ 71,000,000
Balance at the end (in shares) at Sep. 30, 2018	68,181,819
Balance at the beginning at Dec. 31, 2018					$ 1,000	352,000	(47,297,000)			$ (46,944,000)
Balance at the beginning (in shares) at Dec. 31, 2018					1,374,812					1,374,812
Balance at the beginning at Dec. 31, 2018	$ 71,000,000			$ 91,223,000				71,000,000	91,223,000	$ 162,223,000
Balance at the beginning (in shares) at Dec. 31, 2018	68,181,819			56,828,851
Increase (Decrease) in Stockholders' Deficit
Stock based compensation						383,000				383,000
Issuance of stock						4,000				4,000
Issuance of stock (in shares)					4,697
Net loss							(6,155,000)			(6,155,000)
Balance at the end at Mar. 31, 2019					$ 1,000	739,000	(53,452,000)			(52,712,000)
Balance at the end (in shares) at Mar. 31, 2019					1,379,509
Balance at the end at Mar. 31, 2019	$ 71,000,000			$ 91,223,000
Balance at the end (in shares) at Mar. 31, 2019	68,181,819			56,828,851
Balance at the beginning at Dec. 31, 2018					$ 1,000	352,000	(47,297,000)			$ (46,944,000)
Balance at the beginning (in shares) at Dec. 31, 2018					1,374,812					1,374,812
Balance at the beginning at Dec. 31, 2018	$ 71,000,000			$ 91,223,000				$ 71,000,000	$ 91,223,000	$ 162,223,000
Balance at the beginning (in shares) at Dec. 31, 2018	68,181,819			56,828,851
Increase (Decrease) in Stockholders' Deficit
Net loss										(22,810,000)
Balance at the end at Sep. 30, 2019					$ 23,000	240,791,000	(70,107,000)			$ 170,649,000
Balance at the end (in shares) at Sep. 30, 2019					22,739,345					22,739,345
Balance at the beginning at Mar. 31, 2019					$ 1,000	739,000	(53,452,000)			$ (52,712,000)
Balance at the beginning (in shares) at Mar. 31, 2019					1,379,509
Balance at the beginning at Mar. 31, 2019	$ 71,000,000			$ 91,223,000
Balance at the beginning (in shares) at Mar. 31, 2019	68,181,819			56,828,851
Increase (Decrease) in Stockholders' Deficit
Stock based compensation						412,000				412,000
Issuance of stock					$ 1,000	38,000				39,000
Issuance of stock (in shares)					24,687
Net loss							(8,221,000)			(8,221,000)
Balance at the end at Jun. 30, 2019					$ 23,000	240,245,000	(61,673,000)			178,595,000
Balance at the end (in shares) at Jun. 30, 2019					22,714,765
Increase (Decrease) in Stockholders' Deficit
Stock based compensation						524,000				524,000
Issuance of stock						22,000				22,000
Issuance of stock (in shares)					24,580
Net loss							(8,434,000)			(8,434,000)
Balance at the end at Sep. 30, 2019					$ 23,000	$ 240,791,000	$ (70,107,000)			$ 170,649,000
Balance at the end (in shares) at Sep. 30, 2019					22,739,345					22,739,345

- Definition

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

+ References + Details

STATEMENTS OF PREFERRED STOCK AND STOCKHOLDERS' DEFICIT (Parenthetical) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Series A-2 preferred stock
Initial public offering issuance costs		$ 0
Series A-3 preferred stock
Initial public offering issuance costs	$ 0
Series B Preferred Stock
Initial public offering issuance costs	$ 485

STATEMENTS OF CASH FLOWS - USD ($)	12 Months Ended
STATEMENTS OF CASH FLOWS - USD ($)	Dec. 31, 2018	Dec. 31, 2017
Cash flows from operating activities:
Net loss	$ (22,799,000)	$ (15,469,000)
Adjustments to reconcile net loss to net cash provided by (used) in operating activities:
Depreciation and amortization	1,677,000	582,000
Stock-based compensation	263,000	75,000
Changes in operating assets and liabilities:
Prepaid expenses and other current assets	(19,000)	(89,000)
Other assets		21,000
Accounts payable	1,342,000	767,000
Accrued liabilities	847,000	1,557,000
Deferred rent	(44,000)	42,000
Deferred revenue from related party	26,725,000
Net cash used in operating activities	7,992,000	(12,514,000)
Cash flows from investing activities:
Purchase of property and equipment	(3,063,000)	(8,652,000)
Net cash used in investing activities	(3,063,000)	(8,652,000)
Cash flows from financing activities:
Proceeds from issuance of preferred stock, net of issuance costs	122,223,000	25,000,000
Proceeds from issuance of common stock	4,000
Payments of the term loan	(400,000)	(140,000)
Deferred financing costs	(410,000)
Net cash provided by financing activities	121,417,000	24,860,000
Net (decrease) increase in cash, cash equivalents and restricted cash (includes $3,750 of restricted cash in other assets)	126,346,000	3,694,000
Cash, cash equivalents and restricted cash-beginning of year	9,287,000	5,593,000
Cash, cash equivalents and restricted cash-end of period (includes $3,750 of restricted cash in other assets)	135,633,000	9,287,000
Supplemental disclosures of cash flow information:
Cash paid for interest	25,000	30,000
Supplemental disclosures of noncash investing and financing activities:
Purchase of property and equipment included in accrued liabilities		$ 515,000
Deferred financing costs included in accrued liabilities	$ 284,000

Nature of the Business and Basis of Presentation	9 Months Ended	12 Months Ended
Nature of the Business and Basis of Presentation	Sep. 30, 2019	Dec. 31, 2018
Nature of the Business
Nature of the Business and Basis of Presentation	1. Nature of the Business Organization NextCure, Inc. (“NextCure” or the “Company”) was incorporated in Delaware in September 2015 and is headquartered in Beltsville, Maryland. The Company is a clinical-stage biopharmaceutical company committed to discovering and developing novel, first‑in‑class immunomedicines to treat cancer and other immune‑related diseases by restoring normal immune function. Through its proprietary Functional, Integrated, NextCure Discovery in Immuno‑Oncology (“FIND‑IO”) platform, the Company studies various immune cells in order to discover and understand targets and structural components of immune cells and their functional impact in order to develop immunomedicines. Since inception, the Company has devoted substantially all of its efforts and financial resources to organizing and staffing the Company, identifying business development opportunities, raising capital, securing intellectual property rights related to the Company’s product candidates, building and optimizing the Company’s manufacturing capabilities and conducting discovery, research and development activities for the Company’s product candidates, discovery programs and its FIND‑IO platform. Initial Public Offering On May 13, 2019, the Company closed its initial public offering (“IPO”), in which the Company issued and sold 5,750,000 shares of common stock at a public offering price of $15.00 per share, for net proceeds to the Company of approximately $77.0 million after deducting underwriting discounts and commissions of $6.0 million and offering expenses of approximately $3.4 million. In preparation for the IPO, on May 3, 2019, the Company effected a one-for-8.0338 reverse stock split of its issued and outstanding common stock. The par value and authorized shares of common stock were not adjusted as a result of the reverse stock split. All of the share and per share information presented in the accompanying financial statements has been adjusted to reflect the reverse common stock split on a retroactive basis for all periods and as of all dates presented. Upon the closing of the IPO, on May 13, 2019, all of the outstanding shares of the Company’s convertible preferred stock automatically converted into 15,560,569 shares of common stock at the applicable conversion ratio then in effect. Subsequent to the closing of the IPO, there were no shares of preferred stock outstanding. Upon the closing of the IPO, on May 13, 2019, the Company’s certificate of incorporation was amended and restated to provide for 100,000,000 authorized shares of common stock with a par value of $0.001 per share and 10,000,000 authorized shares of preferred stock with a par value of $0.001 per share. Liquidity The Company has not generated any revenue to date from product sales and does not expect to generate any revenues from product sales in the foreseeable future. Through September 2019, the Company has funded its operations primarily with proceeds from the sale of preferred stock and proceeds from the Company’s agreement with Eli Lilly and Company (Note 6) and proceeds from the IPO. The Company expects to incur additional operating losses and negative operating cash flows for the foreseeable future.	NEXTCURE, INC. NOTES TO FINANCIAL STATEMENTS 1. Nature of the Business and Basis of Presentation Organization NextCure, Inc. (“NextCure” or the “Company”) was incorporated in Delaware in September 2015 and is headquartered in Beltsville, Maryland. The Company is a clinical-stage biopharmaceutical company committed to discovering and developing novel, first‑in‑class immunomedicines to treat cancer and other immune‑related diseases by restoring normal immune function. Through its proprietary Functional, Integrated, NextCure Discovery in Immuno‑Oncology (“FIND‑IO”) platform, the Company studies various immune cells in order to discover and understand targets and structural components of immune cells and their functional impact in order to develop immunomedicines. Since inception, the Company has devoted substantially all of its efforts and financial resources to organizing and staffing the Company, identifying business development opportunities, raising capital, securing intellectual property rights related to the Company’s product candidates, building and optimizing the Company’s manufacturing capabilities and conducting discovery, research and development activities for the Company’s product candidates, discovery programs and its FIND‑IO platform. Risks and Uncertainties The Company is subject to risks common to early‑stage companies in the biotechnology industry including, but not limited to: having a limited operating history and no products approved for commercial sale; having a history of significant losses; our need to obtain additional financing; dependence on its ability to advance its current and future product candidates through clinical trials, marketing approval and commercialization; the unproven approach to the discovery and development of product candidates based on the Company’s FIND‑IO platform; the lengthy and expensive nature and uncertain outcomes of the clinical development process; the lengthy, time‑consuming and unpredictable nature of the regulatory approval process; the results of preclinical studies and early‑stage clinical trials that may not be predictive of future results; dependence on its key personnel; its limited manufacturing experience as an organization and with its manufacturing facility; risks related to patent protection and our pending patent applications; dependence on third‑party collaborators for the discovery, development and commercialization of current and future product candidates; and significant competition from other biotechnology and pharmaceutical companies. Pursuit of the Company’s business efforts will require significant amounts of additional capital, adequate personnel, infrastructure and extensive compliance‑reporting capabilities. Even if the Company’s development efforts are successful, it is uncertain when, if ever, the Company will realize significant revenue from product sales. Liquidity The Company expects that its operating losses and negative cash flows will continue for the foreseeable future. As of the issuance date of the financial statements for the year ended December 31, 2018, the Company expects that its cash and cash equivalents will be sufficient to fund its operating expenses and capital expenditure requirements through at least two years from the issuance date of the financial statements. The future viability of the Company beyond that date is dependent on its ability to raise additional capital to finance its operations. On April 5, 2018, the Company issued 28,181,819 shares of Series A‑3 Preferred Stock at an issuance price of $1.10 per share for cash proceeds of $31.0 million (Note 9). On November 5, 2018, the Company entered into a Series B Preferred Stock Purchase Agreement and issued 15,052,117 shares of Series B‑1 Preferred Stock at an issuance price of $1.59 per share, 34,276,734 shares of Series B‑2 Preferred Stock at an issuance price of $1.59 per share and 7,500,000 shares of Series B‑3 Preferred Stock at an issuance price of $2.00 per share for aggregate cash proceeds of $93.4 million (Note 9). The Company plans to seek additional funding through public or private equity offerings, debt financings, marketing and distribution arrangements, other collaborations, strategic alliances and licensing arrangements. The Company may not be able to obtain financing on acceptable terms, or at all, and the Company may not be able to enter into strategic alliances or other arrangements on favorable terms, or at all. The terms of any financing may adversely affect the holdings or the rights of the Company’s stockholders. If the Company is unable to obtain funding, the Company could be required to delay, reduce or eliminate research and development programs, product portfolio expansion or future commercialization efforts, which could adversely affect its business prospects. Although management continues to pursue these funding plans, there is no assurance that the Company will be successful in obtaining sufficient funding on terms acceptable to the Company, if at all, to fund continuing operations past two years from the issuance date of these financial statements. Basis of Presentation The accompanying financial statements include the accounts of the Company. The Company’s financial statements have been prepared in accordance with United States generally accepted accounting principles (“GAAP”). Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Update (“ASU”) of the Financial Accounting Standards Board (“FASB”). Reverse Stock Split On May 3, 2019, the Company effected a 1‑for‑8.0338 reverse stock split of its outstanding common stock. The par value and authorized shares of common stock were not adjusted as a result of the reverse stock split. All of the share and per share information presented in the accompanying financial statements has been adjusted to reflect the reverse common stock split on a retroactive basis for all periods and as of all dates presented. Use of Estimates The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. On an ongoing basis, management evaluates its estimates, including those related to accrued expenses, revenue recognition, the valuation of equity‑based compensation, including incentive stock options, common stock and restricted common stock, as well as income taxes. The Company bases its estimates on various assumptions that the Company believes to be reasonable under the circumstances. Actual results could differ from those estimates. Segment and Geographic Information Operating segments are defined as components of an entity 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 in assessing performance. The Company views its operations as and manages its business in one operating segment operating exclusively in the United States.

Summary of Significant Accounting Policies

9 Months Ended

12 Months Ended

Sep. 30, 2019

Dec. 31, 2018

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed financial statements as of September 30, 2019 and for the three and nine months ended September 30, 2019 and 2018 have been prepared by the Company in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Accordingly, these condensed financial statements should be read in conjunction with the Company’s audited financial statements and the notes thereto as of and for the year ended December 31, 2018, which are included in the Company’s final prospectus that forms a part of the Company’s Registration Statement on Form S-1 (Reg. No. 333-230837) (the “Registration Statement”), as filed with the SEC pursuant to Rule 424(b)(4) under the Securities Act of 1933, as amended, on May 9, 2019.

The unaudited interim condensed financial statements have been prepared on the same basis as the audited financial statements. In the opinion of management, the accompanying unaudited interim condensed financial statements contain all adjustments necessary for a fair statement of the Company’s financial position as of September 30, 2019 and condensed results of operations and cash flows for the three and nine months ended September 30, 2019 and 2018. Such adjustments are of a normal and recurring nature. The results of operations for the three and nine months ended September 30, 2019 are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2019.

Use of Estimates

The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. On an ongoing basis, management evaluates its estimates, including those related to accrued expenses, revenue recognition, the valuation of equity‑based compensation, including incentive stock options, common stock and restricted common stock, as well as income taxes. The Company bases its estimates on various assumptions that the Company believes to be reasonable under the circumstances. Although actual results could differ from those estimates, management does not believe that such differences would be material.

Restricted Cash

The Company is required, as a condition of its Term Loan (Note 8), to maintain cash collateral on deposit in a segregated money market bank account equal to the principal portion of the Term Loan, as determined on a quarterly basis. The bank may restrict withdrawals or transfers by or on behalf of the Company that would violate this requirement. The required reserve totaled $5.0 million as of September 30, 2019. This amount is presented in part as restricted cash and in part as other assets on the accompanying balance sheet.

The following table reconciles cash and cash equivalents and restricted cash per the balance sheet to the statement of cash flows (in thousands):


	September 30,		December 31,
	2019		2018
Cash and cash equivalents	$	9,935	$	135,173
Restricted cash (including $3,750 in other assets)		5,039		460
Total	$	14,974	$	135,633

Marketable Securities

Our investments primarily consist of government debt securities, corporate bonds and agency bonds. These marketable securities are classified as available-for-sale, and as such, are reported at fair value on our condensed balance sheets. Unrealized holding gains and losses are reported within accumulated other comprehensive income (loss) as a separate component of stockholders’ equity. The amortized cost of debt securities is adjusted for amortization of premiums and accretion of discounts to maturity. Such amortization, together with interest on securities, are included in other income, net, on our condensed statements of operations.

If a decline in the fair value of a marketable security below our cost basis is determined to be other than temporary, such marketable security is written down to its estimated fair value as a new cost basis and the amount of the write-down is included in earnings as an impairment charge. The cost of securities sold is based on the specific identification method.

Revenue Recognition

The Company has adopted Accounting Standards Codification Topic 606, Revenue from Contracts with Customers (“ASC 606”). Under ASC 606, an entity recognizes revenue when its customer obtains control of promised goods or services in an amount that reflects the consideration that 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 ASC 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, including whether they are distinct in the context of the contract; (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 Company will collect consideration to which it is entitled in exchange for the goods or services it transfers to the customer.

The Company evaluates customer options for material rights or options to acquire additional goods or services for free or at a discount. If the customer options are determined to represent a material right, the material right is recognized as a separate performance obligation at the outset of the arrangement.

Performance obligations are promised goods or services in a contract to transfer a distinct good or service to the customer and are considered distinct when (i) the customer can benefit from the good or service on its own or together with other readily available resources and (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 its own or whether the required expertise is readily available and whether the goods or services are integral to or dependent on other goods or services in the contract.

The Company estimates the transaction price based on the amount expected to be received for transferring the promised goods or services in the contract. Consideration generally may include fixed consideration or variable consideration. Should an arrangement include variable consideration, the Company will evaluate the amount of potential payments and the likelihood that the payments will be received. The Company will utilize either the most likely amount method or expected amount method to estimate the amount expected to be received based on which method best predicts the amount expected to be received. The amount of variable consideration that is included in the transaction price may be constrained and will be included in the transaction price only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period.

The Company’s contracts may include development and regulatory milestone payments which would be assessed under the most likely amount method and constrained if it is probable that a significant revenue reversal would occur. Milestone payments that are not within the Company’s control or the licensee’s control, such as regulatory approvals, will not be considered probable of being achieved until those approvals are received. At the end of each 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 would be recorded on a cumulative catch-up basis, which would affect collaboration revenues 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 will recognize revenue at the later of (i) when the related sales occur and (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied).

The Company allocates the transaction price based on the estimated stand-alone selling price of each of the 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 for service obligations, which may include other comparable transactions, pricing considered in negotiating the transaction and the estimated costs. Additionally, in determining the standalone selling price for material rights, the Company may reference comparable transactions, clinical trial success probabilities and estimates of option exercise likelihood. Variable consideration will be 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 are consistent with the amounts the Company would expect to receive for the satisfaction of each performance obligation.

The consideration allocated to each performance obligation is recognized as revenue when control is transferred for the related goods or services. For performance obligations which consist 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. The Company evaluates the measure of progress each reporting period and, if necessary, adjusts the measure of performance and related revenue recognition.

Upfront payments and fees are recorded as deferred revenue upon receipt or when due until the Company performs its obligations under these arrangements. Amounts expected to be recognized as revenue within the 12 months following the balance sheet date are classified as current portion of deferred revenue in the accompanying condensed balance sheets. Amounts not expected to be recognized as revenue within the 12 months following the balance sheet date are classified as deferred revenue, net of current portion. Amounts are recorded as accounts receivable when the Company’s right to consideration is unconditional.

Recently Issued Accounting Pronouncements

The Company qualifies as an emerging growth company (“EGC”) as defined under the Jumpstart Our Business Startups Act (the “JOBS Act”). Using exemptions provided under the JOBS Act provided to EGCs, the Company has elected to defer compliance with new or revised financial accounting standards until it is required to comply with such standards.

In February 2016, the FASB issued ASU No. 2016-02, Leases (“ASU 2016-02”). The new guidance will require lessees to record most leases on their balance sheets and recognize the related expenses on their income statements in a manner similar to current practice. ASU 2016-02 states that a lessee would recognize a lease liability for the obligation to make lease payments and a right-to-use asset for the right to use the underlying asset for the lease term. The standard is effective for the Company January 1, 2020.The Company continues to determine if it will elect to use the practical expedients permitted by the guidance and continues to gather data required to comply with the guidance. Based on the work completed to date, the Company is considering the implications of adopting the new standard, including the discount rate to be used in valuing new and existing leases and all applicable financial statement disclosures required by the new guidance. The Company is continuing to evaluate the effect of adoption and anticipates that it will result in the recognition of additional assets and corresponding liabilities related to the existing leases on its balance sheet. The Company is assessing any potential impacts on its internal controls, business processes, and accounting policies related to both the implementation of, and ongoing compliance with, the new guidance.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 will require credit losses to be reported using an expected losses model rather than the incurred losses model that is currently used, and will require additional disclosures related to credit risks. For available-for-sale debt securities with unrealized losses, this standard will require allowances to be recorded instead of reducing the amortized cost of the investment. ASU 2016-13 will be effective for non-emerging growth companies for fiscal years beginning December 15, 2019 and interim periods within those fiscal years, and will be effective for the Company for fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021, assuming the Company remains an emerging growth company. Early adoption is permitted. The Company is currently evaluating the effects the adoption of ASU 2016-13 will have on its financial statements.

In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement—Disclosure Framework-Changes to the Disclosure Requirement for Fair Value Measurement (“ASU 2018-13”). The amendments in ASU 2018-13 modify the disclosure requirements on fair value measurements in ASC 820, Fair Value Measurement, based on the concepts in the FASB Concepts Statement, including the consideration of costs and benefits. ASU 2018-13 will be effective for all companies for fiscal periods beginning after December 15, 2019 and interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the effects the adoption of ASU 2018-13 will have on its 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 (“ASU 2018-18”). ASU 2018-18 clarifies that certain transactions between collaborative arrangement participants should be accounted for as revenue under Topic 606 when the collaborative arrangement participant is a customer in the context of a unit of account. In those situations, all the guidance in Topic 606 should be applied, including recognition, measurement, presentation and disclosure requirements. The amendment also adds unit of account guidance in Topic 808 to align with the guidance in Topic 606 (that is, a distinct good or service) when an entity is assessing whether the collaborative arrangement or a part of the arrangement is within the scope of Topic 606. Lastly, ASU 2018-18 provides that in a transaction with a collaborative arrangement participant that is not directly related to sales to third parties, presenting the transaction together with revenue recognized under Topic 606 will be precluded if the collaborative arrangement participant is not a customer. ASU 2018-18 will be effective for non-emerging growth companies for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years, and will be effective for the Company for fiscal years beginning after December 15, 2020 and interim periods within fiscal years beginning after December 15, 2021, assuming the Company remains an emerging growth company. Early adoption is permitted. The Company is currently evaluating these clarifications for the accounting and presentation for its collaborative arrangements within the scope of Topic 808, but does not expect that the adoption of ASU 2018-18 will have any impact.

2. Summary of Significant Accounting Policies

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity of three months or less at the date of purchase to be cash equivalents. The Company deposits its cash primarily in checking, sweep account and money market accounts.

Restricted Cash

The Company is required to maintain cash collateral on deposit in a segregated money market bank account, as a condition of its Term Loan (Note 8) equal to the principal portion on a quarterly basis. The bank may restrict withdrawals or transfers by, or on behalf of, the Company. The required reserve totaled $460,000 as of December 31, 2018. This amount is presented as restricted cash on the accompanying balance sheet.

The following table reconciles cash and cash equivalents and restricted cash per the balance sheet to the statement of cash flows (in thousands):


	December 31,
	2018		2017
Cash and cash equivalents	$	135,173	$	8,427
Restricted cash		460		860
Total	$	135,633	$	9,287

Concentration of Credit Risk

Financial instruments that potentially expose the Company to concentrations of credit risk primarily consist of cash and cash equivalents. The Company maintains its cash and cash equivalents at one accredited financial institution in amounts that exceed federally insured limits. The Company does not believe that it is subject to unusual credit risk beyond the normal credit risk associated with commercial banking relationships.

Fair Value of Financial Instruments

ASC Topic 820, Fair Value Measurement (“ASC 820”), establishes a fair value hierarchy for instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and the Company’s own assumptions (unobservable inputs). Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the inputs that market participants would use in pricing the asset or liability and are developed based on the best information available in the circumstances. ASC 820 identifies fair value as the exchange price, or exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As a basis for considering market participant assumptions in fair value measurements, ASC 820 establishes a three‑tier value hierarchy that distinguishes between the following:

Level 1—Quoted market prices in active markets for identical assets or liabilities.

Level 2—Inputs other than Level 1 inputs that are either directly or indirectly observable, such as quoted market prices, interest rates and yield curves.

Level 3—Unobservable inputs developed using estimates of assumptions developed by the Company, which reflect those that a market participant would use.

To the extent the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair values requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized as Level 3. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

Property and Equipment, Net

Property and equipment are recorded at cost. Depreciation is computed over the estimated useful lives of the related assets using the straight‑line method. Leasehold improvements are amortized on a straight‑line basis over the shorter of the useful life or term of the lease. Upon retirement or disposal, the cost and related accumulated depreciation are removed from the balance sheet and the resulting gain or loss is recorded to general and administrative expenses in the accompanying statement of operations and comprehensive loss. Routine expenditures for maintenance and repairs are expensed as incurred.

Estimated useful lives for property and equipment are as follows:


		Estimated Useful Life
Computers and peripherals		3 years
Equipment		5 years
Furniture and fixtures		7 years
Leasehold improvements		Lesser of estimated useful life or remaining lease term

Construction in Progress

Construction in progress (Note 4) is carried at cost and consists of specifically identifiable direct and indirect development and construction costs. While under construction, costs of the property are included in construction in progress until the property is placed in service, at which time costs are transferred to the appropriate property and equipment account including, but not limited to, leasehold improvements or other such accounts.

Impairment of Long‑Lived Assets

The Company reviews the recoverability of its long‑lived asset group when events or changes in circumstances occur that indicate that the carrying value of the asset group may not be recoverable. The assessment of possible impairment is based on the ability to recover the carrying value of the asset group from the expected future cash flows (undiscounted and without interest expense) of the related operations. If these cash flows are less than the carrying value of such asset group, an impairment loss for the difference between the estimated fair value and carrying value is recorded. There was no impairment loss recognized during the years ended December 31, 2018 or 2017.

Preferred Stock

The Company’s preferred stock is classified outside of stockholders’ deficit because the shares contain deemed liquidation rights that are a contingent redemption feature not solely within the control of the Company.

Research and Development Costs

Expenditures, including payroll, contractor expenses and supplies, for research and development of products are expensed as incurred. Development costs incurred by third parties are expensed as the contracted work is performed. Where contingent milestone payments are due to third parties under research and development arrangements, the milestone payment obligations are expensed when the milestone results are probable of being achieved.

Patent Costs

All patent‑related costs incurred in connection with filing and prosecuting patent applications are expensed as incurred due to the uncertainty about the recovery of the expenditure. Amounts incurred are classified as general and administrative expenses in the accompanying statement of operations and comprehensive loss.

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 share‑based payments to employees, consultants and directors, including grants of incentive stock options, nonqualified stock options, restricted stock awards, unrestricted stock awards or restricted stock units to employees, consultants and directors of the Company, to be recognized as expense in the statement of operations and comprehensive loss based on their grant date fair values. The Company estimates the fair value of options granted using the Black‑Scholes option pricing model (“Black‑Scholes”) for stock option grants to both employees and non‑employees and the fair value of common stock to determine the fair value of restricted stock.

The Company recognizes forfeitures as they occur as allowed by ASU No. 2016‑09, Improvements to Employee Share‑Based Payment Accounting (“ASU 2016‑09”).

The Black‑Scholes option pricing model requires inputs based on certain subjective assumptions, including (i) the expected stock price volatility, (ii) the expected term of the award, (iii) the risk‑free interest rate and (iv) expected dividends. Due to the lack of a public market for the Company’s common stock and lack of company‑specific historical and implied volatility data, the Company has based its computation of expected volatility on the historical volatility of a representative group of public companies with similar characteristics to the Company, including stage of product development and life science industry focus. The historical volatility is calculated based on a period of time commensurate with expected term assumption. 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. The expected term is applied to the stock option grant group as a whole, as the Company does not expect substantially different exercise or post‑vesting termination behavior among its employee population. For options granted to non‑employees, the Company utilizes the simplified method also 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 pay any dividends on its common stock.

There are significant judgments and estimates inherent in the determination of the fair value of the Company’s common stock. These estimates and assumptions include a number of objective and subjective factors, including external market conditions, the prices at which the Company sold shares of preferred stock, the superior rights and preferences of securities senior to its common stock at the time of, and the likelihood of, achieving a liquidity event, such as an initial public offering or sale.

The Company expenses the fair value of its share‑based compensation awards on a straight‑line basis over the requisite service period, which is generally the vesting period.

Income Taxes

The Company uses the asset and liability method of accounting for income taxes. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax base. Deferred tax assets and liabilities, which relate primarily to the carrying amount of the Company’s property and equipment and its net operating loss carryforwards, are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Deferred tax expense or benefit is the result of changes in the deferred tax assets and liabilities. Valuation allowances are established when necessary to reduce deferred tax assets where, based upon the available evidence, the Company concludes that it is more‑likely‑than‑not that the deferred tax assets will not be realized. In evaluating its ability to recover deferred tax assets, the Company considers all available positive and negative evidence, including its operating results, ongoing tax planning and forecasts of future taxable income on a jurisdiction‑by‑jurisdiction basis. Because of the uncertainty of the realization of deferred tax assets, the Company has recorded a full valuation allowance against its deferred tax assets.

Reserves are provided for tax benefits for which realization is uncertain. Such benefits are only recognized when the underlying tax position is considered more‑likely‑than‑not to be sustained on examination by a taxing authority, assuming they possess full knowledge of the position and facts. Interest and penalties related to uncertain tax positions are recognized in the provision of income taxes; however, the Company currently has no interest or penalties related to uncertain income tax benefits.

Revenue Recognition

The Company has adopted ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”). Under ASC 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 ASC 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 including whether they are distinct in the context of the contract; (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.

Performance obligations are promised goods or services in a contract to transfer a distinct good or service to the customer and are considered distinct when (i) the customer can benefit from the good or service on its own or together with other readily available resources and (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 its own or whether the required expertise is readily available and whether the goods or services are integral or dependent to other goods or services in the contract.

The Company estimates the transaction price based on the amount expected to be received for transferring the promised goods or services in the contract. Consideration generally may include fixed consideration or variable consideration. Should an arrangement include variable consideration, the Company will evaluate the amount of potential payments and the likelihood that the payments will be received. The Company will utilize either the most likely amount method or expected amount method to estimate the amount expected to be received based on which method best predicts the amount expected to be received. The amount of variable consideration which is included in the transaction price may be constrained and will be included in the transaction price only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period.

The Company’s contracts may include development and regulatory milestone payments which would be assessed under the most likely amount method and constrained if it is probable that a significant revenue reversal would occur. Milestone payments that are not within the Company’s control or the licensee’s control, such as regulatory approvals, will not be considered probable of being achieved until those approvals are received. At the end of each reporting period, the Company will re-evaluate 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 would be recorded on a cumulative catch-up basis, which would affect collaboration revenues 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 will recognize 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).

Upfront payments and fees are recorded as deferred revenue upon receipt or when due until the Company performs its obligations under these arrangements. Amounts expected to be recognized as revenue within the 12 months following the balance sheet date are classified as current portion of deferred revenue in the accompanying consolidated balance sheets. Amounts not expected to be recognized as revenue within the 12 months following the balance sheet date are classified as deferred revenue, net of current portion. Amounts are recorded as accounts receivable when the Company’s right to consideration is unconditional.

Comprehensive Loss

The Company did not have any other comprehensive income or loss for any of the periods presented and, therefore, comprehensive loss did not differ from net loss.

Net Loss per Share

The Company calculates basic and diluted net loss per share attributable to common stockholders in conformity with the two‑class method required for participating securities. The Company considers its Series A Preferred Stock and Series B Preferred Stock to be participating securities because in the event a dividend is paid on common stock, the holders of Series A Preferred Stock and Series B Preferred Stock would be entitled to receive dividends on a basis consistent with the common stockholders. Under the two‑class method, the net loss attributable to common stockholders is not allocated to the preferred stock as the holders of the preferred stock do not have a contractual obligation to share in losses.

Under the two‑class method, basic net loss per share attributable to common stockholders is computed by dividing the net loss attributable to common stockholders by the weighted average number of shares of common stock.

Recently Adopted Accounting Pronouncements

In March 2016, the FASB issued ASU No. 2016‑08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net) (“ASU 2016‑08”), which clarified the revenue recognition implementation guidance on principal versus agent considerations. In April 2016, the FASB issued ASU No. 2016‑10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing (“ASU 2016‑10”), which clarified the revenue recognition guidance regarding the identification of performance obligations and the licensing implementation. In May 2016, the FASB issued ASU No. 2016‑12, Revenue from Contracts with Customers (Topic 606): Narrow‑Scope Improvements and Practical Expedients (“ASU 2016‑12”), which narrowly amended the revenue recognition guidance regarding collectability, noncash consideration, presentation of sales tax and transition. ASU No. 2016‑08, ASU No. 2016‑10 and ASU 2016‑12 are effective during the same period as ASU No. 2014‑09, Revenue from Contracts with Customers (“ASU 2014‑09”), which is effective for the Company for fiscal years beginning after December 15, 2018 and interim periods within fiscal years beginning after December 15, 2019. Early adoption is permitted. The Company adopted ASU 2016‑08, ASU 2016‑10, ASU 2016‑12 and ASU 2014‑09 as of January 1, 2018 on a retrospective basis. There was no revenue in previous years and the adoption of ASC 606 did not have any impact on prior year financial statements.

In August 2016, the FASB issued ASU No. 2016‑15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU 2016‑15”). ASU 2016‑15 eliminates the diversity in practice related to the classification of certain cash receipts and payments for debt prepayment or extinguishment costs, the maturing of a zero-coupon bond, the settlement of contingent liabilities arising from a business combination, proceeds from insurance settlements, distributions from certain equity method investees and beneficial interests obtained in a financial asset securitization. ASU 2016‑15 designates the appropriate cash flow classification, including requirements to allocate certain components of these cash receipts and payments among operating, investing and financing activities. The retrospective transition method, requiring adjustment to all comparative periods presented, is required unless it is impracticable for some of the amendments, in which case those amendments would be prospectively applied as of the earliest date practicable. ASU 2016‑15 is effective for the Company for fiscal years beginning after December 15, 2018 and interim periods within fiscal years beginning after December 15, 2019. Early adoption is permitted. The Company adopted ASU 2016-15 as of January 1, 2018.

In November 2016, the FASB issued ASU No. 2016‑18, Statement of Cash Flows (Topic 230): Restricted Cash (“ASU 2016‑18”), which requires that a statement of cash flows explain the change during the period in the total cash, cash equivalents and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning and ending balances shown on the statement of cash flows. The guidance is effective for the Company for fiscal years beginning after December 15, 2018 and interim periods within fiscal years beginning after December 15, 2019. Early adoption is permitted. The Company adopted ASU 2016‑18 as of January 1, 2017.

In May 2017, the FASB issued ASU No. 2017‑09, Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting (“ASU 2017‑09”), which clarifies when to account for a change to the terms or conditions of a share‑based payment award as a modification. Under the new guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award (as equity or liability) changes as a result of the change in terms or conditions of the agreement. The standard is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. The Company adopted ASU 2017‑09 as of the required effective date of January 1, 2018. In June 2018, the FASB issued ASU No. 2018‑07 Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting (“ASU No. 2018‑07”). ASU No. 2018‑07 expands the guidance in ASC718 to include share-based payments for goods and services to non-employees and generally aligns it with the guidance for share-based payments to employees. The amendments are effective for the Company for fiscal years beginning after December 15, 2019 and interim periods within fiscal years beginning after December 15, 2020, with early adoption permitted for entities that have adopted ASC 606. The Company adopted this new standard on January 1, 2018.

Recently Issued Accounting Pronouncements

In February 2016, the FASB issued ASU No. 2016‑02, Leases (“ASU 2016‑02”). The new guidance requires lessees to record most leases on their balance sheets and recognize the related expenses on their income statements in a manner similar to current practice. ASU 2016‑02 states that a lessee would recognize a lease liability for the obligation to make lease payments and a right‑to‑use asset for the right to use the underlying asset for the lease term. The standard is effective for the Company for fiscal years beginning after December 15, 2019 and interim periods fiscal years beginning after December 15, 2020. Early adoption is permitted. The Company is currently evaluating the effect of this standard on its financial statements.

Fair Value of Financial Instruments

9 Months Ended

12 Months Ended

Sep. 30, 2019

Dec. 31, 2018

Fair Value of Financial Instruments

Fair Value of Financial Instruments

4. Fair Value of Financial Instruments

The Company has certain financial assets recorded at fair value, which have been classified as Level 1, 2 or 3 within the fair value hierarchy as described in the accounting standards for fair value measurements.

Level 1—Quoted market prices in active markets for identical assets or liabilities.

Level 2—Inputs other than Level 1 inputs that are either directly or indirectly observable, such as quoted market prices, interest rates and yield curves.

Level 3—Unobservable inputs developed using estimates of assumptions developed by the Company, which reflect those that a market participant would use.

The following tables set forth the fair value of the Company’s financial assets by level within the fair value hierarchy (in thousands):


	September 30, 2019
	Carrying
	Amount		Fair Value		Level 1		Level 2		Level 3
Cash equivalents:
Money market	$	5,465	$	5,465	$	5,465	$	—	$	—
Marketable securities:
U.S. treasury securities		19,982		19,983		—		19,983		—
Agency bonds		47,178		47,161		—		47,161		—
Corporate bonds		107,045		107,003		—		107,003		—
Total	$	179,670	$	179,612	$	5,465	$	174,147	$	—


	December 31, 2018
	Carrying
	Amount		Fair Value		Level 1		Level 2		Level 3
Cash equivalents:
Money market	$	5,000	$	5,000	$	5,000		—		—

The Company did not transfer any assets measured at fair value on a recurring basis between levels during the three and nine months ended September 30, 2019.

3. Fair Value of Financial Instruments

The following table sets forth the fair value of the Company’s financial assets by level within the fair value hierarchy (in thousands):

As of December 31, 2018

Fair Value Measurement Based on

Significant

Quoted Prices in

Other

Significant

Carrying

Fair

Active Markets

Observable

Unobservable

Assets

Amount

Value

(Level 1)

Inputs (Level 2)

Inputs (Level 3)

Money market funds (cash equivalents)

5,000

—

As of December 31, 2017

Fair Value Measurement Based on

Significant

Quoted Prices in

Other

Significant

Carrying

Fair

Active Markets

Observable

Unobservable

Assets

Amount

Value

(Level 1)

Inputs (Level 2)

Inputs (Level 3)

Money market funds (cash equivalents)

1,000

—

The Company did not transfer any assets measured at fair value on a recurring basis to or from Level 1 during the years ended December 31, 2018 and 2017.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Property and Equipment, Net

9 Months Ended

12 Months Ended

Sep. 30, 2019

Dec. 31, 2018

Property and Equipment, Net

Property and Equipment, Net

5. Property and Equipment, Net

Property and equipment consist of the following (in thousands):


	September 30,		December 31,
	2019		2018
Research equipment	$	9,746	$	7,787
Leasehold improvements		5,365		4,825
Computer equipment		441		167
Furniture and fixtures		94		70
Construction in progress		787		1,027
Property and equipment, gross		16,433		13,876
Less: accumulated depreciation and amortization		(4,402)		(2,469)
Property and equipment, net	$	12,031	$	11,407

Construction in progress at September 30, 2019 consists of the costs incurred for research equipment and for the build-out of additional lab and office space and at December 31, 2018 consists of the costs incurred for the build-out of a manufacturing suite at the Company’s headquarters in Beltsville, Maryland.

Depreciation and amortization expense was $788,000 and $1,933,000 for the three and nine months ended September 30, 2019, respectively, and $396,000 and $1,159,000 for the three and nine months ended September 30, 2018, respectively.

4. Property and Equipment, Net

Property and equipment consist of the following (in thousands):


	December 31,
	2018		2017
Research equipment	$	7,787	$	6,213
Leasehold improvements		4,825		564
Computer equipment		167		111
Furniture and fixtures		70		33
Construction in progress		1,027		3,892
Property and equipment, gross		13,876		10,813
Less: accumulated depreciation and amortization		(2,469)		(792)
Property and equipment, net	$	11,407	$	10,021

Construction in progress at December 31, 2018 consists of the costs incurred for research equipment.

Depreciation and amortization expense was $1.7 million and $582,000 for the years ended December 31, 2018 and 2017, respectively.

Accrued Liabilities

12 Months Ended

Dec. 31, 2018

Accrued Liabilities

Accrued Liabilities

5. Accrued Liabilities

Accrued liabilities consist of the following (in thousands):


	December 31,
	2018		2017
Accrued construction in progress	$	—	$	515
Accrued payroll and related benefits		1,008		493
Accrued clinical trial costs		271		—
Accrued operating expenses		719		450
Accrued financing costs		284		—
Accrued office lease		127		104
Accrued interest		2		2
Total accrued liabilities	$	2,411	$	1,564

Agreement with Eli Lilly and Company

9 Months Ended

12 Months Ended

Sep. 30, 2019

Dec. 31, 2018

Agreement with Eli Lilly and Company

Agreement with Eli Lilly and Company

6. Agreement with Eli Lilly and Company

On November 2, 2018, the Company entered into a multi-year research and development collaboration agreement (the “Lilly Agreement”) with Eli Lilly and Company (“Lilly”), pursuant to which the Company will use its proprietary FIND-IO platform to identify novel oncology targets for additional collaborative research and drug discovery by the Company and Lilly. Under the Lilly Agreement, Lilly and the Company have granted one another an equal number of exclusive options to research, develop, manufacture and commercialize compounds and products directed to oncology targets identified through the Lilly Agreement. Both Lilly and the Company have all options remaining eligible for exercise. The research collaboration with Lilly will be managed by a joint steering committee formed by an equal number of members from the Company and Lilly and will expire upon the earlier of the exercise of all options granted to Lilly or four years from the date of the agreement, subject to certain extensions. The Company considers Lilly to be a related party based on Lilly’s equity investment in the Company as discussed below.

During the research term under the Lilly Agreement, as a part of target discovery, the Company will be responsible for providing Lilly with oncology targets identified using the Company’s FIND-IO platform. From the targets provided by the Company, Lilly may select targets to advance to target validation using criteria developed by both parties. Following completion of the agreed upon target validation plan with respect to a given target, either party may propose to advance that target to compound discovery. For each target that has been advanced to compound discovery, Lilly will have the option to obtain an exclusive license with respect to the compounds and products directed to the target. If Lilly does not exercise its option with respect to a given target or has previously exercised all of its options, the Company will have the option to obtain licenses with respect to compounds and products directed to that target. Following option exercise by a party, the development and commercialization of any products directed to the target will be conducted by the exercising party. The exercising party must use commercially reasonable efforts to develop, seek regulatory approval for and commercialize any such products under mutually agreed upon work plans.

In November 2018, the Company received an upfront, non-refundable payment of $25.0 million under the Lilly Agreement and a concurrent $15.0 million equity investment. In addition, the Company will receive quarterly research and development support payments during a portion of the research term as well as option exercise fees upon option exercises by Lilly.

Pursuant to the Lilly Agreement, Lilly may owe an aggregate of up to $1.4 billion in development and regulatory milestones and sales milestones. Additionally, Lilly will pay mid to high single-digit royalties on net sales for all products directed to each target optioned by Lilly. Upon the Company’s exercise of an option with respect to a given target, the Company will pay Lilly an option exercise payment and may become obligated to milestone and royalty payments. The company may owe an aggregate of up to $710.0 million in development and regulatory milestones and sales milestones.

Upon the adoption of ASC 606, the Company evaluated the Lilly Agreement under the provisions of ASC 606 and concluded that Lilly is a customer prior to the exercise of its option to obtain an exclusive license with respect to the compounds and products directed to a target that has been advanced to compound discovery. The Company identified the following material promises under the Lilly Agreement: (i) a limited research license to conduct activities under the research collaboration; (ii) research and development services together with the provision of a data package in connection with Lilly’s option; (iii) various governance obligations, most notably participation on the joint steering committee; and (iv) rights related to an optional term extension by Lilly. The Company evaluated Lilly’s option to obtain an exclusive license with respect to the compounds and products directed to a target that has been advanced to compound discovery and concluded that the option was not issued at a significant and incremental discount, and therefore does not provide material rights. As such, they are excluded as performance obligations at the outset of the arrangement. The Company determined that the research license was not capable of being distinct and the related research and development services and governance activities are not distinct in the context of the contract and, as such, the Company determined that these promises should be combined into a single performance obligation, resulting in a total of two performance obligations under the Lilly Agreement; one for research and development services and one for the right related to an optional term extension by Lilly.

The transaction price at the outset of the arrangement was determined to be $32.7 million, comprised of the upfront fee received from Lilly, quarterly research and development support payments to be received from Lilly during a portion of the research term and an equity investment premium as determined by the Company with reference to a valuation of the Company’s preferred stock prepared by an unrelated third-party valuation firm in accordance with the guidance provided by the American Institute of Certified Public Accountants Practice Guide, Valuation of Privately-Held-Company Equity Securities Issued as Compensation.

The transaction price was allocated to the two performance obligations based on their relative standalone selling price determined with reference to the Company’s estimated costs attendant to the obligations. Revenue allocated to the research and development performance obligation is being recognized as the research and development services are provided using an input method according to research and development costs incurred to date compared to estimated total research and development costs. The transfer of control occurs over this time period and, in management’s judgment, is the best measure of progress towards satisfying the performance obligation. Revenue allocated to Lilly’s right related to an optional term extension is deferred until the right is exercised or lapses, and will subsequently be recognized accordingly.

While the Lilly Agreement was executed in November 2018, the Company’s performance initiated in January 2019. Under the Lilly Agreement, the Company recognized revenue of $1.6 million and $4.3 million for the three and nine months ended September 30, 2019, respectively. As of September 30, 2019, deferred revenue included in the Company’s balance sheets comprised the following (in thousands):


	September 30,		December 31,
	2019		2018
Deferred revenue, beginning of period	$	26,725	$	—
Up-front payment		—		25,000
Attributed premium on the proceeds from Lilly’s investment in the Company		—		1,725
Research and development support billing		1,500		—
Revenue from research and development arrangement recognized		(4,342)		—
Total deferred revenue, end of period		23,883		26,725
Less: Deferred revenue, current portion		(6,199)		(4,989)
Deferred revenue, non-current portion	$	17,684	$	21,736

6. Agreement with Eli Lilly and Company

On November 2, 2018, the Company entered into a multi-year research and development collaboration agreement (the “Lilly Agreement”) with Eli Lilly and Company (“Lilly”), pursuant to which the Company will use its proprietary FIND-IO platform to identify novel oncology targets for additional collaborative research and drug discovery by the Company and Lilly. Under the Lilly Agreement, Lilly and the Company have granted one another an equal number of exclusive options to research, develop, manufacture and commercialize compounds and products directed to oncology targets identified through the Lilly Agreement. Both Lilly and the Company each have all options remaining eligible for exercise. The research collaboration with Lilly will be managed by a joint steering committee formed by an equal number of members from the Company and Lilly and will expire upon the earlier of the exercise of all options granted to Lilly or four years from the date of the agreement, subject to certain extensions.

The Company received an upfront, non-refundable payment of $25.0 million under the Lilly Agreement and a concurrent $15.0 million equity investment (Note 9). In addition, the Company will receive quarterly research and development support payments during a portion of the research term as well as option exercise fees upon option exercises by Lilly.

Pursuant to the Lilly Agreement, Lilly will owe an aggregate of up to $1.4 billion in development and regulatory milestones and sales milestones. Additionally, Lilly will pay mid to high single-digit royalties on net sales for all products directed to each target optioned by Lilly. Upon the Company’s exercise of an option with respect to a given target, the Company will pay Lilly option exercise, milestone and royalty payments. The company will owe an aggregate of up to $710.0 million in development and regulatory milestones and sales milestones.

The company has evaluated the Lilly Agreement under ASC 606. Two performance obligations were identified as follows:

research and development services; and

material right related to an optional term extension by Lilly.

The Lilly Agreement was executed in November 2018, however, the performance obligations were initiated in January 2019; accordingly no revenue was recorded under the Lilly Agreement in 2018. As of December 31, 2018, deferred revenue included in the Company’s balance sheets in connection with the Lilly Agreement was $26.7 million, which consisted of the $25.0 million upfront payment plus $1.7 million attributed as a premium on the proceeds from Lilly’s equity investment in the Company (Note 9).

Commitments and Contingencies

9 Months Ended

12 Months Ended

Sep. 30, 2019

Dec. 31, 2018

Commitments and Contingencies

Commitments and Contingencies

7. Commitments and Contingencies

Operating Leases

On February 9, 2016, the Company entered into a non-cancelable facilities operating sublease (the “2016 Sublease”). On March 15, 2019, the Company amended and restated the 2016 Sublease (as amended, the “Amended 2016 Sublease”) to include additional square footage to be used for office space, which the Company took possession of upon entering into the Amended 2016 Sublease. The Amended 2016 Sublease expires in August 2025. The base rent under the Amended 2016 Sublease is currently $32,254 per month plus the Company’s prorated share of the sublandlord’s operating expense and is subject to annual rent increases of 3%.

On January 30, 2019, the Company entered into a new lease to be used for office and laboratory space (the “New Premises”), which the Company took possession of on June 1, 2019 (the “2019 Lease”). On August 2, 2019, the Company amended the 2019 Lease (as, the “Amended 2019 Lease”) to include additional space to be used for office and laboratory space (the “Expansion Premises”), which the Company expects to take possession of on April 1, 2020. The Amended 2019 Lease expires in March 2030. Upon expiration of the Amended 2016 Sublease, the Amended 2019 Lease will also cover the space the Company is currently subleasing under the Amended 2016 Sublease. Base rent is abated until April 1, 2020 for the New Premises and until seven months after delivery of the Expansion Premises for the Expansion Premises, after which the base rent will be $19,646 per month for the New Premises and $18,178 per month for the Expansion Premises, each subject to annual rent increases of 3%. In connection with this lease, the Company executed a $39,000 letter of credit, which has not been drawn down on. Additionally, there is a base rate adjustment of 8.5% per annum multiplied by the outstanding balance of amounts paid for tenant improvements. The budgeted amounts of tenant improvements are approximately $1,477,000 for the New Premises and $1,517,000 for the Expansion Premises, which are to be fully reimbursed by the landlord.

The future minimum payments for the operating leases are as follows (in thousands):


Remainder of the year	$	97
2020		566
2021		692
2022		742
2023		733
Thereafter		6,088
Total future minimum payments	$	8,918

Rent expense incurred under operating leases was approximately $252,000 and $442,000 for the three and nine months ended September 30, 2019, respectively, and $107,000 and $308,000 for the three and nine months ended September 30, 2018, respectively.

Legal Proceedings

The Company, from time to time, may be party to litigation arising in the ordinary course of business. The Company is not a party to any litigation or legal proceedings, nor is management aware of any pending or threatened litigation that, in the opinion of the Company’s management, are likely to have a material adverse effect on the Company’s business. At each reporting date, the Company evaluates whether a potential loss amount or a potential range of loss is probable and reasonably estimable under the provisions of the authoritative guidance that addresses accounting for contingencies. The Company expenses the costs related to its legal proceedings as incurred.

7. Commitments and Contingencies

Operating Leases

The Company subleases its facilities under a non‑cancelable operating sublease agreement. The sublease commenced on February 9, 2016 and expires on August 31, 2025. The Company is also responsible for its prorated share of the sublandlord’s operating expense.

The future minimum payments for the operating leases are as follows (in thousands):


Year Ending December 31,
2019		325
2020		308
2021		317
2022		355
2023		335
Thereafter		635
Total future minimum payments	$	2,275

Rent expense incurred under operating leases was approximately $420,000 and $376,000 for the years ended December 31, 2018 and 2017, respectively.

Contingencies

The Company is subject to claims and assessments from time to time in the ordinary course of business. The Company records a provision for a liability when it believes that it is both probable that a liability has been incurred and the amount can be reasonably estimated. Significant judgment is required to determine both probability and the estimated amount.

In the normal course of business, the Company may become involved in legal proceedings. The Company will accrue a liability for such matters when it is probable that a liability has been incurred and the amount can be reasonably estimated. When only a range of possible loss can be established, the most probable amount in the range is accrued. If no amount within this range is a better estimate than any other amount within the range, the minimum amount in the range is accrued. As of December 31, 2018 and 2017, the Company was not involved in any material legal proceedings.

Term Loan

9 Months Ended

12 Months Ended

Sep. 30, 2019

Dec. 31, 2018

Term Loan

Term Loan

8. Term Loan

In April 2016, the Company entered into a $1.0 million term loan with a commercial bank (the “Term Loan”). On January 25, 2019, the Company amended the Term Loan to increase the Company’s borrowing capacity to $5.0 million, which amount remains secured by the Company’s certificates of deposit, money market account, investment property and deposit or investment accounts. As amended, the Term Loan bears interest at the greater of the prime rate less 1% and 4.25%. The effective interest rate was 4.33% and 4.44% for the three and nine months ended September 30, 2019, respectively. The effective interest rate was 4.18% and 3.84% for the three and nine months ended September 30, 2018, respectively. Under the Term Loan, the Company is required to make monthly interest-only payments through January 2020 and is required to make 36 equal monthly payments of principal plus accrued interest thereafter through January 2023.

Future maturities of the Term Loan as of September 30, 2019 are as follows (in thousands):


Remainder of the year	$	—
2020		1,528
2021		1,667
2022		1,667
2023		138
Total		5,000
Less: current portion of term loan		(1,250)
Term loan, net of current portion	$	3,750

Interest expense under the Term Loan was approximately $56,000 and $155,000 for the three and nine months ended September 30, 2019, respectively, and $7,000 and $20,000 for the three and nine months ended September 30, 2018, respectively.

8. Term Loan

In April 2016, the Company entered into a $1.0 million term loan (the “Term Loan”). The Term Loan bears interest at the prime rate less 1%. The interest rate in effect was 4.5% and 3.5% for the years ended December 31, 2018 and 2017, respectively. The Term Loan is secured by all certificates of deposit, money market accounts, cash, securities, investment property and deposit or investment accounts. The Term Loan requires monthly payments of interest only before May 2017, and equal monthly payments of principal and interest thereafter, as defined in the agreement. Interest expense under the Term Loan was approximately $25,000 and $30,000 for the years ended December 31, 2018 and 2017, respectively. The outstanding balance on the Term Loan totaled $460,000 as of December 31, 2018.

Future maturities of the Term Loan as of December 31, 2018 are as follows (in thousands):


2019	$	387
2020		73
Total		460
Less: current portion of term loan		387
Term loan, net of current portion	$	73

Preferred Stock	12 Months Ended
Preferred Stock	Dec. 31, 2018
Preferred Stock.
Preferred Stock	9. Preferred Stock As of December 31, 2018, the Company’s certificate of incorporation, as amended and restated, authorized the Company to issue 125,010,671 shares of $0.001 par value preferred stock. The Company’s preferred stock is classified outside of stockholders’ deficit because the shares contain deemed liquidation rights that are a contingent redemption feature not solely within the control of the Company. Series A Preferred Stock As of December 31, 2018, the Company has issued 68,181,819 shares of Series A Preferred Stock as follows: In December 2015, the Company issued 15,000,000 shares of Series A‑1 Preferred Stock at an issuance price of $1.00 per share for cash proceeds of $15.0 million. In January 2017, the Company issued 25,000,000 shares of Series A‑2 Preferred Stock at an issuance price of $1.00 per share for cash proceeds of $25.0 million. In April 2018, the Company issued 28,181,819 shares of Series A‑3 Preferred Stock at an issuance price of $1.10 per share for cash proceeds of approximately $31.0 million. Series B Preferred Stock As of December 31, 2018, the Company has issued 56,828,851 shares of Series B Preferred Stock as follows: In November 2018, the Company issued 15,052,117 and 34,276,734 shares of Series B-1 Preferred Stock and Series B-2 Preferred Stock, respectively, at an issuance price of $1.59 per share for aggregate cash proceeds of approximately $78.4 million. Concurrent with the issuance of the Series B-1 Preferred Stock and Series B-2 Preferred Stock, in November 2018, the Company issued 7,500,000 shares of Series B-3 Preferred Stock at an issuance price of $2.00 per share for cash proceeds of $15.0 million in connection with the execution of the Collaboration Agreement with Lilly. The Company allocated $13.3 million of the proceeds to Series B-3 Preferred Stock and $1.7 million to deferred revenue. The $1.7 million was determined to be a premium over the fair value of the Series B-3 Preferred Stock and attributed as additional consideration of the Collaboration Agreement (Note 6). The Company estimated the premium of the Series B-3 Preferred Stock based on a valuation of the Company’s preferred stock prepared by an unrelated third-party valuation firm in accordance with the guidance provided by the American Institute of Certified Public Accountants Practice Guide, Valuation of Privately-Held-Company Equity Securities Issued as Compensation. The $1.7 million premium on the Series B-3 Preferred Stock will be recognized as revenue on a proportional performance basis over the term of the Collaboration Agreement. The Company’s Preferred Stock has the following rights and preferences, privileges and restrictions: Dividends The holders of Preferred Stock are entitled to receive annual noncumulative dividends at an annual rate of 8% in preference to any declaration or payment of any dividend on the common stock, on an as‑converted basis when, as and if declared by the Board of Directors. As of December 31, 2018, no dividends have been declared. Voting Rights Each share of Preferred Stock represents such number of votes as is equal to the number of shares of common stock into which such share is convertible. The holders of Preferred Stock vote together with the holders of common stock on an as‑converted basis on all matters in which stockholders are entitled to vote. The holders of Series A Preferred Stock, exclusively and as a separate class, are entitled to elect five directors, the holders of the Series B Preferred Stock, exclusively and as a separate class, are entitled to elect two directors of the Company as of December 31, 2018. Conversion Rights The holders of the Preferred Stock are entitled to convert each share into 0.1245 shares of common stock on demand. The Preferred Stock is mandatorily convertible upon the closing of a qualified public offering in which gross proceeds to the Company of not less than $75.0 million or on the date specified by a majority vote of the outstanding shares of Preferred Stock voting on an as‑converted basis. Liquidation Preference In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, the holders of the Company’s Series B Preferred Stock are entitled to receive, before any payment of any of the assets of the Company to the holders of the Series A Preferred Stock and holders of common stock, $12.77 per share with respect to shares of Series B-1 Preferred Stock and Series B-2 Preferred Stock and $16.07 per share with respect to shares of Series B-3 Preferred Stock (as adjusted for any stock dividend, stock split, combination or other similar transactions, plus any declared but unpaid dividends). After payment of the above but before any payment of any of the assets of the Company to the holders of common stock, the holders of Series A Preferred Stock are entitled to receive $8.03 per share with respect to shares of Series A-1 Preferred Stock and Series A-2 Preferred Stock and $8.84 per share with respect to shares of Series A-3 Preferred Stock (as adjusted for any stock dividend, stock split, combination or other similar transactions, plus any declared but unpaid dividends).

Common Stock	12 Months Ended
Common Stock	Dec. 31, 2018
Common Stock.
Common Stock	10. Common Stock As of December 31, 2018, the Company’s Certificate of Incorporation, as amended and restated, authorized the Company to issue 158,745,671 shares of $0.001 par value common stock, of which 1,374,812 were issued and outstanding. Each share of common stock entitles the holder to one vote on all matters submitted to a vote of the Company’s stockholders. Common stockholders are entitled to receive dividends, as may be declared by the board of directors, if any, subject to the preferential dividend rights of the preferred stock. When dividends are declared on shares of common stock, the Company must declare at the same time a dividend payable to the holders of preferred stock equivalent to the dividend amount they would receive if each share of preferred stock was converted into common stock. The Company may not pay dividends to common stockholders until all dividends accrued or declared but unpaid on the preferred stock have been paid in full. No dividends have been declared or paid by the Company through December 31, 2018. In the event of any liquidation or dissolution of the Company, the holders of common stock are entitled to the remaining assets of the Company legally available for distribution after the payment of the full liquidation preference for the preferred stock.

Stock-Based Compensation

9 Months Ended

12 Months Ended

Sep. 30, 2019

Dec. 31, 2018

Stock-Based Compensation

Stock-Based Compensation

9. Stock‑Based Compensation

Employee Equity Plans

The NextCure, Inc. 2015 Omnibus Incentive Plan (the "2015 Plan") provides for the Company to grant incentive stock options or nonqualified stock options, restricted stock awards, unrestricted stock awards or restricted stock units to employees, consultants and directors of the Company. The 2015 Plan is administered by the board of directors, or at the discretion of the board of directors, by a committee of the board of directors. The exercise prices, vesting and other restrictions are determined at the discretion of the board of directors or its committee if so delegated, except that the exercise price per share of the stock options may not be less than 100% of the fair market value of a share of the Company's common stock on the date of grant and the term of the stock options may not be greater than 10 years.

On May 3, 2019, the Company’s stockholders approved the NextCure, Inc. 2019 Omnibus Incentive Plan (the ‘‘2019 Plan’’), which became effective on May 8, 2019, the date on which the Registration Statement was declared effective (the “Effective Date”). The 2019 Plan replaces the 2015 Plan as the Company’s board of directors (the “Board”) determined not to make additional awards under the 2015 Plan following the effectiveness of the 2019 Plan. The 2019 Plan provides for the grant of awards of options, stock appreciation rights, restricted stock, restricted stock units, deferred stock units, unrestricted stock, dividend equivalent rights, other equity-based awards and cash bonus awards to the Company’s officers, employees, non-employee directors and other key persons (including consultants). The number of shares of common stock reserved for issuance under the 2019 Plan is 2,900,000 plus the number of shares of stock related to awards outstanding under the 2015 Plan that subsequently terminate by expiration or forfeiture, cancellation or otherwise without the issuance of such shares. The number of shares reserved for issuance under the 2019 Plan will automatically increase on January 1, 2020 and each January 1st thereafter during the term of the 2019 Plan by 4% of the number of shares of the Company’s common stock outstanding on December 31st of the preceding calendar year or such lesser number of shares determined by the Board.

As of September 30, 2019, 2,653,969 shares were reserved for future grant under the 2019 Plan.

Stock options granted under the 2015 Plan and 2019 Plan (together, the “Plans”) to employees generally vest over four years and expire after ten years.

A summary of stock option activity for awards under the Plans is presented below:


	Options Outstanding and Exercisable
				Weighted
		Weighted		Average	Aggregate
		Average		Remaining	Intrinsic
	Number of	Exercise		Contractual	Value(1)
	Shares	Price		Life (Years)	(in thousands)
Outstanding as of December 31, 2018	2,056,891	$	4.74	9.4	$	5,946
Granted	247,275	$	18.18	10.0
Exercised	(53,963)	$	1.20	8.1
Forfeitures	(1,250)	$	7.63	9.5
Outstanding as of September 30, 2019	2,248,953	$	6.30	9.1	$	55,305