0001367920-20-000055 | 10-Q | XBRL Viewer | Concert Pharmaceuticals INC

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Cover Page - shares	9 Months Ended
Cover Page - shares	Sep. 30, 2020	Oct. 30, 2020
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2020
Document Transition Report	false
Entity File Number	001-36310
Entity Registrant Name	CONCERT PHARMACEUTICALS, INC.
Entity Incorporation, State	DE
Entity Tax Identification Number	20-4839882
Entity Address, Street	65 Hayden Avenue
Entity Address, Suite	Suite 3000N
Entity Address, City	Lexington
Entity Address, State	MA
Entity Address, Postal Zip Code	02421
City Area Code	781
Local Phone Number	860-0045
Title of each class	Common Stock, par value $0.001 per share
Trading Symbol(s)	CNCE
Name of each exchange on which registered	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		30,649,249
Amendment Flag	false
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q3
Entity Central Index Key	0001367920
Current Fiscal Year End Date	--12-31

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Current assets:
Cash and cash equivalents	$ 33,675	$ 53,043
Investments, available for sale	90,496	53,395
Marketable equity securities	2,956	5,375
Interest receivable	314	260
Deferred offering costs	139	143
Accounts receivable	130	72
Income taxes receivable, current	2,390	0
Prepaid expenses and other current assets	6,269	4,567
Total current assets	136,369	116,855
Property and equipment, net	6,730	7,753
Restricted cash	1,157	1,157
Other assets	71	96
Income taxes receivable	0	2,358
Operating lease right-of-use assets, long-term	9,046	9,252
Total assets	153,373	137,471
Current liabilities:
Accounts payable	265	881
Accrued expenses and other liabilities	6,224	8,336
Deferred revenue, current portion	0	7,783
Lease liability, current portion	880	268
Total current liabilities	7,369	17,268
Deferred revenue, net of current portion	2,750	2,750
Lease liability, net of current portion	15,310	15,996
Total liabilities	25,429	36,014
Commitments (Note 11)
Stockholders’ equity:
Preferred stock, $0.001 par value per share; 5,000,000 shares authorized; no shares issued and outstanding as of September 30, 2020 and December 31, 2019	0	0
Common stock, $0.001 par value per share; 100,000,000 shares authorized; 30,018,551 and 24,065,676 shares issued and 29,817,950 and 23,865,075 shares outstanding as of September 30, 2020 and December 31, 2019, respectively	29	24
Additional paid-in capital	374,937	296,145
Accumulated other comprehensive gain (loss)	35	(31)
Accumulated deficit		(194,681)
Total stockholders’ equity	127,944	101,457
Total liabilities and stockholders’ equity	$ 153,373	$ 137,471

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parenthetical) - $ / shares	Sep. 30, 2020	Dec. 31, 2019
Statement of Financial Position [Abstract]
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized (in shares)	5,000,000	5,000,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	100,000,000	100,000,000
Common stock, shares issued (in shares)	30,018,551	24,065,676
Common stock, shares outstanding (in shares)	29,817,950	23,865,075

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (UNAUDITED) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Revenue:
License and research and development revenue	$ 1,501	$ 10	$ 7,895	$ 1,064
Operating expenses:
Research and development	16,347	13,511	45,121	43,797
General and administrative	4,514	4,742	13,917	15,329
Total operating expenses	20,861	18,253	59,038	59,126
Loss from operations	(19,360)	(18,243)	(51,143)	(58,062)
Investment income	183	724	1,101	2,474
Unrealized gain (loss) on marketable equity securities	269	334	(2,419)	(2,091)
Loss before income taxes	(18,908)	(17,185)	(52,461)	(57,679)
Income tax benefit	0	0	(85)	0
Net loss	(18,908)	(17,185)	(52,376)	(57,679)
Other comprehensive (loss) income:
Unrealized (loss) gain on investments, available for sale	(141)	(39)	66	102
Comprehensive loss	$ (19,049)	$ (17,224)	$ (52,310)	$ (57,577)
Net loss per share applicable to common stockholders - basic and diluted (in dollars per share)	$ (0.60)	$ (0.72)	$ (1.71)	$ (2.43)
Weighted-average number of common shares used in net loss per share applicable to common stockholders - basic and diluted (in shares)	31,547	23,807	30,707	23,703

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED) - USD ($) $ in Thousands	Total	Common Stock	In Treasury	Additional paid-in capital	Accumulated other comprehensive income	Accumulated deficit
Beginning balance at Dec. 31, 2018	$ 167,740	$ 23		$ 284,369	$ (137)	$ (116,515)
Beginning balance (in shares) at Dec. 31, 2018		23,519,000	81,000
Increase (Decrease) in Stockholders' Equity
Exercise of stock options	805			805
Exercise of stock options (in shares)		154,000	47,000
Release of restricted stock units	(741)			(741)
Release of restricted stock units (in shares)		202,000	61,000
Unrealized gain (loss) on short-term investments	97				97
Stock-based compensation expense	2,929			2,929
Exercise of stock warrants	1,000			1,000
Exercise of stock warrants (in shares)		71,000
Offering expenses incurred	(206)			(206)
Net loss	(21,826)					(21,826)
Ending balance at Mar. 31, 2019	149,798	$ 23		288,156	(40)	(138,341)
Ending balance (in shares) at Mar. 31, 2019		23,946,000	189,000
Beginning balance at Dec. 31, 2018	167,740	$ 23		284,369	(137)	(116,515)
Beginning balance (in shares) at Dec. 31, 2018		23,519,000	81,000
Increase (Decrease) in Stockholders' Equity
Unrealized gain (loss) on short-term investments	102
Net loss	(57,679)
Ending balance at Sep. 30, 2019	119,263	$ 23		293,469	(35)	(174,194)
Ending balance (in shares) at Sep. 30, 2019		24,031,000	189,000
Beginning balance at Mar. 31, 2019	149,798	$ 23		288,156	(40)	(138,341)
Beginning balance (in shares) at Mar. 31, 2019		23,946,000	189,000
Increase (Decrease) in Stockholders' Equity
Exercise of stock options	165			165
Exercise of stock options (in shares)		40,000
Unrealized gain (loss) on short-term investments	44				44
Stock-based compensation expense	2,362			2,362
Net loss	(18,668)					(18,668)
Ending balance at Jun. 30, 2019	133,701	$ 23		290,683	4	(157,009)
Ending balance (in shares) at Jun. 30, 2019		23,986,000	189,000
Increase (Decrease) in Stockholders' Equity
Exercise of stock options	36			36
Exercise of stock options (in shares)		9,000
Unrealized gain (loss) on short-term investments	(39)				(39)
Stock-based compensation expense	2,420			2,420
Proceeds from at-the-market offering	330			330
Proceeds from at-the-market offering (in shares)		36,000
Net loss	(17,185)					(17,185)
Ending balance at Sep. 30, 2019	119,263	$ 23		293,469	(35)	(174,194)
Ending balance (in shares) at Sep. 30, 2019		24,031,000	189,000
Beginning balance at Dec. 31, 2019	101,457	$ 24		296,145	(31)	(194,681)
Beginning balance (in shares) at Dec. 31, 2019		24,066,000	200,000
Increase (Decrease) in Stockholders' Equity
Exercise of stock options	435			435
Exercise of stock options (in shares)		51,000
Unrealized gain (loss) on short-term investments	523				523
Stock-based compensation expense	2,477			2,477
Proceeds from at-the-market offering	70,064	$ 5		70,059
Proceeds from at-the-market offering (in shares)		5,735,000
Net loss	(20,477)					(20,477)
Ending balance at Mar. 31, 2020	154,479	$ 29		369,116	492	(215,158)
Ending balance (in shares) at Mar. 31, 2020		29,852,000	200,000
Beginning balance at Dec. 31, 2019	$ 101,457	$ 24		296,145	(31)	(194,681)
Beginning balance (in shares) at Dec. 31, 2019		24,066,000	200,000
Increase (Decrease) in Stockholders' Equity
Exercise of stock options (in shares)	81,253
Unrealized gain (loss) on short-term investments	$ 66
Net loss	(52,376)
Ending balance at Sep. 30, 2020	127,944	$ 29		374,937	35	(247,057)
Ending balance (in shares) at Sep. 30, 2020		30,019,000	200,000
Beginning balance at Mar. 31, 2020	154,479	$ 29		369,116	492	(215,158)
Beginning balance (in shares) at Mar. 31, 2020		29,852,000	200,000
Increase (Decrease) in Stockholders' Equity
Exercise of stock options	109			109
Exercise of stock options (in shares)		27,000
Unrealized gain (loss) on short-term investments	(316)				(316)
Stock-based compensation expense	2,804			2,804
Net loss	(12,991)					(12,991)
Ending balance at Jun. 30, 2020	144,085	$ 29		372,029	176	(228,149)
Ending balance (in shares) at Jun. 30, 2020		29,879,000	200,000
Increase (Decrease) in Stockholders' Equity
Exercise of stock options	13			13
Exercise of stock options (in shares)		4,000
Release of restricted stock units	0
Release of restricted stock units (in shares)		136,000
Unrealized gain (loss) on short-term investments	(141)				(141)
Stock-based compensation expense	2,895			2,895
Net loss	(18,908)					(18,908)
Ending balance at Sep. 30, 2020	$ 127,944	$ 29		$ 374,937	$ 35	$ (247,057)
Ending balance (in shares) at Sep. 30, 2020		30,019,000	200,000

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019
Operating activities
Net loss	$ (52,376)	$ (57,679)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	1,208	1,256
Stock-based compensation expense	8,176	7,711
Accretion of premiums and discounts on investments	(39)	(899)
Unrealized loss on marketable equity securities	2,419	2,090
Loss on disposal of asset	4	4
Non-cash lease expense	206	161
Changes in operating assets and liabilities:
Accounts receivable	(58)	4
Deferred offering costs	(52)	0
Interest receivable	(54)	265
Prepaid expenses and other current assets	(1,702)	(1,091)
Contract asset	0	16,000
Other assets	24	(16)
Accounts payable	(615)	207
Accrued expenses and other liabilities	(2,061)	(827)
Income taxes receivable	(32)	(36)
Income taxes payable	0	(390)
Deferred revenue	(7,783)	0
Operating lease liability	(74)	(445)
Net cash used in operating activities	(52,809)	(33,685)
Investing activities
Purchases of property and equipment	(185)	(520)
Purchases of investments	(156,670)	(93,326)
Maturities of investments	119,675	141,706
Net cash (used in) provided by investing activities	(37,180)	47,860
Financing activities
Proceeds from exercises of stock options	557	1,006
Proceeds from exercise of warrants	0	1,000
Repurchase of common stock pursuant to share surrender	0	(741)
Proceeds from common stock and pre-funded warrants sold, net of underwriters' discount and costs	70,064	0
Proceeds from common stock and pre-funded warrants sold, net of underwriters' discount and costs	0	174
Net cash provided by financing activities	70,621	1,439
Net (decrease) increase in cash and cash equivalents and restricted cash	(19,368)	15,614
Cash, cash equivalents and restricted cash at beginning of period	54,200	18,927
Cash, cash equivalents and restricted cash at end of period	34,832	34,541
Supplemental cash flow information:
Cash paid for income taxes	0	453
Public offering costs unpaid at period end	87	50
Cash paid included in measurement of lease liabilities	1,685	2,082
Pre-funded stock warrants issued	$ 16,736	$ 0

Nature of Business	9 Months Ended
Nature of Business	Sep. 30, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Nature of Business	Nature of Business Concert Pharmaceuticals, Inc., or the Company, was incorporated on April 12, 2006 as a Delaware corporation and has its operations based in Lexington, Massachusetts. The Company is a clinical stage biopharmaceutical company that is developing small molecule drugs that it discovered through the application of its deuterated chemical entity platform, or DCE Platform®. Selective incorporation of deuterium into known molecules has the potential, on a case-by-case basis, to provide better pharmacokinetic or metabolic properties, thereby enhancing their clinical safety, tolerability or efficacy. The Company’s pipeline consists of clinical stage candidates targeting autoimmune and central nervous system, or CNS, disorders, and a number of preclinical compounds that it is currently assessing. Liquidity and Going Concern As of September 30, 2020, the Company had cash, cash equivalents and investments of $124.2 million and net working capital of $129.0 million. The Company has incurred cumulative net losses of $247.1 million since its inception and requires capital to continue future development activities. The Company does not have any products approved for sale and has not generated any revenue from product sales. The Company has funded its operations primarily through the public offering and private placement of its equity, debt financing, funding from collaborations and patent assignments, an asset sale and other arrangements. The Company expects its expenses to increase in connection with its ongoing activities, particularly as it initiates new clinical trials such as the Phase 3 trial of CTP-543 in alopecia areata. See Notes 12-14 for information regarding the Company's recently completed equity financings. The Company is subject to risks common to companies in the biotechnology industry, including, but not limited to, risks of failure or unsatisfactory results of nonclinical studies and clinical trials, the need to obtain additional financing to fund the future development of its pipeline, the need to obtain marketing approval for its product candidates, the need to successfully commercialize and gain market acceptance of its product candidates, dependence on key personnel, protection of proprietary technology, compliance with government regulations, development by competitors of technological innovations and ability to transition from pilot-scale manufacturing to large-scale production of products. Under Accounting Standards Codification, or ASC, Topic 205-40, Presentation of Financial Statements - Going Concern, management is required at each reporting period to evaluate whether there are conditions and events, considered in the aggregate, that raise substantial doubt about an entity's ability to continue as a going concern within one year after the date that the financial statements are issued. This evaluation initially does not take into consideration the potential mitigating effect of management's plans that have not been fully implemented as of the date the financial statements are issued. When substantial doubt exists, management evaluates whether the mitigating effect of its plans sufficiently alleviates the substantial doubt about the Company's ability to continue as a going concern. The mitigating effect of management's plans, however, is only considered if both (i) it is probable that the plans will be effectively implemented within one year after the date that the financial statements are issued and (ii) it is probable that the plans, when implemented, will mitigate the relevant conditions or events that raise substantial doubt about the entity's ability to continue as a going concern within one year after the date that the financial statements are issued. Generally, to be considered probable of being effectively implemented, the plans must have been approved by the Company's board of directors before the date that the financial statements are issued. Successful completion of the Company’s development program and, ultimately, the attainment of profitable operations are dependent upon future events, including obtaining adequate financing to support the Company’s cost structure and operating plan. Management’s plans to alleviate its financing requirements include, among other things, pursuing one or more of the following steps to raise additional capital, none of which can be guaranteed or are entirely within the Company’s control: •raise funding through the sale of the Company's common stock; •raise funding through debt financing; and •establish collaborations with potential partners to advance the Company’s product pipeline. Based on the Company’s current operating plan, management believes that its current cash, cash equivalents and available for sale investments will allow the Company to meet its liquidity requirements into the second half of 2021. The Company's history of significant losses, the negative cash flows from operations, the limited liquidity resources currently on hand and the dependence by the Company on its ability, about which there can be no certainty, to obtain additional financing to fund its operations after the current resources are exhausted raises substantial doubt about the Company's ability to continue as a going concern for a period of at least twelve months from the issuance date of this Quarterly Report on Form 10-Q. The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business, and do not include any adjustments that may result from the outcome of this uncertainty. If the Company is unable to raise capital when needed or on attractive terms, or if it is unable to procure collaboration arrangements to advance its programs, the Company would be forced to discontinue some of its operations or develop and implement a plan to further extend payables, reduce overhead or scale back its current operating plan until sufficient additional capital is raised to support further operations. There can be no assurance that such a plan would be successful.

Basis of Presentation and Significant Accounting Policies	9 Months Ended
	Sep. 30, 2020
Accounting Policies [Abstract]
Basis of Presentation and Significant Accounting Policies	Basis of Presentation and Significant Accounting Policies Basis of Presentation The condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments, consisting of normal recurring accruals and revisions of estimates, considered necessary for a fair presentation of the condensed consolidated financial statements have been included. Interim results for the nine months ended September 30, 2020 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2020 or any other future period. The accompanying condensed consolidated financial statements reflect the accounts of the Company and its subsidiaries. All intercompany transactions between the Company and its subsidiaries have been eliminated. Management has determined that the Company operates in one segment: the development of pharmaceutical products on its own behalf or in collaboration with others. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the Company’s consolidated financial statements and the accompanying notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019 filed with the Securities and Exchange Commission, or SEC, on February 27, 2020. Unless otherwise indicated, all amounts in the following tables are in thousands except share and per share amounts. Use of Estimates and Summary of Significant Accounting Policies The preparation of the consolidated financial statements in conformity with U.S. generally accepted accounting principles, or GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, equity, revenue, expenses and the disclosure of contingent assets and liabilities and the Company's ability to continue as a going concern. In preparing the consolidated financial statements, management used estimates in the following areas, among others: revenue recognition; prepaid and accrued research and development expenses; stock-based compensation expense; and the evaluation of the existence of conditions and events that raise substantial doubt regarding the Company’s ability to continue as a going concern. Actual results could differ from those estimates. During the nine months ended September 30, 2020, there have been no material changes to the significant accounting policies previously disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019. Recently Adopted Accounting Pronouncements In August 2018, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, 2018-15, Intangible-Goodwill and Other Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract. This standard aligns the requirements for capitalizing implementation costs in a cloud computing arrangement service contract with the requirements for capitalizing implementation costs incurred for internal-use software. The new guidance also prescribes the balance sheet, income statement and cash flow classification of the capitalized implementation costs and related amortization expense, and requires additional quantitative and qualitative disclosures. ASU 2018-15 is effective for fiscal years beginning after December 15, 2019, and early adoption is permitted. The Company adopted this new standard effective January 1, 2020, on a prospective basis, and it did not have a material effect on the consolidated financial statements and related disclosures. In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This standard includes removal of certain exceptions to the general principles of ASC 740, Income Taxes, and simplification in several other areas. ASU 2019-12 is effective for public business entities for annual reporting periods beginning after December 15, 2020, and interim periods within those reporting periods, and early adoption is permitted. The Company adopted this new standard effective January 1, 2020, and it did not have a material effect on the consolidated financial statements and related disclosures. For a detailed discussion of the adoption of ASU 2019-12, refer to Note 7. Pending Accounting Pronouncements In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses. This standard requires entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. As a smaller reporting company, ASU 2016-13 will become effective for the Company for fiscal years beginning after December 15, 2022, and early adoption is permitted. The Company is currently evaluating the impact that ASU 2016-13 will have on its financial statements and related disclosures.

Fair Value Measurements

9 Months Ended

Sep. 30, 2020

Fair Value Disclosures [Abstract]

Fair Value Measurements

The Company has certain financial assets and liabilities that are 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 prices for identical instruments in active markets;

•Level 2—quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets; and

•Level 3—valuations derived from valuation techniques in which one or more significant value drivers are unobservable.

The tables below present information about the Company’s financial assets and liabilities that are measured and carried at fair value as of September 30, 2020 and December 31, 2019 and indicate the level within the fair value hierarchy where each measurement is classified. The carrying amounts reflected in the condensed consolidated balance sheets for cash, prepaid expenses and other current assets, restricted cash, accounts payable and accrued expenses approximate their fair value due to their short-term nature.


	Level 1		Level 2		Level 3		Total
September 30, 2020
Cash equivalents:
Money market funds	$	30,021	$	—	$	—	$	30,021

Government agency securities	1,002		—		—		1,002
Investments, available for sale:
U.S. Treasury obligations	43,890		—		—		43,890
Government agency securities	20,610		25,996		—		46,606
Marketable equity securities:
Corporate equity securities (Note 8)	2,956		—		—		2,956
Total	$	98,479	$	25,996	$	—	$	124,475


	Level 1		Level 2		Level 3		Total
December 31, 2019
Cash equivalents:
Money market funds	$	40,782	$	—	$	—	$	40,782
Government agency securities	—		2,000		—		2,000
Investments, available for sale:
U.S. Treasury obligations	34,499		—		—		34,499
Government agency securities	10,997		7,899		—		18,896
Marketable equity securities:
Corporate equity securities (Note 8)	5,375		—		—		5,375
Total	$	91,653	$	9,899	$	—	$	101,552

- 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

Cash, Cash Equivalents, Investments and Marketable Equity Securities

9 Months Ended

Sep. 30, 2020

Cash and Cash Equivalents [Abstract]

Cash, Cash Equivalents, Investments and Marketable Equity Securities

Cash, Cash Equivalents, Investments and Marketable Equity SecuritiesCash equivalents include all highly liquid investments maturing within 90 days from the date of purchase. Investments consist of securities with original maturities greater than 90 days when purchased. The Company classifies these investments as available for sale and records them at fair value in the accompanying consolidated balance sheets. Unrealized gains or losses from equity securities are included in net income. Unrealized gains or losses from other investments, including debt securities,

are included in accumulated other comprehensive (loss) income. Premiums or discounts from par value are amortized to investment income over the life of the underlying investment.

Cash, cash equivalents, available for sale investments and marketable equity securities included the following as of September 30, 2020 and December 31, 2019:


	Average Maturity	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
September 30, 2020
Cash		$	2,652	$	—	$	—	$	2,652
Money market funds		30,021		—		—		30,021

Government agency securities	30 days	1,002		—		—		1,002
Cash and cash equivalents		$	33,675	$	—	$	—	$	33,675

U.S. Treasury obligations	126 days	$	43,816	$	74	$	—	$	43,890
Government agency securities	119 days	46,568		38		—		46,606
Investments, available for sale		$	90,384	$	112	$	—	$	90,496

September 30, 2020		Acquisition Value		Unrealized Gains		Unrealized Losses		Fair Value
Marketable equity securities (Note 8)		$	10,451	$	—	$	(7,495)	$	2,956


	Average Maturity	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
December 31, 2019
Cash		$	10,261	$	—	$	—	$	10,261
Money market funds		40,782		—		—		40,782
Government agency securities	8 days	2,000		—		—		2,000
Cash and cash equivalents		$	53,043	$	—	$	—	$	53,043

U.S. Treasury obligations	108 days	$	34,475	$	24	$	—	$	34,499
Government agency securities	74 days	18,874		22		—		18,896
Investments, available for sale		$	53,349	$	46	$	—	$	53,395

December 31, 2019		Acquisition Value		Unrealized Gains		Unrealized Losses		Fair Value
Marketable equity securities (Note 8)		$	10,451	$	—	$	(5,076)	$	5,375

Although available to be sold to meet operating needs or otherwise, securities are generally held through maturity. The Company classifies all investments as current assets, as these assets are readily available for use in current operations. The cost of securities sold is determined based on the specific identification method for purposes of recording realized gains and losses. During 2020 and 2019, there were no realized gains or losses on sales of investments, and no investments were adjusted other than for temporary declines in fair value

Restricted Cash

9 Months Ended

Sep. 30, 2020

Cash and Cash Equivalents [Abstract]

Restricted Cash

Restricted CashRestricted cash as of September 30, 2020 and 2019 was held as collateral for stand-by letters of credit issued by the Company to its landlord in connection with the current lease for its principal facilities located at 65 Hayden Avenue, Lexington, Massachusetts. For additional information regarding the Company's lease, refer to Note 11. Cash, cash equivalents and restricted cash consisted of the following as of September 30, 2020 and 2019:


	September 30, 2020		September 30, 2019
Cash and cash equivalents	$	33,675	$	33,384
Restricted cash	1,157		1,157

Total cash, cash equivalents and restricted cash shown in the statements of cash flows	$	34,832	$	34,541

Accrued Expenses and Other Liabilities

9 Months Ended

Sep. 30, 2020

Payables and Accruals [Abstract]

Accrued Expenses and Other Liabilities

Accrued expenses and other liabilities consisted of the following as of September 30, 2020 and December 31, 2019:


	September 30, 2020		December 31, 2019
Accrued professional fees and other	$	503	$	862
Employee compensation and benefits	2,651		3,222
Research and development expenses	3,070		4,252

Total	$	6,224	$	8,336

Income Taxes	9 Months Ended
Income Taxes	Sep. 30, 2020
Income Tax Disclosure [Abstract]
Income Taxes	Income Taxes Deferred tax assets and deferred tax liabilities are recognized based on temporary differences between the financial reporting and tax basis of assets and liabilities using statutory rates. A valuation allowance is recorded against deferred tax assets if it is more likely than not that some or all of the deferred tax assets will not be realized. The Company’s ability to use its operating loss carryforwards and tax credits to offset future taxable income is subject to restrictions under Sections 382 and 383 of the U.S. Internal Revenue Code. Net operating loss and tax credit carryforwards may become subject to an annual limitation in the event of certain cumulative changes in the ownership interest of significant stockholders over a three-year period in excess of 50%, as defined under Sections 382 and 383 of the Internal Revenue Code. Such changes would limit the Company’s use of its operating loss carryforwards and tax credits. In such a situation, the Company may be required to pay income taxes, even though significant operating loss carryforwards and tax credits exist. The Company records a provision or benefit for income taxes on ordinary pre-tax income or loss based on its estimated effective tax rate for the year. As of September 30, 2020, the Company forecasts an ordinary pre-tax loss for the year ended December 31, 2020 and, since it maintains a full valuation allowance on its deferred tax assets, the Company did not record an income tax benefit relating to this period. During the nine months ended September 30, 2020, the Company recorded a benefit for income taxes of $85 thousand for interest accrued in a prior period under the installment sales method for the sale of CTP-656 to Vertex Pharmaceuticals, Inc., or Vertex. The Company adopted ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, effective January 1, 2020. Under ASU 2019-12, the Company, having a full valuation and a loss in continuing operations, will no longer include the impacts of items in other comprehensive income in determining intra-period allocation of tax expense for continuing operations. Under ASU 2019-12, the Company can apply this change to intra-period tax allocation on a prospective basis. For the nine months ended September 30, 2020, the Company applied the tax allocation rules of ASU 2019-12 to the $66 thousand of unrealized gains on available for sale investments recognized in other comprehensive income, which did not have a material impact on the consolidated financial statements or related disclosures.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References + Details

Revenue	9 Months Ended
Revenue	Sep. 30, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Revenue	Revenue The Company's revenue is generated through collaborative licensing agreements, patent assignments and sales of intellectual property. The Company generates its revenue through one segment. The revenue recognized under each of the Company's arrangements during the current and prior periods is described below. Contract Assets In February 2019, the Company received $16.0 million that had previously been held in escrow for indemnification purposes related to the asset purchase by Vertex. The Company did not have a contract asset as of September 30, 2020 or December 31, 2019. Contract Liabilities As of September 30, 2020 and December 31, 2019, the Company had $2.8 million and $10.6 million, respectively, in contract liabilities related to unsatisfied performance obligations as well as variable consideration paid in advance but currently constrained from recognition. The contract liabilities as of September 30, 2020 consisted of $2.8 million of deferred revenue related to a payment received from GlaxoSmithKline that the Company will not recognize as revenue until all repayment obligations lapse. During the three and nine months ended September 30, 2020, the Company recognized $1.4 million and $7.8 million, respectively, in deferred revenue. In April 2020, the Company recognized $6.4 million in deferred revenue upon the expiration of two licensing options under the Company's collaboration agreement with Celgene. During the three months ended September 30, 2020, the Company recognized $1.4 million in deferred revenue upon the satisfaction of obligations to perform research and development services and to supply nonclinical and clinical trial material in connection with the termination of the agreement with Celgene. The Company also recognized $78 thousand in patent reimbursement costs in connection with the termination of the agreement with Celgene. As of September 30, 2020, no further performance obligations remain outstanding from the revenue arrangement with Celgene. Revenue Arrangements Vertex On March 3, 2017, the Company and Vertex entered into an Asset Purchase Agreement, or the Vertex Agreement, pursuant to which, subject to the satisfaction or waiver of the conditions therein, the Company sold and assigned to Vertex CTP-656, a deuterated analog of ivacaftor, now known as VX-561, and other cystic fibrosis assets of the Company. On July 25, 2017, or the Vertex Closing Date, the transaction contemplated by the Vertex Agreement closed and Vertex paid the Company $160 million in cash consideration. In addition, Vertex has agreed to pay the Company an aggregate of up to $90 million upon the achievement of certain milestone events. As of December 31, 2018, the Vertex indemnification variable consideration represented a contract asset to be released from escrow 18 months following the Vertex Closing Date and was classified as a current asset in the accompanying consolidated balance sheet. In February 2019, the $16.0 million that had previously been held in escrow was released to the Company. Additionally, the variable consideration related to the regulatory milestone payments are fully constrained due to the uncertainty associated with the achievement of the respective milestones. Accordingly, no contract asset was recorded as of September 30, 2020 or December 31, 2019. Processa On October 4, 2017, the Company entered into an Option and License Agreement, or the Option, with Promet Therapeutics, LLC, or Promet, pursuant to which the Company granted Promet an option to obtain an exclusive license to CTP-499, a deuterated analog of 1-(S)-5-hydroxyhexyl-3,7-dimethylxanthine, or HDX, an active metabolite of pentoxifylline, provided certain conditions were met. On October 5, 2017, Promet closed an asset purchase agreement with Heatwurx, Inc., a public company, creating Processa Pharmaceuticals, Inc., or Processa. On March 21, 2018, the Company entered into an Amendment to the Option, or the Amendment, and a Securities Purchase Agreement with both Promet and Processa. Pursuant to the Amendment, the Company granted Promet, who then assigned to Processa, an exclusive, worldwide, royalty-bearing license to develop, manufacture and commercialize CTP-499, now known as PCS-499. Upon transfer of the license and as consideration for the license, the Company received 2,090,301 shares of common stock of Processa. In December 2019, Processa implemented a reverse stock split, and the Company now owns 298,615 shares of common stock of Processa. The Company is also eligible to receive royalties on worldwide net sales. The Amendment contained one performance obligation: an exclusive, worldwide, royalty-bearing license to develop, manufacture and commercialize CTP-499. The Company determined that the transaction price was $10.5 million, which was based on the fair value of the non-cash consideration received on March 19, 2018, which consisted of 2,090,301 shares of publicly traded common stock of Processa. The transaction price of $10.5 million was allocated to the single performance obligation. The performance obligation was considered satisfied at contract inception, as the exclusive license transferred control to the customer at this point in time. Accordingly, revenue of $10.5 million was recognized during the first quarter of 2018. Subsequent changes to the fair value of the underlying securities are recognized as unrealized gains or losses on marketable equity securities within the condensed consolidated statements of operations and comprehensive loss. The Amendment contains consideration that is variable based on royalties upon the customer's commercial success with the licensed product. The consideration related to royalty payments is considered variable consideration that is fully constrained in accordance with the royalty recognition constraint. The variable consideration related to royalties will be recognized in the period the products are sold by Processa and the Company has a present right to payment. For the three and nine months ended September 30, 2020, the Company recognized $3 thousand and $14 thousand in revenue, respectively, related to intellectual property cost reimbursements. For the three and nine months ended September 30, 2019, the Company recognized $2 thousand and $24 thousand in revenue, respectively, related to intellectual property cost reimbursements. Cipla The Company entered into a License Agreement, or the Cipla Agreement, with Cipla Technologies LLC, or Cipla, on January 16, 2019, or the Cipla Closing Date, pursuant to which the Company granted Cipla an exclusive, worldwide, royalty-bearing license to develop, manufacture and commercialize CTP-354, a novel GABAA receptor subtype-selective modulator. As consideration for the license, the Company received an upfront payment of $1.0 million. The Cipla Agreement also provides Cipla the option to purchase the Company’s existing inventory of CTP-354 held as of the Cipla Closing Date, valued in the aggregate at $0.3 million. Additionally, upon the achievement of certain milestone events, Cipla has agreed to pay the Company an aggregate of up to $57.0 million. The first milestone payment the Company may be entitled to receive is $3.0 million when the first investigational new drug application, or IND, for the first CTP-354 product goes into effect. Furthermore, the Company is eligible to receive royalties on worldwide net sales of future product sales at defined percentages ranging from the mid-single to high-single digits. The Cipla Agreement contained one performance obligation: an exclusive, worldwide, royalty-bearing license to develop, manufacture and commercialize CTP-354, referred to as the Transfer of License Performance Obligation. The Company concluded that the option to purchase existing inventory did not provide Cipla a material right, and as such, was treated as a separate contract. The transaction price was determined to be $1.0 million based on the upfront consideration received as of the Cipla Closing Date. As of the Cipla Closing Date, the Transfer of License Performance Obligation was satisfied, as the control of CTP-354 transferred to Cipla, the customer. As a result, the full transaction price was recognized as revenue on the Cipla Closing Date. The sale of existing inventory is recognized as goods are transferred to the customer. The arrangement with Cipla contains consideration that is variable based on the customer’s achievement of certain development and regulatory milestones in addition to royalties upon the customer’s commercial success with the licensed product. The next milestone payment the Company may be entitled to receive of $3.0 million related to the first IND for the first CTP-354 product going into effect is considered variable consideration that is fully constrained due to the uncertainty associated with the achievement of the development milestone. The consideration related to royalties is also variable consideration that is fully constrained in accordance with the royalty recognition constraint. The variable consideration related to royalties will be recognized in the period the products are sold by Cipla and the Company has a present right to payment. The Company did not recognize revenue related to the Cipla Agreement for the three or nine months ended September 30, 2020 or for the three months ended September 30, 2019. The Company recognized $1.0 million in revenue for the nine months ended September 30, 2019 associated with the sale of existing inventory and the Transfer of License Performance Obligation.

Stock-Based Compensation

9 Months Ended

Sep. 30, 2020

Share-based Payment Arrangement [Abstract]

Stock-Based Compensation

Stock-Based CompensationThe Company’s equity incentive plans provide for the issuance of a variety of stock-based awards, including incentive stock options, nonstatutory stock options and awards of stock, to directors, officers and employees of the Company, as well as consultants and advisors to the Company. As of September 30, 2020, the Company has granted awards in the form of stock options and restricted stock units, or RSUs. The stock options generally have been granted with an exercise price equal to the

closing market price of the Company's common stock on the date of grant, a vesting period of one, three or four years, and an expiration date no later than ten years from the date of grant.

Effective January 1, 2020, an additional 954,603 shares were added to the Company’s 2014 Stock Incentive Plan, or the 2014 Plan, for future issuance pursuant to the terms of the 2014 Plan. As of September 30, 2020, there were 1,155,611 shares of common stock available for future awards under the 2014 Plan.

Total stock-based compensation expense related to all stock-based options and awards recognized in the condensed consolidated statements of operations and comprehensive loss consisted of:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Research and development	$	1,555	$	1,190	$	4,226	$	3,728
General and administrative	1,340		1,230		3,950		3,983
Total stock-based compensation expense	$	2,895	$	2,420	$	8,176	$	7,711

Stock Options

Stock options are valued using the Black-Scholes-Merton option valuation model, and compensation cost is recognized based on such fair value over the period of vesting. The weighted-average fair value of options granted in the three and nine months ended September 30, 2020 and 2019 reflect the following weighted-average assumptions:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Expected volatility	70.11	%	74.37	%	68.59	%	76.86	%
Expected term	6.0 years		6.0 years		6.0 years		6.0 years
Risk-free interest rate	0.37	%	1.59	%	1.32	%	2.16	%
Expected dividend yield	—	%	—	%	—	%	—	%

For the three and nine months ended September 30, 2019, expected volatility was estimated using a weighted average of the Company's historical volatility of its common stock and the historical volatility of the common stock of a group of similar companies that were publicly traded. For the three and nine months ended September 30, 2020, expected volatility was estimated using solely the historical volatility of the Company's common stock because the Company had accumulated sufficient historical pricing data.

The following table provides certain information related to the Company's outstanding stock options:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
	(Amounts in thousands, except per share data)
Weighted-average fair value of options granted, per option	$	5.68	$	6.46	$	6.53	$	8.95
Aggregate grant date fair value of options vested during the period	$	2,198	$	2,234	$	6,434	$	7,070
Total cash received from exercises of stock options	$	13	$	36	$	557	$	1,006
Total intrinsic value of stock options exercised	$	21	$	59	$	304	$	1,167

The following is a summary of stock option activity for the nine months ended September 30, 2020:


	Number of Option Shares	Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
				(in years)	(in thousands)
Outstanding at December 31, 2019	4,112,609	$	15.01
Granted	720,154	$	10.62
Exercised	(81,253)	$	6.87
Forfeited or expired	(59,630)	$	19.15
Outstanding at September 30, 2020	4,691,880	$	14.43	6.77	$	1,360
Exercisable at September 30, 2020	3,102,777	$	14.42	5.90	$	1,299
Vested and expected to vest at September 30, 2020(1)	4,579,705	$	14.46	6.72	$	1,357

(1)Represents the number of vested stock option shares as of September 30, 2020, plus the number of unvested stock option shares that the Company estimated as of September 30, 2020 would vest, based on the unvested stock option shares as of September 30, 2020 and an estimated forfeiture rate of 6%.

As of September 30, 2020, there was $13.4 million of unrecognized compensation cost related to stock options that are expected to vest. The stock option costs are expected to be recognized over a weighted-average remaining vesting period of 2.3 years.

Restricted Stock Units

On August 15, 2019, or the 2019 RSU grant date, the Company granted 0.4 million RSUs, or the 2019 RSUs, to certain executives and employees. All of the 2019 RSUs are service-based and vest ratably over two years. On the first anniversary of the 2019 RSU grant date, 35% of the 2019 RSUs will vest. The remainder of the 2019 RSUs will vest on the second anniversary of the 2019 RSU grant date.

On February 14, 2020, or the 2020 RSU grant date, the Company granted 0.4 million RSUs, or the 2020 RSUs, to certain executives and employees. All of the 2020 RSUs are service-based and vest ratably over three years, with one third of the 2020 RSUs vesting on each anniversary of the 2020 RSU grant date through February 14, 2023.

RSUs are not included in issued and outstanding common stock until the shares have vested and settled. As of September 30, 2020, 136,339 of the 2019 RSUs and none of the 2020 RSUs had vested. The fair value of an RSU is measured based on the market price of the underlying common stock as of the date of grant.

The following is a summary of RSU activity for the nine months ended September 30, 2020:


	Number of RSUs	Weighted- Average Grant Date Fair Value

Outstanding at December 31, 2019	393,629	$	10.27
Granted	409,295	$	10.87
Released	(136,339)	$	10.27
Forfeited	(5,053)	$	10.33
Outstanding at September 30, 2020	661,532	$	10.64

As of September 30, 2020, there was $5.8 million of unrecognized compensation cost related to RSUs that are expected to vest. The RSU costs are expected to be recognized over a weighted-average remaining vesting period of 1.8 years.

Loss Per Share

9 Months Ended

Sep. 30, 2020

Earnings Per Share [Abstract]

Loss Per Share

Loss Per ShareBasic net loss per common share is calculated by dividing net loss allocable to common stockholders by the weighted-average common shares outstanding during the period, without consideration of stock options and RSUs as common stock equivalents.

The weighted-average common shares outstanding as of September 30, 2020 includes pre-funded warrants to purchase up to an aggregate of 1.8 million shares of common stock that were issued in connection with the January 2020 public offering, as discussed in Note 13. For purposes of the diluted net loss per share calculation, common stock equivalents are excluded from the calculation if their effect would be anti-dilutive. As such, basic and diluted net loss per share applicable to common stockholders are the same for periods with a net loss.

The following table illustrates the determination of loss per share for each period presented.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
	(Amounts in thousands, except per share amounts)
Numerator:
Net loss applicable to common stockholders - basic and diluted	$	(18,908)	$	(17,185)	$	(52,376)	$	(57,679)

Denominator:
Weighted-average shares outstanding - basic and diluted	31,547		23,807		30,707		23,703

Net loss per share applicable to common stockholders - basic and diluted	$	(0.60)	$	(0.72)	$	(1.71)	$	(2.43)

Anti-dilutive potential common stock equivalents excluded from the calculation of net loss per share*:
Stock options	4,692		4,203		4,692		4,203
Restricted stock units	662		412		662		412
Warrants	61		61		61		61

*For the three and nine months ended September 30, 2020, the Company has presented "Anti-dilutive potential common stock equivalents excluded from the calculation of net loss per share" to include all stock equivalents that could potentially dilute basic earnings per share. The Company has corrected the presentation for the three and nine months ended September 30, 2019 and has concluded that this change is not material to the current or any prior period financial statements.

Lease	9 Months Ended
Lease	Sep. 30, 2020
Leases [Abstract]
Lease	Lease The Company currently has a lease, or the Lease, for approximately 56,000 square feet of office and laboratory space located at 65 Hayden Avenue, Lexington, Massachusetts, or the Premises. The Lease is classified as an operating lease. The lease term extends ten years following January 1, 2019. The Company is entitled to two five-year options to extend the Lease. The Lease provides for annual base rent of approximately $2.8 million in the first year following January 1, 2019, which increases on a yearly basis by 3.0% (subject to an abatement of base rent of approximately $0.5 million at the beginning of the second year of the lease term). There are no variable payments, exercise purchase options, penalties, fees or residual value guarantees under the Lease. The Company is also obligated to pay the landlord for certain costs, taxes and operating expenses related to the Premises, subject to certain exclusions. The Company recorded a liability for the Lease of $16.9 million on January 1, 2019. This lease liability is amortized over the remaining lease term in an amount equal to the difference between the cash rent paid and the monthly interest calculated on the remaining lease liability. As of September 30, 2020, the Company had a current lease liability of $0.9 million and a non-current lease liability of $15.3 million recorded in its condensed consolidated balance sheets. On January 1, 2019, the Company recorded a right-of-use asset in the amount of $9.5 million, which represents the lease liability of $16.9 million, adjusted for previously accrued rent of $2.9 million and previously recorded unamortized lease incentives in the amount of $4.5 million. The right-of-use asset is amortized over the remaining lease term in an amount equal to the difference between the calculated straight-line expense of the total lease payments less the monthly interest calculated on the remaining lease liability. As of September 30, 2020, the Company had a long-term lease asset of $9.0 million recorded in its condensed consolidated balance sheets. The Company recognizes lease expense, calculated as the remaining cost of the Lease allocated over the remaining lease term, on a straight-line basis. Lease expense is presented as part of continuing operations in the condensed consolidated statements of operations and comprehensive loss. For the nine months ended September 30, 2020, the Company recognized $1.8 million in lease expense. The nine months ended September 30, 2020 included two months of rent abatement according to the terms of the Lease, and the Company paid $1.7 million in rent. As a payment arising from an operating lease, the $1.7 million is classified within operating activities in the condensed consolidated statements of cash flows. For the nine months ended September 30, 2020 and 2019, the weighted-average remaining lease term was 8.25 years and 9.25 years, respectively, and the weighted-average discount rate was 13.08%.

Open Market Sale Agreement	9 Months Ended
Open Market Sale Agreement	Sep. 30, 2020
Equity [Abstract]
Open Market Sale Agreement	Open Market Sale Agreement On March 1, 2019, the Company entered into an Open Market Sale Agreement, or the ATM Agreement, with Jefferies LLC, or Jefferies, with respect to an at-the-market offering program under which the Company may offer and sell, from time to time at its sole discretion, shares of its common stock, par value $0.001 per share, having an aggregate offering price of up to $50.0 million, referred to as Placement Shares, through Jefferies as its sales agent. The Company will pay Jefferies a commission equal to 3.0% of the gross sales proceeds of any Placement Shares sold through Jefferies under the ATM Agreement, and also has provided Jefferies with customary indemnification and contribution rights. In addition, the Company has agreed to reimburse certain legal expenses and fees incurred by Jefferies in connection with the offering up to a maximum of $50 thousand, in addition to certain ongoing disbursements of Jefferies' counsel. In 2019, the Company sold 36,167 shares of its common stock pursuant to the ATM Agreement for net proceeds of $0.4 million, after payment of cash commissions of 3.0% of the gross proceeds to Jefferies. Additionally, in 2019, the Company incurred approximately $0.3 million related to legal, accounting and other fees in connection with the ATM Agreement. During the nine months ended September 30, 2020, the Company did not sell any shares of common stock pursuant to the ATM Agreement. Subsequent to September 30, 2020, the Company sold shares under the ATM Agreement. For further details, see Note 14. Sale of Common Stock and Pre-Funded Warrants In January 2020, the Company closed an underwritten public offering of 5,735,283 shares of its common stock to the public at $9.92 per share, which included the full exercise of the underwriters' option to purchase 982,863 additional shares of common stock. In addition, and in lieu of common stock, the Company sold to a certain existing investor pre-funded warrants to purchase up to an aggregate of 1,800,000 shares of common stock at a purchase price of $9.919 per pre-funded warrant, which represents the per share public offering price for the common stock less the $0.001 per share exercise price for each pre-funded warrant. The aggregate net proceeds to the Company from this offering were approximately $70.1 million, after deducting underwriting discounts and commissions and other offering expenses payable by the Company. The pre-funded warrants are exercisable at any time by either (i) payment in full in immediately available funds for the number of shares of common stock purchased upon such exercise or (ii) a cashless exercise, in which case the holder would receive upon such exercise the net number of shares of common stock determined according to the formula set forth in the pre-funded warrant. A holder will not be entitled to exercise any portion of any pre-funded warrant if the holder’s ownership of the Company’s common stock would exceed 19.99% following such exercise. In the event of certain fundamental transactions, the holders of the pre-funded warrants will be entitled to receive upon exercise of the pre-funded warrants the kind and amount of securities, cash or other property that the holders would have received had they exercised the pre-funded warrants immediately prior to such fundamental transaction without regard to any limitations on exercise contained in the pre-funded warrants. The pre-funded warrants were classified as a component of permanent stockholders’ equity within additional paid-in capital and were recorded at the issuance date using a relative fair value allocation method. The pre-funded warrants are equity classified because they are freestanding financial instruments that are legally detachable and separately exercisable from the equity instruments, are immediately exercisable, do not embody an obligation for the Company to repurchase its shares, permit the holders to receive a fixed number of shares of common stock upon exercise, are indexed to the Company’s common stock and meet the equity classification criteria. In addition, such pre-funded warrants do not provide any guarantee of value or return. The Company valued the pre-funded warrants at issuance, concluding that their sales price approximated their fair value, and allocated net proceeds from the sale proportionately to the common stock and pre-funded warrants, of which $16.7 million was allocated to the pre-funded warrants and recorded as a component of additional paid-in capital.

Sale of Common Stock and Pre-Funded Warrants	9 Months Ended
Sale of Common Stock and Pre-Funded Warrants	Sep. 30, 2020
Equity [Abstract]
Sale of Common Stock and Pre-Funded Warrants	Open Market Sale Agreement On March 1, 2019, the Company entered into an Open Market Sale Agreement, or the ATM Agreement, with Jefferies LLC, or Jefferies, with respect to an at-the-market offering program under which the Company may offer and sell, from time to time at its sole discretion, shares of its common stock, par value $0.001 per share, having an aggregate offering price of up to $50.0 million, referred to as Placement Shares, through Jefferies as its sales agent. The Company will pay Jefferies a commission equal to 3.0% of the gross sales proceeds of any Placement Shares sold through Jefferies under the ATM Agreement, and also has provided Jefferies with customary indemnification and contribution rights. In addition, the Company has agreed to reimburse certain legal expenses and fees incurred by Jefferies in connection with the offering up to a maximum of $50 thousand, in addition to certain ongoing disbursements of Jefferies' counsel. In 2019, the Company sold 36,167 shares of its common stock pursuant to the ATM Agreement for net proceeds of $0.4 million, after payment of cash commissions of 3.0% of the gross proceeds to Jefferies. Additionally, in 2019, the Company incurred approximately $0.3 million related to legal, accounting and other fees in connection with the ATM Agreement. During the nine months ended September 30, 2020, the Company did not sell any shares of common stock pursuant to the ATM Agreement. Subsequent to September 30, 2020, the Company sold shares under the ATM Agreement. For further details, see Note 14. Sale of Common Stock and Pre-Funded Warrants In January 2020, the Company closed an underwritten public offering of 5,735,283 shares of its common stock to the public at $9.92 per share, which included the full exercise of the underwriters' option to purchase 982,863 additional shares of common stock. In addition, and in lieu of common stock, the Company sold to a certain existing investor pre-funded warrants to purchase up to an aggregate of 1,800,000 shares of common stock at a purchase price of $9.919 per pre-funded warrant, which represents the per share public offering price for the common stock less the $0.001 per share exercise price for each pre-funded warrant. The aggregate net proceeds to the Company from this offering were approximately $70.1 million, after deducting underwriting discounts and commissions and other offering expenses payable by the Company. The pre-funded warrants are exercisable at any time by either (i) payment in full in immediately available funds for the number of shares of common stock purchased upon such exercise or (ii) a cashless exercise, in which case the holder would receive upon such exercise the net number of shares of common stock determined according to the formula set forth in the pre-funded warrant. A holder will not be entitled to exercise any portion of any pre-funded warrant if the holder’s ownership of the Company’s common stock would exceed 19.99% following such exercise. In the event of certain fundamental transactions, the holders of the pre-funded warrants will be entitled to receive upon exercise of the pre-funded warrants the kind and amount of securities, cash or other property that the holders would have received had they exercised the pre-funded warrants immediately prior to such fundamental transaction without regard to any limitations on exercise contained in the pre-funded warrants. The pre-funded warrants were classified as a component of permanent stockholders’ equity within additional paid-in capital and were recorded at the issuance date using a relative fair value allocation method. The pre-funded warrants are equity classified because they are freestanding financial instruments that are legally detachable and separately exercisable from the equity instruments, are immediately exercisable, do not embody an obligation for the Company to repurchase its shares, permit the holders to receive a fixed number of shares of common stock upon exercise, are indexed to the Company’s common stock and meet the equity classification criteria. In addition, such pre-funded warrants do not provide any guarantee of value or return. The Company valued the pre-funded warrants at issuance, concluding that their sales price approximated their fair value, and allocated net proceeds from the sale proportionately to the common stock and pre-funded warrants, of which $16.7 million was allocated to the pre-funded warrants and recorded as a component of additional paid-in capital.

Subsequent Events	9 Months Ended
Subsequent Events	Sep. 30, 2020
Subsequent Events [Abstract]
Subsequent Events	Subsequent Events Subsequent to September 30, 2020, the Company sold 809,355 shares of its common stock pursuant to the ATM Agreement for net proceeds of $9.1 million, after payment of cash commissions of 3.0% of the gross proceeds to Jefferies. During the three months ended September 30, 2020, the Company incurred approximately $0.1 million related to legal and accounting fees in connection with these sales. In October 2020, Incyte Corporation, or Incyte, filed a post grant review, or PGR, petition with the Patent Trial and Appeal Board, or PTAB, challenging the validity of the Company’s U.S. Patent No. 10,561,659, or the '659 patent. The '659 patent covers pharmaceutical compositions with certain doses of CTP-543 and methods of treating hair loss, including alopecia areata, with certain doses of CTP-543. The Company has three months following the date that Incyte’s PGR petition is docketed in order to file a response. The PTAB is expected to make a decision on whether to institute the PGR within three months after the filing of the Company’s response. The Company intends to vigorously defend the '659 patent.

Basis of Presentation, Significant Accounting Policies and Going Concern (Policies)	9 Months Ended
	Sep. 30, 2020
Accounting Policies [Abstract]
Basis of Presentation	Basis of Presentation The condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments, consisting of normal recurring accruals and revisions of estimates, considered necessary for a fair presentation of the condensed consolidated financial statements have been included. Interim results for the nine months ended September 30, 2020 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2020 or any other future period. The accompanying condensed consolidated financial statements reflect the accounts of the Company and its subsidiaries. All intercompany transactions between the Company and its subsidiaries have been eliminated. Management has determined that the Company operates in one segment: the development of pharmaceutical products on its own behalf or in collaboration with others. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the Company’s consolidated financial statements and the accompanying notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019 filed with the Securities and Exchange Commission, or SEC, on February 27, 2020. Unless otherwise indicated, all amounts in the following tables are in thousands except share and per share amounts.
Use of Estimates and Summary of Significant Accounting Policies	Use of Estimates and Summary of Significant Accounting Policies The preparation of the consolidated financial statements in conformity with U.S. generally accepted accounting principles, or GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, equity, revenue, expenses and the disclosure of contingent assets and liabilities and the Company's ability to continue as a going concern. In preparing the consolidated financial statements, management used estimates in the following areas, among others: revenue recognition; prepaid and accrued research and development expenses; stock-based compensation expense; and the evaluation of the existence of conditions and events that raise substantial doubt regarding the Company’s ability to continue as a going concern. Actual results could differ from those estimates. During the nine months ended September 30, 2020, there have been no material changes to the significant accounting policies previously disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019.
Recently Adopted Accounting Pronouncements and Pending Accounting Pronouncements	Recently Adopted Accounting Pronouncements In August 2018, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, 2018-15, Intangible-Goodwill and Other Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract. This standard aligns the requirements for capitalizing implementation costs in a cloud computing arrangement service contract with the requirements for capitalizing implementation costs incurred for internal-use software. The new guidance also prescribes the balance sheet, income statement and cash flow classification of the capitalized implementation costs and related amortization expense, and requires additional quantitative and qualitative disclosures. ASU 2018-15 is effective for fiscal years beginning after December 15, 2019, and early adoption is permitted. The Company adopted this new standard effective January 1, 2020, on a prospective basis, and it did not have a material effect on the consolidated financial statements and related disclosures. In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This standard includes removal of certain exceptions to the general principles of ASC 740, Income Taxes, and simplification in several other areas. ASU 2019-12 is effective for public business entities for annual reporting periods beginning after December 15, 2020, and interim periods within those reporting periods, and early adoption is permitted. The Company adopted this new standard effective January 1, 2020, and it did not have a material effect on the consolidated financial statements and related disclosures. For a detailed discussion of the adoption of ASU 2019-12, refer to Note 7. Pending Accounting Pronouncements In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses. This standard requires entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. As a smaller reporting company, ASU 2016-13 will become effective for the Company for fiscal years beginning after December 15, 2022, and early adoption is permitted. The Company is currently evaluating the impact that ASU 2016-13 will have on its financial statements and related disclosures.

Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2020

Fair Value Disclosures [Abstract]

Financial Assets and Liabilities Recognized at Fair Value


	Level 1		Level 2		Level 3		Total
September 30, 2020
Cash equivalents:
Money market funds	$	30,021	$	—	$	—	$	30,021

Government agency securities	1,002		—		—		1,002
Investments, available for sale:
U.S. Treasury obligations	43,890		—		—		43,890
Government agency securities	20,610		25,996		—		46,606
Marketable equity securities:
Corporate equity securities (Note 8)	2,956		—		—		2,956
Total	$	98,479	$	25,996	$	—	$	124,475


	Level 1		Level 2		Level 3		Total
December 31, 2019
Cash equivalents:
Money market funds	$	40,782	$	—	$	—	$	40,782
Government agency securities	—		2,000		—		2,000
Investments, available for sale:
U.S. Treasury obligations	34,499		—		—		34,499
Government agency securities	10,997		7,899		—		18,896
Marketable equity securities:
Corporate equity securities (Note 8)	5,375		—		—		5,375
Total	$	91,653	$	9,899	$	—	$	101,552

Cash, Cash Equivalents, Investments and Marketable Equity Securities (Tables)

9 Months Ended

Sep. 30, 2020

Cash and Cash Equivalents [Abstract]

Cash Equivalents and Short-term and Long-term Investments

Cash, cash equivalents, available for sale investments and marketable equity securities included the following as of September 30, 2020 and December 31, 2019:


	Average Maturity	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
September 30, 2020
Cash		$	2,652	$	—	$	—	$	2,652
Money market funds		30,021		—		—		30,021

Government agency securities	30 days	1,002		—		—		1,002
Cash and cash equivalents		$	33,675	$	—	$	—	$	33,675

U.S. Treasury obligations	126 days	$	43,816	$	74	$	—	$	43,890
Government agency securities	119 days	46,568		38		—		46,606
Investments, available for sale		$	90,384	$	112	$	—	$	90,496

September 30, 2020		Acquisition Value		Unrealized Gains		Unrealized Losses		Fair Value
Marketable equity securities (Note 8)		$	10,451	$	—	$	(7,495)	$	2,956


	Average Maturity	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
December 31, 2019
Cash		$	10,261	$	—	$	—	$	10,261
Money market funds		40,782		—		—		40,782
Government agency securities	8 days	2,000		—		—		2,000
Cash and cash equivalents		$	53,043	$	—	$	—	$	53,043

U.S. Treasury obligations	108 days	$	34,475	$	24	$	—	$	34,499
Government agency securities	74 days	18,874		22		—		18,896
Investments, available for sale		$	53,349	$	46	$	—	$	53,395

December 31, 2019		Acquisition Value		Unrealized Gains		Unrealized Losses		Fair Value
Marketable equity securities (Note 8)		$	10,451	$	—	$	(5,076)	$	5,375

Restricted Cash (Tables)

9 Months Ended

Sep. 30, 2020

Cash and Cash Equivalents [Abstract]

Restrictions on Cash and Cash Equivalents

Cash, cash equivalents and restricted cash consisted of the following as of September 30, 2020 and 2019:


	September 30, 2020		September 30, 2019
Cash and cash equivalents	$	33,675	$	33,384
Restricted cash	1,157		1,157

Total cash, cash equivalents and restricted cash shown in the statements of cash flows	$	34,832	$	34,541

Accrued Expenses and Other Liabilities (Tables)

9 Months Ended

Sep. 30, 2020

Payables and Accruals [Abstract]

Accrued Expenses and Other Liabilities

Accrued expenses and other liabilities consisted of the following as of September 30, 2020 and December 31, 2019:


	September 30, 2020		December 31, 2019
Accrued professional fees and other	$	503	$	862
Employee compensation and benefits	2,651		3,222
Research and development expenses	3,070		4,252

Total	$	6,224	$	8,336

Stock-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2020

Share-based Payment Arrangement [Abstract]

Stock-Based Compensation Expense Related to All Stock Based Awards Recognized in Statements of Operations and Comprehensive Income (Loss)

Total stock-based compensation expense related to all stock-based options and awards recognized in the condensed consolidated statements of operations and comprehensive loss consisted of:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Research and development	$	1,555	$	1,190	$	4,226	$	3,728
General and administrative	1,340		1,230		3,950		3,983
Total stock-based compensation expense	$	2,895	$	2,420	$	8,176	$	7,711

Estimated Weighted-Average Assumptions of Options Granted

The weighted-average fair value of options granted in the three and nine months ended September 30, 2020 and 2019 reflect the following weighted-average assumptions:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Expected volatility	70.11	%	74.37	%	68.59	%	76.86	%
Expected term	6.0 years		6.0 years		6.0 years		6.0 years
Risk-free interest rate	0.37	%	1.59	%	1.32	%	2.16	%
Expected dividend yield	—	%	—	%	—	%	—	%

Certain Information Related to Outstanding Stock Options

The following table provides certain information related to the Company's outstanding stock options:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
	(Amounts in thousands, except per share data)
Weighted-average fair value of options granted, per option	$	5.68	$	6.46	$	6.53	$	8.95
Aggregate grant date fair value of options vested during the period	$	2,198	$	2,234	$	6,434	$	7,070
Total cash received from exercises of stock options	$	13	$	36	$	557	$	1,006
Total intrinsic value of stock options exercised	$	21	$	59	$	304	$	1,167

Summary of Stock Option Activity

The following is a summary of stock option activity for the nine months ended September 30, 2020:


	Number of Option Shares	Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
				(in years)	(in thousands)
Outstanding at December 31, 2019	4,112,609	$	15.01
Granted	720,154	$	10.62
Exercised	(81,253)	$	6.87
Forfeited or expired	(59,630)	$	19.15
Outstanding at September 30, 2020	4,691,880	$	14.43	6.77	$	1,360
Exercisable at September 30, 2020	3,102,777	$	14.42	5.90	$	1,299
Vested and expected to vest at September 30, 2020(1)	4,579,705	$	14.46	6.72	$	1,357

Summary of RSU Activity

The following is a summary of RSU activity for the nine months ended September 30, 2020:


	Number of RSUs	Weighted- Average Grant Date Fair Value

Outstanding at December 31, 2019	393,629	$	10.27
Granted	409,295	$	10.87
Released	(136,339)	$	10.27
Forfeited	(5,053)	$	10.33
Outstanding at September 30, 2020	661,532	$	10.64

Loss Per Share (Tables)

9 Months Ended

Sep. 30, 2020

Earnings Per Share [Abstract]

Computation of Basic and Diluted Earnings (Loss) Per Share

The following table illustrates the determination of loss per share for each period presented.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
	(Amounts in thousands, except per share amounts)
Numerator:
Net loss applicable to common stockholders - basic and diluted	$	(18,908)	$	(17,185)	$	(52,376)	$	(57,679)

Denominator:
Weighted-average shares outstanding - basic and diluted	31,547		23,807		30,707		23,703

Net loss per share applicable to common stockholders - basic and diluted	$	(0.60)	$	(0.72)	$	(1.71)	$	(2.43)

Anti-dilutive potential common stock equivalents excluded from the calculation of net loss per share*:
Stock options	4,692		4,203		4,692		4,203
Restricted stock units	662		412		662		412
Warrants	61		61		61		61

Nature of Business - Additional Information (Details) $ in Thousands	Sep. 30, 2020 USD ($)
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Cash and cash equivalents and investments	$ 124,200
Net Working Capital	129,000
Cumulative net loss	$ (247,057)

Basis of Presentation, Significant Accounting Policies and Going Concern - Additional Information (Details)	9 Months Ended
	Sep. 30, 2020 segment
Accounting Policies [Abstract]
Number of segments	1

Fair Value Measurements - Financial Assets and Liabilities Recognized at Fair Value (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Fair value, cash equivalents	$ 33,675	$ 53,043
Money market funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Fair value, cash equivalents	30,021	40,782
Fair value measurements
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Corporate equity securities (Note 8)	2,956	5,375
Total financial assets at fair value	124,475	101,552
Fair value measurements \| Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Corporate equity securities (Note 8)	2,956	5,375
Total financial assets at fair value	98,479	91,653
Fair value measurements \| Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Corporate equity securities (Note 8)	0	0
Total financial assets at fair value	25,996	9,899
Fair value measurements \| Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Corporate equity securities (Note 8)	0	0
Total financial assets at fair value	0	0
Fair value measurements \| U.S. Treasury obligations
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Fair value, investments available-for-sale securities	43,890	34,499
Fair value measurements \| U.S. Treasury obligations \| Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Fair value, investments available-for-sale securities	43,890	34,499
Fair value measurements \| U.S. Treasury obligations \| Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Fair value, investments available-for-sale securities	0	0
Fair value measurements \| U.S. Treasury obligations \| Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Fair value, investments available-for-sale securities	0	0
Fair value measurements \| Government agency securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Fair value, investments available-for-sale securities	46,606	18,896
Fair value measurements \| Government agency securities \| Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Fair value, investments available-for-sale securities	20,610	10,997
Fair value measurements \| Government agency securities \| Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Fair value, investments available-for-sale securities	25,996	7,899
Fair value measurements \| Government agency securities \| Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Fair value, investments available-for-sale securities	0	0
Fair value measurements \| Money market funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Fair value, cash equivalents	30,021	40,782
Fair value measurements \| Money market funds \| Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Fair value, cash equivalents	30,021	40,782
Fair value measurements \| Money market funds \| Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Fair value, cash equivalents	0	0
Fair value measurements \| Money market funds \| Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Fair value, cash equivalents	0	0
Fair value measurements \| Government agency securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Fair value, cash equivalents	1,002	2,000
Fair value measurements \| Government agency securities \| Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Fair value, cash equivalents	1,002	0
Fair value measurements \| Government agency securities \| Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Fair value, cash equivalents	0	2,000
Fair value measurements \| Government agency securities \| Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Fair value, cash equivalents	$ 0	$ 0