0001367920-21-000013 | 10-K | XBRL Viewer | Concert Pharmaceuticals INC

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Cover - USD ($) $ in Thousands	12 Months Ended
Cover - USD ($) $ in Thousands	Dec. 31, 2020	Feb. 19, 2021	Jun. 30, 2020
Cover [Abstract]
Document Type	10-K
Document Annual Report	true
Document Period End Date	Dec. 31, 2020
Current Fiscal Year End Date	--12-31
Document Transition Report	false
Entity File Number	001-36310
Entity Registrant Name	CONCERT PHARMACEUTICALS, INC.
Entity Incorporation, State or Country Code	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, $0.001 par value per share
Trading Symbol(s)	CNCE
Name of each exchange on which registered	NASDAQ
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
ICFR Auditor Attestation Flag	false
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Public Float			$ 173,586
Entity Common Stock, Shares Outstanding		32,173,778
Documents Incorporated by Reference	The registrant intends to file a definitive proxy statement pursuant to Regulation 14A in connection with its 2021 Annual Meeting of Stockholders. Portions of such proxy statement are incorporated by reference into Part III of this Annual Report on Form 10-K.
Amendment Flag	false
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	FY
Entity Central Index Key	0001367920

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
Current assets:
Cash and cash equivalents	$ 77,202	$ 53,043
Investments, available for sale	52,766	53,395
Marketable equity securities	1,969	5,375
Interest receivable	145	260
Deferred offering costs	0	143
Accounts receivable	686	72
Income taxes receivable, current	2,346	0
Prepaid expenses and other current assets	7,610	4,567
Total current assets	142,724	116,855
Property and equipment, net	6,363	7,753
Restricted cash	1,157	1,157
Other assets	51	96
Income taxes receivable	0	2,358
Operating lease right-of-use assets, long-term	8,968	9,252
Total assets	159,263	137,471
Current liabilities:
Accounts payable	230	881
Accrued expenses and other liabilities	9,017	8,336
Deferred revenue, current portion	0	7,783
Lease liability, current portion	931	268
Total current liabilities	10,178	17,268
Accrued expenses, net of current portion	108	0
Deferred revenue, net of current portion	2,750	2,750
Lease liability, net of current portion	15,065	15,996
Total liabilities	28,101	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 December 31, 2020 and 2019, respectively	0	0
Common stock, $0.001 par value per share; 100,000,000 shares authorized; 32,062,799 and 24,065,676 shares issued and 31,862,198 and 23,865,075 outstanding as of December 31, 2020 and 2019, respectively	31	24
Additional paid-in capital	400,636	296,145
Accumulated other comprehensive loss	(58)	(31)
Accumulated deficit	(269,447)	(194,681)
Total stockholders’ equity	131,162	101,457
Total liabilities and stockholders’ equity	$ 159,263	$ 137,471

CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Dec. 31, 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)	32,062,799	31,862,198
Common stock, shares outstanding (in shares)	24,065,676	23,865,075

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) shares in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Revenue:
Total revenue	$ 7,902	$ 1,077
Operating expenses:
Research and development	61,624	59,816
General and administrative	18,925	20,276
Total operating expenses	80,549	80,092
Loss from operations	(72,647)	(79,015)
Investment income	1,202	2,987
Other income	0	12
Unrealized loss on marketable equity securities	(3,406)	(2,150)
Loss before income taxes	(74,851)	(78,166)
Income tax benefit	85	0
Net loss	(74,766)	(78,166)
Other comprehensive income:
Unrealized (loss) gain on investments, available for sale	(27)	106
Comprehensive loss	$ (74,793)	$ (78,060)
Net loss per share attributable to common stockholders - basic and diluted (in dollars per share)	$ (2.40)	$ (3.29)
Weighted-average number of common shares used in net loss per share attributable to common stockholders - basic and diluted (in shares)	31,200	23,740
Revenue from Contract with Customer, Product and Service	cnce:LicenseAndResearchAndDevelopmentRevenueMember	cnce:LicenseAndResearchAndDevelopmentRevenueMember
License and research and development revenue
Revenue:
Total revenue	$ 7,902	$ 1,077

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands	Total	IPO	Common Stock	Common Stock IPO	In Treasury	Additional paid-in capital	Additional paid-in capital IPO	Accumulated other comprehensive loss	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	1,076					1,076
Exercise of stock options (in shares)			237,000		58,000
Release of restricted stock units	(740)		$ 1			(741)
Release of restricted stock units (in shares)			203,000		61,000
Unrealized gain on short-term investments	106							106
Stock-based compensation expense	10,326					10,326
Exercise of stock warrants	1,000					1,000
Exercise of stock warrants (in shares)			71,000
Proceeds from at-the-market offering, net of issuance costs	115					115
Proceeds from at-the-market offering, net of issuance costs (in shares)			36,000
Net loss	(78,166)								(78,166)
Ending balance at Dec. 31, 2019	101,457		$ 24			296,145		(31)	(194,681)
Ending balance (in shares) at Dec. 31, 2019			24,066,000		(200,000)
Increase (Decrease) in Stockholders' Equity
Exercise of stock options	$ 833					833
Exercise of stock options (in shares)	117,304,000		117,000
Release of restricted stock units	$ 0
Release of restricted stock units (in shares)			136,000
Unrealized gain on short-term investments	(27)							(27)
Stock-based compensation expense	11,113					11,113
Proceeds from at-the-market offering, net of issuance costs	22,488	$ 70,064	$ 2	$ 5		22,486	$ 70,059
Proceeds from at-the-market offering, net of issuance costs (in shares)			2,008,000	5,735,000
Net loss	(74,766)								(74,766)
Ending balance at Dec. 31, 2020	$ 131,162		$ 31			$ 400,636		$ (58)	$ (269,447)
Ending balance (in shares) at Dec. 31, 2020			32,062,000		(200,000)

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Operating activities
Net loss	$ (74,766)	$ (78,166)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	1,605	1,664
Stock-based compensation expense	11,113	10,326
Accretion of premiums and discounts on investments	48	(1,013)
Non-cash lease expense	284	226
Unrealized loss on marketable equity securities	3,406	2,150
(Gain) loss on disposal of asset	(2)	4
Changes in operating assets and liabilities:
Accounts receivable	(81)	(57)
Contract asset	0	16,000
Interest receivable	115	296
Prepaid expenses and other current assets	(3,043)	(1,828)
Other assets	45	(96)
Accounts payable	(651)	(217)
Accrued expenses and other liabilities	929	2,984
Income taxes receivable	12	(36)
Income taxes payable	0	(392)
Operating lease liability	(268)	(606)
Deferred revenue	(7,783)	0
Net cash used in operating activities	(69,037)	(48,761)
Investing activities
Purchases of property and equipment	(210)	(685)
Purchases of investments	(156,671)	(97,837)
Maturities of investments	157,225	181,105
Net cash provided by investing activities	344	82,583
Financing activities
Proceeds from at-the-market offering, net of issuance costs	70,064	115
Proceeds from exercise of warrants	0	1,000
Repurchase of common stock pursuant to share surrender	0	(740)
Proceeds from exercise of stock options	833	1,076
Proceeds from common stock and pre-funded warrants sold, net of underwriters' discount and costs	21,955	0
Net cash provided by financing activities	92,852	1,451
Net increase in cash, cash equivalents and restricted cash	24,159	35,273
Cash, cash equivalents and restricted cash at beginning of period	54,200	18,927
Cash, cash equivalents and restricted cash at end of period	78,359	54,200
Supplemental cash flow information:
Cash paid for income taxes	0	459
Purchases of property and equipment unpaid at period end	3	4
Public offering costs unpaid at period end	0	143
Cash paid included in measurement of lease liabilities	2,406	2,778
Pre-funded warrants issued	$ 16,736	$ 0

Nature of Business	12 Months Ended
Nature of Business	Dec. 31, 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 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 lead product candidate is in late-stage development for the treatment of alopecia areata, a serious autoimmune dermatological condition. The Company is also assessing a number of earlier-stage pipeline candidates. Liquidity and Going Concern In February 2014, the Company completed its initial public offering, whereby the Company sold 6,649,690 shares of common stock at a price to the public of $14.00 per share, raising aggregate net proceeds of $83.1 million. In March 2015, the Company sold 3,300,000 shares of common stock through an underwritten public offering at a price to the public of $15.15 per share, raising aggregate net proceeds of $46.7 million. In January 2020, the Company sold 5,735,283 shares of common stock through an underwritten public offering at a price to the public of $9.92 per share. At the same time, 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 the Company received from the January 2020 offering was $70.1 million. In March 2019, the Company entered into the ATM Agreement with Jefferies. As of December 31, 2020, the Company had sold 2,044,364 shares of its common stock pursuant to the ATM Agreement for net proceeds of $23.2 million, after payment of cash commissions of 3.0% of the gross proceeds to Jefferies. For additional information on the ATM Agreement, see Note 13. In June 2015, the Company received a one-time payment of $50.2 million from Auspex pursuant to a patent assignment agreement between the Company and Auspex. The Company became eligible to receive the payment due to a change of control of Auspex, which was acquired by Teva in May 2015. In July 2017, the Company completed the sale of worldwide development and commercialization rights to CTP-656, now known as VX-561, and other assets related to the treatment of cystic fibrosis to Vertex pursuant to the Vertex Agreement. The Company received $160.0 million in cash upon closing, with $16.0 million initially held in escrow, which was released to the Company in February 2019. For additional information concerning the sale of CTP-656, see Note 12. As of December 31, 2020, the Company had cash, cash equivalents and investments of $130.0 million and net working capital of $132.5 million. The Company has incurred cumulative net losses of $269.4 million since 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 financed 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 conducts clinical trials such as the Phase 3 trial of CTP-543 in alopecia areata. For information regarding the Company's recently completed equity financings, see Notes 13-14. 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 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 through 2021. The Company's history of significant losses, its negative cash flows from operations, its limited liquidity resources currently on hand and its dependence on its ability to obtain additional financing to fund its operations after the current resources are exhausted, about which there can be no certainty, have resulted in management's assessment that there is 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 Annual Report on Form 10-K. The accompanying 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 acceptable 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	12 Months Ended
	Dec. 31, 2020
Accounting Policies [Abstract]
Basis of Presentation and Significant Accounting Policies	Basis of Presentation and Significant Accounting Policies Basis of Presentation The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America, or GAAP. Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker, or decision-making group, in making decisions on how to allocate resources and assess performance. The Company's chief operating decision maker is the Chief Executive Officer. The Company and the Chief Executive Officer view the Company's operations and manage its business as one operating segment: the development of pharmaceutical products on its own behalf or in collaboration with others. All material long-lived assets of the Company reside in the United States. The Company does use contract research organizations and research institutions located outside the United States. Some of these expenses are subject to collaboration reimbursement, which is presented as a component of license and research and development revenue in the consolidated statements of operations and comprehensive loss. The accompanying consolidated financial statements include the accounts of Concert Pharmaceuticals, Inc. and its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated. The Company considers events or transactions that occur after the balance sheet date but before the financial statements are issued to provide additional evidence relative to certain estimates or to identify matters that require additional disclosure. 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 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. Cash, Cash Equivalents and Investments Cash 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 are included in accumulated other comprehensive income (loss). Premiums or discounts from par value are amortized to investment income over the life of the underlying investment. 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 for other than temporary declines in fair value. The Company reviews available-for-sale securities for other-than-temporary impairment whenever the fair value of an available-for-sale security is less than the amortized cost and evidence indicates that an available-for-sale security’s carrying amount is not recoverable within a reasonable period of time. Other-than-temporary impairments of investments are recognized in the consolidated statements of operations if the Company has experienced a credit loss, has the intent to sell the security or if it is more likely than not that the Company will be required to sell the security before recovery of the amortized cost basis. Evidence considered in this assessment includes reasons for the impairment, compliance with the Company’s investment policy, the severity and the duration of the impairment and changes in value subsequent to the end of the period. Deferred Offering Costs Costs incurred in the course of preparing for a capital raise, such as legal, accounting and other professional fees, are deferred on the balance sheet as deferred offering costs. At the time of the completion of the offering, the costs are reclassified as a reduction of the proceeds of the capital raise as part of additional paid-in capital. Should the offering be terminated, deferred offering costs are charged to operations during the period in which the offering is terminated. Marketable Equity Securities Marketable equity securities consist of the fair value of shares of common stock of Processa held by the Company, as discussed further in Note 12. The Company recognizes the effects of changes in fair value of equity securities within net income. The Company reviews investments in marketable securities for other-than-temporary impairment whenever the fair value of the investment is less than the cost and evidence indicates that an investment’s carrying amount is not recoverable within a reasonable period of time. To determine whether an impairment is other-than-temporary, the Company considers whether it has an intent to sell, or whether it is more likely than not that the Company will be required to sell, the investment before recovery of the investment’s cost basis. Evidence considered in this assessment includes reasons for the impairment, the severity and duration of the impairment and changes in value subsequent to year-end. Fair Value of Financial 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. For additional information related to fair value measurements, see Note 3. Concentrations of Credit Risk Financial instruments that potentially subject the Company to concentration of credit risk consist principally of money market funds, investments (including interest receivable) and accounts receivable. The Company's current investment policy is to maintain a diversified investment portfolio in U.S. government-backed securities and money market mutual funds consisting of U.S. government-backed securities. The Company's cash is deposited in and invested through highly rated financial institutions in North America. The Company has not experienced any credit losses in these accounts and does not believe it is exposed to any significant credit risk on these funds. The Company has no foreign exchange contracts, option contracts or other foreign exchange hedging arrangements. As of December 31, 2020 and 2019, substantially all of the Company’s cash was deposited in accounts at two financial institutions, thus limiting the amount of credit exposure to any one financial institution. These amounts at times may exceed federally insured limits. Accounts receivable generally represent amounts due from collaboration partners and from sales under the at-the-market offering program discussed in Note 13. The Company monitors economic conditions to identify facts or circumstances that may indicate that any of its accounts receivable are at risk of collection. Property and Equipment Property and equipment are recognized at cost and depreciated over their estimated useful lives using the straight-line method. Leasehold improvements are amortized over the shorter of their useful life or the related lease term. Repair and maintenance costs are expensed as incurred, whereas major improvements are capitalized as additions to property and equipment. Potential impairment is assessed when there is evidence that events or circumstances indicate that the carrying amount of an asset may not be recovered. No such impairment losses have been recorded for the year ended December 31, 2020 and 2019. Rent Expense Rent expense for the years ended December 31, 2020 and 2019 consists of the Company's facility at 65 Hayden Avenue, Lexington, Massachusetts. The Company's operating lease for its facility at 65 Hayden Avenue in Lexington, Massachusetts provides for scheduled annual rent increases throughout the lease term, which expires on January 1, 2029. Additionally, the Company has received certain lease incentives, which are recognized as a reduction to rent expense over the remaining lease term. For additional details regarding the Company’s operating lease, see Note 11. Contingencies The Company records liabilities for legal and other contingencies when information available to the Company indicates that it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. Legal costs in connection with legal and other contingencies are expensed as costs are incurred. No liabilities for legal and other contingencies were accrued as of December 31, 2020 and 2019. Revenue Recognition The Company has generated revenue through arrangements with collaborators and nonprofit organizations for the development and commercialization of product candidates, a patent assignment agreement and an asset sale. The Company accounts for revenue according to the Financial Accounting Standards Board, or FASB, Accounting Standards Update, or ASU, 2014-09, Revenue from Contracts with Customers, and all related amendments, which is also referred to as ASC 606. ASC 606 is a single comprehensive model to account for revenue arising from contracts with customers and is based on the principle that an entity should recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve this core principle, the Company applies the following steps: (1) identify the contract(s) with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract and (5) recognize revenue when, or as, the entity satisfies a performance obligation. ASC 606 also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts and costs to obtain or fulfill contracts. For additional information, see Note 12. Research and Development Costs Research and development costs are expensed as incurred. Research and development expenses are comprised of costs incurred in providing research and development activities, including salaries and benefits, facilities costs, overhead costs, contract research and development services and other outside costs. Non-refundable advance payments for goods and services that will be used in future research and development activities are expensed when the activity has been performed or when the goods have been received rather than when the payment is made. External research and development expenses associated with the Company’s programs include clinical trial site costs, research compounds and clinical manufacturing costs, costs incurred for consultants and other outside services, such as data management and statistical analysis support and materials and supplies used in support of the clinical and nonclinical programs. Internal costs of the Company’s clinical program include salaries, benefits, stock-based compensation and an allocation of the Company’s facility costs. When third-party service providers’ billing terms do not coincide with the Company’s period-end, the Company is required to make estimates of its obligations to those third parties, including clinical trial and pharmaceutical development costs, contractual services costs and costs for supply of its drug candidates, incurred in a given accounting period and record accruals at the end of the period. The Company bases its estimates on its knowledge of the research and development programs, services performed for the period, past history for related activities and the expected duration of the third-party service contract, where applicable. Accounting for Stock-Based Compensation The Company issues stock options and restricted stock units, or RSUs, to certain employees, officers and directors. The Company accounts for stock compensation using the fair value method, which results in the recognition of compensation expense over the vesting period of the awards. For additional information, see Note 8. Income Taxes Income taxes are recorded in accordance with ASC Topic 740, Income Taxes, or ASC 740, which provides for deferred taxes using an asset and liability approach. The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. The Company provides deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the Company’s financial statement carrying amounts and the tax basis of assets and liabilities using enacted tax rates expected to be in effect in the years in which the differences are expected to reverse. A valuation allowance is provided to reduce the deferred tax assets to the amount that will more likely than not be realized. The Company accounts for uncertain tax positions in accordance with the provisions of ASC 740. The Company evaluates tax positions taken, or expected to be taken, in the course of preparing its tax returns to determine whether the tax positions are “more likely than not” of being sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold would be recognized as a tax expense. As of December 31, 2020 and 2019, the Company did not have any significant uncertain tax positions. For additional details regarding the accounting for income taxes, see Note 10. Guarantees As permitted under Delaware law, the Company indemnifies its officers and directors for certain events or occurrences while the officer or director is, or was, serving at the Company’s request in such capacity. The term of the indemnification is for the officer’s or director’s lifetime. The maximum potential amount of future payments the Company could be required to make is unlimited; however, the Company has directors’ and officers’ insurance coverage that limits its exposure and enables it to recover a portion of any future amounts paid. The Company leases office space under a non-cancelable operating lease, which is further described in Note 11. The Company has standard indemnification arrangements under the lease that require it to indemnify the landlord against all costs, expenses, fines, suits, claims, demands, liabilities and actions directly resulting from any breach, violation or non-performance of any covenant or condition of the Company’s lease. Pursuant to the Vertex Agreement, as discussed further in Note 12, the Company agreed to indemnify Vertex for certain matters, including breaches of specified representations and warranties, covenants included in the Vertex Agreement and specified tax claims. Representations and warranties, other than certain fundamental representations and warranties, survived for a period of eighteen months following the closing, and the maximum liability of the Company for claims by Vertex related to the breaches of such representations and warranties, with limited exceptions, was limited to the escrow amount, or $16.0 million. In January 2019, the escrow period expired, and the escrow of $16.0 million was released to the Company in February 2019. As of December 31, 2020 and 2019, the Company had not experienced any material losses related to these indemnification obligations, and no material claims with respect thereto were outstanding. The Company does not expect significant claims related to these indemnification obligations and, consequently, concluded that the fair value of these obligations is negligible, and no related reserves were established. Comprehensive Loss Comprehensive loss is defined as the change in equity of a business enterprise during a period from transactions, other events and circumstances from non-owner sources. Comprehensive loss consists of net loss and other comprehensive loss, which includes certain changes in equity that are excluded from net loss. Comprehensive loss has been disclosed in the accompanying consolidated statements of operations and comprehensive loss. Accumulated other comprehensive loss is presented separately on the consolidated balance sheets and consists entirely of unrealized holdings losses on investments as of December 31, 2020 and 2019. Recently Adopted Accounting Pronouncements In August 2018, the FASB issued 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 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 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, see Note 10. 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

12 Months Ended

Dec. 31, 2020

Fair Value Disclosures [Abstract]

Fair Value Measurements

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


	Level 1		Level 2		Level 3		Total
December 31, 2020
Cash equivalents:
Money market funds	$	69,928	$	—	$	—	$	69,928


Investments, available for sale:
U.S. Treasury obligations	25,528		—		—		25,528
Government agency securities	8,737		18,501		—		27,238
Marketable equity securities:
Corporate equity securities	1,969		—		—		1,969
Total	$	106,162	$	18,501	$	—	$	124,663


	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	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

12 Months Ended

Dec. 31, 2020

Cash and Cash Equivalents [Abstract]

Cash, Cash Equivalents, Investments and Marketable Equity Securities

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


	Average maturity	Amortized cost		Unrealized gains		Unrealized losses		Fair value
December 31, 2020
Cash		$	7,274	$	—	$	—	$	7,274
Money market funds		69,928		—		—		69,928


Cash and cash equivalents		$	77,202	$	—	$	—	$	77,202

U.S. Treasury obligations	70 days	$	25,523	$	5	$	—	$	25,528
Government agency securities	82 days	27,225		13		—		27,238
Investments, available for sale		$	52,748	$	18	$	—	$	52,766

December 31, 2020		Acquisition value		Unrealized gains		Unrealized losses		Fair value
Marketable equity securities		$	10,451	$	—	$	(8,482)	$	1,969


	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		$	10,451	$	—	$	(5,076)	$	5,375

Restricted Cash

12 Months Ended

Dec. 31, 2020

Cash and Cash Equivalents [Abstract]

Restricted Cash

Restricted cash as of December 31, 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, see Note 11. Cash, cash equivalents and restricted cash consisted of the following as of December 31, 2020 and 2019:


	December 31, 2020		December 31, 2019
Cash and cash equivalents	$	77,202	$	53,043
Restricted cash	1,157		1,157
Total cash, cash equivalents and restricted cash shown in the statements of cash flows	$	78,359	$	54,200

Property and Equipment

12 Months Ended

Dec. 31, 2020

Property, Plant and Equipment [Abstract]

Property and Equipment

Property and equipment consist of the following as of December 31, 2020 and 2019:


	Estimated useful life (in years)	December 31, 2020		December 31, 2019
Laboratory equipment	5	$	3,352	$	3,736
Computer, telephone and office equipment	3	881		891
Software	3	187		122
Leasehold improvements	Lesser of useful life or remaining lease term	5,943		5,929
		10,363		10,678
Less accumulated depreciation and amortization		(4,000)		(2,925)
		$	6,363	$	7,753

Depreciation and amortization expense was charged to operations in the amounts of $1.6 million and $1.7 million for the years ended December 31, 2020 and 2019, respectively.

Accrued Expenses and Other Liabilities

12 Months Ended

Dec. 31, 2020

Payables and Accruals [Abstract]

Accrued Expenses and Other Liabilities

Accrued Expenses and Other LiabilitiesAccrued expenses and other liabilities consist of the following as of December 31, 2020 and 2019:


	December 31, 2020		December 31, 2019
Accrued professional fees and other	$	709	$	862
Employee compensation and benefits	3,690		3,222
Research and development expenses	4,618		4,252
Accrued expenses and other liabilities	$	9,017	$	8,336

Employee compensation and benefits, net of current portion	$	108	$	—
Accrued expenses and other liabilities, net of current portion	$	108	$	—

Stock-Based Compensation

12 Months Ended

Dec. 31, 2020

Share-based Payment Arrangement [Abstract]

Stock-Based Compensation

Stock incentive plans

The Company previously sponsored an Amended and Restated 2006 Stock Option and Grant Plan, or the 2006 Plan, which provided for the issuance of shares of common stock in the form of incentive stock options, nonstatutory stock options, awards of stock and direct stock purchase opportunities to directors, officers, employees and consultants of the Company. The 2006 Plan was replaced by the Company’s 2014 Stock Incentive Plan, or the 2014 Plan, which became effective in February 2014. The 2014 Plan provides for the grant of incentive stock options, nonstatutory stock options, restricted stock awards, restricted stock units, stock appreciation rights and other stock-based awards. In addition, the 2014 Plan includes an “evergreen provision” that allows for an annual increase in the number of shares of common stock available for issuance under the 2014 Plan. Effective January 1, 2021, 1,274,487 shares were added to the 2014 Plan for future issuance pursuant to this evergreen provision.

The 2006 Plan has no shares remaining available for grant, although existing stock options granted under the 2006 Plan remain outstanding. As of December 31, 2020, 1,159,069 shares were available for future grant under the 2014 Plan.

Stock options

Stock options are granted with an exercise price equal to the closing market price of the Company’s common stock on the date of grant. Stock options generally vest ratably over one, three or four years and have contractual terms of ten years. 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 following table provides certain information related to the Company's outstanding stock options as of December 31, 2020 and 2019:


	Year ended December 31,
	2020		2019
Weighted-average fair value of options granted, per option	$	6.53	$	8.94
Aggregate grant date fair value of options vested during the year	$	8,506	$	9,354
Total cash received from exercises of stock options	$	833	$	1,076
Total intrinsic market value of stock options exercised	$	452	$	1,277

The weighted-average fair value of options granted in the years ended December 31, 2020 and 2019 reflect the following weighted-average assumptions:


	Year ended December 31,
	2020		2019
Expected volatility	68.60	%	76.83	%
Expected term	6.0 years		6.0 years
Risk-free interest rate	1.31	%	2.16	%
Expected dividend yield	—	%	—	%

Expected volatility. For the year ended December 31, 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. Having accumulated sufficient historical trading data, the Company transitioned to calculating expected volatility for the year ended December 31, 2020 based on the historical volatility of only the Company's common stock.

Expected term. The expected term of awards represents the period of time that the awards are expected to be outstanding. The expected term was determined using the simplified method as prescribed by SAB No. 107, Share-Based Payment, as the Company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected term of stock options granted to employees.

Risk-free interest rate. For the years ended December 31, 2020 and 2019, the risk-free interest rate was estimated using an average of treasury bill interest rates over a period commensurate with the expected term of the option at the time of grant.

Expected dividend yield. The expected dividend yield is zero, as the Company has not paid any dividends to date and has no current intention of paying cash dividends.

Forfeiture rate. The Company elected to estimate potential forfeiture of stock grants and adjust compensation cost recorded accordingly. The estimate of forfeitures is adjusted over the requisite service period to the extent that actual forfeitures differ, or are expected to differ, from such estimates. Changes in estimated forfeitures are recognized through a cumulative catch-up in the period of change and impact the amount of stock compensation expense to be recognized in future periods. For the years ended December 31, 2020 and 2019, the Company assumed forfeiture rates of approximately 7%.

The following is a summary of stock option activity for the year ended December 31, 2020:


	Number of Option Shares	Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Market Value
				(in years)
Outstanding at December 31, 2019	4,112,609	$	15.01
Granted	722,054	$	10.63
Exercised	(117,304)	$	7.11
Forfeited or expired	(64,489)	$	18.80
Outstanding at December 31, 2020	4,652,870	$	14.48	6.55	$	5,930
Exercisable at December 31, 2020	3,273,330	$	14.52	5.81	$	4,520
Vested and expected to vest at December 31, 2020 (1)	4,546,476	$	14.52	6.50	$	5,800

(1)Represents the number of vested stock option shares as of December 31, 2020, plus the number of unvested stock option shares that the Company estimated as of December 31, 2020 would vest, based on the unvested stock option shares as of December 31, 2020 and an estimated forfeiture rate of 7%.

As of December 31, 2020, there was $11.4 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 2.1 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 officers and employees. All of the 2019 RSUs are service-based and vest annually over two years. On the first anniversary of the 2019 RSU grant date, 35% of the RSUs vested. The remainder of the 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 officers 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 December 31, 2020, 0.1 million of the 2019 RSUs had vested, 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 year ended December 31, 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	(5,552)	$	10.38
Outstanding at December 31, 2020	661,033	$	10.64

As of December 31, 2020, there was $4.8 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 1.6 years.

Stock-based compensation expense

Total stock-based compensation expense related to all stock-based options and awards recognized in the consolidated statements of operations and comprehensive loss is as follows for the years ended December 31, 2020 and 2019:


	For the Year Ended December 31,
	2020		2019
Research and development	$	5,800	$	5,049
General and administrative	5,313		5,277
Total stock-based compensation expense	$	11,113	$	10,326

Loss Per Share

12 Months Ended

Dec. 31, 2020

Earnings Per Share [Abstract]

Loss Per Share

Basic 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 December 31, 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 14. 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 the years ended December 31, 2020 and 2019:


	For the Year Ended December 31,
	2020		2019
Numerator:
Net loss applicable to common stockholders - basic and diluted	$	(74,766)	$	(78,166)



Denominator:
Weighted-average shares outstanding - basic and diluted	31,200		23,740



Net loss per share applicable to common stockholders - basic and diluted	$	(2.40)	$	(3.29)

















Anti-dilutive potential common stock equivalents excluded from the calculation of net loss per share*:
Stock options	4,653		4,113
Restricted stock units	661		394
Warrants	61		61

*For the year ended December 31, 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 year ended December 31, 2019 and has concluded that this change is not material to the current or any prior period financial statements.

Income Taxes

12 Months Ended

Dec. 31, 2020

Income Tax Disclosure [Abstract]

Income Taxes

During the year ended December 31, 2020, the Company recorded net loss before taxes of $74.9 million and an income tax benefit of $0.1 million, for an effective rate of 0.1%.

On July 25, 2017, the transaction contemplated by the Vertex Agreement was completed, as discussed further in Note 12, and Vertex paid the Company $160.0 million in cash, with $16.0 million initially held in escrow. For income tax purposes, the $16.0 million held in escrow was recognized under the installment method and therefore deferred until the cash was received by the Company in February 2019. Under Section 453A of the U.S. Internal Revenue Code, or the Code, the Company is required to recognize interest on the deferred tax liability with respect to the portion of the installment sale outstanding as of the close of each taxable year that exceeds $5.0 million. As a result, the Company accrued interest of $0.2 million for 2018. The $16.0 million initially held in escrow was released to the Company in February 2019, and the Company recognized no interest for 2019. During 2020, the Company was able to utilize $0.1 million of state research and development tax credits with its Massachusetts state tax return for the year ending December 31, 2019. The Company has established a full valuation allowance against these credits, and as such the Company has booked a discrete benefit of $0.1 million in 2020 for the utilization of these credits against their Massachusetts state liability.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act, or the CARES Act, was signed into law, making several changes to the Code. The changes include, among other things, increasing the limitation on the amount of deductible interest expense, allowing companies to carryback certain net operating losses and increasing the amount of net operating loss carryforwards that companies can use to offset taxable income. The tax law changes in the CARES Act did not have a material impact on the Company’s income tax provision.

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 twelve months ended December 31, 2020, the Company applied the tax allocation rules of ASU 2019-12 to the $27 thousand of unrealized losses 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.

The Tax Cuts and Jobs Act, or TCJA, repealed the corporate alternative minimum tax, or AMT, for years after 2017. Companies that were previously subject to the AMT and have AMT tax credit carryforwards as of December 31, 2017 are eligible for a refund of these credits for tax years beginning after 2017 and before 2022. The Company was subject to AMT in

the amount of $1.9 million in 2017. Since the AMT paid on its 2017 tax return generated an AMT credit that will be refundable between 2018 and 2022, the Company recorded a $1.9 million income tax receivable rather than a tax expense for 2017. Further, the Company had a deferred tax asset for its AMT credit carryforward related to its AMT liability paid in 2015 in the amount of $0.3 million. This deferred tax asset was previously offset by a full valuation allowance. As a result of the change in law, the Company reclassified the 2015 AMT credit carryforward from deferred tax assets to income tax receivable during 2017. As of December 31, 2020, the Company had a $2.3 million income tax receivable related to AMT taxes in prior years.

The Company’s ability to use its operating loss carryforwards and tax credit carryforwards to offset taxable income is subject to restrictions under Sections 382 and 383 of the Code. Net operating loss and tax credit carryforwards are 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 Code. Such changes would limit the Company’s use of its operating loss and tax credit carryforwards. In such a situation, the Company may be required to pay income taxes, even though significant operating loss and tax credit carryforwards exist. Additionally, any future financing could result in a change in control, as defined by Sections 382 and 383 of the Code, which could further limit the Company's use of its operating loss and tax credit carryforwards.

A reconciliation of the federal statutory income tax rate and the Company’s effective income tax rate is as follows for the years ended December 31, 2020 and 2019:


	Year ended December 31,
	2020		2019
Federal statutory income tax rate	21.0	%	21.0	%
State income taxes	6.6	%	6.8	%
Change in valuation allowance	(30.3)	%	(29.8)	%
Research and development and other credits	3.5	%	3.2	%
Permanent items	(0.7)	%	(1.1)	%

Other	—	%	(0.1)	%
Federal rate change	—	%	—	%
Effective income tax rate	0.1	%	—	%

The significant components of the Company’s net deferred tax assets consist of the following as of December 31, 2020 and 2019:


	December 31,
	2020		2019
Deferred tax assets:
Net operating loss carryforwards	$	57,057	$	38,544
Deferred revenue	751		2,878
Research and development and other credit carryforwards	21,546		18,573
Lease liability	4,370		4,443
Other	10,585		7,508
	94,309		71,946
Valuation allowance	(90,446)		(67,737)
Total deferred tax assets, net of valuation allowance	$	3,863	$	4,209
Deferred tax liabilities:
Fixed assets	$	1,413	$	1,681
Right of use asset	2,450		2,528
Gain deferred under installment method	—		—
Total deferred tax liabilities	$	3,863	$	4,209
Net deferred tax assets	$	—	$	—

Subject to the limitations described above and the impacts of the TCJA, as of December 31, 2020, the Company had gross federal net operating loss carryforwards of $220.8 million and state net operating loss carryforwards of $169.3 million available to reduce future taxable income, of which $54.8 million of the gross federal net operating loss carryforwards and $169.3 million of the state net operating loss carryforwards will expire at various dates beginning in 2034. Approximately $165.9 million of

the federal net operating loss carryforwards will be carried forward indefinitely. The Company also had federal and state tax credit carryforwards of $16.8 million and $6.0 million, respectively, available to reduce future tax liabilities, which expire at various dates through 2040.

Realization of the future tax benefits is dependent on many factors, including the Company’s ability to generate taxable income within the carryforward period. The Company currently has deferred tax assets in excess of its deferred tax liabilities, resulting in the Company having net deferred tax assets. The Company has evaluated the positive and negative evidence bearing upon the realizability of its net deferred tax assets and concluded that it is more likely than not that the Company will not realize the benefit of its net deferred tax assets. As a result, the net deferred tax assets have been fully reserved as of December 31, 2020 and 2019.

As of December 31, 2020, the Company had no unrecognized tax benefits. The Company has not conducted a study of its research and development credit carryforwards. A study may result in an adjustment to the Company’s research and development credit carryforwards; however, until a study is completed and any adjustment is known, no amounts will be presented as an uncertain tax position. A full valuation allowance has been provided against the Company’s research and development credit carryforwards and, if an adjustment is required, this adjustment would be offset by an adjustment to the valuation allowance. Thus, there would be no impact to the consolidated balance sheet or statement of operations if an adjustment were required.

Interest and penalty charges, if any, related to unrecognized tax benefits would be classified as income tax expense in the statement of operations. As of December 31, 2020, the Company had no accrued interest related to uncertain tax positions.

The Company is currently open to examination under the statute of limitations by the IRS and state jurisdictions for the tax years ended 2017 through 2019. Carryforward tax attributes generated in years prior to 2017 may still be adjusted upon future examination if they have or will be used in a future period. The Company is currently not under examination by the IRS or any other jurisdictions for any tax years. Since the Company is in a loss carryforward position, the Company is generally subject to examination by the U.S. federal, state and local income tax authorities for all tax years in which a loss carryforward is available.

- 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

Commitments

12 Months Ended

Dec. 31, 2020

Commitments and Contingencies Disclosure [Abstract]

Commitments

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 received an improvement allowance from the landlord of approximately $5.0 million for certain permitted costs related to the design of the Company's improvements to the Premises, consisting of normal tenant improvements. The Company is deemed to be the owner of these tenant improvements during the lease term. These $5.0 million of improvements are included in the Company’s property, plant and equipment balances in its consolidated balance sheets as of December 31, 2020 and 2019 and are depreciated over the shorter of their useful life or the related lease term.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which is also referred to as ASC 842. ASC 842 requires lessees to recognize assets and liabilities on the balance sheet for the rights and obligations created by all leases with terms of more than 12 months. ASC 842 also requires certain qualitative and quantitative disclosures designed to give financial statement users information on the amount, timing and uncertainty of cash flows arising from leases. The Company adopted ASC 842 effective January 1, 2019.

On January 1, 2019, the Company recorded a right-of-use asset in the amount of $9.5 million, which represented 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 December 31, 2020 and 2019, the Company had a long-term lease asset of $9.0 million and $9.3 million, respectively, recorded in its consolidated balance sheets.

The Company used an incremental borrowing rate of 13.08% to discount the remaining lease payments over the remaining lease term and recorded a lease liability 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 December 31, 2020 and 2019, the Company had a current lease liability of $0.9 million and $0.3 million, respectively, and a non-current lease liability of $15.1 million and $16.0 million, respectively, recorded in its 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 consolidated statements of operations and comprehensive loss. For each of the years ended December 31, 2020 and 2019, the Company recognized $2.4 million in rent expense.

For the years ended December 31, 2020 and 2019, the Company paid rent of $2.4 million and $2.8 million, respectively. The year ended December 31, 2020 included two months of rent abatement according to the terms of the Lease. As a payment arising from an operating lease, the $2.4 million and $2.8 million is classified within operating activities in the consolidated statements of cash flows for the years ended December 31, 2020 and 2019, respectively.

As of December 31, 2020 and 2019, the discount rate for the Lease was 13.08%, and the remaining lease term for the Premises was eight years and nine years, respectively.

Future minimum lease payments under the Company's non-cancelable operating leases as of December 31, 2020 were as follows:


Maturities of lease liabilities:	For the year ended December 31,

2021	$	2,969
2022	3,058
2023	3,150
2024	3,244
2025	3,341
Thereafter	10,637
Total lease payments	$	26,399
Less imputed interest	$	(10,403)
Total	$	15,996

Revenue	12 Months Ended
Revenue	Dec. 31, 2020
Revenue from Contract with Customer [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. The terms of these agreements may contain multiple promised goods or services or optional goods and services, including licenses to product candidates, referred to as exclusive licenses, as well as research and development activities to be performed by the Company on behalf of the collaboration partner related to the licensed product candidates. Revenue recognition Revenue is recognized when control of the promised goods or services are transferred to customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for transferring those goods or providing services. The Company accounts for a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable. When determining whether the customer has obtained control of the goods or services, the Company considers the point at which the customer may benefit from the goods or services. For licenses to product candidates, revenue is recognized upon grant or transfer of the exclusive license, as the Company's licenses are considered functional in nature. For research, development and manufacturing activities, revenue is recognized as the work is performed using either the output or input method. Performance obligations A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the unit of account in ASC 606. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. The Company's contracts may contain multiple performance obligations if a promise to transfer goods or services is separately identifiable from other promises in a contract and, therefore, is considered distinct. For contracts with multiple performance obligations, the Company determines the standalone selling price of each performance obligation and allocates the total transaction price using the relative selling price basis. The Company recognizes performance obligations based on their nature. Significant payment terms The Company’s revenue arrangements include payments to the Company of one or more of the following: a non-refundable, upfront payment; milestone payments; payment of license exercise or option fees with respect to product candidates; fees for research and development services rendered; and royalties on commercial sales of licensed product candidates, if any. To date, the Company has received upfront payments, several milestone payments and certain research and development service payments, but has not received any license exercise or option fees or earned royalty revenue as a result of product sales. Under ASC 606, the Company estimates the amount of consideration to which it will be entitled in exchange for satisfying performance obligations. Based on the Company’s current contracts, variable consideration primarily exists in the following forms: development and regulatory milestones, royalties and sales-based milestones. The Company utilizes the "most likely amount" variable consideration method for estimating development and regulatory milestone consideration to include in the transaction price. The Company only includes an amount of variable consideration in the transaction price to the extent it is probable that a significant reversal in the cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. The Company refers to this as the variable consideration constraint. Due to the uncertainty associated with the occurrence of the underlying events which would trigger development and regulatory milestone consideration under its revenue arrangements, with the exception of those development and regulatory milestones received to date, the Company has concluded the variable consideration associated with all development and regulatory milestones to be fully constrained as of the ASC 606 transition date and as of December 31, 2020 and 2019, and therefore has not included such consideration in the transaction price for any of its revenue arrangements. The Company will reassess this conclusion at each subsequent reporting period and will only include amounts associated with regulatory or development milestones in the transaction price when, or if, the variable consideration is determined to be released from the constraint. To date, the Company has not recognized any royalties or sales-based milestones under its licensing and collaboration arrangements. Royalties and sales-based milestones qualify for the sales-and-usage exemption under ASC 606 as (i) royalties are based strictly on the sales-and-usage by the licensee and (ii) a license of intellectual property is the sole or predominant item to which such royalties relate. Based on this exemption, these royalties are earned under the terms of a license agreement in the period the products are sold by the Company's collaborator and the Company has a present right to payment. In accordance with ASC 606, the Company is required to adjust the transaction price for the effects of the time value of money if the timing of payments agreed to by the parties to the contract, explicitly or implicitly, provides the Company or its customer with a significant benefit of financing the transfer of goods or services. The Company concluded that its licensing and collaboration arrangements do not contain a significant financing component because the payment structure of its agreements arise from reasons other than providing a significant benefit of financing. Contract assets The Company did not have a contract asset as of December 31, 2020 or 2019. Contract liabilities As of December 31, 2020 and 2019, the Company had $2.8 million and $10.5 million, respectively, in contract liabilities related to unsatisfied performance obligations as well as variable consideration paid in advance, but currently constrained from recognition. Contract liabilities are presented as deferred revenue and classified as current or non-current based on the timing of when the Company expects to recognize revenue. The $2.8 million in contract liabilities as of December 31, 2020 is related to a payment received from GSK that the Company will not recognize as revenue until all repayment obligations lapse. The $10.5 million in contract liabilities as of December 31, 2019 is related to the $2.8 million GSK payment and $7.7 million associated with the Company's previous collaboration with Celgene. During the year ended December 31, 2020, the Company recognized $7.7 million in deferred revenue, which consisted of $6.4 million in deferred revenue upon the expiration of two licensing options under the Company's previous collaboration agreement with Celgene and $1.3 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 December 31, 2020, no further performance obligations remain outstanding from the revenue arrangement with Celgene. Revenue arrangements Vertex On July 25, 2017, or the Vertex Closing Date, the Company completed the sale of worldwide development and commercialization rights to CTP-656, now known as VX-561, and other assets related to the treatment of cystic fibrosis to Vertex pursuant to the Vertex Agreement. The Company received $160.0 million in cash on the Vertex Closing Date, with $16.0 million initially held in escrow, which was released to the Company in February 2019. Additionally, upon the achievement of certain milestone events, Vertex has agreed to pay the Company an aggregate of up to $90.0 million. 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 December 31, 2020 or 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, now known as PCS-499, provided certain conditions were met. On October 5, 2017, Promet closed an asset purchase agreement with Heatwurx, Inc., a public company, creating Processa. On March 19, 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. 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 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 year ended December 31, 2020, the Company recognized $18 thousand in revenue related to intellectual property cost reimbursements. For the year ended December 31, 2019, the Company recognized $34 thousand in revenue related to intellectual property cost reimbursements. Cipla The Company entered into the Cipla Agreement with 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. 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 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 year ended December 31, 2020. The Company recognized $1.0 million in revenue associated with the sale of existing inventory and the Transfer of License Performance Obligation for the year ended December 31, 2019.

Open Market Sale Agreement	12 Months Ended
Open Market Sale Agreement	Dec. 31, 2020
Equity [Abstract]
Open Market Sale Agreement	Open Market Sale Agreement On March 1, 2019, the Company entered into the ATM Agreement with 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 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. During the year ended December 31, 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, the Company incurred approximately $0.3 million related to legal, accounting and other fees in connection with the ATM Agreement. On November 5, 2020, the Company entered into an amendment to the ATM Agreement with Jefferies to increase the aggregate offering price of Placement Shares that may be offered and sold pursuant to the ATM Agreement from up to $50.0 million to up to $100.0 million. During the year ended December 31, 2020, the Company sold 2,008,197 shares of its common stock pursuant to the ATM Agreement for net proceeds of $22.8 million, after payment of cash commissions of 3.0% of the gross proceeds to Jefferies. $0.5 million of the net proceeds from the shares sold in 2020 was classified as a receivable as of December 31, 2020. Additionally, the Company incurred approximately $0.3 million related to legal and accounting fees in connection with the ATM Agreement. Subsequent to December 31, 2020, the Company sold additional shares under the ATM Agreement. For further details, see Note 18. Sale of Common Stock and Pre-Funded Warrants In January 2020, the Company sold 5,735,283 shares of common stock through an underwritten public offering at a price to the public of $9.92 per share, which included the full exercise of the underwriters' option to purchase 982,863 additional shares of common stock. At the same time, 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 was $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	12 Months Ended
Sale of Common Stock and Pre-Funded Warrants	Dec. 31, 2020
Equity [Abstract]
Sale of Common Stock and Pre-Funded Warrants	Open Market Sale Agreement On March 1, 2019, the Company entered into the ATM Agreement with 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 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. During the year ended December 31, 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, the Company incurred approximately $0.3 million related to legal, accounting and other fees in connection with the ATM Agreement. On November 5, 2020, the Company entered into an amendment to the ATM Agreement with Jefferies to increase the aggregate offering price of Placement Shares that may be offered and sold pursuant to the ATM Agreement from up to $50.0 million to up to $100.0 million. During the year ended December 31, 2020, the Company sold 2,008,197 shares of its common stock pursuant to the ATM Agreement for net proceeds of $22.8 million, after payment of cash commissions of 3.0% of the gross proceeds to Jefferies. $0.5 million of the net proceeds from the shares sold in 2020 was classified as a receivable as of December 31, 2020. Additionally, the Company incurred approximately $0.3 million related to legal and accounting fees in connection with the ATM Agreement. Subsequent to December 31, 2020, the Company sold additional shares under the ATM Agreement. For further details, see Note 18. Sale of Common Stock and Pre-Funded Warrants In January 2020, the Company sold 5,735,283 shares of common stock through an underwritten public offering at a price to the public of $9.92 per share, which included the full exercise of the underwriters' option to purchase 982,863 additional shares of common stock. At the same time, 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 was $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.

401(k) Retirement Plan	12 Months Ended
401(k) Retirement Plan	Dec. 31, 2020
Retirement Benefits [Abstract]
401(k) Retirement Plan	401(k) Retirement Plan In January 2008, the Company established the Concert Pharmaceuticals 401(k) Retirement Plan, or the 401(k) Plan, in which substantially all of its permanent employees are eligible to contribute a percentage of base wages up to an amount not to exceed an annual statutory maximum. The Company matches 50% of the first 6% of an employee’s contributions, subject to statutory limits. The Company made matching contributions under the 401(k) Plan of $0.4 million for each of the years ended December 31, 2020 and 2019.

- Definition

The entire disclosure for retirement benefits.

+ References

Reference 1: http://www.xbrl.org/2003/role/exampleRef
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Reference 3: http://www.xbrl.org/2003/role/disclosureRef
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Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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Reference 5: http://www.xbrl.org/2003/role/disclosureRef
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Reference 6: http://www.xbrl.org/2003/role/disclosureRef
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Reference 7: http://www.xbrl.org/2003/role/disclosureRef
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Reference 8: http://www.xbrl.org/2003/role/disclosureRef
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Reference 9: http://www.xbrl.org/2003/role/disclosureRef
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Reference 12: http://www.xbrl.org/2003/role/disclosureRef
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Reference 13: http://www.xbrl.org/2003/role/disclosureRef
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Reference 14: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

Warrants to Purchase Redeemable Securities

12 Months Ended

Dec. 31, 2020

Debt Disclosure [Abstract]

Warrants to Purchase Redeemable Securities

Warrants to Purchase Redeemable SecuritiesOn June 8, 2017, the Company entered into a Loan Agreement with Hercules Technology Growth Capital, Inc., or Hercules. In connection with entering into the Loan Agreement, the Company issued warrants, or the Warrants, to certain entities affiliated with Hercules, exercisable for an aggregate of 61,273 shares of the Company’s common stock at an exercise price of $12.24 per share. The Warrants have a five-year term that expires on June 8, 2022 and may be exercised on a cashless basis. The Warrants had a total relative fair value of $0.5 million upon issuance and were recorded as a debt discount.

Pursuant to ASC 480, Distinguishing Liabilities from Equity, and ASC 815, Derivatives and Hedging, the Warrants were classified as equity and were initially measured at relative fair value. Subsequent changes to fair value will not be recognized so long as the instrument continues to be equity classified. To determine the relative fair value, the Company measured the fair value of the Warrants as of June 8, 2017 using the Black-Scholes-Merton option pricing model. The significant assumptions used in estimating the fair value of the Warrants include the volatility of the stock underlying the Warrants, risk-free interest rate and estimated life of the Warrants. The Company used the following weighted-average assumptions:


Expected volatility	73.71	%
Expected term (in years)	5
Risk-free interest rate	1.75	%
Expected dividend yield	—	%

Consistent with the Company’s weighted-average assumptions used in determining the fair value of options in 2017, 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.

Quarterly Financial Information (unaudited)

12 Months Ended

Dec. 31, 2020

Quarterly Financial Information Disclosure [Abstract]

Quarterly Financial Information (unaudited)


	Three Months Ended
	March 31, 2020		June 30, 2020		September 30, 2020		December 31, 2020
Revenue	$	7	$	6,387	$	1,501	$	7
Operating expenses	18,658		19,519		20,861		21,511
Loss from operations	(18,651)		(13,132)		(19,360)		(21,504)
Other (expense) income, net	(1,826)		56		452		(886)
Income tax benefit	—		85		—		—
Net loss	$	(20,477)	$	(12,991)	$	(18,908)	$	(22,390)
Net loss per share - basic and diluted	$	(0.70)	$	(0.41)	$	(0.60)	$	(0.69)


	Three Months Ended
	March 31, 2019		June 30, 2019		September 30, 2019		December 31, 2019
Revenue	$	1,005	$	49	$	10	$	13
Operating expenses	21,399		19,474		18,253		20,966
Loss from operations	(20,394)		(19,425)		(18,243)		(20,953)
Other (expense) income, net	(1,432)		757		1,058		466

Net loss	$	(21,826)	$	(18,668)	$	(17,185)	$	(20,487)
Net loss per share - basic and diluted	$	(0.93)	$	(0.78)	$	(0.72)	$	(0.86)

Subsequent Events	12 Months Ended
Subsequent Events	Dec. 31, 2020
Subsequent Events [Abstract]
Subsequent Events	Subsequent Events Subsequent to December 31, 2020, the Company sold an additional 165,323 shares of its common stock pursuant to the ATM Agreement for net proceeds of $2.0 million, after payment of cash commissions of 3.0% of the gross proceeds to Jefferies. On February 1, 2021, the Company announced that its Phase 2 trial to evaluate CTP-692 as an adjunctive treatment for schizophrenia did not meet the primary endpoint or other secondary endpoints. As a result, the Company has ceased development of CTP-692.

Basis of Presentation and Significant Accounting Policies (Policies)	12 Months Ended
	Dec. 31, 2020
Accounting Policies [Abstract]
Basis of Presentation	Basis of Presentation The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America, or GAAP. Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker, or decision-making group, in making decisions on how to allocate resources and assess performance. The Company's chief operating decision maker is the Chief Executive Officer. The Company and the Chief Executive Officer view the Company's operations and manage its business as one operating segment: the development of pharmaceutical products on its own behalf or in collaboration with others. All material long-lived assets of the Company reside in the United States. The Company does use contract research organizations and research institutions located outside the United States. Some of these expenses are subject to collaboration reimbursement, which is presented as a component of license and research and development revenue in the consolidated statements of operations and comprehensive loss. The accompanying consolidated financial statements include the accounts of Concert Pharmaceuticals, Inc. and its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated. The Company considers events or transactions that occur after the balance sheet date but before the financial statements are issued to provide additional evidence relative to certain estimates or to identify matters that require additional disclosure. 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 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.
Cash, Cash Equivalents and Investments	Cash, Cash Equivalents and Investments Cash 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 are included in accumulated other comprehensive income (loss). Premiums or discounts from par value are amortized to investment income over the life of the underlying investment. 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 for other than temporary declines in fair value. The Company reviews available-for-sale securities for other-than-temporary impairment whenever the fair value of an available-for-sale security is less than the amortized cost and evidence indicates that an available-for-sale security’s carrying amount is not recoverable within a reasonable period of time. Other-than-temporary impairments of investments are recognized in the consolidated statements of operations if the Company has experienced a credit loss, has the intent to sell the security or if it is more likely than not that the Company will be required to sell the security before recovery of the amortized cost basis. Evidence considered in this assessment includes reasons for the impairment, compliance with the Company’s investment policy, the severity and the duration of the impairment and changes in value subsequent to the end of the period.
Deferred Offering Costs	Deferred Offering Costs Costs incurred in the course of preparing for a capital raise, such as legal, accounting and other professional fees, are deferred on the balance sheet as deferred offering costs. At the time of the completion of the offering, the costs are reclassified as a reduction of the proceeds of the capital raise as part of additional paid-in capital. Should the offering be terminated, deferred offering costs are charged to operations during the period in which the offering is terminated.
Marketable Equity Securities	Marketable Equity Securities Marketable equity securities consist of the fair value of shares of common stock of Processa held by the Company, as discussed further in Note 12. The Company recognizes the effects of changes in fair value of equity securities within net income. The Company reviews investments in marketable securities for other-than-temporary impairment whenever the fair value of the investment is less than the cost and evidence indicates that an investment’s carrying amount is not recoverable within a reasonable period of time. To determine whether an impairment is other-than-temporary, the Company considers whether it has an intent to sell, or whether it is more likely than not that the Company will be required to sell, the investment before recovery of the investment’s cost basis. Evidence considered in this assessment includes reasons for the impairment, the severity and duration of the impairment and changes in value subsequent to year-end.
Fair Value of Financial Measurements	Fair Value of Financial 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. For additional information related to fair value measurements, see Note 3.
Concentrations of Credit Risk	Concentrations of Credit Risk Financial instruments that potentially subject the Company to concentration of credit risk consist principally of money market funds, investments (including interest receivable) and accounts receivable. The Company's current investment policy is to maintain a diversified investment portfolio in U.S. government-backed securities and money market mutual funds consisting of U.S. government-backed securities. The Company's cash is deposited in and invested through highly rated financial institutions in North America. The Company has not experienced any credit losses in these accounts and does not believe it is exposed to any significant credit risk on these funds. The Company has no foreign exchange contracts, option contracts or other foreign exchange hedging arrangements. As of December 31, 2020 and 2019, substantially all of the Company’s cash was deposited in accounts at two financial institutions, thus limiting the amount of credit exposure to any one financial institution. These amounts at times may exceed federally insured limits. Accounts receivable generally represent amounts due from collaboration partners and from sales under the at-the-market offering program discussed in Note 13. The Company monitors economic conditions to identify facts or circumstances that may indicate that any of its accounts receivable are at risk of collection.
Property and Equipment	Property and EquipmentProperty and equipment are recognized at cost and depreciated over their estimated useful lives using the straight-line method. Leasehold improvements are amortized over the shorter of their useful life or the related lease term. Repair and maintenance costs are expensed as incurred, whereas major improvements are capitalized as additions to property and equipment. Potential impairment is assessed when there is evidence that events or circumstances indicate that the carrying amount of an asset may not be recovered.
Contingencies	ContingenciesThe Company records liabilities for legal and other contingencies when information available to the Company indicates that it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. Legal costs in connection with legal and other contingencies are expensed as costs are incurred.
Revenue Recognition	Revenue Recognition The Company has generated revenue through arrangements with collaborators and nonprofit organizations for the development and commercialization of product candidates, a patent assignment agreement and an asset sale. The Company accounts for revenue according to the Financial Accounting Standards Board, or FASB, Accounting Standards Update, or ASU, 2014-09, Revenue from Contracts with Customers, and all related amendments, which is also referred to as ASC 606. ASC 606 is a single comprehensive model to account for revenue arising from contracts with customers and is based on the principle that an entity should recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve this core principle, the Company applies the following steps: (1) identify the contract(s) with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract and (5) recognize revenue when, or as, the entity satisfies a performance obligation. ASC 606 also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts and costs to obtain or fulfill contracts. For additional information, see Note 12.
Research and Development Costs	Research and Development Costs Research and development costs are expensed as incurred. Research and development expenses are comprised of costs incurred in providing research and development activities, including salaries and benefits, facilities costs, overhead costs, contract research and development services and other outside costs. Non-refundable advance payments for goods and services that will be used in future research and development activities are expensed when the activity has been performed or when the goods have been received rather than when the payment is made. External research and development expenses associated with the Company’s programs include clinical trial site costs, research compounds and clinical manufacturing costs, costs incurred for consultants and other outside services, such as data management and statistical analysis support and materials and supplies used in support of the clinical and nonclinical programs. Internal costs of the Company’s clinical program include salaries, benefits, stock-based compensation and an allocation of the Company’s facility costs. When third-party service providers’ billing terms do not coincide with the Company’s period-end, the Company is required to make estimates of its obligations to those third parties, including clinical trial and pharmaceutical development costs, contractual services costs and costs for supply of its drug candidates, incurred in a given accounting period and record accruals at the end of the period. The Company bases its estimates on its knowledge of the research and development programs, services performed for the period, past history for related activities and the expected duration of the third-party service contract, where applicable.
Accounting for Stock-Based Compensation	Accounting for Stock-Based CompensationThe Company issues stock options and restricted stock units, or RSUs, to certain employees, officers and directors. The Company accounts for stock compensation using the fair value method, which results in the recognition of compensation expense over the vesting period of the awards.
Income Taxes	Income Taxes Income taxes are recorded in accordance with ASC Topic 740, Income Taxes, or ASC 740, which provides for deferred taxes using an asset and liability approach. The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. The Company provides deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the Company’s financial statement carrying amounts and the tax basis of assets and liabilities using enacted tax rates expected to be in effect in the years in which the differences are expected to reverse. A valuation allowance is provided to reduce the deferred tax assets to the amount that will more likely than not be realized. The Company accounts for uncertain tax positions in accordance with the provisions of ASC 740. The Company evaluates tax positions taken, or expected to be taken, in the course of preparing its tax returns to determine whether the tax positions are “more likely than not” of being sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold would be recognized as a tax expense.
Guarantees	Guarantees As permitted under Delaware law, the Company indemnifies its officers and directors for certain events or occurrences while the officer or director is, or was, serving at the Company’s request in such capacity. The term of the indemnification is for the officer’s or director’s lifetime. The maximum potential amount of future payments the Company could be required to make is unlimited; however, the Company has directors’ and officers’ insurance coverage that limits its exposure and enables it to recover a portion of any future amounts paid. The Company leases office space under a non-cancelable operating lease, which is further described in Note 11. The Company has standard indemnification arrangements under the lease that require it to indemnify the landlord against all costs, expenses, fines, suits, claims, demands, liabilities and actions directly resulting from any breach, violation or non-performance of any covenant or condition of the Company’s lease. Pursuant to the Vertex Agreement, as discussed further in Note 12, the Company agreed to indemnify Vertex for certain matters, including breaches of specified representations and warranties, covenants included in the Vertex Agreement and specified tax claims. Representations and warranties, other than certain fundamental representations and warranties, survived for a period of eighteen months following the closing, and the maximum liability of the Company for claims by Vertex related to the breaches of such representations and warranties, with limited exceptions, was limited to the escrow amount, or $16.0 million. In January 2019, the escrow period expired, and the escrow of $16.0 million was released to the Company in February 2019. As of December 31, 2020 and 2019, the Company had not experienced any material losses related to these indemnification obligations, and no material claims with respect thereto were outstanding. The Company does not expect significant claims related to these indemnification obligations and, consequently, concluded that the fair value of these obligations is negligible, and no related reserves were established.
Comprehensive Loss	Comprehensive Loss Comprehensive loss is defined as the change in equity of a business enterprise during a period from transactions, other events and circumstances from non-owner sources. Comprehensive loss consists of net loss and other comprehensive loss, which includes certain changes in equity that are excluded from net loss. Comprehensive loss has been disclosed in the accompanying consolidated statements of operations and comprehensive loss. Accumulated other comprehensive loss is presented separately on the consolidated balance sheets and consists entirely of unrealized holdings losses on investments as of December 31, 2020 and 2019.
Recently Adopted Accounting Pronouncements and Pending Accounting Pronouncements	Recently Adopted Accounting Pronouncements In August 2018, the FASB issued 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 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 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, see Note 10. 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)

12 Months Ended

Dec. 31, 2020

Fair Value Disclosures [Abstract]

Summary of financial assets and liabilities recognized at fair value

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


	Level 1		Level 2		Level 3		Total
December 31, 2020
Cash equivalents:
Money market funds	$	69,928	$	—	$	—	$	69,928


Investments, available for sale:
U.S. Treasury obligations	25,528		—		—		25,528
Government agency securities	8,737		18,501		—		27,238
Marketable equity securities:
Corporate equity securities	1,969		—		—		1,969
Total	$	106,162	$	18,501	$	—	$	124,663


	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	5,375		—		—		5,375
Total	$	91,653	$	9,899	$	—	$	101,552

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

12 Months Ended

Dec. 31, 2020

Cash and Cash Equivalents [Abstract]

Schedule of cash, cash equivalents and investments, available for sale

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


	Average maturity	Amortized cost		Unrealized gains		Unrealized losses		Fair value
December 31, 2020
Cash		$	7,274	$	—	$	—	$	7,274
Money market funds		69,928		—		—		69,928


Cash and cash equivalents		$	77,202	$	—	$	—	$	77,202

U.S. Treasury obligations	70 days	$	25,523	$	5	$	—	$	25,528
Government agency securities	82 days	27,225		13		—		27,238
Investments, available for sale		$	52,748	$	18	$	—	$	52,766

December 31, 2020		Acquisition value		Unrealized gains		Unrealized losses		Fair value
Marketable equity securities		$	10,451	$	—	$	(8,482)	$	1,969


	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		$	10,451	$	—	$	(5,076)	$	5,375