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Document and Entity Information - shares	6 Months Ended
Document and Entity Information - shares	Jun. 30, 2018	Aug. 06, 2018
Document and Entity Information
Entity Registrant Name	Kala Pharmaceuticals, Inc.
Entity Central Index Key	0001479419
Trading Symbol	kala
Document Type	10-Q
Document Period End Date	Jun. 30, 2018
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		24,592,274
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q2

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Current assets:
Cash	$ 91,205	$ 114,565
Prepaid expenses and other current assets	731	648
Total current assets	91,936	115,213
Property and equipment, net	1,250	786
Right-of-use asset	226	413
Restricted cash	2,178	134
Total assets	95,590	116,546
Current liabilities:
Accounts payable	2,382	1,202
Accrued expenses	5,146	6,606
Lease liabilities	202	397
Current portion of long-term debt	1,667	6,667
Total current liabilities	9,397	14,872
Long-term liabilities:
Long-term debt - less current portion	18,100	11,987
Other long-term liabilities		8
Total long-term liabilities	18,100	11,995
Total liabilities	27,497	26,867
Commitments and Contingencies (Note 10)
Stockholders' equity:
Preferred stock, $0.001 par value; 5,000,000 shares authorized as of June 30, 2018 and December 31, 2017; no shares issued or outstanding as of June 30, 2018 or December 31, 2017
Common stock, $0.001 par value - 120,000,000 shares authorized as of June 30, 2018 and December 31, 2017; 24,592,274 and 24,538,309 shares issued and outstanding as of June 30, 2018 and December 31, 2017, respectively	25	25
Additional paid-in capital	228,355	224,025
Accumulated deficit	(160,287)	(134,371)
Total stockholders’ equity	68,093	89,679
Total liabilities and stockholders' equity	$ 95,590	$ 116,546

CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Jun. 30, 2018	Dec. 31, 2017
CONSOLIDATED BALANCE SHEETS
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, authorized	5,000,000	5,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.001	$ 0.001
Common stock, authorized	120,000,000	120,000,000
Common stock, shares issued	24,592,274	24,538,309
Common stock, shares outstanding	24,592,274	24,538,309

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Operating expenses:
Research and development	$ 7,368	$ 8,071	$ 13,024	$ 16,110
General and administrative	7,151	1,559	12,633	3,091
Total operating expenses	14,519	9,630	25,657	19,201
Loss from operations	(14,519)	(9,630)	(25,657)	(19,201)
Other income (expense):
Interest income	313	37	522	83
Interest expense	(414)	(208)	(781)	(406)
Change in fair value of warrant liability		(1,185)		(1,221)
Total other income (expense)	(101)	(1,356)	(259)	(1,544)
Net loss	$ (14,620)	$ (10,986)	$ (25,916)	$ (20,745)
Net loss per share—basic and diluted	$ (0.60)	$ (9.30)	$ (1.06)	$ (17.56)
Weighted average shares outstanding—basic and diluted	24,567,103	1,181,429	24,554,834	1,181,429

CONSOLIDATED STATEMENTS OF CASH FLOWS $ in Thousands	6 Months Ended
CONSOLIDATED STATEMENTS OF CASH FLOWS $ in Thousands	Jun. 30, 2018 USD ($)	Jun. 30, 2017 USD ($)
Cash flows from operating activities:
Net loss	$ (25,916)	$ (20,745)
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation	173	140
Amortization of right-of-use asset	187	175
Change in fair value of warrant liability		1,221
Amortization of debt discount	51	56
Stock-based compensation	4,152	1,089
Loss on disposal of fixed asset	4
Change in operating assets and liabilities
Prepaid expenses and other current assets	12	(148)
Accounts payable	1,085	192
Accrued expenses	(1,460)	(13)
Lease liabilities	(195)	(175)
Other long-term liabilities	(8)	4
Net cash used in operating activities	(21,915)	(18,204)
Cash flows from investing activities:
Purchases of property and equipment	(545)	(109)
Net cash used in investing activities	(545)	(109)
Cash flows from financing activities:
Proceeds from venture debt, net of debt issuance costs of $50	2,728
Payment of principal on venture debt	(1,667)
Payment of deferred offering costs		(784)
Proceeds from exercise of stock options	83
Net cash providing by (used in) financing activities	1,144	(784)
Net decrease in cash and restricted cash	(21,316)	(19,097)
Cash and restricted cash at beginning of period	114,699	45,581
Cash and restricted cash at end of period	93,383	26,484
Reconciliation of cash and restricted cash:
Cash and restricted cash at end of period	93,383	26,484
Adjustment for restricted cash	(2,178)	(134)
Cash at end of period	91,205	26,350
Supplemental disclosure of non-cash investing and financing activities:
Deferred offering costs included in accounts payable and accruals		458
Exercise of stock options in prepaid expenses and other current assets	95
Purchases of property and equipment in accounts payable	95
Cash paid for interest	$ 800	$ 348

CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) $ in Thousands	Jun. 30, 2018 USD ($)
CONSOLIDATED STATEMENTS OF CASH FLOWS
Debt issuance costs	$ 50

NATURE OF BUSINESS AND BASIS OF PRESENTATION	6 Months Ended
NATURE OF BUSINESS AND BASIS OF PRESENTATION	Jun. 30, 2018
NATURE OF BUSINESS AND BASIS OF PRESENTATION
NATURE OF BUSINESS AND BASIS OF PRESENTATION	1. NATURE OF BUSINESS AND BASIS OF PRESENTATION Nature of Business—Kala Pharmaceuticals, Inc. (the “Company”) was incorporated on July 7, 2009, and is a biopharmaceutical company focused on the development and commercialization of therapies using its proprietary nanoparticle‑based Mucus Penetrating Particles, or MPP, technology, with an initial focus on the treatment of eye diseases. The Company has applied the MPP technology to loteprednol etabonate, or LE, a corticosteroid designed for ocular applications, resulting in two lead product candidates. These product candidates are INVELTYSTM (KPI‑121 1.0%), for the treatment of inflammation and pain following ocular surgery, for which the U.S. Food and Drug Administration (the “FDA”) has accepted for filing the Company’s New Drug Application (“NDA”) and given a target action date under the Prescription Drug User Fee Act (“PDUFA”) of August 24, 2018, and KPI‑121 0.25% for the temporary relief of the signs and symptoms of dry eye disease. The Company is evaluating opportunities for MPP nanosuspensions of LE with less frequent daily dosing regimens for the treatment of inflammation and pain following ocular surgery, for the temporary relief of the signs and symptoms of dry eye disease and for potential chronic treatment of dry eye disease. The Company is also evaluating compounds in its topically applied MPP receptor Tyrosine Kinase Inhibitor program, or rTKI program, that inhibit the vascular endothelial growth factor, or VEGF, pathway, for the potential treatment of a number of retinal diseases. The brand name INVELTYS has been conditionally approved by the FDA. The Company is engaged in research and development activities, raising capital and recruiting skilled personnel. The Company is subject to a number of risks similar to those of other companies conducting high‑risk, early‑stage research and development of pharmaceutical product candidates. Principal among these risks are dependence on key individuals and intellectual property, competition from other products and companies and the technical risks associated with the successful research, development and marketing of its product candidates. The Company’s success is dependent upon its ability to raise additional capital in order to fund ongoing and future research and development, obtain regulatory approval of its product candidates, successfully commercialize its products, generate revenue, meet its obligations, and, ultimately, attain profitable operations. Initial Public Offering—On July 25, 2017, the Company completed its initial public offering (“IPO”) of common stock pursuant to its registration statement on Form S‑1, as amended (File No. 333‑218936), which was declared effective by the Securities Exchange Commission (the “SEC”) on July 19, 2017. Pursuant to the registration statement, the Company issued and sold 6,900,000 shares of $0.001 par value common stock at an initial offering price of $15.00 per share, which included 900,000 shares of common stock pursuant to the underwriters’ option to purchase additional shares. The Company’s shares began trading on the Nasdaq Global Select Market under the symbol “KALA” on July 20, 2017. Proceeds from the Company’s IPO were approximately $94.0 million after deducting underwriting discounts and commissions of $7.3 million and offering costs of $2.2 million. Upon the closing of the IPO, all of the Company’s outstanding shares of convertible preferred stock automatically converted into 16,101,970 shares of common stock at the applicable conversion ratio then in effect. All of the Company’s outstanding warrants to purchase preferred stock automatically converted into warrants to purchase 202,020 shares of common stock. Liquidity— Since inception, we have incurred significant losses from operations and negative cash flows from operations. As of June 30, 2018, we had an accumulated deficit of $160.3 million. We have not generated any revenues to date from product sales and have financed operations primarily through the IPO, private placements of preferred stock, convertible debt financings and borrowings under credit facilities. The Company has devoted substantially all of its financial resources and efforts to research and development, including preclinical studies and clinical trials. The Company expects to continue to incur significant expenses and operating losses over the next several years. Net losses may fluctuate significantly from quarter-to-quarter and year-to-year. The Company believes that its existing cash on hand as of June 30, 2018, will enable it to fund its planned operating expenses, debt service obligations and capital expenditure requirements for at least twelve months from the date these condensed consolidated financial statements were issued. This evaluation is based on relevant conditions and events that are known and reasonably knowable at the date that the condensed consolidated financial statements are issued. As a result, the Company could deplete its available capital resources sooner than it currently expects. Use of Estimates—The preparation of condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expense, and related disclosures. The Company bases estimates and assumptions on historical experience when available and on various factors that it believes to be reasonable under the circumstances. The Company evaluates its estimates and assumptions on an ongoing basis. Estimates relied upon in preparing these condensed consolidated financial statements relate to, but are not limited to, the present value of lease liabilities and the corresponding right-of-use assets, the fair value of warrants, stock compensation, accrued expenses and the recoverability of the Company’s net deferred tax assets and related valuation allowance. Actual results may differ from these estimates under different assumptions or conditions. Net Loss per Share—Basic net loss per share is computed using the weighted average number of common shares outstanding during the period. Diluted net loss per share is computed using the sum of the weighted average number of common shares outstanding during the period and, if dilutive, the weighted average number of potential shares of common stock, including the assumed exercise of stock options and warrants. The Company applies the two-class method to calculate basic and diluted net loss per share attributable to common stockholders as its warrants to purchase common stock are participating securities. The two-class method is an earnings allocation formula that treats a participating security as having rights to earnings that otherwise would have been available to common stockholders. However, the two-class method does not impact the net loss per share of common stock as the Company has been in a net loss position and the warrant holders do not participate in losses. Basic and diluted shares outstanding are the same for each period presented as all common stock equivalents would be antidilutive due to the net losses incurred. Unaudited Interim Financial Information—The condensed consolidated financial statements of the Company included herein have been prepared, without audit, pursuant to the rules and regulations of the SEC. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted from this report, as is permitted by such rules and regulations. The accompanying condensed consolidated financial statements reflect all adjustments consisting of normal, recurring adjustments, that are necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods presented. Interim results are not necessarily indicative of results for a full year. Accordingly, these condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017 (the “Annual Report”). The unaudited condensed consolidated financial statements include the accounts of Kala Pharmaceuticals, Inc. and its wholly owned subsidiary, Kala Pharmaceuticals Security Corporation, which was established in November 2017. All intercompany transactions and balances have been eliminated in consolidation.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

6 Months Ended

Jun. 30, 2018

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Summary of Significant Accounting Policies

The Company’s significant accounting policies are described in Note 2, “Summary of Significant Accounting Policies,” to the consolidated financial statements included in the Annual Report. There have been no material changes to the significant accounting policies during the period ended June 30, 2018 other than those noted below.

Leases

At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the unique facts and circumstances present. Most leases with a term greater than one year are recognized on the balance sheet as right-of-use assets, lease liabilities and, if applicable, long-term lease liabilities. The Company has elected not to recognize on the balance sheet leases with terms of one year or less. Lease liabilities and their corresponding right-of-use assets are recorded based on the present value of lease payments over the expected lease term. The interest rate implicit in lease contracts is typically not readily determinable. As such, the Company utilizes the appropriate incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. Certain adjustments to the right-of-use asset may be required for items such as initial direct costs paid or incentives received.

The components of a lease should be split into three categories: lease components (e.g., land, building, etc.), non-lease components (e.g., common area maintenance, maintenance, consumables, etc.), and non-components (e.g., property taxes, insurance, etc.). Then the fixed and in-substance fixed contract consideration (including any related to non-components) must be allocated based on fair values to the lease components and non-lease components.

Although separation of lease and non-lease components is required, certain practical expedients are available to entities. Entities electing the practical expedient would not separate lease and non-lease components. Rather, they would account for each lease component and the related non-lease component together as a single component. The Company’s facilities operating leases have lease and non-lease components which the Company has elected to account for as one single lease component. The lease component results in a right-of-use asset being recorded on the balance sheet and amortized as lease expense on a straight-line basis to the statements of operations.

Recently Adopted Accounting Pronouncements

In May 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2017-09, Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting (“ASU 2017-09”), which provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. The amendments in ASU 2017-09 are effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017, with early adoption permitted. The Company has prospectively adopted this new standard as of January 1, 2018. The adoption of this standard did not have a material impact on the Company’s condensed consolidated financial statements.

In August 2016, the FASB issued ASU No. 2016‑15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments (“ASU 2016‑15”), to address diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The standard is effective for annual periods beginning after December 15, 2017, including interim periods within those fiscal years. ASU 2016-15 should be applied retrospectively and early adoption is permitted, including adoption in an interim period. The Company has adopted this new standard as of January 1, 2018. The adoption of this standard did not have a material impact on the Company’s condensed consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) (“ASU 2016-02”), which provides guidance to enhance the transparency and comparability of financial reporting related to leasing arrangements. Under this new lease standard, most leases are required to be recognized on the balance sheet as right-of-use assets and corresponding lease liabilities. Disclosure requirements have been enhanced with the objective of enabling financial statement users to assess the amount, timing, and uncertainty of cash flows arising from leases.

The Company elected to early adopt ASU 2016-02, effective January 1, 2018, as permitted in the guidance. The standard has been implemented using the required modified retrospective approach and the Company has also elected to utilize the available practical expedients. In using the modified retrospective approach, the Company was required to recognize and measure leases existing at, or entered into after, the beginning of the earliest comparative period presented. Prior period results have been restated resulting in a material impact on the condensed consolidated balance sheets and the condensed consolidated statement of cash flows. The adoption of this standard did not have a material impact on the condensed consolidated statement of operations. The impact on the consolidated balance sheet as of December 31, 2017 and the condensed consolidated statement of cash flows for the six months ended June 30, 2017 is shown below.

Impact to Previously Reported Results

From December 31, 2017 consolidated balance sheet (in thousands):


	As Previously Reported		New Lease Standard Adjustment		As Restated
Right-of-use asset	$	—	$	413	$	413
Accrued expenses	$	6,589	$	17	$	6,606
Other current and long-term liabilities	$	9	$	(1)	$	8
Lease liabilities	$	—	$	397	$	397

For the six months ended June 30, 2017 condensed consolidated statement of cash flows (in thousands):


	As Previously Reported		New Lease Standard Adjustment		As Restated
Amortization of right-of-use asset	$	—	$	175	$	175
Lease liabilities	$	—	$	(175)	$	(175)

ACCRUED EXPENSES

6 Months Ended

Jun. 30, 2018

ACCRUED EXPENSES

ACCRUED EXPENSES

3. ACCRUED EXPENSES

Accrued expenses consist of the following (in thousands):


	June 30,		December 31,
	2018		2017

Development costs	$	2,157	$	3,054
Compensation and benefits		2,061		2,402
Professional fees		623		666
General and administrative consulting		145		229
Other		160		255
Accrued expenses	$	5,146	$	6,606

LEASES

6 Months Ended

Jun. 30, 2018

LEASES

LEASES

4. LEASES

The Company entered into a three‑year lease agreement for its headquarters on September 30, 2013, with a commencement date of February 1, 2014. On June 30, 2016, the lease was amended to extend the term from January 31, 2017 to January 31, 2019. In connection with the lease agreement, the Company issued a letter of credit to the landlord for $84,000. The Company secured the letter of credit for the full amount of the letter with cash on deposit, which is reported as restricted cash. With the adoption of ASU 2016-02, the Company has recorded a right-of-use asset and corresponding lease liability.

On February 28, 2018, the Company entered into a lease agreement with 480 Arsenal Group LLC (the “Arsenal Group”) for the lease of a portion of the building located at 490 Arsenal Way Watertown, Massachusetts (the “Watertown Lease”). The initial term of the Watertown Lease is eight years with an option to extend for an additional five years. The Company expects to occupy the premises by the end of 2018. The Company plans to use the premises as its new corporate headquarters and for research and development. The Company has not yet occupied this space as it is being renovated for the Company’s use. The Company has concluded that it does not control the space as defined in ASU 2016-02 during the construction period and does not expect to gain control of the space until on or near construction completion and, as such, a right-of-use asset and corresponding lease liability have not been recorded.

In connection with the Watertown Lease, the Company issued a letter of credit to the Arsenal Group for $2.0 million. The Company secured the letter of credit for the full amount of the letter with cash on deposit, which is reported as restricted cash.

On March 15, 2018, the Company entered into a lease agreement with Duffy Associates, LLC for the lease of a portion of the building located at 465 Waverley Oaks Road, Suite 301, Waltham, Massachusetts (the “Waverley Oaks Lease”). The term of the Waverley Oaks Lease is one year, and as such a right-of-use asset and corresponding lease liability has not been recorded. The Company plans to use this location for additional corporate offices before moving to its new corporate headquarters in Watertown, Massachusetts.

The components of lease expense and related cash flows were as follows (in thousands):


	For the three months ended June 30,
	2018		2017
Lease cost
Operating lease cost	$	99	$	99
Short-term lease cost		53		—
Total lease cost	$	152	$	99

Operating cash flows from operating leases	$	103	$	100


	For the six months ended June 30,
	2018		2017
Lease cost
Operating lease cost	$	198	$	196
Short-term lease cost		62		—
Total lease cost	$	260	$	196

Operating cash flows from operating leases	$	205	$	197

As of June 30, 2018 and December 31, 2017, the remaining lease term on the operating lease was 0.59 years and 1.08 years, respectively. As of June 30, 2018 and December 31, 2017, the discount rate was 6.50%.

Future minimum commitments due under these lease agreements as of June 30, 2018 are as follows (in thousands):


Years Ending December 31,		Operating Lease Obligation (1)		Other Lease Obligations (2)		Total
2018 (remaining six months)	$	171	$	101	$	272
2019		34		34		68
2020		—		—		—
2021		—		—		—
2022		—		—		—
Present value adjustment		(3)		—		(3)
Total minimum lease payments	$	202	$	135	$	337

(1)

Future minimum lease payments under the Company’s operating lease for its current corporate headquarters and lab space in Waltham, Massachusetts.

(2)

Future minimum lease payments under the Company’s operating lease for the Waverley Oaks Lease. Excluded from the table above is the Watertown Lease because the Company has concluded that it does not control the space during the construction period and does not expect to gain control of the space until on or near construction completion.

DEBT

6 Months Ended

Jun. 30, 2018

DEBT

DEBT

5. DEBT

2014 Debt Facility

In November 2014, the Company entered into a venture debt facility (“2014 Debt Facility”) for a total loan commitment of $10.0 million. On October 13, 2016, the Company entered into a First Amendment to the 2014 Debt Facility the (“First Amendment”), which reaffirmed the initial commitment to a total of $10.0 million of funding (“Term Loan A”) and increased the Company’s total borrowing capacity by an additional $10.0 million (“Term Loan B” and together with Term Loan A, “Term Loans”). On September 28, 2017, the Company drew the additional $10.0 million available under Term Loan B. On November 22, 2017, the Company entered into a Second Amendment to the 2014 Debt Facility to account for the formation of the Company’s wholly-owned subsidiary. On March 29, 2018, the Company entered into a Third Amendment to the 2014 Debt Facility the (“Third Amendment”), which reaffirmed the initial commitment to a total of $20.0 million of funding (“Term Loan A”), increased the Company’s total borrowing capacity by an additional $5.0 million and extended the interest-only end date for 12 months following the execution of the Third Amendment. The maturity date of the 2014 Debt Facility was also extended from October 13, 2020 to March 29, 2022. Under the terms of the facility, the borrowings accrue interest at an annual rate equal to 3.00% above the Prime Rate then in effect. The interest rate was 8.00% as of June 30, 2018 and 7.50% as of December 31, 2017.

The unpaid principal balance under the 2014 Debt Facility was $20.0 million and $18.9 million as of June 30, 2018 and December 31, 2017, respectively. The unamortized discount was $233,000 and $235,000 as of June 30, 2018 and December 31, 2017, respectively. During the three months ended June 30, 2018 and 2017, the Company recognized interest expense of $414,000 and $208,000, respectively, which consisted of amortization of the debt discount of $21,000 and $28,000 and the contractual coupon interest of $393,000 and $180,000, respectively. During the six months ended June 30, 2018 and 2017, the Company recognized interest expense of $781,000 and $406,000, respectively, which consisted of amortization of the debt discount of $51,000 and $56,000, respectively, and the contractual coupon interest of $730,000 and $350,000, respectively.

The 2014 Debt Facility, as amended, is senior debt and is secured by substantially all of the assets of the Company other than intellectual property. The Company’s ability to pay cash dividends is currently restricted by the terms of the 2014 Debt Facility. In the event the Company is determined to be in default under the 2014 Debt Facility, the outstanding balance accrues interest at five percentage points above the interest rate applicable immediately prior to the occurrence of the event of default and the lender has the right to declare all outstanding principal and interest payable. Under the terms of the 2014 Debt Facility, certain events including but not limited to, the Company’s failure to pay obligations when due, failure to perform obligations under the agreement, insolvency or the occurrence of any circumstance that could reasonably be expected to have a material adverse effect on the Company, constitute events of default.

In connection with its borrowings under the 2014 Debt Facility, the Company issued preferred stock warrants. Upon each issuance of such preferred stock warrants, the Company estimated the fair value using the Black‑Scholes option‑pricing model, and recorded the estimated fair value as a liability separate from the loan balance, and an additional debt discount included within long‑term debt that is amortized to interest expense over the term of the loan using the effective interest method. The initial fair value of all issuances of such preferred stock warrants on an aggregate basis was $365,000. Upon the closing of the Company's IPO on July 25, 2017, all of the underlying preferred stock warrants were converted into warrants for common stock (see Note 6), and the warrant liability was re-measured to fair value and reclassified to additional paid-in capital.

The future annual principal payments due under the 2014 Debt Facility as of June 30, 2018 were as follows (in thousands):


Years Ending December 31,
2018 (remaining six months)	$	—
2019		5,000
2020		6,667
2021		6,667
2022		1,666
Total	$	20,000

WARRANTS

6 Months Ended

Jun. 30, 2018

WARRANTS

WARRANTS

6. WARRANTS

The Company has issued warrants in connection with debt transactions that were completed prior to 2014. Upon the completion of the IPO, the Company’s outstanding warrants to purchase preferred stock converted into warrants to purchase common stock.

The following table summarizes the common stock warrants outstanding, each exercisable into the number of shares of common stock set forth below as of the specified dates:


					Shares Exercisable at
	Exercise		Expiration	Exercisable	June 30,	December 31,
Issued	Price		Date	From	2018	2017
2013	$	7.50	April 2021	July 2017	82,816	82,816
2014	$	7.50	November 2024	July 2017	16,000	16,000
2016	$	8.27	October 2026	September 2017	14,512	14,512
					113,328	113,328

FAIR VALUE OF FINANCIAL INSTRUMENTS

6 Months Ended

Jun. 30, 2018

FAIR VALUE OF FINANCIAL INSTRUMENTS

FAIR VALUE OF FINANCIAL INSTRUMENTS

7. FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company classifies fair value based measurements using a three-level hierarchy that prioritizes the inputs used to measure fair value. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows: Level 1, quoted market prices in active markets for identical assets or liabilities; Level 2, observable inputs other than quoted market prices included in Level 1 such as quoted market prices for markets that are not active or other inputs that are observable or can be corroborated by observable market data; and Level 3, unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities, including estimates and assumptions developed by the Company, reflective of those that a market participant would use, as inputs to certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

The carrying value of accounts payable and accrued expenses approximate their fair value due to the short‑term nature of these assets and liabilities. Management believes that the Company’s long‑term debt (See Note 5) bears interest at the prevailing market rate for instruments with similar characteristics and, accordingly, the carrying value of long‑term debt, including the current portion, also approximates its fair value. The fair value of the outstanding debt was estimated using a discounted cash flow analysis based on current market interest rates for debt issuances with similar remaining years to maturity, adjusted for credit risk, which represents a Level 3 measurement. There were no transfers between fair value measurement levels during the six months ended June 30, 2018 or June 30, 2017.

The Company has historically classified the value of the warrant liability as Level 3 measurements within the fair value hierarchy because the fair value is derived using significant unobservable inputs, which included the estimated volatility, the estimated fair value of the underlying preferred stock, and to the extent that the number of exercisable shares underlying the warrants were adjustable based on the amount of the Term Loans drawn down or the probability that the Company would draw down on the debt facility. Upon the completion of the IPO, the Company’s outstanding warrants to purchase preferred stock converted into warrants to purchase common stock and the Company reclassified the fair value of the warrant liability to additional paid-in capital. All warrants are currently classified as equity and their fair value is not recorded or re-measured.

The following table provides a summary of changes in the fair value of the Company’s warrant liability, which is included as a component of other (income) expense (in thousands) which was subsequently remeasured to the fair value at the date of the IPO and reclassified to additional paid-in capital at that time:


		Three Months Ended
		June 30,
	2018		2017
	Warrant		Warrant
	Liability		Liability

Fair value - March 31,	$	—	$	1,075
Change in fair value of warrant liability		—		1,185
Fair value - June 30,	$	—	$	2,260


		Six Months Ended
		June 30,
	2018		2017
	Warrant		Warrant
	Liability		Liability

Fair value - December 31,	$	—	$	1,039
Change in fair value of warrant liability		—		1,221
Fair value - June 30,	$	—	$	2,260

- 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

STOCK-BASED COMPENSATION

6 Months Ended

Jun. 30, 2018

STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION

8. STOCK‑BASED COMPENSATION

Stock Incentive Plans—In December 2009, the Board of Directors (the “Board”) adopted the 2009 Employee, Director and Consultant Equity Incentive Plan (the “2009 Plan”) for the issuance of common stock and stock options to employees, officers, directors, consultants, and advisors.

In July 2017, the Company’s 2017 Equity Incentive Plan (the “2017 Plan”) became effective, as a result, and no further stock options or other awards will be made under the 2009 Plan. The 2017 Plan was established to provide equity based ownership opportunities for employees, officers, directors, consultants, and advisors. As of June 30, 2018, there were 937,532 shares of common stock available for grant under the 2017 Plan. In addition, any shares of common stock subject to awards under the 2009 Plan that expire, are forfeited, or are otherwise surrendered, without having been fully exercised or resulting in any common stock being issued will become available for issuance under the 2017 Plan, up to an additional 2,780,874 shares, which is the number of shares issuable pursuant to outstanding awards granted under the 2009 Plan.

Also approved under the 2017 Plan is an annual increase for each of the years through December 31, 2027, equal to the least of (i) 3,573,766 shares of common stock, (ii) 4% of the shares of common stock outstanding on December 31 of the prior year and (iii) an amount determined by the Board.

Under the plans, the Board determines the number of shares of common stock to be granted pursuant to the awards, as well as the exercise price and terms of such awards. The exercise price of incentive stock options could not be less than the fair value of the common stock on the date of grant. Stock options awarded under the plans expire 10 years after the grant date, unless the Board sets a shorter term. Options granted under the plans generally vest over a four‑year period. A portion of the unvested stock options will vest upon the sale of all or substantially all of the stock or assets of the Company.

In the past, the Company had granted stock options which contain performance‑based vesting criteria. These criteria were milestone events that were specific to the Company’s corporate goals. Stock‑based compensation expense associated with performance‑based stock options is recognized if the achievement of the performance condition is considered probable using management’s best estimates. As of June 30, 2018 there were no performance-based awards outstanding.

For the three and six months ended June 30, 2018 and 2017, the Company granted 0 and 4,224 stock options to non‑employee consultants, respectively. During the three months ended June 30, 2018 and 2017, the Company recognized $0 and $22,000, respectively, in stock compensation expense related to non‑employee consultants. During the six months ended June 30, 2018 and 2017, the Company recognized $11,000 and $37,000, respectively, in stock compensation expense related to non‑employee consultants.

Inducement Stock Option Awards—In April 2018, the Company issued to its General Counsel, Chief Compliance Officer and Corporate Secretary a non-statutory stock option to purchase an aggregate of 150,000 shares of the Company’s common stock at an exercise price of $16.62 per share. Subject to his continued service to the Company, the stock option will vest over a four-year period, with 25% of the shares underlying the option award vesting on the one year anniversary of the grant date and the remaining 75% of the shares underlying the award vesting monthly thereafter. The stock option was issued outside of the 2017 Plan.

A summary of option activity for employee and non‑employee awards under the 2009 Plan, the 2017 Plan and as material inducement grants for the six months ended June 30, 2018 is as follows (in thousands, except share and per share amounts):


				Weighted
		Weighted		Average
		Average		Remaining	Aggregate
	Number of	Exercise		Contractual	Intrinsic
	Shares	Price		Term	Value
				(Years)
Outstanding at January 1, 2018	3,738,928	$	6.93	8.4	$	44,578
Granted	1,243,390		14.01
Exercised	(53,965)		3.30
Forfeited	(44,235)		5.95
Outstanding at June 30, 2018	4,884,118	$	8.78	8.3	$	29,282
Options exercisable at June 30, 2018	2,135,011	$	4.37	7.3	$	20,151

The Company records stock‑based compensation related to stock options granted at fair value. The Company utilizes the Black‑Scholes option‑pricing model to estimate the fair value of stock option grants and to determine the related compensation expense. The assumptions used in calculating the fair value of stock‑based payment awards represent management’s best estimates. There were 103,013 options granted during the six months ended June 30, 2017. The assumptions used in determining fair value of the stock options granted in the six months ended June 30, 2018 are as follows:


	Six Months Ended June 30,
	2018			2017
Expected volatility	83%	–	85%	103%	–	122%
Risk-free interest rate	2.63%	–	2.96%	1.81%	–	2.29%
Expected dividend yield		0%			0%
Expected term (in years)	5.27	–	6.13	5.04	–	9.82

The Company derived the risk‑free interest rate assumption from the U.S. Treasury rates for U.S. Treasury zero‑coupon bonds with maturities similar to those of the expected term of the awards being valued. The Company based the assumed dividend yield on its expectation of not paying dividends in the foreseeable future. The Company calculated the weighted‑average expected term of options using the simplified method, as the Company lacks relevant historical data due to the Company’s limited operating experience. The estimated volatility is based upon the historical volatility of comparable companies with publicly available share prices. The impact of forfeitures on compensation expense are recorded as they occur.

During the three months ended June 30, 2018 and 2017, the weighted average grant‑date fair value of options granted was $11.46 and $3.86, respectively. During the six months ended June 30, 2018 and 2017, the weighted average grant‑date fair value of options granted was $10.12 and $3.86, respectively. The fair value is being expensed over the vesting period of the options on a straight‑line basis as the services are being provided. As of June 30, 2018, there was $23.7 million of unrecognized compensation cost related to the stock options granted, which is expected to be expensed over a weighted‑average period of 3.12 years.

Employee Stock Purchase Plan—In 2017, the Company approved the 2017 Employee Stock Purchase Plan (the “ESPP”). Under the ESPP, participating employees can authorize the Company to withhold a portion of their base pay during consecutive six-month payment periods for the purchase of shares of the Company’s common stock. At the conclusion of the period, participating employees can purchase shares of the Company’s common stock at 85% of the lesser of the closing price of the common stock on (i) the first business day of the plan period or (ii) the exercise date. The initial six-month period will not commence until January 1, 2019.

Reserved Shares—As of June 30, 2018 and December 31, 2017, the Company had reserved the following shares of common stock issuable upon exercise of rights under equity compensation plans:


	June 30,	December 31,
	2018	2017

2017 Employee Stock Purchase Plan	223,341	223,341
Shares reserved for outstanding inducement stock option award	150,000	—
2009 Plan	2,780,874	2,868,449
2017 Plan	3,040,776	2,025,633
Total	6,194,991	5,117,423

Stock-based Compensation Expenses—Stock‑based compensation expense was classified in the statements of operations as follows (in thousands):


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2018		2017		2018		2017

Research and development	$	741	$	205	$	1,380	$	392
General and administrative		1,550		362		2,772		697
Total	$	2,291	$	567	$	4,152	$	1,089

INCOME TAXES	6 Months Ended
INCOME TAXES	Jun. 30, 2018
INCOME TAXES
INCOME TAXES	9. INCOME TAXES The Company did not record a provision or benefit for income taxes during the three and six months ended June 30, 2018 and 2017. The Company continues to maintain a full valuation allowance for its U.S. federal and state deferred tax assets. The Company has evaluated the positive and negative evidence bearing upon its ability to realize the deferred tax assets. Management has considered the Company’s history of cumulative net losses incurred since inception and its lack of commercialization of any products or generation of any revenue from product sales since inception and has concluded that it is more likely than not that the Company will not realize the benefits of the deferred tax assets. Management reevaluates the positive and negative evidence at each reporting period. Realization of the future tax benefits is dependent on many factors, including the Company’s ability to generate taxable income within the net operating loss carryforward period. Under the provisions of Section 382 of the Internal Revenue Code of 1986, certain substantial changes in the Company’s ownership, including a sale of the Company, or significant changes in ownership due to sales of equity, may have limited, or may limit in the future, the amount of net operating loss carryforwards, which could be used annually to offset future taxable income. The Company files its corporate income tax returns in the United States and Massachusetts, California, Kentucky, Pennsylvania, New Hampshire, New York, North Carolina and Texas. All tax years since the date of incorporation remain open to examination by the major taxing jurisdictions (state and federal) to which the Company is subject, as carryforward attributes generated in years past may still be adjusted upon examination by the Internal Revenue Service (“IRS”) or other authorities if they have or will be used in a future period. The Company is not currently under examination by the IRS or any other jurisdictions for any tax year. As of June 30, 2018 and 2017, the Company had no uncertain tax positions. The Company’s policy is to recognize interest and penalties related to income tax matters as a component of income tax expense, of which no interest or penalties were recorded for the six months ended June 30, 2018 and 2017.

COMMITMENTS AND CONTINGENCIES	6 Months Ended
COMMITMENTS AND CONTINGENCIES	Jun. 30, 2018
COMMITMENTS AND CONTINGENCIES.
COMMITMENTS AND CONTINGENCIES.	10. COMMITMENTS AND CONTINGENCIES License Agreement—In 2009, the Company entered into an exclusive license agreement with The Johns Hopkins University (“JHU”), as amended in November 2012, May 2014, August 2014, October 2014 and June 2018, which licensed to the Company a portfolio of specified patent rights and remains in full force and effect. Pursuant to the terms of the agreement, as amended, the Company agreed to pay an initial license fee, minimum annual payments beginning in 2017, certain development and commercial milestone payments, royalties on product sales and reimburse all or a portion of the costs associated with the preparation, filing, prosecution and maintenance of the agreed‑upon patents and patent applications to JHU. After 2016 and until the first commercial sale of product, the minimum annual payment will be $38,000. If the Company achieves the first commercial sale of the product in the United States, European Union, or Japan, the annual minimum payment will increase to $113,000. The Company is obligated to pay JHU low single‑digit running royalties based upon a percentage of net sales of the licensed products. The Company also has an obligation to pay JHU certain one‑time development and commercial milestone payments. The Company recorded research and development expenses related to the JHU agreement of $169,000 and $0, respectively, for the three months ended June 30, 2018 and 2017 and $200,000 and $10,000, respectively, for the six months ended June 30, 2018 and 2017. Litigation—The Company is not currently subject to any material legal proceedings.

SUBSEQUENT EVENTS	6 Months Ended
SUBSEQUENT EVENTS	Jun. 30, 2018
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS	11. SUBSEQUENT EVENTS The Company has evaluated all events and transactions that occurred after the balance sheet date through the date of this filing. During this period, the Company did not have any material subsequent events that impacted its consolidated financial statements or disclosures.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

6 Months Ended

Jun. 30, 2018

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Leases

Recently Adopted Accounting Pronouncements

Impact to Previously Reported Results

From December 31, 2017 consolidated balance sheet (in thousands):


	As Previously Reported		New Lease Standard Adjustment		As Restated
Right-of-use asset	$	—	$	413	$	413
Accrued expenses	$	6,589	$	17	$	6,606
Other current and long-term liabilities	$	9	$	(1)	$	8
Lease liabilities	$	—	$	397	$	397

For the six months ended June 30, 2017 condensed consolidated statement of cash flows (in thousands):


	As Previously Reported		New Lease Standard Adjustment		As Restated
Amortization of right-of-use asset	$	—	$	175	$	175
Lease liabilities	$	—	$	(175)	$	(175)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

6 Months Ended

Jun. 30, 2018

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Schedule of the impacts to previously reported results

From December 31, 2017 consolidated balance sheet (in thousands):


	As Previously Reported		New Lease Standard Adjustment		As Restated
Right-of-use asset	$	—	$	413	$	413
Accrued expenses	$	6,589	$	17	$	6,606
Other current and long-term liabilities	$	9	$	(1)	$	8
Lease liabilities	$	—	$	397	$	397

For the six months ended June 30, 2017 condensed consolidated statement of cash flows (in thousands):


	As Previously Reported		New Lease Standard Adjustment		As Restated
Amortization of right-of-use asset	$	—	$	175	$	175
Lease liabilities	$	—	$	(175)	$	(175)

ACCRUED EXPENSES (Tables)

6 Months Ended

Jun. 30, 2018

ACCRUED EXPENSES

Schedule of accrued expenses

Accrued expenses consist of the following (in thousands):


	June 30,		December 31,
	2018		2017

Development costs	$	2,157	$	3,054
Compensation and benefits		2,061		2,402
Professional fees		623		666
General and administrative consulting		145		229
Other		160		255
Accrued expenses	$	5,146	$	6,606

LEASES (Tables)

6 Months Ended

Jun. 30, 2018

LEASES

Schedule of components of lease expense and related cash flows

The components of lease expense and related cash flows were as follows (in thousands):


	For the three months ended June 30,
	2018		2017
Lease cost
Operating lease cost	$	99	$	99
Short-term lease cost		53		—
Total lease cost	$	152	$	99

Operating cash flows from operating leases	$	103	$	100


	For the six months ended June 30,
	2018		2017
Lease cost
Operating lease cost	$	198	$	196
Short-term lease cost		62		—
Total lease cost	$	260	$	196

Operating cash flows from operating leases	$	205	$	197

Schedule of future minimum commitments

Future minimum commitments due under these lease agreements as of June 30, 2018 are as follows (in thousands):


Years Ending December 31,		Operating Lease Obligation (1)		Other Lease Obligations (2)		Total
2018 (remaining six months)	$	171	$	101	$	272
2019		34		34		68
2020		—		—		—
2021		—		—		—
2022		—		—		—
Present value adjustment		(3)		—		(3)
Total minimum lease payments	$	202	$	135	$	337

(1)

Future minimum lease payments under the Company’s operating lease for its current corporate headquarters and lab space in Waltham, Massachusetts.

DEBT (Tables)

6 Months Ended

Jun. 30, 2018

DEBT

Schedule of maturities of long-term debt

The future annual principal payments due under the 2014 Debt Facility as of June 30, 2018 were as follows (in thousands):


Years Ending December 31,
2018 (remaining six months)	$	—
2019		5,000
2020		6,667
2021		6,667
2022		1,666
Total	$	20,000

WARRANTS (Tables)

6 Months Ended

Jun. 30, 2018

WARRANTS

Schedule of outstanding warrants


					Shares Exercisable at
	Exercise		Expiration	Exercisable	June 30,	December 31,
Issued	Price		Date	From	2018	2017
2013	$	7.50	April 2021	July 2017	82,816	82,816
2014	$	7.50	November 2024	July 2017	16,000	16,000
2016	$	8.27	October 2026	September 2017	14,512	14,512
					113,328	113,328

- Definition

Tabular disclosure of warrants or rights issued. Warrants and rights outstanding are derivative securities that give the holder the right to purchase securities (usually equity) from the issuer at a specific price within a certain time frame. Warrants are often included in a new debt issue to entice investors by a higher return potential. The main difference between warrants and call options is that warrants are issued and guaranteed by the company, whereas options are exchange instruments and are not issued by the company. Also, the lifetime of a warrant is often measured in years, while the lifetime of a typical option is measured in months. Disclose the title of issue of securities called for by warrants and rights outstanding, the aggregate amount of securities called for by warrants and rights outstanding, the date from which the warrants or rights are exercisable, and the price at which the warrant or right is exercisable.

+ References + Details

FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)

6 Months Ended

Jun. 30, 2018

FAIR VALUE OF FINANCIAL INSTRUMENTS

Schedule of changes in Level 3 fair value measurements


		Three Months Ended
		June 30,
	2018		2017
	Warrant		Warrant
	Liability		Liability

Fair value - March 31,	$	—	$	1,075
Change in fair value of warrant liability		—		1,185
Fair value - June 30,	$	—	$	2,260


		Six Months Ended
		June 30,
	2018		2017
	Warrant		Warrant
	Liability		Liability

Fair value - December 31,	$	—	$	1,039
Change in fair value of warrant liability		—		1,221
Fair value - June 30,	$	—	$	2,260

STOCK-BASED COMPENSATION (Tables)

6 Months Ended

Jun. 30, 2018

STOCK-BASED COMPENSATION

Summary of option activity for employee and non employee awards


				Weighted
		Weighted		Average
		Average		Remaining	Aggregate
	Number of	Exercise		Contractual	Intrinsic
	Shares	Price		Term	Value
				(Years)
Outstanding at January 1, 2018	3,738,928	$	6.93	8.4	$	44,578
Granted	1,243,390		14.01
Exercised	(53,965)		3.30
Forfeited	(44,235)		5.95
Outstanding at June 30, 2018	4,884,118	$	8.78	8.3	$	29,282
Options exercisable at June 30, 2018	2,135,011	$	4.37	7.3	$	20,151

Schedule of assumptions used in determining fair value of the stock options granted


	Six Months Ended June 30,
	2018			2017
Expected volatility	83%	–	85%	103%	–	122%
Risk-free interest rate	2.63%	–	2.96%	1.81%	–	2.29%
Expected dividend yield		0%			0%
Expected term (in years)	5.27	–	6.13	5.04	–	9.82

Schedule of reserved common stock shares upon exercise of rights under equity compensation plans

Reserved Shares—As of June 30, 2018 and December 31, 2017, the Company had reserved the following shares of common stock issuable upon exercise of rights under equity compensation plans:


	June 30,	December 31,
	2018	2017

2017 Employee Stock Purchase Plan	223,341	223,341
Shares reserved for outstanding inducement stock option award	150,000	—
2009 Plan	2,780,874	2,868,449
2017 Plan	3,040,776	2,025,633
Total	6,194,991	5,117,423

Schedule of stock based compensation expense


	June 30,	December 31,
	2018	2017

2017 Employee Stock Purchase Plan	223,341	223,341
Shares reserved for outstanding inducement stock option award	150,000	—
2009 Plan	2,780,874	2,868,449
2017 Plan	3,040,776	2,025,633
Total	6,194,991	5,117,423

Stock-based Compensation Expenses—Stock‑based compensation expense was classified in the statements of operations as follows (in thousands):


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2018		2017		2018		2017

Research and development	$	741	$	205	$	1,380	$	392
General and administrative		1,550		362		2,772		697
Total	$	2,291	$	567	$	4,152	$	1,089

NATURE OF BUSINESS AND BASIS OF PRESENTATION (Details) $ / shares in Units, $ in Thousands		6 Months Ended
	Jul. 25, 2017 USD ($) $ / shares shares	Jun. 30, 2018 USD ($) product $ / shares	Dec. 31, 2017 USD ($) $ / shares
Initial Public Offering
Number of product candidates \| product		2
Common stock, par value \| $ / shares		$ 0.001	$ 0.001
Common stock shares issued \| shares	16,101,970
Accumulated deficit \| $		$ (160,287)	$ (134,371)
IPO
Initial Public Offering
Issuance of common stock upon IPO, net of underwriters discount and offering costs (in shares) \| shares	6,900,000
Share price (in dollars per share) \| $ / shares	$ 15.00
Net proceeds \| $	$ 94,000
Underwriter's option
Initial Public Offering
Issuance of common stock upon IPO, net of underwriters discount and offering costs (in shares) \| shares	900,000
Underwriting discounts and commissions \| $	$ 7,300
Offering costs \| $	$ 2,200
Common stock.
Initial Public Offering
Shares warrants may purchase \| shares	202,020
Common stock. \| IPO
Initial Public Offering
Common stock, par value \| $ / shares	$ 0.001

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) $ in Thousands		6 Months Ended
	Sep. 30, 2013	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017
Lease term	3 years
Impacts to Previously Reported Results
Right-of-use asset		$ 226		$ 413
Accrued expenses		5,146		6,606
Other current and long-term liabilities				8
Lease liabilities		202		397
Amortization of right-of-use asset		187	$ 175
Lease liabilities		$ (195)	(175)
As Previously Reported
Impacts to Previously Reported Results
Accrued expenses				6,589
Other current and long-term liabilities				9
Adjustment
Impacts to Previously Reported Results
Right-of-use asset				413
Accrued expenses				17
Other current and long-term liabilities				(1)
Lease liabilities				$ 397
Amortization of right-of-use asset			175
Lease liabilities			$ (175)
Minimum
Lease term		1 year

ACCRUED EXPENSES (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
ACCRUED EXPENSES
Development costs	$ 2,157	$ 3,054
Compensation and benefits	2,061	2,402
Professional fees	623	666
General and administrative consulting	145	229
Other	160	255
Accrued expenses	$ 5,146	$ 6,606

LEASES (Details) - USD ($)				3 Months Ended		6 Months Ended		12 Months Ended
LEASES (Details) - USD ($)	Mar. 15, 2018	Feb. 28, 2018	Sep. 30, 2013	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017	Mar. 31, 2018
Lessee, Lease, Description [Line Items]
Lease term			3 years
Restricted cash				$ 2,178,000		$ 2,178,000		$ 134,000
Lease cost
Operating lease cost				99,000	$ 99,000	198,000	$ 196,000
Short-term lease cost				53,000		62,000
Total lease cost				152,000	99,000	260,000	196,000
Operating cash flows from operating leases				103,000	$ 100,000	$ 205,000	$ 197,000
Remaining lease term						7 months 2 days		1 year 29 days
Discount rate (as a percent)								6.50%	6.50%
Watertown Lease
Lessee, Lease, Description [Line Items]
Lease term		8 years
Restricted cash			$ 84,000	$ 2,000,000		$ 2,000,000
Existence of option to extend		true
Waverley Oaks Lease
Lessee, Lease, Description [Line Items]
Lease term	1 year

LEASES - Future Minimum Commitments Due (Details) $ in Thousands	Jun. 30, 2018 USD ($)
Future minimum commitments due
2018 (remaining six months)	$ 272
2019	68
Present value adjustment	(3)
Total minimum lease payments	337
Watertown Lease \| Operating Lease Obligations
Future minimum commitments due
2018 (remaining six months)	171
2019	34
Present value adjustment	(3)
Total minimum lease payments	202
Waverley Oaks Lease \| Short-Term Lease Obligations
Future minimum commitments due
2018 (remaining six months)	101
2019	34
Total minimum lease payments	$ 135

DEBT (Details)				3 Months Ended		6 Months Ended		12 Months Ended
DEBT (Details)	Mar. 29, 2018 USD ($)	Sep. 28, 2017 USD ($)	Oct. 13, 2016 USD ($)	Jun. 30, 2018 USD ($)	Jun. 30, 2017 USD ($)	Jun. 30, 2018 USD ($)	Jun. 30, 2017 USD ($)	Dec. 31, 2017 USD ($)	Nov. 30, 2014 USD ($)
Debt instruments
Term loan						$ 2,728,000
Interest expense				$ 414,000	$ 208,000	781,000	$ 406,000
Shares Exercisable						$ 113,328		$ 113,328
2016 Series C Warrants
Debt instruments
Fair value of warrants			$ 365,000
2014 Debt Facility
Debt instruments
Total loan commitment									$ 10,000,000
Additional borrowing capacity	$ 5,000,000		$ 10,000,000
Interest rate (as a percent)				8.00%		8.00%		7.50%
Unpaid principal balance				$ 20,000,000		$ 20,000,000		$ 18,900,000
Unamortized discount				233,000		233,000		$ 235,000
Interest expense				414,000	208,000	781,000	406,000
Amortization of debt discount				21,000	28,000	51,000	56,000
Contractual coupon interest				$ 393,000	$ 180,000	$ 730,000	$ 350,000
Percentage points						5
2014 Debt Facility \| Prime Rate
Debt instruments
Variable rate of interest			3.00%
Term Loan A
Debt instruments
Total loan commitment	$ 20,000,000		$ 10,000,000
Term Loan B
Debt instruments
Term loan		$ 10,000,000

DEBT - Future annual principal payments (Details) $ in Thousands	Jun. 30, 2018 USD ($)
Maturities of long-term debt
2019	$ 5,000
2020	6,667
2020	6,667
2022	1,666
Total	$ 20,000

WARRANTS (Details) - USD ($)	6 Months Ended	12 Months Ended
WARRANTS (Details) - USD ($)	Jun. 30, 2018	Dec. 31, 2017
Preferred stock warrants
Shares Exercisable	$ 113,328	$ 113,328
Warrants 2013
Preferred stock warrants
Exercise Price	$ 7.50
Shares Exercisable	$ 82,816	82,816
Warrants 2015
Preferred stock warrants
Exercise Price	$ 7.50
Shares Exercisable	$ 16,000	16,000
Warrants 2016
Preferred stock warrants
Exercise Price	$ 8.27
Shares Exercisable	$ 14,512	$ 14,512

FAIR VALUE OF FINANCIAL INSTRUMENTS - fair value measurement levels (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
FAIR VALUE OF FINANCIAL INSTRUMENTS
Transfer from level 1 to level 2, Assets	$ 0	$ 0
Transfer from level 2 to level 1, Assets	0	0
Transfer from level 1 to level 2, Liabilities	0	0
Transfer from level 2 to level 1, Liabilities	0	0
Transfer into level 3, Assets	0	0
Transfer into level 3, Liability	0	0
Transfer out of level 3, Liability	$ 0	$ 0

FAIR VALUE OF FINANCIAL INSTRUMENTS - Derivative liability (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2017
Reconciliation of Liabilities Measured at Fair Value on a Recurring Basis Using Significant Unobservable Inputs (Level 3)
Balance at beginning of period	$ 1,075	$ 1,039
Change in fair value of warrant liability	1,185	1,221
Balance at end of period	$ 2,260	$ 2,260

STOCK-BASED COMPENSATION (Details) - USD ($)	1 Months Ended	3 Months Ended		6 Months Ended		12 Months Ended	21 Months Ended
STOCK-BASED COMPENSATION (Details) - USD ($)	Apr. 30, 2018	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017	Sep. 30, 2017
Share-based compensation
Options granted				103,013
Weighted average grant date fair value of options granted		$ 11.46	$ 3.86
Stock based compensation expense		$ 2,291,000	$ 567,000	$ 4,152,000	$ 1,089,000
Cash proceeds from the exercise of stock options				$ 83,000
2009 plan
Share-based compensation
Number of common stock issuable upon exercise of rights under equity compensation plans		2,780,874		2,780,874		2,868,449
Number of shares outstanding		4,884,118		4,884,118		3,738,928
Options granted				1,243,390
Unrecognized compensation expense		$ 23,700,000		$ 23,700,000
Weighted average expense recognition period				3 years 1 month 13 days
Weighted average period				8 years 3 months 18 days		8 years 4 months 24 days
Employee and Non-Employee Stock Options \| Consultant
Share-based compensation
Stock based compensation expense				$ 11,000	$ 37,000
Employee and Non-Employee Stock Options \| Non-employees
Share-based compensation
Options granted		0	4,224	0	4,224
Stock based compensation expense		$ 0	$ 22,000
Employee and Non-Employee Stock Options \| 2009 plan
Share-based compensation
Options Expiry Term							10 years
Vesting Period				4 years
Performance Stock Options
Share-based compensation
Number of shares outstanding		0		0
Non-statutory Stock Options \| General Counsel, Chief Compliance Officer and Corporate Secretary
Share-based compensation
Number of common stock issuable upon exercise of rights under equity compensation plans	150,000
Common stock exercise price per share	$ 16.62
Vesting Period	4 years
Anniversary of the share-based compensation arrangement	1 year
Percentage of vesting of share-based compensation awards on the one year anniversary of the grant date	25.00%
Percentage of vesting of share-based compensation awards after the year anniversary of the grant date	75.00%

STOCK-BASED COMPENSATION - Stock Options (Details) - USD ($) $ / shares in Units, $ in Thousands	6 Months Ended		12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017
Number of Shares
Granted (in shares)	103,013
Weighted Average Exercise Price
Granted (in dollars per share)	$ 10.12	$ 3.86
2009 plan
Number of Shares
Outstanding at the beginning of the period (in shares)	3,738,928
Granted (in shares)	1,243,390
Exercised (in shares)	(53,965)
Forfeited	(44,235)
Outstanding at the end of the period (in shares)	4,884,118		3,738,928
Options exercisable (in shares)	2,135,011
Weighted Average Exercise Price
Outstanding at the beginning of the period (in dollars per share)	$ 6.93
Granted (in dollars per share)	14.01
Exercised (in dollars per share)	3.30
Forfeited	5.95
Outstanding at the end of the period (in dollars per share)	8.78		$ 6.93
Options exercisable (in dollars per shares)	$ 4.37
Weighted Average Remaining Contractual Term
Weighted average period	8 years 3 months 18 days		8 years 4 months 24 days
Options exercisable	7 years 3 months 18 days
Aggregate Intrinsic Value
Outstanding at the beginning of the period (in dollars)	$ 44,578
Outstanding at the end of the period (in dollars)	29,282		$ 44,578
Options exercisable (in dollars)	$ 20,151

STOCK-BASED COMPENSATION - Fair Value Assumptions (Details)	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology
Expected volatility (minimum)	83.00%	103.00%
Expected volatility (maximum)	85.00%	122.00%
Risk-free interest rate (minimum)	2.63%	1.81%
Risk-free interest rate (maximum)	2.96%	2.29%
Expected dividend yield	0.00%	0.00%
Minimum
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology
Expected term (in years)	5 years 3 months 7 days	5 years 15 days
Maximum
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology
Expected term (in years)	6 years 1 month 17 days	9 years 9 months 26 days

STOCK-BASED COMPENSATION (Details) - $ / shares	6 Months Ended	12 Months Ended
STOCK-BASED COMPENSATION (Details) - $ / shares	Jun. 30, 2018	Dec. 31, 2017	Jul. 25, 2017
Common stock and preferred stock
Common stock, authorized	120,000,000	120,000,000
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares issued	24,592,274	24,538,309
Common stock, shares outstanding	24,592,274	24,538,309
Preferred stock, authorized	5,000,000	5,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Closing price of the Common Stock (as percent)	85.00%
Employee basic pay holding period	6 months
Common stock shares reserved for future issuance	6,194,991	5,117,423
Stock Options
Common stock and preferred stock
Common stock shares reserved for future issuance	150,000
Common stock.
Common stock and preferred stock
Shares warrants may purchase			202,020
2017 Employee Stock Purchase Plan
Common stock and preferred stock
Number of common stock issuable upon exercise of rights under equity compensation plans	223,341	223,341
2009 plan
Common stock and preferred stock
Number of common stock issuable upon exercise of rights under equity compensation plans	2,780,874	2,868,449
2017 Equity Incentive Plan
Common stock and preferred stock
Common stock shares reserved for future issuance	937,532
Number of common stock issuable upon exercise of rights under equity compensation plans	3,040,776	2,025,633
2017 Equity Incentive Plan \| Maximum
Common stock and preferred stock
Common stock shares reserved for future issuance	2,780,874
2017 Equity Incentive Plan \| Minimum
Common stock and preferred stock
Common stock shares reserved for future issuance		3,573,766
Percentage of aggregate number of common shares reserved for future issuance (as a percent)		4.00%

STOCK-BASED COMPENSATION - Stock-based compensation expense (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Share-based compensation
Stock based compensation expense	$ 2,291	$ 567	$ 4,152	$ 1,089
Research and development
Share-based compensation
Stock based compensation expense	741	205	1,380	392
General and administrative
Share-based compensation
Stock based compensation expense	$ 1,550	$ 362	$ 2,772	$ 697

INCOME TAXES (Details) - USD ($)	9 Months Ended
INCOME TAXES (Details) - USD ($)	Sep. 30, 2017	Sep. 30, 2016
INCOME TAXES
Uncertain tax positions	$ 0	$ 0
Interest or penalties recorded	$ 0	$ 0

COMMITMENTS AND CONTINGENCIES - License Agreement (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Contingencies
Research and development expenses	$ 7,368,000	$ 8,071,000	$ 13,024,000	$ 16,110,000
The Johns Hopkins University (“JHU”)
Contingencies
Minimum annual payment			38,000
License fee, if the company achieves the first commercial sale			113,000
Research and development expenses	$ 169,000	$ 0	$ 200,000	$ 10,000